In 2007, a Nashville company named Gaylord Entertainment made headlines when it announced it would buy what is now the La Cantera Resort & Spa, in Northwest San Antonio, for $252 million and undertake a $250 million expansion to double its number of rooms.
Like so many things, the plans fell apart during the Great Recession. Gaylord Entertainment went on to pay a $12 million fee for pulling out of the deal.
Fifteen years later, a successor company to Gaylord is targeting another San Antonio resort — and it is aiming higher this time.
On Monday, Ryman Hospitality Properties announced it had reached an agreement to buy the JW Marriott San Antonio Hill Country Resort & Spa, off U.S. Highway 281 on the far Northeast Side, from the Blackstone Real Estate Income Trust for a whopping $800 million.
The deal, if it goes through, will be one of superlatives: The nine-figure price tag is likely the highest to be agreed to for any hotel in San Antonio’s history. It is the second-highest offer in the U.S. for a hotel since the outbreak of the COVID-19 pandemic, beaten only by the $835 million a partnership between Trinity Investments and Credit Suisse recently agreed to pay for the Diplomat Beach Resort in Hollywood, Florida.
The 640-acre, 1,002-room JW Marriott is San Antonio’s preeminent resort, regularly collecting more room revenue than any other hotel in Bexar County, and by a large margin. In April of this year, it raked in $7.3 million in room receipts, according to the office of the Texas Comptroller — well outpacing the second-place finisher, the downtown San Antonio Marriott Rivercenter, with $5.1 million.
Ryman’s portfolio
Ryman, a publicly traded company, doesn’t appear to have a presence in San Antonio, but it has made major investments in Texas. Last year, it paid $260 million for Block 21, a development in downtown Austin that includes the 37-story W Austin Hotel and the Moody Theater performance venue, which hosts Austin City Limits Live. It owns the Gaylord Texan Resort & Convention Center in Grapevine, one of Texas’s largest resorts; it owns other resorts with the Gaylord name in Nashville, Florida, Colorado and elsewhere.
Along with its hotels, Ryman is known for its investments in the country music industry. It owns the iconic Grand Ole Opry and Ryman Auditorium music venues in Nashville. It has partnered with the country star Blake Shelton on the Ole Red chain of restaurants and entertainment venues, and it helped produce the “Nashville” TV show.
Also on Monday, Ryman announced it was offering 3.5 million shares of stock in order to raise money to buy the JW Marriott. Ryman and Blackstone expect to close the deal next year, according to a press release.
“We identified the JW Marriott Hill Country as an ideal acquisition target some time ago,” Ryman President and CEO Mark Fioravanti said in a statement. “Located in an attractive and growing market with no emerging competitive supply, this beautiful resort is a natural complement to our existing Gaylord Hotels portfolio and offers significant opportunities to serve the group and leisure sides of our business.”
Ryman plans to keep operating the resort under the JW Marriott name, according to the release.
Luxury hotel rebound
Three years after the pandemic knocked San Antonio’s hospitality sector off its feet, the JW Marriott deal is a sign the industry has recovered, said Colin Sherman, director of hospitality analytics for CoStar Group, in an interview.
The occupancy rate for hotel rooms across San Antonio has risen from a low of 21.7% in April 2020 to 64% in April of this year, according to data from STR, a subsidiary of CoStar. That’s still below April 2019’s rate of 69.6%, yet hotel revenue in San Antonio rose from $118.7 million that month to $128.4 million this April.
“We’ve seen incredible recovery in the last two years,” Sherman said. “We’re seeing healthy occupancy levels come back among all submarkets.”
Luxury hotels have proven especially resilient, he said. Revenue for luxury hotels in San Antonio has increased from $18.9 million in the month of April 2019 to $22.7 million in April of this year.
In 2021, another of San Antonio’s major resorts changed hands when USAA Real Estate sold the La Cantera Resort & Spa to Ohana Real Estate Investors. The sales price wasn’t disclosed, but an affiliate of Ohana borrowed $188.4 million to make the purchase, according to Bexar County property records.
Proximity to Austin
The JW Marriott San Antonio is a convention destination, with a total 268,000 square feet of meeting and event space. It features a spa, a nine-acre water park and two 18-hole golf courses making up TPC San Antonio, the site of a PGA Tour event. The resort opened in 2010, having been built at a cost of more than $600 million, and underwent a $16 million expansion in 2016.
Blackstone purchased the resort in 2018. It expects to generate $275 million in profit through the sale, according to the press release.
Part of the resort’s appeal is its location near the booming Interstate 35 corridor, Sherman said. It attracts Austin residents willing to drive for cheaper rates than they would find in resorts in their own city.
“San Antonio, while it’s just as popular in its own way, is seeing a little of that overflow from Austin,” he said. Ryman is “investing into the highest-growth area in the nation at the moment, which is San Antonio and Austin. It’s a smart move on anybody’s part. If you’re looking at hotels, and hospitality in general, this is where the people are coming.”
