Presentation is loading. Please wait.

Presentation is loading. Please wait.

Author: Holly Spencer, MBA Candidate Adviser: Dr. Woody Kim, Robert H. Dedman Professor of Hospitality Management Florida State University Dedman School.

Similar presentations

Presentation on theme: "Author: Holly Spencer, MBA Candidate Adviser: Dr. Woody Kim, Robert H. Dedman Professor of Hospitality Management Florida State University Dedman School."— Presentation transcript:

1 Author: Holly Spencer, MBA Candidate Adviser: Dr. Woody Kim, Robert H. Dedman Professor of Hospitality Management Florida State University Dedman School of Hospitality

2 1. Introduction 2. Statement of the Problem 3. Purposes of the study 2. Literature Review 1. Natural disaster and outbreak research relating to the tourism industry 2. Articles relating to industry growth in the U.S. for 2010 3. Data Source 4. Analysis 5. Results 6. Discussion and Future Studies 7. Implications

3  April 20, 2010 – Transocean’s Deepwater Horizon Oil Rig explodes killing eleven people and dumping oil into the Gulf of Mexico  Media frenzy amplified the effects by showing intense coverage of oily beaches and damaged wildlife causing consumers to question visiting Florida and eating Gulf seafood  Initial review of Smith Travel Research data showed an interesting picture as Fort Walton Beach showed continued losses June – August in 2010 compared with 2009 while Pensacola showed steady growth over 2009  This brought to question what the effect of the BP Oil Spill actually was throughout the state of Florida

4  Because of the intense media coverage, many hoteliers throughout Florida felt that their hotel’s performance was affected by the BP Oil Spill.  This can best be determined on a property by property basis, however, this study aims to quantify the effects on an aggregate level in order to summarize how this event has shaped Florida’s hotel industry  The oil spill caused relief workers to deploy to some regions buffering the displacement of leisure travelers  Cannibalization factor: “People who want to go to the beach will go to the beach regardless of if they have to switch coasts”, Paul Tang, Hyatt Regency Grand Cypress

5  While the entire Gulf region has been affected by the BP Gulf Oil Spill, this study focuses on its effects on Florida’s hotel industry including regions whose shores were not actually reached by the oil as well as the regions which saw oil on their sand. The purpose of this study is to a) show the effects of the oil spill on regions within Florida in comparison with those results from other directly affected states and to b) show its effects on the state as an entirety in quantitative terms and by interviewing Florida hoteliers. This study will in turn lead to a better understanding of the economic impact of an environmental crisis on the lodging segment.

6  There is little discussing effects of actual crises on the tourism industry.  Chandler (2004) found that national media coverage during the hurricanes Dennis, Floyd, and Irene influenced prospective visitors’ travel plans to the North Carolina Coastal Plain region.  Pizam (2009) cited DLA Piper’s 2009 Hospitality Outlook where 90% of American respondents described the 12-month outlook for their respective hospitality industries as “bearish” and that 43% felt that this recession has had the biggest impact on RevPAR.

7  Reynolds and Belinbin (2003) studied the effects of Mad Cow Disease and found that outbreaks of disease lead to product avoidance which changes consumer buying behavior while educating consumers showed to add value.  Miller and Glantz (1988) found that Florida’s freezes were partially responsible for growing the Brazilian Frozen Concentrate Orange Juice market.

8  Frietag (2010) of STR stated that 2010 gave optimistic signals for the U.S. hotel industry  Demand up by over 10 percent (luxury, upper upscale, and upscale)  ADR maintaining or increasing in June 2010 Upper upscale and upscale stagnant ADR due to group business  Hart (2010) of Rubicon stated that group room nights committed in Q2 2011 was up 4.5 percent and group pace up 43.7 percent.  Group and business segments occupancy rates at their worst in first half of 2009  Loss of promotional rates from during recession caused some loss of demand for lower-rated leisure

9  Secondary data of 25 separate regions from Smith Travel Research  Monthly occupancy, ADR, RevPar, and total room revenue statistics  Directly Affected in Florida:  Fort Walton Beach  Panama City  Panhandle Area  Pensacola MSA  Directly Affected not in Florida:  Baton Rouge, LA  Biloxi/Gulfport, MS  Mobile (City)  Mobile Area, AL  Southern Louisiana  Southern Mississippi  Not Directly Affected in Florida:  Daytona Beach  Florida Keys  Fort Myers  Fort Pierce  Fort Lauderdale  Jacksonville  Lakeland Area  Melbourne  Miami/Hialeah  Naples MSA  Ocala MSA  Orlando  Sarasota  Tampa/St. Pete  West Palm Beach

10  “Directly Affected”- area that was either touching or highly publicized in association with the BP Oil Spill  Paired t-tests and ANOVA using mean percent change for the three months prior to and the three months after the event month (April) from 2009 to 2010  Interviewed hoteliers by telephone as done in Reynolds and Balinbin (2003), Chen et al. (2006), and Chandler (2004).

