8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
1/28
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
2/28
Agenda
Total US Overview Scales and Major Markets
Pipeline Projections
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
3/28
U.S. Lodging Industry - Key StatisticsJune 2008 YTD (Prelim)
% Change Hotels 49,672 2.0% Room Supply 4.5mm 2.2% Room Demand 2.7mm - 0.4% Occupancy 61.5% - 2.6% A.D.R. $107.62 4.3% RevPAR $66.15 1.6% Room Revenue $54.3B 3.9%
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
4/28
-6
-4
-2
0
2
4
6
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Supply % ChangeDemand % Change
Total United StatesRoom Supply/Demand Percent ChangeTwelve Month Moving Average 1989 to May 2008
5.1%
0.6%
4.0% 4.2%
- 4.8%
1.8%
1.0%
A Year Ago Fundamentals Were Worse
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
5/28
-8
-6
-4
-2
0
2
4
6
8
10
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Occ % ChgADR % Chg
Total United StatesOccupancy/ADR Percent ChangeTwelve Month Moving Average 1989 to May 2008
-0.7%
5.4%
6.8% 7.6%
ADR Growth Is Slowing. But Not Dropping Rapidly
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
6/28
-5
0
5
10
2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 J F M AM
Total United StatesRoom Rate Percent ChangeJan 2003 May 2008
Summer Rate Growth Will Be Closely Watched
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
7/28
-2.2%
4.5%
-5.8%
-3.9%
3.0%
-3.4%
3.3%
-2.0%
4.7%
1.8%
5.4%
-9.6%
0.6%
4.0%
-15%
-10%
-5%
0%
5%
10%
Occupancy % Chg ADR % Chg
May YTD 6/7 6/14 6/21 6/28 7/5 7/12
Total U.S.Occupancy and ADR Percent ChangeYTD through 7/5
July 4 th Timing Helped and Hurt
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
8/28
Chain Scales and Major Markets
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
9/28
3.3 3.3
5.8
-2.6
5.0
2.21.7 1.9
3.6
-6.1
2.2
-1.2
-10
-5
0
5
10
Luxury Upper Upscale
Upscale Mid w F&B Mid wo F&B Economy
SupplyDemand
Chain ScalesSupply/Demand Percent ChangeMay 2008 YTD
Healthy Demand Growth, Except in Two Scales
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
10/28
3.2
5.0
2.4
-1.5-3.3
-2.2-3.5
-1.4
-2.5
3.33.2
4.5
-5
0
5
10
Luxury Upper Upscale
Upscale Mid w F&B Mid wo F&B Economy
OccupancyADR
Chain ScalesOccupancy/ADR Percent ChangeMay 2008 YTD
Rate Growth Around / Above Inflation Except for Economy Segment
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
11/28
0
4
8
Luxury Upper Upscale Upscale Mid With Mid W/O Economy
Chain ScaleADR Percent ChangeTwelve Month Moving Average January 2008 To May 2008
Upper End Scales See ADR Deteriorate But at a High Level
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
12/28
-3.8
-3.2
-2.4
-2.2
-2.2
-2.0
-1.4
-1.0
0.1
0.4
1.4
1.8
1.9
1.5
-8.2-4.5
-4.4
-10 -8 -6 -4 -2 0 2 4
Phoenix, AZ
Philadelphia, PA-NJ
Atlanta, GA
Dallas, TX
Chicago, IL
Los Angeles-Long Beach, CA
All Other Markets
Total United States
Top 25 Markets
Washington, DC-MD-VA
San Diego, CA
New York, NY
Orlando, FL
Oahu Island, HI
Boston, MA
Miami-Hialeah, FL
San Francisco/San Mateo, CA
Key 15 MarketsOccupancy Percent ChangeMay 2008 YTD Year over Year
Coastal OCC Holds So Far
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
13/28
2.3
2.7
3.4
3.9
3.9
4.3
4.5
4.8
5.5
5.7
5.8
5.9
6.5
7.3
7.7
5.3
1.8
0 4 8
Miami-Hialeah, FLAtlanta, GA
Orlando, FL
Washington, DC-MD-VA
All Other Markets
San Diego, CA
Dallas, TX
Total United States
Oahu Island, HI
Top 25 Markets
Los Angeles-Long Beach, CA
Boston, MA
Philadelphia, PA-NJ
Phoenix, AZ
San Francisco/San Mateo, CA
Chicago, IL
New York, NY
Key 15 MarketsADR Percent ChangeMay 2008 YTD Year over Year
Strong Rate Growth Bodes Well for The Summer
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
14/28
Exchange Rate Impacton 2007 ADR % Change
ADR $ % Change Currency % Change
Atlanta, GA 12.7% Euro 3.4%Boston, MA 6.3% Euro -2.5%
New York, NY 10.6% Euro 1.4%Orlando, FL -0.7% Euro -8.9%
Washington, DC-MD-VA 3.7% Euro -4.8%
Los Angeles-Long Beach, CA 9.0% Yen 4.0%Oahu Island, HI 7.4% Yen 2.5%San Diego, CA 2.9% Yen -1.9%
San Francisco/San Mateo, CA 5.7% Yen 0.8%
America Is On Sale!
