Hospitality Investment in Austin
Austin's hotel market runs hot and cold with the city's event calendar. SXSW and ACL push rates through the roof for two weeks, then you're back to fighting for corporate travelers who'd rather stay home. The fundamentals look decent though. Population's still growing, tech jobs keep coming, and the airport's adding flights. Just don't expect the RevPAR growth we saw in 2021-2022.
Market Context
Cap Rate Range
6.5%-8.5% for stabilized properties, select-service trading tighter than full-service
Current Vacancy
Not applicable - occupancy rates averaging 72% for limited-service, 68% for full-service
Rent Trend
ADR up 4.2% year-over-year, now averaging $142 for limited-service, $189 for full-service
Absorption
New supply absorption taking 12-18 months, longer for full-service properties
Price Per Unit Trend
Price per key ranges from $85K for suburban extended-stay to $280K for downtown full-service
Transaction Volume
Down 28% from 2025 peaks, but three major portfolio trades closed Q4 totaling $290M
Submarket Analysis
Downtown
6.0%-7.0% capVacancy
65% occupancy average
Avg Rent (1BR)
ADR $210-$450 depending on events
Event-driven volatility continues, but base demand from state government stable
OM Tip
Must show monthly performance, not just annual averages that hide seasonality
Airport Corridor
7.0%-8.0% capVacancy
74% occupancy average
Avg Rent (1BR)
ADR $125-$165
Steady corporate demand, less event volatility, new terminal construction a plus
OM Tip
Include shuttle costs and parking revenue in operating analysis
South Austin
7.5%-8.5% capVacancy
71% occupancy average
Avg Rent (1BR)
ADR $110-$140
Benefits from Oracle campus and residential growth, but limited corporate base
OM Tip
Highlight proximity to major employers and residential density trends
Northwest/Domain
6.8%-7.8% capVacancy
75% occupancy average
Avg Rent (1BR)
ADR $135-$175
Corporate demand from tech corridor, less dependent on downtown events
OM Tip
Tech company rate agreements and group business crucial to show
East Austin
7.2%-8.2% capVacancy
69% occupancy average
Avg Rent (1BR)
ADR $120-$160
Emerging area with new developments, but still proving demand patterns
OM Tip
Focus on demographic shifts and new attractions driving visitation
Performance by Vintage
0
P
1
r
2
o
3
p
4
e
5
r
6
t
7
i
8
e
9
s
10
11
b
12
u
13
i
14
l
15
t
16
17
p
18
o
19
s
20
t
21
-
22
2
23
0
24
1
25
5
26
27
c
28
o
29
m
30
m
31
a
32
n
33
d
34
35
1
36
5
37
-
38
2
39
0
40
%
41
42
h
43
i
44
g
45
h
46
e
47
r
48
49
A
50
D
51
R
52
s
53
54
d
55
u
56
e
57
58
t
59
o
60
61
m
62
o
63
d
64
e
65
r
66
n
67
68
a
69
m
70
e
71
n
72
i
73
t
74
i
75
e
76
s
77
78
a
79
n
80
d
81
82
t
83
e
84
c
85
h
86
87
i
88
n
89
t
90
e
91
g
92
r
93
a
94
t
95
i
96
o
97
n
98
.
99
100
2
101
0
102
0
103
0
104
s
105
-
106
e
107
r
108
a
109
110
h
111
o
112
t
113
e
114
l
115
s
116
117
s
118
t
119
r
120
u
121
g
122
g
123
l
124
i
125
n
126
g
127
128
w
129
i
130
t
131
h
132
133
P
134
I
135
P
136
137
r
138
e
139
q
140
u
141
i
142
r
143
e
144
m
145
e
146
n
147
t
148
s
149
150
-
151
152
b
153
u
154
d
155
g
156
e
157
t
158
159
$
160
8
161
K
162
-
163
1
164
5
165
K
166
167
p
168
e
169
r
170
171
k
172
e
173
y
174
175
f
176
o
177
r
178
179
m
180
a
181
j
182
o
183
r
184
185
b
186
r
187
a
188
n
189
d
190
191
r
192
e
193
n
194
o
195
v
196
a
197
t
198
i
199
o
200
n
201
s
202
.
