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Va. hotel revenues down 6.5% from Jan. 2019

Virginia hotel revenues in January were 6.5% below January 2019 levels, according to data released Monday by STR Inc., a CoStar Group division that provides market data on the U.S. hospitality industry.

During the same period, hotel rooms sold decreased by 4% compared with 2019 levels. The average daily rate (ADR) paid for hotel rooms last month decreased by 2% to $94, while the revenue per available room (RevPAR) fell to $42, 7% lower than its 2019 level.

The January ADR and RevPAR are improvements from 2020 levels, although Virginia Restaurant, Lodging & Travel Association President Eric Terry has said that comparisons to 2019 numbers are more balanced than comparisons to 2020. In December 2020, the ADR was $77.13 —a 21% drop from 2019 — and the RevPAR $27.94, a 41% drop from 2019.

Hampton Roads hotels’ revenues were 10% higher than their January 2019 totals. Within the region, Virginia Beach saw a 22% increase from its January 2019 revenues. Williamsburg was the only submarket to see a decline — 3%.

In Northern Virginia, hotel revenue was 33% lower than its January 2019 level. The Roanoke market saw a 4% decline, and the Bristol, Virginia, market a 3% drop.

In Richmond, hotel revenue increased 10.4% from its 2019 levels. The uptick in Richmond is likely due to Gov. Glenn Youngkin’s inauguration, as well as the fact that the General Assembly is in session, Terry said.

The number of rooms sold last month decreased by 23% in Northern Virginia, compared to the number sold in 2019. The Bristol, Virginia, market had a 13% decrease, Williamsburg a 9% decrease, Newport News/Hampton an 8% drop, and Roanoke a 7% decline.

Rooms sold increased by 11% in the Norfolk/Portsmouth submarket, and Richmond had a 6.2% increase in rooms sold.

Va. CEOs expect sales to increase despite omicron effects

About 84% of CEOs reported an impact on their businesses from the omicron variant of COVID-19, but almost 60% expect sales to increase over the next six months, according to the fourth quarter CEO Economic Outlook survey conducted by the University of Richmond’s Robins School of Business and the Virginia Council of CEOs (VACEOs).

Of the CEOs who responded that omicron impacted their businesses, 63% reported a minor impact, while 21% reported a significant impact. Employers indicated that the impact was largely a result of employee absenteeism and related costs.

Compared to answers from the survey conducted at the end of the third quarter, fewer CEOs expected growth in sales in the next six months. Their expectations for capital spending were primarily flat.

“I’ve heard from many CEOs that the omicron surge is making it difficult to keep staffing levels up to normal,” VACEOs Executive Director Scot McRoberts said in a statement. “COVID aside, these small business CEOs are seeing growth and opportunity in the next six months.”

Fifty-nine percent of CEOs responded that they expected sales to increase, with most of those (49%) saying they expected sales to be “higher” and 10% choosing “significantly higher.” Thirty-three percent expect no change in sales.

About 41% expect capital spending to increase over the next half-year, down from 47% last quarter, and about 44% expect it to remain flat. Nearly 15% expect a decrease in capital spending.

About 62% of respondents said that they expected employment to increase over the next six months, while 30% expect it to remain flat. Only 8% anticipate employment falling.

The survey also asked CEOs what percentage of their workforce would be working remotely relative to pre-COVID times. Almost half (46%) said that a higher percentage would be working remotely compared to the pre-COVID distribution, and 43% said there would not be a change in their remote workforce percentage. Eleven percent said a lower percentage would be working remotely.

The survey was administered from Jan. 10 to Jan. 14, and 61 CEOs responded. The majority of the respondents were in the services and construction industries. The average company whose CEO responded had about $8 million in revenue for the most recent 12-month period and an average of 55 employees.

The Robins School adapted the survey from Business Roundtable, a Washington, D.C.-based lobbyist association of CEOs of U.S. companies, and has administered it since 2010. Rich Boulger, associate dean at the Robins School, administers the survey and collects the responses.

