HVS Market Intelligence Report: Port Arthur, Texas

Port Arthur’s economy and lodging industry are being fueled by growth in the energy and healthcare sectors. Tourism, shipping, and commerce are also gaining steam, bringing long-awaited signs of promise for area hotels.

Port Arthur, a growing city located along the Gulf Coast of Texas, began as the township of Aurora, where home lots were on offer prior to the Civil War. The town thereafter became known as Sparks, but its economy and community failed to ignite, and the area found itself largely abandoned. That changed late in the 19th century when Arthur E. Stillwell helped energize the new city of Port Arthur with projects that included the Sabine Hotel. A 1901 oil boom brought Port Arthur from very humble beginnings to one of the largest oil-refining centers in the world, and the city’s present economic and hotel demand drivers have much in common with the scope (though not quite on the scale) of those of Houston. The following article explores the renewal of the commercial and leisure industries in Port Arthur, including the effect on area hotels.


Port Arthur’s attractions include many types of outdoor recreation. Port Arthur is regionally known for its birding, boating, fishing, hunting, and golfing activities. Some of the area’s more exotic offerings include gator-watching expeditions, the Shangri-La Botanical Gardens and Nature Center, and the Beau Rêve restaurant, a century-old mansion that once traveled by barge down the Neches River to its present location in Port Arthur.

The Museum of the Gulf Coast features exhibits from the Gulf Coast’s prehistoric past to former Port Arthur resident Janis Joplin. The Dutch Windmill Museum in nearby Nederland pays homage to the area’s Dutch heritage. Other leisure demand generators include the Port Arthur Seawall and Boardwalk, several state parks, and Fun Island Depot. Special events during the year include the Texas Pecan Festival, Dick Dowling Days, Mardi Gras of Southeast Texas, and the Buu Mon Lotus and Bamboo Festival.

The Martin Luther King Jr. Bridge and the Sabine Causeway help channel visitors from the Texas and Louisiana sides of the Gulf to Port Arthur’s Pleasure Island, an 18.5-mile stretch of bluffs and beaches surrounded by Sabine Lake and the Intracoastal Waterway. Pleasure Island’s natural features and comfortable climate attract tourists and anglers throughout the year.

Commercial Developments

Port Arthur houses a huge portion of the U.S. oil-refining capacity and is currently experiencing renewed investment in several key installations. Motiva Enterprises recently completed a major addition to its western Port Arthur refinery, expanding capacity to 600,000 barrels per day. This $10-billion project marks the largest U.S. refinery expansion in the last 30 years; during the five-year project’s peak in activity in 2009/10, the Motiva expansion brought in nearly 15,000 skilled contract laborers to Port Arthur. Valero recently completed a $775-million expansion of its petrochemical plant, and in early 2012, BASF FINA finished construction of a new $1.75-billion gasification and cogeneration unit on the premises of its current installation, which had recently undergone its own $1-billion upgrade.

On August 17, 2012, ExxonMobil and Qatar Petroleum announced a $10-billion joint venture to construct a natural gas export facility adjacent to the existing Golden Pass LNG receiving terminal near Port Arthur. The project is expected to bring between 6,000 to 7,000 contract laborers to the region and nearly 70 permanent jobs once the facility is fully functional. This multi-billion-dollar investment in new operations and infrastructure has had a kinetic effect on the area’s commercial grid; over the last five years, twelve new businesses have opened operations in Port Arthur to support the ever-evolving energy sector.

Shipping also plays an important role in Port Arthur’s economy. Southeast Texas’ comprehensive system of ports and waterways connects the area to the nation and the world via the Intracoastal Waterway. The completion of two new locks of the Panama Canal, anticipated for 2015, should have an enormously positive impact on the region’s import/export industry. The Port of Port Arthur, one of Texas’ largest seaports, handles cargo volumes in the millions of net tons, primarily in break-bulk and bulk commodities such as forest products, iron and steel, petroleum, and chemicals.

Several ambitious initiatives are spawning an economic boom in Port Arthur. At the forefront are the Golden Pass and Sabine Pass LNG terminals, two projects under construction in the nearby Sabine Pass. These projects have reportedly generated cumulative initial investments of $2 billion and are expected to employ thousands.

Health Care

Family members of patients, as well as doctors and nurses on regional rotations, are among those generating healthcare-related hotel demand in Port Arthur. Along with tourism, energy, and shipping, health care is a cornerstone of the Port Arthur economy. The 224-bed Medical Center of Southeast Texas offers comprehensive healthcare services, from emergency care to advanced surgical procedures and diagnostic imaging. Additionally, CHRISTUS St. Mary in the heart of Port Arthur is a leader in the diagnosis and treatment of osteoarthritis. Since 1996, more than 2,000 knee, hip, and shoulder replacements have been performed at the hospital, which is also recognized for its cutting-edge treatments of cardiovascular disease and stroke.

Performance Trends for Local Hotels

Port Arthur offers more than 30 lodging establishments, from independent motels and extended-stay properties to the full-service Holiday Inn Park Central, which offers more than 8,000 square feet of event space. The nine new hotels that have entered the market since 2006 have been largely absorbed. Demand for hotels in Port Arthur peaks mid-week; the typical oil and gas project extends over a period of two years, with extended-stay contract laborers and visitors with ties to the energy industry comprising the heaviest blocks of demand. Many price-conscious leisure travelers to Port Arthur opt for limited-service hotels, with hunters and outdoorspeople staying on shoulder nights between the start of their expeditions and their trips home. Market occupancy peaked in 2007 at 80.0% and then declined from 2008 through 2010, a trend heavily influenced by the downturn in demand from the energy sector. Both occupancy and demand ramped up in 2011. Motiva’s construction project, which had helped market performance recover, was completed in May of 2012; hence, occupancy has noted a dip year-to-date.

Average rate in Port Arthur has fluctuated since 2006, reflecting an increase in 2008 and a significant decline in 2009 through 2011 as area hoteliers discounted rate in an attempt to sustain occupancy during the recent recession. Average rates improved in 2012, and were particularly strong in May, June, and July. With more major construction projects on the horizon, the market should continue to realize a modest rebound in occupancy levels as local hoteliers focus on commanding higher rates at their hotels.


The proposed $10-billion joint venture between ExxonMobil and Qatar Petroleum and other major developments should keep Port Arthur’s economy humming over the next two years, and shipping, health care, and tourism are expected to recover to or even exceed levels seen prior to the recent recession in the next several years. Local hoteliers are hoping the expansions in the refining sector will revitalize the local economy and propel it into the future, and given the improvements in the national and global economies, the outlook for this leisure destination and international shipping port city is optimistic.


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