Demand for hotel rooms — and prices — continues to soar in the wake of Hurricane Harvey, according to new data.
STR, a Tennessee-based hotel data firm that tracks nearly 86,000 hotel rooms in the Houston area, reported Tuesday that hotel occupancy rates between Sept. 1 and Sept. 16 have been consistently above 80 percent — some days hitting or exceeding 90 percent — in the storm’s aftermath.
Before, Houston had the weakest hotel market among 25 major metros nationally with an average occupancy rate of 62 percent.
“We’re now looking at 14 days in a row where occupancy is over 80 percent,” said Jan Freitag, senior vice president of lodging insights for STR. “This is very, very strong occupancy performance. The demand spike is in the same range as a (city hosting the) Super Bowl, the Olympics or South by Southwest.”
Harvey’s historic flooding displaced thousands of Houstonians, who suddenly found themselves looking for temporary housing. The storm also brought out-of-town emergency responders, insurance adjusters and contractors who all needed rooms.
Demand for Houston hotels — which had been anemic during the energy downturn — shot up by at least 30 percent from the same day the previous year, according to STR. Demand doubled some days.
Hotel room prices have skyrocketed. Before the storm, average hotel room rates had been stagnant at around $106 per night. After Harvey, rates averaged $125 a night at their peak, on Sept. 12 and Sept. 13, according to STR.
Nightly hotel room prices are up between 5 percent and 36 percent year over year, according to STR.
“It’s typical for a market to go through demand gyrations after a natural disaster,” Freitag said. “In general, demand spikes and room rates go up.”
Hotel demand will likely stay elevated as long as insurance companies and the Federal Emergency Management Agency pay for hotel rooms. After Hurricane Katrina devastated New Orleans, FEMA paid for hotel rooms for up to a year, after which hotel demand dropped off, Freitag said.
“It all depends on FEMA — how many hotel rooms they are paying for and for how long,” Freitag said. “This could be prolonged or fairly short-lived.”