Va. job openings, number of hires rebound from October 2021

Virginia had 301,000 job openings in November, a small rebound from October 2021, according to U.S. Bureau of Labor Statistics’ latest Job Openings and Labor Turnover Survey (JOLTS) data released Jan. 21.

In October 2021, job openings in Virginia declined by about 28,000, which was the largest drop among states. The Virginia job openings rate was little changed, rising by 0.2 of a percentage point to 7% in November 2021. Nationwide, the number of job openings decreased to 10.6 million, and the rate of job openings fell to 6.6%

The industries with the largest decreases in job openings were accommodation and food service; construction; and nondurable goods and manufacturing.

The U.S. Bureau of Labor Statistics defines job openings as positions that are open on the last business day of the reference month. A job is open only if it meets three conditions: A specific position exists and there is work available for that position; the job could start within 30 days, whether the employer can find a suitable candidate during that time; and the employer is actively recruiting workers from outside the establishment to fill the position.

The number of hires, defined as additions to the payroll during the month, in Virginia rose by 8,000 to 161,000 in November 2021. The number of hires is a rebound from October 2021’s drop, which was then the largest decrease among states, but is still almost 6% lower than November 2020. Nationwide, the number and rate of hires were little changed at 6.7 million and 4.5%, respectively.

The number of quits — voluntary separations initiated by the employee — in Virginia increased by 1,000 to 106,000, 14% higher than November 2020. The quits rate remained at 2.7%.

Across the U.S., the number of quits increased by 370,000 to a series high of 4.5 million — representing the most people quitting since the U.S. began keeping records of the statistic about 20 years ago, according to a Virginia Employment Commission news release. The November 2021 quits rate increased to 3% from October 2021’s 2.8%.

The number of layoffs and discharges — involuntary separations initiated by the employer — in Virginia was 29,000, only about 1,000 more than the number reported in October 2021. It’s a 90% decrease from the pandemic high in March 2020. Nationwide, the number of layoffs and discharges was 1.4 million, and the rate of 0.9% remained the same.

The hires-per-job-openings ratio (HPJO) was unchanged at 0.5 in November 2021 in Virginia and slightly higher at 0.6% nationwide. The HPJO is a proxy for time to fill positions or the efficiency in filling open jobs in a labor market. The HPJO at the nonfarm-industry level has decreased steadily since the end of the Great Recession, and by January 2015, the ratio was regularly below 1.0, indicating less efficiency.

“As the 2021 holiday season began in November, most measures of Virginia job openings and labor turnover indicated continued tightness, reversing some of October’s slight slowdown,” according to a Virginia Employment Commission news release. “Indicators made clear what a job seekers market it was as the rate of hires to job openings fell to a record low in November. … During a period of pandemic fatigue and uncertainty, this accelerated velocity of labor turnover indicates that, while some workers left the labor force entirely, more remained in their industries but shuttled between employers, looking for better working conditions and higher pay.”

In November 2021, as in October 2021 and September 2021, there was less than one (0.5) unemployed worker per job opening in the state, the lowest rate since February 2020. The unemployed per job opening ratio, or job seekers ratio, stood at 3.1 in April 2020.

New Va. unemployment claims down 32%

Virginia’s new unemployment claims declined by almost 32%, the Virginia Employment Commission reported Thursday.

For the filing week ending Jan. 22, Virginians filed 1,940 initial claims, down 909 from the previous week. Continued claims totaled 7,543, an increase of 484 claims from the week before.

Compared to the same week last year, initial claims were 89% lower than the 18,312 recorded then. Continued claims were 89% lower than the 67,298 from the comparable week. People receiving unemployment benefits through the VEC must file weekly unemployment claims in order to continue receiving benefits.

The majority of claimants who filed for benefits last week reported being in these industries: construction; administrative and waste services; accommodation and food service; and retail.

The VEC has drawn attention and legal action for backlogs of claims during the pandemic. On Jan. 19,  Gov. Glenn Youngkin’s office removed Ellen Marie Hess from her position as VEC commissioner, WVEC’s 13News Now reported. On Jan. 21, Youngkin announced that he named Carrie Roth as the VEC commissioner. Roth was the deputy secretary of commerce and trade under former Gov. Bob McDonnell.

