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Oklahoma Hotel Occupancy Rate Decline Tied To Oil Slump; Medford Opens Revolutionary Grain Facility

Sep 23, 2016

On Tuesday, the Oklahoma Hotel and Lodging Association held its annual forecasting luncheon at the Skirvin in downtown Oklahoma City. The group’s figures show hotel demand in the state dropped 3.5 percent, while the supply was up 2.9 percent.

One of the presenters, Jan Freitag, basically said this decline all has to do with the price of oil, and that the demand for hotel rooms used to grow by 8 percent annually.

“The metros fared pretty well, but some of the other cities had much bigger swings in their numbers,” said The Journal Record’s editor Ted Streuli. ‘I think it's important to note there's a big difference between the demand and the occupancy. Demand was down 3 percent, but occupancy statewide was down 6 percent, because that takes into account new rooms that have been added.”

It’s even worse in other cities, The Journal Record’s Molly Fleming reports:

In Enid, the city’s hotels had a 17-percent decline in occupancy from July 2015 to July 2016. Visit Enid Director Marcy Jarrett said the city had a 15-percent increase in supply for that period, putting about 200 more rooms online in the area.

As of STR’s August report, the city’s occupancy was up 6 percent compared to August 2015. Jarrett said there are a lot of construction workers staying in the city’s hotels.

“It’s a layered market,” she said. “We are by far a high percentage of business travelers. That does keep us steady business during the week. Layer on that we are the medical and the regional hub for many different businesses.”

Like many industries affected by the commodity price downturn, Streuli said hoteliers may simply have to wait the slump out.

“All these numbers change dramatically if the price of oil goes back up, because the oilfield workers use a very high number of hotel rooms,” Streuli said.

Forecasters expect Oklahoma’s occupancy rate to continue to decline, but that’s largely due to a significant number of new rooms that will soon be available.

In Oklahoma City, supply increased 1 percent from July 2015 to July 2016. Average daily rate grew only 0.2 percent.

STR defines the Oklahoma City area as the city proper, stretching east to Shawnee, west to Hinton, south to Pauls Valley, and north to Guthrie.

“It sounds like you’re diversifying well, so maybe the relationship to (oil and gas) isn’t as tight,” Freitag said. “Obviously you’re doing something right.”

“There are a lot of other reasons to come to Oklahoma City, and that's helped keep hotel rooms full even when oil is in decline,” Streuli said. “And of course, they're looking forward to the new convention center coming, and a lot of activity by the Convention and Visitors Bureau that ties directly to hotel demand and occupancy.”

The Chisholm Trail Terminal near Medford.
Credit Provided / Farmers Grain Co.

Grain Gains

A new storage facility just opened in the rural north-central Oklahoma community of Medford, just in time to take advantage of a huge winter wheat harvest.

“The USDA has said we really have an overflow of wheat supply,” Streuli said. “A record 54 bushels per acre is what's forecast, and there's already some in storage.”

A three-company partnership built the $16 million facility that can hold 5 million bushels of wheat. It’s a unique facility due to its automation process, The Journal Record’s Brian Brus reports:

Quicker loading means less disruption of other transports on the Union Pacific line. The facility will load up to 48 trains annually.

[Farmers Grain Co. general manager Scott] Bonine said the terminal is more computerized than most. Only four people are needed to load a full train over 15 hours, compared with a dozen bodies to operate older model stations, Bonine said. The facility is expected to create up to eight new jobs for Grant County.

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