Hospitality industry is on the rebound, but how much is still unknown

Michael Novakovich

Michael Novakovich

Michael Novakovich, president and CEO of Visit Tri-Cities, is looking forward to May, which is when the tourism agency he leads expects to finalize the economic impact of tourism on the local economy in 2021.

After a pandemic-battered showing in 2020, signs of revival will be welcome news to an industry that posted a record $496 million in revenue in 2019.

Until the final numbers are out, Novakovich is happy to highlight interim trends, such as a 12% increase in hotel revenue and a 21% increase in Revenue Per Average Room, or RevPAR, a common industry metric.

The 2021 figures will show a sharp, if not full, recovery over 2020, when tourism spending fell a whopping 30% to $345 million because of pandemic shutdowns.

“2020 was a tough pill to swallow,” said Novakovich.

Novakovich credits leisure travelers for the revival. Business travel remains depressed and isn’t expected to return before 2024.

Novakovich said he’s grateful for the interest from visitors in the four major “drive” markets, the urban areas within driving distance – Seattle, Spokane, Boise and Portland.

Seattle and Portland have long been major sources of wine and related tourism. Aggregated shopping data indicates Spokane is a greater source than local officials believed, opening new opportunities to market the area.

“It’s weather, water, wine. There’s so many opportunities in that,” he said.

Surveys of visitors in drive markets and places served by direct flights indicated they travel here for outdoor activities. Dining is a growing area, as is STEM – science, technology, engineering and math – tourism. Visit Tri-Cities has embraced the STEM mission and markets the area’s STEM assets, such as the Manhattan Project National Park to science-minded guests.

“Leisure travel was probably our saving grace because of all the wonderful things we offer in the Tri-Cities – like outdoor space,” he said.

Sports and tournaments have been a particularly bright spot for the region, with events quickly picking up in spring of 2021 and building in 2022. In June, the National Softball Association will bring 115 teams to town.

“June is going to be very exciting,” he said.

The meetings business remains a challenge, but there are several events on the books. From April 18-22, TBEX North America 2022 will bring 300 travel bloggers that will bring hard-to-buy publicity. Local businesses can support the message and interact with the writers by using the TBEX hashtag: #TBEXTricities! all month.

May brings the 92nd Washington FFA Convention, expected to generate $700,000 in spending.

The uptick is welcome, but there’s a challenge that’s familiar to all hiring managers: Staffing.

Hotel revenue is on the rise, but hoteliers are competing for staff with higher wages, pressuring profits.

Staffing will continue to dog the industry, thanks to competition for workers from newcomers such as Amazon Inc. and Darigold Inc., two companies developing massive new facilities in Pasco that will employ thousands.

The Amazons, Darigolds and others offer welcome job opportunities, but for the hospitality sector, Novakovich said it means businesses may have to operate with leaner staffs.

“It will be a challenging space for a while,” he said.

One of the biggest developments in hospitality is the arrival of a Portland company, Fortify Developments, which has bought several properties with the intent to convert them to  microapartments. Several projects are underway, taking rooms out of the inventory.

Two of Fortify’s conversion projects were slowed when the company was unable to purchase the sites they sit on. The city of Richland not only refused to sell the land under the Riverfront Hotel (formerly the Shilo Inn), it warned Fortify against operating it as apartments, saying that it would violate the terms of its land lease.

The Port of Kennewick refused to sell Fortify the land under the Clover Island Inn but signaled that it is amenable to seeing the property renovated and possibly converted.

Novakovich said not all the conversions are welcome.

Some of the converting properties have much-needed conference and meeting space.

“When we lose the meeting space, that’s our biggest concern. We already have less meeting space than our competitors,” he said.

The former Best Western Columbia River Hotel and Conference Center, 1515 George Washington Way, Richland, is a telling example. Recently renovated, its conference space and indoor swimming pool made it a hit with sports teams. Visit Tri-Cities loved having it in its inventory.

In the long term, the conversions signal developer confidence in the Tri-Cities, he said, meaning the old hotels will be replaced by new.

“We get more inventory. New inventory is a great thing,” he said.

For more about Visit Tri-Cities and its suite of tools to help residents and visitors learn about local offerings, go to: visittri-cities.com.

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