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HVS In-Depth United States Hotel Valuation Index:
Atlanta’s hotel market continues to show strength overall, with improving RevPAR in 2018. Growth was led by an increase in average rate of roughly 2.5%, with market-wide occupancy remaining relatively flat, primarily due to new supply and hotel demand both increasing by almost 2.0%. As the pace of demand has kept up with the pace of new supply in recent years, average rate growth has continued, but at a slowing pace, and we expect this trend to continue in the near term. The boom in development, redevelopment, and expansion across Atlanta promises to boost demand for the city’s hotels. Many major projects are underway throughout Metro Atlanta that have the potential to generate demand, and occupancy levels should remain relatively stable in the future, keeping up with the pace of new supply. Meanwhile, average rates are expected to continue to realize modest gains, resulting in a forecast of positive RevPAR growth for Atlanta hotels over the next several years.
In recent years, the city's large amount of meeting and event space at competitive price points has advanced Atlanta's position in citywide convention cycles and has improved the city's standing in relation to other large convention markets. Increasing convention demand will continue to be supported by the ongoing $55-million expansion of the Georgia World Congress Center (GWCC) and the 2019 announcement of a 1,000-room Signia Hilton convention hotel to be located adjacent to the GWCC. Commercial demand is supported by the presence of major corporations, such as Delta Air Lines, SunTrust Banks, and The Coca-Cola Company. Other important demand generators in the market include Georgia Tech and Georgia State University, as well as federal and state government agencies; these entities, which generally weather economic downturns well, provide area hotels with a significant level of base demand. Atlanta's standing as a preferred site for major sporting events has been enhanced by the 2017 opening of the state-of-the-art, $1.6-billion Mercedes-Benz Stadium, as well as the opening of SunTrust Park and the conversion of Turner Field into the new Georgia State Football Stadium. Mercedes-Benz Stadium hosted Super Bowl LIII in February 2019, bringing international attention to the city. We expect demand to continue to increase, generally keeping pace with the continued increase in supply across the market, as has been realized in recent years.
The Atlanta market is a hot spot for new supply, and developers are looking to add product to the market given that hotels have been able to maintain high occupancies despite the introduction of new supply. The development of Aerotropolis Atlanta, the redevelopment of The Gulch and Underground Atlanta, and a myriad of other expansion projects across the city should continue to generate demand for the market, making Atlanta attractive to developers for properties across all product tiers. In addition to the Signia Hilton hotel at the GWCC, a 500-room InterContinental Hotel is proposed as part of a mixed-use development at the Hartsfield-Jackson Atlanta International Airport. Numerous other hotels are proposed for development, as well, including an influx of boutique properties.
The pace of transactions in the Atlanta market remained steady in 2018. The highest level of transaction activity occurred among the nationally branded, limited- and select-service assets. The sale of the Hampton Inn & Suites by Hilton Atlanta Perimeter Dunwoody and the Hyatt Regency Atlanta Perimeter at Villa Christina represented two of the most significant sales, at roundly $200,000 and $225,000 per key, respectively. A substantial amount of work is underway in Atlanta, with new builds and expansions promising to bring in more tourists, commercial travelers, and group demand for the city’s hotels. The highest-profile projects include a $6-billion expansion of Hartsfield-Jackson Atlanta International Airport, which is expected to span the next two decades, and the Mercedes-Benz Stadium, which hosted Super Bowl LIII in 2019 and will host the NCAA Men's Final Four in 2020 (two examples of why hotel investors are continuing to pursue assets in this market for their portfolios). The outlook remains positive for the Atlanta market given its diverse, deep economy and the numerous public and private developments underway.
* 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.
The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide.
Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the
hospitality investment market.
In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely
insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related
restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.
Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with
an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide
insights on the likely trajectory of decline and recovery for hotel values.
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ADR, Demand, Occupancy, RevPAR, and Supply Projections:
|Market Demand Change
|Hotel Occupancy Increase/Decrease
|Market Supply Growth