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Attracting a new market

‘Jewel’ draws clients seeking ‘headquarters hotel’

SHARE Attracting a new market

The Grand America Hotel opened with much fanfare on a spring day three years ago, the focus of great expectations — and more than a whispering undercurrent of worry.

It was opulent, to be sure. Luxurious. A crown jewel for oil magnate R. Earl Holding, owner of Sinclair Oil, the adjacent Little America Hotel, several ski resorts and other commercial properties.

But did Salt Lake City really need another hotel?

"I don't know that, given the size of our market, the market is sufficiently large and sophisticated to support something like that," said James Wood, director of the University of Utah's Bureau of Economic and Business Research. "I don't know that it could have happened, except that we have someone as committed to Salt Lake the way that Earl Holding is."

The market was already softening. The tech bubble had buckled, hitting Utah particularly hard. The New Economy suddenly seemed like dangerous, unfamiliar territory.

"The downturn in the market actually started in the late 1990s," said Grand America general manager Bruce Fery. "Salt Lake was already starting to be overbuilt, because it was getting ready for the (2002) Olympics. There was about a 64 percent increase in room nights, from 9,000 to almost 18,000, and we were a part of that with our 775 rooms. It made it very difficult."

Then, six months later, the world changed. The travel and tourism industries virtually shut down. Business travel slowed to a trickle. The lucrative convention industry canceled events in droves. Airlines crept closer to bankruptcy.

It could have been very, very bad.

"9/11 came along and was a huge step back" for the industry and the Grand America, Fery said. "People stopped traveling. Groups started canceling. The economy started to slip."

But although times were tough, Fery said, it could have been worse.

"Opening as a new property, you expect to start slow," Fery said. "It takes years to build occupancy. But we're not a branded property. We're not a Marriott. We're not a Hilton.

"This has its benefits. We can change on a dime. There's no red tape if we need to make a decision. I have a sole owner who is fairly involved, and if I need something, we can act quickly."

When the hotel was being built, it was envisioned as a world-class facility, able to compete with any resort for high-end clientele. When it was finished, however, the "transient" market had dried up, Fery said, and the Grand had to cater more toward corporate events and group meetings. It would specialize and distinguish itself from the rest of the market.

"We don't view ourself as competing with the other hotels in the community," Fery said. "We view ourselves as bringing in new or additional business that wouldn't ordinarily come to the city."

The Salt Lake Convention and Visitors Bureau conducts regular site tours, including local hotels. Dianne Binger, the bureau's president and chief executive officer, said having the Grand America gives the organization additional firepower in recruiting groups.

"Because of the size and the quality of the hotel, it has enabled us as a community to attract a new market," Binger said. "It's a five-diamond property. Many of the clients we solicit want upscale properties. Also, many of the customers we work with want a 'headquarters hotel.' They want 800 to 1,000 rooms under one roof. By packaging the Little America and the Grand together, we're able to bring in a whole new market."

The Grand America stands on 10 acres in the heart of downtown and includes 380 "premier rooms," each 700 square feet; 395 suites, each 880 square feet; and three "presidential suites," each over 2,000 square feet. The Grand America also has 74,000 square feet of meeting space.

As a privately held part of Holding's portfolio, it isn't known how much money the Grand is making, whether it is operating in the black or how much of it is being utilized.

"It's certainly the class of the field, I think, in terms of quality," Wood said. "At some point, it will be an icon for the sector. But it is still a sector that is suffering. There are a few areas of Utah's economy that are still lingering in weakness, and one of them is hotel occupancy. The tourism sector is still weak. Air passenger numbers are weak."

Teri D. Burns, executive director of the Utah Hotel & Lodging Industry, maintained that things are looking up — locally and nationally — in the hospitality industry.

"The U.S. lodging industry has begun to return to profitability in 2003 and 2004," Burns said. "After the previous 10 years of record-breaking performance, the industry has spent a better part of the last two years dealing with a multitude of issues, including the lingering effects of 9/11, the Iraqi conflict and third-party marketers. Salt lake has fared a little better largely because of the Olympics in 2002, but it has also skewed the figures for comparison to following years."

The Rocky Mountain Lodging Report found that Utah's lodging establishments had an average occupancy rate of 70.5 percent in August 2004, the most recent data available, up from 68.3 percent during the same month in 2003.

"Average occupancy rates and revenue per available room all point to a stronger lodging industry performance ahead," Burns said.

In Salt Lake City, the occupancy rate stood at 71.2 percent in August, up from 66.7 percent a year earlier. Plus, the average room rate across Utah was $72.74 for the month, compared to $70.36 a year ago. In Salt Lake City, average room rates rose to $75.16 from $72.32 in August 2003.

Fery declined to disclose income or occupancy numbers specific to The Grand America. But he said the hotel has increased its occupancy every year since 2001, and "the owners are very happy with its return."

Darlene Cofrancesco, a member of the meeting development team at pharmaceuticals giant Pfizer, said her 160-member group decided to hold its meeting in Salt Lake City after the Grand America hosted a site visit in the spring.

"One of our planners attended the (site visit) and returned with nothing but wonderful things to say about the meeting space, accommodations and service — all factors critical in selecting a venue for our meetings," Cofrancesco said. "To date our experience has been pleasant and stress-free. I hope to return with other groups and will encourage all meeting planners do to the same."

Though the Grand America wasn't the city's only draw, Cofrancesco said she "wasn't sure Salt Lake would have been a selected destination had we not visited the Grand America.

"Our decisions are based on from where the attendees will be coming. As the participants from this meeting come from all across the U.S., Salt Lake City was a great central (sort-of) location with a hub at the airport. That definitely helps."

E-mail: jnii@desnews.com