Slowly but surely, the recovery from the coronavirus pandemic continues.
We reviewed the performance of selected hotels in eight submarkets of King and Snohomish Counties. For the first three months of 2022, the average room occupancy rate was 51.9%, an increase of 14 points over the same period in 2021. Occupancy is quite strong in Everett and has nearly recovered in SeaTac and the University District. The recovery has been slower for the samples in Bellevue, South Lake Union, and the Seattle CBD, areas that rely heavily on corporate travel and group functions.
Room prices increased in each of the markets surveyed, in some cases exceeding the pre-pandemic rates. During 1Q2022, the average price of a room for the hotels sampled in Downtown Seattle was $170, up from $130 for the first quarter of 2021 but still less than the $188 ADR recorded in 1Q2020. Hotels in Bellevue and South Lake Union followed the same pattern. By contrast, prices in some suburban markets have fully recovered.
In the first quarter of 2022, there were five conventional sales of hotels at prices exceeding $2,000,000. In addition, hotels in Tacoma and Kirkland were purchased for conversion to affordable apartments and transitional housing. Over the past two years, at least 13 hotels, most in the budget tier, have been purchased for conversions, reducing the macro market room supply for the first time on record. At present, the three counties are home to about 420 conventional hotels and just under 56,000 guestrooms.
As of March 2022, six hotels are under construction. The Astra Hotel in South Lake Union is scheduled to open in May. The new Best Western in South Tacoma should follow in September. In total, the six hotels will add 1,147 guestrooms to the macro market supply. This figure does not include projects that have yet to break ground.
Click here to subscribe to Kidder Mathews market research.