New Orleans hotels record best four-day weekend performance ever

New Orleans Hotel Market Takes Big Hit in Final Four Tournament

Excerpt from STR

New Orleans Hotel Market Takes Big Hit in Final Four Tournament

This year’s NCAA Men’s Basketball Championship, held in New Orleans the first weekend in April, was a huge boon for area hotels.

STR, CoStar’s hospitality analytics company, recently took a historical look at the revenue impacts of the NCAA Men’s Basketball Final Four Championship in its host markets.

This follow-up analysis expands our initial examination of total market revenue gains to include more key market indicators and examine how the impacts of events dispersed across the market. The basic indicators have been established using a seasonal average of the market performance of the two surrounding non-tournament weekends. The reference dates excluded atypical travel calendar events in New Orleans such as Shrove Tuesday or Easter Week.

The Men’s Final Four was held at Caesars Superdome downtown and began with two playoff games on Saturday (Duke University vs. University of North Carolina and Villanova vs. top seed University of Kansas) followed by a break on Sunday, then ended with Monday night’s championship. Game. In the end, the Kansas Jayhawks defeated the UNC Tarheels, 72-69, in an unprecedented second-half comeback.

The 71,000 weekend ticket holders also had a major impact on the New Orleans hotel market which has a total of 42,000 rooms, particularly in the New Orleans central business district, which includes the French Quarter and approximately 27,000 submarket hotel rooms.

New Orleans hotels generated a record total of $48.3 million in room revenue for the four-day long weekend, a 5% margin over the Final Four’s next best year that s took place in Fort Worth / Arlington / Dallas (a combination of two STR markets) in 2014.

To add additional context, this year’s tournament weekend generated total venue revenue 48% higher than the last time New Orleans hosted the event in 2012 ($32.7 million adjusted for inflation). Collectively, the entire New Orleans hotel market collected $20.1 million in additional room revenue over its seasonal base levels, revenue premiums 71% above seasonal expectations.

There are two other interesting patterns in revenue gains in the New Orleans Final Four. First of all, the daily bounties are surprisingly consistent (and high) from one day to the next of the event, ranging from a $4.3 million bounty on the Friday before the tip off on Saturday at 5, $2 million on Monday Night Championship. The NFL Super Bowl, for example, more generally has a strong tendency to increase market returns throughout the game day. The Final Four has a range of several days in terms of potential income.

A second pattern relates to the strength of market gains on Sunday (no match) as well as Monday. Perhaps this is due to the unique extended game format, with some of the fans expected to extend their stay with their winning team. Sharper-than-expected gains on Sunday and Monday may also be due to some fans overstaying as there is no shortage of recreational activities beyond the game. A later-than-usual whistleblower hour on Monday likely also kept some fans from leaving early on the final day of the tournament.

Due to their centrality, total number of rooms, and higher (and more expensive) hotel categories, Central Business District/French Quarter hotels captured nine out of 10 dollars in incremental revenue for the weekend of the tournament. While CBD saw the largest weekend revenue increase of 87%, revenue from outlying New Orleans submarkets also saw strong percentage revenue gains, with East/Slidell hitting 16% and Metairie/Airport gaining 22%.

Higher-than-normal average daily rates were the primary driver of higher market revenue premiums. Weekend ADRs averaged $338, a premium of $122 (+57%) above the nearest weekend average. ADRs peaked on Saturday night ($368, +29%), but there was an atypical lack of a rate cut for Sunday ($327, +28%) or Championship Monday ($316, +25% ).

Among the New Orleans submarkets, the biggest increase in ADR over the weekend occurred in the central business district with an ADR of $407 (+66%). Downtown hotels weren’t the only ones to see higher ADRs for the weekend, as Metairie/Airport and the New Orleans East/Slidell submarket saw strong ADR gains (21% increases and 15% respectively).

Click here to read the full article on STR.

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