Ann Arbor Business Monthly July 2015 : Page 1

BUSINESS MONTHLY • ann arbor • chelsea • dexter • manchester • milan • saline • whitmore lake • ypsilanti ann arbor area Volume 11, No. 5 July 2015 $2.00 Hospitality Industry’s Local Economic Impact Increases By Duane Ramsey The hospitality industry’s impact on the local economy increased signi fi cantly in 2014 from 2013, according to the Ann Arbor Area Convention & Visitors Bureau (AAACVB). The number of visitors to the Ann Arbor area increased 52 percent from 5.6 million in 2013 to 9.4 million in 2014 while the total economic impact of those visitors increased 30 percent from $535 million in 2013 to $568 million in 2014. The data compiled by The Anderson Economic Group LLC in East Lansing indicated continued growth for the hospitality industry in Washtenaw County during 2014. The group offers research and consulting in economics, fi nance, market analysis, and public policy. Visitation to Ann Arbor had remained relatively stable since 2011 until the increases experienced in 2013. The numbers for 2014 over 2013 fi gures prove that hospitality’s impact continued to grow last year. The University of Michigan signi fi cantly plays into those numbers with the university and medical center attracting large numbers of visitors every year, according to Dennis Doyle, executive vice president, marketing and sales for the AAACVB. INSIDE: Critics Are Wrong: Pure Michigan Campaign Works – Page 4 Legal Matters: Should I Stay Or Should I Go? – Page 5 Auto Insurance Reforms A Good Start – Page 6 May Real Estate Sales Up – Page 6 Small Business and the Internet by Mike Gould “Old Hats, New Markets” – Page 11 business “briefs” – Pages 12-15 Deadline for August 2015 BIZ MO – July 22, 2015 “Working With Your Banker.” September 2015 23rd Annual U-M IMPACT Edition Deadline: August 21, 2015 From left, Darren McKinnon of First Martin, Timothy Stout of O’Neal Construction, with Ryan Wilkins and Craig Avantini of First Hospitality Group, pictured at the construction site of the new Marriott Residence Inn in downtown Ann Arbor. (Photo by Duane Ramsey) About half of visitors to Ann Arbor have some type of relationship with U-M that brought them to the city, according to the Customer Travel and Visitor Assessment Study conducted in 2014 by Equation Research for the AAACVB. Two big events hosted by U-M contributed signi fi cantly to the increased numbers for the hospitality industry last year, according to Joe Sefcovic, general manager of the Holiday Inn Ann Arbor off Plymouth Road, and president of the Washtenaw County Hotel Association. The NHL Winter Classic in January at the “Big House” was a great start to the year and the fi rst World Cup international soccer match hosted there in August brought in a “tremendous amount of business to the entire Ann Arbor market,” he said. Each of those special events at U-M generated two-day sell-outs for the local hotel industry, according to the AAACVB. “Those events fi lled hotels and brought a lot of business our way. The hotel community would love U-M to host more events like those to bring more economic impact into the county,” Sefcovic said. Another event that brings people to the area is the Ann Arbor Art Fair, to be held July 15-18 this Hospitality (Continued Page 3) ann arbor area BUSINESS MONTHLY P. O. Box 460 Hamburg, MI 48139-0460 PRSRT STD US POSTAGE PAID ST JOSEPH MI PERMIT #335

Hospitality Industry’s Local Economic Impact Increases

Duane Ramsey

The hospitality industry’s impact on the local economy increased significantly in 2014 from 2013, according to the Ann Arbor Area Convention & Visitors Bureau (AAACVB).

The number of visitors to the Ann Arbor area increased 52 percent from 5.6 million in 2013 to 9.4 million in 2014 while the total economic impact of those visitors increased 30 percent from $535 million in 2013 to $568 million in 2014.

The data compiled by The Anderson Economic Group LLC in East Lansing indicated continued growth for the hospitality industry in Washtenaw County during 2014. The group offers research and consulting in economics, finance, market analysis, and public policy.

Visitation to Ann Arbor had remained relatively stable since 2011 until the increases experienced in 2013. The numbers for 2014 over 2013 figures prove that hospitality’s impact continued to grow last year.

The University of Michigan significantly plays into those numbers with the university and medical center attracting large numbers of visitors every year, according to Dennis Doyle, executive vice president, marketing and sales for the AAACVB.

About half of visitors to Ann Arbor have some type of relationship with U-M that brought them to the city, according to the Customer Travel and Visitor Assessment Study conducted in 2014 by Equation Research for the AAACVB.

Two big events hosted by U-M contributed significantly to the increased numbers for the hospitality industry last year, according to Joe Sefcovic, general manager of the Holiday Inn Ann Arbor off Plymouth Road, and president of the Washtenaw County Hotel Association.

The NHL Winter Classic in January at the “Big House” was a great start to the year and the first World Cup international soccer match hosted there in August brought in a “tremendous amount of business to the entire Ann Arbor market,” he said.

Each of those special events at U-M generated two-day sellouts for the local hotel industry, according to the AAACVB.

“Those events filled hotels and brought a lot of business our way. The hotel community would love U-M to host more events like those to bring more economic impact into the county,” Sefcovic said.

Another event that brings people to the area is the Ann Arbor Art Fair, to be held July 15-18 this year. It annually draws around 500,000 fairgoers to the streets of downtown Ann Arbor, as well as to its hotels, restaurants and shops.

Ann Arbor is best known for U-M and the Ann Arbor Art Fair, identified by 53 percent and 35 percent respectively, in the Customer Travel and Visitor Assessment Study conducted for the AAACVB.

