Weak Va. Hotel Performance Blamed on Lulled Economy

WASHINGTON — Virginia’s hotel industry has not fared well over the past 25 years, especially lately, with the one-two punch of the Great Recession and sequestration.

It would be easy to blame alternative accommodation services, such as Airbnb, for the hotel industry’s weak performance. But the recent “State of the Commonwealth” report from Old Dominion University says the issues started before 2008 and are deeper than the rise of the sharing economy.

While hotels nationally had their worst year in 2009, the report says Virginia’s worst year was in 2013. The industry’s “real” revenue, when inflation is not considered, has not returned to its peak of $1.5 billion, although it was close in 2015, at $1.49 billion.

The Great Recession knocked the industry down to $1.34 billion in 2009, the nation’s low point, and fluttered at that level until it bottomed out at $1.32 billion in 2013.

The initial punch from the recession was followed by federal spending cuts imposed by Capitol Hill’s sequestration, which impacted Northern Virginia and Hampton Roads, two areas heavily reliant on federal funds.

The cutback on defense spending meant that fewer federal workers and active-duty military personnel were being put up in hotels. This led to the lull in the hotel industry that has lasted until the past year.

But hotel issues even predate both economic messes. Since 1991, it’s been a tale of two different states.

Tourist hotspot Virginia Beach has seen its real hotel revenue drop by about one percent, while Northern Virginia has seen it increase by 93 percent.

The report suggests that the hotel industry is just one additional gauge to view the performance of the state’s economy, highlighting how reliant it is on federal money. As long as defense spending is kept down, the state could expect to see its economy slide into a lull.

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