HVS Market Pulse – Salt Lake City, Utah

Salt Lake City is well positioned for a strong recovery. Several office, hospitality, and residential projects downtown are ongoing and should support a swift recovery and continued growth in a post-pandemic environment. The addition of a convention center headquarters hotel, a potential bid for a future Winter Olympics, a new terminal and expanded airport, a favorable business climate, and proximity to the mountains are factors that are contributing to an overall positive long-term outlook.
Katy Black

Before the Pandemic

Occupancy within the Downtown submarket remained stable, consistently registering near the 70% mark, for the five years prior to the pandemic. Average daily rate (ADR) growth during that period was also consistent at a compound annual growth rate (CAGR) of 3.0%. These metrics illustrate the strength and stability of the local market, even in 2018 when the city lost its largest convention, Outdoor Retailer, as it moved to Denver, Colorado. The number of events held at the Salt Palace Convention Center rebounded in 2019. Convention attendance surpassed one million delegates in the two years prior to the pandemic.
 
Salt Palace Convention Center Statistics
Source: Salt Palace Convention Center

Trends in 2020 and YTD 2021

In 2020, overall demand declined by approximately 50% in the Downtown submarket, while ADR decreased roughly 20%, generally in line with national trends. However, occupancy for the year-to-date period through July reached 50%, with strong month-over-month increases; moreover, occupancy surpassed the 60% mark in June and July of 2021. ADR lagged 2019 levels by roughly $40 during the first four months of 2021. However, this spread was reduced to $20 in May and $10 in June and July. A look at recent passenger traffic numbers for Salt Lake City International Airport (SLC) further illustrates the improvements in travel in recent months.

2017–YTD 2021 Passenger Traffic (in Millions)
Source: Salt Lake City International Airport

Monthly SLC Passenger Traffic through July
Source: Salt Lake City International Airport
Market Outlook
Robust demand recovery is anticipated to continue through the remainder of 2021, as Salt Lake City remains a popular drive-to tourist destination. The return of conferences and events, including FanX, one of Salt Lake City’s largest annual events (to be held in September 2021), should also support increased levels of demand, with occupancy levels expected to surpass 50% by year-end. Thereafter, occupancy levels are anticipated to exceed 70% in the summer of 2022; however, the 272-room dual-brand Element/Tribute Hotel and the 700-room Hyatt Regency are expected to open in the third and fourth quarters of 2022, respectively. Given this new supply, occupancy for the Downtown submarket is not anticipated to return to pre-pandemic levels until 2024/25.

Overall ADR growth for 2021 is expected to be approximately 8%, driven primarily by the anticipation that strong ADR growth will continue through the second half of the year. The return of FanX and other events at the convention center, as well as the expectation that employees will return to the office and that corporate travel will resume to some extent, should support ADR growth for the remainder of the year, in line with what was experienced in June and July of 2021. More significant growth is anticipated in 2022, likely near 10%, as the mix of business shifts to higher-rated corporate demand and as the new hotels raise the ADR ceiling for the overall market. ADR is expected to return to pre-pandemic levels by mid-year 2023. Growth above inflationary levels is also anticipated in 2024, as the new hotels ramp up operations and as stronger occupancy bases allow for continued rate increases.

For more information, contact either Katy Black, MAI, or Ryan Mark with our HVS Denver team.

About Katy Black

Katy Black, MAI is a Senior Vice President with the HVS Denver office. She is an expert on the lodging dynamics of the Rocky Mountain region, with an emphasis on Colorado's Front Range markets. She also has considerable experience in southern California's Orange County. Katy’s history in hospitality includes frontline experience at the Crowne Plaza Quaker Square, the Courtyard by Marriott at The University of Delaware, and the DoubleTree by Hilton and Hilton Akron/Fairlawn. She graduated summa cum laude from The University of Delaware with an honors degree in Hotel, Restaurant, and Institutional Management. Contact Katy at (970) 305-2229 or [email protected].

About Ryan Mark

Ryan Mark, a Director with HVS Denver, brings first-hand experience, excellent communication and problemsolving skills, and attention to detail to conduct hotel market studies, feasibility studies, and valuations. Before joining HVS, Ryan worked in various roles in housekeeping and front office management at the 1,100-room Hyatt Regency Denver; he also acted as Assistant Manager of the hotel. Ryan earned his BS in Restaurant and Resort Management from Colorado State University. Contact Ryan at (303) 881-4762 or [email protected].

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