This analysis article analyzes the efficiency of the lodge market in Baltimore for the trailing 4 quarters ending in Q3 2024, with a particular concentrate on key metrics reminiscent of occupancy, common charge (ADR), and income per accessible room (RevPAR). The report highlights the constructive influence of the elimination of roughly 2,500 lodge rooms from the downtown provide and discusses the potential for improved lodge efficiency in 2025. With sturdy progress in ADR and RevPAR regardless of some challenges available in the market, the evaluation suggests a strong outlook for town’s lodge sector as demand continues to strengthen, and lodge operators capitalize on lowered provide to push charges and enhance 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 elimination of a number of inns from the market. Nonetheless, as proven above, the submarket is dominated by Higher-Priced inns. The Higher-Priced lodge section noticed its RevPAR progress path the Mid and Decrease-Worth classes in 2023; nevertheless, the newest year-to-date interval it realized the quickest charge of RevPAR progress. By means of the third quarter of 2024, the RevPAR of the Higher-Priced inns 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 Day by day Fee (ADR)
In line with the CBRE Lodge Horizons, Q3 2024, for the trailing 4 quarters ending in Q3 2024, Baltimore’s lodge 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 counsel no extra occupancy positive aspects. Thus whereas occupancy stays under pre-pandemic highs, it marks a wholesome rebound and units the stage for additional progress in 2025.
The typical every day charge (ADR) for inns in Baltimore throughout this era stood at $132.29. This represents a notable 3.9% enhance over the earlier trailing four-quarter interval ending Q3 2023. The development in ADR displays rising client confidence, stronger demand, and a tightening of lodge provide, which collectively have enabled operators to command larger costs for rooms. Trying into 2025, a number of upscale lodge house owners/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 accessible room (RevPAR) noticed a big 6.7% enhance, reaching a powerful $87.05 in Q3 2024. The RevPAR progress underscores the constructive financial situations in Baltimore’s hospitality sector and demonstrates that inns have efficiently capitalized on larger charges whereas sustaining wholesome occupancy ranges. The expectation for 2025 subsequently, is a modest enhance in occupancy coupled with strong charge progress. The mixture of those components may result in a double-digit RevPAR enhance for the yr.
The Influence of Lodge Room Removing on Provide and Demand
A major issue influencing the efficiency of the lodge market in Baltimore has been the elimination of roughly 2,500 lodge rooms from the downtown provide. This discount in room stock has created an setting of constrained provide, which has confirmed to be advantageous for inns working within the space. Among the many inns which have closed or been repositioned as various makes use of (reminiscent of homeless shelters or multi-family residences) are the Vacation Inn Downtown, the Sheraton Interior Harbor, the Radisson and the Vacation Inn Interior Harbor. The next desk lists the closed inns.
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Closed Accommodations in Baltimore, MD
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Lodge Identify
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Variety of Rooms
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12 months Closed
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New/Proposed Use
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Sheraton Interior Harbor
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338
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2022
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For Sale
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Radisson Interior Harbor
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323
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2022
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Vivo Dwelling – Residences
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Vacation Inn Interior Harbor
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362
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2022
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Vivo Dwelling – Residences
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Vacation Inn Downtown
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365
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2020
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Residences
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Embassy Suites*
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330
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2020
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Inexpensive Housing
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Vacation Inn Categorical Stadium
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123
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2023
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Homeless Shelter
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Lodge RL
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130
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2023
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Redwood Place – Residences
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House-2-Suites
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95
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2024
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Homeless Shelter
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Sleep Inn
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62
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2024
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Inexpensive Housing
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Vacation Inn Categorical Downtown
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68
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2024
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Inexpensive Housing
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Fairfield Inn & Suites
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155
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2024
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Homeless Shelter
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Delta Baltimore North
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148
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2024
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Residences
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Operating Complete
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2499
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* Offered 1/8/2025 for $23,333 per key
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Supply: Numerous compiled by CBRE Accommodations
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Provide Discount and Fee Development
The elimination of those rooms has helped to cut back competitors within the downtown lodge market. With fewer rooms accessible, inns within the area have gained the power to lift their charges with out the concern of serious demand leakage to competing properties. In consequence, the market has skilled upward strain on ADR, which has been mirrored within the reported 3.9% enhance in common charge. Diminished provide, mixed with elevated demand from each vacationers and enterprise vacationers, has positioned Baltimore’s lodge sector to comprehend stronger returns on funding. There are 280 rooms below development inside two initiatives downtown. These larger rated inns 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 extra new development given the rising borrowing prices stemming from the growing spreads over US Treasuries over the previous month. Subsequently, we anticipate that the brand new provide shall be absorbed into the market and the prevailing inns ought to see wholesome RevPAR enhancements over the subsequent two years.
