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San Antonio's River Walk On Track to Get an Embassy Suites Hotel,
Years After an Exclusivity Deal Barred the Brand from Entering
 the Downtown San Antonio Market
San Antonio Express-News
Knight Ridder/Tribune Business News

May 31, 2006 - The River Walk is on track to get an Embassy Suites Hotel, years after an exclusivity deal barred the upscale chain from entering the downtown market.

Plans for the hotel at 125 E. Houston St. include 260 rooms, a restaurant, coffee bar and retail businesses at street and river levels, said Embassy spokeswoman Dawn Ray.

The site is currently a parking lot owned by International Bank of Commerce.

The 16-story building is estimated to cost about $33 million, not including the price of the land, Ray said, and the developers hope to open the hotel in July 2008.

The project developer is Blanco Rio Ltd., a partnership between finance manager Jack Guenther, Laredo-based IBC President Dennis Nixon, IBC lawyer Jonathan Nixon and Sam Friedman, president of Dimension Development, a prolific developer of Embassy Suites franchises and other hotel brands, based in Natchitoches, La.

Guenther didn't want to say more about the project because "it's premature." "There are lots of issues that haven't been resolved," he said.

The San Antonio Historic and Design Review Commission gave the project preliminary conceptual approval earlier this month.

Hilton Palacio del Rio blocked the earlier Embassy Suites project, which Hixon Properties Inc. started planning in 1999, because Hilton bought Embassy Suites that year, making the two properties competitors within the same family of hotels.

This new project will not meet the same fate, said Vicky Waddy, spokeswoman for Zachry Construction Corp., which has an interest in Palacio del Rio.

The Hixon project eventually became the Hotel Contessa after Palacio del Rio Ltd. sued Hilton to block the development, citing a contract stipulation that no other Hilton flag could fly in the downtown market.

"We don't want to put our sister brands into a situation where they compete with us," Ray said. "We won't go in if the market can't handle it." It would seem downtown can handle it comfortably, according to statistics from local hotel consultant Source Strategies Inc. San Antonio hotels are the most profitable in the state. The average daily rate for a room in San Antonio was $94.45 in the second quarter of 2005 -- about $16.50 more than the average in Houston or Dallas.

Also, hotel occupancy is growing more quickly than the room supply, according to Source Strategies.

Even with the abundance of hotel developments downtown, Embassy is a good fit, said Bruce Walker, Source Strategies president.

"This is an excellent brand and an ideal brand for leisure travelers in San Antonio," Walker said. "It has a cocktail hour and free breakfast, and you can put a family in those suites. It's a really nice leisure hotel product." Many of downtown's non-full-service hotels, such as Drury Inn and AmeriSuites, are commanding a little less than $100 per night, which is still not bad for those hotels to stay profitable, he said.

San Antonio already has two Embassy Suites hotels -- at 7750 Briaridge Drive on the Northwest Side and on U.S. 281 near San Antonio International Airport.

The new hotel would be the first Embassy Suites downtown.

By Rachel Stone And Melissa S. Monroe

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Copyright (c) 2006, San Antonio Express-News

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