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by By Cheryl-Anne Sturken | February 01, 2009

Forty-nine of the top 50 markets will suffer the effects of falling hotel-room occupancy rates in 2009, according to a recent report by Atlanta-based PKF Hospitality Research. But broaden that snapshot to take in the multitude of second- and third-tier cities that comprise the heart of America, and a different picture emerges -- a much brighter one.

While major-league cities were enjoying double-digit room rate increases and near-capacity occupancy levels over the past five years, many smaller destinations were quietly plugging away at downtown revitalization projects and new infrastructure to bolster their offerings. Many of them finally are ready to strut their stuff.

There is no better time than now for planners to look at these cities, says Chad Church, manager of industry research for Hendersonville, Tenn.-based Smith Travel Research. "In the last five to 10 years, some of the smaller destinations have really focused on their appeal," he notes. "They are building convention centers and improving their hotel product. This downturn may prove to be an opportunity for them to lure business away from the major players."

According to Michael Gehrisch, president and CEO of Washington, D.C.-based Destination Management Association International, major hub cities that depend largely on corporate traffic will lose out the most in 2009 as corporations cut back on air-travel spend. The next in line, he notes, will step up and deliver. "I think the smaller cities that are the centers of universities or that have strong state government, like Austin, will do quite well, because unlike the majors, which rely largely on corporate travel, they will remain insulated," says Gehrisch.

What's more, he adds, because many second- and third-tier cities are considered drive-to markets, they will attract even more regional meetings. "The falling price of gas increases the interest in holding regional meetings, which is going to be very strong again," says Gehrisch. "Because they aren't paying for a rental car, people won't mind staying on a day or two to explore. All these budgetary considerations add up and increase the destination appeal of these cities."

After conducting in-depth research and consultation with several lodging research analysts, M&C has selected the following as cities ready and eager to capture planner attention in the coming year.

Alexandria2Alexandria, Va.
Alexandria Convention and Visitors Association
(800) 388-9119; visitalexandriava.com

With more than $200 million invested in new luxury hotel development and upgrades of existing properties in the past two years, Alexandria is poised to step out of the shadow of its more powerful neighbor, Washington, D.C.
 
Last January, San Francisco-based Kimpton Hotels & Resorts opened its first area property, the 241-room Hotel Monaco, with 8,000 square feet of meeting space, and also took over management of the historic 48-room Morrison House. This March, Kimpton will add the 107-room Lorien Hotel & Spa in the city's historic Old Town section. In addition, last November, the 319-room Westin Alexandria opened with 20,000 square feet of meeting space.

Alexandria also has become a magnet for new culinary talent. Dublin transplant Cathal Armstrong, owner of both Restaurant Eve and Eamonn's–A Dublin Chipper in Old Town, was named one of Food & Wine magazine's best new chefs last July. Morou Ouat­tara, a contender on the Food Network's Iron Chef series, has skipped across the Potomac River from D.C. to open his own Old Town eatery, Farrah Olivia.

While Alexandria is close enough to our nation's capital (about six miles) for visitors to tap into a wealth of world-renowned attractions, the city has made a name for itself as an art destination. AmericanStyle magazine has consistently named Alexandria to its list of top 25 midsize destinations in the country.

AustinAustin, Texas
Austin Convention & Visitors Bureau
(800) 926-2282; austintexas.org

Both a college town and a major technology center (more than 3,300 technology companies are located here, including Dell Inc.), Austin is the nucleus of the Central Texas economy.

In recent years, the city's central business district has undergone a major revitalization, and its tourism sector has seen tremendous growth in new hotel, retail and cultural development. In fact, the city has so many major projects in the pipeline -- among them a new federal courthouse, various hotels, a public library, an art museum and an expanded MetroRail system ­-- that last May, Forbes magazine named Austin number three in its top-10 list of recession-proof cities.

In 2008, Austin beefed up its roster of cultural attractions. The 3,000-seat Bass Concert Hall at the University of Texas Performing Arts Center completed a $14.7 million renovation, and the highly anticipated Long Center for the Performing Arts, home of the Austin Symphony Orchestra and Ballet Austin, opened on the site of the old Palmer Auditorium on the shores of Lady Bird Lake. Meanwhile, the Austin Museum of Art has unveiled plans for its new 40,000-square-foot home, which will be part of a multipurpose downtown development.

Several hotel projects are in the pipeline, which will bump downtown Austin's room count from 5,200 to 7,000 by early 2010. White Plains, N.Y.-based Starwood Hotels & Resorts Worldwide will open two new properties this year -- a 120-room Aloft and a 250-room W hotel. Last December, Starwood broke ground on the 340-room Westin at The Domain, which will feature 13,000 square feet of meeting space and is expected to be completed in 2010. In addition, plans are on the table for a 300-room Westin with 15,000 square feet of meeting space, to be located in the city's Warehouse District, and a 1,000-room Marriott with 50,000 square feet of meeting space, which will serve as a headquarters hotel for the Austin Convention Center.

BloomingtonBloomington, Minn.
Bloomington Convention & Visitors Bureau
(866) 435-7425; bloomingtonmn.org

When the Mall of America opened in the summer of 1992, this Midwest city, which lies between its more famous neighbors, Minneapolis and St. Paul, became an overnight mecca for shoppers. But there is much more to Bloomington than retail.

Recent economic investment projects in the "third Twin City" include a new light-rail transit system connecting Minneapolis/St. Paul International Airport to the Mall of America, with several of Bloomington's hotels within walking distance of one of the stations. The former Grand Lodge at the Waterpark of America, with 5,300 square feet of meeting space, was renovated and rebranded a Radisson. And in January 2008, the new 257-room Hilton Minneapolis/Bloomington opened with 9,000 square feet of meeting space.

And at a time when airlines are cutting routes and capacity, Bloomington stands to benefit next month, when Southwest Airlines begins service between Minneapolis/St. Paul and Chicago's Midway Airport, out of which Southwest serves a total of 50 cities.

Bloomington also prides itself on a commitment to open spaces. One-third of the city (8,000 acres) is designated parkland, and it is home to the Minnesota Valley National Wildlife Refuge, one of only four urban wildlife refuges in the country.

This August, Bloomington will host the 91st annual PGA Championship, to be held at the prestigious Hazeltine National Golf Club, one of three professional golf courses in the city.