Henrico considers 2% tourism improvement district tax

Henrico supervisors are poised to join other Richmond-area localities by enacting a tourism improvement district that would levy a 2% tax on hotel rooms at hotels with more than 41 rooms. The money raised through the fee – anticipated to total $8.2 million in the first year – must be used to expand visitation and hotel occupancy through marketing and sales efforts as well as incentives for events like sports tournaments and conventions to be held in the area, according to the proposal's language.

Supervisors held a public hearing March 28 about the concept.

Richmond Region Tourism Executive Vice President Katherine O’Donnell explained that each participating jurisdiction within the region (Chesterfield, Hanover and Henrico counties, the cities of Richmond and Colonial Heights, and the town of Ashland) would enact its own tourism district to create a unified regional district. Her organization receives a portion of the current lodging tax — along with funds from the Greater Richmond Convention Center Authority, ChamberRVA, and local sponsors — meaning that its funding would increase if the proposal is adopted.

“This will right-size the resources that we have to attract more visitors to our community” and double the tourism marketing budget, she said.

The proposal originally required a petition of support from a majority of area hotels, and hotel representatives from SMI Hotel Group, Shamin Hotels, JP Hospitality, and the Westin Richmond offered supportive comments.

Mark Yardis, the vice president of operations for Shamin, noted that youth sporting events have replaced business travel as the primary driver of tourism, saying “sports tourism saved our industry during the pandemic” and that while the hospitality industry is rebounding, individual business travel will never return to pre-pandemic levels. He noted that the region is expanding its sports infrastructure to provide more sites for these events.

Robert Reed of SMI serves on the Tourism Improvement District Steering Committee and told supervisors that the proposal was driven by the hotel industry and that a significant majority of area hotels supported it, though hoteliers felt it would benefit the entire tourism ecosystem and the local economy. The majority of the new tax would be paid by outside tourists, Reed said.

No one spoke in opposition to the proposal.

With this required hearing completed, the Board will vote on an ordinance to create the TID at a future meeting. All districts are planned to be in place by May 2023, O'Donnell said, except the Colonial Heights district, which will become active this fall after an additional hotel is constructed.

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In other matters, the board accepted a donation of 8.3 acres from Lakewood Manor Retirement community and awarded a $1.1 million contract to Vanasse Hangen Brustlin Inc., which together will complete Phase II of a project to build a boardwalk within Tuckahoe Creek Park along the creek. When complete, this boardwalk will serve as the last section of a pedestrian link from the end of Ridgefield Parkway to Old Coach Lane. The work is expected to run from April to August.

The board also awarded a $948,600 contract for the renovation of the Henrico Department of Public Works’ administration space and annex at the Western Government Center on East Parham Road to Woodland Construction Co.