Peachtree Group Breaks Ground on 480-Key Dual-Branded Austin Hotel

• Peachtree Group and Merritt Development Group broke ground on a 30-story, 480-key Embassy Suites by Hilton and Tempo by Hilton in downtown Austin.
• The 336,800-square-foot hotel is expected to open in early 2029, with DPR Construction as general contractor and DLR Group handling architecture and interiors.
• The project carries a development cost of more than $250 million and comes as Austin continues adding hotel supply ahead of major convention and tourism demand drivers.

What The Developers Are Building

Peachtree Group and Merritt Development Group are developing the dual-branded hotel at the corner of Fifth and Lavaca streets in downtown Austin. The 30-story property will combine Embassy Suites' all-suite format with Hilton's lifestyle-focused Tempo brand. The project is designed to serve a broad mix of business, group and leisure travelers, while sharing infrastructure and amenities between the two hotel brands. Planned features include a two-story restaurant, rooftop bar and lounge, Embassy Suites restaurant and bar, Tempo café, fitness center, and meeting and event space.

Peachtree CEO Greg Friedman said, “Austin continues to distinguish itself as one of the country’s most dynamic growth markets.”

What Makes The Downtown Location Significant

The site sits near roughly 14 million square feet of Class A office space and major Austin demand generators including the Texas State Capitol, University of Texas, Sixth Street and the Red River Cultural District. The timing also lines up with major infrastructure investment. Austin's new convention center is scheduled to open in spring 2029, with Marcus & Millichap projecting it could generate approximately $750 million annually once operational. Formula One events at Circuit of The Americas and UT football also provide recurring hotel demand. For investors and landlords, the key issue is whether Austin's growing supply can be absorbed as these demand drivers come online.

What Austin's Hotel Pipeline Looks Like

Austin entered 2026 with roughly 51,000 hotel rooms, with Visit Austin expecting the market to surpass 52,600 rooms by year-end. The city's hotel supply grew 51 percent from 2015 to 2025, while downtown inventory increased 77 percent over the same period. That growth creates both opportunity and competition. Marcus & Millichap reported that Austin hotel occupancy continued to decline in early 2026, although the pace of decline slowed. At the same time, ADR and RevPAR remained among the highest of major Texas metros, while event-driven demand continues to support the market. Nationally, hospitality supply remains a major consideration. Marcus & Millichap expects roughly 94,500 hotel rooms to be delivered across the U.S. in 2026, a five-year high, putting additional pressure on occupancy in high-development Sun Belt markets such as Austin.

What Peachtree Is Betting On

The Austin project is one of Peachtree's largest development plays. The company said its hotel development portfolio surpassed $2 billion nationwide in late 2025, while its Texas activity has expanded across development, acquisitions and lending. Peachtree and Merritt are also behind a recently opened 171-key Residence Inn by Marriott in downtown San Antonio, underscoring their broader Texas strategy. With construction now underway, the downtown Austin hotel is targeting an early 2029 opening, putting it on track to arrive alongside the city's new convention center. For hospitality investors, that alignment makes the project's positioning around business travel, conventions and major events an important factor to watch.