Hotel Industry Trends for the U.S. and Virginia · -0.4 0.7 0.9 1.6 2.0 2.9 3.4 3.5 4.9 6.2...

Hotel Industry Trends for the U.S. and Virginia

Jennifer Foster

Business Development Executive, Destinations

[email protected]© 2019 STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively “STR”) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR. No strategic advice or marketing recommendation is intended or implied.

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Total U.S. Review

Virginia Overview

Virginia Markets & Regional Breakouts

Pipeline

Forecast

Q&A

Agenda

5© 2019 STR. All Rights Reserved.

| The world’s largest hotel performance sample

© 2019 STR. All Rights Reserved. 6

STR Building Blocks

Supply(rooms available)

Demand(rooms sold)

Revenue(rooms revenue)

OCC ADR

RevPAR

Total U.S. Review

© 2019 STR. All Rights Reserved. .

8

September 2019: RevPAR declines Second Time This Year

% Change

Room Supply 2.1%

Room Demand 1.2%

Occupancy 67.4% -0.9%

ADR $132 0.6%

RevPAR $89 -0.3%

Room Revenue 1.7%

Total US Results, September 2019


9

September YTD 2019: RevPAR Growth Now at 1%

% Change

Room Supply 2.0%

Room Demand 2.0%

Occupancy 67.6% 0.0%

ADR $133 1.0%

RevPAR $89 1.0%

Room Revenue 3.0%

Total US Results, September YTD 2019


10

Number of Months with Positive ADR % Change of Less Than 1%

2011 – 2018

0YTD 2019

5


11

Quarterly RevPAR % Change: The Slow Growth Quarters Continue

2.5

3.4 3.3 3.2

3.4

2.7

1.9

4.1

3.5

4.1

1.8

2.4

1.4 1.1

0.7

Q1 Q2 Q3 Q4

2016 2017 2018 2019

* Total US, RevPAR % Change, by Quarter, Q1 2016 – Q3 2019


12

Supply & Demand Growth In Equilibrium Will Drive 2019 /2020 Results

-0.7

-4.7

-7.1

7.8

-8

-4

0

4

8

1990 2000 2010

Supply % Change

Demand % Change

Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 09/2019


13

Long Run Trends Point In One Direction: Down!

-3.4

-6.7

-9.7

-0.0

6.8 7.5

1.4

-10

-5

0

5

1990 2000 2010

Occ % Change

ADR % Change

Total U.S., ADR & OCC % Change, 12 MMA 1/1990 – 09/2019


RevPAR Growth: Longest RevPAR Upcycle (with two small interruptions)

-25

-15

-5

5

15

1990 2000 2010

Total U.S., RevPAR % Change, 1/1990 – 09/2019

56 Months112 Months(out of 115)

111 Months(out of 112)


RevPAR Growth: Slow Growth / No Growth Story Continues

-1

1

3

5

2017 2018 2019

Monthly 12MMA

*Total U.S., RevPAR % Change by month and 12 MMA, 1/2016 – 09/2019

Class Review YTD

LuxuryUpper Upscale

Upscale Upper Midscale

Midscale Economy

Four Seasons & Ritz-Carlton

Marriott & Hilton

DoubleTree, Courtyard & Wyndham

Hampton, Fairfield & Holiday Inn Express

Best Western, Candlewood Suites & Ramada

Days Inn, Red Roof Inn, Super 8, Econo Lodge

© 2019 STR, Inc. All Rights Reserved


Class: Supply Growth Will Impact Results Going Forward

2.72.4

3.6 3.6

1.0

-0.3

2.7

1.7

3.0

3.4

0.9

0.4

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Supply % Change

Demand % Change

*Supply / Demand % Change, by Class, YTD September 2019


Class RevPAR Results: 5 Classes lose OCC, but All Gain ADR

-0.1

-0.7 -0.6

-0.2 -0.1

0.71.1

1.4

0.7 0.60.4

0.4


ADR % Change

Occ % Change

*RevPAR % Change by Contribution of OCC / ADR % Change, by Class, YTD September 2019


Class RevPAR Results: Growth (But Barely)

1.0

0.7

0.1

0.5

0.3

1.1


*RevPAR % Change, by Class, YTD September 2019


Class Occupancy: Occupancy Will Remain Flat (Or Decline) In 2019

72.373.9 72.9

69.2

61.5 60.9

72.374.5 73.3

69.4

61.660.4


2019 2018

*OCC %, by Class, YTD September 2019 & 2018

SegmentationLuxury & Upper Upscale

Group Transient Contract

Segmentation

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Transient Performance: Annualized ADR Growth Now Well Below 2% (And Dropping)

