Texas hotels to rebound in 2009, industry experts say...

November 13th, 2008

Austin Business Journal

Monday, November 10, 2008 - 10:30 AM CST

Texas hotels will do better than the national average in 2009, according to hospitality industry experts.

Industry executives gathered in Dallas last week for an executive briefing conference sponsored by PKF Consulting, PKF Capital and PKF Hospitality Research.

“Matching the national average, hotel real estate transactions are down about 80 percent in Texas in 2008 compared to 2007, but once the dust settles from the current credit crisis, transactions should pick up nicely going forward into 2009,” Hank Wolpert, senior managing director of PKF Capital says, referring to hotel investments.

With the a large number of hotel chains, management companies, hotel REITS, investment funds and entrepreneurs in Texas, Wolpert says there is opportunity to be “well positioned for the future upturn.” The leaders also expect good investment opportunities in hotel markets despite a decline in occupancy and revenue forecasts for 2009.

“We are still seeing a lot of interest from non-local buyers that are impressed with the Texas economy, the intense development in both the downtown centers and the suburban markets and the favorable construction cost and regulatory environment,” he adds.

Austin may fare better in some respects than the other Texas markets. Visitors continue to pour into the state capital for business and pleasure. In fact, hotel occupancy for the metro area was 69.6 percent year-to-date as of September, which is considered healthy by industry standards. The average daily room rate, or ADR, is $110.50, according to Smith Travel Research.

Downtown Austin’s occupancy is 73.3 percent year-to-date, with an ADR of $142.72.

While there will be a downturn in Texas next year, it won’t be as damaging to the state compared to the rest of the country, says John Keeling, senior vice president of PKF Consulting. He expects the pace to pick up in 2010 and be “a year of solid recovery.”

Although statistics show a national downturn in revenue per room, the hotel business is essentially a local business, said Bob Eaton, executive managing partner with PKF Capital.

“I cannot emphasize too strongly that virtually every hotel situation is unique,” he says. “Each needs to be viewed in that light. And there are some very encouraging local scenarios.”

http://austin.bizjournals.com/austin/stories/2008/11/10/daily5.html?surround=lfn&brthrs=1

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