Economic fallout from the pandemic shaved hundreds of millions of dollars off the taxable assessed value of hotels and motels in Henrico and Chesterfield counties in 2021, while such values largely held steady in the city.
The decline was felt the most in Henrico, where the vast majority of the nearly 80 hotels and motels in the county saw their values diminish.
The combined assessed value for the nearly 80 such properties in Henrico fell to $288.6 million during 2021. That’s down 50 percent from $586.7 million in 2020, according to data provided by Henrico.
A similar, though not as drastic decline was levied on the four dozen or so hotels and motels in Chesterfield County, with a total combined assessed value of $177.4 million in 2021, which was a 13 percent decrease compared to $204.5 million in 2020, according to data provided by the county.
The decline in the two localities is due to how they calculate the value of hotels and motels. In Henrico, hotel and motel assessments are driven largely by properties’ revenue. Chesterfield focuses on average daily room rates, number of rooms and occupancy when it assesses the value of hotels and motels.
“You can see there’s clearly a significant difference between the two (years). The reason for that is we value hotels on the income approach and the pandemic played a significant role in the economics of hotels,” Henrico Real Estate Division Director Jason Hughes said.
The Henrico hotel that saw its assessment drop the most among its peers was the Westin Hotel at 6631 W. Broad St. at Reynolds Crossing. The property was assessed at $13.5 million in 2021, a 78 percent drop compared to its assessment of $61.2 million the previous year.
Rounding out the top three assessment declines in Henrico was the Springhill Suites by Marriott Glen Allen at 9701 Brook Road (a 73 percent drop to $2.5 million from $9.1 million) and the Marriott Short Pump at 4240 Dominion Blvd. (a 72 percent drop to $9.4 million from $33.2 million).
In Chesterfield, the top three biggest declines were: the Days Inn by Wyndham at 2410 W. Hundred Road (a 44 percent drop to $2.1 million from $3.8 million), the Hampton Inn at 800 Research Road (a 37 percent drop to $4.5 million from $7.1 million) and the Hampton Inn at 3620 Price Club Blvd. (a 36.6 percent drop to $3.6 million from $5.7 million)
Henrico and Chesterfield were still working on what assessments might look like for 2022 as of earlier this month.
Richmond stays level
Within Richmond city limits, the vast majority of hotel and motel assessments were flat from 2020 to 2021. That’s because the city assessor’s office decided that, given the unusual circumstances of the pandemic, it would be better to hold tight with 2020 assessments.
The roughly 50 hotels and motels in the city were assessed at a combined $257.3 million for 2021, a roughly 5 percent decrease compared to the combined assessment of $271.1 million in 2020, according to online property records.
“The pandemic hit in March of ’20 and, needless to say, it was an experience none of us had come across in our professional lives,” City Assessor Richie McKeithen said. “We thought the best thing to do was to hold the actual assessment for that particular year because we didn’t know what the future would bring.”
The slight downward change was driven by several successful appeals to city staff and the board of equalization.
Richmond typically assesses hotels based mostly on revenue and market sales. Motels are assessed based on property improvements, McKeithen said.
Richmond’s total assessment of hotel and motel properties for the upcoming 2022 assessment year is $281.6 million, which is a roughly 9.5 percent increase from 2021.
Lower or stable property assessments translated into lower or level tax bills, which some local hoteliers said was a helpful financial relief in a time of lower occupancy, operating restrictions and staff shortages.
“Henrico County did adjust the assessment which helped us out tremendously,” SINA Hospitality CEO Ravi Patel said in an email.
SINA’s local footprint includes Fairfield Inn & Suites by Marriott near Richmond International Airport (which dropped 46 percent to $3.8 million from $7.1 million) and Fairfield Inn & Suites by Marriott in Midlothian (which dropped 7.5 percent to $5.6 million from $6.1 million).
“Any and all relief has been greatly appreciated based upon significant losses,” said Paul Cooper, CEO of Retro Hospitality, a consulting firm that helps manage Quirk Hotel in Richmond, as well as other hotels elsewhere in Virginia. “Minimizing the losses has been a benefit and I think it translated directly to keeping people employed and offsetting fixed costs.”
Cooper said leisure travelers are coming back though business travelers are still elusive at Quirk. He declined to share occupancy rates but said Retro Hospitality is optimistic about the rest of the year and that reservations are stronger than expected.
Not every hotel operator was happy with decreased assessments, though.
“Assessments represent the current value of the hotel and the drop in the value of the hotel outweighs any reduction in the tax burden,” Shamin Hotels CEO Neil Amin said in an email.
Shamin owns dozens of hotels around the region, including the Hampton Inn & Suites in downtown Richmond, the Sheraton at RIC and Hyatt Place in Innsbrook.
Shamin’s Hilton Richmond Hotel & Spa at 12042 W. Broad St. in Short Pump was placed into receivership last year after Shamin defaulted on a $45 million loan secured by the property and its 2021 assessment fell 65 percent to $12.4 million. The property is headed to a public foreclosure auction this month.
Like Cooper, Amin said his hotels have seen leisure demand rebound but business travel hasn’t yet come back around.
Hotel occupancy in the Richmond and Petersburg areas was about 73 percent in August, compared to an occupancy rate of about 50 percent in August 2020, according to the latest monthly report on the Virginia Tourism Corp.’s website.
The average daily rate was about $99 in August and about $75 in August 2020.
The 10 highest-assessed hotels in 2021 in Richmond, Henrico and Chesterfield:
- • Hampton Inn & Suites at 700 E. Main St. (Richmond), $34.9 million (no change from 2020)
- • Hilton Richmond Downtown at 501 E. Broad St. (Richmond), $34.8 million (18 percent decrease from 2020)
- • Courtyard by Marriott Richmond Downtown at 1320 E. Cary St., (Richmond), $25.1 million (no change)
- • The Jefferson Hotel at 101 W. Franklin St. (Richmond), $25 million (no change)
- • The Omni Richmond Hotel at 100 S. Twelfth St. (Richmond), $24 million (21 percent decrease)
- • Graduate Richmond at 301 W. Franklin St. (Richmond), $20.1 million (no change)
- • The Westin Hotel at 6631 W. Broad St. (Henrico), $13.5 million (78 percent decrease)
- • Hilton Richmond Hotel & Spa at 12042 W. Broad St. (Henrico), $12.4 million (65 percent decrease)
- • Quirk Hotel at 201 W. Broad St. (Richmond), $12.2 million (no change)
- • DoubleTree By Hilton Hotel Richmond – Midlothian at 1021 Koger Center Blvd. (Chesterfield), $11.4 million (22 percent decrease)