Atlanta’s hotel industry has witnessed steady growth throughout the first quarter of 2023, according to a Colliers hospitality market report released last month.
Hotel occupancy rates and revenue totals are up in comparison to quarters and years past, propelling the local hospitality industry to reach or surpass market activity results from pre-pandemic years.
The report partially credits the market’s economic growth to the return of in-person events across the city, as Georgia residents and visitors solidify and follow through with travel plans following inactivity induced by the pandemic.
The average daily rate jumped to 12.7% year-over-year come the end of the quarter, translating to larger gains for key players in the city’s hospitality industry. The market’s revenue-per-available-room metric also witnessed growth over the same timeframe, increasing 15.4% year-over-year.
In terms of size, Helen Zaver, senior vice president at Colliers International, said that Atlanta’s lodging industry ranks among the top 50 metropolitan statistical areas in the country, and that the city’s role as a focal point for transportation across the southeastern region encourages additional travel among visitors.
“Atlanta is the major hub in the Southeast for everything,” Zaver said. “As far as the city being connected, whether it’s through transit, highways, interstates – they all run through here going south. Atlanta is a key city, not only as a destination and travel hub, but all of that leads to [Atlanta being] one of the largest hotel cities, as well, in the Southeast.”
The Atlanta neighborhoods seeing some of the largest surges in economic progress are Midtown, Downtown and Buckhead – all business-oriented areas also offering ample dining, retail and other tourism-based opportunities to residents and visiting guests. Alpharetta, a suburb lying north of Atlanta’s city limits, is also listed as a corporate lodging destination witnessing gains inside the greater metro area. Zaver said this rebound indicates that the business sectors within these neighborhoods have served as cornerstones for economic mobility, and that these regions will likely see the greatest returns in 2023.
Zaver also said that the city’s hospitality market is expected to flourish even more in the coming months, as domestic and international business travel continues to gain traction and pleasant weather sparks an uptick in civilian travel in and around the metropolitan area.
“All the larger corporate events and conferences were at a standstill since COVID hit, and those now are coming back in full swing,” Zaver said. “The core business for Downtown, Midtown and Buckhead has always been the corporate traveler, so [those regions] were hit the worst [by the economic shutdown], but now I think they’ll see the biggest benefit this year.”
The construction rate for new hotels is seeing a steady increase, as well, also contributing to the industry’s recent gains, rising from 6,220 total hotel rooms under construction at the end of the third quarter in 2022 to nearly 6,800 by the end of 2023’s first quarter. Atlanta’s total hotel inventory has also witnessed steady growth, increasing by approximately 1,000 rooms since the end of 2022’s third quarter and by about 300 rooms since the end of last year.
Zaver said the city’s growth is expected to continue increasing steadily in future quarters, rather than experience a rapid spike reminiscent of the drop seen in 2020. She said Atlanta’s leveling supply is partially responsible for this predicted outcome, as existing hotel stock will likely remain heavily-occupied as new projects hold until future years and current builds finish construction.
“We don’t have new hotel rooms starting up at this point. We have some that have already started and will be completed, but the amount of supply coming into the hotel side is not large,” Zaver said. “That helps with keeping the hotels busy throughout the next couple of years until interest rates start to come back down again, until we see that inflation number come down, and until we see construction costs start to come down, too.”