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The Impact of Natural Disasters on Hotel Occupancy in Florida – by Allison Fogarty

For years, I’ve analyzed sharp fluctuations in hotel occupancy levels across several Florida markets, and one recurring explanation has been “disaster recovery.” In regions prone to hurricanes, fires, and floods, disaster recovery can significantly boost demand for hotels, even as some properties suffer damage or destruction. In the aftermath of Hurricane Helene, it’s a timely reminder for lodging developers and analysts that the hospitality industry often experiences contrasting outcomes: while some hotels are devastated, others see a surge in demand.

The Aftermath of Hurricane Helene

Hurricane Helene touched ground on September 26th. Although Hurricane Helene remained offshore by 60 to 80 miles, the destruction it caused was substantial. St. Petersburg Beach, described by local law enforcement as a “war zone,” bore the brunt of the storm’s force. Powerful storm surges—6.5 feet high—were driven by winds clocking in at 130 miles per hour. The surges washed through buildings, carried away vehicles, and left Gulf Boulevard covered in debris, resembling more of a beach than a main road. Several buildings were severely damaged, with homes either destroyed or left in dire condition.

Further up north, the storm’s impact extended into Georgia, Tennessee, and North Carolina, causing catastrophic flooding. Rivers overflowed, bridges were swept away, and cities like Asheville were submerged, leaving communities and vital infrastructure heavily damaged.

Hotels in these affected areas faced severe damage, leading to closures. Floodwaters needed to recede, assessments made, and repairs completed before normal operations could resume. While the damage to hotels will hinder normal business operations, the recovery efforts will create new demand for accommodation. Utility crews, federal and state workers, FEMA teams, and nonprofit organizations will be deployed to assist in the recovery efforts, along with insurance adjusters and contractors. These professionals, along with displaced residents, will need places to stay, which will likely result in elevated hotel occupancy levels in surrounding regions.

Case Study: Hurricane Ian

A recent example of this phenomenon was seen during Hurricane Ian, which made landfall in Cayo Costa, Florida, as a Category 4 hurricane. The storm’s impact was devastating, particularly in Lee County, where over 52,000 structures were damaged, and 72 lives were lost. Entire neighborhoods, particularly in Fort Myers Beach, were nearly wiped out. Prior to the hurricane, this beach town was home to around 6,000 full-time residents, but as of 2024, less than half have returned.

The recovery process has been slow and arduous. It took almost a full year just to clear the storm debris, and rebuilding has been challenging due to shortages of contractors. Many of the buildings that gave Fort Myers Beach its distinct “Old Florida” charm—low-rise structures, built close to the ground—are now gone. This has had a significant impact on the local hotel inventory, which declined by 12% from June 2022 to June 2024.

While the leisure demand in inland areas dropped, it was compensated for by the influx of recovery workers. These included displaced residents, FEMA teams, contractors, and insurance adjusters, all of whom required temporary accommodations. This led to increased occupancy in hotels further inland, pushing occupancy levels well above those seen in 2019, even as coastal hotels remained closed.

Before Hurricane Ian, Lee County’s hotel market was recovering strongly from the COVID-19 pandemic. In 2019, occupancy levels were around 68%, but they climbed to 71% by August 2022, as Florida reopened earlier than many other states, drawing in tourists seeking warm weather escapes. Cruise ships were also inactive during this period, driving even more visitors to Florida. However, after Hurricane Ian struck in September 2022, these numbers fluctuated. Hotel occupancy remained elevated, with a peak at 71.5% in August 2023.

However, as recovery efforts waned and the number of workers decreased, leisure travelers have been slow to return. This is partly because two major tourist destinations, Fort Myers Beach and Sanibel Island, are still recovering. By August 2024, occupancy levels had dropped to 65.6%, falling below 2019 levels.

The Broader Impact of Disasters on Hotel Markets

What happened in Florida is not an isolated event. Similar trends have been observed in other regions affected by natural disasters. For example, in 2020, Oregon experienced a catastrophic fire season, which temporarily boosted hotel occupancy as recovery efforts got underway. Once both the pandemic and the disaster recovery phase subsided, occupancy levels dropped again.

The effects of disasters often extend beyond the immediate areas of impact. When storms approach, evacuation orders are issued, leading to an increase in demand for accommodations in less vulnerable areas. Hotels along Florida’s highways often experience a surge in occupancy as evacuees seek shelter. Additionally, once recovery efforts are underway, hotel demand remains elevated as utility crews, insurance adjusters, and federal response teams continue their work.

Lessons for Hotel Developers

One important lesson for lodging developers and market analysts is to carefully evaluate the reasons behind rapid increases in demand. While natural disasters can lead to temporary spikes in occupancy, these increases are often unsustainable in the long term. Once the recovery phase concludes, demand returns to pre-disaster levels, and occupancy may drop. Investing in or developing new properties based on short-term gains seen during disaster recovery can lead to disappointment when normal market conditions resume.

In conclusion, while natural disasters can devastate communities and businesses, they can also temporarily boost hotel demand. As the case studies of hurricanes like Helene and Ian show, recovery efforts often lead to elevated occupancy levels, particularly in areas just outside of the most affected zones. However, these gains are usually short-lived, and developers must remain cautious about making long-term decisions based on short-term market changes. Understanding the complexities of disaster recovery and its effects on hotel markets is crucial for navigating these unpredictable events.