Market Reports

HotStats Special Report: Federal Government Shutdown No Good for Washington D.C. Hotels

The shutdown proved a proverbial death knell for hotels in the month. In addition to decreased occupancy, the market reported a consistent decline across all revenue centers.
Capitol Hill, Washington, United States - Photo by Jomar on Unsplash
Federal Government Shutdown No Good for Washington D.C. Hotels

HotStats

This was borne out over the course of the 35-day shutdown, from December 22nd, 2018, to January 25th, 2019, which dealt a crushing blow to profitability for D.C. hotels, resulting in an 88.8-percent year-on-year drop in GOPPAR for the market during the month of January as a whole.

Many factors prompted the precipitous drop, including the closure of the iconic Smithsonian museums, the National Zoo, and the National Gallery of Art. These, combined with delays at Reagan National Airport and Dulles International Airport, culminated in a drop of 4 percentage points in occupancy, to 54.5 percent, compared to the same period the previous year.

The shutdown proved a proverbial death knell for hotels in the month. In addition to decreased occupancy, the market reported a consistent decline across all revenue centers. TRevPAR experienced the negative effects of this demand contraction, with a YOY 4.9-percent fall to $161.95. The 2.0-percent increase in average room rate over that period, to $191.02, was not enough to offset declining occupancy, leading to a YOY drop of 4.9 percent in RevPAR to $104.17.

Not only did the shutdown produce city closures, it, too, precipitated the cancellation of events, such as the 2019 S&T Cybersecurity and Innovation showcase and the 2019 AGA Financial Systems Summits—both moved from January to March. This took a heavy toll on all departments, especially food & beverage through conference and banqueting, with a 17.7-percent YOY plunge in room hire revenue per square foot. The bleak results for that same period of Food RevPAR (down 3.9 percent) and Beverage RevPAR (down 15.0 percent) also contributed to the 6.9-percent fall in total F&B RevPAR to $48.71.



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