Data Center Construction

If you operate a hotel in a Texas market that doesn’t show up on anybody’s top-25 list, you may have spent the past several months watching your figures rise without a clear explanation.

​No new convention center. No new stadium. No big events on the calendar. Just a rise in weeknight and long-stay bookings from companies you didn’t know about a year ago.

​There’s a reason, and it has almost nothing to do with travel.

The Numbers Caught Many Off Guard

The August data told a story that most 2026 forecasts didn’t anticipate in some markets.

Outside of many of the major markets, 74 percent of tracked markets grew RevPAR, and a meaningful share of that growth traced back to data center construction activity. Texas alone had ten markets post double-digit gains in a single week. *​

Room-night demand is shifting structurally, and Texas is at the center of it. At least 248 data center projects are planned across the state, according to a Texas Tribune analysis, with roughly $89.5 billion in construction already underway.

Abilene, Amarillo, Laredo, Milam County, Gray County, and about twenty projects in the greater Austin area are all in some phase of development.

These Aren’t Luxury Travelers

The workers doing this construction aren’t staying in luxury hotels; they’re filling midscale and upper-midscale rooms, and that’s where the growth is showing up.

For Texas operators, the segment that has spent years squeezed between economy and luxury is suddenly the one with pricing power, at least in the markets where this construction is concentrated.

Many extended-stay and select-service properties are seeing the kind of demand that used to track with a hurricane or an oil boom. The Flagship Stargate 1 data center campus in Abilene brought roughly 6,000 workers into a city of just over 100,000 people, which helps explain rising rates and bookings.

A second Stargate campus is under construction about fifty miles north in Shackelford County; Google is building north of Amarillo in Gray County, and Fermi America has proposed an enormous campus outside Amarillo.

What This Demand Means at the Front Desk

Construction crew business behaves differently from the corporate traveler business many hotels are built around, and the operational differences matter.

​Stays often run weeks or months rather than nights. Arrival and departure patterns generally follow shift schedules and project phases rather than the weekday-to-weekend rhythm you’re used to.

Room bookings often come through contractors and staffing firms, not individual travelers or OTAs, so you’re negotiating with a procurement contact rather than just adjusting for peak-demand stretches.

​Breakfast gets busy early. Housekeeping patterns alter when guests stay three weeks instead of two nights, which cuts labor cost per occupied room but increases deep-clean turnover cost at the back end. Parking demand goes up, and so does the size of the vehicles using it.

There’s also a little rougher wear on your facility. A crew occupying a block of rooms for four months puts different stress on food and beverage services, HVAC, and laundry than a business traveler does. If you’re pricing a long-term contract, price the depreciation into it.

The Temptation

It’s tempting in contract crew business to take as much as you can because it’s reliable, fills weeknights, and doesn’t require marketing spend. The risk is that you could disrupt the base business you want to be there still when the project is finished.

​Your corporate accounts, your government per diem business, your local wedding and reunion demand: those relationships took time to build, and they don’t come back automatically once you’ve told them you’re full for six months. Operators who ran hard at a single construction contract and let everything else lapse have historically had a difficult second act. A reasonable rule of thumb is to protect the accounts that survived the last downturn, even if the crew rate looks better on paper today.

Same logic applies to capital decisions. This demand is showing up in a state where hotel construction financing has been selective, and building new supply against a demand source with a known end date is a specific kind of risk.

Because it Does End

The construction phase is the demand event. The operating phase isn’t. Abilene’s economic development agency has said the Stargate facility will employ roughly 100 full-time people once it’s running, a fraction of what a similarly sized industrial development would support. Six thousand construction workers become a hundred permanent employees. Your room nights go with the six thousand.

Some are already seeing the cycle’s downside in real time. At Fermi America’s Amarillo site, local reporting has described a shrinking construction workforce and rumors of layoffs earlier this year, with the company attributing a temporary construction pause to a pending air permit ruling. Whatever the cause, it illustrates the point: these projects depend on permitting, financing, power interconnection, and corporate capital allocation decisions made far from Texas, and any of those can change the on-site workforce with little warning.

The forecasts show that. CoStar and Tourism Economics project U.S. RevPAR growth decelerating to roughly 2.1 percent in 2027, down from this year’s pace, in part because 2027 gets measured against a record 2026 base.

​The Community Conversation

This is also becoming a policy conversation. The same worker influx that filled your rooms has strained housing in several of these communities.

Abilene residents have shown concerns about rising rents and growing homelessness tied to the sudden population surge. Meanwhile, the tax agreements that attracted some of these projects have been aggressive; in Taylor County, developers secured abatement of roughly 85 percent of property taxes over ten years on a $3.5 billion project.

​That combination, large public incentives paired with limited permanent employment and visible community strain, tends to generate legislative interest.

​With interim committee work underway ahead of the 90th Legislature convening in January, and with water, power, and local incentive authority all in play, hotel operators in affected markets have a genuine stake in how these conversations go. You are simultaneously a beneficiary of this construction and a business dealing with its effects, including a tighter labor market for your own housekeeping and front desk positions.

What to do between now and your 2027 budget

Find out what’s actually happening in your market. Check your county and neighboring counties against the publicly tracked project lists, and talk to your economic development corporation concerning timelines. Know whether a site is in early development or final fit-out to understand better how many more quarters of demand you’re looking at.

Get the contracting right. Push for firm minimum room-night commitments and clear terms rather than soft blocks. Negotiate a rate that accounts for consumables, utilities, and accelerated wear on a long stay, not just the headline ADR. Ask for advance notice requirements on demobilization, because the scenario that hurts the bottom line is the crew leaving with two weeks’ notice.

​Protect your base. Keep your corporate and government accounts current even when you don’t need them this quarter. Hold back inventory for the local demand that will still be there in 2028.

​Use the money well. This is usually a good window to pay down debt, or invest in the labor retention that will matter more when the market normalizes. The properties that came out of past Texas boom cycles in the best shape weren’t the ones that captured the most demand. They were the ones that treated the peak as temporary and spent accordingly.

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References:

Hotel Dive: How data center projects are reshaping extended stay hotel demand