United States -  Portland

Overview:

The Portland hotel market, similar to other comparable hotel markets throughout the United States, failed to achieve value growth levels on par or above those of the nation as a whole until 2012. Before then, a slow recovery of the local job market; downward pressure on average rate levels, especially local negotiated rates; and weak convention activity resulted in a somewhat delayed hotel market recovery from a valuation perspective. Beginning in 2012, as Intel’s project-related demand buoyed the local economy and as hoteliers successfully began restructuring average rates, value growth accelerated and comfortably surpassed levels achieved by the nation as a whole. A slew of positive factors have also contributed to the resurgence of the local real estate industry, including Intel’s massive expansion at its Ronler Acres campus in Hillsboro and Nike’s $275-million commitment to expand its Washington County headquarters. Convention demand has returned to the market, with Oregon Convention Center reporting pre-recession booking levels.

Several new, high-profile hotel projects are on the horizon, including the Hyatt convention center headquarters hotel. Other planned projects include the Canopy Pearl District, Curio - A Collection by Hilton, AC Hotel by Marriott, Hyatt House, and Hilton Garden Inn, among others. The area’s strict urban growth regulations and high barriers to entry, marginal new supply growth until now, and strong average rates across all market segments are driving value increases, with 2016 expected to be another strong year. The pace of value growth will be tempered in the near future, with new supply putting downward pressure on value acceleration; however, strong economic fundamentals and a growing and ever-popular urban core are keeping the Portland market high on investors’ watch list.

The number of Portland-area hotel transactions has accelerated in the last 18 months, with price per key and cap rates suggesting high investor-level confidence. Ten hotels priced at over $10 million have traded since 2014, including the sale of the RiverPlace Hotel at just over $750,000 per room, the highest per-room price ever paid in the city of Portland. With efficient operations in place, strong NOI levels, and values nearing or exceeding their prior peak, owners are becoming increasingly interested in asset disposition/acquisition opportunities. HVS anticipates transaction activity to remain strong in the late summer and early fall months of 2016.

* 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:

Portland United States
Previous Year -2% (63 of 71) +1% (49 of 71)
Growth in 2017 +1% (44 of 71) +2% (36 of 71)
Growth in next 4 years +10% (41 of 71) +12% (32 of 71)

Change In Value For Market:

Portland RevPar % Change

For more information, please contact:

Kasia Russell, MAI
krussell@hvs.com
  • +1 970 227-7799 (w)
Desiree Flanary, MAI
dflanary@hvs.com
  • +1 970 381-9794 (w)
Matthew Melville
mmelville@hvs.com
  • +1 505 270-5050 (w)