United States -  Philadelphia

Overview:

Philadelphia, the largest city in Pennsylvania, is one of the top 25 hotel markets in the United States. Philadelphia benefits from a well-diversified economic base, with major sectors such as healthcare, education, legal, insurance, and technology serving as cornerstones for the market’s strength and stability. The city continues to expand and revitalize, with notable projects including the expansion of the Comcast headquarters; expansions at local healthcare and educational entities, such as the University of Pennsylvania (Penn) and the Jefferson Health System; and numerous redevelopment projects that have occurred and/or are occurring at historic buildings located throughout the city.

Several new hotels are expected to enter the Downtown submarket over the next several years. A few of the larger projects include a 700-room, dual-branded W and Element Hotel by Westin; a 150-room SLS Hotel; and a 222-room Four Seasons (built atop Comcast Tower). Many existing hotels have completed or are undergoing significant renovations, which should help support future RevPAR growth in the coming years. Hotel values in Philadelphia are anticipated to register healthy increases through 2017, particularly due to the strong ADR growth expected in the near term. The city also boasts an extensive amount of convention space, which should help drive group bookings for the Pennsylvania Convention Center, as Philadelphia becomes more competitive with other cities and as bookings ramp up in the coming years. The forecasted increase in new hotel supply and meeting space should also attract large groups, making the area more desirable as new brands continue to emerge within the Downtown submarket.

Nine hotels totaling approximately $630 million in transaction volume have sold since January 2014, including such significant assets as the Marriott Philadelphia Downtown (highest total price paid at $302,633,333 or $214,938 per key) and the Hotel Palomar Philadelphia Downtown (highest price per key at $434,783, for a total of $100,000,000).

* 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:

Philadelphia United States
Previous Year +3% (18 of 71) +1% (49 of 71)
Growth in 2017 +3% (12 of 71) +2% (36 of 71)
Growth in next 3 years +12% (15 of 71) +10% (36 of 71)

Change In Value For Market:

Philadelphia RevPar % Change

For more information, please contact:

Jerod Byrd, MAI
jbyrd@hvs.com
  • +1 901 481-3058 (w)