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New forecast says Boston’s hotel market should have a pretty solid 2020

Room rates will inch up on average and hoteliers will make more money—all helps explain the boom in luxury rooms

A luxury hotel room with a bed and other furniture inside large windows looking out on a city. Four Seasons at One Dalton

The Boston hotel market is expected to sail through the first part of the next decade, with higher room rates and with operators making more per room largely as a result.

The average daily room rate (ADR) for the city is expected to increase 1.3 percent in 2020, to $203.52 a day, according to new research from CBRE Hotels, an advisory group within the CBRE Inc. commercial brokerage. Meanwhile the revenue per available room—or RevPAR—is expected to increase under 1 percent, to $149.69.

Occupancy will be down slightly, to 73.6 percent in 2020, but in general the city’s hotel market will remain tight and expensive when compared with much of the rest of the U.S. For instance, that Boston occupancy will remain above 65.5 percent through 2021, CBRE Hotels estimates—well above the industry’s long-run benchmark and meaning that on any given night nearly two-thirds of the city’s rooms will be full.

“Particularly in the lower-priced services, Boston’s supply and demand will continue to grow through 2020,” Mark VanStekelenburg, managing director of CBRE Hotels, said in a release about the figures. “While occupancy is forecasted to dip slightly, ADR and RevPar will increase in 2020.”

The figures dovetail nicely with anecdotal evidence about the Boston hotel market. That market is awash in new development as developers and operators seek to capitalize on that high demand and those high rates. This is especially true on the upper end. The number of luxury hotel rooms in Boston—those generally commanding four or five stars—could double within the next few years, for instance.

New ones such as the Whitney at 170 Charles Street and the Four Seasons component of the One Dalton skyscraper are joining projects such as a redeveloped Langham and an expanded Onyx, both in downtown.