Analysis by M. Brian Riley
We are less than two months away from the first political party conventions to determine America’s 2024 presidential nominees, with the Republican National Convention (RNC) scheduled first in Milwaukee (15-18 July), and the Democratic National Convention (DNC) taking place in Chicago a month later (19-22 August).
Each party’s convention draws thousands of appointed delegates along with a host of officials and attendees, not to mention a legion of external media. Typically, these four day-long events begin on a Monday and end with a Thursday speech by the party nominee. This summer quadrennial tradition consistently results in an oversized performance boost to host markets’ hotel performance on a scale that might be fairly compared to a “Super Bowl” of politics.
STR market performance data from 2000 onwards, covering six presidential election cycles across 12 hosted conventions, repeatedly demonstrates that these multi-day gatherings raised market occupancy to levels indicative of compression which, in turn, turbocharge collective room pricing power and led to accelerated indexed gains in average daily rate (ADR) and revenue per available room (RevPAR).
Average occupancy performance across multiple markets typically saw sizable boosts above normal seasonal baselines. What makes these results especially powerful is that these occupancy premiums occur on summer weekdays, which normally have seasonally diminished bookings from business travelers and conventions.
Weekday occupancy point gains ranged from a staggering 34 percentage point increase above the seasonal norm in Charlotte (2012) to an only “modest” by comparison 8 ppt gain in Boston (2004). Unsurprisingly, last minute pandemic restrictions led to both party’s 2020 conventions being largely virtual and resulted in declines. Occupancy in both markets fell under 40% when their typical performance (when compared to surrounding weeks) would have been in the low-to-mid 50% range.
Some additional observations from convention markets include:
• Tampa’s 2012 RNC saw 81.0% occupancy which was a lower-than-expected market level as Hurricane Isaac threatened a landfall. Ultimately, the storm hit Louisiana but a threat of a destructive storm during the convention likely tempered regional room demand.
• Most political nomination conventions spurred market-level, occupancy-based compression. As wide regions see occupancy levels near or in excess of 85%, data suggests that hoteliers collectively exercise extra pricing power with any last-minute bookings due to limited available rooms.
• Market size matters. The largest markets by room count (such as NYC and LA) appear to be able to absorb larger demand spikes without producing the same exorbitant indexed ADR gains as seen among more moderate-sized markets.
• Conventions held during the week of Labor Day (Minneapolis in 2008, Charlotte in 2012) have larger impacts in terms of indexed gains above normal. Significant bookings during a Labor Day week, which is normally slow, will have an oversized impact to a market.
Philadelphia’s 2016 DNC averaged the highest combined ADR of $361 once adjusted for inflation (CPI, April 2024). This was followed by New York City ($342 in 2004) and Cleveland, OH, ($335 in 2016). In four markets, room rates more than doubled their seasonal expectations for the event period – with the 2012 Charlotte DNC ringing in at almost 1.5x above normal. At the height of the pandemic, however, both of the market’s room rates lost ground compared to matched days from surrounding weeks, with Charlotte ($97) falling short of its $121 baseline.
Over the long term, host markets have historically seen a consistent and rock-solid daily occupancy and ADR pattern both on the days immediately leading into the convention through the final night of speeches. Forward STAR data as of 27 May shows hotel bookings in the Chicago market as high as 36% on 22 August, while bookings in the Chicago CBD are as high as 50% on the corresponding day. STR does not currently have occupancy-on-the-books data for Milwaukee but expects both markets to fall in line with past conventions where all host hoteliers can notch a win irrespective of party.
