Texas Hotel Industry's Q1 2002: Nowhere to Go But Up

The Texas hotel market did improve from fourth quarter 2001, but that doesn't mean this year will be a good one. Crown predicts overall 2002 performance will, in fact, fall short of 2001's close. If it sounds improbable, consider that the market didn't crater until the third quarter. It's highly unlikely, he says, that this year's first two quarters will beat the numbers logged for the same time periods in 2001 although the third and fourth quarters will easily surpass their comparative months for last year. The end result when all's said and done will be a 2002 overall performance that's worse than 2001.

Crown tells GlobeSt.com that his prediction isn't mortared in pessimism. "I'm being realistic," he says. "The drop has stopped and the market's moving up." How much it will move is the issue confronting hoteliers, from the REITs to the small guys.

Occupancy is making a comeback all across the state, according to Crown. While that sounds good, the stickling point is that rates have failed to rebound from last year's drastic reductions. He predicts down rates and lower RevPAR will choke the growth factor for the year despite the optimism that is sure to prevail in the up and coming first quarter conference calls.

Dallas and Austin are, Crown says, "the toughest markets in the state." This year won't bring any changes in that regard. Dallas RevPAR for March was down 15% from 2001's March and Austin probably still will be off 20%, he says. When the counting is done, San Antonio could edge up a couple percentage points. Houston most likely will stay an even course, which closed the year with RevPAR down just 3% from sizzling 2000 numbers.

Guarded optimism is the buzz phrase for the market. "It's getting better, but it's still got a long way to go," Crown says. "I'm not sure people understand just how deep these cuts have been." The hardest hit in the industry are the large full-service lines, with limited service venues experiencing the least impact from a brutal 2001.