HVS Market Report – Greater Houston Lodging Market: On the Mend – By Bunmi Oyinloye

Houston skyline
Greater Houston Lodging Market: On the Mend

Hotels in the Houston location dealt with a substantial RevPAR decrease in2020, and at the start of 2023, the marketplace is once again competing with unpredictability surrounding increasing inflation, danger of a prospective financial downturn, and volatility in its biggest market. In this post, we have a look at Greater Houston lodging healing so far and the outlook for the future.


The oil and gas market stays Greater Houston’s main financial anchor, specifying the marketplace’s organization cycle and the location’s financial development course. The hotel market started to support in 2019 list below decreases in lodging need as an outcome of the volatility of the oil and gas markets, and Greater Houston experienced a high decrease in lodging need in 2020 provided the beginning of the COVID-19 pandemic. Current information show a constant go back to pre-pandemic levels, supported by increasing service movings, continuous financial advancement, and the marketplace’s credibility as an international center for energy, healthcare, and aerospace.

The historic efficiency and our projection of Greater Houston’s accommodations metrics are revealed listed below.

Houston 2023–2025 hotel Forecast

Houston 2023–2025 Hotel Forecast

Source: STR (Historical Years), HVS (Forecast)

The market’s RevPAR is on rate for a complete healing to 2019 levels in 2023 as inflation continues to boost typical everyday rate (ADR) development. Tenancy is anticipated to recuperate in 2024, hindered by supply boosts. Business need and group service have actually traditionally been 2 of the greatest sectors in the Houston market as an outcome of the strength of the oil and gas, aerospace and air travel, and medical markets, as well as the existence of the Port of Houston and the George R. Brown Convention. Leisure need supported the marketplace’s healing through the very first half of 2021, while business and group need slowly enhanced in 2022 as business resumed travel.

Of the 7 submarkets highlighted below, the Medical Center submarket shows the fastest RevPAR enhancement, having actually recuperated to 97% of its 2019 RevPAR levels. The submarket took advantage of the fast rebound of leisure and business/healthcare travel. The Galleria submarket was 13% listed below 2019 levels since year-end 2022, prevented by the slower return of global organization travel.

RevPAR Performance by Submarket–2022 vs. 2019

Houston Hotel RevPAR Performance by Submarket - 2022 vs. 2019

Source: STR

George R. Brown Convention Center

According to Houston First, fulfilling need was approximately 80% of 2019 levels by year-end 2022, strengthened by the return of bigger occasions and citywide conferences and conventions, such as the Offshore Technology Conference and occasions for the American Association of Physicists in Medicine and Walmart Inc.. Houston will host the NCAA Final Four in March 2023, which will improve need within this section. Group need is anticipated to continue to grow over the next couple of years, most likely exceeding 2019 levels by 2024.

Airline Travel Trends

Air travel healing is trending comparable to the lodging need rebound, as revealed on the chart below. Following record-breaking guest traffic numbers at both Houston-area airports in 2019, flight decreased considerably in2020 A healing of guest traffic has actually started at both airports, and traffic for 2022 reached around 90% of 2019 levels. Development in 2022 is credited to the return of company and worldwide travel. The continuous $1.36- billion IAH Terminal Redevelopment Program at George Bush Intercontinental Airport and the $250- million terminal growth and upgrade at William P. Hobby Airport are anticipated to accommodate traveler traffic development and solve difficulties with luggage handling, guest service, and street traffic at each center.

Houston Airport Passenger Traffic (in Millions)

Houston Airport Passenger Traffic (in Millions)

Sources: Respective Airport Authorities

Economic Development Projects

Boasting 24 Fortune 500 head office in the city location following the moving of NRG Energy in 2021 and Hewlett Packard Enterprise (HPE) head office in 2022, Houston continues to draw in brand-new organizations with its schedule of skill, beneficial organization and regulative environment, and tax policies. The variety of Fortune 500 head office will increase to 25 when ExxonMobil finishes its moving in2023 In 2022, Archaea Energy, CDI Engineering Solutions, Dark Pulse, and Noodoe revealed strategies to transfer their head office to the location.

