©pinnacle advisory group · 2020-05-19 · ©pinnacle advisory group boston msa lodging market...
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©Pinnacle Advisory Group
Rachel J. Roginsky, ISHCPrincipalPinnacle Advisory GroupEmail: [email protected]
NE Lodging ConferenceMay 11, 2020
Rachel J. Roginsky, ISHCPrincipal, Pinnacle Advisory Group
©Pinnacle Advisory Group
Boston & Cambridge Lodging Market
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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Boston & Cambridge25-Year Historic Performance
ADR RevPAR Occ
Jan 2020Occ +4.3%ADR: +0.8%RevPAR: +7.8%
Feb 2020Occ +1.1%ADR: +1.9%RevPAR: +3.5%
Source: Pinnacle Advisory Group’s Pinnacle Perspective
©Pinnacle Advisory Group
Boston MSA Lodging Market
Source: STR
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-20.0%
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Daily Performance, % Change YOYMarch 1 to May 2, 2020
Occupancy ADR RevPAR
©Pinnacle Advisory Group
Boston MSA Lodging Market
Source: STR and Pinnacle Advisory Group’s March 2020 Pinnacle Perspective
-70% -60% -50% -40% -30% -20% -10% 0%
Boston/Cambridge
Boston MSA
Top-25 Markets
U.S.
Demand & ADR, % Change YOYMarch 2020
Demand ADR
©Pinnacle Advisory Group
BCEC & Hynes Conventions
Source: MCCA
0
25,000
50,000
75,000
100,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Convention Center RoomnightsStatus as of May 6, 2020
Scheduled Postponed Rescheduled Cancelled
©Pinnacle Advisory Group
Boston & Cambridge Lodging Market
-69% -67% -67%-57% -62% -61% -62%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%Back Bay Cambridge Downtown Fenway & LMA North/West End
Seaport & LoganAirport South Boston
RevPAR Decline by SubmarketMarch 2020
Source: Pinnacle Advisory Group’s March 2020 Pinnacle Perspective
©Pinnacle Advisory Group
Boston Lodging Market Recovery
Expect to see a slow recovery in the Boston Lodging market.
©Pinnacle Advisory Group
Boston Lodging Market RecoveryWhy will the recovery be slow?• 40% of the convention room nights were cancelled as of April 21; potentially more to follow.Convention and group demand in the City accounts for approximately 30% of total lodgingdemand.
• International travel accounts for about 18%-20% of lodging demand in the City. Internationalvisitation will be significantly reduced in 2020.
• Our world renowned medical facilities drive significant lodging demand. These facilities are takingcare of Covid 19 patients, and not providing the services that bring visitors with medical needs tothe City.
• MIT, Harvard, and other institutes for higher education generate meaningful lodging to the City –there is still uncertainty regarding how these schools will re-open in the fall; distance learning orback to campus.
• Major events – the Boston marathon, the Red Sox, major concerts, July 4th at the Hatch Shell, etc.have been cancelled or postponed for 2020. The events bring in lots of visitors to the City.
• That leaves corporate and leisure demand. Massachusetts was hit hard from the virus withdelayed re-opening. This factor, coupled with a challenged economy will substantially impactlodging demand in 2020, with an anticipated slow recovery in 2021.
Jim Berry, MAI, MRICSExecutive Director of Hospitality & GamingCushman & WakefieldEmail: [email protected]
VALUATION & ADVISORYNELC - MAY 2020Historic 12-Month Moving Average - RevPAR Comparison
Historic Monthly Moving Average RevPAR Comparison
Source: STR/Cushman & Wakefield
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-21.0%
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Boston Downtown RevPARMoving Average % Chg
Andover RevPARMoving Average % Chg
Boston South Shore RevPARMoving Average % Chg
Cambridge RevPARMoving Average % Chg
Dedham RevPARMoving Average % Chg
Woburn RevPARMoving Average % Chg
VALUATION & ADVISORYNELC MAY 2020Have Cap Rates Changed? Does the Band of Investment Technique Tell Us?
Development of an Overall Capitalization Rate - 5/1/2020Mortgage Component
Loan to Value Ratio 60.0%Interest Rate 4.50%
Amortization (Months) 300Mortgage Constant 6.67%
Equity ComponentEquity Interest 40.0%
Equity Dividend Rate 10.50%
Base Rate 8.20%Rounded to 8.20%Development of an Overall Capitalization Rate - 12/31/19Mortgage Component
Loan to Value Ratio 65.0%Interest Rate 4.00%
Amortization (Months) 300Mortgage Constant 6.33%
Equity ComponentEquity Interest 35.0%
Equity Dividend Rate 9.00%
Base Rate 7.27%Rounded to 7.30%
