Thursday, October 10, 2013

Report: Hotel Occupancy Rate declines due to Government Shutdown

by Bill McBride on 10/10/2013 11:07:00 AM

From HotelNewsNow.com: STR: US results for week ending 5 October

In year-over-year measurements, the industry’s occupancy declined 1.2% to 64.7%; ADR edged up 1.4% to $111.67; and RevPAR increased 0.1% to $72.29.

The relatively flat performances across the board can be attributed to the partial shutdown of the U.S. government on 1 October, said Brad Garner, senior VP for STR. ...

Washington D.C. and Norfolk-Virginia Beach, Virginia, were among the markets most affected during the week. Garner said each market experienced a progressive decline in occupancy during the week. Washington ended the week with a 12.1 percent decline in occupancy, a flat ADR and a 12.1-percent drop in RevPAR. The Norfolk-Virginia Beach market finished the week with a 9.9-percent fall in occupancy, a 2.4-percent decrease in ADR and a 12.1-percent decline in RevPAR.

“Several variables factor into the performance for the week, and overall there were challenges for a number of markets,” Garner said. “Long-term effects of the shutdown remain to be seen, but in the early going it clearly had an impact on the overall hotel industry.”
emphasis added
The 4-week average of the occupancy rate is close to normal levels.

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Hotel Occupancy Rate Click on graph for larger image.

The red line is for 2013, yellow is for 2012, blue is "normal" and black is for 2009 - the worst year since the Great Depression for hotels.

Through October 5th, the 4-week average of the occupancy rate is slightly higher than the same period last year and is tracking just above the pre-recession levels.  The 4-week average of the occupancy rate would usually increase seasonally over the next several weeks, before declining during the holidays. 

This has been a decent year for the hotel industry before the shutdown.  Now the occupancy rate is down year-over-year, and this decline will also show up in airlines, rental cars, restaurants and more.  Just as the hotel industry is almost back on solid footing, Congress pulls the football away again

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com