Nearly Half Of Williston Hotel Rooms Are Sitting Empty Right Now

Some news from Reuters illustrating the impact of declining oil prices on one of the communities at the epicenter of North Dakota’s oil patch:

Nearly half of the hotel rooms in the epicenter of North Dakota’s energy boom have been sitting empty this year, yet another sign that plunging oil prices have cooled the economy of the second-largest crude producing U.S. state. …

So far this year, Williston’s 2,108 hotel rooms have been, on average, 55 percent full, said Amy Krueger, executive director of the Williston Convention Visitor’s Bureau.

The city’s hotel demand, which reached an apex of 88.2 percent in June 2012, is on par with Minot and Dickinson, two other North Dakota oil communities, Krueger said.

Williston has added 1,500 hotel rooms since the state’s latest oil boom began in earnest five years ago, a step that has helped push the average daily hotel room rate in the city down to about $122 per night.

Hotel prices still trend higher than that average. Williston’s Hampton Inn, a division of Hilton Worldwide, charges $286 per night.

To provide some context, here is the trend in national hotel occupancy rates going back to 2001:

occupancy rates

So right now Williston’s hotel occupancy rate is about where the nation’s as around the time of the 2009 recession. Which, you know, isn’t good.

Yet still, prices are above the national average. I suspect that’s not going to last much longer. The rooms cost money to maintain whether they’re full or not. A cut rate is still better than no rate.

Really, though, this was probably unavoidable given how many people came to Williston to participate in the oil boom. It was a tidal wave of humanity, and so of course hotel capacity got overbuilt.

I’m honestly surprised the numbers aren’t worse.

Meanwhile, the folks in Williston say things are doing just fine:

“There’s still people coming here and there’s still activity,” said Elzi, a principal with THK Associates in Denver. “People forget the most valuable oil that an oil company owns is still in the ground. It’s a bank for them. It’s there when prices recover.”

Shawn Wenko, executive director for Williston Economic Development, which organized the conference, said 2015 has been a good year so far development, but it’s at a pace that’s a “new normal.”

“Everybody got used to what happened between 2010 and 2015, and that was a tremendous amount of growth, numbers that were off the charts,” Wenko said. “And that’s a trajectory that’s not sustainable.”

Sounds about right to me.

Rob Port is the editor of SayAnythingBlog.com, a columnist for the Forum News Service, and host of the Plain Talk Podcast which you can subscribe to by clicking here.

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