Are Phoenix Hotels Ready for The Super Bowl?
Now that the big game is over, we can get excited for next year at University of Phoenix Stadium. (It’s never too early start tailgating.) Expect a boost for Phoenix’s hotel market, but where does it stand today?
It’s still tempered, reports LW Hospitality Advisors CEO Dan Lesser. For investors, there’s more than enough supply for a couple of years, and scant development is happening in a few small pockets. “It’s just not economically viable if you can buy a hotel below replacement cost, and there’s no shortage of those properties to be had,” he says. Only when asset values start exceeding development costs will we see more shovels in the ground.
Regardless, there were few sales in the past year, including Interstate Hotel & Resorts and Waramaug Hospitality’s $16M buy of the 257-room Hilton Phoenix Airport Hotel (pictured) and Interwest Capital Corp’s $11M purchase of the historic 249-room Crowne Plaza San Marcos Golf Resort in Chandler. When the Hilton closed last month, Waramaug founder Paul Nussbaum said the Phoenix-Mesa-Scottsdale area has great upside, and it liked the hotel given its location within the Phoenix Sky Harbor Airport submarket and easy access to downtown Phoenix, ASU, Scottsdale, and downtown Tempe. HREC's Bill Murney (who repped the seller with colleague Scott Stephens) says Hilton required a $7.5M renovation in return for the new 10-year franchise.
While Dan says Phoenix occupancies are still running below the national average, the market will—and always does—bounce back. (Can we say the same for our Cardinals?) Growth will radiate from the core of the city, and available land is being offered at a fairly low price. That could offer opportunities for select-service hotels, which can be developed quickly, versus a market like San Francisco, where it’s tough to get permits and build. Dan, who’s based in New York, is leaving nearly a foot of snow for even more white stuff, heading to Colorado for four days of skiing at Vail, Beaver Creek, Breckenridge, and Copper Mountain.