Economy dampens Virginia resort visits
2009 was a challenge for Virginia’s resorts. Next year is expected to be tough, too.
- November 23, 2009
In 2006, work began on a luxurious addition to Primland, a Virginia mountaintop resort. The multimillion-dollar project included many upscale amenities: a spa, ballroom, fitness center and a 26-room lodge designed to take in the spectacular views from the resort’s perch in the Blue Ridge Mountains. For stargazers, there was even an observatory housed in the dome of a silo.
“We started to build, and the recession hit,” says Steve Helms, Primland’s vice president. “But that didn’t change any of our decisions to move forward.”
The project opened on time in August. So far, bookings are running at about 75 percent of capacity during the week, says Helms. And most weekends have been booked solid.
Primland’s success is notable, because it comes amid one of the industry’s most challenging years. This year’s recession slammed the U.S. hotel industry, particularly the luxury segment. Overall, hotel research firm Smith Travel Research is forecasting a drop in occupancy this year of 8.4 percent to 55.4 percent. The average daily rate is expected to drop by 9.7 percent to $96.43 by year-end. For luxury lodgings, the loss has been even greater — in the neighborhood of 12.1 percent to $253.71.
The outlook for 2010 is better. However, Smith Travel Research expects continued drops in occupancy rates and daily revenues, though at smaller levels.
Recognizing travelers’ budgetary concerns during a slow economy, Virginia resorts have offered discount packages and promoted properties to visitors who live only a few hours away. Some resorts such as Primland also have pressed forward with renovation and new construction in hopes that updated facilities will draw more guests.
Located in Patrick County about an hour off Interstate 81, Primland’s 12,000 acres offer a range of outdoor activities. Didier Primat, a French businessman living in Switzerland, bought the land in 1978 as a mountain getaway. Later on, he added mountain cabins, and the resort began as a seasonal hunting and fishing destination. In 2006, he added a golf course, recognized by Golf Digest and other golf publications as one of the best new courses in the country. Primat died in July 2008. His family-owned company, Geneva-based Primwest Holdings Inc., moved ahead with his plans for expansion.
Helms acknowledges that the recession put a dent in the resort’s business this year. Rentals remained steady for Primland’s mountain homes through November 2008, he says, but dropped 15 percent from December through June 2009 before picking up again in July and August. “We’ve had some downturns in the last year. Bookings in outdoor activities were down, and golf was down early in the year, but we’ve bounced back. We’re making up the difference.”
Due to concerns about the economy, Primland did not set a high occupancy goal for the lodge’s first year. Officials, however, have been pleasantly surprised. “We’re going to meet our revenue goals this year,” Helms says.
Visitors can choose from a range of prices at Primland, from $199 a night for a room in the lodge to $1,200 per night for the 1,800-square-foot Pinnacles Suite. It offers a spiral staircase with direct access to the observatory where guests can stargaze through a massive telescope.
In Richmond, another new hotel opened on schedule. On Dec. 1, Shamin Hotels unveiled its new flagship property, the 254-room Richmond Hilton Conference Center and Spa at Short Pump. The $55 million hotel offers the area’s second largest ballroom, which has attracted the attention of corporate and leisure groups. “There’s been an amazing amount of interest in the hotel,” says Lori Darling, Shamin’s vice president of sales and marketing. “People are ready for a new facility in the West End.”
Opening a high-end hotel during the tail end of an economic downturn does not come without risks. Shamin is prepared for lower profit margins initially. “The overall demand is lower, so revenues are going to be a little bit lower starting out than we had thought,” Darling says.
Developers of the Rivanna Resort and Golf Club in Palmyra are trying to think positive. With up to 254 residential dwellings and up to 88 units in a condominium hotel, the resort plans to open in late 2010 or early 2011. “We’re hoping by the time we open that things will be better,” says Mark Glickman, Rivanna’s public relations director.
