Low OTC attendance dashing hotels’ hopes for August recovery
Booking cancellations amid COVID-19 surge a setback for industry
Houston hotels and restaurants, counting on a boost from the return of the Offshore Technology Conference, are instead counting cancellations as the delta variant drives a surge in coronavirus infections just as the world’s largest oil and gas trade show is set to kick off Monday.
The city’s hospitality industry was already expecting a smaller
OTC, as travel restrictions limited international participants, but early forecasts still put attendance at about 30,000, half the nearly 60,000 who attended in 2019. But attendance is unlikely to reach even that modest estimate, according to hotel and restaurant operators.
The Wyndham Hotel near NRG Park, where the annual conference is held, is normally booked solid when OTC comes to town. But cancellations began rolling in just over a week ago as COVID-19 cases began to overwhelm hospitals in Houston and across Texas, said Shahpar Razmzan, the hotel’s corporate executive director.
Bookings at the hotel are likely to end down as much as 85 percent from previous OTC weeks.
“OTC is mostly international travel,” Razmzan said, “and obviously that’s gone down because people don’t want to take a chance.”
The shrinking attendance and growing cancellations are another setback for an industry that was among the hardest hit by the pandemic, and it’s more evidence that the progress of the economic recovery is linked to progress in controlling the pandemic.
OTC’s return, after last year’s cancellation, brought hope to a
“You’re going to hear that it’s just not the normal OTC — and probably by a long shot.” Michael Heckman, chief executive of Houston First
hotel industry waiting for business travel and revenues to rebound. In the past, the conference has generated at least $60 million in spending inside Houston hotels and restaurants, according to Houston First, the city’s convention and visitor’s bureau.
Usually held in early May, the conference was pushed back this year to August as vaccinations became widely available and COVID-19 cases fell. In April, Houston First started reserving room blocks for OTC based on its attendance projections of around 30,000. But hotel owners said actual bookings are falling far short of even that modest forecast.
“You’re going to hear that it’s just not the normal OTC,” said Michael Heckman, Houston First’s chief executive, “and probably by a long shot.”
OTC organizers declined to provide updated attendance projections but said that more than a quarter of the conference’s attendees came from outside the U.S. in 2019 and that this year’s event would be smaller, with more virtual offerings.
“From day one, the OTC team has been organizing a hybrid conference with health and safety as our top priority,” said Leigh Ann Runyan, OTC’s executive director. “While we are planning to have a smaller footprint at NRG Center this year, we look forward to welcoming energy professionals — whether in person or online.”
Benjamin Berg, owner of Berg Hospitality Group, said he was preparing to host a 150-person private party for OTC attendees this week, but the organizers canceled Tuesday. He still has 12 smaller OTC events on the books across his five Houston restaurants, but given last week’s flow of COVID-related cancellations — 10 dinner parties between Monday and Wednesday — he fears more will follow.
The conference normally makes for one of his busiest weeks of the year, he said — sales typically jump 50 percent from normal weeks. This year, he budgeted a 20 percent sales spike this week, he said, “but I’m not confident in that right now.”
Dan Zimmerman, principal of La Colombe d’Or Hotel, is also preparing for a disappointing OTC week.
“We’re just not seeing as much of the big event traffic,” he said. “Everybody is hopeful that it’s going to be a good OTC; I just don’t think you’re going to see as much travel as you would normally see.”
OTC typically flushes hotels with customers in downtown, the Galleria area and even as far north as The Woodlands, which houses corporate energy offices, said Nick Massad III, vice presiacross dent of development for American Liberty Hospitality, which operates a dozen hotels in the Houston area.
But rooms blocked off for OTC aren’t panning out into many actual bookings, he said. What he and other hotel owners had looked forward to — the moment when OTC gave way to a robust convention season — is not happening.
Revenues and staffing levels his hotels are still down between 30 and 40 percent from before the pandemic, he said. Food and beverage hubs inside his hotels are either closed or running at reduced levels. The weak OTC showing so far is not doing anything to change that.
“It’s going to push a lot of operators to question whether or not they’re going to turn back on all of the full services at their operation,” Massad said.
OTC is just the beginning of Massad’s worries. Last week, Amazon canceled a conference that had blocked off nearly 400 of his rooms later this month. Walmart postponed a September event expected to draw around 10,000 to Houston.
Massad is looking ahead at the back half of 2021 and is concerned about what he’s seeing.
He’s worried, too, about the World Petroleum Congress, a quadrennial event slated to bring 10,000 largely international guests to Houston in December. If the recent rise in COVID cases prolongs border and travel restrictions, he fears the conference could take a blow.
“There’s a cost to our caution,” he said. “Not saying it’s wrong, but it’s a big cost every week we wait.”
Suzanne Neufang, CEO of the Global Business Travel Association, a trade group, said travel restrictions hampering events such as OTC are out of date and fail to recognize the vast majority of business travelers are vaccinated.
The association is calling on federal leaders to review these policies, especially in cases where countries permit vaccinated Americans to enter but the U.S. is not reciprocating.
“We’re asking them to follow the science, reciprocate and set the guidelines in place for what would be allowable travel inbound because we do know businesses are hurt by this,” she said.
Energy conventions such as OTC and the World Petroleum Congress are big for the Houston hospitality industry because they generate so much spending, Massad said.
“It’s not just room sales,” he said. “These are businesspeople who are doing business the entire time they’re here — breakfast, lunch, events. We get to sell them everything because they need so much.”