Buyer Demand Accelerates in Upper Midwest Amid Healthy Performance
Solid gains recorded in Upper Midwest region. During the year ending in June, re-spectable improvements in occupancy and revenue metrics were registered in the Up-per Midwest region, which contains Illinois, Iowa, Minnesota, Nebraska, North Dakota, South Dakota and Wisconsin. The states of Wisconsin, North Dakota and Illinois led occupancy improvement in the region as each market posted signifi cant increases in the rate year over year. In Illinois, the Chica-go metro contributed greatly to advancing occupancy, leading to healthy increases in RevPAR and ADR. The metro has benefi ted from rising leisure room demand as domes-tic and foreign travel to the area grew. The heightened demand has led to a jump in construction, which may place downward pressure on the occupancy rate into 2018. Elsewhere in the region, Nebraska was the only state to post declines across all metrics amid mounting supply pressures as six ho-tels opened during the prior 12-month pe-riod in Omaha alone. In Iowa, declining oc-cupancy did not hinder ADR growth, which contributed to a slight rise in RevPAR. The Iowa Events Center, located in Des Moines, is expected to be completed early next year and should benefi t hospitality demand in the state moving forward. Several groups have already scheduled events at the new center before its opening.
Demand heightens for region’s hotel properties. Steady RevPAR growth and ris-ing occupancy have made hotels in the Up-per Midwest region a popular target among investors, fueling transaction velocity during the last four quarters. A sizable concentra-tion of brand-affi liated hotels, combined with a variety of large and small markets with established and reliable demand drivers, provide an array of potential opportunities for buyers. While a signifi cant number of limited service properties changed hands regionwide, sales of select service proper-ties increased year over year. Hotels in the midscale and upper midscale segments were of particular interest to investors amid steady revenue growth. Transactions also rose in the economy segment as private in-vestors in the $1 million to $10 million price tranche became more active. Across the region, Illinois recorded the greatest sales velocity, though Wyoming was not far be-hind. Occupancy and revenue improve-ments in North Dakota piqued investors’ attention, fueling competition for the state’s hotel properties and lifting the average price per room up considerably over the previous four quarters.
