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Galveston Economic Report
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 David Stanowski Publisher Home The Blog   |
Galveston Economic Indicators
by David Stanowski Sales Tax Hotel Revenue Residential Real Estate Mixed Beverage Tax Sales tax collections are a very good proxy for overall economic activity, excluding investment. They are also very accurate, because they do not rely on estimates or formulas; they represent actual sales. Note: Collections posted for a given month represent sales about 2 months prior to that date. Sales tax collections plunged to a 10-year low last month, the lowest since March 2002, when they were $767,028.72, however, there was a strong rebound this month! This month's data tends to show that last month was an aberration that was likely caused by collection problems since January-February 2012 was 0.35% higher than January-February 2011. The year-over-year rate of change in City sales tax collections spiked lower in October 2008 in the aftermath of Hurricane Ike, and then surged in October 2009, because October 2008 was such a low baseline. Year-over-year sales went from -23.0% last month to +17.2% due to the apparent late collections! Monthly Local
Sales Tax
Please note: State sales tax reporting runs one month behind that of the City, so the latest data point is local January versus State January. This metric simply divides the amount of sales tax collected by the City of Galveston by the amount of sales tax collected by the State of Texas. The City's share reached an anemic 0.058% in October 2008 when many businesses were shut down due to Hurricane Ike. The ratio hit the high of this study period, 0.114%, in August 2009, nearly double the reading at the low point, most likely due to the rebuilding efforts. Unfortunately, the City's share of State sales hit a ten-year low in April 2011; 0.052%. After a 5-month bounce, this ratio hit a new all-time low in January, but it is overstated due to the apparent collection problems last month. Yearly
Sales Tax Data: Last Update: 15 December 2011
Sales tax collections are a very good proxy for overall economic activity, excluding investment. They are also very accurate, because they do not rely on estimates or formulas; they represent actual sales. 2008 held even with 2007 sales due the beginning of the rebuilding effort in the aftermath of Hurricane Ike. 2009 got a bump from increased rebuilding, and 2010 reflects the local economic slump as rebuilding slowed. This 25-year history of sales tax collections showed only two slightly negative year-over-year rates of change in City sales tax collections in 1988 and 2002, until the unprecedented 16% plunge in 2010. More recently, 2008 was flat, and then 2009 experienced healthy growth, before the plunge in 2010. 2011 saw renewed growth from the low baseline the previous year. Yearly City of Galveston Local
Sales Tax
July is the peak month in hotel revenues every year for the period in question, and January is the low point. Since the Great Recession began in the Fall of 2007, and was even more severe in the Summer of 2008, the fact that revenue pushed to a new high in July 2008 supports the theory that people in the Houston metro-area chose to take vacations closer to home to save money that summer. With revenue soaring to its all-time high in July 2011, it seems clear that the continuing weak economy has convinced people in the Houston metro-area that vacationing closer to home is still the prudent choice! The last 21 months have shown year-over-year gains with the exception of a small 1.4% decline in August 2010; although the size of the gains shows a definite declining trend. January 2011 posted a 56.2% jump versus the very low baseline in January 2010. The number of hotel rooms peaked at 5,394, in September 2008, and then hit a low point of 4,412 in July 2009. For some reason, the number of rooms plunged to 4,857 in September 2011. It's currently holding at about 4,900+. July is the peak month in hotel revenues per room every year for the period in question, and January is the low point. Like total hotel revenue, revenue per room pushed to a new high in July 2008, and recently soared to its all-time high in July 2011! City of Galveston Hotel Revenue
Yearly
Hotel Data: Last Update: 19 February 2012
Revenues began rapid growth in 2005, but almost dropped back to 2005 levels in 2009 and 2010. However, 2011 revenues nearly returned to 2007 levels! 2009 is the first year during the period studied that showed dramatically lower revenue than the previous year. 2011 was up 17.3%! The average number of rooms showed sustained growth during this period until 2009, but has recovered in 2010 and 2011 to hold near 5,000. Revenues per room began rapid growth in 2005, but declined dramatically in 2009 and 2010; they rebounded nicely in 2011! City of Galveston Hotel Revenue
HENDERSONVILLE, Tennessee—The U.S. hotel industry reported increases in all three key performance metrics in 2011, according to data from STR. Overall, the U.S. hotel industry’s occupancy rose 4.4 percent to 60.1 percent, its average daily rate was up 3.7 percent to US$101.64 and its revenue per available room increased 8.2 percent to US$61.06. 2011 was the first time since 2008 that the industry ended the year with occupancy of more than 60 percent and an ADR of more than US$100. The industry reported a 0.6-percent increase in supply in 2011 and a 5.0-percent demand increase for the year. Demand has increased 5.0 percent or more only three times since 1987. “2011 was a strong year for the U.S. hotel industry,” said Randy Smith, co-founder and chairman at STR. “Room-supply growth continued to drift downward as room demand reached record levels during the year. Though occupancy and ADR were still below 2007 and 2008 levels, it was still encouraging to see the industry experience a solid rebound during a period of considerable economic difficulties.” “In 2012 the hotel industry will face tough year-over-year comparisons, though we are still optimistic,” Smith continued. “With modest gains in occupancy and stronger increases in room rates, we expect RevPAR to increase about 4.3 percent in 2012.” Among the Top 25 Markets, Detroit, Michigan, ended the year with the largest occupancy