2011 Smith Travel Research, Inc.1 Southern Lodging Summit 2011 Jan D. Freitag Senior Vice President.

2011 Smith Travel Research, Inc. 1

Southern Lodging Summit 2011

Jan D. Freitag

Senior Vice President


Agenda• US Hotel Trends• Chain Scale Trends• Segmentation• US Forecast• Memphis Trends• AH&LA Channel Study – A First Look

Smith Travel Research, Inc. and/or STR Global, Ltd. (collectively for these purposes, “STR”) are the exclusive owners of all rights in these Industry Presentations and their content. Reproduction of all or a portion of these presentations for any purpose without prior approval of STR is strictly prohibited.


2011 / 2012

Recovery? Or Recovery!


Total US - Key StatisticsYTD July 2011

% Change• Hotels 52k • Room Supply 1.0 bn 0.8%• Room Demand 622 mm 5.4%• Occupancy 60.7% 4.6%• A.D.R. $101 3.5%• RevPAR $61 8.2%• Room Revenue $63 bn 9.1%


19891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011-9

-6

-3

0

3

6

9

Supply Demand

Strongest Demand Rebound Ever. Supply Line Turning

- 6.9%

-0.9%

- 4.7%

*Total US, Supply & Demand % Change, 12 MMA 1/89 – 7/11

6.5%


19891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011-12

-9

-6

-3

0

3

6

9

ADR Demand

ADR Changes Get More Erratic in Each Downturn

- 8.8%

-0.1%

- 4.5%

*Total US, ADR & Demand % Change, 12 MMA, 1/89 – 7/11

2.8%


$85.10 $83.90 $82.68 $82.79 $86.25 $91.06 $97.98 $104.26 $107.30 $98.17 $98.08 $102.21 $109.16

$85.11 $87.52

$88.91 $90.92

$93.36

$96.53

$99.64

$102.48

$106.41 $106.04 $107.63

$109.46 $111.54

Nominal ADR

Yr 2000, Grown by CPI

If year 2000 ADR had increased by CPI each year…

Note: 2011 & 2012 CPI forecast from Blue Chip Economic Indicators


On An Annualized Basis: Most Rooms Sold - EVER

19891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011720,000,000.0

770,000,000.0

820,000,000.0

870,000,000.0

920,000,000.0

970,000,000.0

1,020,000,000.0

*Number of Rooms Sold, 12 MMA, 1/89 – 7/11


Chain Scales


• Luxury – Four Seasons, Ritz Carlton, W Hotels, InterContinental

• Upper Upscale – Hyatt, Embassy Suites, Hilton, Marriott, Sheraton

• Upscale – Hyatt Place, Hilton Garden Inn, Courtyard, Hotel Indigo

• Upper Midscale – Best Western PLUS/Premier, Hampton Inn

• Midscale – Best Western, Country Inn & Suites, La Quinta Inn

• Economy – America’s Best Inn, Econolodge, Red Roof, Days Inn

2011 STR Chain Scales(Selected chains from each segment)


Demand Rebounds Nicely.Supply Growth in Upscale / UpMid.

Luxury Upper Upscale

Upscale Upper Midscale

Midscale Economy-9

-7

-5

-3

-1

1

3

5

7

9

11

2.0 1.82.7

4.5

-7.5

0.0

7.5

4.6

7.2

10.2

-4.2

4.2

Supply

Demand

*US Chain Scales, Supply & Demand % Change, YTD 7/11


Healthy OCC Growth “Should” Lead to ADR Increases



Midscale Economy

5.4

2.7

4.4

5.4

3.54.2

6.4

3.83.5

3.1

-0.8

1.5

OccupancyADR

*US Chain Scales, Occupancy & ADR % Change, YTD 7/11


Selling 7 out of 10 Rooms “Should” Lead to ADR Increases



Midscale Economy

70.6 70.4 70.1

62.2

54.1 54.1

*US Chain Scales, Absolute Occupancy % , YTD 7/11


After 4 Years Prior Peak ADRs Still Elusive



Midscale Economy

$287

$159

$122

$91$75

$53

$254

$147

$111 $94

$73

$50

YTD June '07

YTD July '11

*US Chain Scales, ADR $, YTD 6/07 vs. YTD 7/11


Segmentation Data


Transient Demand Rebounds Nicely, But …

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec40,000,000

50,000,000

60,000,000

70,000,000

2007

2010

2011

* Total Transient Demand in Millions of Rooms, 1/07 – 7/11.

Mill

ion

s


… At What Cost?

