AUSTIN (KXAN) — The loss of South by Southwest means lost reservations for local hotels and restaurants.
The Texas Hotel and Lodging Association told KXAN they’re in an “unprecedented scenario” and are “not quite sure what to anticipate” when it comes to how many people will keep their hotel and restaurant reservations and will still come to Austin during the month of March.
“That period, in Austin, is the highest demand period of the year,” said Paul Vaughn at Source Strategies. The San Antonio-based company analyzes hotel data. Vaughn explained, “For March, I would expect that you’re going to see probably at least a 20% drop in revenues with the corresponding drops in rates and occupancy for those hotels.”
He said hotel cancellations will have a domino effect.
“[If] they have full hotels, they get a pretty high dollar per room, and it allows them to have maximum staff,” Vaughn said. “So you’re definitely going to see an impact, not just on the hotels, but in all of the service workers who work at those hotels.”
He said bars, restaurants and rideshare drivers will feel the impact as well.
“If they’re not coming to Austin, if they’re not staying at the hotel, they’re also not doing any of those other activities. They’re not taking a cab. They’re not taking an Uber. They’re not going out to eat. They’re not going to a bar,” Vaughn told KXAN.
Stuart Thomajan owns restaurants like Swift’s Attic, and Wu Chow Austin. He said he’s already had several companies cancel their event space reservations.
“We’re in the restaurant business, so we’re always trying to stay nimble,” Thomajan said. “We keep track of all of our expenses pretty closely as a general rule, but in a general situation like this, we move into a little bit more conservative response.”
Losing hotel reservations also means losing the Hotel Occupancy Tax revenue, which the city uses to promote arts and tourism.
According to SXSW, direct bookings by SXSW alone generated nearly $1.8 million in hotel occupancy tax revenues for the City of Austin in 2019.
John Riedie, CEO of the Austin Creative Alliance, pointed out, South by’s contribution is a small portion of the total Hotel and Motel Occupancy Tax revenue.
In Fiscal Year 2019, the City of Austin reported about $112 million in the hotel tax revenue.
“For the Austin Creative Alliance members, we just want to put their mind at ease that this is not apocalyptic, yet,” Riedie said. “We can sustain this if there’s no further damage to the tourism economy.”
Riedie said, “Assuming that this outbreak is put under control in the same amount of time as others, we should be fine,” referring to previous outbreaks of respiratory illnesses.
Riedie hopes the outbreak can be contained soon without a devastating impact on the global economy.
“You can’t say what’s going to happen next week nationwide,” he told KXAN. “If all other factors are okay, South by’s cancellation should not cause a decline in cultural funding in next fiscal year.”
Vaughn said, “Once this crisis is over, the local leaders need to get together and figure out how can we bring tourism back.
We also spoke with a short-term vacation rental company TurnKey.
Its Co-Founder and CEO John Banczak said in a statement:
“We’ve seen a slight uptick in cancellations, but not overwhelming. A private vacation home is resonating with travelers as the ideal place to stay now and over the summer. A lot of travelers are still coming to visit Austin. It is a great town to visit, even if you don’t get the chance to be in a room of more than 2,500 people at once! Plenty of smaller venues are keeping their schedules, bands are coming, and even larger venues like the Moody Theater announced many of their shows will go on. There are a lot of folks in Austin putting in hard work to make the best of the situation.”
The City of Austin told KXAN it is too early to speculate what will happen to its hotel tax revenue. They’re waiting to see what the actual impact will be.
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