Emerging Hospitality Markets in Texas
Emerging Hospitality Markets in Texas
In a landscape where legacy hotel markets like Dallas, Austin, and Houston have long dominated investor attention, a quiet but powerful shift is underway. Across Texas, a new class of emerging markets is capturing interest—markets that promise stronger yields, fewer barriers to entry, and deeply rooted demand drivers. As investors look for new opportunities in hospitality, lesser-known cities are gaining attention and offering strong potential for owners, developers, and institutions. This article explores the rising stars of Texas’ hotel sector and why now may be the ideal time to look beyond the usual suspects.
What Defines an ‘Emerging Market’?
Emerging hotel markets are distinguished not just by growth, but by the convergence of strategic fundamentals that support long-term hospitality performance. These markets typically exhibit strong population growth, significant infrastructure investments, and new demand generators. Some of these demand drivers include expanding healthcare systems, logistics hubs, energy developments, and higher education institutions. In many cases, they are marked by a critical undersupply of hotel rooms, particularly in the midscale and extended stay segments, creating a compelling supply-demand imbalance. With lower costs of entry and operational efficiencies, these markets present a prime opportunity for investors looking to venture away from saturated metro areas while still capturing resilient, year-round demand.
Top Markets to Watch in 2025
College Station
Anchored by the presence of Texas A&M University, College Station offers a dependable and diversified demand base fueled by students, faculty, parents, and year-round campus events. The market has shown strong performance in the midscale and economy segments, with limited new supply pressure. As a stable university-driven hub, College Station presents an attractive opportunity for investors seeking consistent occupancy and recession-resilient cash flows.
Midland-Odessa
Fueled by a resurgence in oil and gas activity, Midland–Odessa has reasserted itself as a high-performing hotel market. Extended stay properties are leading the charge, benefiting from prolonged corporate demand tied to energy sector operations. Despite cyclical volatility, the market consistently delivers strong RevPAR and remains underbuilt in key segments, making it a compelling option for investors targeting yield and operational resilience.
Lubbock
Home to Texas Tech University and a major regional medical hub, Lubbock benefits from steady weekday business travel and institutional demand. The city’s hotel market remains resilient, with limited new construction keeping supply in check. With strong fundamentals and a diverse demand base—from healthcare to higher education—Lubbock offers investors a stable environment with room for strategic growth, particularly in select-service and extended stay segments.
Del Rio/Eagle Pass
Positioned along the U.S.–Mexico border, Del Rio and Eagle Pass are experiencing increased cross-border business and retail activity, driving demand for dependable lodging options. The region also benefits from casino-related tourism spillover from Mexico, creating a unique leisure demand stream. With a low competitive hotel sector and minimal new development, operators enjoy pricing power and high occupancy potential. These factors make the area an emerging hotspot for value-focused investors searching for untapped markets with strong upside.
Temple/Killeen/Fort Hood
This central Texas corridor is anchored by Fort Hood—one of the largest military installations in the country—providing a stable, year-round demand base. Coupled with expanding regional healthcare infrastructure and affordable construction costs, the market supports strong performance across branded limited-service and extended stay segments. With narrow competition and consistent government/medical-related travel, Temple/Killeen/Fort Hood offers a compelling opportunity for developers and investors seeking durable returns in an underappreciated market.
Key Takeaways for Hotel Owners and Investors
Sellers
With investor interest rising in these emerging Texas markets, now is an opportune time to capitalize on heightened demand and favorable pricing dynamics. Owners looking to exit can leverage improved valuations and compressed marketing timelines.
Buyers
These submarkets offer attractive cap rates and ROI potential not typically found in primary metros. Diversified demand drivers and low competition create strong fundamentals for long-term investment success.
Developers
With underserved supply and limited new construction, there is significant opportunity for ground-up development, particularly in limited-service and extended stay formats that align with local demand profiles.
Conclusion
As Texas continues to grow and diversify economically, the hotel investment landscape is shifting beyond the state’s traditional powerhouses. With their resilient demand drivers, limited competition, and compelling returns, these emerging markets are ones to watch. For owners, investors, and developers willing to look past the obvious, these submarkets represent strategic entry points into the next phase of hospitality growth in Texas. Staying ahead of capital flows and aligning with localized demand trends can be the key to outperforming in a competitive investment environment.
