Local Hospitality Industry Helping Strong Texas Economy
In case anyone has not noticed, the Texas economy has been doing significantly better than the United States economy as a whole. Governor Rick Perry has been extolling the virtues of the Texas economy, and most recently, started a 2013 campaign to entice businesses to relocate from California to the Longhorn state.
More people than ever are taking notice of Texas. Business leaders and tourists are coming to see all that Texas has to offer. Hotels, restaurants and entertainment venues are all-seeing increases in attendance. The Texas economy is doing well.
According to the U.S. Bureau of Labor Statistics, the unemployment rate in Texas for December 2012 was 6.1 percent. That compares favorably to the 7.4 percent rate back in December of 2011. When comparing the Texas unemployment rate to the U.S. unemployment rate, Texas has consistently had a lower rate. As of the end of 2012, Texas had a 6.1 percent rate while the national unemployment rate was 7.9 percent.
Texas has a very diverse economy. Always a leader in oil and energy production, parts of Texas have seen explosive growth due to the introduction of fracking technology. As one of only a handful of states that does not have a state income tax, Texas is an ideal place for business.
Houston is home to 23 Fortune 500 corporations, Dallas has the Cowboys and technology companies flourish around the Austin and Round Rock area. One of the very important components of the Texas economy is the vibrant hotel and hospitality industry.
Travel to Texas
According to the September 2012 Office of the Governor’s Economic Development and Tourism Report, there were 208 million domestic leisure and business travelers who spent more than $63 million in Texas in 2011. Another 7.5 million international visitors added an extra $4.8 billion to the Texas economy in 2011.
Fastest Growing Cities are in Texas
A 2013 survey of the 20 fastest growing cities in America ranked Austin, Houston and Dallas as the number one, two and three fastest growing cities in America. For Austin, it was the third consecutive year in the number one position.
The Metropolitan Statistical Area (MSA) of Austin-Round Rock-San Marcos, TX had a population growth rate of 2.8 percent in 2012 and 2.7 percent for 2013. Other key metrics that gave Austin the title of fastest growing American city were its 3.1 percent job growth rate, low unemployment rate of 4.9 percent and a Gross Metro Product (measure of area’s economic activity) of 6.3 percent.
Houston and Dallas Metropolitan Statistical Areas also had population growth rates of at least 2 percent for 2013 and enjoyed unemployment rates of less than 6 percent. New jobs are being created at a pace well above the national average.
Hotel Industry Statistics
Texas hotels have been doing brisk business in recent years and the outlook for continued growth and improvement remains strong for the future.
According to Source Strategies, located in San Antonio, TX, Texas lodging room revenues were $8.1 billion dollars for the 2012 calendar year, representing a 10.2 percent gain over the previous year. The number of annual room-nights in 2012 rose by 6.2 percent over the 2011 figure. Annual occupancy for the state rose 2.8 percentage points from 2011 to 62.3 percent for 2012. The hotel industries important RevPAR figure hit $55.83, a level not seen since 2008.
Occupancy rates for 2012 were higher than the state average of 62.3 percent in Austin, Houston and Dallas. Austin hotels recorded occupancy rates of 69.2 percent while Houston registered a figure of 64.3 percent and Dallas just beat the average at 62.7 percent.
Midland and Odessa, where the discovery of underground energy reserves fueled an economic boom, saw hotel occupancy soar to just over 90 percent for the year which resulted in a 55 percent increase in overall hotel revenues.
Throughout the state of Texas, new hotels have recently been opened or are scheduled to be opened in the next few years. Others are in the early planning stages. The 1,000 room Omni Hotel at the Dallas Convention Center opened at the end of 2011 and more recently, Le Meridien Dallas – the Stoneleigh opened on January 31, 2013.
In Houston, the Westin Houston Downtown is scheduled to open on August 29, 2013 and Best Western has plans for a new Houston hotel in the coming year.
Austin, where the demand for more hotel rooms is even greater is preparing for two very large hotels located in the Convention Center area. The Fairmont Austin is a 1,000 room upscale hotel with a scheduled opening in 2015 and the Westin Austin Downtown 1,000 room hotel is expected to open in March of 2016.
Outlook for 2013 and Beyond
In 2013, the U.S. GDP is expected to grow at a modest two percent. With the Federal Reserve still keeping interest rates very low, that will keep the economy moving along. Over the next few years, economists predict that the economy will start to gather more steam.
Texas has shown that they do better than the U.S. economy as a whole and that trend should continue over the next several years. As the economy gains strength, the hotel and hospitality industry should also do better.
The cities of Austin, Dallas and Houston are all positioned to do well as more people are traveling to these major hubs in Texas. Business travel, leisure travel and international travel to Texas should all increase, creating additional demand for hotel rooms.
Large hotel projects are in the works around the convention centers and tourist attractions in many areas of Texas. Oil and natural gas exploration and production is turning quiet towns and cities into busy communities. Overall, the hotel and hospitality industry is growing and will be a great boost to the Texas economy.
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