Distress has seeped into Downtown Austin’s luxury hotels, and Fairmont Austin is the latest property facing financial headwinds.
The $430 million CMBS loan tied to the hotel owned by San Diego billionaire and longtime Republican donor “Papa Doug” Manchester’s firm Manchester Financial Group was transferred to special servicing, according to a report from Morningstar Credit.
Manchester, which opened the hotel in 2018, used the loan to refinance the property in 2024. Prior to securing the refi deal, Manchester tried listing the property at 101 Red River Street for more than $600 million in 2023, or about $575,000 per room.
Morningstar said the 1,048-key hotel’s cash flow fell to 65 percent of its underwritten level between March 2025 and March 2026. The Fairmont’s occupancy dropped from 72 percent to 54 percent since the loan was provided.
The Fairmont, the city’s largest hotel, is the third Downtown Austin hotel facing distress in the last two months. Ron Burkle’s Soho House gave the keys to The Line Austin back to its lender, at 111 East Cesar Chavez Street, after allegedly defaulting on the $172 million loan tied to the property. JP Morgan provided the mortgage for the 428-key hotel in 2023. Realberry, a developer based in Denver, lost control of Hyatt Centric during the same foreclosure auction after appearing to default on a $50.5 million loan tied to the hotel.
Hospitality distress in Downtown Austin comes about a year after the Austin Convention Center, at 500 East Cesar Chavez Street, closed for a $1.6 billion overhaul that involves doubling the facility’s available meeting space to about 700,000 square feet. It’s expected to reopen in 2029.
The downtown hotel market has been bracing for the closure for years. Fairmont Austin was likely hit particularly hard, since it’s connected to the convention center by skybridge.