Hotel development in Southwest Austin has been on the rise the past four years as prominent names in the hospitality industry seek to benefit from an untapped market. 

In 2013, Hilton Worldwide opened a Hampton Inn near the Y in Oak Hill, a decision that the hotel’s Director of Operations Bill Karotkin said was linked to growth in the region.

“Hilton is always looking for a strong position in any market, and Southwest Austin is grossly underrepresented by any brand,” he said.

According to the city of Austin’s permitting database, between 2007 and 2012, only one building permit was issued for a hotel in Southwest Austin. Since then, five more

hotels have been issued building permits—a trend that some in the hospitality industry attribute to the proximity to downtown; growth of the wedding business in the area and in neighboring cities, such as Dripping Springs; and the proliferation of residential and commercial developments.

Strong demand for more large-scale lodging options in Southwest Austin has prompted at least one hotel developer to target the area.

Residence Inn Austin Southwest is currently under construction at 6000 W. Hwy. 290, adding to the trend of nearby hotels. A combination of factors has contributed to the increased interest, according to Ron Stewart area vice president of lodging development for the western region of Marriott International Inc.

“There were many corporate demand generators out in this market as well as an

explosion of new residential, retail, restaurant and office growth, which are all great reasons to consider adding a hotel,” Stewart said.

In Southwest Austin, the type of traveler depends on the day of the week, Karotkin said. Monday through Wednesday the area hotels are occupied by business travelers looking for a cost-effective, convenient alternative to staying downtown.

“As downtown [hotels] fill up, people get pushed out,” Karotkin said.

And on the weekends, leisure travelers frequent the area, often in town for weddings at venues such as the Brodie Homestead, which opened in 2014 in Sunset Valley.

Juliana Ross, director of events, said she regularly works with couples hosting destination weddings as well as clients who have friends and family from out of town in attendance.

According to hotel market data analysis firm STR, the percentage of rooms occupied in Southwest Austin increased steadily from 2010 until 2016 when it took a slight dip, from 76.6 percent to 74.6 percent. Karotkin said this could be due to the election year.

“There tends to be a lot of uncertainty of what policies will stay in place or be changed, and a lot of businesses may curb their business travels accordingly,” he said.

Dripping Springs hotels

Just down the road in Dripping Springs, designated by the Texas House of representatives as the “Wedding Capital of Texas,” hospitality companies are responding to the increased demand for lodging. Pam Owens, director of tourism for the Dripping Springs Chamber of

Commerce & Visitors Bureau, said there is a rising need for large-scale hotels to help offset the number of wedding-related travelers.

“Weddings are definitely driving the demand,” she said. “We have a large number of lodging facilities that are bed and breakfasts, cabins and inns, but they aren’t the right fit for everyone, especially if you need 40 rooms.”

Because of the lack of suitable accommodations, Dripping Springs is losing tourism revenue to nearby cities, Owens explained.

“Currently we are having to send families into Austin, Blanco and Johnson City to find accommodations,” Owens said. “Those communities are having the benefit of the hotel occupancy tax, and visitors are spending their money in other towns’ stores and restaurants.”

Jay Sinojia, owner of Sach Hospitality, plans to open two hotels in Dripping Springs within the next 18 months—a Holiday Inn Express, expected to open by the end of this July, and a Courtyard by Marriott slated for July 2018.

“This is the ‘Wedding Capital of Texas,’ so the demand is here,” Sinojia said. “We are outside of Austin, so we will get overflow from there as well.”

By opening two hotels with separate customer bases, Sinojia said he hopes to corner the Dripping Springs large-scale lodging market.

“Those on a low budget can stay [at the Holiday Inn Express], and those who want to spend a good amount can stay at the Courtyard,” he said.

What the future holds

More competition is in store for hotels already established in Southwest Austin as new hotels begin to crop up in the area, such as the WoodSpring Suites Signature now open at 4911 S. I-35.

Anita Gonzales, assistant manager of WoodSpring Suites Signature, said business has taken off since the hotel opened last December. She expects the area to continue to attract visitors as more hotels move into the area. Just across I-35, a Staybridge Suites is slated to open in March.

“This is such an up-and-coming part of town; we can see another hotel being built really close to us,” she said.

Martha Lefner, co-owner of the South 20 Austin bed and breakfast located in the Circle C Ranch development, said she does not worry about corporate competition because she markets to the clients who come to Austin voluntarily rather than for business or a wedding.

“Being a bed and breakfast, you don’t compete with the hotels,” she said. “We get the people that are coming to Austin because they’ve heard about it.”

Karotkin said he is confident growth in the region will only serve to benefit the Hampton Inn Oak Hill.

“Because of our location on Hwy. 290, we can’t help but either maintain or grow [our business],” he said. 

Although there are many factors to consider when deciding where to open a franchise, Stewart said Southwest Austin will remain on Marriott International’s radar as a locale for hotels.

“There are many obstacles in play, but there is no question that Southwest Austin continues to be a high area of focus for us,” he said.