The Top of the Park Summer Festival, which ran from June 12 through July 5 this year, featured art, cultural, and musical events that annually draws a lot of people to town, according to Doyle.

Slide the City, a familyfriendly slip and slide water party, was set to invade Ann Arbor on July 4, 2015. The event features a giant water slide to be located at Packard Road and State Street was expected to draw a large crowd to town over the holiday weekend, said Doyle.

All of these special events along with U-M football, basketball and other athletic contests draw people to town throughout the year.

The annual occupancy rate for area hotels and motels was 68.1 percent based on the numbers in 2014. A total of 7,700 jobs in Washtenaw County in 2014 were generated by the hospitality industry that includes hotels, restaurants, transportation providers and other businesses, according to the AAACVB.

About 65 percent of visitors to Ann Arbor stayed at a hotel or motel on their most recent visit to the city, according to the research conducted for the AAACVB.

“The Ann Arbor Area Convention and Visitors Bureau was established 40 years ago to promote Ann Arbor and Washtenaw County as a destination for overnight visitors,” said Mary Kerr, president and CEO of the AAACVB.

“ Over the years, we have applied innovative and strategic sales and marketing strategies to attract more leisure and business travelers to the area. It’s incredibly rewarding to see the tremendous efforts of everyone within the tourism and hospitality industry benefit Washtenaw County’s economy,” Kerr said.

A sign of continued growth of the local hospitality industry is the construction of new hotels in Washtenaw County during the past 12 months.

The Marriott Residence Inn currently under construction at Ashley and Huron downtown and owned by First Martin Corporation is scheduled to open in early October, according to Darren McKinnon, vice president of First Martin who is supervising the construction project.

“We’re excited to get this hotel open. The location, just one block off Main Street, will be the major selling point and is an extremely big advantage,” said Ryan Wilkins, general manager of the new Residence Inn.

The downtown location will attract clientele and market, according to Wilkins of First Hospitality Group based in Chicago, chosen by First Martin to operate its first hotel property.

Wilkins said they are looking for average stays of five to 12 days at the new Residence Inn because the rates are more advantageous for the longer stays.

The Residence Inn will offer 110 spacious suites on floors two through six. All of the suites will feature full kitchens with refrigerator, stove, microwave and dishwasher, said Wilkins.

The hotel will also offer the usual free breakfast with a complete breakfast room off the lobby, he added.

The first floor will include all of the public spaces, featuring a large lobby with a fireplace, fitness, center, indoor swimming pool, meeting rooms and restaurant. First Martin is seeking a local entity to operate the restaurant, according to McKinnon.

There will be as many as three meeting rooms and a conference room at the hotel for use by businesses.

“There’s a lot of interest from the business community downtown and the entire area,” said Wilkins, who has worked at Marriott properties in Ann Arbor since 2012. He is originally from Hartland and currently resides in Howell.

They are already getting calls for booking business conferences and meetings, according to Craig Avantini, director of sales for the new hotel. They even expect to host small weddings at the facility.

“We’re in good shape construction wise for the October opening,” said Wilkins about the project being built by O’Neal Construction of Ann Arbor.

Timothy Stout, project manager for O’Neal, agreed with Wilkins about the progress of its construction which was powered by a large portable generator until it was connected to the electric utility in June.

Another Residence Inn by Marriott in Ann Arbor opened on Green Court in June of 2014. The 86-room hotel is operating as a Marriott franchise, owned and operated by Lodgco Management of Mount Pleasant.

The newest hotel in the area, Holiday Inn Express and Suites West on Zeeb Road near I-94, opened in March. This property offers 109 rooms with 54 suites, three of which are Jacuzzi suites, swimming pool, fitness and business centers with 1,700 square feet of meeting and banquet space.

It is being billed as the “greenest property in Ann Arbor” with indoor and outdoor LED lighting, motion-controlled sensors on the lights in hallways and temperature controls in the guest rooms, water saving features in the guest rooms and laundry, according to Nancy Schnebelt, director of sales for the hotel.

“We provide morning breakfast with hot and cold choices and are within walking distance of several restaurants,” said Schnebelt. “We had a full house of racing fans for the Michigan International Speedway weekend in June.”

A new Hampton Inn is under construction on Jackson Road across from Weber’s Inn & Restaurant. The hotel is expected to open early in the first quarter of 2016, according to Doyle. It would become the third Hampton Inn in the area joining existing hotels on Green Road and Victors Way in Ann Arbor.

“We’re not extremely worried about the increased competition from the new hotels nearby affecting our hotel business. We believe that our guests would still choose to stay at Weber’s with our price points,” said Michael Weber, vice president of Weber’s Inc.

“The positive thing is that there will be another 200 to 300 people right across the street from us who will need a place to eat and we’re right here,” he said about the new Hampton Inn.

“Overall our business has been robust,” Weber said. “We’ve seen strong increases during the last three years but not quite as good in the last six months.”

Weber reported that they experienced an 8.9 percent increase in revenue per available room, known as REVPAR in the hotel business, from 2013 to 2014. He said “it was a very good increase and is more important to us than occupancy or room rates.” Weber is the grandson of the founder of Weber’s in Ann Arbor and currently a member of the board of directors for the AAACVB.

Read the full article at http://digitaleditions.walsworthprintgroup.com/article/Hospitality+Industry%E2%80%99s+Local+Economic+Impact+Increases/2047070/264360/article.html.

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