Source: “State of the Region: Hampton Roads 2016”
As Virginia casts around for an industry to lead the way in economic growth, don’t look to the hotel sector. Hotels in Virginia have severely under-performed the national average as measured by a key indicator, revenue earned per available room (REVPAR). The chart above, taken from the “State of the Region: Hampton Roads 2016” compares the change in this metric over the course of the current business cycle for the U.S., Virginia, Hampton Roads and various sub-markets in Hampton Roads.
Don’t blame Airbnb, says the report, which was produced by the Center for Economic Analysis and Policy at Old Dominion University. “There is little mystery attached to the causes of the under-performance of the hotel industry in Virginia in recent years. The combination of the Great Recession plus federal government budget sequestration constituted powerful blows from which the industry has yet to recover.”
Aggravating the tumble in demand, the supply of hotel rooms in Virginia increased between 2006 and 2015, creating oversupply. If there’s a silver lining says the report, supply has leveled off — it’s actually a tiny bit smaller than in 2010. “Nonetheless, happy days are not likely to return until federal spending in the Commonwealth, especially for defense, revives.”
— JAB
