HAMPTON, Va. (WAVY) — More than $17.3 million will be invested into the City of Hampton for a new hotel.

Construction is underway for the Starwood Hotels and Resorts Element Hotel at Peninsula Town Center and officials say it will bring millions of dollars in revenue to the city.

“Tourism is a great economic driver in the state of Virginia. It’s a $25 billion business across the commonwealth. The spending by visitors in Hampton in 2016 was $248 million,” said Rita McClenny, the president and CEO of Virginia Tourism Corporation.

The VTC says Hampton, the state, and the hotel developer are partnering together for their Tourism Development Financing Program.

It will allow them to fill gaps in funding for the project.

Officials say developers already have about 75 percent of finances before getting help through the program.

The gap estimate for the Hampton project is estimated to cost around $1.8 million over 10 years and each group will pay around $800,000 during that time, according to the VTC.

The VTC says every quarter the state will look at revenue from the hotel and identify one percent of that sum, so they can return their portion through state taxes to go back to the loan lender.

McClenny says they picked Hampton to give tourists more options for places to stay.

“It’s a great location. It’s a great property and it’s a great opportunity to fill in the gap to have lodging in the area,” she said.

Mayor Donnie Tuck says city staff alerted them to the hotel room shortage a couple of years ago.

They’re hoping it will give guests, who come to events at Hampton Coliseum and Hampton University, places to stay.

“This adds to our mix. We toured it last week. We think it’s going to be a great, great asset,” Tuck said.

According to officials, the hotel will be 95,000 square feet with more than 120 rooms ,employ 22 full time staff members, and generate around $2 million in revenue.

The hotel is expected to open in the fall.

Tuck says he hopes that tourists who come will see what the city has to offer and maybe one day call the city home.

“We have an opportunity for them to see our city and perhaps choose to live here sometime,” he said.