increase, up 10.2 percent to 59.8 percent, followed by Tampa-St. Petersburg, Florida, with a 9.7-percent increase to 60.5 percent. New Orleans, Louisiana, ended the year virtually flat with a 0.4-percent decrease to 64.2 percent. Two markets ended the year with double-digit ADR increases: San Francisco/San Mateo, California (+13.9 percent to US$155.14), and Oahu Island, Hawaii (+10.0 percent to US$165.05). Atlanta, Georgia (-0.4 percent to US$82.58), and Norfolk-Virginia Beach, Virginia (-0.3 percent to US$84.24) were the only top markets to report ADR decreases in 2011. San Francisco/San Mateo achieved the largest RevPAR increase, rising 19.7 percent to US$122.54, followed by Nashville (+14.8 percent to US$58.01) and Miami-Hialeah (+14.1 percent to US$115.65). None of the top markets reported RevPAR decreases for the year. http://www.hotelnewsnow.com/Articles.aspx/ 7365/STR-US-hotels-report-strong-results-in-2011 Total dollar sales peaked in May 2006 at $34,500,000. May 2011 sales were $19,290,460; 44% below the peak level.  Total dollar sales crashed in the post-Ike period (see arrow) driving year-over-year rates of change negative. September and October 2009 spiked higher due to the low comparative baseline in the post-Ike period, but year-over-year rates of change have declined steadily since the peak in October 2009. May, June, July and August 2011 recorded year-over-year declines in total dollar sales, September was up 42.3% over September 2010, but October 2011 continued the downtrend coming in 12% lower than October 2010! November was up 8.5%, but December was down 8.2%.  The number of properties sold peaked at 160 in April 2005, and the number of months of inventory made its low of 6.3 in the same month. Sales in December 2011 were 79; 51% below the peak level in April 2005! The number of months of inventory in December 2011 was 13.0. The number of properties listed for sale has declined from 1,964 in June 2007 to 983 in December 2011. The average price of residential real estate held up much longer than the national averages, peaking in March 2008 as opposed to 2005-2006 in most locations. After the plunge in 2009, to the April low, where prices were 56% below their peak levels, they have rebounded as high as $245,100, in February 2011. The average price in December 2011 was down 10.5% on a year-over-year basis. Obviously, some portion of the 2009 plunge was distressed selling, due to Hurricane Ike, but with 7,671 "distressed" vacant housing units in the City, the difficulty of finding people who want to live in Galveston, and the weak national and local economies may lead to further price declines in the coming years. Vacant Housing Crisis Galveston Glut: 3,237 Vacant Rentals Looking at average selling prices versus their 120-month moving average (a simple measure of the long-term value) finds prices consistently and substantially above their 120-month MA until the post-Ike collapse hit in December 2008; followed by a fairly strong rebound after five negative months. This study would argue that there need to be more price declines in the future to allow prices to find levels that are more in line with measures of long-term value. Note: Prices fell below their 120-month MA in June for the first time in seven months, but bounced back in July, August, September and October. November found prices slightly below their 120-month MA, but they were above the 120-month MA again in December. City of Galveston Residential
Real Estate Average Price
Yearly
Residential Real Estate Data:
Last Update: 28 January 2012 Yearly total dollar sales also tend to show that the local market was topping in the 2005-2006 period even though prices held up beyond that time. Total dollar sales peaked in 2005 at $260,280,000, but 2006 and 2007 also exceeded $250,000,000. 2008 and 2009 show the effects of the weak national and local economies, as well as Hurricane Ike. 2010 and 2011 rebounded from the 2009 low, so that 2011 total dollar sales are almost back to 2004 levels. On a yearly basis, the number of properties sold peaked at 1,294 in 2005, but 2011 did improve to 909 from 755 in 2009. The yearly data also show that the average price of residential real estate has held up much longer than the national averages, peaking in 2008 as opposed to 2005-2006 in most locations. Prices plunged in 2009, in the aftermath of Hurricane Ike, but have rebounded in 2010 and 2011; although 2011 was slightly less than 2010. Note: The City of Galveston has the most unfordable residential real estate in the County which will continue to act as a major obstacle to clearing the local housing inventory, including the "shadow inventory" made up of several thousand vacant housing units. Read more: Click Here
Mixed Beverage tax collections are a good proxy for overall bar and club sales. Collections for a
given quarter are posted on:
January 1Q (sales from October, November, December) April 2Q (sales from January, February, March) July 3Q (sales from April, May, June) October 4Q (sales from July, August, September) and represent sales for the 3 months prior to that date. After reaching a low of $67,054 in 1Q 2009 (sales from October, November, and December 2008) immediately after Hurricane Ike, mixed beverage taxes collected hit an all time high of $148,993 in 4Q 2010 (sales from July, August, and September 2010). However, 4Q 2011 has just dropped to $132,435. The year-over-year rate of change in mixed-beverage tax collections spiked lower in 1Q 2009 in the aftermath of Hurricane Ike, and then surged in 1Q 2010, because 1Q 2009 was such a low baseline. Growth turned negative in the latest quarter (4Q 2011) dropping 11.1% versus 4Q 2010. Quarterly Mixed Beverage Tax
Yearly
Mixed Beverage Tax Data: Last Update: 17 November 2011
Mixed Beverage tax collections are a good proxy for overall bar and club sales. 2011 mixed beverage tax collections hit an all-time high, slightly exceeding 2008, even as 2011 4Q was slowing dramatically. After 13 straight years of positive gains, 2009 plunged -14.6% in the aftermath of Hurricane Ike, but 2010 and 2011 have been showing growth again! Yearly Mixed Beverage Tax
For more information on the Galveston Economy: Click Here or Search Our Site or Search the Internet 
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