The Washington, D.C., hotel market filled just over 3 in 5 rooms — 62.3% at the peak — during the days around President Biden’s inauguration ceremony, marking the lowest inaugural performance since STR began collecting daily performance data in 2001.

On several fronts, the 2021 inauguration was clearly unlike any other for the Washington, D.C., hotel market. Washington provides one of the more extreme cases of a market that was disrupted in 2020 by COVID-19 and the loss of normal business-leisure travel patterns. Since mid-March, D.C. hotel market performance has been near the bottom of all U.S. markets. Notably, only the Hawaii markets, which were largely closed for travel, consistently underperformed D.C.

The major economic and health challenges confronting hotels in the Washington area in 2020 have extended into 2021.

It also was generally expected that hotel performance indicators would be lower for this inauguration than past inaugurations, particularly as much of the traditional pomp and circumstance was canceled in lieu of a televised celebration, and then, a week before, rioters storming the U.S. Capitol spurred increased security in the heart of the city.

Still, the market did experience a small, albeit brief direct bump in performance for the inauguration.

Considering its low starting position, perhaps more notable is how the D.C. market has recently experienced steady weekly gains in occupancy and demand since the start of 2021. Most notable is the sharp increase in group demand. The increase in group segments could be tied to an influx of added security personnel resulting from the Capitol riots on Jan. 6, as security was heightened in the buildup to inauguration week, ending Saturday, Jan. 23. This is unlikely to be sustainable as it is dependent on a temporary security presence in the D.C. area.

Considering Washington’s low starting position at the beginning of the new year, another important takeaway from this analysis of the first weeks of 2021 is the market’s solid return from some of the worst performance levels in the U.S. during the COVID-19 recession.

Biden was sworn in as president on Wednesday, Jan. 20. Peak hotel occupancy for the Washington, D.C., market occurred the night before, reaching 62.3%. That is a full 13 percentage points behind the peak hotel occupancy reached during the second-term inauguration of former President Barack Obama in 2013, which was 75.3%. As additional comparison, D.C. hotel occupancy peaked in the vicinity of 90% for the first-term inaugurations of both Obama in 2009 and former President Donald Trump in 2017.

Unlike in past inauguration cycles, there was no major boost in hotel rooms sold in the days leading up to Jan. 20, 2021.

Occupancy gained a meager 5.4 percentage points from the Sunday before the event, when 56.9% of rooms were sold, to Tuesday, which reached 62.3%. The 2013 inauguration — Obama’s second term — marked the second-slowest pickup in hotel occupancy but still managed about a 27 percentage point increase in the same lead-in period, increasing from 48.6% to 75.4%. Other recent inaugurations had an even more substantial performance lift during the days preceding Inauguration Day.

Not unexpectedly, average daily rates for D.C. hotels in inauguration week 2021 fell well short of past years, given a lack of demand-driven pricing power, along with limited social galas. Market ADR peaked on Tuesday night at $145, which is more in range of the non-inaugural year of 2019, when occupancy was also 60% to 70%.

In stark contrast, rates in the inaugural years of 2013 and 2017 both surpassed $740, adjusting for inflation.

In absolute metrics, peak-period hotel performance appears disappointing, especially in light of past inaugurations. However, all area markets reported significant performance improvements in the days and weeks leading into the inauguration period.

Long-term room demand trends clearly demonstrate that the D.C. hotel market largely had been unable to close its performance gap through the end of 2020. Since the start of the new year, however, there have been sizable weekly increases in hotel bookings. Those recent increases, while still modest compared to past years, brought market demand much closer to seasonally appropriate expectations.

A large proportion of those January bookings were in the group segment. The D.C. market sold a total of 117,000 luxury and upper-upscale group rooms in just inauguration week alone, which might be reflective of a large influx of media and presidential well-wishers, as well as a large boost in security personnel.

In context of other U.S. markets, D.C. hotel occupancy has risen from near the bottom to among the best in the nation, with 57.6% of rooms sold for the week ending Jan. 23.

Traditionally, Inauguration Day has ramped up D.C. hotel performance steeply — not unlike the Super Bowl. This year, that was obviously not the case. However, no other presidential inauguration period in recent history has had to contend with as many challenges — for D.C., that included physical area restrictions, enhanced security and concerns about continued protests, as well as ongoing COVID-19-related trepidation among travelers.

Despite all this, the market appears to have outperformed many industry watchers’ expectations.

Under normal circumstances, few would call out D.C. area occupancies in the upper-50% to low-70% range, with ADRs of $100 to $200, as “wins.” But this year has been truly harrowing for area operators. Despite unusual circumstances, the events of January leading into inauguration week likely reminded area hotel operators what it felt like to fill most rooms again.

M. Brian Riley is a research analyst with STR’s Market Insights division.

This article represents an interpretation of data collected by CoStar's hospitality analytics firm STR.