Hospitality Lawyer:Hotel Industry Update from Smith Travel Research

8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research

1/28


2/28

Agenda

Total US Overview Scales and Major Markets

Pipeline Projections


3/28

U.S. Lodging Industry - Key StatisticsJune 2008 YTD (Prelim)

% Change Hotels 49,672 2.0% Room Supply 4.5mm 2.2% Room Demand 2.7mm - 0.4% Occupancy 61.5% - 2.6% A.D.R. $107.62 4.3% RevPAR $66.15 1.6% Room Revenue $54.3B 3.9%


4/28

-6

-4

-2

0

2

4

6

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Supply % ChangeDemand % Change

Total United StatesRoom Supply/Demand Percent ChangeTwelve Month Moving Average 1989 to May 2008

5.1%

0.6%

4.0% 4.2%

- 4.8%

1.8%

1.0%

A Year Ago Fundamentals Were Worse


5/28

-8

-6

-4

-2

0

2

4

6

8

10

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Occ % ChgADR % Chg

Total United StatesOccupancy/ADR Percent ChangeTwelve Month Moving Average 1989 to May 2008

-0.7%

5.4%

6.8% 7.6%

ADR Growth Is Slowing. But Not Dropping Rapidly


6/28

-5

0

5

10

2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 J F M AM

Total United StatesRoom Rate Percent ChangeJan 2003 May 2008

Summer Rate Growth Will Be Closely Watched


7/28

-2.2%

4.5%

-5.8%

-3.9%

3.0%

-3.4%

3.3%

-2.0%

4.7%

1.8%

5.4%

-9.6%

0.6%

4.0%

-15%

-10%

-5%

0%

5%

10%

Occupancy % Chg ADR % Chg

May YTD 6/7 6/14 6/21 6/28 7/5 7/12

Total U.S.Occupancy and ADR Percent ChangeYTD through 7/5

July 4 th Timing Helped and Hurt


8/28

Chain Scales and Major Markets


9/28

3.3 3.3

5.8

-2.6

5.0

2.21.7 1.9

3.6

-6.1

2.2

-1.2

-10

-5

0

5

10

Luxury Upper Upscale

Upscale Mid w F&B Mid wo F&B Economy

SupplyDemand

Chain ScalesSupply/Demand Percent ChangeMay 2008 YTD

Healthy Demand Growth, Except in Two Scales


10/28

3.2

5.0

2.4

-1.5-3.3

-2.2-3.5

-1.4

-2.5

3.33.2

4.5

-5

0

5

10

Luxury Upper Upscale

Upscale Mid w F&B Mid wo F&B Economy

OccupancyADR

Chain ScalesOccupancy/ADR Percent ChangeMay 2008 YTD

Rate Growth Around / Above Inflation Except for Economy Segment


11/28

0

4

8

Luxury Upper Upscale Upscale Mid With Mid W/O Economy

Chain ScaleADR Percent ChangeTwelve Month Moving Average January 2008 To May 2008

Upper End Scales See ADR Deteriorate But at a High Level


12/28

-3.8

-3.2

-2.4

-2.2

-2.2

-2.0

-1.4

-1.0

0.1

0.4

1.4

1.8

1.9

1.5

-8.2-4.5

-4.4

-10 -8 -6 -4 -2 0 2 4

Phoenix, AZ

Philadelphia, PA-NJ

Atlanta, GA

Dallas, TX

Chicago, IL

Los Angeles-Long Beach, CA

All Other Markets

Total United States

Top 25 Markets

Washington, DC-MD-VA

San Diego, CA

New York, NY

Orlando, FL

Oahu Island, HI

Boston, MA

Miami-Hialeah, FL

San Francisco/San Mateo, CA

Key 15 MarketsOccupancy Percent ChangeMay 2008 YTD Year over Year

Coastal OCC Holds So Far


13/28

2.3

2.7

3.4

3.9

3.9

4.3

4.5

4.8

5.5

5.7

5.8

5.9

6.5

7.3

7.7

5.3

1.8

0 4 8

Miami-Hialeah, FLAtlanta, GA

Orlando, FL

Washington, DC-MD-VA

All Other Markets

San Diego, CA

Dallas, TX

Total United States

Oahu Island, HI

Top 25 Markets

Los Angeles-Long Beach, CA

Boston, MA

Philadelphia, PA-NJ

Phoenix, AZ

San Francisco/San Mateo, CA

Chicago, IL

New York, NY

Key 15 MarketsADR Percent ChangeMay 2008 YTD Year over Year

Strong Rate Growth Bodes Well for The Summer


14/28

Exchange Rate Impacton 2007 ADR % Change

ADR $ % Change Currency % Change

Atlanta, GA 12.7% Euro 3.4%Boston, MA 6.3% Euro -2.5%

New York, NY 10.6% Euro 1.4%Orlando, FL -0.7% Euro -8.9%

Washington, DC-MD-VA 3.7% Euro -4.8%

Los Angeles-Long Beach, CA 9.0% Yen 4.0%Oahu Island, HI 7.4% Yen 2.5%San Diego, CA 2.9% Yen -1.9%

San Francisco/San Mateo, CA 5.7% Yen 0.8%

America Is On Sale!


