United States -  Washington DC

Washington, D.C. holds a worldwide reputation as a cosmopolitan city rich in museums, monuments, and culture, bustling with political power. As the nation’s hub of political affairs, the city is the center of governmental action and policy in the U.S. From Capitol Hill to Embassy Row, the National Mall, and historic Georgetown, Washington, D.C. also boasts a diverse concentration of national and international organizations and associations. A number of major universities, educational agencies, and museums—including Georgetown University, George Washington University, Howard University, Catholic University, American University, and the Smithsonian Institution—are located within the District of Columbia. The Washington, D.C. area's hotels occupancy and average rates have risen over the past several years; the collection of corporate, government, and educational institutions continues to support an economy that is relatively resilient to major downturns on a national level.

While tourism continues to be a strong component of demand for area hotels, Washington, D.C.'s major driver of room-night demand remains the federal government. The volume of travel related to government activity, complemented by steady tourism demand, sustained occupancy levels in the mid-60s, even during the market's slowest years. ADR growth among the midscale to upscale hotels is largely tied to the federal per-diem rate, which is set annually. In 2016, hotels experienced occupancy levels and average rates above those registered in prior peak years. A strong 2017 and 2018 convention calendar, coupled with the strong demand figures in early 2017 caused by the Presidential Inauguration and Women's March, should bode well for the hotel market’s performance.

Offsetting the favorable outlook of growth in the metro area is the significant influx of new supply anticipated for this market. In the District alone, supply is expected to increase by roughly 15% by 2020, not factoring in the rebranding and conversion projects recently completed or underway, which will potentially change hotel market dynamics in some submarkets. The advent of new supply will likely constrain overall market growth. However, the continued growth of the convention segment, and an anticipated spike in demand as the current administration settles into office, should mitigate the effect of new supply and support the performance of the city and region.

Transaction activity over the past year has demonstrated investor confidence in the market and has reflected a more diverse array of assets than was the case several years ago, particularly in the District itself. The quality assets in reputable neighborhoods continue to command strong prices, as evidenced by the sales in Northwest and Georgetown neighborhoods. Most recently, the Courtyard by Marriott Washington Convention Center in Penn Quarter sold in March 2017 for $436,170 per key. Limited available land leads investors and developers looking to renovate, rebrand, or reposition existing hotels within the market. The outlook for hotel investment and underlying values remains positive for Washington, D.C.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Change In Value For Market:

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Washington DC RevPAR Change

Washington DC RevPAR

Year RevPAR
2006 96.50
2007 102.27
2008 102.56
2009 93.76
2010 96.15
2011 97.53
2012 97.05
2013 95.52
2014 100.53
2015 100.26
2016 110.73
2017 (f) 115.20
2018 (f) 117.51
2019 (f) 118.68

For more information, please contact:

Chelsey Leffet
cleffet@hvs.com
  • +1 202 434-8793 (w)
  • +1 302 740-2772 (m)