A Good Year for Tourism and Hospitality in Coastal Virginia

A Year-End Regional Roundup

by Barrett Baker

Since 1999, the Dragas Center for Economic Analysis and Policy at Old Dominion University has been releasing its annual State of the Region Report that analyzes a variety of economic sectors impacting the region.

For this issue, we obtained a preview of the 2023 report from one of its authors, Dr. Robert M. McNab, Professor of Economics, Chair of the Department of Economics at ODU, and Director of the Dragas Center for Economic Analysis and Policy. According to McNab, 2023 has been a good year for the hospitality and tourism industry in Coastal Virginia.

In 2022, estimated hotel revenues reached a record $1.1 billion. McNab and his co-author, Dr. Vinod Agarwal, Professor of Economics at ODU and Deputy Director of the Dragas Center for Economic Analysis and Policy project that the area will set another record in 2023.

“While many economists believed a recession was highly likely in 2023, we noted there was a distinct possibility that Hampton Roads and the nation would ‘muddle through’ this period of higher inflation,” says McNab. “Instead of recession in 2023, we expect real (inflation-adjusted) regional economic growth that will reach, if not exceed, 2.0%, as defense expenditures continue to increase, the Port of Virginia continues to move significant amounts of cargo, and the hospitality and tourism industry observes another record year. If there is a slowdown in consumer demand, that bodes well for Hampton Roads as consumers would shift vacations to domestic locations. I suspect that 2024 will get off to a slower start than 2023, but, barring an unexpected shock, 2024 should also be another good year for the travel and tourism industry in Hampton Roads.”

tourism in hampton roads

Here’s what each of the cities reported to us about the hospitality and tourism scene so far in 2023.

Known as prime outdoor destinations for their proximity to both the Chesapeake Bay and The Great Dismal Swamp, Chesapeake and Suffolk were both attractive destinations during the pandemic for people who wanted a break yet wanted to minimize the potential for COVID exposure. Through July 2023, Chesapeake and Suffolk saw the second and third largest revenue increases in Coastal Virginia, up 27.9% and 27.7% respectively over pre-pandemic revenues in 2019.

Sports tourism has been a major focus for Hampton boosted by the opening of the Hampton Aquaplex with it’s 26,000 square-foot Splashdown Park.

“In the last few years, we have been excited to see an upward trend in the number of visitors and visitor spending,” says Yuri R. Milligan, Director of Media and Community Relations for Hampton Convention and Visitors Bureau. “Travelers to Hampton continue to enjoy our profound history and enticing businesses, attractions, and sports facilities. Also, as visitors continue to come to Hampton for conferences, events, and competitions, we are on pace to continue this upward trend in the years to come. We also attribute the overall visitation to Coastal Virginia Tourism Alliance’s collaborative marketing of the entire region, encouraging cross-visitation between the cities.”

Newport News
“People crave experiences and guests are looking for unique opportunities while visiting a destination,” says Sarah Bowman, Communications and Marketing Manager for Newport News. “In Newport News, we are working with attractions, amenities, restaurants, and hotels to market breakthrough activities in our city. We have also modified our tourism philosophy and are focusing on tourism at home. We want Newport News residents to explore and rediscover the city, then encourage their family members and friends to visit.”

Bowman points out that several one-of-a-kind events help to support tourism and visitation in Newport News, including the One City Marathon weekend, the Tour of Newport News—the largest bike race in Virginia—a new fall festival, and their annual holiday event series that includes INLIGHTN: Lights at the Fountain.

“This past year, revenue for our hotels went up 9% and demand went up more than 3%, which takes us back to what 2019 pre-pandemic levels were,” says Sarah Hughes, Vice President of Marketing and Communications for VisitNorfolk. “Part of that is because all of our festivals and events returned to full capacity. In addition, Norfolk International Airport hit record-breaking numbers this past year, with more than 4.2 million passengers in and out of the airport. So, as an industry as a whole, we are doing very well.”

Two other factors that Hughes sees in building Norfolk’s tourism is Carnival Cruise Line’s commitment to making Norfolk a port-of-call in addition to the return of group activities and conventions after years of cut budgets for businesses and associations. “We’ve had a lot of change in growth,” says Hughes. “We’re constantly seeing new businesses open. With people wanting to travel for food, experiences, history, arts, and culture, we have a lot of that, and we have a very walkable city. You see people out and about, places are busy and crowded, and you feel the energy is back.”

“Tourism in Portsmouth has been quite good this year,” says Keith Toler, Assistant Director, Department of Museums and Tourism. “Two of our hotels reported all-time best spring travel in the history of each hotel. Hotel occupancy and rates are both up for the year. Virginia’s first casino opened in Portsmouth this year, which has brought a lot of first-time visitors to the city. Casino revenue exceeds $20 million per month.”

Virginia Beach
While the oceanfront resort area is certainly a huge draw for tourism, Virginia Beach Police Chief Paul Neudigate feels that falling crime rates is also making the area a more desirable destination. In a recent presentation to the Virginia Beach City Council, Neudigate reported that violent crimes (homicide, rape, robbery, and aggravated assault) were down more than 12% in 2022, compared with the previous year, and down almost 21% over the last five years. This was supported by the fact that Virginia Beach saw its revenue increase the most in Coastal Virginia this year (through July 2023) compared with 2019, up 31.2%.

According to Victoria Cimino, CEO of Visit Williamsburg—which represents Williamsburg, Yorktown, and Jamestown—Smith Travel Research is reporting year-to-date an occupancy rate of 52.6% for Williamsburg. This marks a significant improvement post-COVID, with a 6.3% increase over 2022 levels and a notable 3.3% rise over the record-breaking year of 2019, the best performance since 2007. Additionally, there has been a 7% uptick in the number of rooms sold, and hotel revenue has exceeded 2022 levels by 6%.

Leisure travel has also driven Williamsburg’s recovery post-COVID. However, group, business and international travel numbers are rebounding and showing signs of continued growth.

Higher Occupancy and Increased Revenue
Tourism is alive and well in Coastal Virginia, perhaps faring better than many other areas of Virginia and the country. McNab noted that hotel revenues increased faster in Coastal Virginia over the last three years than across Virginia and the nation. Hoteliers have also been able to command higher prices for rooms in the region. Simply put, Coastal Virginia has sold more rooms at higher rates through June 2023 than similar hoteliers across the Commonwealth of Virginia and the United States.

On a more granular level, increased tourism dollars help to raise employment rates and puts more revenue in the bank for each of the cities in Coastal Virginia. Consequently, both those factors help to bring in greater tax revenue, which directly benefits all of the taxpaying citizens in each municipality.

As Sarah Hughes stated, “Sometimes if you’re not in this industry, there’s a lack of knowledge of what tourism can do for the community. What helps the visitor also helps the local resident.”

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