Tourists from abroad give Washington hotels a boost

June 16, 2013

Hotels in the Washington area are still seeing a year-over-year pickup in performance, despite a presumed slowdown in business travel as a result of sequestration and the deceleration in government spending.

The likely reason for this is continued growth in the region’s tourism sector.

After record-breaking tourism in Washington in 2012, all signs point to another banner year in 2013 if hotel data through April is any indication. In 2012, the District welcomed 18.9 million visitors, a 5.6 percent increase over the 17.9 million visitors in 2011 and a 22 percent increase over the number of visitors in 2010, according to the marketing group Destination DC. The increase is largely because of the rise in international tourists traveling to Washington. On average, these visitors tend to stay for longer periods of time and spend more money than their domestic counterparts.

Across all price points, from economy to luxury, hotel fundamentals continued to improve both in the Washington area and in the United States as a whole. In Washington, occupancy is up 0.7 percentage points to 64.1 percent and the average daily rate (ADR), which measures the average income per occupied room, is up 4.6 percent through the first four months of the year, according to Smith Travel Research. Additionally, revenue per available room (RevPAR), a performance metric used in the hotel industry that takes into account occupancy and ADR, is up 5.6 percent in the Washington area year-over-year.

Nationally, ADR is up 5.7 percent in luxury hotels, 4.7 percent in upscale hotels, 2.4 percent in midscale hotels, and 2.0 percent in economy hotels in 2013. The largest increases were seen in the south Atlantic region of the country, which includes Maryland, the District and Virginia, among other states along the eastern seaboard. ADR increased there by 4.6 percent overall.

The Washington area ranks sixth in ADR among all metropolitan areas at $153.12, behind New York, Oahu, San Francisco, Miami, and New Orleans. It far surpasses the national average of $108.79.

While there are a significant number of new hotel rooms in the planning stages and under construction in the Washington region, the only notable delivery thus far in 2013 is the 49-unit Capella Hotel in Georgetown. Started by Ritz-Carlton co-founder Horst Schulze, the luxury property along the C&O Canal is the first Capella in the United States and fifth in the world (others are in Mexico, Germany, and Singapore).

Steven Reilly is a senior associate at Delta Associates. Staff at Delta Associates contributed to this article. For more information, please visit www.deltaassociates.com

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