by Bill McBride on 9/03/2017 10:17:00 AM
Note: Hotel occupancy rates increased noticeably following Hurricanes Katrina and Rita in 2005. I expect the overall occupancy rate will also increase following Hurricane Harvey – and stay elevated for several months. This might even push 2017 into record territory.
From HotelNewsNow.com: How Hurricane Harvey could affect US hotel industry
We expect that the room supply number of Texas will decline for at least a year. After Katrina, Louisiana room supply dropped by roughly 25% between September 2005 and August 2006. This equated to a supply loss for the U.S. of 0.5%, in fact negating the slow U.S. supply growth we had reported so that—for the first time in history—the annualized supply growth for the U.S. was negative.
It is still too early to tell which hotels are closed for business. We hope that the number is relatively small, and current industry commentary gives us reason for optimism. But it is not a stretch to assume that the supply decline in and around Houston will affect the national numbers.
If a hotel makes it through the storm unscathed or can be re-opened pretty quickly after the event, there is a high likelihood that it will post very strong demand numbers in the months to come. Demand will be generated by multiple sources: displaced residents, FEMA and other federal personnel, insurance adjusters and contractors. Most of these will stay for months in the area keeping room demand numbers artificially high.
If the room supply declines, but room demand remains steady, then occupancy is increasing. This could imply that our STR forecast of 0% occupancy growth for 2017 is too low and that we may be able to report a slight occupancy increase this year and through the second half of next year.
And on a happier note: Hotels in path of total eclipse see unprecedented boon
From HotelNewsNow.com: STR: US hotel results for week ending 26 August
The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 20-26 August 2017, according to data from STR.
In comparison with the week of 21-27 August 2016, the industry recorded the following:
• Occupancy: +3.0% to 69.5%
• Average daily rate (ADR): +3.2% to US$125.57
• Revenue per available room (RevPAR): +6.3% to US$87.28
Among the Top 25 Markets, Nashville, Tennessee, reported the largest year-over-year increases in ADR (+21.7% to US$155.04) and RevPAR (+39.4% to US$126.48). Occupancy in Nashville, a key market in the Great American Eclipse path of totality, was up 14.6% to 81.6%. … St. Louis, another key market in the band of totality, recorded the largest increase in occupancy (+18.9% to 80.6%).
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.
The 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 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