United States -  Detroit

The “Big Three” automakers, local employers and headquarter offices, conventions, and leisure destinations represent the primary sources of lodging demand for the greater Detroit market. Following RevPAR growth from 2002 through 2007, the entrance of extensive new supply in late 2007, which included two 400-room casino hotels, coupled with the onset of the recession, resulted in a subsequent decrease in RevPAR. This downward trend continued through 2009, concurrent with the near-collapse of the U.S. automotive industry. In 2010, occupancy rebounded, and ADR growth resumed in 2011 as the automotive industry and national lodging market began to recover. RevPAR surpassed the prior peak in 2013 and continued to increase year-over-year through 2018. Increases in commercial activity throughout Metro Detroit brought on by a more diverse economy, record levels of tourism, and the continued presence of citywide events, such as the North American International Auto Show, contributed to this year-over-year growth. Despite increasing demand levels in 2019, RevPAR decreased slightly given the decline in occupancy, as a large amount of new supply had recently entered the greater Detroit market.

The COVID-19 pandemic has significantly affected the greater Detroit lodging market, as evidenced by the nearly 58% decline in 2020 RevPAR when compared to the 2019 level. The Downtown Detroit market, in particular, has experienced notable losses in demand given the large presence of full-service hotels that rely heavily on meeting and group demand generated both in-house and by the Huntington Place. Upon the lifting of pandemic-related restrictions, occupancy and ADR recovered slightly in the summer months, driven by the increase in leisure demand. However, many large employers throughout the region were reluctant to bring their workforces back to their offices in 2021, and large events such as the International Auto Show were absent. As such, RevPAR levels in 2021 remained well below the levels achieved from 2015 through 2019. While lagging business travel and group demand are still anticipated to affect the Downtown submarket in the near term, demand related to these two segments is expected to accelerate in the spring of 2022. The long-term outlook remains positive, as continued commercial development should drive demand growth during the recovery period, while Detroit's increasing popularity as a tourist destination is also anticipated to support the lodging industry.

* 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: More than -10%

For more information, please contact:

Brandon Leversee
Vice President
Valuation, Market & Feasibility Consulting
[email protected]
  • +1 269 303-5551 (w)