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Heritage Value Boosts Older Hotels

New, chic and tricked out with all the latest amenities — that’s the marketing message you get from most hotels these days. But a new study by Mineola, N.Y.-based hotel consulting firm HVS International suggests that there is another, more powerful lure for discerning travelers willing to pay a premium for their room: historic value. According to the study, occupancy rates at historic hotels were as much as 10% higher than the national average during the past few years. Historic hotels also posted an average daily rate (ADR) of $165, or more than double the nationwide average in recent years.

The study, which crunched occupancy data from Hendersonville, Tenn.-based hotel research firm Smith Travel Research, examined operating trends among 120 member hotels of Historic Hotels of America (HHA) between January 2000 and October 2005. All HHA properties must be at least 50 years old and eligible for National Register of Historic Places status to be a member.

Based on the findings, occupancy rates at historic hotels were 8% higher on average compared to the newer hotel properties. To be sure, most of the historic hotels are full-service or resort properties while the nationwide data set includes several limited-service properties.

“Travelers interested in historic hotels are generally more affluent,” says Matthew Melville, a consulting and valuation analyst at HVS. “They seek to make their hotel stay a memorable part of an overall vacation experience.” The stronger operating performance of historic hotels does indeed suggest that history-craving clientele are willing to pay extra to stay at an older property.

Case in point: a 2003 market study commissioned by the Travel Industry Association of America noted an increase in travelers' desire to experience cultural, arts, historic and heritage activities. The study found that 81% of travelers who took a trip away from home in 2002 included at least one of those activities during their trip. By comparison, a 2001 study found that only 71% of travelers were interested in such activities during their trip.

Even so, RevPAR levels (revenue per available room) for the historic hotel group was far more volatile than all other hotels. Melville says that nationwide average RevPAR between January 2000 and October 2005 was relatively stable, hovering between $40 and $63 in that period. Historic hotels, however, posted RevPAR rates between $80 and $155 during that stretch.

In 2001, for example, historic hotel RevPAR fell from $140 to $85 between the end of September and December 2001, a plunge that nearly halved the historic segment's steep RevPAR level. Compared to the nationwide RevPAR, too, that was a huge plunge since the nationwide segment only dropped from $60 to $40 during that period. The terrorist attacks on 9/11 were largely responsible for this sudden decline in rates.

“These fluctuations can be attributed to changes in both occupancy and average rate, with the majority of the fluctuation attributed to occupancy changes,” says Melville. The lack of geographic diversity and a national reservations system also didn’t help the historic hotels. Occupancy rates at historic hotels dropped from roughly 80% to 55% between the 9/11 attacks and the end of 2001 with nationwide occupancy falling from 68% to 50% during that period.

This recent shift towards elegant, independent hotels with a rich history also suggests that many guests are shying away from so-called “cookie cutter” hotels that offer uninspired quarters at cheaper rates. To Mary Billingsley, public relations director for Historic Hotels of America, it’s all about a sense of place. “People are really looking to enhance their journey,” she says, adding that some member hotels even keep historians on the payroll. Not only are these historians valuable to the marketing staff, but they are also preserving the history of the property.

Quirkiness also sells. One example: the Crescent Hotel in Eureka Springs, Ark., uses its spooky history to target guests with a bent for the paranormal. The hotel’s website even features first-person accounts of ghostly encounters at the property.

“Growing interest in historic hotels is apparent,” says Melville. “No single asset may have more marketing value to a historic hotel than its history.”

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