Changing hands: The decline of mom-and-pop hotels in Virginia Beach

VIRGINIA BEACH — Among the piles of paperwork rising from Andy Vakos’ desk behind the lobby of The Oceanfront Inn, there are two offers to buy his hotel.

It seems hardly a day goes by he doesn’t get a call from investors asking if he wants to sell. His seven-story beachfront property spans a full city block, with 147 rooms, just south of the King Neptune statue.

“They’re very aggressive,” said Vakos, 58, who has owned and operated The Oceanfront Inn for 33 years.

He leans back, occasionally glancing outside the window where tourists pedal by on four-wheel Surrey bikes. Beyond the Boardwalk, Vakos can see waves unfurling over the sand. The existence of owner-operated hotels like his are becoming a rarity.

Of the roughly 75 hotels within walking distance of the beach, only a handful of mom-and-pop hotels that once prevailed in the Virginia Beach resort area remain. Most hotels are owned by local hospitality companies that operate under franchise agreements brandishing familiar names such as Hilton, Doubletree and Marriott. A few are owned by large, out-of-town investment firms that hire third party management companies to operate them.

Less than 10% are mom-and-pops, where the owner is on site, handling the day-to-day operations, according to the Virginia Beach Hotel Association.

Vakos has no plans to sell. For starters, all his cousins who are his partners would have to agree. Even more difficult would be letting the hotel go.

A tug of war plays out in his mind.

“The money would be good,” he said, digging in his heels. “What would I do?”

But for others, the offers came at the right time.

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Investor interest

Owning a hotel in Virginia Beach has become more attractive to investors in recent years.

Virginia Beach drew attention in the midst of the pandemic. Several months in, when nearly everything was shut down in 2020, then-Gov. Ralph Northam and Mayor Bobby Dyer announced Virginia Beach would be the first city to reopen beaches for recreational activity on Memorial Day weekend.

Since then, Virginia Beach hotels have consistently been top ranked for performance, according to industry economists. Tourism generated $2 billion of direct spending in Virginia Beach in 2021 — the last year data was available from the Convention & Visitors Bureau — and the city attracted more than five million overnight visitors annually.

Those visitors spent $582 million on lodging in Virginia Beach in 2021, which includes hotel stays and private home rentals, according to the city.

Bouncing back after the pandemic coupled with the city taking steps to grow its tourism industry by building an indoor sports center, closing a deal for the massive surf park project and hosting large festivals at the Oceanfront, hasn’t gone unnoticed by investors.

“They (city officials) realize the importance of tourism to the local economy, and they’re embracing it,” said Neil Shamin, CEO of Shamin Hotels of Richmond, the state’s largest hotel company. Shamin has invested hundreds of millions of dollars into buying nine properties at the Oceanfront over the past several years.

With hardly any undeveloped real estate available at the Oceanfront, mom-and-pop hotels are looking more attractive by the day. More money than ever is being invested in new hotel projects.

In 2022, the city’s assessor noted more than $100 million in greater real estate assessed value from the construction of three hotels on Atlantic Avenue. Among those, Suburban Capital razed the Belvedere Hotel on 36th Street — one of Virginia Beach’s original motor lodges — and built Hyatt Place Oceanfront.

Chris Perry, owner of Suburban Capital, grew up in Virginia Beach and started in commercial real estate. He got the bug for hotels about eight years ago. The company also owns Moxy Virginia Beach Oceanfront, Hyatt Place Town Center and the Glass Light Hotel in downtown Norfolk.

Several other Virginia Beach-based hospitality companies own and manage Oceanfront hotels, including Coastal Hospitality Associates, owned by the Lyons family, and Bruce Thompson’s Gold Key | PHR.

In 1968, Tom Lyons bought his first motel, the Sandpiper Inn, in the resort area’s South End. He would offer owners equity for land, said son Russell Lyons. He was the first owner/operator to introduce branded hotels, or franchises, to the area. Coastal Hospitality Associates now operates six Oceanfront hotels.

Thompson bought his first hotel with business partner Ed Ruffin in the 1980s.

In the early 2000’s, zoning laws related to density and building heights changed, and developers like Thompson and Lyons bought and tore down multiple older hotels on neighboring properties to build new high-rise hotels or timeshare buildings.

“That’s what really started to change the dynamics of what was taking place,” Thompson said.

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Early days

Virginia Beach was first recognized as a viable destination for tourists more than a century ago. In the beginning, wealthy guests who could afford to travel by train vacationed at the beach.

The first overnight lodging option was the Virginia Beach Hotel. A group of investors built the wooden lodge in early 1880s, just south of 17th Street. It could accommodate 75 guests. The hotel later expanded to hold 400 guests and renamed the Princess Anne Hotel. Famous inventors and presidents stayed there, but in 1907, it was destroyed by fire.

By the 1920s, Virginia Beach Boulevard opened as the only direct concrete road between Norfolk and Virginia Beach. In 1924, daily bus service operated between the cities.

In 1925, a group of Norfolk businessmen launched a stock-selling campaign to build The Cavalier hotel on 42nd Street.

Among the laborers were Black trade organizations, who took part in Virginia Beach’s 1920s construction boom.

The hotel had 200 guest rooms, a saltwater plunge pool, a barbershop and a confectionary. Each room had its own bathroom, and prices ranged from $4 to $18 a day. Black and Jewish tourists were not allowed as guests, though the hotel employed many Black workers.

Until the 1960s when the area was integrated, Black tourists were not allowed to stay in the Oceanfront hotels or go on the beach.

Over the next several decades, dignitaries, presidents and famous people stayed at the luxurious Cavalier. In 2013, Cavalier Associates, led by Thompson, bought it. After an extensive restoration project, the Cavalier reopened in 2018.

