Lodging Econometrics (LE), the Industry Authority for Hotel Real Estate, has announced in the first-available comprehensive study of the impact of Hurricane Katrina, that a total of 286 hotels in the Gulf Coast states of Louisiana, Mississippi and Alabama having a total of 45,832 rooms have reported service interruptions and damage so severe that they are no longer accepting reservations from the traveling public.
The report published by LE for the lodging industry and vendor community is the first and only detailed, comprehensive analysis of Hurricane Katrina's impact on the lodging industry. According to Patrick Ford, President, the report is an empirical buildup of fact-based research, hotel by hotel - not by computer modeling - and that the data has been gathered through interviews with hotel owners and managers, state and city hotel associations and the leading hotel companies and brands.
Ford stated that the effect on lodging real estate in Louisiana, Mississippi, and Alabama is more extensive than the 30,000 to 40,000 rooms originally forecasted by computer modeling.
As of September 15, the closed hotel count in Louisiana is 160 hotels with 28,481 rooms; in Mississippi, 93 hotels having 13,701 rooms; and in Alabama, 33 hotels with 3,650 rooms. Ford said, 'The number of reported closings is likely to rise as communications systems are restored and the extent of the damage will become better known as certain areas like New Orleans are reopened to travel, allowing hotel owners and managers and insurance adjusters to travel to the affected areas to make property assessments.'
Coastal Counties Absorbed the Biggest Impact of Katrina
The two counties in Alabama (Baldwin and Mobile) and the three in Mississippi (Hancock, Harrison, and Jackson) comprising the states' shorelines, and the eight parishes in Louisiana (Jefferson, Orleans, Plaquemines, Saint Bernard, Saint Charles, Saint John the Baptist, Saint Tammany and Lafourche) either on the shore, surrounding the Mississippi Delta, or adjacent to Lake Pontchartrain, suffered the greatest devastation from the category-four winds and severe flooding. In these parishes/counties, 133 hotels with 25,452 rooms, or 70% of available guestrooms are closed in Louisiana; in Mississippi, 53 hotels/9,240 rooms, or 65% of available guestrooms are reported closed; and in Alabama, 29 hotels/3,389 rooms, or 34% of available guestrooms are closed.
All 13 parishes/counties were in Katrina's most direct path and have been declared Federal Disaster Areas by the Federal Emergency Management Agency (FEMA). The destruction in these areas is so severe that it will be months before damage assessments can be calculated, insurance claims settled, and redevelopment planning can begin.
Fourteen hotels in the hurricane-affected area have reported that they are housing governmental, military, and contractual workers, as well as some evacuees. Ford said, 'Accommodations are more like those of a dormitory than a hotel. These hotels are operating with few staff members, as a majority of hotel workers were among the thousands of people ordered to evacuate. Those hotels providing temporary shelter today will require significant refurbishing in the future before resuming normal operations and welcoming the traveling public.'
Coastal Cities and Tourist Hubs are Hardest Hit
New Orleans, one of the nation's key convention and business meeting destinations, was devastated not only by the hurricane's winds, but also by the subsequent widespread flooding. Of the 203 hotels/35,574 guestrooms in New Orleans, 127 hotels/24,972 rooms, or 70% of available guestrooms, are reported closed. In Biloxi, 22 hotels/5,646 rooms out of 34 hotels/7,930 rooms, or 71% of available guestrooms, are reported closed; and 12 hotels/1,987 rooms out of 21 hotels/3,021 rooms, or 66% of available guestrooms are closed in Gulfport. In Mobile, of the 92 hotels/10,206 rooms available, 29 hotels/3,389 rooms, or 34% are closed.
Along the Mississippi Coast, the Hotel/Casino industry is all but demolished. Notably, the Hard Rock Hotel and Casino, which had been under construction since February, 2004 and was scheduled to open this month, will have to be completely rebuilt. In the three counties along the Mississippi coastline, there are 11 Hotel/Casinos having 5,606 rooms. All received major damage and are closed for guest traffic. Two are temporarily being used for housing. 'Reconstruction along the Mississippi and Alabama coasts could move along more quickly than in New Orleans,' said Ford, 'because these areas did not experience the double-whammy of the long-standing flood waters.'
New Construction Pipeline Expected to be Affected
When Katrina struck, in the three states there were a total of 32 new hotel projects with 5,551 rooms in the Construction Pipeline. At 2Q 05, there were eight hotels Under Construction, 17 Scheduled to Start in the Next 12 Months, and seven in various stages of Early Planning. Of these, 15 hotels rooms were in Louisiana; 5 hotels were in Mississippi, and 12 hotels were in Alabama. Projects currently Under Construction will be delayed. Many 'Starts' and Early Planning projects are likely to be cancelled outright or postponed indefinitely. LE is presently interviewing these Developers and will soon issue a report on all planned development activity in the Gulf Area.
What the Future Holds
Hurricane Katrina, the most significant natural disaster ever to befall the United States, has had a concentrated but devastating effect on the lodging industry in the Gulf States. It will take time to assess the damage, settle insurance claims, and formulate redevelopment plans that will synchronize with the larger communities' economic and tourist development recovery - but recover they will! These are important business and industrial centers as well as tourist hubs critical to the region's - and the nation's - economy. The entire country, and the citizens of the Gulf Coast in particular, feel that there can be no other decision but to redevelop. Importantly, the lodging industry will be a prominent participant in the country's largest rebuilding effort ever.
To inquire about receiving a copy of LE's report on Hurricane Katrina's Impact on the Lodging Industry, and to enroll to receive periodic updates, please call (603) 431-8740, ext. 45.
To learn more about LE's products and services or to inquire about ordering a customized report, please visit them online at www.lodging-econometrics.com.
Logos, product and company names mentioned are the property of their respective owners.