United States -  Phoenix

The Phoenix market struggled initially to overcome the effects of the Great Recession and negative press pertaining to a boycott over the SB 1070 immigration law in 2010, which contributed to RevPAR fluctuations through 2012. Operating performance in Phoenix realized strong year-over-year growth in 2013 and 2014, as a limited supply pipeline and improving local economy bolstered overall hotel performance in the region. The Phoenix lodging market recorded positive trends following the Super Bowl in 2015, with overall RevPAR reaching a historical high in 2019, despite continued supply growth. Increases in commercial activity throughout Phoenix, including the resurgence of Downtown Phoenix and the expansion of Class-A office development in the outlying submarkets of Mesa, Gilbert, Chandler, and North Scottsdale, boosted demand during that period. While the state government, higher education (Arizona State University), and the construction industry have long been economic stalwarts in Phoenix, significant economic diversification efforts successfully attracted major employers in the medical research, technology, financial services, and insurance industries over the past several years.

While the Phoenix market began 2020 strong, the outbreak of COVID-19 and its impact on travel caused a significant RevPAR decline in 2020. Many events were postponed or canceled, particularly affecting hotels near the Phoenix Convention Center (PCC), as well as the area resorts. Demand began to rebound in the summer, and although RevPAR remained suppressed, declines through the remainder of the year were less severe than those of other top 25 metro markets. Transient demand from areas with stricter COVID-19 restrictions bolstered occupancy in the market. While group demand was minimal in the first half of 2021, demand strengthened in the second half of the year, and the PCC and area resorts reported a significant number of re-bookings for future years. Although demand and ADR registered low levels in early 2021, robust demand beginning in March 2021 supported the 2021 rebound. In May 2021, occupancy, ADR, and RevPAR exceeded 2019 levels during select periods, such as Memorial Day. The outlook is optimistic given the dynamics of this market, the successful rollout of vaccines in the U.S., the removal of COVID-related restrictions, the recent increase in travel, and the continued strengthening of international tourism, commercial demand, and meeting/group events.

* 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:

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:

McKenna Luke, MAI
Managing Director
Valuation, Market & Feasibility Consulting
[email protected]
  • +1 303 704-2636 (w)