11  The performance factors asked about included  a) in which market segment(s) did the respondents see the biggest drop(s) from April 2010 to August 2010  b) if they saw a decline in group business, what percentage of those canceled plans does the respondent expect to reschedule  c) to what does the respondent most directly attribute the departure from their property’s forecasts,  d) what segment does their property fit into  e) what is the ownership/management structure of their property  Respondents were also asked about Occupancy, ADR, RevPAR, and Revenue trends in their region as well as demographic items about themselves such as age, years of experience in the hotel industry, prior background, and current position.

12  July 2009 – July 2010:  Occupancy- 5% increase for Florida’s East Coast.1% increase for Florida’s Gulf Coast  RevPar- $6 increase for the East Coast $3.64 increase for the Gulf Coast  Many articles in the media expressed dramatic increases in occupancy on the East Coast implying possible cannibalization

13  Mean percent change from 2009 – 2010 after the BP Oil Spill was improved and of greater magnitude than the before in tested areas including state of Florida as a whole and some Gulf Coast areas outside of Florida  Only statistically significant in areas tested on the Gulf Coast outside of Florida Many emergency management personnel even from Florida were directed to Mobile, AL Mean Percent Change Before versus After -3.61% Before, 20.23% After

14  Mean percent change for Directly Affected area of Florida after oil spill proved to be of significantly less magnitude and had a vastly smaller percent change than those areas directly affected outside of Florida  Mean percent increase for directly affected area outside of Florida was of significantly greater magnitude than those areas in Florida not directly affected by oil  Mean percent change for area not in Florida showed significantly smaller mean percent change before oil spill compared with the areas in Florida not directly affected  BOTTOM LINE: Areas outside of Florida on Gulf Coast experienced much better effects in occupancy than the areas in Florida both affected and not affected

15  Florida Department of Emergency Management:  May 1 st, 2010 Situation Report: More than 2,000 personnel involved in the response as of that date both on and offshore with additional resources ready to deploy 242 BP and contract personnel in Pensacola, FL  May 19 th, 2010 Situation Report: 19,400 personnel working on offshore response 538 BP and contract personnel working on the effort in Florida 33 members on-site at Unified Command in Mobile  July 3 rd, 2010 Situation Report 587 state personnel currently deployed 188 of those 587 in Florida’s Panhandle

16  Both directly affected outside of Florida and not directly affected in Florida areas’ mean percent change after was significantly smaller than the before thus their ADR had improved.  The directly affected area had a significantly greater mean percent change (negative) than both the tested areas outside of Florida and the not directly affected areas in Florida after the oil spill.  In terms of ADR, it appears that the BP Oil Spill truly negatively impacted the Gulf Coast of Florida’s hotels and did so more significantly than in the other tested areas.

17  RevPAR results nearly mirror the ADR results implying that ADR had a bigger impact overall on performance than did Occupancy  The mean percent change after is significantly greater in magnitude and improved in all areas except for those directly impacted and in Florida.  The mean percent change for the directly impacted areas of Florida did in fact improve over 2009 despite not being significant

18  The mean percent change of Total Room Revenue after the oil spill for all areas tested both in and outside of Florida proved to be of greater magnitude than the mean percent change in the months prior and showed improvement in mean percent change in 2010 over 2009.  All areas also showed higher after mean percent changes than the months leading up to the spill and were significant with the exception of the directly impacted area of Florida.





23 Occupancy % Change 2010 - 2009 Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Fort Walton Bch967102-7-15 Panama City160-2782 Panhandle Area-24 -13-15-10614 Pensacola MSA5-2111415 9 Average D-2-312363

24 Occupancy % Change 2010 - 2009 Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Baton Rouge-17-11 -753-3 Biloxi/Gulfport-2691132123 Mobile (City)12101524655348 Mobile Area-82920373130 So. Louisiana-34-27-13-9161721 Southern Miss.-2 -18-17011 Average DNF-9-414231918

25 Occupancy % Change 2010 - 2009 Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Daytona Bch-501268-2-5 Florida Keys-2051310 Fort Myers-501268-2-5 Fort Pierce0519 543 Ft. Lauderdale65116896 Jacksonville-22757912 Lakeland Area-11-324411 Melbourne7146178-5-2 Miami/Hialeah108 5586 Naples MSA14711714-2 Ocala MSA-6-3-23117 Orlando309248 Sarasota53977-2 Tampa/St. Pete-30107876 West Palm Bch312 99817 Average ND1397644

26 ADR % Change 2010 - 2009 Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Fort Walton Bch-9-6-5-7-4-2-11 Panama City-3 3-2-5-7-8 Panhandle Area10-4-3-62-4 Pensacola MSA-2-3-20 -6-10 Average D-3 -2-3-4-3-8

