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Houston Hotels Enjoyed 31% Jump in Revenue in January and
 February; Super Bowl Provides Spike in Revenue
 but Not Occupancy

By Bill Murphy, Houston Chronicle
Knight Ridder/Tribune Business News

May 19, 2004 - In the months leading up to the Super Bowl, state Comptroller Carole Keeton Strayhorn estimated that the game and related festivities would have a $336 million economic impact on the Houston area.

Local organizers were only slightly less optimistic, claiming a $300 million impact for hotels, restaurants, nightclubs, caterers, golf courses, gift shops and sundry others.

More than three months after the Feb. 1 game, the verdict is unclear.

Local hotels experienced a 31 percent jump in revenue in January and February over the same period last year, according to a Chronicle analysis of state comptroller data. Similarly, sales of mixed drinks increased 16.5 percent compared to January and February 2003.

Revenue from the local sales tax, a broader barometer, increased in January and February, but it also rose in the prior four months. City officials say it is impossible to determine whether the increased revenue is the result of an economic recovery, the Super Bowl or both.

"The economy began to pick up at the end of the year, and that's mixed in with the Super Bowl," Controller Annise Parker said.

Hotels and motels took in $136.3 million in taxable revenue in January and February, $32.4 million more than in 2003, which was a weak year.

That doesn't mean there were more visitors. Rates were set 10 percent higher than the highest rate for a room the year before, so guests often paid $250 a night for a room that normally goes for $150, and there was a four-night minimum during Super Bowl week, said Don Henderson, a Super Bowl XXXVIII Host Committee member and general manager of the downtown Hyatt.

As a result, revenue per average hotel room soared 19 percent for Houston hotels in January and February, according to PKF Consulting.

"That's an incredible increase," Henderson said.

Revenue per average hotel room rose 6 percent statewide, an increase that was driven in part by Houston's numbers. But the game didn't boost the occupancy rate much, only 3.6 percent in January and February, slightly more than the 2.6 increase seen statewide, PKF found.

Part of the reason the occupancy rate didn't increase more, Henderson said, is because more than 1,600 new rooms were added downtown in 2003. The Hilton Americas, Hotel Icon, Magnolia and Inn at the Ballpark opened after February 2003, meaning that there were far more rooms to fill up when the Super Bowl was played.

Philip Porter, a University of South Florida economist who has studied the economic benefits of Super Bowls, said Houston's hotel numbers follow the trend seen in other host cities. Hotel revenues spike during the month the game is played because room rates are raised dramatically. But occupancy rates, he said, stay about the same because the Super Bowl drives away some business before and after the game.

Alcohol sales in January and February were $15.2 million higher than in January and February 2003, the Chronicle found. And tax revenue from car rentals in Harris County was 22 percent higher in the first three months of the year than last year, said Oliver Luck, executive director of the Harris County-Houston Sports Authority.

Porter says a $300 million economic impact would cause a significant blip in sales taxes collected in Houston. But Parker and the city's finance and administration director, Judy Gray Johnson, say the Super Bowl's effect on sales is unclear.

The city, which receives 1 cent of the 8.25 percent sales tax, saw its share of the taxes increase 3.9 percent in January and 9.9 percent in February over 2003, according to an analysis of comptroller data.

But there were big increases in the city's share of the sales tax in the months before and after the Super Bowl compared with the same months a year earlier. In December, the numbers rose by 6.4 percent, higher than the 3.9 percent increase in January, when most Super Bowl partying occurred. And March's 11.7 percent gain outstripped February's healthy 9.9 percent spike.

Janice Evans, spokeswoman for the city controller, wrote in an e-mail: "We view this as further evidence that the sales tax increases we saw in January and February were due more to the economic turnaround than the Super Bowl. It's a trend we started noticing long before the Super Bowl. It appears to be continuing, if not improving, with each passing month."

Attributing increases in Houston's sales tax revenues to the Super Bowl would be problematic, said Victor Matheson, a Holy Cross economist who is researching the economic benefits of hosting a Super Bowl.

"The major hazard is that the economy is doing much better the first quarter of 2004 than the first quarter of 2003," said Matheson, who reviewed the comptroller's tax data for Houston. "You'd be giving the Super Bowl credit for a general economic revival."

The city's Johnson said: "There is no doubt that people came to the city and spent money in droves. The difficulty is putting a number on it."

Last year, state legislators enacted a law that requires the state comptroller to estimate how much a big sporting event is expected to bump up the state's share of taxes on sales, car rentals, hotel occupancy and alcohol. The comptroller then gives a host city or local organizers the state's anticipated share of the increased tax revenue to offset the cost of staging an event.

Strayhorn said Wednesday that her office will give Houston, host of the All-Star Game in July, up to $4.18 million, based on her office's predictions that the game will have an $85.6 million statewide economic impact.

Before the Super Bowl, the comptroller gave the Host Committee $8.7 million based on her office's estimate that the game and festivities two weeks before the game would have a $336 million economic impact.

But James LeBas, chief revenue estimater for the comptroller, said the office will not do an analysis to gauge whether the event actually generated $8.7 million in state taxes.

"All the law requires is a pre-estimate," he said. If legislators change the law and want a post-estimate, "we'll do that."

Porter, the University of South Florida economist, said the comptroller's office isn't "in the business of finding out the truth. They are in the business of giving away money. Otherwise, they would go back and check. The state spent big money on a big party and not on education or whatever else they should be spending money on."

Matheson, the Holy Cross professor, estimates the game has a local economic impact of $30 million to $80 million, and the impact on Houston may have been on the high end because unlike previous host cities, it typically is not a tourist destination in January.

But he, Porter and other economists scoff at the $300 million estimate, partly because the Super Bowl displaces conventions and other business.

Porter said Houston's hotel, beverage and sales tax figures for January and February do not appear to have risen enough to justify an $8.7 million award, especially if economic displacement is factored in.

But Jordy Tollett, president of the Greater Houston Visitors and Convention Bureau, said he believes the impact was higher than $300 million, especially if visits to the city by the NFL and corporations searching for hotel and party sites over the last three years are considered.

Before the Super Bowl, Tollett and other Host Committee members cited another benefit from hosting the game, free publicity for the city, saying it would be priceless.

The convention bureau has now put a price on it -- $24.6 million -- based on estimates by Burrelle's, a clipping service, and Video Monitoring Services.

The companies reviewed Super Bowl newspaper stories and radio and television reports and valued them based on ad cost, said Lindsey Folger, convention bureau spokeswoman.

That includes negative stories, such as a front page Washington Post story: "Houston, Playing Defense/Super Bowl Host Battles Its 'Ugly' Image." The headline of a front page Wall Street Journal story: "Houston Knows We Have a Problem; They're Working on It; Preparing for Super Bowl, City Addresses Beauty Deficit."

Folger said Burrelle's and Video Monitoring Services viewed negative stories in the same light as positive ones and priced them accordingly.

"There were some good things mentioned," in the Journal story, she said. "As long as the city of Houston is mentioned, we would count it."

Matheson said, "A Super Bowl is going to bring you publicity, but it's not all going to be good."

-----To see more of the Houston Chronicle, or to subscribe to the newspaper, go to

(c) 2004, Houston Chronicle. Distributed by Knight Ridder/Tribune Business News.

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