GALVESTON

More tourists in Galveston means more hotels, but some industry stakeholders worry an increase in cheaper rooms could drive down room prices and decrease the hotel tax coming into the city.

Many new hotels coming to the island are limited-service, or hotels with fewer add-on amenities and lower operating costs than upscale or midscale hotels, said Spencer Priest, chairman of the Galveston Park Board of Trustees, which promotes island tourism.

“The long-term impacts of having too much inventory available to visitors can create a drop in what we call our average daily rate and revenues,” Priest said. “If we bring revenues down, there is potential for a negative impact to profitability and hotel tax collections.”

Priest also is regional director of revenue management for Landry’s Hotel Division, which operates the San Luis Resort, Spa and Conference and a Hilton Hotel on the island.

At the end of 2014, 23.4 percent of the 5,200 hotel rooms in Galveston were chain limited-service or budget, according to Source Strategies Inc., which maintains a comprehensive database of Texas hotels.

In 2018, chain limited-service and budget hotels accounted for 28.9 percent of the 5,700 hotel rooms, according to the data.

In 2014, chain midscale and upscale hotels made up 15.8 percent of the hotel rooms, compared with 14.3 percent in 2018, according to the data.

Chain hotels also are becoming more prevalent, making up 49.6 percent of the 5,200 hotel rooms in 2014, but 60.5 percent of the 5,700 hotel rooms in 2018, according to the data.

More limited-service hotels are coming into Galveston because that’s what the demand is for, said Willis Gandhi president of the Galveston Hotel & Lodging Association.

Gandhi oversees several island hotels including the Best Western Plus Galveston Suites, 8502 Seawall Blvd.

Visitors often prefer chain limited-service hotels because they’re familiar with the product, Gandhi said.

“They’re working toward consistency,” Gandhi said.

His hotels cater to both cruise passengers and families visiting Galveston itself, he said.

If there are more limited-service hotels in Galveston, it’s because that’s what people demand, said Michael Gaertner, owner of Michael Gaertner Architects. He’s designed several hotels in Galveston.

“People build hotels to meet demand of the marketplace,” Gaertner said. “You cannot control who your market is.”

There ought to be a healthy balance, hotel owner Dennis Byrd said.

Byrd’s company, Island Famous, owns a full-service DoubleTree by Hilton at 1702 Seawall Blvd. That attracts a different kind of guest than would stay in his limited-service Holiday Inn Express & Suites under construction in the 3200 block of Seawall Blvd., he said.

While the DoubleTree attracts weddings and corporate events, the Holiday Inn will cater to the leisure traveler, he said.

“I do think it is important to evaluate development as a whole,” Byrd said. “I don’t think you would want 100 percent full-service or 100 percent limited-service hotels.”

Where that balance is could be hard to determine, he said.

At some point, Galveston might have too many hotel rooms, but it’s hard to say when that will be, Gandhi said.

He doesn’t think limited-service hotels drive down hotel tax collections, he said. Sometimes, limited-service hotel room prices are more expensive than full-service prices because full-service hotels collect more money in add-ons like breakfast, he said.

But the average rent per room per day for limited-service chain hotels in Galveston was $66.41 per night last year, compared to $126.13 per night for mid- and up-scale hotels, according to Source Strategies.

Hotel tax collections are continuing to grow, however, despite growth in the number of rooms.

The park board collected $18.6 million last year, compared with $10.7 million in 2008, according to park board data.

The park board has launched a lodging study to answer questions about the industry, Priest said.

Keri Heath: 409-683-5241; keri.heath@galvnews.com or on Twitter @HeathKeri.

(15) comments

Ron Woody

Very informative, well written article. Thanks!!

Bill Cochrane

So, Mr. Priest is chairman of the GPB and works for Landry’s as regional director of revenue for upscale hotels. It looks like Priest has a conflict of interest. He wants to ignore free market so competition doesn’t affect his bottom line, probably tied to an annual bonus. I predict the next move is to try to limit competition by convincing the City Council to adopt new rules banning new hotels unless the have swimming pools, workout gyms, and other amenities that will cause limited service hotel builders to quit building competitive hotels in Galveston.

