South Padre Island sees signs of economic recovery

SOUTH PADRE ISLAND — Things are starting to look up for South Padre Island.

Hurricane Dolly wreaked economic havoc on the tourist hotspot in summer 2008. Then came an economic recession, red tide and the demolition of a high-rise hotel plagued by allegations of defects before it was even completed.

Gross sales and hotel receipts declined by 30 and 38 percent, respectively, in the third quarter of 2008 compared to 2007, according to the Texas Comptroller’s Office. Two of the Island’s four full-service hotels never recovered.

But things are starting to look up.

The first quarter of the year brought a $200,408 increase in hotel/tax allocations over the same quarter last year, according to tourism records. That’s comparable to pre-Dolly income.

And expansion seems to be a business theme. A third full-service hotel is set to open in July and restaurants are expanding their operations.

The Sunset Cafe & Deli, the full-service bakery and cafe at 1004 Padre Blvd., is expanding to include a 40-seat dining room, a catering service and room service to the nearby Suites at Sunchase, owner Avi Scudder said.

Across the bridge, in Port Isabel, Pirate’s Landing owner Scott Friedman recently formed a partnership with Osprey Cruises in which they co-own a 40-seat speedboat that runs three to four trips a day for $24 per adult and $18 per child under 12.

“We just thought it was necessary to get a thrill ride into our businesses because there isn’t anything like it here,” said Pablo Salazar, manager of Osprey Cruises. The business also co-owns the pirate ship cruise that runs between Pirate’s Landing and Friedman’s Island restaurant, Pier 19.

Barry Patel, the owner of La Copa Inn & Suites and La Quinta Inn & Suites, plans to open his first full-service hotel, the Hilton Garden Inn, at 7300 Padre Blvd. in July, he said.

“I’m really not worried about the recession,” Patel said. “Generally, things are looking pretty good this summer.”

Patel aims to attract people visiting Andy Bowie Park, located a few hundred yards from his Hilton hotel, he said. He thinks the proximity will draw the predominately Rio Grande Valley crowd from the park to his hotel, bar and restaurant because of its convenience. The hotel could also serve the nearby convention center crowd.

The 156-room Hilton will be the Island’s third full-service hotel and is intended to help fill the hotel/motel tax gap left by the Bahia Mar and the South Padre Island Beach Resort, which have not reopened since Hurricane Dolly.

“We had a better first quarter of this year than we anticipated,” said Dan Quandt, executive director of the South Padre Island Convention and Visitors Bureau.

“Adding another full-service hotel will only add to that (improvement),” Quandt said. “Remember, we lost 50 percent of meeting capacity after (Hurricane) Dolly. Adding fresh rooms is also a positive.”

With expansion projects across the Island, Spark Plug owners Jeff Hooper and Crystal Burton are not the only wide-eyed optimists for the summer season.

“I’m pretty business-savvy,” Hooper said. “We looked at the numbers and the market here. If you give people a reason to come, they will come.”

Hooper, who holds an engineering degree from Grand Valley State University and a business degree from the University of Michigan, hopes to give people a reason stop at Spark Plug, tapping a niche market.

While most Island bars stick to DJs and soft beach tunes, Spark Plug features live music by rock ‘n’ roll, hard rock and blues acts from across Texas on a nightly basis, Hooper said.

Music and atmosphere aren’t where the contrast between Spark Plug and other Island bars stops, Burton said. For food, the bar sums up its selection with the declaration “We Ain’t Sellin’ No Seafood.”

Burton, who has owned a cake decorating business and worked food service at a school district, fills the menu instead with bacon-stuffed burgers and deep-fried appetizers she concocted when owning a bar was just a fantasy.

“It’s a great market here,” Hooper said, discussing Valley residents on both sides of the border. “I think those are our primary customers, but it should attract Austin, Dallas and San Antonio” residents.

Island businesses can expect wealthy Mexican nationals to contribute to the tourism industry, said Rafael Otero, the interim dean of the School of Business at the University of Texas-Brownsville.

Otero, who has studied the effects of Mexican nationals on the Island economy in the past, said he expects tourists will look to escape from violence across the border by vacationing in the much safer South Padre Island.

The only impediment to attracting wealthy Mexican nationals is the continuing rise of the dollar, Otero said. The dollar has increased in value since instability with the European Union led to the recent decline of the euro.

“As long as the exchange rate stays below 14 pesos per dollar, it should be OK,” Otero said. The exchange rate was 12.9460 pesos for every dollar on Friday, according to Bloomberg News.

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Corey Ryan is a reporter for the Valley Morning Star in Harlingen.