After SXSW cancellation, Austin hotels and restaurants are bracing for a rough road ahead

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The rooms at the Carpenter Hotel, a stylish boutique property not far from Lady Bird Lake and downtown Austin, typically fetch somewhere in the high $400s per night during South by Southwest (SXSW), the annual two-week music festival and economic juggernaut that was scheduled to kick off Monday.

On March 6, following the withdrawal of a number of noteworthy attendees (Apple, Netflix, et al.) and a public petition generating thousands of signatures, the City of Austin canceled the festival owing to health and safety concerns related to COVID-19, leaving venues scrambling, service-industry workers and ride-sharing drivers worrying, and hotels awash in hand sanitizer and empty rooms. I booked one at the Carpenter day-of this week for $150.

“Hours before the announcement they were oversold,” says Liz Subauste, an Austin hospitality veteran who earlier today had been chatting with the Carpenter’s general manager. “By the end of the day, they were at 10% occupancy. Austin is such an event-driven city: South By, ACL [Austin City Limits music festival], Nascar. Winter and summer are slow, so we count on that income.”

Sitting outside Nixta Taqueria with Subauste and writer and hospitality consultant Andrew Knowlton, you wouldn’t know anything is amiss. The Topo Chicos are frosty, the tortillas topped with duck carnitas are warm, and neighbors stop by to chat with one another. It feels like any other day in East Austin, but below the surface, “it’s pretty fair to say people are freaking out,” Knowlton says. “Restaurants do their P&Ls [profit and loss statements] based on South By. It brings millions of dollars into the city.”

Specifically $335.9 million last year, according to SXSW’s annual report. It’s hard to overstate the economic impact of SXSW, which started in 1987 with 700 attendees and has evolved—some locals might say metastasized—into a two-week event of nearly 300,000 attendees that’s as much about—some locals might say in bed with—the tech industry as it is about music. Giants like Twitter, Facebook, and Amazon host concerts, panels, parties, and product launches—and they arrive with wallets open. “So many of the big brands buy out restaurants and host big dinners,” says Elaine Garza, who owns Austin public relations firm Giant Noise. “You have this infusion of cash over 10 days. It gets these [businesses] through and evens out their year.”

Subauste says her friends at a popular downtown barbecue spot had five straight days booked: “They were expecting to make $50,000, and that’s gone.”

Liz Subauste and Andrew Knowlton at Nixta Taqueria in East Austin, March 2020.

It’s a tough position for small-business owners like James Moody, a former pharmaceutical sales rep who says he relocated to Austin 13 years ago during a “midlife crisis, bought an old Mexican restaurant, and turned it into a live-music venue.” Mohawk is one of the city’s premier places to see bands, with live music 365 days of the year. “Normally we will be packed to the gills during South By,” Moody explains. “We’ve been able to pick up other shows that were displaced, so it’s looking like 70% to 80% retention, but I’m gonna have a couple days I don’t know if I will fill completely.”

An entire ecosystem of businesses exist in Austin to support the festival—lighting, security, AV, trucking, catering, tent companies—to say nothing of scores of bartenders, ride-share drivers, massage therapists, hotel housekeepers, freelance photographers, makeup artists, and other hourly, tipped, and self-employed workers on whom the cancellation may have a catastrophic down-ballot effect. I spoke with a bartender at a high-end Austin resort who moonlights as a brand ambassador. “I had events every day next week—Audible, Tito’s vodka—and they all canceled,” she says, asking not to be named. “It’s really frustrating. I understand the safety concern, I do. But also, people’s lives are being impacted. Some of my friends who are artists, they’ve been booked out a year in advance, and they’re not getting paid.”

The identity of the city is also at stake. “It feels like there’s a
hole in Austin,” Knowlton says. “It’s like not having Christmas or a major
holiday here.”

A view of downtown Austin on 5th Street, in the heart of the entertainment district, on March 9, 2020. Despite being canceled owing to fears about the coronavirus, South by Southwest banners still decorate the streets.

Moody is making the best of it. “When you’re in the venue business, struggle is part of it. We’re used to having our asses kicked,” he says. “There’s this idea of making lemonade all the time. Some locals are saying, ‘Great, no tourists or corporate sponsors, maybe we can go back to a small spring festival and experience SXSW for ourselves again.’ What if there’s some demand for South By 2005? What if we can bring that back?”

Most Austinites I spoke with this week are hopeful fellow residents will fill the tourist void. “I was out for lunch and dinner yesterday, and the restaurants were busy,” Garza says. “[Restaurant staffs] are not dancing, but they’re not all doom and gloom either.” At Comedor, recently named the best new restaurant in the state by Texas Monthly, every table was filled, and it was SRO at the mezcal bottle–lined bar. Tonight, a solid crowd has gathered on the patio at the Carpenter Hotel’s restaurant, Carpenters Hall. “We get a lot of support from locals,” the front desk agent tells me at check-in. To fill their empty space, he continues, they’re offering residents rooms at $120 with a $25 room service credit.

The true impact of the cancellation of SXSW on Austin’s economy
won’t be known for a while, nor will the true impact of COVID-19. “This is
uncharted territory,” Garza says. “Not just for Austin, but for the world.”