Developers Are Bullish On Hotels As Anchors For Mixed-Use Projects
Hotels have become a key ingredient to mixed-use projects in Austin as ATX tests its potential to be counted among the cities that never sleep.
Lodging has become an essential component of mixed-use developments across the city, according to developers at Bisnow’s Austin State of the Market.
Developers recognize hotels can create a symbiotic pull with other mixed-use elements when paired in the right setting, said Urbanspace CEO Kevin Burns.
“I believe that a great hotel developer understands that if the neighborhood and the city love going there, then the tourists are going to want to go there that much more,” Burns said.
Austin ranked among the top five markets for hotel development in the first quarter, with 117 projects totaling 13,850 rooms in the city’s construction pipeline, according to Lodging Econometrics data.
Since 2019, Austin has added approximately 11,000 hotel rooms, boasting one of the largest pipelines in the country, Business Travel News reports.
Hotels now often serve as an anchor element of mixed-use projects and are often combined with many different commercial real estate assets, including residential, office, restaurant and retail/entertainment complexes, said Amber Autumn, director of Adolfson & Peterson.
Craig Cavileer, co-founder of the Delightful Development Co., said hotels opening in mixed-use buildings create an ecosystem where guests, restaurantgoers, retail shoppers and even apartment residents enhance the experience.
“All of those factors matter when you’re trying to build a hotel that’s going to be everlasting,” Cavileer said at the event, held at the Texas Bankers Building on April 29. “It goes way beyond architecture and landscape, and it gets to an emotional sense of place that you are shooting for.”
This year, Element North Austin, an extended-stay hotel, opened at 900 E. Parmer Lane in Tech Ridge. It was developed in a mixed-use complex that includes retail and apartments, according to Community Impact.
Other recently completed mixed-use developments with hotels in Austin include the W Austin Hotel & Residences, which completed a $50M transformation last year, and the 59-unit Roost Apartment Hotel, which opened inside the Paseo 48-story mixed-use development at 80 Rainey St. in January.
The city finds itself in the middle of a short-term adjustment phase, with supply slightly higher than demand, CoStar reported, causing hotel performance to dip in 2025. Occupancy remains stable at around 63%.
Developers hope the dip is temporary. SXSW was shorter this year, as the city demolished the 365K SF Austin Convention Center, where it had historically been held, in 2025. The convention center’s 620K replacement is expected to deliver in 2029 and generate $750M annually.
The city still fared well compared to other Texas metros in average daily rate and revenue per available room, according to a Marcus & Millichap hospitality report.
Steady, strong demand for tourism offerings in the city makes new hotel projects attractive to developers. Some bigger hotel projects under construction in the city include 1 Hotel Austin, which anchors the 74-story Waterline tower and will open its doors in August, and Hotel Trinity, which will span 13 stories and open later this year.
Roughly 1,600 keys are expected to be delivered this year, the Marcus & Millichap report says, a nearly 25% rise from 2025.
