• 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


    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.