Jump to content

W Hotel  

147 members have voted

  1. 1. What Development will Land the "W" in Houston?

    • BLVD Place
      48
    • Westcreek - Whatever it's called
      15
    • Highland Village
      17
    • Somewhere else
      31
    • Don't kid yourself. Houston can't support a "W"
      20
    • Downtown (Even though it would be financial suicide
      30


Recommended Posts

Would love to , but it would take me a while to get there. ;-)

(No offense, but I'm not the one who has gotten all snippy and defensive, and wishing for businesses to "commit suicide"...)

In summary, you are failing to distinguish between the health of the overall downtown hotel market (which is pretty good) and the health of individual hotels (regarding several of which you have provided anecdotes, but no facts, indicating they may be struggling). As one "in the industry" I am sure you know there are many reasons particular hotels may struggle even when the overall market is good... bad management, failure to affiliate with a chain or national reservation system, bad location within the market, bad marketing...

If these hotels (Icon, Alden, Magnolia) are indeed all struggling as badly as you say, one would expect their owners to make some drastic changes, like affiliating with a chain, lowering their weekday rates to a level closer to their weekend rates. (or as TNJ predicted some years ago, close down). And yet, they continue to soldier on, remaining independent, still charging over $200/night (except for the Magnolia) on weekdays... I just can't make sense of it. ;-)

And, fwiw, you have probably noticed that the W is part of a major national chain, which would give it a clear leg up on succeeding in the downtown market.

I remember the Juniper's predictions. It was dire. 2 to 3 of the boutiques would most likely be closed within a few years and the Hilton was going to wreck the market.

I am glad that didn't happen. The downtown hotel market (as a whole) is doing ok. January and February are two of the slowest travel times of the year so having collective occupancy levels around 63% and ADR around $170 is pretty darn decent. The ADR is around an ALL-time high. Predictions for the rest of the year and near future are bright (thanks to advance convention bookings and solid energy related biz travel).

Link to post
Share on other sites
  • Replies 419
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Popular Posts

Was kinda hoping nativehoustonian was sitting in first class on that Malaysian flight but then realized he only flies United BF.

Ritz is actively looking, possibly a couple others.

With business booming, the population exploding, and money flowing, I find it really hard to believe that someone hasn't taken a chance on a W Hotel, Mandarin Oriental, Ritz-Carlton, Taj, or Fairmont

Posted Images

I think it's fair to point out that, according to you, a good number of the downtown hotels were supposed to have gone under by now. But, amazingly, not a one has closed.

This type of dialogue is what is great about the site.

I will say it this way, the hotels are struggling. The reason they haven't closed is because the owners are writing checks to keep them afloat. Unnamed hotels have had to go to their banks and restructure and negotiate long periods where no payments are made b/c none can be afforded. Not interest only payment, NO payments. Some very wealthy people own huge chucks of these hotels downtown and are all, all, all are writing checks.

I remember the Juniper's predictions. It was dire. 2 to 3 of the boutiques would most likely be closed within a few years and the Hilton was going to wreck the market.

I would love to be wrong. But I am not.

In the hotel business, the fact the door is open is not representative that they are doing well or are even justified. In many cases, they are open b/c the banks would rather have an asset back that generates some cash as opposed to none.

Now, before anyone freaks out and accuses me of saying these hotels are in bankruptcy blah blah, I'm not. They do not make money. They don't. Period. If the owners want to continue to write checks b/c it makes them feel better, they don't want to admit failure, they can't afford not to write the checks b/c the alternative is even worse....makes no difference to me.

But, anyone who believes the fact that somehow the existence of a property justifies the construction and development of it is in the wrong business.

The W or Ritz will be built in Houston for one of two reasons: First, the condos will be tremendously profitable. Secondly, to stoke someone's ego. That is it. There is no set of projections John Keeling can produce that will justify the investment.

