Rising Oil Prices Could Spur Texas Hotel Construction, Says Arch-Con CEO
Michael Vaughn
HOUSTON – (Realty News Report) – Houston’s hotel market, in America’s fourth-largest city and energy hub, has been relatively steady over the past few years as the energy sector experienced price swings. With oil prices recovering, hotel development activity could pick up. Arch-Con Construction, based in Houston, currently has nearly 1,200 rooms underway across Texas, about half of them in Houston. To learn where the hospitality sector is headed and the latest trends shaping it, Realty News Report spoke with Michael Vaughn, senior vice president at Arch-Con. Vaughn leads the Hospitality and Multifamily Divisions and has been with the firm for nearly 15 years.
Realty News Report: What’s your outlook for hotel construction in Texas over the coming months? Have you seen more developers approaching Arch-Con, or will construction remain flat?
Michael Vaughn: Houston’s market has been flat for the last few years with occupancy and rates remaining stable. Lately we are seeing projects that had been on hold resume construction. There has been a decline in activity in areas like the Energy Corridor, Downtown and The Woodlands, but with oil back above $60 a barrel, we expect renewed interest and more activity going forward.
Realty News Report: Arch-Con reportedly has more than 1,100 rooms under construction or about to break ground in Texas, half in Houston. What’s driving this surge?
Michael Vaughn: Several projects have moved forward recently that likely wouldn’t have a year ago. Lending terms have improved and equity investors are showing more interest in Houston’s economy. These factors have helped projects advance from planning into construction.
Realty News Report: Arch-Con converted the historic Stowers Furniture building, built in 1913, into the Aloft Houston Downtown. Are conversions becoming more common in the hospitality industry?
Michael Vaughn: Yes. Federal and state tax incentives have encouraged more adaptive reuse in urban markets. Many vacant office buildings are being repurposed as hotels because historic preservation incentives reduce the tax burden on remodels. When a project meets the federal criteria and is listed on the National Register of Historic Places, developers can save on portions of sales tax associated with a remodel. Those savings make conversion projects viable.
Realty News Report: How many historic buildings remain that could be redeveloped? Has the pool of suitable buildings been exhausted?
Michael Vaughn: There are still buildings that qualify for conversion, but the bigger challenge is finding an available brand or flag interested in the site. In many cases the physical inventory exists, while brand availability is the limiting factor.
Realty News Report: Dual-branded hotels—two hotel brands sharing a single property—are becoming more common. Why is that?
Michael Vaughn: Dual-brand properties are increasingly popular because they allow developers to maximize efficiencies on smaller parcels of land while offering two distinct brands. Shared back-of-house services reduce operating costs and increase feasibility in dense urban locations where land values make building a single, stand-alone hotel difficult to justify.
Realty News Report: Has the success of Airbnb affected the hotel industry?
Michael Vaughn: Definitely. Airbnb and similar platforms are major factors influencing how hotels attract and retain guests. Younger travelers show less brand loyalty and prefer simple, cost-effective booking options. Many guests prioritize convenience and price, sometimes foregoing traditional hotel services.
Realty News Report: Are developers focusing more on millennials with certain brands, such as the AC Hotel by Marriott?
Michael Vaughn: Some brands reflect lifestyle preferences common among younger travelers, but brand placement often depends on franchise availability in a given area. The AC Hotel, a European lifestyle brand, filled a downtown niche where other franchise flags were already taken. While that brand isn’t specifically marketed solely to millennials, hotel concepts increasingly include amenities that appeal to younger guests: grab-and-go food, social lobbies with games and pool tables, and modern communal spaces. Our Aloft Houston Downtown project, for example, incorporates services and design elements that resonate with younger travelers.
Realty News Report: What design trends are shaping new hotels—smaller rooms, compact lobbies, larger gathering spaces?
Michael Vaughn: Technology and operational changes are influencing hotel design. Built-in, multifunctional furniture, electronic check-in, and digital room keys are altering how guests use rooms and access the property. Outsourcing services like linen and laundry reduces the need for onsite laundry facilities, which decreases back-of-house space requirements. At the same time, many hotels emphasize versatile public areas and larger gathering spaces to support social interaction and communal experiences.
Realty News Report: The Valencia Group recently opened the Hotel Alessandra in downtown Houston. Is that the right move?
Michael Vaughn: Yes. There’s been a marked shift toward boutique and independent hotels. Limited brand availability, the desire to avoid franchise fees, and the freedom to pursue unique designs outside franchise standards have made non-franchised hotels an attractive option for many developers and owners.
