Salt Lake City is one of the “better-performing” markets in the West Coast/Mountain West region, according to James Stockdale, managing director at JLL Los Angeles. Revenue per available room in the city was 20 percent higher at the end of 2023 than it was at the end of 2019. In comparison, Stockdale said Los Angeles reported 4 percent RevPAR growth over that period, Denver hotels reported 5 percent growth and San Francisco RevPAR declined.
The Snowball Effect
According to CBRE, hotel inventory in the Salt Lake City/Ogden market showed “significant growth” in the past 18 months, adding nearly 1,200 rooms across five hotels. Larry Kaplan, executive vice president at CBRE, highlighted the October 2022 opening of the 700-room Hyatt Regency Salt Lake City, the only hotel directly adjoining the Salt Palace Convention Center, as one of the “most meaningful” properties to launch in the city in recent years. The hotel, he explained, positions Salt Lake City to tap into a new market.
“Historically, Salt Lake City has followed some of the trends of its larger regional neighbor, Denver,” Kaplan explained. In 2005, Denver opened its own Hyatt Convention Center hotel, which he credits for the city’s increased convention center demand and subsequent strong hotel performance. “The same trend is expected to happen in Salt Lake City after the opening of the Hyatt,” he said. As evidence, he points to Salt Lake City hosting the NBA All-Star Game weekend in 2023—“which would not have occurred … without the convention center hotel being built.” In the year following its opening, the Hyatt Regency Salt Lake City reported more than 75,000 guests.
A few months after the Hyatt opened, Utah-based commercial real estate development companies The Ritchie Group and Garn Development opened the dual-brand Element Salt Lake City Downtown and Le Méridien Salt Lake City Downtown. Kaplan predicted that more upscale properties would follow. “You will see the visitor demographic begin to skew toward more group demand,” he said.
Kaplan sees several reasons why Salt Lake City could attract convention business. Beyond the weather (which is “relatively temperate” throughout the year), the downtown area is a 15-minute drive from the airport (which is completing a $5+ billion expansion) and a 30-minute drive from Park City’s ski areas. “These factors, in tandem with the numerous upscale and new hotels in downtown [Salt Lake], position the convention center as a really attractive option going forward,” he said.
Stockdale agreed that the Hyatt would help attract more convention business to the city, and noted the nearby Delta Center that could hold large-scale events. “So you do have a couple of good, large-group venues that can bring in room nights.”
Downtown Development
Salt Lake City’s demographics are “very attractive” for investors, according to Stockdale, who described the market as “high-growth” and “business-friendly.” According to CBRE, the city’s construction pipeline has 567 hotel rooms under construction (as of press time) for a 2.2 percent inventory increase. These hotels are scheduled to open in 2024 and 2025. “Any time you get a market that's running really good numbers, you'll tend to see the supply hit,” Stockdale said.
Later this year, the 225-room Asher Adams Hotel will open in the downtown area as an adaptive reuse of the former Union Pacific Depot Train Station, which dates back to 1909. The hotel will be part of Marriott International’s Autograph Collection.
The uptick in development has also driven some notable midscale deals. In October, Apple Hospitality REIT acquired the 175-room Courtyard by Marriott Salt Lake City Downtown for approximately $48.1 million, or $275,000 per key; the 159-room Hyatt House Salt Lake City/Downtown for approximately $34.3 million, or $215,000 per key. Both properties opened in 2015. The following month, Apple Hospitality completed the acquisition of the 192-room Embassy Suites by Hilton South Jordan Salt Lake City for approximately $36.8 million, or $191,000 per key. The Embassy Suites South Jordan Salt Lake City opened in March 2018.
Kaplan believes that the growth of upscale hotels in the city’s downtown area reflects higher-end group demand following the Hyatt opening and also follows a similar trend seen in Denver over the past 10 years. The market, he said, is growing economically, which is resulting in a push for a Major League Baseball team. This, he noted, “would be another example of [Salt Lake City] moving into a top-tier metro area position.”