Economy

 

There’s going to be a full house at Churchill Downs, and hotels throughout Louisville are ready for the rush. 

The 148th Kentucky Derby will return on Saturday without capacity restrictions for the first time since 2019. For the Louisville tourism industry’s biggest weekend, local hoteliers say they’re back to packed rooms.

After a delayed September showing without fans in 2020, the race moved back to May last year with nearly 52,000 fans in attendance, following efforts to limit reserved seats. It was a lean event compared to past years, which regularly saw over 150,000 guests at the track.

Derby season has an outsized impact on Louisville’s tourism industry, typically bringing in around $400 million to the city in taxes and business sales. With the pandemic came hardship, and while 2021’s outperformed expectations, it still brought in only around $60 million in economic impact to the city, far below previous figures.

This year’s Derby season is shaping up to be different. 

Back in January, Churchill Downs was already planning for full capacity on Saturday, and while the racecourse says it will follow any existing COVID-19 guidelines, none are in place that would prevent selling out.

More attendees at the track means more tourists, and more tourists means more reservations at local hotels. For Eamon O’Brien, general manager of the Omni Louisville Hotel, it’s a crucial return to normal.

The Omni sold about 25% of its over 600 rooms during the 2021 Derby weekend. This year, he said, it was almost fully booked less than three weeks before the races.

“We’re very excited to see that people are ready and willing to travel, ready and willing to come in and support our local community here in Louisville,” said O’Brien.

J. Tyler Franklin | wfpl.org

The Omni Hotel is expecting to rebound this Derby weekend, after filling just 25% of its 600 rooms during the 2021 weekend.

Executives at smaller hotels are excited, too. Sarah Mattingly and Ben Botkins are two of four co-owners of The Bellwether Hotel, which opened last October. The couple also own a local Airbnb business called Bed and Bike.

Mattingly said The Bellwether sold out for Derby weekend before Christmas.

“The Derby for most hospitality businesses, it’s the 13th month, right? We’re at full capacity. It’s a really important time for us… there’s just a lot of preparation that goes into it, making sure the week goes flawlessly,” she said.

This year’s Derby also offers a chance for local businesses to rebound after two years of lost earnings.

“I’m just so pumped for the entire community,” Botkins said. “I mean, anyone who’s worked hard to get their restaurant ready to this point, or anyone in the service industry who’s missed out on having the revenue from the busy Derby weekend, it’s great.”

Industry trends point to pressure

Local hotels welcomed significantly more visitors last year than in 2020, but guest counts remained lower than in pre-pandemic years.

In 2021, the occupancy of 46 hotel properties in and around the Louisville area rose by nearly 69%, though the overall occupancy rate was down by more than a third compared to 2019. That’s according to an end-of-year report by CBRE Hotels Research, a practice within the real estate services firm CBRE, using data from hotel analysis company Kalibri Labs.

Hotel owners and executives said they are staffed and ready for this year’s Derby crowds, but they acknowledged challenges in hiring workers. In March, Louisville Tourism and the Louisville Hotel Association hosted a hospitality career fair in anticipation of a busy Derby season, featuring hotels like the Brown Hotel, Moxy Hotel and the Omni.

Cleo Battle, the president of Louisville Tourism, said this year’s Derby is predicted to bring in over $400 million to the city, similar to past seasons. But he said there are concerns about available workers for the event.

“Our challenge in our industry right now is workforce,” Battle said. “And I think it’s great that we’re sold out, but can we provide the level of service that we have always provided that makes people want to come back to Derby year after year after year because of that experience?”

J. Tyler Franklin | wfpl.org

The Brown was one of several hotels represented at a March hospitality career fair.

Leisure and hospitality employment in the Louisville area picked up over the past year. According to preliminary data from the Bureau of Labor Statistics, there were about 62,300 workers at places like hotels, restaurants and museums in March. That’s an increase of almost 12% compared to a year ago, the largest positive shift among any of the bureau’s industry categories during the time period.

But that gain doesn’t make up for the steep drop in employment brought on by the pandemic. Local employment in leisure and hospitality nearly halved from February to April 2020, and recent employment figures still reflect a deficit compared to three years ago.

The local unemployment rate in March is relatively low compared to a year ago, so the available pool of job seekers is smaller than employers might like. 

Tim Dick, executive vice president of CBRE Hotels Advisory in its southeast division, said hotels finding workers is a problem throughout the country.

“Not only is there labor shortage, but… there’s an increase in the expense because of the cost of it,” said Dick.

Though the 2022 Derby weekend is expected to bring in dollars at pre-pandemic levels, it remains to be seen whether staffing will exhibit a similar bump.

An optimistic outlook

Among the hotels expecting their first normal Derby weekend in three years is The Brown Hotel. 

The Brown never closed its doors during the pandemic lockdowns, said Marc Salmon, the Brown’s human resources director. But there were times when amenities and services such as restaurants and daily housekeeping went away, and in 2021 the Brown booked just about 75% of its almost 300 rooms during Derby. But he said this year is looking up.

“A lot of things that went away during the pandemic … are now back in full force,” Salmon said.

Salmon said the hotel was fully staffed ahead of Derby weekend, and he anticipates a revival to last beyond May.

“We're extremely busy the next several months, so it looks solid. We're kind of back to those pre-pandemic levels at this point in the year. There was that slump after New Year’s when omicron first came around. Once we put that in our rear-view mirror, it was nowhere to go but up,” he said.

Lauren Jenney shared that optimistic view. She’s a senior marketing manager for the hotel management company White Lodging and oversees five hotels in downtown Louisville, including the Moxy, which she helped open in late 2019.

She says her hotels were fully booked during the previous two Derby weekends, but this year they ran out of available rooms months in advance. It was with a quickness she said she hadn’t previously been seen at her locations.

“I think the city as a whole and our attraction partners are feeling it as well. And that just speaks to the consumers' willingness to get out and start experiencing things again,” she said.

However, she said all her hotels still have open jobs.

“It's no secret that there is, you know, a gap in staffing everywhere, not just in the hospitality industry. I would say we absolutely are feeling it,” she said.

J. Tyler Franklin | wfpl.org

Lauren Jenney, senior marketing manager for several city hotels including the Moxy, said her locations are still looking for workers.

Back at the Omni, O’Brien said they’ll try to round out their Derby weekend staffing with former Omni Louisville workers who are now employed at some of the brand’s other hotels and resorts. He said they also used this approach in 2018 and 2019.

“We have a lot of our alumni, I’ll call them, that are throughout the country in Nashville, in Dallas…and Fort Worth, and even on the West Coast that are going to come in for Derby to help us, because obviously [there’s] very, very high expectations for Derby this year,” O’Brien said.

There is pressure on Louisville’s tourism industry to perform well this Derby, even though the pandemic is not yet over, with a bump in COVID-19 cases in Jefferson County cases over the past month.

O’Brien said that his hotel will be challenged to deliver beyond the races, too.

“People are sick of being in their homes and on Zoom calls,” he said. “They want to be out with people, they want to be experiencing the Derby, they want to be experiencing live racing and hopefully great weather, and things moving forward like that.”

Jacob is WFPL's Business and Development Reporter.