Before taking a look at the future of Springfield’s travel industry in 2015, let’s look back for a moment at 2014.
The “Great Recession” is finally in the rearview mirror of the Springfield travel industry. Room demand (the number of rooms occupied) increased to record levels in 2014. Increased demand, coupled with a significant improvement in Springfield’s hotel inventory, caused healthy increases in average daily rate (the average rate charged by a hotel for a specific date or period of time). Combined, the increase in demand (2.0 percent) and average daily rate (5.8 percent) caused room sales and room tax to increase by 7.9 percent.
What Brings Visitors to Springfield
Unlike Branson where the overwhelming majority of overnight visitors are leisure travelers, Springfield’s market mix is much more diverse. According to 2014 CVB hotel statistics as reported by Springfield hotels, the breakdown of reasons overnight travelers visit Springfield and the approximate percentage each contributes to total overnight travel are as follows:
As there are different reasons for visiting Springfield, there are also different reasons these individual segments increase or decrease.
Business travel typically goes up and down with the economy. Economic conditions and the job market continue to improve and corporate sales and profits overall are up. Assuming current trends continue, and most expect they will, business travel should lead the pack in year-over-year increases.
Leisure travel should also be strong next year. Branson had a strong 2014 and is expecting a strong 2015. When it comes to leisure travel, Springfield and Branson are complimentary and what’s good for Branson is usually good for Springfield. The economy also impacts leisure travel. The stock market is at record levels, employment continues to improve, and wages are increasing, all good signs for leisure travel. Although the Branson Airport is struggling and has lost most scheduled service, the Springfield-Branson National Airport had record traffic last year and will likely set another record in 2015. Because both cities are “rubber-tire” destinations, the price of gas is more important to the leisure market than air service. As we all know, the cost of gas is comparatively low and expected to remain low for the immediate future.
Another boost to leisure travel should come as a result of the reopening of Wonders of Wildlife. Although opening dates have not yet been established, company officials indicate the facility will open in stages beginning by mid-2015. Once open, Wonders of Wildlife will be a major attraction and with ongoing improvements at Bass Pro Shops Outdoor World, leisure travel will increase as a result. How much is opened and when it opens will determine its impact on 2015 leisure travel.
Group travel (meetings/conventions and sporting events) will be a mixed bag in 2015. The bigger of the two, meetings and conventions, will likely continue its slow decline. In 2000, group rooms accounted for 22.7 percent of all occupied rooms in Springfield. In 2014, group rooms had decreased considerably and accounted for only 13.9 percent of total occupied rooms. Because rooms occupied as a result of sporting events account for less than four percent of all occupied rooms, it is apparent the decrease has come from meetings and conventions. To make the decrease even more concerning is the fact that the Expo Center did not open until 2003 and the National Christian Homeschool Basketball Tournament (accounting for nearly one-fourth of all rooms occupied by sporting events) was not in Springfield until 2009.
More and better competitive facilities in other communities (especially the Branson Convention Center) and the lack of a convention complex here present challenges for increasing business as a result of meetings and conventions in Springfield. The University Plaza/Expo Center complex does not have enough overflow hotel rooms within walking distance for larger groups and the meeting and exhibit facilities are not connected. The White River Conference Center has been a great addition to Springfield’s meeting space, but it is not connected to any hotel rooms. Improvements and additional space at the Ramada Plaza Hotel & Oasis Convention Center has helped and additional meeting space and a Fairfield Inn adjacent to the DoubleTree will also help increase rooms occupied as a result of meetings and conventions, but it takes several years for new meeting facilities to ramp up. Meanwhile, competing cities aren’t sitting still and several Missouri cities have plans to build convention centers. Jefferson City already has a hotel tax in place to do so.
Sports, Bus Tours and Medical Tourism Part of the Mix
Many would argue that overnight travel from sporting events could make up the loss in overnight travel from meetings and conventions. Prior to 2014, Springfield hotels did not report rooms occupied as a result of sporting events. A full year of reporting shows overnight travel from sporting events accounts for approximately 4 percent of total occupied rooms. Although there is no doubt there is growth potential from sporting events, it is apparent even healthy increases in overnight travel from sporting events will not replace rooms lost from the decline in meetings and conventions.
The bus tour market does not generate significant overnight travel for Springfield as most bus tours to the area have Branson as their final destination. They will visit attractions in Springfield, but usually do not overnight here. This market has also changed considerably from its peak in the 1980s and 90s when it appealed to seniors who grew up during the Great Recession and World War II. Today, the industry is evolving into attracting a younger customer interested in educational and adventure travel. Although this has caused a bit of a rebound for this market, even significant growth will have little impact on total overnight travel in Springfield.
A developing market for overnight travel is medical tourism. Both CoxHealth and Mercy have entered into agreements with national medical insurance companies to perform certain specialty procedures, such as knee and hip replacements, in Springfield in order to control costs and improve results. Although overnight travel resulting from medical tourism will not generate a significant percentage of total overnight travel, it is all new business that will be significant for some hotels.
Springfield Hotel Inventory Improves
As previously mentioned, the quality of Springfield’s hotel inventory has improved significantly in the past several years and this bodes well for the future. Several older hotels have been closed, others have been sold and upgraded, and new hotels have opened. This is good news for the hotel industry as occupancy has increased because of a decrease in available rooms. Coupled with a considerable improvement in the quality of Springfield’s hotel inventory, occupancy, average daily rates and revenue per occupied room all saw healthy increases in 2014 that will continue in 2015.
All in all, 2014 was a great year and 2015 should be even better. The economy continues to improve, the stock market is doing well, gas prices are low, Wonders of Wildlife should reopen and the hotel inventory will continue to improve. The decline in meetings and conventions will continue until we have a competitive convention complex, but assuming there are no major pandemics or terrorist attacks, 2015 should break the records set in 2014.