But, it will get done. The first owner of the hotel will bask in the glory of owning the highest profile hospitality project to ever hit Houston. It will do well for a bit after opening. Then, with the tremendous backing of the Starwood name, it will settle very nicely into a business traveler niche and generate great cash flow. Only the cash flow won't be enough to cover the debt and it will be sold. Then, the second guy will struggle and keep it going until he realizes it is never the profit center he thought. The second guy will struggle between spening money on deferred maintenance (replacing furniture, carpet, etc. ) in the building which will cost $20MM or so. He will say, "how can i justify spending the money if i don't make any currently"? Finally, in year 10, someone will buy the hotel, put the cost of the deferred maintenance in his purchase, fix it up, and by then the rates will carry it and he'll make money.

If you don't believe me, go ask the group that started Four Seasons. Ask them how much they made.

Happy July 4th.

TNJ

Link to post
Share on other sites
This type of dialogue is what is great about the site.

I would love to be wrong. But I am not.

TNJ

The problem with all of that, TNJ, is that you ARE wrong. You predicted a veritable bloodbath with multiple closings. It couldn't be much simpler and is clear for all to see. That has not happened. So enjoy being wrong.

Link to post
Share on other sites

Aren't there two main drivers for downtown hotels? First is mainly business travel, which as pointed out is strong due to the strong economy. Anecdotally, I have had coworkers complain about it being hard to find a hotel room downtown, although our corporate travel site steers them to the large chains where there are discounts. The second driver is the convention business, and most of the newer hotels were developed and given tax breaks to support that. The convention business is a lot more likely to be spotty, and it makes sense that those newer hotels are struggling. Hotel rebranding is very common. At some point maybe some of the hotels like Magnolia, Inn at Ballpark, Alden, etc. will end up as Marriotts or Sheratons.

Link to post
Share on other sites
I will say it this way, the hotels are struggling. The reason they haven't closed is because the owners are writing checks to keep them afloat. Unnamed hotels have had to go to their banks and restructure and negotiate long periods where no payments are made b/c none can be afforded. Not interest only payment, NO payments. Some very wealthy people own huge chucks of these hotels downtown and are all, all, all are writing checks.

TNJ

If a hotel is struggling so badly and is unable to fill its rooms, wouldn't we expect them to take some significant steps to address the problem? Starting with lowering rates to fill the rooms? I am presuming that their substantially lower weekend rates still more than cover their marginal costs; please correct me if that presumption is wrong. If so, it seems that they should be able to generate better cash flow if they lowered their weekday rates in the direction of their weekend rates and filled more rooms. AND, it would seem maybe they would affiliate with a chain. Very wealthy people may have large egos, but most of them don't enjoy writing checks and pouring money down a rat hole, so to speak. Tell me where I am going wrong.

Link to post
Share on other sites
Anecdotally, I have had coworkers complain about it being hard to find a hotel room downtown, although our corporate travel site steers them to the large chains where there are discounts.

That's a large part of the supposed problem, IMHO. Most people traveling for business - especially in Houston, with the oil or medical industry - either book their rooms on the company's preferred travel website, or they have an admin do it for them.

Few business travelers risk a reservation at an unknown hotel, instead picking a place (e.g. Doubletree) they "know". Also, hardcore travelers are point-whores, and will go out their way to ensure they check-in to somewhere that 1) they get some sort of privileges associated with their "status", and 2) they'll earn points for their next planned vacation. That means a chain, and not an unknown-to-them boutique hotel.

Link to post
Share on other sites

Just spoke to someone about the W this morning. The W is a done deal and will be in Houston with construction starting within the next 2 years. Location is finalized, but the design is still in the works, in fact drawings have not yet begun as far as I know.

Link to post
Share on other sites
Just spoke to someone about the W this morning. The W is a done deal and will be in Houston with construction starting within the next 2 years. Location is finalized, but the design is still in the works, in fact drawings have not yet begun as far as I know.

Can you provide location?

Link to post
Share on other sites

i tried to get engcons to play the "it is not going to be at *******" game and he wouldn't take the bait.

he said it would NOT be in the woodlands, but he wouldn't say it would NOT be at blvd place.

maybe he/she will tell us if it will NOT be downtown. that would be another good indicator.

i think the galleria area is the most likely place and coming from someone who is in the know (engcons), where it will NOT be will be fun for most of us.

