Hotels break ground in Cy-Fair despite cool market projectionsHotel occupancy rates in the northwest Houston submarket are projected to fall in 2016, down to 60 percent from a high point of 70.5 percent in 2014, according to a study from PFK Consulting, an agency that releases annual reports on hotel occupancy.


Even with occupancy rates dropping, a number of hotel projects are expected to begin construction in the Cy-Fair area, including a new Homewood Suites by Hilton along northwest Beltway 8, east of Fallbrook Drive.


The Homewood Suites is being managed by Houston-based New Horizons Hospitality.


“We’re finalizing prices with contractors and expect to break ground on Jan. 1,” New Horizons Vice President Aly Valiani said.


The hotel is expected to open    Jan. 1, 2017, he said. This will be New Horizon’s second Homewood Suites in the Cy-Fair area, with another at 13110 Wortham Center Drive.


Farther out in Cypress, construction will start next spring on a new 96-room Holiday Inn Express & Suites at the intersection of Fairfield Place and Field Green Drive, said Shelby Lits, a spokeswoman for the company.


The hotel contract was signed in fall 2014, and the hotel is slated to open in spring 2017, she said.


A Fairfield Inn & Suites by Marriott is coming soon on North Gessner Road near Beltway 8. Construction is underway. No additional information has been released on the project.


Cypress Crossing, the 15.5-acre mixed-use development being built by Caldwell Companies, will most likely feature a limited service hotel, ranging in size from 100-150 rooms, officials said.


Cypress Crossing is at the northeast corner of Hwy. 290 and FM 1960. Caldwell officials say they are communicating with several national hotel brands.


Hotel room supply continues to rise in the Northwest Houston submarket as new projects opened throughout 2015, according to the PFK study.


Average daily rates per room are expected to drop to $92 in 2016 from $95.50 in 2015, the report found. However, revenue per available room is expected to drop to $55.20 in 2016, down from $61.12 in 2015 and $66.08 in 2014.


The downturn in the market is likely because of drops in oil prices, said Randy McCaslin, managing director of PKF Consulting in Houston.


“The oil companies are laying off people, canceling meetings and traveling less because oil is down,” he said.


McCaslin said the downturn is likely short-term, and he expects the hotel market to strengthen in 2018-19. He said the hotel projects currently under construction are still needed.


“The hotels being built in the market are still needed because of the population increase, but the demand is dropping because of the drop in oil prices,” he said.