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Three Under-the-Radar Texas Hotel Markets

August 25, 2023 – By John Plasencia, Managing Director

These smaller markets don’t bear the same renown as Texas’ big cities, but they teem with accretive opportunities for the astute hotel investor.

1. Fredericksburg and Hill Country

Though not as well-known nationally as other top leisure destinations, Hill Country, a large swath of rolling hills in Central Texas, is the outdoor recreation mecca within the country’s second most populous state. With limited hotel supply and ample leisure demand coming by way of car from Dallas, Austin, Houston, and San Antonio, the region boasts a very healthy hospitality operating marketplace. Fredericksburg, less than two hours west of Austin by car, is the beating heart of Hill Country and is known for its wineries and charming, historic Downtown.

2. Laredo and other Border Towns

Laredo and other border towns have seen a boom in performance lately given increased activity at the border. Government personnel, aid workers, migrants, and other travelers have filled border town hotel rooms to levels never before seen. Beyond this dynamic, shifts in global supply chains have turned Texas border towns into warehousing hubs. Many American companies are bringing manufacturing hubs closer to home by moving factories “nearshore,” from Asia to Mexico. As a result, Laredo and other similar cities near the manufacturing sources in Mexico are seeing immense growth in the industrial sector. These developments certainly bode well for area hotels.

3. Midland-Odessa and the Oil Patch

While relatively slow to recover in the immediate wake of the pandemic and affiliated oil supply chain struggles, the Permian Basin oil patch in West Texas, headlined by the cities of Midland and Odessa, is now thriving in terms of RevPAR performance. In fact, Midland-Odessa is the top performing market in terms of RevPAR growth thus far in 2023. West Texas is also a global hub for wind and other renewable power sources, keeping it at the forefront of the global energy industry going forward.

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