0%

1%

2%

3%

4%

Jan-18 Jan-19

Demand % Change

ADR % Change

*Transient Demand and ADR % Change, 12 MMA, 1/2018 – 09/2019


Group Performance: ADR Growth Holds Steady – For Now

-2%

-1%

0%

1%

2%

3%

4%

Jan-18 Jan-19

Demand % Change

ADR % Change

*Group Demand and ADR % Change, 12 MMA, 1/2018 – 09/2019

Easter Shift

Easter Shift


Segmentation ADR % Change: Transient ADR Growth Noticeably Weaker Than Group ADR Growth

0.0%

1.0%

2.0%

3.0%

Jan-18 Jan-19

Transient ADR % Change

Group ADR % Change

*ADR % Change, Transient & Group, 12MMA, 1/2017 – 09/2019

Markets


26

September YTD Top 25 Market Performance: Despite High Occupancies a Very Mixed Bag

Market OCC % RevPAR % Change Influenced By

Phoenix, AZ 71.2 4.7 0.6% Supply Growth

Atlanta, GA 71.0 4.7 Super Bowl LIII = ADR +5.2%

Denver, CO 76.6 3.9 8.1% Demand Growth

San Francisco/San Mateo, CA 83.0 3.4 Moscone Reopens = ADR +5.3%

Nashville, TN 74.9 3.4PBS’s “Country Music” + NFL Draft =

+8.6% Demand Growth

Miami/Hialeah, FL 76.2 -3.0 Supply Growth +3.8%

Orlando, FL 76.2 -3.1 ADR only +0.3%

New York, NY 85.4 -3.2 Surprisingly Weak, ADR -1.9%

Houston, TX 63.8 -4.5 Supply Growth +4.1%

Seattle, WA 76.1 -5.0 Supply Growth +6.5%

*RevPAR % Change and absolute OCC in Top 25: 5 Best / 5 Worst Performing RevPAR % Markets, YTD September 2019


Mississippi PerformanceVirginia Performance


STR Hotel Participation:85.4%

Hotels: 1,540Rooms: 155,603


29

September 2019 - Virginia YoY Percent Change

6.9% 0.6%

4.2%

7.5%

3.2%

3.6%


30

Virginia: ADR Growth Drives RevPAR Growth

Total VA Results, September 2019 12MMA

Occ

64%

0.3%

ADR

$112

1.5%

RevPAR

$72

1.8%

Raw Data % chg

Supply

0.4%

Demand

0.7%

Revenue

2.2%


31

Virginia Demand Growth & Supply Growth Lines Have Crossed Twice in Past Year

-6

-2

2

6

2006 2008 2010 2012 2014 2016 2018

Supply % Change

Demand % Change

Total VA: Supply & Demand % Change; 12 MMA 2006 – September 2019


32

Virginia Occ Growth Trends Down & ADR Growth On The Rise in 2019

-7.8

6.0

-8

-6

-4

-2

0

2

4

6

2006 2008 2010 2012 2014 2016 2018

OCC % Change ADR % Change

0.3

Total VA: ADR & OCC % Change; 12 MMA 2006 – September 2019

1.5


Virginia RevPAR Growth: Overall Positive Trend

-10

-5

0

5

10

15

2016 2017 2018 2019

Monthly 12MMA

Virginia State., RevPAR % Change by month and 12 MMA, 1/2016 – 09/2019


34

Day of Week Occupancy12 MMA – September 2019

50.1%

61.4%

66.9% 67.4%

64.0%

68.9%

71.1%

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Virginia, Occupancy, 12MMA September 2019


35

Day of Week Rates12 MMA – September 2019

$103

$114

$119 $118

$110 $110 $111

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Virginia, ADR, 12MMA September 2019


36

Virginia Submarkets (22)


37

STR Markets in Virginia (4) and Surrounding Area


38VA Markets Supply/Demand % change, September 2019 YTDeptember 2018

1.8 1.9

0.3

-0.3

-0.9

0.1

0.6

0.1

0.7

0.3

Washington, DC-MD-VA

Virginia Area Virginia (state) Richmond-Petersburg Norfolk-VirginiaBeach

Supply Demand

Supply and Demand Growth Across the Markets


39

VA Markets, OCC % Change, September 2019 YTD

-1.6

-1.3

-0.2

0.0

1.0

1.2


Virginia Area

Virginia (state)

Total US

Richmond-Petersburg

Norfolk-Virginia Beach

Positive Occupancy Growth in 2 of the 4 Markets


40

VA Markets : ADR % Change; September 2019 YTD

-0.1

1.0

1.7

1.7

2.1

2.4

Richmond-Petersburg

Total US

Virginia (State)