Link to post
Share on other sites

So they do plan to build a W Hotel in Houston?

I noticed on another forum that someone had pointed out that they planned to build a W Hotel in Houston and they featured this image:

aa34lo.jpg

^^ W Hotel

Any thoughts?

Link to post
Share on other sites
So they do plan to build a W Hotel in Houston?

I noticed on another forum that someone had pointed out that they planned to build a W Hotel in Houston and they featured this image:

aa34lo.jpg

^^ W Hotel

Any thoughts?

Pretty! :rolleyes:

Link to post
Share on other sites

Sorry due to confidentiality agreements I cannot talk about the location. But if you just think about it where it should go then you can figure it out.

Also I am getting a red X on the image posted so I can't say.

I know the W is pretty cool news coming to Houston, but there is another project that is in the works is going to be even more awesome if it goes through.

Link to post
Share on other sites
Sorry due to confidentiality agreements I cannot talk about the location. But if you just think about it where it should go then you can figure it out.

Also I am getting a red X on the image posted so I can't say.

I know the W is pretty cool news coming to Houston, but there is another project that is in the works is going to be even more awesome if it goes through.

dude, you're hurting me.

Link to post
Share on other sites
Sorry due to confidentiality agreements I cannot talk about the location. But if you just think about it where it should go then you can figure it out.

Also I am getting a red X on the image posted so I can't say.

I know the W is pretty cool news coming to Houston, but there is another project that is in the works is going to be even more awesome if it goes through.

That tells me BLVD Place.

Link to post
Share on other sites

Who cares if it's a smart idea or not, I'm thinking about the coolness factor a W would add to the HP area. The reality of the actual hotel business is too boring to care about, give me risky and stupid anytime. :D:blink:

Is it downtown?

If someone guesses right, will you let them know, ENGcons? No one in the industry will know you spilled the beans. Besides, the W people probably don't come to HAIF, so theres no need to worry. ;)

Is the answer among the locations listed in the poll? - "somewhere else" doesn't count!

If you can't give info about where it will be, can you tell us WHEN we might be hearing an announcement?

Will it be July?

Link to post
Share on other sites

Call me a skeptic but i wouldn't put too much into something that someone "says" without a source. No offense ENGcons! But how do we know you're not just some kid playing with our minds?

Edited by C2H
Link to post
Share on other sites

just for clarification, are you saying they have closed the land, without any drawings/renderings, and will break ground sometime within the next two years?

thank you in advance for the insight.

and edited to add, after reading tnj's post: he pretty much hit the nail on the head. several downtown hotels are bleeding red and the owners are throwing good money after bad.

you can choose to believe it or not.

Edited by houston-development
Link to post
Share on other sites
Call me a skeptic but i wouldn't put too much into something that someone "says" without a source. No offense ENGcons! But how do we know you're not just some kid playing with our minds?

No offense taken. The reason for the Hush Hush is the company I work for is in negotiations with the W people to build the thing. I do not want to jeopordize the process.

Link to post
Share on other sites
and edited to add, after reading tnj's post: he pretty much hit the nail on the head. several downtown hotels are bleeding red and the owners are throwing good money after bad.

you can choose to believe it or not.

I'm perfectly willing to believe it. But I am genuinely curious about why they would not take significant actions to save themselves, as I have asked in several previous posts. I seriously wish one of the industry people would tell me where my logic is wrong. Why would they not lower their weekday rates a bit to fill up some more rooms (and generate higher revenue)? Why would they not affiliate with a chain to instantly generate more business traffic?

Link to post
Share on other sites

New hotel numbers:

Downtown Houston hotel occupancy: April 2007: 72.3%, up from last year's 70.9%.

Jan-Apr 2007: 67.7%, down from last year's 72.3% (Katrina/Rita effect)

downtown ADR: April 2007: $162.36, up 8.4% from last year

Jan-Apr: $164.66, up 6.6% from 2006

Uptown/Galleria hotel occupancy: April 2007: 77.9%, up from last year's 73.9%

Jan-Apr: 74.3%, down from last year's 76.1%

uptown ADR: April 2007: $145.36, up 11.8% from last year

Jan-Apr: $138.44, up 4.4% from 2006

What in those numbers would cause a rational investor to automatically exclude downtown from consideration for a new luxury hotel in favor of uptown?

