San Antonio Express-News: San Antonio hotels keep betting on brighter future despite downtown demand slump

The San Antonio Express-News is reporting on San Antonio’s wager that the hospitality sector will rebound as new luxury hotels continue to enter the market. In the article, San Antonio hotels keep betting on brighter future despite downtown demand slump, journalist Lily O’Neill used data from Source Strategies to provide meaningful context to the current situation in the Alamo City’s most important hospitality submarket.

The Monarch San Antonio, the long-sought hotel anchor at Hemisfair, just got its finishing touches, and the historic El Tropicano Riverwalk Hotel is set to reopen this fall as Sítio El Tropicano after a significant reinvestment.

Despite such grand unveilings, it’s not a great time to be opening a hotel in downtown San Antonio — particularly an upscale establishment.

But they’ve been coming fast. 

The past few years have seen The Kimpton Santo San Antonio-Riverwalk, Plaza San Antonio Hotel & Spa, InterContinental San Antonio Riverwalk and others open their doors. 

But amidst all of this high-end hotel development, trouble lurks.

The new wave of hotel supply is coming despite a drop in visitor demand since 2019 due to the post-pandemic slowdown in convention business — the city’s traditional tourism backbone — a slowdown in domestic leisure travel blamed on high inflation and the weak economy and a decline in international visitors attributed to the Trump administration’s immigration policies and rhetoric.

Source Strategies brought the data to contextualize the situation:

It adds up to what Source Strategies, a local hotel consulting firm, says is one of the most turbulent stretches the San Antonio market has faced since the pandemic. 

Its data tells the story.

As the number of rooms in the urban core increased 4.2% since 2019, the number of nights sold plummeted 15.6%. That’s pushed revenue per available room — a key measure of hotel performance — to an increase of an anemic 2.3% since the pandemic.

“It has not come anywhere close to keeping up with the rate of inflation,” said Paul Vaughn, director of data operations at Source Strategies.

And the trend has not yet changed course:

In the final three months of 2025, occupancy in downtown hotels slid to just 59%, more than 9 percentage points below the same period in prepandemic 2019. Revenue per available room fell nearly 9% from a year earlier.

That helped drive a citywide revenue drop of 7%, the steepest decline among Texas’ major metros and far off the statewide average decline of 2%. 

“We expect this demand to slowly rebound, but it will take time to see occupancies rise to the pre-pandemic level as this supply is absorbed into the marketplace,” Vaughn said, adding that the activity suggests investors see a turnaround ahead. “Developers and franchises are risk-averse and would not invest in San Antonio if they did not expect to profit.”

After a review of international travel declines, the rebound of the Convention Center, the foreclosure of the Thompson San Antonio, the closing of the Havana Hotel, the article details new projects that include the Monarch and El Tropicano hotels. But then O’Neill grounds this progress with further data from Source Strategies on high-end hotels in the downtown San Antonio submarket.

In the luxury category, the number of rooms completed in downtown San Antonio has increased 3.5% since 2019, including a whopping 7.1% increase since 2024 alone. But the number of nights sold decreased about 17% — and remained flat from 2024 to 2025, according to Source Strategies.

The article closes on an upbeat note from Rick Slutter, managing director of Zachry Hospitality, the company that just opened the Monarch hotel.

Slutter said he believes city projects, including Oxbow Development Group’s expansion in Southtown, the Alamo and the plaza’s makeover and the first phase of Project Marvel will help drive visitors to the city’s urban core in the long term.

“There’s never been a better time to open a luxury hotel downtown,” he said. “There’s so much energy building within the city between the arenas and the expansions of the Convention Center, the Alamo and the new food and beverage experiences in town. It’s the perfect time for someone to visit San Antonio for the first time or to return and check into a world-class hotel.”

Read the full article, San Antonio hotels keep betting on brighter future despite downtown demand slump, on the San Antonio Express-News website.