BOULDER, Colorado—While much of Texas is still below peak levels of revenue per available room (east Texas in particular), north Texas has climbed almost fully out of the trough and nears new peak RevPARs.
Like the rest of the nation, Dallas and Ft. Worth have experienced moderate to strong growth since the downturn during 2009 and much of 2010. For the first two quarters of this year, Dallas outpaced the growth of the United States hotel market in almost every metric, while Ft. Worth/Arlington kept pace with the U.S.
However, this was coming from a lower base in 2012, at which time RevPAR growth in the Dallas market was barely half of what the country overall experienced. On a 12-month moving average basis, peak RevPAR for Dallas was $56 in September 2008; through June 2013 it was approximately $53, or 95% recovered. Peak RevPAR for Ft. Worth/Arlington was $61 in June 2008; now it stands at $57, or 90% recovered.
The push in demand for Dallas has come primarily in the form of transient travelers. While the increase in Sunday-through-Thursday business in Dallas translates into strong RevPAR gains in 2013, weekend demand continues to pace even higher, up more than 11% year-to-date.
Breaking Dallas into segments, both group and transient RevPARs are increasing approximately 10% in 2013 through June, with 4% of that increase from rate growth. The mix of group/transient has shifted from 2008, with more of Dallas' overall occupancy from the transient traveler and less from group. This pattern is seen nationally.
The patterns are similar in the Ft. Worth/Arlington market, albeit with softer rates of growth. Weekends are slightly stronger than weekdays in 2013, with weekend RevPAR growth just less than 8%.
Transient demand is pacing only slightly ahead of group, but group rate is actually down this year, with transient rate pacing at a 4% growth rate. Like Dallas, transient demand in Ft. Worth/Arlington now accounts for a much larger portion of the market's overall occupancy than it did prior to the downturn in 2009.
Six hotels are under construction in the Dallas market; and 34 are in the final planning stages, representing more than 5,000 new hotel rooms to open in the area over the next few years, a 6% increase over existing supply. This increase is not insubstantial, and most of it is from upper-midscale hotels.
Dallas' moving 12-month occupancy through June 2013 stood at 62.7%, somewhat shy of the peak of 64.2% set in January 2001. While occupancy levels are decent, rate is even further below peak, so Dallas could have some growing pains as it adjusts to the new supply.
A similar 6% increase to supply for the Ft. Worth/Arlington market is expected over the next few years, but its current occupancy of 61.6% (moving 12-month average through June 2013) is short of its peak of 68.1% set in August 2006.
Compared to the top 25 markets, of which the Dallas market is included, Dallas is in the bottom of the pack in terms of moving 12-month RevPAR, keeping close company with St. Louis, Atlanta and Detroit. Houston, the only other Texas market in the top 25, fared little better.
Plotting the second-quarter RevPAR performance, Dallas sits below the collective average in occupancy and rate, a position that hasn't changed through the entire cycle since 2008.