As Richmond Region’s popularity as a tourist destination continues to grow, local jurisdictions are seeing a tangible financial impact. For the first time, the collective occupancy tax for hotels in Chesterfield, Hanover, Henrico and Richmond climbed past the $30 million mark in 2018, a total that marks a near 50 percent increase in just six years and a year-over-year jump of 2.06 percent.
And according to local tourism officials, the rosy revenue trend line has contributed to S&P Global Ratings’ decision to raise its long-term rating on the Greater Richmond Convention Center Authority’s debt from “A+” to “AA-,” representing a jump of one rating category.
“These figures reflect the empirical evidence of what I think everyone knows by now, and that is Richmond – with its great restaurants and breweries, cultural and historic assets and parks and year-round sports tourism – has arrived as a top-flight tourism destination,” said Jack Berry, president and CEO of Richmond Region Tourism. “Tourism strengthens quality of life and provides an economic stimulus not only to hotel and restaurants and the like, but as these statistics bear out, it also contributes significant revenue to local governments.”
The current occupancy tax rate in the region for hotels, motels, campgrounds and other entities is 8 percent.
Bond Rating Moves Up
In announcing the improved bond rating, S&P Global Ratings said that its conclusions were based on the “generally stable growth in the pledged revenues.” Additional criteria included the region’s “very strong economic base” featuring a “broad and diverse economy;” stable employment base; moderate levels of volatility; and strong coverage and liquidity. The rating announcement also noted the region’s popularity for attracting events such as NASCAR and a variety of sports tourism competitions, and it cited the fact that Richmond has been named as a “top 10 choice destination” by Lonely Planet and Forbes magazine.
“The improved bond rating is a validation that we are moving in the right direction, and in practical terms, it means that the authority can borrow at more attractive interest rates,” said Michael Meyers, Spectra’s general manager at the Greater Richmond Convention Center. “It makes the news twice as good – higher revenues, reduced costs in servicing our debt. Suffice it to say, we are in a very healthy position.”
Convention Center Renovations
The convention center also announced that it is undertaking a comprehensive 24-month renovation at a cost of around $7 million. The work includes the installation of LED lamping in the exhibition hall and a digital signage program; marquees on 3rd and 5th streets; the renovation of the food court; and the replacement of aging furniture, among other projects. The renovations will be paid for out of existing funds earmarked for capital improvements.