United States -  Detroit

Detroit is known as the world's traditional automotive center, as the city was the home of the invention of the automobile and its mass production, headed by Henry Ford. Detroit also has a long history of producing groundbreaking and influential musical talent. These two historical legacies are celebrated by the city's two familiar nicknames: Motor City and Motown. Detroit and the surrounding region constitute a manufacturing powerhouse, most notably as home to the Big Three automobile companies: General Motors, Ford Motor Company, and Fiat Chrysler’s American (FCA) headquarters. The Big Three each posted increases in profits from 2012 through 2016. In early 2017, each of the Big Three automakers announced plans to invest in U.S. manufacturing. Ford announced plans to invest $1.2 billion in its Michigan plants, GM announced a $1-billion investment across the U.S., while FCA announced plans to invest in plants in Michigan and Ohio. Additionally, the region has become competitive in emerging technologies such as biotechnology, nanotechnology, information technology, and hydrogen-fuel-cell development.

The greater Detroit economy suffered major setbacks due to the near collapse of the U.S. automotive industry last decade. The restructuring and rebuilding of the auto industry in the years that followed, along with continued challenges in the residential real estate market and a national recession, left the Detroit market one of the nation’s hardest-hit areas. However, several factors are contributing to an improved economic outlook for the region, including the strengthening of the Big Three automakers and the continued diversification of the local employment landscape. In addition, lower unemployment levels and improving vacancy rates for commercial office space are indicators of the positive changes occurring in the market. Value gains for hotels were accordingly robust during the 2010–2016 period. Average rate and occupancy have posted consistent gains since 2010; moreover, 2016 registered a record number of room nights sold for the City of Detroit.

Multiple developments are underway throughout Detroit. The District Detroit, a 35-acre, $650-million entertainment district anchored by a new multipurpose arena for the Detroit Red Wings, is scheduled for completion in the fall of 2017. Additionally, construction has begun on The Detroit River International Crossing. Moreover, the completion of the $137-million M-1 rail circulator, and the relatively recent $279-million renovation and expansion of The Cobo Center, should be catalysts for continued job growth, economic vitality, and urban renewal throughout Detroit. Bedrock Real Estate Development Detroit (owned by Dan Gilbert of Quicken Loans) has been purchasing buildings in Downtown Detroit at a record pace since 2010, now owning or controlling more than 80 buildings, with plans to redevelop most all of them. Since that time, Quicken Loans has relocated its headquarters to Downtown Detroit, including about 3,100 employees. The latest plans for development include constructing a 52-story, high-rise apartment and condo building on the site of the old J.L Hudson department store on Woodward Avenue. Furthermore, two of Detroit’s most prominent billionaires, Tom Gores and Dan Gilbert, continue to push forward with their plan of attracting a Major League Soccer team to Detroit. With a new stadium in the early planning phases, and City and MLS approval in the works, Gilbert and Gores are aiming to have a team in Detroit by 2020.

The Detroit metro area and CBD lodging markets have experienced significant and record growth in recent years. The CBD’s demand growth has outpaced the additions to supply, resulting in occupancy levels similar to those experienced in the late 1990s and early 2000s. Average rate peaked for the market in 2016. The renovations of existing hotels and the anticipated entrance of several additional, smaller boutique properties should support continued rate growth with minimal impact on hotel occupancy levels. Most notably, the Detroit Foundation Hotel, a boutique property built in the former Detroit Fire Department Headquarters, opened in May 2017, with the Shinola Hotel and the Wurlitzer Building Hotel, two similar boutique-style hotels, expected to open in 2018. The redevelopment efforts in Downtown Detroit continue to attract more demand to the CBD. Limited sales volume occurred in Detroit in 2014 and 2015, with most sales occurring in the surrounding suburbs and representing limited-service lodging facilities. No transactions of noteworthy importance took place in Downtown Detroit in 2016 or thus far in 2017. Overall, moderate value gains are expected in 2017, before tapering off somewhat through 2018.

* 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%

Detroit RevPAR Change

Detroit RevPAR

Year RevPAR
2006 48.63
2007 49.76
2008 47.67
2009 37.50
2010 40.89
2011 45.81
2012 49.06
2013 52.67
2014 57.97
2015 61.70
2016 64.08
2017 (f) 66.65
2018 (f) 68.82
2019 (f) 69.50

For more information, please contact:

Stacey Nadolny, MAI
snadolny@hvs.com
  • +1 419 367-3879 (w)
Brandon Leversee
bleversee@hvs.com
  • +1 269 303-5551 (w)