The NCAA college men’s basketball Final Four championship is one of the larger hotel revenue-generating special events in the U.S.
A few key factors make this popular college basketball tournament unique. For one, it has an extended format. The four-team, two-game, long weekend (Friday to Monday) series culminates the larger March Madness playoffs, which alone generates “buzz” and popular interest. Men’s games traditionally start on the Saturday and end with Monday night’s championship game. Both games occur within the same city. Finally, team fans have a short relative room booking window, which can result in unique pricing opportunities for area hotels.
While we wait for the final performance tallies to arrive from the Final Four held this previous weekend in New Orleans, it is worth briefly highlighting below how impactful this sport series has been over the previous decade.
STR, CoStar's hospitality analytics firm, examined host markets’ room revenue impacts from 2012 through 2019. Final Fours were omitted from 2020, when the tournament canceled amid the COVID-19 pandemic, and 2021, when attendance was severely reduced by COVID-19 restrictions.
Of note, both the 2015 tournament in Indianapolis and the 2018 tournament in San Antonio occurred on travel-reduced Easter weekends which, despite the playoffs' significant impacts, likely constrained the overall revenue impact. Seasonally adjusted performance baselines were established using an average of the market’s own two surrounding non-tournament weekends, flexibly adjusted as needed to exclude an Easter holiday weekend.
While large by any measure, not every year nor every market experienced the same level of hotel room revenue gains. Obviously, location and market size are two key factors, and popular and/or readily accessible markets have a natural advantage with special event attendance and hotel revenues.
One emergent pattern from the historical data is how a market’s own seasonal performance patterns can impact revenue premiums as compared to baseline levels.
For markets at or near seasonal performance highs, indexed gains might be reduced, while low-season markets record larger percentage gains from their base levels.
For example, Phoenix, which hosted the Final Four in 2017, had a four-day total hotel room revenue premium of $9.6 million dollars — or $11.2 million when adjusted for inflation (the February 2022 dollar value). That represents a very solid 27% gain above normal performance for that time of year.
In comparison, the Indianapolis and Minneapolis markets, which hosted in 2015 and 2019 respectively, notched total weekend room revenue premiums that approached three times higher than seasonal levels.
The earliest hotel reports from this past weekend hint that 2022’s Final Four led to a superb weekend for New Orleans.
M. Brian Riley is a senior research analyst for product analytics and insights at STR.