Financial BenchmarkingFinancial Benchmarking

Your ResortYour Resort&&

U.S. Resort Industry U.S. Resort Industry OverviewOverview

Financial BenchmarkingFinancial Benchmarking

Your ResortYour Resort&&

U.S. Resort Industry U.S. Resort Industry OverviewOverview

Robert MandelbaumRobert Mandelbaumrobert.mandelbaum@pkfc.comrobert.mandelbaum@pkfc.com

Mark WoodworthMark Woodworthmark.woodworth@pkfc.commark.woodworth@pkfc.com

Presented byPresented by

Presentation OutlinePresentation Outline

Industry OverviewIndustry Overview Benchmarking definedBenchmarking defined When did benchmarking start?When did benchmarking start? How to benchmark!How to benchmark! Why use benchmark$Why use benchmark$ Resort financial benchmarkingResort financial benchmarking Uniform System of AccountsUniform System of Accounts Methods of financial comparisonMethods of financial comparison Case studyCase study HRG’s Benchmarker®HRG’s Benchmarker®

U.S. ResortsU.S. ResortsAnnual Change In Total RevenueAnnual Change In Total Revenue

7.1%8.9%

5.2%

8.6%

2.5%

5.0%3.1%

-3.5%

-8.4%

6.5%

-12%

-8%

-4%

0%

4%

8%

12%

1995 1996 1997 1998 1999 2000 2001 2002 2003EST

2004PROJ

Resorts All Hotels

Source: PKF/HRG Trends in the Hotel Industry

U.S. ResortsU.S. ResortsChange In Total Revenue By Change In Total Revenue By

RegionRegion

RegionRegion 20012001 20022002 2003 2003 PreliminaryPreliminary

NortheastNortheast -5.4%-5.4% -6.2%-6.2% -5.8%-5.8%

North CentralNorth Central -1.7%-1.7% 3.6%3.6% -2.8%-2.8%

SoutheastSoutheast -7.6%-7.6% -5.6%-5.6% -1.3%-1.3%

South CentralSouth Central -9.2%-9.2% 3.4%3.4% 0.3%0.3%

Mountain/Mountain/PacificPacific

-9.3%-9.3% -3.3%-3.3% 0.0%0.0%

Source: PKF/HRG Trends in the Hotel Industry

U.S. ResortsU.S. ResortsAnnual Change In Rooms Annual Change In Rooms

RevPARRevPAR

-12%

-8%

-4%

0%

4%

8%

12%

1995 1996 1997 1998 1999 2000 2001 2002 2003EST

2004PROJ

Occupancy ADR All Hotels RevPAR

Source: PKF/HRG Trends in the Hotel Industry

8.1%6.2%

7.7%4.0%

2.5%

8.0%

-8.0%

-4.1%

2.2%3.2%

U.S. ResortsU.S. ResortsAnnual Change InAnnual Change In

Total Revenue And ExpensesTotal Revenue And Expenses

7.1%8.6%8.9%

2.5%

5.2%5.0%3.1%

-3.5%

-8.4%

6.5%

3.1%2.8%

-1.1%

-6.0%

6.7%5.5%4.3%

6.5%4.8%4.3%

-12%

-8%

-4%

0%

4%

8%

12%

1995 1996 1997 1998 1999 2000 2001 2002 2003EST

2004PROJ

Revenues Expenses C.P.I.

Source: PKF/HRG Trends in the Hotel Industry

U.S. ResortsU.S. ResortsAnnual Change In Net Income*Annual Change In Net Income*

17.0% 15.9%

4.4%

13.8%

1.6%

6.9%

3.2%

-10.5%

-14.7%

12.2%

-24%

-18%

-12%

-6%

0%

6%

12%

18%

24%

1995 1996 1997 1998 1999 2000 2001 2002 2003EST

2004PROJ

Resorts All Hotels

Note:* - Before capital reserve, rent, debt service, income taxes, amortization, and depreciation

Source: PKF/HRG Trends in the Hotel Industry

Comparative OperatingComparative OperatingPerformancePerformance

Other Property TypesOther Property TypesFull Limited

2003 Estimates Resorts Service Service ConventionTotal RevPAR $66,257 $36,435 $14,739 $58,417% Rooms Revenue 56.3% 65.5% 96.4% 61.0%% F&B Revenue 33.1% 28.7% N/A 32.2%% Other Operated Revenue 8.8% 3.0% 1.7% 3.0%Total Payroll and Related Costs 33.7% 33.9% 25.5% 32.6%% Operated Dept. Income 54.9% 58.0% 72.1% 58.3%Income Before Fixed Charges 31.2% 30.9% 42.5% 36.8%N.O.I.* % Revenue 23.6% 23.3% 32.5% 27.8%N.O.I.* $ PAR $15,623 $8,502 $4,790 $16,217

% - Percent of total revenue* - Before capital reserve, rent, debt service, and income taxes.

