Chicago Skyline (Max Bender Photo/Unsplash.com)
CHICAGO, IL—Chicago is outpacing the national averages for growth in hotel performance, according to CBRE Hotels Americas Research.
“By year-end 2018, Chicago hotels are forecast to see a RevPAR increase of 4.1%,” says Mark Eble, managing director and Chicago practice leader for CBRE Hotels Advisory. (RevPAR is “revenue per available room.”) “This is the result of an estimated increase in occupancy of 1.0% and a 3.1% gain in average daily room rates (ADR). The 4.1% advance in Chicago RevPAR is better than the national projection of a 2.8% increase.”
Leading the way in 2018 RevPAR growth is the upper-priced segment of Chicago. The properties in this category are forecast to attain a 3.4% gain in ADR and see a 1.0% increase in occupancy, resulting in a 4.5% RevPAR increase. Lower priced hotels are projected to experience an ADR growth rate of 1.5%, along with a 0.8% gain in occupancy, resulting in a 2.4% RevPAR increase.
Looking towards 2019, Chicago RevPAR is expected to grow 1.8%. This is less than the rate of growth in 2018. Prospects for RevPAR growth in the upper-priced segment (positive 1.8%) are better than in the lower-priced segment (positive 1.6%). Chicago market occupancy levels are expected to range from 67.9% to 69.1% during the 5-year forecast period.
CBRE is forecasting the nation's hotels generally will enjoy a 10th consecutive year of growth in 2019. According to the December 2018 edition of Hotel Horizons, US hotel occupancy will rise to 66.2% next year, a fifth straight record level. The growth in occupancy is primarily the result of a projected 2.1% increase in demand, more than enough to offset an estimated net increase in supply of 1.9% for the year.
“It all starts with the demand for lodging accommodations. Without leisure, corporate and group travelers on the road seeking hotel rooms, there is no need to worry about all the other performance metrics,” says R. Mark Woodworth, senior managing director of CBRE Hotels Americas Research. “From 1988 through 2017, the average annual gain in accommodated room nights in the U.S. was 2%. For 2018 and 2019, we believe demand growth will exceed this long-run average.”
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Steve Lubetkin
Steve Lubetkin is the New Jersey and Philadelphia editor for GlobeSt.com. He is currently filling in covering Chicago and Midwest markets until a new permanent editor is named. He previously filled in covering Atlanta. Steve’s journalism background includes print and broadcast reporting for NJ news organizations. His audio and video work for GlobeSt.com has been honored by the Garden State Journalists Association, and he has also been recognized for video by the New Jersey Chapter of the Society of Professional Journalists. He has produced audio podcasts on CRE topics for the NAR Commercial Division and the CCIM Institute. Steve has also served (from August 2017 to March 2018) as national broadcast news correspondent for CEOReport.com, a news website focused on practical advice for senior executives in small- and medium-sized companies. Steve also reports on-camera and covers conferences for NJSpotlight.com, a public policy news coverage website focused on New Jersey government and industry; and for clients of StateBroadcastNews.com, a division of The Lubetkin Media Companies LLC. Steve has been the computer columnist for the Jewish Community Voice of Southern New Jersey, since 1996. Steve is co-author, with Toronto-based podcasting pioneer Donna Papacosta, of the book, The Business of Podcasting: How to Take Your Podcasting Passion from the Personal to the Professional. You can email Steve at [email protected].
