.png)
The second largest U.S. state in terms of size and population, Texas, draws in millions of travelers every year. Known for its diverse landscapes and attractions, the destination offers everything from gulf coast beaches and woodlands to the rodeo and world-famous barbeque.
In 2021, tourists brought $76.1 billion into the area, supporting over one million local jobs. International and domestic visitor numbers are believed to have surpassed 2019 levels in 2022, with a total of 279 million travelers entering the state. But how is the travel sector performing in Texas today?
To find out, we’re taking an in-depth look at the state’s short term rental market data to identify its top-performing destinations for property investment.
Texas Destinations to Watch
According to scraped market data as of May 1, short term rentals in the state of Texas have witnessed a 13% increase in occupancy since 2022, having already risen 8% year-over-year from 2021 levels. However, revenue per available rental (RevPAR) across the state only increased by 7% as overall average daily rates (ADR) dropped 6% year-over-over. This decline could simply reflect the leveling out of nightly rates, which rose from $228 to $244 in 2022, likely due to inflation. Rates are now back down to an average similar to 2021’s ($230).
Using short term rental market data for 2022 and 2023 (as of May 1 each year), we’re taking a deeper look into the travel performance of five destinations across the state.
1. Houston
Texas’s most populous city and the fourth most populous city in the country, Houston, was ranked the 11th best city and the 6th most visited metropolitan area in the United States in 2021. It has since received the top spot for the most popular Texas city for overseas tourists. This large metropolis houses NASA’s official visitors center, a Theater District, the Houston Grand Opera, and much more.
Houston’s travel market has been performing well in recent years, with short term rental market data showing increases in demand, with occupancy rates up 24% this year. As traveler demand is growing, Houston may be a prime location for short term rental investment this year, especially since the area currently has no zoning restrictions or regulations. However, it’s worth noting that ADRs have been consistently falling in the city (-9% for two consecutive years to an average nightly rate of $155). But since occupancy has grown at speed, RevPAR still sits at a healthy 13% above 2022 levels.
.png)
2. Dallas
Texas’s third largest city and the fourth largest metropolitan area in the United States, Dallas, is the commercial and cultural center of the region. After receiving $4.4 billion in visitor spending in 2021, the city now forecasts over $10 billion in traveler spending this year.
So far this year, the city has outperformed the state’s averages in terms of occupancy (+26% year-over-year) and RevPAR (+33% year-over-year), with an ADR of $187, putting rates 5% higher than 2022 levels. On top of this great travel market performance, interested parties should keep in mind that the city collects 7% of net room receipts for Hotel Occupancy Tax (HOT), which is 1% higher than the overall HOT in Texas and applies to short term rentals as well as other hospitality businesses.
3. New Braunfels
Known for its German Texas heritage, the city of New Braunfels is home to four of Texas’s top 20 attractions and the Comal and Guadalupe rivers. Annually the city receives over 3 million visitors.
The city’s short term rental scene has been growing steadily over the past two years. Since demand has been growing, with occupancy rising 4% year-over-year in 2023, it seems travelers are also gaining more and more interest in visiting the area. It certainly seems that New Braunfels is one to watch in the coming months.
It should be noted, however, that ADR has fallen 5% year-over-year, in line with the state’s average, but is still slightly above 2019 prices. The average nightly rate in New Braunfels is currently $313.
.png)
4. Corpus Christi
In the south region of Texas, the city of Corpus Christi on the Gulf of Mexico boasts beautiful, sheltered beaches and a seashore that houses migratory birds and endangered turtles. The destination is also one of the best cities for kiteboarding, sailing, and windsurfing in North America. Over 10.6 million visitors flock to the area every year.
Over the past two years, the destination has witnessed great traveler demand. Occupancy rates showed a strong 20% rise between 2022 and 2023, which suggests there could still be room for more supply here. Those who choose to enter the market will continue to reap the benefits of the up-and-coming destination. Despite the state’s average declining, Corpus Christi has witnessed a 10% year-over-year ADR increase, causing RevPAR to climb 32% above 2022 levels.
5. South Padre Island
Sitting on the southern coast of the state, South Padre Island is the only tropical island in Texas and has 34 miles of breathtaking white beaches. While the small resort town is only home to around 5,000 people, over one million visitors per year flock to the destination to experience its calm waters, nature center, and boat tours.
Short term rental market occupancy in South Padre Island slumped 11% in 2022. However, the area’s travel market has since drawn in greater traveler demand, which has seen occupancy recover to 2021 levels. These results could suggest that the appeal of the destination is on an upward trend, and interested investors could also reflect on how ADR here remains steady despite the state’s overall decline, meaning RevPAR is up 9% over 2022 levels.
Key Takeaways
- Traveler demand is growing in Houston but ADRs are falling.
- Dallas and Corpus Christi are prime investment contenders for consideration, with great performances across the board
- New Braunfel’s short term rental scene has flourished in recent years, and South Padre Island shows promise.
Want to research another destination to inform your investment strategy for the months ahead? Reliable market data on our Key Data Dashboard can provide you with the in-depth insights you need to make those crucial decisions. Sign up for a demo to give it a try, or check out our previous Investment Destination Spotlights for Tennessee and Colorado.
