Supply provides a variety of hotel options.

by admin

Historically, hotel rooms in San Antonio have either been in the central business district (CBD) or near the airport and “loop land.” In the 1980s and ’90s, there were two top golf resort properties built — Hyatt Hill Country Golf Resort near Sea World and Westin La Cantera Golf Resort near Six Flags Fiesta Texas — that attracted a new set of business. Additionally, the highway-located budget properties began posting strong numbers.

In more recent years, hotel chains have recognized the need to cater to a mid-to-upscale market of tourists and small business road warriors who were unable to find hotel rooms during special events (such as The Final Four) for large conventions or during the busy summer months. Mid-upscale properties, including Marriott, Intercontinental Hotels, Hilton, Starwood, Sheraton, Hyatt, Doubletree, Drury, as well as boutique CBD/River Walk properties such as The Valencia, Watermark Hotel & Spa and Hotel Contessa, were developed and changed the entire complexion of the hospitality market in San Antonio.

This year, there have been three major developments that are impacting the hospitality market in San Antonio:

• The completion of a 1,000-room Hyatt Regency hotel/condo project adjacent to the Convention Center on the River Walk
• The extension of the River Walk to the renovated historic Pearl Brewery development
• The completion of a 1,000-room Marriott PGA Golf Resort Village featuring two golf courses designed by Greg Norman and Pete Dye

With economic woes spreading, San Antonio has just begun to feel the pinch. Hotel revenues are down approximately 18.8 percent compared to the second quarter of 2008. Occupancy declined 13.2 percent, and rates dropped 6.5 percent versus the second quarter of 2008. Part of this is also attributable to the several new properties (estimated at 4,300 rooms) have been delivered to the market within the past 12 months. For the first time in more than 20 years, average annual occupancy for hotels in San Antonio fell to 60.4 percent for 2008, below the state average of 61.4 percent.

While the higher priced properties and upscale brands averaged a revenue decline of 18.5 percent in the second quarter, the mid-upscale segment was a mixed bag with moderate losses, and the limited-service budget properties with a lower price structure experienced a revenue decline of 18.7 percent.

Reports indicate that the properties with the strongest REVPAR have been the Hyatt Hill Country Golf Resort, Watermark Hotel & Spa, Westin Riverwalk and Hotel Contessa, followed by the River Walk hotels and the Westin La Cantera Golf Resort. Airport properties appear to perform consistently.

Tourism, special events and conventions created the demand for new construction. Unfortunately, all the new properties were delivered in a short period of time and during a global recession. It is likely that some of the oversupply may be absorbed by the increase in the military spending in the city.

— Keith Coelho, principal, Henry S. Miller Commercial, San Antonio

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