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The Gaylord Texan Resort & Convention Center Performing
 Beyond Developer's Expectations -- Without Stealing
 Business from Dallas Hotels

By Suzanne Marta, The Dallas Morning News
Knight Ridder/Tribune Business News

Dec. 11, 2004 - As the Gaylord Texan Resort & Convention Center was being built, local hoteliers and tourism officials nervously referred to the Grapevine behemoth as the "giant sucking sound to the west."

But less than nine months after it opened, the Gaylord complex appears to be performing well beyond its developer's expectations -- without stealing business from the competition.

"It certainly has increased the level of competition, but it's also brought more attention to the area," said Phillip Jones, chief executive of the Dallas Convention & Visitors Bureau.

"Clearly, we'd like to have all their room nights in Dallas, but in retrospect it's been a positive development for the area."

Company officials say the Gaylord Texan is doing well by almost any measure.

Occupancy was 75.7 percent during the most recent quarter -- up from analysts' expectations of 65 percent and significantly higher than that of Dallas downtown properties.

"They've brought in a lot of new business," said Greg Crown, a lodging expert with PKF Consulting in Dallas. "I don't know anyone who's not impressed with their ability to put heads in beds."

Jones estimates that room demand in Dallas rose 5.1 percent from a year ago. Occupancy was up 4.3 percent, and room revenue rose 4.2 percent.

Some Dallas hotels have even snared group meetings from customers who came to visit the $480 million Gaylord property but decided to go with something downtown instead, Jones said.

At the Wyndham Anatole in Dallas, which is similar in size to the Gaylord Texan, bookings have been looking up this year and next despite the added competition.

"Time will tell, but it doesn't appear to have had a significant impact on us," said Tom Faust, the Anatole's vice president of sales and marketing.

"The fact that they're drawing attention to Texas and the Dallas area for conventions and meetings is great for us."

Gaylord relies on groups for 80 percent of its business, a higher percentage than most hotel companies.

Although convention guests typically pay lower room rates than individual corporate travelers, the segment is also less sensitive to downturns in the economy.

Gaylord Entertainment Co., based in Nashville, Tenn., also boosts traffic by designing its projects to appeal to locals.

At the Gaylord Texan, an assortment of restaurants, bars and shops has been so popular with residents that the property is adding 1,200 parking spots early next year.

Local traffic has been especially robust during the last few weeks, as visitors come to see the hotel's Lone Star Christmas light display and roving entertainment.

Aiming to offset slow sales in December, when corporate travelers stay home for the holidays, Gaylord has transformed all three of its hotels into holiday-themed attractions.

"We've made it one of our busiest times of the year," said Jay Sevigny, chief operating officer for the Gaylord Hotels division.

Gaylord seeks conventions that will rotate events among its properties, a practice followed by 43 percent of its group customers, Sevigny said.

The company's first two convention and resort complexes were in the Nashville and Orlando, Fla., areas.

When the Gaylord Texan opened in April, it provided a critical third entry point to the company's offerings. A fourth location is now under construction in the Washington, D.C., area.

"We're finally at the point where we have the base that we want," Sevigny said.

Analysts say Gaylord's business model -- attracting groups to its sites and getting them to eat, work and have fun on premises -- will help the company outpace the industry for revenue growth.

Shares in the publicly traded company, which has other leisure, entertainment and retail holdings, have outpaced counterparts in the hotel business over the past two months.

On Friday, Gaylord stock rose 44 cents to close at $38.39.

"No one else is providing a one-stop shop convention hotel like Gaylord is," said Will Marks, an analyst with JMP Securities in San Francisco.

"They really capture the wallet of their guests because everything is right there at the hotel."

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