San Antonio’s hotel industry experienced a significant downturn in the fourth quarter of 2025, with a drop in room sales and revenue, as well as the foreclosure of a major luxury hotel. The city’s hotels sold about 2.5 million room nights during this period, which was approximately 220,000 fewer than the same quarter in the previous year. This decrease led to a $25 million reduction in hotel revenue, representing a 7 percent year-over-year decline to about $342 million.
The drop in occupancy rates affected nearly every part of San Antonio, with only the West/Seaworld area showing stable demand. “Demand was down in all submarkets except for the West/Seaworld area,” Source Strategies President Paul Vaughn said. He added that there were “few bright spots” for local hotels.
The weakened market conditions contributed to financial distress for some properties. Lenders Sunrise Realty Trust and Southern Realty Trust foreclosed on the Thompson San Antonio hotel at 115 Lexington Avenue after making a credit bid of $40.6 million at auction. The move followed several attempts by developer DC Partners to avoid default, including four loan extensions throughout 2025.
Sunrise disclosed that $26.4 million remained outstanding on its share of the loan, while Southern’s portion totaled about $14.2 million—the credit bid matched these unpaid balances. Sunrise CEO Brian Sedrish said, “Prior to and following the foreclosure event, numerous hospitality companies have reached out to us inquiring about the prospects of acquiring the asset.” He confirmed that Sunrise plans to hire a broker to market the property.
Additional challenges have faced the Thompson San Antonio beyond market conditions: DC Partners is involved in litigation with Powers Brown Architecture over building design issues, and a condo owner has alleged construction defects within The Arts Residences condos located in the tower.
Despite these setbacks, new hotels continue to open in San Antonio. Zachry Hospitality recently launched the Monarch Hotel at Hemisfair with around 200 rooms, and developers are pursuing projects such as converting an office building into a new hotel on East Houston Street. However, occupancy rates remain more than nine percent below pre-pandemic levels from late 2019 even as room supply has increased by nearly seven percent since then.
Industry leaders remain optimistic about long-term prospects for San Antonio’s hospitality sector. “Well-financed developers seem to remain bullish on San Antonio,” said Bill Brendel, CEO of San Antonio Visitor Alliance, noting potential opportunities for convention business while other Texas cities renovate their facilities.
