Kinzer Hospitality Expert Jena Thornton breaks down Seattle hotel trends to watch in 2020 and key figures from 2019.
2019 Key Statistics
|$775,000||Highest price per key sale – The Mark|
|81% occupancy||Luxury class leads occupancy rates|
|11.6%||Supply increase in downtown Seattle|
|1.8% RevPar||Everett had the only positive RevPar in the region|
The Seattle hotel market has been hit hard this past year and unfortunately the bleeding will continue in 2020.
The primary reason for overall decline in revenue per available room (RevPAR) is due to supply increases. However, as an industry, operators seem to repeat historical mistakes as new supply gets absorbed by dropping rates to drive occupied rooms, without great regard to the cost of acquisition for that customer.
While operators are motivated to drive revenue, they are more incentivized to increase market share, a metric often tied to an owner’s ability to terminate an operator.
This is a standard provision in many management agreements. This dynamic creates misalignment between operators and owners and hence more amplified decline in Net Operating Income (“NOI”), ultimately negatively impacting asset value.
In spite of growing demand (albeit at a slower pace than supply), almost all categories experienced rate erosion; Seattle North/Everett submarket was the one outlier and reflected 1.8% RevPAR growth via increases in both
occupancy and rate.
With the exceptions of the luxury segment, the University/Lynnwood submarket and the Kent/Renton submarket, all other categories reflected growth in total room revenue year-over-year. The luxury segment and
Kent/Renton submarket were the only categories that saw a decline in total occupied rooms as compared to 2018.