Editor’s Note: This is the third in a 15-part series (appearing on Lodgingmagazine.com each Monday)
examining the performance of various markets in the United States. The
following is courtesy of Deloitte’s “Hospitality Vision US Performance Review.”
The hospitality market in Washington, D.C., was flat compared with most other markets in 2011.
STR metrics show that in the first 11 months of 2011 RevPAR increased slightly by 1.3 percent, while occupancy rates were up only by less than 1 percent. Average room rates remained nearly flat with a 1.1 percent gain to $146.
In 2011, the CityCenterDC project finally kicked off, after years of planning. According to The New York Times, the $700 million complex—with 2.5 million square feet of office, residential, and retail space, as well as a public plaza and park—is an ambitious project that caps a transformation of downtown started in the late 1990s. Completion of CityCenterDC, which will include a luxury hotel, is expected in late 2013, according to the developers.
Hersha Hospitality Trust acquired the 152-room Capitol Hill Suites for $47.5 million, a move intended to expand the company’s footprint in the Washington, D.C., market (bloomberg.com). Chesapeake Lodging Trust purchased Courtyard Washington Capitol Hill/Navy Yard for $68 million (costar.com), and a Bethesda-based hotel company purchased the 888-room Grand Hyatt D.C. for $442 million (bizjournals.com).
Choice Hotels International announced plans to develop the city’s first Cambria Suites hotel, the project being a joint venture between Choice Hotels, Concord Hospitality, and Roadside Development (investor.choicehotels.com). At the same time, other investors made plans for properties in the area. The Washington Post reports that Richard Branson, owner of Virgin Hotels, told participants at The Americas Lodging Investment Summit that Washington, D.C., would be a prime market for his business, but did not identify any specific targets. Barclays Capital looked for buyers for the St. Regis hotel.
Trump Hotel Collection proposed transforming the historic Old Post Office Pavilion into a nearly 300-room luxury hotel complete with conference meeting space, a spa, and museum. Though listed on the National Register of Historic Places, the building was deemed under-utilized by the government, and the General Services Administration solicited proposals for its redevelopment.
Looking forward, tourism officials in both D.C. and the surrounding suburbs are concerned about the potential impact of politics on business. The likelihood of cuts in federal spending could hurt business, especially since D.C. is the center for many government meetings and conventions. If federal travel is curtailed, hotels will feel the pinch.
Washington, D.C., is the nation’s fourth most expensive market for air travel, according to the Bureau of Transportation Statistics, with both Dulles International and Reagan National above the national average for air fares.