United States -  New Orleans

Overview:

Since 2010, New Orleans has benefitted from continued private- and public-sector investment and a string of high-profile events that have reintroduced the city as a major global destination. The market, which is anchored by the Central Business District (CBD), was largely unaffected by the Deepwater Horizon oil spill in 2010. Yet as the Gulf Coast’s largest city, New Orleans was the primary beneficiary of the BP-funded tourism advertising campaign resulting from the spill, which dovetailed with a tide of improving public perception as major news outlets spotlighted the city’s recovery from Hurricane Katrina during the New Orleans Saints’ 2009/10 Super Bowl run. Since that time, New Orleans has hosted the BCS National Championship (2012), Super Bowl XLVII (2013), the NBA All-Star Game (2014), and Wrestlemania XXX (2014). While these events were important in the city’s surge in RevPARs through 2014, a steady rise in tourism and increasing attendance at the city’s annual festivals and events were equally critical. However, as major events have been awarded to an increasingly broad array of markets, New Orleans has become more reliant upon individual tourism and convention groups. As a result, RevPAR growth has normalized since 2014.

Since January 2015, twelve confirmed transactions have occurred in the Greater New Orleans market, totaling approximately $315 million. Notable transactions have included the sales of the DoubleTree by Hilton, Le Pavillon Hotel, and the Q&C Hotel/Bar (an Autograph Collection by Marriott property), all of which sold for more than $200,000 per room. Additionally, a portfolio of three Hampton-branded hotels in Downtown and Uptown New Orleans was sold in early 2015.

As RevPAR growth has normalized, transaction activity in New Orleans has slowed somewhat, and new projects are firmly on center stage. Recent openings include an AC Hotel by Marriott (the first in North America) in late 2014, the city’s first Aloft Hotel in the spring of 2015, the city’s first Ace Hotel in March 2016, and the city’s first Moxy by Marriott in April 2016. Furthermore, in March 2015, a team affiliated with the Four Seasons brand won the rights to redevelop the long-vacant World Trade Center, although the project has recently been delayed by litigation. Still, barriers to entry remain higher than in most markets, and projects such as a dual-branded Marriott hotel at the corner of Tchoupitoulas and Canal Streets often struggle to gain approval from local planning agencies. These high barriers coupled with increasing demand and developments, such as the BioDistrict, a $546-million airport terminal, and a proposed expansion of the Ernest N. Morial Convention Center, support a positive outlook for hotel value growth through the Crescent City’s tercentennial celebration in 2018.

* 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:

New Orleans United States
Previous Year +5% (10 of 71) +1% (49 of 71)
Growth in 2017 -7% (71 of 71) +2% (36 of 71)
Growth in next 4 years +7% (56 of 71) +12% (32 of 71)

Change In Value For Market:

New Orleans RevPar % Change

For more information, please contact:

Adam Lair, MAI
alair@hvs.com
  • +1 415 896-0868 (w)
  • +1 504 231-2651 (m)
Lauren Hock
lhock@hvs.com
  • +1 805 431-0729 (w)