2023 Va. hotel revenues up 12.9% over pre-pandemic
As of May, all markets except NoVa have recovered
Hotel revenues in the commonwealth this year were 12.9% higher from January through May, compared with pre-pandemic business during the same period in 2019, according to data released Tuesday by STR Inc., a division of CoStar Group Inc. that provides market data on the U.S. hospitality industry.
Hotel rooms sold were about the same compared with the same period in 2019. The average daily rate (ADR) for hotel rooms was $125, a 12.8% increase from 2019. Revenue per available room (RevPAR) stood at $75, up 11.4% from the same period in 2019.
Revenues are up because prices are higher compared with 2019 in part due to inflation and labor costs, versus greater occupancy rates, Vinod Agarwal, deputy director of Old Dominion University’s Dragas Center for Economic Analysis and Policy told Virginia Business.
Also, as the pandemic lessened, there has been pent-up demand from leisure travelers, Agarwal said. Driven largely by tourism, hotel revenues in Hampton Roads led the state, rising 27.4% higher than 2019. The region has “more than fully recovered from the pandemic,” according to a news release from the Dragas Center.
In fact, every major market in the commonwealth except Northern Virginia appears to have fully recovered from the pandemic, which is responsible for Virginia hotels’ overall “lackluster performance” through May 2023, ODU said. Northern Virginia’s hotels are much more dependent on business travel, which has not returned to pre-pandemic levels, Agarwal noted.
Northern Virginia’s hotel revenues were down 3.1% through May this year, compared with the same period in 2019 when Northern Virginia accounted for 43% of hotel revenue generated in the commonwealth,
“Hoteliers have to adjust,” Agarwal said. “Business travel won’t be the same as it was before.” Airlines are experiencing something similar, he noted — leisure travel has returned but not business travel. “The markets doing well are the ones that are not dependent on business travel.”
Rooms sold through May decreased 10.5% in Northern Virginia, by 7.1% in the Roanoke market and by 1.3% in the Virginia portion of the Bristol/Kingsport market, compared with pre-pandemic data.
In Hampton Roads, the Norfolk/Portsmouth, Chesapeake/Suffolk and Virginia Beach markets fared better than other submarkets, with 10.8%, 6% and 4.9% increases in rooms sold, respectively. The Newport News/Hampton market was the only submarket in that region that saw a decline. Rooms were down 1.2%.
Hampton Roads saw its revenue increase the most in Virginia Beach, which was up 33.1% compared with 2019, followed by Chesapeake/Suffolk, which was up 31.2%. The Norfolk/Portsmouth market was up 30.5%. The slowest growth in that region was in the Williamsburg market, with a 17.6% increase.