United States -  Philadelphia

The Greater Philadelphia hotel market continued to strengthen in 2016, achieving an occupancy level near the performance reflected prior to the recession, in 2006, despite the continued entrance of new supply. Average rate has also strengthened, registering a new peak of nearly $128 for 2016, which exceeded the prior 2008 peak. Economic prosperity is evidenced by the stability of the region's healthcare and education sectors. The continued revitalization efforts throughout the city, along with Philadelphia's popular airport, tourism, and convention base, should provide for a positive economic situation over the long term.

Demand for the Philadelphia market is generated by a multitude of nationally known employers, such as Comcast, Independence Blue Cross, Jefferson Health System, and the University of Pennsylvania, among many others. Continued growth and development in Downtown Philadelphia is evident, including the ongoing construction of the new Comcast Innovation and Technology Center, which is expected to open in early 2018. The new facility will boast 1.5 million square feet of office space, three television studios, a retail mall, and a 200-unit Four Seasons hotel. Additionally, the Downtown neighborhood's proximity to many law firms should further bolster corporate demand. Furthermore, the Pennsylvania Convention Center stimulates a significant amount of demand for Greater Philadelphia hotels throughout the year, albeit to a lesser degree than in prior years because of new supply continuing to enter the downtown area and absorbing a majority of the group-related business, as opposed to the hotels in the outskirts of the city. Additional increases should occur through the stabilized year as large events continue to fill the books in the coming years. Lastly, tourism is expected to remain healthy given the numerous sites and attractions throughout the Philadelphia area, along with the numerous sports and concert events held throughout the year.

In recent years, hotel supply growth has remained modest; however, as overall development activity ramps up, hotel development is expected to follow suit. Many of the proposed hotel projects slated for the Greater Philadelphia market appear to be appropriately located in areas primed for further demand growth. Overall, the entrance of new supply should be kept in check, in relative equilibrium with the anticipated expansion of demand.

The pace of local transactions remained somewhat subdued in 2016, a continuation of the trend from recent years, as most property owners in the region have taken a buy/build-and-hold approach. Transaction highlights in 2016 for the city were limited to the 275-unit Club Quarters Philadelphia for approximately $63 million, or roughly $229,000 per room. No other major transactions were reported for 2016.

* 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%

Philadelphia RevPAR Change

Philadelphia RevPAR

Year RevPAR
2006 $77.47
2007 $82.35
2008 $80.06
2009 $67.75
2010 $69.14
2011 $75.71
2012 $79.66
2013 $78.99
2014 $82.69
2015 $87.26
2016 $91.62
2017 (f) $95.77
2018 (f) $99.62
2019 (f) $102.61

For more information, please contact:

Jerod Byrd, MAI
jbyrd@hvs.com
  • +1 901 481-3058 (w)
Scott Killheffer
skillheffer@hvs.com
  • +1 302 897-9393 (w)
Dinaker Mallya
dmallya@hvs.com
  • +1 484 557-1668 (w)