After calling revenue projections for Conroe’s new $107 million Hyatt Regency Hotel and Convention Center in September unreasonable, council revisited the operating budget that leaves the city unable to pay $3 million in debt service due in 2024.
Jeff Binford with Garfield Public Private, which serves as asset manager for the hotel, presented a financial forecast in September showing the hotel would see a $217,000 profit for the year.
However, council said numbers were inflated and sent Binford back to the drawing board for revised projections.
During the council’s Nov. 8 workshop, Binford provided updated numbers.
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Binford said the hotel’s operating revenues are expected to be $10.7 million with expenses at $11.1 million, leaving the hotel and convention center in the red at $682,387.
The city had to allocate $5.1 million in operating costs in May, just days before the hotel opened. That amount has been drawn down to just over $3 million. The city is projected to have just $638,575 of those funds left by September 2024.
Collin Boothe, assistant city manager and director of finance, said the numbers don’t factor in the hotel’s $3.3 million in debt service for 2024.
Boothe said those numbers will force the city to borrow money from the Conroe Industrial Development Corp. to cover debt service for the hotel.
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The CIDC is a nonprofit development corporation operated under the supervision of the city council to promote economic development. Revenue from a one-half-cent sales tax levied by the city provides incentive funding to attract new business.
“I think it is a reasonable budget,” Binford said of the revised budget.
In September, Binford said the hotel has had a slow start and hasn’t attracted the number of guests as it was originally expected.
Councilman Howard Wood asked if the occupancy rates are increasing month over month.
“The numbers are OK,” Binford said. “We had a last-minute group that boosted occupancies. We are seeing more activity in the bar and restaurant.”
Binford said he did not have specific numbers but said the rates appear to be trending up. The updated numbers, he said, are based on an occupancy rate of 48%.
Wood said he didn’t want to be “blindsided” by expenses as the city budgets other expenses.
“Are you confident this is the best number we should plug in?” Wood said. “I can handle problems, but I can’t handle a freight train hitting us at the last minute.”
Binford said the numbers were the best available but would continue to be evaluated.
During a regular meeting Nov. 9, the council approved the operating budget of $11.3 million for the hotel and convention center for 2024.
