Is the DC Hotel Market Faring Better Thanks to a "Business Only" Reputation?

U.S. Capitol BuildingHotels in Washington, DC got a boost in January thanks to the popularity of Barack Obama's presidential inauguration. However, it looks like that was just a momentary jump in the overall struggling hotel market.

In January, occupancy at luxury hotels in DC was up 2 percent over 2008, while the luxury hotel market nationwide fell 14.4 percent that same month compared to the previous year. But in February, business at DC accommodations dropped below the same time in 2008, and it seems the drag has continued.

The historic Hay-Adams hotel in downtown DC has seen a decline in business following the inauguration. General Manager Hans Bruland told the Washington Business Journal in April that occupancy rates were down slightly over last year. Plus, business travelers aren't buying as much, he said; for example, they book single rooms rather than suites.

Still, even if the effects of the inauguration didn't last, DC's reputation for "strictly business" might be helping its hotels and venues fare better than other so-called luxury or resort destinations such as Las Vegas. As Bill Hanbury, former president of Destination DC, told WBJ, the District is a no-frills alternative.

"[Business travelers] may be sneaking off to Charlie Palmer's, but not to a casino," he said.

Whatever the reason, Washington, DC does seem to be escaping some of the worst of the recession. Two weeks ago, it posted the smallest available daily rate decline in Smith Travel Research's U.S. hotel performance measurements. Its ADR dropped 5 percent to $122.29, while its revenue per available room saw a decrease of 4.7 percent.

As a means of comparison, DC was one of only four markets to see single-digit RevPAR declines. Six markets saw RevPAR declines of more than 25 percent, including New York with a decline of 30.2  percent, Denver with a decline of 30.1 percent, and Los Angeles-Long Beach with a decline of 29.2 percent.
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