Nationwide, the advance figure for seasonally unadjusted initial claims was 260,000, a decrease of 30,000 from the previous week’s revised level. The advance number of actual initial claims, unadjusted, totaled 267,573.

Va. economic growth will slow in 2022, ODU economists predict

Virginia’s economy is likely to grow at a slightly slower pace in 2022 than it did last year, with the COVID-19 pandemic continuing to make future predictions murky, according to the 2022 Annual Economic Forecast released Wednesday by Old Dominion University’s Dragas Center for Economic Analysis and Policy.

“If we can control COVID-19, the economy will do quite well. But as we’ve seen for two years, that’s a big if,” said Vinod Agarwal, deputy director of the Dragas Center and director of the ODU Economic Forecasting Project, in a statement.

The U.S. saw 5.2% growth in real GDP last year after a 3.7% decline in 2020. In 2022, the nation’s GDP is expected to grow 3%, and Virginia’s real GDP growth is also expected to be 3%, following 2021’s 3.8% growth.

Supply chain constraints are likely to ease in the second half of 2022 but will continue into 2023, Dragas Center Director Robert McNab said in the forecast presentation. “We’re seeing suppliers adapt [and] we’re seeing goods move through ports at a faster pace, so that suggests that producers will learn and that supply chain constraints will ease but not be entirely eliminated this year,” McNab said.

U.S. civilian job growth is expected to be 2.4%, slightly down from 2.7% in 2021, while the unemployment rate is expected to drop from 5.4% to 4%. For Virginia, civilian job growth is projected to be 2.2%, also slightly lower than the 2.5% seen by the commonwealth in 2021.

For 2023, the report forecasts that Virginia’s GDP will grow to 2.8% GDP but civilian job growth will shrink to 1.5%.

McNab predicts that labor shortages will remain as the Great Resignation continues and Baby Boomers continue to exit the workforce, with international migration potentially unable to keep up with industry demand.

On the good news front, the U.S. inflation rate is expected to be 3.8%, down from the 4.7% seen in 2021. The Federal Reserve is expected to begin raising interest rates in an effort to combat inflation, potentially as soon as March.

Political and global uncertainty lingers, including potential disruptions like a Russian invasion of Ukraine, but “even with all this, I would argue that the U.S. is poised for growth in 2022 and into the next year,” McNab said.

For Hampton Roads, Agarwal expects the region’s economic growth — as measured by GDP — to be lower this year than it was in 2021. The Dragas Center forecasts a 2022 real GDP growth of 2.4% in the region, following a 2021 rate of 3%. ODU predicts a civilian job growth of 2.1% for the region, while the regional unemployment rate will likely be around 3.3%.

Defense spending will boost the Hampton Roads economy. The Dragas Center predicts that the Department of Defense will spend $25.3 billion in Hampton Roads in 2022, an increase from the $24.5 billion spent in 2021.

The Port of Virginia should also contribute, with record-breaking cargo shipments expected this year. In 2021, the Port surpassed 3 million TEUs (20-foot equivalent container units) for the first time.

ODU further estimates that hotel revenues in the region will increase 6.4% this year.

Although mortgage rates are expected to increase by about a percentage point, Agarwal predicts that single-family home prices will continue to increase. The median sales price for the region increased 9.4% from 2020 to 2021, from $255,000 to $279,000.

Housing supply has trended lower, with demand increasing during the pandemic. During 2020 and 2021, the average days on the market for home listings in Hampton Roads dropped from 41 to 24. The number of existing residential homes sold rose from 29,895 in 2020 to 34,703 in 2021.

For 2022, there is only a supply of existing homes for 0.8 months in region, a big decrease from 2020, when there was enough regional supply of existing homes for 2.31 months. Near the end of 2010, there was an estimated 10.52-month supply.

In response to a question about offshore wind’s effect on the regional economy, McNab said it will depend on whether Hampton Roads can leverage its comparative advantages in advanced manufacturing, data analytics and shipbuilding to attract manufacturing. “What you want to do is look for those possibilities where you can manufacture and export,” he said, so that the region becomes a net exporter rather than importer of renewable energy goods.

