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The traffic on i_35 over the weekend was like a blast from
the past, when the economy was humming and the state of Texas was rocking and
rolling, literally.
Yes, it's that time of the month when this scribe makes the monthly pilgrimage
to a Texas city in the pursuit of junior tennis perfection. And of late, the
trips, and the observations had been mixed, at best. San Antonio, this summer
was fairly busy, but not overwhelmingly so. Waco, this fall, was quite a beehive,
especially when it came to casual dining, where a Panera's Bread (nasdaq: PNRA)
store frequented by the college crowd had huge lines.
Last week, in this space, we noted how a "Texas Roadhouse" restaurant in the
Dallas metroplex city of Mesquite was packed to the rafters. As we drove down
I-35 from Dallas to Austin, we saw the same kind of action at other Texas Roadhouses
along the road, especially one in Temple, just south of Waco. The Roadhouse in
Waco was also doing a bustling business. Full disclosure, Dr. Duarte owns shares
in Texas Roadhouse.
This column is being penned, late at night in the lobby of a Hampton Inn in Austin.
The lobby traffic is non-stop. Lots of coming in and out, new reservations being
made. The coffee in the lobby was running out. Breakfast in the morning almost
had a line.
We visited several restaurants in the university area, and found an intersting
dichotomy, which we've seen elsewhere in our travels. Local businesses were doing
better than the national chains. This was especiall noted in a Chili's, which
was about a third full. Accross the street was a local sandwhich shop, "Which
Wich", which (he!) had brisk traffic on both Saturday and Sunday. The modernly
architectured set of shops, which housed the sandwich shop, was full, with a
local Italian restaurant sitting both inside and outside in the good weekend
weather.
We sampled "The Domain" an upscale shopping area, and it too was doing brisk
business. A Starwood (NYSE: HOT) imprint, the trendy "Aloft" brand was also doing
a booming business, literally, with the techno blaring in the lobby and the 20
somethings sashaying about.
And here's the kicker. When we spoke to the reception clerk at the Hampton, she
told us that the hotel is now consistently booked throughout the week adn that
the chain has pricing power, with the room rates rising from $119 on average
per room last year, to $149 per room this year. Weekend business was also huge
this weekend due to a convention being in town.
Now, the flip side. We spoke to lots of parents this weekend. These are mostly
executives, physicians, and business owners. They remain cautious and are starting
to cut back on the tennis related travel out of state. Many are cutting back
on their travel to national tournaments and also are driving more modest cars.
To be sure, this is not a rule, as others are doing what they've always done.
So what have we learned? There are more and more sectors of the economy that
are starting to show signs of life. Pricing power seems to be returning to the
mid-price level of the hotel industry. And the upscale demographics are still
showing some caution.
Conclusion
This was the busiest we've seen the I-35 corridor in over twelve months. Gone
were the for sale signs along the side of the road on empty farms, although that
may be a sign that people are giving up.
This is in contrast to some of the things we saw in parts of the south when we
traveled to Alabama in February.
Perhaps the most interesting development that we uncovered was the rise in pricing
power in the lodging industry.
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