Global comparative effects of civil unrests on hotel performance

Civil unrest is an old phenomenon with causes spanning from economic conditions to political, ideological, religious and other perceived oppressions or limitations by a portion of an area’s population. The level of unrest can span the full spectrum of crowd dynamics, from peaceful demonstrations to riots, with their fall-out effects causing minimal to significant damage in both the urban environment as well as the urban fabric. The extent, intensity and time-frame of the civil unrests affect an area’s commerce, with hotels being in the forefront of such risk due to the perceived fear resulting in reservation cancellations and therefore lost income for owners of this real estate asset type.The paper focuses on hotel performance in select countries across continents which experienced civil unrest due to the financial crisis, occupy and political movements (e.g. Arab Spring) as well as radical or racial tensions. Utilizing hotel data from 2000 through the beginning of 2015 the paper explores the links between performance indicators, such as Average-Daily-Rate (ADR) and Revenue-Per-Available-Room (RevPAR) with civil unrest variables while differentiating among luxury, mid-price and economy hotels.Two distinct methodologies are applied: a) identification of densities and clustering of civil unrest events and hotel performance trends with the use of GIS and b) econometric analysis with the use of fixed effect regression modeling. The initial results suggest that economic and radical unrests affect more deeply hotel performance compared to others.