Analyzing impact of the US government shutdown
 
Analyzing impact of the US government shutdown
30 OCTOBER 2013 7:47 AM

An analysis of STR’s data shows the impact of the U.S. government shutdown to national parks and two key cities.

BOULDER, Colorado—The government shutdown had a general dampening effect on hotel performance throughout the United States, but the true impact was felt more strongly in some markets than in others.

In this article, we examine eight areas that were impacted by the shutdown of the U.S. National Park Service and two central cities, Washington, D.C., and Philadelphia.

Using daily data from STR, parent company of Hotel News Now, we analyzed hotel performance during the 16-day government shutdown.

For the areas surrounding national parks, the set of hotels was determined by using the tract that encompasses the specific national park, and then narrowing down the geographic area by nearby cities. We also analyzed two central business district tracts within Washington D.C. and Philadelphia, using the same methodology.

To achieve a same-store sample, hotels were only included if they reported daily data for the 16-day period this year and last year. A few main national parks were excluded from the analysis due to lack of sufficient data.

National parks
Shutting down the National Parks Service nationwide interrupted the vacation plans of many visitors. According to the National Parks Traveler, 283 million visitors traveled to the National Park System in 2012, the highest level of visitation since 2009. With parks such as the Great Smoky Mountain National Park reporting 9.7 million visitors in 2012, it’s apparent the surrounding area has come to depend on tourism.

The chart below shows demand and average-daily-rate percent change for the 16-day shutdown, compared to the same period last year.



All eight parks experienced a decrease in demand. The Grand Canyon experienced the greatest decrease in demand (-35%). However, the Grand Canyon was one of the few national park sites that found state funding to reopen on 12 October. The chart below shows how demand started to recover and ADR rose once the park reopened.


Click to enlarge.

Average-daily-rate percent change followed a less consistent trend than demand. The Grand Canyon and Zion saw the greatest ADR declines over a five-day period, approximately 3% and 7%, respectively. On the other side, ADR within the Yellowstone area increased each day, which helped to balance out their demand decreases.

Central cities
Washington, D.C., was an obvious choice for this analysis, as well as Philadelphia, a city rich in American history.

The chart below shows the daily demand changes for the Washington, D.C., central-business-district tract and the Philadelphia CBD tract.


Click to enlarge.

Demand within the Philadelphia and Washington, D.C., CBD tracts had grown 2.2% as of year-to-date September. During the shutdown, demand declined within the two tracts by 1.1% and 9.2%, respectively.

Demand in Washington, D.C., immediately dropped the first day of the shutdown. There was negligible demand growth during the second week, and demand continued to drop during the final week, decreasing nearly 36% during one day alone. Washington D.C. hasn’t been a hot market in terms of demand increases, but it certainly wasn’t experiencing these levels of decline before the shutdown.

With historical sites, such as the Liberty Bell and Independence Hall, roped off, demand in Philadelphia declined but not as drastically or consistently as Washington D.C.

Room revenue
Room revenue in the examined markets declined by an average of 12% year over year during the 16-day period. The overall impact on room revenue was mostly demand driven, as detailed in the charts above. Washington, D.C., was the only location that gained 4% in room revenue during the period.



The two RevPAR Positioning Matrix charts demonstrate how the decrease in demand changed the overall positioning of these locations, relative to one another. The number following the location name is the revenue-per-available-room rank for that area. With most locations seeing an overall occupancy decline, the pack of green markers on the 2013 chart shifts left, but several locations maintain their ranks. Zion and the Grand Canyon experienced the greatest shift in RevPAR rank, slipping two rank positions.





It will be interesting to see how the rest of the year plays out for these locations—whether leisure travelers were able to rebook their vacations and what impact the lack of government business will have on year-end performance.

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