Group demand for the quarter was essentially flat with last year, as increases in Corporate and association business were essentially offset by reductions in discount group. The combination of positive mix shift and rate increases in all 3 segments drove group rates up by 4.7%, which represents more than twice the rate of increase in Q1. The growth on these higher-priced segments was even more pronounced in our luxury hotels, where they grew by more than 16%, leading to a luxury group room night increase of more than 8%. Overall, group revenues were up by almost 4.5%.
to be somewhat soft over the next, I guess, 6 quarters or so. Obviously, Marriott is a little most exposed to suburbs, and you talked about the CBD being a little bit stronger. I just had a quick question. I wanted to — I was hoping you could talk a little bit about D.C. and, particularly, the acquisition that you made. I know Marriott last week came out saying that they expected D.C. But can you just give us some indications as to how you’re feeling about the CBD versus suburbs going forward and kind of how you got to your valuation, which seemed a little high at about $500,000 a key?.
And so as a result, we’ve seen a little bit of a group decline in Washington, and in most other markets, we’ve seen a little bit of a group increase. I think that this year we’ve seen — we have seen and felt the pain from all of the disarray in the federal government around both the budget issues that related to this year’s budget, as well as the current concerns relating to extending the debt amount, that — the debt ceiling, as well as what that may mean going forward. And as we look forward and look at Washington, while it is true that this year is a bit weaker, we see the outlook in a very positive fashion. market did not fall as much as a number of other markets, so there is less of a rebound effect there. So I think that accounts for a large amount of the decline. this year, it is obviously clear that D.C. And with government per diem rate down this year compared to last year, that’s also been a little bit of a wind that D.C. Leaving out the problems for this year, we firmly believe that Washington is a great market to invest in. It has recovered quickly. There’s a lot going on that’s making Washington a more exciting city and more of a 24-hour city, all of which we think is only going to drive better results in our hotels over the course of the next decade. I think as you — I think Larry had made a comment in his comments that our RevPAR growth in the city was about twice the level that we had for the market overall. I think next year — election years are actually tend to be decent in Washington, but I think the current next year that we’ll be fighting is a little bit weaker convention business. And the consequence of that uncertainty has been that government, which represents, call it, 15% to 20% of our business in the Washington area, government has not booked rooms, especially group rooms, at the level that they had in the past. As we look at D.C. It is generally, at least for our portfolio, we are back to ’07 levels. But I think there is a weakness rather. Speaking specifically about the hotel, we think we’ve got a great hotel in one of the best locations in Washington. is underperforming a bit. From our perspective, looking at owning that much of fee-simple property in the heart of D.C., we think that we’re buying this at probably a 10% discount to replacement cost, and that’s a little bit richer than where some of the other transactions we have done have been completed at. It is the — the projected bookings for that Convention Center, especially as you look out to ’15, ’16 and ’17, are very attractive. And I think the other point to pick up, which some of you have already commented on is that this is as I already described, it’s a little bit higher-government market than what we normally experience. is fighting against. I think, one, fundamentally, is that the D.C. I mean, there’s no doubt that the downtown area has outperformed the suburbs this year. The Convention Center that Washington has is one of the best on the eastern coast of the United States. I think that there’s a variety of reasons for that. Just as importantly, there’s a lot of activity happening in downtown Washington that is make — and some of that, I referenced in my comments, is happening immediately across the street from our new asset. If you look at Washington over the course of, call it, the 10 years ending in ’08, before we went into the downturn or the severe part of the downturn, Washington was really one of the best markets in the country to be invested in. But now the other thing I would point out with this particular acquisition is, you may remember, that we also own the Capitol Hill Hyatt. But I think once you get past ’12, we are very optimistic about the outlook for the future beyond that. Let’s start with the market first. And one of the benefits, we think, we see of owning the 2 hotels is as we’ve been able to do in other markets, we think there will be an opportunity, especially because it’s the same brand, to take advantage of some synergies, combine some positions and enhance cooperation between the hotels, which will not only help this hotel but will also help our other Hyatt over on New Jersey Avenue. Working its way through the downturn, it fell at — it fell far less than any of the other markets across the country. So at the end, that clearly Washington’s going through a little bit of a soft patch. Sure.
So if that’s true, that should clearly help us in general because, of course, our industry is dependent on economic growth. I think there’s a couple of things that gives us kind of confidence in our second half guidance. As we look at business investment, while that — while the outlook for business investment is a bit more conservative than where it was at the beginning of the year, it is still quite robust. Now we don’t see any reason why that’s going to slow a little bit. The trickiest part of this whole process is to try to assess the economy. If you look at the blue-chip consensus and use that as, at least, a measure of how folks are looking at the economy, they’re essentially calling for better than 3% GDP growth in the second half of the year compared to about 2% in the first half of the year. So as we think about the second half of the year and we recognize that our renovation disruption should go down a bit, we think it’s — just as — just to run at the same level as the first half would suggest that the second half of the year is going to run over 7%. I think as we also feel that as we look at the group booking pace as it carries into the second half of the year, it does seem to be a little bit stronger. The rate does seem to be growing. So I think at the end of the day, you put all those factors together and especially as you look at the fourth quarter, which is where our forecast are showing the most strength, we generally think that we’re going to be in much better shape in the second half of the year than in the first. So that gives us a fair amount of confidence that things should be a little bit better. That, in our mind, has been one of the factors behind a strong transient demand and rate growth that we’ve seen. The first is if you leave out the renovation impacts on the 2 hotels that we’ve been commenting on, the Sheraton New York and Philadelphia Marriott, and you look at our performance in the first half of the year, we were running at a RevPAR rate in the first half that was over 7%.
The bulk of that increase is in occupancy, not in rate. But one of the trends that we’ve been seeing for most of this year that the — we’re seeing more rate improvement as we get closer to the actual quarter in which, at least — which suggests what’s happening is as we get closer to the bookings that we’re doing in the real short term are apparently coming in at better rates than some of the longer-term business that we had booked. And if you think about some of the business that’s happening in ’12, a lot of that would have been booked during some of those weaker time periods in 2009. Rate is up. So it’s probably not surprising to see that rates are improving. What I would tell you right now is that the — we’re probably up 6% to 7%, in terms of group bookings for ’12.
Smedes, I would say there’s still not a lot of evidence of transactions happening in those markets. And as we think about ’12 and ’13, we’re hoping that we’re going to be able to accelerate our sales pace. That will involve a number of deals in secondary markets, and we’re anticipating that the levels of demand in those markets will have improved. So as we look forward, we will most likely be marketing at least a few properties in the fall. A lot of this starts on the financing side, and I think the indications that we’ve been getting is that the lenders who initially were only focused on the top 5 or 8 markets have now realized that — gotten more comfortable with the overall level of a recovery and they’re starting to expand out into other markets, which is then creating a basis for transactions in secondary markets to happen. But I think overall, our sense is that things are slowly but surely picking up.
So we do have pretty good liquidity on the line of credit. I mean, we have, I think Larry said, over $475 million of availability on the line of credit. So as you start to look out into ’12 and ’13, I think we will be — we’re looking less at external sources of cash and more and effectively internally generated, either from ops or from sales, is the way to fund acquisitions. And as we’re starting to get to a point where I think we may start — we’re starting to generate some cash flow from operations, too, which would also contribute to the mix. I think going forward, we would generally be expecting to fund transaction through a mix of equity, most likely on the ATM Program and then debt. Yes, let me clarify one point. And then the last thing to take into account, I mean, just — we haven’t made an incredible amount of progress on this front yet, but we are going to be selling more assets.
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