United States -  St. Louis

The St. Louis hotel market continued to strengthen in 2017, although performance reached a tipping point as supply increases outpaced demand growth. The area benefits from a diverse economy that provides a solid foundation for steady economic growth, anchored by strong healthcare, education, manufacturing, and government sectors, as well as growing financial services and life-science industries. Several major developments, the continued expansion of area business, and a burgeoning tech start-up industry are positively affecting the greater St. Louis economy and hotel demand.

According to officials with the St. Louis Convention & Visitor’s Commission, hotel demand from activities at The America’s Center Convention Complex were at an all-time high in 2017, which helped support strong demand levels in the Downtown submarket. However, 2018 is expected to be a relatively soft convention year, with multiple large events relocating to other cities. Significant investments in new leisure demand generators are underway, including the $380-million renovation of the Gateway Arch and the surrounding grounds, which is scheduled for completion in 2018. Additionally, the owners of historic Union Station are moving forward with a $70-million redevelopment, including a fire, light, and laser show; a 200-foot Ferris wheel; and a 75,000-square-foot aquarium. Commercial demand in St. Louis should be most directly affected by the construction of the new, $1.75-billion western headquarters of the National Geospatial Intelligence Agency, which is expected to begin in 2019, as well as the continued growth of the Cortex Innovation Community, a regional hub of bioscience and technology research. Other major regional developments and expansions that bode well for increased commercial demand include Pfizer's new, $200-million research and development campus and Centene Corporation's $770-million expansion of its Clayton headquarters campus.

Over the last several years, the growth in the supply of hotel rooms remained modest and even declined to a low in 2015; however, supply growth accelerated in 2016 and 2017. We are currently tracking numerous projects that are under construction and proposed. As such, supply growth is anticipated to continue to accelerate, reaching a growth rate of 2.5 to 3.0% by 2019. As a result, occupancy levels are expected to experience a modest correction, and average rate (ADR) growth is expected to decelerate. It remains to be seen how slower anticipated RevPAR growth and rising construction costs will affect the development pipeline in 2020 and beyond, particularly for projects that have yet to be financed.

The pace of local transactions remained somewhat subdued in 2017, a continuation of the trend from recent years, as many property owners in the region have taken a buy/build-and-hold approach. However, two transactions of high-profile trophy assets drove the local transactions market to new heights in terms of price per room and total transaction dollar volume. In June, the Chase Park Plaza was purchased by a publicly-traded real estate investment trust, and in August, the Westin was purchased by a local hotel investment fund; these two transactions alone accounted for approximately $150 million in local transaction volume.

* 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: Less than -10%

St. Louis RevPAR Change

St. Louis RevPAR

Year RevPAR
2007 $51.58
2008 $50.56
2009 $44.37
2010 $46.03
2011 $48.92
2012 $52.17
2013 $55.94
2014 $61.57
2015 $64.71
2016 $66.52
2017 $68.30
2018 $69.80
2019 (f) $70.47
2020 (f) $72.24

For more information, please contact:

Daniel McCoy, MAI
[email protected]
  • +1 970 215-0620 (w)