D.C. hotel room rates stagnant 5 years running

The more than 27,000 hotel rooms in D.C. are occupied more often than not, but for some reason — or, more likely, for a number of reasons — the hotels themselves aren’t benefiting in terms of revenue.

Who does benefit? Travelers, who pay roughly the same amount to stay in a D.C. hotel today as they did five years ago.

“The impact on rate is a simply matter of supply and demand,” said Solomon Keene, president of the Hotel Association of Washington, D.C., noting the Great Recession continues to impact the hotel market.

D.C. hotels maintained an average of 27,611 rooms throughout fiscal year 2012, according to the D.C. Chief Financial Officer and Smith Travel Research. Those rooms were occupied 75.1 percent of the time, translating into 7.56 million hotel stays over the course of the year.

Between October 2007 and October 2012, room stays rose 6 percent, a healthier jump than during the previous six years despite the crushing recession. The overall occupancy rate has remained steady or improved slightly.

Yet, over the last five years, the average hotel room rate rose only $1, from $202.60 in October 2007 to $203.74 in October 2012.

That’s good for visitors, but it doesn’t bode well for hotel revenue, which, when adjusted for inflation, fell 3.7 percent over the last five years.

“From the summary data it is not possible to explain exactly why the average daily rate has been essentially flat in the years since October 2007,” Stephen Swaim of D.C.’s Office of Revenue Analysis wrote in the most recent edition of the CFO’s Economic and Revenue Trends report. “However, given the severe nature of the US recession, it is likely that weaker demand is the primary reason.”

Hotels employ 15,950 people in the District, up from 15,200 in March 2001. And more hotels will come online in the next two years, from the Marriott Marquis at the Washington Convention Center to the Hilton Garden Inn on the West End, the Capella Washington in Georgetown and the Cambria Suites in Shaw, part of the CityMarket at O project.

The market will adjust to more options and more variety, Keene said.

“Saturation,” he said, “I don’t think we’re anywhere near that.”

Notes from the CFO’s trends report for December.

  • October wage and salary employment in D.C. was up by 4,667, or .6 percent from a year earlier. “D.C.’s job growth,” per the report, “is decelerating.”
  • Federal government employment for October was down by 3,133 jobs, while private sector employment increased by 7,400. Need a job? Join the health industry.
  • Wages earned in the District rose 1.7 percent in the June 2012 quarter compared to the same quarter the year before, the slowest year-over-year increase since 2009.
  • On the housing front, 3,563 single family homes were sold in the District in fiscal 2012 at an average price of $630,109, while 2,784 condos were sold at an average price of $429,611. More than 450 of the single family properties and 72 of the condos sold for more than $1 million.
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