
Idaho hotels lead the northwestern states in increases in the average daily rate at hotels but also had the largest decrease in room occupancy over the past year, according to a hospitality research report.
The Marcus & Millichap Hospitality Research Report noted that average daily rates (ADR) at Idaho hotels increased 4.5 percent to $101.96 from July 2017 to July 2018, the largest increase among Oregon, Washington, Idaho, Montana and Wyoming.
Specifically in Boise, ADR increased 5.2 percent from $102.61 to $108.02, according to Greater Boise Auditorium District statistics.
The Marcus & Millichap report also cautioned that Idaho room occupancy “plummeted” 1.9 percentage points to 63.2 percent compared to a .3 percentage point increase to 64.2 percent across the five states. GBAD notes Boise occupancy dropped 2.7 percentage points to 72.0 percent.
The occupancy rate is moot because Idaho has added some 3,000 new rooms at about 40 new hotels in the past couple years, said Pat Rice, executive director at GBAD, which is funded by transient occupancy taxes charged at hotels.
Downtown Boise alone has added four new hotels with 580 rooms in less than two years.
“I would say nothing plummeted,” Rice said. “The occupancy rate is driven purely by supply. You add that kind of supply to the market, you might have more occupancy.”
But Rice said Boise has absorbed nearly all the new rooms, considering the vacancy rate is similar with more than 600 new rooms across the city. He noted that room nights increased by 66,925 to 1.56 million rooms filled over the course of a year.
“We’re up simply because of the number of conventions we can do,” Rice said.
Boise Centre events and conventions spiked following the August 2017 opening of the 36,000-square-foot Boise Centre East expansion. The number of total events at Boise Centre increased from 270 in 2016 to a projected 368 for 2018, bringing 42,000 more people to the convention center, and the number of conventions grew from 47 to 68, Rice said.
Room revenue also increased 7.3 percent to $170.4 million in July 2018 in the GBAD area, which is generally east of Eagle Road, Rice said.
Jared S. Barr built the largest hotel among the current generation of new hotels, the 185-room Marriott Residence Inn Boise Downtown/City Center. He is also building a 108-room Marriott TownePlace Suites in Twin Falls that is expected to open in June next to his 92-room Marriott Fairfield Inn.
“We put a massive amount of supply on the market,” Smith said. “We all need time to understand how it will affect all of us.”
New hotels aren’t the only factor taking a bite out of occupancy rates. Airbnb’s presence in Idaho more than tripled from 7,300 vacation home rentals in 2016 to 24,000 in 2018, according to the Idaho Department of Commerce.
“The vacation rental element made a much bigger impact,” said Matt Borud, Commerce’s chief marketing and innovation officer.
Borud said he has watched hotel room rates climb over the past two to three years.
“New high-end properties coming online is a driver of that,” Borud said.
Unlike neighboring states, where a lion’s share of tourism generally focuses on one or two general areas, Idaho has seen hotel construction all over the state in nearly all significant population centers. Idaho visitation is up 4 percent from 2015, according to Borud.
“Visitation is up across the state,” Borud said. “The growth is not limited to one or two pockets. Every area around the state has a unique travel opportunity.”
Marcus & Millichap also mentioned that “more flights are being added to and from Boise, giving visitors more flexibility to visit the state from some of the nation’s largest markets.”
Since June 2017, Boise Airport has seen several airlines launch service to new cities — Southwest Airlines offers flights to San Diego and San Jose, American Airlines to Chicago O’Hare and Allegiant to Phoenix-Mesa Gateway Airport. Frontier entered the market with service to Denver. American added a flight to Dallas, and Alaska Airlines increased plane size on some flights to Seattle, airport spokesman Sean Briggs said.
Passenger traffic increased 11 percent through July 2018 to 3.69 million.
“Last year was a record year, and we’re blowing it out of the water this year,” Briggs said.