Developers are seeing plenty of opportunity in the Washington, D.C., hotel sector this year. But it’s not in new construction.

Hospitality executives speaking at Bisnow’s Mid-Atlantic Hospitality Summit this month were generally optimistic about strong tourism and government-related travel continuing to drive demand. To meet that demand, developers are leaning on conversions — either transforming existing hotels to new brands or redeveloping office buildings to hotels — due to the high costs of building.

“I think long term, D.C. is a great bet,” Guy Cook, vice president of luxury and lifestyle development for Hyatt, said at the event, held May 14 at The Westin Washington, D.C. City Center.

“But finding the right property, adaptive reuse, keeping the cost low is the path that leads to the luxury and lifestyle side," he said.

The executives' comments reflect a more positive outlook than those at last year's hospitality summit, during which hotel owners said they were hit hard by federal funding cuts.

In 2025, roughly 27 million visitors came to D.C., a 20,000-person increase from the year prior, according to tourism agency Destination D.C. Visitors in 2025 spent $11.9B, a 4% rise from 2024.

Hotel brand companies like Wyndham and Accor are now looking to capitalize on the trend.

Wyndham Hotels & Resorts is looking at “a lot of adaptive reuse right now,” said Barry Tiggemann, Wyndham’s senior director of development. He said the company will have a few new properties opening in the next 18 months.

Last year, half of Accor’s deals were conversions, either with independent hotels or other brands, according to Ben Cary, Accor’s vice president of premium, midscale and economy development.

Two of the largest hotels to debut in D.C. last year exemplified these trends. The former Cambria Hotel at 899 O St. NW was converted to a 184-unit Hyatt House that opened in July. And a former office building in Georgetown was converted to the 107-room Canal House hotel that opened in March 2025.

A key factor behind choosing conversions over new builds has been the rising costs of construction. Construction input prices climbed 6.2% from January to April, marking a bigger rise during the first four months of 2026 than over the past three years, according to an analysis from Associated Builders and Contractors. Inflation, tariffs and the conflict in Iran have all contributed to the increase.

“Construction costs can be more expensive, but those barriers to entry create opportunities for compression driving, you know, better performance for the existing hotels,” said Mark Shalala, senior vice president for upscale development at Choice Hotels International.

“We see a huge opportunity just for straight-up conversions,” he said.

Conversions and adaptive reuse projects come with challenges, however. Real estate executives noted that bringing in a design team early is critical to identifying how to establish the amenities necessary for a luxury hotel.

Luxury properties need restaurants, bars, a commercial kitchen and other infrastructure, Nelson said.

“Some of the conversions of one hotel to another are perhaps better than an office to a hotel,” he said.

And hotels that are in good condition work well for conversions, as do independent hotels that don’t require breaking an existing contract with a brand operator, Cary said.

Developers aren’t shying away from new projects, they’re just finding ways to be creative to keep down costs while meeting demand.

“It’s not atypical from any other year, necessarily, but it is getting a little bit tighter,” Tiggemann said. “There are solutions out there.”