Hotel Performance: Must have insights€¦ · Hotel Performance: Must have insights Robin Rossmann,...
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Hotel Performance: Must have insights Robin Rossmann, Managing Director at STR
Transcript of Hotel Performance: Must have insights€¦ · Hotel Performance: Must have insights Robin Rossmann,...
Hotel Performance: Must have insights
Robin Rossmann, Managing Director at STR
Agenda
1. Demand for hotels significantly up across the world
2. Middle East hotels weathering the perfect storm?
3. Pick of the resorts
4. UAE - demand continues to deliver
Demand for hotels significantly up across the world
Significant demand growth across the world2017 supply & demand % change
1.9%
1.2%
2.6%
0.8%
5.2%
1.3%
3.3%
1.6%
2.8%3.3%
4.9%
3.2%
4.0%
7.0%
6.2%
2.5%
North America &Caribbean
Central America South America Europe Middle East Africa Asia Australia & Oceania
Supply Demand
2017 RevPAR up everywhere, with the exception of the Middle EastUSD Constant Currency, Full year 2017
NorthAfrica+38%
Sea of positivity across EuropeConstant Currency, Full Year 2017 RevPAR % Change
Europe 2017 occupancies now almost 10% above previous peakOccupancy 2008, 2016 & 2017
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
January February March April May June July August September October November December
2017 2016 2008
Thanks to 7 years of limited supply and good demand growthEurope – Supply, Demand, RevPAR % Change
0%
5%
10%
2011 2012 2013 2014 2015 2016 2017
Supply % change Demand % change RevPAR % change
USA insert
US Concerns…. Trumped upDespite many uncertainties, US RevPAR should grow 3%
0%
5%
10%
2011 2012 2013 2014 2015 2016 2017 2018 (F)
Supply % change Demand % change RevPAR % change
Intra-APAC travel continues to drive demandAsia Pacific – Supply, Demand % Change, RevPAR % Change, USD, CC, Full Year 2011-2017
-2%
0%
2%
4%
6%
2015 2016 2017
Supply % change
Demand % change
RevPAR % change
Conclusion
Globally, hotel performance has and should continue to grow strongly due to strong fundamental
demand drivers.
This is despite the headwinds of hotel supply growth, the rise of alternative accommodation and
continued global political uncertainty.
Middle East Hotels weathering the perfect storm?
Economic downturn Traveller perceptions Supply increase
The three things that keep hotel investors up at night…
What do the following destinations have in common (it’s not the weather)Aberdeen
Abu DhabiRiyadh Dubai
Houston
The oil prices decline hurt… but this recovery is certainly helpingRevPAR change USD Constant Currency, Full Year 2010 - 2017
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
2014 2015 2016 2017
Oil Price Aberdeen Abu Dhabi Dubai Riyadh Houston
-15%
-10%
-5%
0%
5%
10%
15%
2011 2012 2013 2014 2015 2016 2017
Supply % change Demand % change RevPAR % change
Middle East supply growth has outpaced demand for the past 3 yearsUSD Constant Currency, Full Year 2011-2017
105,616 more rooms by
2020
489 seats on A380 & 4 days Length of Stay
42 more A380s daily in
the sky
Significant supply growth is still on the way across the Middle EastDemand will need to grow significantly to keep pace
… but supply growth has differed on a market by market basisFull Year 2017, Supply % Change
0% 2% 4% 6% 8% 10%
Manama
Beirut
Cairo
Abu Dhabi
Muscat
Amman
Doha Central
Kuwait City
Dubai
Ras Al-Khaimah
Hundreds
… and future supply growth will also vary significantly by marketSupply Pipeline
… and will also vary significantly by location in marketsSupply Pipeline
2022
Cairo 72
Beirut 18
Amman -10
Jeddah -11
Riyadh -6
Muscat -5Abu Dhabi -4
Doha-19Manama -10
Dubai -3 Ras Al-Khaimah-4
Kuwait City 4
Unsurprisingly, 2017 has been a tough year in many marketsFull Year 2017, RevPAR % Change, Local Currency
Some smaller markets have fared better, but not all….USD, RevPAR % Change, Full Year 2017
Fujairah0
Sharjah2
Al Khobar/ Dammam-15Aqaba-1
Dead Sea2
Ajman 8
Al Ain-25
Salalah12
Yanbu -19
2018 has started with some green shoots but other markets remain challengedQ12018, RevPAR % Change, Local Currency
-28.0
-15.4
-8.3-3.7 -2.2
1.1 2.04.4
7.210.4
25.2
-40%
-30%
-20%
-10%
0%
10%
20%
30%
Doha Centre Jeddah Manama Abu Dhabi Dubai Beirut Muscat Ras Al-Khaimah
Riyadh Amman Kuwait City
Conclusion
Middle East hotel markets are incredibly profitable but has had a challenging last three years.
