Area occupancy rates slide as new hotels open doors

CAPITAL REGION — August turned out to be a hotter month for the Capital Region hospitality sector’s supply side than its demand side, with the area posting the state’s second highest growth rate in new rooms.

Even as the credit crunch strangled the nation’s hotel construction boom, the number of rooms in the region increased 4.1 percent over last August, boosted strongly by the summer openings of at least three hotels.

Only the Rockland/Westchester area posted stronger growth for August, at 5.1 percent. Both regions far outpaced the nation’s room growth rate of 2.8 percent, according to Smith Travel Research, a Hendersonville, Tenn., lodging information and data provider.

But that robust growth took its toll on reservations of the Albany area’s occupancy rate, which dipped last month to 76.3 percent from 78.3 percent a year earlier.

The downstate region, which is more reliant on corporate travelers, saw its occupancy rate plunge during that period to 70.7 percent from 75.7 percent.

“The supply is just slightly ahead of demand, and we may see, over the next couple of years, that reverse itself,” said Dan Murphy, president of the New York State Hospitality and Tourism Association, a trade organization in Colonie.

August’s lackluster occupancy growth continued a trend that had played out all summer around Albany.

July’s occupancy rate inched up 0.7 point from a year earlier to 71.7 percent while June’s rate slipped 2.6 points to 66.3 percent. The region’s rate for the first eight months was 60.6 percent, compared with 61.5 percent for the same period of 2007.

By the end of August, the region had 11,666 rooms, 468 more than a year earlier. Eighty-one percent of those new rooms came online in the past two months, with the opening of a 123-room Hampton Inn in Saratoga Springs, a 130-room Holiday Inn Express in Latham and a 130-room Hyatt Place in Malta.

Rooms were costlier last month, as the region’s average daily rate rose to $127.08 from $123.28 a year earlier.

However, at the 78-room La Quinta Inn in Latham, co-owner Rocky Cocca said the recent influx of new hotels made him lower his average daily rate in August to $113 from $120.

“We fought pretty hard and we held our own,” said Cocca, who also owns three Cocca’s Inn & Suites plus a Travelodge next to the La Quinta.

Cocca last month received approvals from Colonie planning officials to raze his 40-room Cocca’s on Route 7 in Latham and replace it with a 100-room Candlewood suites.

But Murphy at the hospitality association said the nation’s economic woes and credit crunch will likely prevent many developers from pursuing similar projects.

“We may see a stalling out of supply for the immediate future,” Murphy said.