Dorian’s unclear path stymied Florida Labor Day demand
Dorian’s unclear path stymied Florida Labor Day demand
17 SEPTEMBER 2019 8:37 AM

Fears related to Hurricane Dorian, which peaked as a Category 5 storm, pushed demand inland during Labor Day weekend.

BROOMFIELD, Colorado—Dorian, the first major hurricane of the Atlantic storm season, reached Category 5 status and caused historic devastation in the northwestern Bahamas before making landfall in the southeastern U.S. and moving north to Atlantic Canada.

While it will be another month or two before we are able to measure the impact on the hotel industry in the Bahamas, our daily data sample in the U.S. allows us to examine the initial performance impact around Dorian through Saturday, 7 September.

For our analysis, we focused on markets in the states most associated with the storm: Florida, Georgia, South Carolina and North Carolina. We expected to see performance fluctuations consistent with historical storm trends in the region, but we were especially focused on the longevity and timing of demand shifts given the distance between initial forecasts, state of emergency declarations and actual landfall in the U.S. The fact that the storm’s path developed around the extended Labor Day weekend added another layer into our analysis. On top of that, the comparable period from last year would have been affected by Hurricane Florence.

Uncertain storm path, certain performance impact
There was great uncertainty around Dorian’s path during the final days of August and even into the first week of September, but we saw measurable impact on hotel performance during that time. As shown in the heat map below, major demand declines began across the Florida markets on Friday, 30 August—two days after Governor Ron DeSantis declared a state of emergency.

Demand percent change compared with same day in 2018 (Click chart to expand)

Demand decreases continued over the duration of the week with exceptions on Monday, 2 September (Labor Day) and Tuesday, 3 September. At the same time, demand pickups were easily visible in Georgia and the Carolinas. That type of shift is consistent with historical trends around hurricanes in the southeast as Florida residents fled the path of the storm and headed north or west to the security of evacuation zones. The only markets in the region to buck the trend were those in coastal areas—Savannah, Georgia; Charleston, South Carolina; and Myrtle Beach, South Carolina—all markets that expected to see the wrath of Dorian. What’s clear from the data is that hotel demand took a greater hit in coastal Florida markets than in the Carolinas even during landfall for the latter of the two areas.

More Labor Day demand?
The Labor Day demand increases shown on the previous heat map are more a case of lower performance in 2018 as opposed to higher performance this year. As previously mentioned, performance levels during this time in 2018 were significantly affected by Hurricane Florence—for example, Fort Myers showed an absolute occupancy level of just 28.1% on Labor Day 2018. That made the market’s 58.7% occupancy level for Labor Day 2019 look significant in year-over-year comparisons. There was also the case of Tropical Storm Gordon last year, which made brief landfall near Tavernier and Flamingo.

RevPAR fluctuations
With large fluctuations in demand, and subsequently occupancy and average daily rate, hotels in a general hurricane region realize large year-over-year differences in revenue per available room—whether they be positive or negative. To no surprise, the more inland markets showed the highest RevPAR changes on Labor Day and the days to follow. Coastal areas were generally on the other side of the spectrum.

RevPAR percent change compared with same day in 2018 (Click chart to expand)
RevPAR percent change compared with same day in 2018 (Click chart to expand)

Long-term impact
The long-term performance impact from hurricanes is largely dependent on the length of the storm and the amount of destruction and devastation caused—specifically, the number of residents in need of extended lodging due to home damage. The obvious recent example is Hurricane Harvey, which affected hotel performance figures for months and months after that 2017 storm. Fortunately in the case of Dorian, reports would suggest that most of the southeast U.S. avoided massive damage, especially when considering the catastrophic destruction seen in the Bahamas. STR will continue to monitor daily data for the coming weeks to determine the longer-term impacts of Dorian on the U.S. southeastern seaboard.

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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