Tracking the recovery of Texas, Florida hotels
Tracking the recovery of Texas, Florida hotels
27 MARCH 2018 8:09 AM

Six months after Hurricane Harvey and Hurricane Irma, are hotels in Houston and the Florida Keys showing signs of pre-storm performance levels?

BROOMFIELD, Colorado—The 2017 Atlantic hurricane season was among the most intense on record, with Hurricane Harvey, Hurricane Irma, and Hurricane Maria making landfall in the United States and Caribbean in a span of one month.

STR, the parent company of Hotel News Now, reported on the initial impact of each of the hurricanes on the affected hotel markets, but these natural disasters have had a lasting effect on both the directly hit areas and the U.S. as a whole.

Key points

  • Hurricane-related demand lifted overall U.S. performance 1.5 percentage points in the fourth quarter of 2017.
  • Inflated demand and occupancy growth lasts between six and eight months after a hurricane in the affected markets.
  • The Houston market saw double-digit revenue-per-available-room growth for the five months post-Hurricane Harvey.*
  • The Florida Keys market is struggling to recover to pre-hurricane levels, while the rest of the state has experienced strong RevPAR increases from recovery efforts related to Irma and Maria.

In the months after Hurricane Harvey hit Texas and Hurricane Irma hit Florida, the entirety of these two states saw double-digit demand and RevPAR increases as recovery efforts began. The increases were so significant that U.S. RevPAR growth in the fourth quarter (+4.2%) rose nearly 2 percentage points above U.S. RevPAR growth when excluding those two states (+2.3%). These two states make up 17.2% of total U.S. supply and typically represent 20% of demand in the winter months, so it’s unsurprising that their performance has a great impact on the U.S. as a whole.

Historical hurricane impact
To understand the impact that a hurricane can have on an area, we compared Hurricanes Harvey and Irma to Hurricane Andrew in 1992, Hurricane Katrina in 2005 and Hurricane Sandy in 2012. These storms, along with Hurricane Maria, are the top six most-destructive hurricanes in the United States on record, according to NOAA. The data shows an initial drop in demand in the weeks immediately following a storm, followed by a lift in demand for six to eight months after the storm hits. This is the trend that the storms of 2017 have followed as well.

The recovery after Hurricane Katrina was an anomaly when compared to other hurricanes. The New Orleans and Louisiana South markets lost 40% of existing hotel room supply in the first month following the hurricane and did not return to pre-storm supply levels until 2009. Hurricane Katrina is also the only storm that saw a demand decrease in the directly affected markets for the two months post-hurricane. Surrounding markets, such as Louisiana North, saw demand increases of around 40% for those months, so it seems that the drop in supply and destruction to the area’s infrastructure meant that the recovery demand simply couldn’t be fully accommodated in the directly affected markets.

Source: STR; 6 months before through 18 months after hurricane landfall. Markets: Hurricane Andrew: Miami/Hialeah, Fort Lauderdale and Florida Keys (combined); Hurricane Katrina: Louisiana South and New Orleans (combined); Hurricane Sandy: New Jersey Shore, Lower Hudson Valley, Long Island and Central New Jersey (combined); Hurricane Harvey: Texas East, Houston and Texas South (combined); Hurricane Irma: Florida Keys, Miami/Hialeah, Fort Myers and Florida Central (combined).

Hurricane Harvey impact
Hurricane Harvey made landfall on 25 August 2017 south of Houston. Although there was certainly some damage to hotels in the area, there was no noticeable drop in supply in the months following the storm. This doesn’t include short-term or partial closures for less-intensive repairs. The storm also afftected hotel properties in the pipeline, with construction crews being diverted to repair existing structures and hurricane-related damage.

For five months after the storm hit Houston, demand and occupancy showed double-digit growth. Average daily rate also saw double-digit growth for the first four months after Hurricane Harvey, partially due to the increased government business from FEMA and other federal aid employees. The U.S. government per diem rate was set at $135 for August and September of 2017, and $121 in the months since, which is $15-$30 higher than Houston’s 2016 ADR of $105. This ADR growth started to level off in December, although demand still remained strong, as hotels were likely still busy with lower-rated guests including construction crews and non-government aid.

February year-over-year growth data presents a different story for Houston, with the tough comparison to February 2017, when the city hosted the Super Bowl. Both ADR and RevPAR growth show double-digit decreases in February, although the $112 ADR and $79 RevPAR for the market are higher than the trailing twelve-month averages of $106 and $72. Even with the elevated performance last February around the Super Bowl, demand is still up 7.6% over last year.

Hurricane Irma impact
Florida was bracing for Hurricane Irma in early September, with many models predicting that the storm would travel up the Atlantic coast, causing evacuations north and west from the Florida Keys, Miami, and other areas on the east coast. Irma actually took a route along the Gulf coast and through the middle of the state. This unpredictable path caused large swings in performance in September in areas that did not end up feeling the full brunt of the storm.

The Florida Keys market was hit particularly hard by Hurricane Irma, with a 19.4% drop in available room supply in October and November. Construction and repairs are slowly progressing, as the market supply is at 85% of pre-hurricane supply levels. The decreased hotel supply in the Florida Keys combined with public perception that the Keys are not yet ready for travelers has contributed to double-digit decreases in demand in almost every month since the hurricane. Although demand was down 11% over the fourth quarter for the market, lowered supply contributed to an inflated occupancy and positive RevPAR growth.

Most Florida markets saw some kind of demand and RevPAR lift in the recovery from the storm, with double-digit demand growth in October for most markets. Demand statewide increased 8% and RevPAR increased 12.6% in the fourth quarter of 2017, with demand increases remaining strong in markets near the Florida Keys, including Fort Myers and Miami. Some of the storm-related demand seen in Florida is not solely connected to recovery from Hurricane Irma, but is also connected to displaced residents from Puerto Rico after Hurricane Maria.

Although the impact from hurricanes on the hotel performance in Texas and Florida is leveling off, recovery efforts are ongoing to restore the hardest-hit areas back to pre-storm conditions. A future analysis will focus on Hurricane Maria’s lasting impact on hotel performance in Puerto Rico and the rest of the Caribbean.

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.

*Correction, 27 March 2018: This article has been updated to correct Houston's double-digit RevPAR growth following Hurricane Harvey to five months.

1 Comment

  • Hotel Watcher April 1, 2018 8:25 PM Reply

    Thanks for the great analysis. The year over year occupancy info was interesting and useful. I love it when HNN gives this kind of insight. Keep up the good work.

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