United States -  Wilmington

Overview:

The chemical and pharmaceutical industries, as well as the financial, education, and healthcare sectors, are cornerstones of the greater Wilmington economy. Just within the past year, however, some significant shifts have taken place in Wilmington’s major employers. E.I. du Pont de Nemours and Company, commonly referred to as DuPont, is one of the world’s largest chemical companies. Headquartered in Wilmington, DuPont employed over 6,000 workers statewide as of mid-year 2015. In December 2015, DuPont announced a merger with Dow Chemical Company. The new $130-billion company, DowDuPont, is expected to lay off approximately 1,700 people by the end of 2016 in Delaware alone. Furthermore, AstraZeneca, a British-Swedish pharmaceutical and biologics company, recently sold off a portion of its northern Wilmington offices to JPMorgan Chase; in a downsizing effort, the company also demolished another portion of its local offices. The downsizing has brought sizable layoffs for AstraZeneca since early 2014, with approximately 1,200 jobs disappearing from Delaware.

The city of Wilmington has not experienced much supply growth over the course of the past decade; however, the Downtown submarket realized an increase in supply with the addition of the 180-room Westin hotel in 2014, and the Riverfront District is expected to gain an additional 300 rooms by 2018. Meanwhile, supply growth continues in nearby Newark, Delaware, with the addition of several limited-service and extended-stay products slated to enter the market in 2016 and 2017. The introduction of higher-rate products and the ongoing renovations to existing supply are anticipated to help drive room rate for the market and attract more transient and group-related demand. Demand levels should moderately outpace supply growth, and room rate should continue to remain strong in the near term, supported by the strength of the legal, finance, education, and healthcare sectors. In regard to transaction activity, only one hotel has sold in Wilmington since 2014, the DoubleTree by Hilton Downtown, at a price of roughly $23.5 million ($108,000 per key).

Economic growth and expansion has characterized the greater Wilmington market over the past several years, and the benefits to the area’s hotel industry are evident in occupancy and average rate performance. The layoffs at DuPont and AstraZeneca defy the overall trend of growth, though the stability of the market’s financial institutions and the expansion of its healthcare sector provide some assurance that the local economy stands on solid ground.

* 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:

Wilmington United States
Previous Year +1% (35 of 71) +1% (49 of 71)
Growth in 2017 +2% (31 of 71) +2% (36 of 71)
Growth in next 4 years +14% (24 of 71) +12% (32 of 71)

Change In Value For Market:

Wilmington RevPar % Change

For more information, please contact:

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