The following report examines the effects of past recessions on hotel performance in Manhattan, as well as the dynamics of hotel supply and demand and forecasts for the health of the local lodging industry in the near term.
The Coachella Valley extends for approximately 45 miles in Riverside County and comprises the following nine cities: Palm Springs, Rancho Mirage, Palm Desert, La Quinta, Indio, Indian Wells, Desert Hot Springs, Coachella, and Cathedral City. Typically, the population of these desert cities nearly doubles during the winter months by growing interest in leisure travel, improving convention business, and large-scale events, supplemented by part-time residents from colder climates due to its warmer temperatures. Tourism is the major industry in this area, with a variety of attractions and special events drawing significant numbers of leisure travelers. The market area is experiencing a period of economic strength as it continues to benefit from its position as a resort destination. With demand levels on the rise and several redevelopment and revitalization projects occurring in the area, the Coachella Valley is experiencing a renaissance.
Portland, Maine, is the northernmost outpost of the Atlantic Seaboard, host to a six-month winter and minor league hockey. A small, third-tier city, with steady but slow economic growth, Portland's downtown hotel inventory recently grew from five to ten properties over a six-year period. Why did developers and loan underwriters think there was enough demand potential to support approximately 1,000 new rooms, a 127% increase? Because it could, evidently. Credit goes to induced demand.
Downtown San Diego is considered the heart of San Diego County, and given its excellent accessibility attributes, there are a variety of options for travel in and around the city. Three of the county's nine major freeways flow through the city, Downtown is located only two miles southeast of the airport, and there are several ridesharing and public transportation options that can easily connect tourists to the area's primary sources of lodging demand. San Diego benefits from a diverse mix of demand generated by local corporations, government entities, meeting and group business, and leisure-related activity. Compression resulting from large conventions held at the San Diego Convention Center produces a significant number of room nights in the market on an annual basis. Furthermore, the Little Italy and the Gaslamp Quarter neighborhoods are home to an array of restaurants, bars, nightclubs, and other tourist-oriented businesses that attract leisure guests and serve as amenities to convention attendees. Popular leisure attractions throughout the area continue to attract strong fly-in and drive-in demand. The local economy continues to expand, with tech start-ups, residential development, increases in military spending, and record high levels of visitation. One of the most up-and-coming areas of the city is its East Village neighborhood. The downtown San Diego area can be divided into eight neighborhoods: Columbia, Core, Cortez Hill, East Village, Gaslamp Quarter, Horton Plaza, Little Italy, and the Marina District. Each neighborhood contains a unique mix of cultural and distinct demand generators, which, to some extent, may preclude the hotels from competing for the same business. Downtown San Diego's primary economic districts are the Core (office space), Horton Plaza (shopping), Gaslamp Quarter (restaurants and entertainment), and Marina (waterfront and convention center). Many residential, retail, office, and other commercial developments are occurring in the market. Most of the high-rise buildings that have recently been completed or are currently under construction represent high-end condominiums and hotels. Most of these projects are on sites near the waterfront or in East Village, consistent with the overall civic redevelopment plans for San Diego. We have outlined a few of these projects below. • Pacific Gate: Vancouver, B.C.-based Bosa Development Corp is currently amid developing a new condominium building called Pacific Gate; the 41-story property will contain 215 residences, 16,000 square feet of retail space, and 460 parking stalls within three below-grade levels. Bosa has played a major role in creating many of San Diego's upscale, high-rise residences and landmarks; other completed Bosa developments in Downtown San Diego include Horizons, Park Place, Discovery, The Grande, and Electra. • Manchester Gateway: This project is being developed by Manchester Financial Group, a prominent San-Diego based development firm. The complex will occupy a three-million-square-foot site to be improved with a mixed-use development including the following components: a four-star hotel and four-and-a-half-star hotel, totaling 1,360 guestrooms; more than 1.2 million square feet of office space among three Class-A office buildings, one of which is being built solely for use by the U.S. Navy; a 