Doubletree shakes up market
Camino’s revenues down 50 percent
By Timothy Roberts |
Since September 2008, revenues at the Camino Real Hotel in Downtown El Paso have dropped more than 50 percent.
The Camino Real’s general manager, René Rubio, says the reason is obvious: “We have a brand new hotel a couple of blocks from here. That was the biggest hit.”
That brand new hotel is the 200-room Doubletree, which opened just four blocks away in April.
But the Doubletree’s owner says his hotel is bringing in new customers, not taking them away from the three other major hotels in or close to Downtown: the Camino Real, the Holiday Inn Express and the Hilton Garden Inn.
“I didn’t build the Doubletree to take business from the Camino,” says owner Jim Scherr. “I built my hotel to bring business to all the hotels Downtown.”
Others say the Camino Real is hurting because its Mexican owners have not invested enough in the 97-year-old landmark that’s listed on the National Register of Historic Places, and potential customers are eager for an alternative.
The questions raised by the market shift underscore the risk the city took in agreeing to rebate taxes to the Doubletree, and to pay the hotel $184,000 a year for parking and for blocks of rooms to be used for conventions held at the city’s convention center.
On Oct. 20, City Council agreed to reduce some restrictions in the agreement with Doubletree owner Scherr, allowing him to, among other things, hire fewer people.
Bring ‘em Downtown
The Camino Real, the Hilton Garden Inn and the Holiday Inn Express have all lost revenue over the last year, as the recession cut into business and pleasure travel.
Total revenues for the Downtown hotels have remained relatively stable during the same period, at about $1.2 million per month. That’s according to figures compiled by the Texas Comptroller’s office, which collects the hotel occupancy tax.
But at the same time, each hotel’s share of the Downtown market has declined. The 359-room Camino Real took the biggest hit, dropping from 38 percent of the market to 21 percent.
The Doubletree, in operation for seven months, now claims 31 percent of the revenue.
But will adding hotel rooms bring more people Downtown?
“Anybody who thinks building a hotel will draw a convention just doesn’t understand the market,” says Rich Cane, president of the El Paso Hotel Motel Association and a hotel owner whose holdings include the Wingate Hotel on Gateway West. “You have to have a downtown like Austin or San Antonio to draw people. El Paso’s Downtown isn’t an interesting place to go.”
But Bill Blaziek, general manager of El Paso’s Convention and Visitors Bureau, says that adding rooms Downtown makes it possible for more and larger conventions to come to El Paso.
“A city’s attraction as a convention destination depends on room capacity,” he says. The addition of the Doubletree “broadens our field of opportunity.”
Scherr said he thinks many of the people staying at the Doubletree are people who would otherwise have stayed near the airport. Because of his hotel, he says, more people are coming Downtown.
Revenues
The $367,666 in revenue his hotel had this August is about half of what he’d like to see eventually, Scherr says. Since its April opening, the Doubletree’s revenues have steadily increased each month.
At the Camino, the biggest recent month was September 2008, when revenues totaled more than $508,000. According to the latest figures available from the Texas Comptroller’s Office, its worst performance was this August, when it brought in just under $241,000.
Most hotel markets, including the top five markets in Texas, have seen declining revenue since at least the second quarter of this year, says Randy McCaslin, vice president and practice leader in the Houston office of the hotel consultant PKF. That El Paso remained relatively stable may mean that the new hotel has been drawing new business Downtown, and not taking it from a competitor.
Unlike the last two recessions, this one hit just as hotels were expanding, McCaslin says.
“We were building hotels thinking there was nothing around the corner,” he says.
Any assessment of the Downtown hotel market has to include a look at the Camino Real.
“We have a brand-new facility on line, and the Camino hasn’t been investing a lot of money in their hotel,” says Kathy Dodson, El Paso’s economic development director. “We often hear from people that it wasn’t what they expected. Maybe this will prompt the Camino Real to make some investments in the hotel.”
Adds Blaziek: “The Camino Real has a need to invest in an a capital improvement program.”
Camino updates
In 2000, the Camino was purchased by a Mexican company, Grupo Empresarial Angeles. It’s one of 26 properties in the company’s hotel division, and the only one in the U.S. The company also operates hospitals, including one in Juarez, as well as radio stations, department stores and parking lots.
When the owners announced a $4.2 million renovation in 2003, the Camino briefly became part of the Hilton chain. But when the upgrades failed to materialize, the Hilton name was removed.
Rubio, the Camino’s general manager, acknowledges that his hotel needs improvements. He says he’s working on them now.
The hotel is spending $500,000 to overhaul its main bank of elevators. The wait for an elevator is a frequently heard complaint about the Camino Real. The hotel also has spent $60,000 on new computers this year and $13,000 on a new WiFi system. A $350,000 remodeling of the hotel’s bathrooms was planned for this year but was scrubbed because of the decline in revenue, Rubio says.
“People say México doesn’t want to spend money on this hotel, but that’s not true,” he says. “We have a lot of plans for the hotel.”
The hotel’s occupancy rate is running at about 37 percent, down from 52 percent a year ago. The statewide average usually runs about 60 percent, although last year, El Paso led the state with an average 72 percent.
Rubio was a little perturbed that the city was complaining about his hotel while helping out a new property.
“Instead of complaining, the city should be saying, ‘Let’s see what they need and help them out.”’
Meanwhile, Rubio hopes the updates he’s working on will renew interest in the Camino.
“I wish the people we lost would give us another chance,” he says.
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