More people are staying in District hotels and they are paying more for their rooms

According to STR, Inc., an industry data company, the demand for DC hotel rooms for the 12-months ending May 2015 was 6.2 percent higher than in the prior 12-month period. The high demand, combined with an average room rate that was 4.3 percent above the prior year’s, drove hotel revenue higher by a remarkable 10.7 percent.

Looking back over the past decade (from May 2005 to May 2015), the year that just ended was by far the best one for growth in room demand and revenue as measured by the 12-month moving total.

  • The past year, the first full year in which the new Convention Center hotel began operating, also saw the highest occupancy rate of the decade (77.3 percent) for all hotels in DC.image002
  • The 4.3 percent increase in average room rate in the past year was also the highest percent change in 4 years. Over the past 4 years, however, rates have remained stagnant and most of the gain in revenue has been attributable to increasing demand.image004
  • The strong hotel room sales is adding roughly $22 million to the District’s tax revenue in 2015. The District taxes hotel accommodations at 14.5 percent and uses about a third of its collections to pay the debt service on the Convention Center bonds and support tourism promotion. In 2014, the hotel tax generated $226 million in revenue—this is about one fifth of total sales tax revenue in the District. A 10 percent growth in the hotel sales would also boost the tax collections by the same proportion.
  • However, the stronger demand and prices have not yet translated into more jobs in the hotel sector in the District. Room demand increased by more than 16 percent in the last decade and revenue, adjusted for inflation, is up by more than 20 percent. At the same time, there has been virtually no gain in wage and salary employment reported by the Bureau of Labor Statistics for the DC accommodations industry sector. The accommodations industry includes more than the hotels included in the STR, Inc. statistics, but the lack of increase in reported employment likely also reflects some combination of change in the mix of hotel types, productivity increases, and changes in proportion of full-time and part-time employment in the hotels.image006

You can read more about the performance of the hotel industry in the June 2015 District of Columbia Economic and Revenue Trends report.

What exactly what is this data? STR, Inc. is a private company that reports industry data on hotel demand (room-days sold in a month), hotel supply (number of hotel rooms available for rent each day of the month), average daily rate, and revenue. Employment numbers are from DC accommodations sector as reported monthly by the US Bureau of Labor Statistics.


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