United States -  Detroit

Detroit is known as the world's traditional automotive center, as the city was the home of the invention of the automobile and its mass production, headed by Henry Ford. Detroit also has a long history of producing groundbreaking and influential musical talent. These two historical legacies are celebrated by the city's two familiar nicknames: Motor City and Motown. Detroit and the surrounding region constitute a manufacturing powerhouse, most notably as home to the Big Three automobile companies: General Motors, Ford Motor Company, and Fiat Chrysler’s American (FCA) headquarters. The Big Three each posted increases in profits from 2012 through 2016, while 2017 marked a year of big announcements. Ford announced plans to invest $1.2 billion in its Michigan plants, GM announced a $1-billion investment across the U.S., and FCA announced plans to invest in its Michigan and Ohio plants. Financial services and healthcare have remained cornerstones of Detroit economy, as well. Metro Detroit ranks among the nation’s top five financial districts, with major financial service employers including KPMG, Fifth Third Bank, Comerica, Deloitte, Ernst & Young, and PricewaterhouseCoopers. Headquartered in Downtown Detroit, Quicken Loans is the largest online retail mortgage lender and the third-largest overall retail lender in the United States. Additionally the greater Detroit market is home to more than a dozen major hospitals including the Detroit Medical Center, Henry Ford Health Systems, the St. John Hospitals, and the John D. Dingell VA Medical Center. Headquartered in Detroit, the Henry Ford Health System is one of the nation’s leading comprehensive, nonprofit healthcare organizations.

The greater Detroit economy suffered major setbacks due to the near collapse of the U.S. automotive industry last decade. The restructuring and rebuilding of the auto industry in the years that followed, along with continued challenges in the residential real estate market and a national recession, left the Detroit market one of the nation’s hardest-hit areas. However, several factors are contributing to an improved economic outlook for the region, including the strengthening of the Big Three automakers and the continued diversification of the local employment landscape. In addition, lower unemployment levels and improving vacancy rates for commercial office space are indicators of the positive changes occurring in the market. Value gains for hotels were accordingly robust during the 2010–2017 period. Average rate (ADR) and occupancy have posted consistent gains since 2010; moreover, 2017 registered a record number of room nights sold for the City of Detroit.

Multiple developments are underway throughout Detroit. The District Detroit, a 35-acre, $650-million entertainment district anchored by a new multipurpose arena for the Detroit Red Wings, which opened in the fall of 2017. Additionally, construction has begun on The Detroit River International Crossing. Moreover, the completion of the $137-million M-1 rail circulator and the relatively recent $279-million renovation and expansion of The Cobo Center should be catalysts for continued job growth, economic vitality, and urban renewal throughout Detroit. Detroit has become a great example of a revitalizing city, led primarily by Bedrock Real Estate Development Detroit (owned by Dan Gilbert of Quicken Loans). Furthering Detroit's revitalization is Bedrock Real Estate Development Detroit's plans for the development a 52-story, multi-unit residential building on the site of the old J.L Hudson department store on Woodward Avenue; this development, which will represent Michigan's tallest building, broke ground in late 2017. The revitalization of Detroit has drawn interest from many hotel developers, especially in the Downtown/Midtown core, with over 1,500 rooms expected to open in the next three years.

The Detroit metro area and CBD lodging markets have experienced significant and record growth in recent years. The CBD’s demand growth has outpaced the additions to supply, resulting in occupancy levels similar to those experienced in the late 1990s and early 2000s. ADR peaked for the market in 2017. The renovations of existing hotels and the anticipated entrance of several additional, smaller boutique properties should support continued rate growth, with minimal impact on hotel occupancy levels. Most notably, the Detroit Foundation Hotel, a boutique property built in the former Detroit Fire Department Headquarters, opened in May 2017, and the Siren Hotel opened in the renovated Wurlitzer Building in March 2018. Additionally, the 130-room, boutique Shinola Hotel is expected to open by Thanksgiving 2018 and is anticipated to lead the market in average rate. The redevelopment efforts in Downtown Detroit continue to attract more demand to the CBD. Limited sales volume occurred in Detroit in 2014 and 2015, with most sales occurring in the surrounding suburbs and representing limited-service lodging facilities. No transactions of noteworthy importance took place in Downtown Detroit in 2016 or 2017. Overall, moderate value gains are expected in 2018, before tapering off somewhat through 2019.

* 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.

Change In Value For Market:

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Detroit RevPAR Change

Detroit RevPAR

Year RevPAR
2007 $49.76
2008 $47.67
2009 $37.50
2010 $40.89
2011 $45.81
2012 $49.06
2013 $52.67
2014 $57.97
2015 $61.70
2016 $64.08
2017 $67.96
2018 (f) $70.34
2019 (f) $71.72
2020 (f) $72.79

For more information, please contact:

Stacey Nadolny, MAI
[email protected]
  • +1 419 367-3879 (w)
Brandon Leversee
[email protected]
  • +1 269 303-5551 (w)