Justin Mabey, the developer behind the Home2 Suites by Hilton that opened in Round Rock in March, said he likes the location of his new hotel off the SH 45 N intersection with MoPac so much that he plans to open another nearby.

He said the new hotel will probably start construction in the first quarter of 2016 and be located by The Salvation Army store.

He said the Home2 is doing well and attracting business travelers.

“We feel very good being the newest hotel,” he said.

Mabey’s new hotel is not the only one that will help change the Round Rock skyline. There is also a Holiday Inn Express under construction next to the Art Institute of Austin on the south side of SH 45 N. A Hyatt hotel is also under construction at the intersection of La Frontera Boulevard and Sundance Parkway.

Jan Frietag is the senior vice president at STR, a firm that monitors the hotel industry. Frietag said the accommodations industry is booming throughout the country, but the Austin area and Round Rock specifically are doing especially well. He said according to data his company collects, Round Rock hotel occupancy is at about 71 percent, which he describes as a “very healthy number.”

Data from the Texas Comptroller’s Office also shows that total taxable receipts have been increasing in recent years for hotels in Round Rock, with hotels bringing in about $48.1 million in taxable revenue in 2014, up from $43.7 million in 2013 and $38.3 million in 2012.

Furthermore, Frietag said room demand currently outpaces supply in the city, but with the opening of Home2 in March and more hotels on the way, occupancy rates could fall if hotels and the city cannot increase the demand.

“Can the presence of the new hotels grow the pie?” he said. “That’s up for debate—some [general managers] think they can.”

A competitive market

Abbi Bhakta, general manager at the Hilton Garden Inn in Round Rock, said his rooms are usually fully booked Monday through Thursday with business travelers, and families make up most of his weekend business.

“The hotel is a lot more full [on the weekends with families] even though all the rooms might not be sold,” he said.

He said he does worry about oversaturation in the market with new hotels coming, but the Hilton Garden Inn will be undergoing a renovation in October to make it more competitive with newer offerings.

Bhakta said hotels in Round Rock will depend more on the business they and the city can generate on their own.

“Two hospitals off University [Boulevard], the brand new Bass Pro [Shops], those are huge, unique things that will serve our area,” he said.

For those booking the hotels, the high occupancy rates can drive up prices. Paul Rose, vice president of Elite Sports Inc., hosts softball showcases in Round Rock that display players to college scouts. He said the showcases can attract players from throughout the state as well as Louisiana and Oklahoma to Round Rock.

Rose said he has been hosting the showcases in Round Rock for about five years, and he loves the facilities and the support he has received from the city.

Rose said the hotel room prices in Round Rock have been steadily increasing for groups that are booking large quantities of rooms.

“I think the lowest rate I’ve had was $90 a night, and in Plano I’ll get down to high $70s for comparable [hotel rooms],” Rose said.

Rose said he would like to see more supply in Round Rock.

“We’ve had to tell people [coming in for the showcase] to use an Austin hotel—we want to get people using not only the Round Rock hotels but also Round Rock restaurants,” he said. “We’re trying to put money back into the city.”

Planning for growth

Round Rock City Manager Laurie Hadley said hotel developers continue coming to the city looking to build in the city.

“At the moment we have several knocking on our door,” she said.

Hadley said the city has great interest in watching the number of hotels increase, but officials are also aware that they do not want to flood the market.

“If you have too many hotels then rooms aren’t filling up [and] the hotels suffer,” Hadley said.

Hadley said the northern part of the city around the Round Rock Premium Outlets and newly opened Bass Pro is where officials are seeing increased interest.

“With the outlets and the [Round Rock] Sports Center there’s a high need [for hotels],” she said. “That area has become more attractive because of all the activity.”

Hadley said the majority of hotels Round Rock offers are family-friendly.

“[The family-friendly hotels] are awesome to have,” she said. “But you need a blend to accommodate everyone who comes to town.”

Hadley said the city would especially like to attract another high-end hotel, preferably one with additional conference space.

“As much as we’d like [additional high-end hotels] that’s up to [hotel developers],” she said. “We never give up trying. We certainly feel we have the market and the clientele.”

Hadley said the city uses the 7 percent hotel occupancy tax revenue it receives toward its Convention & Visitors Bureau and the Sports Capital of Texas campaign. The city also collects a 2 percent venue tax that goes entirely toward funding the Round Rock Sports Center.

“[Sports tourism] helps perpetuate itself,” she said. “Tourism is a great source of revenue—folks come for a few days, and then they go. We’re really happy they want to continue.”

Area growth

Round Rock’s hotel business is growing, but it is not the only city in the area seeing gains in the accommodations industry.

Pflugerville announced in 2014 its first two hotels—a Best Western Plus and a Courtyard Marriott—would be built in the city both in the 130 Commerce Center near Pecan Street and SH 130.

Dilip Naik, manager of the forthcoming Best Western Plus in Pflugerville, said he and his business partner decided there was a need for a hotel in Pflugerville after seeing the growth of the Stone Hill Town Center and the opening of the Hawaiian Falls Water & Adventure Park. He said incentives from the Pflugerville Community Development Corp. helped finalize the decision, but the decision was ultimately because of growth in the area.

“Most people who [visit] the area tend to want to stay close to those facilities,” he said. “As much as there are good hotels on I-35, it is 4 or 5 miles from here. Staying in the community would get [visitors] there much quicker.”

Naik said the Marriott coming next door could actually help business since it will bring a conference center with it.

“I think Pflugerville could have four or five hotels in the area,” he said. “It could happen in the next five years.”

Pflugerville Public Information Officer Terri Waggoner said the city of Pflugerville started the “Pfun, TX” campaign in response to the anticipated hotels and increase in tourism to the area.

In Hutto the city’s second hotel—Hampton Inn & Suites—opened in July on Ed Schmidt Boulevard near Hwy. 79. Hector Orozco, the hotel’s general manager, said Hilton, which owns the Hampton brand, had been looking to add a hotel in Hutto for about 10 years.

Orozco said he anticipates a mix of business travelers on the weekdays and leisure travelers on the weekend. He said recreational travelers are attracted by The Dell Diamond and Hawaiian Falls.

“We think this city has a lot of potential,” he said. “This location has very good access and a lot of businesses are coming in.”