Why IHG is flooding Texas’ hotel market with development this year

Development activity in Texas indicates that hospitality is coming back big time.

More than 16,000 hotel keys are set to be delivered in Texas within the next three years, according to CoStar. Dallas leads the nation for number of hotels in the development pipeline, with 21,882 keys across 185 projects, according to Lodging Econometrics. Dallas is second to New York for the most hotels under construction, with 3,059 rooms across 25 projects.

IHG, whose brands include InterContinental and Holiday Inn, is adding 13 hotels totaling more than 11,000 keys to Texas this year. The UK-based firm’s Texas deliveries expected this year total 1,886 rooms — that equals about 15 percent of the state’s pipeline projected over the next three years. 

The development growth stems from corporate relocations and residential migration into Texas, said Kevin Schramm, a senior executive at IHG Hotels & Resorts.

“Even for as big as Texas is, it’s out-punching its weight class when it comes to hotel growth and development,” Schramm said.

Its Texas pipeline includes three luxury flags — Hotel Indigo Irving – Las Colinas, opening with 150 rooms in June, at 55 East John W Carpenter Freeway; the 21-story, 390-key InterContinental San Antonio Riverwalk, opening this fall at 111 East Pecan Street; and the 357-key Kimpton San Antonio, opening this fall at 431 South Alamo, as the first Kimpton in San Antonio.

Austin has the fourth-busiest hotel development pipeline in the nation with 5,608 keys across 51 hotels, according to Lodging Econometrics. IHG has opened three hotels totaling 344 keys in the capital city this year — Holiday Inn Austin Airport, EVEN, and avid Austin Northwest Lakeline.

Houston, previously dubbed by Trepp as the “worst hotel market in the nation” saw modest gains in its construction pipeline by the end of last year. Houston led Texas in hotel deliveries last year, with 10 projects totaling 1,327 keys, according to Lodging Econometrics. 

“DFW is growing like wildfire. Houston will come back and resurrect itself, and the central part of the state is blossoming, not only San Antonio and Austin, but also when you look at these mid-size college towns. Not to mention secondary MSAs,” Schramm said.

The firm is opening Holiday Inn Express hotels in fast-growing DFW suburbs Anna and Haltom City, as well as in downtown Waco, home of Baylor University.

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What’s the next hot market for hospitality in Texas? It could be the Bayou City. 

“We’re actively growing in Houston. Downtown has seen a real surge there due to the growth in residential, which helps support restaurants and other amenities that hotel guests find appealing,” Schramm said.

Houston-based developer Neway Hospitality is developing dual-branded IHG hotels — a 275-key Holiday Inn Express/Staybridge Suites — in downtown Houston, with delivery expected next year.