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New hotel tax revenues to promote regional tourism

A grey building with a sign that reads "DELTA HOTELS MARRIOTT"
Crixell Matthews
VPM News File
Richmond's Delta Hotel stands on Canal Street. Medium- and large-size hotels throughout the Richmond region will soon charge a new 2% tax on stays.

Many hotels will add a 2% fee to their nightly rates starting July 1.

The Greater Richmond region is the first in Virginia to establish a Tourism Improvement District. On Tuesday, Richmond City Council passed an ordinance joining the TID, which will allow regional tourism organizations to collect more money.

Richmond joins Chesterfield, Henrico, Hanover, New Kent, Colonial Heights and Ashland in the effort to increase tourism. The revenue increase will come from a new tax on hotel stays in these localities.

Starting July 1, hotels with 41 rooms or more will add a 2% fee to their nightly rates.

This charge will appear on hotel guests’ invoices and be paid to Richmond Region Tourism. RRT says the fee could generate up to $8.2 million each year, which will be used to promote visitation and hotel occupancy. According to a press release, 6.6 million overnight visitors came to Richmond last year.

As RRT President and CEO Jack Berry said, the region's TID is a "win-win" for businesses and residents as it relies on taxing visitors instead. The money from this lodging tax will go toward enticing tourists from other regions along the Interstate 95 corridor to visit.

"Those monies would be directed by the hotels, to go out and advertise and solicit new business. So it's really kind of a win-win for everybody," he told VPM News. "But in the past, I mean, we've never ever, ever had an advertising campaign, because we could never afford it. The very best we've spent about $500,000 [in] any given year, but now we'll have the capability of having a multimillion dollar advertising campaign."

Berry also said that RRT will partner with businesses and governments on providing promotions and incentives for new businesses and sporting events to come to Richmond.

Unhoused populations living in hotels will pay the fee for the first 30 days of hotel occupancy, according to Berry, but not after that.

"So if it's a residency, they wouldn't be affected, " he said. "If that's their living accommodations."

However, Berry said the lodging tax exemption only applies for a specific jurisdiction (city, town or county) — not the whole region. If someone moves to a hotel in a different locality, they will have to pay the tax for another 30 days. It was not immediately clear whether the new tax would re-apply to unhoused people who stay at multiple tax-applying hotels within the same jurisdiction.