Expect years for Houston area hotels to recover, expert says

GALVESTON COUNTY, Texas (KTRK) -- Hotels in Galveston are finally beginning to see some relief as beaches and businesses reopen, but filling rooms is still a struggle.

Willis Gandhi is the owner of Best Western Suites Galveston, Holiday Inn Express, Galveston Beach Hotel, and Days Inn & Suites.

Just a few weeks ago, Gandhi was barely booking any rooms. Now, occupancy is up by at least 40 percent. But he's still anticipating a revenue shortfall of at least 50 percent for this year.

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"We just have to control our expenses. Just because once the summer is over, I don't know what else is going to happen," Gandhi said.

The hotel industry in Houston has also taken a major hit.

"Right now, what we're possibly looking at is ending 2020 with a 41 percent hotel occupancy. Now to put that into perspective, we ended last year at 63 percent," said Arlene Ramirez, an assistant professor at the University of Houston Conrad N. Hilton College of Hotel and Restaurant Management.

She said Houston First was initially expected to generate $91 million in hotel occupancy tax revenue, but now, it's projected to fall short by at least $30 million for this year.

Ramirez said it could take several years before occupancy rates return to normal.

"The statistical information that we're getting is that 2023 is when the hotel industry will get back to the levels they were at in 2019. The city of Houston is expected to get back to 2019 levels in 2025, and that's because we were already seeing some pressure on the rate because of oil and gas," Ramirez said.

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Ramirez said canceled conventions and business trips are some of the biggest financial setbacks for Houston hotels.

"We're seeing big conferences canceled. There's a big, big oil and gas world conference that was supposed to take place in December, and that was going to bring about 10,000 visitors to the city. That has been postponed until 2021," Ramirez said.

Now the industry has to be creative.

"The hotels themselves, as far as attracting the guests, are doing everything possible to market the fact that we are clean and that we are walking in the customer's footsteps. We are seeing what they would approach, what they would touch, what would be something that would be a concern, and we're tracking that," Ramirez said.

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