Lodging Market Potential Index (LMPI) - 2013 >> globalEDGE: Your source for Global Business Knowledge

August 1, 2013

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 2013

Dimension	Weight	Measures Used
Size of Economic Base	5 %	Regional GDP - 2013¹ Population - July 1, 2012² FIRE, wholesale trade, services employment (in thousands) - 2012³ Total Employment (in thousands) - May 2013⁴
Growth of Economic Base	6 %	Regional GDP Growth - 2008-2013¹ Population Growth - 2007-2012² Growth in FIRE - 2008-2012³ Total Employment Growth - 2009-2013⁴
Economic Stability (Standard Deviation)	5 %	Volatility in per capital real regional GDP - 2007-2012¹ Volatility in Population - 2007-2012² Volatility in FIRE - 2008-2012³ Volatility in Total Employment - 2009-2013⁴
Market Consumer Purchasing Power	5 %	Per Capita Personal Income - 2012¹ Unemployment - Dec 2012⁴ Total Retail Sales - 2012³ Eating and Drinking Place Sales - 2012³
Tourism Trends	7 %	Airport Traffic - 2012⁵
Growth in Tourism Trends	8 %	Change in Airport Traffic - 2008-2012⁵
Performance of Commercial Real Estate	7 %	Office Space Vacancy Rate - Q1 2013⁶ Retail Space Vacancy Rate - Q1 2013^7,9 Office Space Net Absorption - Q1 2013⁸ Retail Space Net Absorption - Q1 2013^7,9
Hotel Market Supply and Absorption	17 %	Room Inventory Absorption - May 2012 - May 2013⁸ New Hotel Supply Construction Pipeline - May 2013⁸
Hotel Market Performance	20 %	ADR Annual - May 2013⁸ REVPAR - May 2013⁸ Occupancy - May 2013⁸
Hotel Market Performance Growth	20 %	Annual ADR Growth - 2008-2012⁸ REVPAR Growth - 2008-2012⁸ Occupancy Growth - 2007-2013⁸
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 ⁹ Source: REIS, Inc.

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	Oahu Island, HI	1	64	100	30	12	13	100	93	63	62	100
2	New York, NY	100	44	1	100	81	14	98	1	100	37	95
3	San Fran-San Mateo, CA	18	52	79	54	38	21	78	74	64	50	93
4	Miami-Hialeah, FL	24	39	26	28	49	19	88	49	44	93	90
5	New Orleans, LA	2	74	73	17	5	18	45	67	33	100	85
6	Dallas, TX	31	88	18	46	100	100	86	64	11	33	83
7	Boston, MA	23	50	68	60	20	22	86	69	52	51	82
8	Houston, TX	28	95	12	47	35	10	46	92	26	61	78
9	Nashville, TN	5	100	70	19	6	14	59	100	24	52	70
10	Chicago, IL	43	30	34	47	62	10	78	79	36	33	66
11	LA-Long Beach, CA	46	27	16	47	51	17	51	74	37	41	65
12	Washington, DC-MD-VA	28	80	37	68	46	14	34	32	41	44	55
13	Tampa-St Pete, FL	9	28	92	4	11	2	56	83	11	59	48
14	Seattle, WA	15	57	62	37	23	12	88	66	32	23	46
15	Denver, CO	10	56	81	26	38	17	83	52	25	35	46
16	Phoenix, AZ	16	29	54	20	28	12	35	58	6	72	45
17	St Louis, MO-IL	10	34	92	19	8	2	64	93	13	40	45
18	Philadelphia, PA-NJ	27	78	27	36	21	3	44	48	31	44	45
19	Anaheim, CA	13	40	87	29	5	1	86	67	31	28	40
20	Atlanta, GA	23	29	51	22	68	15	29	62	6	41	38
21	Minn-St Paul, MN-WI	15	64	64	43	23	8	55	61	16	24	32
22	San Diego, CA	12	49	71	20	12	7	77	74	28	7	31
23	Orlando, FL	7	41	53	1	26	9	41	53	16	23	18
24	Detroit, MI	16	1	52	7	22	1	1	74	8	32	18
25	Norfolk-VA Beach, VA	4	36	68	19	1	2	40	76	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