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SAN ANTONIO-Gaylord Entertainment Co., owner of Opryland, the home of the Grand Ole Opry, has entered into a definitive agreement to purchase the 508-room Westin La Cantera Resort in San Antonio for $252.5 million. The Nashville-based company also will buy an adjacent 90 acres of undeveloped land to accommodate a $250-million expansion that will take the property to more than 1,000 rooms.

Harry Curtis, a hotels and lodging analyst with JPMorgan in New York City, says Gaylord’s decision to acquire and expand La Cantera could help San Antonio book larger conventions that previously had overlooked the city due to a shortage of convention-grade hotel rooms. “Our sense is that group demand is strong for San Antonio,” he tells GlobeSt.com. “San Antonio has one of the highest growth rates of new room supply over the next three years, with nearly 7% growth per year through 2009. However, with the exception of a new 1,000-room Grand Hyatt and 1,000-room JW Marriott being built, most of the new supply is in the midscale and economy segments.”

Gaylord CEO Colin V. Reed says the purchase marks an important step in the company’s strategy to increase distribution to stockholders through acquisitions rather than relying strictly on new development. He says all other Gaylord properties were ground-up developments. Its most recent development was the 2,000-room Gaylord National Resort & Convention Center in National Harbor, MD, which opened in April and being touted as the largest resort hotel on the East Coast.

The company also is aggressively expanding existing facilities. In September, the city of Grapevine approved economic incentives enabling Gaylord to add more than 200,000 sf of meeting space, some 500 guest rooms, a resort pool and other recreational amenities to the Gaylord Texan Resort & Convention Center in Grapevine. In August, Gaylord committed to add more than 400,000 sf of convention and meeting space and a new 400-room all-suites hotel to Opryland Resort & Convention Center in Nashville.

La Cantera, which opened in 1999, is a destination resort hotel with 107,000 sf of interior and exterior meeting space and six restaurants and lounges. Located on a 691-acre hilltop site overlooking Downtown San Antonio and the Texas Hill Country, the asset includes two 18-hole championship golf courses, six quarry pools, two tennis courts and a fitness center. The planned expansion, tentatively set for completion in 2011, will add about 1,000 rooms and 160,000 sf of meeting space.

The seller is a joint venture of entities affiliated with locally based USAA/La Cantera Development Co. and Starwood Hotels & Resorts Worldwide Inc., of White Plains. The two companies developed the property, a former limestone quarry, with Dallas-based Woodbine Development Corp. for $115 million. Woodbine sold its interest in 2005. Cantera means quarry in Spanish.

The deal is expected to close in the first quarter, pending satisfactory completion of due diligence and other customary closing conditions. According to a Gaylord press release, the acquisition will be financed with its existing line of credit.

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