United States -  New Orleans

After six straight years of RevPAR growth averaging 8% per year, the New Orleans hotel market slowed somewhat in 2016 and at a lesser rate in 2017. Supply grew at a higher rate then any year since 2012. Despite the opening of new higher-rated hotels, rates declined in 2017; operators reported that in addition to new hotel supply, the increase in short-term rentals has necessitated discounting. Regional storms in Florida and the Gulf Coast did not have a major impact on New Orleans visitation during the summer and fall months. The city continues to be a top-tier convention destination; the 2018 tercentennial year's convention schedule is strong, with 31 groups of 2,500+ peak room nights scheduled (more than the previous year's 28). Tourism, which drove much of New Orleans' renaissance over the past decade, also continues to grow. In 2017, the number of visitors to the city reached a peak of 10,890,000, and finishing 4.2% higher than the 2016 level; visitor spending passed the $7.5-billion mark.

The two major drivers of hotel demand in New Orleans—conventions and tourism—continue to grow, although the city remains behind pace to reach its goal of 13,500,000 visitors in 2018. Nevertheless, the 2018 tercentennial is the first of a handful of events and developments that bode well for near-term demand; the year-long celebration and a particularly strong convention schedule should draw significant room nights to the market. The early 2019 opening of a new, 35-gate, billion-dollar terminal at the Louis Armstrong New Orleans International Airport should bolster tourism levels and further solidify the city's convention status. In 2020, New Orleans will host the College Football Playoff National Championship, an event that played a large part in the market's double-digit RevPAR growth in 2012. New supply remains a concern for New Orleans, and convention scheduling will always cause fluctuations, but the strength of the city's demand generators should support ADR growth and allow occupancy to stay near current levels.

Although New Orleans has captured investor interest throughout the current cycle, supply growth was particularly significant in 2017. The opening of a second Homewood Suites in Central New Orleans followed the extension of the Rampart streetcar line, making the north side of the French Quarter and the Marigny more accessible. The trend towards more upscale hotels in the market continued with the opening of the NOPSI Hotel within a historic public utilities building. New Orleans continues to act as a testing market for new brands; the Cambria Hotel & Suites in the Warehouse District was one of Choice's newest brand openings in the country. Despite delays in many projects, the new supply pipeline continues to expand; over 20 hotel projects remain in in the pipeline for the Central New Orleans market. Construction on the Four Seasons development at the former World Trade Center began May 1, 2018, designs for the Curio Collection by Hilton World War II Museum hotel have been released, and the second Virgin Hotel in America is planned for New Orleans. Other major announcements in 2018 include the construction of a 350-room Hard Rock Hotel and the addition of 340 rooms for Harrah's. Growth continues on the West Bank and River Parishes, due to the airport extension, construction at Ochsner, and new petrochemical developments. The trend of redevelopment has continued in New Orleans; already in 2018, the luxury Jung Hotel revitalizing a historic hotel and the opening of a dual-brand SpringHill Suites and TownePlace Suites by Marriott in a former UNO Tower. The former Country Inn & Suites also reopened in April 2018, and work is underway to expand the hotel to take over two vacant buildings; the former Clarion on the north side of Canal Street also unveiled renovations and reopened as the B on Canal in May 2018.

Transaction activity slowed further in the greater New Orleans area in 2017. The Stay Express Inn & Suites New Orleans represented the first hotel sale of the year in New Orleans East for $2.7 million (under $20,000 per room); this hotel operated under several brand names in the past, but reaffiliated as a Quality Inn in October 2017. The Wyndham New Orleans French Quarter and Holiday Inn French Quarter Chateau Lemoyne sold as part of a larger, 37-hotel portfolio. Towards the end of the year, the Hyatt Place New Orleans Convention Center sold for $32 million, or $188,235 per key. The Holiday Inn Express New Orleans Downtown sold for $23.7 million; the hotel's value had increased approximately $100,000 per room from its sale in 2014 given its conversion from an underperforming independent hotel to reopen under the brand in March 2015. The biggest sale of the year was of the Westin New Orleans Canal Place in September 2017; the $121 million sale represented the highest per-room sale in two years at a price of $276,256 per key.

* 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%

New Orleans RevPAR Change

New Orleans RevPAR

Year RevPAR
2007 $67.33
2008 $74.02
2009 $65.35
2010 $74.97
2011 $78.26
2012 $89.70
2013 $95.53
2014 $99.82
2015 $103.44
2016 $102.00
2017 $101.57
2018 (f) $103.62
2019 (f) $105.18
2020 (f) $108.88

For more information, please contact:

Adam Lair, MAI
[email protected]
  • +1 415 896-0868 (w)
  • +1 504 231-2651 (m)
Lauren Hock
[email protected]
  • +1 805 431-0729 (w)
Bunmi Adeboye
[email protected]
  • +1 504 250-0891 (w)