Occupancy Ranges and the Provide-Demand Stability
Whereas occupancy ranges have elevated from the pandemic lows, they haven’t but totally recovered to pre-pandemic ranges. The lower within the variety of accessible lodge rooms, nevertheless, has helped to maintain occupancy ranges larger by tightening the competitors. The elimination of greater than 2,500 rooms has successfully redistributed demand throughout a smaller pool of obtainable rooms, enabling these remaining inns to fill their properties at the next 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 sturdy demand is poised to push occupancy ranges larger, notably 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 progress of the lodge market in Baltimore:
- Enterprise and Company Journey: With companies adopting hybrid and versatile work fashions, there’s a renewed concentrate on 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 major location for such occasions. This might result in an uptick in company journey and better occupancy for inns.
- Tourism Restoration: Baltimore has seen a resurgence in tourism as vacationers are wanting to discover cultural points of interest, historic websites, and waterfront locations. As journey restrictions proceed to ease, town’s tourism sector is anticipated to expertise vital progress, benefiting inns with elevated leisure journey.
- Conventions and Main Occasions: Baltimore’s strategic place as a hub for conferences and conventions additionally positions its inns to learn from the inflow of eventgoers. With the latest growth of occasion venues and elevated concentrate on creating enticing vacation spot experiences, lodge demand tied to conventions and large-scale occasions is anticipated to develop.
In line with Go to Baltimore, there are 87 occasions on the calendar for 2025 ranging in attendance from 275 to 75,000 individuals. These occasions are projected to generate 71,329 room nights within the downtown Baltimore market. The info reveals that for each 5 attendees there’s roughly one room night time generated. Moreover, these occasions will fill 23% of the accessible rooms within the downtown market over the course of the upcoming yr.
- Lengthy-Time period Provide Constraints: The elimination of two,500 lodge rooms will probably proceed to exert strain 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 strong occupancy.
Strategic Alternatives for Lodge Operators
Because the market progresses into 2025, lodge operators in Baltimore may have a number of alternatives to capitalize on the evolving panorama:
- Fee Optimization: With the lowered provide and rising demand, inns ought to proceed to concentrate on charge optimization methods, utilizing dynamic pricing fashions to maximise ADR throughout peak demand intervals, reminiscent of conventions, summer season tourism season, and vacation weekends.
- Enhanced Visitor Expertise: Given the aggressive nature of the market, offering an distinctive visitor expertise shall be essential to sustaining excessive occupancy ranges. Accommodations can spend money on upgrades and companies that attraction to each leisure and enterprise vacationers, enhancing the general worth proposition.
- Sustainability and Wellness Tendencies: As sustainability turns into an more and more vital issue for vacationers, inns 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 lodge market has proven sturdy resilience and progress within the trailing 4 quarters ending in Q3 2024, with a big uptick in each ADR and RevPAR. The elimination of roughly 2,500 lodge rooms from the downtown provide has performed a important function in making a extra favorable supply-demand steadiness, which has enabled operators to push charges and preserve strong occupancy ranges. Waiting for 2025, the outlook for the lodge market in Baltimore stays constructive, supported by sturdy demand drivers from enterprise journey, tourism, and occasions. The lowered provide, mixed with a continued restoration in demand, presents vital alternatives for inns to additional capitalize on charge will increase and occupancy progress, positioning 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.