Current research by HREC – Hospitality Real Estate Counselors indicates that hotel investors have been aggressively pursuing St. Louis in the past 2 years, and that activity is likely to increase as the market becomes more attractive with planned urban mixed-use development and historical restoration.
Key Indicators
- In 2015, 18 hotels were sold in the Greater St. Louis market. In 2014, there were 20 hotel transactions, the largest being the Arch Hyatt Regency, which sold for $134 million or $147,000 per key. These numbers are up from just 7 transactions in 2011, an approximately 185% increase in just 3 years.
- In 2016 so far, 8 hotels have sold in the market. Currently, HREC is in the process of selling multiple hotels in greater St. Louis. If these deals close, the sales proceeds will add approximately $50 million in transaction volume to the 2016 total.
- The city is in the process of blighting 395 acres across Midtown and the Gate District for the purpose of new development and urban revitalization, which will drive ADR and occupancy of existing hotels in the area.
- America’s Center Convention Complex (St. Louis Convention Center) is a constant driver of hotel sales in the St. Louis market. On an annual basis, the complex hosts an average of 109 events generating over 600,000 attendees, 350,000 hotel room nights, and $285 million of direct spending to the regional economy, supporting the equivalent of 3,340 full-time jobs.
- In 2014, a strong convention schedule allowed St. Louis to hit its highest levels of ADR, Occupancy, and RevPAR in a decade, with a $61.72 RevPAR setting a new annual record for the city, according to the St. Louis Convention and Visitor’s Commission.
- HREC’s brokers around the country consistently receive requests for hotel assets to purchase in the St. Louis area and our company’s strong Midwest presence allows us to deliver upon those requests.
- HREC consultants project an increased amount of national developers looking for hotel development sites in these planned revitalized areas of St. Louis. We also project a number of hotel investors looking to buy existing properties in and around the areas to capitalize on new demand.
America’s Center Convention Complex Schedule
Why Do Investors Want to Buy a Hotel in St. Louis?
From a real-estate perspective on a macro level, St. Louis is becoming more and more attractive for office, retail, and residential investors given new urban development and planned mixed-use projects. We at HREC believe that this revitalization coupled with strong convention center volume will spur an increased demand for hotel rooms. New operators will be able to capture consistent RevPAR growth over time due to higher ADR that will reflect the new socio-economic status of Greater St. Louis:
- The city is making a substantial effort both financially and socio-economically to revitalize itself through mixed use development plans and finding new purpose for older, vacant buildings.
- St. Louis had established a more resilient recession-proof economy than other similar-sized cities through job diversification, minimizing dependence on any one particular economic sector or industry.
- The city is the 3rd most concentrated market in the country for investment advisors, just behind New York and Boston.
- Investors are looking to St. Louis to capitalize on the more than $500 million in projects set to be spent in the Clayton and Central West End areas of the city, which is scheduled to create hundreds of jobs and bring in approximately 1,000 new residents.
- Inc. Magazine’s list of America’s 5,000 fastest-growing private companies 2015 includes over 41 companies based in the St. Louis metropolitan area, 20 of which ranked in the top 2,000.
- Three of the 10 largest financial advisory firms in the U.S. are based in St. Louis
- Overall, the greater St. Louis lodging market has thrived in the past 2 years. According to STR (www.str.com), in 2015, RevPAR for the St. Louis market was $45.55, a 12.9% increase from 2014. Occupancy also increased by 10.5% from the previous year. Steady growth is expected for these metrics with the upcoming convention schedule.
- Investors in the St. Louis lodging market in the past 2 years are primarily top U.S. based firms such as Clearview and Starwood Capital, but international investors from Singapore and Canada have expressed interest in the city, acquiring 6 properties in the limited-service sector in 2015.
- St. Louis welcomes nearly 22 million visitors annually for leisure, convention, meeting, and business travel. Visitors spend $4.43 billion in the city each year.
- Hotel investment stability from a diverse economy and nationally recognized major universities;
- Diversified hotel demand, ranging from growing commercial business and construction, to a leading convention, group and leisure destination. We at HREC feel that all these factors will work together better than ever before to drive key metrics in the market and keep St. Louis an attractive city for hotel investors.
Company Overview
HREC – Hospitality Real Estate Counselors is the nation’s premier real estate advisory and brokerage organization specializing exclusively in the lodging and gaming industries. HREC is excited to announce the recent addition of our Kansas City office headed by Herb Warmbrodt. HREC has merged with Warmbrodt Hotel Investments, adding decades of collective experience in the industry to the firm. In his 30+ years in the hospitality industry, Herb has been involved in over $1.5 billion in hotel transactions. Through his experience and expertise, specifically in the Midwest region, Herb is going to add a new perspective and way of thinking to allow us to better serve our clients and operate at a higher level as a company.
The goal of HREC is simply to be the premier real estate advisory and investment banking organization in the hospitality industry. Our integrity is undisputed; our commitment to quality is uncompromising. As trusted advisors, HREC’s clients directly benefit from our loyalty in assisting them to achieve their financial goals. We approach all engagements as a team, with the achievement of the client’s goals as paramount.