September 2, 2015 / 6:04 PM / 2 years ago

Nearly half of hotel rooms in North Dakota oil capital sit empty

3 Min Read

Pumpjacks taken out of production temporarily stand idle at a Hess site while new wells are fracked near Williston, North Dakota November 12, 2014.Andrew Cullen/Files

WILLISTON, N.D. (Reuters) - Nearly half of the hotel rooms in the epicenter of North Dakota's energy boom have been sitting empty this year, yet another sign that plunging oil prices have cooled the economy of the second-largest crude producing U.S. state.

Producers, oilfield service providers and other energy companies across the state's western oil patch have cut employee hours, canceled projects and laid off staff, all hoping to weather the low-price storm.

When prices started to slide last fall, producers in North Dakota kept up production levels hoping for a rebound. But since January, that has changed as oil prices kept falling.

One result of that curtailment has been less corporate travel to the region, a factor that eats into hotel demand. More than 15 apartment complexes have also opened in Williston in the past year, leading Schlumberger and others to sign long-term apartment rental agreements to house some employees, further negating need for hotel stays.

So far this year, Williston's 2,108 hotel rooms have been, on average, 55 percent full, said Amy Krueger, executive director of the Williston Convention Visitor's Bureau.

The city's hotel demand, which reached an apex of 88.2 percent in June 2012, is on par with Minot and Dickinson, two other North Dakota oil communities, Krueger said.

Williston has added 1,500 hotel rooms since the state's latest oil boom began in earnest five years ago, a step that has helped push the average daily hotel room rate in the city down to about $122 per night.

Hotel prices still trend higher than that average. Williston's Hampton Inn, a division of Hilton Worldwide, charges $286 per night.

"We now have the rooms," Krueger told the Williston Economic Summit and Trade Show on Wednesday. "We're now tasked with sustaining that growth."

Williston has been ranked the fastest-growing small community in the United States for the past three years and still has a 1.8 percent unemployment rate, according to the latest state data.

Still, the community has seen its population shrink 6 percent in the past year to about 32,000 as the oil industry's contraction takes its toll.

At the economic development summit on Wednesday - a smaller affair than 2014's - roughly 75 real estate developers, regulators and others mingled and networked, with many saying they were interested in how Williston will energy from the price slump.

Reporting by Ernest Scheyder; Editing by David Gregorio

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