............... Private companies overview
Houston’s public entities aren’t the only movers and shakers in town. Private companies, ranging from retail chains to construction companies and beer distributors, are also pumping a significant amount of money into the local economy.
The 75 companies that participated in this year’s Top Private Companies list generated nearly $50 billion in revenues and employed more than 50,000 people in the Houston area.
“That shows there is a significant amount of business activity that’s occurring among privately owned companies,” said Patrick Jankowski, senior vice president of research for the Greater Houston Partnership.
The list includes many familiar companies, names that Jankowski said literally built Houston, such as Tellepsen, Wortham Insurance & Risk Management and Stewart & Stevenson. But there are also some younger companies, relatively speaking, and he said these tend to be focused in areas such as retail, electricity, logistics and specialty chemicals.
“That’s kind of the new way of making money in town,” Jankowski said.
He added that logistics will become increasingly important as Houston continues to increase its exports.
Crane Worldwide Logistics, No. 23 on the list with $616 million in revenues last year, opened in 2008 to help companies transport cargo via land, seas and skies. President and CEO John Magee said the company found a niche in moving unique items requiring hands-on attention.
The company grew to $690 million in revenue within its first six years, but then the price of oil crashed. Crane lost $200 million in revenue from its top 20 energy clients. They simply weren’t shipping the same amount of cargo.
So Crane expanded its work with life sciences, automotive, aerospace and government and defense contracts.
The energy sector now represents 23 percent of Crane’s business, down from 57 percent in 2014.
“It definitely had an impact,” he said. “We’ve done a good job offsetting the impact.”
One life sciences company, for instance, has hired Crane to transport cardiovascular kits. If someone has a severe cardiac issue and the emergency room doesn’t have the necessary tools, Crane is responsible for getting the cardiovascular kit on the very next flight departing Washington, D.C., for that city. It also coordinates a driver to pick up the kit from the airport and deliver it to the hospital.
Another life sciences company has hired Crane to quickly transport bovine tissues used for the research and development of human drugs. The tissues must be moved in a temperature-controlled environment.
To further diversify its offerings, Crane announced a merger with Davaco in March. Davaco is a program management company that specializes in restaurants, hospitality and retail. If a nationwide franchise decided to install new countertops at all of its restaurants, it might hire Davaco to manage that process.
Magee said the merger with Davaco will allow the combined company to “do things that not all of our competitors do.”
Instead of hiring three companies — one to do a site survey, a second to deliver the cargo, and a third to install and test the products — his combined company could handle all of those tasks.
Benchmark, No. 24 on the Private Companies list with $602.6 million in revenue last year, is also boosting its bottom line with a merger. Benchmark Hospitality International merged with Gemstone Hotels & Resorts last year and rebranded the combined company as Benchmark.
“The industry has gone through quite a bit of consolidation over the last five years,” CEO Alex Cabañas said.
Gemstone managed boutique hotels, while Benchmark Hospitality managed larger hotels and resorts often attached to conference centers. The combined hotel management company operates 70 properties with 58 commercial hotels
and resorts, including Hotel Contessa on the San Antonio River Walk. Its revenues reflect the combined revenue of all the properties it manages.
Cabañas expects the combined company to increase its revenue 30 percent to 40 percent this year as it has a number of projects under construction or being renovated. It’s also involved in new development.
It will manage a 250room hotel and conference center that is being built across the street from Kyle Field at Texas A&M University. As an Aggie, Cabañas is excited to be part of the project.
“It’s been a great opportunity for us,” he said. “We’ve been working on it for a couple years.”
Benchmark also will operate the Delta by Marriott Hotel and Watters Creek Convention Center being built in Allen, near Dallas. The full-service hotel and convention center is scheduled to open in late 2018.
Cabañas said the convention center will feature more open floor plans, natural lighting, outdoor space and living-room type seating.
“Our joke in the company is no one wants to meet in beige ballrooms anymore,” he said.