Extended-stay hotels saw a boost in occupancy in the years following Hurricane Katrina, a pattern that may repeat itself in Texas and Florida after Hurricanes Harvey and Irma, said Mark Skinner, a partner with The Highland Group.

HURRICANES HARVEY AND Irma caused mass destruction in Florida and Texas, without question. But the storms also brought added revenue for hotels in the affected areas with occupancy soaring, if only temporarily.

Extended-stay hotels stand to profit, if trends seen after 2005’s Hurricane Katrina hold true, said Mark Skinner, a partner with The Highland Group. “Empirical evidence from the post Hurricane Katrina period strongly indicates the recent severe weather will significantly increase extended-stay hotel revenue per available room in markets closest to where Hurricanes Harvey and Irma landed,” Skinner said.

The mass evacuations caused by Katrina led to a surge in demand for lodging by displaced evacuees and relief workers. The average daily rate gained 14.5 percent in markets around New Orleans, where the storm struck, compared to 9.2 percent in other markets in the year following the storm.

Austin, Texas; Baton Rouge, Louisiana; Birmingham, Alabama; Dallas-Fort Worth, Texas; Houston; New Orleans and San Antonio saw the most benefits, Skinner said.  “Hurricane Katrina essentially filled extended-stay hotels in these markets (Katrina Markets) for the last four months of 2005 and kept occupancy above the other market (100 largest MSAs excluding Katrina Markets) average during 2006,” Skinner said.

RevPAR grew as well in 2005 and 2006 around the South Atlantic and West South-Central regions, Skinner said. “These regions account for more than 30 percent of U.S. extended-stay hotel rooms and more than 40 percent of economy extended-stay supply. The impact on the economy segment was the greatest and it was long enough to boost the segment’s national average occupancy through mid-2006.”

Economy extended-stay hotel national average RevPAR saw double-digit growth for four consecutive quarters after Katrina, and the 15.4 percent gain in 2005 fourth quarter is the segment’s largest quarterly increase ever reported.

Houston area hotels in general are already seeing a rise in occupancy, according to CBRE. FEMA is housing 53,000 people in government-funded hotel rooms, and according to Houston media the agency has extended the Transitional Sheltering Assistance program two weeks until Oct. 24. “Although initial reports are of relatively few closures among Houston’s 868 hotels totaling 85,615 rooms, some properties that remained open suffered flooding and/or reduced services,” CBRE said in a report.

CBRE also looked to data from previous storms, including Katrina, Superstorm Sandy and Hurricane Andrew, to predict demand grown in Houston following Harvey. “Assuming that Hurricane Harvey has a similar impact as past major storms, that there is no significant increase in room rates and that there is no major decline in the number of available hotel rooms, then hotels in the five major Texas markets could generate an additional 3.4 million room nights of demand and roughly $430 million in additional revenue,” CBRE said. “Given CBRE’s current U.S. forecast of a 3.5 percent increase in RevPAR for Q4 2017, this additional demand would increase the RevPAR growth rate to 4.4 percent for the quarter and raise the overall RevPAR outlook for the year to 3.1 percent from our current forecast of 2.8 percent.”