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Is Austin the next…Austin?

Posted May 13, 2021

Continued growth spurs substantial demand for lodging investments

Austin, Texas has established itself as a top destination for corporations and people leaving coastal urban centers seeking friendlier business and living environments in the wake of the pandemic. High profile corporate relocations and expansions for companies like Tesla, Oracle, Apple, Amazon, Google, and Facebook have made headlines before and during the pandemic, and the expansion of local commercial (non-hospitality) and residential real estate markets is also growing at a record pace.

This abundant growth creates hotel demand and arguably serves to position the Austin lodging market to yield better performance in the post-pandemic environment than any non-beach market in the nation. The rapidly growing and high-rated corporate segment, along with longstanding demand from state government, the University of Texas (UT), and a world-class entertainment scene, continue to make Austin very attractive to hotel investors.

Visitors and locals are flocking to bars, restaurants, shops, venues, and hotels along Sixth Street, Rainey Street, and South Congress. The return of major citywide events like South by Southwest, Austin City Limits, and UT sporting events, as well as a pickup in the convention calendar, will further advance Austin’s recovery. Meaningful real estate development in North Austin, Bee Cave, the Domain, Round Rock, Leander, San Marcos, and other areas means that this growth won’t just be confined to Downtown Austin.

Unlike many other major cities, there is little long-term concern over the viability of Austin’s hospitality sector. On the contrary, the recovery is in full swing, and hotel investors are excited to be part of Austin’s growth story.

Without question, aside from beachfront locations, Austin is the market we are asked about most frequently in discussions with lodging investors. Based on the tsunami of capital looking for deals, the scarcity of quality assets on the market, the enhanced profile of Austin, and the relatively good performance of the local hotel market throughout the pandemic, now is a great time for owners of Austin area hotels to consider an exit.