Hotel industry recovering, but unevenly

The hotel industry will continue its recovery from 2020 this year, but unevenly, according to the American Hotel & Lodging Association’s 2022 State of the Hotel Industry Report.

“Hotels have faced enormous challenges over the past two years, and we are still a long way from full recovery. The uncertainty about the omicron variant suggests just how difficult it will be to predict travel readiness in 2022, adding to the challenges hotels are already facing,” AHLA President and CEO Chip Rogers said in a statement.

The report projects that hotel occupancy rates and room revenue will approach 2019 levels this year. U.S hotel occupancy will average 63.4% for the year, slightly below the 2019 average of 66%. The projection for total room revenue is $168.4 billion, near the 2019 total of $169 billion. In 2020, hotel room revenue fell by almost 50% to $85.7 billion.

While those numbers in some Virginia regions like Hampton Roads and the Greater Richmond area are approaching 2019 levels, Northern Virginia is not, Virginia Restaurant, Lodging & Travel Association President Eric Terry said, as business travel remains down.

Business travel is likely to remain down more than 20% for much of 2022, and 58% of meetings and events are expected to return, according to the AHLA report.

“Bleisure” travelers — those who blend business and leisure travel — and digital nomads are emerging traveler segments. Fly-to-the-meeting and fly-back-from-the-meeting day trips might become a thing of the past, according to the report.

Digital nomads are people who have the flexibility to work from anywhere and decided to travel, and the number of them is expected to grow.

Hotels are expected to employ 2.19 million people — 93% of their 2019 employment levels. In 2020, hotels employed only 1.65 million people.

AHLA also expects to see increased uses of and upgrades to technology, like reservation systems that allow flexible check-in and check-out times and self-service devices.

AHLA created the report in collaboration with Irish Fortune Global 500 company Accenture LLP. It is based on data and forecasts from Oxford Economics and STR Inc., a CoStar Group division that provides market data on the U.S. hospitality industry.

Parsons lands $100M COVID testing contract

Centreville-based defense contractor Parsons Corp. has been awarded a task order to provide COVID-19 tests to Department of Homeland Security and Immigration and Customs Enforcement facilities across the United States, the company announced Jan. 19.

Parsons will supply emergency-use authorized, portable, rapid molecular and rapid antigen test kits to DHS, as well as provide logistics, coordination and training support.

“As we continue to battle the pandemic, testing availability is a crucial component to helping DHS fulfill its mission of securing the nation from threats, and keeping people safe by helping detect and slow the spread of the COVID-19 virus,” said Jon Moretta, Parsons’ president for engineered systems, in a statement. “We are proud to provide our biosurveillance knowledge to the department, leveraging our industry-leading resources, capabilities and expertise as we work with DHS and organizations around the world to improve disease surveillance, monitoring and detection; public health and medical situational awareness; and research, development, testing and evaluation.”

Founded in 1944, Parsons employs more than 16,000 people in 24 countries and specializes in defense, intelligence, security and infrastructure engineering, focusing on technology.

Virginia ABC stores to change to noon opening

The Virginia Alcoholic Beverage Control Authority will change its daily opening hours to noon at its 395 stores starting Monday.

Staffing stores has become difficult as “increasing numbers of ABC’s retail employees continue to be affected by COVID-19,” the authority said in a news release. Store closing times will remain the same.

“Like other retailers affected by pandemic-related staffing shortages, we are modifying our store hours to reduce the need to close stores because of employee quarantines,” Virginia ABC CEO Travis Hill said in a statement. “Opening at noon meets the needs of the majority of our customers, most of whom prefer to shop in the afternoon.”

Virginia ABC stores continue to follow safety measures, according to a news release. All stores have Plexiglas shields at registers and undergo daily cleaning and sanitizing, and all employees must wear masks.

In most of Virginia, customers can also place orders online for curbside pickup or home delivery rather than shop in-store.

