Metropolitan Boston February 2015

Transcription

1 33 Arch Street, 28 th Floor Boston, MA Telephone (617) Fax (617) Metropolitan Boston February 2015 Boston Area Roundup The greater Boston area hotels reported significantly increased operating results for February The 94 hotel operators in the PKF Trends in the Hotel Industry sample for the greater Boston area achieved an average 66.4 percent occupancy at a $ average daily rate (ADR) with a resulting $ revenue per available room (RevPAR). These performance levels represented an occupancy increase of 9.5 percent, a 4.1 percent increase in ADR, and an overall 14.0 percent increase in RevPAR for February 2015 as compared to February For February 2015, all submarkets experienced occupancy increases, with the Route 495 South submarket leading at 21.6 percent. In terms of ADR, all Boston Core submarkets achieved an increase of at least 4.2 percent. Route 495 South was the only submarket that experienced a decrease in ADR, of 0.3 percent specifically. Route 495 North led all submarkets in ADR growth at 6.4 percent, followed closely by the Cambridge submarket at 6.2 percent. Overall, the Downtown and Cambridge submarkets tied for the highest occupancy among all submarkets at 69.6 percent. In February 2015 the Greater Boston area received historic levels of snowfall. According to the National Weather Service, the season was the all-time snowiest season in Boston s history, receiving inches of snow. The majority occurred in the month of February when the city reached 64.8 inches, shattering February s previous records of snowfall. Despite these record levels, Boston area hotels, on average, saw great gains in occupancy and strong average daily rate. Suburban hotels achieved more significant gains in occupancy compared to the Boston Core, as these hotel rooms saw increased demand from snow removers, insurance adjusters, and displaced individuals and families. While many Greater Boston hotels experienced cancellations due to the snow, the overall effect of the snow was net positive, as travelers were stranded in the city in need of rooms, and companies were in need of hotel rooms for snow-related business. Compared to previous Februarys over the last ten years, based on our monthly Trends sample in each respective year, February 2015 performance for the greater Boston area hotels is the highest occupancy since 2007 and the highest ADR and RevPAR since 2008.

2 For year-to-date February 2015, the 94 hotel operators in the PKF Trends in the Hotel Industry sample for the greater Boston area achieved an average 63.3 percent occupancy at a $ ADR with a resulting $99.53 RevPAR. These performance levels represented an occupancy increase of 7.2 percent, a 3.7 percent increase in ADR, and an overall 11.1 percent increase in RevPAR for yearto-date February 2015 as compared to year-to-date February For year-to-date February 2015, under the Location category, the Route 495 South submarket has achieved the most occupancy growth of 13.7 percent, driven by February s 21.6 percent gain. The Route 495 North submarket has led in ADR gain with a 7.3 percent increase, followed by the Back Bay submarket with a 4.9 percent increase. Under the Average Daily Rate category, the hotels in the Under $100 category experienced the largest occupancy gain at 13.1 percent, followed by the Between $100 and $150 category with a 9.8 percent gain. The hotels in the Over $200 ADR category achieved the most ADR growth at 5.5 percent, followed closely by the Between $150 and $200 category at 5.1 percent. Under the Size category, the hotels in the Under 150 Rooms category achieved the most occupancy growth at 11.0 percent. The hotels in the Over 400 Rooms category experienced the most ADR gain at 4.6 percent. Overall, most hotels in the greater Boston area finished February 2015 with significantly increased RevPAR results compared to February In the following is an article summarizing the results of our PKF Hospitality Research s annual survey of meeting planners.

