BP Oil Spill
BP oil spill was a disaster that occurred on 20th April 2010 within the Gulf of Mexico. Eleven people were killed by this disaster and it was the largest marine spill to be recorded in the petroleum industry’s history. The government of the U.S estimated that the oil discharge amount from this spill was about 4.9 million barrels. Major attempts for preventing the spread of the oil spill into the beaches, wetlands and estuaries were made after this disaster (BBC para. 1). This oil spill extended for a month causing severe damage to the fishing, tourism, wildlife habitat, marine life and human health. Even today, the problems of this oil spill are experienced. The reports of 2013 showed that the rate at which the marine life was perishing remained high even at that time due to this spill (BBC para.2). The impact that this oil spill has had on the Florida’s hotel market will be examined in this paper.
The Impacts of the BP Oil Spill on the Hotel Market in Florida
Among the major economic sectors in Florida is tourism. This industry provides employment to approximately 1million people. In Florida, tourism is among the largest industry and its annual revenues surpasses 60 billion dollars. Most of this revenue is generated throughout summer, particularly between the Memorial Day and the Labor Day. At this time, children do not go to school. Most families opt to go on vacation at this time to the beaches (Harper 2). The impacts of this oil spill on the entire Florida’s tourism industry were negative. This is because the tourists who visited this state were reduced by the spill. The beaches were contaminated and tourists were scared away. Additionally, tourists were prevented from visiting Florida by public misunderstanding (Harper 2).
In 2010’s summer, there was tourists’ decline in some Florida hotels in different parts by up to 70 percent. This decline was due to the fear of tourists who were not ready to risk losing their money as well as the fact that this vacation time is precious to most of them. Tourists feared that they would spend money on a vacation that might not be enjoyable. Since Florida is among the states that generate most income from the tourism industry, other businesses were negatively affected by tourists’ reduction in a significant number (Harper 3). For example, there were businesses that suffered significant impact due to this decline including fishing, lodging, hotel and restaurants among other businesses that engage in recreational activities such as boating and diving (Harper 3).
Following this oil spill, five surveys were carried out by the Knowland Group from 3rd May to 20th July. The aim of these surveys was to assess the effects of the oil spill on the entire hospitality industry within the gulf region. 50 hotels in Florida, Louisiana, Mississippi and Alabama were included in the surveys (The Knowland Group 6). The choice of these hotels was done in a random manner. Brand hotels in the market were the hotel types that were included and their target budgets are tourists’ conscious. The hotels also included those with single property and catering for tourists form respective states as well as resort hotels whose targets are visitors from other states apart from Florida. According to these surveys, the media started being used by hoteliers within the gulf cost for purposes of damage control in the two weeks that followed this oil spill (The Knowland Group 6).
For instance, a meeting was held on 6th May 2010 by Florida hoteliers and some officials of the state at Pensacola Beach. This was followed by a press conference whose aim was to help in tackling media’s misinformation. Julian McQueen, the Innisfree Hotels CEO within the Gulf Breeze in Florida stated that this oil spill was yet to reach the coast of Florida. He also stated that the operations of the hotels would continue till they notice its impact (The Knowland Group 6). Nevertheless, the efforts made to restore the confidence of potential tourists were delayed because there was an already spread uncertainty of the tourism industry in Florida. For example Knowland Group conducted its first survey from 3rd to 4th May. This survey showed that 35% of Florida hotels as well as those in other regions in the Gulf Coast were already receiving clients’ cancellations due to this oil spill (The Knowland Group 6).
This survey also showed that the hoteliers feared that failure to quickly resolve the issue of oil spill would increase the months’ cancellations. In the May of 2010, 425 of all hotels that took part in the survey showed that their capacity for reserving future events had been reduced by this oil spill (The Knowland Group 7). 62% of Florida hotels as well as those in the other regions of the gulf coast began implementing measures that were aimed at dealing with the spill’s negative impacts especially cancellations. Among the measures that hotels used was declining to implement the cancellation consequences that the contracts that they had with clients stipulated. This implied that after canceling their bookings, clients did not incur the cancellation fee. There were cases where clients were given credits during future bookings after canceling their bookings (The Knowland Group 7).
Measures for dealing with the cancellation were implemented mainly by the larger hotel chains that had began to creating their response plans immediately after the spill. Contrary to this, single property entities charged cancellation fees to the clients as per the stipulations of their contracts. This is because small hotels were likely to suffer significant impact on their revenues. The Knowland Group’s survey established that in addition to bookings, this oil spill affected the hotels’ ability to offer tourists fresh seafood (The Knowland Group 8).
