outlook 2004 pinnacle advisory grouppinnacle realty investments rachel j. roginsky, ishc pinnacle...
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Outlook 2004Outlook 2004
Pinnacle Advisory GroupPinnacle Realty Investments
Rachel J. Roginsky, ISHCPinnacle Advisory Group
76 Canal StreetBoston, MA 02114
Telephone: 617-722-9916 Fax: [email protected]
National Lodging MarketNational Lodging Market
Top 25 Markets – 2002
Total U.S. Market Through April 2003
National Projections
National Lodging MarketNational Lodging Market
Top 25 Markets – 2002
Top 25 MarketsRoom Supply Percent Change - 2002
Source: Smith Travel Research / Pinnacle Advisory Group
-2
0
2
4
6
MIA
MI-
HIA
LE
AH
, FL
OA
HU
ISL
AN
D
PH
OE
NIX
, AZ
TA
MP
A, F
L
ST
. LO
UIS
, MO
-IL
DA
LL
AS
, TX
DE
NV
ER
, CO
WA
SH
ING
TO
N, D
C
NO
RF
OL
K, V
A
NE
W Y
OR
K, N
Y
PH
ILA
DE
LP
HIA
, PA
AT
LA
NT
A, G
A
TO
TA
L U
.S.
LO
S A
NG
EL
ES
, CA
OR
LA
ND
O, F
L
SA
N D
IEG
O, C
A
NA
SH
VIL
LE
, TN
HO
US
TO
N, T
X
CH
ICA
GO
, IL
SA
N F
RA
NC
ISC
O, C
A
MIN
NE
AP
OL
IS, M
N
SE
AT
TL
E, W
A
BO
ST
ON
, MA
DE
TR
OIT
, MI
AN
AH
EIM
, CA
NE
W O
RL
EA
NS
, LA
INDUSTRY AVERAGE 1.8 %
Top 25 MarketsADR Percent Change - 2002
Source: Smith Travel Research / Pinnacle Advisory Group
-15
-10
-5
0
5
10
SA
N F
RA
NC
ISC
O, C
A
BO
ST
ON
, MA
MIA
MI-
HIA
LE
AH
, FL
NE
W Y
OR
K, N
Y
OA
HU
ISL
AN
D
PH
OE
NIX
, AZ
DE
TR
OIT
, MI
DE
NV
ER
, CO
TA
MP
A, F
L
SE
AT
TL
E, W
A
AN
AH
EIM
, CA
CH
ICA
GO
, IL
DA
LL
AS
, TX
LO
S A
NG
EL
ES
, CA
AT
LA
NT
A, G
A
NE
W O
RL
EA
NS
, LA
MIN
NE
AP
OL
IS, M
N
WA
SH
ING
TO
N, D
C
TO
TA
L U
.S.
OR
LA
ND
O, F
L
SA
N D
IEG
O, C
A
NA
SH
VIL
LE
, TN
HO
US
TO
N, T
X
ST
. LO
UIS
, MO
-IL
PH
ILA
DE
LP
HIA
, PA
NO
RF
OL
K, V
A
INDUSTRY AVERAGE -1.5 %
Top 25 MarketsOccupancy 2002
Source: Smith Travel Research
50
55
60
65
70
75
DA
LL
AS
, TX
DE
TR
OIT
, MI
NA
SH
VIL
LE
, TN
AT
LA
NT
A, G
A
PH
OE
NIX
, AZ
TO
TA
L U
S
HO
US
TO
N, T
X
DE
NV
ER
, CO
CH
ICA
GO
, IL
TA
MP
A, F
L
ST
. LO
UIS
, MO
-IL
MIN
NE
AP
OL
IS, M
N
SE
AT
TL
E, W
A
SA
N F
RA
NC
ISC
O, C
A
NO
RF
OL
K, V
A
MIA
MI-
HIA
LE
AH
, FL
NE
W O
RL
EA
NS
, LA
OR
LA
ND
O, F
L
BO
ST
ON
, MA
AN
AH
EIM
, CA
PH
ILA
DE
LP
HIA
, PA
LO
S A
NG
EL
ES
, CA
WA
SH
ING
TO
N, D
C
SA
N D
IEG
O, C
A
OA
HU
ISL
AN
D
NE
W Y
OR
K, N
Y
INDUSTRY AVERAGE 59.2 %
Top 25 Markets RevPAR 2002
Source: Smith Travel Research / Pinnacle Advisory Group
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00N
orfo
lk-V
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St.
