This analysis article analyzes the efficiency of the resort market in Baltimore for the trailing 4 quarters ending in Q3 2024, with a selected give attention to key metrics comparable to occupancy, common charge (ADR), and income per obtainable room (RevPAR). The report highlights the constructive influence of the removing of roughly 2,500 resort rooms from the downtown provide and discusses the potential for improved resort efficiency in 2025. With robust development in ADR and RevPAR regardless of some challenges available in the market, the evaluation suggests a strong outlook for the town’s resort sector as demand continues to strengthen, and resort operators capitalize on lowered provide to push charges and improve occupancy.

Key Market Indicators for Trailing 4 Quarters (Ending Q3 2024)

As of Q3, CBRE has tracked that the downtown Baltimore submarket consisted of 9,143 rooms as proven under:

This complete provide pre-dates the removing of a number of accommodations from the market. Nonetheless, as proven above, the submarket is dominated by Higher-Priced accommodations. The Higher-Priced resort phase noticed its RevPAR development path the Mid and Decrease-Value classes in 2023; nonetheless, the newest year-to-date interval it realized the quickest charge of RevPAR development.  By way of the third quarter of 2024, the RevPAR of the Higher-Priced accommodations elevated by 13.2% over the identical interval in 2023. The submarket is outperforming the broader market as evidenced by the RevPAR penetration at 126% of the larger Baltimore market (as of year-to-date 2024).

Occupancy and Common Each day Price (ADR)

Based on the CBRE Lodge Horizons, Q3 2024, for the trailing 4 quarters ending in Q3 2024, Baltimore’s resort market achieved a median occupancy charge of 65.8%. This stage of occupancy represents a modest however regular restoration from the pandemic’s impacts, signaling a stabilization in demand throughout each leisure and enterprise segments. The preliminary year-end 2024 figures recommend no further occupancy features. Thus whereas occupancy stays under pre-pandemic highs, it marks a wholesome rebound and units the stage for additional development in 2025.

The typical each day charge (ADR) for accommodations in Baltimore throughout this era stood at $132.29. This represents a notable 3.9% improve over the earlier trailing four-quarter interval ending Q3 2023. The development in ADR displays rising client confidence, stronger demand, and a tightening of resort provide, which collectively have enabled operators to command larger costs for rooms. Wanting into 2025, a number of upscale resort homeowners/managers are projecting will increase of 5% to 10% in ADR as a byproduct of the constricted provide.

Income Per Accessible Room (RevPAR)

As a direct results of the rise in each occupancy and ADR, income per obtainable room (RevPAR) noticed a big 6.7% improve, reaching a robust $87.05 in Q3 2024. The RevPAR development underscores the constructive financial circumstances in Baltimore’s hospitality sector and demonstrates that accommodations have efficiently capitalized on larger charges whereas sustaining wholesome occupancy ranges. The expectation for 2025 due to this fact, is a modest improve in occupancy coupled with stable charge development. The mixture of those components may result in a double-digit RevPAR improve for the 12 months.

The Influence of Lodge Room Removing on Provide and Demand

A big issue influencing the efficiency of the resort market in Baltimore has been the removing of roughly 2,500 resort rooms from the downtown provide. This discount in room stock has created an surroundings of constrained provide, which has confirmed to be advantageous for accommodations working within the space. Among the many accommodations which have closed or been repositioned as different makes use of (comparable to homeless shelters or multi-family flats) are the Vacation Inn Downtown, the Sheraton Inside Harbor, the Radisson and the Vacation Inn Inside Harbor. The next desk lists the closed accommodations.

Provide Discount and Price Progress

The removing of those rooms has helped to cut back competitors within the downtown resort market. With fewer rooms obtainable, accommodations within the area have gained the power to boost their charges with out the concern of great demand leakage to competing properties. In consequence, the market has skilled upward stress on ADR, which has been mirrored within the reported 3.9% improve in common charge. Diminished provide, mixed with elevated demand from each vacationers and enterprise vacationers, has positioned Baltimore’s resort sector to appreciate stronger returns on funding.  There are 280 rooms below building inside two tasks downtown. These larger rated accommodations embody the Hilton Backyard Inn Downtown and an unbiased boutique property on the former Brager Gutman Division Retailer.  Thus, whereas the general provide decreased by greater than 20% between 2020 and 2024, the brand new provide marks solely a 3.3% alternative of the misplaced stock.  We don’t foresee further new building given the rising borrowing prices stemming from the growing spreads over US Treasuries over the previous month. Due to this fact, we anticipate that the brand new provide will probably be absorbed into the market and the present accommodations ought to see wholesome RevPAR enhancements over the following two years.

