By Kevin Thompson :: Renderings courtesy of Phoenix Hospitality Group
Local governments, tourism gurus and developers see project as economic catalyst.
Later this year, a four-story, 124-room Hilton DoubleTree Hotel will rise among these hills. Located in South Boerne or “SoBo,” the upscale facility will offer 7,500 square feet of meeting space, a sit-down restaurant, a full-service bar and a resort-style pool. It’s been a long time coming.
Years in the Making
Hospitality industry veteran Larry Woods has directed Boerne’s Convention and Visitors Bureau (CVB) for nearly ten years. “We’ve been talking about a conference center hotel for much of that time,” Woods said. “This won’t be your average DoubleTree. It will be a tremendous anchor for SoBo.”
The project isn’t Hilton’s first look at Boerne. Ten years ago, local hotelier Ed McClure planned to wrap a DoubleTree around the historic Ye Kendall Inn. Then came financial crisis. “Our industry was extremely adversely affected by the downturn,” lamented McClure, who sold his interest in Ye Kendall Inn in 2012.
Since then, McClure has constructed five Hilton brand hotels around San Antonio, primarily through public-private partnerships. “We’ve had success in communities that see hospitality as a critical component of economic development,” McClure noted. McClure built one conference center hotel on “a depressed strip” in Live Oak northeast of San Antonio. Now the street is lined with new restaurants and retail. IKEA is building close by. “The hotel has had an enormous impact,” McClure observed. “It was a brilliant move by the City of Live Oak.”
Here to Stay
McClure and his wife Elisa still live on the same Kendall County property where they once operated the award-winning Guadalupe River Ranch in the 1990s. Their grown kids live in Boerne and work in the business. “We have come full circle,” said McClure who connected with land developer Ross Partlow last year to explore options for a full-service hotel in Boerne.
Since relocating to Boerne from Corpus in 2007, Partlow has been improving vacant land for commercial use, first on Highway 46 East and now along Interstate 10. Partlow takes a balanced tack. “We have a long-term outlook that an out-of-town developer might not have,” Partlow explained. “We live here. Our kids go to school here. We have a deep understanding of the market. We’re sensitive to the community’s concerns, and we understand what’s lacking.”
Need for Space
The CVB’s Woods knows exactly what’s lacking: meeting space. “We’re missing state association business on a regional level, not to mention corporate business,” Woods stated. “75 percent of the business of the proposed hotel will be business we don’t currently get because we don’t have the space.”
Presently, the largest meeting space in Boerne is 4,500 square feet, but it’s attached to a hotel that only has 42 rooms. “We’re upside down,” Woods said. While critics wonder whether the project will negatively impact existing hotels in town, Partlow thinks differently. “We will have meeting space to host 400 people, but we’re only building 124 hotel rooms,” he said. “When we host large events, all hotels stand to benefit, not to mention other local businesses and restaurants.”
“The sky is not falling,” assured Woods who noted that hotel visitors in Boerne spend on average $95 per day. That translated into $15 million of economic impact last year. But most of that happened on weekends. “Weeknights are our weak nights,” Woods quipped. “The proposed hotel will bring people in Monday through Thursday. It will fill a huge void.” McClure agreed, “Boerne’s Main Street will really stabilize when we get enough people to spend money on Tuesday night or Wednesday afternoon.”
A Team Effort
Late last year, the Boerne Kendall County Economic Development Corporation worked with city and county leaders to craft a multi-tax abatement package to entice McClure and Partlow. Local government officials hope the new hotel will help achieve a longstanding goal: stymie the leakage of spending into Bexar County. “Many people who visit Boerne end up staying at La Cantera or The Eilan,” Partlow explained. “A full-service hotel will minimize that seepage. We want people not just to visit, but to stay and spend their dollars. Everyone wins at that point.”
According to McClure, disposable income will go into the quality of life aspects of Boerne: galleries, restaurants, bars and attractions like Cibolo Nature Center. “People will come to Boerne for the reasons we live in Boerne — and they’ll leave some of their money behind.”
Though McClure claims it’s his “absolute skinniest” tax rebate deal to date, the net present value of the incentive package is estimated at $3.5 million. The developers will get 75 percent rebates on real estate, hotel and sales taxes for up to fifteen years.
McClure said the project wouldn’t happen but for local government involvement. “On the Riverwalk or even at La Cantera, you can very easily make assumptions that even a banker can understand — no offense to bankers,” McClure explained. “But there is no established market in Boerne. We needed help to secure equity, debt and a commitment from Hilton.”
Taxpayers didn’t take it in the shorts, however, at least according to Partlow. “Our elected officials really studied and understood the vision and benefits of this project,” he observed. “They were very tough. They negotiated a fair deal for the local community.” Partlow noted the tax incentives are totally self-funded by the performance of the project. The city and county are paying nothing “out-of-pocket.”
Positioned for Success
Even with millions of dollars of public investment, the $24 million project is not without risk.
“This is a capital-intensive and management-intensive business,” stated McClure. “There are more ways for things to go wrong than right. But with our industry experience, we will mitigate those risks.”
Woods is equally confident. “Hilton would not allow it to be built if there was a good chance it would fail.”