Aug. 6, 2003 - Construction has begun on a luxury hotel and conference center at the upscale Horseshoe Bay Resort about 45 miles northwest of Austin.

HSB Development Inc. announced its plans for the hotel in early 2001. But a downturn in the economy and the Sept. 11 terrorist attacks -- a double whammy for the hotel industry -- put the project and others like it nationwide on hold.

Now, with the economy showing modest signs of improvement, the developer is betting that the hotel will open at just the right time in October 2004.

Although it will heighten competition among Texas' resorts for business and vacation travelers, one hotel industry analyst thinks there's enough business to go around.

Ron Mitchell, president and chief operating officer of Horseshoe Bay Resort Ltd., agreed.

"We think the economy's already on an upward move, and we think it definitely will be better by the time it opens," Mitchell said

Horseshoe Bay Resort, which is controlled by the Jaffe Group Ltd. of San Antonio, and Dallas-based Serofim Realty Advisors are partners on the project. Developer HSB is a subsidiary of Horseshoe Bay Resort.

Marriott International Inc. will manage the seven-story, 250-room hotel, which will employ 250 people. Another 99 existing adjacent suites will be renovated as part of the project.

The hotel will have about 20,000 square feet of meeting and banquet space.

Hotel guests will be able to use the resort's three 18-hole golf courses, spa, tennis courts, marina and private airport. A fourth golf course, designed by Jack Nicklaus, is planned, along with a 600-home upscale residential subdivision, Bayplace.

Horseshoe Bay already has about 1,800 residents, including such high-profile homeowners as former Dallas Cowboy quarterback Roger Staubach and former astronaut Jim Lovell. Homes in the resort range from $200,000 to $8 million.

Some might think the idea of building a new luxury hotel while the country is still recovering from a recession is far-fetched.

"If they were up and operating today, they'd be hurting," said John Keeling, senior vice president with PKF Consulting, which tracks the hotel industry. "Right now, things look pretty dark, but nothing lasts forever."

In fact, Keeling said occupancies are already improving in many Texas cities, including Austin.

"Signs of the recovery in the hotel industry are apparent," he said. By 2005, the hotel's first full year of operation, "no one anticipates we're still going to be in a national economic recession," Keeling said.

Golf resorts in Texas have fared fairly well compared to resorts in some other states, such as California, Florida and Hawaii, Keeling said.

That's because most of the state's resorts sit in an area dubbed the "Texas Golden Triangle" of Dallas, Houston and San Antonio.

The area is home to two-thirds of the state's wealth and population. With the still-faltering economy and the threat of terrorism, many of the area's 18 million people are staying closer to home when taking a vacation.

"There's lots of buying power there. And with people more reluctant to get on a plane and fly to Cancun than to get in a Suburban and drive to a local resort, we're benefiting from that," Keeling said.

The 300-room Barton Creek Resort & Spa in Southwest Austin has been focusing its advertising and marketing efforts within Texas rather than marketing the resort out-of-state. And that strategy has been working, resort officials say.

Through the first half of the year, leisure business from Dallas and Houston was up 24 percent and 23 percent, respectively. Still, the hotel is having to offer specials to lure guests.

"It's definitely a buyer's market," said Martha Heagany, Barton Creek Resort's vice president of marketing. "Everyone out there is looking for the best rate, the best deal."

To attract individual business travelers, the resort in April started offering guests rates of $140 a night for Sunday through Thursday stays, down from the standard $198 rate -- plus half off a round of golf at any of the resort's four courses.

"It was a difficult time for everyone, and we certainly were not unique to it," Heagany said.

Jasmine Braunig, marketing director for the Woodlands Resort & Conference Center, a half-hour's drive from downtown Houston, said business at the 490-room hotel has fluctuated.

"We've had some good months and some bad months, but in general, we're still pretty flat," Braunig said.

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(c) 2003, Austin American-Statesman, Texas. Distributed by Knight Ridder/Tribune Business News. MAR,