Loui
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O, I
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Dal
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Den
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CO
Atla
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GA
Det
roit,
MI
Hou
ston
, TX
Min
n-S
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Nas
hville
, TN
Tam
pa-S
t. P
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Pho
enix
, AZ
Sea
ttle,
WA
Orla
ndo,
FL
Ana
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anta
Ana
, CA
New
Orle
ans,
LA
Chi
cago
, IL
LA-L
ong
Bea
ch, C
A
San
Die
go, C
A
Was
hing
ton,
DC
-MD
-VA
Phi
lade
phia
, PA
-NJ
Bos
ton,
MA
San
Fra
n-S
an M
ateo
, CA
Mia
mi-H
iale
ah, F
L
Oah
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, HI
New
Yor
k, N
Y
National Lodging MarketNational Lodging Market
Total U.S. Market Through April 2003
Total United StatesRoom Supply/Demand Percent Change
Twelve Month Moving Average To April 2003
Source: Smith Travel Research / Pinnacle Advisory Group
-6
-4
-2
0
2
4
6
1998 1999 2000 2001 2002 2003
Supply % Change
Demand % Change
Total United StatesTotal United StatesOccupancy and ADROccupancy and ADR
Twelve Month Moving Average To Apr 2003Twelve Month Moving Average To Apr 2003
50
55
60
65
70
75
80
85
90
1996 1997 1998 1999 2000 2001 2002 2003
Occupancy (%)
ADR ($)
Peak $87June 2001
$83.44Apr 2003
Peak 65.2% 58.8 %
Apr 2003
$83.80Apr 2002
58.9 %Apr 2002
Source: Smith Travel Research / Pinnacle Advisory Group
Total United StatesTotal United StatesKey Performance Indicators Percent ChangeKey Performance Indicators Percent Change
Twelve Months Ending AprilTwelve Months Ending April
2
-4.7-6.5
-3.4
-9.8
1.7 1.4
-0.2 -0.4 -0.7
-20
-15
-10
-5
0
5
10
Supply Demand Occupancy ADR RevPAR
2002 2003
Source: Smith Travel Research / Pinnacle Advisory Group
Chain ScalesChain ScalesOccupancy/ADR Percent ChangeOccupancy/ADR Percent ChangeTwelve Months Ended April 2003Twelve Months Ended April 2003
1.7
0.9
-1.1-0.6
-2.6-2.6 -2.6
-0.6
0.3 0.5
-5
0
5
UpperUpscale
Upscale Mid w F&B Mid wo F&B Economy
OccupancyADR
Source: Smith Travel Research / Pinnacle Advisory Group
National Lodging MarketNational Lodging Market
National Projections
* Occupancy Flat
* Demand Lags, Then Recovers
* Slow RevPAR Growth
* Potential Threat – War/Terrorism
U.S. Lodging Outlook
* Supply Growth Significantly Lower
* Pressure on Room Rates
Total United StatesTotal United StatesSupply/Demand Percent ChangeSupply/Demand Percent Change1996 – 2003P1996 – 2003P
2.4
3.53.9 3.8
2.82.3
1.7 1.52
2.6 2.8 33.4
-3.5
0.7
2
-5-4-3
-2-1012
345
1996 1997 1998 1999 2000 2001 2002 2003P
Supply % Chg
Demand % Chg
Source: Smith Travel Research / Pinnacle Advisory Group
Total United StatesTotal United StatesOccupancy PercentOccupancy Percent1996 – 2003P1996 – 2003P
64.764.1
63.4 63 63.3
59.7 59.2 59.4
55
60
65
70
1996 1997 1998 1999 2000 2001 2002 2003P
Source: Smith Travel Research / Pinnacle Advisory Group
Total United StatesTotal United StatesAverage Daily RateAverage Daily Rate1996 – 2003P1996 – 2003P
70.67
74.83
78.29
81.27
85.7684.96
83.6784.55
70
75
80
85
90
1996 1997 1998 1999 2000 2001 2002 2003P
Source: Smith Travel Research / Pinnacle Advisory Group
Total United StatesTotal United StatesRevPAR Percent ChangeRevPAR Percent Change1996 – 2003P1996 – 2003P
