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Negative outlook for DC group meetings
February 1 2013

2012 wasn’t a kind year for Washington, D.C.’s group meetings market. But planned improvements to the city’s 2.3-million-square-foot convention center could help turn things around.

Highlights
  • The number of citywide conventions held in Washington fell to 13 during 2012, from 22 a year earlier, according to Destination DC’s Ronnie Burt.
  • “Over the long term, we think D.C. is a great market to be in,” Host’s Gee Lingberg said.
  • A number of improvements are planned for the Walter E. Washington Convention Center, which turns 10 years old in 2013.
     

WASHINGTON, D.C.—Hoteliers in the U.S. capital slogged their way through a tough year for group meetings, and early indications are that 2013 will not bring any relief.

The number of citywide conventions held in Washington fell to 13 during 2012 from 22 a year earlier, said Ronnie Burt, VP of sales and services for Destination DC. The number of group roomnights fell by 25% in 2012 to 360,000, he said.

“2012 was kind of a down year in Washington, D.C., actually,” said Paige T. Dunn, regional director of sales and marketing for mid-Atlantic and southeast U.S. regions for Kimpton Hotels & Restaurants. “We went into the year trying to be optimistic, but what with all the (disruptions) in Congress and it being an election year, some of the quarters didn’t pan out the way we hoped.”

Dunn said Kimpton, which has eight hotels in the Washington, D.C., market, didn’t count on Congress being out of session for the entire month of October. Also, the General Services Administration clamping down on its meetings budget didn’t help either, she said. “I think it probably caught most of the hotels off guard,” Dunn said.

Further, the U.S. capital is down 2% in commitments and 4% in terms of actual group roomnights reserved as of December 2012 for the following 12 months, according to TravelClick data.

An uneven economy has taken its toll on Washington’s meetings market, Burt said.

“It’s kind of the world we’re living in,” he added.

Convention center upgrade
Philip Wood, managing director at The Jefferson hotel, a 99-room property, is not bullish on 2013.

“It’s going to be a soft year,” Wood said. “D.C. is predominantly more a business town than anything, which always surprises me because D.C. is such a great place to visit from a tourist perspective. … What drives business to the hotels is whether or not the convention businesses is coming to town.”

Gee Lingberg, a VP at Host Hotels & Resorts, said the real estate investment trust expects 2013 to be a “market perform” year for Washington as far as group business goes.

The key to reversing that trend might lie in conventions, sources said. Convention business, while it doesn’t spark all of the demand coming to the region’s hotels, does drive compression, said Wood.
 
Washington’s meetings market could receive a needed shot in the arm from renovations being done to the 2.3-million-square-foot Walter E. Washington Convention Center. Among the planned improvements is the addition of more meeting rooms, digital signs and drop-down folding air walls, Burt said.

“The facility is in pristine condition,” Burt said of the convention center that turns 10 years old in 2013. “It’s very well maintained.”

Development has also sprouted around the convention center, he said, noting that a 1,175-room Marriott Marquis is scheduled to open during the spring of 2014.

“The nice thing about the project is that it will be connected to the Walter E. Washington via a below-ground concourse,” he said. “It adds about 100,000 square feet of meeting space.”

The city is counting on strong business from the medical community, Burt said, as medical meetings business is Washington’s strongest group meetings sector.

Meetings outlook
While the market might have stumbled during 2012, the longer-term outlook is brighter, sources said.

Burt said the number of citywide meeting roomnights on the books as far out as 2018 already outnumbers roomnights during 2010. “Our pace has improved, and we’re excited about it,” he said.

Host has also shown its confidence in the market, Lingberg said. The REIT last year acquired the 888-room Grand Hyatt Washington, D.C., for approximately $400 million.

“Over the long term, we think D.C. is a great market to be in,” she said.

Still, 2013 is apt to result in another down meetings business year for Washington’s hotels, Dunn said. While she expects Congressional business to pick up, convention business will decline.

“For compression in the city, we need both of those things,” she said.

Patrick Mayock contributed to this report.

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