BROOMFIELD, Colorado—As the United States occupancy level creeps closer to the moving 12-month record level of 64.9% set in September 1995, the question becomes: What's the limit? STR, parent company of Hotel News Now, and Tourism Economics are forecasting that record to be broken in 2015, but then what?
Several factors clearly play into how high occupancy levels can ultimately go, including new supply growth, average rate aggressiveness and economic fluctuations (such as oil dropping to below $70 a barrel). But one clear limit on occupancy growth is seasonality. There are simply some markets where it will always be slow in an off-season. The existence of seasonal markets is one of the reasons the total U.S. occupancy will never reach, say, 80%.
So, which markets are the most seasonal?
To answer this question, STR Analytics, sister company of HNN, pulled data on every market (163 in total) and tract (630). We looked at the delta between the high and low occupancy levels on an annual basis for the last four years, and then averaged the difference. Those markets and tracts exhibiting the greatest overall difference were labeled the most seasonal.
Fig. 1 Most-Seasonal Markets and Tracts
Source: STR Analytics
Click to enlarge.
It was no surprise the most-seasonal tract and market are both tourist destinations. The Grand Canyon/Williams, Arizona, tract had an average fluctuation of 64 points of occupancy from peak-month to trough-month for the past four years, and Myrtle Beach, South Carolina, had a swing of nearly 59 points.
Other seasonal markets and tracts included areas where tourist destinations are in huge demand in the summer but the area is not especially welcoming in the winter (South Dakota, Montana). One surprise on the list is Colorado Springs, Colorado, typically known for corporate and government demand, which is not seasonal in nature. Yet, there are enough tourist attractions there to make it a popular summer destination.
All of the markets and tracts had their peak occupancy month in the summer, with the one exception of Fort Myers, Florida, which draws spring-breakers every March.
Least seasonal
Which markets and tracts are the least seasonal?
Fig. 2 Least Seasonal Markets and Tracts
Source: STR Analytics
Click to enlarge.
Hawaii tops the list for the least-seasonal tract and market (Waikiki and Oahu, respectively), which had occupancy fluctuations of about 12 points from peak-to-trough months. Riverside and San Bernardino, both in California, had strong representations on the list, as did some oil-exploration areas (West Texas, New Mexico South). Overall, the least-seasonal markets and tracts in our study had occupancy point swings of less than 20 from peak-to-trough months.
Illustrating these high-and-low seasonality markets further, we can look at their actual occupancy ranges.
Fig. 3 Occupancy Ranges - Tracts
Source: STR Analytics
Click to enlarge.
For the tracts, the most-seasonal areas hit highs in the 90%-occupancy range and lows in the 20s and 30s. For the least-seasonal tract, Waikiki wasn't seasonal because it performed well all year, with a monthly occupancy high of 90.7% and a low of 78.7%. Other tracts, such as Albany/Southwest, Georgia, weren't seasonal because they were mired in relatively low occupancy levels year-round.
Fig. 4 Occupancy Ranges - Markets
Source: STR Analytics
Click to enlarge.
For markets, a similar pattern is displayed, although the least-seasonal markets tended toward higher overall occupancy levels than the least-seasonal tracts.
Find out for yourself which areas are busiest at which times of the year by using the interactive heat map below. Simply choose a month (or several), and the map will display those tracts that have peak occupancy levels during that time.
Fig. 5 Interactive Peak-Occupancy-Month Heat Map
Source: STR Analytics and Tableau