15/28

U.S. Pipeline


16/28

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 J FMAM

Total United StatesRoom Supply Percent ChangeJan 2003 May 2008

Summer Will See More Supply Increases


17/28

Total United StatesActive Development Pipeline (Thousands of Rooms)Change From Last Year

Source: STR / TWR / Dodge Construction Pipeline

Phase May 2008 May 2007 Difference % Change

In Construction 206 189 + 17 9.3%

Final Planning 106 50 + 56 112.3%

Planning 359 302 + 57 19.0%

Active Pipeline 672 541 + 131 24.2%

Pre-Planning 159 94 + 64 67.9%

Total 831 636 + 195 30.7%

U/C Rooms Off The High of Dec. 2007


18/28

Total United StatesRooms In Construction by Scale In ThousandsMay 2008

7.3

23.9

52.1

58.8

9.3 11.3

43.9

0

10

20

30

40

50

60

Luxury Upper Upscale Upscale Mid w F&B Mid w/o F&B Economy Unaffiliated


Development is in Growth Scales


19/28

Markets with Highest Construction ActivityMay 2008

Market # Rooms % of Existing Supply

Las Vegas 19,212 12.5

New York 9,108 10.9

Orlando 5,133 4.5

Phoenix 4,622 8.5

Washington, DC 4,598 4.8

Chicago 4,454 4.3

LA-Long Beach, CA 3,801 4.1


The Usual Suspects


20/28

Projections


21/28

85.6

93.1

102.9

112.1

103.5 102.6105.3

113.7

122.7

133.4139.4

17.0 20.922.1 22.5

16.2 14.2 12.816.7

22.626.6 28.0

40.3% 40.2%39.2%

40.9%

37.1%

35.7%35.0%

36.6%

38.8%

41.3% 41.3%

0

20

40

60

80

100

120

140

160

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

25%

30%

35%

40%

45%

50%

Revenue IncomeGOP

Total United StatesEstimated Revenue and Profitability

Years 1997 - 2007


22/28

-2

-1

0

1

2

3

4

5

6

1989q1 1992q1 1995q1 1998q1 2001q1 2004q1 2007q1-8

-6

-4

-2

0

2

4

6

8

GDP % Chg Demand % Chg

Total U.S.Hotel Rooms Sold vs. GDP ChangeQuarterly Change 1988 to Q1 2008


23/28

1.6

2.41.9

0.51.2 1.3

1.8

1.4

2.4

-0.1

0.2

1.00.4

4.0

2.8

1.0

0.3

1.3

-1

0

1

2

3

4

5

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8 P

2 0 0 9 P

2 0 Y r A

v e r a g e

Supply % Chg

Demand % Chg

Total U.S.Supply/Demand Percent Change2002 2009P


24/28

2.9

-1.1-1.4

3.6

0.3 0.4

-0.2

-1.2

-2

-1

0

1

2

3

4

2002 2003 2004 2005 2006 2007 2008P 2009P

Total U.S.Occupancy Percent Change2002 2009P

20 Year Average: -0.1%


25/28

Total USOccupancy Percent2002 2009P

59.0 59.2

61.4

63.1 63.3 63.262.3

61.6

50

60

70

2002 2003 2004 2005 2006 2007 2008P 2009P


26/28

4.2 4.4 4

0.1

7.4

5.9

-1.5

5.5

-3

-1

1

3

5

7

2002 2003 2004 2005 2006 2007 2008P 2009P

Total U.S.ADR Percent Change2002 2009P

20 Year Average: 3.5%


27/28

8.5

2.83

7.5

5.7

7.9

0.5

-2.7

-5

0

5

10

2002 2003 2004 2005 2006 2007 2008P 2009P

Total U.S.RevPAR Percent Change2002 2009P

20 Year Average: 3.4%


28/28

2008 Lodging Industry Takeaways

Accelerating Supply Growth Pipeline Attrition?

Slowing Economy = Slower Demand Growth

Top Markets may outperform

Weak Dollar = U.S. Bargain

Leisure feels greater impact than business?

Revenue Management Discipline?

Hospitality Lawyer:Hotel Industry Update from Smith Travel Research

Documents

Transcript of Hospitality Lawyer:Hotel Industry Update from Smith Travel Research