Boston & Cambridge Lodging Market Peaks in 2018 as Demand Outpaces Supply
By Sebastian Colella , Vice President at Pinnacle Advisory Group
The Boston and Cambridge lodging market accommodated approximately 7.5 million roomnights in 2018, growth in demand of 3.4% from the prior year. The market's supply increased 2.8% with the opening of four new hotels and a guestroom expansion which combined for approximately 760 new rooms available nightly. As a result of these dynamics, the market's occupancy increased 0.3% to 82.7%, its highest point in history.
Of the six submarkets analyzed by Pinnacle Advisory Group, the Cambridge set of hotels experienced the largest increase in RevPAR. The ADR in Cambridge increased 2.9%, due in part to many of its largest hotels undergoing renovations in 2017 and early 2018. These increases to rate, matched with a 0.5% increase to occupancy, resulted in a RevPAR increase of 3.6%, greatly outperforming the overall market. As the only submarket to experience a decline in occupancy, the hotels in the Fenway/Longwood Medical Area experienced the weakest RevPAR growth of 1.0%.
Although the key economic indicators are leading to a healthy outlook for the U.S economy in 2019, the Boston & Cambridge lodging market has two factors which will negatively impact its performance; supply growth of over 5.5% and a weak convention calendar comparative to the prior year. As Pinnacle has reported previously, the market is expected to experience a decline in RevPAR in 2019.
The Pinnacle Perspective reports the Boston & Cambridge lodging market's performance on a monthly and annual basis. Individual reports provide an indication of performance metrics by submarket, hotel size, and price point. Data is collected from over 95% of the market's rooms supply and aggregated to provide detailed market reports for its contributors.