United States -  Wilmington

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The Wilmington area benefits from a diverse economic base, including anchors in the pharmaceutical, legal, high-tech, healthcare, finance, insurance, and manufacturing fields. Christiana Care Health System is based in Wilmington and is one of the largest healthcare providers in the Mid-Atlantic region. Financial institutions with buildings in Downtown Wilmington include Capital One 360, Barclays Bank, M&T Bank, Wilmington Savings Fund Society, JPMorgan Chase, Bank of America, and HSBC Bank. In the summer of 2015, JPMorgan Chase opened its new Global Technology Center along U.S. Route 202 that created an additional 1,800 jobs, with 300 more jobs to be added in the region in the coming years. Moreover, nearby Newark continues to expand, particularly with the redevelopment of the former Chrysler manufacturing plant. City officials, in conjunction with the University of Delaware, have transformed the former automotive manufacturing facility into a state-of-the-art biosciences engineering complex referred to as the STAR Campus. A 120,000-square-foot health-sciences building, known as STAR Tower, was completed in October 2018 with leasing underway. Construction is ongoing for the Newark Regional Transportation Center, with an expected completion of August 2019. A $150-million, 300,000-square-foot global research headquarters for The Chemours Company is underway on the STAR campus, to be completed in December 2020. The University of Delaware announced plans to construct a $156-million Biopharmaceutical Innovation Building on the STAR Campus, which will reportedly add 1,500 jobs over the next decade. Upon completion, the STAR Campus will feature two million square feet of retail space, residential housing, hospitality uses, conference space, and parking.

The Wilmington area attracts a strong amount of demand associated with legal and government entities, a steady demand source for area hotels. The recent legislative changes regarding patent lawsuits, which require corporate lawyers and employees to travel to Wilmington, have helped drive room-night demand to the market. Moreover, continued growth and revitalization efforts along the Wilmington riverfront and the sports complex that is proposed in Wilmington should contribute to further demand growth in the leisure segment in the near term. Given the anticipated continued strengthening of the banking and legal sectors driven by the JPMorgan Chase expansion, the recent Supreme Court ruling related to patents, and increased visitation stemming from the revitalization of the Wilmington Riverfront, we expect moderate demand growth during the next several years, although occupancy is forecast to remain generally stable while the greater market absorbs the recent and anticipated new supply.

While only two properties have entered the Downtown Wilmington area within the last several years (the Westin Wilmington Riverfront and Residence Inn by Marriott), the 120-unit Homewood Suites by Hilton and 122-unit Hyatt Place are under construction at the riverfront, slated for September 2019 openings. The addition of new supply and upgrading of existing supply should support moderate RevPAR growth in the coming years.

Given the limited number of hotels in the market, only three hotel transactions occurred in the Wilmington/Newark market in 2018; two of the transactions were in Downtown Wilmington and involved the Sheraton Suites and the Residence Inn by Marriott. With the entrance of new supply in the market, hotel values are likely to be tempered by marginal RevPAR growth expectations when compared to prior years.

* 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.

The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide. Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the hospitality investment market.

In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.

Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide insights on the likely trajectory of decline and recovery for hotel values.

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For more information, please contact:

Jerod Byrd, MAI
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