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Choice Hotel officials and Sussex county leaders gathered to break ground on the Cambria hotel in Rehoboth Beach, marking it the third hotel under construction or planned in Sussex County.| PHOTO COURTESY OF CHOICE HOTELS INTERNATIONAL[/caption]
REHOBOTH BEACH — Now in the second year of the COVID-19 pandemic, Delaware’s beach towns continue to enjoy a wave of visitors this summer, fueling a hotel building boom in Sussex County.
In the past year alone, two hotels have opened for business in the county, between the Hyatt House Lewes and the Avid Hotel in Millsboro adding roughly 185 rooms. In the next year another four hotels will either break ground or open for business in Rehoboth Beach or Fenwick Island. There were 3,342 hotel rooms booked in Rehoboth and Dewey beach hotels on the weekend of June 3, according to Rehoboth Beach-Dewey Beach Chamber of Commerce.
“Standing at my window right now, I see Route 1 north and south backed up, even with $5 a gallon at the gas pump,” Beacon Hospitality Managing Director Chad Moore said. “You’re seeing people, who may not have been able to get away last year due to COVID take their vacations now — and they’re still focusing on drive-to locations. The demand is there to support the builds.”
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Source: Rehoboth Beach-Dewey Beach Chamber of Commerce[/caption]
Rehoboth Beach and its sister beach communities are within a three-hour drive from 20 million people, according to the Rehoboth Beach-Dewey Beach Chamber of Commerce. It’s become a favorite spot to go throughout the pandemic, as people were looking for ways to be outdoors to escape work-from-home. Others have started to discover Delaware’s beaches, as President Joe Biden’s takes regular trips to his second home in Lewes.
Data from the Delaware Hotel and Lodging Association (DHLA) has shown interest in Sussex County remains high in the past three years, while Kent and New Castle Counties are showing more of an uneven recovery.
“The hotel industry in general is all about supply and demand, and the demand is definitely there,” said Vince DiFonzo, president and chief operating officer of TKO Hospitality. The firm is a hotel management arm of Harvey Hannah, and it manages the Hyatt House in Lewes, and is currently renovating the former Sandcastle Motel into an boutique hotel. “When you add more inventory, the prices are sure to come down - but you have to consider the type of the brand for the potential customer.”
For example, hotel rooms in April 2020 were roughly at $99 per night, according to DHLA data. This April, a room is $115 per night. Deals on hotel rooms were commonplace, as the uncertainty about the virus left hoteliers eager to draw in customers.
“You also have to keep in mind that the hotel industry hasn’t had to deal with inflation for about 15 years,” Moore added. “It’s crazy these days. I think it’s about a 3% increase in costs, and next year it may be around 7%, and there’s only so much you can pass onto the customer.”
While record-shattering inflation does little to deter tourists, it may have an impact on the hotel building industry. Construction costs are up 21% from where they were last year, according to the National Association of Builders and Contractors. That’s also playing out when it comes to renovation and furniture costs in Delaware as well — DiFonzo said he was paying 20% more for furniture for Harvey Hannah’s latest hotel in Kent Narrows, Md.
Bill Sullivan, board member of the Delaware Hotel & Lodging Association, said that while he’s seeing hotels still as a hot commodity in the region, he’s unsure whether it will last as the nation continues forward in this new phase of the economy.
“The jury’s still out whether this is a wise decision [to build], because it’s becoming even more costly to build even with the occupancy there. We’re also still struggling with a labor shortage, so you’re going to see more hotels struggle to maintain services with less,” he said. “We’re still not technically recovered in some parts of the state, so it may be a sign to be cautious moving forward.”
