Trump ho­tel strug­gles amid sale

Lux­ury prop­erty in Wash­ing­ton trails com­pet­ing sites

Orlando Sentinel - - WALL STREET REPORT - BY JONATHAN O’CON­NELL AND DAVID A. FAHREN­THOLD

WASH­ING­TON — Pres­i­dent Don­ald Trump’s Wash­ing­ton ho­tel has fallen well be­hind com­pet­ing prop­er­ties de­spite con­tin­u­ing to charge among the high­est rates in the na­tion’s cap­i­tal, ac­cord­ing to fi­nan­cial in­for­ma­tion pro­vided to po­ten­tial bid­ders as his com­pany tries to sell the ho­tel’s lease.

The ho­tel has be­come a cen­ter of Repub­li­can pol­i­tics and a fre­quent stop­ping point for mem­bers of Trump’s cabi­net and in­ner cir­cle. But its guest rooms are run­ning nearly half empty this year, ac­cord­ing to the in­for­ma­tion, caus­ing the 263-room lux­ury prop­erty — which opened on Penn­syl­va­nia Av­enue weeks be­fore Trump ar­rived in the White House — to fall short of the com­pany’s own ex­pec­ta­tions.

Mar­ket­ing ma­te­ri­als dis­trib­uted by a real es­tate firm hired by Trump’s com­pany say that a new owner, op­er­at­ing “un­en­cum­bered” by Trump’s name or his man­age­ment com­pany, could dra­mat­i­cally in­crease profits, par­tic­u­larly through a mas­sive in­crease in business with for­eign govern­ments.

The ho­tel “is or­gan­i­cally po­si­tioned to mar­ket and so­licit for­eign govern­ment business” given its “un­be­liev­able prox­im­ity to the White House, U.S. Capi­tol, In­ter­nal Rev­enue Ser­vice, Trea­sury, De­part­ment of Jus­tice” and other of­fices, ac­cord­ing to the mar­ket­ing ma­te­ri­als given to po­ten­tial buy­ers by the firm JLL, which was ob­tained by The Wash­ing­ton Post.

The mar­ket­ing ma­te­ri­als cite 77 of­fi­cial state vis­its to Wash­ing­ton that have oc­curred since Trump en­tered of­fice and say that the ho­tel “turned away” an es­ti­mated 17,100 guest stays in 2019 alone, for­go­ing as much as $9.2 mil­lion in rev­enue, ac­cord­ing to the ma­te­ri­als.

The Trump Or­ga­ni­za­tion did not re­spond to ques­tions about how it cal­cu­lated those fig­ures and whether the ho­tel was ac­tively turn­ing away for­eign govern­ments that call and ask for book­ings. JLL did not pro­vide com­ment.

Don­ald Trump Jr., who along with his brother Eric Trump is man­ag­ing the Trump Or­ga­ni­za­tion while their fa­ther is in of­fice, told Fox News re­cently that they were ex­plor­ing a sale be­cause they had agreed not to pur­sue events held by for­eign govern­ments.

In an ap­pear­ance last week on CNN, which ear­lier re­ported some of the in­for­ma­tion, White House coun­selor Kellyanne Con­way bat­ted away ques­tions about the pos­si­ble sale.

“It’s a great ho­tel. Have you been there? The food is de­li­cious, the ho­tel is great, it has prox­im­ity to many places,” she said.

“The fam­ily, be­gin­ning with Pres­i­dent Trump, have made fi­nan­cial sac­ri­fices to be pres­i­dent of the United States,” she also said.

Other Trump prop­er­ties, in­clud­ing his Do­ral golf re­sort and Chicago ho­tel, have suf­fered steep fi­nan­cial de­clines since Trump en­tered of­fice, but the District of Co­lum­bia ho­tel — op­er­at­ing at the cen­ter of Trump’s Wash­ing­ton — has be­come wildly pop­u­lar with Repub­li­can cam­paigns, con­ser­va­tive au­thors, Chris­tian or­ga­ni­za­tions and other Trump-aligned groups hold­ing events in Wash­ing­ton.

