World Cup, July Fourth Brought Big But Uneven Boost To Philly Hospitality Industry

Brauhaus Schmitz had a massive June, as throngs of international tourists descended on the South Street beer hall to watch World Cup games.

Business was up more than 300% year-over-year, as the German bar and restaurant with a long history of catering to soccer fans notched five new daily sales records, owner Doug Hager said.

“It’s obviously much more business than we’re used to," he said.

The Philadelphia hospitality sector recorded a massive Fourth of July bump as America’s 250th birthday converged with the international soccer tournament. That followed a somewhat underwhelming June compared to the economic impact that World Cup organizers predicted. While hotel rates rose and Philly’s streets surged with foot traffic, it had an uneven impact on the city’s bar and restaurant sector.

Revenue per available room across greater Philly’s hotels jumped 112% year-over-year on July 4, driven by a 75% increase in average daily rates, according to data from CoStar. Those metrics were even higher in the central business district, where RevPAR and ADR grew 222% and 142%, respectively.

July 4 featured Philly’s final World Cup match, a Round of 16 contest between France and Paraguay, as well as the One Philly Unity Concert for America, a seven-hour-long event with several major musical acts and fireworks. While that night had the largest boost for the city’s hotel market, CoStar found that the four nights leading up to it also had year-over-year revenue jumps of more than 30%. 

“The numbers came in much stronger than expected,” CoStar Director of Hospitality Market Analytics Didio Pequeno said.

The city’s busy tourism stretch isn’t over. Philly’s Citizens Bank Park hosts the MLB All-Star Game next Tuesday, capping off a five-day series of events that also includes the Home Run Derby. 

Greater Philadelphia Hotel Association CEO Ed Grose said the people visiting the city during these events could bolster tourism going forward.

“The worldwide exposure we’re getting has been phenomenal,” he said.

The World Cup brought a palpable tourism and economic boost to Philly beyond the hotel sector. 

Foot traffic in Center City was up 9.3% and 8.1% compared to last year on the weeks of June 8 and June 15, according to MRI Software. 

Point-of-sale platform Square also tracked a 23% increase in spending at the city’s bars and breweries between June 11 and 27, the second-highest of any U.S. World Cup host city, behind only Boston. 

But that impact wasn’t spread evenly across the region’s food and drink businesses.

“Some operators aren’t seeing this giant influx from the crowd, but summer is a slower time historically in Philadelphia,” Pennsylvania Restaurant & Lodging Association Senior Vice President of Strategy and Engagement Ben Fileccia said. “What we have not been hearing is people with completely lagging sales right now.”

He said bars near the FIFA Fan Festival at Lemon Hill in Fairmount Park saw a major boost from the attraction. 

But some Brewerytown restaurant operators told The Philadelphia Inquirer that parking restrictions in place due to the festival kept away their regular customers, counteracting the increase from soccer fans visiting the neighborhood.

“We were prepared for a huge crowd,” Baby’s Kusina + Market front of house manager AJ Kim told the publication. “But it wasn’t much at all.”

Fileccia said the city’s decision to allow bar owners to apply for a license to stay open two hours past the longstanding 2 a.m. curfew worked out well for operators.

“They’ve really been successful in seeing the crowds stick around and return,” he said. “So far, we’ve been hearing a lot of positive feedback from operators.”

The Fourth of July festivities in Philly combined with the World Cup brought a much larger boost than the matches alone did last month.

Hotel occupancy on June 19 — the day Brazil played Haiti — was down 1.6% year-over-year, according to CoStar data, though ADR and RevPAR were up 62.9% and 60.2%, respectively.

France’s June 22 game against Iraq contributed to a 14.3% year-over-year occupancy increase, as ADR and RevPAR surged 40.8% and 60.9%, respectively.

But the bump was less than what local hospitality players had hoped for.

“We’re about 10% off of where we expected to be as far as our occupancy,” Grose said last week.

“We’ll also see we didn’t get to what we expected ratewise,” he added.

Pequeno said some of the rhetoric about the World Cup’s economic impact earlier this year may have been overblown.

“I know it made waves when the FIFA president said the matches would be like 104 Super Bowls,” he said. “We always knew that was going to be a stretch.”

National data shows an increase in hotel demand in host cities compared to nonhost cities last month, but it’s far below the jump seen around this year’s Super Bowl. The length of stays were shorter than some hotel leaders expected, with many fans coming for game day but not staying for a full week. 

Greater Philadelphia’s short-term rental market saw a World Cup boost, but it was slightly below average compared to other host cities.

AirDNA Director of Economics and Forecasting Bram Gallagher said 20% ADR growth and a 10% bump in demand nights year-over-year over the course of the tournament were roughly average for host cities across the U.S., Canada and Mexico.

While Philly saw ADR growth of 23% year-over-year in June, it also saw demand fall by nearly 4%.

“You’ve got this really nice ADR premium,” he added. “This diminishment in demand is a little sad to see.”

The All-Star game next week has lifted short-term rental demand on Tuesday by 14% and rates by 30%, according to AirDNA. Gallagher said the travelers coming to Philly for these events could bring long-term benefits for the city. 

“Travel is a repeat business,” he said. “I think that’s going to raise the profile of the city.”