Destinations

Superstorm Sandy helped boost New Jersey hotel revenues to 5-year high

Feb 18, 2013 10:40 am

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Displaced homeowners flooded hotels throughout the fall after a strong summer, but Sandy’s long-term impact could hurt 2013 revenues with low tourism expectations and continuing cleanup costs.

— Samantha Shankman

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Southern New Jersey hotels and motels in 2012 saw their highest inflation-adjusted revenues in five years, bolstering a recession-pummeled industry regionally and statewide, a Press analysis of state tax records shows.

Hurricane Sandy played a role — in some cases prompting a well-paying Federal Emergency Management Agency to book rooms for displaced homeowners during typically slow months. However, revenues in Atlantic, Cape May and Cumberland counties were significantly higher already, before the storm.

“It was a real positive year statewide … and in South Jersey in particular, and that was put on overdrive with recovery efforts and increased lodging demand,” said Brian Tyrrell, an associate professor of hospitality and tourism management studies at Richard Stockton College.

The state Division of Taxation released data last week showing income from its 5 percent state hotel occupancy tax, a main barometer of the lodging industry.

Revenue for 2012 grew more than 16 percent from 2011 in Atlantic County, about 10 percent in Cape May County and 15 percent in Cumberland County, the data show.

After factoring in Consumer Price Index inflation, revenues were the highest since 2007.

Throughout New Jersey, almost $87 million in state occupancy tax was collected, about $8 million more than in 2011 and a 10 percent increase. These figures exclude taxes municipalities may impose.

Revenues have ticked up since 2010. Tyrrell said this year’s were on pace to reach $83 million before Hurricane Sandy boosted business in November and December. Atlantic County revenues had been up almost 14 percent through October.

At Watson’s Regency Suites in Ocean City, 2012 occupancy rates were the best since 2008, Manager Kurt Rishell said.

The hotel lost as much as $30,000 in revenue right after Sandy struck Oct. 29. But when it reopened 10 days later, the hotel welcomed dozens of Ocean City residents who were refugees from the storm and quickly recovered its lost earnings, Rishell said.

In 2011, the hotel lost an estimated $100,000 after mandatory evacuations prompted by Tropical Storm Irene.

“We never got that back. It wiped out Labor Day weekend,” he said.

In North Wildwood, the Aloha Motel had a strong summer. Since the recession, some families have shortened the length of their vacations, but increasing demand has been strong enough to fill up the seasonal oceanfront hotel’s 23 rooms, said owner Joan Kontos, of North Wildwood.

“I feel (the high occupancy rates) are a sign of people being under so much stress. They’ll do anything to get away and relax,” she said. “They leave their worries at home. When times are tough, vacations are very important to people.”

John Cooke, manager of Cape May’s Victorian Motel, said occupancy rates are the key to a solid season.

“If the occupancy rates are high, restaurants will do well, attractions will do well, retail stores will do well,” he said.

Tyrrell said South Jersey’s lodging industry, which caters more to leisure accommodations, has fared better than in North Jersey, where the proximity to New York’s financial markets hurt business travel during the downturn.

Although occupancy tax collections offer a glimpse of the industry by county, there are other measurements to gauge Atlantic City.

The Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton is set to release an Atlantic City Performance Index in early March to track occupancy taxes as well as Atlantic City parking fees and luxury taxes, Tyrrell said.

“I expect they’re going to be positive as well,” he said.

Atlantic City’s gambling revenues have fallen more than 40 percent since 2007, but Tyrrell said massive marketing initiatives such as the “Do AC” campaign may be aiding nongambling attractions.

“I don’t know if we’re ready to say this is exactly because of that, but there has been nothing to suggest it’s having the opposite effect,” he said.

“The Do AC campaign is about restaurants, shows, nightclubs, beaches and Boardwalk — the destination amenities where we have a competitive advantage over many of these new gaming markets (in neighboring states),” Tyrrell said.

As 2013 goes forward, the lodging industry faces questions about whether it can continue on last year’s trajectory.

Tourists may still harbor misperceptions that Sandy splintered boardwalks and obliterated beaches, even as tourism advocates along the coast have mounted awareness campaigns.

But there’s also the issue of how much money Sandy cost potential Atlantic City visitors, said Howard Bacharach, executive director of the Atlantic City Hotel & Lodging Association.

“I think it will gradually increase, but we’re still dealing with the issue of people who visit us had significant damage in their own home properties,” Bacharach said. “I think that’s going to weigh hard on us this first six months of 2013.”

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