Va. hotel revenues still lagging pre-pandemic levels

Virginia hotel revenues for June 2021 were down 22% compared with pre-pandemic levels in June 2019, according to newly released data from STR Inc., a CoStar Group division that provides market data on the U.S. hospitality industry.

During the same period, rooms sold decreased by 14%. The average daily rate (ADR) paid for hotel rooms decreased 9% from June 2019 to $111.83, while revenue per available room (RevPAR) fell to $71.42, a 22% decrease from its June 2019 level.

The June ADR is, however, an improvement from mid-pandemic levels in 2020. In the first week of June 2020, the ADR was $79.71, and in the second week, $84.39. For the week ending June 20, 2020, the ADR was $85.69. Additionally, the RevPAR for the third week of June was $35.78 in 2020.

“The hotel industry continues to recover in the commonwealth, as well as in Hampton Roads,” Professor Vinod Agarwal of Old Dominion University’s Dragas Center for Economic Analysis and Policy said in a statement. “With increasing vaccinations, rising consumer confidence and pent-up demand, we have seen significant improvement in the performance of the hotel industry over the 2020 levels and we expect the industry to continue its recovery each month through the end of 2021. However, increasing COVID-19 infections, hospitalizations and deaths among the unvaccinated due to the rise of the Delta variant also threaten to undermine the pace of recovery.”

The American Hotel & Lodging Association said Tuesday that it expects a hotel industry job loss of 23.7% in Virginia by the end of 2021, compared to the pre-pandemic 2019 baseline.

Comparisons to 2019 numbers are more balanced than comparisons to summer 2020, when hotels were almost completely shut down, said Virginia Restaurant, Lodging & Travel Association President Eric Terry.

“We still have areas of the state that are really struggling,” Terry said, “compounded by the huge labor issues that they’re encountering, and many of the hotels are not able to sell all of their rooms as a result.”

Hotel revenues in some Virginia’s markets are still below June 2019 levels, although some Hampton Roads markets have seen increases. In Northern Virginia, hotel revenue decreased by 53% compared to June 2019 levels. The Charlottesville market saw a 9% decrease; 6% in Williamsburg; and 9% in Newport News/Hampton. Revenues increased in some Hampton Roads submarkets — by 24% in Virginia Beach, 7% in Norfolk/Portsmouth, and 6.7% in Chesapeake/Suffolk.

The number of rooms sold compared to June 2019 has also declined, with a decrease of 35% in Northern Virginia; 12% in Charlottesville; and 2% in the Hampton Roads market, although the Virginia Beach submarket of Hampton Roads saw an increase in rooms sold of 4%.