Link to post
Share on other sites
and edited to add, after reading tnj's post: he pretty much hit the nail on the head. several downtown hotels are bleeding red and the owners are throwing good money after bad.

you can choose to believe it or not.

I believe it. His only mistake was to predict that there would be closings. It is indeed a financial bloodbath, but as long as they can cover their operating expenses, their doors will not close. Some may be repositioned or eventually even converted to some other use, but the building won't just go dark.

Link to post
Share on other sites
Why would they not lower their weekday rates a bit to fill up some more rooms (and generate higher revenue)?

Lowering the rates does not necessarily mean that a sufficient number of hotel customers will be induced to stay there; meanwhile, those of the clientele that would have stayed there anyway would effectively get a discount. I would suspect, however, that if you were to play one boutique off another, you could get a really good deal, since they'd have the opportunity to engage in the kind of price discrimination that their price-taking customers couldn't get a peice of.

Why would they not affiliate with a chain to instantly generate more business traffic?

There are plenty of possible reasons. There are only so many chains with which to affiliate, and chains often have standards for consistency that would require remodeling. It can be difficult to convince an owner of something that is unprofitable--or especially his lender--to throw more money at an unprofitable venture. The owner may be in it more for his/her ego than for the buck. Those chains that are a good fit may already have a position in the market, probably with a non-compete agreement with the other hotel owner(s). There may be agreements in place between the hotel and the City regarding subsidy in some form or another that could be tricky to work around. And then there are the oddball reasons that aren't known to more than a handful of people.

^Just brainstorming.

Link to post
Share on other sites
Lowering the rates does not necessarily mean that a sufficient number of hotel customers will be induced to stay there; meanwhile, those of the clientele that would have stayed there anyway would effectively get a discount. I would suspect, however, that if you were to play one boutique off another, you could get a really good deal, since they'd have the opportunity to engage in the kind of price discrimination that their price-taking customers couldn't get a peice of.

There are plenty of possible reasons. There are only so many chains with which to affiliate, and chains often have standards for consistency that would require remodeling. It can be difficult to convince an owner of something that is unprofitable--or especially his lender--to throw more money at an unprofitable venture. The owner may be in it more for his/her ego than for the buck. Those chains that are a good fit may already have a position in the market, probably with a non-compete agreement with the other hotel owner(s). There may be agreements in place between the hotel and the City regarding subsidy in some form or another that could be tricky to work around. And then there are the oddball reasons that aren't known to more than a handful of people.

^Just brainstorming.

You are quite right that lowering the rates does not necessarily mean that a sufficient number of hotel customers will be induced to stay there, etc. But you know as well as I do that it is quite likely to do so. Especially when we can all see that they do lower their rates on the weekends to induce demand.

Your brainstorming list is interesting and most are possible. None are likely, especially in the combinations required to come up with three or four hotel/owner situations.

There are plenty of chains of various levels not currently represented in downtown Houston. None of Starwoods chains are there (W, Westin, Sheraton, Aloft, and more). Fairmont. Raddison. Omni. Marriott has several chains not represented. Intercontinental Group has several chains not represented. (and it's highly unlikely that the agreement with Courtyard/Residence Inn would not allow a Marriott, Rennaissance, Ritz-Carlton or other Marriott property.)

Yes, chains have certain standards. But, the properties we are talking about have all been recently built/rehabbed and are all well-done to pretty high standards. In most cases, the required remodeling would probably not be huge. As to owners' willingness to undertake such expense, you are sort of stepping on your message. On one hand you tell us they are willing to continue to bleed huge losses year after year. On the other hand, you suggest they would not be willing to spend money necessary to stanch those losses. In general, these people probably didn't become rich by being economic fools.

