Hotel Industry Overview...Dec 04, 2012  · 6.0% 5.7% 5.1% 5.0% 3.9% 2.3% -0.1% New Orleans SF Chicago LA San Diego Seattle Boston Miami Denver Atlanta Orlando NYC Dallas Phoenix DC

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Hotel Industry Overview for

Vantage Hospitality December 4, 2012

Jeff Higley

vice president, digital media & communications, STR editorial director, HotelNewsNow.com

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www.hotelnewsnow.com Click on “Hotel Data Presentations”

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Through 10/12: Strong results with a few headwinds YTD October 2012

% Change

• Hotels 52.2 k

• Room Supply 1.5 bn 0.4%

• Room Demand 931.6 mn 3.0%

• Occupancy 63.2% 2.6%

• ADR $106.34 4.2%

• RevPAR $67.18 6.9%

• Room Revenue $99.1 bn 7.3%

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July 2012:

Highest Demand - EVER

(106 Million Rooms Sold)

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Rising ’Net usage helps fuel hotel demand World Internet usage by select region (Source: Miniwatts Marketing Group)

Total users

June 2012 Growth

2000-2012

Asia 1.1 billion 842%

Europe 518.5 million 393%

North America 273.8 million 153%

Latin America/Caribbean

254.9 million 1,311%

TOTAL 2.4 BILLION 566%

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Demand, Internet & the future

6 billion+ smartphones/tablets (including 550 million in China) (source: ITU)

Holiday sales expected to be $54.5 billion (+11%) (source: eMarketer)

Mobile messaging ad spend = $7.4 billion by 2017 (source: Juniper Research)

34% of mobile owners made purchases on device in 2012 (+19%) (source: DC Financial Insights)

55% of mobile owners access mobile web (source: Pew Research Center)

Wave Collapse asked consumers in April to ID last purchase on their tablet devices. Top 5: 1. HOTEL RESERVATIONS (22%); 2. DVDs (22%); Clothing (20%); Books (18%); Air tickets (17%)

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-8

-4

0

4

8

1990 2000 2010

Supply Demand

Demand growth expected to slow to ~2%; Supply not an issue

-6.9%

-0.9%

- 4.7%

Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 10/2012

8.0%

3 %

8

-10

-5

0

5

1990 2000 2010

Demand ADR

ADR changes got more erratic with each downturn

-6.9%

-4.7%

-0.9%

-4.6%

-0.2%

-8.7%

4.2%

Total U.S., ADR & Demand % Change, 12 MMA 1/1990 – 10/2012

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ADR discounting at twice the speed of ADR increases

95

100

105

110

2008 2009 2010 2011 2012

Total U.S., ADR $, 12 MMA 1/08 – 7/12

Apr ‘10 $97

Sept ‘08 $108

Dec ‘11 $102

+4.9%

-10%

19 Months

19 Months

10/12 $106

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Segmentation Review

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September 2012: Transient demand breaks records, but....

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12.5

15

17.5

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

2007 2011 2012

Transient Demand in Millions of Rooms; 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

Mill

ion

s

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… transient ADR still lags 2007 (though not by much)

$140

$150

$160

$170

$180

$190

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

2007 2011 2012

Transient ADR $, 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

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October 2012: Group rooms sold surpass 2007 and 2011

4

6

8

10

12

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

Milli

on

s

2007 2011 2012

Group Demand in Millions of Rooms, 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

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… group ADRs still down (& could dampen future absolute ADRs)

$130

$140

$150

$160

$170

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

2008 2011 2012

Group ADR $, 2008, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

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U.S. Chain Scales

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• Luxury – Fairmont, Four Seasons, Ritz Carlton, JW Marriott

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

• Upscale – Radisson, Hilton Garden Inn, Residence Inn, Springhill Suites, Homewood Suites, Courtyard, Best Western Premier

• Upper Midscale – Lexington, Fairfield Inn/Suites, Holiday Inn, Clarion, Hampton Inn/Suites, Best Western PLUS, Country Inn & Suites

• Midscale –, Best Western, Candlewood Suites, Quality Inn/Suites

• Economy – Americas Best Value Inn, Extended Stay America, Red Roof, Days Inn, Microtel

