Baltimore Resort Market 2025+ Outlook

This analysis article analyzes the efficiency of the resort market in Baltimore for the trailing 4 quarters ending in Q3 2024, with a selected give attention to key metrics corresponding to occupancy, common charge (ADR), and income per accessible room (RevPAR). The report highlights the optimistic influence of the elimination of roughly 2,500 resort rooms from the downtown provide and discusses the potential for improved resort efficiency in 2025. With robust progress in ADR and RevPAR regardless of some challenges out there, the evaluation suggests a sturdy outlook for the town’s resort sector as demand continues to strengthen, and resort operators capitalize on decreased provide to push charges and improve occupancy.

Key Market Indicators for Trailing 4 Quarters (Ending Q3 2024)

As of Q3, CBRE has tracked that the downtown Baltimore submarket consisted of 9,143 rooms as proven beneath:

This whole provide pre-dates the elimination of a number of resorts from the market. Nonetheless, as proven above, the submarket is dominated by Higher-Priced resorts. The Higher-Priced resort phase noticed its RevPAR progress path the Mid and Decrease-Worth classes in 2023; nevertheless, the newest year-to-date interval it realized the quickest charge of RevPAR progress.  Via the third quarter of 2024, the RevPAR of the Higher-Priced resorts elevated by 13.2% over the identical interval in 2023. The submarket is outperforming the broader market as evidenced by the RevPAR penetration at 126% of the larger Baltimore market (as of year-to-date 2024).

Occupancy and Common Every day Fee (ADR)

In accordance with the CBRE Resort Horizons, Q3 2024, for the trailing 4 quarters ending in Q3 2024, Baltimore’s resort market achieved a mean occupancy charge of 65.8%. This degree of occupancy represents a modest however regular restoration from the pandemic’s impacts, signaling a stabilization in demand throughout each leisure and enterprise segments. The preliminary year-end 2024 figures recommend no extra occupancy features. Thus whereas occupancy stays beneath pre-pandemic highs, it marks a wholesome rebound and units the stage for additional progress in 2025.

The common each day charge (ADR) for resorts in Baltimore throughout this era stood at $132.29. This represents a notable 3.9% improve over the earlier trailing four-quarter interval ending Q3 2023. The development in ADR displays rising shopper confidence, stronger demand, and a tightening of resort provide, which collectively have enabled operators to command greater costs for rooms. Trying into 2025, a number of upscale resort house owners/managers are projecting will increase of 5% to 10% in ADR as a byproduct of the constricted provide.

Income Per Out there Room (RevPAR)

As a direct results of the rise in each occupancy and ADR, income per accessible room (RevPAR) noticed a big 6.7% improve, reaching a powerful $87.05 in Q3 2024. The RevPAR progress underscores the optimistic financial situations in Baltimore’s hospitality sector and demonstrates that resorts have efficiently capitalized on greater charges whereas sustaining wholesome occupancy ranges. The expectation for 2025 due to this fact, is a modest improve in occupancy coupled with strong charge progress. The mixture of those elements might result in a double-digit RevPAR improve for the yr.

The Affect of Resort Room Elimination on Provide and Demand

A major issue influencing the efficiency of the resort market in Baltimore has been the elimination of roughly 2,500 resort rooms from the downtown provide. This discount in room stock has created an setting of constrained provide, which has confirmed to be advantageous for resorts working within the space. Among the many resorts which have closed or been repositioned as various makes use of (corresponding to homeless shelters or multi-family residences) are the Vacation Inn Downtown, the Sheraton Internal Harbor, the Radisson and the Vacation Inn Internal Harbor. The next desk lists the closed resorts.

Provide Discount and Fee Progress

The elimination of those rooms has helped to cut back competitors within the downtown resort market. With fewer rooms accessible, resorts within the area have gained the flexibility to lift their charges with out the concern of serious demand leakage to competing properties. Because of this, the market has skilled upward stress on ADR, which has been mirrored within the reported 3.9% improve in common charge. Lowered provide, mixed with elevated demand from each vacationers and enterprise vacationers, has positioned Baltimore’s resort sector to appreciate stronger returns on funding.  There are 280 rooms underneath building inside two initiatives downtown. These greater rated resorts embody the Hilton Backyard Inn Downtown and an unbiased boutique property on the former Brager Gutman Division Retailer.  Thus, whereas the general provide decreased by greater than 20% between 2020 and 2024, the brand new provide marks solely a 3.3% alternative of the misplaced stock.  We don’t foresee extra new building given the rising borrowing prices stemming from the growing spreads over US Treasuries over the previous month. Subsequently, we anticipate that the brand new provide shall be absorbed into the market and the prevailing resorts ought to see wholesome RevPAR enhancements over the following two years.

