It marked the beginning of one of the final phases of the project located in the Grand Central Park development off I-45, city officials said.
“This is a landmark day in the history of our city. Hyatt Regency Conroe will be another jewel in the crown of America’s miracle city,” Mayor Jody Czajkoski said at the groundbreaking.
“We’re not only thrilled to see this fantastic project move forward. but are also excited about the economic development opportunities it brings along with it.”
The hotel and convention center’s estimated cost is around $98 million, paid for by three bonds for the hotel and one for the convention center, Conroe Chief Financial Officer Steve Williams said. It will have 250 rooms as well as 41,000 square feet of space for the convention center, divided into two ballrooms with breakout rooms and boardrooms. The hotel will also include a restaurant.
The Hyatt Regency Conroe is expected to open in the second quarter of 2023, according to the city.
"There is a market for hotels and convention space. We wanted to bring in a product that filled that need. ... With that higher level of product, it’s [going to] attract more business and commercial development,” Williams said.
The planning phase
In planning for the hotel, the city contracted with real estate services firm CBRE to conduct feasibility studies for a hotel project in 2015, which continued until September 2020, Williams said. The feasibility studies examined several metrics, such as occupancy, overall revenue and revenue per available room—which calculates how a property can fill its rooms at a given rate.
The hotel project stemmed from the city’s desire to tap into an expanding hotel market as well as the possibility of an alternative to corporate and group travel, which usually stays in The Woodlands, Williams said. According to the feasibility study’s market analysis, Conroe has “a healthy appetite for projects in the area to further fuel the local economy and help bring more business to Conroe.”
Williams said the feasibility studies compared a potential hotel project to several others nearby, such as The Woodlands Waterway Marriott Hotel and Convention Center and the Embassy Suites by Hilton The Woodlands.
In 2018, the Conroe Industrial Development Corp. moved forward with a predevelopment agreement with the Dallas-based firm Garfield Public Private to craft a deal with a hotel brand for the project.
Hyatt Corp. was one of several hotel brands, including Marriott and Hilton, that were interested. The city and Hyatt finalized the project discussions in 2018, although the Hyatt brand was not revealed until a May 26, 2021, City Council workshop.
Williams said reports during the last year showed revenue per available room, occupancy and overall revenue were all increasing despite the COVID-19 pandemic.
“I think the timing worked out well because the projected opening date is mid-2023,” Williams said. “As we progressed through the planning process, those metrics were all increasing—higher than pre-COVID levels.”
Funding the project
City officials claimed the hotel will not affect the city’s property tax rate. The bonds paying for the hotel project will be paid for by the hotel’s net operating income, while the convention center’s taxes and room sales will pay for its bond, Williams said.
According to CBRE’s study, the Hyatt is projected to bring in $4.67 million in net operating income in fiscal year 2022-23, rising to $8.05 million in FY 2031-32.
Williams said the hotel bonds will take about 30 years to pay off. He described the hotel as a “self-contained project,” in which revenue goes toward upkeep, improvements and maintenance.
An unforeseen effect of the pandemic is historically low borrowing rates, Williams said.
“Even as we were seeing an increase in materials, we were able to offset it due to the cheaper debt,” he said.
While Williams was not able to comment on how the hotel might add jobs in Conroe, a September 2020 release from the Conroe Economic Development Council said more than 300 jobs will be needed to fully operate the hotel and convention center.
Attracting businesses, events
City officials said Hyatt Regency Conroe is slated to bring both business and tourism to the city. Shannon Overby, the director of Visit Conroe, said Hyatt Regency Conroe provides a different “vibe” to another local retreat, Margaritaville Lake Resort based near Lake Conroe.
“Interestingly enough, because of our proximity to Houston, because people felt safer in outdoor settings and smaller communities, we did very well [during the pandemic],” Overby said.
A Visit Conroe report for the end of fiscal year 2021 showed Conroe hotels saw a 60% occupancy rate, higher than the same time frame in fiscal years 2018-20. The CBRE study projected the Hyatt project to yield a 69% occupancy rate for FY 2022-23, rising to 71% occupancy in FY 2031-32.
Williams said local businesses have already expressed interest in bringing clients to the Hyatt for meetings instead of traveling to The Woodlands.
For residents in the Conroe area, Williams also said local events, such as weddings and proms, could be held at the Hyatt.
“I believe that you’ll see a lot of proms and weddings and things that might normally go to The Woodlands or other places end up [at the Hyatt],” Williams said. “There are a number of factors you look at in a location. ... We believe that proximity to that part of town, I-45, made it a good location.”
Overby said Conroe has marketed itself more for group travel—for conferences and conventions—over leisure travel since 2017.
“The Hyatt is definitely going to have more of a corporate feel to it,” Overby said. “More business, more medical conferences, ... especially with [Sam Houston State University’s College of Osteopathic Medicine] right next door.”