Texas Medical Center’s TMC Helix Park, a 37- acre biomedical research study school, is under building and construction. The Baylor College of Medicine is prepared to inhabit among the research study structures once the park is total in2023 Levit Green, a 53- acre mixed-use life-sciences district, is under building and construction next to the TMC. These health care advancements will enhance Houston’s position as the world’s biggest medical center.

Furthermore, Houston’s aerospace and air travel market is broadening, with Axiom Space, Collins Aerospace, and Intuitive Machines set up to open brand-new centers at Ellington Field and produce brand-new tasks by 2024.

New Supply

New supply is anticipated to restrict general tenancy development in the near term, as numerous hotel jobs that were postponed by the start of the pandemic have actually just recently been finished or are nearing conclusion.

In June 2022, the Holiday Inn Express & & Suites opened in Downtown Houston, and approximately 1,600 brand-new guestrooms are prepared to be contributed to the marketplace in2023 Noteworthy jobs under building and construction and anticipated to open in 2023 consist of the Moxy Houston Downtown, Staybridge Suites Cypress Crossing, dual-branded Hyatt Place and Hyatt House Texas Medical District, and Thompson hotel at The Allen.

Notable advancements proposed for the marketplace consist of the hotel Saint Augustine Montrose, Great Wolf Lodge Webster, W Houston Downtown, and dual-branded Home2 Suites and Tru by Hilton Houston Downtown.

hotel Transactions

Despite depressed RevPAR levels, our study of hotel sales in the market location in the previous twelve months shows 19 multi-asset portfolio deals valued at an overall of over $186 million, with a typical cost per secret of $85,000 There were 39 individual-asset deals valued at more than $353 million overall. These offers consisted of around 4,700 hotel spaces with a typical cost per secret of $78,000 In contrast, 54 private possession sales amounting to 6,200 guestrooms were reported in 2021, valued at an overall of $460 million and $69,000 per space.

The 2 most considerable deals in the market in 2022 were the Air Conditioning hotel by Marriott Houston Downtown, which opened in 2019 and was offered as part of a 23- residential or commercial property portfolio, and the Aloft Houston Downtown, which opened in 2016.

2022 hotel Transactions by Product Tier

Houston 2022 Hotel Transactions by Product Tier

Source: HVS

In 2021 and the very first half of 2022, purchasers aspired to profit from the market’s healing and the accessibility of financial obligation; nevertheless, the interest has actually been moistened by inflationary pressures and rate of interest walkings. Limited-service and extended-stay hotels continue to gather the greatest level of interest, as these homes normally bring lower danger than full-service hotels.


We are positive that Greater Houston will continue this upward course to healing. The volatility of oil and gas costs, as well as the continuous increase in inflation and interest rates, are prospective dangers to the market’s near-term development. We continue to enjoy the aspects impacting accommodations in the market location, and our routine consulting tasks in the location permit us to stay educated about the condition of the marketplace.

For more info, contact Bunmi Oyinloye or Shannon Sampson of the HVS Houston workplace.

About Caroline Dioso

Bunmi Adeboye, a Director with HVS Houston, carries out appraisals and expediency research studies for hotels throughout Texas and the Gulf Coast area. Bunmi previously operated in accounting and visitor service functions at the Sheraton Dallas North hotel and as a Revenue Specialist for Hilton Worldwide, examining the efficiency of Hilton-branded residential or commercial properties and carrying out techniques to increase space nights and profits. Bunmi made a master’s degree in Hospitality Management, concentrating on Finance, from the University of Houston’s Conrad N. Hilton College of hotel and Restaurant Management. Contact Bunmi at 1 (504) 250-0891 or badeboye@hvs.com


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