203
204
1
205
9
206
9
207
0
208
s
209
210
p
211
r
212
o
213
p
214
e
215
r
216
t
217
i
218
e
219
s
220
221
o
222
f
223
t
224
e
225
n
226
227
c
228
a
229
n
230
d
231
i
232
d
233
a
234
t
235
e
236
s
237
238
f
239
o
240
r
241
242
c
243
o
244
n
245
v
246
e
247
r
248
s
249
i
250
o
251
n
252
253
o
254
r
255
256
m
257
a
258
j
259
o
260
r
261
262
r
263
e
264
p
265
o
266
s
267
i
268
t
269
i
270
o
271
n
272
i
273
n
274
g
275
.
276
277
P
278
r
279
e
280
-
281
1
282
9
283
9
284
0
285
286
s
287
t
288
o
289
c
290
k
291
292
m
293
o
294
s
295
t
296
l
297
y
298
299
e
300
c
301
o
302
n
303
o
304
m
305
y
306
307
b
308
r
309
a
310
n
311
d
312
s
313
314
o
315
r
316
317
i
318
n
319
d
320
e
321
p
322
e
323
n
324
d
325
e
326
n
327
t
328
s
329
330
w
331
i
332
t
333
h
334
335
n
336
i
337
c
338
h
339
e
340
341
p
342
o
343
s
344
i
345
t
346
i
347
o
348
n
349
i
350
n
351
g
352
.
What Your OM Needs to Address
STR Competitive Set Data
Include full comp set with monthly RevPAR, ADR, and occupancy for trailing 24 months
Data to Include
Market penetration index, ADR index, RevPAR index vs. competitive set and market overall
Event Calendar Impact
Austin's events drive huge rate premiums but create volatility buyers need to understand
Data to Include
Monthly performance breakdown showing SXSW, ACL, F1, UT football impact on rates and occupancy
PIP Requirements and Timeline
Franchise agreements often require property improvement plans that hit cash flow hard
Data to Include
Current PIP status, estimated costs, timeline, and impact on NOI during renovation
Labor Cost Pressures
Austin's tight labor market means housekeeping and front desk wages up 18% since 2024
Data to Include
Current wage rates vs. market, turnover costs, any union considerations or organizing activity
Franchise Fee Structure
Brand fees eat into NOI more than other property types - buyers want the full picture
Data to Include
All franchise fees as percentage of revenue, marketing fees, reservation system costs, loyalty program fees
Corporate Rate Agreements
Contracted rates with major employers provide base demand but limit upside during peak periods
Data to Include
List of corporate accounts, negotiated rates, percentage of total revenue, contract expiration dates
Investment Outlook
Short Term
Next 12-18 months look steady but not spectacular. Corporate travel still hasn't fully recovered, and new supply in some submarkets is taking longer to absorb. Event demand remains strong, but that's already priced into most deals.
Medium Term
Austin's growth fundamentals support hotel investment through 2028-2029. Population growth, job creation, and infrastructure improvements should drive demand. The key is avoiding markets with too much new supply and focusing on corporate corridors.
Long Term
Five-year outlook positive if you pick the right submarket. Airport expansion, continued tech growth, and Austin's brand as a destination support long-term demand growth. Climate change might actually help as a alternative to hotter markets.
Buyer Profile
Seeing mostly regional hotel groups and private equity with hospitality experience. REITs are cautious after getting burned on development costs. International buyers still minimal compared to other Texas markets.
Marketing a hospitality property in Austin?
DealDraft generates professional offering memorandums with market-specific data and property-type expertise built in.
Create Your OM