Persistence brings a new
oceanfront hotel to Virginia Beach

by Rob Walker
for Virginia Business
June 2005

THE DEAL: Development of the 21-story, 291-room Hilton Virginia Beach Oceanfront hotel. Through a public-private partnership, the project includes an adjacent city park and a 380-space parking garage, shared by the public and hotel guests. The $75 million development at 31st Street and Atlantic Avenue near the city’s new convention center offers more than 12,000 square feet of meeting space and a ballroom that can accommodate 1,000. The business-resort hotel contains two restaurants, a bar and a rooftop pool, plasma TVs, wireless Internet, and upscale shops off the lobby.

KEY PLAYERS: Bruce Thompson, CEO Professional Hospitality Resources Inc., which developed and manages the hotel; Mayor Meyera E. Oberndorf, former Vice Mayor William D. Sessoms; former city council members William W. Harrison Jr. and Linwood Branch; Leslie L. Lilley, city attorney; James K. Spore, city manager; and Morgan Davis, president of TowneBank’s Towne Financial Services, which handled financing.

HOW THE DEAL UNFOLDED: In the late 1980s, the city Economic Development Authority bought the site of an old oceanfront amusement park at a foreclosure sale. The first plan for the site included a 168-room hotel with a public park, parking lot and a Dairy Queen. Over time, City Council’s vision for the property grew. With a boost from plans for the new convention center, the full-service hotel-conference center finally became reality.

Initially, the city planned to sell the land to the hotel developers but eventually decided to lease the ground to maintain control of the land. The city and developer entered a partnership, and the city — which paid $11 million for the land — invested another $20 million to cover costs of the park and parking deck. The hotel development entity, Thirty-First Street LLC, built the hotel.

MAJOR HURDLES: “There were many fits and starts. … There was wrangling and politics, and more time with lawyers than architects,” notes Thompson.

There also was the flawed structure of the deal with “two visions and two budgets,” representing the city and the developer he adds. As might be expected, the plans diverged, time passed, and as advocates of the project departed, enthusiasm waned. “There were times we and the city thought about throwing in the towel,” Thompson recalls. “It was flat dogged persistence that made it happen. But everyone who sees it now says, ‘Wow.’”

ECONOMIC SIGNIFICANCE: James B. Ricketts, director of Virginia Beach’s Convention and Visitors Bureau, describes the hotel development as “essential to the way the whole resort and city are evolving. Knowing there was demand for this higher-end product is changing the way we do business.”

The hotel is a vital complement to the city’s 500,000 square-foot plus convention center, which opens its first phase this summer. The new Hilton employs about 300 people and is expected to generate more than $1 million in state taxes and $1.3 million in city taxes. Its meeting and business spaces already are nearly booked for 18 months, and it is running at 90 percent occupancy.