United States -  Norfolk - Virginia Beach

Norfolk is part of the greater Hampton Roads economy, which is largely driven by the government and military sectors. The Hampton Roads area, which comprises several cities, including Norfolk, Williamsburg, Hampton, Newport News, Suffolk, Portsmouth, Virginia Beach, among others, is home to eleven major military installations representing all branches of the U.S. Armed Forces, including the world's largest naval base, Naval Station Norfolk. These military stations, as well as related defense contracting firms, generate significant demand for the market. The healthcare and education sectors, as well as leisure attractions, are the other primary demand generators for the market.

Norfolk has been experiencing growth in recent years; the downtown and waterfront areas continue to experience revitalization efforts. The Waterside District, City Walk, and Norfolk Premium Outlets developments should continue to promote the area as a retail and entertainment destination. The healthcare sector is strengthening with the recent expansion of Sentara Leigh Hospital, the creation of the Bon Secours Cancer Institute at DePaul, and the ongoing $199-million expansion of Sentara Norfolk General Hospital, which is expected to be completed in 2020. The Hampton Roads area is anticipated to experience higher demand levels as the military and government sectors gain momentum under the current administration.

The market was somewhat slow to recover from the recession, affected by the consolidation of operations at Langley Air Force Base and Fort Eustis in 2010, as well as the closure of Fort Monroe in 2011. Given its heavy dependence on the military, the market was further affected in 2013 by the mandatory budget cuts related to the federal sequestration. Market-wide occupancy declined, although average rate increased slightly. However, demand and occupancy have improved since that time, as some military-related tensions eased and average rate continued to increase. Occupancy is forecast to increase as the greater market continues to expand and the economy strengthens. Average rate gains should be realized in the future, as well. We note that the greater Hampton Roads market experienced a significant increase in new supply during the height of the recession. This resulted in declines in revenue and hotel values following the recession. Supply has stabilized in recent years, coupled with numerous closings of older hotels. A notable hotel opening in Norfolk was the 300-room Hilton Norfolk at The Main (a mixed-use entertainment, meeting, dining, and hotel venue) in March 2017. The revitalization efforts in Norfolk are creating investment headwinds throughout the market, which bodes well for future hotel values.

Transaction activity has been steady in the Hampton Roads market since January 2016. The Cambria Suites Roanoke sold in January 2017 for the highest price per room in the market at $93,307 per key, with the Kingsmill Resort in Williamsburg following, at a sales price of $71,090 per key. Of the confirmed hotel sales in the market area, the average sale price is roughly $40,000 per key, if one leaves the two higher-priced sales out of the equation. Hotel value growth should be moderate in coming years, largely due to the potential effects that the new administration could have on this market. Furthermore, given the lack of new hotel supply in recent years, the market is likely to realize some new supply additions in the years to come.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Change In Value For Market:

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Norfolk - Virginia Beach RevPAR Change

Norfolk - Virginia Beach RevPAR

Year RevPAR
2006 $49.72
2007 $52.93
2008 $48.28
2009 $45.99
2010 $44.82
2011 $45.40
2012 $47.33
2013 $46.95
2014 $49.30
2015 $53.90
2016 $59.60
2017 (f) $63.54
2018 (f) $66.10
2019 (f) $67.77

For more information, please contact:

Chelsey Leffet
cleffet@hvs.com
  • +1 202 434-8793 (w)
  • +1 302 740-2772 (m)