Hotel Online 
News for the Hospitality Executive

Houston's 5,200 Downtown Hotel Rooms May
 Not Exceed 60% Occupancy Until 2007
By L.M. Sixel, Houston Chronicle
Knight Ridder/Tribune Business News

Sep. 19, 2004 - Las Vegas has casinos and showgirls.

Orlando has Disney World.

New York has Broadway.

And Houston has, well, 5,200 downtown hotel rooms -- twice as many as a year ago.

Houston has never been known as a major convention destination.

Sure, its downtown nightlife is coming back. And its sporting venues are new and spacious, drawing a Super Bowl in February and a Major League Baseball All-Star Game in July.

This week's National Black MBA Association's Conference, which drew 13,000 convention-goers and filled 3,300 rooms for four nights, was impressive.

But it's going to take about 40 conventions a year like that one for Houston's hotels to survive, convention officials and planners say.

Is there reason to worry, considering downtown's hotel occupancy rate has fallen to 51 percent this year from 70 percent four years ago?

Not according to Jordy Tollett, president and CEO of the Greater Houston Convention and Visitors Bureau.

"If you build it, they will come," Tollett confidently told those gathered recently for the group's annual luncheon when referring to the doubled-in-size George R. Brown Convention Center, the attached Hilton Americas-Houston and all the new downtown hotels.

But Bill Sharman, CEO of the company that owns the 93-room Lancaster Hotel downtown, is not so optimistic.

Although he thinks the situation will brighten as the national economy and energy business improves, Sharman said he sees nothing that indicates it will get much better in the next several years.

"The convention business is booking some business, but it's four, five, six years out," he said. "The business on the books for 2005 and 2006 doesn't make up for the added supply just from the Hilton, much less than the others."

He's right. But Tollett thinks the numbers look good.

In fact, Tollett said, the plan is already working, pointing to the 607,000 room nights that were booked last year, a 45 percent increase from the previous year. And bookings for 2004 look healthy as well at 483,000 room nights.

And more are coming, he said, ticking off the shows: the National Association of College Stores in 2006 (12,000 room nights), American Medical Association in 2009 (12,000 room nights) and the National Collegiate Athletic Association's Final Four in 2011 (23,000 room nights).

In the meantime, most of the hotels can hang on, said John Keeling, senior vice president of PKF Consulting, a hotel consulting firm that appraises, brokers and builds hotels. They know they've made a long-term investment, he said.

For years, Houston has had four hotels downtown to handle business travelers.

In the past two years, 10 new hotels sprang up, doubling the number of downtown rooms and depressing the occupancy rate.

"It will take a while to fill those rooms," said Keeling, estimating Houston's downtown occupancy rate won't exceed 60 percent before 2007.

In the hotel business, a healthy occupancy rate is 65 percent.

But the occupancy rate doesn't tell the whole story, Sharman said.

Business travel is barely back to its pre-Sept. 11, 2001, levels and with all those new rooms downtown, the prices he can charge are falling.

He estimates room rates have dropped about 20 percent. That, coupled with the decline in occupancy, has reduced the hotel's revenue about 40 percent this year.

"We haven't made a profit this year," Sharman said.

But if those hotel rooms weren't added and the downtown Hilton wasn't built, Houston wouldn't have been able to host the Super Bowl, said Wayne Chappell, vice president of the Greater Houston Convention and Visitors Bureau.

To fill up all those rooms, Chappell figures Houston needs to host 30 to 40 major conventions each year that occupy 3,000 rooms each night. Right now, Houston is hosting about 20 big conventions a year.

But is an ample supply of hotel rooms enough to propel Houston from a second-tier convention city to a first-tier destination like Las Vegas, Orlando or San Diego?

The right travel mix -- enough airline flights going in and out, good transportation to downtown and a range of hotels in quality and price near the convention center -- is critical to draw a convention, said David Kushner, president and CEO of the Professional Convention Management Association, a 5,500 member group based in Chicago.

But that's not enough. As Kushner explains, a city has to have some "fluff."

Convention planners want to know what their members can do while they're in the city, like visiting museums, going shopping or touring historical sites. And it has to be attractive enough to entice the conventioneer along with family members and guests.

That's what makes Las Vegas so appealing, said Erika Yowell, spokeswoman for the Las Vegas Convention and Visitors Authority, the No. 1 destination for large meetings.

It's a 24-hour a day town, said Yowell. People know they can work during the day and once they're finished, they can go to the casinos and shows.

While Houston has several museums and the Galleria, it lacks pizzazz.

"The problem is that people think Houston is boring," said Keeling. "They don't appreciate how Houston has changed in five years."

The Greater Houston Convention and Visitors Bureau is trying to change that image by inviting top meeting planners to the Super Bowl and enticing groups like the Professional Convention Management Association, which is holding its board meeting here in October.

Bruce Harris, president of Conferon Global Services, which brokers hotel rooms for conventions, handles their registration, and promotes the convention city, brought 76 of his top clients to Houston for four days last month.

Harris, who last visited Houston 12 to 15 years ago, said he was surprised to see how well the George R. Brown Convention Center connects with the new Hilton Hotel.

"One of the problems with Houston is that it has so many downtowns -- the Galleria, the Astrodome," he said, adding that the Hilton makes having a convention in Houston so much easier.

As for the nightlife, Houston could also add a few more downtown entertainment hot spots.

"In almost every city, you can always have more entertainment near the convention center," he said.

"The question is whether it's enough (in Houston). I think it's adequate."


The top 10 conventions and national sporting events planned for Houston, ranked by hotel room nights booked:

--Offshore Technology Conference (2005-2008)

--ISA, The Instrumentation Systems and Automation Society (2004, 2006)

--Big 12 Conference Championship (2005)

--National Baptist Convention of the USA (2005)

--Mary Kay Inc. (2008)

--Diving Equipment and Marketing Association (2004, 2007, 2010)

--National Basketball Association (2006)

--Produce Marketing Association (2010)

--Society of Exploration Geophysicists (2005, 2009)


Growth in the number of rooms by year:

-- 1999: 2,267

-- 2000: 2,343

-- 2001: 2,714

-- 2002: 2,814

-- 2003: 3,626

-- 2004: 5,292

Occupancy by year:

-- 1999: 67.2 percent

-- 2000: 70.2 percent

-- 2001: 67.9 percent

-- 2002: 60.1 percent

-- 2003: 50.2 percent

-- 2004: 51.0 percent

-- 58,607: Total Houston-area hotel rooms

-- Occupancy: 61 percent

Source: PKF Consulting

-----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. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail

To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| Catalogs& Pricing |
Viewpoint Forum | Ideas&Trends | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.