ishc conference - 2010 mark lomanno president smith travel research / str global
TRANSCRIPT
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ISHC Conference - 2010
Mark LomannoPresident
Smith Travel Research /
STR Global
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Today’s Agenda
• Global Overview
• U.S. Performance
• Chain Scale Performance
• Group/Transient Performance
• Construction Pipeline
• Forecast/Takeaways
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Europe2008 2009 8/10-3.6% -6.2% 5.4%
ME & A2008 2009 8/100.7% -10.9% -0.5%
Asia Pacific2008 2009 8/10-7.2% -6.9% 11.6%
USA 2008 2009 8/10-4.6% -8.8% 5.0%
Occupancy % Change – Full Year 2008, 2009, August YTD 2010
Caribbean2008 2009 8/10-3.9% -4.1% 1.3%
2010 STR Global Limited
Positive Occupancy Growth around the Globe . . .
Canada2008 2009 8/10- 2.1% -7.6% 2.9%
Mexico2008 2009 8/10-2.0% -16.1% 10.1%
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Europe €2008 2009 8/10-1.4% -11.2% 2.9%
ME & A $2008 2009 8/1016.2% -2.7% 3.6 %
Asia Pacific $2008 2009 8/109.5% -13.5% 10.3%
USA $2008 2009 8/10 2.7% -8.7% -1.0%
Caribbean $2008 2009 8/10-10.2% -13.5% 4.6%
2010 STR Global Limited
ADR Increases everywhere but USA and Mexico . . . .
ADR % Change – Full Year 2008, 2009, August YTD 2010
Canada C$2008 2009 8/103.1% -5.1% 2.4%
Mexico P$2008 2009 8/10
5.2% -0.2% -9.7%
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Europe €2008 2009 8/10-4.9% -16.7% 8.4%
ME & A $2008 2009 8/1017.1% -13.3% 3.1%
Asia Pacific $2008 2009 8/101.6% -19.4% 23.1%
USA $2008 2009 8/10 -1.9% -16.7% 4.0%
Caribbean $2008 2009 8/10-14.4% -17.1% 6.0%
2010 STR Global Limited
Global RevPAR Recovers – Primarily Occupancy Driven
RevPAR % Change – Full Year 2008, 2009, August YTD 2010
Canada C$2008 2009 8/100.9% -12.3% 5.3%
Mexico P$2008 2009 8/10 2.9% -16.1% -0.5%
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Total United StatesKey Performance Indicators Percent ChangeAugust YTD 2010
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Strong Demand Rebound – Supply Slowing
4.3%
2.5%
-4.7%
-6.9%
Total United States: Twelve Month Moving Average 1989 thru August 2010
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Total United StatesMonthly Room Demand – Seasonally Adjusted1998 to August 2010
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102,307,179
July 2010The Most U.S. Monthly Rooms Sold – EVER!!!
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ADR Declines Accelerate In Each Downturn
+0.1%
-4.7%
-8.9%
Total United States: Twelve Month Moving Average 1989 thru August 2010
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Total United StatesADR – Seasonally Adjusted1998 to August 2010
$86.59Oct 2000
$86.79Oct 2004
$107.91Sep 2008
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41 Months
23 Months
Total United States: ADR Twelve Month Moving Average2000 – August 2010
Absolute ADR Will Not Recover for At Least 2 More Years
-$3.70
-$10.25
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Total United StatesOccupancy and ADR Percent ChangeYTD through 9/25
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Key 15 U.S. MarketsADR Percent ChangeAugust 2010 YTD
Excludes Las Vegas
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Total United StatesRevPAR Percent ChangeTwelve Month Moving Average – 1989 to August 2010
2008 Smith Travel Research, Inc.
-10.5%
- 1.8%
-16.8%
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Total United StatesRevPAR – Seasonally Adjusted1998 to August 2010
$55.29Nov 2000
$55.67Mar 2005
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U.S. Chain Scales
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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
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U.S. Chain ScalesSupply/Demand Percent ChangeAugust 2010 YTD
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Total United StatesRooms Under Construction by Scale – ThousandsAugust 2010
Source: STR / Dodge Construction Pipeline
60% = Upscale & Mid w/o F&B
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U.S. Chain ScalesOccupancy/ADR Percent ChangeAugust 2010 YTD
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Chain Scale ADR Compression: Threat? Opportunity?
