New Research by STR looks at the impact of alcohol bans on hotel performance in traditional spring break markets.
By Henry Min and Jan Freitag
HENDERSONVILLE, Tennessee—Some traditional spring break markets, looking to avoid problems associated with drunken and disorderly tourists, have passed laws banning alcohol from their beaches during spring break week. For many college students looking for unbridled fun, such bans are likely unpopular. But have these markets taken a tourism hit as a result?
STR decided to look at hotel performance in three traditional spring break markets that have alcohol bans, and compare that with hotel performance in spring break markets where no such ban exists. (STR is the parent company of Hotel News Now.)
A ban on drinking on the beach isn’t anything new. Fort Lauderdale, Florida, did it in 1985 in a move widely believed to have ended that destination’s reputation as the spring break capital of the U.S.
In March 2015, a shooting at a house party prompted Panama City Beach, Florida, City Council to issue a similar alcohol ban during spring break.
Last year, city officials in Pensacola, Florida, and Gulf Shores, Alabama, followed suit with their own spring break alcohol bans.
Now Miami Beach, Florida, has done the same. Officials there announced in February that the police will enforce a ban on alcohol on beaches from 3 March to 16 April.
To begin to determine what effect, if any, these laws have had on hotel performance, we first had to decide which time period to study, since spring break is not a standard week each year.
According to STR’s School Break Report, spring break 2016 seemed to peak around the week of 12 March. The chart below is from the School Break Report database, which covers about 54% of the four-year universities in the U.S. The states represented here are Alabama, Florida, Georgia, Kentucky, Louisiana, Michigan, South Carolina, Tennessee and Virginia.
The data shows that during the peak spring break week of 12 March, 80% of college students from most southeastern states were on spring break.
Thus, we used March data as the basis to approximate spring break hotel performance. Since Easter weekend fell in March in 2016, but not in 2015, we excluded data from that weekend. This should give a normalized picture of the true hotel performance during spring break.
First, let’s look at the three spring break markets with alcohol bans.
Panama City Beach, Florida
Before the alcohol ban was enacted on 31 March 2015, hotels in Panama City were seeing steadily increasing performance. This resulted in an average occupancy of 72.4% during March 2015. The chart below shows the revenue per available room percentage change from March 2011 and March 2016.
During March 2016, the region experienced a significant performance dip, as the ban on alcohol consumption on beaches was in effect for the whole month. Additionally, city officials imposed tighter regulation on bars and large-scale events. These have resulted in the double-digit declines in both average daily rate and occupancy, and shifted RevPAR growth from a steady increase to a one-time decline of 28.5%.
Gulf Shores, Alabama
130 miles away, another popular spring break destination, Gulf Shores passed its own alcohol ban in March 2016. But there, the ban was effective from 18 March until 17 April. The chart below shows RevPAR change for the Gulf Shores market from March 2011 to March 2016. (The data excludes hotels in Orange Beach, a neighboring beach with no alcohol ban during 2016.)
Hotels in the market saw seemingly little impact from the ban. Despite flat ADR growth, occupancy was the main driver for the double-digit RevPAR increase. Since the ban wasn’t in effect until halfway through the break, it is possible that Gulf Shores hoteliers would have seen less robust performance had the ban been in place throughout March.
90 miles from Panama City Beach and 50 miles from Gulf Shores, Pensacola Beach could well accommodate the student influx from both of those other markets. Interestingly, during spring break 2016, Pensacola issued a “reverse ban” in which alcohol consumption was banned in public areas (boardwalk, parking lots, sidewalks), yet exclusively allowed in the beach area. The chart below shows the RevPAR percent change for the Pensacola market from March 2011 to March 2016.
The data suggests little impact from the “reverse ban.” From a RevPAR standpoint, Pensacola hotel performance was able to grow on par with the previous years. The data seems to suggest that students responded better to a market that still allows alcohol consumption on the beach.
Markets without alcohol ban*
Several markets could have received these students that were turned away by the alcohol bans. We analyzed two comparable markets to understand if performance changed.
South Padre Island, Texas: The Texan island, now home to multiple spring break music festivals and college tours, saw strong momentum across the board. During March 2016, hoteliers in this region posted a strong gain in occupancy (+14.5%), which, combined with an increase in ADR, resulted in a healthy RevPAR increase of 25.7%—never before seen for the market’s March performance.
Myrtle Beach, South Carolina: In March 2016, this spring break market posted a stunning ADR increase (+12.8) and a similarly impressive occupancy gain (+11%), together resulting in the highest RevPAR gain of the three observed markets: 28%.
Our analysis shows that alcohol bans in recent years seem to have had a negative impact on three traditional spring break markets. However, the timeframe of the ban and the specific restrictions matter.
It will be interesting to monitor the Miami Beach ban on alcohol to see if the impact mirrors the markets observed in this report.
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.