3 Attendance and Expenditures Now Lead Recovery Of Group Demand By Robert Mandelbaum and Gary McDade Group demand continued to grow in 2014, and 2015 will be another strong year. For a fourth straight year, PKF Hospitality Research (PKF-HR), a CBRE Company, has observed an increase in the number of events organized by meeting planners in Not only did a greater percentage of meeting planners report an increase in the number of events planned from 2013 to 2014, but a growing number of event organizers noted increased attendance at each meeting as well. According to the planners surveyed, growth in both the number of meetings and attendance should continue in Each year, PKF-HR asks meeting planners to answer questions about the events they are organizing as part of a survey sponsored by ConventionSouth magazine. In October of 2014 a total 95 meeting planners provided insights regarding their events. Although the meeting planners surveyed are located throughout the U.S., the survey questions were primarily focused on the southeast region of the country. Their experiences during 2014, as well as their expectations for the future, are highlighted in the following paragraphs. Increasing Expenditures While increases in the number of meetings and attendance are great news for hoteliers, even more welcome is the fact the meeting planner budgets appear to be on the rise. Fifty-five percent of the meeting planners reported an increase in meeting expenditures from 2013 to 2014.

4 The primary reason cited for these increased expenditures was the increasing cost to conduct a meeting (64 percent of planners), as opposed to their organization investing in more meetings (20 percent). The greatest increases in expenditures were identified for food and beverage (39 percent), programming (47 percent) and guest rooms (37 percent). Going forward, 71 percent of meeting planners believe it will be more expensive to conduct their meetings in 2015 than it was in Forty 40 percent of planners say providing their attendees with a great meeting experience that doesn t exceed their budget is their biggest challenge. Struggle to Control Costs Unfortunately for the meeting planners, strong lodging industry fundamentals have swung the pendulum of negotiating leverage towards hotel management. PKF-HR forecasts occupancies in excess of 70 percent through 2018 in the chain-scales that most groups desire. Accordingly, luxury, upper-upscale and upscale hotel managers have become more aggressive with regards to group room rates and less willing to offer discounts and concessions for other group meeting services. Only 25 percent of the planners in our survey reported that hoteliers were more willing to concede room rates in 2014 than they were in Hotel managers were not flexible with food and beverage prices either, with only nine percent of planners stating that hoteliers were more willing to make concessions for food and beverages. Conversely, 59 percent of planners reported a greater incidence of concessions for internet access.

5 Fewer Rooms, Higher Rates With high occupancy levels being realized by hotels in many U.S. cities, an increasing number of planners are finding it more difficult to book rooms at their preferred hotels. Twenty-one percent of planners stated that it is more difficult to find available rooms for their attendees in 2015 than it was in 2014, which was nearly double the 11 percent reported in last year s survey. In addition, 51 percent of respondents believe that the majority of hotel room rates are too high. The increased difficulty in finding available, and affordable, hotel rooms has led meeting planners to become more flexible as to the location of their meetings. The percentage of meeting planners that held meetings within first-tier destinations decreased from 50 percent in 2013 to 39 percent in Conversely, the percentage that held meetings at second-tier destinations increased from 39 percent to 49 percent. Meeting planners are also finding the need to book their rooms farther in advance of their events. Twenty-six percent of the 2014 survey participants see their booking windows getting longer, as compared to only 19 percent in last year s survey.

6 Bright Future Meeting planners, in general, continue to have a positive outlook about the future of the meetings industry. Similar to last year s survey, 93 percent of planners expect the health of the meetings industry in the next eighteen months to be as good as, or better, than it is today. For hotel managers, the increased demand for rooms from meeting planners should result in continued high occupancy levels, rising group room rates, and increasing revenues from other meeting services. * * * Robert Mandelbaum and Gary McDade work in the Atlanta office of PKF Hospitality Research, a CBRE company ( Special thanks to Marlane Bundock, Managing Editor of ConventionSouth, for sponsoring the survey.

