Photo by Barb DeLollis.

Photo by Barb DeLollis.

WASHINGTON D.C. – Looking to book a hotel room in Washington? Relax!

The nation’s capitol is one of the few big cities in the U.S. where rates are sinking thanks largely to the federal government’s reduced travel and group meeting spending, according to the CEO of one of the largest owners of upscale hotels in the country.

“As expected, our hotels in Washington D.C. are having a challenging year,” Ed Walter, CEO of Host Hotels & Resorts, told Wall Street analysts last week during the company’s Q2 earnings call. “We expect Washington D.C. hotels will continue to lag in the third quarter.”

Washington visitors are enjoying a break on hotel rates due to an increase in the number of hotel rooms combined with government cutbacks in travel. The number of groups that stayed in Washington hotels during the period fell compared to 2013, he explained.

As a result, the average rate at Host’s Washington hotels declined by 2.4% during the April-June period vs. the same period a year ago, Walter said.

The only other market where Host’s average daily rate (ADR) fell in Q2 more than Washington’s was Philadelphia, where it fell by 2.7%.

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At Host’s properties in Washington during Q2, some hotel managers were able to replace the reduced group bookings with business travelers and people traveling on pre-negotiated rates but in those cases “we have done so at lower rates.” Host owns five large, upscale hotels in the city: the JW Marriott, Westin Georgetown, Grand Hyatt Washington, Hyatt Regency Washington on Capitol Hill and Washington Marriott at Metro Center.

One analyst asked Walter if the city’s newly opened Marriott Marquis convention center hotel is doing what it was supposed to do – and that is, to help the city attract more conventions, which would fill more rooms and ultimately help lift rates higher. “The new hotel is helping Washington to grow its convention center business,” Walter replied.

Generally, he said, he’s impressed with how the city’s been transforming over the last 10 to 15 years and sees growth ahead. But the city’s big pain point remains government cutbacks.

“The one negative – and it’s a big one for Washington – continues to be what’s been happening with the government. The combination both on the political side, the lack of activity on the Hill has to some degree stunted some business transient travel that we might normally have seen. And the combination of government cutbacks, sequesters, and everything else.”

The combination, he said, “has meant that instead of government travel and government groups being at least a modest contributor to growth, it has been a detractor. We are getting to the point here, where there is not a lot more to lose, so I think that the drag that that represents this year – second half of this year and into next year – will probably be relatively modest. At least that’s our hope. We’re looking forward to getting that period of time our convention business starts to pick up again.”

Readers: What have you seen lately in terms of rates or room availability when you come to Washington?