A rule of thumb for redeveloping a hotel is that every $1,000 one spends improving each room ought to bring back $1 in rent a night on that room. The Trumps plan to spend $200 million on 261 rooms, which equates to more than $750,000 per room and indicates an average nightly rate of $750. That measure, however, can be crude because hotels have other ways to generate revenue.
A $750 average daily rate would easily be the highest in the city; it is more than $200 a night above what the Four Seasons, perhaps the top hotel in the city, managed last year when it collected $530.23 a day on average and had a 71.5 percent occupancy.
Ivanka Trump said room rates have yet to be set, but the Trumps plans to supplement revenue with spa services and income from banquet facilities. Their mix of rooms would include a higher percentage of suites and over-sized accomodations than competitors, something she said diplomatsprefer.
Wherever rates are set, they will assuredly be above the per diem rate that government employees may spend, meaning the hotel will likely be dependent on business executives and international travelers, the same market segment that frequents the company’s other locations.
David Loeb, who analyzes hotel companies as managing director at Robert W. Baird & Co., said $200 million was a lot to spend creating a luxury hotel surrounded by government offices, even one on a main thoroughfare connecting the Capitol to the White House: “The bottom line for Trump is it’s an ‘A’ location, but not an ‘A-plus’ location.”
“If a public company did it,” Loeb added, “I would probably be saying that it’s a tremendous risk.”
The Trumps call for reopening the Old Post Office’s front entrance facing Pennsylvania Avenue NW, where most of the doors are currently locked. An 11th Street NW entrance would be opened to cars and taxis, and Metro riders would arrive through an entrance on 12th Street NW.
Ivanka Trump has not shared many details about amenities, but for hints, consider what some of the Trump’s New York hotels offer.
At Trump SoHo, the 46-story tower in Lower Manhattan, the more than 11,000-square-foot Middle Eastern-themed spa features two Turkish baths with intricately adorned tile walls and seven treatment rooms. The suites upstairs, which rent for between $625 and $995 a night, include remote controls that operate not only the television, but the lights, drapes, heating and air conditioning. The seventh floor features an 8,000-square-foot rooftop pool deck and lounge.