Industry keeps hotels in business

The booming Ranger oil field inspired Conrad Hilton to open his first Hotel in 1920, according to the American Oil & Gas Historical Society. Hilton believed he had found his life's work in the banking industry when he founded the New Mexico State Bank of San Antonio with only $2,900 in capital. In 2 years, Hilton built his bank's assets to $135,000. When World War I interrupted his plans, Hilton sold his bank and served his country.

Hilton was determined to get back into the banking business when he returned from France after the Armistice. But times had changed and banking opportunities had dried up. A friend suggested Texas, where the Ranger oil field was making millionaires. But just as he had found in Albuquerque, there was no room for a new guy in the banking community of Wichita Falls. Hilton continued down the Texas Central Railroad to the Cisco railway station, just east of Ranger's booming oil field in Eastland County. He was determined to build a banking empire.

With just $5,011 in his possession, Hilton walked to the first bank he saw in Cisco and found to his delight that it was for sale for $75,000. Accustomed to finding financial backers and undeterred by the $70,000 shortfall, he wired the absentee Kansas City owner to close the deal. Hilton was poised to build the banking empire he had long dreamed of when the seller came back by telegram, tersely raising the price to $80,000.

In his autobiography, Be My Guest, Hilton recalled telling the startled telegraph operator, "He can keep his bank!" Then he strode out of the station and across the street to a two-story red brick building, the Mobley Hotel. Henry Mobley, the hotel's owner, was making the most he could off of the Ranger oil field boom. His lobby was constantly packed with tired workers, maneuvering for space and impatiently awaiting their turn to rent a room. Mobley rented the hotel's 40 beds in 8-hr blocks corresponding to shifts.

Hilton joined the crowd and was alert to the opportunity. He approached Henry Mobley, who was convinced that the real money was in oil, not in the "glorified boarding house" business. Before long, they closed a $40,000 deal. Hilton had his first hotel and never returned to banking.

After learning some history about oil and Hilton, this editor became curious about the current relationship between oil and hotels.

Revenue, occupancy

Oil and gas counties maintained very high revenue and occupancy levels in the hotel industry, according to the Hotel Brand Report conducted by Source Strategies Inc. This report takes a look at the lodging industry over a 5½-year period, from January 2008 through June 2013. The top 100 oil and gas counties averaged a 9.8% gain in revenues, slightly above state averages. In 2012, oil and gas revenues gained 15.7% for the year, more than twice the 7% rate of revenue gains in the balance of Texas.

The largest revenue gains in the past 30 months have been among higher-priced hotels (in part influenced by insufficient hotel rooms in oil and gas areas). In 2009, lodging priced above $135/night declined 31.2% as high-priced hotels dropped rates to hold their occupancy while some consumers still traded down. Starting in 2011, the strongest increases have been at price levels above $135/night.

Occupancy is growing. Second-quarter occupancy reached 66%, well above the long-term Texas average of 60%. According to the report, highest occupancies were oil and gas driven: Midland 84.7%, San Angelo 83.8%, Odessa 81.5% and Lubbock 71.7%.

Mid-upscales and limited service (chain hotels that offer high-quality rooms without restaurants) added more than half of new chain supply: 2,500 of the 4,600 net room supply increase; independents accounted for another 2,200, mainly low-cost room construction in oil and gas areas.

Houston-Baytown-Sugar Land revenues moved 12.8% higher, to $561 million and continue to approach those of the largest metro, Dallas-Ft. Worth, at $593 million. Oil and gas continues to power Houston.