Indianapolis is having a moment.
The Indiana Pacers made their first NBA Finals in 25 years, Caitlin Clark and the Indiana Fever are selling out arenas for WNBA games, and the Indianapolis 500 remains one of the most iconic races in the United States.
But it's not just the sports scene. The city's hotel market is growing expeditiously. Now, the checkered flag is in sight as the Indianapolis Convention Center nears the finish line on its $200 million renovation and the connected 800-room Signia by Hilton Indianapolis is set to open in early 2027.
Over the past five years, eight hotels have opened in the market's central business district, accounting for 1,052 rooms. This includes two new openings in 2025 in the 170-room InterContinental Indianapolis following a $120 million renovation and the 128-room Aloft Hotel Indianapolis Downtown.
According to CoStar data, Indianapolis' pipeline has more than 1,500 rooms under construction, 3,402 rooms in the final planning stages and 3,220 rooms proposed.
Didio Pequeno, director of hospitality market analytics for the Northeast and Midwestern U.S. for CoStar Group, said the influx of hotel supply has driven Indianapolis' occupancy numbers down in spite of otherwise solid demand since the pandemic.
Over the past 10 years, supply growth has outpaced demand growth 1.5% to 1% in the market, Pequeno said.
In May, Indianapolis hotel occupancy levels declined 1.3% on a 12-month basis, the first decline since the pandemic, he said. Occupancy is expected to continue to decline throughout the remainder of the year, as should revenue per available room.
"A lot of that has to do with supply," Pequeno said. "Total demand on a room-night basis has already surpassed the COVID numbers. If you didn't have all that supply coming online, occupancy would actually be increasing."
CoStar data shows that over the past 12 months, there have been 8.1 million room nights of demand, which is more than 580,000 more than its pre-COVID peak. Occupancy, however, is down 3% compared to pre-pandemic numbers.
According to Tourism Economics, Indianapolis' total domestic and inbound travel expenditure reached a record high $3.5 billion in 2024, equating to a compound annual growth rate of 5.6% over 2019 levels. Domestic and international visits to the market were up 1% over 2019 levels last year.
The success of the market moving forward hinges on the success of the openings of the convention center and Signia hotel, Pequeno said. The convention center is expected to open in the summer of 2026, and the connected 800-room Signia by Hilton Indianapolis on track to open in March 2027.
With 800 more hotel rooms added to the market, this indicates optimism in Indianapolis' hotels obtaining groups they weren't able to in the past. Even if they're low-rated groups, it'll benefit the entire market, Pequeno said.
"A lot of how the market is going to do is going to be determined by the Signia and the convention center. I think that's first and foremost and top of mind for everyone, really," Pequeno said. "Whether or whether not they're able to generate group, corporate and event demand, that's really going to determine how this market is going to do going forward."
Indianapolis is starting to bud as a sports market, as well.
When the Indiana Pacers hosted three NBA Finals games this past June, Indianapolis hotel RevPAR increased 20% to 30% year over year on average during game nights, Pequeno said. The Indy 500 brings an additional 350,000 attendees per year every Memorial Day.
"I would say it's a good time to be a sports fan in Indiana, and it's a good time to have a hotel in Indiana with all this coming together at the same time," he said.