United States -  Raleigh-Durham-Chapel Hill

Overview:

The Raleigh-Durham market benefits from its diverse and thriving economy. Raleigh is the capital and second-largest city in North Carolina, while Durham is the home to Research Triangle Park, the country’s largest research park. The market’s economic base is largely driven by the education, energy, and technology sectors. Three major universities are located in the region: North Carolina State University (NCSU), University of North Carolina at Chapel Hill, and Duke University. These schools positively influence the local economy by providing faculty, administrative, and operational jobs to residents throughout the area. The schools also provide well-educated graduates who stay in the area following graduation, contributing to the local economy. Raleigh-Durham has long been recognized as one of the state's hubs for technology growth. Some of the largest employers for the market include Duke Energy, Red Hat, IBM, Citrix, and Cisco Systems. Forbes ranked Raleigh as the ninth-fastest growing city in March 2016, with a 2015 population growth rate of over 2%. The breadth of employers and companies in the Raleigh-Durham area should continue to bolster the area’s economy.

Market demand has improved annually since 2010, while average rate growth followed suit in 2011. The Raleigh-Durham area experienced the opening of numerous new hotels in 2009 and 2010, resulting in declines in revenue and hotel values those years. Supply has begun to increase again, with twelve new hotels opening in the greater market since January 2014, of which nine have opened since the beginning of 2015. Aloft hotels opened in both Downtown Raleigh and Downtown Durham in 2015. Furthermore, several new hotels are planned for the greater area, including multiple hotels in Downtown Raleigh.

Since January 2015, 14 hotel sales have been reported in the Raleigh-Durham market. The most significant transaction was the sale of the Downtown Sheraton Raleigh in July 2015; the hotel sold for $47,850,000 ($135,552 per key). The most recent sale was the Hilton North Raleigh Midtown, which sold in April 2016 for $44,950,000 ($134,581 per key). The passing of controversial House Bill 2 in early 2016 has reportedly somewhat affected hotel demand in larger cities throughout the state, primarily in the group segment where event organizers have canceled events in response to the bill. While it is unsure what the future holds for the bill, it will likely temper lodging metrics in the near term. Nevertheless, the value of local hotels should continue to appreciate over the next several years, albeit at a slower pace than in the recent past.

* 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:

Raleigh-Durham-Chapel Hill United States
Previous Year +2% (23 of 71) +1% (49 of 71)
Growth in 2017 +3% (11 of 71) +2% (36 of 71)
Growth in next 3 years +15% (8 of 71) +10% (36 of 71)

Change In Value For Market:

Raleigh-Durham-Chapel Hill RevPAR % Change

For more information, please contact:

Janet Snyder
jsnyder@hvs.com
  • +1 972 978-4714 (w)
Mike Bendert
mbendert@hvs.com
  • +1 248 953-7894 (w)
Patricia Shih
pshih@hvs.com
  • +1 404 791-5509 (w)