Alexandria hotels are still hurting, but there may be some signs of relief on the horizon.
The ongoing battering of the hotel industry by Covid has been one of the biggest talking points in the budget so far: particularly because city leaders say it could lead to more tax pressure on the city’s residents.
Visit Alexandria COO Tom Kaiden said while recovery has been slow, some aspects of the hospitality industry could return to nearly pre-pandemic levels this year, while others will take longer to recover.
“There’s no question that a whole host of issues have impacted the sector,” Kaiden said. “the ongoing nature of the pandemic, the recent spike of omicron, the reduction in business travel, the supply chain and labor challenges, inflation — all of those are headwinds the sector has faced.”
Pre-pandemic, Kaiden said the occupancy numbers were tracking at record levels. Trajectories charted in late 2019 and early 2020 projected hitting record occupancy in summer 2020 — but that obviously didn’t happen. That spring, hotel occupancy dropped to 8%.
Kaiden said while the city saw a dramatic reduction in occupancy rates early in the pandemic, there have been some signs of recovery over the last year. The occupancy rate is back up to 53% compared to 34% this time last year.
“There’s national data that looks at the composition and forecasting what they think will happen,” Kaiden said. “We’ve been looking at data from Oxford Economics [that says] leisure will be back to normal in 2022 but business travel won’t recover until 2024. Long term view is business travel will recover but we’re still a few years away from that. This year we’re expecting business travel to be down 24%.”
Kaiden said that while people are ready to travel again, companies tend to be more reticent.
“Individuals seem ready to travel again, we’re seeing that in consumer confidence in the desire to travel,” Kaiden said. “They might not be wanting to travel in January, but they were still dreaming to travel when the immediate variant subsided. Individuals make that choice for themselves more freely. Employers are more risk-averse, more reticent, and are using tools like Zoom and hybrid meetings.”
While Kaiden said those are useful short-term strategies, the city is banking on in-person business travel eventually coming back. While the long-term effects of COVID on office space usage are unknown, Kaiden said in-person meetings have a value that can’t be fully replicated online.
Beyond COVID, one of the other major shake-ups in hospitality has been the rise of alternative lodging like Airbnb. The city started authorizing and collecting taxes from transient lodging in 2018, though that kind of lodging also took a hit from the pandemic. In terms of impact on local hotels, Kaiden said transient lodging doesn’t have as much of an effect in Alexandria as it might in other tourist destinations.
“We’ve seen Airbnb rise nationally but it is more of a long-term stay alternative, so their prevalence in markets like the DC metro… the impact is not as great here as it is in traditional mountain and beach destinations,” Kaiden said. “So yes, Airbnb is a factor, but less so here and honestly hotels are adapting their offerings and are essentially more nimble.”
In response to both Covid and transient lodging options like Airbnb, Kaiden said hotels are shifting to focus around guiding visitors around the locality as much as providing a room.
“Our hotels are very good at working with guests to guide the guest experience and make sure they get the most out of their stay,” Kaiden said. “At Visit Alexandria we work with them on a key city attractions package, which encourages people to get out in the community and explore museums. That level of personal service and the added benefit of the inclusion of attractions gives visitors a deeper, richer experience and enables them to get out into neighborhoods and discover the city in the way an unguided experience — like staying in an Airbnb style property — just isn’t as rich.”
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