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Airport Hilton rebounds from pandemic losses

Thursday, April 28, 2022 by Jo Clifton

The Hilton hotel at Austin’s airport has made a significant recovery from the dark days of the pandemic, airport executives Tracy Thompson and Rajeev Thomas explained to the City Council Audit & Finance Committee Wednesday.

During 2021, the Hilton’s occupancy rate was about 62 percent and the average daily room rate was slightly less than $136. For the first quarter of 2022, occupancy and room rates at the Hilton shot up, as did operating revenues, Thomas said, noting that March was a particularly good month because of NASCAR and South by Southwest. Occupancy rose to 88.8 percent and the room rate topped $180 per night. As a result, operating revenues climbed to $1.6 million for March of this year, compared to $571,000 in March 2021.

Thomas showed data indicating that, compared to other airport hotels not associated with hub airports like Dallas-Fort Worth, Austin’s airport Hilton had a higher occupancy rate in 2021 and was achieving a higher average daily room rate. He compared the local Hilton to airport hotels in New Orleans, St. Louis, Pittsburgh and Portland, Oregon.

The airport Hilton is run by the nonprofit corporation Austin-Bergstrom Landhost Enterprises, or ABLE, which was created to finance construction of the hotel with proceeds from bonds. Last summer, City Council agreed that the Department of Aviation would loan ABLE $1.35 million in order to keep paying its debts during the Covid pandemic. Thomas explained that the corporation actually borrowed less than $825,000, returning more than $525,000 to the Department of Aviation in March.

Mayor Pro Tem Alison Alter, who chairs the committee, asked Thomas when ABLE would be able to pay back the rest of the loan. He responded that if the corporation has sufficient operating cash the board would look at repaying the money earlier. Under the agreement with the city, ABLE would not be required to start repaying interest on the loan until 2024, with principal and interest payments to start on April 1, 2025, and continue for three years.

Thomas said he would be looking at revenues over the next couple of months to see whether they can pay the loan back early. He also announced some good news from the credit rating agency Standard & Poor’s, which upgraded ABLE’s bond rating from A- to A.

In addition to her other duties, Thompson serves as vice president for development for ABLE. She reported that effective Feb. 18, wages for non-tipped employees were increased to the city’s $15 living wage. She assured the committee that ABLE would comply with all city regulations.

Earlier this month, the hotel’s operator, Boykin Prospera LLC, signed a labor peace agreement with UNITE HERE Local 23. Under the agreement, both parties agreed to waive certain rights they have under federal law regarding union organizing activities. The union agreed to refrain from strikes, and Boykin Prospera agreed to remain neutral on organizing activities. Willy Gonzalez, secretary-treasurer of the union, told the committee Thompson and her staff were helpful in facilitating the meetings that resulted in the agreement.

Finally, Thompson told the committee that ABLE will be asking Council to amend an agreement with Boykin Prospera to extend the hotel management agreement to Oct. 31, 2024. The current agreement is set to expire on Oct. 31, 2022.

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