The United States is facing one of the worst unemployment crises in its history due to the COVID-19 pandemic. The leisure and hospitality industry is one of the sectors experiencing the greatest uptick in unemployment. Therefore, places that are dependent on tourism seem likely to have high unemployment rates due to the reduction in travel amidst the pandemic. Using unemployment data from the Bureau of Labor Statistics and occupancy data from our vacation rental partners, we explored the relationship between March and April vacation rental occupancy rates and April unemployment rates for 29 counties, all of which could be classified as leisure markets, around the United States. Here’s what we found:
1. A larger decrease in the Paid and Owner Occupancy Rate correlated with a larger increase in the unemployment rate.
Below, we compare the difference from 2019 to 2020 for the Paid and Owner Occupancy Rate during March and April and the April unemployment rate. Logically, it would make sense that markets with larger decreases in visitation would have a higher unemployment rate as restaurant, hotel, commercial, and other hospitality workers were laid off. The data support this as there was a statistically significant relationship between the two variables: markets with larger decreases in Paid and Owner Occupancy Rate had higher increases in the unemployment rate.
2. Many leisure destinations had a larger increase in the unemployment rate than the average for the United States.
Out of the 29 counties included, 19 (66%) had a larger increase in the unemployment rate than the United States as a whole. Some of these markets had smaller declines in the Paid and Owner Occupancy Rate than the average for the United States. The dependence of these counties on travel and tourism likely made them more susceptible to the economic impacts of the pandemic.
3. A handful of markets experienced increases in occupancy rates but unemployment still rose.
San Bernardino County, California (Big Bear); Fannin County, GA (Blue Ridge); and Watauga County, NC (Blowing Rock); benefitted from being remote mountain markets. The Paid and Owner Occupancy Rate for March and April actually increased year over year due to a higher number of owner stays. While vacation rentals in these counties had higher occupancy rates, unemployment still increased. This shows the complexity of this pandemic - vacation rental occupancy can serve as an indicator of a destination’s health but many other factors are at work and many other industries were also impacted.
5. Counties with higher spring occupancy rates in 2019 had higher unemployment in 2020
In April 2019, these 29 counties had unemployment rates between 2% and 7%. In April 2020, the range expanded greatly to between 11% and 35%. Counties with higher March and April Paid and Owner Occupancy Rates during the 2019 Spring season had higher April 2020 unemployment rates. This correlation is statistically significant and may be attributed to companies in those areas being more dependent on spring tourism for revenue and laying off more employees as a result of lost revenue.
There are a few limitations to our research: we only included leisure destinations and compare a single measure of a single industry (vacation rental occupancy) to the overall unemployment rate. Still, the relationship is clear. In places where the tourism industry was more negatively impacted by the coronavirus pandemic, there were larger increases in the unemployment rate. This correlation emphasizes the value of tourism and hospitality companies to local economies.