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The Gaylord Texan and Other Hotels Making
 Grapevine, Texas a Top Texas Market

By David Wethe, Fort Worth Star-Telegram, TexasMcClatchy-Tribune Regional News

Aug. 20, 2007 -- GRAPEVINE -- Like clockwork, the trolley motors down Main Street.

The boutiques it passes along the way sport signs that welcome the latest group of conventioneers staying at the nearby Gaylord Texan Resort & Convention Center. Every other hour, the blue-and-white bus -- made to look like an old-time trolley -- drops off guests from the Gaylord Texan like an armored truck dropping off moneybags.

The trolley highlights this town's dependence on one of the strongest convention hotels in the state. But the ties stretch beyond Main Street.

Each year, the 1,511-room property hosts 35-40 groups that are so large they spill guests out into other hotels around Grapevine. It's so much business that more hoteliers are looking for a piece of the action.

While the Grapevine hotel market has almost doubled since before the Gaylord Texan opened in April 2004 -- from 2,300 rooms in 11 hotels to 4,500 rooms in 16 hotels -- it's not done yet.

An additional 1,500 rooms scattered across four hotels are in the works, all partly because of growth at the Gaylord.

"The effect of the Texan can't be overstated," said Kevin Gallagher, a Dallas hotel executive looking for space to build a hotel for his company somewhere near Main Street in Grapevine. "I think very few people really were aware of how much demand they were going to induce."

Bringing more upscale demand

Grapevine hotels are booming, experts say. The market is considered one of the hottest in the state.

A common industry measurement of a hotel's financial health is its revenue per available room, or revpar. The average revpar for hotels in Grapevine grew 29 percent in three years, to $101.43 in 2006, according to Smith Travel Research. That's almost twice the average for all hotels in Texas during 2006, which was $51.30.

"A lot of downtown areas would be envious of their numbers," said Todd Walker, vice president at Source Strategies, a San Antonio-based hotel consultant.

Hotels along the Riverwalk in San Antonio have almost an identical average revpar, but they're also a little more empty -- 68 percent full compared with Grapevine's 72 percent occupancy, Walker said.

Much of the reason for such a high revpar in Grapevine is attributed to the Gaylord Texan and the Embassy Suites next to the Bass Pro Shops Outdoor World, Walker said.

Both are the type of upscale, full-service hotels Grapevine would like to see more of.

In fact, in 2000, the city passed an ordinance requiring new lodging to have at least 300 rooms, 10,000 square feet of meeting space and a full-service restaurant. The ordinance applies to most parts of Grapevine but excludes downtown.

Grapevine officials think the city has reached its "maximum threshold" for limited-service hotels, said Barry Lewis, spokesman for the Grapevine Convention & Visitors Bureau.

Limited-service hotels generally don't have room service or full-service restaurants that are open throughout the day.

"We're really trying to establish Grapevine as a destination for both leisure travelers and the groups and meetings convention market," Lewis said, "and not just an airport-hotel destination."

That's kind of what Grapevine was before the Grapevine Mills mall opened in 1997, he said. The mall helped give more hotels more of a destination to build around.

All the hotel development has really occurred over the past 11 years, when 13 hotels popped up on the Grapevine map. Before that, the only hotel in Grapevine that wasn't on Dallas/Fort Worth Airport property was the 393-room Hilton DFW Lakes Executive Conference Center, which opened in 1983.

But as much as Grapevine wants to be more of a place for big-dollar, full-service hotels, there's still some work to be done to attract the clientele that stays there, said Greg Crown, vice president for hotel adviser PKF Consulting.

While Grapevine has attractions such as the mall, lake, downtown and Gaylord Texan, it doesn't have a lot of office space. More office space means more corporate travelers in town visiting clients. They're the ones who can generally afford the higher room rates that Grapevine is after.

"Quite frankly, the reason all the commercial guys stay in Grapevine is it's a great central location from which to serve the greater Dallas-Fort Worth and the greater D/FW Airport area," Crown said. "It's less driven by Grapevine itself than what it is that surrounds Grapevine."

Yet because of the high revpar and occupancy numbers, Crown still sees Grapevine as "among the hottest markets around."

New growth

Most of the hotel development planned for Grapevine makes sense, Crown said.

