DC Hotel Revenue is Down 87%, Due to Lack of Business Travel

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2021 is proving to be an even worse year for hotels than 2020. 

The hotel industry is poised to see a decrease of more than $59 billion nationally in 2021, due to the lack of business travel revenue, according to a new report by the American Hotel & Lodging Association and Kalibri Labs.

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This follows a year that saw losses of approximately $49 billion.

The Washington, D.C., region has been one of the markets impacted most, dropping a whopping 86.5 percent in business travel revenue since 2019, with total revenue of just $371.2 million compared to $2.7 billion pre-pandemic.

That figure is the second-highest amount in total revenue lost, trailing only New York’s $4 billion decrease; and is fourth in total percentage loss, behind San Francisco (93 percent), Boston (88.6 percent) and New York (88.4 percent).

“Business travel has declined precipitously this year due to COVID-19, and Washington, D.C., is highly reliant on business travel, generating 61 percent of its pre-pandemic hotel room revenue from business travelers,” Jennifer Myers, senior director of communications for the American Hotel & Lodging Association, told Commercial Observer. “Given that Washington is highly reliant on business travel, it will likely be one of the later markets to recover.” 

Virginia is also down considerably, seeing 63.5 percent less hotel activity than in 2019.

“Virginia’s decline was largely driven by revenue and business travel decreases in Northern Virginia,” Myers said. “The other factor is that Richmond is also quite dependent on business travel—with 54 percent of hotel revenue in 2019—so that market suffered as well. The state’s overall impact was mitigated a bit by leisure travel into Virginia Beach, but broadly, the state is above average in terms of business travel dependence.”

One important factor for recovery, the report noted, is employers bringing employees back to the office.

“Business travel is not likely to increase until employees are back in an office setting and client and in-person meetings start to resume,” Myers said. “Right now, renewed COVID-19 concerns due to the Delta variant remain a major challenge to resuming business travel.” 

While it’s difficult to make predictions into 2022 and beyond, a recent national survey conducted by Morning Consult on behalf of the AHLA revealed that U.S. business travelers are scaling back travel plans amid rising COVID-19 cases, with 67 percent planning to take fewer trips, 52 percent likely to cancel existing travel plans without rescheduling, and 60 percent planning to postpone existing travel plans.

Furthermore, the AHLA predicts business travel revenue will not reach pre-pandemic levels until 2024.

Keith Loria can be reached at Kloria@commercialobserver.com.