Occupancy Ranges and the Provide-Demand Stability

Whereas occupancy ranges have elevated from the pandemic lows, they haven’t but absolutely recovered to pre-pandemic ranges. The lower within the variety of accessible resort rooms, nevertheless, has helped to maintain occupancy ranges greater by tightening the competitors. The elimination of greater than 2,500 rooms has successfully redistributed demand throughout a smaller pool of obtainable rooms, enabling these remaining resorts to fill their properties at a better charge of occupancy.

Furthermore, with the continued evolution of the workforce panorama, together with an uptick in company journey and a rise in conferences and occasions as a part of post-pandemic restoration, the decreased provide coupled with robust demand is poised to push occupancy ranges greater, significantly within the coming years.

Outlook for Baltimore’s Resort Market in 2025

Demand Drivers for 2025

As we stay up for 2025, a number of elements are anticipated to contribute to the continued progress of the resort market in Baltimore:

1. Enterprise and Company Journey: With companies adopting hybrid and versatile work fashions, there’s a renewed give attention to in-person conferences, conventions, and company occasions. Baltimore’s proximity to main metropolitan areas like Washington, D.C., and its enticing downtown venues make it a main location for such occasions. This might result in an uptick in company journey and better occupancy for resorts.
2. Tourism Restoration: Baltimore has seen a resurgence in tourism as vacationers are desperate to discover cultural points of interest, historic websites, and waterfront locations. As journey restrictions proceed to ease, the town’s tourism sector is predicted to expertise vital progress, benefiting resorts with elevated leisure journey.
3. Conventions and Main Occasions: Baltimore’s strategic place as a hub for conferences and conventions additionally positions its resorts to learn from the inflow of eventgoers. With the latest enlargement of occasion venues and elevated give attention to creating enticing vacation spot experiences, resort demand tied to conventions and large-scale occasions is predicted to develop.

In accordance with Go to Baltimore, there are 87 occasions on the calendar for 2025 ranging in attendance from 275 to 75,000 individuals. These occasions are projected to generate 71,329 room nights within the downtown Baltimore market.  The information exhibits that for each 5 attendees there may be roughly one room evening generated. Moreover, these occasions will fill 23% of the accessible rooms within the downtown market over the course of the upcoming yr.

4. Lengthy-Time period Provide Constraints: The elimination of two,500 resort rooms will possible proceed to exert stress on provide and help occupancy ranges at current properties. As demand rises in 2025, hoteliers out there ought to discover themselves higher positioned to push room charges additional whereas sustaining strong occupancy.

Strategic Alternatives for Resort Operators

Because the market progresses into 2025, resort operators in Baltimore may have a number of alternatives to capitalize on the evolving panorama:

• Fee Optimization: With the decreased provide and rising demand, resorts ought to proceed to give attention to charge optimization methods, utilizing dynamic pricing fashions to maximise ADR throughout peak demand intervals, corresponding to conventions, summer season tourism season, and vacation weekends.
• Enhanced Visitor Expertise: Given the aggressive nature of the market, offering an distinctive visitor expertise shall be essential to sustaining excessive occupancy ranges. Motels can put money into upgrades and companies that attraction to each leisure and enterprise vacationers, enhancing the general worth proposition.
• Sustainability and Wellness Tendencies: As sustainability turns into an more and more essential issue for vacationers, resorts in Baltimore can leverage environmentally-friendly practices and wellness-focused facilities as key differentiators. Capitalizing on the growing demand for eco-friendly journey choices can entice a rising base of aware vacationers.

Conclusion

The Baltimore resort market has proven robust resilience and progress within the trailing 4 quarters ending in Q3 2024, with a big uptick in each ADR and RevPAR. The elimination of roughly 2,500 resort rooms from the downtown provide has performed a vital function in making a extra favorable supply-demand stability, which has enabled operators to push charges and keep strong occupancy ranges. Looking forward to 2025, the outlook for the resort market in Baltimore stays optimistic, supported by robust demand drivers from enterprise journey, tourism, and occasions. The decreased provide, mixed with a continued restoration in demand, gives vital alternatives for resorts to additional capitalize on charge will increase and occupancy progress, positioning the town’s hospitality sector for continued success within the years forward.

David P. Fuller, MAI, Senior Vice President, is positioned within the Bethesda, MD workplace of CBRE.  He will be reached at david.fuller@cbre.com.