6.15
3.5 3
6.2
-6.6
-2.4
1.4
-10
-5
0
5
10
1996 1997 1998 1999 2000 2001 2002 2003P
Source: Smith Travel Research / Pinnacle Advisory Group
New England Lodging MarketNew England Lodging Market
New England Occupancy - 2002New England Occupancy - 2002
Source: Smith Travel Research / Pinnacle Advisory Group
62.2%
67.1%
60.1%57.7%
60.2%
55.7%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Connecticut Rhode Island Massachusetts Vermont New Hampshire Maine
New England Average Daily Rate – 2002New England Average Daily Rate – 2002
Source: Smith Travel Research / Pinnacle Advisory Group
$90.92
$112.55 $111.34
$84.75
$79.05
$94.16
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
Connecticut Rhode Island Massachusetts Vermont NewHampshire
Maine
New England RevPAR – 2002New England RevPAR – 2002
Source: Smith Travel Research / Pinnacle Advisory Group
$56.55
$75.52
$66.92
$54.33$51.02
$44.03
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
Connecticut Rhode Island Massachusetts Vermont NewHampshire
Maine
New England Change in Performance - 2002New England Change in Performance - 2002
Source: Smith Travel Research / Pinnacle Advisory Group
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
Occupancy
Avg Rate
RevPAR
New England Change in Performance – YTD New England Change in Performance – YTD June 2003June 2003
Source: Smith Travel Research / Pinnacle Advisory Group
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
Occupancy
Avg Rate
RevPAR
Suburban Boston Lodging Suburban Boston Lodging MarketMarket
Statistics
Projections
Suburban Boston Lodging Suburban Boston Lodging MarketMarket
Statistics
Suburban Boston StatisticsSuburban Boston Statistics
Suburban Boston Occupancy 1995-2002Suburban Boston Occupancy 1995-2002
66%69.4%
71% 70% 70%73%
61%58%
0%
10%
20%
30%
40%
50%
60%
70%
80%
1995 1996 1997 1998 1999 2000 2001 2002
Source: Smith Travel Research / Pinnacle Advisory Group
Suburban Boston Average Room Rate 1995 - 2002Suburban Boston Average Room Rate 1995 - 2002
$75.35$81.51
$89.87
$97.91$102.07
$111.15 $108.23
$97.37
$-
$20
$40
$60
$80
$100
$120
1995 1996 1997 1998 1999 2000 2001 2002
Source: Smith Travel Research / Pinnacle Advisory Group
Suburban Boston RevPAR 1995 - 2002Suburban Boston RevPAR 1995 - 2002
Source: Smith Travel Research / Pinnacle Advisory Group
$56.67
$66.47
$81.47
$71.46$68.71
$64.22
$56.57
$49.81
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
1995 1996 1997 1998 1999 2000 2001 2002
Suburban Boston Lodging Supply 1995 - 2002Suburban Boston Lodging Supply 1995 - 2002
20,387 20,387 20,677 20,677
22,92823,998
25,77226,988
0
5,000
10,000
15,000
20,000
25,000
30,000
1995 1996 1997 1998 1999 2000 2001 2002
Source: Smith Travel Research / Pinnacle Advisory Group
Suburban Boston Occupancy Suburban Boston Occupancy YTD June 2001 - 2003YTD June 2001 - 2003
Source: Smith Travel Research / Pinnacle Advisory Group
64.2%
56.2%
51.8%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
2001 2002 2003
Suburban Boston Average Daily Rate Suburban Boston Average Daily Rate YTD 2001 - 2003YTD 2001 - 2003
Source: Smith Travel Research / Pinnacle Advisory Group
$112.16
$97.09$92.45
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
2001 2002 2003
Suburban Boston RevPARSuburban Boston RevPARYTD 2001 - 2003YTD 2001 - 2003
Source: Smith Travel Research / Pinnacle Advisory Group
