The Kansas City hotel market has actually rebounded following the effects of the COVID-19pandemic, and high levels of leisure need and the return of convention activity have actually driven the healing. Regardless of increasing building and construction expenses, a variety of hotel advancements are proposed in Kansas City, indicating a positive outlook for the marketplace.
The Kansas City hotel market has actually rebounded following the effects of the COVID-19 pandemic, and high levels of leisure need and the return of convention activity have actually driven the healing. In spite of increasing building expenses, a variety of hotel advancements are proposed in Kansas City, signifying a positive outlook for the marketplace.
Events and Developments in Kansas City
A variety of significant occasions and advancement tasks throughout Kansas City ought to increase hotel need and reinforce rates power in the coming years, as detailed listed below.
- In March 2019, building started on a $1.5-billion job to transform the Kansas City International Airport to a single-terminal center. The brand-new 40- gate terminal opened in February 2023, together with a surrounding 6,200- area parking lot. The old terminals will be destroyed, leaving space for prospective future growth of the brand-new center.
- The NFL Draft happened in front of Union Station in April2023 This is the very first time that Kansas City has actually hosted the occasion, and it was anticipated to draw numerous countless visitors, likely the biggest occasion in Kansas City’s history.
- In 2022, Meta Platforms Inc. started building on a one-million-square-foot information center in northern Kansas City, which will cost over $800 million and is anticipated to be functional in 2024.
- Hunt Midwest got 3,300 acres of land northeast of the airport and prepares to start building and construction on the KCI 29 Logistics Park in2023 The task consists of the building and construction of 27 Class A commercial structures, which will amount to more than 20 million square feet of production and storage facility centers.
- On the western edge of the KC city location in De Soto, Kansas, Panasonic has actually begun on a $4-billion electric-vehicle battery plant. The task is anticipated to develop 20,000 tasks and will start mass production of lithium-ion batteries in March 2025.
- Kansas City will be among the host cities for the 2026 FIFA World Cup; choose matches will be dipped into GEHA Field at Arrowhead Stadium. City authorities are approximating that the occasion will create approximately $700 million in favorable financial effect from visitor costs, mainly benefiting the hospitality, dining establishment, and show business.
Convention Center Demand Outlook
In an effort to bring in big convention groups to the city, public authorities looked for the advancement of a brand-new flagship hotel for the Kansas City Convention Center prior to the COVID-19 pandemic, and the 800- space Loews Kansas City was finished in2020 The pandemic postponed the awaited advantages of the brand-new hotel, such as more conventions and participants, the number of occasions and space nights created by the convention center rebounded quickly, reaching pre-pandemic levels in 2022.
The outlook for activity at the convention center in 2023 is reasonably strong, as the variety of space nights on the books currently surpasses those taped for2022 A considerable number of scheduled and tentative space nights are in the pipeline for 2024 and beyond.
Convention Activity Forecast since March 15, 2023
Source: Visit KC
Supply Growth
The Kansas City market experienced an increase of hotel supply over the previous years, mainly credited to the revitalization of downtown and the continuing advancement of Johnson County, Kansas. Designers had a strong reward to construct offered the fairly low-cost financial obligation and just moderate boosts in building expenses prior to the COVID-19 pandemic.
However, these market conditions have actually altered given that2020 The pandemic significantly slowed the hotel building and construction pipeline, and the subsequent boosts in advancement and capital expenses have actually restricted the variety of brand-new hotel tasks. In spite of these headwinds, Kansas City continues to bring in advancement interest due to the positive outlook for this market.
The following charts reveal the variety of hotels and spaces that have actually opened in the Kansas City city location considering that 2017.
Historical Supply Growth in Kansas City
Source: STR
Furthermore, the breakdown of brand-new hotel tasks we are presently tracking is shown listed below.
hotel Rooms in Development within the Kansas City Metro Area since Q2 2023
Source: HVS
Historical Performance and Outlook
Occupancy was adversely impacted by the intro of brand-new supply prior to the COVID-19 pandemic and continued to decrease in 2020 as the pandemic impacted the marketplace. Ever since, increases in leisure travel, the return of significant occasions, and a high volume of building activity have actually supported the healing of hotel need levels in Kansas City. Since year-end 2022, tenancy stayed rather listed below pre-pandemic levels as brand-new supply had actually not been totally taken in by the market; nevertheless, the continuous return of lots of staff members to workplaces, a boost in group events, and a number of scheduled significant occasions are anticipated to drive sufficient need to outmatch brand-new supply and push tenancy back to a typical level.
Average rates for this market are expected to continue the strong development pattern that was understood in 2021 and 2022 through the very first half of 2023 offered the variety of unique occasions slated for the marketplace. Afterwards, the rate of ADR development is anticipated to moderate rather, especially throughout 2024, which is anticipated to have a weaker convention calendar. Kansas City will host a series of World Cup matches in 2026, which ought to favorably impact prices power that year.
Conclusion
A strong healing of need because the COVID-19 pandemic, numerous big advancements, and a variety of scheduled occasions all add to a positive projection of need in the Kansas City market. Provided these elements, hotel advancement interest in Kansas City is strong, regardless of increasing building expenses.
For comprehensive projections or to ask about a particular hotel job, contact Benjamin Giebler or Dan McCoy of the HVS St. Louis workplace
About Daniel P. McCoy
As the HVS Practice Leader for the Midwest, Dan McCoy, MAI, manages the company’s 7 workplaces in this area. A Senior Managing Director at HVS, Dan is an acknowledged thought-leader, collective consultant, and important resource for the Midwest’s lodging market. He integrates a deep understanding of local hotel markets with strong analytical thinking to offer a wide array of customers with updated hospitality intelligence and custom-made services. Dan is a Designated Member of the Appraisal Institute (MAI) and a qualified basic appraiser. Contact Dan at 1 (970) 215-0620 or dmccoy@hvs.com
About Benjamin Giebler
Benjamin Giebler is a Project Manager with the St. Louis HVS consulting and appraisal practice. Benjamin acquired his Missouri Real Estate License in 2018 and Kansas Real Estate License in 2020 and worked as a business property representative in Kansas City. His experience in the hospitality market consists of working as a valet and bell manager at the Marriott Downtown Kansas City, and he belonged to the opening group at hotel Kansas City as a front workplace and bell manager. He finished from the University of Missouri-Kansas City with a Bachelor of Science in Business Administration with a focus in Real Estate and Finance. In addition, he made a certificate in Hospitality Real Estate Investments and Asset Management from Cornell University. Contact Benjamin at (816) 589-0922 or bgiebler@hvs.com
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