Energy firms, the Port of Houston, the Texas Medical Center, conventions, and leisure attractions represent the primary sources of demand for the greater Houston area. Following years of substantial RevPAR gains, the Great Recession caused a decline in energy prices, which negatively influenced RevPAR. A relatively short recovery period ensued, with RevPAR increases in 2013, 2014, and 2015 driven largely by the advent of new oil-exploration technologies, such as hydraulic fracturing, and consistent production. However, energy prices began to weaken in late 2015, which resulted in a decline of midweek corporate travel, and this trend worsened in 2016, as new supply created a more competitive pricing environment. Market RevPAR improved significantly in 2017, bolstered by Super Bowl LI, held in Houston in February, and the August landfall of Hurricane Harvey. In 2018, RevPAR declined given the significant demand skew created by the Super Bowl in the first half of 2017 and by Hurricane Harvey in the second half of 2017; however, RevPAR actually increased slightly from 2016 to 2018, indicating overall growth outside of the non-recurring events in 2017. Occupancy levels remained relatively stable in 2019 despite significant increases in supply across all asset classes in the city, but the increased inventory resulted in rate discounting, and RevPAR declined that year.
Energy overproduction across the globe resulted in a notable decline in oil prices in early 2020, with demand further plummeting following the COVID-19 outbreak and subsequent travel restrictions put in place in March. As a result of the extreme imbalance of supply and demand created by the pandemic, RevPAR for the Houston market declined by more than 45.0% in 2020. In March 2021, the Texas governor rescinded all COVID-related governmental restrictions, and energy production rebounded, with per-barrel prices of West Texas Intermediate at an average of roughly $70 by year's end. As a result, in 2021, the market recovered roughly 90.0% of the demand lost because of the pandemic, although ADR was still $10 below the 2019 level. Continued positive volatility within the energy industry in 2022 bolstered ADR to pre-pandemic levels, enabling RevPAR to rebound to 97.0% of the 2019 level. Larger group events and conventions returned to the market in 2022, supporting improvements in overall demand, and corporate travel increased, especially within the medical and energy industries. Year-to-date 2023 data illustrate a RevPAR level similar to the prior peak of 2014/15, bolstered by strengthening commercial and group demand. The long-term outlook is favorable, as Houston remains a global hub for the energy, medical, aerospace, and transportation industries, among others.
* 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.