Hotel Industry. Downtown Houston
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1 Downtown Houston Significant change has occurred in the downtown hospitality sector over recent years as the number of hotel rooms in downtown increased from 1,796 to 4,821 since During the past decade ten hotels opened with a total of 2,195 rooms. Today there are 14 hotels ranging from luxury to limited service. Downtown represents 7.3 percent of the 66,725 room regional hotel market. Total hotels Total guest rooms & suites... 4,821 Total hotel meeting space ,916 sf George R. Brown Convention Center space... 1,200,000 sf Hotels measure performance based on revenue per occupied room, or RevPAR. The graph below illustrates the long term trends of the downtown market. Downtown s room bookings result from three markets: individual business travelers (45%), group bookings (40%) and leisure travel (12%). Because of the strong reliance on the business traveler, downtown hotel performance is somewhat sensitive to changes in business conditions. The decline of the merchant energy business in 2002 is clearly reflected below. Downtown Hotel Trends Source: PKF Consulting and Central Houston, Inc. $250 80% $200 $150 $100 $ % Occupancy 67.2% 67.3% 68.0% 67.9% $ $ $ $ ADR $ $ $97.33 $ Rev PAR $89.90 $87 $80.57 $65 $67 $54 $60 Total Rev 60.1% $ $92.54 $ % 53.8% 48.7% $153 $ $ $ $129 $114 $86.52 $77.07 $ % 67.6% 63.3% $202 $175 $ % $ $154 $ $ $ $ $98.90 $96.77 $ % 60% 50% 40% 30% 20% $0 Room Count # of Hotels ADR RevPAR Hotel Room Count (hundreds) Total Hotel Revenue (millions) # of Hotels Occupancy 10% 0% 1
2 Since the George R. Brown Convention Center (GRBCC) was conceived in the early 1980s, there has been a strong civic focus on building the necessary hotel infrastructure to support the competitiveness of downtown and Houston as a convention location. This resulted in special legislation to support the development of very large convention center hotels adjacent to the GRBCC that can serve as a headquarters hotel for major conventions, and as well as city policy aimed at increasing the overall number of downtown hotel rooms to maximize the city s attractiveness to conventions. The opening of the Hilton Americas represented a major milestone as Houston now had an excellently designed 1,200-room property adjacent to an expanded convention center. This project utilizes the incentive structure that allows for the rebate of hotel occupancy, sales, mixed beverage and property taxes by the State, County, City, METRO, HCC and HISD for ten years. Development of other hotel properties was assisted by the contracted rebates of City hotel occupancy taxes in return for a commitment of rooms for convention guests. These include the Marriott Courtyard & Residence Inn, the Magnolia, the Alden, the Icon, Club Quarters, Inn at the Ballpark and Embassy Suites, which is scheduled to open in The Crown Plaza was assisted by a unique tax exemption for economic development. Even with recent additions of rooms, downtown s hotel room count is comparatively low, especially within walking distance of the GRBCC. City Council approved in 2009 a policy of rebating 100% (walking distance of GRBCC)/ 50% (rest of downtown) of City hotel occupancy taxes for 3-diamond full service hotels of 350 rooms or more that started before October Properties must contract a room block for conventions 24 months in advance at rates defined by formula. At the same time, the City is working toward the development of a second large (1,000+/-) room convention hotel. Embassy Suites Although the condition of current capital markets has slowed several projects in development, American Liberty Hospitality broke ground in May 2009 on a 262-room, 19-story Embassy Suites Hotel. The property is adjacent to the GRBCC, the Hilton Americas Houston and Discovery Green, downtown s 12-acre urban park. It is the first privately developed, fullservice hotel built from the ground up in downtown for the past 25 years. The new hotel will open in March 2011, in time for the NCAA Final Four basketball tournament, which will be held in Houston. The property will have 6,000 square-feet of meeting space, rooftop swimming pool, spa and fitness center, restaurant and street-level café and wine bar. 2
3 A number of issues make downtown favorable for more hotel development and operation: After a couple of decades of downtown s image as a place with nothing for a visitor to do, now guests can experience full urban experience with restaurants, clubs, arts, sports and entertainment attractions. Room rates in Houston are very competitive compared to other cities favoring steering meetings here. Houston has excellent non-stop air connections to most major US cities and many international destinations, and a locally headquartered airline that is a partner in attracting visitors and convention guests. With the 2003 expansion of the George R. Brown Convention Center, downtown has a state-of-the-art nationally competitive convention and trade show facility. Added to this is a second state-of-the-art facility in Reliant Center. The community has an aggressive team headed by the Greater Houston Convention & Visitors Bureau that is successfully booking business including major events such as the Super Bowl, MLB All Star and NBA All Star Games and NCAA Final Four tournaments. The current light rail connections open up downtown as the place to stay for other areas: the Museum District, Texas Medical Center and Reliant Park. Overall, downtown provides an ideal location for visitors as it is conveniently situated in the heart of the central city in the midst of Houston s business, nightlife and theater attractions. 3
