HENDERSONVILLE, Tennessee—An analysis of the past four years of the United States Grand Prix reveals that the weekend of the race has an overwhelmingly positive impact on the Austin, Texas, market.
For Austin hotels, STR data shows average daily rates increase by more than $100 on peak nights, and revenue per available room more than doubles on the Sunday night of the main race event. (STR is parent company of Hotel News Now.)
Moving to Austin in 2012 after a four-year hiatus, the United States Grand Prix has been held every October at the Circuit of the Americas racetrack, just southeast of the Austin-Bergstrom International Airport. The event begins officially on Friday morning, with several practice and qualifying rounds of racing. The main event is the Formula One Grand Prix race on Sunday afternoon, which typically lasts for a couple of hours and is followed by a headlining musical act. In 2018, Bruno Mars and Britney Spears each played sets on Saturday and Sunday evenings, respectively.
With attendance usually hovering around 250,000 people, this race has cemented itself as a highly advantageous annual event for Austin hoteliers. On average, the seven-day period surrounding the event brings in an extra $16.5 million in hotel revenue above what is normal during that time of year. This brings the total revenue up to about $45 million for that week.
Due to October already being one of the highest occupancy months over the course of the years studied in this analysis—averaging nearly 80% of rooms filled—hoteliers in Austin have the upper hand in terms of pricing power, particularly on the Friday, Saturday and Sunday nights during the event. With room rates surging up to a peak of 64% above normal (Saturday nights), RevPAR hits $241, which is 76% above normal. On what would typically be the slowest night of the week (Sunday), RevPAR has been shown to more than double from a typical $80 up to $176.
The chart below indicates that due to the smaller premiums in occupancy—since hotels are already so full even without the Grand Prix impact—the RevPAR lifts can be attributed primarily to rate increases, which indicates strategic pricing adjustments by Austin hoteliers.
Averaged over the most recent four years, the Grand Prix showed positive impact to all key hotel performance metrics for every day of the event, and for the two-day “shoulder” periods preceding and following the race as well.
Only in rare instances did any of the actual metrics observed dip below what is typical in the Austin market in late October. In 2016 and 2017, occupancy, ADR and RevPAR dipped just below normal to an index of roughly 95% on the Tuesday following the event. This dip, frequently seen after an event, is sometimes referred to as the “post-event hangover.” That said, KPIs always increased both during and preceding the Grand Prix for the dates studied.
The Grand Prix brought an average of 32,000 extra roomnights over the course of the week surrounding the event, which is a healthy 17% boost above the 186,000 rooms that are typically sold during a full week in Austin around that time of the year. It comes as no surprise that an international racing event would generate this level of interest in a market like Austin, and the measurably positive impact that the Grand Prix has brought to Austin hotels is where the rubber really meets the road.
Brannan Doyle is a research analyst on the Market Insights team at STR.
This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.