Moreover, there's nothing really firmly in the pipeline save for the 329-room tower addition to the Downtown Hilton and no planned projects reporting a firm construction date, says Dundon. "This all bodes will for a recovery of the local hotel industry to parallel the local economic recovery without the dampening affect of supply additions," writes Dundon.

A recent Legg Mason Walker report predicting positive RevPar growth in the fourth quarter of 2002 and up to 3% growth in 2003, states Dundon. That rate is nearly two percentage points behind what Pricewaterhouse Coopers is predicting for the hotel market nationwide, but Portland lagged the rest of the nation going into the recession. Backing all that up is a Goldman Sachs report this month predicting that lodging stocks are at the beginning of a multi-year out performance and will produce better than expected earnings for the first three months of 2002.

The positive expectations should also increase investment activity, says Dundon, as investors perceive the market has bottomed out and angle to get in on the beginning of an expansion phase. "While closings of transactions have been slow the past six months, market activity has increased with more owners willing to consider selling instead of waiting out the market," he says. "In addition, there are now more active buyers in the market…"

In his spring survey, Dundon found that 41 hotels in the market had raised their corporate rates by $9.40, 68 hotels had decreased their rates by a similar amount and 65 hotels had kept their rates the same. There are 21,216 hotel rooms in the Portland Metropolitan market, which includes Vancouver, Wash., home to about 1,900 hotel rooms. The largest market is the Suburban Westside, which is home to 5,296 units, many of them built within the last several years and not performing very well.

Downtown Portland is the second largest market with 4,601 units, followed by the Suburban Eastside with 4,011 units and the Portland International Airport with 3,265 units. The 2,132-unit Rose Quarter area rounds out the top five markets.

Instant Insights /

Portland Hotel Market Looks Good for 2003

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