Hotel Dc & Baltimore
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HOTEL
While participants are concerned about the anticipated economic downturn and potential decrease of GDP, participants are optimistic about our region and anticipate modest growth in performance and values. Hotels in the region have fared relatively well the past couple of years and Trend Watchers believe this trend will continue in the next two years. Although occupancy rates in both metro Washington and Baltimore have not grown as some expected, for the most part average daily rates (ADR) and revenue per available room (RevPAR) have consistently grown the past three years. Generally speaking, most respondents believe that this trend of growing ADR and RevPAR will continue over the short term. For metro Washington, most respondents do not think that occupancy rates will increase. For the Baltimore area, however, respondents were more optimistic about occupancy rates thinking that they will not drop over the next one to two years.
In both downtown Washington D.C. and Baltimore markets respondents cite lack of additional convention business due to inadequate hotel supply. This is quickly changing as both markets have a pipeline of planned hotels and hotels under construction. Catching everyone’s attention is the National Harbor project along with planned convention hotels in DC and downtown Baltimore.
Trend Watchers in both markets believe there will be an increase of limited service hotels as well as an increase in boutique type hotels. The most successful limited service hotels will be in locations where guests have pedestrian access to amenities such as restaurants, bars, shops and entertainment venues. The limited service hotel format allows the guest a more affordable stay as compared to a full service hotel and can result in higher returns for hotel operators that have difficulty controlling operating costs associated with full service amenities. As well, there is less overhead to overcome with a limited service format when hotel occupancy is not as strong as anticipated.
One of the biggest challenges facing operators in this region is the lack of labor, according to participants. Immigration issues and affordable housing will need to be addressed in order to employ the necessary labor for existing and anticipated hotel growth. Some participants also believe that hotel owners and operators will have to contend with unionization of labor in the hotel industry within the next two years. {G: Graphics