The greater Hampton Roads economy depends primarily on the federal government and U.S. military; the aerospace, manufacturing, and distribution industries; the healthcare sector; and leisure travelers. Most of these sources are directly related to Hampton Roads’ natural harbor and the Port of Virginia. Norfolk and Virginia Beach fared better throughout the recession because of continued Department of Defense spending. Demand began to strengthen in 2010, but increases in ADR were more modest given the reliance of local hotels on government-established per-diem rates for military service people and contractors. A decrease in occupancy in 2013 was largely attributed to the government sequestration that began in March of that year; however, occupancy and ADR grew in 2014 and 2015, concurrent with returning demand following the sequester. Significant RevPAR growth was realized in 2015 and 2016 as government-related travel through the area increased and the effects of the government sequestration subsided; ADR also grew, bolstered by stronger demand and an increase in the government per-diem rate. In 2017, occupancy increased, while ADR growth was moderate given the new supply. Both occupancy and ADR rose moderately in 2018 and 2019.

The Norfolk/Virginia Beach market was significantly affected by the COVID-19 outbreak, although it fared better than many other major markets across the country given its dependence on government and military demand. While this demand has been somewhat restricted, it never completely dissipated, as travel is required to maintain continuity of national services. The market ended 2020 with a RevPAR loss of nearly 35.0% when compared with the level achieved in 2019. Demand from leisure travelers also declined in 2020; however, once the stay-at-home order was lifted, leisure travel and economic activity increased substantially. In late 2020 and throughout 2021, hotels benefited from the strong visitation levels, as Virginians and regional visitors traveling by car continued to take "staycations" or vacations. Moreover, ADR for 2021 exceeded the 2019 level given the temporary shift in segmentation; as a result, RevPAR also surpassed historical levels in 2021. Data for 2022 illustrate continued growth, driven primarily by continued increases in ADR, albeit at a more tempered pace compared to the other top 25 markets. Market RevPAR reached a new all-time high, while occupancy was just below the historical peak of 2019. The near-term outlook remains positive given the market's traditionally strong tourism industry and diverse economic base.

* 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.

ADR, Demand, Occupancy, RevPAR, and Supply Projections:

Change In Value For Market:

Norfolk - Virginia Beach RevPAR Change

Norfolk - Virginia Beach RevPAR

For more information, please contact:

Chelsey Leffet Managing Director, Northeast Leader Valuation, Market & Feasibility Consulting [email protected] +1 302 740-2772 (m)