The Boston Lodging Market: What the Supply Surge Means Moving Forward

At year-end 2018, the Boston and Cambridge lodging market was comprised of 105 hotels with approximately 24,000 rooms. While this has grown considerably in four years, lodging supply in this market remains small relative to other major gateway cities. The ongoing building boom in Boston and Cambridge has contributed greatly to the recent surge in lodging supply and is expected to continue through 2021 and beyond.

What does the pipeline of hotel development, its largest in recent history, mean for the Boston lodging market’s performance?

Recent & Continued Supply Growth

Between 2000 and 2014, rooms supply in market increased at an average rate of 2.3% annually. As financing became more readily available and market dynamics continued to improve, hotel projects began moving forward. Between 2015 and 2018, over 2,600 rooms opened in the Boston lodging market, a 12% increase in just four years with the largest increases experienced in 2016 and 2018.

Despite these above-average increases to supply, demand has kept pace. Market occupancy has remained above 80% for six years, reaching a historic high of 82.7% in 2018. Much of this demand growth is a result unaccommodated demand previously forced to stay elsewhere due to lack of availability, specifically weekdays throughout most of the year and weekends May through October.