27 ADR % Change 2010 - 2009 Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Baton Rouge-10 -5-7-2 Biloxi/Gulfport-4-6-3023 Mobile (City)-10-14-11-84814 Mobile Area-12-15-10 -9-10-12 So. Louisiana-7-8-6-4-237 Southern Miss.11-4-6-30 Average DNF-7-9-6 -302

28 ADR % Change 2010 - 2009 Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Daytona Bch-5-73372 Florida Keys2395244 Fort Myers-10-13-8-6-3-5-3 Fort Pierce-12 -7-4-61 Ft. Lauderdale-74-8-3 0 Jacksonville-11 -7-5-8-5-2 Lakeland Area-16-2220-6 Melbourne-4 -80-6 Miami/Hialeah-6126-242 Naples MSA-5-72521-2 Ocala MSA 03032 Orlando-11-8-6-2-1123 Sarasota-14-11-7-9-2 0 Tampa/St. Pete-25-17-5-6-4-2-3 West Palm Bch-11-9-5-4-5 Average ND-9-5-3-2 0

29 RevPAR % Change 2010 - 2009 Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Fort Walton Bch022-2-9-25 Panama City-243-420-6 Panhandle Area-23-24-17-18-15810 Pensacola MSA3-5914128-2 Average D-5-6-22-6

30 RevPAR % Change 2010 - 2009 Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Baton Rouge-26-20-15-1322-3 Biloxi/Gulfport-651133147 Mobile (City)1-6314726568 Mobile Area-19-14-29251814 So. Louisiana-38-33-19-13142029 Southern Miss. -2-22 -311 Average DNF-15-12-5-2211921

31 RevPAR % Change 2010 - 2009 Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Daytona Bch-4-11-3213815 Florida Keys03157555 Fort Myers-15-1335-7-8 Fort Pierce-12-7111444 Ft. Lauderdale910-2557 Jacksonville-12-90 410 Lakeland Area-25-3066114 Melbourne39-2177-10-8 Miami/Hialeah4211745138 Naples MSA80141235-4 Ocala MSA-7-5-26149 Orlando-9-83-2-10611 Sarasota-10-82-34 -2 Tampa/St. Pete-27-1741343 West Palm Bch-82644716 Average ND-8-354345

32 Total Room Revenue % Change Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Fort Walton Bch0022-3-10-25 Panama City16653-3 Panhandle Area-12-13-6-10-71820 Pensacola MSA1-5101513121 Average D-3 3126-2

33 Total Room Revenue % Change Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Baton Rouge-20-15-8 883 Biloxi/Gulfport-50713371712 Mobile (City)3-44157568 Mobile Area-4-3814282015 So. Louisiana-33-27-12-5253038 Southern Miss.221-19-2011 Average DNF-10-802252425

34 Total Room Revenue % Change Market/TractJanuaryFebruaryMarchAprilMayJuneJuly Daytona Bch-3-411410-2-4 Florida Keys14168776 Fort Myers-3-411410-2-4 Fort Pierce-7-41618277 Ft. Lauderdale61615181012 Jacksonville-10-7232812 Lakeland Area-23288146 Melbourne410-2177-9-8 Miami/Hialeah5443332 Naples MSA91151446-2 Ocala MSA-7-5-26149 Orlando-6-561-7915 Sarasota-8-651901 Tampa/St. Pete-27-1662565 West Palm Bch-3510881120 Average ND-587555

35  It can be inferred from the data that while the Gulf Coast of Florida was affected in terms of ADR and thus RevPAR, their overall performance was not severely affected in comparison with the prior year.  Looking at the other areas of Florida, however, as well as the rest of the U.S., summer 2010 marked an uptick in occupancy and in revenue higher than that which was felt in the directly affected areas of Florida, though this study was unable to trace how much growth was lost in that region.

36  Areas of Florida not bordering the Gulf of Mexico, however, who did not have oil on their beaches, appear unaffected and seem to have seen growth over 2009 due to the rebounding economy.  It is uncertain from this data how the areas outside of Florida which also had oil on their beaches achieved such astronomical gains over 2009, although it can be at least partially attributed to government aid agencies reacting to the BP Oil Spill.

37  Interviews with Florida General Managers:  Mr. Dale Haney of the Ponte Vedra Inn and Beach Club, a five diamond resort near the Jacksonville, FL market, noticed an uptick in leisure travel from Alabama with some travelers noting that they normally traveled to the Gulf beaches of Florida but instead chose Ponte Vedra during summer 2010 in fear of the oil spill. The Ponte Vedra Inn and Beach Club saw a large increase from April 2010 to August 2010 in individual leisure travelers.  As stated by Paul Tang, Vice President and Managing Director of the Hyatt Regency Grand Cypress in Orlando, “People who want to go to the beach will go to the beach regardless of if they have to switch coasts”. Mr. Tang also noted that his hotel experienced a great drop in individual leisure travelers mostly due to the effects of the current economic downturn and felt that the Orlando market remained largely unaffected by the oil spill.  Mr. Derrick Morrow of the Hyatt Regency Tampa also saw a downturn in his hotel’s business but also attributed it to the recession. It is also noteworthy to mention that Mr. Morrow disclosed an increase in group business throughout summer 2010.  Note that Gulf Region General Managers were unavailable for comment due to pending litigation.

