BROOMFIELD, Colorado and HENDERSONVILLE, Tennessee—In September of 2017, two major hurricanes made landfall in the United States.
Hurricane Irma hit Florida and caused 134 fatalities and around $65 billion in damages. Hurricane Harvey hit Texas and caused 107 deaths and around $125 billion in damages. The Federal Emergency Management Agency provided short-term relief for displaced residents and paid for hotel rooms as needed. This relief is named Transitional Shelter Assistance and is authorized by FEMA on a short-term basis and is extended as needed.
FEMA recently extended its deadline for hotels to temporarily house residents displaced by Hurricane Harvey to 1 July 2018. In Florida, FEMA paid for hotel rooms for residents displaced by Hurricane Irma through 11 March 2018.
We filed a Freedom of Information Act request with the Disclosure Branch of the Division of Information Management within the Office of the Chief Administrative Officer for FEMA, which is part of the U.S. Department of Homeland Security. After about a month we received a detailed database of dollar amounts spent by month by hotel for October, November and December 2017. Even though this does not cover the complete time frame for Transitional Shelter Assistance, we feel it gives enough information to be meaningful.
The data provided only shows the amount paid by hotel by months and does not account for the roomnights covered, so calculations of occupancy or average daily rate are not possible.
Spend by state
According to the data, Transitional Shelter Assistance spent money in a total of 1,124 hotels in Texas and 1,126 in Florida. We merged these hotels with our STR census database, and 203 of them were not hotels according to STR’s definition. Most likely these were vacation rentals, bed-and-breakfasts and other accommodation types that STR does not report on. The following picture emerges:
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So, the majority of Transitional Shelter Assistance payments made in the fourth quarter of 2017 went to Texas after Hurricane Harvey, and only roughly a quarter was spent on the impact of Irma in Florida.
Spend by in-state vs out of state
We then broke out the payment by affected state, differentiating if the payment for displaced residents was made in that state or out-of-state.
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Transitional Shelter Assistance spent the majority of the money in the state where the hurricane made landfall. A different way to look at this is to map the properties that received payments.
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According to the map, hotels as far away as the Northeast U.S. received FEMA payments as part of the relief efforts for both storms.
Spend by class
Next, we tallied the amount spent by asset class.
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Roughly a third of dollars flowed to economy properties. Clearly, Transitional Shelter Assistance paid for lower-end properties to maximize the amount of people that could be temporarily housed. That said, of the total amount spent on relief efforts for both Harvey and Irma—just under $2 million—more than $50,000 was spent on upper-upscale and luxury hotels.
An additional important data point is the paid ADR by class by month to show the amount that Transitional Shelter Assistance actually reimbursed.
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Spend by market
Following both hurricanes, in-state markets reported the largest amounts of revenue from the Transitional Shelter Assistance program.
After Irma, FEMA spent the most on hotel rooms in the following five markets. Florida markets held the top 10 spots on the list.
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The total dollars spent in these five markets equals 53% of all dollars spent by FEMA as part of the Transitional Shelter Assistance program after Irma.
After Harvey, FEMA spent the most dollars in Transitional Shelter Assistance at hotels in Texas markets.
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The amount spent on these five markets alone accounts for 75% of all dollars spent by the program after Harvey.
FEMA payments to displaced residents provide a welcome revenue boost to local hotels. The impact is very regional and focused on areas around the impact area and mostly benefit mid- to lower-tier hotels. Weather-related events will likely be more common in the future as changes in climate become more extreme, so FEMA payments and room demand caused by natural disasters will likely impact the local, state and sometimes national performance data. We will continue to monitor the aftermath of natural disasters and report on any noteworthy trends that emerge.
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.