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March is usually a boom time for Washington hotels, as better weather and the U.S. capital’s famed cherry blossoms draw tourists, school groups and armies of government contractors pitching goods and services to federal agencies.
Now, with national parks closed and contracting agents furloughed in the longest-ever government shutdown, the city’s hotels are facing a spring chill, said Jan Freitag, a senior vice president at lodging data provider STR.
Group travelers who book blocks of rooms in advance might not wait to see whether the government reopens, meaning hotel operators could see cancellations sooner rather than later. Lower occupancies could lead hotels to send home staff, meaning the effects of the shutdown will linger even after the shutdown ends.
“You don’t go to Disney if the rides are closed,” Freitag said. “Events organized by the government or by groups doing business with the government will be postponed or not happen. School groups that had bake sales to fund a trip aren’t going to come.”
The shutdown is also likely to weigh on the broader U.S. hotel industry as government contractors take a break from the road and leisure travelers digest news reports of airport-security staffing challenges, Michael Bellisario, an analyst at Robert W. Baird & Co., wrote in a Jan. 16 research note.
“We believe investors (and hotel operators) likely continue to underestimate the demand impact of the partial government shutdown, and we expect the shutdown to become more impactful over time,” Bellisario wrote.
©2019 Bloomberg L.P.