The one bright note in the report is that because construction levels have fallen so low that the market is expected to rebound slightly next year. The report says that 655 rooms will be delivered to the city market next year, down from an average of 1,800 rooms per year every year since 1999.
But Adam P. Weber, a senior market analyst with the firm, emphasizes that the supply constraint will eventually lead to more construction in the market. He tells GlobeSt.com that the market is still much healthier than it was in the early 1990s when a downturn coincided with overbuilding leaving developers scrambling to fill rooms.
Weber also notes that while the report says that the city has not fared as well as New York and Washington, it is in line with similar sized markets such as San Francisco and Philadelphia.
The city's occupancy levels are down 2% from last July to 62.7%, while average daily rates are down 7.5% from $120.44 to $111.38 in the same time period. Weber points out that that drop is significant.
Not surprisingly, investment activity slowed during the first half of this year with only one transaction reported and three transactions for the year ending this past July. But Weber stresses that while the average sales price per room is $52,380 in the report, the most recent transaction last February of the Harborwatch Hotel in Wareham went for $90,000 a room.
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