Austin Prepares for Four-Year Convention Center Closure as Hotels Introduce New Room Fee to Boost Tourism

Austin Faces Four-Year Convention Center Closure, Hotel Industry Moves Forward with New Room Fee

The city of Austin is bracing for a significant challenge after its convention center closes on April 1 of next year. This closure is expected to last four years as a new facility is built, posing a potential strain on the local tourism and hospitality sector. In light of this situation, local hotel industry leaders are supporting a new room fee that aims to bolster Austin’s marketing efforts as a destination for tourism and business travel.

New Room Fee Approved by Hotels

A new initiative called the Tourism Public Improvement District (TPID) is on the verge of implementation. Under this plan, hotels with 100 or more rooms will charge a 2% nightly fee. This fee is expected to generate over $20 million each year, which will be used to promote Austin more extensively as a tourist destination. The idea has gained support from local hotels, according to Tom Noonan, president and CEO of Visit Austin.

However, before the TPID can officially commence, it must receive final approval from the Austin City Council and pass through the Texas Hotel and Lodging Association for vetting. As of now, agencies within the hotel industry indicate that they are receptive to this plan.

Impact of Convention Center Closure

The decision to close the Austin Convention Center for four years is likely to have adverse effects on the city’s tourism and hospitality industry. The absence of a main convention center downtown could lead to a decline in business events, festivals, and gatherings that typically draw large crowds to the area.

City officials have ruled out the possibility of incorporating a hotel or housing project into the new convention center. Trisha Tatro, director of the Austin Convention Center Department, stated that any delay in development would jeopardize the timeline for the new facility, especially with the expected completion coinciding with the spring festival season of 2029.

Challenges of Integrating Hotels or Housing

According to Tatro’s memo, bringing in hotel development would add at least 8 to 10 months to the project timeline, as well as an extra cost of $16 million. Moreover, Austin already has a robust hotel market, with approximately 15,000 hotel rooms available downtown. This number has increased significantly, with a 111% climb from 2015 to 2023, and more projects on the way promise to add an additional 1,900 rooms.

The potential for adding a housing component to the convention center project has also been deemed unfeasible. Tatro pointed out that rapid housing development in downtown Austin has lowered rental rates, making it less appealing for investors interested in public-private housing projects.

Aiming for Strong Tourism Recovery

The launch of the TPID is a proactive measure to mitigate the anticipated impact due to the convention center’s closure. By collecting the 2% nightly fee, Austin aims to enhance its marketing strategies to attract more tourists and business travelers, ensuring the city’s recovery during construction.

Noonan has stated that the hotel industry has already surpassed the necessary thresholds to implement the TPID. As of late October, 65% of eligible hotels have signed on to the TPID in terms of total number and square footage, and 83% in assessed value terms. If everything goes according to plan, the TPID could go before the City Council for final approval before the year ends, and the new fee could start generating revenue by January 2024.

As Austin prepares for these transitions, the focus remains on balancing the immediate challenges with long-term goals for the city’s tourism sector.