Economy, airport drive hospitality industry growth in the Lake Houston area

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Economy, airport drive hospitality industry growth
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In recent years, the Lake Houston area has seen growth across all development sectors—from residential and commercial development to job growth with recent expansions of the industrial and health care markets.

Experts say the hospitality industry has benefited from that growth, with more than 20 hotels opening in the Lake Houston area since 2013, according to data from the Texas Comptroller’s Office.

“I’d say for our area, [the hotel growth] is probably mostly driven by targeted population growth and it’s driven by proximity to the airport,” said Mark Mitchell, president of the Lake Houston Economic Development Partnership. “Another thing we’re seeing take place here, as well, is a significant increase in health care growth … so I think it’s kind of a combination of all of those.”

The Lake Houston area is projected to reach 288,599 residents by 2020, an increase of more than 60,000 in 10 years, according to census data.

Data from CBRE—a development research firm—shows the Greater Houston area added the second-most rooms of any metropolitan area nationally from 2015-17, and it gained more than 11,700 rooms from 2016-18.

Commercial growth

The hospitality industry in the Lake Houston area is largely connected to the success of its surrounding industries, said Tom Jamison, general manager for Hyatt Regency Houston Intercontinental Airport. For example, when the oil and gas industry slumped in 2015-16, investments in the hospitality industry also slowed.

However, in the last two years as oil and gas has stabilized and mixed-use projects have developed, the hospitality industry is looking up, Jamison said.

“I think it’s all positive for the hospitality industry now that we’ve come out of the oil and gas industry doldrums, and we’re starting to absorb all this new supply that came into the marketplace,” he said. “Every indicator I’ve looked at show[s] that the next two years is where the hospitality industry recovers.”

The economic growth of the region—coupled with mixed-use developments like McCord Development Inc.’s Generation Park—is attractive to hospitality investors, Jamison said. Generation Park has attracted several industrial companies, such as the corporate headquarters for Apache Industrial Services and TechnipFMC’s 173-acre campus.

McCord Development plans to build a range of hotels in Generation Park. Some larger hotels will feature in-hotel bars, restaurants, meeting spaces and ballrooms for conferences and events, said Ian Adler, director of marketing at McCord Development.

Redemption Square, Generation Park’s 52-acre lifestyle district, will feature three hotels. Construction will begin in May on the first, a Courtyard Marriott that will open in summer 2019, Adler said. The other two hotels will follow based on the hotel’s performance.

“We know what businesses are making the move here,” Adler said. “Having that insight drives the future projections based on information we glean from the needs of our clients.”

Farther north along Hwy. 59, expansion of the health care market also draws interest from hotel investors, experts said. Memorial Hermann Northeast Hospital opened a convenient care center in Main Street Kingwood in 2017, and expanded a tower and purchased 40 additional acres at the northeast campus for future expansion. Moreover, CHI St. Luke’s Health was confirmed in late 2017 to be the first tenant in Vivacity Medical District, an 186-acre district in Valley Ranch.

At Kingwood Medical Center, a division of HCA Healthcare, hotels are important when recruiting new physicians to the hospital, HCA Healthcare CEO Melinda Stephenson said. Kingwood Medical Center accepts 300 patient transfers per month, many of which do not live nearby.

Having hotels near hospitals also allows families to visit loved ones, HCA Healthcare COO Rob Marmerstein said.

“[That is] why having clean, high-quality accommodations in close proximity to our facility is a great resource for our hospital,” Marmerstein said.

Airport benefiting hospitality

Many hotels benefit from the nearby George Bush Intercontinental Airport, offering airport shuttles and selling parking lot spaces to travelers unwilling to pay the airport’s parking fees. More than 800 hotel rooms were added within the airport submarket from 2016 to 2018, according to CBRE.

Hyatt Regency Houston Intercontinental Airport, which opened in February 2012, is used by a variety of people using the airport, Jamison said.

“It’s in the proximity to the airport and it’s [relative] to the oil and gas industry,” Jamison said. “It’s the perfect destination for our business goals. I know it’s in an established suburban area, but it’s still a center hub of a lot of the things happening in Houston.”

In the Humble area, limited-service hotels targeting airport travelers have opened along the Hwy. 59 corridor at Beltway 8 and along FM 1960. However, most of the hotel growth is happening outside the city’s limits, with only three hotels opening in Humble since 2013, Texas comptroller data showed.

Humble City Manager Jason Stuebe said Humble City Council approved ordinances in late 2015 regulating hotel development in the city limits after city officials began noticing a trend of small hotels opening and becoming places for illegal activities, Stuebe said.

Since Dec. 1, 2015, hotels have to be on a minimum 1-acre lot, have at least 65 rooms and rooms must be accessible through internal hallways. As a result, the city has received fewer development requests and only one hotel has opened within city limits, Stuebe said.

“[The ordinance] doesn’t prohibit hotels from developing here, but we want to attract the national or the regional brand and slowly move away from these [microhotels],” Stuebe said. “We’re getting a better handle on the quality and style of development that is coming into town.”
By Kelly Schafler

Managing editor, South Houston

Kelly joined Community Impact Newspaper as a reporter in June 2017 after majoring in print journalism and creative writing at the University of Houston. In March 2019, she transitioned to editor for the Lake Houston-Humble-Kingwood edition and began covering the Spring and Klein area as well in August 2020. In June 2021, Kelly was promoted to South Houston managing editor.