They gathered in such large numbers that there was no room left, not even outside the door, and He preached the Word to them. (Mark 2:2)
BROOMFIELD, Colorado—Pope Francis’ visit to the United States was met with great exuberance and his presence had a lasting impact on many issues, from faith to politics to social responsibility. Of course, his visit even affected hotel performance.
Although his visit was somewhat brief, people flocked to see him on his journey through Philadelphia, New York City and Washington, D.C. And they were more than willing to pay a premium to partake in this once-in-a-lifetime opportunity.
Looking at the performance of the three markets, there was a noticeable spike in room rates as well as a slight bump in demand in some areas. As witnessed with other major events such as the Super Bowl or the Final Four, induced demand will often displace normal market demand and dissuade potential demand from visiting the area. This effect on demand is clearly shown in the daily performance metrics during the pope’s visit. Nevertheless, the overall impact on room revenue is significant.
Philadelphia
To evaluate the true impact of the pope’s U.S. tour, we first estimated the expected performance for each submarket based on typical conditions for those days and current trending. In the chart below, the blue illustrates the room revenue trend of the key Philadelphia submarkets (central business district, Airport/Stadium, North Suburbs, Northeast/Lower Bucks County and West Suburbs) under normal market conditions and the orange indicates the net gain during the days affected by the pope’s visit.
On the weekend that the pope visited Philadelphia, room rates grew 86.3% across the five key submarkets in the Philadelphia area. However, the net gain in occupied roomnights was fairly benign with an estimated 420 more rooms occupied than one would expect under normal market conditions. Primarily driven by rate increases, the net impact to Philadelphia hotels was approximately $8.2 million in room revenue.
New York
Manhattan’s average-daily-rate growth has been lifeless for most of the year, but Pope Francis raised the performance from the dead. In a typical week, Wednesday achieves the highest ADR in the New York area. As you can see in the chart below, room rates continued to climb on Thursday and Friday during the pope’s stay in Manhattan.
Through August, average rate among the three Manhattan submarkets (Lower Manhattan, Times Square and Uptown/Midtown East) declined 2%. However, on Thursday, 24 September and Friday, 25 September, room rates in Manhattan grew 23.3%. With the expectation that average rate would decline on those days based on current trending, the net impact was a 27.5% improvement to ADR. That boost in ADR provided New York area hotels with more than $18 million in additional room revenue over the course of two days.
Washington, et al.
The chart below details our analysis of the net impact of the pope’s visit to occupied roomnights, room revenue and average rate for each of the major submarkets in the Washington, D.C., New York and Philadelphia areas.
The pope’s brief visit to Washington, D.C., had a minor impact in comparison to the other markets. The Philadelphia area experienced the largest impact in average room rate with the CBD and Airport/Stadium submarkets seeing the rate boosts nearly double their typical room rates. Meanwhile, the sheer size of the New York hotel population allowed its submarkets to reap the largest rewards.
Overall, the incremental gain in room revenue for the three markets on the pope’s itinerary is estimated to be more than $29 million.