San Angelo Economy Sunny, Long-Term Room Prices May Drop
Business is booming in San Angelo, and according to the trends of some of the individual sectors, it could mean cheaper rent in the long-term and more affordable hotel rooms.
The recent Business Barometer report from the San Angelo Chamber of Commerce shows growth in virtually all sectors aside from that of hotel occupancy. Curiously, rates have risen by an average of $30 per night since 2012, while occupancy has dropped by nearly 5 percent. Chamber of Commerce President Phil Neighbors states the numbers are directly related.
“If you had the opportunity to stay in Abilene or San Angelo or Midland to do your business that week, and Midland was the highest, San Angelo was the next highest and Abilene was the most reasonable, where do you think you’d stay? he inquires.
“Unfortunately because our rates have been so high for the past several months our occupancy is going down,” Neighbors says.
Neighbors states that there has been a high demand despite higher prices, however that the demand is starting to wane as people are weighing the cost. But with related sectors doing well and in fact increasing, the expectation is that in the long-term the rates for rooms will begin to level off and eventually drop.
According the Business Barometer, one of the most economically strong sectors in San Angelo at the moment is the building and construction permits for commercial and housing purposes.
San Angelo has been seeing a growth spurt for about three years now, however the areas affected by growth have shifted slightly since the impact of the energy boom.
Neighbors says indicators of the current energy boom were evident before it hit 18-24 months ago.
“Two to three years ago, we were seeing increases because of increases in employment among our major employers and because of construction in the public sector that was very high,” Neighbors says.
Back then, the economy was weak and in a sort of recovery mode nationwide. San Angelo, however, trucked along with number of major public sector construction projects to keep the local economy afloat.
“The good news is that when the economy was slower and there was less private sector construction, we were very fortunate here because the county, the city, Goodfellow, the schools and ASU, all of them were doing building projects, so that kind of helped us turn the corner on our ‘economic slowdown,’” Neighbors says.
Since that slowdown has been reversed and San Angelo’s economy has been steadily rising, the focus of the construction sector has also changed to meet the demands of the current energy boom.
“All of the construction industries have switched from that public sector to apartments, multi-family housing, single-family housing and commercial construction,” Neighbors says, noting that construction is the biggest area of growth in the past three years with a spike in 2013.
Currently, there are a number of new housing properties in the planning stages, including both large apartment complexes and six new hotels. When these new properties finally do up open up, their presence is anticipated to impact the pricing of current hotel room costs.
“The expectation is that like other markets that have gotten several new properties, when there is a shortage and their rates are very high, we expect a leveling off of the individual prices of the individual rooms,” Neighbors explains. “So with six new properties on the way, that should be our long-range expectation: that the lodging market will begin to level out a bit.”
Neighbors says the same concept applies to apartment complexes in San Angelo as well: as the needs of the housing demand are accommodated, prices should level and discontinue their rise.
The Business Barometer report covers building permits, sales and use tax rebated, labor market statistics, airport travel stats and housing and hotel rates for one month in 2013 as compared to the same month the previous year.
In November’s report, all numbers have increased except for the hotel occupancy rate; labor market statistics are unavailable due to the government shutdown. Sales tax revenues were among the highest of those sectors, however the peak in sales tax was seen at the beginning of the three-year period.
As for the future, Neighbor’s says, “Barring unforeseen circumstances that are not on my radar screen at the time, we expect continued growth because of what we know is in the pipeline in commercial projects and residential projects. And we expect the sales tax to continue to grow as long is people have confidence in the economy, which translates that they have confidence in their current jobs.”
The Business Barometer is released once a month by the Chamber of Commerce. Each month focuses on comparing the numbers for that month for the current and past year.
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