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec$95

$100

$105

$110

$115

$120 2007 2008 2010 2011

* Transient ADR $, 1/07 – 7/11


Group Demand Recovers Nicely, But …

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

2007 2010 2011

* Total Group Demand in Millions of Rooms, 1/07 – 7/11


… Low Group ADR Will Take (At Least) A Year To “Burn Off”

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec$90

$100

$110 2007 2008 2010 2011

* Group ADR $, 1/07 – 7/11


US Forecast


Total United StatesOutlook Scenarios (% change vs. Prior Year)2011P

Hotel Industry Performance Scenarios

2011

Low RevPARGrowth Forecast

High RevPARGrowth

Supply 0.9 0.7 0.4

Demand 4.0 4.7 5.3

Occupancy 3.2 3.9 4.6

ADR 3.2 3.7 4.5

RevPAR 6.5 7.8 9.1


Total United StatesChain Scale Key Performance Indicator Outlook 2011F by Chain Scale

2011 Year End Outlook

Chain Scale

Occupancy(% chg)

ADR (% chg)

RevPAR (%chg)

Luxury 4.7 6.7 11.7

Upper Upscale 2.6 5.0 7.7

Upscale 3.7 4.7 8.6

Upper Midscale 4.8 4.2 9.4

Midscale 4.0 0.1 4.1

Economy 2.9 2.0 5.4

Total United States 3.9 3.7 7.8


Total United StatesOutlook Scenarios (% change vs. Prior Year)2012P

Hotel Industry Performance Scenarios

2012

Low RevPARGrowth Forecast

High RevPARGrowth

Supply 0.8 0.5 0.3

Demand 2.0 2.5 2.9

Occupancy 1.3 2.0 2.7

ADR 4.3 4.9 5.7

RevPAR 5.6 7.0 8.4


Total United StatesChain Scale Key Performance Indicator Outlook 2012F by Chain Scale

2012 Year End Outlook

Chain Scale

Occupancy(% chg)

ADR (% chg)

RevPAR (%chg)

Luxury 2.5 7.7 10.2

Upper Upscale 1.6 5.0 6.7

Upscale 3.6 6.8 10.4

Upper Midscale 1.4 5.6 6.5

Midscale 2.5 2.3 4.8

Economy 2.5 3.0 5.5

Total United States 2.0 4.9 7.0


Hotel Industry Forecasts – STR Revisions

2011 2012

Demand ADR Demand ADR

Jan 11 2.5 4.2 2.2 6.8

Jun 11 4.6 4.0 2.5 6.0

Aug 11 4.7 3.7 2.5 4.9


Takeways

• Demand Is Back• ADR’s “Should” Follow Strong Demand • Trust The Data


Memphis Trends


% Change

• Hotels 246• Room Supply 4.9 mm 0.5%• Room Demand 2.9 mm 3.4%• Occupancy 59.6% 2.9%• Average Daily Rate $76 - 0.1%• RevPAR $45 2.8%

Memphis, TN - Key StatisticsYTD July 2011


2007

2008

2009

2010

2011

-8.0

-4.0

0.0

4.0

8.0 Supply % Change

Demand % Change

Supply Growth Muted - Strong Demand Rebound

9.0%

4.1%

1.0%

-6.5%

* Memphis, Supply & Demand % Change, 12 MMA, Jan ’07– July ’11

4.9%


2007

2008

2009

2010

2011

-8.0

-4.0

0.0

4.0

8.0

12.0 ADR % Change

Demand % Change

ADR % Change Has Not Yet Turned Positive

10.2%

-6.7%

* Memphis, ADR & Demand % Change, 12 MMA, Jan ’00 – July ’10

-1.6%


2007 2008 2009 2010 201175

80

85

* Memphis ADR, 12 MMA, Jan ’07 – July ’11

Absolute ADR Discounts Will Be Felt For A While

-10%

$84

$76


Memphis Downtown Select Set

•Springhill Suites Memphis Downtown

•Madison Hotel

•Sleep Inn @ Court Square Memphis

•Hampton Inn Suites Memphis @ Beale Street

•River Inn Of Harbor Town

•Courtyard Memphis Downtown

•Residence Inn Memphis Downtown

•Westin Memphis Beale Street

•King`s Court Motel

•Holiday Inn Select Memphis Downtown

•Marriott Memphis Downtown

•Preferred The Peabody Memphis

•Comfort Inn Downtown Memphis

•Econo Lodge Memphis

•Doubletree Hotel Memphis Downtown

•Benchmark Hotel


% Change

• Hotels 16• Room Supply 612 k 0.1%• Room Demand 413 k 1.0%• Occupancy 67.6% 1.0%• Average Daily Rate $129 0.1%• RevPAR $87 1.0%

Memphis Downtown Select Set - Key StatisticsYTD July 2011


2007

2008

2009

2010

2011

-8.0

-5.0

-2.0

1.0

4.0

7.0

10.0

ADR % Change

Demand % Change

Downtown Discounts Continue

6.8%

-7.2%

* Select Set, ADR & Demand % Change, 12 MMA, Jan ’07 – July ’11

-2.1%

-4.7%


AH&LA Channel Study- A First Look -



Agenda

Introduction

US Data

Scale Data

Other Examples


Channels

• Brand.com – Marriott.com, Starwood.com, hotel’s own web site

• CRS/Voice – 1-800-hiltons, 1-800-ichotels, 3rd parties also

• GDS – travel agent (Sabre, Galileo, Amadeus, Worldspan)

