Gulf Coast Hotels Desperately Cutting Rates
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MIAMI — Dramatic rate cuts are luring visitors to Gulf Coast resorts despite a massive oil spill that threatens beaches and salt marshes from Texas to Florida, but it's too early to say whether the disaster will leave a more permanent stain on Southeastern tourism.
During the first two weeks of May, hotels within 10 miles of the coast in Louisiana, Mississippi and Alabama saw occupancy rates rise dramatically – in some cases by a third or more over the same time last year, according to an industry data firm.
It's a positive omen for nervous hotels and restaurants: Despite an initial wave of cancellations, potential visitors have been persuaded that most areas remain unaffected by the gushing crude. But experts say it's too soon to gauge the broad economic impact of the April 20 explosion at an oil rig leased by BP-PLC that killed 11 workers off the Louisiana coast, triggering what is expected to become the worst oil spill in U.S. history.
The data could also be misleading – partly because 2009 was such a miserable year for hotels – but largely because occupancy rates often swell with government and relief workers after disasters.
"(The occupancy bubble) lasts from the first week to a month or eight weeks, 12 weeks maybe," said Jan Freitag, vice president of global operations for STR Global, the firm that conducted the survey. "By that time, word has gotten out on how good or bad the situation is, and tourists return or they don't. That verdict is still out."
The Gulf Coast states depend on millions of travelers who fish, patronize restaurants, picnic, snorkel and swim in the oil-endangered areas – and the high season starts with Memorial Day. So far, many hotels across the region are reporting greater than 90 percent occupancy rates for that crucial opening weekend. But they're doing it with aggressive promotions like free golf and even complimentary room nights, leaving revenue below 2009 levels that were already at historic lows.
As the oil plume washed across a 150-mile span from Dauphin Island, Ala. to Grand Isle, La., hotels in so-far unaffected areas of Alabama, Mississippi, Texas and Florida managed to retain worried visitors by relaxing cancellation policies and promising full refunds if the oil arrives on popular beaches.
But the longer the crude continues to spill – and the more shoreline it blackens – the more hotels will empty and tourism-dependent industries that generate tens of billions of dollars will suffer.
"It's almost like crisis management – just constantly trying to manage the information the guests are receiving," said Kathleen Williams, general manager of Spectrum Resorts, which owns three properties on Alabama beaches.
At The Beach Club, Turquoise Place and Caribe Resort in Gulf Shores, Ala., Williams' company first relaxed its 30-day cancellation policy if oil interrupts a vacation, then eliminated altogether the full upfront room payment previously required at booking.
So far the properties are roughly on pace with last year, but Williams says the company has worked hard to keep it that way. The Beach Club is offering up to $450 credit at the resort's restaurants, spa and shops for those who book at least four nights. Like many on the Gulf, the company has been promoting Web cams and video updates to show the sand and surf remain pristine.
"We're trying to market the fact that even if you're afraid of the water, which there's no reason to be, we are a resort and we have other things," Williams said.
Florida on Tuesday received $25 million pledged by BP to promote the message that its beaches remain clean. The state planned to immediately buy air and radio time in drive-in markets for the Panhandle, encouraging last-minute Memorial Day travel. Separately, the Bay County Tourist Development Council is buying 25 digital billboards in cities like Nashville, Tenn., Atlanta and Birmingham, Ala., that will display daily photos taken on Panama City, Fla., beaches.
BP has also promised $15 million apiece for tourism marketing in Alabama, Louisiana and Mississippi.
Hard numbers are tough to come by for reservations beyond the coming holiday weekend, but property owners and local tourism officials estimate they're off 25-30 percent. So far that hasn't meant people aren't willing to come – just that they don't want to commit until the last minute.
That was how E.J. Ryan of Covington, La., planned his vacation. His family almost scrapped their Gulf plans and headed to Mexico after the spill. Then they discovered a last-minute deal offering $2,000 off the weekly rental on a beach home in Destin, on the Florida Panhandle.
"It's been terrific," he said, standing before clear turquoise waters and snow-white sand.
Jim Hutchinson, assistant secretary for the Louisiana Office of Tourism, called the occupancy numbers misleading, but not surprising. The hotels may have a lot of guests, he says, but he suspects they're not vacationers.
"Because of the oil slick, the hotels are completely full of people dealing with that problem," he said. "They're certainly not coming here as tourists. People aren't sport fishing, they aren't buying fuel at the marinas, they aren't staying at the little hotels on the coast and eating at the restaurants."
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Associated Press Writers Melissa Nelson, Annie Greenberg, Mitch Stacy, Kelli Kennedy and Brent Kallestad contributed to this report.
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TRAVIS REED 05/26/10 04:20 PM ET Associated Press