Four new hotels are in the planning stages in the city of Katy that will add to hotel occupancy tax revenue the city already collects and uses for various events.
“We have the Four Points by Sheraton coming, a Holiday Inn Express and a La Quinta. The convention center will be the fourth [new] one,” said Kayce Reina, director of tourism and marketing for the city of Katy. “The convention center hotel will be our full-service hotel. None of them have broken ground. We haven’t received any kind of plans yet. ”
Reina said the new hotels will in part serve a different group of travelers: those seeking recreational visits to the city.
“We have a lot of weekday travelers with the oil and gas industry [and] see a high occupancy rate during the week,” she said. “With the [Typhoon Texas] water park and the Boardwalk [District] coming, they need more weekend occupancy.”
The Katy Boardwalk District will be centered around the new city-owned convention center that is being funded with HOT revenue, Reina said. One of the four new hotels will be adjacent to the convention center and surrounded by retail stores and restaurants.
Katy City Administrator Byron Hebert said the Boardwalk District and other amenities have attracted hotels.
“The Boardwalk [District] project has turned into something bigger than what it was envisioned as,” Hebert said. “First it started out as, ‘We’ll put a park in there.’ Then we thought about a convention center. We have an opportunity to put another economic generator in the city.”
Hebert said the hotel industry studies market trends that may create a need for new hotels.
“Hotels want to come to Katy,” he said. “With the Typhoon Texas [water park], that helped a lot of [hotel companies] make the decision to build [in Katy].”
Hebert said the four new hotels are expected to generate another estimated $500,000 in HOT tax for the city once they open.
City HOT funds
Residents of the Katy area can thank visitors who stay at local hotels for many of the entertainment options offered in the region, including local festivals like the Wild West Brew Fest and the Rice Harvest Festival to sports events at NRG Stadium.
Events and facilities that draw tourists are enabled in part due to funds generated from a hotel occupancy tax—ranging from 2 to 7 percent of a room’s cost—that are used to pay for and promote nine different areas related to tourism, sports and entertainment.
Revenue generated from the HOT taxes in the city of Katy go directly to a bevy of events and facilities.
Reina said the city and residents both benefit from revenue generated from the tax.
The city uses the money for many different purposes aside from festivals, including advertising and salaries of various officials. In the future, HOT funds will be used to construct a convention center at the new Katy Boardwalk District.
“Because the convention center is something that will draw tourists and travelers to the city, HOT funds can be used to purchase the land as well as construction costs,” Reina said. “My salary comes out of this account because my job is to promote the city. You [also] have a lot of events the funds have been used for.”
The HOT taxes collected in unincorporated Harris and Fort Bend counties are used differently than in the city of Katy.
Helen Steffey, tax research division supervisor with the Fort Bend County Tax Office, said there are no hotels in unincorporated areas of Fort Bend County and the county does not collect any HOT revenue. Cities inside the county collect HOT, she said.
According to the Harris County Tax Assessor-Collector’s Office, more than $200 million in HOT taxes were collected between 2013 and 2015.
Bill Jackson, budget officer for Harris County, said those funds are split between both Harris County and the Harris County-Houston Sports Authority, which manages NRG Stadium and 17 other regional sports facilities.
The HOT tax rate in Harris County is 7 percent in unincorporated areas and 2 percent in incorporated areas. For the Sports Authority it is 2 percent.
The HOT taxes collected by Harris County are used to pay the $240 million in debt generated by the construction of the NRG Center, he said.
“The majority of our [HOT taxes] goes to the principal debt and interest on [NRG Center] and utility bills,” Jackson said.
He said the funds collected on behalf of the Sports Authority are used to fund 18 different athletic venues, including NRG Stadium, BBVA Compass Stadium and Toyota Center in Houston.
Harris County Precinct 3 Commissioner Steve Radack said he receives an average of $10,000 a year in HOT revenue from the county to be used for promoting Harris County Precinct 3 events.
“I think the last time I used any of those funds, it was the Harris County Fair several years ago,” Radack said.
Between the fiscal years 2013-14 and 2015-16, the city of Katy collected more than $3.1 million in HOT funds. During those three years, the city spent more than $2.2 million of those funds for numerous events as well as purchasing the land for the future convention center at the Katy Boardwalk District.
The city paid the Katy Development Authority more than $870,000 to purchase the land south of Katy Mills. [totalpoll id="165216"]
The city has a Convention and Tourism Bureau board—composed of seven members who are appointed—that makes decisions on how the HOT revenue is spent.
“These events have to come and present [to the board]; they have to fill out a grant application, and it’s a whole process,” Reina said. “They have to visit the board, tell us how it’s going to promote the city. They have to advertise the city and hotels on their marketing [materials].”
Reina said HOT revenue is not only being used to promote the city and fund various festivals, but also to help transform the city into a tourist destination with an array of amenities, including a public transit system to connect the northern portion of the city with the southern section.
“I want a trolley system, which can be funded by HOT funds,” she said. “You [would] have a stop at the hotels, stops at the Boardwalk [District], stops at the water park [and] downtown.”
Visitors are attracted to the amenities on both sides of I-10, Reina said. Connecting the two areas is an important goal for city officials, she said.
“I want it to tie both old Katy and new Katy together when we have that trolley system in place,” Reina said. Creating a true destination is my long-term goal.”