• OTA – online travel agents

• Property Direct/Other – walk-in, group/rooming list,

employee/discount, contract


Participation

• 24,500 properties submitted data

• All of the major players– 95 chains

– 25 additional companies


US Data


Demand & Revenue Share (%) by Channel

Brand.com17

CRS /Voice13.7

GDS7.9

Prop-erty

Direct /Other51.6

OTA9.8

Demand Share

Total US, 2010

Brand .com

19.4

CRS /Voice17.4

GDS10.4

Property Direct /Other45.6

OTA7.2

Revenue Share


OTA Demand & Revenue Share (%) by Business Model

Merchant Retail Opaque

6.4

0.7

2.1

6.6

0.9

2.3

Demand Share

20092010

Total US, 2009 & 2010


5.0

0.91.2

4.9

1.11.3

Revenue Share

20092010


ADR ($) by Channel

OTA Brand.com CRS/Voice GDS Prop Direct/Other

Total

75

110

124127

87

98

73

112

125129

87

98

2009 2010

Total US, Annual 2009 & 2010


ADR ($) by OTA Business Model


76

119

55

73

119

55

2009 2010

Total US, 2009 & 2010


Absolute Room Demand by Channel (in millions)


Total

87

156 13673

489

940

99

172138

80

522

1,011

2009 2010

Total US, 2009 & 2010


Absolute Revenue by Channel (in billions $)


Total

6.5

17.2 16.9

9.3

42.5

92.4

7.2

19.2 17.2

10.4

45.2

99.2

2009 2010

Total US, 2009 & 2010


Scale Data


Property Direct/Other Demand Share (%) by Scale



Midscale Economy Inde-pen-dents

33 31

41

52

63

77

52

3431

41

52

62

76

52

2009 2010

Percent of Total Demand, Annual 2009 & 2010


GDS Demand Share (%) by Scale



Midscale Economy Inde-pen-dents

11

12

14

10

5

1

6

1313

15

10

5

1

6

2009 2010



Brand.com Demand Share (%) by Scale



Midscale Economy Inde-pen-

dents

20

25

2221

15

1112

20

25

2221

15

10

13

2009 2010



CRS/Voice Demand Share (%) by Scale




dents

26 25

16

12

7

4

17

2524

15

10

7

4

17

2009 2010


Higher percentages in upper scales & IndependentsYOY decrease for most every scale


OTA Demand Share (%) by Scale




dents

9.2

8.07.2

6.1

10.8

7.5

12.9

8.17.5 7.2

6.8

11.5

10.0

13.22009 2010



ADR for Luxury Scale by Channel

OTA Merchant

OTA Retail

OTA Opaque

Brand.com CRS/Voice GDS Prop Di-rect/Other

Total

179

244

93

228

257273

243 239

195

257

100

238

258

274

241 244

2009 2010

Annual 2009 & 2010


Additional Data


Top 10 Markets - OTA Demand %Annual 2010, OTA demand as % of total demand

San Antonio

Fort Myers

Ft. Lauderdale

Seattle

San Diego

LA

Oahu

NYC

SF

Orlando

10.1

10.2

10.3

10.5

11.2

11.2

11.3

11.5

11.5

11.8


Channel ADR ($) for 5 Metro Markets

Boston NYC Miami SF LA

110

178

100 9783

149

242

148139

124

162

246

183

159

138

160

285

176 169

149

126

209

127 120102


Annual 2010


Comp Sets

• Generated US comp set data

• 9,000 full comp sets

• 21,000 sufficient (greater than 4 hotels participating)


Channel Demand Share for Sample Property in NY


8

26

17

12

38

7

2527

16

24

7

27

24

17

25

7

2625

18

24

Subject Comp Set Tract Scale Market Scale

Demand Share as percent of Total Demand, Annual 2010


Length of Stay Data

• Most companies submitted “Number of Reservations” along with “Room Nights” and “Revenue”

• Allows us to calculate Length of Stay per Channel


Length of Stay (Days) by Channel

Upper Upscale Upscale

2.1 1.91.7 1.7

2.6

2.2

2.7

2.32.6 2.5

3.5

2.9

OTA Merchant/Retail OTA Opaque Brand.com CRS/Voice GDS

Prop Direct/Other

Upper Upscale / Upscale Chains, Annual 2010


Channel Study

• Findings to be published in mid-September

• Corporate monthly product in H1 of 2012

• Property Comp Set product out thereafter

• More research is needed


www.hotelnewsnow.com

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2011 Smith Travel Research, Inc.1 Southern Lodging Summit 2011 Jan D. Freitag Senior Vice President.

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