Business travel is the No. 1 reason hotel guests visit Frisco, according to the Frisco Convention and Visitors Bureau. As more corporate businesses move to the area and retail developments expand in Frisco, the demand for more hotels will continue to rise, CVB Executive Director Marla Roe said.
“Corporate travelers are looking for a good deal, a good experience and new product,” Roe said. “Our demand is up right now, but a year from now it’s going to be out the roof. That is why we need more hotels so we can fill in the pipeline with people who are traveling more.”
Frisco is home to 14 established hotels, three hotels under construction and nine hotels that have been announced and are expected to break ground this year. More hotels are projected in the coming years, Roe said.
Hotel supply and demand are increasing rapidly throughout Frisco, according to Smith Travel Research, a data and analytics firm that specializes in the hospitality industry.
In 2014, the hotel supply in Frisco did not change. In 2015, the hotel supply increased by 7.3 percent, and it increased by another 7.4 percent in 2016. That rate is far above the national average of 1 percent, said Jan Freitag, senior vice president of lodging insights at STR.
Freitag said though the supply growth is outpacing the demand growth, the room demand has continued to grow rapidly since 2013. That year, Frisco’s room demand increased by 15 percent. Since then, it has increased by 4.2 percent in 2014, 4.5 percent in 2015 and 6 percent in 2016.
Oversupply not a concern
Roe said the market and economy would determine how many hotels end up being built.
“Hotel developers are really good at determining whether an area is good for them to
build by conducting their own hotel feasibility studies,” she said.
Freitag said he is not surprised that more hotels are planned because Frisco’s demand growth has been healthy.
“Hotel rooms follow demand, and demand is generated because you have an increase of oil, health care or tech jobs,” he said.
Because the hotel supply growth is outpacing demand growth in Frisco, hotel occupancy rates were down in 2016, but Freitag said rates were still at a high level.
“Occupancy was down by 71.4 percent, so that means hotels were selling seven out of 10 rooms every night,”
Craig Sundell, Westin Stonebriar Hotel & Golf Club general manager, said he is not worried about Frisco’s occupancy rates. He said he believes occupancy will continue to increase as more developments begin to open, such as The Star in Frisco, Wade Park, The Gate, Legacy West in Plano and Grandscape in The Colony.
“We have some new and exciting things in the works that will bring in more people into the area,” he said.
Roe said hotel use is very strong during weekends in Frisco because of the leisure travelers that come in driven by retail business.
“We have 9 million square feet of retail space, and if you think
about the city of our size, you wouldn’t normally be able to sustain that,” she said. “But because we have [Stonebriar Centre] and IKEA, we’ve become a retail destination.”
Roe said on the weekend, visitors come from Oklahoma City and East and West Texas and tend to spend the weekend in Frisco for the retail experience.
Frisco hotels also benefit from sports, which draw the biggest crowds during the summer months. With expansion of medical facilities in Frisco such as Baylor Scott & White Health and Texas Scottish Rite Hospital for Children, Roe said more outside visitors will begin to seek specialists in sports medicine in Frisco.
As new businesses, such as the Dallas Cowboys and Jamba Juice, move their headquarters to Frisco or the edge of Frisco in Plano’s Legacy West, the demand will continue to rise, Roe said.
Jim Gandy, president of the Frisco Economic Development Corp., said having enough hotels is a priority for existing businesses in Frisco and those planning to expand or relocate to the area.
“The weekday corporate business in this market—in Frisco and the immediate area—is tremendous,” Gandy said. “There is an incredible amount of business for our hotels as well as for our restaurants and retailers.”
Limited meeting space
Gandy said the availability of corporate meeting space is limited in Frisco, and the available space stays booked.
“With these new hotels coming in, we are encouraging them to build additional corporate meeting space,” Gandy said.
The 16-story Omni Frisco Hotel, which is set to open this summer, will have 24,000 square feet of meeting and event space, including a 13,000-square-foot ballroom.
The recently announced Hyatt Regency Hotel at Stonebriar, set to open in 2019, will also include a city-owned conference center.
The Embassy Suites Frisco Hotel and Convention Center, which opened in 2005, is 50 percent a group hotel, meaning about half of the occupants of the hotel are from big companies or statewide associations or organizations, Embassy Suites General Manager Rich Lundt said.
Lundt said most of the new hotels coming to Frisco and Plano will be geared toward the midsize groups, whereas the Embassy will still be marketed toward larger groups. The hotel has 90,000 square feet of meeting space.
“We’re always going to have our niche group market and although there will be a lot of new supply, we still have the amount of meeting space that is a differentiator for us to attract those large groups that a lot of hotels cannot,” Lundt said.
After watching Frisco’s hotel market for the past 16 years, Sundell said more hotels could benefit the city.
“It’s been interesting to watch the growth all these years, but I think right now the market is definitely in need of more hotels,” Sundell said.
He said the hotels in Frisco are providing a high-end product.
“I still think business travelers or just travelers in general are going to select the hotels that continue to provide the quality and service they are accustomed to,” Sundell said.