The eyes of the world are on the Gulf portion of Texas right now, as the remains of Hurricane Harvey pounded Houston and other cities along the coast. The Category 4 hurricane made landfall late on Friday, and has—so far—left at least 10 people dead and thousands injured or homeless.
On Friday, just before the worst of the storm hit, Texas Governor Greg Abbott suspended hotel occupancy taxes for evacuees for at least two weeks.
There's Room at the Inn
As such, many hotels throughout the region lowered rates for evacuees. Hotels in San Antonio, Austin, Round Rock, Pflugerville and near Austin-Bergstrom International Airport were advertising rates under $100 per night.
A Motel 6 at Interstate 35 and East Rundberg Lane reportedly had one of the lowest rates, with rooms starting at $52, according to Hotels.com. Other local hotels and motels were also priced under $60, such as the America’s Best Value Inn on East Koenig Lane, the Red Roof Inn near I-35 and U.S. 183, the Relax Inn in Manor, the Super 8 near Capital Plaza and the Rodeway Inn near I-35 and East Oltorf Street.
At the Austin Marriott South, one of more than 20 Austin-area hotels operated by White Lodging, evacuees from Victoria, Corpus Christi and Houston were occupying about 50 rooms Sunday, general manager David Rowland said.
“We’ve softened the animal policy and the cancellation policy to be as flexible as possible,” he told the Statesman. “We’ve noticed the little things seem to really make a big difference.”
The Hotel Derek in uptown Houston is offering $99 evacuation rates until Thursday, Aug. 31. The hotel will also waive pet fees for up to two animals.
Price-Gouging
The Texas Hotel and Lodging Association is encouraging its member hotels to keep prices affordable for evacuees and others. "For lodging operators, we advise that a hotel not raise its rates to levels that are higher than the rates the hotel would normally charge for that level of occupancy when there is not an emergency," the Association said on its website.
Some hotels, however, are taking advantage of the crisis to turn a profit. A crew from Austin-based station KXAN reportedly booked a room at the Best Western Plus in Robstown, a town 20 miles west of Corpus Christi. An internet search showed room rates for a two queen bed priced between $120 and $149 a night. But, when it came time to book the room, the crew was quoted a nightly rate of $321.89. The hotel also assessed $31.90 in state and local taxes, in spite of Gov. Abbott’s tax suspension.
Deputy Attorney General Jim Davis later uncovered 39 other guests with similar elevated charges. The hotel has since promised to refund the difference in the normal rate.
Best Western Hotels & Resorts issued a statement on the hotel’s actions: “In advance of the storm, we proactively advised hotels on prohibitions against price-gouging and communicated our position as a brand that compassion be exercised during this time of crisis,” company spokeswoman Courtney McCurry wrote in a statement.
McCurry’s statement went on to state the chain “is dedicated to providing the highest level of customer care. We take reports of price-gouging very seriously and immediately contacted the property in question when we learned of this report. The hotel advised they would be reimbursing guests on Aug. 28 all amounts charged in excess of their average daily rate for this time period.”
The THLA offered advice to avoid accidental gouging:
Hotels should review their prior rate history for comparable rooms at the various levels of occupancy at their property. The pricing for the rooms during an emergency should be comparable to those rates at those occupancy levels. For example, if a guest calls for a room and the hotel is at 30 percent occupancy, it should quote the rate that is traditional for that level of occupancy. As the hotel fills up, it can raise its rates as it has in the past for higher occupancy levels. However, a hotel's reputation is only benefited by considering a courtesy rate or reduction for individuals who are traveling due to the emergency.
Keep in mind that holding the line on pricing for guests who cannot leave your property is a wonderful industry gesture if possible. Please provide all possible courtesies to not use traditional yield management pricing during this emergency and try to hold rates to what they were before the occupancy started rising due to the emergency. Additionally, we urge you to not require minimum stays for evacuees if this is not your standard requirement.
San Antonio Reaches Out
Just before the hurricane hit, the St. Anthony Hotel in San Antonio announced a special rate starting at $125 that let guests bring their pets. The La Cantera Resort & Spa offered evacuee rates starting at $119, but the property was at full capacity by Friday afternoon.
The Hotel Emma has cut its rates by about $100 during the storm, while the downtown Crockett Hotel is offering a 25 percent discount, General Manager Bill Brendel said. At the Hyatt Regency San Antonio Riverwalk, the typical rate of “upwards of $200” is being reduced to as low as $109, spokeswoman Tania Tadevic said. The Omni La Mansion del Rio in San Antonio is offering a $109 per night rate for singles or a $129 per night rate for doubles for evacuees. Proof of residency will be required upon check-in.