Virginia Area

Virginia Area Leads in ADR Growth


41

Absolute Occ / ADR – Rooms Full 3 Out of 5 Nights

Occupancy ADR

Washington, DC-MD-VA 72% $160

Virginia (state) 66% $114

Norfolk-Virginia Beach 66% $110

Virginia Area 59% $99

Richmond-Petersburg 67% $96

VA Markets, Absolute Occupancy / ADR September 2019 YTD


42

VA Markets, RevPAR % Change, September 2019 YTD

0.0

0.9

1.0

1.1

1.4


Richmond-Petersburg

Total US

Virginia Area

Virginia (state)


Positive RevPAR Growth Across All Markets

3.3


Mississippi Performance

Virginia Regional Breakouts


44

VA Regional Breakouts, OCC % Change, September 2019 YTD

-5.2

-1.2

-1.1

-0.7

0.2

0.4

0.5

1.2

2.1

3.1

Southern Virginia

Northern Virginia

Shenandoah Valley

SW - Heart of Appalachia

Virginia Mountains

Central Virginia

SW - Blue Ridge Highlands

Coastal - Hampton Roads

Coastal - Eastern Shore

Chesapeake Bay

Occupancy Growth Across The Regions


45

VA Regions : ADR % Change; September 2019 YTD

0.5

0.7

1.7

1.8

1.9

2.1

3.0

3.5

4.0

7.1

Central Virginia

Shenandoah Valley

Chesapeake Bay

Virginia Mountains

Northern Virginia





Southern Virginia

Southern Virginia Leads in ADR Growth


46

VA Regional Breakouts, RevPAR % Change, September 2019 YTD

-0.4

0.7

0.9

1.6

2.0

2.9

3.4

3.5

4.9

6.2

Shenandoah Valley

Northern Virginia

Central Virginia

Southern Virginia

Virginia Mountains




Chesapeake Bay


Positive RevPAR Growth Across (almost) All The Regions

In Construction: Vertical construction on the physical building has begun.

Final Planning:Construction will begin within the next 12 months.

Planning:Construction will begin in more than 13 months.

Under Contract

Pipeline



48

US Pipeline: I/C Rooms Increase, But Still Manageable

Phase 2019 2018 % Change

In Construction 204 188 8.2%

Final Planning 231 207 11.5%

Planning 221 218 1.6%

Under Contract 656 614 7.0%

*Total US Pipeline, by Phase, ‘000s Rooms, September 2019 and 2018


Number of I/C Rooms: Hovering Around the +10% Growth Mark

-10

-5

0

5

10

15

20

25

30

35

150

175

200

225

2017 2018 2019

Rooms ('000s) (LHS)

% Change YoY (RHS)

*Total U.S Pipeline, Rooms In Construction and % Change from Same Month Prior Year, 1/2017 – 09/2019

Rooms (000s)% Change


50

Limited Service Construction Is The Name Of The Game

13.8

28.9

62.9 61.0

13.6

3.2

20.3

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated

*US Pipeline, Rooms In Construction , ‘000s Rooms, by Scale, September 2019

69%


51

In Construction Rooms Are Dominated By Two Players: Hilton & Marriott

59%41%Hilton + Marriott

All Other

*US Pipeline, Rooms In Construction, Share of HLT & MAR of total, Q3 2019


52

Total Active Pipeline Rooms: Over 80% Are Branded By The “Big 6”

82%

18%IHG, Choice,Hilton, Hyatt,Marriott,Wyndham

All Other

*US Active Pipeline, Share of IHG, CHH, HLT, H, MAR, WYN of total, Q3 2019


53

Large Markets Grow Rapidly

Market Rooms In Construction % Of ExistingNashville, TN 5,642 12%

New York, NY 13,907 11%

Minneapolis/St Paul, MN-WI 3,233 7%

Miami/Hialeah, FL 3,489 6%

Phoenix, AZ 3,924 6%

Dallas, TX 5,426 6%

Los Angeles/Long Beach, CA 6,117 6%

Boston, MA 3,439 6%

Tampa/St Petersburg, FL 2,712 6%

Las Vegas, NV 9,163 5%

*US Pipeline, Rooms I/C and as % of Existing Supply, Largest % In Top 26 Markets, September 2019


54

Total United StatesSTR Pipeline Attrition RateLong Term Average (2013 – 2016)

