In California in 2017 and 2018, two of the most destructive wildfires in state history occurred. The Tubbs fire hit California Wine Country, taking its toll on the popular tourist destination which boasts high rates and occupancy. The Camp Fire, best known for the destruction of Paradise, was contained to primarily residential areas in Northern California. The two fires show the different ways hotels can be affected by disaster, depending on the driving demand forces before the fires hit.
In the case of the Tubbs Fire in California Wine Country, we see a very drastic impact in the revPAR during the month of the fire, October 8-31, 2017. This decrease in revPAR is driven by a 15% reduction in ADR and a 13% drop in Occupancy. While the recovery over the months immediately following the fire was apparent, the high season in 2018 continued to see the impact with an average revPAR decrease of 2%. This is especially alarming when the months of June through September saw an average revPAR growth of 6.7% in 2015, 2016 and 2017.
The following year, the Camp Fire destroyed Paradise, and the impact on the hotels in Northern California was the exact opposite. Occupancy drove the growth with an increase of 18%, presumably due to relocations of residents who evacuated their homes and many who ultimately lost their homes. These damages carried high occupancy rates through December of 2018 and beyond. ADR also grew slightly with 2% growth in November and almost 6% growth in December.
This quick demonstration provides evidence that, when using historical data, it is imperative to ensure it is market specific and adjusts for specific events that cause disruption.
