WASHINGTON, DC-Hotels in the DC area have had a lackluster year due to several factors, not the least of which has been scaled back travel activity by the federal government. DiamondRock Hospitality, a locally-based REIT, to cite one example, reported that its Westin Washington, DC City Center hotel is expected to experience RevPAR contraction of 5% to 7% in the fourth quarter in part for that reason, according to comments made by CEO Mark Brugger in a recent earnings call.
Now, estimates by District of Columbia about the visitor count expected for the presidential inauguration suggest that there is little relief in sight.
District of Columbia officials say they are expecting 600,000 to 800,000 visitors for the Jan. 21 inauguration, according to ABC News–far less than the 1.8 million people who came to town for President Obama’s first swearing.
That said, any increase in traffic is better than none. GlobeSt.com examined several earnings call made by hotel REITs with assets in the area, and found that local hotels see the inauguration worth RePAR of between 1% to 1.5%. That, at least, is DiamondRock’s Brugger’s forecast for the big day.
In general, he said, “I think DC will be a much better story next year than this year. And, I think perennially, with the government here and the high occupancies that DC runs, it’s a great market to be in.”
Jay Shah, CEO of Hersha Hospitality Trust, also was optimistic about the market and the impact of inauguration day, although admittedly the REIT’s RevPAR quarterly growth of 5% has outperformed the market.
“As we look ahead to next year, we are anticipating a robust first quarter with the Presidential inauguration, a more active congressional calendar throughout the year, and a better overall outlook for demand growth next year in DC,” he said. Neil Shah, COO of the REIT added that he expects the inauguration to add as much as a couple of basis points of RevPAR to the overall market for the year.
LaSalle Hotel Properties, by contrast, has had a less-than-robust year with 11 assets here. During its October 18th earnings call, CFO Bruce Riggins noted the REIT had been warning of a below-average market for at least a year.
“Obviously, DC will have a very strong first quarter with the inauguration,” he did say.
He pointed to the delta in room revenue that those hotels did during last four-day inauguration period, which was about $4.5 million just of room revenue. The two inaugurations are hardly apples to apples comparison, he said, but the last set of figures do provide a good data point.