391,000-square-foot retail development; and a public waterfront park. The site represents one of the largest, if not the largest, undeveloped urban waterfront sites located along the California coast, located in San Diego's Central Business District and within walking distance of the convention center. Given the large size and scope of this project, as well as its location on the San Diego waterfront, this development represents one of the most prominent and unique development opportunities on the West Coast. • Seaport Village: Seaport Village is a waterfront retail and dining complex that opened in 1980 on the site of the San Diego-Coronado ferry landing. Operated by Terramar Retail Centers, Seaport Village represents yet another tremendous waterfront redevelopment opportunity. Various developers have expressed interest in the site; the most recent proposal is a $1.2-billion project that includes three hotels; retail and restaurants; a 480-foot observation tower; a partially underground aquarium; 30 acres of new parkland, beach, and promenades; and upgraded facilities for commercial fishing fleets and pleasure craft on more than 70 acres. • Ballpark Village: A 37-story apartment tower and retail development is under construction on a site located directly east of the Petco Park baseball stadium. With an anticipated opening date slated for the third quarter of 2018, the $250-million project is anticipated to include 439 luxury apartments, 274 low-rise residential units, 45,000 square feet of retail and restaurant space, a 12,000-square-foot open-air plaza, an above-grade walkway, and over 900 parking spaces. The developer is also proposing a 1,600-room hotel; however, the hotel component is contingent upon a convention center expansion. The developer noted that the projects could represent more than $1.5 billion of additional construction activity in Downtown San Diego. • UCSD Extension Project: UC San Diego and Holland Partner Group recently broke ground on a $275-million, 34-story apartment building and a UC San Diego cultural and education hub, which is expected to feature 426 apartments, a 53,000-square-foot office and classroom building, a historic restaurant facility, and a 3,200-square-foot outdoor amphitheater. Officials anticipate the project to be completed in 2021. The following table illustrates new and proposed hotel supply in Downtown San Diego.[1] A summary of a few of these projects has been provided below. The Lane Field South site is currently under construction with a 400-room InterContinental Hotel, set to open in early 2019. The project is part of an ongoing effort to redevelop the waterfront; the recently developed dual-brand Residence Inn/SpringHill Suites by Marriott hotel is located on the site adjacent to the north, while the proposed Manchester Gateway development is across Broadway to the south. A $270-million project, set to include an 831-room convention headquarters hotel and a 160-room boutique or "shared accommodations" lower-cost hotel, is proposed for development on the Fifth Avenue Landing site. Of important note, this is the same site that would house the contiguous expansion of the convention center, if approved. The project came about because of the City of San Diego's default on purchasing the premise for the Convention Center Expansion and the corresponding lease obligations of Fifth Avenue Landing (FAL). A 500-room expansion to the existing Hilton Bayfront has been proposed by its owner, Sunstone Hotel Investors. The added rooms would be located adjacent to the existing building and would include a 34,500-square-foot ballroom, 12,000 square feet of meeting rooms (92 square feet of meeting space per room in total), and a 7,500-square-foot fitness center and spa. The project is estimated to cost $200 million and is currently being planned and entitled with the expansion of the convention center. Tourism Tourism is an important factor for San Diego area hotels. San Diego's numerous beaches and beach towns, including Mission Beach, Pacific Beach, Ocean Beach, and La Jolla, attract large numbers of visitors annually. Aside from the sun-soaked beaches, three major attractions bring families to the greater San Diego market. SeaWorld is a marine animal theme park featuring animal shows and a variety of rides. In September 2016, SeaWorld officials announced the investment of $175 million on new attractions at SeaWorld Florida and SeaWorld San Diego, which are anticipated to open in 2018; a new documentary-style orca encounter is planned for SeaWorld San Diego. LEGOLAND is a theme park that focuses on Lego bricks, a popular children's toy. Balboa Park is a 1,200-acre, urban, horticultural and cultural resource park containing vast open spaces, natural vegetation zones and green belts, gardens, and walking paths. It contains 15,000 trees and 14 specialty gardens; nearly 100 arts, education, recreational, social, and sports organizations; 17 museums and cultural institutions; the San Diego Zoo; and Old