Back In Business

Mark Belhumeur and Philip Hampton bought Monte Rio's Village Inn in spring 2001, just in time to see the hotel business slide in the wake of the 9/11 terrorist attacks.

But they and other hoteliers around the county have ridden a wave of prosperity since then, and forecasters expect that rosy picture to continue for at least the next few years.

The number of motel and hotel rooms occupied on a typical night is stabilizing, but the cost of a night's stay will continue to climb because of the high demand for Sonoma County lodging, said

Tom Callahan, chief executive officer of PKF Consulting, a San Francisco company that tracks hotel trends.

"We think Sonoma County will finish out the year with a 68 percent occupancy rate, about the same as last year," Callahan said. "Room rates will move up 5 or 6 or 7 percent a year over the next few years."

Every tourism destination is different, and Sonoma County is generally following national trends. However, the 2001-2003 recession did not hit hotels here as hard as it did in many other parts of the Bay Area.

Nationally, most hotel owners saw a significant drop in business from 2001 to 2003, said Robert Mendelbaum, director of PKF's research and information services department.

But Sonoma County hotel occupancy rates dropped only about 6 percent and hotels stayed more than 60 percent full.

During the two-year recession, Sonoma County was close enough to the Bay Area to serve as a vacation spot that could be reached without expensive airplane fares, said Ben Stone, executive director of the Sonoma County Economic Development Board.

Nationally and locally, the recession years were followed by a period of rapid growth in revenues and profits from 2004 to 2006.

"The industry had three years of double-digit growth and profits. Room rates rose at two to three times the rate of inflation," Mendelbaum said.

"What we see happening now, and for the next two, three or four years, is a return to levels closer to long-term growth averages," Mendelbaum said.

The past six years have been a roller coaster ride for the county's hotel and motel owners and managers.

In 2000, about 69 percent of all hotel rooms were full. The number dropped to an average 65 percent in 2001 and continued to drop until it reached an average 63 percent occupancy in 2004, according to PKF figures.

The turnaround came swiftly, and in 2006, 69 percent of the county's hotel rooms were occupied on an average night for the first time since 2000.

The 69 percent figure is significant because the county added about 2,500 hotel rooms from 2001 to 2005, rising from 5,950 rooms to 8,400 rooms, according to figures from the Sonoma County Economic Development Board.

Bed taxes -- the county's levy on each night's lodging -- were almost flat at $3 million a quarter from 2001 to 2003, a period in which 33 percent more hotel rooms were added in Sonoma County, Stone said.

Bed taxes rose to $3.5 million a quarter in 2004 and reached $5 million a quarter in 2007, he said.

Belhumeur's experience during those years was similar to that of many owners of large and small lodgings in Sonoma County.

The Village Inn is one of the county's smaller hotels, with 11 rooms, a restaurant, bar and banquet facilities.

Following their purchase, Belhumeur and Hampton spent the summer of 2001 repainting and refurbishing the historic inn, which dates from 1906.

"The economic dip we saw didn't happen in September -- it probably started in December," Belhumeur said. "Winters are traditionally quiet at the river, but the winter of 2001-2002 was very quiet. It was still a soft market in summer 2002."

"It rebounded a little in late 2002 or 2003, and over the last three years, we've had steady, moderate growth of between 7 percent and 9 percent a year," Belhumeur said.

For the first five months of 2007, the offseason for Sonoma County, hoteliers saw 63 percent of their rooms filled on a typical night.

During that five-month period hoteliers charged an average $7 more a night than they did in 2006, according to PKF figures. The average room rate climbed from $119 to $126.

"Sonoma County is doing great. The occupancy is about as good as it gets for the seasonal pattern and room rates are growing strongly," Callahan said.

Several new hotels are being built, but Callahan said he did not think that would affect the upward trend. "We think it will be absorbed into the market pretty readily," he said.

You can reach Staff Writer Carol

Benfell at 521-5259 or carol.benfell@pressdemocrat.com.