I suppose it's always possible the owner is in it for his ego. But, again, is it really reasonably likely that we have 3 or 4 such owners operating hotels in downtown Houston? Seems unlikely. And even if they are doing if for their ego, wouldn't their ego get just as much stroking from a profitable hotel? I don't know, maybe not... As I said earlier in this thread, I know a lot of rich people with large egos. NONE of them enjoy writing checks.

It's very difficult to imagine what could possibly be in the agreements with the city that would make affiliation with a chain difficult. That just makes no sense. It's in everyone's interest for the hotels to succeed.

My skepticism of our resident insiders' claims of rivers of red ink for all downtown boutique hotels aside, the more important point is this. It has almost no relevance to the question of whether or not a W or Ritz-Carlton or Mandarin Oriental or other such uber-high-end hotel might be built downtown (or for that matter other high-end hotels). This is so for several reasons. 1. The market is pretty healthy, even if certain individual hotels are not. 2. All of those mentioned possible hotels are affiliated with strong chains. 3. Any of those hotels would also have (presumably profitable) condos associated with them.

Edited by Houston19514
Link to post
Share on other sites
You are quite right that lowering the rates does not necessarily mean that a sufficient number of hotel customers will be induced to stay there, etc. But you know as well as I do that it is quite likely to do so. Especially when we can all see that they do lower their rates on the weekends to induce demand.

Right, they lower their rates on the weekends but even then, they only lower them to a point. Beyond that point, they'd only hurt their own profitability by continuing to lower rates, even if their occupancy could be boosted.

There are plenty of chains of various levels not currently represented in downtown Houston. None of Starwoods chains are there (W, Westin, Sheraton, Aloft, and more). Fairmont. Raddison. Omni. Marriott has several chains not represented. Intercontinental Group has several chains not represented. (and it's highly unlikely that the agreement with Courtyard/Residence Inn would not allow a Marriott, Rennaissance, Ritz-Carlton or other Marriott property.)

Yes, chains have certain standards. But, the properties we are talking about have all been recently built/rehabbed and are all well-done to pretty high standards. In most cases, the required remodeling would probably not be huge. As to owners' willingness to undertake such expense, you are sort of stepping on your message. On one hand you tell us they are willing to continue to bleed huge losses year after year. On the other hand, you suggest they would not be willing to spend money necessary to stanch those losses. In general, these people probably didn't become rich by being economic fools.

These chains, especially the high-end ones that could take on a boutique hotel, tend to be extremely picky. The greater the number of stars a hotel is going to have, the more leverage they exert over everything, especially location. And the boutique chains tend not to be quite as interested in downtown as they are in other areas, especially the Galleria area. That isn't necessarily the case when you throw condos into the mix in a new construction deal, but it is a strike against the independent downtown boutiques.

And you're right that many of these hotel owners are likely to have some basic sense about them...but not necessarily. Depending on their current level of financial distress and whether lenders will still trust someone that invested in a flop, it may not be easy to reposition a property.

I suppose it's always possible the owner is in it for his ego. But, again, is it really reasonably likely that we have 3 or 4 such owners operating hotels in downtown Houston? Seems unlikely.

...but I agree that the fact that there are several hotel owners that are hurting makes some combination of my brainstormed ideas unlikely. I'd suspect that there's something holding all of them back that is similar in nature.

It's very difficult to imagine what could possibly be in the agreements with the city that would make affiliation with a chain difficult. That just makes no sense. It's in everyone's interest for the hotels to succeed.

...and that's why I came up with the idea that it might be an issue with the City, which was giving away money left and right--except that there's no such thing as free money. There's always some sort of a contractual agreement. And what's more, there's no guarantee that the City's restrictions made sense. In fact, I'd hardly expect for everything to make sense.

My skepticism of our resident insiders' claims of rivers of red ink for all downtown boutique hotels aside, the more important point is this. It has almost no relevance to the question of whether or not a W or Ritz-Carlton or Mandarin Oriental or other such uber-high-end hotel might be built downtown (or for that matter other high-end hotels). This is so for several reasons. 1. The market is pretty healthy, even if certain individual hotels are not. 2. All of those mentioned possible hotels are affiliated with strong chains. 3. Any of those hotels would also have (presumably profitable) condos associated with them.

