NFL affects hotel market: Chargers move to Los Angeles causes 19.5% decline in revenues

National Football League
So, Super Bowl LII just happened (congratulations to the Eagles), and it’s once again a trending topic all over the world. American football is the biggest sport in the U.S. and the NFL definitely affects everything – from the sales of beer and chips to the hotel market’s revenues.

San Diego’s hotel market was the one most affected by the two NFL franchise relocations of the last two years, according to STR’s Consulting & Analytics team. The city was deeply affected when the San Diego Chargers announced its move to Los Angeles early last year.

When comparing home regular season nights of 2016 with the same days in 2017, San Diego reported an 8.9% decrease in occupancy and a 7.1% drop in average daily rate (ADR). This resulted in a 15.4% decline in revenue per available room (RevPAR). When excluding the final home game of 2016, which fell on New Year’s weekend, the overall RevPAR decline year over year was 19.5%.

“Determining the relocation impact, whether it be positive or negative, on San Diego, Los Angeles and St. Louis is difficult because these are all major markets with a lot of performance variables from year to year,” said Raquel Ortiz, STR’s senior analytics manager. “However, even though we can’t attribute percentage changes strictly to the Chargers’ move to LA, we can say that the San Diego market was the most affected by NFL relocation.”

Below are data from STR on how NFL teams’ relocations have been messing around with the hotel industry.

Market Comparison Years Demand Occupancy ADR RevPAR
San Diego 2017 vs. 2016 -11.1% -12.0% -8.5% -19.5%
Los Angeles 2017 vs. 2016 +4.4% +0.8% +4.6% +5.5%
St. Louis 2016 vs. 2015 -2.1% -1.1% +1.3% +0.2%
Los Angeles 2016 vs. 2015 +5.1% +4.4% +11.5 +16.4%

Using the same type of comparison for 2015 and 2016, St. Louis actually showed a 0.2% increase in RevPAR the year after the Rams were moved to Los Angeles. The city, welcoming both the Rams and Chargers, is by far the largest of the three hotel markets included in the analysis.

Around the Chargers’ home regular season games in 2017, the five LA submarkets saw a 5.5% increase in RevPAR from 2016, mostly due to a 4.6% lift in ADR. Around the Rams home regular season games in 2016, the RevPAR jump was 16.4%, again mostly pushed by ADR (+11.5%). When comparing Rams home games in 2017 versus 2016, the RevPAR increase was significantly less than the team’s first year at the Coliseum (+5.5%).

“The next move is the Raiders from Oakland to Las Vegas in 2020, and many believe each of those markets will see a significant impact from the relocation,” Ortiz said.

Since the early years of the National Football League (NFL), teams had to move cities in order to survive financial instability. These moves influence hotel markets significantly as shown in the data above.

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