Austin Hospitality Market Report

The Austin market has experienced substantial growth in its hotel industry. This growth is driven by a surge in new developments buoyed by its thriving economy. In 2024, Austin added 1,300 hotel rooms across 14 properties, with 17 additional projects nearing completion and set to deliver 1,800 rooms. In total, this represents a 3.7% increase in existing supply. The central business district (CBD) has seen the most activity. Significant developments like the luxury 1 Hotel Austin, set to be the tallest mixed-use tower in Texas by 2026. Meanwhile, mid-tier properties dominate growth in areas like South Austin and the airport submarket, bolstered by affordability and business expansion in these regions. The broader Austin hotel market ranks among the top 20 U.S. metropolitan statistical areas for construction.

Despite these advancements, Austin’s hospitality faced challenges in 2024. Year-over-year revenue per available room (RevPAR) declined 4.1% due to softer weekday and weekend demand, but RevPAR still rose 10.2% from the previous year as average daily rate (ADR) climbed 3.3% and occupancy improved by 7.2%. Market dynamics, such as shifting travel preferences and economic headwinds, continue to affect overall performance, particularly in higher-priced hotel segments. Events like South by Southwest (SXSW) and the Austin City Limits Festival remain key demand drivers, while group travel performance in the Downtown/ CBD submarket has improved significantly. However, a slower pace of weekday business travel and moderating weekend occupancy rates are notable trends.

Looking ahead, Austin’s hospitality landscape is poised for transformation with the $1.6 billion expansion of the Austin Convention Center beginning in 2025. This project will nearly double rentable space by its 2019 completion, creating opportunities for increased group travel. During construction, meeting planners are coordinating alternative venues to sustain convention activity. Simultaneously, economic diversification and infrastructure projects like the $4 billion airport expansion will enhance Austin’s appeal as a major destination for business and leisure travelers.

Market Snapshot

• Occupancy: 66%
• ADR: $169.09
• RevPAR: $111.54
• RevPAR Growth: -4.1%
• Sales Volume: $62.3M
• Under Construction: 1,817 keys
• Sale Price per Room: $225,000 | 2024 | Source: CoStar Group