The Washington area’s hospitality industry has been one of the mainstays of the local economy. But recently, business has slipped a bit compared to the rest of the nation.

Hotel occupancy and average daily rates in the Washington area have exceeded national averages over the past 12 years. But in the third quarter of 2012, occupancy in the region was 72.8 percent, compared to an average of 74.6 percent for the top 25 markets in the United States. The region’s average daily rate was $171.62, compared to a top 25 average of $180.39. The average for the top 25 metropolitan areas is boosted significantly by New York, San Francisco and a handful of other large markets.

The region performed on par with the nation with a 1.3 percentage-point increase in occupancy over one year; the top 25 markets had a 1.4 percentage-point increase. The region, though, lagged the rest of the nation based on changes in the average daily rate. Washington saw rates fall 1.6 percent, while the nation overall rose by 4.1 percent.

The national hotel market’s strong growth over the year can be attributed to the broader economic recovery. The Washington region never experienced the sort of volatility faced by other parts of the country, and so the economic rebound has had less effect here.

In the third quarter, the Washington area had 661 hotel properties with approximately 105,900 rooms, according to Lodging Econometrics, including 118 hotels with about 28,196 rooms in the District of Columbia. There were 17 hotels under construction with 3,275 rooms, most of which are outside of the District of Columbia. An additional 23 hotels with 2,660 rooms were expected to begin construction within the next 12 months, and 54 more projects with 8,947 rooms were in the early planning stages.

The largest hotel opening in the region recently was the Hyatt House Falls Church Hotel, which added 148 rooms to the Fairfax area when it opened in September. The largest project in the development pipeline is the 1,175-room Marriott Marquis Convention Center Hotel in the District of Columbia, which is scheduled to wrap up construction in the spring of 2014.

Even with the hotel development activity, demand is projected to outpace supply over the next few years. As a result, PKF Hospitality Research projects that revenue per available room, a key industry metric, will grow from $97.59 in 2011 to $119.43 by 2016, a 22.4 percent increase. Likewise, the firm projects that occupancy will rise through 2014.

Potential cuts in the federal government’s 2013 budget, particularly cuts in administrative expenditures such as travel and conferences, remain a source of concern for the local hospitality sector. However, the passage of Question 7, which expanded gambling in Maryland, could increase the hotel traffic if a casino is approved at National Harbor.

Ricky Bierbower is an associate at Delta Associates. Staff at Delta Associates contributed to this article. For more information, please visit