Some hotel companies are offering support. Marriott hotels in the affected area are waiving cancellation fees, for example, and the company and the J. Willard & Alice S. Marriott Foundation are each contributing $250,000 to the American Red Cross, for a total contribution of $500,000, to assist those communities and individuals impacted by the hurricane. Members of Marriott Rewards, Starwood Preferred Guest, and The Ritz-Carlton Rewards loyalty programs can donate points as contributions to the American Red Cross.
Homesharing in a Disaster
Even hospitality disruptor Airbnb is stepping in. The company engaged its Disaster Response service in Texas for listings in the San Antonio, Austin and Dallas areas. This lets hosts open up their extra space for displaced people and relief workers free of charge.
As of Monday morning, 13 pages on Airbnb’s site listed free accommodations.
During emergencies, Airbnb emails local hosts with information on how to help and offer urgent accommodations. Property owners are still protected by Host Guarantee though Airbnb's fees are waived.
Legal Obligations
In the case of disasters, hotels can be in a tricky legal predicament. On the one hand, they may want to open up rooms to evacuees and allow guests who are unable to leave to stay as long as needed—but if they have incoming guests who have already reserved rooms, they may find themselves forced to send people away.
“We have an obligation to our incoming guests that have reservations and we have to honor those contracts,” Hospitality-focused attorney Stephen Barth said. “So legally what you're looking at is two separate contracts. You're looking at people that have overstayed a reservation—so they are in breach of their reservation agreement. And then you have people coming in with a reservation. That are reliant upon that promise to provide them a place to stay. So it puts the hotel in a very awkward position.”
The best course, Barth said, is to honor the incoming reservation. “Legally speaking, the existence of the disaster declaration doesn't change the hotel's obligations,” Justin Bragiel, general counsel at the Texas Hotel & Lodging Association said. “What we encourage hotels to do is to make every effort to accommodate those that are displaced involuntarily regardless of the legalities.”
Every hotel's situation is different, however, and each GM will need to make decisions on a case-by-case basis. “The hotel still wants to manage this as delicately as possible and to accommodate as many people as possible and to assist in locating other places for potentially displaced people to stay,” Barth said.
What's Next for Houston's Hotels?
Thanks to the decline in oil prices, Houston’s hotel industry has been struggling for the last three years, according to STR, with occupancy and room rates on a decline. RevPAR declined 4.6 percent year to date, after falling 12.5 percent last year and 3.4 percent in 2015, the firm said. For the first seven months of the year, Houston’s hotel occupancy averaged 62.7 percent, the lowest among the top 25 U.S. markets, and its room rates are the sixth-lowest among those 25 areas, averaging $107 a night this year, below the $127 U.S. average.
To dissociate itself from the oil industry, Houston has been looking to capture new demographics. Last year’s opening of the 1,000-guestroom Marriott Marquis Houston was one of the first steps in the city’s reinvention. “The idea was to not just drive in for an Astros game and then head back to the 'burbs, but spend a night or two. We are trying to change the mentality,” Ira Mitzner, CEO of RIDA Development Group, the developer of the hotel, said earlier this year at the first of the Hotel ROI series, one-day conferences focused on maximizing hotel profits for franchisees and owners.
Adding the Marriott Marquis was, Mitzner said, crucial to competing with sister cities like Atlanta and Dallas for meeting and group business. “If you compare Houston to Atlanta and Dallas, you find in those cores there are half dozen hotels that have 800 rooms and large meeting space. Houston doesn’t have enough meeting space," he said. There were no choices in Houston for large meetings. We had to get to a level playing field.”
Mike Waterman, president of the Greater Houston Convention and Visitors Bureau and EVP, Houston First Corp., Visit Houston, said that garnering more convention business has a positive impact on hotels outside the immediate downtown core. “Major conventions spur overflow into select-service hotels. When there is capacity, it drives demand,” he said.
As Houston emerges from the floods, its hotels may be filled by first responders, Federal Emergency Management Agency workers, insurance adjusters and others dealing with the aftermath, boosting demand for accommodation. At the same time, storm-damaged hotels may close temporarily (or permanently), depleting availability.
This, in theory, could pave the way for new development that will help shift Houston's focus from oil-related business to leisure and convention travel. “We need more than just the big-box hotels. We need a Hampton or an Embassy Suites,” Houston local Nick Massad, president & CEO of management and development company American Liberty Hospitality, said earlier this year. Massad noted that finding debt for new project three to four years ago was almost impossible. That, he said, has changed, noting that before the Hilton Americas opened, in 2003, there were 1,800 rooms in downtown Houston; there are now 8,000 rooms today in the downtown corridor.
But for now, the city has to deal with the immediate crisis, and Harvey's impact on the hotel market could last for more than a year, Carter Wilson, VP of consulting and analytics at STR, said. “This kind of thing fundamentally changes the nature of the city’s infrastructure. Some hotels close and never come back.” On the positive side, many groups are likely to book events in Houston once order is restored to show support for the city, as happened with following Hurricane Katrina’s devastation of New Orleans in 2005.