One positive sign: Inquiries for conferences and wedding are coming in. “The demand is there,” Glickman says. “There really is not a lot between Charlottesville and Richmond.”
Rivanna is incorporating green construction techniques from the ground up. It hopes to stand out from the competition by offering an ecology center that focuses on environmental education and the Monticello Art Center. Here the plan is to get nationally recognized artists to conduct weeklong seminars.
The economy delayed the opening of at least one Virginia resort. Salamander Resort and Spa in Middleburg, a 168-room luxury project being developed by Black Entertainment Television co-founder Sheila C. Johnson, was initially set to open in March 2010. That date got pushed back to spring 2011. This fall, citing concerns about the recession’s impact on the luxury hospitality market, Johnson’s company pushed back the opening again to between fall 2011 and spring 2012.
The story has played out differently for Lansdowne, an existing 500-acre resort on the Potomac River near Leesburg. “Overall when we finish this year, we will have more occupied rooms than we did last year,” says Warren Breaux, director of sales and marketing. However, those occupancies come with a price tag for the resort, namely in the form of package deals and discounted rates.
Lansdowne has seen its average daily rate drop by about $35 because of incentives offered to attract business and leisure travelers. “We make sure we get as high occupancy as we possibly can,” Breaux says. To attract conference business, the resort has offered one $289 group package that includes overnight accommodations, three meals, a free round of golf, audio-visual equipment and airport transportation. “The focus is on holding effective, well-priced meetings,” Breaux says. “That has been a challenge this year and will be for the next year as well.” Breaux believes business will return to normal by mid-2010 but says it will be three to five years before average rates build up again.
Groups and conferences make up 75 percent of Lansdowne’s business, with 80 percent of them coming from Virginia, Washington, D.C., and Maryland. “The federal government and those who do business with them help keep our business alive,” Breaux notes.
Another top Virginia destination, Colonial Williamsburg, saw many visitors this year. However, Thomas Shrout, director of communications, points out that hotel occupancy has been a challenge.
“Hotel occupancy, in particular conference business, is a continuing challenge as it is across the country,” he says. Colonial Williamsburg’s six hotels offered a variety of promotions during the summer and fall. Promotions available through Dec. 29 include an autumn getaway package that consists of accommodations at the Williamsburg Lodge and a $100 resort credit for Sunday through Tuesday arrivals that can be used at select Colonial Williamsburg restaurants, taverns, golf courses or the resort’s spa. Guests also receive 20 percent off most purchases at Colonial Williamsburg-owned stores.
While many hotels worked to sustain typical occupancy rates, some resorts actually gained business. The four-season Massanutten Resort outside Harrisonburg saw an uptick in rentals this year. “With the water park, we had a record year in August,” says Sarah Elson, business relations manager for Massanutten. “As far as the resort in general, we are up slightly over last year.” She attributes the increase to guests preferring to travel to nearby destinations for shorter vacations. “Instead of people taking long trips, they’re staying closer to home.”
Massanutten offers various “stay and play” packages revolving around the water park, golf and ski facilities, as well as its million-dollar spa, which opened in May. “People are looking for a better deal,” Elson says.
Across the Alleghany Mountains in West Virginia, the storied Greenbrier Resort is in the middle of a mega makeover. Local coal magnate Jim Justice purchased the bankrupt hotel for $20 million, beating out Marriott Corp. in a bid to pick up the national historic landmark at a bargain. Justice has grand plans for the 635-room resort. He’s building a $25 million, 50,000-square-foot casino slated to open in April and has lined up an annual PGA golf tournament. Plus, he plans to open Prime 44 West, a steakhouse honoring NBA legend Jerry West, a West Virginia native.
So far, Justice’s ideas have met with approval. “There’s definitely been an increase in interest in the property,” says Greenbrier Public Relations Director Lynn Swann.
Like most resorts, The Greenbrier is looking for 2010 to usher in a better economy and more guests. “I think everybody’s feeling better,” says Primland’s Helms. “People are more optimistic.”