Houston hotels faced an abysmal year in 2016. The Greater Houston Partnership in conjunction with CBRE Hotels reported occupancy was down 6.7 percent, average daily rate fell 3.5 percent and revenue per available room dipped 8.94 percent. The numbers reveal just how reliant the city is on the declining oil and energy sector, particularly in the face of a supply surge.
As the might of the city’s oil and energy sector wavers, Mike Waterman, president of the Greater Houston CVB and EVP, Houston First Corp., Visit Houston, told attendees at the Hotel ROI series recent Houston stop: “We don’t have a position …it’s a challenge with our brand.” But it stands to reason that the city is having something of an identity crisis: Oil and energy are one vertical in Houston’s economy; other major contributors include a base in manufacturing aeronautics and transportation as well as healthcare and more than 14 higher learning institutions, including Texas A&M and Rice University.
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Houston also has the country’s second greatest concentration of Fortune 500 headquarters after New York City. Last year, the city’s visibility was also heightened among meeting planners when the 1,000-room Marriott Marquis Houston opened with more than 100,000 square feet of meeting space across the street from the city’s convention center. It wasn’t oil and energy alone that attracted a record 20 million visitors to Houston in 2016.
“Microsoft just built an office two blocks from our hotel and that’s a new avenue that we’ve had success in obtaining business from,” said Juan Flores, general manager of Valencia Group's Hotel Sorella CityCentre. The 226-room boutique hotel sits adjacent to the Oil and Energy Cooridor and, nearly 10 years since its opening, continues to rank BP and Shell as it’s top two corporate clients.
The Leisure Outlook
Yet, the property’s appeal goes beyond corporate travelers because it sits in a mixed-use development that is CityCentre, which hosts weekly family programming on the green space around which its restaurants, shops and entertainment are built. “The dining scene here has created huge attraction for staycations where locals come for two or three nights and never get back into their cars until they go home,” Flores said.
With more than 10,000 restaurants and 500 cultural institutions, Houston has a solid base of attractions to draw more leisure travelers and its arts and dining scenes are only growing. In October, The Menil Collection of private art will open the $40 million Menil Drawing Institute, while the Museum of Fine Arts has a $450-million expansion slated for completion in 2019. Just this past February, the $30-million, 50,000-square-foot performance and exhibit space Moody Center debuted. Even more recently, the $58 million Buffalo Bayou Park development project, which rehabbed 10 miles of trails, parkland, bridges, art spaces and pavilions just west of downtown, unveiled the Cistern in May, a near 88,000-square-foot exhibit and performance space that previously supported Houston’s municipal water system for almost a century.
Beautiful day for a run in Houston. Midway stop at Phoenicia, then stopped to see the dragon boat races. pic.twitter.com/WGVm26FS5B— Christopher Andrews (@chrisandrewsCDA) May 6, 2017
Business travelers to Houston are starting to take note of all that the city has to offer, turning bleisure travel into a growing segment, according to Visit Houston, as are visitors from China. The tourism office also is testing Oklahoma City as a new source market since it’s already a strong market for Dallas.
New Lux Hotel in Reminted Downtown
“Houston is a sleeper destination with a strong arts culture and an immigrant community that has helped shaped the destination. It’s past time that hotels catch up with where the city is going,” said Chris Evans, senior associate at Rottet Studio, the Houston-based design firm tasked with creating the interiors of the new Hotel Alessandra, a Valencia Group property slated to open this fall. The 223-room luxury hotel is part of downtown Houston’s GreenStreet Development and will be the most luxurious in the Valencia Group portfolio, with deep soaking tubs, custom designed furniture and a restaurant inspired by Viennese café culture.
The property is expected to tap into corporate demand from downtown businesses as well as its proximity to the city’s convention center. “There’s so much development that’s changing downtown Houston as a destination and, in some ways, it’s a blank slate that gives us the opportunity to bring a new experience to the city and one that travelers are looking for,” Evans said.
GreenStreet Development, formerly known as Houston Pavilions, is a mixed-use project by local developer Midway that exemplifies the transformation that has revitalized the area into a thriving downtown with dining, shopping, entertainment and a residential population of 10,000. More are still to come because another 3,000 downtown residential units are expected to come online in the next two to three years and if history is any indicator, that number, too, will grow. Houston’s population has grown by an average of 125,000 residents annually for the past decade, fueling the city’s renaissance.