United States -  Atlanta

Overview:

Led by the resurgence of the local economy, numerous public and private developments are currently underway in Atlanta that will further enhance hotel demand levels in the near term, particularly in the leisure and group segments. The opening of the College Football Hall of Fame and Center for Civil and Human Rights in the summer of 2014 helped bolster leisure demand in Downtown Atlanta. The completion of the new $1.1-billion SunTrust Park and adjoining Battery mixed-use development in Cobb County, as well as the new, $1.5-billion, state-of-the-art Falcons’ stadium in Downtown, should further boost leisure demand levels when they open in 2017. Moreover, the anticipated development of an 800 to 1,200-room hotel adjoining the Georgia World Congress Center is expected to entice additional and larger groups to Atlanta. Furthermore, major sporting events scheduled to be held here, such as the Super Bowl (2019), the NCAA College Football Championship (2020), and the NCAA Final Four (2020), will all draw high levels of demand.

Thirteen hotels totaling more than $525 million in transaction volume have sold since January 2015, including such significant assets as the Hilton Downtown Atlanta (highest total price paid at $174,000,000 or $140,500 per key) and the Hilton Garden Inn/Homewood Suites by Hilton dual-branded hotel in Midtown (highest price per key at $256,000, for a total of $58,300,000). Improving market conditions continue to put downward pressure on capitalization rates, driving hotel values to peak levels. Moreover, transaction activity increased in late 2015 and early in 2016.

Following several years of limited supply growth, due in part to a lack of readily available financing, numerous hotel projects are now underway in Metro Atlanta, with several more hotels in the planning stages. However, demand is expected to slightly outpace new supply, and Atlanta should continue to benefit from strong rate gains. As such, we anticipate the value of Atlanta hotels to continue to appreciate in the next four years, albeit at a slower pace than in the recent past.

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Atlanta United States
Previous Year +2% (26 of 71) +1% (49 of 71)
Growth in 2017 +4% (3 of 71) +2% (36 of 71)
Growth in next 3 years +9% (46 of 71) +10% (36 of 71)

Change In Value For Market:

Atlanta RevPar % Change

For more information, please contact:

Michael Brophy
mbrophy@hvs.com
  • +1 678 628-6577 (w)
Benjamin Levin
blevin@hvs.com
  • +1 404 276-5862 (w)
Kristin Rinaudo
krinaudo@hvs.com
  • +1 850 774-4229 (w)