Globe Theatre. There are also many other recreational facilities, including a golf course and several gift shops and restaurants, within the boundaries of the park. It entertains more than 10 million visitors per year. Although present year-round, the peak season for tourism in this area is from May to September. Leisure demand is typically strongest during key weekends and during the summer vacation season. Convention Center The San Diego Convention Center (SDCC) is the premier facility for conventions and trade shows in San Diego, hosting nationally and internationally renowned events such as San Diego Comic-Con International, the American College of Cardiology Scientific Session, the National Safety Council Expo, Cisco Live, and the Esri User Conference. Operated by the San Diego Convention Center Corporation, the venue attracts national and international associations and corporate events. The SDCC opened in 1989 and underwent an expansion that roughly doubled its size in 2001. The facility spans 2.6 million square feet, including 615,701 square feet of total exhibit space, 284,494 square feet of lobby and pre-function space, 204,114 square feet of meeting space, and 184,514 square feet of outdoor space. The remainder of the space comprises hallways, kitchens, executive offices, and other back-of-the-house facilities, as well as parking. During fiscal 2017, the SDCC achieved a 76% occupancy and generated a $1.1-billion regional economic impact, with nearly 844,382 estimated hotel room nights.[2] Given the significant amount of meeting and group demand in the market, proposals to expand the center have been brought forth; however, the last two expansion attempts have not received enough support from the citizens of San Diego to secure the appropriate amount of funding. Continued efforts to expand the center are expected; If the expansion is passed in the November 2018 election, it could be completed by 2021, at the earliest. Airport San Diego International Airport (SAN) is the busiest single-runway airport in the United States and occupies the smallest land footprint of any commercial airport in the country (661 acres). With no plans for future runway expansion, current airport forecasts suggest that arrivals and departures at the airport will increase to 260,000 annually between 2018 and 2022. August 2013 marked the completion of the $900-million "Green Build" expansion project of Terminal 2, which was completed $45 million under budget. The project, which was the largest in the airport's history, included ten new jet gates; additional shopping and dining options; expanded concessions; enhanced curbside check-in capacity; a new security checkpoint; a new, 25,000-square-foot check-in lobby with 32 airline counters and ten self-service kiosks; and a dual-level roadway to separate arriving and departing passengers. In April 2014, the airport became the first in the world to achieve LEED Platinum certification. The next part of the airport's Master Plan phase includes determining what improvements are necessary for the airport to accommodate demand through the year 2035. The primary project for consideration at this time is the demolition of Terminal 1 and construction of a new, 1,500,000-square-foot, 30-aircraft-gate facility that is anticipated to extend up to 150 feet above the ground. Airport officials have indicated that the project could open as early as 2020. It is important to note that several additional flight routes were added to San Diego International Airport in the recent past. In May 2017, new seasonal service between San Diego and Frankfurt, Germany, commenced. The new flight is operated by one of Germany's most popular leisure airlines, Condor (DE), and is one of only three nonstop connections between San Diego and Continental Europe. With up to three weekly flights on Mondays, Thursdays, and Saturdays, the route operates on a Boeing 767-300ER aircraft. City officials stated that Germany is one of San Diego's top partners for exports and foreign investments, and is rapidly becoming one of the economy's most important international markets. In June 2017, Edelweiss, an affiliate of Swiss International Airlines, launched a new nonstop route between Zurich and San Diego; the service runs seasonally through early November. San Diego marks Edelweiss' first nonstop destination in California; the flights will reportedly bring approximately 15,000 visitors to San Diego each year, creating an estimated economic impact of $50 million. In the spring of 2017, low-cost carrier Frontier Airlines announced nonstop service from Cleveland Hopkins International Airport to San Diego. Cleveland has not had a nonstop flight to San Diego since 2008. According to Cleveland Hopkins airport officials, San Diego was the largest unserved market from Cleveland, with just under 100 passengers a day traveling between Hopkins and San Diego International Airport; the new nonstop flight has significantly increased travel between the cities. Lodging Metrics Hotel demand and occupancy has been steadily rising since 2010, resulting in peak occupancy levels over 79% in 2016,[3] nearly 4.5 points above the prior peak of 74.7% in 2007.