HOUSTON—Houston is a city that is having a tough time figuring out its identity. It's considered the most ethnically diverse large metropolitan area in the country, is often referred to as "Space City," since it's home to NASA's Johnson Space Center, stakes its claim and reputation on oil and gas and is an attractive place for development thanks in no small part to its absence of land-use zoning laws. Maybe the city's tagline should be: Houston, What's Not To Love?
Still, the city is having a hard time positioning itself, said Mike Waterman, president of the Greater Houston Convention and Visitors Bureau and EVP, Houston First Corp., Visit Houston. He was speaking at the first stop of the Hotel ROI series, one-day conferences focused on maximizing hotel profits for franchisees and owners.
"We don’t have a position…it's a challenge with our brand," he told the assemblage.
But it hasn't been an obstacle to Houston's success—especially its hospitality industry. According to Waterman, Houston booked 756,000 room nights in 2016 and is on pace for more than 800,000 this year. Houston also had the distinction of hosting Super Bowl LI and the 2016 men's college basketball Final Four.
Big Box Hotels
Helping boost the number of visits to the city is the Marriott Marquis Houston, which opened in late 2016. The hotel adds 1,000 rooms into a supply that was in need of a convention-type hotel. Until the opening, much of Houston's convention business, at the George R. Brown Convention Center, was accommodated by the adjacent 1,200-room Hilton Americas. Each hotel is now connected to the convention center via skybridge.
Adding the Marriott Marquis was, according to Ira Mitzner, CEO of RIDA Development Group, the developer of the hotel, 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."
Though Houston may have a brand identity problem, it has, for financial sake, tried pivoting from its perception as tethered to the whims of the oil and gas sector. Sure, when the sector is humming, Houston benefits, but ever since oil slid, so too has the fortunes of the city and its hotels. "When oil is at $100 a barrel, things are great; when it's at $30, things are not," Mitzner said.
To confront this, Waterman and Visit Houston have recast Houston as a true leisure destination. Even the Marriott Marquis has been touted as a staycation destination, replete with a Texas-shaped lazy river that guests can float around on. "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," Mitzner said.
"We historically used oil and gas as a crutch," Waterman said. "Not anymore. We are creating Houston as a tourist destination."
And it doesn't stop with the Marriott Marquis. In fact, the development of the hotel is helping spur further development in the select-service space. "We need more than just the big-box hotels. We need a Hampton or an Embassy Suites," said Houston local Nick Massad, president & CEO of American Liberty Hospitality, a management and development company. 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.
Waterman added 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. (Houston altogether boasts more than 80,000 hotel rooms.)
"If we can sell 52 weeks in downtown Houston, it’s going to naturally create compression," Waterman added. "When you fill downtown and convention, it naturally creates demand elsewhere."
The Hotel ROI conference series will visit six more cities this year: Los Angeles, Chicago, Baltimore, Pittsburgh, Atlanta and Charlotte. To find out more and register, visit www.hotelroi.com.