65%76%

96%

36%24%

4%

Planning Final Planning In Construction

Opened Abandoned

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Phase Projects Rooms

In Construction 29 3,073

Final Planning 39 4,223

Planning 44 4,557

Total Under Contract Pipeline

112 11,853

Total Virginia State Pipeline, by Project Phase, October 2019

Increases in Supply to Come – Virginia


57

Cities with the most hotel rooms in STR Pipeline

1,157

845712

628 585467

Richmond CharlottesvilleVirginia Beach Herndon Harrisonburg Winchester

Virginia Pipeline, Rooms Under Contract, by city, October 2019


58

Upper Midscale = Most Rooms Coming

80

1,035

2,422

4,536

2,104

836 841

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated

Virginia Pipeline, Rooms Under Contract, by Scale, October 2019


In Construction Properties (29) - Virginia


60

Marriott Virginia Beach Oceanfront

305 Rooms

Open Date: March 2020

Homewood Suites by Hilton Reston

134 Rooms

Open Date: Oct 2020

Residence Inn Richmond

131 Rooms

Open Date: July 2020

Hampton by Hilton Richmond

128 Rooms

Open Date: Sept 2020

Tru by Hilton Ashburn

One Loudoun

125 Rooms

Open Date: Nov 2020

Virginia Pipeline, In Construction, 5 largest by room count, October 2019

Largest In Construction Properties


61

When to Expect the New Rooms in Virginia

183

2,911

3,825

2,065

463

2019 2020 2021 2022 2023

Virginia State Under Contract Pipeline, by room, by projected open date, October 2018

Forecast


63

Notable Calendar Shifts Impacting US Lodging Performance Data in 2019:

Easter: Shift from March to April (also affects Q1/Q2)

Passover: Shift from March to April (also affects Q1/Q2)

Hanukkah: Shift from 12/3 to 12/23, impacting weekly results

Weekend Night: May/Sept/Dec lose. Jul/Aug/Nov gain.

Notable Market Level Events / Comps:

Super Bowl: From Minneapolis to Atlanta

North Carolina: Hurricane Florence 9/14/2018 and thereafter

Florida: Hurricane Michael 10/10/18 and thereafter

California: Wildfires 11/8 through 11/25/2018 and thereafter


64

Nine Years of Super Bowl Performance (RevPAR Growth)

447%

1082%

361%

115%

344%

234%

356%

626%

387%

0%

200%

400%

600%

800%

1000%

1200%

Dallas -2011

Indianapolis -2012

New Orleans- 2013

New York -2014

Phoenix -2015

SanFrancisco -

2016

Houston -2017

Minneapolis- 2018

Atlanta -2019

RevPAR % Change - Friday, Saturday, and Sunday nights of Super Bowl weekend versus same day-of-week prior year


Outlook

Metric2019

Forecast2020

Forecast

Supply 2.0% 2.0%

Demand 1.8% 1.5%

Occupancy -0.2% -0.4%

ADR 1.0% 0.9%

RevPAR 0.8% 0.5%

Total United StatesKey Performance Indicator Outlook (% Change vs. Prior Year)2019F – 2020F


66

- 3% to 1% 1% to 3% 3% to 6%Atlanta, GA Anaheim/Santa Ana, CA Miami/Hialeah, FL

New York, NY Boston, MA Montreal, QCPhiladelphia, PA-NJ Chicago, IL San Francisco/ San Mateo, CA

Tampa/St Petersburg, FL Dallas, TX Vancouver, BCDenver, CODetroit, MI

Houston, TXLos Angeles/Long Beach, CAMinneapolis/St Paul MN-WI

Nashville, TNNew Orleans, LA

Norfolk/Virginia Beach, VAOahu Island, HI

Orlando, FLPhoenix, AZ

San Diego, CASeattle, WA

St Louis, MO-ILWashington, DC-MD-VA

Toronto, ON

2020 Year End RevPAR ForecastTop North American Markets, August 2019 Forecast (Markets sorted alphabetically)

Note: RevPAR Growth forecast estimates are in local currency


67

Virginia – Key Performance Indicator Outlook (% Change vs. Prior Year)2018 – 2019F - 2020F

Outlook

20182019

Forecast2020

Forecast

Occupancy 0.7% -0.4% -2.3

ADR 0.6% -0.1% 0.3

RevPAR 1.3% -0.6% -2.1

Virginia Lodging Industry Forecast


68

October 2019 - Virginia YoY Percent Change

-0.1% 0.7%

-0.6%1.1%

-1.3%


Slow growth: Slow down in RevPAR and Occupancy growth

Travel economy is still resilient: Transient demand strong

Group is holding ADR growth will continue to underwhelm The economy will dictate what happens to the

hotel industry

Virginia (and U.S.) Takeaways:

Hotel Industry Trends for the U.S. and Virginia · -0.4 0.7 0.9 1.6 2.0 2.9 3.4 3.5 4.9 6.2...

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