Aims to Transform Area’s Convention & Tourism Market with the 23-story Hilton Hotel & Conference Center
May 24–NORFOLK — Virginia Beach developer Bruce Thompson joined local officials and Gov. Terry McAuliffe on Thursday to mark his first foray in Norfolk: a 23-story Hilton hotel and conference center that he and his backers say will transform downtown’s convention and tourism market.
“This is a new era,” Thompson said during a ceremonial groundbreaking at Nauticus. Norfolk Mayor Paul D. Fraim called the hotel, dubbed The Main, “a stunning visual landmark” that will preserve architectural heritage and drive more business to Norfolk.
Thompson and city officials said the facility, set to open in mid-2017, will generate $2 million per year in taxes for the city, and create 850 jobs.
The project — financed with $89 million in public money and $64 million in private money — has been controversial. This spring, some candidates in city elections cited it as an example of the City Council favoring downtown over more hard-hit neighborhoods.
McAuliffe, previously a developer himself, acknowledged that the plan was not without uncertainty.
“It’s not easy to step up to the plate and take on this kind of risk, with this kind of vision, in this kind of economy,” the governor said.
Norfolk already owns the Waterside Marriott’s conference center. Fraim has pressed for a new conference center for about a decade. The city has set aside a portion of meals and lodging tax revenues in a fund to pay for it. That fund will be sufficient to cover the debt on the conference center, officials said.
In 2012, after several failed attempts with other developers, the city began negotiations with Thompson’s company, Gold Key/PHR Hotels & Resorts.
Thompson grew up in Norfolk’s Roosevelt Shores neighborhood before moving to a farm in Virginia Beach at age 12.
He has led two major public-private partnerships at the Beach: the Oceanfront Hilton and the Cavalier Hotel. Virginia Beach put nearly $32 million into the $79 million Hilton, which now brings the city millions in tax revenue each year. Last year, the Virginia Beach City Council authorized $18 million for Thompson to refurbish and redevelop the Cavalier.
Representatives of Norfolk’s downtown Marriott and Sheraton hotels said last year that a new conference center would cause “significant, irreparable harm to the existing hotels” in a weak market and pointed out that the city would be competing with itself because it already owns the Marriott’s conference center.
The Marriott has 60,000 square feet of meeting space and 405 rooms. The Hilton will have 50,000 square feet of conference space and 300 rooms, although its main ballroom, with seating for 1,500, will be larger than the Marriott’s.
Both the Marriott and Sheraton have reported declines in business and government bookings. In 2010, the Marriott notified its lender that it was not generating enough income to pay its mortgage, and then missed a payment.
The Hampton Roads hotel market is ranked in the top 25 in the country by STR, a company that gathers data on the hotel industry. The April occupancy rate of about 58 percent in Hampton Roads ranked last of the 25, just behind Detroit.
Norfolk’s occupancy rate was 60 percent in 2012 and is 53 percent so far this year, according to STR.
The City Council voted 6-1 to approve the project last year,
with lone opposition from Councilman Tommy Smigiel.
He said Thursday that he hopes the Hilton succeeds “for the sake of our taxpaying citizens. I still believe that the tax dollars used to subsidize this project would have been better spent on our neighborhoods and schools.”
Patrick Wilson, 757-222-3893, patrick.wilson@pilotonline.com
