Dallas-based Ashford Hospitality Trust recently sold the 315-room Courtyard Boston Downtown hotel for $123 million, or nearly $391,000 per room. Photo courtesy of JLL
Boston’s hotel market offers a rare commodity in today’s CRE environment: predictable growth in a world of unpredictability.
The city’s success stems from its diverse demand drivers, balancing business, group and leisure travel, which provides stability even as travel patterns shift. Coupled with high barriers to entry for new developments, Boston offers a unique and attractive environment for hotel investors.
The metro area’s diverse demand generators, strong RevPAR growth and appeal to foreign investors are shaping its position as a top performer in the U.S. hospitality landscape.
A Stable Market with Strong Recovery
Prior to the COVID-19 pandemic, Boston’s hotel market was characterized by stability and predictability.
While the pandemic hit Boston harder than many other markets due to strict travel restrictions, the market’s strong recovery indicates that Boston has not only bounced back from the pandemic-induced slowdown, but has also surpassed its pre-pandemic performance levels.
According to Smith Travel Research, Boston’s RevPAR (revenue per available room) has shown significant growth, with a 17.8 percent increase compared to 2019 levels and a 6.2 percent growth versus 2023. This outpaces many other top 25 markets in the U.S. and places Boston alongside other major cities including Houston, New York City, Seattle and Chicago.
Boston’s position as a top-performing lodging market in the U.S. is largely due to its diverse mix of demand drivers. Unlike markets that are heavily reliant on a single sector, Boston benefits from a balanced blend of business, group and leisure demand.
With its world-class higher education and medical institutions, expanding corporate presence, robust transportation system and world-class convention facilities, Boston is considered one of the country’s most important gateway cities.
Adding to Boston’s appeal is its roster of upcoming high-profile events, notably its role as one of the host cities for the 2026 FIFA World Cup. This global sporting event is expected to draw significant international visitors, further boosting the city’s hospitality sector and reinforcing its status as a world-class destination.
These factors provide stability to the market, even during economic fluctuations, making Boston an attractive option for hotel investors looking for consistent performance and returns.
Supply Constraints Driving Growth
Another one of the key factors contributing to Boston’s appeal is the severe constraints on new hotel supply.
The city’s land scarcity, coupled with high construction costs and a lengthy approval process, makes new hotel development extremely challenging. With the cost per key for new construction far exceeding recent sale prices of existing properties, investors see value in acquiring established hotels.
This trend is underscored by several recent transactions, where properties have changed hands at approximately 50 percent discount to their replacement cost, highlighting the compelling value proposition of acquiring existing assets in this market.
This supply constraint, coupled with Boston’s steady tourism volume year-round, creates a perfect storm for hotel performance. The market consistently achieves high occupancy rates and strong average daily rates.
During peak periods, such as major events or busy seasons, rates can skyrocket to extraordinary levels, with guests willing to pay premium prices for accommodations. The pricing power resulting from this supply-demand imbalance contributes significantly to the overall strong performance of Boston’s hotel market.
Alan Suzuki
Investment Magnet for Cross-Border Capital
As Boston continues to outperform many other markets in terms of recovery and growth, it remains a top target for both domestic and international investors.
Even though the hotel market is relatively small in terms of annual transactions, each sale attracts considerable attention with an average of 5 to 10 groups consistently bidding for available properties, underscoring the market’s perceived value and growth potential.
Furthermore, since 2024 Boston has attracted $427 million in foreign hotel investment, placing it among the top markets for cross-border capital alongside New York City, Washington D.C., Phoenix and Miami.
While overall foreign investment in U.S. hotels has been limited due to ongoing geopolitical volatility, JLL expects cash-rich Middle Eastern and select Asian investors to be increasing acquisitive in the coming months. These investors are likely to target must-have assets in high barrier-to-entry markets like Boston, further driving competition for prime hotel properties in the city.
In a world where certainty is increasingly scarce, Boston’s hotel market continues to offer a compelling proposition: a chance to check in to a market where the fundamentals remain strong, the barriers to entry are high and the opportunities for growth abundant.
As we’ve seen, investors are indeed lining up – and for good reason.
The market’s capacity to attract global capital and deliver strong returns, even in a challenging economic climate, reinforces its distinctive position in the U.S. hospitality landscape, both now and for years to come.
Alan Suzuki is a managing director in JLL’s hotels and hospitality group.
