Domestic and international investors are taking notice. CBRE Hotels recently arranged three San Antonio-area hotel sales on behalf of sellers.

“The buyers for our most recent three transactions in San Antonio are based in California and Canada,” Drake tells GlobeSt.com. “Out-of-state investors find the city appealing because of diverse revenue generators and room supply that is growing at a slower pace than demand, especially compared to other major cities in Texas.”

The transactions included:

Los Angeles-based Continental Asset Management LLC's purchase of Home2 Suites San Antonio, a 111-key full-service hotel at 94 NE Interstate Loop 410 from Baywood Hotels.

A San Francisco confidential buyer's purchase of the Country Inn & Suites Lackland, a 74-key limited-service hotel at 6502 Old Highway 90 W from SATY AM Inc.

Toronto-based LD Hospitality LLC's purchase of the Courtyard by Marriott San Antonio Sea World, a 96-key full-service hotel at 6738 NW Loop 410 from Baywood Hotels.

“The points that attracted me to this asset were its prime location and its strong Courtyard by Marriott brand,” said Ram Khatter, president, LD Hospitality. “The San Antonio market has shown steady growth and resilience due to diverse business generators and a very limited amount of new hotels entering the market.”

To capitalize on the growing visitor appeal, San Antonio opened the doors to the newly transformed Henry B. González Convention Center earlier this year. The $325 million expansion marks the largest capital improvement project in San Antonio's history and increases the footprint to 1.6 million square feet. The convention center was originally built in 1968 when San Antonio hosted the World's Fair, and has welcomed numerous additions and renovations throughout the years.

“The San Antonio Convention Center has gone through a major renovation and expansion during the last few years,” Yu tells GlobeSt.com. “Convention booking in 2017 and 2018 is significantly higher than 2015 and 2016, and has driven a strong increase in room demand in the Alamo City.”

SAN ANTONIO—By year-end 2017, San Antonio hotels are forecast to have a revenue per available room increase of 3.9%, more than the national projection of 3%, according to data from CBRE Hotels' Americas Research. The RevPAR increase is the result of an estimated 1.3% occupancy increase and a 2.6% gain in average daily room rates.

“With Houston's market still in decline, and the Austin and Dallas-Fort Worth markets flattening out due to large hotel room supply increase, San Antonio is becoming a more attractive destination in Texas for hotel investors. A very small new hotel room supply pipeline and increasing hotel demand will help drive hotel RevPAR growth for the next few years,” said Michael Yu, senior vice president, CBRE Hotels.

San Antonio market occupancy rate levels are forecast to range from 62.4% for lower-priced hotels to 70.2% for upper-priced hotels in 2017.

“San Antonio's new room supply will increase by only 1.9% over the next 12 months, which is well below the long-term average of approximately 3.1%. Buyers can see that demand has caught up to supply. The Alamo City has a diversified base of business drivers and should have higher growth than many other Texas markets moving forward,” said Dennis Drake, senior associate, CBRE Hotels.

Domestic and international investors are taking notice. CBRE Hotels recently arranged three San Antonio-area hotel sales on behalf of sellers.

“The buyers for our most recent three transactions in San Antonio are based in California and Canada,” Drake tells GlobeSt.com. “Out-of-state investors find the city appealing because of diverse revenue generators and room supply that is growing at a slower pace than demand, especially compared to other major cities in Texas.”

The transactions included:

Los Angeles-based Continental Asset Management LLC's purchase of Home2 Suites San Antonio, a 111-key full-service hotel at 94 NE Interstate Loop 410 from Baywood Hotels.

A San Francisco confidential buyer's purchase of the Country Inn & Suites Lackland, a 74-key limited-service hotel at 6502 Old Highway 90 W from SATY AM Inc.

Toronto-based LD Hospitality LLC's purchase of the Courtyard by Marriott San Antonio Sea World, a 96-key full-service hotel at 6738 NW Loop 410 from Baywood Hotels.

“The points that attracted me to this asset were its prime location and its strong Courtyard by Marriott brand,” said Ram Khatter, president, LD Hospitality. “The San Antonio market has shown steady growth and resilience due to diverse business generators and a very limited amount of new hotels entering the market.”

To capitalize on the growing visitor appeal, San Antonio opened the doors to the newly transformed Henry B. González Convention Center earlier this year. The $325 million expansion marks the largest capital improvement project in San Antonio's history and increases the footprint to 1.6 million square feet. The convention center was originally built in 1968 when San Antonio hosted the World's Fair, and has welcomed numerous additions and renovations throughout the years.

“The San Antonio Convention Center has gone through a major renovation and expansion during the last few years,” Yu tells GlobeSt.com. “Convention booking in 2017 and 2018 is significantly higher than 2015 and 2016, and has driven a strong increase in room demand in the Alamo City.”