Finance & DevelopmentHow the Hurricane Cycle Affects Hotel Demand

How the Hurricane Cycle Affects Hotel Demand

Many factors can influence the demand for hotel rooms, but weather-related events have the potential for a stronger impact than others. In particular, hurricanes are known for disrupting the hotel performance dynamics—but they do so in an unusual way. Because hurricanes are more predictable than other natural disasters, hotels—and guests—are able to prepare for the event and plan a response.

An interesting trend has been identified through analysis of hotel performance during various hurricanes that have hit the United States. Demand decreases significantly for the hotels located along the forecasted hurricane path, as evacuation efforts start taking place. In turn, the demand increases for nearby markets where evacuees and stranded travelers take shelter. A few days after the storm has moved away, hotels experience an increase in demand. This is likely due to the arrival of rescue and disaster recovery crews, displaced residents, etc.

Analysis of two of the most relevant hurricanes of the 2019 season, Hurricane Barry and Hurricane Dorian, help illustrate this trend.

Hurricane Barry

Even though Hurricane Barry was a relatively short-lived hurricane, it still disrupted areas along its path, and hotels were no exception.

Among the states affected, Louisiana and Mississippi reported the strongest impact on hotel performance. Hotels in both states had sharp demand decreases along coastal areas as the hurricane approached. The most dramatic percent change was seen with the New Orleans market, which experienced a seven-day-average drop of 30.7 percent in demand, resulting in a 30 percent drop in RevPAR.

Hurricane Barry Seven-Day Demand Change

Meanwhile, there were demand increases throughout inland areas for both states—up to a seven-day-average increase of 10.5 percent year-over-year for Jackson, Miss., as Barry gained strength and approached the coast.

Hurricane Dorian

The trends mentioned above were more obvious with Hurricane Dorian, as the storm lasted longer and affected a larger area. Hotels in Florida reported strong decreases in demand as the hurricane gained strength and was forecasted to make its way towards the eastern part of the state; even some inland areas experienced significant drops in demand. Despite the uncertainty with the hurricane’s path, Labor Day weekend brought along an increase in demand for a few days. Florida’s sharp increase of 56 percent was inflated by Labor Day travelers and recovery performance from Tropical Storm Gordon, which briefly made landfall the previous year.

In turn, hotels located away from the coast had strong demand increases as people evacuated the affected areas. Georgia experienced some of the highest spikes in demand during this period. Demand also started picking up for hotels in coastal areas as rescue crews arrived to help with cleanup efforts and residents moved closer to home and work on repairs as needed.

Of course, there are many other hurricane-related factors that can impact demand growth, including the impact from previous hurricanes, destruction of infrastructure, the number of residents in need of accommodation due to damage to their homes, and more. For some markets, the impact from hurricanes lingers for several months after the storm has passed.

 


Subscribe to Lodging Daily News for updates.

SUBSCRIBE

Claudia Alvarado Cruz
Claudia Alvarado Cruz
Claudia Alvarado Cruz is senior analytics manager, financial performance at STR.

RELATED ARTICLES

New Pyramid Global Hospitality COO Continues Focus on Big Data to Benefit Owners

Pyramid Global Hospitality Chief Operating Officer Eric Habermann retired in April following seven years with the company and a nearly 40-year career in hospitality....

Grand Hyatt Kauai Resort & Spa Launches Scholarship Program

Grand Hyatt Kauai Resort & Spa, a 605-room resort, announced the launch of a scholarship program to support the continued education of its colleagues...

Hilton Surpasses 500 Hotels in Florida

MCLEAN, Virginia, and MIAMI, Florida—Hilton announced a major milestone as the company surpassed 500 open hotels across Florida. This growth was fueled in part...

Hunter Hotel Advisors Brokers Sale of Residence Inn Detroit Novi

ATLANTA, Georgia—Hunter Hotel Advisors (Hunter) announced the successful sale of the 107-key Residence Inn Detroit Novi. Spark GHC purchased the property from an institutional...

PMZ Realty Capital Arranges Loan for Hampton Inn Marysville

PMZ Realty Capital LLC announced that it has secured a $5.3 million loan for the Hampton Inn Marysville, located in Marysville, Ohio. The loan...

LivAway Suites Breaks Ground on New Property in Tucson, Arizona

SALT LAKE CITY, Utah—LivAway Suites announced the groundbreaking of its newest property in Tucson, Arizona, which marks its fourth in the state over the...