7 REPORT OF ROOMS BUSINESS BY LOCATION STATISTICS AND TRENDS OF HOTEL-MOTEL BUSINESS BOSTON MONTHLY TRENDS MONTH OF FEBRUARY BACK BAY $ $ % 65.8% 61.6% 6.9% $ $ % DOWNTOWN % 69.6% 65.4% 6.5% % CAMBRIDGE % 69.6% 65.7% 5.9% % Boston Core Average $ $ % 68.7% 64.5% 6.5% $ $ % ROUTE % 67.7% 59.2% 14.4% % ROUTE 495 NORTH % 57.2% 51.2% 11.8% % ROUTE 495 SOUTH % 57.3% 47.1% 21.6% % Boston Suburbs Average $ $ % 62.2% 53.6% 16.0% $63.55 $ % OVERALL AVERAGE $ $ % 66.4% 60.6% 9.5% $ $ % REPORT OF ROOMS BUSINESS BY AVERAGE DAILY RATE OVER $ $ $ % 65.9% 67.5% -2.4% $ $ % $ TO $ % 69.6% 63.8% 9.2% % $ TO $ % 64.4% 57.4% 12.2% % UNDER $ % 62.7% 51.3% 22.3% % OVERALL AVERAGE $ $ % 66.4% 60.6% 9.5% $ $ % REPORT OF ROOMS BUSINESS BY SIZE OF PROPERTY UNDER 150 ROOMS $ $ % 62.4% 53.3% 17.0% $67.78 $ % 150 TO 400 ROOMS % 64.7% 60.2% 7.5% % OVER 400 ROOMS % 71.0% 65.2% 8.9% % OVERALL AVERAGE $ $ % 66.4% 60.6% 9.5% $ $ % Survey includes 94 properties in the Boston area with 19,908 available rooms. 11 properties in Back Bay with 3,095 available rooms, 20 properties in Downtown with 6,807 available rooms, 10 properties in Cambridge with 2,859 available rooms, 25 properties in Route 128 with 3,345 available rooms, 9 properties in Route 495 North with 1,580 available rooms, and 19 properties in Route 495 South with 2,285 available rooms. SOURCE: PKF CONSULTING

8 REPORT OF ROOMS BUSINESS BY LOCATION STATISTICS AND TRENDS OF HOTEL-MOTEL BUSINESS BOSTON MONTHLY TRENDS TWO MONTHS ENDED FEBRUARY BACK BAY $ $ % 63.4% 60.8% 4.2% $ $ % DOWNTOWN % 68.8% 65.0% 5.9% % CAMBRIDGE % 67.6% 62.7% 7.7% % Boston Core Average $ $ % 67.2% 63.5% 5.9% $ $ % ROUTE % 61.2% 55.9% 9.5% % ROUTE 495 NORTH % 51.8% 49.2% 5.2% % ROUTE 495 SOUTH % 52.3% 46.0% 13.7% % Boston Suburbs Average $ $ % 56.4% 51.3% 9.9% $57.63 $ % OVERALL AVERAGE $ $ % 63.3% 59.1% 7.2% $99.53 $ % REPORT OF ROOMS BUSINESS BY AVERAGE DAILY RATE OVER $ $ $ % 65.6% 65.3% 0.6% $ $ % $ TO $ % 67.6% 63.4% 6.6% % $ TO $ % 60.9% 55.5% 9.8% % UNDER $ % 55.1% 48.7% 13.1% % OVERALL AVERAGE $ $ % 63.3% 59.1% 7.2% $99.53 $ % REPORT OF ROOMS BUSINESS BY SIZE OF PROPERTY UNDER 150 ROOMS $ $ % 57.5% 51.8% 11.0% $62.91 $ % 150 TO 400 ROOMS % 61.9% 57.8% 7.0% % OVER 400 ROOMS % 68.6% 64.9% 5.7% % OVERALL AVERAGE $ $ % 63.3% 59.1% 7.2% $99.53 $ % Survey includes 94 properties in the Boston area with 19,908 available rooms. 11 properties in Back Bay with 3,095 available rooms, 20 properties in Downtown with 6,807 available rooms, 10 properties in Cambridge with 2,859 available rooms, 25 properties in Route 128 with 3,345 available rooms, 9 properties in Route 495 North with 1,580 available rooms, and 19 properties in Route 495 South with 2,285 available rooms. SOURCE: PKF CONSULTING

9 Boston Area Market Mix

10 Boston Area Market Mix is compiled and produced by PKF Consulting. Readers are advised that PKF Consulting does not represent the data contained herein to be definitive. Neither should the contents of this publication be construed as a recommendation of policies or actions. Quotation and reproduction of this material are permitted with credit to PKF Consulting.