One-hotel cities use funds for big events, quality of life projects
In late February, Westlake council members approved an economic development grant agreement with the town's lone hotel, solidifying a formal partnership with the Dallas/Fort Worth Marriott Solana to the tune of $110,000. It was a move that will help the hotel attract both tourists and business professionals in the coming year, and compete with neighboring establishments.
"They are an important part of our community, particularly since such a large part of Westlake involves corporate office locations," Town Manager Tom Brymer said. "Having a great full-service hotel here is important."
Just miles down Hwy. 114, Southlake leaders agree. While it has no formal arrangement with its only hotel, the Hilton Dallas/Southlake Town Square, the city has partnered with it since its opening in 2007, said Greg Last, the city's economic development and tourism director.
"They are our primary hotel, so anything and everything we can do to help them book rooms and convention space is not only good for them, but it is good for the city," Last said. "It brings people to shop and dine, it helps the restaurants and retailers."
But the real payoff is for the cities and its citizens, who benefit from hundreds of thousands in hotel occupancy tax revenue annually.
Hotel occupancy tax
Southlake and Westlake collect taxes levied on the hotel rooms within their city limits, and both will reap the benefits of 2011. The two hotels finished strong last year, with the Hilton Southlake setting new records while seeing profit grow by 11 percent, and the Marriott Solana seeing an increase of 21 percent.
Southlake receives a 7 percent tax on rooms at the Hilton Southlake. In fiscal year 2011, which ended Sept. 30, Southlake collected about $810,300 from hotel taxes, which have restricted use in promoting the hotel, convention and tourism industry.
In 2011, Southlake used more than $200,000 to support events such as Art in the Square, Green Day, Oktoberfest and Home for the Holidays.
"The reason we do it is because we think those events bring people to the city, so that's why we feel like it is justified to use the hotel tax to help support those events," Last said.
The city also used $5,000 from hotel tax revenues for advertising in the Dallas Convention and Visitors Bureau's Visitors Guide and $20,000 for joint-advertising with the Hilton Southlake at Cowboys Stadium last year. The city spent about $2,500 to help decorate the Hilton Southlake with Christmas lights in 2011, as well as pay for a portion of the hotel's membership costs with the Dallas/Fort Worth Area Tourism Council.
"The city works real close with us in allocating the funds to the right trade shows and the right associations to get our names out there," Hilton Southlake General Manager Mike Hutchison said.
Southlake also spent $1,700 for heritage and historical programs, and transferred about $110,600 into the public art fund.
More spending freedom
Because of its small population, state law allows Westlake to spend its hotel tax revenues to cover municipal operation costs.
Westlake receives a 7 percent tax on rooms at the Marriott Solana. The town collected roughly $527,200 in hotel tax revenues during fiscal year 2011 and used about $197,000 of these funds on payroll, office rent, utilities and a residential survey.
"Westlake has a little broader statutory authority under state law, so we can use it for just about anything," Brymer said. "But we use a lot of it for community events."
In addition to city needs, Westlake has spent hotel tax revenue on its MasterWorks outdoor concert series, Arbor Day and Decoration Day.
Location, location, location
The Hilton Southlake is located in the heart of Southlake Town Square, which boasts approximately 120 retail stores and restaurants.
"We are right in the middle of Town Square, so people come and they are able to walk to the movie theater, walk to the restaurants, walk to shopping ... probably our greatest contributor to our success is being in Town Square," Hutchison said.
The hotel sits next to Hwy. 114 and away from major construction projects in the area.
"I think the construction has actually helped us," Hutchison said. "I'm sure it has influenced someone's decision in staying."
Westlake's Marriott Solana also sits along Hwy. 114, about 14 miles from the Dallas/Fort Worth International Airport — making it easily accessible to tourists with the town's help.
The economic development grant agreement approved by the Westlake Town Council in February is a 12-month agreement with the Marriott Solana to pay for a portion of its operating cost for complimentary shuttle service between the hotel and the DFW Airport, and a group business incentive program.
"It just allows us to be more competitive with airport hotels, because we are not right on DFW," Marriott Solana General Manager John Klukan said.
This year the town allocated $70,000 to the shuttle and $40,000 for a group business incentive program, which allows the hotel to provide discounted room rates and services as a way to attract new group businesses and keep existing ones.
With help from area businesses and a nearby training center, the hotel increased profit by 21 percent last year, Klukan said.
"We grew our group business and we also grew some of our local business like Sabre [Holdings] and Fidelity [Investments] and Deloitte [University] opened in July," he said. "And Deloitte is right behind us; we are their primary overflow hotel."
Attracting a hotel
Southlake's new luxury, mixed-use community Carillon is under construction now at Hwy. 114 between Southlake Town Square and Westlake. An upscale full-service hotel with about 150 rooms is planned for the Carillon, but the developer's director Jeff Kennemer said they are currently searching for the right hotel developer.
"The hotel market like all of commercial real estate markets was deeply impacted by the recession," he said. "We look forward to the development of a hotel in Carillon when market conditions are right."
The City of Colleyville currently has no hotel, but the city has been working to attract one, said Marty Wieder, the city's economic development director. Little freeway frontage has been a challenge, he said.
The City Council in fall 2009 conducted an analysis of the city's greatest strengths and weaknesses. The city developed an economic development strategic plan that identified five points, one of which included attracting a hotel to the city and collecting hotel occupancy tax revenues.
"We do have an ordinance in place that would allow us to collect hotel occupancy tax when that day comes," he said.
