Trade groups says Virginia hotel industry is growing

A recent report by Oxford Economics for the American Hotel & Lodging Association paints Virginia’s hotel Industry in a positive light, according to a state hospitality trade group.

The information, tabulated from the U.S. Bureau of Economic Analysis, the Census Bureau, STR and Oxford Economics, states that in 2015 hotel sales (revenue, plus certain taxes) increased to $5.1 billion, with the total impact of the hotel industry in Virginia about $26.9 billion. This represents an 11 percent increase over the 2007 figure of $4.5 billion.

The figures show that Virginia’s hotel industry has returned to pre-recession levels, says the Virginia Restaurant Lodging and Travel Association (VRLTA).

Comparing the same years, while the occupancy rate is down slightly, (61.6 percent in 2015 vs. 61.8 percent in 2007), the average daily rate increased to $103.88 compared to $100.23.

The average daily rate and occupancy through October 2016 continue to improve. According to a year-to-date October report from STR for Virginia, occupancy is 65.6 percent, up 2.8 percent from 2015,  and the average daily rate is $108.72, up 2.5 percent. Revenue per available room increased 5.4 percent year-over-year, outpacing the national average of 3-plus percent from $67.68 to $71.35 per room.

The VRLTA said in a press release that gains in 2015 and 2016 for the industry have come despite additional challenges presented by cuts in government travel. Since 2010, the U.S. General Services Administration has lowered the per diem for lodging and travel. Several key markets in Virginia impacted by these decreases include the Northern Virginia area, which saw the per diem drop from $207 in January 2010 to $179 in January 2016.

Over the same period, Loudoun County per diem decreased from $135 to $97, and Norfolk/Portsmouth decreased from $96 to $89.

Additionally, beginning in 2015 the Department of Defense also began testing a pilot “Integrate Lodging Program” which effectively created sub-per diem lodging rates for U.S. defense agencies and defense contractors.


“While Virginia has been adversely affected by decreased government travel spending and the DOD’s integrated lodging pilot program, the commonwealth’s tourism and meeting industry is continuing to drive significant hotel spending,” Eric Terry, VRLTA’s president, said in a statement.

Investment in Virginia’s future hotel industry also is strong. Data from HotelMarketData (a database of projects in planning and construction stages including new, expansion and renovation) pulled on Dec. 7, indicates a development pipeline of 46 properties and over 6,000 guestrooms with planned opening dates in 2017 and 2018,

The VRLTA says these projects represent a projected construction investment of up to $1.2 billion. The full pipeline of projects with opening dates beyond 2018 includes a projected 171 properties, with roughly 24,000-25,000 rooms, and a potential investment of $2.4 billion to $3 billion.

“Virginia is fortunate to have a strong tourism industry,” Bruce Thompson, CEO of Gold Key | PHR, said in a statement. “The decrease in government spending just places more emphasis on the leisure markets; a trend hoteliers see in the increased demand for hotels with modern finishes and better design.

Thompson’s firm has more than $400 million in new developments opening in the Hampton Roads region in the next two years.

“While Virginia has largely been government driven in certain metro markets due to our proximity to D.C. and many military installations, other parts of the state are enjoying significant growth in leisure tourism business,” said Kimberly Christner, CEO of Cornerstone Hospitality, based in Williamsburg.

Virginia’s historic tax credit program has helped companies like Cornerstone renovate historic boutique hotel and restaurant projects. Cornerstone has such projects in Bristol, St. Paul, Wytheville, Lynchburg, Farmville, Danville and South Boston.