BP Contractors Do Not Rent Jet Skis.

Biloxi needs money, and to get money, it needs tourists to fill up those hotel rooms. This is a city build on sales taxes. Except that with the Gulf in such bad shape, the tourists just aren’t coming.

story by Dan Oshinsky / photos by Dan Oshinsky
published August 3, 2010

Nearly one out of every four hotel rooms in Mississippi is located in either Biloxi or Gulfport. These cities were built on sales taxes from those hotel rooms.

So when there’s what Linda Hornsby calls an “interruption” — a Category 3 hurricane, say, or minor collapse of capitalism in the West, or an oil spill, or any other event that keeps hotel rooms empty — then the results can be devastating for a place like Biloxi. Officials announced at a Biloxi city council meeting Tuesday night that they’re predicting a net operating loss of $6 million for this fiscal year — the worst number this city has seen since casinos first came to the coast in the early 1990s.

Biloxi needs money, and to get money, it needs tourists to fill up those hotel rooms. The economy hit the city’s hotels and casinos especially hard in 2009, Hornsby says.

“It wasn’t a recession as far as the lodging industry” was concerned, says Hornsby, executive director of the Mississippi Hotel and Lodging Association. “It was a depression.”

But she’s still hopeful that 2010 will bring some good news for Biloxi. Hornsby provided Stry with data from Smith Travel Research, a group that tracks key hotel metrics nationwide. Their latest hotel report, filed at the end of June, seem to suggest an uptick in tourism in 2010, though the full effects of the Gulf oil spill won’t be known until the year’s final numbers come in.

The hotel industry monitors three key pieces of data: occupancy, average daily rate (ADR) and revenue per available room (rev/par). All three are showing encouraging signs this year. Among them:

  • Through the first six months of 2010, hotels in Biloxi and Gulfport were 68.6 percent filled, compared to 61.5 percent in 2009.
  • The year-to-date occupancy rate is 12 percent higher here than it is nationally.
  • In 2009, local hotels made $4 less in rev/par than the national average. This year, the numbers are almost even ($54.80 nationally vs. $54.28 locally).
  • In June alone, Biloxi/Gulfport hotels were 84.1 percent filled. In June 2009, local hotels saw only 75.8 percent occupancy.

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The Beau Rivage, one of Biloxi's biggest casinos.

(At top) The Hard Rock Casino in Biloxi, which was originally scheduled to open the week Katrina hit. (Above) Cars on Highway 90 pass by the Beau Rivage.

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But Hornsby says that June high-occupancy number could be misleading. She says despite conventional wisdom, smaller properties haven’t seen a decline in customers due to the oil spill.

“Because they have lower rates, BP workers were placed there in these non-casino properties,” she says. “The casino properties that have the larger amount of rooms did not enjoy the BP business. They may have enjoyed it in their casino, at night, but as far as hotel rooms, they did not.”

But in this case, Hornsby says the high rate of occupancy has not carried over to other local businesses.

The BP employees are “not your typical tourist, so the impact is felt throughout tourism,” Hornsby says. “BP contractors don’t rent jet skis.”

She’s hearing that soon, BP will begin moving many employees into long-term housing, which could lead to a dive in overall numbers for non-casino hotels.

The occupancy rate at casinos is also slightly inflated, she says. Hornsby calls it “occupancy at a cost,” as casinos are often providing complementary rooms, entertainment or even flights to get guests onto the gaming floor.

The year-to-date occupancy rate is 12 percent higher here than it is nationally. The problem is, the people staying in those rooms aren’t tourists. They’re here to work on the oil spill — not working on their tan or hitting the casino floors.

As far as overall success is concerned, Hornsby says, the barometer is still 2008, when rev/par topped $56 and occupancy hit 70 percent.

But again, Hornsby thinks she has an explanation for those high numbers.

“There was a lot of money floating around…,” she says. “People were getting their instant checks from FEMA and, yeah, gambling was taking place. I’d like to say that wasn’t true, but it was.”

All these anomalies worry Hornsby. She does fear a worst-case scenario for Biloxi, in which regular Gulf Coast vacationers see chaos here and decide to pick a new summer hangout.

“We could lose them forever,” she says. “If they go somewhere else that they like better, we may not get them back.” ❑