Don Schlessinger

[thumbup][thumbup]

Jon Babara

YEP, Tillman wants to keep controlling Galveston for his own benefit! MONOLOPY

Steve Fouga

Before I was a Galveston resident, I tried all the types of hotel the Island has to offer, and enjoyed every visit. The more I stayed in Galveston, the more I gravitated to limited-service (i.e., cheaper) hotels. Not being wealthy, and therefore having to choose how I spent my money, I chose to spend it in restaurants and attractions rather than hotels, because I was only in the hotels to sleep anyway. This tactic allowed me to visit the Island several times per year, rather than once.

If I wanted a "rich" once-per-year vacation, it was Crested Butte, Cozumel, Destin, San Diego, etc. Galveston simply wasn't, and isn't, in my opinion, one of those places where it makes sense to spend a lot on a hotel.

Long story short, it's easy to understand why limited-service hotels are becoming more popular.

Don Schlessinger

[thumbup][thumbup][thumbup]

Bobby Pope

I like full service hotels. Bur some folk on a budget will choose a cheaper hotel and their is none on the island the will stay somewhere else. You can stay at the Hilton by NASA for $120.00 per night on the weekends or even South Shore Resort. The weekend rates in Galveston are stupid high. If you are taking a cruise you can stray and spend your eating dollars in Kemah or worse Harris County. Galveston can't see the forest for the trees. It will only help every restaurant in Galveston to have some cheaper options for the tourist to choose from. Not everyone can pay over $300.00 per night for some of Tillman's and the Moody's hotels.

Todd Flores

Cheap and tacky-
Inexpensive hotels and dollar stores.


Charlotte O'rourke

Jan. 8, 2008, Dolph Tillotson, Low-rises a death knell for economy

“If the only hotels we permit to build are the smaller lower-priced types of hotels” Rapp said “then we’ll continue to get just those. That will mean that we’re going to continue Galveston’s reputation as a third-class destination.

“Someday we may want to bring in those larger hoteliers and we may find ourselves unable to do that.”

My question: if someone wanted to build another great full service, beautiful hotel on the seawall like the San Luis, could they?

We reap what we sow.

Don Schlessinger

Charolette, I agree with most of what you say, but Galveston is growing and maturing now, not down the road. If the "big money" wants in now is the time to do it. Tillman is a smart. If there was any danger of "cheap" hotels ruining things Tillman would be buying LOTS of property to stop the invasion.

Charlotte O'rourke

Don, [thumbup]

Kelly Naschke

High end upscale hotels = high end upscale clientele. Pretty simple math. The 4th largest city in the US is an hour away. We should be marketing to the affluent as well as the budget minded tourist.

Kelly Naschke

What’s with all the Tillman bashing? All of his properties do nothing but enhance the island. Everything under his umbrella is well maintained and an asset to Galveston.

Rusty Schroeder

Nobody want's to talk about the elephant in the room, Steve and Kelly are really close with their comments. There are 2 high end upscale hotels 2 hours away from Houston in the Louisiana marshlands, Tillman Fertitta owns one of them. What both of these hotels have that Galveston's don't is 1 thing, Casino Gambling. Galveston never will compete with tourists destinations in Florida, South Carolina, or even California. There is not enough to do in a weeks time unless lounging on the beach is your goal. Then there are rental homes and timeshare hotels on the west end that fill that void. Galveston can't make the cruise passengers stay in Galveston hotels, that has been noted in the past few weeks. Galveston is the playground for Houston weekenders or day guests. There could be new large upscale hotels built, but it's not happening without gambling. Tillman knows that, that is why the Pleasure Pier and his seawall restaurants benefit from the day and weekend tourists. The Kemah Boardwalk is the same way, both entertain a family environment and are modeled that way. Galveston needs to accept what it is, an island town that attracts tourists. I think if more time and money were spent on the upgrading of the town aspect the tourism dollars would follow. I still have ideas that could be talked about over lunch and not an out of town study group. I see what other coastal cities have and shake my head why Galveston doesn't have the same or close to amenities. I guess bickering over sargassum and parking is more of a Galveston issue, because it has been going on for decades.

James Lippert

Let the Free Market decide what should be built, this is America after all! Having Government dictate what should be built smacks of Communism and we all know how that story ends.

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