Austin, Texas, lost $65 million in hotel rooms revenue between 12-21 March due to both cancellation of SXSW and coronavirus fears.
HENDERSONVILLE, Tennessee—The film and music festival South By Southwest is typically held in mid-March in Austin, Texas, and this year, SXSW was one of the first major events to be canceled in the U.S. due to coronavirus (COVID-19) fears.
This 2020 event would have taken place Friday, 13 March, to Sunday, 22 March. SXSW has historically spanned two full weekends, 10 weekdays in total, with music events kicking off on the Monday during the event span. For the purpose of this analysis, we have actually focused on the span from Thursday, 12 March, to Saturday, 21 March as many attendees arrive the evening before the event starts and check out of their hotels on the final Sunday morning of the festival.
The analysis below shows that:
- According to historic baseline calculations, the Austin market normally records around $46 million during a typical non-event matching period of 10 days (Thursday-Saturday).
- Rooms revenue recorded during SXSW 2019 was $80 million, which is comprised of the $46 million that is normal for the market plus the $34-million premium we attribute to the event being held.
- Rooms revenue for the canceled 2020 event period dropped sharply to $15 million, representing an 81% revenue deficit from the matching event period in 2019. Given the loss of the $34 million in event premium rooms revenues, the loss of an additional $31 million in revenues are most likely attributed to travelers’ fear of COVID-19 and quarantine measures being passed across the country.
The next two charts visualize demand and revenue per available room using the same approach. Market capacity allowed for a smaller demand premium relative to the rooms-revenue premium during the 2019 event—approximately 58,000 rooms more than the normal 306,000, which equals 364,000 rooms sold during the 2019 event period. Demand dipped 62% from 364,000 to 138,000 comparing the matching event periods from 2019 to 2020.
Of this 226,000-room drop in sales, only about 58,000 should be attributed to the cancellation of the event, suggesting that 168,000 roomnights were lost due to the virus outbreak.
Finally, Austin hotels’ RevPAR averaged over the 2019 event period showed a boost of $79 above typical average RevPAR for a comparable period in March. Average RevPAR during the canceled event period in 2020 dropped by 82% to $35. Subtracting the $79 event premium from this downward shift in average RevPAR leaves a gap of $83 in average RevPAR attributed to the COVID-19 virus.
Brannan Doyle is a research analyst with STR’s Market Insights division.
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.