The Washington Post

Washington see 6.2 percent jump in tourist spending

Tourism spending was up in Washington last year. (T.J. Kirkpatrick/BLOOMBERG)

Tourism locally picked up last year, but the region’s hospitality industry may not have gotten the full benefit as the federal government pulled back on travel and event spending.

Washington’s chief tourism bureau, Destination DC, said visitors spent $6 billion in the city in 2011, a 6.2 percent increase from the year before, as the national economy began to mend.

The city welcomed 16.1 million domestic visitors last year, an increase of 3.7 percent. The numbers for international travelers are unavailable until the end of the month.

“The economy has gotten a little better domestically, so you see more people making decisions to travel, and D.C. is part of their plans,” said Elliott Ferguson, chief executive of Destination DC.

Traveler dollars were in brisk circulation at city restaurants and entertainment venues, but area hotels seemed to benefit from only a fraction of that activity.

Sales inched up 2.8 percent, to $3.7 billion, at Washington area hotels last year, according to Smith Travel Research. Average revenue per available room — a key industry metric — crept up 1.5 percent, to $97.62, and the average occupancy rate rose 0.5 percent, to 67.4 percent.

“Travel spending and hotel revenue is moving in the same direction, but maybe not to the same magnitude,” said Kannan Sankaran, a District-based vice president at PKF Consulting, a firm that tracks the hospitality industry.

According to Sankaran, about 68 percent of hotel owners reported a rise in revenue last year, and about 60 percent logged a profit. Results, in large part, were tied to location, he said. Properties in the heart of the city fared better than those in outlying suburbs. District hotels captured $2.1 billion, or about 35 percent, of the $6 billion in visitor spending in the city.

Further out, however, the story was different. Gaylord National in Oxon Hill, for instance, reported that occupancy dipped 4.9 percent in 2011 from the previous year. The 2,000-room hotel at National Harbor reported that per-room revenue slid 4.4 percent, to $134.52.

In a regulatory filing, owner Gaylord Entertainment attributed the results to “a decline in government-related group room nights that are typically booked in-the-year, for-the-year.”

Government agencies have reduced travel spending because of concern about looming federal budget cutbacks, a trend that continues to plague hotels across the region. Washington was one of two markets in the country to swing to a decline in room revenue in the first quarter, according to Smith Travel.

Sankaran estimates that government-related travel accounts for 15 to 20 percent of business at many D.C. area hotels. And with the Society of Government Travel Professionals projecting a 20 percent drop in government travel this year, area hotels are likely to feel the pain. The election season, with politicians on the road campaigning and legislative activity down, will also be a drag on the local lodging industry.

Barring any blips in the economic recovery, leisure travel, accounting for about 70 percent of hotel business, could make up some of the loss in government patronage.

Despite the challenges, Washington is still operating from a position of strength as a top international tourism destination, said David Huether, senior vice president of economics and research at the U.S. Travel Association.

The hospitality industry has been a boon for the D.C. economy. The sector was responsible for 76,000 jobs in the District in 2011, a 7 percent increase from the year before. Nationwide, Huether said, the industry contributed 142,000 new jobs last year.

For the District, the uptick in visitor spending translated into $600 million in tax revenue, which Ferguson hopes will strengthen the case for increased funding of marketing initiatives.

As the city awaits the opening of the much-anticipated Marriott Marquis convention hotel, scheduled for 2014, it is losing out on convention bookings. There are only 13 major conventions booked in the city this year, compared with 22 in 2011. Ferguson said that while construction on the 1,175-room hotel was delayed, a crop of new or improved convention centers sprung up in cities such as Indianapolis, heightening competition.

“We lost market share as groups wound up pulling out of D.C. and going to other destinations because we didn’t have that hotel,” he said. “We are also [being] outspent by a lot of first-tier cities. Most of them have state economic development organizations that have a budget specifically for tourism and travel, but we do not.”



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