Hampton’s hotel strategy City Council October 14, 2015

Why are hotels important?

In 2014, Visitors spent $203 million in Hampton Visitors paid $9.3 million in hotel and meals taxes That is the equivalent of 9 cents on the property tax rate. Importance of hotels

$90/year $180/year $270/year Equivalent annual cost $100,000 house $200,000 house$300,000 house

$78 million taxpayer investment 14,000- person capacity Hampton Roads Convention Center

Public investment spurred development Hampton Coliseum

Private investment with public support Boo Williams Sportsplex

53,643 hotel rooms/year

Bookings down

Why are we facing this challenge?

21% decline from 2011 to 2015 Holiday Inn Hotel and Conference Center closed – 300 rooms, full-service hotel No longer enough quality rooms in the city to attract larger conventions or host all the weekend guests for concerts or athletic events What happened?

Convention and meeting planners have said that 4 of the 9 closest hotels are substandard, defined as hotels that do not meet customer expectations and are not suitable for convention business. Up to 40% of visitors for the the Boo Williams Sportsplex in Hampton stay in other localities and boost those localities’ tax revenues. Substandard rooms

Hotels near convention center Only 2 of the 9 hotels closest to the convention center were built this century. Average age of the others: 32 years Some have been maintained and updated but many have not.

Hampton has: 1,200 business-quality hotel rooms citywide Hampton needs for conventions: 1,500 business-quality rooms (minimum) Gap of 300 quality rooms within walking distance of the convention center Consultants’ feedback

Developers look at 3 statistics to determine whether to invest in new hotel properties Average rate Revenue per room Occupancy rate Opportunity for developers

Substandard hotels drive down stats

How much are we losing?

313,000 room nights lost because of room quality ( ) $13.5 million in tax revenues (5 years) $313,000 in fees to improve attractions (5 years) Convention Center

2013 and 2014: 23,000 room nights. $14 million worth of hotel, restaurant and retail spending that produce jobs. $1 million worth in local tax revenues. Sportsplex

One visit creates a lasting impression of our city

Police say that three of the substandard hotels created significant calls. In the past 12 months: 87 serious crimes (“Group A offenses”) 538 calls for service That’s 1½ calls a day to just three businesses. Crime

Substandard: Extremely negative posts on online sites Reports of dirty and stained bed linens; heat/air conditioning not working; plumbing not working properly; dark, dingy and musty; filthy; moldy; cockroaches; odor of cigarettes; mouse droppings; water leak; feces; mildew. Which image do we want?

Business-quality: Positive posts on online sites Reports of comfortable beds; nice amenities; very clean and functional; modern; top-notch service; great rooms; fabulous breakfasts; super friendly; helpful staff Which image do we want?

Which of our visitors will

What can we do to regain business?

Private investment Code/blight enforcement Remove substandard properties Incentivize new construction Tools for improvement

Landmark Hotel Group remodel created award-winning Holiday Inn Express. Now it is a quality select-service option for conventions. Nearly doubled the value of the property, and therefore its property taxes. Private reinvestment

Hotel stay limitation ordinance Blight enforcement Health Department enforcement Police enforcement Enforce clean & safe standards

Williamsburg purchased two hotels in 2015 Paid from 22% and 53% over assessed values, according to media reports Also bought older motels in 2001, 2003 and 2007 Many of these were torn down, and the land has been returned to more productive uses in the private sector. Remove substandard properties

Increases occupancy rates Increases average daily room rate Increases revenue per room Better image of city and impression to visitors Statistics help drive private investment Remove substandard properties

Incentivize hotel businesses to locate in the city either with up-front incentives or land discounts, or operating guarantees or incentives. –Newport News’ public support of Marriott convention center hotel –Norfolk city spending up to $99 million for The Main hotel center –Virginia Beach spending about $18 million on redevelopment of the Cavalier Hotel Incentivize construction

The value of the only full-service hotel in Coliseum Central is worth one and a half times the combined value of all four of the substandard hotels, even though it has half as many rooms. Public payback: Property tax, hotel tax, meals tax, sales tax, jobs, convention center fees Look to recoup investment

Restore hotel room nights to 2011 levels Grow beyond 2011 to reach potential Support tourism facilities and jobs Improve image of Hampton; increase repeat visitors Goals for future

Maximize public assets