San Diego benefits from a diverse mix of demand generated by local corporations, government entities, meeting and group business, and leisure-related activity. Favorable year-round weather conditions and attractions such as the San Diego Zoo, Coronado Island, Pacific Beach, SeaWorld, La Jolla, and the nearby Temecula Wine Valley generate steady tourism demand. Furthermore, compression from large conventions held at the San Diego Convention Center produces a significant number of room nights. Hotel demand and occupancy increased steadily from 2010 through 2018, resulting in peak occupancy levels above 78% by year-end 2018. Occupancy declined in 2019, as new supply entered the greater San Diego market; moreover, the drop in occupancy was affected by the rainy winter conditions early in the year. ADR began to rebound in 2011 following the recovery in occupied rooms and increased year-over-year through 2018. In 2018, market-wide ADR reached a new peak above $166, and RevPAR surpassed the $130 mark for the first time, despite a significant increase in supply during 2018. ADR levels stabilized in 2019, while RevPAR decreased by approximately $2.50 given the lower occupancy levels.

San Diego's hospitality sector was negatively affected by the onset of the COVID-19 pandemic in March 2020, resulting in a decline in tourism and the cancellation of a number of large-scale conferences, conventions, and self-contained groups. The market ended 2020 with a RevPAR decrease of nearly 50%, compared to the level achieved in 2019. Group events at area hotels and the San Diego Convention Center resumed mid-year 2021, although attendance remained well below the pre-pandemic levels. Meanwhile, leisure visitation increased substantially as San Diego benefited from strong visitation from other areas of California and Arizona, as well as the city's relatively relaxed COVID-related restrictions compared to the other California submarkets. RevPAR in 2021 rebounded substantially, as ADR approached the 2019 level. While attendance at large-scale conventions is not expected to fully recover until 2023/24, smaller group events should fill the gap in the near term. Leisure demand will continue to lead the pace of recovery. In the long term, the popularity of San Diego as a meetings/event destination, the minimal new supply in the pipeline, the diversity of the local economy, and the historically strong levels of tourism should support the recovery by 2023/24.

* 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:

San Diego RevPAR Change

San Diego RevPAR

For more information, please contact:

	Luigi Major, MAI Managing Director Valuation, Market & Feasibility Consulting [email protected] +1 310 270-3240 (w)
	Kirsten Smiley Senior Vice President, Southern California Region Director Valuation, Market & Feasibility Consulting [email protected] +1 405 612-6255 (w)
	Emil Iskandar Senior Vice President Capital Markets [email protected] +1 720 231-3927 (m)