News for the Hospitality Executive
|By David Wethe, Fort Worth Star-Telegram, Texas
Knight Ridder/Tribune Business News
Mar. 21, 2004 - --GRAPEVINE, Texas -- Come April 2, a Texas-sized showdown begins.
Just about every major convention center and hotel manager in the area is bracing for a turbulent year after the grand opening of the Gaylord Texan Resort & Convention Center on Lake Grapevine.
Some concede inevitable losses to Gaylord early on, vowing to lure back any lost business over time. Others say they hope the resort will elevate the Metroplex to a new level in the travel business and give it more prominence.
"I think they're gonna be the big bull in the rodeo arena," said Steven G. Foster, managing partner of Circle R Ranch in Grapevine, one of the nearby attractions aiming to feed off of excess Gaylord business. "Go to any industry meeting these days and the hot topic is Gaylord. They're a huge factor that will refocus attention on the Dallas-Fort Worth area."
Even before the first guests check in, the sprawling property will claim top-shelf status as the second-largest convention center in North Texas -- bigger than the newly expanded centers in Fort Worth and Arlington -- and the region's third-largest hotel. Gaylord officials say the Texan is the largest hotel convention center in the state.
Some competitors are already feeling the impact.
The Cyberathlete Professional League, a large group of 4,000 video-game players from around the world, is moving its largest annual conference 22 miles west from the Hyatt Regency in downtown Dallas to the Texan.
Angel Munoz, founder and president of the Irving-based league, said his group simply outgrew its space at the Hyatt, where it had met for five years.
Including spectators, Munoz said attendance is expected to be about 9,000, which would be 18 times larger than the 500 at its first event at the Hyatt in 1998. The Texan has more than 1,500 rooms.
Steve Vissotzky, general manager of the Hyatt Regency, said he doesn't necessarily consider the situation a loss. His hotel will retain one of the league's smaller conferences of 4,000 attendees.
"It was just way too difficult to squeeze them in," Vissotzky said.
"It probably made sense for them to gain a relationship out there."
Early response The Wyndham Anatole hotel in Dallas, the area's second-largest, didn't wait for the Texan to open before reacting.
Tom Faust, vice president of sales and marketing for the Anatole, said that the Grapevine resort was a factor in Wyndham's decision to do a $39 million expansion and renovation.
"Certainly we want to put our best foot forward," Faust said. "We want to make sure the hotel stays contemporary and fresh."
Faust said he expects Gaylord's entry on the local scene to both help and hurt his hotel at first: It will bring new business to the area but also steal some of his customers.
Officials for Gaylord Entertainment Co., the Texan's publicly traded parent, announced in a recent analyst conference call that of the 118 large groups booked for 2004 and beyond in Grapevine, 90 have not been to the Metroplex in the past three years. This, the company said, shows that it's bringing new business to the area.
Bob McPherrin, Gaylord's vice president of sales and marketing, conceded that some of these groups might not be new customers for the Metroplex, they just haven't been here in the past three years.
Some industry experts say that Gaylord has to bring new visitors to the Metroplex.
"The fact of the matter is, they have to do that or they're not going to be successful -- they know that," said Greg Crown, vice president of PKF Consulting in Dallas. "They can't cannibalize Dallas."
Metroplex hotels have recently been averaging a 56 percent occupancy rate, a figure that is expected to improve in 2004, Crown said. Any new meetings and conventions that Gaylord attracts will only help that number grow, he said.
One of the Gaylord resort's big attractions is its location near Lake Grapevine and Grapevine Mills mall, which was a factor in shifting the video-gamers conference there, Munoz said.
"This is still a vacation for thousands of people worldwide," he said. "We're excited about bringing people that have been going to downtown Dallas. There was nothing to do there."
Dallas hoteliers say that argument can be tough to counter.
"I can't create a lake downtown," said Michael Spamer, general manager of Adam's Mark Hotel Dallas, the largest hotel in North Texas.
Spamer added that although he'd love to have a lake to lure clients, there are plenty of groups out there who aren't looking for that kind of setting, groups that his hotel will appeal to.
"Some meetings prefer more of the downtown location," he said. "It just depends what kind of a convention it is."
Risky tax plan Dallas hoteliers, who have been suffering from a downturn in business travel for the past few years, also face another hurdle: The city is considering raising its 13 percent tax on hotel rooms to 18 percent -- which would be the highest in the nation -- in order to pay for a new stadium for the Dallas Cowboys. Fort Worth's room tax is 15 percent, and Grapevine's is 12 percent.
One corporate group -- Mary Kay Inc. -- has already threatened to bolt if Dallas goes through with the increase.
Doug Harman, president and CEO of the Fort Worth Convention and Visitors Bureau, said it's up to each city to promote its own unique traits and attractions. For example, he said, "There is no Kimbell or Amon Carter Museum that is ever going to exist in Gaylord. You can't replicate everything here."
David B. Hall, president and chief operating officer of the Dallas-based cosmetics company, said in a Dec. 4 letter to the Dallas Convention & Visitors Bureau that an 18 percent hotel tax would cause the company to relocate its 4,500-person conference from Dallas County to the Texan.
Conventions that end up at the Texan aren't likely to spread their money around to other area cities while they're here, said Arthur Gallego, vice president of LaForce & Stevens, a marketing and public relations firm in New York. Gallego has consulted for several hotel properties, including W Hotels and Canadian Pacific Hotels & Resorts.
"What they are creating is a juggernaut that is going to create no competition," he said. "I am not sure spillover is part of their plans. For conventioneers, having a self-contained environment is critical. It's one-stop shopping."
The distance from Grapevine to Fort Worth or Dallas means those cities will miss some dollars, Harman said.
"It is not going to be easy to get from Gaylord to any other place," he said. "A small percentage of people will go beyond the hotel.
Only time will tell what that percentage will be."
Linda DiMario, president and CEO of the Arlington Convention & Visitors Bureau, said she is confident that visitors will find a way to get out and explore.
"I've learned from experience that discerning travelers understand there's usually more to their confines than just the hotel," said DiMario. "I think ultimately the ability of that resort to take its place in the Metroplex will serve it best in the long run."
Gaylord's McPherrin has talked about being a good Metroplex teammate by setting up guest shuttles throughout North Texas.
Some Gaylord competitors said they are looking on the bright side when it comes to their new neighbor.
"A rising tide raises all ships," said Tom Smith, general manager of the Hyatt Regency DFW hotel at Dallas/Fort Worth Airport. "Everyone is going to give them a try in the beginning. That is certainly a risk and a concern, but not one we have for the long run."
Foster, who served a year as the Dallas/Fort Worth chapter president of Meeting Planners International and now helps run Circle R Ranch, agrees, while noting that the new resort's impact is likely to be far-reaching.
He hopes the Gaylord Texan is so successful, he said, that it forces city leaders in Dallas and Fort Worth to follow through with plans to build large hotels next to their recently expanded convention centers.
"I think that they are going to really force a paradigm shift in the meetings industry," Foster said. "Both Dallas and Fort Worth won't have to look too far down the road and say we've had that success in the past and we want that in the future."
Staff Writer Elena Morrison contributed to this report.
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(c) 2004, Fort Worth Star-Telegram, Texas. Distributed by Knight Ridder/Tribune Business News. GET,