BELLEVUE, WA—With corporate giants like Amazon and Microsoft in the area, this Northwest city outside of Seattle attracts a lot of weekday business travelers, which has become a boon for local hotels.
“There is about 9.5 million sq. ft. of class A office space in downtown Bellevue and the vacancy rate is below 4%,” said Julie Purnell, managing director/co-leader of the Northwest & Mountain Region practice, CBRE Hotels Advisory. “There is quite a bit of office development underway—close to 700,000 sq. ft. of class A offices under development right now in downtown Bellevue. What is prompting all that is that Expedia used to be based in Bellevue. It left Bellevue to go to Seattle to increase its footprint, so Amazon took over the 400,000-sq.-ft. tower; in addition to that, Amazon has increased by about an additional 600,000 sq. ft., so it has about a million sq. ft. right now, and Amazon is also developing a tower. That is going to be about 1 million sq. ft. in 2024.”
The market also sees some overflow from Seattle travelers. “Bellevue has also been the recipient when there has been compression in Downtown Seattle,” she said. “It receives overflow when the major conventions are in town, or during the peak months. The peak months in the Seattle area are June, July and August because you’ve got all of the corporate business that is still traveling during those months, but you also have a very robust leisure business in the summer months in the greater Seattle area. You also have some conventions during that time period. Everybody wants to be there when the sun shines.”
Bellevue has an inventory of 5,556 rooms and 31 hotels, which include brands such as W, Westin, Hyatt Regency, Marriott and Hilton—as well as boutique properties like Bellevue Club Hotel and Hotel 116. From 2017 to 2018, the city experienced a 10% increase in the number of hotel rooms, and maintained strong demand, average rates and occupancy levels, according to Visit Bellevue. There are currently multiple new hotels in the Bellevue development pipeline—including the Pacific Northwest’s first InterContinental Hotel. The city is expected to add approximately 15% in new supply in the next three years.
Given the great influence of business travelers on the market, there is a stark difference between weekday and weekend occupancy and ADR. “Expedia Group data indicates average daily rates pace nearly 45% higher on weekdays (Monday – Friday) versus weekends (Saturday – Sunday),” said Cindy Heiple, area manager, Expedia Group.
CBRE’s Purnell said that occupancy drops approximately 25% as well. “You are averaging close to 80% on Monday through Thursday, and then you are down to the mid-60s on Friday and Saturday,” she said. “With that, there is no rate compression on the weekends as a result, so your average rates drop pretty significantly from the peak weeknight of Tuesday night, down to a Saturday night—it is almost a $100 difference in average room rate.”
Local authorities are working to attract more leisure visitors to the city, especially on the weekends. “With a unique location in the Pacific Northwest, surrounded by three national parks, two lakes and a robust corporate epicenter, Bellevue is well-positioned as a distinct tourism market that places extreme value on wellness, self-care, safety and has unparalleled access to the outdoors,” said Brad Jones, executive director, Visit Bellevue.
Visit Bellevue, together with the City of Bellevue, has just completed developing a new destination development plan, destination brand and a three-year marketing and communications plan geared to increase overnight visitors by 15% in the coming years.
“Working alongside community leadership and stakeholders, Bellevue is focused on developing new visitor experiences, attractions, events and amenities to draw in new overnight travelers to the city,” he said. “Bellevue also has bold plans to expand its meetings and conventions business through strong corporate partnerships and the addition and expansion of venue space.” HB