August 20, 2004
Nothin' but good times ahead

They're an optimistic lot in the Houston hotel business, that's for sure.

The Super Bowl drove thousands of visitors to Houston hotels earlier this year, but it still wasn't enough to cure the city's ailing lodging market.

More than two years after the Sept. 11 terrorist attacks and the Enron bankruptcy, Houston hotels are still struggling.

But the city's hostelries are beginning to see a slight turnaround, said hotel consultant John Keeling, who spoke to the Hotel & Motel Association of Greater Houston on Thursday.

"We're beginning to see better numbers in Houston, and we think that's just the beginning," he said.

Houston's citywide occupancy is expected to reach 61 percent this year, up slightly from 60.4 percent in 2003.

"We haven't returned to the high occupancies we experienced in 2000, and it probably will be a long time until we do," Keeling said.

A big part of the problem is downtown. Over the past year, more than 1,500 hotel rooms were added to the city's central business district.

The new Hilton Americas-Houston convention center hotel and several boutique hotels opened, flooding the market with rooms.

Downtown will end the year with a 51 percent occupancy rate.

Keeling said 2005 will be "fairly anemic" as well, increasing to just 53.4 percent.

But the promise of future convention business is keeping spirits high.

Most conventions are booked three to four years out, said Joan Johnson of the Hotel & Motel Association.

"It's the next couple of years that'll be good," she said.

Indeed, by 2007 occupancies are expected to be in the low 60 percent range, according to Keeling.

"We'll start to see a very strong comeback in downtown," Keeling said.

Ah, the convention business. Haven't we discussed this already? Here's a quote from that first Current article:

Studies by Heywood Sanders [professor of public administration at the University of Texas at San Antonio] show that nationally, the convention industry is flagging. Attendance in 2000 was 126 million people, 10 percent below projections. In 1999 the total number of conventions was about the same as 1993, and less than in 1985, 1987, and 1989.

Note that the decline began before 2001. Do we know if anything has happened to reverse that trend?

Look, I hope I'm wrong and the downtown hoteliers do just great. Downtown Houston has had enough problems - it doesn't need a bunch of hotels turning into abandoned white elephants. All I know is that the track record here is not very encouraging.

Posted by Charles Kuffner on August 20, 2004 to Elsewhere in Houston | TrackBack

With the development of the Internet as a place to showcase new products and ideas, perhaps the idea of a business convention is outdated (The concept of a political convention was outdated in the 1960's with the growth of television coverage, but that's another discussion). Most cities depend more on tourism to fill hotel rooms rather than conventions, so I'm not surprised at the occupancy rate in Houston. By comparison, the bellwether for New York City hotels is over 75 percent, and during the summer months, closer to 80 percent. While NYC also draws a large number of business travelers, however, tourism plays as much of a part in filling the rooms.

Of course, that doesn't mean you'll see a Motel 6 in NYC any time soon. ;-)

Posted by: William Hughes on August 20, 2004 9:51 AM