As someone who doesn't live in Texas, I am frequently in Waco and fascinated with the growth of the Hotel market in Waco. Everytime I am there, there is a new hotel being built.

During homecoming, i asked the owner of the Hotel i was staying at... how much occupancy in hotel rooms has Waco added in the past 10 years?

In 2019, there were 1400 rooms. In 2024, there are 2800 rooms.

It feels overbuilt except for a few weeks out of the year. The Airbnb we rent says bookings are down midweek. The Magnolia effect slowing and all the new hotels are having an impact it feels like.

It would be interesting to see the rate of occupancy.

It is demand based. There's a lag time between demand and when the hotel rooms get built, but we had 650,000 tourists here in 2014 and 2.7 million in 2018. Since then, tourists have dropped to about 1.8 million per year. That's about 5000 tourists per night every day of the year if everyone stays only one night. Obviously not everyone stays overnight, but others may stay more than one night. Factoring in seasonality, 2800 rooms is probably not too much currently.

No idea how long the demand lasts with the Magnolia effect. Waco is also getting some actual sustainable tourist business too, but without Magnolia, it's definitely overbuilt.

Texas as a whole is growing, so even without Magnolia, Waco would be growing regardless. Magnolia still draws a crowd, though there probably won't be any future growth from that.

Baylor will continue to grow, people will continue to move here, other businesses are making their home here, and we have all the patent lawyers visiting regularly.

I think we'll grow into our current hotel build, even if it's a little overbuilt today.

Waco is a slow grower, especially compared to other metros in the central part of Texas.

Waco will remain a college town, and there will be tourism growth in the area as the area develops more attractions for people to visit. And that will spur hotel growth.

As far as other growth is concerned, I think you'll see the Waco area fighting even more now to compete with the Bryan-College Station and Temple-Killeen metros, which are growing at a much faster clip than the Waco MSA in the same way Waco had to compete with Dallas, Fort Worth and Austin in the late 1800's/ early 1900's.

But that kind of growth doesn't necessarily mean there is a good market for hotels. You have to have something in your town, regardless of its size, that makes people want to spend the night.

And that's where Waco has outpaced its neighbors recently.

That being said, many proposed hotels for Waco have been cancelled or downsized in the past 4 years, So, I think the market is right where it needs to be with inventory.

Additionally, occupancy rate has slipped year over year by 1.6% in Waco due to supply growth.

However, average daily rates are up 6% year over year and RevPar is up 4%.

This means the market is hanging tough with thousands of new rooms and fears of occupancy and revenue failing through the floor have not come true.

Form your own conclusions, but the data is good particularly when factoring in the results with 1m less visitors to Magnolia compared to prior years.

Lots of things at play here, but overall the market is healthy for many hoteliers with brand loyalty, quality product, and good locations.

For example, many thought the Hilton (a 1981 build) would see declines with new hotel product in East Waco and Marriott AC by the Silos.

There have been 600 rooms added within a mile of the Hilton recently.

The declines haven't come true (yet).

Hilton revenue, occupancies, rates are all in the green year over year and revenue and rates are at all time highs when looking over multiple years. Occupancy is with a couple of points of all time highs.

Ex) Year to date occupancy is at 73% vs 68% in 2023.

I think Waco has a more resilient travel (corporate and leisure) than people realize.

Also, as the city, BU, TPID, Convention Center (just outsourced to ASM Global), and others further improve strategies, it should be good for everyone.

FlyinDubGreenGold said:

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For example, many thought the Hilton (a 1981 build) would see declines with new hotel product in East Waco and Marriott AC by the Silos.

There have been 600 rooms added within a mile of the Hilton recently.

The declines haven't come true (yet).

Hilton revenue, occupancies, rates are all in the green year over year and revenue and rates are at all time highs when looking over multiple years. Occupancy is with a couple of points of all time highs.

Ex) Year to date occupancy is at 73% vs 68% in 2023.

I think Waco has a more resilient travel (corporate and leisure) than people realize.

Also, as the city, BU, TPID, Convention Center (just outsourced to ASM Global), and others further improve strategies, it should be good for everyone.

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This is actually correct. With Waco being accessible within the Texas Triangle, a sputtering economy make's many in this area of 25 million more likely to stay close to home.

I'm just happy to see actual high end hotels in the area. When we were hotel visitors in Waco prior to buying then later moving here there was nothing that would encourage a long weekend at a semi nice hotel. Both 1928, Herringbone and perhaps Pivovar are destination worthy IMO.

I think if the downtown plans come to fruition with the new convention center and projects like the new performing arts center (https://otj.com/projects/waco-performing-arts-center-study/), more events will be coming that drive tourism and overnight stays.

BerenstainBear said:

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I think if the downtown plans come to fruition with the new convention center and projects like the new performing arts center (https://otj.com/projects/waco-performing-arts-center-study/), more events will be coming that drive tourism and overnight stays.

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Is there a wildly optimistic ETA out there for the Performing Arts Center? It's been my #1 wanted project for years.

As far as I know, the PAC is a priority. Now, absent some private contributions, it is probably 10 years way or so. But, similar sized communities have been building new PAC's, and I know that Waco will want to remain competitive with those communities.

Check out Lubbock's PAC. It's relatively new and designed well for that community's needs.

BerenstainBear said:

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I think if the downtown plans come to fruition with the new convention center and projects like the new performing arts center (https://otj.com/projects/waco-performing-arts-center-study/), more events will be coming that drive tourism and overnight stays.

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Any news on the minor league baseball facility?

PAC, Convention Center, and Minor League Ballpark are all on the books in the Downtown Strategic Roadmap (attached below).

City is contemplating what goes first, when, which produces the most ROI/private development….and the most important part….how much will it cost.

Fun project for sure and I would guess there will be updates in the coming months.

In the deal with Pavilion, BU committed to $10m contribution PAC to get things kick-started.

But the PAC estimated construction is north of $150m. The Convention Center is $200m+. The Ballpark is $115m. These all are cool things with huge potential.

Link to Strategic Roadmap: https://www.waco-texas.com/News/Downtown-Development

Yogi said:

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As far as I know, the PAC is a priority. Now, absent some private contributions, it is probably 10 years way or so. But, similar sized communities have been building new PAC's, and I know that Waco will want to remain competitive with those communities.

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The Master Development calendar shows years 4-8. So, 10 years is probably a good estimate.