Va. Beach hotels may not sell out for SITW

Something in the Water, the three-day Virginia Beach music festival helmed by music superstar Pharrell Williams, is a big economic deal for Hampton Roads — but whether area hotels will sell out is still up in the air.

As of Thursday evening, a quick scan of Expedia.com showed some remaining rooms near the Virginia Beach Oceanfront, ranging between $249 a night at Seashire Inn & Suites to $599 at Boardwalk Resort and Villas. A few weeks ago, Oceanfront rooms were advertised in the $800 to $1,000 daily range, but as Something in the Water’s return to the beach got closer, prices got more realistic.

In 2019, the first year the festival was held and the last time it was in Virginia Beach, the area hotel occupancy rate during SITW was above 94%, according to Kurt Krause, president and CEO of Visit Norfolk. The festival was canceled in 2020 and 2021 due to COVID, and temporarily moved to Washington, D.C., last year.

This time, Krause and his colleagues in Virginia Beach are hoping for occupancy rates between 85% and 90%. “That’s not selling out,” he said, noting that spillover hotel room sales in Norfolk and other parts of southern Hampton Roads are “not the same as it was four years ago.”

Nevertheless, downtown Norfolk hotels sell out nearly every weekend, and nightly rates there run in the $300s, a boost from pre-pandemic prices primarily due to inflationary price hikes, Krause observed.

John Zirkle Jr., president of the Virginia Beach Hotel Association, corporate director of operations for Harmony Hospitality and general manager of the DoubleTree by Hilton Virginia Beach, echoed Krause’s comments.

“We’re a little softer than we were in 2019,” he told Virginia Business on Thursday, saying he has heard similar stories from other beach hoteliers. But Zirkle wasn’t worried. “We’re all very encouraged that it’s going to be a sellout or near sellout for the resort area.”

In the resort area between Second and 17th streets, where the festival will be held, many hotels initially required two- or three-night minimum reservations, but those restrictions were removed as the festival neared. Regardless, hotels are planning for sellout crowds and staffing up accordingly, Zirkle noted.

Still, he also doesn’t think the demand for rooms in nearby Hampton Roads cities will be as strong for this year’s festival. “In 2019, I think all of Hampton Roads was full. I don’t think we’ll see quite that big of an impact this year.”

Some concerns, Zirkle notes, could be affecting hotel occupancy rates, including later announcements of performers and set times, and possibly more short-term rental options being available — although those properties will mostly be further away from the festival and more expensive than hotel rooms, he says. Additionally, the forecast is calling for rain during the long festival weekend, which could deter some last-minute attendees.

The festival effect

Far, far away from Hampton Roads, the two-weekend Coachella festival in Indio, California, prompted a boost in hotel prices earlier this month. According to Isaac Collazo, vice president of analytics for STR Inc., a division of CoStar Group Inc. that provides market data on the U.S. hospitality industry, the Palm Springs, California, submarket that includes the concert site had a 92% hotel occupancy rate during the two weekends of Coachella, and a $511 average daily room rate. On non-Coachella festival weekends this year, hotels were 80% full, with room rates averaging $296 a night.

“There is a bump you expect to happen” from festivals, said Collazo, who attended Coachella this year and has tickets for the Austin City Limits festival in Texas this October. South by Southwest, the March music, film, TV and tech festival held in Austin, is another event that increases hotel room prices, he adds — noting that some well-established festivals like SXSW and Coachella have “industry appeal. It’s like a corporate event.” That means attracting celebrities, influencers and well-heeled corporate types who are fine with paying for a $1,000-plus hotel room, Collazo said.

It’s hard to tell yet whether Something in the Water could be seen as having similar networking appeal or will achieve  that status in the future. Virginia Beach native Williams, who hosted the Mighty Dream business conference in Norfolk last November, is part of the development team behind Atlantic Park in Virginia Beach, and was hired as creative director of Louis Vuitton’s men’s fashion line in February, typically emphasizes equity, diversity and inclusion in business in his Virginia projects, as well as collaboration and networking opportunities. In 2019, Something in the Water included panel discussions at the Virginia Beach Convention Center — although this year is limiting its business focus to a pitch contest on Saturday for local entrepreneurs.

This year’s festival has “more of a celebration feel,” with three local music stages, “dozens and dozens of local vendors,” and partnerships with area businesses, said Robby Wells, SITW’s executive producer and an executive with I Am Other, Williams’ strategic consulting and creative collective. Although Wells said Thursday he didn’t have a full breakdown of who purchased tickets for the 2023 festival, “a significant portion are from drivable markets,” i.e., fans from Virginia and other states on the East Coast.

But one sign that there are high rollers at SITW is the sellout of all VIP tickets, ranging from $525 to $600 each, and the ultra-exclusive Yellowzone passes, which cost $2,000 for access to “prime viewing area” at both stages, a dedicated merchandise store and an air-conditioned VIP area at Waterman’s Surfside Grille, among other perks.

Still, most SITW attendees will be young fans of hip-hop, rock, R&B and pop music, Collazo said, many of whom “can’t afford $1,000 room rates.”

Zirkle said SITW brings a diverse crowd to Virginia Beach — mirroring the character of the city. In 2019, he said, SITW “brought a sense of togetherness and community,” and that’s what he’s hoping for with this year’s event.

Even if the hotels don’t sell out, “yay for Hampton Roads, and yay for Virginia Beach for doing it,” Krause said. “The excitement around Pharrell — that will attract people.”