Lodging Market Potential Index (LMPI) - 2012 >> globalEDGE: Your source for Global Business Knowledge

August 13, 2012

You are currently viewing an old version of the Lodging Market Potential Index (MPI).

It is generally accepted that hotel development, investment and acquisition follows three basic steps (Rushmore, 2001);

Identifying market areas that show long term potential for hotel investment
Choosing a lodging product that takes advantage of the dynamics of the local supply and demand characteristics
Search and selection of a suitable site

Whereas, there is value in the individual data and information sources to identify potential markets for lodging investment decisions, a systematic and formal analysis of aggregate market potential can be a useful tool for hotel developers and investors. As a joint research project between The School of Hospitality Business, MSU-CIBER, and globalEDGE, we have developed this objective measure in the form of a Lodging Market Potential Index (L-MPI©)

As a first step in hotel development, investment and acquisitions decisions, this index identifies market areas that show long term potential for hotel investment. It will enable hotel developers and investors to conduct a relative comparison of the 25 largest lodging markets (as tracked by Smith Travel Research) along 10 Dimensions Dimension are measured using 30 different indicators and are weighted to determine their contribution to the overall market potential index. The Lodging Market Potential is based on a scale of 1 to 100.

The School of Hospitality Business Real Estate Advisory Council members were instrumental in working with the faculty researchers in The School, in determining the ten dimensions, associated indicators and their corresponding weights. To measure the performance of each dimension, objective, credible, reliable and quantifiable indicators were identified and are listed below the index.

Dimensions and Measures of Lodging Market Potential Index for 2012

Dimension	Weight	Measures Used
Size of Economic Base	5 %	Regional GDP (in millions) - 2010¹ Population - July 1, 2011² FIRE, wholesale trade, services employment (in thousands) - 2012³ Total Employment (in thousands) - May 2012⁴
Growth of Economic Base	6 %	Regional GDP Growth - 2006-2010¹ Population Growth - 2006-2011² Growth in FIRE - 2008-2012³ Total Employment Growth - 2008-2012⁴
Economic Stability (Standard Deviation)	5 %	Volatility in per capital real regional GDP - 2006-2010¹ Volatility in Population - 2006-2011² Volatility in FIRE - 2008-2012³ Volatility in Total Employment - 2008-2012⁴
Market Consumer Purchasing Power	5 %	Per Capita Personal Income - 2010¹ Unemployment - May 2012⁴ Total Retail Sales (in millions) - 2012³ Eating and Drinking Place Sales (in millions) - 2012³
Tourism Trends	7 %	Airport Traffic - 2011⁵
Growth in Tourism Trends	8 %	Change in Airport Traffic - 2007-2011⁵
Performance of Commercial Real Estate	7 %	Office Space Vacancy Rate - Q1 2012⁶ Retail Space Vacancy Rate - Q1 2012⁷ Office Space Net Absorption (sf) - Q1 2012⁸ Retail Space Net Absorption (sf) - Q1 2012⁸
Hotel Market Supply and Absorption	17 %	Room Inventory Absorption - May 2011 - May 2012⁸ New Hotel Supply Construction Pipeline (rooms) - May 2012⁸
Hotel Market Performance	20 %	ADR Annual - May 2012⁸ REVPAR - May 2012⁸ Occupancy - May 2012⁸
Hotel Market Performance Growth	20 %	Annual ADR Growth - 2007-2012⁸ REVPAR Growth - 2007-2012⁸ Occupancy Growth - 2007-2012⁸
Data used are those available for most recent year. ¹ Source: U.S. Bureau of Economic Analysis ² Source: U.S. Census Bureau ³ Source: Woods & Poole ⁴ Source: U.S. Bureau of Labor Statistics ⁵ Source: U.S. Federal Aviation Administration ⁶ Source: Jones Lang LaSalle ⁷ Source: CB Richard Ellis ⁸ Source: Smith Travel Research

Release Dates

2018
2013
2012
2011

Overall Rank	City	Size of Economic Base	Growth of Economic Base	Economic Stability	Market Consumer Purchasing Power	Tourism Trends	Growth in Tourism Trends	Performance of Commercial Real Estate	Hotel Market Supply and Absorption	Hotel Market Performance	Hotel Market Performance Growth	Overall Score
1	San Fran-San Mateo, CA	17	49	58	50	45	71	83	83	58	58	100
2	New York, NY	100	49	19	100	100	50	87	1	100	33	98
3	Oahu Island, HI	1	70	89	30	14	1	100	84	62	78	97
4	New Orleans, LA	2	93	22	17	6	100	70	47	34	100	94
5	Boston, MA	23	63	67	57	25	69	42	77	55	61	92
6	Miami-Hialeah, FL	24	41	40	28	61	80	71	51	41	50	74
7	Houston, TX	27	100	6	40	44	47	94	82	17	46	70
8	Nashville, TN	4	84	73	17	6	45	84	100	18	47	66
9	LA-Long Beach, CA	50	30	1	52	64	72	75	32	34	42	61
10	Denver, CO	10	60	85	25	47	80	73	54	19	45	61
11	Washington, DC-MD-VA	28	92	28	71	58	58	52	27	48	31	60
12	Seattle, WA	14	68	53	34	28	71	79	74	27	27	58
13	Chicago, IL	43	43	28	45	77	25	25	79	31	29	56
14	Philadelphia, PA-NJ	27	90	33	37	26	43	41	42	32	41	51
15	St Louis, MO-IL	10	49	88	17	9	12	57	87	14	51	50
16	Atlanta, GA	23	39	37	24	84	68	54	61	5	31	45
17	San Diego, CA	12	56	69	20	14	35	69	79	25	20	42
18	Minn-St Paul, MN-WI	15	68	65	43	28	38	57	65	10	31	41
19	Dallas, TX	30	87	11	43	58	48	43	51	2	27	36
20	Tampa-St Pete, FL	9	35	75	2	13	18	60	87	8	33	35
21	Anaheim, CA	12	52	76	17	6	22	47	71	24	25	34
22	Orlando, FL	7	50	62	1	32	56	55	51	11	27	30
23	Norfolk-VA Beach, VA	4	51	100	18	1	11	80	90	1	12	22
24	Detroit, MI	16	1	43	6	28	25	15	86	1	30	22
25	Phoenix, AZ	16	39	43	20	36	43	1	49	1	1	1

City	2018	2013	2012	2011
Miami-Hialeah, FL	1	4	6	6
New Orleans, LA	2	5	4	17
Orlando, FL	3	23	22	22
Tampa-St Pete, FL	4	13	20	24
Atlanta, GA	5	20	16	20
LA-Long Beach, CA	6	11	10	7
New York, NY	7	2	2	2
San Fran-San Mateo, CA	8	3	1	1
Nashville, TN	9	9	8	14
Anaheim, CA	10	19	21	12
Oahu Island, HI	11	1	3	3
Phoenix, AZ	12	16	25	25
San Diego, CA	13	22	17	19
Seattle, WA	14	14	12	9
Boston, MA	15	7	5	5
Chicago, IL	16	10	13	8
Houston, TX	17	8	7	21
Norfolk-VA Beach, VA	18	25	23	15
Denver, CO	19	15	9	4
Dallas, TX	20	6	19	16
Minn-St Paul, MN-WI	21	21	18	13
St Louis, MO-IL	22	17	15	18
Philadelphia, PA-NJ	23	18	14	11
Washington, DC-MD-VA	24	12	11	10
Detroit, MI	25	24	24	23