United States -  Omaha

Overview:

Omaha boasts a diverse and stable economy. The city is home to four Fortune 500 companies, including Berkshire Hathaway, Union Pacific, Kiewit Sons, and Mutual of Omaha Insurance, in addition to five Fortune 1,000 companies. Previously, a fifth Fortune 500 company, Con Agra Foods, was headquartered in Omaha, but the company announced in October 2015 that it plans to relocate is headquarters from Omaha to Chicago; the transition will occur throughout 2016. Despite the company reducing its local labor force by approximately 1,000, the market is expected to absorb the displaced employees, particularly given Omaha’s low unemployment rate near 3.0%. Given its central location and favorable cost of living and quality of life, not only is Omaha a regional transportation hub for rail, water, and highway, but it is also home to numerous processing and call centers, market research companies, and major healthcare facilities, such as University of Nebraska Medical Center, CHI Health, and the Nebraska Medical Center. Government also remains a large employer in the area, as Offutt Air Force Base and the national command and control center for strategic forces around the globe (USSTRATCOM) are located in the Omaha metropolitan area. This diversity of economic players in the market allowed the Omaha metro area to remain highly resilient to downturns in the national economy during the last decade.

Because of a favorable local economy, new hotels have slowly entered the market over the last ten years, including the convention headquarters Hilton Hotel and surrounding hotel projects in the La Vista and Aksarben neighborhoods. Most recently, a Holiday Inn Express Hotel & Suites opened in April 2016 in the Millard neighborhood of West Omaha. Multiple other limited- and select-service hotel properties have opened over the last two years, primarily in the western half of the city, as well as in the Aksarben and Ralston neighborhoods. In the downtown market, hotels under construction include a 333-room full-service Marriott, an EVEN Hotel, and a Holiday Inn Express Hotel & Suites. Several other hotels are proposed and under construction farther west. Limited sales volume occurred in Omaha in 2014 and 2015, with eight hotel sales recorded at a sales price averaging just under $40,000 per room. New hotel development projects are moving forward, and the outlook for demand is favorable for the next few years. However, as anticipated new supply levels continue to rise and as interest rates and capitalization rates begin to increase, hotel vales are expected to stagnate in the near future.

* 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:

Omaha United States
Previous Year +1% (38 of 71) +1% (49 of 71)
Growth in 2017 +2% (24 of 71) +2% (36 of 71)
Growth in next 4 years +11% (36 of 71) +12% (32 of 71)

Change In Value For Market:

Omaha RevPar % Change

For more information, please contact:

Sara Olson
solson@hvs.com
  • +1 402 690-0407 (w)