Developers add to Coppell, Irving hotel inventory

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Developers have long considered Irving a prime market for new hotel projects based on the city’s proximity to airports and its laundry list of major regional employers.

“That’s why the market is so appealing,” said Maura Gast, Irving Convention and Visitors Bureau executive director. “It’s the location between both airports. It’s also ... the corporate presence that’s here or near this radius.”

Despite now housing more than 80 hotels within the city limits, the fervor among developers to construct new projects has not died down.

Eight new projects are either under construction or expected to open soon in Irving. They will add more than 1,500 rooms to the city’s existing hotel room inventory.

Market indicators such as occupancy rates and revenue per available room show the city can stand to add even more hotels, industry experts say. But there is dissension among some city officials about whether there is a need for any more.

“We are beginning to get too many hotels into our city,” Irving City Council Member Kyle Taylor said at an Oct. 3 meeting on plans for one of the new hotel projects. “We have had conversations with our folks that run the conventions and visitors bureau, and they have told us this. ... So I will be voting ‘no.’” City Council ultimately approved plans for the new project with a 6-2 vote at that meeting.

Coppell enters market

Irving is not the only city to see more hotel business—neighboring Coppell is working to tap into the market. With two hotels recently unveiled, the city anticipates opening more in the coming years. Most are located along SH 121 near the Dallas/Fort Worth International Airport.

“[Developers] wouldn’t be coming if they didn’t see the opportunity for business there,” Coppell Chamber of Commerce President Ellie Braxton-Leveen said.

Similar to Irving, Coppell Community Development Director Mindi Hurley said the city’s proximity to the airport has helped to attract more developers.

“Everything around the airport is a ripe market for hotels,” Hurley said. “We did incentivize the first few hotels.

“Since that point, we’ve been able to back off. ... I think it has a lot to do with available land, an untapped market.”

Corporate travel hub

Though Irving’s large international companies, such as ExxonMobil and Kimberly-Clark Corp., contribute to the city’s traveler base, some of the smaller companies also draw visitors to Irving hotels, Gast said.

“We don’t have Hilti’s headquarters here in Irving ... but we have their training facility,” she said. “Our hotels do a lot of volume with that training facility.”And area hotels’ reliance on weekday travelers shows in the numbers. Irving’s highest occupancy rates in 2018 were Wednesdays in July at 88.6%. The Irving CVB is working to attract more weekend travelers by providing various entertainment attractions, Gast said.

“The bread and butter for our hotels in Irving is business travel,” Gast said. “Now what we’re able to do on the weekends, not just with the [Toyota] Music Factory, [but] the type of business the convention center is able to generate ... these are groups that weren’t in Irving before.”

Irving hotels’ performance should remain steady so long as corporations remain in the city and travelers continue passing through the Dallas/Fort Worth and Love Field airports, said Scott Joslove, president and CEO of the Texas Hotel and Lodging Association. “Every market is different in terms of their elasticity,” Joslove said. “Irving is more of a corporate market. ... While business is strong and ... the airport traffic is strong, I think you’re going to see a strong Irving hotel market.”

Reasons for building

Irving banker and hotel developer Sushil Patel said he sees the convention center and music factory being demand generators for some of his future hotels.

Patel and his family are constructing two hotels near the intersection of SH 114 and O’Connor Road in Las Colinas: one Marriott and one Hilton.

“In real estate, location is always key,” he said. “However, in hotel business, in addition to location, it’s what franchise affiliation are you going with. ... As a result of consolidation ... each consumer usually prefers a certain brand family over the other.”

But sometimes the consumer does not have a say in which hotel they stay in, Gast said.

“Corporate may have negotiated rates every year to do a certain volume of business with a certain brand or chain of brands,” she said. “That is not uncommon for large corporations. So not every traveler has discretion on where they’re staying.”

Though similar in size and amenities, there are four hotels projects underway in Irving’s northwest corner alone. They all come from different brand families: Hilton, Marriott, InterContinental Hotels Group and Radisson Hospitality.

Patel said he primarily bases his decisions to construct new hotels on current market performance.

“The only thing that we do have as of now is statistical reporting that shows that the Irving hotel market is robust,” Patel said. “There have not been so many new hotel properties built except for the Westin and the Texican.”

Irving reported an average occupancy rate of 73% in July. Joslove said those numbers look good to developers.“If you have a market that’s 70% or higher occupancy, you’re going to see more building,” he said. “If the market is strong, [then] there’s arguably still opportunities for development.”

Hotel abundance

While Irving hotels are reporting strong occupancy rates, Gast said she worries the hotel supply could reach a tipping point and outpace demand.

“And we’re going to always be concerned about that,” she said. “We can do that because we are not hotel developers, and we don’t own land.”

Of the 86 hotels reported in Irving’s July STR report, they accounted for 12,727 rooms. The additional eight hotels would increase that room number to about 14,200.

“I don’t doubt that [developers] are going to build a quality product,” Gast said. “My worry isn’t today. My worry is 10 years down the road. My worry is when the market gets soft.”

And because the Irving CVB is funded exclusively by the city’s 9% hotel tax, market downturns can mean tough times.

Patel pointed to council’s recent flexibility on granting exceptions on some hotel building standards, such as required number of rooms and the types of amenities offered, as a reason for why there may be more projects.

“Because of the variances that [are] being granted ... all of a sudden it opens up the floodgate,” Patel said.

A saturated hotel market would translate to lower occupancy rates and less construction, Joslove said.

“People are not going to build hotels as prolifically when you’re at 60% occupancy as they do when you’re 72% occupancy,” Joslove said.

Still, Gast said she recognizes that some small land parcels can have little use other than a hotel.

“If you’re the landowner, you didn’t buy the land to sit on it,” Gast said. “So what can you develop on it based on where you are? And sometimes the answer is going to be a 100-room hotel.”

By Gavin Pugh

After reporting for Community Impact Newspaper's Plano paper for over two years, Gavin launched the Coppell, Valley Ranch and Las Colinas edition in October 2019. As editor, Gavin's beat includes transportation, municipal government, education and Dallas Area Rapid Transit.


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