$71.96
$54.54$47.91
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
2001 2002 2003
Suburban Boston Lodging Suburban Boston Lodging MarketMarket
Projections
Suburban Boston 2003Suburban Boston 2003
Continued Lack of Overflow from Boston
Major Demand Generators Report only limited increases in demand
Shorter Booking WindowNew Supply Less but Still a FactorPent-up demand
Pinnacle ProjectionsPinnacle ProjectionsSuburban Boston 2003Suburban Boston 2003
2002 2003 Change
Occupancy 58.3% 55.0% -5.7%
Average Rate
$97.20 $92.75 -4.6%
RevPAR $56.69 $51.01 -10.0%
Suburban Boston 2004Suburban Boston 2004
Stronger Convention Year for BostonImproving economyLimited New SupplyStable Geopolitical SituationWeak Dollar
Pinnacle ProjectionsPinnacle ProjectionsSuburban Boston 2004Suburban Boston 2004
2002 2003 Change
Occupancy 55.0% 57.0% 3.6%
Average Rate
$92.75 $93.75 1.1%
RevPAR $51.01 $53.44 4.8%
Boston / Cambridge Lodging Boston / Cambridge Lodging MarketMarket
Statistics
New Supply
Demand Trends
Projections
Boston / Cambridge Lodging Boston / Cambridge Lodging MarketMarket
Statistics
Boston / Cambridge Occupancy 1989 – Boston / Cambridge Occupancy 1989 – 20022002
Source: Pinnacle Advisory Group
79%
70%
72%
77%78%
79%78%78%
77%
75%
72%
68%
74%
72%
60%
65%
70%
75%
80%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Boston / Cambridge Average Room Rate Boston / Cambridge Average Room Rate 1989-20021989-2002
$199.74
$181.34
$165.04
$188.77
$176.65
$161.15
$143.58$132.93
$125.03$117.35$113.92$115.96$118.72$114.11
$-
$25.00
$50.00
$75.00
$100.00
$125.00
$150.00
$175.00
$200.00
$225.00
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: Pinnacle Advisory Group
Boston / Cambridge RevPAR 1989-2002Boston / Cambridge RevPAR 1989-2002
Source: Pinnacle Advisory Group
$157.79
$126.94$118.83
$145.35$137.79
$127.31
$111.99$103.69
$96.27$88.01
$82.02$78.85$87.85
$82.16
$-
$25.00
$50.00
$75.00
$100.00
$125.00
$150.00
$175.00
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Boston / Cambridge Lodging Supply 1989 - Boston / Cambridge Lodging Supply 1989 - 20022002
Source: Pinnacle Advisory Group
16,300 16,600 17,00017,700
15,60014,800
14,20014,10014,00014,00013,80013,70013,40013,40013,300
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Boston / Cambridge Occupancy Boston / Cambridge Occupancy YTD June 2001-2003YTD June 2001-2003
Source: Pinnacle Advisory Group
71.4%68.5%
63.9%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
2001 2002 2003
Boston / Cambridge Average Room Rate Boston / Cambridge Average Room Rate YTD June 2001-2003YTD June 2001-2003
$188.63
$162.22$148.05
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
$200.00
2001 2002 2003
Source: Pinnacle Advisory Group
Boston / Cambridge RevPARBoston / Cambridge RevPARYTD June 2001-2003YTD June 2001-2003
Source: Pinnacle Advisory Group
$134.68
$111.12
$94.60
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
2001 2002 2003
Boston / Cambridge Change in RevPAR Boston / Cambridge Change in RevPAR 1996 – YTD June 20031996 – YTD June 2003
Source: Pinnacle Advisory Group
8.0%
14.4%
8.7%
2.6%
9.7%
-18.8%
-6.7%
-14.9%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
1996 1997 1998 1999 2000 2001 2002 YTD2003
Boston / Cambridge Change in Performance Boston / Cambridge Change in Performance By Market Area - 2002By Market Area - 2002
