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2002 National Lodging Forecast Ernst & Young LLP National Lodging Trends, Outlook & Segment Reports |
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Introduction
The Seattle lodging market is anticipated to experience a reduction in lodging demand during the first half of 2002 due to national and local economics with an anticipated recovery in the later part of the year. The lodging market is anticipated to be further challenged in 2003 as the market absorbs a significant level of new supply. Average daily rates are anticipated to be strained in 2002 with the opening of the expanded Convention & Trade Center in downtown Seattle, as hoteliers are likely to replace lost corporate demand with lower-rated convention business. Seattle Report
Major Demand Changes In the late 1990�s, Seattle�s economy expanded significantly with employment growth exceeding the nation due its high concentration of technology, dotcom, telecom, and aerospace industries. In 2002, however, Seattle�s economy is anticipated to contract more severely and its recovery is anticipated to be slower and longer as these industries face continued challenges. Seattle�s economy is anticipated to benefit, however, from its concentration of biotech and healthcare software industries in the coming years as these industries expand and become the growth leaders for the area. The most noteworthy corporate change in Seattle in 2001 was the Boeing Company�s decision to relocate its corporate headquarters to Chicago, which had more of a psychological effect upon the economy than actual job losses. Microsoft continues to dominate Seattle�s office market with plans to build and/or lease an additional one million square feet of office space throughout the metropolitan area. A 570,000 square foot office tower, under construction at Sammamish Park, when completed, will bring the company�s office occupied square feet to an estimated 8.4 million. IDX systems, a healthcare software company, is constructing a new office tower in downtown Seattle that is anticipated to be completed in 2003. Immunex Corporation, a biopharmaceutical company, continues to move forward with a $450 million campus at Piers 88 and 89 on the Seattle waterfront. The Washington State Convention & Trade Center has expanded its exhibit space to 207,000 square feet as part of a $190 million expansion that was completed in July 2001. Approximately 150 events have been scheduled beyond 2002 for the expanded center. The expansion of the Meydenbauer Convention Center in Bellevue from 48,000 square feet to 100,000 square feet is currently on hold but construction is anticipated to commence with the development of the adjacent hotel site. The $425 million, 72,000-seat football stadium, is scheduled to open in 2002, which will be home to the National Football League�s Seattle Seahawks, complementing Seattle�s existing leisure demand generators. The Seattle-Tacoma International Airport has proposed a $2.6 billion expansion project, including the development of a third runway, the expansion of Concourse A and a major renovation of the airport�s main terminal. The airport authority issued bonds to finance the project in October 2001, and it is anticipated to be complete in 2003. Major Supply Changes In the downtown area, the 425-room Elliott Grand Hyatt Seattle, adjacent to the expanded convention center, opened in July 2001. The Elliott Hotel was purchased by a joint venture between Hyatt Hotels Corporation and R.C. Hedreen Company and was renamed the Elliott Grand Hyatt Seattle. A 400-room Marriott Hotel, adjacent to the new World Trade Center, is currently under construction. Due to Bellevue�s long-term economic potential, the hotel market continues to expand and is growing in significance. As a result, a 303-room Westin Hotel is under construction as part of the $360-million Lincoln Square mixed-use development and is anticipated to be completed in September 2002. Additionally, a 500-room hotel adjacent to the Meydenbauer Center is in the planning stages. In the airport area, the Hilton Seattle Airport & Conference Center completed its renovation and expansion project. The $56 million project entailed a refurbishment of the existing hotel and added guestrooms and meeting space. This sub-market is anticipated to significantly benefit from the airport expansion. Political/Economic/Legal The passage of a law that gave most cities throughout the state the right to set aside a portion of their sales tax revenue to fund the development of convention centers has spawned further convention center development activity in this area. This includes a 200,000 square-foot facility being proposed by the City of Tacoma, scheduled for completion in 2002. Jeff Dallas, Los Angeles
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M. CHASE BURRITT
National Director, Hospitality Services (305) 358-4111 BOSTON
DALLAS
LOS ANGELES
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MIAMI
Mark Lunt (305) 358-4111 NEW YORK
PHILADELPHIA
PHOENIX
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Also See | 2002 National Lodging Forecast / Trends, Outlook, Market Segment Reports / Ernst & Young LLP / Feb 2002 |
2002 California Lodging Forecast / Ernst & Young LLP / Feb 2002 | |
2002 Manhattan Lodging Forecast / Top 10 Thoughts for 2002 and Beyond / Ernst & Young LLP / Feb 2002 | |
Canadian Hotel Investment Report 2002 / Colliers International Hotels / Feb 2002 |