Will tourists save DC’s hotels this year?

2020 was the worst year in history for the U.S. hospitality industry, so there is nowhere to go but up. But D.C.’s hospitality industry finds itself in a Catch-22, with travel expected to slowly recover starting this year.

D.C.’s hotels are heavily dependent on business travelers, conferences and conventions, and business travel — virtually nonexistent now — is not expected to return soon.

But D.C. is also heavily dependent on tourism, and leisure travel is expected to return much more quickly than business travel, perhaps starting this spring. Will that be enough to get the District’s hotels back on their feet?

“Well, not really. Some of the challenges that D.C. is going to face is what happens in and around the convention center. That’s where we see the biggest concern,” said Chip Rogers, president and CEO of the American Hotel and Lodging Association in D.C.

“Conventions and meetings may not come back late in 2021 — we may be looking at 2022. D.C. does have that combination of business, government and leisure travel, so it may be one of the better performers, but there are still concerns,” he said.

Hotels typically get 60% to 65% of their revenue from business travel and related spending.

The work-from-home phenomenon that emerged from the pandemic may support a hybrid form of travel that the AHLA is calling “Bleisure,” or travelers combining business with vacations.

On the flip side, pent-up demand for vacations, combined with money to spend, should make 2021 a strong year for vacation travel, once vaccines raise traveler comfort levels.

“Consumer spending, even during these tough economic times, has held up pretty well, so we know consumers are ready to spend money. And frankly, right now, it is without question the best time to travel,” Rogers said.

“Whether it’s air travel, hotels, or some of the attractions that are beginning to open up again, prices are at an all-time low. All of that is going to create that leisure demand for the summertime.”

Still, the hotel industry is not anticipating a complete return to normalcy.

The AHLA’s 2021 Hotel and Travel Outlook report expects half of American hotel rooms will remain empty this year. The hospitality industry has lost nearly 4 million jobs, and, while some 200,000 jobs are expected to be recovered this year, the accommodations sector still faces an 18.9% unemployment rate.

The long-term outlook is better, but AHLA’s forecast for a full recovery is years away.

“Long-term for us is going to be anything after 2024. We still believe we will be in a recovery phase from mid-2021 until at least the end of 2023,” Rogers said.

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Jeff Clabaugh

Jeff Clabaugh has spent 20 years covering the Washington region's economy and financial markets for WTOP as part of a partnership with the Washington Business Journal, and officially joined the WTOP newsroom staff in January 2016.

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