[4] Average rates (ADR) began rebounding in 2011, following the recovery in occupied rooms, and have increased year-over-year since then. In 2014, market-wide ADR growth reached levels not experienced since the prior demand peak of 2007; this strong performance was driven by an increase in the number of attendees at key annual conventions, such as Comic-Con International, and healthy tourism levels. Year-to-date data for 2017 illustrate a slight increase in occupancy. Specifically, we note that the increases in demand have been diminished by increases in new supply. Alternatively, ADR has increased moderately, thus, resulting in a moderate RevPAR gain. Given the diversity and depth of the local economy combined with the anticipated moderate increases in new supply, the outlook for the San Diego lodging market remains favorable. Airbnb A growing trend in the lodging industry is the use of Airbnb, an online marketplace and hospitality service that enables people to list privately-owned real estate as alternative lodging options to traditional hotel rooms. Airbnb does not own any lodging facilities; it acts as a brokerage service and receives service fees from both guests and hosts on every booking. Airbnb supply in San Diego has been consistently increasing over the past two years. Due to the different kinds of Airbnb accommodations and fluctuations in nightly inventory, is difficult to conclude to the exact number of lodging facilities available on average each night, but Airbnb supply is becoming an increasingly large component of the San Diego lodging industry. Due to San Diego's large number of seasonal and absentee owners, the market is even more vulnerable to this trend. Airbnb provides additional supply during peak demand periods, which can be viewed as a positive impact, allowing more visitors to stay in the San Diego area when hotel supply is inadequate. In addition, a wide variety of units, including entire homes, are made available to the public, which increases the spectrum of lodging options. On the downside, when residential-unit owners put their units into the Airbnb rental program during peak compression periods, the pressure on existing hotels that allows them to charge peak rates is reduced. The profitability of hotels is positively affected by strong pricing during peak demand periods, and with more competitive supply available during times of compression, average rate and profit gains can be diluted. City officials are currently in the process of reaching an agreement on new rules that would limit the short-term rental of investor properties; negotiations are ongoing. Conclusion This report discussed a wide variety of economic indicators for the pertinent market area. San Diego is experiencing a period economic strength and expansion. The federal government and related entities will remain cornerstones of the market, while the tourism, health sciences, wireless technology, and biomedical engineering sectors should continue to expand. Given the anticipated increases in government funding of the area's military installations, the ongoing expansion throughout Downtown, a strong convention calendar, and other positive corporate news, the outlook is optimistic. [1] San Diego Tourism Authority, San Diego County Potential New Supply Developments; updated December 2017.[2] San Diego Convention Center Corporation, Inc., Fiscal-Year 2017 Annual Report, FY 2017 Performance Summary.[3] San Diego Tourism Authority, San Diego Visitor Summary (Annual), Hotel Performance – Source: STR.[4] San Diego Tourism Authority, 2017 San Diego County Visitor Summary by Month through September 2017, Hotel Sector Actuals – Source: STR.
According to the recent United States Construction Pipeline Trend Report from Lodging Econometrics (LE), the franchise companies with the largest construction pipelines are; Marriott with 1,410 Projects/180,647 Rooms, Hilton with 1,287 Projects/144,958 Rooms and IHG with 831 Projects/84,865 Rooms. These 3 franchise companies comprise 69% of all projects in the Total Pipeline.The largest brands for each of these companies are: Marriott's Fairfield Inn with 303 Projects/29,051 Rooms and TownePlace Suites with 208 Projects/21,299 Rooms; Hilton's Home2 Suites with 355 Projects/37,188 Rooms and Hampton Inn & Suites with 314 Projects/32,386 Rooms; and IHG's Holiday Inn Express with 444 Projects/41,343 Rooms and Staybridge Suites with 135 Projects/14,124 Rooms.By the close of 2018, Marriott is forecasted to open 351 Projects/43,587 Rooms, Hilton is set to open 294 projects/32,192 Rooms and IHG expects 174 Projects/17,982 Rooms to open. Marriott also leads in new openings for 2019 with 362 Projects/44,624 Rooms, IHG is anticipating 272 Projects/26,983 Rooms and Hilton expects 253 Projects/28,584 Rooms to open next year.