Another survey conducted by The Knowland Group from 16th to 17th May showed that 42% of all hotels that participated in this survey received cancellations from prospective clients. Thus, the survey showed that there was a 7% increase in the cancellations from the previous survey that indicated the rate as 35%. This increased rate showed that this oil spill was gradually reaching Florida’s coast (The Knowlabd Group 8). This survey also established that these hotels were also experiencing challenges in reserving their future events more so short term events. Contrary to this, some hotels suffered the cancellations’ effects while others were benefiting from petroleum industry’s officials, media people and environmental groups officials who were increasing in the area (The Knowland Group 8).
There was a slight increase in the number of people visiting Florida briefly for business following this oil spill. These increased the room occupancy. According to statistics, 40% of room bookings at that time were linked to the workers whose roles entailed cleaning this oil spill. There were hotels where all rooms were occupied by people that were linked to BP oil spill. The surveyed hoteliers noted that there was a significant role played by the media and this contributed to tourists’ cancellations (The Knowland Group 9). For instance, a Panama City hotelier noted that the oil spill events were being exaggerated by the media. He noted that the media made the events appear worse than they were. According to statistics, 56 % of the surveyed hoteliers blamed the bookings’ decline on the media. 48% the bookings’ decline was due to the beaches that were contaminated by the oil spill (The Knowland Group 9).
It is only 14 % of hoteliers who indicated that the chances of petroleum odor’s presence in the surrounding air caused the prospective tourists’ cancellations. The surveys also indicated that hotel management firms and hotel operators were reluctant in implementing the plans of dealing with increased cancellations’ possibility (The Knowland Group 9). This survey indicated that 56% of the hoteliers had corporate or property level strategies for tackling the negative impacts of this spill. There were hotels next to Florida Keys that showed that in case their beaches were reached by the spill, they were ready to implement the plans that they had used in dealing with the St. Petersburg Florida’s oil spill of 1991. Nevertheless, experts observed that these plans or strategies were now 20 years old and they may have not been effective in handling a disaster within the contemporary society that is driven by the internet and the media that is available 24 hours per day (The Knowland Group 9).
From 2nd to 3rd June, The Knowland Group conducted another survey. This was also the time of the Memorial Day that is officially considered as the beginning of summer. It is also the peak season for tourists within the gulf coast. At this period, people have a three-day weekend which most people in America take advantage of to visit the beaches (The Knowland Group 10). The aim of conducting this survey at this time was to determine the effects of this oil spill on the weekend holiday. The results of this survey differed from the tourism industry’s results. According to this survey’s results, 60% of all hotels within gulf coast experienced cancellations of group bookings of the clients (The Knowland Group 10).
This indicated that there was an 18% increase in cancellations from the other surveys conducted previously, about 2 weeks before this particular survey. A 60% cancellation rate also indicated that there was a 25% increase in cancellations from the time of conducting the initial survey. Florida hotels continued to face challenges in future events’ reservation during summer. 28% of all hotels that participated in this survey noted that they faced considerable difficulties in reserving the future events. 39% of the surveyed hotels observed that they were receiving cancellations even during the weekend of the Memorial Day due to this oil spill (The Knowland Group 10).
On comparing the Memorial Day’s weekend holiday of 2010 with that of the past year, the comparison showed that a 26% business reduction was experienced by the hotels. The cancellations of the Memorial Day were attributed by hoteliers to the continued oil spill coverage that the media gave it. Initially, there were normal bookings for Florida hotels during summer vacation. However, when the oil spill reports started being aired by the media, the cancellations started. Nevertheless, lack of tourists for the Florida hotels as well as other regions in the gulf coast implied a gain for hotels in other places in the U.S (Conversation for Responsible Economic Development para. 7).
For instance, a South Carolina hotelier, Tom Ridgeway noted that the volume of hotel reservations increased dramatically. Within South Carolina, it was estimated that there was an increase of hotel reservations by 20% to 30%. On foreseeing a possibility of failing to enjoy their beach vacation within Florida, tourists shifted reservation. Tourism decline was felt the most in Florida out of all states within the Gulf Coast. In Florida, tourism is the major industry. 94% of annual tourists in Florida are the repeat visitors. On foreseeing the business decline’s possibility over the weekend of the Memorial Day, Florida hoteliers implemented different measures of attracting clients (Conversation for Responsible Economic Development para. 8).
According to the findings of this survey, 28% of the hotels that participated gave attractive deals or incentives with an aim of enticing customers. There were hotels that had offers that led to paying a third of a room’s value by the tourists. However, this survey established that there were no families’ visits over the weekend of the Memorial Day as it had been the case in the previous years. Some revenue was injected by clean up experts and other individuals who visited in response to this spill. Nevertheless, it was observed that there was no increase in hotels’ revenue due to the revenue that cleanup workers brought to the industry (Conversation for Responsible Economic Development para. 9).