Source: PKF/HRG Trends in the Hotel Industry

Comparative OperatingComparative OperatingPerformancePerformance

Comparable Full-Service HotelsComparable Full-Service HotelsFull

Resorts ServiceAverage Number of Rooms 374 367Occupancy 66.3% 66.9%ADR $154.25 $146.75Total RevPAR $66,257 $55,957% Rooms Revenue 56.3% 63.1%% F&B Revenue 33.1% 31.1%% Other Operated Revenue 8.8% 2.3%Total Payroll and Related Costs 33.7% 35.6%% Operated Dept. Income 54.9% 59.0%Income Before Fixed Charges 31.2% 32.4%N.O.I.* % Revenue 23.6% 25.2%N.O.I.* $ PAR $15,623 $14,049

% - Percent of total revenue* - Before capital reserve, rent, debt service, and income taxes.

Source: PKF/HRG Trends in the Hotel Industry

DefinitionDefinition

“ “bench-mark-ing” bench-mark-ing” Noun Noun (1976): the study of a (1976): the study of a competitor’s product … in competitor’s product … in order to improve the order to improve the performance of one’s own performance of one’s own companycompany

Merriam-Webster’s Collegiate DictionaryMerriam-Webster’s Collegiate Dictionary

When & Who StartedWhen & Who StartedHotel Benchmarking?Hotel Benchmarking?

Harris Kerr & Foster [PKF Consulting]Harris Kerr & Foster [PKF Consulting] Laventhol & HorwathLaventhol & Horwath

Smith Travel Research Smith Travel Research The Hospitality Research Group [HRG]The Hospitality Research Group [HRG]

BenchmarkerBenchmarker®®

The The COMPCOMP Set Set

CompetitiveCompetitive

- Sub Market - Sub Market GeographyGeography

- Top Line- Top Line

- Market Share- Market Share

ComparableComparable / Criteria / Criteria- Also Geography- Also Geography- Occ – ADR – RevPAR- Occ – ADR – RevPAR- Mix of Revenues- Mix of Revenues- Bottom Line - Bottom Line ComparisonComparison * Segment* Segment

* Size* Size * Location* Location

vs.vs.

How To Benchmark!How To Benchmark!

Subject / Pro Forma

'A' 'B' 'C' 'D'

197,000$ vs. 170,000$ 192,000$ 176,000$ 184,000$

+ 9.1% 722,000$ / 4 = 180,500$

Property COMP Set

• Loan ApplicationLoan Application• Insurance – lossInsurance – loss• Tax - reductionTax - reduction• Measure managementMeasure management• BudgetingBudgeting

Why Use Why Use Benchmarking?Benchmarking?

Applying Financial Applying Financial BenchmarkingBenchmarking

To The Hotel IndustryTo The Hotel Industry

Uniform System of AccountsUniform System of Accountsfor the Lodging Industryfor the Lodging Industry

99thth Edition – Current Edition – Current1010thth Edition – Edition – Release in 2004Release in 2004

For Use in 2005For Use in 2005

Common LanguageCommon Language

Operating DepartmentsOperating Departments– Rooms, Food, Beverage, Minor Operated, Rooms, Food, Beverage, Minor Operated,

Rental and Other IncomeRental and Other Income Undistributed DepartmentsUndistributed Departments

– A&G, Marketing, P.O.M., UtilitiesA&G, Marketing, P.O.M., Utilities Fixed ChargesFixed Charges

– Management Fees, Property Taxes, InsuranceManagement Fees, Property Taxes, Insurance

Uniform System of AccountsUniform System of Accounts

Total DollarsTotal Dollars Percent of Department RevenuePercent of Department Revenue Percent of Total RevenuePercent of Total Revenue Dollars Per Available RoomDollars Per Available Room Dollars Per Occupied RoomDollars Per Occupied Room

Methods of Financial Methods of Financial ComparisonComparison

Comparable PropertyComparable PropertySelection CriteriaSelection Criteria

Subject HotelSubject HotelComparable Comparable

CriteriaCriteria

Property Property TypeType

ResortResort ResortResort

GeographyGeography FloridaFlorida SoutheastSoutheast

AffiliationAffiliation Chain Chain AffiliatedAffiliated

Chain Chain AffiliatedAffiliated

RoomsRooms 252252 200 - 300200 - 300

OccupancyOccupancy 67.6%67.6% 60% - 70%60% - 70%

A.D.R.A.D.R. $294.60$294.60 $275 - $325$275 - $325

Comparable PropertyComparable PropertySelection CriteriaSelection Criteria

Subject Subject HotelHotel

ComparablComparable Criteriae Criteria

RecreationRecreation TennisTennis

No GolfNo GolfTennisTennis

No GolfNo Golf

Other Operated Other Operated Dept.Dept.

% Of Total Revenue% Of Total Revenue

6.8%6.8% 5% - 15%5% - 15%

The Hospitality Research GroupThe Hospitality Research Groupof PKF Consultingof PKF Consulting

BenchmarkerBenchmarker®®

……of Hotel Profitsof Hotel Profits

BenchmarkerBenchmarker®®

Customer selects Customer selects propertiesproperties

Choice of 7 Choice of 7 segmentssegments

All U.S. citiesAll U.S. cities 24 hour delivery24 hour delivery $175 on up$175 on up Excel XLS formatExcel XLS format

Thank YouThank You

Contact Information

(404) 842-1150

mark.woodworth@pkfc.com

robert.mandelbaum@pkfc.com