WASHINGTON, D.C., Nov. 30, 2010 – Jones Lang LaSalle Hotels today released Hotel Intelligence Washington, D.C., the second in its series of U.S. hotel market reports which identify market trends and investment opportunities. As a key international gateway market, Washington, D.C. is attracting significant hotel investor interest. Hotel transaction volume topped $327 million so far this year, making the District of Columbia one of the three most liquid hotel investment markets in the United States. Outpaced only by New York and Boston, Washington, D.C. ranks third, and is ahead of Los Angeles, San Francisco and Miami.
The two largest transactions in the city this year were LaSalle Hotel Properties’ purchase of the Sofitel Lafayette Square for $95 million and Pebblebrook’s acquisition of the Hotel Monaco for $74 million. Both properties traded just above $400,000 per key.
“Since 2000, there have only been five other single assets that sold above $400,000 per key in Washington, D.C. This indicates the strength of current and forecast market fundamentals,” said Bruce Stemerman, managing director of the firm’s strategic advisory and asset management practice.
Following solid performance in 2010, upper upscale and luxury hotel properties in Washington, D.C. will benefit from a strengthening convention calendar in 2011. Hotels are expected to achieve revenue per available room (RevPAR) growth of 5-7 percent in 2011 over 2010 levels, with increases driven more heavily by average daily (ADR) growth than occupancy growth.
“The number of nights with more than 5,000 convention center room nights booked is expected to increase by nearly 50 percent in 2011. The market will benefit from increased demand, which, amid steady supply levels, will lead to a considerable amount of compression,” said Stemerman.
While the city overall is set to experience healthy RevPAR increases in 2011, the government per-diem rate for the District of Columbia will actually decline by approximately 10 percent compared to 2010.
Rising ADRs will enable operators at upper-tier hotels in the city to increasingly focus on blocking out lower-rated government business. “This shift in business mix will lift rates at the city’s upper-tier properties, while also boosting rates at the city’s upscale select service properties, along with properties located in suburban markets that will in turn absorb more government rate business which often exceeds the rates of their group and leisure base,” said Clay Dickinson, executive vice president for the firm’s strategic advisory and asset management group.
Consistent with national trends, new room openings were above the long-term average in 2009, but the city now has a relatively limited supply pipeline for the next three years. No new rooms are projected to enter the market in 2011. Supply additions will total approximately five hotels with 700 rooms in 2012, a relatively constrained increase historically, which will further boost the recovery in the market. The most significant new hotel opening over the longer term is the 1,167 room Marriott Marquis Convention Center Hotel, scheduled to open in 2014, which just celebrated its groundbreaking.
“As the core downtown area has virtually no vacant land, real estate development is moving to several areas that are being revived. Among the areas to watch for future hotel development in the medium-term are the blocks around the new Nationals Park in Navy Yard, the area north of Union Station, and Capitol Hill,” said Dickinson.
To request a copy of Jones Lang LaSalle Hotels’ report, visitwww.joneslanglasallehotels.com or www.jllhss.com.
About Jones Lang LaSalle Hotels
Jones Lang LaSalle Hotels, the first and leading global hotel investment services firm, is uniquely positioned to provide the depth and breadth of advice required by hotel investor and operator clients, through a robust and integrated local network. In 2009, Jones Lang LaSalle Hotels provided sale, purchase and financing advice on over $1.6 billion worth of transactions globally. In addition, advisory and valuation services were provided on nearly 800 assignments. The global team comprises over 200 hotel specialists, operating from 36 offices in 19 countries. The firm's advice is supported by a dedicated global research team, which produced 80 publications in 2009 in addition to client research. Jones Lang LaSalle Hotels' services span the hospitality spectrum; from luxury single assets and large portfolios to select service and budget hotels, resorts and pubs. Services include investment sales, mergers and acquisitions, capital raising, valuation and appraisal, asset management, strategic planning, operator selection, management contract negotiation, consulting, industry research and project development services. Jones Lang LaSalle Hotels' clients have access to the resources of its parent company, Jones Lang LaSalle (NYSE: JLL). www.joneslanglasallehotels.com.