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
15/28
U.S. Pipeline
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
16/28
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 J FMAM
Total United StatesRoom Supply Percent ChangeJan 2003 May 2008
Summer Will See More Supply Increases
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
17/28
Total United StatesActive Development Pipeline (Thousands of Rooms)Change From Last Year
Source: STR / TWR / Dodge Construction Pipeline
Phase May 2008 May 2007 Difference % Change
In Construction 206 189 + 17 9.3%
Final Planning 106 50 + 56 112.3%
Planning 359 302 + 57 19.0%
Active Pipeline 672 541 + 131 24.2%
Pre-Planning 159 94 + 64 67.9%
Total 831 636 + 195 30.7%
U/C Rooms Off The High of Dec. 2007
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
18/28
Total United StatesRooms In Construction by Scale In ThousandsMay 2008
7.3
23.9
52.1
58.8
9.3 11.3
43.9
0
10
20
30
40
50
60
Luxury Upper Upscale Upscale Mid w F&B Mid w/o F&B Economy Unaffiliated
Source: STR / TWR / Dodge Construction Pipeline
Development is in Growth Scales
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
19/28
Markets with Highest Construction ActivityMay 2008
Market # Rooms % of Existing Supply
Las Vegas 19,212 12.5
New York 9,108 10.9
Orlando 5,133 4.5
Phoenix 4,622 8.5
Washington, DC 4,598 4.8
Chicago 4,454 4.3
LA-Long Beach, CA 3,801 4.1
Source: STR / TWR / Dodge Construction Pipeline
The Usual Suspects
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
20/28
Projections
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
21/28
85.6
93.1
102.9
112.1
103.5 102.6105.3
113.7
122.7
133.4139.4
17.0 20.922.1 22.5
16.2 14.2 12.816.7
22.626.6 28.0
40.3% 40.2%39.2%
40.9%
37.1%
35.7%35.0%
36.6%
38.8%
41.3% 41.3%
0
20
40
60
80
100
120
140
160
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
25%
30%
35%
40%
45%
50%
Revenue IncomeGOP
Total United StatesEstimated Revenue and Profitability
Years 1997 - 2007
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
22/28
-2
-1
0
1
2
3
4
5
6
1989q1 1992q1 1995q1 1998q1 2001q1 2004q1 2007q1-8
-6
-4
-2
0
2
4
6
8
GDP % Chg Demand % Chg
Total U.S.Hotel Rooms Sold vs. GDP ChangeQuarterly Change 1988 to Q1 2008
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
23/28
1.6
2.41.9
0.51.2 1.3
1.8
1.4
2.4
-0.1
0.2
1.00.4
4.0
2.8
1.0
0.3
1.3
-1
0
1
2
3
4
5
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8 P
2 0 0 9 P
2 0 Y r A
v e r a g e
Supply % Chg
Demand % Chg
Total U.S.Supply/Demand Percent Change2002 2009P
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
24/28
2.9
-1.1-1.4
3.6
0.3 0.4
-0.2
-1.2
-2
-1
0
1
2
3
4
2002 2003 2004 2005 2006 2007 2008P 2009P
Total U.S.Occupancy Percent Change2002 2009P
20 Year Average: -0.1%
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
25/28
Total USOccupancy Percent2002 2009P
59.0 59.2
61.4
63.1 63.3 63.262.3
61.6
50
60
70
2002 2003 2004 2005 2006 2007 2008P 2009P
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
26/28
4.2 4.4 4
0.1
7.4
5.9
-1.5
5.5
-3
-1
1
3
5
7
2002 2003 2004 2005 2006 2007 2008P 2009P
Total U.S.ADR Percent Change2002 2009P
20 Year Average: 3.5%
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
27/28
8.5
2.83
7.5
5.7
7.9
0.5
-2.7
-5
0
5
10
2002 2003 2004 2005 2006 2007 2008P 2009P
Total U.S.RevPAR Percent Change2002 2009P
20 Year Average: 3.4%
8/14/2019 Hospitality Lawyer:Hotel Industry Update from Smith Travel Research
28/28
2008 Lodging Industry Takeaways
Accelerating Supply Growth Pipeline Attrition?
Slowing Economy = Slower Demand Growth
Top Markets may outperform
Weak Dollar = U.S. Bargain
Leisure feels greater impact than business?
Revenue Management Discipline?