Significant increases in hotel occupancy tax revenue and planned construction of several new hotels in The Woodlands and Shenandoah are signaling a boom in the local hotel industry.
The increased demand for hotel stays in the community also highlights a lack of inventory of available hotel rooms.
“For hotels during the middle of the week, you could probably ask a lot of businesses or corporations around here if they need more hotels and they’d say, ‘Yes,'” said Nick Wolda, president of The Woodlands Conventions and Visitor’s Bureau. “Hotels are usually sold out Monday nights, Tuesday nights and even on some Wednesday nights.”
The Woodlands’ hotel occupancy tax revenue rose 13.5 percent from January through April compared to the same four months of 2012, while Shenandoah’s hotel occupancy tax revenue increased 18.7 percent for the fiscal year-to-date through June compared with 2012.
The two communities have eight possible hotel projects on the horizon, which are expected to add hundreds of hotel rooms to the area over the next several years. Meanwhile, Oak Ridge North has begun discussions regarding construction of the city’s first hotel.
The Woodlands has 11 hotels within its limits with about 1,500 available rooms. The planned $60 million renovation to The Woodlands Resort and Convention Center will add 184 rooms to the hotel, while construction of the Hyatt Place Hotel at Research Forest Drive and Grogan’s Mill Road should bring 150 guest rooms and 6,000 square feet of meeting space to The Woodlands, he said. Both should be completed in spring 2014.
“[Those new hotel rooms] will be a welcome addition, certainly to the inventory that’s here, because there is a pressure point on the inventory here,” Wolda said. “It’s sometimes very tough to find guest rooms here, particularly during the week and during big events.”
Officials from The Woodlands Development Company said future hotels are also planned at Hughes Landing and at Waterway Square. A luxury hotel at Waterway Square could house 300-plus rooms and open in early 2015, while the Hughes Landing hotel will target business and leisure travel, house about 175 rooms and open in mid-2015.
Wolda said he believes large corporations are significant drivers to the demand in the hotel industry, citing businesses that host their customers and vendors. He also credited the demand to The Woodlands’ experience in hosting conventions of 400-600 people, with even non-host hotels receiving stays from conventions.
Leisure activities also drive hotel stays, Wolda said, citing the success of events, such as Memorial Hermann IronMan Texas, The Woodlands Waterway Arts Festival and concerts at the Cynthia Woods Mitchell Pavilion. Wolda said The Woodlands’ 8 million square feet of shopping, dining, hospitality and entertainment encourage tourism as well.
“It’s kind of a perfect world [for] the hotels, because it’s not just dependent on one thing,” Wolda said. “Disney is just dependent on Disney—the hotels there. How the attraction goes, that’s how the hotels go. But for us, there’s a multitude of reasons.”
The Woodlands is not alone in its hotel industry growth or need for new inventory. Shenandoah, which houses seven hotels with 600 total rooms, is negotiating with five different hotels for land east of I-45 near the intersection of David Memorial Drive and Tamina Drive, City Administrator Greg Smith said. These developments could increase the city’s hotel rooms to 1,000-1,200 over the next three-to-four years, Smith said.
“The demand for hotels is growing in the whole South Montgomery County area,” he said. “Shenandoah’s just very fortunate that we’re right in the middle of it.”
Developers for Hilton’s Home2 Suites have submitted building plans for a possible hotel on vacant land between the Red Robin and the Woodforest Tower along I-45. However, Smith said building plans do no not guarantee the hotel will be constructed.
Other hotels Shenandoah has been in discussions for include a Courtyard Marriott north of the city’s visitor center at David Memorial Drive and Tamina Road; a Holiday Inn at the south side of that intersection; a Staybridge Suites adjacent to the south side of the Holiday Inn and a fifth potential hotel just east of the visitor’s center.
Although Smith credited corporate business and conferences with driving growth in the hotel industry, he recognized Conroe ISD’s sports facilities—Woodforest Bank Stadium and the natatorium—for being one of the largest drivers for the city’s hotels. In recent years, Shenandoah has hosted national and regional swimming, diving, water polo, lacrosse and other sports events at the complexes. Smith also credited regional events, such as IronMan Texas in The Woodlands, for driving its hotel stays.
“We have become more focused on the sports market in Shenandoah, especially with the sports facilities that CISD has,” he said. “We’re going to continue to try to market to sports events and continue the sports marketing [for events] that have occurred in the whole South Montgomery County area.”
Hotel industry growth
Fred Domenick, general manager of The Woodlands Waterway Marriott Hotel and Convention Center and CVB board director, said the revenue per available room at the Marriott is up about 9-10 percent from last year, a trend he believes is similar across South Montgomery County properties. Domenick said the local industry’s growth has been consistent since a “minor blip” from the nation’s economic recession.
“The demand is very strong in the market, both in the group and the transient side,” Domenick said.
The Marriott’s occupancy should be about 73 percent by the end of 2013, he said. Tuesday and Wednesday occupancy—the strongest nights of the week—should resemble 2012 figures, which were about 86 percent occupied on average last year. Although he credited leisure and activities for weekend stays, Domenick believes the oil and gas industry is the biggest driver of mid-week occupancy growth.
Domenick said ExxonMobil already creates tens of thousands of hotel night stays in Houston, and the company’s relocation to a 385-acre campus just south of The Woodlands could drive much of those stays to the area. He said the Houston hotel market—including The Woodlands—is among the strongest in the country, although he said the current hotel supply does not meet the demand.
“[The Woodlands is] way under-supplied,” Domenick said. “We’ll be supplied properly in three to four years probably when those projects get finished, but they’re late to the game.”
Oak Ridge North
Although the city does not have any hotels, Oak Ridge North has been in discussions with several hotel companies for land on the southwest corner of Robinson Road and the I-45 feeder road. City Manager Vicky Rudy said the tract is the only one within city limits that could be used for a hotel.
“It would be a wonderful addition to the city,” she said. “It creates a community vibe that if you get the right kind of hotel in, it creates sales tax revenue and property tax. It would transform a corner that is unproductive at this point. And it would change an entrance to Oak Ridge North.”
Although she could not confirm which hotels the city has spoken with, she said she hopes a hotel will occupy the tract of land within two to three years.
“We want an upper-end hotel befitting this community, and one that would attract business and overnight guests and restaurants,” Rudy said.