Wednesday PM October 6th, 2010

Houston ship channel reopens…Landry’s Restaurants goes private…Galveston’s Flagship Hotel to be demolished…


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The Houston ship channel has reopened, three days after it was closed by a barge accident. Coast Guard Petty Officer Richard Brahm says the channel reopened to all marine traffic about 7 this morning, a few hours after it was partially reopened to outbound tug and barge traffic.

“They severed all the lines for the high-line power structure and that’s actually leaning in the water right now and they’re finishing cutting off the legs on it, and then they’re going to take it out of there.”

Brahm said vessels are being admitted to the channel, one by one, by order of priority. The main artery into one of the nation’s busiest ports had been closed since a barge struck a tower holding high-voltage electric cables above the canal. The impact left the tower teetering precariously over the waterway. Workers using one of the nation’s largest cranes lowered the tower to its side this morning.

After a two-year battle to go private, Tilman Fertitta has taken Landry’s Restaurants private again. It’s been a 17-year run as a public company.

“It was fun and a pleasure to be chairman and CEO of a New York Stock Exchange company for 17 years. It’s fun to do it one way, and it’s fun to go back the other way.”
Ed: “How is the restaurant business now, and how do you foresee how things will be over the next months and years?”

“Business really slowed down a couple years ago when we went into this recession. But Landry’s, unlike a lot of companies, has so many iconic locations. Use Texas as an example, you know, look at the Kemah Boardwalk, look at the Galveston waterfront. We control more waterfront locations than any other company in America. Then you have all these Disney locations that we have, so we were never hurt like everybody else. But the consumer is out spending money and all restaurant companies have made a comeback in 2010 and it’ll only get better as the economy has stopped it’s bleeding and is starting to heal.”

Ed: “And now that you’re private, will the company strategy change much?” “Absolutely not at all. This is just another day. When you become out size with over, you know, a billion in revenue and a billion in assets, you operate the same. I mean, I owned 56 percent of the company before. There’s really no difference whatsoever, you just don’t have certain SEC filings and the companies will operate the same. Our strategy’s the same. We’re right now looking for opportunistic acquisitions, and the company will continue to grow, if not even a quicker pace than it grew the last 17 years.”

Fertitta took Landry’s public in 1993, starting with nine restaurants. The chain now boasts more than 200 outlets, amusement venues and casinos.

The owner of Galveston’s Flagship Hotel says it plans to demolish the landmark hotel on a pier rather than spend $15 million to renovate and repair damage from Hurricane Ike. Tilman Fertitta has told Galveston’s City Planning Commission that he plans to replace the 225-room hotel in front of the city’s historic seawall with an amusement park. The commission endorsed the plan to the city council, which will have the final say. Landry’s had bought the hurricane-mauled hotel in 2005 for $500,000. The hotel was built in 1965 on a pier built in 1943. Ironically, it replaced an amusement park damaged in 1962 by Hurricane Carla.

Applications for mortgages to buy homes rose last week to the highest level since May, while overall applications were down slightly. The Mortgage Bankers Association says overall applications fell 0.2 percent from a week earlier, driven by a 2.5 percent decline in applications to refinance home loans. Those taken out to purchase homes, however, rose 9.3 percent to the highest level since early May. Rates have been at or near the lowest level in decades since spring as investors have shifted money into safer treasury bonds. That has lowered their yields, which mortgage rates tend to track. However, the weak economy has kept demand for homes dormant. The average rate for a 30-year fixed loan dipped to 4.25 percent from 4.38 percent a week earlier.

Local tax revenue fell this year by the steepest amount in 25 years, with falling home prices just beginning to drag down property tax receipts. The National League of Cities says that local governments’ property tax revenue fell 1.8 percent in fiscal year 2010, the first drop in the 25 years the survey has been conducted. Overall, tax revenue fell 3.2 percent in 2010, and cities cut spending by 2.3 percent. Revenues are likely to fall further in coming years as the housing slump takes its toll on real estate values. That will increase the pressure on city governments to cut services and raise taxes and fees. Home prices peaked several years ago, but the impact of falling prices takes time to affect property taxes. Most local government real estate assessments lag changes in market values.

American Airlines, British Airways and Iberia have announced new routes as they launch their transatlantic joint business. Fort Worth-based American and the two other airlines say the tie-up will give customers more access to cheaper fares, bigger choice of flight times and easier connecting journeys. Among the new routes are New York to Budapest, Chicago to Helsinki and London to San Diego. The airlines have also placed code shares on a significant number of additional routes, greatly increasing the number of destination choices available to customers. The closer ties between the trio have worried rival airlines–Virgin Atlantic airways is concerned about BA’s dominance at Heathrow Airport.

AMR Chief Executive Gerard Arpey says that American Airlines is recalling around 800 employees as part of the launch of the new transatlantic business.

Gas prices are more than 25 cents a gallon higher than they were a year ago, and a government report out today could help continue that trend. Analysts expect the Energy Information Administration’s weekly report to show that crude oil inventories shrank by one-point-three million barrels. But the American Petroleum Institute said that crude inventories rose 4.4 million barrels last week. Lower supplies can help push prices higher. AAA, Wright Express and the Oil Price Information Service say the average price for a gallon of regular is $2.73. That’s 27 cents higher than a year ago.

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