Jan 18, 2022 - Business

New boutique hotels latest sign of Austin's rebounding travel industry

A photo of a bed in a hotel room.

Thompson Austin guest room. Photo courtesy: Hyatt Hotels

Hoteliers are placing big bets on Austin and a U.S. pandemic recovery.

Driving the news: Two new (and similarly named) hotels opened their doors last Wednesday — Thompson Austin and tommie Austin — the latest sign that the city's hotel industry is making a comeback.

Why it matters: The spread of the coronavirus slowed hotel occupancy rates, but the industry is rebounding as travel resumes.

What they're saying: Austin has added more than 5,000 hotel rooms since 2019, and every hotel project that was in the construction pipeline before the pandemic has either opened or moved forward, said Tom Noonan, president and CEO of Visit Austin.

  • "The Thompson Austin and tommie Austin [are] just the latest in a hotel supply boom that began in 2015," Noonan said.
  • Plus, hotels had a strong October thanks to events like Austin City Limits and the U.S. Grand Prix.
    • "Austin hotels continue on the path to recovery," Noonan said. "Meetings and convention demand were recovering before the recent omicron surge, signaling a shift in travel risk tolerance."
A photo of a lobby with two couches a fire place in the background.
Thompson Austin lobby. Photo courtesy of Hyatt Hotels

Yes, but: Across the country, hotel occupancy rates remain significantly lower than pre-pandemic levels.

  • A report from the American Hotel & Lodging Association and Kalibri Labs found that the Delta variant surge drastically slowed business travel, and is "not expected to reach pre-pandemic levels until 2024."

And Austin's hotel industry still faces lower occupancy rates than pre-pandemic levels.

  • Visit Austin reported that downtown hotel revenue per available room decreased 70% year-over-year in 2020.
  • By March 2021, downtown hotels began to rebound to 39% occupancy. Pre-pandemic hotel occupancy in Austin and downtown hovered between 60-90% through much of 2019.
A photo of a hotel room with a sink in the foreground and a bed in the background.
A tommie Austin guest bedroom. Photo courtesy of Hyatt Hotels

Flashback: South by Southwest's 2020 cancellation resulted in $34 million in lost hotel revenue, an analysis by Greyhill Advisors found.

In its 2021 report, Downtown Austin Alliance officials found that although the pandemic affected all industries, "perhaps none has been as severely impacted as the hotel industry."

The group pointed to some glimmers of hope, though.

  • In its 2021 "State of Downtown" report, the group predicted that tourism demand will return as the pandemic recedes. However, it will not recover all at once.
  • The group's report found that "hotel development has not shown any indication of slowing down."

Zoom in: The two new hotels are the latest lifestyle properties from Hyatt, located at the intersection of Fifth and San Jacinto. Hyatt first announced the construction of the lodgings in March 2021, signaling confidence in the city's tourism industry despite the pandemic.

  • Thompson Austin and tommie Austin guests can choose from several dining concepts, including a fourth-floor restaurant and bar, a street-level eatery, market and a ground-floor coffee shop and bar.
  • "The biggest thing I've taken away from speaking with current luxury travelers is that the pandemic brought a higher-level of treatment and more personalized touch points to the customer service experience," Thompson Austin's managing director, Nate Hardesty, told Axios. "Guests don't want to see that go away as travel continues to return."

Of note: "Boutique" is originally French for "shop," but now, in American English, means something like "more expensive than you can afford."

  • As in, several boutique hotels are opening in Austin.
The lobby of the Thompson Austin. Photo courtesy: Hyatt Hotels

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