Hurricane Ida impact on hotels

Almost two weeks after Hurricane Ida made landfall, the impact of the storm is becoming clearer. Reports show the latest death toll at more than 130 between the Gulf region and the Northeast, and officials in New Orleans are still advising evacuees to stay away from the affected areas due to continued power outages, road blockages, and disruptions in other essential services.

The picture is also coming together on the secondary impact on the hotel industry, not only in the Gulf region, but in those parts of the Northeastern U.S. that were hit by the remnants of this catastrophic storm.

We continue to keep those affected in our thoughts and will do our best to continue updating clients on the industry impact. Analysis of our most recent data from 29 August-4 September contains the added layers of Labor Day weekend demand as well as the return of college football, but there are clear impacts from Ida as outlined below.

Significant volume of temporary closures in New Orleans

The preliminary expectation is there will not be widespread permanent closures because of storm damage. However, a significant volume of inventory is temporarily closed due to continued power outages as well as staffing issues and third-party providers such as linen services being offline. Many of the properties that fall into this category are showing anticipated reopening dates in the short-term.

Including all the properties that report data to STR in the NOLA area, we researched the operating status of 208 hotels accounting for 35,835 rooms. From that sample, 155 properties (75%) and 28,756 rooms (80%) are currently closed.

The table below shows planned reopening dates by month. However, there will almost certainly be updates to this information as the weeks progress and more properties make determinations based on power restoration, supplier availability, staffing, demand, etc. Currently, 24.2% of closed rooms don’t show a reopening date.

Demand lift in the Gulf region

Like previous major storms, there was a noticeable demand lift in evacuation zones, which in the case of Ida meant Mississippi, Alabama, and the northern portion of Louisiana. Based on the rush for quick evacuations, it is not surprising that the markets within driving distance would see a significant uptick.

A common trend around major storms historically is an initial drop in occupancy for the areas directly affected. In this latest hurricane, however, New Orleans was already at significantly low performance levels because of the pandemic. That meant that hotels that remained open in the New Orleans area saw improved levels of occupancy with guests seeking refuge from their damaged properties, as well as the usual influx of media and relief workers that enter a market once a storm has passed.

Weekend demand in the Northeast

The remnants of Ida created unprecedented weather in the Northeast, especially in New York City, creating massive flooding and subsequent loss of life. The Northeast is where it becomes a bit more difficult to quantify the demand lift from Ida vs. the demand lift from Labor Day weekend. NYC shot up to 80.1% occupancy for the weekend, which was likely part Ida displacements and part leisure demand that was already planned for the long weekend—especially with several Broadway shows reopening. D.C., on the other hand, was not hit by the storms and can mostly attribute its 68.9% weekend occupancy to leisure demand. Overall, most of the markets outlined below showed occupancy levels like previous weekends this summer.

Future analysis

Based on the destruction Ida caused, there is likely to be a longer-than-usual occupancy lift for hotels in Gulf evacuation zones. Additionally, hotels in the New Orleans region, as they reopen, will see continued demand from displaced residents, media, relief workers, insurance adjustors, etc. 

The Ida impact on hotel performance in the Northeast corner of the country is expected to be much more short-term

STR will continue to monitor data, especially around closures, and report findings should any significant trends develop. In the meantime, please do not hesitate to reach out to info@str.com if we can assist in any way. Also be sure to keep an eye on our weekly Market Recovery Monitor.