January Va. hotel revenues surpass 2019

Higher rates drive revenue growth for most markets

Published February 21, 2023 by Katherine Schulte

Virginia hotel revenues in January were 14.9% higher than pre-pandemic levels, largely due to higher hotel room rates, 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 increased by 5% last month compared with January 2019. The average daily rate (ADR) paid for hotel rooms in January was $105, a 9.3% increase from the ADR in January 2019. Revenue per available room (RevPAR) was $50, a 13.4% increase from the same period in 2019.

“With continued pent-up demand in leisure travel and a recovery in group travel, we have seen significant improvement in the performance of the hotel industry over the 2019 levels,” Vinod Agarwal, deputy director of Old Dominion University’s Dragas Center for Economic Analysis and Policy, said in a statement. “Substantial increases in hotel revenue in almost all markets, however, can be easily attributed to higher room rates rather than increases in occupancy or increases in hotel rooms sold.”

The Hampton Roads, Staunton/Harrisonburg and Blacksburg markets saw the largest revenue increases from January 2019, up 37.1%, 37.5% and 35.5%, respectively. Rooms sold in Staunton/Harrisonburg increased 21.9% over January 2019 levels, and in Blacksburg, rooms sold increased by 21.2%.

Rooms sold in Hampton Roads were up 13.6% from pre-pandemic levels. In the Norfolk/Portsmouth submarket, rooms sold increased by 22.4%, and in the Chesapeake/Suffolk submarket, rooms sold increased by 14.5%. Both submarkets’ revenues increased by 41.6%. The Virginia Beach submarket, though, had the largest increase in revenue — 44.7% — with a 13.1% increase in rooms sold. The Williamsburg market had the slowest revenue growth in Hampton Roads, up 25.1% from 2019 levels, with 13.2% more rooms sold.

The increase in the Staunton/Harrisonburg and Blacksburg markets could be a general trend from universities resuming larger in-person activities, said Virginia Restaurant, Lodging & Travel Association President Eric Terry, like hosting conferences and campus tours.

In Richmond, hotel revenue increased 15.4%, and rooms sold increased 4.4%. The Charlottesville market saw revenue gains of 18.4% with a 4.9% increase in rooms sold.

Hotel revenues for the Roanoke market increased 13.6%, although rooms sold decreased by 1.8%. In the Bristol/Kingsport market, hotel revenues rose 16.4%, but rooms sold declined 3.3%.

Although the Hampton Roads market has more than recovered from the pandemic, the Northern Virginia market still lags its pre-pandemic numbers, with hotel revenue down 4.1% compared with 2019. Rooms sold in Northern Virginia last month decreased by 8.4% from January 2019. In August 2022, Northern Virginia hotel revenue was down by 20.4%.

“Northern Virginia is continuing to strengthen. I think as businesses come back to the office, it seems to be doing quite a bit better,” VRLTA’s Terry said.

Although individual corporate travel remains low, group travel, such as trade association members or conference attendees, is picking up, Terry said, “and that helps quite a bit.”

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