Norfolk Airport cancels development contract for 165-room hotel

The Norfolk Airport Authority‘s plans to build a 165-room hotel at Norfolk International Airport have been delayed by approximately two years until 2028, as the authority recently canceled the contract with the development team due to an alleged contract violation.

Norfolk Airport Authority CEO Mark Perryman said the authority terminated the contract after discovering that one of the project’s developers had left the project, and the remaining developer failed to notify them immediately.

In September 2023, the authority selected a development team dubbed ORF Hospitality, a partnership between Virginia Beach-based LTD Hospitality and Arizona-based real estate investment firm Caliber Cos. The plan was for the hotel to be a Courtyard by Marriott, and it would address a shortage of hotel rooms in the city. Perryman said the contract with the team was signed in February 2024.

However, Perryman said the authority learned in November 2024 that Caliber had pulled out of the project, and didn’t get confirmation from LTD until January of this year. Perryman said he was never given a reason why Caliber departed, but that the team the authority had selected “was no longer that team.”

In April, the airport authority sent LTD a notice stating the company was in default of the contract and gave the firm 60 days to remedy the matter and bring Caliber back on board, Perryman said. That never happened, and on July 22, the authority sent LTD a notice to terminate the contract, stating that the developers failed to meet the agreement terms.

The letter accused the development team of making “material misrepresentations, both orally and in writing” in its proposal submitted to the authority, including its capacity to perform, financial capabilities and other areas. The letter also accused the team of making misrepresentations in pre-selection interviews upon which the authority “relied to its detriment.”

“​​We selected a team that consisted of the two partners,” Perryman said. “And in fact, during the interview, we asked, ‘What’s the relationship?’ And they said, it’s a 50/50 partnership. So when you look at the public procurement process, when you have a change of a team of that nature, I had no choice but to tell them they were in default.”

Neither LTD nor Caliber immediately returned requests for comment.

As early as January of this year, Perryman says he was optimistic that the project could be ready for completion by 2026. But with the contract cancellation, he said the opening of the hotel would likely be delayed about two years, with a 2028 opening being most likely.

The developers had not broken ground on the hotel and, to Perryman’s knowledge, a final contractor had not yet been selected. He said the original project’s estimated cost ranged from $40 million to $50 million, and that the price will now likely increase due to inflation and cost escalation.

He said the airport authority is now exploring different options. Still, the most likely new option is the airport building the hotel itself and bringing in a third-party operator to manage it. Perryman said the hope is for the authority to solidify a plan around November. It’s unclear if the Courtyard by Marriott branding will still be used.

Despite the setbacks, Perryman maintains that the hotel remains a significant priority for the airport.

“I still think it is a fundamental amenity that we need to provide the traveling public,” he said. “We have no hotels near the airport in what I would consider close proximity, and it is something that is in high demand.”