The Correlation Between Oil Prices And Hotel Occupancy
The energy sector is a major economic driver in the U.S., boosting job growth and adding millions in revenue to local economies, all of which is a positive for a hotel sector that depends on a thriving economy to boost business and leisure travel.
Coming out of the recession, the energy sector was booming. Crude oil production had peaked somewhere around $115/barrel in 2014 and those markets most dependent on the energy sector — such as Houston and Oklahoma City — were reaping the benefits. But massive global oil output coupled with a lack of demand triggered a huge price correction that sent crude prices to lows of $26/barrel in early 2016, according to a Cushman & Wakefield report.
Though a cutback in oil production spurred by the world’s largest producers in an OPEC deal helped boost prices a bit, C&W expects prices will remain flat throughout the year at around $60/barrel. The firm predicts an uptick in pricing within the next few years, but doesn't foresee it reaching beyond $70/barrel until 2020.
In the recent hotel and energy report dissecting the energy sector's impact on the hotel industry, C&W found oil prices have affected hotel occupancy and hotel supply growth within the past decade. As the two maps below indicate, when oil prices rose or fell, hotel supply and occupancy within that region adjusted in response.
Oil Supply And Prices Vs. Hotel Occupancy In Louisiana, New Mexico And Texas
Oil Supply And Prices vs. Hotel Occupancy In Ohio, Pennsylvania, West Virginia, Oklahoma And Kansas