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January 1, 2012
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Hospitality Outlook 2012

Kentucky hospitality officials expect a 2-4% growth, while restaurateurs see another tight year ahead

By Meredith Lane

Seelbach Hotel, Louisville

As 2012 begins, Prep Magazine is looking to this new year with optimism about the economy, the expansion of tourism in our state and the economic impact of the hospitality industries in our local communities. These industries are crucial to our state, with Kentucky’s tourism industry generating $11 billion in economic impact annually.

Tourism is the commonwealth’s third-largest revenue producing industry and the second-largest employer in the state. Narrowing it down to the food service industry, Kentucky’s restaurants were projected to register $5.7 billion in sales for 2011.

With such a vital economic impact, Prep talked with hospitality leaders from across the state in the restaurant, hotels and lodging, tourism, Bourbon, wine and local foods industries to get their thoughts on what 2012 will bring for Kentucky’s economy. We’re delighted to see that their views also are positive, with predictions of increased business across the hospitality industry in 2012.

Jim Browder
President,

Downtown Louisville

Lexington Convention and Visitors Bureau
“It’s projected there will be a minimal increase in the number of travelers, but they are expected to spend more than in 2011. We do not foresee significant new trends but do anticipate current tourism expectations and patterns will gain strength as it relates to customers selecting a preferred destination. Travel decisions will still be relatively short-term and desired expectations have grown to include unique, personalized experiences and a desire to support both green initiatives and use of local products. Lexington and the Bluegrass region and our unique, personal equine and bourbon experiences are well-positioned to experience tourism growth in 2012. Our ongoing mission is to truly embrace our many new visitors and ask them to come back soon.”

Jesse Bowling
Director,
Pikeville City Tourism

Doc Crow’s Southern Smokehouse and Raw Bar, Louisville

“I am ecstatic about this year. Pikeville City Tourism and Convention Commission was established in 2011 and opened in the East Kentucky Expo Center, which is the focal point of state tourism east of Lexington. We will launch several initiatives in 2012. The Tourism and Convention Commission partnered with several businesses to bring in East Kentucky Motorcycle Tours. Muscle on Main returns, and adventure tourism has advanced with Cut-Thru Adventures hosting canoeing, kayaking and tubing. Black Widow Paintball debuts in January at Bob Amos Park and in April we host the second largest festival in the state with the Hillbilly Days Festival.”

James Wood
FCDME, President/CEO,
Louisville Convention & Visitors Bureau

“Travel and tourism will continue to be on a slow but steady climb in 2012 with a moderate hotel business growth of 2 percent. The growth will be led by the corporate and leisure travel, but travelers are looking for more value-added options from the hotel sector than ever before.”

Eric Summe
President/CEO,
Northern Kentucky Convention & Visitors Bureau

“We expect the hospitality industry in Northern Kentucky to grow during 2012, reflecting the modest gains projected within the U.S. hotel industry. In particular, we expect to see stronger hotel pricing due to favorable supply and demand numbers, which should increase overall room revenue about 4 percent. Specific large events scheduled during 2012 should help the growth, including the Kentucky Speedway Sprint Cup Series scheduled in June and the World Choir Games in July in Cincinnati.”

Bill Abner

Saul Good Restaurant & Pub, Lexington

President, Kentucky Hotel & Lodging Association;
owner, Li’l Abner Motel, Slade, Ky.
“Kentucky hotels and motels will follow the same trends as 2011; there could be a slight increase. Economic factors continue to impact the lodging industry. A lot of people come into Kentucky from other countries that also are affected by the economy. There will not be much new construction of lodging properties in Kentucky. Expect a room rate increase of 2-5 percent to offset some of the maintenance that has been delayed in previous years.”

Vicki Fitch
Executive Director,
Bowling Green Area Convention & Visitors Bureau

“We are optimistic that Bowling Green’s primary markets of leisure, sports and group travel will continue to see a moderate increase in 2012. With several attractions expanding their activities, the addition of the Southern Kentucky Performing Arts Center and a number of new events coming to the area, there are more reasons to visit our region this year.”

Marcheta Sparrow
Secretary,

Kentucky Speedway, Sparta

Kentucky Tourism Arts and Heritage Cabinet
“Kentucky’s tourism industry has managed very well during the economic downturn, and I expect it to continue to do well in 2012. Tourism trends indicate that the outdoor adventure category will continue to grow in popularity. In light of recent developments in Kentucky, I think we’re in a position to capitalize on that type of tourism.”

