Survey: Texas service industry is recovering
Activity in Texas’ struggling service industry accelerated in March at its fastest pace since mid-2019 as visitors returned to hotels and restaurants and businesses recovered from February’s winter storm, a survey by the Federal Reserve Bank of Dallas indicates.
The revenue index — a key measure of the sector’s health — jumped from 2.6 in February to 21.6 last month, signaling an uptick in revenues.
“We are seeing travel picking up,” one respondent wrote, citing spring break and the NCAA women’s basketball tournament. “We are hoping for group business in hotels to continue to increase.”
“Thank God for the vaccines!” another wrote.
Service sector executives are feeling more optimistic about current and future conditions. The general business activity index surged to 28.9, a record high since the survey began in 2007, and over 60 percent of respondents said they anticipate higher revenues in the coming months.
“Texas service sector activity accelerated sharply in March, with revenue and labor market indicators rising to multiyear highs,” said Christopher Slijk, an associate economist at the Dallas Fed. “Price pressures continued to increase, and wage pressures surged to pre-pandemic levels.”
Retail receipts also increased in March, with the sales index reaching its highest point since last fall. Gauges of future sales and em
ployment also improved.
“Retailers were very positive in their assessment of business conditions and outlooks, despite voicing concerns about inventory shortages,” Slijk said.
Business leaders said segments such as residential real estate are faring well, and they are bouncing back from the winter storm in February. But they expressed concerns about the ability to find workers and federal policies.
“The labor market is increasingly tight,” one respondent said. “It is very difficult to find employees to
work.”
“In the first two months of 2021, we have seen unprecedented price increases from our suppliers, causing us to raise pricing,” another wrote. “Inflation is a concern of ours as well as a potential Biden tax increase. If we are unable to pass along all the price increases, or if we are faced with an income tax rate increase, we will be forced to cut capital spending and possibly evaluate employment levels.”
In San Antonio, spring break brought a stream of vacationers to the area. Some downtown hotels and businesses got a revenue bump from the NCAA women’s basketball tournament.
Preliminary projections
provided to Visit San Antonio by data firm STR indicate occupancy at hotels citywide was above 60 percent in March, said spokesman Richard Oliver.
During the same month last year, as the coronavirus pandemic was taking hold, occupancy dropped to about 40 percent. Before the pandemic, it was typically in the upper 70s in March, Oliver said.
“We’re extremely bullish on the summer period,” he said. “Our outreach with partners, including hotels, indicate there’s real optimism that between vaccinations, herd immunity and the norm of safety protocols now, along with a real pentup demand to travel, we’re going to see strong numbers of visitors.”
In March, Hotel Valencia Riverwalk started selling out of rooms on Friday and Saturday nights, said Stacy Seaborn, director of sales and marketing. Before then, oc- cupancy on weekends hovered between 70 and 80 percent.
During the NCAA tournament, the 213-room hotel hosted guests who transferred from another hotel nearby, resulting in 160 room nights. Bookings for weeknights are increasing.
“We have definitely seen an uptick in business,” Seaborn said.