After more than five years of relative stability, new factors are at play in the hotel investment market that will affect hotel capitalization rates and values in a changing economic landscape. Hotel sales transaction activity declined in 2017, while cap rates continued to rise modestly, and hotel values held stable. The outlook for 2018, while uncertain because of the changing political and economic landscape, is more positive than a year ago due to the tax reform's favorable treatment of commercial real estate and a more optimistic business environment. This article presents recent trends and a sensitivity analysis illustrating the potential impact of these forces.
My, oh, my! The famous catchphrase coined by Seattle Mariners' longtime sportscaster, Dave Niehaus, is ever so fitting as we look at how Seattle has changed over the last ten years. Seattle enjoys a diverse economy rooted in manufacturing, biotechnology, high technology, telecommunications, health care, and tourism. Metro Seattle, especially Downtown Seattle and Bellevue, is experiencing a period of exponential growth anchored by tech giants, such as Amazon, Microsoft, Google, and Expedia. The area is also home to several Fortune 500 companies, such as Boeing, Costco, PACCAR, Weyerhaeuser, Starbucks, and Nordstrom. Moreover, other key employers in the area, such as the University of Washington, Bill & Melinda Gates Foundation, and Fred Hutchinson Cancer Research Center, strongly influence the local and regional economies. Today, Seattle is among the fastest-growing cities in the U.S., and the commercial developments in the area have fueled unprecedented hotel demand growth, spurring new hotel construction throughout the market.
Anchoring the west end of the Dallas/Fort Worth Metroplex, Fort Worth features the old and the new. Also known as "Cowtown," the cattle industry initially spurred economic development in the city. Today, glass and steel skyscrapers share the sidewalks of Downtown with renovated historic districts, such as the Fort Worth Stockyards National Historic District and Sundance Square.
Philadelphia lays claim to many firsts in the U.S., including the first state capital, public library, hospital, stock exchange, and even the nation's first zoo. Today, revitalization efforts continue to fuel the city's engine of innovation, building on a base of airport, tourism, education, and convention demand drivers. Strong group demand in recent years, combined with rising levels of transient corporate and leisure travel, has boosted occupancy and average daily rate (ADR), especially within Philadelphia's Center City submarket.
The market is experiencing a period of economic strength and expansion, primarily led by the tourism and leisure industry and the presence of Disneyland and the Anaheim Convention Center, which continue to attract visitors and bolster lodging demand.
The Detroit metropolitan area has experienced significant economic growth in recent years, fueled by a strengthening auto industry as well as the continued diversification of the local employment landscape. The hotel sector is benefitting from existing employers expanding operations locally and new entrants to the market. The Big Three automakers continue to invest in the region, while companies like e-commerce giant Amazon.com Inc. are building large warehouse facilities. Revenue gains for hotels were accordingly robust during the 2010–2016 period. Revenue per available room (RevPAR) during that stretch grew nearly 71 percent, rising from a low of roughly $38 in 2009 at the depths of the Great Recession to over $64 by year-end 2016. Both the average daily rate (ADR) and occupancy have posted consistent gains since 2010. Moreover, hoteliers sold a record number of room nights in the city of Detroit in 2016, according to STR. Occupancy levels approached 70 percent by the end of 2016, with ADRs of nearly $150 in the central business district (CBD). The data for 2017 show a relatively stable occupancy level with robust gains in ADR. The record performance achieved in this expansionary period has spurred tremendous hotel development in the downtown core and suburbs.
Lubbock (aka "Hub City"), Texas, connects business, educational, and healthcare enterprises spread across the region known as the South Plains. This region encompasses the largest contiguous cotton-growing operations in the U.S., and agriculture, manufacturing, and technology are pillars of the local and regional economies. Economic growth in Lubbock has boomed over the past several years, and through a varied cross-section of industries, the city's Downtown is poised for a major revitalization.
