HENDERSONVILLE, Tennessee—STR data shows the Winter Olympics gives the area’s host hotels a performance boost leading up to, and particularly during, the event. But what happens when the figure skaters, hockey players and skiers leave? How long does it take for the key hotel performance indicators to level out again?
During the bidding process, the International Olympic Committee reviews and researches several factors when determining the proper destination to host the Winter Olympics. A few of the factors are local support, general infrastructure, public transportation, environment and one that is near and dear to the hotel industry—housing capability.
Supply growth
When Salt Lake City hosted the Winter Olympics, year-to-date ending February 2002, the hotel supply had grown 5.3 percent. Looking to the recent host city, year-to-date ending February 2010, the Vancouver hotel supply grew 4.1 percent; total Canada hotel supply grew 1.5 percent during the same period.
Although hotel supply growth may have the most long-term impact on a destination, demand and average daily rate numbers usually get the most attention. And these numbers can often be quite impressive.
Demand and ADR growth
Year-to-date ending February 2002, Salt Lake City demand was up 20.8 percent, and its ADR was US$139.34, up 73.3 percent over the previous year.
In analyzing the daily data using a 28-day moving average, the spike in demand and ADR was predominant. ADR growth peaked with more than a 124-percent change over the same day the prior year. These peaks occurred in the middle of the transition from the Winter Olympics games to the Paralympics games.
The demand and rate decline was rapid after the events left the area. The decline stopped quickly and remained relatively flat until the beginning of 2003. And it is no surprise they haven’t had demand and rate growth performance numbers like that since.
Click image to enlarge.
STR’s recent February 2010 data shows the Vancouver market hotel demand was up a notable 27.3 percent, and the ADR ended at CAD$194.18 (US$192.77), which grew an impressive 56.5 percent compared with the same period last year.
During the actual 17-day period of the Winter Olympics (12 February through 28 February), Vancouver hotel demand was up 62.3 percent over the same period last year, and the average occupancy was 96.5 percent. The ADR was CAD$253.34 (US$251.51), resulting in revenue per available room of CAD $244.37 (US$242.63)—up an astounding 217 percent.
Click image to enlarge.
Was the wealth spread equally? Reviewing the hotel class segments and comparing the high/upper end of the market to the mid/lower end, it appears the picture looked the same. Occupancy for the Luxury, Upper Upscale and Upscale class hotels averaged 98.9 percent, with an average daily rate of CAD$285.37 (US$283.34), up 97.9 percent over the same time last year. Midscale with Food & Beverage, Midscale without Food & Beverage and Economy class hotels had an average occupancy of 93.4 percent and average daily rate of CAD$203.20 (US$201.75), up 230 percent over last year.
Click image to enlarge.
Business as usual
So when does the party end, and how quickly does everything return to “business as usual?” It could be too soon to tell because the Paralympics just ended 21 March, but STR daily data ending 3 April does clearly indicate the decline has begun—a similar decline to what Salt Lake City experienced in 2002. The 28-day moving average data shows hotel demand down 0.6 percent, compared to their peak demand growth of 45.7 percent experienced during the Games. ADR on a 28-day moving average ending 3 April is up 4.4 percent, and the peak was more than 88 percent.
Click image to enlarge.
While hosting the Olympics can be a short-term boost to tourism, the jury is still out on long-term benefits. Cities that invest in the bidding process and infrastructure improvements might have some impressive facilities post-Olympics, but businesses that geared up for the games could be overextended. STR will continue to monitor and report the impact of Olympic events on future hotel markets.
