Arizona Hospitality Market Report
Phoenix
By the Numbers Last 12 Months
- Occupancy: 69.2%
- ADR: $173.16
- RevPAR: $119.83
- Average Cap Rate: 7.6%
Market Overview
The Phoenix hospitality market is thriving, bolstered by robust employment growth, with over 42,700 jobs added between July 2022 to July 2023. This success is driven by Phoenix’s appeal as an affordable and business-friendly market, attracting both residents and enterprises. Leisure visitors are fueling high weekend occupancy rates, drawn by attractions like sports events, a vibrant downtown scene, and nearby natural wonders. Notably, group occupancy, boosted by major events such as the Super Bowl and conventions at the Phoenix Convention Center, contributes significantly to the market’s hospitality sector, which is experiencing substantial growth, positioning Phoenix as a prominent player in the Western U.S. hospitality market.
Market Performance
The 12-month ADR in Phoenix is currently $173.16, and the 12-month RevPAR is $119.83. Both ADR and RevPAR had annual growth rates of 10.9% and 13.8%, respectively, indicating a positive growth in hospitality performance. Phoenix has also seen a growth in construction, with approximately 4,615 rooms under construction across 26 properties. The Phoenix West submarket has the highest concentration of hotel rooms under development, most of them being built for independent brands. The 12-month sale price averaged $30.5 million per property, with an average price per room of $246,000. Recent trades achieved record-high pricing with relatively low cap rates, reflecting strong investor interest in the Phoenix hospitality market.
Phoenix has the second-highest share of under-construction hotel inventory among the top 40 U.S. markets, at 6.5%
Tucson
By the Numbers in the Last 12 Months
- Occupancy: 63.3%
- ADR: $149.61
- RevPAR: $94.67
- Average Cap Rate: 7.6%
Market Overview
Tucson’s hospitality market consists of approximately 17,000 rooms spread across 168 properties. The average hotel in Tucson, Arizona, has around 101 rooms, which is in line with the overall U.S. average. Notably, over 25% of the market’s rooms fall into the Luxury or Upper Upscale category, a higher proportion compared to most U.S. markets. The job market has been growing steadily, with an annual job growth rate of 1.8%, adding approximately 7,200 jobs to the area.
Market Performance
Tucson’s trailing 12-month occupancy rate stands at 63.3%, slightly surpassing the national average of 63.2%. The 12-month average RevPAR has been growing at an exceptionally strong rate, with a recent increase of 7.9%, and is currently $94.67. The 12-month ADR grew at a rate of 6.3%, currently sitting at $149.61. Currently, there is one hotel project underway in Tucson, consisting of 86 rooms. Approximately 14 hotel trades closed in the past 12 months, with an average sale price of 13.2M.
Over the past three years, the market has witnessed significant development, with 11 projects delivering around 1,100 rooms.
