Central Texas Hotels Finding Appeal With International And Out-of-State Buyers

Buyers find opportunity to enter Central Texas markets as some local owners are diversifying out.

Austin, TX – With strong economies and a continued influx of both residents and businesses to the Austin and San Antonio markets, Central Texas is seeing increased investments in the hotel industry.

In 2018, CBRE Hotels sold an average of one hotel a month in Central Texas, totaling seven in Austin MSA and four in San Antonio, making CBRE the number one hotel brokerage company in the region.

In Austin the hotels sold are: Staybridge Suites Austin South, Holiday Inn Express & Suites –Bastrop, Holiday Inn Express & Suites – Hutto, Holiday Inn Express & Suites – Georgetown, Austin Suites Hotel, Best Western Marble Falls and Econo Lodge Austin.

In San Antonio, the hotels sold are: Holiday Inn Express & Suites San Antonio West – Seaworld, La Quinta Inn & Suites Floresville, Quality Suites San Antonio – North IH 35 and Best Western Plus – San Antonio Medical Center South.

Dennis Drake, Michael Yu and Rahul Bijlani with CBRE’s Hotels group arranged the transactions.   

In Austin, the total number of hotel rooms has increased by 12.4 percent within the last two years and is expected to increase by approximately 11 percent over the next two years, consistent with the market room demand increase of 9.5 percent.

“As demand begins to catch up with supply growth in Austin, some sellers are seeing an opportunity to diversify out of Central Texas, whereas the buyers for those assets have often been international or from out of state,” said Michael Yu, Senior Vice President at CBRE.

“With large companies continuing their rapid expansion in Austin, it is just a matter of time before the market stabilizes and resumes its rapid growth,” said Dennis Drake, Senior Associate at CBRE.

In San Antonio, supply of new hotel rooms is expected to grow by less than 2 percent this year and demand correlates at 3 percent this year.

“Buyers seem to look at San Antonio as a good opportunity to buy a hotel as a steady investment opportunity in a growing city with limited new hotel construction and stable growth,” continued Mr. Drake.