This much is true. All of it.

Link to post
Share on other sites
No offense taken. The reason for the Hush Hush is the company I work for is in negotiations with the W people to build the thing. I do not want to jeopordize the process.

Can you tell us who the players are in the deal? Obviously Starwood but who is their development partner? Thanks

Link to post
Share on other sites
there is a rumor that waterway square in the woodlands will have a W hotel. i do not know if this means that the development company is courting W hotels or that W hotels are interested in placing one here.

I actually work for Starwood Hotels/Resorts in which the W Hotel is part of. As of right now, the plans are to put the aloft hotel (which is a less expensive version of the W) in the SW area or possibly just south of the Galleria area. Then of course the new Westin and Sheraton will be going close to where Sam Parkway and I 10 meet...and there will be a Four Points over in that area as well...then another Starwood product, the Element, will be going in off 249 and Louetta...all of which are planned to open around 2009. There had been talks about the W taking over Hotel Derek but that is no longer the case.

Link to post
Share on other sites
I actually work for Starwood Hotels/Resorts in which the W Hotel is part of. As of right now, the plans are to put the aloft hotel (which is a less expensive version of the W) in the SW area or possibly just south of the Galleria area. Then of course the new Westin and Sheraton will be going close to where Sam Parkway and I 10 meet...and there will be a Four Points over in that area as well...then another Starwood product, the Element, will be going in off 249 and Louetta...all of which are planned to open around 2009. There had been talks about the W taking over Hotel Derek but that is no longer the case.

They've already announced the Aloft will be in the Galleria area, just west of the Galleria at 5433 Westheimer.

Link to post
Share on other sites
several downtown hotels are bleeding red and the owners are throwing good money after bad.

i was speaking with someone who works at the magnolia and he confirmed that occupancy is low. he mentioned that they had 3 nights where no one was staying.

Link to post
Share on other sites
In the latest BLVD place rendering there are 3 towers within the complex behind the retail stuff. It's all adding up now. I vote for BLVD place.

And your vote would be incorrect. BLVD Place is an entirely different development.

Link to post
Share on other sites
My vote is that ENGcons needs to get his rocks off elsewhere.

This is absurd. Wake us up when they make an "official" announcement

No problem. Sorry guys, no more updates until ground is broken. Send your complaints to talltexan83 if you have any.

Link to post
Share on other sites

Hey, don't listen to talltexan, I like being played with... it's fun to guess. Come back Engcons and tell us more. I just wanted to point out an observation that BLVD place had a new rendering that depicted 3 towers, and Engcons said the W hotel project also had 3 towers. BLVD place has the most votes on the poll, so it sounded like a match.

No need for anyone to be rude or be driven away. We should all respect the insiders' need to limit the info they can post. Otherwise, we have NOTHING to go on at all around here about these speculative projects going up all over the place. HAIF would be dull without insider info - be especially nice to them, and save the hostility for the Dallas trolls (just kidding).

So now, if we can eliminate BLVD Place, I would vote for - High Street/Westcreek. - But I'm still HOPING it will be downtown.

Come back, Engcons :)

Edited by Mister X
Link to post
Share on other sites

Hey yeah. Maybe it's that thing people were talking about on Richmond and Post Oak near Windsor Plaza. That sounded like a large mysterious project that no one has elaborated on.

EngCons...?

Kinkaid...?

Houston 19514...?

Great Hizzy...?

Niche...?

PR Girl...?

Houston Developement...?

New Juniper...?

anyone...? anyone...?

Be nice to me - I'm one of your biggest fans. :wub:

Edited by Mister X
Link to post
Share on other sites

I have no clue other than I had heard that BLVD Place had higher aspirations than the W to run their hotel and condos (think RITZ). Wulfe wants to pull in empty nesters from Tanglewood and River Oaks to his condo tower at BLVD Place and they are too old and too blue-blooded for a W would be my uneducated guess. However, these types might trip over themselves to get the chance to say they live at the Ritz or Mandarin...