Occupancy Ranges and the Provide-Demand Stability

Whereas occupancy ranges have elevated from the pandemic lows, they haven’t but absolutely recovered to pre-pandemic ranges. The lower within the variety of obtainable resort rooms, nonetheless, has helped to maintain occupancy ranges larger by tightening the competitors. The removing of greater than 2,500 rooms has successfully redistributed demand throughout a smaller pool of obtainable rooms, enabling these remaining accommodations to fill their properties at a better charge of occupancy.

Furthermore, with the continued evolution of the workforce panorama, together with an uptick in company journey and a rise in conferences and occasions as a part of post-pandemic restoration, the lowered provide coupled with robust demand is poised to push occupancy ranges larger, significantly within the coming years.

Outlook for Baltimore’s Lodge Market in 2025

Demand Drivers for 2025

As we stay up for 2025, a number of components are anticipated to contribute to the continued development of the resort market in Baltimore:

1. Enterprise and Company Journey: With companies adopting hybrid and versatile work fashions, there’s a renewed give attention to in-person conferences, conventions, and company occasions. Baltimore’s proximity to main metropolitan areas like Washington, D.C., and its enticing downtown venues make it a primary location for such occasions. This might result in an uptick in company journey and better occupancy for accommodations.
2. Tourism Restoration: Baltimore has seen a resurgence in tourism as vacationers are desperate to discover cultural points of interest, historic websites, and waterfront locations. As journey restrictions proceed to ease, the town’s tourism sector is anticipated to expertise vital development, benefiting accommodations with elevated leisure journey.
3. Conventions and Main Occasions: Baltimore’s strategic place as a hub for conferences and conventions additionally positions its accommodations to learn from the inflow of eventgoers. With the current enlargement of occasion venues and elevated give attention to creating enticing vacation spot experiences, resort demand tied to conventions and large-scale occasions is anticipated to develop.

Based on Go to Baltimore, there are 87 occasions on the calendar for 2025 ranging in attendance from 275 to 75,000 folks. These occasions are projected to generate 71,329 room nights within the downtown Baltimore market.  The info exhibits that for each 5 attendees there’s roughly one room night time generated. Moreover, these occasions will fill 23% of the obtainable rooms within the downtown market over the course of the upcoming 12 months.

4. Lengthy-Time period Provide Constraints: The removing of two,500 resort rooms will possible proceed to exert stress on provide and assist occupancy ranges at current properties. As demand rises in 2025, hoteliers available in the market ought to discover themselves higher positioned to push room charges additional whereas sustaining stable occupancy.

Strategic Alternatives for Lodge Operators

Because the market progresses into 2025, resort operators in Baltimore may have a number of alternatives to capitalize on the evolving panorama:

• Price Optimization: With the lowered provide and rising demand, accommodations ought to proceed to give attention to charge optimization methods, utilizing dynamic pricing fashions to maximise ADR throughout peak demand durations, comparable to conventions, summer season tourism season, and vacation weekends.
• Enhanced Visitor Expertise: Given the aggressive nature of the market, offering an distinctive visitor expertise will probably be essential to sustaining excessive occupancy ranges. Resorts can put money into upgrades and providers that enchantment to each leisure and enterprise vacationers, enhancing the general worth proposition.
• Sustainability and Wellness Traits: As sustainability turns into an more and more vital issue for vacationers, accommodations in Baltimore can leverage environmentally-friendly practices and wellness-focused facilities as key differentiators. Capitalizing on the growing demand for eco-friendly journey choices can appeal to a rising base of aware vacationers.

Conclusion

The Baltimore resort market has proven robust resilience and development within the trailing 4 quarters ending in Q3 2024, with a big uptick in each ADR and RevPAR. The removing of roughly 2,500 resort rooms from the downtown provide has performed a important function in making a extra favorable supply-demand stability, which has enabled operators to push charges and keep stable occupancy ranges. Waiting for 2025, the outlook for the resort market in Baltimore stays constructive, supported by robust demand drivers from enterprise journey, tourism, and occasions. The lowered provide, mixed with a continued restoration in demand, presents vital alternatives for accommodations to additional capitalize on charge will increase and occupancy development, positioning the town’s hospitality sector for continued success within the years forward.

David P. Fuller, MAI, Senior Vice President, is positioned within the Bethesda, MD workplace of CBRE.  He might be reached at david.fuller@cbre.com.