Historic Hotels Achieve a Substantial Premium in ADR and REVPAR over Comparable Contemporary Hotels
PKF-HR Issues U.S. Lodging Forecast At Historic Hotels Of America Annual Conference
The outlook for the U.S. lodging industry, particularly historic hotels, continues to be extremely strong, according to PKF Hospitality Research (PKF- HR is a CBRE company).
For the second consecutive year, PKF Hospitality Research, a CBRE Company (PKF-HR) presented a Historic Hotels of America – PKF-HR five-year forecast at the Historic Hotels of America annual conference. PKF-HR relies on historical hotel performance data from STR, Inc., and economic forecasts from CBRE Economic Advisors, to prepare its lodging forecasts.
Key points presented by Mark Eble, managing director and Midwest practice leader for PKFC- USA | CBRE Hotels to more than 200 Historic Hotels of America annual conference attendees at French Lick Resort on Thursday, October 8 included:
Hotels that are marketed as historic hotels achieve a substantial premium in ADR and REVPAR over comparable contemporary hotels. Per STR, Inc., the aggregate RevPAR for historic hotels that are members of Historic Hotels of America continues to fall between national averages for all upper-upscale and all luxury hotels in the U.S.
Over the next five years, RevPAR for historic hotels is expected to grow at a compound average annual rate of 4.2 percent, tracking closely with the nation’s upper upscale hotels at 3.9 percent and 4.5 percent for luxury hotels. Most of the RevPAR growth is expected to stem from increases in ADR.
Annual occupancy levels for properties that are members of Historic Hotels of America remains 8 to 10 percentage points above the national average occupancy level through 2019.
For the full year 2014, historic hotels (including those that are not members of Historic Hotels of America) had an average ADR of $262.27, 17.7 percent more than the $222.84 ADR for contemporary hotels. (See chart below)
Historic hotels have recovered fully from the 2007 down-turn while contemporary hotels are still lagging in recovery.
“The data strongly supports the idea that many consumers favor and will pay more for the unique hotel experience historic properties can offer,” Eble said.
Independent research conducted by Bradford Hudson, a marketing professor at Boston College, and presented at the Historic Hotels of America conference reaches similar conclusions.
“Academic research conducted across several different industries suggests that brand heritage supports premium pricing,” said Hudson. “For the hotel industry specifically, preliminary studies indicate that historic hotels can achieve a significant advantage in ADR and REVPAR versus contemporary hotels that are directly comparable in condition and operating characteristics. The key variable seems to be the degree to which the older hotel emphasizes and celebrates its history.”
“Historic Hotels of America helps the consumer differentiate the authentic historic hotel from other hotels,” said Lawrence Horwitz, Executive Director, Historic Hotels of America and Historic Hotels Worldwide “Hotels participating in Historic Hotels of America realize a competitive advantage as well as a substantial premium with their rates, occupancy and RevPAR.”
ABOUT PKF CONSULTING, USA, A CBRE COMPANY
PKF Consulting, USA (www.pkfc.com), a CBRE Company, is an advisory and real estate firm specializing in the hospitality industry. PKF Hospitality Research is the research affiliate of PKFC. The firm has offices in New York, Boston, Indianapolis, Nashville, Chicago, Philadelphia, Washington DC, Atlanta, Jacksonville, Tampa/Orlando, Houston, Dallas, Los Angeles, Bozeman, Seattle, and San Francisco.