National Harbor Starting To Rebound From Crisis, But Gaylord Closure Hurting Businesses

Thousands of conferencegoers typically flow from the Gaylord National Resort & Convention Center into National Harbor's shops and restaurants, but as those stores reopen and try to welcome back customers, the mammoth hotel's ongoing closure has hurt the area's recovery from the pandemic. 

Hotels and restaurants in National Harbor have seen business start to come back as Maryland has proceeded through the phases of reopening, and the MGM National Harbor resort casino and Tanger Outlets have reopened. But business owners, developers and economic development officials say the lack of activity from the Gaylord has stunted the area's progress. 

"The three foundational anchors of National Harbor are the Gaylord, Tanger and MGM, and each of them contributes to the overall demand for hotels and retail and restaurants," Prince George's County Economic Development Corp. CEO David Iannucci said. "With the Gaylord not being open, you have one leg of that three-legged stool that's making things a little less stable than everyone would like."

Mark Ridley, the owner of The Brass Tap, said he has had at least 10 groups who had planned private parties at his bar during their visit to the Gaylord cancel their reservation because of the closure, and he has had to return the deposits. 

"The hardest thing that has hit us and other businesses is the fact that when the convention crowd is not there, it's a whole different demographic of customers and flow of people that come through," Ridley said. 

Knead Hospitality & Design co-founder Jason Berry, whose group owns National Harbor restaurant Succotash, also said the closure of the Gaylord has depressed activity in the area. 

"The Gaylord is a huge provider of revenue for all of us at the harbor," Berry said. "It's an enormous component of our business with all of the convention guests. That's gone at the moment, so all the private events business is gone. We can't take care of large groups. That has not been very good for the harbor."

The Gaylord has been closed since March 24, and it filed a layoff notice June 15 for 2,077 of its employees. The Gaylord is operated by Marriott International and owned by Ryman Hospitality Partners and hasn't set a reopening date. Neither Marriott nor Ryman responded to requests for comment.

The MGM National Harbor, the area's other major draw, reopened June 29. The casino and hotel has been operating at partial capacity, but it has managed to fill nearly all of its available occupancy, according to Peterson Cos. Executive Vice President Kent Digby. Peterson is the primary developer behind National Harbor and partnered with MGM on its $1.4B project, and Digby oversees the operations of all National Harbor properties. 

"They have done it very cautiously, so they can staff it well, clean it well, learn lessons and correct anything as they're learning," Digby said of MGM. "They'll continue to grow when opportunities are provided through regulation. They have plenty of customers and they can do more, they just don't want to rush."

Iannucci said MGM told his economic development organization that it was at full occupancy over Fourth of July weekend. 

"By definition, the people going to MGM are risk-takers, and there's a sense they're going to be more willing to take a risk, but there's a limit they've had to impose on themselves, and they've had to do it responsibly," Iannucci said. 

MGM has 308 hotel rooms, and some out-of-town visitors to the casino stay at other hotels in National Harbor, Digby said. He said the area's open hotels all sold out over the Fourth of July weekend. On recent nonholiday weekends, they have had occupancy in the 60% to 70% range. But he said hotel occupancies during the week have remained around 30%, largely because of the lack of conventions. 

"People wanted to come out for the holiday, they wanted staycations, they wanted to socialize and meet friends, so we had a full sellout," Digby said. "If you told me we'd sell out anytime soon, I would have said, 'No way.'"

Additionally, the new 156-room Hyatt Place Hotel that has been under construction in National Harbor is set for an August opening, Digby said, one month earlier than it had previously planned. 

"They wouldn't open in August if they didn't have something on the books, so it's pretty exciting to see construction moving ahead and their willingness to open," Digby said. 

Restaurant owners said the opening of MGM has increased foot traffic throughout National Harbor and brought in more business.

"Most people eat at the harbor and stay at the harbor and then party at MGM, or at least they used to," Berry said. "MGM's price point for restaurants is higher than most harbor restaurants, including ours, so we're much more approachable for the average guest."