Performance does appear to be stabilising in markets without severe supply increases and should
be helped by the oil price recovery.
Pick of the resorts
The Gulf and Indian Ocean has compelling resort marketsWhich would you pick?
Occupancy – Mauritius, Dubai & Ras Al Khaimah come out tops2017 Occupancy (Dubai, Oman & Sri Lanka are resort hotels only)
ADR and RevPAR – Maldives, Dubai & Seychelles move to the topUSD, ADR and RevPAR, Full Year 2017
USD 0
USD 100
USD 200
USD 300
USD 400
USD 500
USD 600
USD 700
Sri Lanka Resorts Goa Ras Al-Khaimah Oman Resorts Mauritius Seychelles Dubai Resorts Maldives
ADR RevPAR
Long-term performance – Goa, Mauritius & Sri Lanka growing the mostRevPAR Indexed from 2011 to 2017
0.5
1.0
1.5
2017201620152014201320122011
Goa Maldives Mauritius Sri Lanka Seychelles Dubai Resorts Oman Ras Al-Khaimah
Strong performers: Goa, Mauritius & Maldives
Stable performance: Ras Al-Khaimah
Recovering: Seychelles & Sri Lanka
In decline: Dubai & Oman
Conclusion
Resort markets are showing strong growth around the world.
The Gulf and Indian Ocean has compelling options both for customers and investors…
UAE - demand continues to deliver
Dubai supply has doubled in the last 10 years – but so has demand12 MMA, December 1996 – December 2017
AED 100
AED 200
AED 300
AED 400
AED 500
AED 600
AED 700
AED 800
AED 900
AED 1,000
0
5
10
15
20
25
30
35
40
Mill
ion
s
Supply Demand RevPAR
Source: Business Insider
Dubai is now the 4th most visited city in the worldVisitors in Millions, 2017
20.2 20.0
16.1 16.0
13.512.5 12.4 12.4 12.1
9.3
Bangkok London Paris Dubai Singapore Tokyo Seoul New York Kuala Lumpur Hong Kong
International Overnight Visitors
Occupancy has risen across the UAE despite significant supply increasesOccupancy, Full Year 2010-2017
55%
60%
65%
70%
75%
80%
85%
2010 2011 2012 2013 2014 2015 2016 2017
Abu Dhabi Dubai Ras Al Khaimah Sharjah Al Ain Fujairah
# Compression Nights (>90% Occ) ADR Premium
2010 2017 2017
Abu Dhabi 1 25 67%
Ras Al-Khaimah 8 29 41%
Dubai 16 52 41%
Note: ADR premium compares compression nights (>=90% occupancy) compared to all other days
Despite supply increases, compression nights have grownFull Year 2017 vs 2010
Individual hotels can and have outperformed the marketDubai individual hotel 2017 Occ and ADR % Change
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
-20% -15% -10% -5% 0% 5% 10% 15% 20%
Occ % Change
ADR % Change
-10%
-5%
0%
5%
10%
15%
20%
Dubai Abu Dhabi
Occupancy ADR RevPAR F&B + Other Total Revenue
Strong F&B revenues have also helped total revenue growth to remain +’veFull Year 2017, % Change, Local Currency
Conclusion
The UAE has absorbed new supply well, with occupancies remaining strong. ADR has come
under pressure and this is likely to remain challenging as supply continues to grow.
Good revenue management and focus on total revenues will enable individual properties to
outperform.
