Southlake’s second hotel, Cambria Hotel & Suites, is nearly ready to open, making it the first of multiple large-scale hospitality projects expected to debut in 2016 and beyond.
The first guests at Cambria, which is located at the corner of Kimball Avenue and SH 114, will arrive in October, making it the first of four hotels along SH 114 that are opening, about to begin construction or in the planning stages. In December construction is expected to start on the Westin Hotel with ground breakings on Hotel Indigo and Marriott Delta to follow if the hotels are approved by City Council.
With the opening of these hotels, Southlake will more than quadruple the amount of hotel rooms currently available. For almost a decade the city has only had one hotel, Hilton Dallas/Southlake Town Square.
Southlake Mayor Laura Hill said she believes growth at Dallas-Fort Worth International Airport combined with more corporate businesses in the area is driving more hotels to the area.
“I think the growth of the airport has been huge,” she said. “Former [Southlake] Mayor [John Terrell, who is the vice president of commercial development for DFW Airport], said we will have about 64 million passengers that come into the area—not just connect through DFW [Airport], but actually come in [to the city].”
Recently several corporations announced that they are coming to Southlake or to neighboring cities such as TD Ameritrade, Fidelity, Charles Schwab, and Facebook.
“The Facebook deal in Alliance was huge for us,” Hill said. “Those kinds of companies bring in so many travelers, making this area more of a destination and gives travelers more of a reason to come here.”
With about 75 percent of city sales tax revenue generated from visitors, Southlake Assistant City Manager Alison Ortowski said the hotels will help drive more visitors to the city and save residents money in the form of property taxes.
“The tourism industry is very important to ensuring a sustainable and healthy Southlake economy,” she said. “It creates and sustains jobs, supports existing businesses and brings new businesses to the city, all of which generates a substantial amount of sales tax and hotel occupancy tax revenue. Ultimately, this strong business environment benefits our residents, saving them an estimated $1,292 per household in property taxes [annually], on average.”
The need for more hotels
With the city growing from having one hotel to several, some analysts are wondering if there will be enough demand.[totalpoll id="185068"]
Bobby Bowers, senior vice president of operations for STR, a hospitality industry data and analytics firm, said demand for hotel rooms in the area has steadily increased.
“When you look at the data for the area, the numbers are pretty strong,” he said. “The [hotel] occupancy rate is 70 percent or more for the last three years or close to it. There hasn’t really been a lot of new room supply added for the last year and a half or so. I can definitely see why [hotel developers] are taking a look at Southlake and wanting to add new hotel supply because there is a sufficient demand to be able support it.”
Bowers said although new supply has come online in the past few years in the area, it is not enough to meet the demand.
“The demand growth has been higher than the supply growth pretty much throughout the entire time [the Hilton has been open], and when that happens that means occupancy rates are growing,” he said. “When that happens that’s when the development people take a look at the area and say, ‘Well, if occupancies are up, the demand is up, so maybe there is room for additional hotels.’”
Although the data show the hotels will fair well, Bowers said the true test is when the hotels open.
“Is the demand really there, or is it not there?” he said. “That’s something you aren’t going to be able to answer 100 percent until these hotels actually open. But just looking at the data it would certainly suggest they have a pretty good chance at being successful.”
Harrell Hospitality Group CEO Paul Barham, who oversees the Westin development, said the hotels will serve different kinds of customers and therefore there should be enough demand to go around.
“Most of the hotels being proposed along SH 114 are select-service, and as such are not targeting a Westin customer,” he said. “So while the number of hotels potentially coming to the market is of some concern, we don’t consider them to be competitive with the Westin.”
Hill said the hotels will have different price points and amenities, therefore attracting different customers.
“I think it’s great because we will be able to accommodate the family traveler, the business traveler and the resort/weekend traveler,” she said. “It makes us a greater destination choice so no matter why you are coming to the area, you can find what you need—not only in activities and where you choose to eat but where you choose to stay.”
Hill said the new hotels will most likely be the last ones to come to the city.
“We don’t have a lot of space left on SH 114,” she said. “I would be shocked if any other hotel came looking our direction. We haven’t had anybody else express interest.”