The Say-Town-Lowdown

The news isn’t good.

But you likely won’t see it reported in San Antonio.

Take a look at the September 17 USA Today. In an article titled “If you build it, they will check in,” reporter Barbara De Lollis described the boom in new hotel development around the nation, with hundreds of new hotels being built — “the highest number of new rooms in the pipeline in more than seven years.”

But if the hotel boom promises more choice and selection in many communities, it won’t be good news everywhere.

“In some places,” continues De Lollis, “including San Antonio and Phoenix, the buildup of hotel rooms could possibly push down rates, says Jan Freitag, Smith Travel Research vice president.”

Wait a minute. Push down rates? That would mean the hotel market was overbuilt, with supply neatly exceeding demand. How could that be for a visitor destination as popular as San Antonio?

We’re certainly building lots of new hotel rooms, with more than 7,000 either under construction or planned for the next year. And the biggest of them all is the 1,000-room Hyatt rising steadily (if not necessarily beautifully) on the downtown skyline, financed and bankrolled by the city.

How could the good folks at Smith Travel Research think that a big new Hyatt won’t draw thousands of visitors to San Antonio and boost our convention business?

First, there is a whole lot of new hotel building going on here. And second, it is not at all clear that our convention business is going to be booming. The numbers from the San Antonio Convention and Visitors Bureau show that convention business — measured by hotel demand — should be up in 2008. But the boost doesn’t look like it will be more than something between 50,000 and 70,000 room nights over the 2006 total. That may sound impressive, but it won’t do much to fill up a 1,000-room hotel that will put 365,000 room nights on the market in 2008, and every year thereafter.

The owners of the pre-existing Hyatt hotel on the River Walk weren’t exactly convinced either. They brought an arbitration action against Hyatt Corporation, alleging that the shiny new hotel would seriously impact their business. And they won: The Hyatt Corporation ultimately bought them out.

We won’t know for a few years whether the city’s big bet on a massive hotel will be successful. What we do know is that while we are busy building a downtown for visitors and convention-goers, the downtown for locals isn’t going anywhere. That’s the really serious trouble, the trouble that should particularly concern those who envision a grand new neighborhood combining residences, offices, and shops in “River North,” the zone along and around the San Antonio River north of the downtown core.

To get a sense of how the overall downtown economy is faring, I pulled together the U.S. Census Bureau annual figures on employment by Zip code for the last decade. We constantly hear how San Antonio is adding jobs and attracting new employers, and AT&T is certainly a major presence in downtown, along with all the visitor-oriented hotel and restaurant employers. But the employment numbers tell a very clear story.

For Zip 78205, the heart of the downtown area, the Census Bureau reported 24,735 jobs in 1994 and 26,447 for 1996. For 2005, the latest year available, the employment total came to 26,048. During a decade that saw the expansion of the convention center, the development of new hotels, and the “revitalization” of Houston Street, downtown employment has been effectively flat.

In other parts of the city, the story is very different. Zip code 78232, north of the airport along 281 up to 1604, had 8,961 jobs in 1994. Its 2005 total was close to double that, at 17,290. A little farther north, beyond 1604 and west of 281 in the Stone Oak/Sonterra area, the job count was just 1,312 in 1994. By 2005 it had hit 12,173. With new employment centers like Methodist Hospital going up, the total will grow even more.

Add the number of jobs in those two Zips, and their 2005 employment exceeds the downtown core — and the gap is getting bigger.

With downtown employment as it is, there may not be anyone to buy those expensive new condos, rent the new apartments planned for “River North,” or spend their dollars in the chic new shops lining Houston Street and stretching north along the river. But surely the tourists will come. •

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