Staycationers Love the Omni, Which Is One Reason it's Doing Better Than Expected After Its First Year

Categories: Biz, City Hall

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On Sunday, the Omni will have been opened a full year. That's long enough that the does-the-city-have-any-business-owning-a-hotel debate has died away, replaced by artists dreaming of all the cool shit they can do with those lights.

The hotel has a slate of offerings Sunday to commemorate its 11/11/11 debut. An $11.11 bucket of beer from The Owner's Box? Check. A $111 Swedish massage/manicure at Mokara? Yep. An $11.11, farm-to-table meal of shrimp and grits and chicken-fried steak? That too.

The anniversary is being celebrated in less obnoxiously numbered ways too, namely by sending a press release bragging about how well the hotel is doing.

Since January 1, 361,000 people have stayed at the hotel, purchasing $24.5 million worth of food and drinks and occupying an average of 67.9 percent of the rooms. Gross operating revenue was $61.4 million, and net earnings were a shade over $18 million.

That last number is the only one that really matters, of course, and, seeing as it came in a good 20 percent higher than initial projections, it's a sign that the hotel is doing well. Damn well, even.

Ed Netzhammer, the Omni's managing director, said the hotel's better-than-expected performance is due to a number of things. The hotel market in Dallas citywide has been strong for the past year, and the Omni has managed to pull in extra convention and group business.

The biggest surprise comes in the "leisure/transient" category -- people staying at the Omni for pleasure. The projection was for 41,045 room nights. There were actually 64,572, helping drive up sales of food and drink.

That was a huge leap, but more surprising to Netzhammer was where a large percentage of those guests were coming from: Dallas. That's right. The Omni is Dallas' premier staycation destination. Twice as many of the leisure/transient guests came from here than from any other place.

No doubt that number will drop once the novelty of the place wears off, but Netzhammer says the Omni is well positioned to stay ahead of expectations. Already, reservations and other leading indicators hint that next year will be better than the last.

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12 comments
Myrna.Minkoff-Katz
Myrna.Minkoff-Katz topcommenter

Some people are missing the point.  In Philadelphia, there was scant convention business until the mega-Marriott was built.  Soon after, a "world-class" convention center was built two blocks away, the city witnessed a major hotel building boom, hundreds of new restaurants opened, thousands of jobs were created, and tax revenues increased to help the stagnating city economy surge forward.  The same whining and complaining occurred there as it is occurring here.  Let's hope the "non-whiners" win out.

mcdallas
mcdallas

I'm starting an Observer "office" pool.

 

Here's the bet: how many months will it be until this successful manager is fired/relocated?  

 

Can someone help me set the odds on this?

Myrna.Minkoff-Katz
Myrna.Minkoff-Katz topcommenter

Tom Leppert worked very hard to get the Omni built and was bitterly opposed by people who did not want federal assistance ($388.2 million) in getting this important project done.  The Omni created jobs, and boosts revenue to a city in dire need of both.  Leppert is to be congratulated.

MikeWestEast
MikeWestEast

At this point, I do not care how they get their money. I do not care about the other hotels since their owners supported this thing. They made their bed and need to lie in it for the next 20 years, come what may. The ONLY criterion for success is paying off that bond on time using funds from current cash flows, not from that padded reserved (on which we are paying interest). We will not know the real story for another few years until they stop using the reserve to pay off the bond. Promos and press releases do not really matter. If supporters want to claim victory, so be it. Eventually cash flow, not headlines of unaudited estimates, will tell the tale.

Borborygmus
Borborygmus

The question is how much better is the Omni doing than the competitors that receive no tax subsidy. Did they grow the market as promised or did they just cannibalize their neighbors?

cynicaloldbastard
cynicaloldbastard

"and net earnings were a shade over $18 million."

 

Before or after debt service?

censormeallyouwant
censormeallyouwant

$61.4 million that could have gone to hotels that aren't subsidized and actually pay property tax. 

cynicaloldbastard
cynicaloldbastard

 @mcdallas The manager is successful because the interest payments on the bonds issued for the hotel are booked under the convention center.

That's like running up your credit card but your brother gets charged the interest.

 

And, as noted below, how much of the employment, dining revenue and room rentals are simply transferred from property tax paying hotels in the area?  Every fund raising auction I've heard about in the past six months includes a weekend at the Omni.  The rooms are being donated at way below market rate.

ScottsMerkin
ScottsMerkin topcommenter

 @Myrna.Minkoff-Katz so pillaging customers and revenues from tax paying hotels to a taxpayer funded hotel is to be congratulated?  No wonder our economy sucks.  Do they even require economics classes hi high school anymore?

primi_timpano
primi_timpano topcommenter

@cynicaloldbastard Wondering the same thing. Those are awfully high margins for most any business, much less a hotel.

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