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DC's Hotel Influx Expected To Hurt Occupancy, RevPAR in 2017

Hotel Supply Demand Graph DC

The recent influx in DC's hotel supply has led to underperforming rate growth, and a new report predicts an upcoming decline in occupancy.

Between Q2 2010 and Q2 2016, the DC area added 5,000 hotel rooms, making it the seventh-fastest-growing hotel market in the US, according to CBRE's 2017 hotel outlook. The added supply hasn't hurt occupancy yet, with a 77.9% Q2 occupancy rate in the District and 71.1% rate in the metro area, compared with the US average of 65.5%.

DC's hotel room supply will increase another 2.6% in 2017 and 3% in 2018. The CBRE report predicts occupancy, which has been growing since 2012, will begin to decline in 2017. Researchers also expect RevPAR growth to slow with the increased supply. DC's RevPAR growth has already lagged behind the national average, with the District experiencing 2% growth between 2012 and 2015 compared to 6.6% nationally

DC's hotel market, the fourth-largest in the country, continues to be driven by tourism, with 21.3 million visitors in 2015, and convention activity, with 15 citywide conventions in 2016. 

Related Topics: CBRE