R.I. restaurant-sales growth among nation’s worst

Rhode Island’s projected 2.3 percent restaurant-sales growth for 2012 is among the worst in the country, besting only Vermont and West Virginia, at 2.2 percent each, and can be at least partially blamed on its slow population growth and high unemployment rate, according to National Restaurant Association research.
“Demographics truly become destiny,” said Hudson Riehle, senior vice president of research at the restaurant association, during the Rhode Island Hospitality Association’s trend summit held at the R.I. Convention Center Sept. 26.
Riehle and Rachel Roginsky, principal of the Pinnacle Advisory Group, a national hospitality-industry consulting firm, spoke to local industry professionals about forecasts and trends in lodging, food service and tourism.
The state’s projected restaurant-sales growth, like projections for all other states, is tied, Riehle said, to its projected 2013 0.2 percent population growth, 0.8 percent projected employment-growth rate and 1 percent projected growth in disposable income.
Nationally, disposable personal income is expected to grow between 1.5 percent and 2 percent and employment between 1.5 percent and 2 percent.
Also, although the national average decline in household income was 8.1 percent, Rhode Island ranked among states with a 15 percent or greater decline. And an increase in personal savings as a percent of income nationwide signals a decline in discretionary spending.
An additional cause for concern is that although the restaurant industry ranks second only behind computing as industries United States residents have the most confidence in, the New England region has the least confidence. The region posted only a 30.9 consumer-confidence index compared to a 79.5 consumer-confidence index in the West South Central region, the best in the country. Still, there are reasons to be optimistic. Forty-one percent of U.S. residents, according to a National Restaurant Association poll, say they aren’t eating out as much as they would like, up from 31 percent in 2007.
Among middle-income residents that number increased from 13 percent in 2007 to 36 percent now and it is females, at 44 percent, who are most looking to eat out more often.
“When one is thinking of promoting and marketing, it’s important to nudge the customer [the right way],” Riehle said.
The restaurant business, of course, is only a piece of the state’s hospitality industry.
Lodging is looking pretty good for 2012 and beyond, though continued growth has become moderate.
Rhode Island’s has seen a 6 percent revenue per-room growth for 2012 so far and remains second in the New England region for occupancy rates, according to Smith Travel Research numbers Roginsky presented at the summit.
The 61.2 percent rate for 2011 was behind just Massachusetts, which has a 65.8 percent rate that Roginsky said is driven by the Boston market.
The U.S. saw a 60 percent occupancy rate for 2011, hovering well below the average 63 percent seen in better economic times.
In Rhode Island, August saw a 62.5 percent occupancy rate and a $75.04 revenue per room up 5.8 percent from August 2011.
“We’re really gaining some traction now,” Roginsky said. “[Numbers] are still significantly down from pre-recession levels but continue to improve.”
Within individual state markets for 2012 through August, Providence has a 67.9 percent occupancy rate and a $93.70 revenue per room, which is up 11.8 percent from last year, Warwick has 64.8 percent occupancy rate and a $54.85 revenue per room, which is down 3.1 percent from last year, and Newport has a 61.7 percent occupancy rate and a $112.04 revenue per room, up 7.6 percent from last year. Rhode Island had an average daily room rate of $114.92 for 2011, compared to the national rate of $101.70, and $120.12 for August up from $115.75 for August 2011.
Roginsky did not provide forecasts for the New England region or Rhode Island as a whole but gave the following projections for the Providence, Warwick and Newport markets:
• Providence for 2012 will see a 67 percent occupancy rate at $136 average daily-room rate and $91.12 revenue per available room.
• Providence for 2013 will see a 69 percent occupancy rate at $141.40 average daily-room rate and $97.56 revenue per available room.
• Warwick for 2012 will see a 66 percent occupancy rate at $85 average daily-room rate and $56.10 revenue per available room.
• Warwick for 2013 will see a 68 percent occupancy rate at $87.50 average daily room rate and $59.50 revenue per available room.
• Newport for 2012 will see a 61 percent occupancy rate at $179 average daily room rate and $109.19 revenue per available room.
• Newport for 2013 will see a 61 percent occupancy rate at $183 average daily room rate and $111.16 revenue per available room.
Newport, Roginsky said, will benefit from a growth trend in luxury travel.
The U.S. occupancy rate, Roginsky reported, is expected to reach 61.2 percent for 2012 and 61.4 percent for 2013. •

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