Va. hotel revenues continue to recover from pandemic

Almost all Virginia hotel markets have fully recovered financially from the COVID-19 pandemic, and Hampton Roads continues to outpace Virginia and the U.S. in improvement based on hotel revenue.

Virginia hotel revenues through November were 12.7% higher than they were in 2019, according to a report released Tuesday by Old Dominion University’s Dragas Center for Economic Analysis and Policy, although Northern Virginia still lags.

Dragas Center economists analyzed data from STR, a division of CoStar Group that provides market data on the U.S. hospitality industry, for the report.

The number of rooms sold in Virginia was 1.6% lower in November than it was from January through November 2019. The average daily rate (ADR) for hotel rooms through November was $131, up 14.6% from 2019. Revenue per available room (RevPAR) was up 11.1% from 2019, at $82.

The state’s three largest markets — Northern Virginia, Hampton Roads and Richmond — accounted for about 77% of Virginia hotels’ revenue. In Hampton Roads, hotel revenues are 22.3% higher than they were from year-to-date 2019 levels, and Richmond hotel revenues rose 17.4%. But, in Northern Virginia, where work-related travel continues to stall, hotel revenue was down 2.5% from the same period in 2019.

In Northern Virginia, “we’re still not seeing the recovery in the corporate individual travel that we’d like to see, but most of the other segments continue to perform pretty well,” said Eric Terry, president of the Virginia Restaurant, Lodging & Travel Association.

College towns led the way in revenue increases through November. In the Charlottesville market, hotel revenues increased 29.5% from 2019 levels, while in Blacksburg, revenues rose 27.8%. The Staunton/Harrisonburg area had a 26.1% increase over 2019 levels. Football, basketball and other fall sports are likely contributing to the rising hotel revenues, Terry said.

Within Hampton Roads, the Virginia Beach submarket had the largest revenue increase from 2019: 28.8%. Chesapeake/Suffolk followed, with an increase of 26.3%, and Norfolk/Portsmouth were close behind with a 26% increase in revenue from 2019. The Williamsburg market had the slowest revenue growth in the area, at 8.5%.

Rooms sold through November decreased 10.6% from 2019 levels in Northern Virginia, 8% in the Roanoke market and 5.5% in the Virginia portion of the Bristol/Kingsport, Tennessee, market.

Within Hampton Roads, rooms sold in the Norfolk/Portsmouth submarket increased 5.8% from the same period in 2019. Rooms sold in Virginia Beach increased 3.8%, and the Chesapeake/Suffolk submarket had a 1.9% increase in rooms sold. In the Williamsburg and Newport News/Hampton submarkets, however, rooms sold declined 4.3% and 2.7%, respectively.

“With continued increase in leisure travel and a recovery in group travel, we have seen significant improvement in the performance of the hotel industry over the 2019 levels,” Vinod Agarwal, deputy director of ODU’s Dragas Center, said in a statement. “Substantial increases in hotel revenue in almost all markets, however, can be easily attributed to higher room rates rather than increases in occupancy or increases in hotel rooms sold.”

In October, Virginia hotel revenues were up 12.6% compared with 2019 levels, and Hampton Roads revenues were up 22.8%. The federal per diem reimbursement rate increase that went into effect Oct. 1 has contributed to the revenue increases of the past two months, Terry said.

Compared to year-to-date 2022 numbers, Virginia’s hotel revenue through November was up 9.5%, and rooms sold were up 0.8%. Northern Virginia’s hotel revenues through November were up 18.5% from the same period last year, while Hampton Roads saw a 3% revenue increase. The Richmond market had a 5.3% increase in revenue from 2022 levels.