Localized Revenue Implications of Severe Tornado Outbreaks on the Lodging Industry

Abstract

In 2011, significant tornado outbreaks occurred throughout the United States. The property damage from these tornadoes was record breaking at over $28 billion. The impact of these tornadic events on the lodging industry, however, was not as extreme and in some instances was financially beneficial. This study evaluated the revenue implications of severe tornado events on the lodging industry. Using data provided by the National Oceanic and Atmospheric Administration (NOAA) and Smith Travel Research (STR), the lodging industries of 17 counties impacted by either EF4 or EF5 (enhanced Fujita scale) tornadoes were analyzed. Results indicated that the lodging operations in all 17 counties experienced an occupancy percentage increase for multiple days after tornado events. Only five counties experienced significant increases in average daily rate (ADR) for seven days following tornado events. All but one county experienced increases in revenue per available room (RevPAR) following tornado events. This suggests that gains in RevPAR were influenced more by increased occupancy opposed to inflated room rates.