Hospitality Investing News - South Central Texas March 2025

Austin and San Antonio, two key Texas hospitality markets, have shown mixed performance across economy, midscale, and upper midscale segments over the past 12 months. In Austin, the market faced a -3.8% drop in RevPAR, with growth in economy properties but pressure on midscale and upper midscale ADR due to new supply and weaker demand. Austin’s 20,329 rooms, including 896 under construction, have a 65.7% occupancy rate and a 12-month ADR of $101.65 and RevPAR of $66.79 (as of January 2025). In contrast, San Antonio saw a 0.9% increase in RevPAR, with steady occupancy but softer ADR in economy and midscale segments. The 23,000 rooms in San Antonio, including 560 under construction, have a 59.3% occupancy rate, with a 12-month ADR of $89.48 and RevPAR of $53.06 (as of January 2025). Both markets continue to attract investment, with supply growth of 2.9% in San Antonio and 3.6% in Austin, and market sale prices at $80.2K per room in San Antonio and $99K in Austin, with cap rates of 10.0% and 10.2%, respectively (as of January 2025).

The New Mexico hospitality market is comprised of two regions: New Mexico North and New Mexico South. In New Mexico North, the market includes 8,356 rooms, with 30 under construction. The 12-month occupancy rate is 66.2%, with an ADR of $146 and RevPAR of $88. Among the subtypes, Luxury & Upper Upscale properties have a 12-month occupancy rate of 67.5%, an ADR of $270, and a RevPAR of $179, while Upscale & Upper Midscale properties show a 69.6% occupancy rate, an ADR of $144, and a RevPAR of $100. Midscale & Economy hotels have a 50.9% occupancy rate, an ADR of $87, and a RevPAR of $44. Over the past year, occupancy in New Mexico North increased slightly by 0.2%, ADR rose by 2.8%, and RevPAR grew by 2.9%. Market sale prices are $94.4K per room, with a cap rate of 10.0%.

In New Mexico South, the market comprises around 17,000 rooms across 290 properties, with no new construction in the past year. The 12-month occupancy rate is 57.7%, with an ADR of $105 and RevPAR of $60. Year-over-year, occupancy decreased by -2.0%, ADR increased by 3.2%, and RevPAR rose by 1.2%. With no new deliveries or construction, the hotel stock in New Mexico South grew by 400 rooms over the past three years. In comparison, national hotel inventory grew by 110,000 rooms, or 1.2%, in the same period.

Both markets show cautious growth, with limited new construction and soft performance in the economy and midscale segments, while upper-tier properties remain more stable.