With market performance improving and debt financing more readily available, hotel development is accelerating in Seattle Southside.
Seattle Southside is home to just under 8,000 hotel rooms or an estimated 24% of all the hotel rooms in King County.
Just five years ago the Southside hotel market lay in the depths of recession, with low rates of occupancy and declining revenue. The contrast with current market performance could not be more striking, as room prices rise and occupancy rates approach 80%. We are at the peak of what is typically an eight to ten-year cycle characterized by steady growth in demand and occasional surges in supply. Depending on the pace of construction, occupancy rates could reach a trough in 2017 or 2018, with the next peak expected around 2022.
In the greater Seattle area, the highest rates of occupancy are reported in Seattle’s South Lake Union neighborhood and Seattle Southside near the Sea-Tac Airport. Occupancy rates also are influenced by room process. During the recession, many hotels offered significant discounts, drawing guests away from what had been more affordable alternatives. With occupancy now at or above pre-recession levels, property managers have become more aggressive, raising rack rates and limiting discounts. Based on anecdotal evidence, we expect inventory to continue to added to the market as developers look to capitalize on greater demand.
Latest hotel updates:
Following a significant $9 million renovation by owner, SeaTac Airport Hospitality, LLC, the 260-room Crowne Plaza Seattle Airport, formerly Holiday Inn Seattle Airport is now open.
A $16 million expansion at Cedarbrook Lodge increased capacity by 60%. Also included in the expansion is a new 3,350-square-foot spa, an outdoor heated whirlpool and an additional 49 guest parking spaces.
Ariel Development has announced plans for a 150-room Hyatt Place in SeaTac. Located near Angle Lake, this $25 million development is expected to be completed in 2016.
Home2 Suites by Hilton is slated to open in Tukwila June 2015 with 139 rooms.
A 140-room Residence Inn by Marriott is being developed on Angle Lake, likely in 2017.
The $45 million, eight-story Artemis Hotel is under construction in Des Moines. The 238-room hotel complex, hospitality & entertainment facility is expected to be open in 2015 and carry a Sheraton flag.