Hotel Market Statewide Shows Strong Gains

"If you look at the Houston economy, it's hitting on all cylinders," John Keeling, senior vice president with PKF Consulting Inc.'s Houston office, tells GlobeSt.com. "The economy is up dramatically in all sectors--housing, oil and gas, job creation. And, we're seeing a general economic resurgent which correlates to hotel room demand."

According to PKF's area-wide and statewide statistics through March 2006, occupancy in Texas hotels was 76.1% versus 70.2% for the same period last year. The Houston-area saw a spike of 8.2%: 76.1% occupancy at the quarter's end to last year's 67.9%.

Equally healthy gains were made in the average daily room rates. The statewide average was $99.04 at the Q1 close in comparison to $88.13 for last year's first quarter. The Greater Houston region's ADR increased to $97.14 from $85.29 in the quarter-to-quarter analysis.

Statewide, revenue per room rose 19% in PKF's latest analysis: $69.18 this year to last year's $58.07. The Houston metro's last reading was $70.32 or a 23.6% jump from Q1 2005's $56.91.

A just-released report by Guram Enterprises' Hospitality Division in Irving has come up with the same level of readings as PKF. In Harris County, room revenues increased 21% from $66 million in Q1 2005 to $80 million for the same timeframe in 2006. Guram says hotels statewide ended the quarter with $446 million in revenue, reflecting a 17% increase from the $380 million recorded in the previous year.

While Keeling notes the mega-storms last fall weren't the main reason for the strong figures, he acknowledges they helped jumpstart the trend as evacuees set up temporary residences. "The hurricanes absolutely pumped up the city's performance for the last four months of the year," he says. However by late 2005, he says most people in hotels either returned to New Orleans or found more permanent housing. "The first quarter of 2006 has been very strong," he adds, "but it's not due to the hurricane."

The hurricanes have had an interesting impact on perception among corporate travelers. Keeling says of the meeting planners, surveyed last fall by PKF, that 20% had demonstrated a clear reluctance to schedule meetings in any Gulf Coast city during September, which is traditionally a strong month for meeting planners and conventions. "Granted, 80% of those surveyed didn't indicate it," he adds, "but it's a stress point that we need to be aware of."

Keeling firmly expects hotels and motels statewide will see more growth as this year plays out--and possibly beyond. "It'll be a very good year this year, all the way around," he says.