United States -  Atlanta

Atlanta’s hotel market continues to show strength overall, with market-wide occupancy approaching 70.0% in 2016, remaining relatively stable compared to 2015, primarily due to new supply increasing at 1.5%, with demand keeping pace at an increase of 1.6%. In 2016, the market experienced an almost 6.0% increase in ADR given the stabilized occupancy levels, reaching a historical high. We expect local hotel operators to continue to push rate in the future, as new supply is readily becoming absorbed, with demand growth keeping pace with the entrance of new supply. The boom in development, redevelopment, and expansion across Atlanta promises to boost demand for the city’s hotels. With so many major projects underway throughout Metro Atlanta having the potential generate demand, occupancy levels should maintain this elevated position in the near term, with only a minor dip in overall occupancy anticipated as new hotels come online. Meanwhile, average rates are expected to continue to realize healthy gains, resulting in a forecast for positive RevPAR growth for Atlanta hotels over the next several years.

In recent years, the city's large amount of meeting and event space at competitive price points has advanced Atlanta's position in citywide convention cycles and has improved the city's standing in relation to other large convention markets. Commercial demand is supported by the presence of major corporations, such as Georgia-Pacific Corporation, SunTrust Banks, and The Coca-Cola Company. Other important demand generators in the market include Georgia Tech and Georgia State University, as well as federal and state government agencies; these entities, which generally weather economic downturns well, provide area hotels with a significant level of base demand. Atlanta's standing as a preferred site for major sporting events should also be bolstered by the development of the new, state-of-the-art, $1.6-billion Atlanta Falcons stadium. We expect demand to continue to increase; however, as several hotels open in the Atlanta market, occupancy levels are anticipated to decline slightly as new supply is absorbed in 2018 and 2019, before resuming growth in 2020.

The Atlanta market is a hot spot for new supply, and developers are looking to add product to the market given that hotels have been able to achieve high occupancies and still maintain those highs with the introduction of new supply. Noteworthy projects in the pipeline include the proposed Georgia World Congress Center Hotel, an 800-room hotel that is proposed for development on a site located between the Georgia World Congress and the new Falcons Stadium. This full-service hotel will offer an extensive array of meeting space and will be principally oriented to serve the meeting and group segment of the market. Several other hotels are proposed for development, as well.

The pace of transactions in the Atlanta market remained modest in 2016, a trend that carried over into early 2017, with some activity among the nationally branded, limited- and select-service assets. The sale of the Marriott Perimeter represents the most significant sale, with a per-room cost of just over $200,000 per key. A substantial amount of work is underway in Atlanta, with new expansions and builds promising to bring in more tourists, commercial travelers, and group demand for the city’s hotels. The highest-profile projects include a $6-billion expansion of Hartsfield-Jackson Atlanta International Airport, which is expected to span the next two decades, and the Mercedes-Benz Stadium, which will host Super Bowl LIII in 2019 (two examples of why hotel investors are continuing to pursue assets in this market for their portfolio). While overall growth is slowing, the outlook remains positive for the Atlanta market given its diverse, deep economy and the numerous public and private developments underway.

* 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.

Change In Value For Market:

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Atlanta RevPAR Change

Atlanta RevPAR

Year RevPAR
2006 55.06
2007 56.66
2008 53.30
2009 43.71
2010 47.55
2011 48.79
2012 52.22
2013 55.38
2014 62.64
2015 68.40
2016 72.39
2017 (f) 75.27
2018 (f) 76.72
2019 (f) 78.61

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)