US Chain Scales: Actual ADRPeak vs. August 2010
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Upper End Chain Segments Driving Demand Recovery…
U.S. Chain Scales: Demand % Change Monthly thru August 2010
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…And ADR Recovery
U.S. Chain Scales: ADR % Change Monthly thru August 2010
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Group vs. TransientPerformance
Transient Customer: Third party, rack rate, government rate.
Group Customer: Rooms booked in blocks of 10 or more.
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Transient Occupancy is back . . . .
U.S. Upper Tier Hotels – 2010 data through August
Upper Tier = Luxury, Upper Upscale Chains and Upper Tier Independents
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Total United States – Transient SegmentRoom Demand Percent ChangeJan 2003 – August 2010
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. . . . But Transient ADR is not
U.S. Upper Tier Hotels – 2010 data through August
Upper Tier = Luxury, Upper Upscale Chains and Upper Tier Independents
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Group Occupancy Below Peak 2007 Levels . . . .
U.S. Upper Tier Hotels – 2010 data through August
Upper Tier = Luxury, Upper Upscale Chains and Upper Tier Independents
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Total United States – Group SegmentRoom Demand Percent ChangeJan 2003 – August 2010
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. . . And Group ADR Below Depressed 2009 Levels
U.S. Upper Tier Hotels – 2010 data through August
Upper Tier = Luxury, Upper Upscale Chains and Upper Tier Independents
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US Transient vs. GroupMonthly ADR ($) - Jan 2003 – August 2010
Low Transient Rate will hold Group Rate Hostage
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18 Months
25 Months
* Total US, Transient & Group ADR, 12 MMA, Jan ’03 – July ’10
Group Rates Lag Transient Rates by 1 to 2 Years
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Pipeline
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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
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Total United StatesMarkets with Most Rooms In-ConstructionAugust 2010
Market Rooms % of Existing Supply
New York 7,412 7.8%
Houston 2,053 2.9
Dallas 1,759 2.3
Washington, DC 1,445 1.4
Atlanta 1,395 1.5
Miami-Hialeah 1,354 2.9
Orlando 1,283 1.1
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Key 15 U.S. MarketsAbsolute OccupancyAugust 2010 YTD
Excludes Las Vegas
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Key 15 U.S. MarketsAbsolute ADRAugust 2010 YTD
Excludes Las Vegas
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U.S. Industry Outlook
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U.S. Economic OutlookBlue Chip Economic Indicators – September 2010
2009 2010F 2011F
Real GDP -2.6% +2.7% +2.5 %
CPI -0.4% +1.6 % +1.5%
Corporate Profits -3.8% +30.0% +6.4 %
Disp Personal Income +0.6% +1.4% +2.1%
Unemployment Rate 9.3% 9.6% 9.3%
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Total United StatesKey Performance Indicators Percent ChangeFull Year 2009 Actual & 2010 / 2011 Forecast
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Total United StatesOccupancy Percent2004 – 2011P
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Total United States Average Daily Rate 2004 – 2011P
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If year 2000 ADR had increased by CPI each year…
Total US Room RatesActual vs. Inflation Adjusted2000 – 2011F
Note: 2010 & 2011 inflation rate forecast from Blue Chip Economic Indicators
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Total United States – Recession Demand % Change12 MMA Demand ChangeFrom Start of Recession, by Month
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Total United States – Recession ADR % Change 12 MMA ADR ($) ChangeFrom Start of Recession, by Month
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Total United States – Recession Revenue % Change 12 MMA Revenue ChangeFrom Start of Recession, by Month
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Total United StatesChain Scale Key Performance Indicator Outlook 2010F by Chain Scale
2010 Year End Outlook
Chain Scale
Occupancy(% chg)
ADR (% chg) RevPAR (%chg)
Luxury 8.1 1.3 9.4
Upper Upscale 6.7 0.2 7.3
Upscale 6.3 0.5 6.8
Midscale w/ F&B 3.0 -0.3 2.7
Midscale w/o F&B 4.4 0.0 4.4
Economy 3.4 -3.2 0.2
Independent 4.0 0.8 4.9
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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 0.4 6.7 7.1
Upper Upscale 1.6 5.4 7.0
Upscale 2.1 4.4 6.5
Midscale w/ F&B -1.0 2.5 1.5
Midscale w/o F&B 1.8 4.0 5.8
Economy 1.3 2.3 3.6
Independent 2.4 3.7 6.1
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Takeaways
• Value is King
• Performance trough likely past
• Supply growth slowing
• Demand improving
• Pricing conditions improving unevenly
• Second Half 2010 improvement – into 2011
• Performance reset – dig out of the hole
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Thank you.
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