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Hotel business is booming in Boston

Room rates are rising amid a brisk demand

Lane Turner/Globe Staff

The 94-room Verb Hotel is opening soon in the Fenway neighborhood of Boston.

Boston-area hotels can look forward to another strong year in 2015 as a rising number of business travelers and overseas tourists are booking nearly every available room.

The annual forecast presented by the Massachusetts Lodging Association Friday predicted rates at hotels in Boston and Cambridge will jump 7 percent next year, to $255.94 a night, while occupancy will remain at an all-time high even with the addition of several new hotels.

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“It’s phenomenal. Everyone should be thrilled,” said Rachel Roginksy, principal at Pinnacle Advisory Group, a consulting firm that conducted the forecast for the association. “Boston is sold out every single Saturday and just about every single Tuesday, Wednesday, and Thursday. We are a very robust lodging market.”

RELATED: Fenway’s changing profile to claim landmark HoJo’s

Occupancy rates for local hotels, which reached a record 80 percent last year, are expected to continue at that high level through 2015 — well above the national average of 62 percent.

Room rates, meanwhile, are climbing at a faster pace. From 2009 through 2013, rates increased an average of about $35 a night, but are forecast to jump another $33 through 2015.

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Industry specialists attribute the rise in demand to the thriving biotechnology and technology sectors that attract scores of business travelers, an abundance of universities, a healthy convention market, and higher numbers of international tourists arriving at Logan Airport, which has recently added several nonstop flights from overseas capitals.

RELATED: Hotels cater to foreign guests’ tastes

As hotels fill up in Boston, travelers are also spilling into the suburbs.

The suburban market — out to Interstate 495 — is expected to reach an average occupancy of 70 percent in 2015.

Rates will increase about 5 percent to $127.37 per night from 2014.

Erin McGrath, a spokeswoman for the Westin Waltham Boston, said the hotel’s revenue per available room is expected to climb 40 percent from 2009 to the end of 2014.

Many companies cut back on travel budgets during the recession and the years that followed, often requiring employees to stay in midlevel hotels rather than luxury accommodations. Now, they are spending again, McGrath said.

“It’s just a very healthy economy,” McGrath said. “We’ve seen a nice return in corporate travel.”

The rising demand is prompting developers to bring new hotels to the Boston market. The 94-room Verb hotel in the Fenway and the 123-room Fairfield Inn and Suites in Cambridge are expected to open this year.

At least five more hotels will enter the market next year, and another will expand.

By the end of 2015, Boston and Cambridge will have added more than 1,100 hotel rooms, bringing the total to 23,025.

Some hoteliers are cautious about increasing the supply too much.

“It’s a blessing and curse in a way,” said James Carmody, general manager of the Seaport Hotel.

“A few years ago, capital got very tight. Developers were not getting money. You saw a relatively small growth in supply. As we see a real ramp up in supply the question is whether the demand will match that.”

Related coverage:

Hotels cater to foreign guests’ tastes

Residential tower to join offices on Boston’s skyline

BRA approves $4.6m tax break for Fenway Center project

Fenway’s changing profile claims landmark Howard Johnson

Howard Johnson, then and now

Taryn Luna can be reached at taryn.luna@globe.com. Follow her on Twitter @TarynLuna.
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