DFW Hospitality Sector Still Strong as Convention Center Hotel Delivers

It’s just about one month until the soft opening for the $91M Allen convention center and hotel. The long-awaited opening comes as the lodging industry caps off a strong 2018 and contemplates what's in store for 2019.

The hotel industry has several strengths propelling it into the new year, including strong operating metrics and high consumer confidence, LWH Advisors CEO Dan Lesser said at a Dallas hotel conference sponsored by Aimbridge Hospitality, Alvarez & Marsal, Foley Gardere and HFF.

And while there is a ton of capital chasing deals, there has not been overbuilding of new supply nationally although select individual markets may have challenges.

The industry had a record-setting 102-month stretch of consecutive monthly year-over-year revenue per available room increases that came to an end in September when RevPAR declined by 0.3%, but some experts blamed the decline on the effects of hurricanes in Texas and Florida.

“The way the economy goes is the way the hotel business goes,” Lesser said. “I don’t know when this economy is going to tail down but as long as it is powering ahead, we will see more and more record room operating statistics,” he said. “The industry is highly profitable, and has never been as profitable as it [is] today.”

National third-quarter lodging fundamentals came in below expectations with RevPAR growth of 1.7% year over year, led by a rate growth of 2.1%, PwC said in a November outlook on the industry. The industry also saw third-quarter lodging supply growth (1.9%) outpace demand (1.6%), resulting in occupancy decreasing 0.4%.

Group demand increased 2.5% in the third quarter, with growth in the transient and contract segments also remaining positive, PwC said.

“As we head towards 2019, economic indicators appear to support continued industry growth, given high consumer spending supported by rising disposable income, employment and household net worth,” the report said.

In Allen, Altera's Kennedy said he is not overly concerned about opening the hotel and convention center at what some lodging experts believe could be the peak of the market.

“The peak is a very subjective term and is variable depending on your geography,” Kennedy said. “We don’t feel like we are at the peak in Allen. In that market, we are the only full-service hotel in the market, and we also have developed what is effectively the city’s convention center with tremendous meeting space,” he said. “While there may be a slowdown or softening in areas where there’s been a tremendous amount of hotel development, Allen is just getting started and we are the best game in town.”

Kennedy said the convention center has booked business but not much information has been released. So far, it has only announced plans for a car show and auction that will happen shortly after the soft open. The city’s convention and visitors bureau plans to move into the facility, where it will have its offices.

Delta Concept New To DFW

The Delta Hotels by Marriott Dallas Allen & Watters Creek Convention Center contains 90K SF of convention, ballroom and meeting space, 300 guest rooms and suites, a 1,000-car garage and a restaurant headed by celebrity chef Stephan Pyles. A smaller concept, Provisions 66, will offer gourmet food to go.

The hotel, the first Delta Marriott in DFW, and the convention center will open Jan. 15, and a grand opening celebration will occur sometime in March, Altera Development principal Michael Kennedy said. Construction has been underway for about two years.

“The project is progressing very nicely,” he said. “The interior finishes are being completed in the guest rooms and all the furniture is coming in.” Technology is being installed and artwork is going up, he said.

Building Highlights

Besides meeting space, the facility is touting its resort-like pool and courtyard and walkability to Watters Creek at Montgomery Farm, a sizable shopping and dining district across Bethany Road. Houston-based Benchmark Global Hospitality is operating, managing and booking both the hotel and convention center on behalf of Altera.

The property includes nine innovation suites — meeting room suites configured for smaller think tank, working retreats. The suites open out onto the pool and courtyard and are near the bar and restaurant. The courtyard includes a fire pit and a 20-foot-wide LCD outdoor screen. Larger conventions and groups will be accommodated on the other side of the facility in the convention center, which includes six flexible, technology-rich meeting rooms.

Technology is among the amenities the property plans to highlight.

“It’s all about millennial connectivity and that demand,” Kennedy said. “That is one of the reasons why we have the Marriott Delta brand, because Delta’s mantra is free water, free WiFi and powerful connectivity.”

The Allen facility will be one of the largest meeting facilities in the DFW region. It likely will face some convention and meeting competition from the Omni Dallas Hotel, which connects by skybridge to the Dallas Convention Center, as well as with the Irving Convention Center, which offers about 100K SF of meeting space but doesn’t include an attached hotel.

The project is a public-private partnership between the city of Allen, Delta Hotels by Marriott, Altera Development, Allen Convention and Visitor’s Bureau and Benchmark. The city of Allen, Allen Economic Development Corp. and Allen Community Development Corp. are jointly investing $10M in hotel occupancy tax revenue toward the management operation of the convention center.