• Complete list can be found at www.HotelNewsNow.com/chainscales.pdf

2012 STR Chain Scales

17 Supply / Demand Percent Change by chain scale - October YTD 2012

-0.1

0.1

1.9

2.9

-4.1

-0.2

3.2

2.3

4.0

5.8

-1.1

1.6

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Supply Demand

“Upper End” leading demand growth; supply flat

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Strong OCC & rate growth across the board

3.3

2.2 2.1

2.8

3.2

1.8

4.7 4.4

4.6

3.7

2.8

3.9

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Occupancy ADR

Occupancy / ADR Percent Change by chain scale October 2012 YTD

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Market Review

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Top 25 26 - 50 51 - 75 76 - 94

Top 94 metro markets by size

Orlando, FL

Chicago, IL

Washington, DC-MD-VA

New York, NY

Los Angeles-Long Beach, CA

Atlanta, GA

Dallas, TX

Houston, TX

Phoenix, AZ

San Diego, CA

Anaheim-Santa Ana, CA

San Francisco/San Mateo, CA

Boston, MA

Miami-Hialeah, FL

Tampa-St Petersburg, FL

Philadelphia, PA-NJ

Detroit, MI

Seattle, WA

Denver, CO

St Louis, MO-IL

Norfolk-Virginia Beach, VA

Minneapolis-St Paul, MN-WI

New Orleans, LA

Nashville, TN

Oahu Island, HI

San Antonio, TX

Riverside-San Bernardino, CA

Baltimore, MD

Kansas City, MO-KS

Charlotte, NC-SC

Indianapolis, IN

Fort Worth-Arlington, TX

Knoxville, TN

Fort Lauderdale, FL

Austin, TX

San Jose-Santa Cruz, CA

Myrtle Beach, SC

Cincinnati, OH-KY-IN

Jacksonville, FL

Raleigh-Durham-Chapel Hill, NC

Portland, OR

Columbus, OH

Sacramento, CA

Oakland, CA

Pittsburgh, PA

Oklahoma City, OK

Memphis, TN-AR-MS

Richmond-Petersburg, VA

Cleveland, OH

Salt Lake City-Ogden, UT

Louisville, KY-IN

Greensboro-Winston Salem, NC

Newark, NJ

Charleston, SC

Albuquerque, NM

Birmingham, AL

Tucson, AZ

Milwaukee, WI

West Palm Beach-Boca Raton, FL

Greenville-Spartanburg, SC

Savannah, GA

Tulsa, OK

Maui Island, HI

Long Island

Daytona Beach, FL

Harrisburg, PA

Hawaii-Kauai Islands

Omaha, NE

Hartford, CT

Buffalo, NY

Scranton--Wilkes-Barre, PA

Mobile, AL

Little Rock, AR

Fort Myers, FL

Albany/Schenectady, NY

Columbia, SC

Dayton-Springfield, OH

Grand Rapids, MI

Lexington, KY

Des Moines, IA

Colorado Springs, CO

Jackson, MS

Rochester, NY

Macon/Warner Robbins, GA

Bergen-Passaic, NJ

Chattanooga, TN-GA

Allentown-Reading, PA

Florida Keys

Augusta, GA-SC

Madison, WI

Melbourne-Titusville, FL

Sarasota-Bradenton, FL

Syracuse, NY

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-10

-5

0

5

10

2002 2007 2012

Top 25 26-50 51-75 76-94

Demand performance distinctly different this time

Metro markets by size, in 25 market increments, Demand % Change, 12 MMA 1990 – 6/2012

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-12

-8

-4

0

4

8

12

2002 2007 2012

Top 25 26-50 51-75 76-94

ADR swings in Top 25 markets most erratic

Metro markets by size, in 25 market increments, ADR % Change, 12 MMA 1990 – 6/2012