Tampa's warm weather and relatively inexpensive cost of living are just a couple of the reasons people and companies are relocating to the Tampa Bay area from far and wide. Continued investment by both the public and private sectors is anticipated to set the stage for continued growth. These factors, among others, are driving hotel demand and room-night production, which is leading to an increase in new hotel developments.
A weak energy sector has led to negative lodging fundamentals throughout much of the greater Houston region; however, one destination continues to illustrate its resilience. Galveston Island has realized year-over-year growth in total visitation in each of the past seven years following Hurricane Ike. While the rate of growth has slowed in recent years, no doubt somewhat affected by volatility in the energy sector, positive factors such as the recently completed expansion of the cruise terminal and the low gasoline prices have contributed to the growth in visitation numbers. This article will explore tourism trends on Galveston Island. Galveston Island is a 64-square-mile barrier island located 50 miles southeast of Houston. With 32 miles of beaches, a variety of historic neighborhoods, ample leisure attractions, and a multitude of festivals, the tourism industry remains a mainstay of the local economy. The relative affordability of the island, and the proximity to and size of the Houston metropolitan area contribute to the strength of this industry.
The LAX/El Segundo area has experienced robust growth in hotel demand in recent years, buoyed by increased passenger volume at LAX, the addition of new upper-upscale hotels, and sustained corporate demand from El Segundo and the surrounding markets. LAX is the second-busiest airport in the nation, behind Atlanta's Hartsfield International Airport, and the gateway to Southern California. The airport reached a new peak in passenger volume in 2016, which grew 7.0% over the prior year, and this trend continued through the September 2017 year-to-date period. The addition of Delta's direct flights from China on Boeing's Dreamliner and recent renovations at LAX have contributed to this growth.
As North American hoteliers enter the holiday season and round out the year, all travel segments are seeing a noticeable increase across the board in both average daily rates (ADR) and occupancy, up 1.4 percent and 3.9 percent respectively, during the fourth quarter of 2017, according to new data from TravelClick's November 2017 North American Hospitality Review (NAHR).
Indiana's capital city, Indianapolis, is the state's largest and the third-largest city in the Midwest. The city is a primary industrial, commercial, and transportation center for the Midwest, as the most centrally located of the largest 100 cities in the United States. The city is well served by four interstates, six railroads, an international airport, and a foreign trade zone. Historically known for its concentration of major manufacturing operations and logistics, the city has evolved as a hub for advanced manufacturing, digital technology, and life science/healthcare, as well as amateur and professional sporting events, which have brought Indianapolis broader recognition. The area is most well known for hosting the Grand Prix of Indianapolis and Indianapolis 500 each spring.
Before leaf-changing season kicks into full swing, check out our fall travel trends that reveal interesting insights into traveler search behavior. Our data* tells us where travelers to the US are coming from and what cities they're going to and compares their search behavior with those traveling domestically.
When Ebola struck the Sub-Saharan continent in the summer of 2014, thousands of travelers canceled their safari plans in South Africa, resulting in an immediate decline of multimillions of dollars given the tourist cancelations. Truth be told, South African cities such as Johannesburg and Cape Town were more than 2,000 miles from the epicenter of the outbreak, unlike the wildly successful summer destinations of the South of France and England, which were actually far closer to the sources of the viral outbreak. Unfortunately, the geographically challenged visitors, who could have seamlessly enjoyed their intended holidays, altered their plans, and the destinations that relied heavily on the bookings and inbound travel suffered economically, and greatly.
In this sixth annual Lodging Tax Study, HVS Convention, Sports, and Entertainment Consulting surveys lodging tax rates and revenues across the United States. Our study includes a broad range of cities and tracks policy trends in lodging tax impositions. This research identifies the lodging tax rates levied at the state, county, city, and special district levels. We provide data on the collection and distribution of revenue from lodging taxes levied in all 50 States and the 150 largest cities in the United States.