Source: Pinnacle Advisory Group
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
Back Bay Downtown Other CambridgeOccupancy
Avg Rate
RevPAR
Boston / Cambridge Change in Performance Boston / Cambridge Change in Performance By Market Area – YTD June 2003By Market Area – YTD June 2003
Source: Pinnacle Advisory Group
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
Back Bay Downtown Other Cambridge
Occupancy
Avg Rate
RevPAR
Boston / Cambridge Lodging Boston / Cambridge Lodging MarketMarket
New Supply
Boston / Cambridge New Supply 2003Boston / Cambridge New Supply 2003
• Embassy Suites - Airport – 273 Rooms - April• Residence Inn – Charlestown – 168 Rooms – May• Hotel Marlowe – E. Cambridge – 236 Rooms – May• Commonwealth Hotel – Kenmore Square 149 -
Rooms - May • Courtyard Hotel – Back Bay - 90 - Rooms -
September/October
Boston / Cambridge New Supply 2004Boston / Cambridge New Supply 2004
• Hotel Onyx – N. Station – 112 Rooms – Winter/Spring
• Jurys Doyle – Back Bay – 220 Rooms – Spring• Clarion – N. Station – 88 Rooms – Summer• Hampton Inn and Suites – Crosstown – 175 Rooms –
Summer
Boston / Cambridge Lodging Boston / Cambridge Lodging MarketMarket
Demand Trends
Boston / Cambridge Demand TrendsBoston / Cambridge Demand Trends
Declining Corporate Demand– Economy– Geopolitical Situation
Declining Group Demand– Weak Corporate Demand– Off Convention Years
Declining Airline Crew Demand– Economy– Airline Industry Woes
Boston / Cambridge Demand TrendsBoston / Cambridge Demand Trends
Increasing Leisure Demand– “Buying” Demand Through Lower Rates– Increasing Use of the Internet
Increasing Government Demand– Increased Per Diem – Homeland Security
Factors Affecting Boston / Cambridge Factors Affecting Boston / Cambridge Performance vs. National PerformancePerformance vs. National Performance
Stronger Supply IncreasesHeavy Reliance on Technology and
Financial Services IndustriesPopular Destination with
International Travelers
Boston / Cambridge Lodging Boston / Cambridge Lodging MarketMarket
Projections
Factors Affecting Demand 2H 2003Factors Affecting Demand 2H 2003
• Fewer Conventions than 2H 2002• New Supply• Shorter Booking Window• Improving Economy• More Stable Geopolitical Situation• Weak Dollar
Pinnacle Operators Survey 2003Pinnacle Operators Survey 2003
18 Hotels, 7,900 Rooms
OccupancyDown 2.4 Points
Average RateDown 7.3 Percent
RevPARDown 10.2 Percent
Pinnacle Projections Boston / Cambridge Pinnacle Projections Boston / Cambridge 20032003
2002 2003 Change
Occupancy 72.3% 68.8% -4.8%
Average Rate
$165.04 $151.84 -8.0%
RevPAR $119.32 $104.46 -12.4%
Factors Affecting Demand 2004Factors Affecting Demand 2004
• Strong Convention Year• New Supply• Improving Economy• More Stable Geopolitical Situation• Weak Dollar• MOTT Budget Reduction
Pinnacle Operators Survey 2004Pinnacle Operators Survey 2004
18 Hotels, 7,900 Rooms
OccupancyUp 1.4 Points
Average RateUp 2.5 Percent
RevPARUp 4.8 Percent
Pinnacle Projections Boston / Cambridge Pinnacle Projections Boston / Cambridge 20042004
2003 2004 Change
Occupancy 68.8% 70.5% 2.5%
Average Rate
$151.84 $155.63 2.5%
RevPAR $104.46 $109.72 5.0%
Outlook 2004Outlook 2004
Pinnacle Advisory GroupPinnacle Realty Investments
Rachel J. Roginsky, ISHCPinnacle Advisory Group
76 Canal StreetBoston, MA 02114
Telephone: 617-722-9916 Fax: [email protected]