Maine’s hospitality industry reached new revenue highs last year, bringing in $3.8 billion as the state continued to attract more tourists.
Lodging sales broke the $1 billion mark for the first time in 2017, increasing 7 percent from the year before, according to Maine Revenue Services sales records. Maine restaurants brought in nearly $2.8 billion, a 4 percent increase from 2016.
“The strength of Maine as a destination is unbounded by anything,” said Steve Hewins, CEO of the Maine Innkeepers and Maine Restaurants associations. “We continue to be the hot destination for people right now.”
The number of tourists reached 36 million in 2016, and 2017 will likely show strong growth again, according to early estimates. Final figures have not been released.
Roughly 1 million more people visited Maine during last year’s summer season, and overnight stays jumped about 8 percent, according to an estimate by DPA, a Portland-based research firm that studies tourism trends for the state.
Summer is the high point for visitors and spending – hotels and restaurants brought in just under $1.5 billion in June, July and August last year, more than a third of the annual total.
Those gains came despite a seasonal labor shortage that forced some businesses to reduce hours or close hotel rooms.
“There were inns last year that really struggled to perform,” said Allyson Cavaretta, director of sales and marketing at the Meadowmere Resort in Ogunquit.
Businesses that rely on hiring temporary foreign workers were especially affected by a federal cutback in worker visas, Cavaretta said. It a similar situation is likely in 2018, she said.
“I think last year could have been even better if that disruption hadn’t occurred,” Cavaretta said. “I anticipate another good year, but we really need to have the staffing constraints addressed.”
More than half of lodging and restaurant spending was concentrated in Cumberland and York counties, the most populous part of the state. But coastal tourism havens, including towns in Hancock County, also reported strong revenue gains.
“We had a great year. Most of our properties had sales records,” said Pat Morgan, president of Witham Family Hotels. Witham owns 13 properties in Maine, including nine hotels in Bar Harbor, a perennial tourist destination.
Based on early bookings, Morgan’s company projects another record-breaking summer in 2018.
“Obviously with the stock market where it is, it doesn’t surprise me at all that sales numbers in Maine are going up and up,” he said.
HIGHER HOTEL ROOM PROFITABILITY
Occupancy at Maine hotels was flat last year, but the price and profitability per room increased, according to figures from STR, a Tennessee-based hospitality research firm.
Revenue per available room increased 4.6 percent in Maine to $77.45 a night, and the average daily room rate rose 3.3 percent, to $129.42 – a bump of about $4 per room from 2016. The growth of daily rates and revenue outpaced national and New England averages, STR said. There are about 22,100 hotel rooms in the state.
The rise in room rates is good news for hotel owners, but the upward trend might not hold because of new hotel construction, especially in the Portland area, said Sean Riley, president and CEO of Maine Course Hospitality Group.
“The economics of the business is still pretty good, (but) the fear is oversupply is going to cause the problem,” he said. “It’s a balancing act, it always is.”
Generally, Maine Course properties did well, but business “softened” in parts of the state where it was competing with new properties, Riley said. The company owns and operates 15 hotels in Maine, including Courtyard Marriotts in downtown Portland and near the Portland International Jetport.
As new-room supply meets demand, annual gains are bound to level out, Riley said.
“I don’t see a drastic turn, but we won’t see the 5, 6, 7 percent gains we have had,” he said.
INDUSTRY GROWTH RATE LEVELS OFF
Other kinds of accommodation also boomed in 2017. Airbnb, a popular home-sharing platform, reported its hosts earned a record $43 million last year, up from $26 million in 2016. In April, Airbnb started to collect state lodging taxes for the first time.
Although the state’s hospitality industry is making record revenues, growth leveled off last year. Combined spending on restaurants and lodging grew 4.7 percent in 2017, down from a 10-year-high growth rate of 7.2 percent in 2016 and 5.8 percent the year before.
The reduced growth “is totally driven by restaurants coming into line after two years of really incredible growth,” said Greg Dugal, director of governmental affairs at the restaurant and innkeepers associations. Growth rates of around 6 percent were unsustainable over time because the majority of restaurant sales were to Maine residents, Dugal said.
“I see similar numbers in 2018 for restaurants and probably slightly reduced increases in lodging, again, not because of any negativity in the market, but simply coming back to earth,” he said.
Peter McGuire can be contacted at 791-6325 or at:
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