Baltimore Resort Market 2025+ Outlook

This analysis article analyzes the efficiency of the resort market in Baltimore for the trailing 4 quarters ending in Q3 2024, with a selected give attention to key metrics corresponding to occupancy, common price (ADR), and income per out there room (RevPAR). The report highlights the constructive affect of the elimination of roughly 2,500 resort rooms from the downtown provide and discusses the potential for improved resort efficiency in 2025. With sturdy development in ADR and RevPAR regardless of some challenges out there, the evaluation suggests a sturdy outlook for town’s resort sector as demand continues to strengthen, and resort operators capitalize on decreased provide to push charges and enhance occupancy.

Key Market Indicators for Trailing 4 Quarters (Ending Q3 2024)

As of Q3, CBRE has tracked that the downtown Baltimore submarket consisted of 9,143 rooms as proven beneath:

This whole provide pre-dates the elimination of a number of inns from the market. Nonetheless, as proven above, the submarket is dominated by Higher-Priced inns. The Higher-Priced resort section noticed its RevPAR development path the Mid and Decrease-Worth classes in 2023; nonetheless, the newest year-to-date interval it realized the quickest price of RevPAR development.  By means of the third quarter of 2024, the RevPAR of the Higher-Priced inns elevated by 13.2% over the identical interval in 2023. The submarket is outperforming the broader market as evidenced by the RevPAR penetration at 126% of the better Baltimore market (as of year-to-date 2024).

Occupancy and Common Day by day Charge (ADR)

In keeping with the CBRE Resort Horizons, Q3 2024, for the trailing 4 quarters ending in Q3 2024, Baltimore’s resort market achieved a median occupancy price of 65.8%. This degree of occupancy represents a modest however regular restoration from the pandemic’s impacts, signaling a stabilization in demand throughout each leisure and enterprise segments. The preliminary year-end 2024 figures counsel no further occupancy positive factors. Thus whereas occupancy stays beneath pre-pandemic highs, it marks a wholesome rebound and units the stage for additional development in 2025.

The typical day by day price (ADR) for inns in Baltimore throughout this era stood at $132.29. This represents a notable 3.9% enhance over the earlier trailing four-quarter interval ending Q3 2023. The advance in ADR displays rising shopper confidence, stronger demand, and a tightening of resort provide, which collectively have enabled operators to command larger costs for rooms. Wanting into 2025, a number of upscale resort house owners/managers are projecting will increase of 5% to 10% in ADR as a byproduct of the constricted provide.

Income Per Accessible Room (RevPAR)

As a direct results of the rise in each occupancy and ADR, income per out there room (RevPAR) noticed a big 6.7% enhance, reaching a powerful $87.05 in Q3 2024. The RevPAR development underscores the constructive financial situations in Baltimore’s hospitality sector and demonstrates that inns have efficiently capitalized on larger charges whereas sustaining wholesome occupancy ranges. The expectation for 2025 due to this fact, is a modest enhance in occupancy coupled with stable price development. The mixture of those components may result in a double-digit RevPAR enhance for the yr.

The Influence of Resort Room Removing on Provide and Demand

A big issue influencing the efficiency of the resort market in Baltimore has been the elimination of roughly 2,500 resort rooms from the downtown provide. This discount in room stock has created an setting of constrained provide, which has confirmed to be advantageous for inns working within the space. Among the many inns which have closed or been repositioned as various makes use of (corresponding to homeless shelters or multi-family residences) are the Vacation Inn Downtown, the Sheraton Internal Harbor, the Radisson and the Vacation Inn Internal Harbor. The next desk lists the closed inns.

Provide Discount and Charge Progress

The elimination of those rooms has helped to scale back competitors within the downtown resort market. With fewer rooms out there, inns within the area have gained the power to boost their charges with out the worry of great demand leakage to competing properties. Consequently, the market has skilled upward strain on ADR, which has been mirrored within the reported 3.9% enhance in common price. Lowered provide, mixed with elevated demand from each vacationers and enterprise vacationers, has positioned Baltimore’s resort sector to appreciate stronger returns on funding.  There are 280 rooms beneath development inside two initiatives downtown. These larger rated inns embody the Hilton Backyard Inn Downtown and an impartial boutique property on the former Brager Gutman Division Retailer.  Thus, whereas the general provide decreased by greater than 20% between 2020 and 2024, the brand new provide marks solely a 3.3% alternative of the misplaced stock.  We don’t foresee further new development given the rising borrowing prices stemming from the growing spreads over US Treasuries over the previous month. Due to this fact, we count on that the brand new provide can be absorbed into the market and the present inns ought to see wholesome RevPAR enhancements over the subsequent two years.

