Report: Washington, D.C., hotels suffered during government shutdown

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The 35-day government shutdown from Dec. 22, 2018, through Jan. 25, 2019, wasn’t only a tumultuous time for the United States in general—hotels in Washington, D.C., felt a blow to business, according to a recent report from HotStats.

During January, hotels in the market experienced an 88.8-percent year-over-year decline in gross operating profit per available room, according to the data. Researchers attributed that drop to the closure of the Smithsonian museums, the National Zoo and the National Gallery of Art, combined with delays at Reagan National Airport and Dulles International Airport.

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It appears no metric of the D.C. market's hotel industry was left unscathed. Occupancy, for one, declined 6.8 percent to 54.5 percent in January when compared to the previous year. Total revenue per available room, or TRevPAR, fell 4.9 percent year over year to $161.95, according to the report. RevPAR also decreased 4.9 percent to $104.17.

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Food-and-beverage figures were negatively affected, too, due to events rescheduling from January to later months. F&B through conference and banqueting experienced a 17.7-percent year-over-year drop in room hire revenue per square foot, according to the data. Food RevPAR was down 3.9 percent, while beverage RevPAR declined 15 percent. These dives led to a 6.9-percent decrease in total F&B RevPAR of $48.71.

The result? Year-over-year GOPPAR fell to its lowest level in more than 48 months (86 cents), according to HotStats. By comparison, the overall U.S. saw GOPPAR increase 3 percent to $76.31 over the same time period.

Labor Costs, Expenses

As a response to the shutdown, HotStats researchers noted that hoteliers worked to manage labor costs. Hotels in Washington, D.C., decreased total labor costs per available room 3.7 percent in January over the previous year. By contrast, the overall U.S. hotel industry increased these costs 3.9 percent over the same period. Meanwhile, total labor costs as a percentage of total revenue declined 2.5 percent.

However, HotStats data shows that D.C. hoteliers grew total expenses per available room by 3.2 percent in January. While that figure wasn’t as high as the total U.S.’s 4-percent gain, it’s still notable. And while expenses per available room for operating departments saw a 1.1-percent gain in the overall U.S., Washington, D.C., hotels experienced a 2-percent decline in the metric.

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HotStats analysts noted that the U.S. federal shutdown should act as a “cautionary tale” for the industry, showing what can happen due to black swan events. Hoteliers are encouraged to remain on alert for the next event to swoop in, and to prepare as if the next one is circling the horizon.