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 between 2016 and 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; however, the increased inventory resulted in rate discounting, and RevPAR declined in 2019.
Energy overproduction across the globe resulted in a notable decline in 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 this extreme imbalance of supply and demand created by the pandemic, RevPAR for the Houston market declined by more than 45% 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 In March 2021, the Texas governor rescinded all COVID-related governmental restrictions, and energy production rebounded, with per-barrel prices of West Texas Intermediate at an average of roughly $70 by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. Although RevPAR in 2021 still fell short of 2019 levels, Houston has recovered much of the demand lost because of the pandemic. Leisure travel rebounded strongly in 2021, and with events such as the Houston Rodeo returning in February 2022, this segment is expected to continue to strengthen. While lagging business travel and group demand are still anticipated to affect the Downtown and Uptown submarkets in the near term, demand related to these two segments is expected to accelerate in the spring of 2022. Over the longer term, the market is positioned to recover to pre-pandemic levels due to the city's position as an international hub for numerous industries, including energy, medical, aerospace, and transportation, 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.