Forget Beryl. It's Full Steam Ahead For Upcoming Galveston County Tourist Destinations

Less than two weeks after Hurricane Beryl slammed into the Houston area, some developers might rethink their coastal Texas investment decisions.

But that’s not the case for those who gathered at the South Shore Harbour Resort and Conference Center in League City Thursday. 

Panelists at Bisnow’s Future of Galveston County event said storms are part of life in the region, and they’re charging ahead with a host of ritzy tourism, hospitality and residential projects that should boost Galveston’s status among the country’s beach towns. 

“We think Galveston is in a position like few communities today,” said Carl Schwab, president of RREAF Development Services. “Galveston is in a position to not necessarily resign to the quantity of growth but to focus on the quality of its growth.” 

RREAF Holdings and Innisfree Hotels are partnering to build a Margaritaville Beach Resort with a water park, restaurants and hundreds of guest rooms on a swath of empty beachfront land in East Galveston. They are confident that the $700M project will bring close to 1 million guests per year to the island.

“It’s just going to be a phenomenal venue,” Schwab said. “Very exciting, very high-end. … It’ll be a great tax generator for the city of Galveston and the state of Texas.” 

The project should create a $650M to $750M ad valorem tax base for Galveston at full build-out, Schwab said. 

The resort will be set on a 90-acre site, which will also include 279 elevated single-family homes with a dedicated amenity deck, Schwab said. 

“We’re dead set on providing the finest residential community on the Texas coast,” he said. “Our numbers indicate that we’re going to be able to do that. Our market study indicates that Galveston Island is ripe for it.” 

The developers are also lobbying Magaritaville’s cruise line, Margaritaville at Sea, to be part of the development, RREAF Holdings Chairman and CEO Kip Sowden said, adding that the cruise terminal would garner interest from across the state.

Galveston is already home to the fourth-largest cruise terminal in the United States, Port of Galveston Director and CEO Rodger Rees said. In 2023, the number of cruise passengers leaving Galveston increased 42%, from 1 million to almost 1.5 million, he said. 

The revenue brought in since the start of the pandemic, including from Royal Caribbean’s terminal that opened in 2022, has put the port in a position to upgrade its west end, which handles cargo, Rees said.

MSC Cruises, a Swiss-Italian shipping company that is now the third-largest cruise line by number of passengers carried, is building a fourth cruise terminal at Galveston to open in late 2025. 

“We are the fourth-largest cruise terminal in the United States, and by the time of the new terminal, we’ll probably be No. 3,” Rees said.

Projects like this will drive more tourism and more year-round residents to Galveston, Royal Crown Enterprise CEO Mohamed Eldawy said. Eldawy purchased a 16-acre plot on the west side of the city's seawall and plans to develop a mixed-use district that includes a 10-to-12-story condo tower, two apartment complexes, a hotel, restaurants and retail. 

Nan and Company Properties opened a Galveston office when it became clear that its clients wanted second homes on the island, President and CEO Nancy Almodovar said. The firm is spearheading leasing for Tiara on the Beach, a luxury condominium project that will bring Miami vibes to the Texas coast, she said.

The project is the first beachfront condo in Galveston in 14 years and will have 63 homes starting at $1.2M. The project is set to break ground this summer and is already 25% sold, she said.

“I believe in the project so much that I've personally purchased in the building,” Almodovar said. “I don't do that with all of my projects.” 

But while Galveston is seeing its fair share of luxury projects, its local businesses are suffering from Hurricane Beryl. The timing was especially painful for the beach town that usually has its best month in July, Galveston Restaurant Group President Johnny Smecca said.

Galveston Restaurant Group joined the $100M lawsuit against CenterPoint Energy alleging the power company was negligent in maintenance, resulting in the prolonged power outage after Beryl.

“Beryl hits, and honestly, it was a nothingburger in what I’ve been through,” Smecca said.

But the restaurants had no power.

“When you don’t have power, there’s no insurance that comes to you and covers your losses. Not in my business,” Smecca said.

Galveston buildings are built to high standards and maintained to withstand these types of storms, he said, adding CenterPoint should be held accountable for not properly maintaining its power infrastructure. 

Smecca finally broke down and spent about $50K to get generators for his three Galveston Seawall properties, he said.

“We have to do things now because there’s no confidence that we’re going to have power,” he said.

It would take three fall months for restaurants to make up for a lost summer month, Smecca said. When Galveston Restaurant Group businesses have to close, that impacts all 350 of its employees, plus their families. 

This will be especially painful for small-business owners, Smecca said. 

“So when you lose July, expect to see mom-and-pops hurt in November, December and January of this year,” he said.

While this storm didn't obliterate buildings, more storms will come. To protect Galveston County's future, Smecca said the most important thing is to build the Ike Dike. 

It should be built in a way that protects the island, its buildings and people, the ship channel and petrochemical plants, he said.

"Without the Ike Dike, the future is going to get harder and harder for our region," Smecca said.