By Doug Denison
Staff writer
doug.denison@doverpost.com

    Dover’s hotel industry was pummeled this summer by economics’ classic two-punch combo: high supply and shrinking demand.

    In September, the Kent County Tourism Board reported July revenue from the state public accommodations tax was the lowest it’s been in 10 years. August’s take from the PAT was the lowest in five years.

    Cynthia Small, executive director of the Kent County and Greater Dover Convention and Visitors Bureau, said hotels in the county generated approximately $22,000 in PAT revenue in July, down from roughly $30,000 in 2007.

    The Delaware PAT is an 8% tax on the cost of a hotel room, charged to hoteliers by the state. More than 60% of PAT revenue goes to the state’s general fund, and a little more than 12% each funds beach replenishment, the Delaware Tourism Office and the local tourism bureau where the money was generated.

    Small said the low numbers for July and August are products of a slow economy and a boom in local hotel construction.

    “Kent County is kind of in a unique position right now because of the large number of rooms that came online all at one time,” she said. “Usually what happens in a typical area where tourism is part of the structure [supply] grows exponentially so the demand has time to catch up.”

    But, Small said, demand stayed flat or slightly decreased as new hotels opened.

    In the past year-and-a-half, seven new hotels opened in the county and Dover Downs Hotel & Casino added hundreds of new rooms, she said.

    “We went from about 1,700 rooms … to about 3,000 rooms in an 18-month period. Dover Downs doubled from 250 to 500 rooms. They’re the biggest hotel in the state,” she said.

    This glut of rooms drove down rates, which in turn drove down PAT revenue.

    Demand was down because of high gas prices and the weakened economy, said Victor Schimp, general manager of the Sheraton Dover Hotel and president of the Kent County Tourism Board.

    Because of its lack of a major airport, Dover caters mostly to driving vacationers and business travelers, which makes gas prices a huge factor, Schimp said.

    “We tend to be a drive-in market, so when the price of gas is up around $4 a gallon that’s going to keep some tourists away,” he said. “Plus, companies are cutting back on their travel; say they used to send a sales consultant to Dover, maybe now they’ll do it over the phone.”

    Small said high gas prices over the summer also pushed people to take trips closer to home, thereby decreasing the need for hotel stays.

    “Some of our attractions reported the highest number of attendance they’ve ever had,” she said. “People are staying more local, doing a lot more daytrips than maybe overnights.”

    Ed Sutor, president of Dover Downs Hotel & Casino, said that even though new dining, shopping and entertainment attractions at the complex have brought in visitors, overnight hotel stays were down all summer.

    “We had a mixed summer, we had the opening of The Colonnade, a 7,000-square-foot addition. We got additional foot traffic because of those new additions, however our hotel was off every month of the quarter from the previous year, some of that has to do with the economy,” he said.

    And with the economy continuing to falter, Sutor’s summer problems have spilled over into autumn.

    “Our hotel sales have been off especially in September and October,” he said. “The current crunch is, we believe, having an effect on the consumer mindset.”

    But the slow summer in Kent County hasn’t sent state tourism officials into a panic.

    “Overall the public accommodations tax statewide this past fiscal year was up, and we’re just starting to see a little bit of a slowdown in the last couple months, but that definitely correlates to the global economy,” said state Director of Tourism Linda Parkowski.

    “You really need to look at it overall and look at fiscal year, because month to month can be affected by so many things,” she said.

    In the face of economic downturn, Parkowski’s office is focusing its efforts on bringing visitors to Delaware from the Mid-Atlantic region, and hammering on one of the state’s most prominent selling points: its lack of a sales tax.

    “The fact that Delaware has no sales tax is a huge draw to visitors, especially around the holidays,” said Nikki Boone, a public relations specialist with the Delaware Economic Development Office.

    “Making sure we get that message out is critically important now,” she said. “Right now the message is that Delaware offers a great value to visitors.”

    Small said Kent County needs to concentrate on filling its hotel rooms with convention guests during the particularly slow — and always cheaper — mid-week period.

    This strategy is key for Schimp’s Sheraton, which has the facilities to handle small and large conventions.

    “We’re looking at focusing on conventions and meetings, they tend to stay two or three days, some are longer,” he said. “There’s overnights there, that raises the PAT, even if they come for one day and leave.

    “You’re looking to try to fill Sunday, Monday, Tuesday, Wednesday and Thursday; that’s the difference between having a regular month and a good month.”

    Sutor hopes an expansion of Delaware’s gambling laws that could include sports betting and table games will help fill his rooms every night of the week.

    “That’s why we built the hotel, we built it to attract people who love gaming,” he said.

    “We’re hoping, in fact pretty confident, that the new administration that comes in January will look more favorably on table gaming. That will give us a monopoly on the East Coast, people from New York and as far away as Pittsburgh.”

    But for Small it all comes back to simple supply and demand, and it might take some time for things to level out.

    “There are other hotels that have been approved, and whether they will build them or not I don’t know,” she said. “When you have this many more rooms than demand, it takes a lot of marketing dollars.”