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Motor lodges

By the mid-1950s, the hotel landscape shifted to a more informal setting. America’s economy was thriving after World War II. A strong middle class with leisure time was growing. They had private automobiles and could afford to vacation each summer. In 1966, for example, the Avamere Hotel on 26th Street, cost $17-$26 a night.

Business in the resort area blossomed. Within the first three years of the 1960s, 11 new motels/hotels were added to the Virginia Beach resort area, according to the city’s application to designate notable hotels that were built between 1955 and 1970 and still exist on the Virginia Landmarks Register and the National Register of Historic Places.

By early the 1970s, dozens of motor lodges had open-air walkways overlooking the parking lot.

A brochure for The Thunderbird Motor Lodge, a five-story lodge called a high-rise when it was built in 1959 at 35th Street, describes it as having “The New Look.”

“Every room has a window-wall and private veranda overlooking the surf,” according to the brochure.

Many of the early hotels were either developed or bought by local couples or families who devoted their summers to the business, often times living on the premises.

When Jimmie and Melvin Koch bought the Cutty Sark Motel in 1977, the nightly rate for a room on Fourth of July weekend was $35. During the busy season, the couple lived in a suite behind the lobby. The Koch family continues to operate the three-story motel on the land side of Atlantic Avenue at 37th Street, and it was recently added to the national register.

Betty and Bill Sams built the 50-room Belvedere Beach Resort in 1969. Later, their daughter, Leigh, ran the hotel with her husband.

Joanne Schiffbauer of Pennsylvania stayed there several times in the 1980s.

“It was small; it was clean; and the price was good,” she recalled.

All of these establishments were eventually torn down, and the land was redeveloped with new, bigger hotels.

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A family affair

The Vakos family emigrated from Greece and has owned property at the Oceanfront for generations. Andy’s grandfather opened one of the resort area’s first motels — The Colonial Inn — a two-story u-shaped brick building on 28th Street. It was eventually razed to make room for a more modern hotel that Vakos’ uncle operated until recently.

Vakos’ dad, George, a circuit judge in Virginia Beach, and his uncle, John, built and opened The Oceanfront Inn on 29th Street in 1980, where the Top Hat dance club used to be.

When the hotel was under construction in 1978, Andy, who was in high school at the time, lent a hand in the afternoons.

“We’d come here and help out running cable lines and telephone lines and setting doors in place and getting the rooms ready,” he said.

He attended community college and worked in the hotel during the summer.

“It’s kinda tough when all your friends are out surfing, skimboarding and having fun on the beach, and well, 3 o’clock, I got to go to work,” he said.

He took over operations in 1990. His wife, Ann, manages the parking lot across the street.

Dwight Penny, 64, is the hotel’s chief engineer. He started working for George Vakos in the 1970s when he was 16. Several other employees have also worked there for decades.

“We’ve always been like family,” Penny said.

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Changing hands

There comes a point when some of the more seasoned hoteliers are ready to throw in the towel.

Jimmy Capps, 80, made the hard choice last year.

He and his wife, Clara, sold The Breakers Resort Inn on 15th Street and an adjacent parking lot to the Sibony family, who now also own the Virginia Beach Fishing Pier, other Virginia Beach hotels and about a dozen Sunsations souvenir shops on Atlantic Avenue.

“The price was right; the timing seemed to be right, so we just pulled the trigger,” said Capps, who was receiving two or three offers a month.

The hotel sold for $6.4 million; the parking lot for $5.7 million, according to city records. The Sibonys are currently operating the hotel, though it’s likely slated for redevelopment as part of a major overhaul of the pier and surrounding properties.

The Breakers was built it 1983. Before that, Capps’ parents operated the Essex House on the same land. It had 35 rooms and a restaurant.

“That’s how we got our start,” Capps said.

He remembers the resort area in the 1950s when small motels and cottages lined the beach.

“It used to be a little sleepy town,” he said. “It was a little, tight-knit group.”

Many of the businesses closed during the winter months. Capps’ wife ran the Breakers in early spring and fall, and Capps, who was a teacher, managed the hotel during the summer. His children worked there, too.

“The seasons were shorter,” said Capps. “When you get to October, you lock the doors, and you go back home, and you count your money.”

As he’s witnessed older properties turning over to corporations, Capps sees pros and cons. While a bigger company can afford to upgrade elements of a hotel, he’s worried that corporate managers are focused on the balance sheet.

“The individual property owner was more concerned with the customer,” Capps said. “I always felt if the customer was satisfied, he’d come back and bring someone back with him.”

The Breakers offered free bike rentals for guests and kept the coffee shop in the lobby open even though it wasn’t profitable, so they could greet and catch up with people in the morning.

“I always tried to take care of the customers as much as I could,” he said.

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Holding on

Vakos had a wake-up call with his health five years ago. He underwent a kidney transplant. Now, he’s trying to avoid stress, taking a step back from the day-to-day operations at The Oceanfront Inn, and relying more on his staff, which he continues to oversee.

He recently took a few bucket list vacations with his wife.

“This year, I’ve made an effort to have fun,” Vakos said.

But with no intention of selling, he focuses on long-term upgrades and investments to the property. He plans to invest a half-million dollars on concrete repairs to the balconies soon. After that, he’ll update the room furniture and then renovate the bathrooms.

“Always something to keep the property fresh, because I’m competing with a lot,” he said.

Vakos credits most of his success to loyal customers who come back each year. As for new guests who choose Vakos’ hotel, he hopes they’ll become regulars.

“If they remember that they had a good time, they’ll want to come back, and maybe they’ll remember that they stayed at The Oceanfront Inn,” he said.

Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com