WESTERN SNAPSHOT, AUGUST 2009

Tucson, Arizona, Hospitality Market

1. MARKET MOVE

Jones

The only major hospitality development currently being planned for Tucson is the 525-room, $167 million Sheraton Hotel in the downtown/convention center corridor. The hotel, which is slated to break ground in early 2010, is being developed for the city by Dallas-based Garfield Traub Development. The Sheraton will be part of a $239 million master-planned project that includes the hotel, an expansion of the existing convention facilitie, and a new parking structure. The Sheraton is being financed by city-issued bonds, following the current trend of only projects that have creative financing coming to fruition.

2. MARKET MEASURE

Tucson is on par with the Phoenix market with a year-over-year RevPAR decline of around 25 percent. This is primarily being driven by a large decrease in room rates versus 2008. The most important indicator of a recovery will be rate stabilization. This is most likely to occur in early 2010 with gradual increases in rates coming in 2011 and 2012.

3. MARK OF A MARKET

Tucson’s lodging market is very similar to Phoenix, as they both have a large base of business and leisure travelers. While Tucson has long been known for its 4- and 5-star resorts, with the current redevelopment of the Interstate 10 corridor underway and the convention center hotel and expansion planned for downtown, Tucson could soon become the next big thing in the West for business travelers and conventioneers.

— Jason Jones is a senior vice president for Jones Lang LaSalle in Tucson.

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