A look at how Charlotte's hotel market performed in 2018- and what is forecast in the year ahead

The Charlotte hotel industry posted small gains in three key performance metrics in 2018, according to year-end figures recently released by travel data and analytics firm STR.

Within those three metrics: occupancy, average daily rate (ADR) and revenue per available room (RevPAR), which is calculated by dividing total room revenue by the total number of available rooms, Charlotte-area hotels saw year-over-year increases of 0.5%, 0.6% and 1.1%, respectively, in 2018. Hotel occupancy averaged 69.8% to end the year, while ADR reached an average of $110.24 and RevPar grew to $76.99.

Charlotte's hotel occupancy exceeded the national rate of 66.2%, which represented year-over-year growth of 0.5%. The national ADR of $129.83 (up 2.4%) and the RevPar of $85.96 (up 2.9%), though, was higher than Charlotte's.

However, annual growth in both supply and demand in the Charlotte market in 2018 eclipsed the national increases of 2% and 2.5%, respectively, according to STR's data, which for the Charlotte market, encompasses the central business district and surrounding areas such as Gastonia, Lincolnton, Rock Hill, Matthews, Monroe, Huntersville, Cornelius, Concord and Salisbury. Mooresville and Statesville are not included in STR's coverage area for the local market.

A look at supply and demand in Charlotte's hotel market shows the two growing at somewhat similar paces last year. Demand growth, at 3.9%, slightly outpaced supply's 3.3% uptick from 2017 to 2018.

Among the hotels to open in Charlotte last year was the long-anticipated, dual-branded AC Hotel and Residence Inn above the EpiCentre in uptown.

Charlotte saw double-digit growth in demand just one month last year: October. Then, it jumped 10.1% from the previous year. Another likely spike in demand is on the horizon for 2019, when the upcoming NBA All-Star Game comes to town next month.

The graphs below provide a look even further back at Charlotte's hotel performance, over the past five years.


For the overall U.S. hotel sector, 2018 represented a "good, not great year," said Amanda Hite, STR's president and CEO.

Charlotte's tepid results last year come amid a good number of local hotel projects still in the construction pipeline.

CBRE (NYSE: CBRE), in its recent 2019 outlook on Charlotte's hotel market, said hotel construction in Charlotte "remains strong."

As of September 2018, it said that 44 such properties — to add 5,374 new rooms — were either under construction or in the final planning stages in the Charlotte market. That represents a little more than 15% of the current local inventory.

The majority of those projects — 31 — are considered to be upper-midscale or upscale. That includes the 254-room, 15-floor Grand Bohemian Hotel Charlotte now underway in uptown's Third Ward and a 21-story, 381-room JW Marriott hotel coming to a bustling corridor of uptown. Even more recently announced is a 175-room hotel for SouthPark, expected to carry the Hyatt Centric upscale flag.

But CBRE noted that the growth rate for revenue per available room is now much lower than the 14.1% increase posted in 2014.

"This drop in RevPAR (revenue per available room) growth has coincided with a large jump in supply changes, increasing from 1.1% year-over-year growth in 2016 to 5.7% in 2017. On the other hand, the current drop in RevPAR has been driven entirely by declines in occupancy, with ADR (average daily rate) growth remaining strong, 3.4% in 2017," the CBRE report said.

And supply is expected to outpace demand in Charlotte's hotel market this year.

"Although demand, driven by a growing population and tech sector economy, will remain strong in Charlotte, the market is forecast to weather even higher supply growth and declining occupancy for the foreseeable future," CBRE said.

CBRE's research anticipates that Charlotte's hotel supply will increase by 5.6% in 2019 "amid a national economic slowdown that will likely dampen demand."

As a result of that, a further slowdown in revenue per available room is forecast in the year ahead.