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Hartsfield's Luxury Hotel Market Shows Strength

The luxury hotel market around Hartsfield-Jackson Atlanta International Airport may have legs enough to accommodate both the Solis and a potential InterContinental Hotel connected to the airport. After all, current data suggests the high-end market there has been pent-up.

Rendering of the under-construction Solis Hotel connected to Porsche North America's headquarters

According to data from CBRE, 2016 occupancy rates at hotels around the airport were nearly 74%, while average occupancy rates for all of metro Atlanta barely cracked 70%. And during the same period, luxury hotels saw average occupancy at nearly 80% while metro Atlanta as a whole saw 74.1%, according to CBRE. Average daily rates grew from $108/night to $115/night between 2015 and 2016.

Scott Smith, managing director of CBRE's hotel group, said average occupancy over 72% is considered strong for hotels. And 74% is phenomenal, Smith said.

“What that tells me is there's pent-up demand” for luxury hotels near the airport, he said.

Atlanta Airport Marriott Gateway proved that point, Smith said, as it has remained strong since opening in 2010. The latest entry is the Solis Hotel, a 214-room luxury hotel set to open in November next to the Porsche Experience Center at the luxury automaker's headquarters. Scott Condra, president of Condra Group, which is developing Solis, said the demand for his hotel is generated partly by those visiting the Porsche headquarters.

Carter's David Nelson

Carter is in talks to develop a 440-room InterContinental Hotel connected to the domestic terminal of the airport. Carter senior vice president David Nelson said the firm is in talks with the City of Atlanta for a 50-year ground lease, and could be a year or so away from breaking ground. Nelson said the InterContinental, which would include 20K SF of office and 80K SF in meeting space, would cater to groups looking for big events and conferences.

But the new supply could tap out the market in the short term, Smith said. If InterContinental comes to fruition, the added high-end room supply could flatten average daily room rates around the airport.

“The Atlanta airport market is fairly rate sensitive,” Smith said. “And there is going to be some softness in the market, no doubt.”