Tourism, hospitality are rebounding, Youngkin says at VA1 summit
Annual tourism industry conference is being held in Norfolk
One of the big takeaways from the VA1 Governor’s Tourism Summit being held in Norfolk this week is that Virginia is ready and eager for travelers.
Travel industry professionals from around the commonwealth are gathering at Hilton Norfolk The Main through Tuesday for the ninth annual state tourism industry conference, which is presented in part by the Virginia Restaurant, Lodging & Travel Association.
The conference started Sunday and was formally kicked off Monday with an appearance by Gov. Glenn Youngkin, who announced $300,000 in matching grants to 64 small business partnerships as part of Virginia Tourism Corp.’s microbusiness marketing leveraging program. In total, more than $1 million will be spent on new marketing activity focused on small businesses and shoulder season visitation, impacting 189 combined partners and supporting more than 400 jobs, he said.
“Tourism is essential for Virginia, that we all know,” he said, noting that tourism in Virginia generated about $25 billion in visitor spending last year, supporting 185,000 jobs and contributed nearly $2 billion in state and local taxes.
“Since we’ve been open again, and Virginia has been open and thriving, the tourism industry has continued to see strong recovery along with the whole commonwealth. Over 60% of Virginia’s localities have already fully recovered from the 2019 levels of spending, and of course we see the hotel sector coming off of a strong year in 2021 for a stronger year in 2022.”
While acknowledging ongoing challenges to the tourism and hospitality industries, including workforce demand, Youngkin said, “We fully expect Virginia and its localities to see continued growth, in visitor spending, with a full recovery in 2023.”
Other state officials in attendance at the tourism conference included Virginia Secretary of Commerce and Trade Caren Merrick and Virginia Tourism Corp. President and CEO Rita McClenny. Norfolk Mayor Kenneth Alexander welcomed the conference, noting how much of an economic driver hospitality and tourism are for the city. In 2021, tourism revenue for Norfolk reached more than $1.1 billion, a 55% change over 2020, according to VisitNorfolk, a nonprofit that promotes the city.
One of the conference’s keynote speakers Monday was Carter Wilson, senior vice president of consulting and analytics with STR Inc., a division of CoStar Group Inc. that provides market data on the U.S. hospitality industry. “Uncertain times are ahead, but the industry remains resilient,” Wilson told a crowd of about 450 people.
STR is forecasting hospitality industry growth in 2023 and 2024, however Wilson cautioned that STR’s partner forecasting agency, Tourism Economics, is predicting a mild recession for the first and second quarters of 2023. And while leisure travel is back above 2019 levels, group and business travel still isn’t. He noted that the top 25 markets are the most vulnerable, and secondary or tertiary markets are not as vulnerable. The Norfolk/Virginia Beach market, he said, is 98.5% recovered, compared with 2019 levels.
Starting in summer 2021, most Virginia markets exceeded 2019 levels for revenue per available room (RevPAR), an industry standard of the health of the lodging sector, Wilson said. Occupancy is nearly recovered across Virginia, which STR breaks into four markets: Washington, D.C.; Norfolk/Virginia Beach; Richmond/Petersburg; and the rest of the state.
One factor that significantly helped the industry recover was maintaining hotel room rates. In fact, luxury hotel room rates are 30% higher than pre-pandemic, he said, citing higher labor costs. Though there are fewer workers in the hospitality industry now, labor costs are up 15% across the industry nationally.