• Houston hospitality update

    by  • February 10, 2012 • CRE, Economics

    I wanted to post a quick update on hospitality recovery. The 2012 occupancy rate seems to have settled between 2011s improvement and the pre-recession (2000 to 2007) median occupancy rate – a 5.5% y-o-y improvement. All things considered, that is still good news. But what’s better is that RevPAR (revenue per available room) is up 8.7% y-o-y. Average daily rate (ADR) is up 3.1% – keeping up with inflation.

    On a more local economy note – the biggest drop off in occupancy, ADR and RevPar was in Dallas. And proudly Houston, had one of the biggest jumps in occupancy at 12% y-o-y – brining average occupancy to 61%. Oil and gas, the shale fields, and health care are driving Houston. The fact that we’re also become known as a good sporting event city will help with hospitality too – as the NBA All-Star game will be hosted in Houston in 2012.

    All in all, I think this is good news for investors who like to hedge real estate investments in hotels. Generally hotels are attractive because you acquire the underlying business – and the above notes illustrate to me that in Houston the underlying business looks to be on the rebound – meaning a window for seeking value is open now, but maybe not for long.

    Graph below is from Calculated Risk

    About

    Patrick Sprouse has over a decade of experience in the commercial real estate sector. Mr. Sprouse has held numerous positions in commercial brokerage, real estate technology and executive operations on regional, multi-market and national scales. Currently Mr. Sprouse is providing management and technology consulting service for a private real estate services company based in Washington, DC with over $1.5 billion in 2015 revenue. Mr. Sprouse has an extensive background in business management, sales engineering, project management, software selection and business analysis as well as organizational change and brand management.

    http://www.patricksprouse.com