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Napa Valley lodging occupancy sinks to record low during COVID-19 pandemic

Napa Valley lodging occupancy sinks to record low during COVID-19 pandemic

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As a result of the COVID-19 pandemic, hotel occupancy in Napa County reached an all-time low of just 12 percent from March 22 to 28, reported Visit Napa Valley and STR data service.

That’s an 83.2 percent decline from 2019 when the number was 71.4 percent, said a news release from the county’s official tourism agency.

“While the health and safety of our community remains everyone’s top priority, the negative economic impact of the current shelter in place order continues to be far reaching,” said Linsey Gallagher, president and CEO of Visit Napa Valley.

“As tax collections from hotel revenue from Napa Valley’s visitor industry continue to decline, our local governments — and ultimately all residents who rely on them for public services — will be affected.”

Preliminary month-to-date numbers for Napa County from STR indicated that:

  • The average daily rate (ADR) was down 10.1 percent ($251.03 vs $279.15 in 2019)
  • Year over year hotel occupancy was down 52.6 percent (32 percent vs 67.6 percent in 2019)
  • Revenue per available room (RevPar) was down 57.4 percent ($88.48 vs $188.81 in 2019)
  • Total hotel revenue was down 57.3 percent ($11.3 million vs $26.5 million in 2019)

“While we anticipate a slow recovery beginning this summer, for every month without tourists, our county and local governments across the Valley lose an average of $5.4 million in hotel tax revenue – funds that the visitor industry brings into our local economy,” said Gallagher.

Tourism tax revenue, which comes from visitor spending on hotel rooms and purchases, contributes substantially to each jurisdiction’s general fund, she noted.

In 2018, this revenue, generated by visitors, totaled $85 million.

“For Napa County’s local communities, the general fund is the driver for many public services that we rely upon, from public safety, to parks and recreation, as well as sidewalk and street repair.”

“Visit Napa Valley remains focused on our role in destination management, and, as demand and business levels start to return, we look forward to driving the recovery efforts to welcome back visitors, who are a vital thread that stitches our local economy together,” she said.

Nationwide, the U.S. hotel industry reported significant year-over-year declines in the three key performance metrics during the week of March 22 to 28, according to data from STR.

In comparison with the week of March 24-30, 2019, the industry recorded the following:

  • Occupancy dropped 67.5% to 22.6%
  • Average daily rate (ADR) dropped 39.4% to $79.92
  • Revenue per available room (RevPAR) dropped 80.3% to $18.05

“Year-over-year declines of this magnitude will unfortunately be the ‘new normal’ until the number of new COVID-19 cases slows significantly,” said Jan Freitag, STR’s senior VP of lodging insights.

“Occupancy continues to fall to unprecedented lows, with more than 75% of rooms empty around the nation last week. As projected in our U.S. forecast revision, 2020 will be the worst year on record for occupancy. We do, however, expect the industry to begin to recover once the economy reignites and travel resumes.”

For the rest of 2020, the U.S. hotel industry is projected to report a 50.6% decline in revenue per available room (RevPAR) in 2020, according to a special forecast revision from STR and Tourism Economics.

“The industry was already set for a non-growth year, now throw in this ultimate ‘black swan’ event, and we’re set to see occupancy drop to an unprecedented low,” said Freitag.

“Our historical database extends back to 1987, and the worst we have ever seen for absolute occupancy was 54.6% during the financial crisis in 2009. With roughly six of 10 rooms on average empty, already wavering pricing confidence will take a significant hit and drop ADR to a six-year low.”

STR’s latest monthly data (February) showed 55,734 hotels and 5,341,586 rooms in the U.S.

Property closures are expected to lead to a 14.9% decline in room nights available for the year.

“Travel has come to a virtual standstill, but we expect the market to begin to regain its footing this summer,” said Adam Sacks, president of Tourism Economics.

“Once travel resumes, the combination of pent-up travel demand and federal aid will help fuel the recovery as we move into the latter part of this year and next year.”

Editor’s note: Because of the health implications of the COVID-19 virus, this article is being made available free to all online readers. If you’d like to join us in supporting the mission of local journalism, please visit napavalleyregister.com/members/join/.

Complete coronavirus coverage from the Napa Valley Register, St. Helena Star, and The Weekly Calistogan

This webpage contains all Napa County coronavirus coverage as featured in the Napa Valley Register, St. Helena Star and The Weekly Calistogan. This page will be updated several times a day as news comes in. Please bookmark this page to stay on top of local developments.

“2020 will be the worst year on record for (hotel) occupancy,” Jan Freitag, STR senior VP of lodging insights.

You can reach reporter Jennifer Huffman at 256-2218 or jhuffman@napanews.com

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Business Editor

Jennifer Huffman is the business editor and a general assignment reporter for the Napa Valley Register. I cover a wide variety of topics for the newspaper. I've been with the Register since 2005.

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