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Cities with rail-to-airport connection boost hotel revenue

  • Blog Post by: Tim Harlow
  • November 20, 2013 - 1:26 PM

Advocates who say that expanding the metro area's light-rail system and adding streetcars to the transportation system will spur economic growth might have a point.

A new joint study from the American Public Transportation Association (APTA) and the U.S. Travel Association out Wednesday says cities such as Minneapolis that have direct rail service from the airport to downtown increase their ability to attract large conventions and events. In turn hotels in those cities earn 11 percent more revenue per room than in cities that lack a rail connection to the airport.

The combination of higher occupancy rates and higher room rates translates into up to $313 million per year for cities that have rail lines serving the airport, according to the report called "A New Partnership: Rail Transit and Convention Growth."

"Clearly investment in local rail systems not only benefit residents, but drives significant economic growth in the travel and hospitality industries," said Michael Melaniphy, APTA's president and CEO.

On average, hotels within one-quarter mile of a rail line had a 12.3 percent higher occupancy rate and had room rates nearly 50 percent higher than those that are further away. In Minneapolis, hotels near the Blue Line saw 64.4 percent higher revenue per room and average daily room rates 46 percent higher than those outside the radius.

Business travel, including meetings, conventions and events, generated $258.6 billion in 2012 and supported more than 2.2 million jobs. It also generated $39.8 billion in tax revenue, the study said.

"Our nation's downtowns have lots to offer travelers,and rail connections allow travelers to have greater choice and flexibility in how they experience a region's amenities," said U.S. Travel Association President and CEO Roger Dow. "It is important that we continue to invest in public transportation options to make our cities attractive business destinations. The benefits of rail continue down the line, with increased hotel, restaurant, business and tourism revenue that help support our entire economy."

The study comes as both Minneapolis and St. Paul are looking to expand rail transportation. In addition to the proposed Green Line light-rail extension from downtown Minneapolis to the southwest suburbs, Minneapolis is looking at building a streetcar line along Nicollet Avenue, another one along West Broadway Avenue and perhaps along the Midtown Greenway.

In St. Paul, officials are studying the idea of a streetcar line along E. and W. 7th Streets.

Sometime in 2014, the area's newest light-rail line, the Green Line, will begin operating. The line will link downtown Minneapolis and downtown St. Paul via University Avenue.

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