Link to post
Share on other sites
You are quite right that lowering the rates does not necessarily mean that a sufficient number of hotel customers will be induced to stay there, etc. But you know as well as I do that it is quite likely to do so. Especially when we can all see that they do lower their rates on the weekends to induce demand.

Your brainstorming list is interesting and most are possible. None are likely, especially in the combinations required to come up with three or four hotel/owner situations.

There are plenty of chains of various levels not currently represented in downtown Houston. None of Starwoods chains are there (W, Westin, Sheraton, Aloft, and more). Fairmont. Raddison. Omni. Marriott has several chains not represented. Intercontinental Group has several chains not represented. (and it's highly unlikely that the agreement with Courtyard/Residence Inn would not allow a Marriott, Rennaissance, Ritz-Carlton or other Marriott property.)

Yes, chains have certain standards. But, the properties we are talking about have all been recently built/rehabbed and are all well-done to pretty high standards. In most cases, the required remodeling would probably not be huge. As to owners' willingness to undertake such expense, you are sort of stepping on your message. On one hand you tell us they are willing to continue to bleed huge losses year after year. On the other hand, you suggest they would not be willing to spend money necessary to stanch those losses. In general, these people probably didn't become rich by being economic fools.

I suppose it's always possible the owner is in it for his ego. But, again, is it really reasonably likely that we have 3 or 4 such owners operating hotels in downtown Houston? Seems unlikely. And even if they are doing if for their ego, wouldn't their ego get just as much stroking from a profitable hotel? I don't know, maybe not... As I said earlier in this thread, I know a lot of rich people with large egos. NONE of them enjoy writing checks.

It's very difficult to imagine what could possibly be in the agreements with the city that would make affiliation with a chain difficult. That just makes no sense. It's in everyone's interest for the hotels to succeed.

My skepticism of our resident insiders' claims of rivers of red ink for all downtown boutique hotels aside, the more important point is this. It has almost no relevance to the question of whether or not a W or Ritz-Carlton or Mandarin Oriental or other such uber-high-end hotel might be built downtown (or for that matter other high-end hotels). This is so for several reasons. 1. The market is pretty healthy, even if certain individual hotels are not. 2. All of those mentioned possible hotels are affiliated with strong chains. 3. Any of those hotels would also have (presumably profitable) condos associated with them.

OK. I apologize in advance for the posting, but i can only take so much.

I will not tell you that i know everything about the future of Houston real estate. But, I do know more than most. Don't believe me, just stop reading here.

I will not tell you that i know everything about the economics of hotel development. But, I do know welllllll more than most. Again, same admonition regarding leaving the post at this time.....

However, anyone who uses the logic (<- term used loosely) that hotels should merely lower their rates to increase demand knows NOTHING about the hotel business). It was at this point in the previous post that hopefully most of you hit the "back" button on your browser. Hotels have certain fixed costs and certain variable costs. By way of a very basic example, hotels would MUCH rather sell one room for $100 than 100 rooms for $1 each. Same amount of revenue generated, but much higher variable costs per room on the 100 rooms. So, a novice might say, "Well, if you can't fill your rooms at $150 per night, sell them for $75 and you'll be full." Half right. You'd be full. BUT, you would actually be worse off than if you closed the doors completely. Nice hotels such as Alden, Icon, Lancaster, have high fixed and variable costs.

Their staff per occupied room is very high. (Thus the difference between full service and limited service - but that is a story for another day). Turning a room (transitioning from one guest to another), by way of example, in a limited service should run about $35 - $40 per room. In a full service boutique, it may be twice that. So, selling a room for $75 is actually a money loser just on that alone. Then figure in the staff that you wouldn't have to pay if you were not full of $75 per night guests, and it furthers the problem.

