Va. hotel revenues up slightly over 2019
NoVa continues to lag behind due to reduced biz travel
Northern Virginia’s hotel market continues to be a drag on the lodging industry’s performance in the commonwealth as a whole, according to recently released data from STR Inc., a division of CoStar Group Inc. that provides market data on the U.S. hospitality industry.
The latest data show rooms sold decreased by 4.6% in Virginia through July 2022, compared with 2019, remaining consistent with June of this year. The average daily rate (ADR) paid for hotel rooms through July was $120, a 5.6% increase compared with 2019. Revenue per available room (RevPAR), an industry standard of the health of the lodging sector, was $74 and was 0.2% lower compared with 2019.
“Room rates gave gone up dramatically,” said Eric Terry, president of the Virginia Restaurant, Lodging and Travel Association. Hotels are having to compensate for increases in the cost of labor and other expenses, he added. “We’ve actually got a much higher room rate than what what we typically would be, especially down at the beach areas and whatnot. I think it’s just indicative of what the industry has [needed to do] to adjust.”
The three largest markets in the state are Northern Virginia, Hampton Roads and Richmond. Together, they generated about 77% of the commonwealth’s hotel revenue in 2019. Hampton Roads’ room revenue in the first seven months of 2022 was 20.2% higher than during the same period of 2019; Richmond’s was 10.2% higher; and Northern Virginia remained down by 22%. Overall, hotel revenues for the commonwealth through July are o.7% higher than during the same period in 2019.
“Essentially, the Northern Virginia market, which accounted for 43% of the revenue generated in the commonwealth in 2019, is responsible for the lackluster performance through July 2022,” Old Dominion University’s Dragas Center for Economic Analysis and Policy said in a news release Friday. Terry, ODU and hospitality experts have attributed this to the fact that business travel, which accounted for much of the Northern Virginia hotel market’s pre-pandemic business, still hasn’t returned to 2019 levels.
While revenues may be up in some markets, rooms sold, however, continued to show declines from July 2022 compared to 2019. In Northern Virginia, rooms sold decreased by 18.1%; they decreased by 6.7% in Bristol, Virginia, and by 6.9% in Roanoke. Lynchburg saw the largest increase at 11.4%, followed by Staunton/Harrisonburg at 7.9%, Blacksburg at 6.4% and Richmond at 1.3%.
Blacksburg, Lynchburg and Hampton Roads saw the largest increases in percent change in total room revenue at 22.9%, 20.3% and 20.2% respectively.
“The normal pattern is that occupancy goes up first and then your room rates go up after that,” Terry said. “This time … your room rates go up first and then your occupancy. … It’s kind of been an inverse relationship to what the industry normally has.”