Houston Hospitality Market Report

Bifurcated recovery correlated to hotel composition. Among all U.S. hospitality submarkets with at least 8,000 rooms of local inventory, the Houston CBD’s occupancy climb ranked in the top-25 last year. The metric downtown, however, trailed its 2019 equivalent by the second-largest margin in Houston during 2022, beating only the adjacent Galleria-Greenway Plaza. Corridors that are the most recovered compared to pre-pandemic occupancy figures include the Northwest and Southwest Freeway areas, where hotel demand should be less impaired by economic conditions in 2023. The Northwest submarket spans U.S. Route 290 west to Austin, while the Southwest encompasses U.S. Route 90 west to San Antonio and State Route 6 south to Galveston. During a year in which travelers may be looking to cut costs amid inflation, in-state road trips could become more popular, further supporting hotel demand in these areas. On the other hand, the two locales that are the least recovered — the CBD and Galleria-Greenway Plaza — as well as the neighboring Medical Center-Reliant Stadium submarket, have characteristics that signal additional challenges ahead. In all three areas, roughly one-third to one-half of local hotel inventory is in the full-service category, making it difficult to attract budget-sensitive visitors.