Hotel Online 
News for the Hospitality Executive

Build Central
advertisements
 

The City of Houston Is Selling the 1,203 Hilton Americas-Houston;
Average Occupancy Up to  70% Since Opening in 2003

By Carolyn Feibel, Houston ChronicleMcClatchy-Tribune Regional News

Sep. 11, 2008 - -The city is selling the Hilton Americas-Houston across from the George R. Brown Convention Center, officials announced Wednesday.

An offering memorandum placing the hotel on the market was issued Wednesday by CBRE/Concordis Real Estate. Hilton is the operator of the 1,203-room hotel.

The memorandum is a detailed property description for potential investors, which includes market information on downtown Houston and projections of future revenue based on industry models. The memorandum will be available only to serious potential investors, who agree to keep the contents confidential.

"We do believe there can be significant interest in this property at a very good price," Mayor Bill White said.

White told City Council he would monitor sale negotiations and that he had a "reserve price" in mind that he would not share with anyone.

"If we don't think there is adequate interest, we're not going to sell it," White said.

The convention center hotel has seen its average occupancy increase to more than 70 percent since opening in December 2003, city officials said.

Mary Carolan, who is marketing the property on behalf of CB Richard Ellis Hotels, said that while credit markets are tight, Houston should have no problem finding qualified buyers for what she called a "trophy property."

Carolan said that today's conservative investors are looking for high-quality properties with little risk, and the Hilton fits the bill, especially given its young age and its high occupancy rate.

Carolan declined to say how much money the hotel makes, but said "it's performing quite well" for a large hotel.

Hotel broker Ray Hankamer Jr., who is not involved in the sale, agreed that the hotel should easily draw buyers.

"Obviously, a quality brand name like Hilton, located across the street from the principal convention center in the central business district of a dynamic town like Houston should be a hotel property that sells for a premium," said Hankemer, president of Southwest Hotel Management.

The hotel has been used to secure debt on the city's municipal pension fund, and White said it has performed well in that regard.

"It allowed us to make the pension fund more secure and cut unfunded liabilities," the mayor said.

The city issued a $300 million note to the pension fund in 2004, using the hotel as collateral.

At that time, the fund had a $1.9 billion unfunded liability because of benefit promises approved during former Mayor Lee Brown's administration and faulty calculations about whether the city could afford them.

The hotel-backed note was part of White's strategy to cut the liability, along with reduced benefits for new employees.

The city plans to issue pension obligation bonds to pay off the note, and the fund should end up with about $350 million in cash, said Craig Mason, the city's chief pension executive.

In recent months, analysts have said it could fetch $350 million.

White did say the property "is now worth significantly more, we believe, than the investment put into the hotel."

Proceeds from the sale will be used to refinance the pension debt.

White said that if the city has extra revenue left over, it may be used to entice a developer to build a second hotel near the convention center and Minute Maid Park.

As an inducement, the city could offer a developer 50 percent to 100 percent rebates of hotel occupancy taxes for a fixed period of time.

"If there's an opportunity today to get some of the public money out, and to reinvest that money into other projects which will draw more tourism, more dollars, more visits, more jobs to our city, we want to do that," White said.

[email protected]

-----

To see more of the Houston Chronicle, or to subscribe to the newspaper, go to http://www.HoustonChronicle.com.

Copyright (c) 2008, Houston Chronicle

Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NYSE:CBG,



To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| One-on-One |
Viewpoint Forum | Industry Resources | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions. 
 

Back to September 11, 2008 | Back to Hospitality News | Back to Home Page