The Developing Story: Austin

Last year’s construction hotspot remains active in 2015 and provides a blueprint for other up-and-coming hotel markets.

There are plenty of reasons developers like Austin. It has strong fundamentals, such as a large diversity of business, a highly educated population, government dollars, and a strong university presence. With its eclectic cultural vibe and massive festivals—SXSW and the Austin City Limits Music Festival are the biggest—the city is a magnet for younger, affluent residents and travelers.

The result is a 24/7 hotel market fueled by a range of major demand generators that are amazingly robust. “The problem Austin’s had in terms of hotels is that there has not been a lot of new supply added for a number of years,” says Randy McCaslin, long-time Austin resident and SVP at PKF Consulting. “So the city’s averaging 78 percent occupancy, which is basically at capacity.”
That’ll change this year as big projects like the 1,012-room JW Marriott convention center hotel and the 322-room Kimpton Van Zandt open their doors in downtown Austin. And next year will bring another big hotel to downtown—the 1,000-room Austin Fairmont. “There’s a lot of new supply coming and there’s going to be a transition,” says McCaslin. “The overall effect will bring occupancy down slightly citywide, but it should normalize to remain above long-term averages.”


To view our market overview, click here.

Ron Vlasic, regional VP, Kimpton Hotels & Restaurants, says the company had its eye on Austin for a few years before pulling the trigger on the Hotel Van Zandt, which is slated to open in May.

  • It’s a new-build 16-story hotel located in the historic Rainey Street District and everything about it will celebrate what the city is about.
  • The developer of the project is JMI Realty, who we previously worked with on the Hotel Solamar in San Diego.
  • It’s a little bit of a gamble to go with a four and a half star product, but that’s what we’re committed to because we saw an intense customer base to support it.
  • We’re running fiber optic lines throughout the property so there will be enormous bandwidth available all over. They’ll also supply a live feed to each room of the live performances onstage at the downstairs bar.
  • We’re converting a nearby house that sits on Rainey Street into a restaurant with outdoor seating and adding a rooftop pool with cabanas and Wi-Fi.
  • There’s going to be nothing like this hotel in the downtown area.