As the San Diego economy continues to improve, so too does the local hotel market. The chart below, compiled by Integra Realty Resources – San Diego, shows how San Diego hotels are performing (delineated by full service lodging and limited service lodging).
In the past three years, hotel property values increased at a significant rate (4%+ over a three-year period). While the rate of growth decreased over the last 12 months (and even decreased slightly for limited service lodging), San Diego Hotel values are expected to gradually increase over the next three years.
The main factor driving an increase in hotel property values is the average daily rate, which is forecasted to grow approximately 5% per year. The average lodging rate in San Diego is approximately $176 per room, which is higher than both the regional rate ($151) and the national rate ($141). This coupled with a high occupancy rate (currently 73.9%) makes hotel properties in San Diego an attractive investment.
Summary
The outlook for hotel properties in San Diego is positive. The occupancy rate is expected to grow modestly in the next few years, but the average daily rate of both full service and limited service hotel properties are expected to significantly increase at rates of approximately 5% per year. Revenue Per Available Room (RevPAR) is also expected to grow at a rate in line with the historical average (approximately 3%). Overall, hotel values are anticipated to continue to increase in the San Diego market in the near future.
Sources:
Compiled by Integra Realty Resources – San Diego