A fourth survey was carried out by The Knowland Group from 28th to 29th June 2010. The findings of this survey indicated that most hotel operators had found means of handling the crisis that resulted from this oil spill. Additionally, even with the challenges brought by the spill, 66% of the gulf coast hotels participated in this survey and they indicated an increase in room bookings. Nevertheless, majority of the experienced increase in bookings at this time related to the rooms occupied by cleanup workers. A Panama City Beach hotelier in Florida noted that 75% of her hotel rooms were occupied by cleanup workers. Visitors that were linked to this spill also spent more time when compared to other guests (Conversation for Responsible Economic Development para. 10).
According to statistics, 52% of cleanup workers occupied the hotel rooms for a minimum of one week. 14% of cleanup workers stayed in the rooms for a minimum of two weeks. 9% occupied the room for three weeks. 14% stayed in the room for four weeks while 11% stayed for five or more weeks. Contrary to this, holiday tourists within the Gulf Coast book rooms for fewer days. According to statistics, 59% of holiday tourists book rooms for 2 nights. 19% book rooms for three nights. After tourists stopped visiting Florida and the surrounding states over the summer holiday, hoteliers noticed that BP oil spill had significant and lasting impacts on the overall summer travels (Conversation for Responsible Economic Development para. 11).
All major players within the tourism industry realized that visitors’ number decline came from gulf coast. Trip Advisor, a famous travel site for instance showed that from 28th June to 18th July gulf coast’s destinations were not checked out by potential travelers. There was a reduction in tourist searches specifically for Florida destinations by 48%. For instance, declines were reported for Florida destinations that include Key Largo and Fort Meyer Beach (The Knowland Group 11). A report released by the Travel Association in U.S forecasted the loss that the economy would experience within Gulf Coast as a result of this oil spill. This report showed that the Gulf Coast area would incur 23 billion dollars between 2010 and 2013 (The Knowland Group 11).
The Gulf Coast states, which are Alabama, Louisiana, Texas, Mississippi and Florida, generate 34 billion dollars revenue from tourism every year. Additionally, 400,000 jobs in this region are supported by tourism. From 2010 to 2013, the tourism sector’s revenue that would be lost amounted to about a third of the revenue that tourism generates in the whole gulf region. This was a huge loss and it made majority of the hoteliers reluctant to apply for a compensation of 20 billion dollars that BP was offering. The survey showed that 19% of hotels that participated were willing to apply for compensation funds in order to alleviate losses. 19% of hoteliers were not ready to apply for these funds (Spear para. 5).
A last survey was conducted by The Knowland Group between 19th and 20th July 2010. The survey followed the attempts by the government as well as the tourism sector to persuade more tourists to visit the region. These attempts did not succeed. During this crisis, celebrities offered to assist. Jimmy Buffet was among the celebrities who participated in the organization of the gulf shores’ benefit concert on 11th July 2010. The aim of this concert was to attract more tourists in the region. A survey was conducted by The Knowland Group following this concert with an aim of examining if the efforts of Buffet were successful in attracting more tourists in the region (Spear para. 5).
This survey’s results showed that majority of the region’s hotels situated about 75 miles away from the shores had bookings. Nevertheless, future bookings did not indicate a significant increase. According to these findings, 49% of the surveyed hotels noted that 50% of guests were mainly individuals who had attended the concert. 41% of the concert’s attendees booked hotel rooms for a night. 53% spent 2 nights. Tourists’ increase that the Buffet’s concert caused was highly regarded by the hotel owners. 89% of them showed that this concert greatly assisted them. Nevertheless, apart from the tourists who attended the party, others continued avoiding the region (Finn para. 9).
59% of the hotel owners showed that there were no increases in the room bookings during the time of this concert. Nevertheless, this concert was seen as a success in the efforts of bringing tourists back to Florida after this oil spill. Additionally, Buffet’s concert’s success compelled BP to provide more 2 million dollars that would be used to organize another concert in the region (Finn para. 9). The BP oil spill’s effects on Florida’s tourism sector and the entire Gulf Coast area extended for 2 years after happening. The usual tourists’ visits in Florida started in 2012. According to experts, when tourists started visiting Florida, they visited in huge numbers. This led to an increase in the average room’s cost by 13% (Finn para. 9).
BBC. Mapped: eco-impact of the BP oil spill. 8 Feb. 2012 . Web. 13 Mar. 2014 <http://www.bbc.co.uk/news/special_reports/oil_disaster/>.
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Spear, Sara K. Clarke and Kevin. In Florida’s Panhandle, hotels still suffer from oil spill’s effects. 23 Oct. 2010. Web. 13 Mar. 2014 <http://articles.latimes.com/2010/oct/23/business/la-fi-oilspill-hotels-20101023>.
The Knowland Group. The Gulf Coast Oil Spill and the Hospitality Industry. Aug. 2010. Web. 13 Mar. 2014 <http://www.knowland.com/data/caseStudy/06a17a78-f1fd-47dc-b8db-be6e9379601b.pdf>.