Wondering if the Boston hotel market is slowing after 2012s scorching performance. No worries. Its still in excellent shape despite an easing of occupancy rates and room rate growth in Q1, says Pinnacle Advisory Group owner Rachel Roginsky. Just look at the recent Park Plaza sale.
Sunstone Hotel Investors announced Monday that it agreed to buy the Park Plaza Hotel complex from DL Saunders Co and Rockpoint Group for $250M; the JV sellers paid $124M for the same asset two years ago. (Today "yes" is spelled "R-O-I.") The profit appears to be fabulous, but take into account the JV's investment into the 1,053-key hotel property, Rachel says. It removed Starwood as the manager to bring in Highgate, significantly improving RevPAR and net income; completed a substantial renovation; and increased the room count by converting some suites into singles, she tells us.
Other investors are diving in, too. In February, Loews Hotels closed on its $84.4M purchase of the Back Bay Hotel to partake in the nearly 12% rise in RevPAR here last yearfar superior to the growth in NYC and DC and almost 50% better than the national average of 8%. (Read about Loews CEO Paul Whetsell in today's Bisnow Hotel Sheet.) But in Q1, Bostons average room rate growth slowed to about 6% from 9% in 12, and the annual occupancy rate was 77%, down from 79% last year. Still, the average room rate rose from $198/night to $230/night in two years and its nearly impossible to get a room most Tuesday, Wednesday, and Saturday nights. The verdict:Boston will continue to get better, Rachel says.
