Region’s lodging tax revenue rebounds and tops pre-pandemic levels
Reflecting a rebound in regional tourism and lodging since the onset of COVID in early 2020, the latest hotel and motel tax revenue figures in the Greater Richmond area have surpassed pre-pandemic levels.
According to data from the Greater Richmond Convention Center Authority, housing occupancy tax revenue in Richmond and the counties of Chesterfield, Hanover and Henrico totaled $30.8 million in fiscal year 2022 which ends June 30.
The total surpasses a previous record set in fiscal 2019, when occupancy tax revenue between the four localities reached $30 million. It’s also a 70% jump from FY21, when annual revenue hit a pandemic-era low of $18.1 million.
The figures were presented to the finance committee of the authority GRCC and announced in a press release from Richmond Region Tourism. The non-profit organization attributed the numbers to increased bookings at the convention center and continued efforts to support and promote sports tourism in the area.
“It’s really thanks to the best efforts of tourism, and we’re starting to see business travel again, which is helpful,” said Brandon Hinton, deputy county executive of Henrico who chairs the city’s finance committee. ‘authority.
“Sports tourism has been great and has been sustained, and frankly we’re seeing the fruits of that,” Hinton said last week. “The convention center, we had a very good end of the year in terms of the events that take place there.”
According to the release, GRCC event bookings jumped 227% from FY21 to FY22, and attendance increased 163%. The increase in attendance was attributed to events such as the International Missions Conference, the 2022 USA Field Hockey National Indoor Conference and GalaxyCon. Attendance is expected to increase another 30% this fiscal year, according to the statement.
The revenue figures are good news for the authority as it continues to pay debt service on bonds used to fund the GRCC, which was built in 1986 and expanded to 700,000 square feet in 2003. There are ten left years on these annual payments, which should end. in 2032.
The authority was formed by the four localities and is structured so that Richmond, where the center is located, pays 50% of all debt service charges, Henrico 35%, Chesterfield 13% and Hanover 2% .
Despite the loss of events and other pandemic impacts that followed the arrival of COVID in March 2020, the area’s occupancy tax collections during this time were sufficient to pay all operating debts and obligations of authority, Hinton said.
“Of course, with business down sharply at the convention center, operating costs have also gone down, so we have to give credit to both operators for going through tough times as well,” Hinton said. GRCC has been run since 2001 by Philadelphia-based Spectra, which was acquired last year by Los Angeles-based Oak View Group.
The payment of the administration’s debt service, in principal and interest, amounted to $8.2 million during the last financial year. The payout stands at $9.5 million this fiscal year and is expected to hover around the $9.6 million mark through 2032.
With Richmond paying the largest share of debt servicing costs of the four localities, a breakdown of occupancy tax revenue by locality shows that Henrico led the pack in tax remission during last year with $14.9 million, above its total of $14.1 million for fiscal 2019.
Richmond was next with $7.9 million, below its $9 million total for fiscal 2019, making the city the only locality not to exceed its pre-pandemic count. Even so, the city saw the strongest year-over-year growth, surpassing 100% growth in fiscal year 2019, Hinton said.
“They’re coming back, but they haven’t quite caught up to pre-COVID levels. I think business travel is a big reason for that,” he said.
Chesterfield grossed $6.6 million, down from $5.7 million in FY19. And Hanover brought in $1.4 million, topping its fiscal 2019 total of $1.2 million.
The higher figures show a recovery in regional tourism and accommodation as well as a strengthening of the authority’s ability to repay bond debt. Earlier this year, bond rating agencies Fitch and Standard & Poor’s both affirmed the authority’s “AA-” rating on its 2015 hotel tax revenue refund bond series, and revised the rating outlook. authority from negative to stable.
“That means our coverage for our leverage ratios is at its peak,” he said. “Because our tax revenue from hotels and motels is coming in as it is, we don’t see it stopping. It will only increase from here unless we have some sort of substantial shift in COVID.
In its rating report published in March, S&P said of its findings for the authority: “The revised outlook reflects our view of a strong ongoing recovery in promised hotel tax revenue, as recreational activities are largely returned to the region. We expect revenue to support its strong or better near-term debt service coverage, although there is a pullback as new variants of COVID-19 spread.
Renovations to the convention center completed during the pandemic helped boost bookings. More than $2 billion was spent on upgrades and maintenance such as new LED lighting, repairing the parking lot, painting, and adding digital signage.
The renovations were funded by the authority’s capital improvement program, which in turn is funded using part of accommodation taxes, said GRCC chief executive Michael Meyers.
“The Authority is very aware of what it takes to ensure the facility is well maintained so that it continues to be a place event organizers want to return to again and again,” Meyers said. in an email. “We were able to tap into this funding to complete these projects even though we experienced a slowdown in lodging taxes during the pandemic.”
Hinton noted new hotels in the pipeline that would add to the area’s lodging capacity. More than 10 hotels are currently planned or under construction in the area, according to Richmond Region Tourism, representing more than 1,200 additional rooms in development.
Also on the horizon, a much sought-after convention center hotel is included in Richmond’s adopted downtown plan. Officials said the new hotel was needed to supplement capacity around the GRCC, which is currently served by the 400-room Richmond Marriott and the 249-room Hilton Richmond Downtown.
Sports tourism efforts also contribute to these numbers, including Chesterfield’s investments in and around its River City Sportsplex, as well as ball diamond improvements and other improvements at Henrico’s Dorey and Glover Parks. Hinton also highlighted Henrico’s upcoming indoor sports facility, which is slated to open at the Virginia Center Commons in the fall of 2023.
“We all invest heavily in sports infrastructure,” Hinton said. “Not just to consolidate where we are today, but to take us to the next level in the future.”
Note: This story has been updated with renovation details received from GRCC Director General Michael Meyers after the deadline.