NWA Able to Absorb More Hotel Rooms (Tom Reed Commentary)

When grading the overall commercial real estate market in northwest Arkansas, the grade assigned by Streetsmart Data Services for the first quarter of 2007 was a "B." This was primarily due to the professional office sector, which showed increased vacancy as a result of the recent delivery of new product to the market. 

In this article I would like to address the hotel sector of the commercial real estate market.

Streetsmart Data Services researches various sectors of the commercial real estate market in northwest Arkansas, including professional office, office/retail, retail, medical office, office/warehouse, hotel and full-service restaurant. Reports are produced on a quarterly basis.

In the first quarter of 2007, Streetsmart Data Services researched 51 hotels comprising 5,060 rooms in Benton and Washington counties. The hotels examined included both limited-service and full-service facilities. These facilities are typically located along the Interstate 540 corridor, at or near major interchanges, between Bentonville and Fayetteville.

A limited-service hotel typically offers a continental breakfast, business traveler conveniences, etc., in addition to room rental, while a full-service hotel includes a restaurant and lounge, and possibly meeting rooms, in addition to room rental.

The majority of the hotels examined were limited-service facilities, as only seven full-service hotels were noted. Many of the newer limited-service hotels are being designed for extended-stay occupancy.

What appears evident is that northwest Arkansas hotels are experiencing reasonably high annual occupancy rates.

Average annual occupancy rates quoted ranged from a low in Fayetteville of 63.9 percent to a high in Springdale of 71.5 percent. Bentonville reflected an average annual occupancy rate for the first quarter of 2007 of 68 percent, while Rogers indicated 68.8 percent.

Our research supports that occupancy rates are typically very high Monday through Thursday nights, tailing off somewhat on the weekend unless there is a Razorback sporting event or major convention/business meeting in the area.

Nightly room rental rates researched in the area hotels showed a significant variation from low to high. This is due to the type of room being rented, hotel amenities, etc.

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