|By David Macaulay, Daily Press, Newport
News, Va.McClatchy-Tribune Regional News
March 16, 2010--HAMPTON -- When it opened in 2005, the 295-room Embassy Suites was billed as a showpiece hotel poised to take advantage of the nearby Hampton Coliseum and newly built Hampton Roads Convention Center.
But like many other hotels in the Coliseum area, the Embassy Suites has seen a massive reduction in assessed value during the recession, losing more than $13 million, a reflection of a downturn in business at city hotels in the last few years.
The falling values of the city's hotels were highlighted in a memo last week to Hampton City Council members from City Assessor Brian Gordineer. The assessor pointed out that the value of hotels is linked to how much income they bring in.
Hampton Mayor Molly Joseph Ward said the fall in hotel value contributed to a decline of about $2 million in real estate tax dollars looming in the 2010-11 budget.
She did not think it was a reflection on the success of the convention center.
"I think what we have experienced in the last 18-24 months has been so unusual and unpredictable that you can't make any correlation with the convention center," she said. "Obviously they are having less conferences, so Hampton Convention Center will be affected by that like every other convention center in the country."
Gordineer said the struggling economy and an increase in the number of rooms available in the city, contributed to a fall in revenue at hotels.
The valuation of the Embassy Suites fell from $46.2 million in 2009 to $36 million in 2010 and $32.4 million in the 2011 financial year.
The Crown Plaza in downtown Hampton (formerly the Radisson) has also lost millions of dollars in assessment. It was assessed at $12.1 million in 2009 but that assessment was reduced to $5.9 million by staff during a review because renovations at the hotel affected business there. After a troubled past that resulted in the city taking it over, the hotel was purchased by MHI Hospitality, an experienced Williamsburg-based hotel operator, and opened as The Crowne Plaza Hotel in 2008 after a $3.5 million overhaul.
The Holiday Inn near the intersection of Mercury Boulevard and Coliseum Drive was originally assessed at $10.1 million in 2009 but that figure was reduced to $6.1 million in a Board of Review appeal. The Holiday Inn lost value due to "high expenses and low occupancy," Gordineer said. "The property was in foreclosure and receivership and experiencing negative cash flow."
The Hilton Garden Inn has seen a more modest loss in value of almost $2 million from 2009 to 2011. The assessments for 2011 will still be subject to the Board of Review. Hotels are assessed primarily on their income, Gordineer said in the memo.
Some property owners did not present income and expense information to the assessor's office, he said. So, Gordineer said, "regretfully" the Board of Review lowered several assessments for 2010 (Jan. 1 valuation date) based on market data from the period after the date of valuation.
According to the Weldon Cooper Center for Public Service, lodging revenues in Hampton fell 18.9 percent from 2007 to 2009 going from $29.6 million to $24 million, Gordineer said.
"Compounding the decreased demand has been increased supply, which includes the new Hampton Inn opposite Sentara (CarePlex hospital), as well as new units nearby in the vicinity of Patrick Henry Mall," Gordineer said.
But Ward said people who attend conventions want a certain number of high-quality hotels rooms and there was still a concern that the city did not have enough quality rooms.
Lodging market research from PKF Hospitality Research has estimated that 70 percent to 80 percent of a hotel's performance relates to the local economy and unemployment rates, Gordineer said.
Hotels across the state and nation saw occupancy rates fall during the recession. Nationally, revenue per available room fell 16.9 percent from 2008 to 2009, the largest decline since the 1930s, he said.
"The impact of recent economic conditions on the conference market has further contributed to the negative influences in the overall lodging markets," he said.
Despite the overall decline, revenue from lodging taxes has increased in the city, said Mary Fugere of the Hampton Convention and Visitor Bureau.
"When we look at Hampton-specific statistics, specifically lodging tax receipts, reports from the Commissioner of the Revenue Office indicate an annual increase between 2007 and 2009," she said. "Hampton ended 2009 with an increase of 4.6 percent over 2008 results."
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By the numbers Hotel rooms and lodging revenue in Hampton Year rooms revenue 2007 2,755 $29.6 million 2009 3,137 $24 million Occupancy rate, 2008: 59.2 percent
Average room rate: $68.64
Tax revenue on lodging
2007 ... $3,048,661
2008 ... $3,078,134
2009 ... $3,221,183
Source: Hampton City Assessor's Office
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