25

5.8%

4.9% 4.7%

3.6% 3.4%

2.9% 2.8% 2.7% 2.5%

1.9% 1.7%

1.1% 1.0%

0.6%

0.0%

New Orleans

LA Chicago San Diego

Seattle Dallas Atlanta Denver NYC Orlando SF Miami Boston DC Phoenix

Select 15 U.S. Markets – OCC % Chng – October 2012 YTD

Majority of Top 25 markets seeing 2-3% OCC growth

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11.9%

7.5%

6.5% 6.3% 5.8%

5.4% 5.2% 5.0%

3.2% 3.1% 2.9% 2.4% 2.3%

1.0%

-0.7%

SF Boston Miami Chicago New Orleans

LA Seattle San Diego

Denver Orlando Atlanta NYC Phoenix Dallas DC

Select 15 U.S. Markets – ADR % Chng – October 2012 YTD

Several Top 25 markets seeing strong rate growth

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15.8%

13.8%

11.3% 10.6%

8.8% 8.8% 8.6%

7.6%

6.0% 5.7% 5.1% 5.0%

3.9%

2.3%

-0.1%

New Orleans

SF Chicago LA San Diego

Seattle Boston Miami Denver Atlanta Orlando NYC Dallas Phoenix DC

Select 15 Markets – RevPAR % Chng - September 2012 YTD

Chicago & L.A. driven by OCC; NO & San Fran driven by rate

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Pipeline

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Pipeline definitions:

In Construction: Ground broken or bids on general contractor being made

Final Planning: project out for bids, or construction to start within 4 months Planning: An architect/engineer selected & plans are underway. (Initial approvals have usually been granted) Pre-Planning: No architect has been selected

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Total United States Development Pipeline – Rooms Change From Last Year

Phase October 2012 October 2011 Difference % Change

In Construction 67,640 55,139 12,501 22.7%

Final Planning 99,997 95,506 4,491 4.7%

Planning 122,620 159,742 -37,122 -23.2%

Active Pipeline 290,257 310,387 -20,130 -6.5%

Pre-Planning 90,654 101,809 -11,155 -11.0%

Total 380,911 412,196 -31,285 -7.6%

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2012 / 2013 Forecast

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Overall outlook is not too shabby Key Performance Indicator Outlook (% Change vs. Prior Year) 2012 - 2013

Outlook

2012 Forecast

2013 Forecast

Supply 0.5% 0.9%

Demand 2.6% 1.2%

Occupancy 2.1% 0.3%

ADR 4.4% 4.6%

RevPAR 6.5% 4.9%

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Chain scales look strong in 2012 Chain Scale Key Performance Indicator Outlook; 2012F by Chain Scale

2012 Year End Outlook

Chain Scale Occupancy

(% chg) ADR

(% chg) RevPAR (%chg)

Luxury 3.1% 4.8% 8.0%

Upper Upscale 2.2% 4.5% 6.8%

Upscale 1.7% 4.4% 6.2%

Upper Midscale 2.2% 4.2% 6.5%

Midscale 2.9% 2.4% 5.5%

Economy 1.7% 3.7% 5.4%

Independent 1.7% 4.4% 6.2%

Total United States 2.1% 4.4% 6.5%

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2013 growth shaping up to be driven by rate Chain Scale Key Performance Indicator Outlook; 2013F by Chain Scale

2013 Year End Outlook

Chain Scale Occupancy

(% chg) ADR

(% chg) RevPAR (%chg)

Luxury 1.9% 6.3% 8.3%

Upper Upscale -1.0% 4.2% 3.2%

Upscale 2.2% 5.5% 7.9%

Upper Midscale -0.5% 4.5% 4.0%

Midscale 1.3% 2.3% 3.6%

Economy 0.8% 3.1% 3.9%

Independent -0.6% 4.3% 3.6%

Total United States 0.3% 4.6% 4.9%

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$85 $104 $107 $111

$85

$102

$107

$120

$75

$85

$95

$105

$115

$125 Nominal ADR

2000/2008 ADR Grown by CPI

2000 ADR Grown by CPI

2008 ADR Grown by CPI

Rates still have a ways to go to keep pace with inflation Actual vs. Inflation Adjusted 2000 – 2013F

Note: 2012 & 2013 CPI forecast from Blue Chip Economic Indicators

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Takeaways

Supply growth still “muted”

Record breaking demand

Rate slowly catching up

STR forecasting rate driven RevPAR growth

Overall positive hotel environment

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