Friday, September 08, 2017

Hotel Occupancy and Hurricanes Harvey and Irma

by Bill McBride on 9/08/2017 11:31:00 AM

Note: Hotel occupancy rates increased noticeably following Hurricanes Katrina and Rita in 2005. I expect the overall occupancy rate will also increase following Hurricanes Harvey and Irma - and stay elevated for several months.

The hurricanes reduce supply (damaged hotels), and increase demand (damaged homes and apartments). This increases the overall occupancy rate. The impact from the hurricanes might even push 2017 to a new occupancy rate record.

From HotelNewsNow.com: STR: US hotel results for week ending 2 September

The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 27 August through 2 September 2017, according to data from STR.

In comparison with the week of 28 August through 3 September 2016, the industry recorded the following:

Occupancy: +2.2% to 65.9%
• Average daily rate (ADR): +2.1% to US$121.76
• Revenue per available room (RevPAR): +4.3% to US$80.22

Among the Top 25 Markets, Houston, Texas, reported the largest year-over-year increases in occupancy (+23.4% to 69.1%) and RevPAR (+29.8% to US$70.13). ADR in the market rose 5.2% to US$101.44. STR will release a detailed analysis on Hurricane Harvey’s impact on hotel performance early next week.
emphasis added
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Hotel Occupancy RateThe red line is for 2017, dash light blue is 2016, dashed orange is 2015 (best year on record), blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels).

Currently the occupancy rate to date is slightly ahead of last year, and behind the record year in 2015.

Seasonally, the occupancy rate has peaked and will decline into the Fall.

Data Source: STR, Courtesy of HotelNewsNow.com