May 01– May 1–Downtown El Paso's 10th major hotel is being planned by an Austin lawyer who recently bought the mostly vacant, nine-floor International Building — bringing concerns from some El Paso hoteliers that more rooms may hurt hotel occupancies citywide.
But Tony Nguyen, a lawyer with a practice in Austin and one in El Paso, said he believes Downtown and El Paso as a whole can support additional hotels.
"(Hotel) supply is a concern in every market we go. El Paso is a growing city. So, at the rate it's growing, I don't see that (hotel oversupply) as a problem," Nguyen said. "I have a lot of faith in El Paso."
Nguyen said he is a partner in hotels in other cities, but he declined to provide specifics. He said he doesn't have permission from his partners to talk about the other hotel ventures. He plans to open the El Paso hotel as the sole owner, he said.
Nguyen's plan is to renovate the more than 90 year-old office building designed by the late, iconic El Paso architect Henry Trost, and turn it into a hotel with a major brand. The building is at 119 N. Stanton St. and Texas Avenue, across the street from two new Downtown hotels, also in renovated buildings.
It had been owned by a group of California and El Paso area investors. No sales price was divulged. The El Paso Central Appraisal District has it appraised at $1.83 million for tax purposes.
It's too early to say how many rooms the hotel will have, Nguyen said.
"It should be up and running in a couple of years," he said.
EP hotel occupancy, averaging 72% in Q1, may go down in future, experts say
Downtown El Paso currently has six major hotels operating, two buildings under renovation for hotels, and now, hotel plans by two out-of-town investors.
Two other old, small hotels also operate in Downtown — the 96-year-old, 50-room Gardner Hotel and hostel; and the 112-year-old Gateway Hotel, which only has a small portion of its 100 rooms operating as it goes through a slow renovation process by the hotel owner.
For many years, Downtown only had three major hotels in operation.
Gabriel Ayub, president of the El Paso Hotel and Lodging Association and general manager of the 139-room Hampton Inn and Suites El Paso Airport hotel, said adding additional hotels Downtown will dilute hotel occupancy throughout El Paso without more business to create additional room demand.
At least three other hotels also are under construction in other parts of El Paso, which also will dilute the citywide rate when those open, he said.
El Paso's hotel occupancy rate averaged just under 72 percent for the first three months of this year, slightly below the 73.3 percent average for the first quarter of 2018, reported STR, a Nashville company tracking hotel data worldwide.
The El Paso occupancy rate was better than the Texas rate, which averaged just under 65 percent in the first quarter — virtually the same rate at the same time in 2018, STR data shows.
"What happens, is Downtown hotels are new" and take business from older hotels, Ayub said. "It's great the focus is on Downtown, but we need more events to generate more (hotel) business."
Downtown hotel projects also are getting city tax incentives, which puts other hotels in the city at an unfair advantage, Ayub said.
"If a hotel developer feels business is strong enough to build in El Paso, then tax incentives should not be necessary," Ayub said.
Lane Gaddy, an El Paso businessman who led a group that renovated the Bassett Tower into a Marriott Aloft Hotel, which opened in May 2018 across the street from the International Building, said it will be difficult for the El Paso hotel market to immediately absorb all the new rooms.
"I think the overall market will be overbuilt," if the other planned hotels get built, Gaddy said.
Some old hotels in other parts of El Paso may need to be torn down and the land redeveloped into other uses, Gaddy said.
Eventually the Downtown market will be able to absorb all the rooms by changing habits of travelers coming to El Paso, Gaddy said. In the past, hotels near the El Paso International Airport have been the busiest.
Gaddy's Downtown Aloft Hotel has been doing well with about 80 percent occupancy in recent months, he said.
"It's always exciting to see investment in Downtown, especially from outside of El Paso," Gaddy added.
Nguyen is the second out-of-town investor this year to buy a Downtown building for a hotel. A Chihuahua City, Mexico group announced in February that it planned to turn the 108-year-old Roberts-Banner Building, into a 64-room, upscale boutique hotel. The group bought the building in January.
A group headed by Gaddy sold the building, located at 215 N. Mesa St. and Mills Avenue, across the street from San Jacinto Plaza.
Plans for the International Building
Nguyen said engineers will determine if the International Building's facade of glass and mortar panels can be removed. It's hiding the building's original brick exterior. The building has ornate molding along the roof and above the ground floor.
Several retail tenants are on the ground floor, including the District Coffee Co., coffee shop.
"We'll try to keep them (retail tenants) as part of the (hotel) plan," Nguyen said.
Nguyen, founder of the Tony Nguyen Law Firm in Austin, also operates the Abogados PNB (Polan, Nguyen & Briggle) law firm, which he opened this year in Downtown El Paso.
"I saw this (International) building sitting there. It was kind of sad, and I figured I can turn this thing around," he said.
Vic Kolenc may be reached at vkolenc@elpasotimes.com, 546-6421; @vickolenc on Twitter.
