So is it over? As is typical for the lodging industry, it all comes
down to location.
In resort markets with a high volume of leisure travel, such as Chelan and Ocean Shores, occupancy and room prices have fully recovered from the pandemic. Lodging markets approaching a complete recovery include Tacoma, Olympia, North Kitsap County, Wenatchee, and Spokane Valley. Nearer Seattle, hotels that rely more heavily on business and group demand are still one to two years away from achieving pre-pandemic performance.
We reviewed the aggregate results of selected hotels in eight submarkets of King, Pierce, and Snohomish Counties. For the second quarter of 2022, the average room occupancy rate was 71.9%. By comparison, 2Q occupancy averaged 23.5% in 2020 and 51.9% in 2021. Room prices have improved as well, from $98 in 2Q2020 to $156 in 2Q2022.
There were six sales of hotels at prices exceeding $2,000,000. The largest transaction was the June 2022 purchase of the Homewood Suites in Downtown Seattle, where the buyer plans to convert the extended stay hotel to rental apartments. That property sold for $410,256/room. The new Hilton Garden Inn in Lynnwood sold for $206,169/room. There also were four sales of budget properties ranging from $60,185/ room to $112,500/room.
Most of the projects that were underway during the pandemic have been completed. Recent openings include the Best Western Plus in South Tacoma, the Astra Hotel in South Lake Union, and citizenM Pioneer Square. Construction has resumed on the Home2 Suites in Marysville, now scheduled to open in October. The InterContinental Hotel just north of Bellevue Square should be completed in 2023.
For markets west of the Cascades, one measure to watch is air passenger traffic through SeaTac Airport. In April 2020, the airport accommodated 6% of its pre-pandemic volume. By May 2022, the ratio had improved to 88%.
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