IRR-Sacramento Mid-Year Viewpoint 2015 Local Market Report - Lodging
Sacramento’s lodging market continues to improve with financial performances exceeding those before the recession. The recovery is now in its fifth year. For the first quarter of 2015, the region experienced increases in both ADR and occupancy.
Downtown Sacramento is the most dominate hotel submarket in the region. In 2016 Sacramento will open its new entertainment and sports arena. The arena will be a multi-use facility that will accommodate various sporting and entertainment events.
Around the new arena are project approvals for up to 1.5 million square feet of additional development. Kimpton Hotels recently announced plans for a 250 room luxury boutique hotel to be located across the street from the arena. The hotel is being developed by the Sacramento Kings and JMA Ventures LLC. This hotel will help accommodate the expected 3.1 million new visitors to the area. Various studies show the arena will generate the demand of over 300,000 guest rooms annually.
Outside of the central area of Sacramento, the lodging market’s best performing areas include the cities of Davis, Folsom and Roseville. On the drawing board is a new Hyatt Place hotel at the Sacramento International Airport, three hotels proposed in West Sacramento, two hotels near Sacramento State, a 250-room and conference facility in Roseville and a 120-room Embassy Suites in Davis.
The region’s lodging market continues to improve with first quarter RevPar up 7.0% from the previous year. Average room rates for first quarter of 2015 reached $113.36, up 6.4 percent over the previous year. For the month of March Sacramento had an average occupancy of 79%, up from 75% a year earlier. The near-term outlook is for smaller gains in ADR and occupancy as the region is close to becoming balanced. New development will continue to be slow due to high construction costs and feasibility issues.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.