AUSTIN, TX—Not that this city would need convincing, but according to a recent Trend Report from New Hampshire-based Lodging Econometrics, Austin is among the top five markets expecting the largest number of new hotel openings this year. As of August, the Texas town, with 19 projects representing 2,176 rooms, was right up there with New York (46 projects/7,129 rooms), Houston (36 projects/4,145 rooms), Dallas (25 projects/3,014 rooms) and Miami (21 projects/2,638 rooms). And by year’s end, the Austin Convention and Visitors Bureau indicates there will be an aggregate 3,000-plus hotel rooms.
This year’s rush to rooms comes on top of a robust 2015, which saw the opening of a variety of hotel types, from luxury to lifestyle. These included the 1,012-room JW Marriott Austin on Congress Ave., the brand’s largest hotel in the Americas, as well as the largest in Austin. Also opened were the 195-room Sonesta Bee Cave (a town west of Austin) at the Hill Country Galleria; the 366-room Westin Austin Downtown on East Fifth St., a 20-story hotel near the convention center that is a joint venture among White Lodging Services Corp., the Whittington Family and REI Real Estate Services, LLC; the independent South Congress Hotel, a boutique property with a live-music stage; the 319-room Kimpton Hotel Van Zandt, which features underground parking and is within walking distance of Lady Bird Lake; and the Hotel Granduca, a 194-room luxury property situated on 38 acres overlooking Texas Hill Country.
So, anyone holding on to the impression the city could be summed up by watching the long-running (40 years) PBS staple, Austin City Limits, would be in for a surprise when visiting the destination, which has a determination to keep itself “weird.”
It also is bent apparently on continuing to grow, not only in population—it was the third fastest-growing large city in the U.S. from 2011 to 2014 (latest figures available), but in the number of visitors (22.6 million in 2014)—something not lost on hotel owners and developers, who are expected to continue to inject the market with product. Indeed, the Austin CVB already has its eyes on the 2019 horizon in terms of the amount of hotel inventory coming to the city.
For example, its rooms inventory data (projected) for 2016 shows: 8,568 downtown, 35,100 citywide; for 2017: 10,359 downtown, 37,041 citywide; for 2018: 10,763 downtown, 37,445 citywide; and for 2019: 11,725 downtown, 38,407 citywide.
According to Austin CVB President/CEO Tom Noonan, occupancy and demand have kept pace with supply. “Over the past decade, demand on average increased more than 5% each year, occupancy increased nearly 20%, ADR almost doubled and RevPAR growth was consistently close to double digits. Within the industry, it’s widely acknowledged that the point at which hotels can control pricing is when they attain a 65% occupancy rate. Austin’s downtown occupancy is nearly 80% and the greater Austin MSA is in the mid-’70s. Given this fact, it’s no surprise there has been so much interest to develop hotel projects here,” he said.
Among projects opened earlier this year is the dual-branded Hotel Indigo/Holiday Inn Express at 513 East Ninth St., offering 171 and 134 rooms, respectively, along with separate entrances.
Debuting last month was Archer Austin The Domain. The 171-room, upscale boutique hotel was developed by LodgeWorks Partners and is the third hotel in the U.S. for the brand. The eight-story hotel is located in The Domain, a North Austin mixed-use development.
Set to open this month is the 79-room Staybridge Suites Austin South on South I-35.
Interestingly, Noonan considers 2016 a “lull” year, while noting “there are close to 3,500 additional rooms in the construction pipeline and those are just the ones we’re aware of.”
Last month, for example, construction got underway for the 33-story Austin Proper Hotel & Residences with a groundbreaking organized by project developer The Kor Group, members of the City of Austin Economic Development Department (CAEDD), Trammell Crow and others. The Proper tower will feature 244 guestrooms and 99 condominium residences and penthouses.
The project will anchor the redevelopment of the former Thomas C. Green Water Treatment Plant, which is being led by the Trammell Crow Co. via a master development agreement with the CAEDD to create 1.7 million sq. ft. of office, retail, residential and hospitality space.
“From the very first conceptual discussions to this wonderful milestone in our development, the community has been exceedingly receptive, focused and collaborative,” said Brian De Lowe, president/co-founder of Proper Hospitality and partner at The Kor Group.
Adam Nims, principal of Trammel Crow Co., said the luxury hotel and residential offering “completes our vision of making Greenwater the ultimate lifestyle work/live/stay/play development in all of Austin.” Noted the CVB’s Noonan: “Between 2015 and 2019, the projected supply growth in the CBD is over 80%, and 23% for the market.”
Among the hotels expected to open in 2017 is the Hyatt Place Hotel Austin–Bergstrom International Airport. The 139-room will be part of a newly proposed retail development near the airport’s main roadway, Presidential Blvd.
A 10-story Hyatt House with 190 keys and a 139-space parking garage is set for 901 Neches St. The extended-stay hotel, owned by Journeyman Austin Holdings, will join a sister property near the city’s Arboretum.
On the luxury side, the Fairmont Austin, a 37-story, $370-million project by Manchester Financial Group, will open at 101 Red River St., with access to the Austin Convention Center. It will offer 1,048 guestrooms and 42 suites, including Fairmont Gold rooms and lounge; more than 128,500 sq. ft. of meeting space, including two ballrooms and an outdoor deck with space for 1,800 guests; and underground parking.
White Lodging Services Corp. is planning two hotels in a 32-story tower downtown that will tandem a 144-room Element and a 270-room Aloft.
“One of the greatest advantages of Austin for all visitors is the diversity of hotel product,” said Noonan. “This has always been the case and the new supply continues that trend, representing a wide range of brands and pricing—from luxury (Fairmont Austin, Hotel Granduca) to corporate mainstays (Marriott, Westin) to select-service (Holiday Inn Express, Hyatt House) to independents (Proper, Archer, Hotel ZaZa). Almost all recent and upcoming projects are new construction projects.”
Along with the Proper Hotel, a Hotel ZaZa is slated to open in 2018 on West Fourth St. The brand, with locations in Dallas and Houston, will bring together a 160-room hotel topped by 200 apartments in a 24-story tower. And in 2019, another dual-brand project is expected in the form of a 191-room Autograph Collection hotel and a 156-room AC Hotel by Marriott, a first for that brand in Austin, and located at 1901 San Antonio St. Additionally, the Marriott Downtown will open on the northwest corner of Cesar Chavez and Trinity. The full-service property across from the convention center will offer 615 rooms and 65,000 sq. ft. of meeting space.
Commenting on the long-term vision of the city in terms of rooms absorption, Noonan was positive.
“One of the great things about the Austin market is that hotel demand is not dependent upon a single industry or market segment. This variety of demand drivers lessened the severity of impact from the last two economic downturns (2001 and 2008). For example, our hotel performance did not decline as much as the overall market, the ‘pain period’ did not last as long and the recovery started earlier. However, this all occurred during a time period when the market had been under-supplied for years,”he said. HB