News

Cleveland's Hotel Boom

Aired May 11, 2001

The number of hotel rooms in northeast Ohio is increasing. But tourism industry leaders say a glut of rooms could lead to job losses and eventually hotel failures. Meanwhile, a new hotel has just opened in downtown Cleveland. The building is also bringing a surge of new retail shops to the heart of the city. 90.3 WCPN®'s Mike West explores whether the new businesses will satisfy demand, or if they'll be another mouth to feed, hungry for tourist dollars.

Mike West–To the sound of music, and the speeches of political and business leaders, the ribbon was recently cut at the historic Arcade in downtown Cleveland while the first guest checked in.

After years of neglect, the $60 million renovation is finished. The result: a new Hyatt hotel, and new shops and restaurants at the 293-room hotel. But some say it's not needed. According to Smith Travel Research, a national firm that tracks such things, between 1995 and the year 2000 the number of rooms in northeast Ohio grew much faster than demand. And at least several hundred more rooms are also expected to open this year. Too many rooms could mean lay-offs and other cost cutting measures.

Joe Khairallah runs the new Hyatt hotel at the Arcade, but he's not worried. He feels when the corporation spent $30 million for half of the arcade project, they knew what they were doing.

Joe Khairallah–We typically do not come to a city and walk away from it. Our customers have been asking us to come to Cleveland and now here we are. We're very proud to be here we look forward to a prosperous relationship with the city, the mayor and the locals in Cleveland and I think without a doubt this hotel will be successful.

MW–The Hyatt and other upscale chains don't have to depend on mom, dad and the kids to drop in for a stay. Their bread and butter is the business traveler. At the Hyatt for example, it costs $209 to stay during the week and $109 on the weekend. It's also loaded with the kind of meeting rooms and other amenities business guests are willing to pay for.

However, the head of the Cleveland Convention and Visitor's Bureau, David Nolan, warns we are at a dangerous crossroads.

David Nolan–We have defiantly turned the corner from years ago being very similar to Bethlehem where there's no rooms in the inn to the situation as of today where there's too many rooms in the city available, and it is a question of oversupply.

MW–While Nolan says Cleveland has too many rooms, he also points to the need for a new convention center to create more demand. But the facility itself would come with up 1,000 new beds.

DN–The first priority for cities who desire to compete and ultimately dominate the market, is to have destination appeal. Cleveland has been able to meet that first requirement in test.

MW–The destinations include Cleveland's many sports facilities, the Play House district, the Rock Hall and numerous other museums.

DN–First and foremost the customer needs to have a desire to visit a city and a region and when you have that and enjoy that. Then you earn the right to enjoy business, once your destination is appealing meetings and conventions follow.

MW–Hotel rooms aside, the opening of the arcade also comes with 40 new retail shops in an area some say already has enough stores at tower city and here at the galleria. A shopping center just a few blocks away from the arcade.

Mike–The big problem here at the Galleria is the fact that there's too many empty stores.

MW–That's Mike, a shopkeeper who doesn't want to be identified. He says times are tough and he doesn't welcome new merchants competing for the same customers.

Mike–Traffic downtown had slowed down in the last year or two. When the Rock Hall opened, that was good for business, when the (Great Lakes) Science Center opened, that was good for business and all those things helped but everyone who wanted to go to those things have gone once and don't need to go again.

MW–But just down the way, another store manager sees things differently.

Susan–We do an excellent job, were keeping up with our suburban stores and were open 14 hours less a week, so were doing more business.

MW–Susan also wants to remain anonymous because she's afraid of getting in trouble with her chain. She says for shops and hotels, the more the merrier.

Susan–We have competition by Tower City and it's not causing any problems at all. The more hotel rooms that more conventions the more conferences that are coming into our town the more business for retailers.

MW–Back at the arcade, about half of the 40 stores are filled and will open in June. 14 merchants were her before the renovation and are now back to try their luck. Gary Jacobs is the general manger of the Federal Coin Exchange. He spent 19 years in the old Arcade and is happy to return to the "new and improved" building.

Gary Jacobs–At one time we had real good traffic, as the arcade started to deteriorate the business started to decline. Some of the businesses moved out, it declined more. We enjoyed it, we were a destination business, we didn't suffer as bad as some other people.

MW–Jacobs feels it's best to encourage more hotels and retailers to set up shop in downtown because eventually demand will catch up.

GJ–Somebody has to take the leap and for years we've heard there wasn't enough hotel room, now we hear there's too much. Somewhere there's a happy medium. We won't get conventions in downtown Cleveland if we don't have enough hotels. Sometimes it better to have too much for a while than not enough ever.

MW–Many believe a new convention center would solve the demand question because Cleveland could host more conferences. But the future of a convention center is as murky as the Cuyahoga River after a rainstorm. The mayor suddenly abandoned his efforts for renovating the current convention center. At the same time county leaders are still at the very early stages of gaining support for a new one on the lake front. In Cleveland, Mike West, 90.3 WCPN® 90.3 FM.