HENDERSONVILLE, Tennessee—March and early April mean one thing to sports fans—the brackets have been released, and it’s NCAA tournament time. The pinnacle of the men’s college basketball season is upon us, and it’s down to the Final Four, as 65 teams began play in a single elimination tournament at various locations throughout the U.S. two weeks ago.
The tournament is played over a three-week period. The final weekend—this coming weekend—is reserved for the four remaining teams. Semifinal games are played on Saturday, and the championship is played the following Monday night. The site where the Final Four will be played is chosen several years in advance of the event. This year the event is in Detroit, Michigan. Saturday’s semifinal match-ups are: Michigan State University vs. the University of Connecticut and Villanova University vs. the University of North Carolina. The winners meet Monday night for the national title. This is THE event of the college basketball season.
What does all this mean to the lodging industry? Fans are passionate about their teams, and travel well to watch them play. Because the selected sites are neutral, fans of all teams (along with basketball fans in general) need some place to stay while they’re in town. So, the question is: Just how much of an impact does this have on the hotel industry?
I’ve isolated this analysis to the Final Four locations of the previous four years using data from Smith Travel Research. An average of the daily data for the Friday through Monday will be used for the year the tournament occurred in the respective market. A comparison will then be made for the same Friday through Monday of the previous year.
| Final Four locations |
Tournament dates |
Previous year comparable dates |
| St. Louis, Missouri |
1 - 4 April 2005 |
2 - 5 April 2004 |
| Indianapolis, Indiana |
31 March - 3 April 2006 |
1 - 4 April 2005 |
| Atlanta, Georgia |
30 March - 2 April 2007 |
31 March - 3 April 2006 |
| San Antonio, Texas |
4 - 7 April 2008 |
6 - 9 April 2007 |
The other variable that need to be factored in is the market size and the number of available rooms for use. As the following chart indicates, Atlanta is a significantly larger market, and therefore, should be able to absorb more travelers without seeing as much of a spike in numbers.
| Market
|
Tournament dates
|
Previous year dates
|
|
|
Properties
|
Rooms
|
Properties
|
Rooms
|
| St. Louis, Missouri |
291 |
35,197 |
290 |
34,985 |
| Indianapolis, Indiana |
246 |
27,690 |
247 |
27,659 |
| Atlanta, Georgia |
743 |
90,238 |
741 |
91,373 |
| San Antonio, Texas |
327 |
36,391 |
313 |
34,312 |
In looking at the following data, it’s obvious all four markets experienced year-over-year growth across the board with occupancy, average daily rate and revenue per room available. Atlanta experienced the smallest increase in all three categories. Occupancy percent change topped out at 60.7 percent for St. Louis, while San Antonio experienced the biggest rate jump over the previous year at 81.9 percent. Even Atlanta had a large rate increase at 34.8 percent. What does this rate increase mean? It’s quite simple. It’s easy to raise the rates knowing the rooms are going to sell with so many people coming in from out of town. This results in RevPAR percent changes range from 45.0 percent for Atlanta all the way up to 185.9 percent for St. Louis—something any market would be thrilled to see right now.
Occupancy comparison
| Market |
Tournament dates |
Previous year dates |
Percent change |
| St. Louis, Missouri |
87.0% |
54.1% |
+60.7% |
| Indianapolis, Indiana |
84.6% |
66.5% |
+27.1% |
| Atlanta, Georgia |
74.3% |
69.1% |
+7.6% |
| San Antonio, Texas |
82.8% |
60.9% |
+35.8% |
ADR comparison (amounts in U.S. dollars)
| Market |
Tournament dates |
Previous year dates |
Percent change |
| St. Louis, Missouri |
$126.74 |
$71.26 |
+77.9% |
| Indianapolis, Indiana |
$141.50 |
$88.99 |
+59.0% |
| Atlanta, Georgia |
$113.10 |
$83.90 |
+34.8% |
| San Antonio, Texas |
$177.69 |
$97.71 |
+81.9% |
RevPAR comparison (amounts in U.S. dollars)
| Market |
Tournament dates |
Previous year dates |
Percent change |
| St. Louis, Missouri |
$110.29 |
$38.58 |
+185.9% |
| Indianapolis, Indiana |
$119.66 |
$59.21 |
+102.1% |
| Atlanta, Georgia |
$84.08 |
$57.99 |
+45.0% |
| San Antonio, Texas |
$147.12 |
$59.55 |
+147.0% |
So, as hotel owners and operators in Detroit prepare for this weekend’s big event, they can look forward to a strong performance. Detroit has 377 hotels with 42,252 rooms. There are more rooms in Detroit than San Antonio, St, Louis and Indianapolis, but still well short of Atlanta. To give you a baseline, for the same period last year, Detroit’s occupancy, ADR and RevPAR were 52.2 percent, US$83.18, and US$43.44, respectively. So, despite the poor economy and the well-publicized struggles of the big three automakers, Detroit still should have something to smile about—even if it is only for a few days. Did someone say bailout?