Va. new unemployment claims up 16%

New unemployment claims in Virginia increased 16% last week, the Virginia Employment Commission reported Thursday.

For the filing week ending Jan. 15, Virginians filed 2,849 initial claims, an increase of 406 from the week before. Continued claims totaled 7,059, down 1,131 from the previous week.

Compared to the same week last year, initials claims were 86% lower than the 21,073 recorded then. Continued claims were almost 89% lower than the 63,839 from the comparable week. People receiving unemployment benefits through the VEC must file weekly unemployment claims in order to continue receiving benefits.

The majority of claimants who filed for benefits last week reported being in these industries: construction; administrative and waste services; retail; and health care and social assistances.

The VEC has been under scrutiny for backlogs of claims during the pandemic, and the agency recently reached an agreement with five legal advocacy groups to end a federal lawsuit the groups had filed against the state. On Wednesday, Gov. Glenn Youngkin’s office removed Ellen Marie Hess from her position as VEC commissioner, WVEC’s 13News Now reported.

Nationwide, the advance figure for seasonally adjusted initial claims was 286,000, an increase of 55,000 from the previous week’s revised level.  There were 937,313 initial claims in the comparable week in 2021. The advance number of actual initial claims under state programs, unadjusted, totaled 337,417.

Roaring ’20s repeat possible, Richmond Fed president says

Federal Reserve Bank of Richmond President and CEO Thomas Barkin said he could visualize another round of the “roaring ’20s,” he said Thursday during the Virginia Bankers Association/Virginia Chamber 2022 Financial Forecast event. Driven by investment and real estate appreciation, the nation has seen a 28% boost in household net worth over the past two years, a $32 trillion increase.

“Businesses are reporting record profits and strong balance sheets,” he said. “Inventories are low. States are seeing sizable surpluses.” All of these factors should sustain demand, he added.

However, Barkin said he expected labor shortages to continue over the short term, and supply issues to last for another 10 to 12 months. Manufacturers will likely get some breathing room this quarter as demand for products drops after the holidays, he noted.

COVID-19 and its variants continue to be a wild card, Barkin said, with outbreaks due to delta and then omicron strains causing work absences and child care difficulties. Barkin warned that he had underestimated inflation in 2021, and joked that economic forecasters were created to make weather forecasters look good.

As people begin to view the coronavirus as more of an endemic than a pandemic, “COVID has now largely become a supply side and an inflationary challenge,” Barkin said, pointing to airline travel over the holidays as an example. People wanted to fly, but airlines couldn’t find enough flight crews, he said. Numerous flights were canceled due to staff members’ COVID exposures and bad weather.

Barkin said he also expects inflation in the prices of goods to reduce as supply chain pressures ease. The real escalation in inflation has been from goods, he said, with about a 6.3% inflation rate, higher than the 0.2% decrease a year that the U.S. saw over the last five years, not counting the two pandemic years.

Services inflation, by contrast, has remained roughly in line with the past five years, Barkin said, although he expects labor shortages to pressure the prices of services.

“Price hasn’t yet had its say,” Barkin said. Normally, when prices increase, the quantity in demand decreases. He hasn’t yet seen that, he said. For example, retailers are prioritizing availability over pricing. Supply chain redesign could also increase prices.

The past two years taught the U.S. several lessons, Barkin said. The $6 trillion in federal stimulus money fueled the U.S. economic recovery, and the nation’s GDP is now 1.4% higher than it was in the fourth quarter of 2019. Consequences of the spending, though, are that demands for goods increased — up 16% now — and broke supply chains; workers were slow to return to the labor force, potentially because of payments; and national debt increased.

This week, Federal Reserve Chairman Jerome Powell, who spoke before the U.S. Senate Committee on Banking, Housing and Urban Affairs for his confirmation hearing Tuesday, said that the central bank will likely raise interest rates several times this year, as well as other tightening measures to fight inflation.

The Fed has started the process of normalization, Barkin said Thursday. In November 2021, Fed officials began tapering asset purchases, and at the board of governors’ December meeting, they accelerated the taper, which is expected to end by mid-March.