Texas oil and gas markets lag in demand, revenue growth

Hotels in Texas’s largest metro area, Houston-Baytown-Sugar Land, experienced a revenue drop of 19.7 percent during the fourth quarter of 2018, according to Source Strategies. Photo credit: Pixabay/Falkenpost

Hotel demand once again is slowing in oil and gas production areas of Texas, while revenue continues to decline in markets that experienced a boom due to hurricanes.

Demand, when measured in roomnights sold, dropped 1.7 percent during the fourth quarter in the top 100 oil- and gas-producing counties, according to Source Strategies’ most recent quarterly "Texas Hotel Brand Report." Even though this was the second consecutive quarter for declining demand, the number of roomnights sold for the year still was at its highest point in about a decade.

Although the Texas hotel industry saw a revenue gain of 2.8 percent during the fourth quarter of last year, revenue in the oil patch fell 2.7 percent, according to the report.

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“Oil patch lodging markets thrived with last year’s high crude oil prices but saw a correction at the end of the year,” said Todd Walker, president of Source Strategies. “West Texas crude has been over $50 per barrel for most of the year, and lodging demand in the oil- and gas-production counties remains the highest it has been in a decade.”

In the state’s oil-patch markets, Midland-Odessa led with revenue rising 48.8 percent. Meanwhile, revenue in San Angelo increased 24.5 percent. On the flip side, Beaumont-Port Arthur’s revenue saw a steep dive, down 35.5 percent. The state’s largest metro area, Houston-Baytown-Sugar Land, experienced a revenue decline of 19.7 percent.

Non-oil markets in Texas fared much better than their counterparts during the fourth quarter, increasing revenue 7.5 percent, according to the Source Strategies report. San Antonio led the pack, with revenue increasing 13 percent during the quarter. Fort Worth-Arlington followed with an 11.9-percent revenue gain. Dallas (+8 percent) and Austin-Round Rock (+7.5 percent) weren’t far behind in terms of revenue growth.

Of the smaller metros, El Paso experienced a sharp increase in revenue of 29.2 percent, the data showed. Waco followed with a 25.7-percent gain, and Lubbock’s revenue was up 22.7 percent. Corpus Christi told a different story, however, with this metro’s revenue declining a whopping 25.2 percent during the fourth quarter.

A Look at 2018 Overall

Texas saw occupancy increase during the full year, averaging 65.1 percent versus 64.8 percent in 2017, according to the report. For the year, Waco had the highest occupancy at 76.7 percent. Midland was right on its heels at 76.6 percent occupancy, while Odessa notched 74.2 percent occupancy in 2018.

Several other markets experienced occupancy rates above the state average last year, including: Austin-Round Rock (73.7 percent), El Paso (71.8 percent), Fort Worth-Arlington (68.9 percent), Dallas (68.8 percent) and Beaumont-Port Arthur (65.4 percent).


Overall Year of 2018


          Total Revenue (000s)


Metropolitan Areas

% Market



 % Change

% Occ



Dallas-Ft Worth-Arlington
















Austin-Round Rock








San Antonio








Non-Metro Areas








Corpus Christi








El Paso








Midland & Odessa








Balance of Texas








Total State of Texas








Source: Source Strategies

In 2018, revenue for the state grew 9.1 percent to $11.8 billion, according to Source Strategies analysts. The oil and gas boom of 2018 had a significant impact on revenue in several markets, such as Odessa (up 92.6 percent over 2017), Midland (+73.1 percent), San Angelo (+27.6 percent) and non-metro areas of Texas (+22.4 percent).