Master template - Workforce Partners · Title: Master template Author: Jan D Freitag, SVP, STR Created Date: 12/5/2016 7:48:09 AM

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© 2016 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.

U.S. Hotel Industry Performance

Jan D. FreitagSenior Vice President

jan@str.com

@jan_freitag

2© 2016 STR. All Rights Reserved.

• Total US Review

• Scale Review

• Segmentation

• Markets

• Pipeline

• 2016 / 2017 Forecast

Agenda

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www.hotelnewsnow.comData Dashboard>View All Data Presentations

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Total U.S. Review

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October Occupancy -0.3%

Two Things To Get Used To From Now On:Occupancy Declines

and

Vanityfair.com

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October 2016 YTD: Occupancy Declines Start Now

% Change

• Room Supply 1.5%

• Room Demand 1.5%

• Occupancy 67.3% -0.02%

• A.D.R. $125 3.1%

• RevPAR $84 3.0%

• Room Revenue 4.6%

October 2016 YTD, Total US Results

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US October YTD 2016 RevPAR: 3 Markets Dragged US Results

Total US YTD: +3.2%NYC: - 2.9%Miami: - 3.3%Houston: -10.9%

Total US excluding NYC, Miami & Houston: +3.8%

*RevPAR % Change October 2016 YTD

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Demand Growth Slows. Supply Growth Increases To 1.5%.

-0.8

-4.7

-7.1

7.7

-8

-4

0

4

8

1990 2000 2010

Supply % Change

Demand % Change

Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 10/2016

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Declining Occupancies and Rising ADRs Are Not Unprecedented

-4

-2

0

2

4

6

8

1990 1992 1994 1996 1998

OCC % Change

ADR % Change

24 Months

42 Months

Total U.S., ADR & OCC % Change, 12 MMA 1/1990 – 12/1999

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RevPAR Growth: Slowing Down After 6 Yrs. Of Growth

-25

-20

-15

-10

-5

0

5

10

15

1990 2000 2010

Total U.S., RevPAR % Change, 1/1990 – 10/2016

56 Months 80 Months80 Months 31 Mo

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Chain Scale Review

- October YTD -

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(Only) In This Part Of The Cycle: Independents Outperform Brands

-0.6 -0.3 -0.6-0.2 -0.4 -0.6

0.61.5

2.22.8 2.6 2.6

3.5

3.7

Luxury UpperUpscale

Upscale UpperMidscale

Midscale Economy Independents

ADR % Change

Occupancy % Change

*RevPAR % Change by Contribution of OCC / ADR % Change, by Scale, October 2016 YTD

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High End Hotels Still Very Busy (But A Little Less So)

76.1 75.9 75.7

69.5

61.259.4

64.0

76.5 76.2 76.2

69.6

61.459.7

63.7

Luxury UpperUpscale

Upscale UpperMidscale

Midscale Economy Independents

2016 2015

*OCC %, by Scale, October YTD 2016 & 2015

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Segmentation

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Transient ADR Growth: Slow Despite High Occupancy

1.5%

0%

1%

2%

3%

4%

5%

6%

2013 2014 2015 2016

Demand % Change

ADR % Change

*Transient Demand and ADR % Change, 12 MMA, 1/2013 – 10/2016

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No Group Demand Growth To Speak Of

0.2%

-2%

-1%

1%

2%

3%

4%

5%

6%

2013 2014 2015 2016

Demand % Change

ADR % Change

*Group Demand and ADR % Change, 12 MMA, 1/2013 – 10/2016

Jewish Holiday Shift

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Markets

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October 2016 : New Supply Hits NYC, Houston, Miami.

Market OCC % ADR % Change

Los Angeles/Long Beach, CA 83.2 8.9

Nashville, TN 76.8 6.0

Atlanta, GA 71.8 5.9

Denver, CO 76.8 5.9

Tampa/St Petersburg, FL 73.1 5.9

Chicago, IL 71.0 0.9

New Orleans, LA 70.3 0.2

Miami/Hialeah, FL 76.5 -2.0

Houston, TX 63.9 -3.2

New York, NY 85.5 -3.7

* October 2016 YTD ADR % Change in Top 25: 5 Best / 5 Worst Performing ADR % Markets

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NYC

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-4.1 -4.3

-2.4

-6.5

3.2

-4.5 -4.9 -4.0

-1.5 -1.7

-3.7

-7.5

Nov Dec Jan Feb Mar Apr May Jun July Aug Sept Oct

NYC Monthly RevPAR % Change: All Bad, All The Time

* NYC RevPAR % Change, by Month, 11/2015 – 10/2016

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NYC: No Pricing Power Anywhere

Scales OCC % Occ % Change ADR ADR % Change RevPAR % Change

Luxury 80.7 -2.3 $440 -3.2 -5.5

Upper Upscale 86.8 -1.1 $273 -3.6 -4.7

Upscale 90.1 -0.5 $231 -3.2 -3.7

Upper Midscale 87.1 2.9 $185 -1.8 1.1

Midscale 84.9 0.9 $154 -2.4 -1.6

Independents 84.1 0.9 $246 -2.7 -1.9

* NYC , Chain Scale KPIIs, 12 MMA October 2016

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Pipeline

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US Pipeline: We will Look Back At This Moment And Realize This Is When Overbuilding Happened