Officials for Gaylord Entertainment, the Nashville-based parent of the Texan, recently announced that they're talking with officials from the city and the Army Corps of Engineers -- owner of property that part of the Texan sits on -- about adding 500 rooms and as much as 300,000 square feet of meeting space to the hotel.

Several experts said Gaylord's expansion would help bring in even larger conventions than it's already attracting.

The American Bus Association is one example of the huge meetings the Gaylord Texan is already attracting. In January, the group brought 3,000 people to town and spread them over nine hotels in Grapevine, Lewis said.

Just across Northwest Highway from the Gaylord Texan is the construction site for Great Wolf Lodge. That hotel is expected to open in December with 402 rooms. But already officials for the Madison, Wis., parent company are looking at adding 204 rooms after it opens.

The hotel will pump 435,000 gallons of water through its 80,000-square-foot indoor water park. The hotel will complement the Gaylord Texan because Great Wolf will seek primarily leisure travelers while its counterpart goes after group meetings, said Jack Bateman, the general manager for Great Wolf.

Great Wolf also hopes to get some of the Texan's spillover business that's going to other hotels in Grapevine, he said.

The water-park hotel concept is popular up north, especially in Wisconsin and Minnesota.

But Crown is skeptical about its success in the South. He points out that most business travelers don't travel with their families and argues that they won't warm up to the water park.

"I just don't understand what you're going to do in that place Monday through Thursday nights in the key commercial periods," he said. "Why would I stay in that hotel?"

With 30,000 square feet of meeting space, Great Wolf will try to attract some group business, Bateman said. But he added that the hotel's bread and butter will be leisure travelers. And some may be stolen away from other leisure destinations around Texas.

"You're going to have some cannibalization, there's no doubt about that," he said. "But the fact is that the brand is so unique that people are going to come up and give trial visits."

Just across Texan Trail from Great Wolf Lodge, Joe Champ is looking to put up a 300-room hotel.

To meet the 300-room minimum required by the Grapevine ordinance, the hotel would carry the "aloft" and "element" brands, both new hotel concepts from Starwood Hotels and Resorts. Plans call for two lobby entrances, said Champ, formerly chief investment officer for Dallas-based Wyndham Hotels and Resorts.

Champ expects to close on the land, which is inside the Grapevine Station development, closer to year's end.

A Hilton Garden Inn is also under construction near Main Street, south of Texas 121/114. Although that's expected to open sometime in 2008 with only 110 rooms, the hotel was grandfathered in. The city approved the permits before the ordinance went into effect seven years ago. But 9-11 and a slowing hotel industry put the job on hold for a while, Lewis said.

Main Street business

The city's 300-room minimum does not apply to hotels along Main Street in downtown Grapevine.

That's because no hotels at all are allowed along the historic road, said Scott Williams, director of development services for the city. But that doesn't mean a developer couldn't ask for council approval to change the zoning for his property.

To build a hotel, the developer would also have to get approval from the city's Historic Preservation Commission.

Gallagher, vice president of business development for Dallas-based Prism Hotels & Resorts, is interested inbuilding a small hotel somewhere near Main Street.

Experts disagree on whether a hotel could survive there.

Regardless, the Grapevine hotel market looks good from a pure numbers standpoint, Gallagher said.

"It's not just that it's a fun place," Gallagher said. "It's because the underlying fundamentals of occupancy are strong. It's a simple supply-demand equation. When demand is up, you can add supply."

And when hotel demand is up, you can also add nearby retail. That's why Paul Ryan and his wife, Kathleen, are holding down a couple of retail spots downtown. One is a Texana-themed gift and novelty shop, Tolbert's Texas Trading Co., and the other is a chili restaurant called Tolbert's, both named after Kathleen's dad, Frank X. Tolbert.

"We wouldn't have opened if the Gaylord hadn't gone in," Paul Ryan said.

Many retailers end up staying open a couple of hours later than their usual 6 p.m. closing time some days, just for the conventioneers spilling out of the trolley after a day of meetings at the Gaylord Texan.

"We love seeing the Gaylord trolley come down," said Kathleen Socket, an assistant manager at Auntie's Beads, a small store on Main Street. Socket, who's lived in the area for 15 years, remembers when times were not so busy downtown.

"I brought my mom up and down these streets 10 years ago and there was nothing," she said. "Now it's just crazy."


David Wethe, 817-685-3803


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