Pittsburgh’s hotel market recently experienced economic boom, fueled in part by the energy industry. For years, the steel industry led the charge, but in recent years the shift has been towards the exploration of Marcellus Shale and natural gas deposits. Downtown received nearly $6 billion in investment, furthering hotel development especially within the limited-service area. The story takes on a different shape more recently, with increased supply and very little demand. According to STR Global, hotel occupancy is down 9.6 percent YOY, to 60.3 percent.
The Pittsburgh Opportunity
About 4 million people visit Pittsburgh annually, representing a spend of $5.9 billion annually across Allegheny County. Harper’s Bazaar recently named the city No. 4 “best places to travel in 2017.” The city is driven by education, as it is home to major colleges and universities such as Carnegie Mellon, Duquesne, and Pitt. Other demand generators include finance, technology, healthcare and a handful of Fortune 500 companies, such as WESCO International and Allegheny Technologies. With 252 hotels and 28,000 rooms, supply is up 6.9 percent and demand is down 3.3 percent.
Current projects and numbers:
- There are 52 hotels with 5,250 rooms in the pipeline
- 11 hotels with over 1,100 rooms are currently underway
- $5.5 billion has been invested in the downtown area for redevelopment since 2006
- A 155-room Even Hotel is expected to open in 2017
- Concord Hospitality has plans to open Pittsburgh’s first AC Hotel by Marriott in the Strip District in Downtown Pittsburgh
Past numbers and transactions that speak to the current opportunity include:
- Eleven hotels in Pittsburgh sold for more than $150,000 per key
- On a per-room basis, the largest sale was the Residence Inn by Marriott Pittsburgh North Shore for about $44 million
- Valuation is expected to grow by 2 percent this year and by 12 percent over the next four years
Because, you will be armed with ideas, solutions and actionable insights that will make an immediate impact on your property. Whether you focus on infrastructure investment opportunities or strategies that force you to “think and act locally” in targeting specific growth sectors, you can take steps that positively influence your ROI.
"While not traditionally considered a tourism magnet, Pittsburgh's incredibly diversified sources of investment make it an extremely attractive location for both industry newcomers and veterans. It's a particularly exciting place for the Hotel ROI Conference because the city's market potential is now only very partially realized." - Jagruti Panwala, AAHOA Secretary