Just recently, the United States Travel Association released data that quantified the tremendous impact that tourism has on our local economy. Last year, travel spending in the seven jurisdictions that comprise Richmond Region Tourism amounted to more than $2.5 billion, driven by the 7.7 million visitors to our region.
This spending generates more than 24,000 jobs for hardworking citizens in our community and an average of $600 per year in tax relief for local households. Our cultural institutions, sports facilities, restaurant and brewery scenes and historical assets all are contributing to — and benefiting from — recurring national rankings and a growing reputation as a sought-after visitor destination.
Those of us on the front lines of our local tourism industry feel understandable pride in these numbers, but we must also confess to a feeling of frustration. The competition among our peer destinations for attracting visitors — especially the conferences and trade shows that represent the foundation of our business — is intense. The sad reality is that, despite our many assets, the Richmond region lacks a critical prerequisite when it comes to competing for many, many event opportunities.
There are simply not enough hotel rooms within walking distance of the convention center.
That immutable fact precludes us from even bidding on hundreds of conventions and large-scale meetings. Last year, there were more than 49,000 hotel room nights representing 24 groups that Richmond Region Tourism attempted to recruit but lost due to a lack of headquarters hotel rooms. While we have executed work-arounds — deploying armadas of buses to transport conference-goers back and forth to often dozens of other hotels — most event planners won’t even consider such arrangements. And frankly, the economics of such shuttling are unsustainable. To compete effectively, we need a substantial infusion of hotel rooms beyond the 600 or so that currently exist adjacent to the Greater Richmond Convention Center.
What is exciting is that there is a proposed solution at hand. The Navy Hill project, with a 525-room Hyatt hotel sitting prominently at its center, represents a once-in-a-lifetime opportunity that would invigorate our capacity to compete head to head with convention centers all over the country, opening up the best of our region to thousands of new visitors each year.
It’s important to understand the economics of how hotels are typically financed in this day and age. The fact is, developers cannot afford to build large hotels of this size on their own. They typically rely on incentives from cities to subsidize the construction. Hotel deals in Salt Lake City, Utah; Overland Park, Kansas; West Palm Beach, Fla.; and many others around the country have included donations of land and incentives each in the tens of millions of dollars.
These cities understand that 500-plus-room hotels are necessary to compete for visitor dollars, and they have made the calculation that such public subsidies are worth the investment. Even down the road in Hampton Roads, the city of Norfolk put up $110 million to fund the construction of a parking garage and 300-room Hilton conference center.
Here in Richmond, we have traditionally been averse to contributing public funds to subsidize hotel construction. But it is significant to note that the Navy Hill project asks for not one penny in public subsidy to build the new Hyatt. What is important here is that the Navy Hill development team has committed to building the hotel at the same time as the new arena is constructed. All the city needs to do is approve non-recourse bonds to seal the deal. It is a no-risk proposition, with an unprecedented upside. In my more than 40 years in this industry, I have never seen a deal with such a win-win appeal.
Finally, a peek behind the curtain. The tourism industry is keenly competitive. Destinations of all sizes around the country work very aggressively to attract national associations, religious groups, sports tournament organizers, business groups and many others to their convention centers and arenas. Our sales team competes day in and day out against destinations that, frankly, can offer more than we can. And yet, we have held our own, and we are proud of all our success to date.
Even so, the prospect of adding a more than 500-room Hyatt near our convention center — with a sparkling new arena at its side — has the tourism industry salivating over the possibilities. These additional resources would be transformative and take the Richmond region’s tourism to new heights, which, in turn, will deliver increased revenue for the region. We hope that the community and its leaders recognize the game-changing quality of the Navy Hill proposal. It will open up new gateways to RVA, and without the kind of investment that most cities are having to make.