Phase 2016 2015 % Change

In Construction 183 138 33%

Final Planning 192 175 10%

Planning 178 141 27%

Under Contract 554 454 22%

*Total US Pipeline, by Phase, ‘000s Rooms, October 2015 and 2016

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Limited Service Construction Is The Name Of The Game

7.2

23.3

60.6 58.0

7.53.2

23.6

Luxury UpperUpscale

Upscale UpperMidscale

Midscale Economy Unaffiliated

*US Pipeline, Rooms Under Construction , ‘000s Rooms, by Scale, October 2016

65%

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Construction In Top 26 Markets: 23 With 2%+ Of Supply

*US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, October 2016

Market Rooms U/C % Of Existing

Orlando, FL 1,183 1%

Norfolk/Virginia Beach, VA 456 1%

Oahu Island, HI 410 1%

St Louis, MO-IL 842 2%

Minneapolis/St Paul, MN-WI 915 2%

Las Vegas, NV 3,979 2%

Washington, DC-MD-VA 3,356 3%

Atlanta, GA 3,016 3%

Chicago, IL 3,827 3%

Phoenix, AZ 2,131 3%

San Francisco/San Mateo, CA 1,829 4%

San Diego, CA 2,266 4%

Detroit, MI 1,611 4%

Anaheim/Santa Ana, CA 2,381 4%

Tampa/St Petersburg, FL 1,976 4%

Boston, MA 2,608 5%

New Orleans, LA 1,909 5%

Los Angeles/Long Beach, CA 5,397 5%

Miami/Hialeah, FL 3,296 6%

Philadelphia, PA-NJ 2,870 6%

Houston, TX 5,747 7%

Dallas, TX 6,501 8%

Nashville, TN 3,267 8%

Denver, CO 4,368 10%

Seattle, WA 5,047 12%

New York, NY 16,546 15%

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Upscale Hotels:

In Search Of The Ideal Occupancy

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Upscale Hotels:Maximum GOP (47.9%) at Occupancy of 75.1%

Upscale Hotels, ADR Bucket of $120, Sliding Occ and GOP %, 2015 HOST Almanac

Peak GOP %

Occupancy %

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A Good Hotel Is A Sold Out Hotel? Not True!!!

Service

Level

Class ADR Range Maximum

GOP %

Ideal

Occupancy

Full-

serv

ice

Luxury $175 - $210 40.2% 82.4%

Upper Upscale $140 - $160 39.7% 84.6%Upscale $120 - $140 47.9% 75.1%

Lim

ite

d-

serv

ice

Upscale $120 - $140 50.3% 80.2%

Upper Midscale $80 - $100 40.5% 71.4%Midscale/Economy $40 - $60 54.2% 78.6%

Based on 2015 HOST Almanac data of 5,000+ hotels

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2016 / 2017 Forecast

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Lower International Favorability Of US Hurts Travel To US

R² = 0.1969

0

1

2

3

4

5

6

7

8

-80% -60% -40% -20% 0% 20% 40% 60%

Arrivals performance vs favorabilityPew net favorability index, 2006

Source: Tourism Economics, Pewchange in arrivals to US, 2006/2000

India

Brazil

Hong Kong

Germany

Argentina

France

S Korea

Spain

Australia

Denmark

Russia

Ireland

China

Mexico

Netherlands

Sweden

Canada

UKItaly

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Total United StatesKey Performance Indicator Outlook (% Change vs. Prior Year)2016 - 2017

Outlook

2016Forecast

2017Forecast

Supply 1.6% 2.0%

Demand 1.6% 1.6%

Occupancy 0.0% -0.3%

ADR 3.2% 3.1%

RevPAR 3.2% 2.8%

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Total United StatesChain Scale Key Performance Indicator Outlook 2016F by Chain Scale

2016 Year End Outlook

Chain ScaleOccupancy

(% chg)ADR

(% chg)RevPAR(% chg)

Luxury -0.4% 2.8% 2.3%

Upper Upscale -0.1% 3.0% 2.9%

Upscale -0.4% 3.0% 2.6%

Upper Midscale -0.1% 2.8% 2.7%

Midscale -0.3% 2.8% 2.5%

Economy -0.5% 3.3% 2.8%

Independent 0.4% 3.3% 3.6%

Total United States 0.0% 3.2% 3.2%

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Total United StatesChain Scale Key Performance Indicator Outlook 2017F by Chain Scale

2017 Year End Outlook

Chain ScaleOccupancy

(% chg)ADR

(% chg)RevPAR(% chg)

Luxury -0.3% 3.5% 3.2%

Upper Upscale -0.3% 3.4% 3.0%

Upscale -1.1% 2.7% 1.5%

Upper Midscale -0.8% 2.7% 1.9%

Midscale 0.1% 2.7% 2.8%

Economy 0.0% 2.6% 2.6%

Independent -0.4% 3.2% 2.8%

Total United States -0.3% 3.1% 2.8%

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Questions?

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© 2016 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.