Inland American Lodging Group, Inc., a wholly owned subsidiary of Inland American Real Estate Trust, Inc., acquired two Westin hotels located in Houston’s Galleria District for approximately $220 million, a move that fortifies its presence in the area.
“It’s a major coo. What it seems like Inland is trying to do is reposition its portfolio to the upper, up-scale chain scale,” JP Ford, senior vice president of Lodging Econometrics, told Commercial Property Executive. “Seemingly, it’s a great buy. The properties have been renovated, you have the Starwood team managing them, Houston has been doing well operationally and there’s an uptick in the economic climate here. With all of those factors aligned, you set yourself up for a pretty good run over the next few years.”
The 24-story Westin Galleria includes 487 rooms and more than 71,000 square feet of meeting space. The Westin Oaks Houston at the Galleria offers 406 rooms on 21 floors as well as 23,500 square feet of meeting space, including a 4,500-square-foot banquet space overlooking the Houston skyline. Both hotels recently underwent renovations totaling $35 million.
“The acquisition of the two Westin hotels was a strategic fit with our lodging portfolio’s long-term business and investment strategy to invest in luxury, upper-upscale and urban-upscale properties in top 25 markets,” Marcel Verbaas, Inland American Lodging Advisor, Inc.’s president & CEO, told CPE. “The Westin Hotel brand is considered one of the top brands of choice for travelers around the world, is in the midst of the most robust growth period in the brand’s 78-year history and is the fastest growing upper-upscale hotel brand in the world.”
The properties are an integral component of the Houston’s Galleria District, a well-known upscale area that offers the finest high-end retail shopping, restaurants and Class A office buildings, and is located at one of the busiest intersections in the country. The Westin Galleria and Westin Oaks are the only hotels connected to the Galleria complex, offering access to its well-diversified population.
“Inland already had a good feel of the supply and demand dynamics in the city prior to making their bid,” Ford said. “From a macro level, through the second quarter of 2013, you have individual transactions up 10 percent across the country over where there were in 2012. The trend is toward buying hotels and you have a lot of active groups out there right now.”
According to Verbaas, the Houston lodging market continues to outperform the majority of the country, ranking as the third highest in RevPAR growth out of the top 25 major U.S. markets.
“The Galleria submarket is also consistently the best-performing submarket in Houston,” Verbaas added. “Additionally, as owners of the Marriott Woodlands and a number of other hotels in the area, we are very optimistic about both the short- and long-term growth prospects for the city.”