Stacy Roof
President/CEO,
Kentucky Restaurant Association

“Kentucky will continue to be highly regarded as a restaurant mecca. Kentucky chefs will continue their close relationships with farmers, focusing on locally grown seasonal products. Because the restaurant industry is so competitive, social media use will increase as operators look for ways to keep their brand front of mind for their customers.”

Brian McCarty
General Partner,
Bluegrass Hospitality Group

“We believe that consumers will continue to demand value and variety across all spectrums of the restaurant industry in 2012. Look for diversification on menus and guests who are looking for the best experience for the price.”

J.D. Rothberg
Proprietor,
Napa River Grill, Louisville

“In the 12-year history of Napa River Grill, it seems each year our customer becomes more educated about the quality of food being served and where it’s being sourced. 2012 will be another year of high customer demand for farm-to-table food from local purveyors. We’ll be focusing on giving patrons opportunities to try more, taste more and dine on more occasions with us by offering a wide range of price points for high-quality food and wine.”

Mark Wombles
Chef/Owner,
Heirloom Restaurant, Midway

“Mostly I see more casual dining spots opening up in Kentucky. I think people have slowly been getting away from stuffy white-tablecloth type establishments. The economy seems to be making a slow comeback, so perhaps this trend will change eventually. Being an almost-native – living here since I was 5 – I can see that Kentucky is becoming a more desirable place to live as we grow as a state. It seems like we are becoming more up to date!”

Doug Gossman
Founder/President,
Bristol Bar and Grill, Louisville

“One of the biggest industry issues is always labor, but because of a down economy labor is not a problem. There are a lot of talented professionals looking for work in the industry. Lending institutions are still very cautious, so there will continue to be a problem with the availability of capital. This should translate into fewer new restaurants for 2012. We took a huge hit on cost of food this year, and 2012 will be even harder on our bottom line. Fortunately Bristol has been around nearly 40 years and developed a very loyal customer base. They appreciate that we provide a great product at a good value.”

Rob Perez
Owner/Operator,
Saul Good Restaurant& Pub

“2012 will challenge the independent restaurant operator to become better at just that: operating. With a 12 percent cost of goods increase over the past two years and more and more competition from national restaurant chains, the market is dictating that we work even harder to keep our piece of the pie. I hope to see our customer base become more discerning about their dining choices and to support local restaurateurs who live and work in the same communities that they do.”

Brett Davis
Master Sommelier,
Partner,
Doc Crow’s Southern Smokehouse and Raw Bar, Louisville

“Consumers will continue to gravitate towards more casual restaurant concepts with a perceived value and high design, while most white-tablecloth high-end concepts may continue to decline in market share. Louisville’s East Market Street/NuLu corridor will continue to blossom with new A-market local concepts and become the top area for innovative dining. The trend towards smaller-production craft beers, wines and spirits also will continue. We will see rapid growth in micro-distilleries regionally and nationally. Demand for lesser-known wines with friendly pricing will persist and European wines will have a resurgence if the euro continues to fall or fail completely. The beer world will see lower demand for national microbrewery labels as consumers continue to support their local brews.”

Richie Farmer
Former Commissioner,
Kentucky Department of Agriculture

“Kentucky Proud is established and accepted in the most populated areas of the commonwealth. In 2012, growing numbers of consumers in many new parts of the state will look for the Kentucky Proud brand as the mark of excellent local foods. Kentucky wines will continue to garner awards in major wine competitions throughout the nation.”

Eric Gregory
President,
Kentucky Distillers’ Association

“Kentucky’s signature Bourbon and distilled spirits industry is in a historic expansion phase – the largest since Prohibition – with about $170 million in capital investment to meet growing global demand for our premium brands. We expect this surge to continue in 2012 as new markets open around the world thanks to recent free trade agreements. Our Kentucky Bourbon Trail adventure saw record growth in 2011 with more than 400,000 visits to our legendary distilleries. Tourism will continue to be a major draw in 2012 with new and upgraded visitors’ centers under way at Jim Beam, Four Roses and Wild Turkey.”

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Hospitality Outlook 2012
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