Portland’s hotel industry is navigating a challenging recovery path in 2024, with occupancy rates and average room prices trailing behind other major cities. While the industry showed signs of improvement in the first quarter, with data indicating increased demand and revenue, it continues to grapple with obstacles that hinder its return to pre-pandemic levels.
According to the Lodging Analytics Research & Consulting (LARC) 1Q-2024 Hotel Industry Outlook and Market Intelligence Report, Portland experienced moderate growth in the first quarter, with RevPAR (revenue per available room) increasing due to a rise in ADR (average daily rate) and a slight decrease in occupancy. However, the report also noted that public safety concerns and the absorption of new hotel supply continue to pose challenges for the market.
Data presented at Travel Portland’s annual State of the Industry event further highlighted these challenges. While downtown Portland hotels sold just over 2 million room nights in 2023, the highest since 2019, it’s only a 9 percent increase from 2022 and still 21 percent below pre-pandemic levels. This disparity is even more pronounced when compared to other markets, with downtown Portland’s occupancy rate at 56 percent compared to 61 percent in San Francisco, 67 percent in Salt Lake City and Phoenix, 68 percent in Seattle, and 79 percent in Vancouver.
Marcus Hibdon, communications director for Travel Portland, attributes this lag to several factors, including the slow return of business travel, postponed convention bookings, and lingering “reputational issues” stemming from the 2020 protests and subsequent rise in crime. These issues, along with negative media coverage, have tarnished the city’s image and may be deterring potential visitors.
In recent news reported by The Registry, it is evident that some hotel properties are struggling financially and may face some dire consequences in the months to come. The Dossier hotel in downtown Portland is facing foreclosure due to a $60 million debt and the slow recovery of the city’s hospitality market. The hotel, located at 750 S.W. Alder St. and owned by Portland Hotel LLC, a joint venture between Provenance Hotels, Gencom, and Corten, defaulted on a 2015 loan. A default notice filed by law firm Lane Powell PC states that while the borrowers owe over $60 million, they can avoid foreclosure by paying $11 million. If not, the property will be auctioned off in October.
This isn’t the Dossier’s first brush with foreclosure. A similar situation arose in 2022, but the owners managed to avert the crisis by bringing the loan up to date.
However, there are glimmers of hope. The HVS Market Report “Resilience Renewed: The Transformation of the Portland, Oregon Hotel Market” highlighted initiatives such as the Hotel Security District and a government task force addressing homelessness, signaling positive change. Additionally, the opening of the Ritz-Carlton Hotel & Residences and upcoming events contribute to a cautiously optimistic outlook for the remainder of 2024.
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