D.C. hotels brace for inauguration crowds
 
D.C. hotels brace for inauguration crowds
03 DECEMBER 2008 11:25 AM

Hoteliers in the District of Columbia are expecting average daily rate increases approaching triple digits during the week leading up to the inauguration of President-elect Barack Obama in January.

HENDERSONVILLE, Tennessee--While average daily rates and occupancies continue to drop nationwide, you can bet that won’t be the case for the Washington, D.C. area during inauguration week. Doing some background research for this article, I decided to check out some of my favorite travel reservation sites to investigate room rates in the days around the inauguration of President-elect Barack Obama. If you’re looking to stay inside the Beltway for a few nights without breaking the bank, you might be out of luck. Here is a quick rundown of what I found available for the night of 19 January, 2009:

• A midscale property in Springfield, Va., for $400 per night.
• An upscale property in Rockville, Md., for $450 per night.
• An upscale property in Silver Spring, Md., for $730 per night.
• An upper-upscale property just inside the Beltway for $1,200 per night.

In addition, many of these availabilities also require a minimum stay of at least three nights.

A number of outlets have provided estimates that put the volume of visitors at 1 million to more than 2 million to the nation’s capital on inauguration day. This could prove to be the highest attendance for an inauguration ever, eclipsing the crowd of 1.2 million that gathered to see Lyndon B. Johnson sworn into office in 1965. Needless to say, demand will outpace room supply (about 97,000 guestrooms) in the Washington market on the days surrounding 20 January. News reports during the past week have indicated that hotels as far as two hours drive away are booked to capacity and countless postings on craigslist.com are advertising apartments and homes for rent during the week.

It’s a given that occupancies will run very high, but what will ADRs look like during the week? Studying performance data from other major events during the past few years will help in estimating market performance during inauguration week. First, hotels in Minneapolis-St. Paul and Denver saw ADRs nearly double for the weeks comprising the Republican and Democratic National Conventions this summer. While the convention host cities have less than half of the room supply of Washington, the estimated attendance (25,000-40,000 at each event) was significantly less than what is expected during the inauguration. A key consideration in this comparison is the duration of the conventions compared to the inauguration. The Washington market will see steep ADR gains in the days leading up to the inauguration followed by ADR declines starting on the 21st – especially in budget properties. It remains to be seen if the gains during the days leading up to the 20th can drive weekly performance to outpace the levels (in terms of percent change) experienced during the national conventions.

During the Democratic National Convention, Denver measured an increase of 94.8 percent in ADR versus the same week last year. During the Republican National Convention in Minneapolis-St. Paul, ADRs registered a percent change of 88.8 percent over the same week last year. For the 2009 inauguration, the week to be used for same week last year performance change registered an ADR of $145.23. To experience a similar percent change in ADR performance, the market will need to command room rates in the $265 to $280 range. Given the recent news stories regarding hotel room demand and prices in the days surrounding the event, ADR gains in the 80 percent to 90 percent range definitely are within reach. 

Other large events that might provide some insight into expected ADRs during the week include the inauguration of George W. Bush in 2001 and the Super Bowl. The table below shows the performance of the market for the week of the event compared with the same week last year. Both of these events commanded premiums in ADR; however, neither drove the year over year changes to the levels of the 2008 national conventions.

2009 Presidential Inauguration Comparable Events
(Weekly Performance, Event Week vs. Last Year Same Week)

 

Event Week
ADR*

ADR Last Year
Same Week*

ADR
Percent Change

Democratic National Convention (Denver, CO) $187.05 $96.04 94.8%
Republican National Convention (Minneapolis-St. Paul, MN) $175.82 $93.11 88.8%
Superbowl XLII (Phoenix/Glendale, AZ) $238.21 $150.07 58.7%
Washington, D.C. (George W. Bush Inauguration - 2001) $149.15 $107.29 39.0%
*ADR in U.S. dollars
Source: STR

Washington hoteliers are poised to take advantage of the overwhelming demand for rooms in the days around the inauguration. ADRs will soar, all segments will experience tremendous revenue increases and hoteliers will rejoice. It appears that even in a recession, consumers are willing to dip into savings, cut back on other expenses or go into debt to be a part of the inauguration festivities; many are willing to spend whatever necessary to be a part of the Obama inauguration. What remains to be seen is if that willingness can push ADR gains into triple digits for the week.

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