Hotel Development Plans in Washington, D.C. Hit a Supply-and-Demand Snag
More people are visiting the U.S. capital, but occupancy rates and revenue per room have not budged much. Chalk it up to an old-fashioned economics problem of supply and demand, but that’s not stopping developers from building more hotels.
The Washington, D.C., hotel market has always been a safe bet for developers because the nation's capital can usually withstand any economic downturns or political upheaval.
That is still true to some extent. Yet the Washington market struggled for a good part of 2019, based on key industry metrics, making it not so much of a lucrative venture for hotel developers and investors. That leaves developers entering the New Year feeling a bit uneasy about a potential oversupply problem in the nation's capital.
Here is some of what they face. The occupancy rate dropped 1 percent from January to November 2019 to 72.1 percent in the Washington metro area, which includes suburbs in Maryland and Virginia, according to industry research firm STR. RevPAR, or revenue per available room, was down for six out of the 11 months reported so far last year. It did rebound by the end of November to an average of $116.62, a 1.3 percent increase.
