The Phoenix hotel market (defined as Maricopa County and parts of Pinal County) realized continued improvements across all performance metrics in 2017, with occupancy reaching nearly 68% as the local economy continues to thrive. Average rate (ADR) grew moderately in 2017, following more modest growth in 2016 given the departure of one-time Super Bowl demand from 2015. Looking to 2018, the Phoenix market is forecast to experience continued RevPAR growth, primarily through ADR increases. However, year-over-year RevPAR growth is anticipated to temper somewhat before declining, as new supply will likely test some of the region’s most active submarkets, including Downtown Phoenix, Tempe, Scottsdale, and Chandler. Nevertheless, the region’s growing economic diversity, coupled with strong increases in population and employment, should allow Phoenix to quickly rebound.

The Phoenix hotel market experienced continued demand increases in 2017. Continued increases in transient leisure demand during the market’s peak seasons (January through April) and commercial activity throughout the Valley were bolstered by major events, such as the NCAA Final Four. Given the high number of resorts and other large meeting venues in the Valley, the meeting and group segment continues to be the key to a healthy Phoenix lodging market. By all accounts, in-house meeting and group demand appears to be strong again, with resorts achieving record in-house meeting and group demand in 2017, according to Visit Phoenix. Phoenix Convention Center experienced strong growth in terms attendees in 2017. According to Visit Phoenix, the convention center remains on pace to make further strides in both number of conventions and number of attendees through 2021, which is considered encouraging for the overall market.

The number of new hotel projects in the Phoenix area has continued to increase as the market’s operating performance has improved. These new projects span from limited-service hotels to resorts, and continue to be largely concentrated in the region’s most active submarkets, such as Downtown Phoenix, Downtown Tempe/ASU, Chandler Price Road Corridor, and Scottsdale/Paradise Valley; however, activity in Phoenix's West Valley is beginning to increase. While new supply is expected to moderate operating performance in the near term, these robust submarkets should prove resilient over the long term given the number of planned commercial and/or leisure oriented developments in the respective areas.

Transaction activity in Phoenix increased in 2017. The sale of the Hyatt House Scottsdale Old Town at roughly $220,000 per room represented the top single-asset sale last year; however, the sale of the Royal Palms Resort & Spa topped the market. The Royal Palms, which sold with the Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, garnered an allocated sale price of approximately $714,000 per room in the sale to Xenia Hotels & Resorts, just one year after its previous sale to Hyatt Hotels for nearly $740,000 per room in a single-asset sale. Looking forward, the recent sale of the Waldorf Astoria Arizona Biltmore for roughly $665,000 per room bodes well for 2018. Furthermore, sales volume has increased somewhat year to date. 

* 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.

ADR, Demand, Occupancy, RevPAR, and Supply Projections:

Change In Value For Market:

Phoenix RevPAR Change

Phoenix RevPAR

For more information, please contact:

	Adam Lair, MAI [email protected] +1 415 896-0868 (w) +1 504 231-2651 (m)
	Michael Smithson [email protected] +1 214 629-5909 (w)