The Best of Times for Houston Hospitality (With a Few Caveats)

As Houston hotel occupancies and RevPAR boom, the race is on to build more. To be a world-class hospitality market, especially for conventions, Downtown needs to be a more walkable, livable core. (The Force is with Star Wars fans, but so is precious disposable income.) That was one major takeaway from Bisnow's Houston Hospitality Summit yesterday at the Hilton Americas.

What else to call it but a boom? There are eight new hotels slated for the Downtown market alone, bringing over 2,460 rooms to the area for a total to 7,700 by late 2016, in time for the Super Bowl. The number of new hotels opening in The Woodlands alone is enough to sustain a small city. Occupancies in the market are on track to be well above 70% this year, for the first time in decades. The question then is, where does the market go from here? The event drew about 150 attendees.

The Hotel & Lodging Association of Greater Houston 2014 chair Helen Bonsall, who’s the GM of the DoubleTree by Hilton Houston Hobby Airport, affirmed in the opening remarks that this is an extraordinary time in the hospitality business in Houston, with the traditional economic drivers being reinforced by Houston as a growing destination for conventions and other visitors. “The world is learning about Houston’s theater, symphony, sports, and museums, and the reinvention of Downtown as a residential neighborhood,” she says. Her 300-member organization’s role, she adds, is to be an advocate on legislation, and to help the hospitality industry make “sure there are beds for those visitors’ heads.” 

Source Strategies Inc president Bruce Walker, who gave a market overview, says that as of Q2, the Houston market’s occupancy is 73.6%, and RevPAR is $89.45, up over 9% for the year. Both are very healthy numbers, and room nights sold went up 5% in the second quarter, a “monumentally high number.” Since 2010, Houston’s seen slow supply growth—roughly 1% a year, so Houston’s not oversupplied with rooms right now. Source Strategies is a leading hotel consultant in Texas, producing more than 75 hotel feasibility studies a year.

RIDA Development Corp CEO Ira Mitzner (left), whose company was selected by Houston First Corp to develop the 1,000-room Marriott Marquis in the convention district, says that Houston needs to be remarketed as a convention destination. The city has to be publicized as a place not just to attend a convention, he says, but to have an great experience, and then visitors will go home and tell everyone about their experience. With its rich cultural and experiential assets, Houston is well on its way to being such a great destination for convention goers and others, but the word still isn’t completely out. “We need to create a buzz about Houston,” Ira says. RIDA’s doing its part by adding unique features to the Marriott Marquis, such as with a 600-ft lazy river in the shape of Texas planned for the roof.

Houston First COO-hotels Peter McStravick (right) says that Houston has lost convention business due to lack of hotel rooms in walking distance to the convention center, a fact that was an impetus to develop the Marriott Marquis. More rooms will help attract more business, but re-inventing the convention district is about more than adding rooms; it’s about the public space. “We have to give guests the experience they’re looking for by activating the sidewalks,” Peter says. Discovery Green is an important element in doing that, because it’s the kind of space that people want, bringing new life to the sidewalks around the convention center. Houston First manages the convention center and performance venues on behalf of the city, and owns the Hilton Americas-Houston, which is operated by operated by Hilton Worldwide.

American Liberty Hospitality CEO Nick Massad (left), whose company owns 25 hotels, half in Houston, most recently developing the Hilton Garden Inn Galleria, the Hilton Garden Inn Energy Corridor, and the Embassy Suites Downtown. He says that surveys show that meeting planners want rooms within walking distance of a convention center. With the coming of the Marriott Marquis, the city will compete in the top five convention cities in the country. But he cautioned that the convention businesses has to be ready for after the 2017 Super Bowl. “We need to be selling the period after that, so there isn’t sudden drop off in business, and as chair-elect of the GHCVB, the convention and tourism arm of Houston First, we definitely have our marching orders.”

Morris Architects VP Doug Childers (right), whose firm has renovated over 30,000 keys over the last 20 years, and who’s working on the Downtown Marriott Marquis, says that urbanism is critical to up the game in Houston hospitality. The demand is there—6,000 people a month are moving to Houston, and many want a walkable, interesting environment, with shops, eating places, entertainment, cultural assets, and inviting streetscapes. Creating a new urban core is important to sustaining a permanent population Downtown, which in turn is important to the health of the hospitality industry serving visitors. Tune in tomorrow for more coverage of the event.

CORRECTION: In yesterday's Deal Sheet, we incorrectly reported that Allen Harrison bought 1.2 acres at the NEC of I-10 and Adkins Drive. The buyer is SV Physician Properties 1.