Thanks to blockbuster revenue performance in 2018, the Live Music Capital of the World can now add another title: Hotel Capital of Texas.
A new report from San Antonio-based hotel consulting and research firm Source Strategies Inc. indicates six of last year’s top 10 Texas hotels for revenue per available room (RevPAR), a key metric of financial performance in the hotel industry, were in Austin. Going a step further, Austin boasted 30 hotels among the top 100 for RevPAR — the most in Texas.
Topping the revenue list for local hotels was the Four Seasons Hotel Austin, with RevPAR of $290.85 last year (ranked second statewide). Joining it in the top 10 were the South Congress Hotel ($256.23, ranked fourth statewide), Hotel San José ($256.21, ranked fifth), The Driskill ($255.17, ranked sixth), the W Austin ($245.84, ranked eighth), and Hotel Van Zandt ($240.05, ranked ninth).
For all hotels in the Austin metro area, RevPAR in 2018 averaged $101.94, up from $101.63 in 2017 and compared with $69.76 statewide in 2018, Source Strategies says.
Overall, hotel revenue in Austin jumped 11.3 percent last year to $1.56 billion — the highest growth rate among Texas’ four major metro areas, according to Source Strategies. The Austin area, which accounts for more than 13 percent of the state’s hotel market, also posted the highest occupancy rate (73.7 percent) among the four major metros, the report shows.
With the addition of 4,100 hotel rooms in 2018, Austin’s supply of hotel rooms grew 10.9 percent, the report says. That boost in supply even outpaced 2017’s heightened demand of 9.8 percent.
However, Paul Vaughn, senior vice president of Source Strategies, says demand continues to outstrip supply in the Austin hotel market.
“Austin is considered undersupplied because the occupancy rates and average daily room rates are still sky high,” Vaughn tells CultureMap. “This makes building new hotels attractive to developers. Land is at a premium in Austin, making it slower to start a new lodging project, but the market incentives are there for a high return on investment.”
The Ritz-Carlton in Dallas laid claim to the richest RevPAR among Texas hotels last year, at $336.12, Source Strategies says. It was the only Texas hotel with RevPAR above $300 in 2018. In third place statewide was Hotel Emma in San Antonio ($287.27), with The Joule Dallas at No. 7 ($246.09) and Rosewood Mansion on Turtle Creek in Dallas at No. 10 ($238.13) rounding out the top 10.
In the Source Strategies report, the highest-ranking Houston hotel (No. 12) was Hotel Granduca, with RevPAR in 2018 of $223.07.