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November 9, 2018

Houston is putting more hotels down on the game board

The pipeline of proposed hotels in the Houston region totals nearly 16,000 rooms in 152 projects, representing an 18 percent increase in the supply across the Houston area, according to CBRE. Although not all of the projects will get built. “If you are a hotel owner in Houston, you’re dealing with an onslaught of new supply in pretty much every market,” CBRE senior vice president Rahul Bijlani said. “Overall demand growth in Houston is going up. It’s just that supply is going up faster.”

Revenue per available room will likely take until 2021 or 2022 to get back to peak levels of $77 in 2014. Houston is on track to end the year with revenue per available room rate of about $70.

Institutional buyers are targeting markets such as downtown and the Texas Medical Center, where properties are not being discounted, Bijlani said. He added that investors making long-term bets on Houston are buying properties at costs that are below what it would take to replace a property and are willing to endure negative cash flow if they need to.

Houston’s hotel market got a boost from the Super Bowl and Hurricane Harvey that lasted through March of this year. That probably helped some operators build up their cash reserves and stave off bankruptcy, Bijlani said.

Houston’s aviation hub can’t compete with demand in Asia

Houston is a bustling aviation hub, ferrying more than 54 million passengers to cities near and far in 2017. But its passenger counts can’t compete with those in the Asia-Pacific region, which largely dominated the world’s busiest passenger air routes.

According to Routesonline.com, the busiest air route in the world is a 280-mile flight transporting leisure travelers from South Korea’s capital, Seoul, to the island of Jeju, famed for its white sands beach resorts and volcanic landscape off the Korean Peninsula. The route has an average of 180 scheduled flights per day, or one flight every eight minutes, and flew 13.5 million passengers in 2017. That’s up 9 percent from 2016, when this route also ranked as the world’s busiest.

Flying from Melbourne, Australia, to Sydney, Australia, ranked as the second-busiest route with 9.1 million passengers in 2017. Sapporo, on the northern Japanese island of Hokkaido, to Tokyo was the third busiest with 8.7 million travelers.

The Asia-Pacific region dominated the top 100 busiest routes by passenger numbers, accounting for more than 70 percent of the total.

“This research backs up forecasts that the Asia-Pacific region will be the biggest driver of passenger demand over the next 20 years,” Steven Small, brand director of Routes, said in the online article.

The highest-ranked U.S. route on the Top 100 list is New York JFK to Los Angeles with 3.53 million passengers. It was No. 30. Los Angeles-San Francisco came in at No. 31, with 3.51 million passengers.

New York JFK-London Heathrow was the busiest international route featuring an American city. With 3 million passengers, it ranked No. 49 overall but was No. 9 when just looking at the busiest international routes.

No routes from Texas made the list of Top 100 busiest .

Cyber perps pose as CEOs

The Securities and Exchange Commission warned public companies to consider cyberthreats when designing internal accounting controls after nine companies lost nearly $100 million from cyberfraud.

Perpetrators pose as company executives or vendors and use emails to convince employees to send large amounts of money to bank accounts controlled by the fraudsters, according to the SEC. Some of the frauds last for months. One of the companies lost more than $45 million and two lost more than $30 million, according to the SEC, which did not identify the companies, which included technology, machinery, real estate, energy, financial and consumer product firms.

Most the money wired to the fraudulent bank accounts was not recoverable.

Public companies have a responsibility to investors to design their internal accounting controls so they’re not at risk for fraud. None of the nine companies was charged with failing to safeguard accounting procedures, according to the SEC.

The FBI estimates that fraud involving compromised business email accounts has cost companies more than $5 billion during the past five years.

China still No. 1 in wind energy

China cemented its dominance of the global wind power business following the merger of former top energy producer Guodian Group and seventh-ranked Shenhua into the industrial giant CHN Energy, according to a report by the research firm Wood Mackenzie.

The conglomerate is focused on coal extraction and coal power generation but its wind fleet is more than twice as large as the second largest utility, Spain-based Iberdrola, according to the study.

The growth will likely lead to expansion of Chinese wind investment.

“Chinese asset owners, long confined to their domestic market, are now looking to build and buy wind assets abroad,” said Xiaoyang Li, an analyst with Wood Mackenzie power and renewables’ Asia Pacific team. “Australia has been a particularly attractive overseas market, thanks to its open market and high project profits.”

Houston ranks No. 8 among top cities for conferences, report says

Houston ranks No. 8 among the top U.S. cities for hosting conferences, according to a new report.

SmartAsset, an online personal finance company, ranked cities by several factors, including the number of hotels, average room cost, the concentration of dining and entertainment venues and the distance from airports to downtown.

Houston has more than 550 hotels, but the market is dominated by medium-sized ones, SmartAsset said. Other cities, such as New York and Orlando, have larger hotels that can accommodate bigger conventions, according to the rankings.

The Bayou City has affordable hotels, which can attract a wider range of conventions. The average night at a Houston hotel costs $123, according to SmartAsset, compared to $166 in Portland, Ore., or $258 in New York City.

Other major Texas cities cracked SmartAsset’s fourth annual list of the best conference cities. San Antonio topped the list and Austin ranked No. 4. Dallas was No. 18.

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