Repub­li­can groups have spent al­most $2.4 mil­lion at Trump’s District ho­tel since Jan­uary 2017, ac­cord­ing to cam­paign fil­ings. The big­gest spenders in­clude a pro-Trump Su­per PAC, Trump’s own re­elec­tion cam­paign, the Repub­li­can Na­tional Com­mit­tee and a PAC set up by Vice Pres­i­dent Mike Pence.

Dur­ing the first four months of 2017, with Trump newly in of­fice, his ho­tel turned a $1.97 mil­lion profit, dra­mat­i­cally beat­ing the com­pany’s own ex­pec­ta­tions, ac­cord­ing to doc­u­ments posted on­line by the Gen­eral Ser­vices Ad­min­is­tra­tion, which leases the build­ing to Trump’s com­pany. (The GSA un­der Trump has re­sisted pro­vid­ing fi­nan­cial in­for­ma­tion on the ho­tel, prompt­ing House Democrats to is­sue a sub­poena for it last month.)

The Trump ho­tel’s oc­cu­pancy for that time pe­riod, which in­cluded Trump’s in­au­gu­ra­tion fes­tiv­i­ties, was still be­low that of com­peti­tors, but the ho­tel was charg­ing much higher rates than other ho­tels, and its rev­enue was $6 mil­lion above the com­pany’s own pro­jec­tions.

Last year — in an in­di­ca­tion that the ho­tel was not liv­ing up to orig­i­nal ex­pec­ta­tions — District of Co­lum­bia tax of­fi­cials agreed to re­duce the prop­erty’s 2018 as­sess­ment by $53.6 mil­lion, sav­ing Trump’s com­pany nearly $1 mil­lion. Trump re­ceived $41 mil­lion in in­come from the prop­erty in 2018, ac­cord­ing to his fi­nan­cial dis­clo­sure form with the govern­ment.

More re­cently, the boost in pro-Trump business hasn’t been enough.

Oc­cu­pancy this year has been around 57%, com­pared with 75% for com­peti­tors in­clud­ing the Four Sea­sons, the Ritz-Carl­ton and the Hay-Adams, ac­cord­ing to an analysis of in­for­ma­tion in the mar­ket­ing ma­te­ri­als by The Post.

As a re­sult, the ho­tel has taken in about $20 less per avail­able room than com­peti­tors this year, even though the av­er­age guest paid about $650 per night to stay there. Real es­tate ex­perts say that could be an in­di­ca­tion that some trav­el­ers and groups re­main ex­tremely loyal to Trump’s brand, but Democrats and govern­ment ethics ex­perts have charged that the ho­tel’s clients are try­ing to buy fa­vor with the pres­i­dent.

In three law­suits wend­ing their way through fed­eral court, plain­tiffs ar­gue that Trump has vi­o­lated the Con­sti­tu­tion’s for­eign emol­u­ments clause by main­tain­ing own­er­ship of his business and leas­ing rooms to for­eign govern­ments, in­clud­ing Malaysia, Saudi Ara­bia and Kuwait.

The Trump Or­ga­ni­za­tion has do­nated $340,000 to the U.S. Trea­sury since Trump took of­fice, money the com­pany says equates to profits it has made from for­eign govern­ments. At­tor­neys for Trump ar­gue that he has not vi­o­lated the emol­u­ments clause be­cause the pay­ments are mar­ket-rate trans­ac­tions.

Trump leased the prop­erty from the govern­ment in 2013 and spent an es­ti­mated $210 mil­lion re­de­vel­op­ing it, us­ing a $170 mil­lion loan from Deutsche Bank. The lease stip­u­lates that he may sell his in­ter­est, sub­ject to ap­proval by the GSA.

JONATHAN NEW­TON/THE WASH­ING­TON POST

Pro-Trump business hasn’t helped Trump In­ter­na­tional Ho­tel in Wash­ing­ton, as its rooms are run­ning half empty this year.

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