December 20, 2013 | Publications

Overbuilt is Over-hyped: The Promising Future of the Boston Hotel Market

Forecasts are in for the future of the lodging industry – and things are looking good for the hotel market over the next few years. According to a current market analysis by PKF Consulting USA, the industry is well on its way to a recovery with very few factors in existence today that could stall or derail hotel industry growth.

On the national level, the industry is expected to experience gains in RevPAR, occupancy, and ADR through 2014 and 2015. Other national economic factors are also calming previous anxieties over hotel development. Home prices are escalating, availability of credit is up, and job and economic growth looks positive.

For Boston, we are expected to see incremental growth in all major performance metrics including hotel occupancy rates, RevPAR, and ADR through next year. Boston’s hotel occupancy continues to be in the upper 70th percentile, well above the U.S. average that holds steady in the mid-60s. On top of that, the city continues to rank as one of the most desirable markets for expansion in the United States.

  • In 2013, only 2 hotels opened in previous 5 years
  • High barrier to entry in Boston Market
  • Select service hotels needed
  • Research shows demand for more Boston hotel rooms

Despite encouraging reports in the local sector, the national market is still expected to outpace Boston’s overall hospitality growth during the next few years. Why? Some industry insiders say Boston is “overbuilt.”

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