- September 5, 2021
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One of Houston’s largest hotels, which is located in the Galleria area, is seeking bankruptcy protection in the wake of the pandemic.
Hilton Houston Post Oak by the Galleria filed for Chapter 11 bankruptcy protection on Aug. 31, citing estimated liabilities between $50 million and $100 million.
The hotel at 2001 Post Oak Blvd. said in the bankruptcy filing that it has between 50 and 99 creditors and assets between $50 million and $100 million.
Hilton Houston Post Oak by the Galleria is owned by a subsidiary of Palm Beach, Florida-based Ecclestone Organization Inc. Company President E. Llwyd Ecclestone Jr. signed the bankruptcy filing, which was filed in the U.S. Bankruptcy Court for the Southern District of Florida.
The hotel was represented by attorneys from Miami-based León Cosgrove and Wilmington, Delaware-based Morris, Nichols, Arsht & Tunnell.
Representatives of the Hilton Houston Post Oak by the Galleria did not respond to requests for comment.
Hilton Houston Post Oak by the Galleria was once known as Doubletree Hotel on Post Oak. However, the hotel changed its name, and branding, in 2004 while it was undergoing a $13 million renovation.
The hotel is among the largest in Houston, ranking No. 18 on the Houston Business Journal’s 2021 List. According to Houston Business Journal research, the 448-key hotel reported total room receipts of $5.48 million between January and October 2020. That was significantly lower than the $13 million the hotel reported during the same period of 2019.
Although the hotel’s bankruptcy filing did not state why revenue had taken such a dramatic downturn, many hotels across the country — including in Houston — have seen their finances slide into freefall in the wake of the pandemic. Travel bans and social distancing mandates all but froze business and leisure travel for over a year, leaving many hotel companies scrambling to find new revenue streams.
Data from Oxford Economics and the American Hotel & Lodging Association predicts that the U.S. will lose nearly 486,000 direct hotel industry jobs by the end of 2021, the San Antonio Business Journal reported in August. Only five states — California, Nevada, Florida, New York and Illinois — are expected to suffer bigger losses than Texas. The Lone Star State had more than 151,400 hotel industry jobs in 2019. That total is now closer to 130,000 — and more losses are expected by the end of the year.
However, as vaccines against Covid-19 became more accessible, travel began to pick back up, casting a much-needed lifeline to the beleaguered hospitality industry.
In May, for example, The Howard Hughes Corp. (NYSE: HHC) reported two of its hotels in The Woodlands saw higher occupancy rates than in the previous quarter.
Jim Carman, president of the Houston region for Howard Hughes, said at the time that leisure-traveler demand for hotel rooms started to recover from the Covid-19 coronavirus pandemic last summer and has continued to increase throughout the spring.
“In addition, business travel is beginning to return, although far below 2019 peak numbers,” Carman said at the time.
A recent report by San Antonio-based hotel consulting firm Source Strategies found that after more than a year of unprecedented revenue losses in the Texas hospitality industry, lodging demand spiked sharply in the second quarter across the state. Industry revenue statewide increased 163% compared to second quarter 2020, which was the lowest point of the pandemic-induced crisis. The Q2 2021 revenue of $3.1 billion was just 5% lower than the same period in 2019, Source Strategies said.
That said, the Houston-Baytown-Sugar Land metropolitan statistical area saw room revenue increase 144.7%, trailing many other metro areas in the state. Austin-Round Rock, with room revenues up 333.1%, Waco (up 287.9%), College Station-Bryan (up 267.9%) and San Antonio (up 252.4%) saw the biggest increases. Fort Worth-Arlington (up 201.5%), Dallas-Plano (up 197.5%) and El Paso (up 165.5%) came in closer to Houston, while Corpus Christi room revenue increased only 65.8%.
But the delta variant caused Covid-19 cases and hospitalizations to surge in the third quarter, likely impacting hotel business.
This year’s Offshore Technology Conference, held Aug. 16-19, was already expected to be significantly smaller than in past years even before delta was cause for concern, and the National Rifle Association canceled its annual meeting — which was slated to be held in Houston Sept. 3-5 — due to the Covid-19 numbers in Harris County. The NRA said in December that the event had already resulted in more than 7,000 hotel rooms being reserved in 30 hotels across the city.