The largest hotel in Austin history is nearly ready to open, marking the first of multiple large-scale hospitality projects expected to debut in 2015 and beyond.
The first guests at the JW Marriott Austin, a 1,012-room hotel along downtown Congress Avenue, arrive Feb. 13. The nearly complete project is among eight downtown-area hotels under construction, and numerous other concepts remain in the planning stages that could potentially double the number of Central Austin hotel rooms by 2017. Having nearly 10,000 downtown-based hotel rooms by then could help elevate Austin to new opportunities, JW Marriott General Manager Scott Blalock said.
“We compete as much with other convention cities as hotels within Austin, and we’re opening up Austin to a whole new group of conventions we couldn’t host before,” Blalock said.
When Hilton Austin—the city’s first convention hotel—opened in 2003, 60 percent of all bookings represented new business to Austin, according to Robert Watson, the hotel’s general manager. JW Marriott officials also project first-time Austin visitors will occupy up to 60 percent of the 512,000 rooms pre-booked through 2021.
And Austin already is riding a strong wave of momentum. For example, when Blalock helped launch the last JW Marriott property, a 1,005-room convention hotel in Indianapolis, the downtown occupancy rate barely exceeded 50 percent, he said. Austin, on the other hand, ended 2014 with a 72.3 percent hotel occupancy rate, according to STR, a hospitality industry analysis firm.
In other words, more than seven out of every 10 Austin hotel rooms were booked, on average, each night in 2014.
But high occupancy creates higher room rates, Freitag said, with the average Austin hotel room costing $128.90 in 2014, an increase of almost $10 from 2013 and a nearly $30 increase since 2010.
However, Austin’s occupancy rate in 2014 grew at its slowest level in five years because no significant new hotels opened, Freitag said. More than 1,500 rooms are expected to come online in 2015, which—should demand remain the same—potentially decreases the city’s occupancy rate for the first time in five years and could cause hotels to drop room rates to remain competitive.
“We have to make sure Austin doesn’t price itself out of the market,” said James Walsh, immediate past president of the Austin Hotel & Lodging Association.
Contrary to popular belief, most of Austin’s hotel business occurs beyond the large-scale events that typically define the city’s tourism industry, said Bob Lander, president/CEO of the Austin Convention and Visitors Bureau. He leads the public agency that was responsible for helping to book more than 600,000 room nights in Austin last year, or approximately one-quarter of all hotel sales.
Austin is also targeting more international visitors, a market Lander said he considers relatively untapped despite hosting the Formula 1 United States Grand Prix the past three years. International travelers typically benefit the tourism economy two to three times more than domestic tourists, he said.
But there is also money to be made serving Austin’s event and hospitality needs. The Westin Austin Downtown debuts July 2 and expects to serve a much more localized clientele than larger convention hotels, General Manager Kristofer Carlson said.
“Our hotel more than likely will attract the local corporate business seeking to book downtown,” he said, adding that weddings are also expected to account for a significant portion of business at the 366-room hotel.
Other existing hotels, such as Hyatt Regency Austin, first built in 1982, have sought upgrades to keep up with changing demands. Last year the 488-room hotel south of Lady Bird Lake completed renovations on the city’s second-largest ballroom attached to a new seven-story, 794-space parking garage. The ballroom is separate from the hotel and is intended for local large-scale events, General Manager Lance Stumpf said.
Hilton Austin also renovated its 800 guest rooms last year as part of a $22 million makeover. Watson said the next step is to upgrade the hotel’s event spaces during the next three years to help Hilton Austin leverage its location next to the Austin Convention Center.
“Being this close, most of those meeting planners are looking at rooms within walking distance,” Watson said.
The new hotel rooms will allow Austin to soon compete against other convention city heavyweights, such as San Antonio, New Orleans, Phoenix and Las Vegas, Walsh said. The next step, he said, is to upgrade the Austin Convention Center.
Lander’s bureau is already six months into a study to decide what upgrades and other improvements might be needed at the convention center. The report could reveal by April what long-term strategy to take, Lander said.
Until the Austin Convention Center is expanded, Austin risks losing business to those larger convention cities, he said.
Austin ended 2014 with a 72.3 percent hotel occupancy rate!
Wow, Austin ended 2014 with a 72.3 percent hotel occupancy rate.