Management & Operations

Cities with rail-to-airport connection boost hotel revenue

Posted on November 20, 2013

“Rail cities” represented in the report include Atlanta, which has a major multimodal transportation infrastructure option for both residents and travelers.
Photo courtesy DeKalb
“Rail cities” represented in the report include Atlanta, which has a major multimodal transportation infrastructure option for both residents and travelers.Photo courtesy DeKalb
Hotels in cities with direct rail access from downtown to airport terminals receive nearly 11% more revenue per room than hotels in cities without a rail airport connection, according to a study released by the American Public Transportation Association (APTA) and the U.S. Travel Association.

“Clearly investment in local rail systems not only benefits residents, but drives significant economic growth in the travel and hospitality industries,” said APTA President/CEO Michael Melaniphy. “For our nation’s great cities to be more competitive and command higher hotel room rates, we must seize the opportunity to invest in our local rail systems and interconnect these high-demand airports to our American cities’ world-class amenities.”

The jointly released study, “A New Partnership: Rail Transit and Convention Growth,” shows that higher revenue per room translates to a potential $313 million in revenue per year for “rail cities” — cities which have direct rail access to airport terminals. In the post-recession period, rail cities commanded 16% higher revenue per room than hotels in non-rail cities.

According to the study, hotel properties located within ¼ mile of a rail station performed even better than those outside of that radius. These hotel properties averaged a nearly 50% higher daily room rate and a 12.5% higher occupancy rate.

“Rail cities” represented in the report include Atlanta; Chicago; Washington, D.C.; Minneapolis; Portland, Ore.; and San Francisco — all of which have major multimodal transportation infrastructure options for both residents and travelers. These six “rail cities” were compared to hotel performance in popular convention cities that lacked a direct rail connection to the airport terminal: Las Vegas; New Orleans; Orlando, Fla.; Sacramento, Calif.; and Tampa, Fla.

The difference in performance between hotels in “rail cities” and those without rail public transportation was also apparent with the luxury and upscale hotel properties, which are frequently preferred by business travelers and convention attendees. Luxury hotels can command a 12.4% higher average daily room rate as compared to a non-rail city and also boast a 5.7% higher occupancy rate.

Business meetings and conventions are not limited to American attendees. In fact, international travelers accounted for 14.6% of total business travel spending in 2012, which generated nearly $38 billion, supported 332,000 American jobs and generated $5.7 billion in tax revenue, according to the study. Intermodal infrastructure that provides direct public transit service from airports to cities offers a competitive edge in winning global business meetings, conventions and events, according the study.

“Looking forward, it is essential that America add balance to our overall intercity passenger travel options,” said Melaniphy. “Highway and airports alone will not have the capacity or the dexterity to serve the growing travel markets of the future. Development of higher-performing intercity passenger rail corridors will be critical to America’s future. There already are success stories all over the world. International visitors know how to use these systems. Destinations become stronger. Travel and tourism become still more robust.”

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