Government shutdown nears tipping point for DC hotels
Government shutdown nears tipping point for DC hotels
16 JANUARY 2019 9:12 AM

Although January and February are typically slower months for D.C. hotels, any loss of business due to the partial U.S. government shutdown is causing concern among some hoteliers.

WASHINGTON—It’s day 26 of the partial shutdown of the U.S. government, and hoteliers in the Washington, D.C., area are approaching a timeframe where group business could be interrupted if the city’s popular demand drivers are limited.

Joseph Bojanowski, president of PM Hotel Group, which has about 11 hotels in the district and surrounding suburbs, said spring time is when the student tour season picks up, along with other big group activities, but if the shutdown continues these groups could be affected.

And if they cancel, “we’ve lost the whole season,” he said.

So far he has had two medium-sized groups with government agencies that canceled their bookings and said they would rebook once the government was open. But that doesn’t guarantee business back for his hotels.

He’s concerned that groups might cancel for March bookings when guests would normally come for the Cherry Blossom Festival and other activities, too.

Loss of group business is also a worry for Randy Griffin, EVP of sales and marketing, Marshall Hotels & Resorts.

Aside from government contractors changing their plans, tour groups for the month is “non-existent at the moment,” he said via email, as some museums and D.C. parks are closed.

“We have tour groups on the books for February that could cancel if the museums do not reopen soon,” he added.

Having tour groups coming now could have given a hotel around $13,000 in group revenue, he said.

He said based on historical pickup numbers for January at Marshall Hotels & Resorts, “We are approximately $60,000 in lost business due to the shutdown. I see another $50,000 loss in the next five to seven days if the shutdown continues.”

Michael Anderson, GM of Canopy by Hilton Washington, DC The Wharf, said the biggest impact he’s seen at his property is a slowdown from the mid-week business traveler. And not only has he seen cancellations in the recent weeks, “we’re just not seeing the short-term pickup that we would normally see.”

He’s also seen this extend into the leisure side of things. There’s “certainly a little bit of a slowdown on the leisure side, too, for our shoulder night business on the weekends but not quite the impact we see from our mid-week travelers.”

January and February are already typically slower months for D.C. hotels, Anderson said, especially “these first two weeks in January,” but he would start to see higher business levels later in January and going into February, he said.

This might not be the case if the shutdown continues, he said.

Daily performance data from STR, parent company of HNN, shows hotels in the D.C. market saw occupancy fall by double digit figures for four days straight from 2-5 January.

Jan Freitag, SVP of lodging insights at STR, said it’s still too early to tell what the overall impact will be and if those decreases were due to the shutdown or because of the slower season.

“Hotels are less than half full in general, so it’s really hard (to tell),” he said. “With congress out of session, schools out of session, so there are no school trips and no major conventions early in the year … this occupancy is not surprising.”

How hoteliers are adjusting
Anderson said his team at the Canopy is always scrutinizing revenue management and making sure the rooms are priced properly to stay competitive in the market.

But when circumstances like the shutdown come across, “there’s certainly heightened scrutiny on how we’re making sure we’re within not only the city of D.C. but looking at Virginia and Maryland.” He said it’s about being creative in ways to still drive business.

Bojanowski said his team at PM Hotel Group is “getting aggressive around locking up business that has certainty to them,” such as big groups that aren’t attached to the government.

Hoteliers are also focused on battling the guest perception that D.C. is “closed.”

Anderson said tourists can still walk to see monuments, there’s just some limitations since there aren’t any park rangers to do guided tours.

He said he references Destination D.C.’s website, which has a running list of what’s accessible, in order to give guests a true picture of what they can do and where they can go.

Aside from ensuring guests aren’t left in the dark, Anderson said he also needs to reassure his team members that the hotel will remain operating as usual.

“We’re not going to ignore that there’s an impact on business with the government shutdown being where we’re located of course. But for us, it’s so important for our team members … who are relying on us to drive business to ensure they’re getting full hours,” he said.

And even when the government reopens, business doesn’t just pick right back up, Bojanowski said.

“When it closes, it closes right away, but when it will reopen, there’s a lag period,” he said.

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