Most hotels in and near Seattle have fully recovered from the impact of the coronavirus pandemic. With growth in demand and a stable supply, we expect that hotel performance will continue to improve in the coming year.
The extent of the recovery is demonstrated by the fourth quarter results (October through December) for samples of hotels in eight submarkets. In 4Q19, these hotels recorded an average occupancy rate of 68.8%, an average room rate of $136, and daily RevPAR of $93. The market collapsed at the onset of the pandemic and then slowly recovered. By 4Q22, the sample means were 60.4%, $152, and $92.
Some downtown hotels continue to struggle, weighed down by the exodus of office workers and a concurrent reduction in business travel. The convention market also has been slow to recover, but the opening of the new Summit expansion should provide a boost in 2023. Most suburban and rural occupancy rates are at or above pre-pandemic levels, and room prices are increasing rapidly.
During 2022, there were 22 sales of hotels in King, Pierce, and Snohomish Counties at prices exceeding $2,000,000. This figure excludes properties that were purchased for demolition or conversion to an alternate use. The transaction volume was very near the average for the three years preceding the pandemic. With several upscale hotels changing hands, the mean price per room was 13% greater than the 2021 mean.
At year end, only one hotel, the 252-room Intercontinental Bellevue, was actively under construction in the Tri-County area. Projects in Seattle, Bellevue, and SeaTac that were put on hold during the pandemic are expected to break ground soon. Most markets are likely to see some new supply in 2024 or 2025.
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