The hub of New England's economy, Greater Boston is one of the world's great intellectual centers, home to both Harvard University and Massachusetts Institute of Technology (MIT), as well as countless other universities and colleges. The medical industry also plays a vital role, spanning numerous world-class hospitals including Massachusetts General, Dana Farber, Brigham & Women's, and Beth Israel Deaconess. Other major industries include finance, technology, and bio-pharmacology. Prior to the onset of COVID-19, economic performance in the regional hotel market had already begun to slow, with generally sub-inflation gains in RevPAR recorded between 2016 and 2019. Although underlying economic conditions remained sound through year-end 2019, significant increases in supply created softness in the market. The number of occupied rooms continued to grow in 2019, but the gain of 0.9% was far surpassed by the 3.2% increase in supply, as seven new hotels opened in 2019.
Following the onset of the pandemic in March 2020, the Boston lodging market faced a radically shifted reality, which has only partially normalized. Boston was among the hardest hit markets in the country, incurring a 70% RevPAR loss in 2020. Key reasons for Boston's vulnerability include its reliance on large-scale citywide conventions, which are slow to return; the market's dependence on air travel for commercial and group demand; and its reliance on international visitation, which was almost totally curtailed until the third quarter of 2021. The city also has a shorter drive-to leisure season than major markets in the South and the West. Most travel restrictions were lifted by mid-year 2021, and leisure travel was strong, but commercial and group demand sources remained below pre-pandemic levels. As such, the market’s 2021 RevPAR finished below the 2019 level. New supply has also been a factor, primarily the new, 1,055-room Omni, a convention headquarters hotel that opened in September 2021 when the adjacent Boston Convention & Exhibition Center remained largely idle. Despite the many challenges, investors and operators remain hopeful, expecting the rebound in commercial and group travel to resume and accelerate through 2022 as the effects of COVID variants wane. Boston has remained an attractive investment location because of its excellent economic fundamentals.
* 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.