4 Existing Hotels Downtown s hotels include the following: Alden-Houston 1117 Prairie Street This unique downtown hotel reopened in 2002, 78 years after its original opening in The 97- room, boutique hotel is located in an ideal downtown location and is designed with modern amenities and state-of-the-art technology along with an award winning restaurant, *17. Best Western Downtown Inn & Suites 915 W. Dallas The Best Western, which opened in 2001 on the west side of downtown, has 75 suites. The facility includes a business center and the boardroom provides the perfect professional environment. Courtyard by Marriott 916 Dallas Housed within the Historic Humble Oil Building, the Courtyard by Marriott Houston - Downtown offers spacious guest rooms and suites with either one king bed and a sofa sleeper or two double beds. All guest rooms feature a large work desk, two phones with data ports and in-room coffee and tea. The Courtyard surrounds travelers with the conveniences that make business and pleasure travel easy. Club Quarters Hotel 720 Fannin Club Quarters hotels are private, full service hotels restricted to corporate members. This full-service facility is designed for the business traveler, subsidized for family and friends' use on weekends and holiday periods. The downtown Houston location features corporate apartments and standard hotel rooms in 4
5 a beautifully restored landmark building located in the center of downtown and features Table 7 Bistro s New Age American Urban cuisine. Crowne Plaza Cullen Center 1700 Smith Street Located in the midst of downtown s bustling Cullen Center this 259-room, former Whitehall Hotel re-opened in 2001 after an extensive $25 million renovation. The hotel features 12,000 squarefeet of function space, 24-hour fitness center, 24-hour business center and outdoor swimming pool. Doubletree Hotel Allen Center 400 Dallas Street Located in the west end of downtown at the edge of Sam Houston Park, the Doubletree is a medium-size luxury business hotel with 350 guest rooms and suites. The 20-story structure features 17,000 square feet of meeting space in 15 rooms, including the 5,580 square-foot LaSalle Ballroom. Four Seasons Hotel 1300 Lamar Street The Four Seasons Hotel is located across the street from Houston Center s retail complex, the Shops at Houston Center. This luxury hotel is located three blocks from the George R. Brown Convention Center and recently completed a $12 million extensive upgrade including a saltwater resort pool. The hotel includes 399 guest rooms and 18,000 square feet of meeting facilities, including a 4,800 square-foot ballroom. Hilton Americas-Houston 1600 Lamar This 1200-room hotel is Houston's largest convention hotel and is connected to the George R. Brown Convention Center. Over 91,000 square feet of flexible meeting space including a 40,000-square-foot ballroom, 26,000-square-foot ballroom and 30 versatile 5
6 meeting rooms, a comprehensive business center, three restaurants, a lobby lounge, Java Coast Coffee Bar, and a fitness center and spa. All function space is equipped with ''Smart Walls'' with sound, light, and air, strategically placed floor pockets containing Ethernet connection, dedicated ''Show Power,'' rigging points every 30 feet, and more. Hyatt Regency Houston 1200 Louisiana Street Set in the heart of the business and entertainment districts, Hyatt Regency is one of Houston s largest hotels, with 947 guest rooms, 21 suites, 30-story atrium lobby, and Spindletop, Houston s only revolving rooftop restaurant. The hotel, which recently underwent a $40 million renovation, offers 66,000 square feet of function space in 30 meeting rooms, including the 30,000-square-foot Exhibit Hall, fully-equipped fitness room, and rooftop pool. Holiday Inn Express 1810 Bell Avenue The Holiday Inn Express is conveniently located two blocks from the George R. Brown Convention Center and the site of downtown s Toyota Center. The 57,000-square-foot hotel has 114 rooms. The $8 million hotel opened in May 2001 in the southeast sector of downtown Houston, one block from U.S. Highway 59. Hotel Icon 220 Main Street Hotel Icon is an experience in opulence. With its historic façade and classic-contemporary custom designed European dècor, furnishings and original artwork, this newly restored 1911 bank building provides individually tailored services and accommodations for both the corporate and leisure traveler. The 135-room Hotel ICON offers travelers an intriguing option worthy of destination status. 6
7 Inn at the Ballpark 1520 Texas Avenue Inn at the Ballpark is across the street from Minute Maid Park and just steps from the business district and George R. Brown Convention Center. Designed around an American nostalgia theme, this 12-story hotel has 208 guest rooms, a four-story atrium lobby bar and corporate and special event facilities. The Lancaster 701 Texas Avenue The Lancaster is a small, luxury hotel specializing in old world charm and excellence. Located in the Theater District, the 12-story hotel includes 84 rooms and nine suites. Meeting facilities are ideal for small business gatherings with rooms ranging from 300 to 570 square feet. Magnolia Hotel 1100 Texas Avenue The Magnolia Hotel, built in the historic Post-Dispatch Building, has meeting and conference dining space and an Executive Conference Center. The hotel s rooms feature large desks, ergonomic chairs, extra-large bathtubs, granite vanities, coffee makers and mini bars, roof top fitness center and pool. Marriott Residence Inn 904 Dallas Street Housed within the Historic Humble Oil Building, the Residence Inn by Marriott Houston - Downtown offers spacious studio, one and two-bedroom suites all with the convenience of a fully equipped kitchen, separate living area with sleeper sofa and daily housekeeping service. 7
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