Initial analysis of hotel performance in markets affected by Hurricane Michael suggests this storm has had a different impact than others in the region.
BROOMFIELD, Colorado—Ahead of, during and in the aftermath of Hurricane Michael, which made landfall on 10 October in the Florida Panhandle as a Category 4 hurricane (the strongest ever to hit this part of Florida), demand for hotels in affected markets mostly rose, according to data from STR, parent company of Hotel News Now.
While demand declines due to evacuations are common, the Florida Panhandle market only saw demand drop on 8 October, when the initial hurricane warning was issued. Demand in the Florida Panhandle market increased 36.1% for the 10-day period immediately after the storm made landfall (11-20 October).
Prior to publication, STR was unable to confirm the number of hotel closures. However, there were a lower number of hotels in the hurricane path compared to other recent hurricanes, so long-term closures could be minimal.
Another factor on statewide hotel performance for Florida is a tough comp with the same period last year, when markets in central and southern Florida still were seeing significant demand growth a month after Hurricane Irma.
The performance impact of this storm was more pronounced at the market level. This analysis looks at the initial and potentially prolonged impacts on affected markets in Florida, Alabama and Georgia.
Before and after the storm
On 8 October, two days before Hurricane Michael made landfall, hotel demand in the Florida Panhandle declined 5.1%. Then, for the 10 days after landfall, the market saw significant increases in demand (+36.1%).
As a tropical storm, Michael continued to move over the state of Georgia, with the greatest impact on the Georgia South hotel market, where hotel demand increased 11% on average from 10-20 October.
Given the growth in demand prior to landfall (+48% on 8 October and 43.2% on 9 October) in the Alabama South market, this was likely an evacuation market for Florida residents. While not as high days after Michael hit, demand growth in the Alabama South market still rose significantly (+21.5%) over the 10-day period.
Supply impact: Hotel closures
STR has been unable to confirm the exact number of hotel closures due to disconnected phone lines as a result of Hurricane Michael. The map below shows the path of Hurricane Michael based on wind swath, with the darkest blue area representing greatest hurricane wind strength. The teal dots represent hotels. Based on the map below, there does not appear to be significant hotel supply located in the strongest path of the storm, but the degree of damage sustained and long-term hotel closures cannot yet be assessed.
Looking at lodging impact at the state level, Hurricane Michael shows a different impact initially compared to other hurricanes. Historically, the state that endured the largest impact from the storm will see an increase in demand from recovery efforts starting to get underway. However, Florida is showing a slight decline in demand and occupancy for the week following the storm. The surrounding states of Alabama and Georgia saw demand and occupancy increase during the same period.
Statewide data for Florida also reflects the impact from Hurricane Irma on Central and Southern Florida last year. Hurricane Irma made landfall in Florida on 10 September 2017, and one month later, there was still significant demand growth as a result of the hurricane. Now comparing data for the state of Florida one year later, demand has returned to a normal level, which appears as a decline when compared to the significant demand growth the prior year. As shown in the maps below, there was significant demand growth (green) on 15 October 2017 compared to 14 October 2018, which appears as a demand decline (red) in the map on the right.
This point is further illustrated in year-over-year revenue per available room changes by each submarket one week after the storm. As expected, with the exception of Albany/Southwest Georgia, the greatest year-over-year RevPAR increases occurred in the submarkets of the Florida Panhandle market. The bottom five submarkets by RevPAR percent change were primarily in Central and Southern Florida, which most likely had little to do with Hurricane Michael and is related to the inflated demand last year from Hurricane Irma.
STR’s Dominik Kozissnik contributed analysis to this article.
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.