Saturday, June 21, 2025

With King County hotels having to contend with continued economic struggles, tourism officials ring alarm bells about closures in the near years ahead. With accelerated expenditures, steady increases in occupancy, and growing rates devouring profits, local hospitality leaders suggest that situations may take an even bleaker tone following a projected fall in overseas journeys to America. That could have a tremendous effect upon the strained hotel sector in the region.

King County, home to major metropolitan areas like Seattle, Tukwila, and Des Moines, accounts for approximately 41% of Washington state’s hotel inventory, which amounts to 43,000 available rooms daily. Despite this substantial market share, the region’s hotel sector is under severe strain. According to Mark Everton, CEO of the Seattle Southside Regional Tourism Authority, hotel bookings are significantly down, and occupancy levels are failing to keep pace with the region’s economic realities.

Currently, King County hotels are selling roughly 65% of their rooms at an average daily rate (ADR) of $167. While this may seem promising at first glance, both the occupancy rate and ADR are lower than the previous year’s figures. Over the years, the region has faced slow growth in hotel bookings, with average daily rates rising only by 12-13% between 2019 and 2024. This translates to a mere 2% annual growth—a figure that reflects the ongoing struggles faced by the local hospitality industry.

Rising operational costs have become one of the primary drivers of hotel struggles. Washington’s minimum wage has increased by nearly 40% since 2019, pushing labor costs upward. Health insurance premiums have risen by 42%, and liability insurance costs have more than doubled in some cases. These rising expenses are further compounded by interest rates for commercial mortgage-backed securities—a key financing tool for hotel owners—which have surged by 92%. With increasing expenses and shrinking revenue, many hotel owners in the county are left with difficult financial decisions.

Everton made an alarming comparison to hotels in the San Francisco Bay Area, many of which have been forced to close or hand their keys back to lenders due to an inability to refinance their properties. He cautioned that King County hotels could face similar struggles in the near future should the financial situation worsen. He said, “Our hotels are struggling and will continue to struggle for some time.”

A key factor exacerbating the situation is the forecasted decline in international travel to the United States. The Seattle-Tacoma International Airport has added new routes, but the outlook for inbound traffic from Canada and Mexico is concerning. According to forecasts from Oxford Economics, the number of international visitors to the U.S. is expected to drop this year, which could have significant implications for King County’s hotels, as many international visitors contribute significantly to local tourism and occupancy.

In more rural areas of Washington, such as Whatcom County, hotel occupancy has already begun to fall, largely due to the slowdown in Canadian visitors. “Our hotels in Seattle have actually experienced negative growth in occupancy—inbound international travel is a concern,” said Everton.

The drop in international travel is particularly concerning in the face of rising competition from other international tourism destinations. As global tourism recovers post-pandemic, travelers are increasingly opting for destinations offering more favorable exchange rates or enhanced travel incentives.

Despite these challenges, there are signs that domestic tourism remains robust. According to a recent survey from U.S. Travel, 92% of Americans plan to take a trip in the next six months. However, 70% of those travelers reported they are choosing more affordable options, which could prevent King County hotels from raising their rates. This trend toward budget-conscious travel is particularly evident among domestic travelers, who are opting for more economical choices due to financial constraints.

To adapt to these changes, Everton’s team at the Seattle Southside Regional Tourism Authority has reallocated its marketing budget. Instead of focusing on Canadian travelers, whose interest in Seattle has waned due to economic factors, the team has redirected marketing efforts to major domestic feeder markets such as the Bay Area, Los Angeles, Dallas, Phoenix, Chicago, New York, and Boston. This shift aims to attract more visitors from within the United States, who may be seeking affordable travel options while still desiring to explore new destinations.

Cruise tourism remains a key focus for local authorities, with efforts being made to encourage cruise passengers to extend their stay in the region before or after their voyage. Seattle’s proximity to popular cruise departure points offers a valuable opportunity to tap into this market. According to Everton, attracting cruise tourists to extend their stays could serve as a vital strategy to boost both occupancy rates and local tourism.

While King County hotels weather these uncertain times, tourism officials have several key strategies in store to assist in supporting the industry. They involve redoubling efforts to attract domestic visitors, forging partnerships with cruise lines, and reconfiguring marketing budgets to focus on markets that represent potential in terms of demand.

Everton’s catch-all is short and to the point: “We’ve got to get more travelers, more visitors, more tourists, more business travel, more corporations coming, and more conventions.” The local county tourism board is busy fighting its way through obstacles thrown up by rising costs and volatile international travel flows.

As developments come, authorities will be monitoring the situation closely, assisting local hotels and tourism sectors. In the long term, however, such rising expenditures and changing global traveling habits could have serious ramifications for King County’s hotel sector, and King County’s tourism industry will need to be versatile to weather such storms.

References: U.S. Travel Association, Seattle Southside Regional Tourism Authority