Downtown St. Louis Hotel Market Gaining Momentum
Following the challenges faced in 2020 due to the COVID-19 pandemic, the St. Louis hotel market experienced a slow recovery in 2021 with the introduction of new accommodation options. However, the market saw a significant improvement in Average Daily Rate (ADR) thanks to an uptick in high-rated leisure demand. Throughout 2023, there was a gradual recovery in commercial, meeting, and group demands, leading to an increase in ADR, although occupancy growth was hindered by additional supply in the market.
Unfortunately, in 2024, demand and occupancy in the market stagnated as the commercial sector showed signs of improvement, but a dip in leisure demand and weaker convention demand due to construction at the convention center offset these gains. Looking ahead, as the renovation of the convention center nears completion and development projects in the downtown area and the wider region progress, there is optimism for an increase in demand in the upcoming years.
In terms of hotel development, various projects that were underway prior to the pandemic have been completed, with a few remaining in progress or on hold. The revitalization and expansion of the America’s Center Convention Complex in 2024, known as “AC Next Gen,” significantly added to the city’s appeal and offered new spaces for events and conferences. Despite a relatively weak convention year in 2024, the St. Louis Convention & Visitors Commission (CVC) anticipates a strong booking pace for 2025, with room nights expected to surpass 250,000, indicating positive growth in the sector.
St. Louis Lambert International Airport (STL) has witnessed a recovery in passenger traffic following a decline in 2020, reaching pre-pandemic levels. Plans to merge the airport’s two terminals into a single facility at an estimated cost of nearly $3 billion are in the works, with an initial $1 billion approved for design work and preliminary projects. Construction is expected to commence in 2026 to cater to the anticipated increase in passenger traffic.
Commercial developments in the market are also on the rise, with significant projects like Boeing’s Defense, Space & Security manufacturing campus expansion and the Gateway South project contributing to the positive trend. Meanwhile, leisure demand remains a crucial factor for St. Louis hotels, with attractions like the St. Louis Aquarium, Gateway Arch, St. Louis Zoo, Ballpark Village, Union Station, and Energizer Park expected to drive demand. The ongoing expansion of the St. Louis Zoo to include the WildCare Park by 2027 aims to enhance the visitor experience and further boost leisure demand.
Looking ahead, the downtown St. Louis hotel market appears resilient despite challenges faced in 2024. With positive trends in hotel demand and regional development initiatives, the outlook for 2025 seems promising. HVS, through its unique methodology involving primary market interviews, provides real-time insights for informed decision-making. For more information or assistance in investment decision-making aligned with specific goals and risk tolerance, HVS Midwest hospitality experts, Kaitlyn Hennessy, and Daniel McCoy, are available to help.