Hotel InduSTRy Overvie€¦ · Hotel InduSTRy Overview Vail R. Brown Vice President, Global Sales &...

2010 Smith Travel Research, Inc.

Hotel InduSTRy Overview

Vail R. Brown

Vice President, Global Sales & Marketing


Agenda: 22 September 2010

• U.S. Hotel Overview

• Chain Scales

• Group vs. Transient

• U.S. Outlook

• Takeaways


Current Reality…Hotel Overview


102,307,179

July 2010The Most U.S. Monthly Rooms Sold – EVER!!!


5.0%

-1.0%

6.7%

1.6%

6.9%

1.9%

8.2%

1.5%

10.6%

2.4%

7.5%

2.1%2.7%

-2.0%

6.7%

1.8%

-5%

0%

5%

10%

15%

Occupancy % Chg ADR % Chg

Aug YTD 8/7 8/14 8/21 8/28 9/4 9/11 9/18

Total United StatesAugust YTD through week of September 18th

Consistent OCC growth…ADR growth sporadic


-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Supply % Change

Demand % Change

Strong Demand Rebound – Supply Slowing

4.3%

2.5%

-4.7%

-6.9%

Total United States: Twelve Month Moving Average 1989 thru August 2010


Phase August 2010 August 2009 Difference % Change

In Construction 58,609 130,471 -71,862 -55.1%

Final Planning 64,317 70,811 -6,494 -9.2%

Planning 237,580 274,239 -36,659 -13.4%

Active Pipeline 360,506 475,521 -115,015 -24.2%

Pre-Planning 96,147 114,986 -18,839 -16.4%

Total 456,653 590,507 -133,854 -22.7%

U.S. Active Development Pipeline - RoomsChange From Last Year

Active Pipeline is Emptying


-10.0

-5.0

0.0

5.0

10.0

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

ADR % Change

Demand % Change

ADR Declines Accelerate In Each Downturn

+0.1%

-4.7%

-8.9%

Total United States: Twelve Month Moving Average 1989 thru August 2010


70

80

90

100

110

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

41 Months

23 Months

Total United States: ADR Twelve Month Moving Average2000 – August 2010

Absolute ADR Will Not Recover for At Least 2 Years

-$3.70

-$10.25


U.S. Chain Scales


STR Chain ScalesSelected chains from each segment

• Luxury – Four Seasons, Ritz Carlton, Fairmont

• Upper Upscale – Hyatt, Embassy, Hilton, Marriott, Kimpton

• Upscale – Hyatt Place, Hilton Garden Inn, aloft Hotel

• Mid with F&B – Best Western, Holiday Inn, Ramada, Quality Inn

• Mid no F&B – Hampton Inn, HI Express, Country Inn & Suites

• Economy – Econolodge, Red Roof, Days Inn


Midscale w/out F&B fastest growing…Upscale segment close 2nd.

1.3

7.5

14.5

4.8

20

2

8.1

0

5

10

15

20

25

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

U.S. Rooms In Construction by Scale – In ThousandsAugust 2010


-12-10

-8-6-4-202468

10121416

Jan 07 Jan 08 Jan 09 Jan. 10

Lux/Upper Up/Upscale

Mid With/Mid Without/Economy

Total US

Upper End Chain Segments Driving Demand Recovery…

U.S. Chain Scales: Demand % Change Monthly thru August 2010


-16

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

8

Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan. 10 July. 10

Luxury/Upper Up/Upscale

Mid With/Mid Without/Economy

Total US

…And ADR Recovery

U.S. Chain Scales: ADR % Change Monthly thru August 2010


$295

$233

$161

$136$120

$106$89 $88$90 $88

$55 $53

Peak Aug. 2010

Lux

UpUp

Up

Mid with

Mid w/o

Econ

$133

$97

Chain Scale ADR Compression: Threat? Opportunity?

US Chain Scales: Actual ADRPeak vs. August 2010


Total US: Outlook Scenario2010F by Chain Scale

2010 Year End Outlook

Chain Scale

Occupancy(% chg)

ADR (% chg)

RevPAR (%chg)

Luxury 8.2 0.3 8.5

Upper Upscale 6.0 -0.7 5.4

Upscale 4.7 -1.2 3.5

Midscale w/ F&B 0.8 -1.6 -0.8

Midscale w/o F&B 3.4 0.8 4.2

Economy 2.8 -3.2 -0.4

Independent 3.6 -0.3 3.4

2010 RevPAR Driven by OCC across all Scales


Group vs. TransientPerformance

Transient Customer: Third party, rack rate, government rate.

