Hilton Vancouver Washington expects revenue boost in 2019

Next year should see a revenue boost at the Hilton Vancouver Washington after convention center bookings this year fell slightly below expectations, says Mike McLeod, hotel general manager.

McLeod last week presented a 2019 budget to the city’s Downtown Redevelopment Authority that anticipates a nearly 5 percent revenue increase over this year and nearly 6 percent over 2017. The authority, which oversees the city-owned hotel, unanimously approved the $19.4 million operating budget and $1.05 million capital budget.

The Hilton enters one of the last years that it will enjoy the upscale downtown hotel market largely for itself. Next year, the 120-room Hotel Indigo at The Waterfront Vancouver is expected to open. On top of that, a 160-room AC by Marriott on Port of Vancouver property is planned as well as the 120-room Hyatt Place.

But last week McLeod was focused on the immediate future. He said in an interview following his presentation to the redevelopment authority board that revenue this year did not quite meet expectations.

“We had planned and built a budget to do similar business that we did in ’17,” McLeod said. “And pretty quickly we realized that wasn’t going to be the case. We realized that group rooms (and) convention business was not going to be where it was in ’17.”

On the other hand, business and leisure travel bookings were higher than expected and nearly made up for the underperformance of group and convention business, McLeod said.

Also, hotel restaurant Gray’s — formerly known as Gray’s at the Park — will nearly hit its 2018 budget mark even though the revamped space opened two months later than planned.

“We’re actually very pleased with that,” McLeod said. “But it’s only a sliver of our food and beverage.”

The hotel will enter 2019 enjoying relatively the same position as it did entering 2017 with substantial pre-sold group and catering business.

McLeod, however, knows there’s competition around the corner. In fact, in his presentation last week, he pointed to competition for the Hotel Vancouver Washington that arrived late this year or is anticipated for early next:

• Twigs Bistro and Martini Bar and WildFin restaurants opened in the third quarter at The Waterfront Vancouver.

• Holiday Inn Express & Suites 1805 S.E. 192nd Ave. in Camas, with 82 rooms, opened in the fourth quarter.

• Best Western Premier at 1500 S.E. 167th Ave. in Vancouver, with 132 rooms, is expected to open in the first quarter of next year.

• Residence Inn Portland Vancouver at 411 S.E. 123rd Ave. in Vancouver with 90 rooms, is expected to open in the first quarter of next year.

That’s 304 additional rooms to compete with the 226-room Hilton Vancouver Washington, which features 30,000 square feet of meeting space. On top of that, McLeod also expects the Hilton is already feeling the impact when the 600-room Hyatt Regency Portland at the Oregon Convention Center opens in the fourth quarter next year. The Vancouver hotel and other Portland-area hotels with meeting space are “aggressively” booking meetings for 2020 and beyond, in part because of the big hotel’s arrival.

And then there’s the 120-room Hotel Indigo, which is expected to open in 2020. The addition of the Indigo, the Port’s AC by Marriott and the Hyatt Place would add 400 rooms.

“So as far as short-term, there’s not any immediate concern,” said McLeod, who has led the Hilton Vancouver Washington since his September 2015 appointment. “One hotel (Indigo) coming into my immediate market will be fine. Maybe 100, 150 days, I won’t like it, because I don’t fill every day.”

It’s possible the additional competitors’ rooms could benefit the Hilton, McLeod said, noting that a convention center of the Hilton’s size usually has an attached hotel of 400 rooms, not 226.

“If we could overflow 25 or 50 rooms to another hotel, it might allow us to book something that we couldn’t fit in before,” he said, “and allow the other hotel to have a little base of business and get them started on filling their property.”

The additional rooms might present a welcome dilemma for Visit Vancouver USA, the nonprofit agency that promotes travel and convention business. The agency’s budget is supported by room fees that generated about $1.2 million in 2017.

“We’re cautiously optimistic about the growth ahead, particularly with the new waterfront development,” Jacob Schmidt, Visit Vancouver USA director of marketing and communications, said in an e-mail.

“Downtown hotels will give us new overflow hotel options for large groups meeting at the Hilton and Vancouver Convention Center,” Schmidt said. “However, in conjunction with a general softening in the economy, the new hotel supply may contribute to an overall plateau effect in 2019.”

Because, as every hotelier knows, a recession is always looming on a horizon, be it near or far.

“Our industry feels the pain of recessions more than most,” wrote Joseph Reel in a Hotel News Now story, “A look at past U.S. recessions and their hotel impact.”

The story notes that 500,000 hotel rooms have been added since the Great Recession, increasing national supply by more than 10 percent. On top of that, the story says, labor costs have outpaced revenue over the past two years.

“But the magnitude of the next recession,” the story concludes, “will most likely be less of an impact overall — fingers crossed.”