HENDERSONVILLE, Tenn. — Global oil prices continue to gyrate but have stayed well below $100 per barrel for quite some time now. Consequently, Hotel News Now and STR research firm chart the hotel performance of some oil-dependent markets against crude oil benchmarks and examines how the two might be related, it was announced Nov. 21.
“We cannot for certain establish causality, although it is probably not too much of a leap to assume that as oil prices decline, travel to oil-dependent markets declines as well. As pumps get shut down or exploratory drilling activities slow, the need for engineers and consultants diminishes. Most of the markets surveyed also do not have a well-diversified economy, so as oil prices slump, the majority of hotel demand slumps with it,” said HNN’s article authors..
In North America, the authors examined Calgary and Houston, Texas.
For Calgary, they examined the Brent Crude price, whereas they used the West Texas Intermediate barrel price as a benchmark for Houston.
Overall, the result in and outside North America are not different.
The occupancy decline was most pronounced in Lagos, but the market seems to have stopped the decline in the most recent past.
Other markets continue to observe declines of more than 10 per cent on an annualized basis with no sign of change. It is probably fair to state that as long as oil prices continue to be well below $100 per barrel, there seems to be no catalyst for performance improvements.