38  Future studies may include findings as to why the Gulf region outside of Florida made such positive gains in summer 2010 over 2009 and factor in how much of that growth was due to government aid and relief attempts.  Future studies may be able to figure in how much the economy actually played a part in this disaster by going further in depth analysis of the government’s response both in Florida and in the surrounding areas.  Future studies may also be able to measure the long-term impact of the oil spill on the hotel industry by being able to measure summer 2011’s performance to 2010 and 2009 performance.

39  State Tourism Bureau:  Natural disasters will undoubtedly affect your state’s industry  Acting swiftly and strongly will buffer the blows dealt to your operators by the media  Florida’s State Tourism Bureau could have benefitted by getting the word out there sooner that Florida’s beaches were clean as the state was unfortunately bundled in to the rest of the spill prior to oil hitting their beaches  Hotel Marketers:  Fighting with deeply discounted rates to increase occupancy may not be necessary  Working with your local visitor’s bureau, you may look to attract state government relief and task forces in your state and look to attract relief from other states to help out your state

40  Hotel Operators:  Having good relations with state government is more important than ever when disaster strikes  This disaster proves that attracting government customers, despite typically lower rates, will at least buffer the blow to your total revenue  Hotel Owners:  It is important to keep abreast of new happenings related to natural disasters even if they do not originate in your own state  Be proactive and empower your management team to contact state government to attract their business  State Government Officials:  Support your state by holding task force response meetings in your state

41 Region OccupancyADRRevPARRevenue Fort Lauderdale positive, spike in May and Junenegative, but better from May onpositive, spike May - Julypositive, big spike May - July Daytona Beach positive, spikes May - Sept except in Junepositive, spike in Junepositive, spike May - Sept positive, big spike May - Sept Panhandle negative in April and May, positive from June oncontinually negative positive, June on; negative in Apr and May Baton Rouge, LA positive, spike in May and Juneslightly negativepositive, slightlypositive from May on Mobile, AL positive spike in May, huge decreases after positive, increasingly so from May on positive, huge spike from May onpositive, huge spike in May Jacksonville, FL positive, increasing from May on negative, slightly more negative in Maypositive, spike from July onpositive, big from June on Fort Myers positive in May and June, negative in June and August positive April and May, negative June - Aug positive up until May, negative from June on positive in Apr and May; negative June - Aug Tampa positively increasing growthnegative, but better from May on positively increasing from May on positive, increasing from May on Florida Keys positive but decreasing gains from May on positive, but decreasing gains in summer especially Maypositive, steady increases Orlando positive, huge spike in July positive, June on; largely negative in May

42  British Petroleum. (2010). BP Releases Report on Causes of Gulf of Mexico Tragedy, Press Release. BP Internal Investigation, 13 September 2010. Retrieved from  Chandler, J. A. (2004). An analysis of the economic impact of hurricanes Dennis, Floyd, and Irene on North Carolina’s lodging industry. Journal of Hospitality & Tourism Research, 28(3), 313-326.  Chen, M., Jang, S., & Kim, W. G. (2007). The impact of the SARS outbreak on Taiwanese hotel stock performance: An event-study approach. International Journal of Hospitality Management, 26(1), 200-212.  Freitag, Jan D. (2010, September). Half-Year Chain-Scale Review, The Numbers Provide Hope. Lodging Magazine, 28.  Hart, Time. (2010, September). Group, Business, and Leisure Travel, How Future Business Looks for Each Segment. Lodging Magazine, 30.  Pizam, A. (2009). The global financial crisis and its impact on the hospitality industry. International Journal of Hospitality Management, 28(3), 301-301.  Reynolds, D., & Balinbin, W. M. (2003). Mad cow disease: An empirical investigation of restaurant strategies and consumer response. Journal of Hospitality & Tourism Research, 27(3), 358-368.  Seccombe, Will. (2010) Impact of Deepwater Horizon Oil Spill – Perception, Reality and Next Steps — Sunshine Matters. Sunshine Matters — The Official Corporate Blog for VISIT FLORIDA, 13 September 2010. Retrieved from


Download ppt "Author: Holly Spencer, MBA Candidate Adviser: Dr. Woody Kim, Robert H. Dedman Professor of Hospitality Management Florida State University Dedman School."

Similar presentations

Ads by Google