Occupancy Ranges and the Provide-Demand Steadiness

Whereas occupancy ranges have elevated from the pandemic lows, they haven’t but absolutely recovered to pre-pandemic ranges. The lower within the variety of out there resort rooms, nonetheless, has helped to maintain occupancy ranges larger by tightening the competitors. The elimination of greater than 2,500 rooms has successfully redistributed demand throughout a smaller pool of obtainable rooms, enabling these remaining inns to fill their properties at the next price of occupancy.

Furthermore, with the continuing evolution of the workforce panorama, together with an uptick in company journey and a rise in conferences and occasions as a part of post-pandemic restoration, the decreased provide coupled with sturdy demand is poised to push occupancy ranges larger, significantly within the coming years.

Outlook for Baltimore’s Resort Market in 2025

Demand Drivers for 2025

As we stay up for 2025, a number of components are anticipated to contribute to the continued development of the resort market in Baltimore:

1. Enterprise and Company Journey: With companies adopting hybrid and versatile work fashions, there’s a renewed give attention to in-person conferences, conventions, and company occasions. Baltimore’s proximity to main metropolitan areas like Washington, D.C., and its enticing downtown venues make it a primary location for such occasions. This might result in an uptick in company journey and better occupancy for inns.
2. Tourism Restoration: Baltimore has seen a resurgence in tourism as vacationers are desperate to discover cultural points of interest, historic websites, and waterfront locations. As journey restrictions proceed to ease, town’s tourism sector is anticipated to expertise vital development, benefiting inns with elevated leisure journey.
3. Conventions and Main Occasions: Baltimore’s strategic place as a hub for conferences and conventions additionally positions its inns to profit from the inflow of eventgoers. With the latest enlargement of occasion venues and elevated give attention to creating enticing vacation spot experiences, resort demand tied to conventions and large-scale occasions is anticipated to develop.

In keeping with Go to Baltimore, there are 87 occasions on the calendar for 2025 ranging in attendance from 275 to 75,000 individuals. These occasions are projected to generate 71,329 room nights within the downtown Baltimore market.  The information exhibits that for each 5 attendees there may be roughly one room evening generated. Moreover, these occasions will fill 23% of the out there rooms within the downtown market over the course of the upcoming yr.

4. Lengthy-Time period Provide Constraints: The elimination of two,500 resort rooms will doubtless proceed to exert strain on provide and assist occupancy ranges at present properties. As demand rises in 2025, hoteliers out there ought to discover themselves higher positioned to push room charges additional whereas sustaining stable occupancy.

Strategic Alternatives for Resort Operators

Because the market progresses into 2025, resort operators in Baltimore could have a number of alternatives to capitalize on the evolving panorama:

• Charge Optimization: With the decreased provide and rising demand, inns ought to proceed to give attention to price optimization methods, utilizing dynamic pricing fashions to maximise ADR throughout peak demand durations, corresponding to conventions, summer season tourism season, and vacation weekends.
• Enhanced Visitor Expertise: Given the aggressive nature of the market, offering an distinctive visitor expertise can be essential to sustaining excessive occupancy ranges. Inns can spend money on upgrades and providers that enchantment to each leisure and enterprise vacationers, enhancing the general worth proposition.
• Sustainability and Wellness Traits: As sustainability turns into an more and more vital issue for vacationers, inns in Baltimore can leverage environmentally-friendly practices and wellness-focused facilities as key differentiators. Capitalizing on the growing demand for eco-friendly journey choices can entice a rising base of aware vacationers.

Conclusion

The Baltimore resort market has proven sturdy resilience and development within the trailing 4 quarters ending in Q3 2024, with a big uptick in each ADR and RevPAR. The elimination of roughly 2,500 resort rooms from the downtown provide has performed a important position in making a extra favorable supply-demand stability, which has enabled operators to push charges and keep stable occupancy ranges. Waiting for 2025, the outlook for the resort market in Baltimore stays constructive, supported by sturdy demand drivers from enterprise journey, tourism, and occasions. The decreased provide, mixed with a continued restoration in demand, gives vital alternatives for inns to additional capitalize on price will increase and occupancy development, positioning town’s hospitality sector for continued success within the years forward.

David P. Fuller, MAI, Senior Vice President, is situated within the Bethesda, MD workplace of CBRE.  He could be reached at david.fuller@cbre.com.