The spotlight was on New Orleans earlier this year with the city hosting Super Bowl LIX, among the city’s notoriously strong Mardi Gras celebration and the Jazz Festival.
“With the Super Bowl coinciding with Mardi Gras and then Jazz Fest shortly after, the New Orleans market is doing very well right now,” said Colin Sherman, director of hospitality market analytics in Texas and the U.S. South for CoStar Group. “With those two events alone [Mardi Gras and Jazz Fest], the market typically performs well, so with the Super Bowl added [to the mix], the market has done quite well.”
Sherman said over the Super Bowl weekend, RevPAR was up 156 percent, while ADR was up almost 142 percent on the Friday and Saturday before the big game.
New Orleans demonstrated mixed performance trends throughout the last year. In the first half of the year, the market did face few headwinds due to increased room supply and moderate demand growth, which led to compressing occupancy rates, which then constrained RevPAR. “We haven’t seen ADR grow too high,” he said. “It’s remained around 1 to 2 percent growth. It’s been fairly steady.”
More recently, in the second half year, the market has improved. “We saw RevPAR actually go into positive territory, above 2 percent, and with these kind of market conditions and improvements, we did see the momentum of demand go up quite a bit,” Sherman continued.
For the Super Bowl, contracts with the NFL are signed years in advance to reserve 90 percent of a hotel's room inventory in the host market. With the majority of New Orleans hotels in the central business district and French Quarter, it allows for hotels to push rates higher.
When New Orleans hosted the Super Bowl earlier this year, among the top 25 markets, New Orleans reported the highest increases in ADR (+42.8 percent to $314.37) and RevPAR (+33.5 percent to $222.66). Occupancy, however, was down 6.5 percent to 70.8 percent, due to a comparison against Mardi Gras in 2024, according to CoStar’s weekly hotel results.
Kevin Davis, Americas CEO at JLL Hotels & Hospitality, agreed that the market has finally had a turnaround year in 2024. “Some of the challenges in the market have been a result of new supply that has entered the market,” he said. “There also is a fair amount of shadow supply with Airbnb so that combination, coupled with convention demand being down, has been one of the past challenges for the market. It’s primarily a leisure transient and group demand market and without the strong convention market, causes challenges.”
Between 2014 and 2019, there was about a 10.4 percent increase in supply, mostly in limited-service, smaller assets, Davis said. Right now, there are only two hotels under construction in the downtown area—the 253-key Fairmont and the 216-key Element. “That’s against the base of about 25,000 rooms downtown,” he continued. “New supply is off, which is good, but the gamechanger for the market will be the upcoming Omni hotel.”
There hasn’t been a new convention center hotel built in the market since the mid-1980s so as a result, the city has aged group hotel stock, which makes it more difficult to attract higher-rated groups to the city, Davis concluded. “With that brand-new Omni adjacent to the convention center, it will help drive group business in the future, which the broader market will benefit from,” Davis said.
Development
There are about 900 rooms currently under construction, according to Sherman. One of the more exciting upcoming projects is the Omni Hotels & Resorts’ 1,000-room headquarters hotel across the street from the New Orleans Convention Center. The development has been held up since 2018, when the convention center's renovation was first announced.
“The Ernest N. Morial New Orleans renovations and improvements are really going to highlight the New Orleans market to groups and group events,” Sherman said. “Now with a new hotel, it will have a further impact on the market.”
This will be Omni's second hotel in New Orleans, along with the Omni Royal Orleans. Omni has convention center hotels the Dallas; Fort Worth, Texas; Nashville, Tenn.; Atlanta; and Boston markets.
“Today’s vote is an exciting moment for this project, and Omni New Orleans will be a fitting addition to the cityscape that underscores the unique hospitality you can only find in this city,” said Kurt Alexander, president of Omni Hotels & Resorts. “We look forward to engaging with city officials, our neighbors in the Warehouse District, as well as other community stakeholders to create a destination that everyone is proud of and that reflects the amazing culture of New Orleans. We will continue to share additional details as the project progresses.”
The hotel will include 100,000-square-feet of meeting space, multiple restaurants and bars, a rooftop pool deck, a spa and a parking garage. Design of the hotel will continue through this year, with construction expected to begin in 2026 and the opening expected in 2029.
“Today marks a significant milestone for New Orleans and Louisiana. Omni’s investment demonstrates the confidence national businesses have in New Orleans and our state and reinforces that we are open and ready for new opportunities,” Louisiana Governor Jeff Landry said in a prepared statement. “This hotel will draw new meetings, conventions and business travelers to the region, benefiting hospitality-related businesses and creating more jobs for residents. It’s a gamechanger for the tourism industry that powers New Orleans, and I look forward to seeing Omni New Orleans become a landmark for hospitality and a symbol of growth in Louisiana.”
Last fall, Caesars Entertainment completed the $435 million renovation of Harrah’s to Caesars New Orleans. As the only land-based casino in the city, the property now has nearly 800 guestrooms between its two hotel towers.
Slated to open later this year, the Fairmont New Orleans is part of a redevelopment project which will transform the former Bank of New Orleans Building, a 31-story skyscraper and the city’s 10th tallest building, located in the Central Business District.
Completed in 1971 and originally designed by architects Skidmore Owings & Merrill, known for the Willis Tower in Chicago and One World Trade Center in New York, the building is an example of International Style architecture and is listed on the National Register of Historic Places. Fairmont New Orleans will occupy 18 stories within the building, with 250 luxury guestrooms, including 40 suites ranging from one-bedrooms to specialty suites. There will be three food and drink venues throughout the property, including an all-day-dining restaurant, a lobby lounge and a rooftop bar and speakeasy overlooking a swimming pool.
As far as the upcoming pipeline, there are a lot of smaller projects, Sherman said. “In 2025, the pipeline picked up and now with this Omni, I think that's probably the largest new hotel to hit the market in a very long time,” he said. “Which could significantly impact supply, too, so that’s another potential concern. But it seems the city has the demand, particularly in the French Quarter.”
This article was originally published in the April edition of Hotel Management magazine. Subscribe here.