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 slower RevPAR growth in 2010 and 2012. Operating performance in Phoenix improved year-over-year in 2013 and 2014, as the 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, economic diversification efforts have successfully attracted major employers in the medical research, technology, financial services, and insurance industries over the past decade.

The strength of the pre-pandemic first quarter of 2020 resulted in the lowest RevPAR decline among the top 25 markets for the year overall. Transient demand from areas with stricter COVID-19 restrictions bolstered occupancy, and the Phoenix Convention Center and area resorts experienced demand growth in the second half of the year. Although capacity restrictions and cancellations affected demand and ADR in early 2021, robust demand growth returned in the spring, with ADR increasing above the level attained in 2019 by year's end. The market's peak season rebounded in 2022, but demand continued to lag somewhat, influenced by the MLB labor lockout. In 2022, occupancy rebounded to 97.0% of the 2019 level, while ADR and RevPAR well surpassed pre-pandemic levels, driven by the improvement in pricing power, shift in segmentation, and continued evolution of the destination. This positive trend continued into 2023, supported by the full-capacity return of MLB Spring Training and bolstered by the Super Bowl in February 2023. ADR and RevPAR growth began to slow in the second quarter of the year, while some demand softening or contraction has been noted given alternative destinations and the return of more typical seasonality. However, the long-term outlook remains optimistic given 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:

Zabada Abouelhana
Vice President, Leader - Arizona Region
Valuation, Market & Feasibility Consulting
[email protected]
  • +1 314 280-2017 (w)
McKenna Luke, MAI
Managing Director
Valuation, Market & Feasibility Consulting
[email protected]
  • +1 303 704-2636 (w)