August 10, 2017 at 7:18 PM
Donald Trump's company turned a $1.97 million profit at its opulent Trump International Hotel so far in 2017, dramatically beating its expectations and giving the first hard numbers to critics who charge that Trump is profiting from his presidency.
The Trump Organization had projected that it would lose $2.1 million during the first four months of 2017 as it established a new hotel and convention business in the nation's capital, according to newly released federal documents.
Instead the hotel, with its namesake in the White House down the street, is already turning a hefty profit and charging more for its rooms than most or all of the city's other hotels.
The $4.1 million swing from projected losses to profitability represents a 192 percent improvement over what the Trump family planned to make when the company opened the hotel in the fall.
Driving the profits are the extraordinary prices guests have been willing to pay for rooms, including members of Trump's Cabinet who have stayed or lived there, as well as big spending on food and beverages in the meeting areas, bar and restaurant — spots frequented by members of Trump's inner circle and other Republican leaders.
This year, guests have paid an average of $652.98 a night to stay there, beating the company's expectations by 57 percent, according to documents posted online recently by the General Services Administration.
That probably makes it the most expensive hotel in the city, according to industry experts, as guests at competing luxury hotels such as the Hay-Adams, Four Seasons and Willard paid an average of $495 a night, according to data from STR.
Since Trump entered the White House in January, the hotel has emerged as a Republican Party power center and popular destination for conservative, foreign and Christian groups holding meetings in Washington, earning Trump's company $19.7 million through April 15, according to his financial disclosure with the government.
Government ethics experts and Democrats in Congress have railed against the government's lease, with Rep. Peter A. DeFazio (D-Ore.) calling it a "highly unethical arrangement."
"What makes all of this particularly galling is that we now have the unprecedented situation where the President of the United States is both the landlord and tenant of a federal building," he said in a July statement.
Upon taking office, Trump tried to address ethical concerns by turning over the hotel's management to his two eldest sons and vowing to take no hotel profits during his tenure. But he retained his ownership interest, allowing him to eventually profit from the holdings, against the advice of the government's top ethics official.
Government watchdog groups, competing businesses and state attorneys general have sued over what they call unfair business practices that allow Trump to use the presidency to enrich himself — a tension likely to be heightened by the hotel's almost immediate profitability.
Of his 202 days in office, Trump has spent 65 days at his properties, most of them at his golf properties. He has twice been to the Pennsylvania Avenue hotel to have dinner, appearances that critics say amount to promotional displays.
But although there has been evidence of revenue slipping at Trump golf courses, his D.C. hotel is already able to charge more than most — if not all — other hotels in the capital.
"The Trump International is, if not the, then one of the top rate-getters in the city," said Marc Magazine, an executive at the real estate firm Savills Studley.
Trump International visitors have spent $8.2 million on food and drinks so far at the hotel this year, beating expectations by 37.2 percent. Those gains easily outweighed underperformance by the hotel's retail, parking and Spa by Ivanka Trump, which all failed to meet the company's expectations.
Ivanka Trump, the president's daughter, led the development of the project as a Trump Organization executive before resigning to join the White House. She also retained her stake in the hotel and reported $2.4 million in hotel-related revenue from its opening to June.
The hotel's management has sought to capitalize on the president's popularity in the GOP by marketing meeting space and rooms to Republicans and conservatives.
"We are very proud of the success of the project," the president's son Eric Trump, who took over the company with his brother Don Jr., said in an email.
The data does not show how much of the hotel's profits come from foreign governments, money the hotel has promised to donate to the U.S. treasury at the end of the year to avoid violating the Constitution's emoluments clause, which prohibits the president from profiting from foreign governments without specific approval from Congress.
The Trump International's performance to date comes despite the fact that its rooms are more often empty than its competitors', meaning there is room to grow its profits. It posted an occupancy rate of 42.3 percent, compared with nearly 70 percent in the industry.
Management is charging so much, however, that the hotel is doing just fine.
"Basically, this hotel is getting three times the average rate," said analyst Michael Bellisario of Robert W. Baird & Co. "So some people really want to stay there, and then there's a bunch of people who don't."