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BOSTON PUBLIC LIBRARY Digitized by the Internet Archive in 2010 with funding from Boston Public Library http://www.archive.org/details/hotelmarketinbosOObost 9£K Poc HfZA US'? The Hotel Market in Boston and Ten Other Cities The Outlook for Boston to theYear 2005 June 1992 CITYOFBOSTON RAYMONDL.FLYNN,MAYOR BOSTONREDEVELOPMENTAUTHORITY THEODORES.CHANDLER,ActingDirector CLARENCEJ.JONES,Chairman MICHAELF.DONLAN,Co-Vice-Chairman FRANCISX.O'BRIEN,Co-Vice-Chairman JAMESK.FLAHERTY,Treasurer CONSUELOGONZALES-THORNELL,Member KANESIMONIAN,Secretary TheHotelMarketinBostonandTenOtherCities TABLE OF CONTENTS EXECUTIVE SUMMARY i INTRODUCTION I. 1 THE BOSTONREGIONALHOTELMARKET II. 2 Boston andRegional Hotel Market Trends III. COMPARATIVE CITIES HOTEL MARKETS 6 TheBoston Hotel Market Compared withTen Other Cities TheDowntown Boston Hotel Market ComparedwithSix OtherDowntowns SeasonalityFactors ofBoston, NewYorkand San Francisco ............... IV. OUTLOOKFORTHE HOTELINDUSTRY 11 Nearand LongTermView in the U.S. Demand forBoston HotelAccommodations to theYear 2005 Prospects forNewHotel Development Regional IssuesAffectingthe Boston Hotel Market in the 1990s V. BOSTON'SVISITORINDUSTRYAND ITS PROMOTION 17 Tourists BusinessVisitors Meetingand ConventionVisitors MarketingBoston's Tourism Boston sdgmje j . • • • • • 2;i LIE} Ml m \ i j Ilk TheHotelMarketinBostonandTenOtherCities EXECUTIVE SUMMARY . This report examines Boston's current local and regional tourism and hotel markets, compares the Boston's performance with that of 10 other large North American cities, projectsdemandforhotelaccommodationstotheyear2005withprospects fordevelopment, and describes the economic characteristics ofBoston's hotel and tourism industries. Bos- ton's reputation as asite ofAmerican historic events, architecture, and culture, its roleas a locus ofintellectual, commercial, and financial activity, and its flair as a cosmopolitan and international cityprovide manyvisitors with the occasion to travel to the Cityand its environs. • In 1991, Downtown / Back Bay was the strongest hotel market in Greater Boston, experiencingthehighest occupancyandroomrates. HotelsinCambridgeandinBoston outside ofdowntown have also done well, while hotels in the Route 128 corridor have notdone as well. • GreaterBoston luxuryhotels, thosechargingover$100 pernight, havemaintained the highest occupancyrates. TheDowntown/BackBayhotels represent85%oftheluxury hotel rooms in Greater Boston, reflectingthe strength ofBoston. The 1991 occupancy rate forthe top luxury hotels chargingover $120 per night was 74.5%, a small decline from 76.9% in 1990. • Market information indicates that the Boston area hotel industry remains healthy despite three years ofa slack regional economy. The average room occupancy rate of allhotels inthe CityofBostonand Cambridge in 1991 was 68.3%. This representedan 8.3% drop fromthehighmarkof74.5%reachedin 1988, whilethe 1991 GreaterBoston rate of65.4% remained above the 65% national average for major U.S. hotel markets. The average daily room rate in Greater Boston in 1991 was $116.47, a 2.9% rise from the $113.21 in 1988, but asmall decline from the $120.21 peak in 1990. • In comparison with hotel markets of10 other large NorthAmerican non - resort cities, theBostonarearankedbestinoccupancyrateandsecondhighestinaveragedailyroom rates based on 1990 data. • DatasolelyforthedowntownsofBostonandsixothercitiesforwhichdataareavailable also point to the comparative health of Boston's hotel industry. In 1991, Boston's occupancyrate,at69%,rankedsecondtothatforSanFranciscoandBoston'sdailyroom rateat$121.47rankedhighest. Whilesomeotherdowntownshaveexperiencedasmuch as a 20% decline in occupancy since 1988, the fact that Boston has not added any new rooms since 1987 has helped keep its occupancy rates high. • Patterns ofseasonality in the monthly hotel occupancy rates ofBoston illustrate that its hotels have a nine-month period of very high occupancies contrasting with three months of very low activity in the winter. In Boston, for six months of each year, occupancies are over 80%. Other cities with comparable annual average occupancy, suchasNewYorkandSanFrancisco,experienceonly3monthsofoccupanciesover80%. • TheoutlookforBostontotheyear2005 is forsteadilygrowingdemandandacontinued favorablematchbetweensupplyanddemandforhotel accommodations, particularlyin areas closertodowntown. Tomaintain a 70% rate ofhoteloccupancythrough theyear BostonRedevelopmentAuthority-June1992 i