BY NICHAELA SHAHEEN
What they’re saying
The options
From October 2024 through August 2025, the Hyatt reported 50.7% occupancy and an average daily rate of $162, compared with original expec- tations of above 60% occupancy and higher rates ranging from $203-$233. Despite the financial pressures related to the hotel, city officials say Conroe’s overall finances remain solid, pointing to a strong general fund balance and positive net income. “The financial condition of the city remains strong, despite the ongoing hotel debt and the bad financial decisions from the previous administra- tion and council,” Gibbs said. During Conroe City Council’s Nov. 13 meeting, city staff said the city has around $70 million in its general reserve fund, and the city spends roughly $465,000 per day, as previously reported.
continue making debt payments each April and October using net operating revenues, reserve funds and, when necessary, CIDC support for the third lien, Gibbs said. In an email, city officials said they’re “com- mitted to resolving the hotel with the best financial outcome we can obtain.” Wood said he is open to a sale if it can reduce that burden. “If selling gets taxpayers out from under this debt and puts the risk back where it belongs— on private business—then yes, I’d be open to it,” he said.
During the Oct. 23 meeting, council members and CLGC board members began weighing what to do with the hotel. The options generally fall into two categories: sell the hotel or keep it and manage through decades of debt. City staff said no decisions have been made. Any move to sell, refinance or restructure the hotel debt would need approval from City Council, the CLGC board and the CIDC board. City officials also have not yet outlined how sale proceeds would be applied to the outstanding debt should the hotel be sold. If Conroe keeps the hotel, the CLGC will
Selling vs. keeping the Hyatt A decision on whether to sell the hotel has not been made yet, and officials said any action would need approval from council, the CLGC and the CIDC.
If hotel is sold
If hotel is kept
S&P projects a potential default on the third hotel lien in April 2026 The hotel project will continue to limit financial flexibility
Around $76M in lien debt still owed*
“My heart is for the things a city should do well: police, fire, roads, water, sewer. Not high-risk business ventures.” HOWARD WOOD, CONROE CITY COUNCIL MEMBER
Selling could improve the city’s financial flexibility, though the hotel's base valuation is -79.16% less than it cost to construct
Hotel responsibility shifts to a private buyer
The city will make debt payments until 2050
*THE PAYMENT PLAN SHOULD THE CITY SELL THE HOTEL HAS NOT BEEN DEFINED YET. SOURCES: JONES LANG LASALLE, CITY OF CONROE, S&P GLOBAL RATINGS/COMMUNITY IMPACT
Looking ahead
Under the hotel’s financing documents, the CLGC hired a hotel consultant in October 2023 to recommend ways to improve profitability. S&P analysts said in their October 2025 report that they expect to revise their forecast once they review that report and the hotel’s FY 2026-27 budget. In the meantime, the CLGC will continue to monitor occupancy, rates, operating costs and reserve levels ahead of debt payments in April and October, Gibbs said. Whether the city ultimately chooses a sale, a restructuring or continued ownership, leaders said any path will need to balance long-term financial recovery with rebuilding public trust. “People deserve straight answers. Trust grows when we tell the truth—even when the truth is uncomfortable,” Wood said. “We rebuild trust by owning the mistake, learning from it, and making better choices moving forward.” Conroe City Council also discussed and approved the hotel’s FY 2025-26 operating and capital
Conroe Local Government Corp. Hyatt Hotel debt service payments
The city of Conroe—through the Conroe Local Government Corp., which functions as the Hyatt Regency Conroe’s borrower and hotel owner—will be paying off debt associated with the hotel until 2051. First-lien hotel revenue bonds Second-lien hotel revenue bonds Third-lien hotel revenue bonds
$0 $1M $2M $3M $4M $5M $6M
2023
2051
NOTE: PAYMENT DATA INCLUDES PRINCIPAL AND INTEREST.
SOURCE: CITY OF CONROE/COMMUNITY IMPACT
Community Impact reached out to Mayor Duke Coon as well as council members Harry Hardman, David Hairel, Shana Arthur and Marsha Porter and did not get a response back prior to press time.
budget at its Dec. 11 meeting. City staff said projected income available for debt service was about $1.787 million, compared to the total $4.372 million in payments across the three liens for FY 2025-26, leaving a $2.584 million shortfall.
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CONROE - MONTGOMERY EDITION
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