Arizona Hotel Room Rates Spike Amid Sagging Demand

PHOENIX-Tucson has walked away the winner in hotel demand, which has dropped in most Arizona cities, including Phoenix where occupancy is 0.6% below midyear 2000′s tally. In turn, rooms are more costly, according to Warnick & Co. a Scottsdale-based hospital consulting and research firm.

The research firm’s midyear survey shows Tucson bucked the statewide slump by posting a 2.2% increase in its average occupancy for a high of 70.2%. The state average was 67.8%, down from last year’s 68.2%. Blame it on the summer heat and sagging economy, say the researchers.

Northern Arizona was the hardest hit, where occupancy dipped to 47.3%, down 8.7% from the previous year. Eastern Arizona occupancy was recorded at 50.7%, a 3.1% drop from midyear 2000. In the Valley, Tempe saw the biggest decline with a 3.1% fall for a 67.8% occupancy rate. West Phoenix escaped the downturn, posting a 2.5% increase for an average occupancy of 65.4% and was the city’s only section to do so.

The drooping economy had its greatest impact on upscale properties, which were off 4.8% overall for hotels located outside Tucson and Phoenix borders. The statewide average upscale occupancy now stands at 58.1%. Luxury hotels in the Valley declined by 2.9%. Even Tucson’s high-end market got hit, showing a 4.3% drop in the occupancy rates.

Overall, the average daily room rate for Arizona hotels was up 1.5% from a year ago. At the end of June, the average room rate hit $95.75 per night. Similarly, RevPAR increased to $62.52 per night or a hike of 1.1% from midyear 2000.

In the Valley, hotels around Phoenix Sky Harbor Airport posted a 3.9% increase in room rates while west and east Phoenix showed slight declines. Scottsdale’s average room rate rose 5.8% to $167.53 at June’s end. The luxury market cornered the highest spike of the product types, shooting up 4.3% while budget hotels held steady. In Tucson, the luxury market rose 3.3% and the upscale market, 3.6% for average room rates.