Florence’s impact on performance in Carolinas, Virginia
 
Florence’s impact on performance in Carolinas, Virginia
09 OCTOBER 2018 8:16 AM

Despite confirmed closure in the Carolinas of 68 hotels representing 4,475 rooms in the immediate aftermath of Hurricane Florence, STR data shows strong performance by North Carolina hotels in the two weeks since, compared to hotels in other affected regions.

BROOMFIELD, Colorado—Hurricane Florence made landfall in North Carolina on 14 September as a slow-moving storm bringing widespread flooding throughout the region. A previous article looked at how hoteliers in the area weathered the storm, while this analysis examines the overall effect of Florence on hotels in the directly impacted markets and the United States as a whole.

Key points:

  • Demand typically decreases prior to a storm’s arrival, then increases due to recovery efforts once the storm passes, as seen in the map below.
  • 68 hotels are confirmed to be closed due to storm-related damage, with the majority of those concentrated on the North Carolina coastline.
  • North Carolina saw the greatest performance lift following the storm, while South Carolina and Virginia saw statewide declines.
  • Impact on the total U.S. hotel industry is muted so far.

Market impact before and after the storm
The interactive map below shows the demand percent change at the market level in the period of time leading up to and following the landfall of Hurricane Florence. As the storm approached on 11 September, demand declined along the coastline and increased further inland, which is an indication of early evacuees moving to presumed safer areas within Virginia, Tennessee and the western Carolinas.

In the days following the storm’s landfall, demand shifts tell a predictable story. In areas where storm impact is predicted, demand growth is negative as travelers avoid the area and some residents evacuate. If the storm causes significant damage and relief efforts are needed, demand increases. For instance, around 13 September when forecasts of the hurricane’s path had it moving north through Virginia, demand began to drop significantly in Virginia markets compared to last year. This effect is seen most strongly in North Carolina, which saw a statewide demand increase of 48% on 16 September as the storm moved to South Carolina and Tennessee. A combination of displaced residents, emergency first-responders, and aid workers contribute to these significant demand increases following natural disasters.

Note: Large decreases across the gulf coast and Florida are related to the strong performance following Hurricanes Harvey and Irma last year and are likely not related to the impact of Hurricane Florence.

Supply impact: Hotel closures
Unsurprisingly, hotel closures were concentrated along the coastal areas that experienced the brunt of the storm’s impact from the storm surge and flooding from more than 30 inches of rain. While the full extent of the damage is difficult to determine in the immediate aftermath of the storm, as of 3 October, 68 hotels representing 4,475 rooms have been confirmed closed by STR, the parent company of Hotel News Now. Closures in the Coastal Carolina, N.C., and Wilmington, N.C., submarkets are the most significant, representing more than 20% of the supply in each of those areas. Approximately half of the surveyed closed properties already have planned re-open dates, with the majority of those estimating a re-opening date in October or November.

Recovery impact
Out of the directly affected hurricane areas, North Carolina saw the greatest positive impact in KPIs in the week following Hurricane Florence’s landfall. The nearly 25% increase in revenue per available room over that week last year was driven mainly by occupancy growth, while South Carolina and Virginia saw a decrease across almost every KPI.

This difference is even starker at the submarket level. The top 5 submarkets by RevPAR growth that week saw increases of between 44% and 101% over the same week last year. Four of those submarkets were in North Carolina, with the Florence/Dillon, S.C., submarket just over the border between the Carolinas. The strongest decreases—more than 20% declines—were seen in South Carolina submarkets, four of which are coastal areas. This data strengthens the idea that recovery-related demand lifts performance in the areas immediately surrounding the greatest destruction, but may decrease demand in less strongly impacted areas.

Total US impact
For several months at the end of last year, we looked at growth in the U.S. both nationwide and without Florida and Texas data, which showed just how significantly markets recovering from a natural disaster can impact nationwide data. In the weeks immediately surrounding Hurricane Florence, the total U.S. data has not seen the same influence from markets impacted by and recovering from the storm. During the week of Hurricane Florence’s main impact, including the affected areas brought RevPAR percent change down, from -3.6% when the markets are excluded to -3.8% when they are included. In the aftermath of the storm, including the impacted markets results in a slightly higher occupancy percent change, but lower average daily rate growth.

It’s likely that both the aftermath of Hurricane Florence and the comparison to hurricanes Harvey, Irma, and Maria will continue to impact the directly affected markets, and possibly the United States, for the coming months.

[1] Week of Hurricane Florence represents data from 9-15 September 2018
[2] Hurricane Florence Aftermath represents data from 16-29 September 2018

STR’s Dominik Kozissnik and Kobe Owoo contributed analysis to this article.

This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.

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