Two Luxury Brands; Two Slightly Different Constituencies

It is a rare event for Washington DC to have one luxury hotel open, much less two. Is there enough room in the market for both brands? Marc A. Magazine, Executive Managing Director of Savills Studley's Hospitality Group, believes so, in part because the two hotels are aiming at slightly different clientele.

To be sure, there will be plenty of overlap, but generally speaking, Magazine told GlobeSt.com that he expected the Trump hotel to be competing for the visitors that typically go to the Hay Adams or the St Regis or the Jefferson, while the Watergate will be more likely to compete for the visitors that might otherwise visit the Intercontinental — the new one under development at The Wharf that is opening in 2017 — and the Hilton Conrad under development at CityCenter, which is opening in 2018.

An Upscale Pipeline

Indeed, much of the hotel pipeline for the DC area is aimed at the upscale and upper midscale markets, Magazine said, citing STR Data. The Washington DC metro market currently has 3,339 rooms under construction, representing 3.1% of the existing supply, according to STR. There are an additional 6,882 rooms in various stages of planning, which is down by 16% this time last year.

The District hotels can absorb this new supply, Magazine said, especially with a new administration coming in — a guaranteed generator of heavy hotel traffic.

“What might get affected are the suburban hotels that used to benefit from the compression,” he said.

WASHINGTON, DC—Washington DC has never been known as a five-star hotel type of town. There is the Hay Adams, the Jefferson, the St. Regis, Ritz-Carlton, the St. Gregory, the Willard Intercontinental and the Four Seasons …and starting this fall, the Trump Hotel.

The federal government selected the Trump Hotel Collection to redevelop the Old Post Office Pavilion in 2012 with an August 2018 delivery date as part of the contract. Trump Hotels secured a 60-year lease and began a $200-million renovation to develop a 263-room luxury hotel, which includes three 6,300-square-foot presidential suites and a 13,200-square-foot ballroom.

Taking a break from the presidential race campaign trail, Donald Trump announced on Tuesday the hotel would be opening in September 2016, some two years ahead of schedule. However, the grand opening still won't beat the Watergate's opening – another new lux hotel entering the DC market.

According to Watergate's website, it is accepting reservations starting for May 1.

Two Luxury Brands; Two Slightly Different Constituencies

It is a rare event for Washington DC to have one luxury hotel open, much less two. Is there enough room in the market for both brands? Marc A. Magazine, Executive Managing Director of Savills Studley's Hospitality Group, believes so, in part because the two hotels are aiming at slightly different clientele.

To be sure, there will be plenty of overlap, but generally speaking, Magazine told GlobeSt.com that he expected the Trump hotel to be competing for the visitors that typically go to the Hay Adams or the St Regis or the Jefferson, while the Watergate will be more likely to compete for the visitors that might otherwise visit the Intercontinental — the new one under development at The Wharf that is opening in 2017 — and the Hilton Conrad under development at CityCenter, which is opening in 2018.

An Upscale Pipeline

Indeed, much of the hotel pipeline for the DC area is aimed at the upscale and upper midscale markets, Magazine said, citing STR Data. The Washington DC metro market currently has 3,339 rooms under construction, representing 3.1% of the existing supply, according to STR. There are an additional 6,882 rooms in various stages of planning, which is down by 16% this time last year.

The District hotels can absorb this new supply, Magazine said, especially with a new administration coming in — a guaranteed generator of heavy hotel traffic.

“What might get affected are the suburban hotels that used to benefit from the compression,” he said.