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Simon Says: Hotel and Tourism industries try to dig out from covid

Dr. Simon Medcalfe, AU Economics Professor

We all know the leisure and hospitality sector has been hardest hit by the pandemic. Leisure and hospitality employment in the Augusta Metropolitan Statistical Area (MSA) has fallen from more than 28,000 pre-pandemic to 24,000 in December 2021.

The leisure and hospitality sector includes hotels and restaurants as well as arts, entertainment and recreation.

However, there is some good news from the hotel section of the industry as reported by Smith Travel Research. In Richmond County, both occupancy rates and revenues per available room (RevPAR) were generally higher in 2021 than in 2020, as seen in the accompanying charts.

Occupancy rates peaked at 68.9 percent in July and remained above 60 percent from March through September, a capacity rate not seen since 2007. The occupancy rate was higher in 2021 than 2020 for all months except January and February.

Revenue per available room peaked in April at $77, not surprisingly, given the Masters tournament in that month. This was however, lower than pre-pandemic revenues when the average revenue was over $100 per available room.

But, like occupancy rates, revenue per available room was higher from March through December for 2021 compared to 2020. While revenue per available room is not adjusted for inflation, which is running at 7.5% currently, calculations taking into account inflation do not change the overall picture. Real revenue per available room increased 20 percent over 2021.

Revenue is increasing generally because of high demand (occupancy rates) rather than hoteliers increasing prices because of general inflation.

The continued drag on the Augusta Tourism Index is the employment of workers in the leisure and hospitality industry. As occupancy rates and revenues increased through the summer, the tourism index almost recovered its pre-pandemic level, but with revenues, occupancy rates and employment declining through the fall, the index has slipped to a year end 115.3, still 4.1% higher than December 2020.

“This analysis underscores the trials and tribulations of Augusta’s leisure and hospitality industry over the past two years, while also shining the spotlight on its importance to our local economy,” said Bennish Brown, President and CEO of Destination Augusta. “The findings also support the value of maintaining destination awareness through creative and meaningful tourism promotion efforts designed to attract visitors to our community.”

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