Lastly on rate. Few things in the hotel business are as studied and cherished as rate integrity. You have to build rate up and condition your customers to expect to pay a certain amount. Then, slowly, you can bump rate up without much push back. However, drop your rate drastically and here is what you get: business conditioned to pay $75 per night (money loser) that will jump ship the minute you try to push rate up again. Oh, and those that were paying $150 and happy to do so, resent the lowering of the rate, realize there is a problem, and go to the Four Seasons. The knee jerk reaction to declining occupancy is to dump rate. Biggest problem/mistake in hotel management. GM's want to be able to show owners that they have 85% occupancy and to heck with the ADR. HUGE problem if not caught early. It is a vicious, downward spiral.....

And, while i'm at it. Making a call on Wednesday to get a hotel room downtown and learning your hotel is full is not exactly a leading indicator of the hotel market in CBD. Business travelers are the bread and butter of downtown hotels. Staying full Tuesday, Wednesday and Thursday evenings is not the problem. It is the other four nights that kill these places.

Making the decision between losing $1MM per year and spending another $10MM to upgrade with the prospect of STILL losing money is not as easy as you make it sound. Just consider if it were your money. And, while i'm on it, your statement of "the remodeling costs would not be huge" is equally as baffling. Have you ever recarpeted 250,000 sf of floor? How about new wallpaper for 150 rooms? Nevermind, let's say, just new bedding, towels, sheets. How about upgrading the HVAC system? The hot water delivery system? All of these things would help the guest experience but are VERY expensive.

Staying full for business travel and/or special events is easy. It is the other days that bankrupt a property.

Downtown, unflagged hotels lose money. Period.

I am certain of very few things in life. This one i know.

I don't want to go off on a rant here Dennis Miller style, but goodness gracious.

Sorry if the post skipped around a bit. However, just too much to address for one monring.

If I'm wrong, I'm wrong. Happy to admit it. However, at least prove me wrong based on some, reasonable, sound, based on some sort of reality, logic.....

Respectfully,

TNJ

Edited by The New Juniper
Link to post
Share on other sites

: applause :

well said tnj!

hopefully, people will take your post as gaining insight rather than looking for a way to be overly critical of your real world experiences.

and edited to add:

i am personally not aware that W closed and funded a sight.

engcons hasnt directly answered my questions, for whatever reason.. however, not saying he's right or wrong.

i just dunno...

Edited by houston-development
Link to post
Share on other sites
: applause :

well said tnj!

hopefully, people will take your post as gaining insight rather than looking for a way to be overly critical of your real world experiences.

and edited to add:

i am personally not aware that W closed and funded a sight.

engcons hasnt directly answered my questions, for whatever reason.. however, not saying he's right or wrong.

i just dunno...

Thanks houston dev.

The end game here is a sharing of info. Enough "i heard this" and "i heard that" eventually leads to the truth. No one person is the sole repository for all facts. I share what i know. I share what i heard.

If, from time to time, we have a spirited debate, then so be it. Opposing views are what make the world go 'round. Discussions, even arguments, should be reviewed carefully and learned from.

Link to post
Share on other sites
: applause :

well said tnj!

hopefully, people will take your post as gaining insight rather than looking for a way to be overly critical of your real world experiences.

and edited to add:

i am personally not aware that W closed and funded a sight.

engcons hasnt directly answered my questions, for whatever reason.. however, not saying he's right or wrong.

i just dunno...

And I am not going to answer questions about it. This is a project that NONE of you have come close to knowing anything about. I know a great deal about this project, yet cannot discuss it.

Link to post
Share on other sites
And I am not going to answer questions about it. This is a project that NONE of you have come close to knowing anything about. I know a great deal about this project, yet cannot discuss it.

i asked you to confirm if W closed the land, which is something you alluded to earlier. you are not providing any additional information; only making a clarification.

if you cant answer, then it is what it is. this has nothing to do with who knows more than the other.

again, thanks for the insight in advance.

edited to add the question i asked earlier:

just for clarification, are you saying they have closed the land, without any drawings/renderings, and will break ground sometime within the next two years?

thank you in advance for the insight.

Edited by houston-development
Link to post
Share on other sites

Well I was trying to give some insight to a project that I know about since the board was asking. I now wish I had never said a word and let you guys keep playing pin the tail on the donkey.

I'm done filling in the board on the W development. You guys can just guess on your own from now on.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

×
×
  • Create New...