Home to more than 3,000 energy-related businesses, Houston, Texas, is well-known for its role as a hub for energy production in the United States. However, this market can be extremely volatile, and is currently in the midst of a downturn due to the plummeting price of oil (the cost of a barrel dropped more than 50 percent from June 2015 to January 2016).
According to Randy McCaslin, SVP of the Southern Midwest at CBRE Hotels Americas Research, the city’s current temporary downturn is not a reason for panic, it is simply a part of how the city’s economy operates. “It’s not a recession, more a two-, three-year temporary lull,” he explains. “So what you’re seeing is an oil boom, an oil bust, and an oil recovery. We predict numbers are going to bounce back in 2018 and 2019, but 2016 and 2017 are not going to be fun.” Buoying the city in this downturn is the fact that Houston is coming off of a period of financial prosperity, rather than continuing to slide down after shaky financial times. The city will also be hosting two major sporting events in the next two years—the Final Four and Super Bowl—drawing in travelers from all over the country.
In spite of Houston’s current energy-related economic struggles, hotel construction is booming there. McCaslin says many of the hotels currently in the pipeline are long overdue, as demand was up but there wasn’t any supply to meet it. “It may come as a surprise, but the Houston market has gone without updating its supply for quite some time,” he describes. “Houston is now developing its supply and filling its need for different types of hotels, such as convention center and luxury hotels. It is just unfortunate that all of this development began at the same time Houston’s main economic market started to take a downturn.”
McCaslin believes Houston hoteliers should view this market downturn as a chance to renovate their existing properties and put their best foot forward when the next upswing occurs. Ultimately, the hope is that completion of Houston’s various hospitality projects, coupled with the city’s eventual economic rise, will make the city stronger and more attractive to tourists.
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Straight Talk on Houston
Scot Cotton, general manager of the Marriott Marquis Houston—a 1,000-room property due to open in the fall—says the current expansion of downtown Houston’s entertainment and nightlife scene, which was spurred on by the city’s announcement that it will host the 2017 Super Bowl, will bolster the hospitality market over the next several years. He describes the role the Marquis will play in Houston’s future.
» “Our property is acting as a catalyst for many of the changes that are happening downtown. If you walk around Houston right now, you can count anywhere from eight to 15 cranes and see all of these venues going up. The Houston Marquis is going to help drive this new activity that’s happening downtown and bring in additional demand.”
» ”We’re also right on top of Houston’s LightRail transit system, which connects the property to everything that is downtown Houston.”
» “With the Final Four in March and the Super Bowl next February, the goal is to get all new venues open by then. Then people get see how dramatically Houston has transformed.”
