By Connor Bevans, Jeff Myers and Charlie Schwieger
While there’s no place like home for the holidays, many people will be traveling over the river and through the woods — and staying in hotels throughout the country. That’s good news for hotel operators in the Washington market.
While occupancies have improved coming out of the recession, with the average hotel occupancy up over 250 basis points since the beginning of 2010 to more than 66 percent, the occupancy average dipped in the past quarter, reflecting the impact from a large number of new hotel rooms recently added to the market.
In fact, the region’s hotel market has attracted the attention of developers seeking to take advantage of the rebound in both business and pleasure travel. Even “The Donald” himself has jumped in with plans for a hotel at the Old Post Office Pavilion. The current proposal by the Trump Organization calls for converting the historical property into a 270-room hotel scheduled to open by the end of 2015.
This coming spring, the Marriott Marquis, one of the largest hotels underway in the country, will open next to the Washington Convention Center. After several years of construction, the massive project will add a staggering 1,175 rooms to the region’s inventory.
Even considering all of the interest in new development, investors are still buying existing hotels as well. The largest hotel sale in District history took place last year when Host Hotels bought an 888-room hotel at 1000 H St. NW for $400 million and re-branded it as the Grand Hyatt Washington. This year, Loews purchased the 356-room Madison Hotel for $140 million, almost a 14 percent increase in sale price for the same property from just two years before.
What makes the D.C. hotel market different is the fact that there is no typical D.C. hotel guest. From school groups touring the monuments, to constituents visiting their congressman to professionals on business trips, Washington attracts visitors that demand a wide variety of options and price points. That diversity helps when budget-conscious managers in the federal government pull back on conference spending.
With brand-new hotels opening each quarter, holiday and business travelers alike will have new accommodations and amenities to make themselves at home in the nation’s capital.
Connor Bevans is a real estate economist, Jeff Myers is a senior real estate economist and Charlie Schwieger is an analyst with CoStar Group.