Austin Hospitality Market Report
2023 Investment Forecast
Nationally High Population Gains Fuel Airport Traffic; Supply Wave Presents Occupancy Headwinds
Pre-pandemic occupancy remains just out of reach. Austin-Bergstrom International Airport had its busiest year on record during 2022, aiding adjacent hotels and those in growing submarkets. Last year’s surge in activity came as Austin’s population grew at the fastest rate among major U.S. markets, which supported visitations by family and friends of new residents, along with corporate relocations. These dynamics boosted both leisure and business-related travel to the metro, raising annual occupancy to nearly 70 percent. This year, however, mounting economic headwinds could slow travel volumes, leading to a reduction in occupancy. An additional challenge to hotel demand and ADR is a surge in supply. Among major metros, Austin is slated to record the second-largest supply change from 2019-2023 with three projects — each surpassing 200 rooms — delivering in the CBD this year. Still, several major events will prevent a substantial slide in bookings. The Formula 1 U.S. Grand Prix will be held in Austin for an 11th year, and the World Golf Championships–Dell Technologies Match Play will also be held again in 2023.