While the casino generates demand for other National Harbor businesses, its impact is not nearly as important as Gaylord's for local restaurants, Ridley said. 

"You definitely get more foot traffic with MGM open, it doesn't hurt," Ridley said. "But it's not the same level as the Gaylord." 

The Tanger Outlets, another anchor for National Harbor, has reopened about 97% of its stores, Digby said, and it has seen foot traffic return. 

"Their sales are terrific, not just good, terrific," Digby said. "A lot of the reason is it has really credible brands, but they also have a lot of inventory. The pandemic slowed a lot of inventory disbursement, but it came back to the outlets."

Iannucci said the outlets have been performing well because people slowed their spending for nonessential items during the pandemic and saved money. 

"What they told me was it is pent-up demand," Iannucci said. "People are getting tired of being inside their houses, and they have money in their pockets because they haven't been out, and Tanger was doing pretty well from that standpoint."

While the Gaylord's continued closure has prevented National Harbor businesses from reaching their typical levels of sales, they still say they have seen an increase in recent weeks as the state has moved through the phased reopening.

Restaurants in Maryland are now allowed to seat customers inside at half capacity in addition to their outdoor patios and takeout sales. D.C. and Virginia have also moved to this phase, and it has similarly improved restaurant sales in those jurisdictions. 

"Given the world we are in, sales are much better than I would have expected," Berry said. "Last week, we were within 10% of the prior year. It wasn't like that all month, but it's getting closer and closer to where it needs to be."

Ridley said The Brass Tap's year-to-date sales are down by about 55%, but recent weekly sales numbers have improved and are down about 30% year-over-year. He said the timing of the pandemic made it especially difficult. 

"It has not been easy at all, because our highest-earning months for most places in National Harbor begin in March when the conference season starts, so everyone was really hit by that," Ridley said. 

Digby said he has seen most National Harbor restaurants experience an improvement in sales but not a full recovery. 

"Everybody’s recovering, but are they getting back to where they're profitable yet? They'd probably tell you they're losing a little bit less and getting back to normal," Digby said.

The strongest business for restaurants has been outdoor seating, and many customers are still hesitant about sitting indoors. 

"What we see now that we're allowed to enter inside restaurants with social distancing, there's a reluctance," Digby said. "People are still not quite as comfortable inside, even with social distancing."

Ridley said about 50% of Brass Tap's sales are coming from outdoor service, with the remainder from takeout and indoor seating. He also said there has been a reluctance to sit inside. 

"Right now people want to sit outside, they feel safe outside, it's a good environment and there are a lot of people that want to get out," he said. "We get calls all day long about, 'What time do you close? Can we reserve a seat outside?' A lot of people want to sit outside."

The warm weather will not last forever, though, and some are worried about what will happen later in the year if people are still not comfortable dining inside. 

"We're going to have winter coming up, so with outdoor dining, what's going to happen then?" Iannucci said. "This is not done yet. We're not out of this yet, and there will continue to be casualties in retail and restaurants as fall turns to winter, outdoor dining goes away and some folks that have been struggling are not going to be able to pull it off. Will there be some of that in National Harbor? Yes. But it will be throughout the region and the country."

Prince George's County has distributed about $11M of the $20M it plans to give to local businesses from its CARES Act funding, Iannucci said, and it is continuing to review applications. 

Berry said he would like to see more help from the state and federal governments. 

"Restaurants are dropping like flies," Berry said. "There's a lot going on out there, and we need more support from our leaders, which we're getting in some areas, but the state of Maryland and D.C. [have] not really been able to step up and show financial support."

Business owners are also concerned that the rise of COVID-19 cases that other parts of the country are experiencing could happen in the D.C. area and stunt their progress. 

"Every day, everybody is waiting for another shoe to drop with coronavirus," Berry said. "If cases are going up, that's a signal you're going to get stay-at-home orders again. I like to be optimistic, but it's been a rough couple of months."