Mar. 28, 2005 - GRAPEVINE -- In its first year in business, the Gaylord Texan gathered supporters and ruffled a few feathers.

The 1,511-room hotel and convention center on the shores of Lake Grapevine helped bring new business to town but also lured conventions and employees from other hotels.

Before opening, officials for the Gaylord Texan said they'd pull very little from existing hotels and would instead shine a brighter light on the entire area for meetings and conventions.

Gaylord officials have lived up to their promises, said Greg Crown, vice president of PKF Consulting in Dallas, an independent adviser that follows the hospitality industry.

"I have been extremely impressed with their ability to put room nights into that hotel in their first year and do it with relatively little impact on the rest of the market in the D-FW area," Crown said. "While you can't conclude that they didn't take anything, they didn't push these guys lower, because everybody was up considerably."

The Gaylord Texan opened April 2, 2004, as the area's third-largest hotel and second-largest convention center. Over the next nine months, it generated $94.70 a night in average revenue for every room available to rent. Industry experts consider "revpar" -- revenue per available room -- the most important measurement of a hotel's health. The hotel booked 68 percent of its rooms and charged an average of $138.19 a night, according to the latest annual report from its corporate parent.

By comparison, the area's five largest hotels -- including the Gaylord Texan -- generated revpar of $64.59 from April through December 2004, according to Smith Travel Research, which tracks hotel performance nationwide.

Overall, Metroplex hoteliers saw their revpar grow 6 percent to $53 in 2004, according to PKF. Occupancy for the 82,000 rooms in the Metroplex grew 4 points to 61 percent while the average daily rate stayed the same at $86.

With its ties to the two other similar-sized Gaylord hotels and convention centers in Tennessee and Florida, the Texan is poised to attract large conventions that hadn't otherwise thought of meeting in Texas.

"They certainly are in a position to bring more attention to the D-FW area," said Phillip Jones, president and chief executive of the Dallas Convention & Visitors Bureau.

The Hyatt Regency in downtown Dallas lost some business to the Gaylord Texan, said Steve Vissotzky, Hyatt's general manager. He can't say how much, because much of it included prospective customers.

But one thing is certain. Just about every major competing hotelier has had to gear up for Gaylord.

"Whenever you do have new inventory coming into the market, everyone has to make sure their own product is up to speed," said Vissotzky, whose hotel completed a $15 million renovation last year.

Officials at other Dallas hotels said they have had their share of picking off business from the Grapevine hotel. Jones said some meeting planners who came to town to tour the Texan ended up booking with Dallas hotels after visiting them later.

The Dallas bureau is now talking with Gaylord officials about the Grapevine hotel joining the CVB.

John Imaizumi, general manager of the Texan, said he sees cooperation with Dallas hotels as an important step in changing his property's image. Right now, Imaizumi said, the Gaylord's biggest detractors are Dallas operators who think it is taking away more business than it's creating.

Jones said he foresees a day when large conventions, such as the American Heart Association, could stay in hotels as far away as the Texan. This year, the national organization will host 32,000 at the Dallas Convention Center, and guests are staying in hotels as far away as Irving, he said.

"The Gaylord team has proven they want to work cooperatively when they can," he said. "Hopefully we can work out an agreement."

Gaylord officials say the economic impact of their hotel actually surpasses what was projected in a 1998 study by Dallas-based Insight Research Corp. There has been no update since then.

The study estimated that the hotel would generate $299 million in total tax revenue by 2013. The city of Grapevine, which commissioned the study, is expected to receive $66.2 million in direct and indirect tax revenues over 15 years. The Gaylord also generates tax money for the Grapevine-Colleyville school district and Tarrant County.

The hotel was projected to employ between 1,400 and 1,500 people. But that has grown to more than 1,900, mainly because of the increase in restaurants there, Imaizumi said. The hotel has 1,580 full-time employees and 60 part-timers, and 344 others who work on busy days.

But the Texan has not been without its problems. The hotel is entrenched in a legal battle over its taxable value.

If the hotel's corporate parent wins its dispute with the Tarrant Appraisal District, it will mean smaller tax payments to Grapevine, which is counting on the higher revenue to pay back bonds for building roads and a hotel parking garage. The appraisal district valued the property at $270 million, but Gaylord thinks it should be $138 million, said John Marshall, the district's chief appraiser and executive director.

A court date has been set for March 20, 2006. No depositions have been taken or offers made to settle, Marshall said.

Through it all, Grapevine is still happy to have the behemoth hotel.

"It sure appears to us that they are well above their projections," said Roger Nelson, Grapevine's city manager. "You can drive out there any weekend and see that their parking lot is full.

"They have ended up pulling from a market they weren't expecting -- the local market."

Imaizumi said early successes are often chalked up to the "honeymoon effect," where visitors love a hotel in its infancy but lose interest once the newness fades. To keep the momentum going, he said, the Texan will have to continually upgrade the property or hold new events.

Last year, the hotel's largest group was the 15,000-guest Honda Gold Wing Riders gathering. The Gaylord has not scheduled a group that large for 2005. Hotel officials are not saying how many total meeting attendees they expect will walk through the convention center this year.

The Gaylord Texan is spending $9.4 million to build a 1,700-spot parking garage that's expected to open in July. The hotel also plans to hold a two-month summer festival designed to attract families from within a couple-hundred-mile radius. Running from July 1 to Aug. 31, "SummerFest at Gaylord Texan" will display rabbits, bobcats, prairie dogs and alligators in the giant atrium.

Based on the new events and the success of its sister hotels, Crown said the Texan has a bright future.

"Good hotels are able to keep the momentum going and win over those people who came in to try it," he said. "The history of these guys is they're able to keep the ball rolling."

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