Group Customer: Rooms booked in blocks of 10 or more.


35

40

45

50

55

60

65

70

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mill

ion

s

2007 20082009 2010

Transient Room Demand Outpacing Prior Years

US Transient Room Demand by Month, Jan’07 – Aug’10

+3.9mm Rooms


$90

$100

$110

$120


2007 20082009 2010

Transient ADR has a long way to go from 2008 Peak

US Transient ADR By Month, Jan’07 – Aug’10

- $11.48


10

15

20

25

30

35

40


Mill

ion

s

2007 2008

2009 2010

Group Room Demand Lagging. Negative Impact on Transient

US Group Room Demand by Month, Jan’07 – Aug’10

-3.4 mm Rooms


$85

$90

$95

$100

$105

$110


2007 2008

2009 2010

Group ADR: A Rough Road Ahead

US Group ADR By Month, Jan’07 – Aug ’10

- $4.92


$110.10

$99.92

$114.27

$105.37

$99.91$103.93

$100.70$98.72

Transient Group

2007 2008 2009 2010

Actual ADR: Transient premium ranges from >$9 to <$1

Customer Segmentation: Actual ADR ($) Year to date August 2007-2010


US Transient vs. GroupMonthly ADR ($) - Jan 2003 – August 2010

$70

$75

$80

$85

$90

$95

$100

$105

$110

$115

$120

2003 2004 2005 2006 2007 2008 2009 2010

Transient Group

Low Transient Rate will hold Group Rate Hostage


U.S. Industry Outlook


Total United States: Supply & Demand OutlookQuarterly 2010-11 vs. Same Quarter Prior Year

2.7%

5.1%

2.3%

8.7%

2.0%

7.0%

1.7%

5.5%

1.5%

4.1%

1.3%1.7%

1.0%

2.6%

0.8%

1.9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Supply % Chg Demand % Chg

2010Q1 A 2010Q2 A 2010Q3 2010Q4

2011Q1 2011Q2 2011Q3 2011Q4

A AA A

Note: Q1 & Q2 2010 data is actual

Most Demand Growth in Q2 2010


Total United States: Occupancy & ADR OutlookQuarterly 2010-11 vs. Same Quarter Prior Year

2.3%

-4.3%

6.2%

0.0%

4.9%

1.5%

3.8%

1.9%2.6%

3.2%

0.4%

3.5%

1.6%

4.1%

1.1%

5.0%

-5%

-3%

-1%

1%

3%

5%

7%

9%

Occupancy % Chg ADR % Chg

2010Q1A 2010Q2 2010Q32010Q4 2011Q1 2011Q22011Q3 2011Q4

A

A

A

A

Note: Q1 & Q2 2010 data is actual

Growth Strong but Actual Rate will take time


Total US - Occupancy Percent2004 – 2011F

61.3

63.0 63.2 62.8

59.9

54.7

57.157.9

40

45

50

55

60

65

2004 2005 2006 2007 2008 2009 2010F 2011F

2010 & 2011 Still Not at 2004 OCC Levels


$85.10 $83.90 $82.68 $82.79 $86.25 $91.05 $97.96 $104.23$107.18 $97.87

$97.74

$101.55

85.1187.52

88.9190.92

93.36

96.53

99.64

102.48106.41 106.04

108.16 110.21

Nominal ADR

Yr 2000, Grown by CPI

Total US Room RatesActual vs. Inflation Adjusted - 2000 – 2011F

Note: 2010 & 2011 inflation rate forecast from Blue Chip Economic Indicators

If year 2000 ADR had increased by CPI each year…Discounting will be felt for a while.


$102.9$112.1

$103.5 $102.6 $105.3$113.7

$122.7

$133.4$139.4 $140.6

$127.1

$22.1 $22.5$16.2 $14.2 $12.8

$16.7$22.6

$26.6 $28.0 $25.9$16.0

$0

$20

$40

$60

$80

$100

$120

$140

$160

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Revenue Profit

Total United States: Total Revenue and Profitability In Billions – Year End 1999 – 2009

Continually Profitable…Just $9.9B less than 2008!


• Demand is Back, ADR is Not

• Upper End Drives The Recovery

• Group Rate will struggle to grow

• Forecasting Sustained Rate Growth in 2011

Takeaways:


Thank you.

www.hotelnewsnow.com

Click on “Industry Presentations”

Date post:	30-Apr-2020
Category:	Documents
Upload:	others
View:	3 times
Download:	0 times

Hotel InduSTRy Overvie€¦ · Hotel InduSTRy Overview Vail R. Brown Vice President, Global Sales &...

Documents