Saturday, June 21, 2025
The King County hotel business is battling persistent economic challenges. While booking about 65% of their rooms at an average rate of $167, both rates being somewhat softer than last year, rising costs of doing business, lethargy in growth in occupancy, and interest rates adding to the mix to take profitability down, regional tourism officials worry that projected declines in international visits to America will add to woes, even hotel closures.
As one Everett hotel rep, Everton, puts it, “Our hotels suffer and will suffer for several months to come.” The situation is still grim, and King County accounts for roughly 41% of Washington hotel inventory, providing 43,000 rooms statewide per day. The outlook is not positive, though. Statewide hotel occupancy rates average 60%, 1.5% down from last year, and at an average rate of $142.
Economic Factors Contributing to Hotel Struggles
While King County hotels are seeing a slight dip in occupancy rates, there are larger, more pressing issues at play. Between 2019 and 2024, the average daily rates for hotels rose by 12–13%, but that only equates to an annual growth rate of about 2%. In downtown Seattle, the growth barely outpaced 1% during the same period.
At the same time, hotel operating costs have surged. Since 2019, Washington’s minimum wage has increased by nearly 40%, health insurance premiums rose by 42%, and certain liability insurance costs have more than doubled. Interest rates for commercial mortgage-backed securities, which are commonly used for hotel financing, have also increased by 92%, putting further financial pressure on local hotels.
“Some of the largest hotels in the San Francisco Bay area have closed or handed their keys back to their lenders because they simply can’t afford to refinance,” said Everton. “King County hotels may be facing similar situations soon.”
Declining International Travel and Occupancy Concerns
In addition to rising operational costs, the hotel industry faces negative growth trends in international travel. While Seattle-Tacoma International Airport (Sea-Tac) has added new international routes, particularly to Europe and Asia, the decline in inbound traffic from Canada and Mexico is concerning. Oxford Economics has forecast a drop in international visitors to the U.S. this year, which will disproportionately affect regions like King County, where international travelers make up a significant portion of hotel guests.
In particular, Whatcom County—a more rural part of Washington—has already seen falling hotel occupancy, attributed to a slowdown in Canadian visitors. The trend of negative growth in occupancy in Seattle and surrounding areas is now a major concern for the region’s tourism authorities. Everton stressed the importance of increasing the number of international visitors to compensate for these losses.
Domestic Demand and Affordable Travel Trends
Despite the challenges, domestic demand for travel remains strong. According to a recent U.S. Travel survey, 92% of Americans plan to take a trip within the next six months, though 70% of these travelers say they are opting for more affordable options. This trend has implications for the hotel industry, as higher hotel rates may not be sustainable if travelers are increasingly choosing more budget-friendly accommodations.
“We need to get more travelers, more visitors, more tourists, more business travel, more corporations coming, more conventions,” Everton added. It’s clear that while demand for travel is strong, the focus must shift toward attracting domestic tourists and corporate clients who may be more likely to travel in a cost-conscious environment.
Strategic Marketing Shifts in Response to Travel Trends
In response to the shifting travel landscape, King County’s tourism authority has reallocated its marketing budget to focus on major domestic feeder markets. Instead of focusing on Canada, where interest from Canadian travelers has waned, the emphasis has shifted to cities such as Los Angeles, Dallas, Phoenix, Chicago, New York, and Boston. This reallocation is aimed at bringing more U.S. tourists to the region, countering the decline in international interest.
“We’ve moved most of our marketing away from Canada due to the negativity we were receiving from Canadian travelers at least for now,” Everton noted. “Instead, we’ve redirected those marketing dollars to more promising U.S. cities with strong potential for tourism growth.”
Cruise Passengers and Extended Stays
Another area of focus for the tourism authority is the growing cruise passenger market. With Seattle being a major cruise hub, the city has worked hard to encourage cruise passengers to extend their stay before or after their voyages. Everton emphasized the importance of targeting cruise tourists, who are often eager to explore the region beyond their brief port-of-call stops.
“We’re working hard to get cruise passengers to stay longer in Seattle, to visit surrounding areas like Tukwila and Des Moines,” he explained. This strategy could help bring in more tourism dollars, offsetting some of the challenges the hotel industry faces.
Looking Ahead: Strategies for Hotel Recovery
Hotel properties in King County are at a crossroads, experiencing rising operation costs and declining international visitors to impact profitability. Hotel bookings in the region remain uncertain, but it is feasible to capitalize on strong domestic trip demands and shift marketing forces to U.S. target markets. Growing corporate events, business travelers, and extension stay for cruisers will be important in growing tourism revenue in the region.
As it works to overcome these challenges, King County’s businesses, tourism commissions, and accommodations will be asked to collaborate to find innovative solutions to contain costs while building visitor demand. King County’s tourism industry will be in a position to recover and surpass previous years only if it adapts to changing travel patterns and focuses on key areas of growth.
Source: KING5
