Island economic indicators down going into 2010

A series of unfortunate and uncontrollable circumstances led to consecutive months of poor economic performance on South Padre Island as 2009 ended, according to several economic indicators from the Texas Comptroller.

But with red tide and cold weather perhaps in the rearview mirror, the Island business community is optimistic about 2010, local officials said.

After a $15.4 million, or 21 percent, decline in hotel occupancy receipts in hurricane year 2008 versus 2007, the Island’s hotels did not see much of a boost in 2009, records show.

Island hotels generated $69.4 million in 2009, not counting December’s dollars, which were not available by press time. Records show that was 2 percent less than 2008’s total of $70.9 million.

"This is the year we’re telling all those bad things to go away," Dan Quandt, executive director of the South Padre Island Convention and Visitors Bureau, said.

Gross sales numbers and hotel occupancy receipts from 2000 through 2007 were increasing annually, records show.

"We were having a record year in 2008 before (Hurricane) Dolly hit," Quandt said.

Hotels did not return to last decade’s peak year of 2007 because the Island lost two full-service hotels in Hurricane Dolly, Quandt said.

The Bahia Mar and the South Padre Beach Resort have not reopened since the July 23, 2008 storm, Quandt said. The plan for the Bahia Mar is to convert it to a condominium tower, while the Beach Resort has not announced any reopening plans.

One of the Island’s two full-service hotels, the Sheraton, was not open in time for Spring Break 2009, which also would have impacted the receipt numbers, Quandt said.

He said he has seen an increase in condo occupancy in the past year, possibly a result of the full-service hotel decline.

"The (national) industry reports stated that there was a slight turning point in November 2009," said Stormy Wall, a member of the South Padre Island Convention and Visitors Authority Board and the operations manager of Sapphire Condominiums.

"I expect for us, that we’ll have a good summer and an OK spring," Wall said. "We’re having to work harder and smarter in the upcoming year."

Sales tax allocations for the 2009 fourth fiscal quarter would not have been impacted by the hotel occupancy because that quarter is historically poor for the Island, records show.

The Rio Grande Valley is the base for tourism on South Padre Island, Quandt said, especially after September.

But red tide, a toxic algae always present in the Gulf of Mexico waters that sometimes multiplies dramatically, made visiting the Island unpleasant in October through December.

In the areas most affected by red tide, people had trouble breathing and their eyes would water, they said. The effect was most pronounced on the elderly and anyone with asthma.

So with poor conditions, Valley residents did not make as many day trips to the Island for events such as Kite Fest and Sand Castle Days, as they had in years past, Quandt said.

"Our business did not see a decline (in 2009)," said Scott Friedman, the owner of several restaurants and businesses on the Island, including Pier 19 and Pirates Landing.

Friedman said the businesses he and his father own here cater to Valley residents and Winter Texans.

So Friedman’s water sport and charter fishing businesses declined in the fourth quarter of 2009, but everything else remained stable, he said.

"We’re different than the business on (Padre Boulevard)," said Friedman, referring to the water sports stationed at Pier 19 and the pirate ship cruise from his Port Isabel restaurant. "You got water all around you here. You can come in and see the boats bring in the fish. We’re a destination."

The outlook for

the spring season

The outlook for Spring Break has been fuzzy, Quandt said.

Colleges and universities all over the country close off a week’s vacation in February and March, and some students from those schools choose the Island for their vacations.

But Texas’ largest universities — the University of Texas at Austin, Texas A&M, Texas Tech and the University of Houston — begin their Spring Break on March 13, which becomes Texas Week here.

College students have been making Spring Break decisions later and later each year, Quandt said. So although the booking numbers may not be too favorable at the moment, there could be a surge in the next few weeks.

Condo occupancy numbers have increased into March, Quandt said, possibly a result of Winter Texans staying longer than in past years.

Multi-bedroom condos and rental homes have been marketed to college students in the past, said Wall, a local condo business owner. So the Island could see an improvement in that department once the Spring Breakers make their plans.

Hotels and condos should also see increased business for Semana Santa, Quandt said.

This year, Holy Week begins on Palm Sunday, March 28, to Easter Sunday, April 4.

But Quandt expects most visitors to stay on the Island only Thursday through Sunday, instead of the entire week as in years past.

Despite the negatives affecting the Island’s 2009 numbers, local business owners have some reasons for optimism.

The owner of La Quinta Inn and La Copa Inn and Suites is scheduled to open a full-service hotel on the Island’s north end this June, Quandt said. The Hilton Garden Inn will feature 150 rooms, which should make the Island more attractive to convention groups.

Friedman, the owner of Pirates Landing and Pier 19, plans to open an 80-person speedboat thrill ride this summer, he said. The ride is a high-throttle cruise through the bay that should add to the destination model of his business, he said.