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Ongoing oil boom brings influx of hotels to Crossroads region

By ALLISON MILES
Oct. 6, 2012 at 5:06 a.m.
Updated Oct. 7, 2012 at 5:07 a.m.


A closer look at the Victoria metropolitan area's lodging industry:

First quarter, 2011:

• Number of hotels: 36

• Room nights sold: 114,000

• Revenue: $7.7 million

• Percent occupancy: 64%

First quarter, 2012:

• Number of hotels: 37

• Room nights sold: 134,000

• Revenue: $11 million

• Percent occupancy: 76%

Source: Office of the Governor, Economic Development and Tourism website

Pounding hammers, buzzing saws and similar construction site sounds are giving way to new options for a comfortable night's sleep.

With the ongoing oil boom limiting available lodging throughout the region, hotel construction is up throughout the Crossroads.

Hotel Texas, an incoming 39-room hotel on its way to Cuero, is a welcome sight to a community whose hotels run at nearly 100 percent occupancy, said Randall Malik, director of the Cuero Development Corporation. Two additional hotels - a 63-room La Quinta Inn and a 75-room Holiday Inn Express - have also been approved for a zoning change.

Additional lodging options mean more hotel income, he said, but it doesn't end there. People staying in the region also contribute to the economy by eating in restaurants, shopping in town and so on.

"It certainly means a boost," he said.

Yoakum is in on the growth, too.

The 38-unit Black Gold Inn is currently under construction, said Patrick J. Kennedy, economic and community development coordinator for the City of Yoakum. There are thought to be as many as three others coming in, he said, although the companies had not yet made building permit requests.

Two hotels - a Hilton Garden Inn and and a Homewood Suites - are already under way in Victoria, while a Days Inn and a Courtyard Marriott are also slated to soon call the city home.

Randy Vivian, president and chief executive officer of the Victoria Chamber of Commerce, also said it was good to see businesses coming in to meet the demand. Still, he said, it's important to pay attention to the long-term outlook.

Eagle Ford Shale projections indicate activity could last anywhere from five to 30 years, he said, noting boom times won't last forever.

"As these businesses come in, they need to take that into account," he said, explaining that overbuilding could lead to too many rooms once activity ceased. "There needs to be some strategic planning."

Yatin Bhakta is general manager of Goliad's Best Western Plus, a 42-room hotel that opened Aug. 16. He, too, said he hopes the incoming businesses don't find themselves in over their heads as time progresses.

That isn't his only concern, however. The added competition could hurt his own business in the long run, he said.

The Best Western Plus costs a bit more than its Goliad counterparts, he said, but tries to offer a more luxurious experience with added amenities.

"It's been a little slow but I'm very optimistic," he said. "I hope that steady business the next two to three years will help us settle in."

The influx means good things for Victoria, which has turned away a fair share of business due to lack of lodging availability, said LaRue Roth, director of the Victoria Convention and Visitors Bureau (CVB).

Still, it likely means hoteliers will probably become more competitive down the road. The region's rental rates have sat on the high end for some time now, she said, but hotels will likely find themselves lowering rates to attract guests.

One incoming hotel, Homewood Suites, is a sort of game changer, she noted.

As the first hotel to obtain a 380 agreement from the Victoria City Council, it must leave at least three room blocks open a month for the convention and visitors bureau to sell, she said.

"They must make them available and at a certain percentage below the average rack rate," Roth said. "They will have to come in at a lower rate, and other hotels will have to pay attention to that."

Malik, too, said he expected to see some rate changes since the lodging industry is all about supply and demand. It's too soon to tell exactly what will happen, however.

"It's really tough to gauge the saturation points with this industry," he said. "But it's very exciting to see the positive uptick in the local and regional economy."

Competition isn't limited solely to the hotels, though. Roth said that, once those rooms go online, tourism specialists must step up their game and market what their towns have to offer.

"Now it's game on. We'll have to be out there hustling more," Roth said. "But that's fun for me. When you have a racehorse, you let him run. When you have a rottweiler, you let him work. When you have a CVB professional, you let him sell."

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