Hotel InduSTRy Overview

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1 Hotel InduSTRy Overview Chris Klauda, CHIA Director, Destination Research ESTO Webinar November 12,

2 1. Visit 2. Create Free Login 3. Click on Data Presentations 2

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4 About STR The recognized leader in hotel benchmarking Founded in 1985 Sample 72% of total U.S. room supply; 50% of total global room supply. Provide monthly, weekly, and daily STAR reports to over 46,000 hotels, representing 6.1 million rooms worldwide Provide reports to DMOs, CVBs and any organization working in the lodging industry Impartial, timely, confidential 4

5 5 Things to Know.. 1. Industry Record Breaking Continues 2. Group and Transient Pricing Power What do Meeting Planners Think? 3. Highest & Lowest Growth Markets 4. Pipeline Growth 5. Where Are We Headed? 5

6 1 U.S. Pulse Going Gangbusters

7 U.S. Hotels TTM Sept 2015 Metric No. Status Remarks OCC 65.4% 2.5% RECORD ADR $ % RECORD REVPAR $78 7.2% RECORD AVAIL ROOMS 1.8B 1.0% RECORD OCC ROOMS * 1.2B 3.4% RECORD ROOM REV $141B 8.2% RECORD 7 * Demand SOURCE: STR

8 Demand Growth Rates Slow. Supply Growth Now Back At 1% Supply % Change Demand % Change Total U.S., Supply & Demand % Change, 12 MMA 1/ /2015 8

9 ADR Growth Healthy. Occ Growth Easing Occ % Change ADR % Change Total U.S., ADR & OCC % Change, 12 MMA 1/ /2015 9

10 ADR Growth Healthy. Demand Easing Demand % Change ADR % Change Total U.S., ADR & OCC % Change, 12 MMA 1/ /

11 TTM September 2015 $141 billion U.S. hotel room revenue 11

12 52% of U.S. rooms revenue in 2015 came from 8 states 33% from California, Florida and New York U.S. Hotels TTM Sept

13 Where are we in the lodging cycle? The Back 9 13

14 TTM September 2015 $78 U.S. hotel RevPAR 14

15 Expect More Of The Same: Positive (but slowing) Growth % 8.5% 5 7.2% Months 65 Months 61 Months % % % Total U.S., RevPAR % Change, 12 MMA 1/1990 9/

16 2 Group and Transient Pricing Power Group Transient Contract Segmentation 16

17 Chain Scales - examples Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Four Seasons Hilton Courtyard Comfort Suites Best Western Days Inn Loews Hyatt DoubleTree Hampton Inn La Quinta EconoLodge Ritz Carlton Marriott Hilton Garden Inn Holiday Inn Ramada Motel 6 W Hotel Westin Radisson Holiday Inn Express Sleep Inn Super 8

18 Demand Segmentation: Continued Group Rebound Transient % Change Group % Change Luxury Upper Upscale *Segmentation Occupancy % Change, by Class, September 2015 TTM

19 ADR Segmentation: Transient and Group Increases Growth Pace Transient % Change Group % Change Luxury *Segmentation ADR % Change, by Class, September 2015 TTM Upper Upscale

20 Transient ADR Growth Follows High Occupancies 6% 5% 4% 4.4% 3% 2.6% 2% 1% Demand % Change ADR % Change 0% Feb 12 Feb 13 Feb 14 Feb-15 *Transient Demand and ADR % Change, 12 MMA, 1/ /

21 Group Demand Growth Slows As Hotels Are Full 6% 5% 4% Demand % Change ADR % Change 3.8% 3% 2% 1.9% 1% -1% -2% *Group Demand and ADR % Change, 12 MMA, 1/ /

22 September million more transient rooms sold than in the prior 12 months 22

23 September million more group rooms sold than in the prior 12 months 23

MEETING SIZE Meetings of 1000+ attendees make up the largest major meeting segment and are on the rise.

24 MEETING SIZE Meetings of attendees make up the largest major meeting segment and are on the rise. OVERALL ATTENDANCE AT LARGEST MEETING PLANNED IN LAST YEAR 30% % 38% 35% 32% 37% Less than *DMAP 2015, a national survey of meeting planners 24

25 What Are Meeting Planners Saying? 25

26 Sources that are personal or directly connected to meeting planner are the most trustworthy and valued. VERY IMPORTANT INFORMATION SOURCES 83% 76% 58% 57% 56% 45% Past experience Attendee feedback Hotel website Colleague recommendations Hotel rating/user review sites Destination website 26

27 Meeting planners are demanding when selecting a meeting site CONSIDERATIONS RATED VERY IMPORTANT IN SITE SELECTION COSTS Good value for the money Travel costs to destination Food and lodging costs CONVENIENCE Easy for delegates to get to Convenient airline service # of hotel rooms available CLEAN/ ATTRACTIVE Attractive conference hotels Clean/attractive city 50% 60% 70% 80% 90% 100% 27

Meeting planners are demanding when selecting a meeting site CONSIDERATIONS RATED VERY IMPORTANT IN SITE SELECTION COSTS Good value for the money Travel costs to destination Food and lodging costs

28 Meeting planners are demanding when selecting a meeting site CONSIDERATIONS RATED VERY IMPORTANT IN SITE SELECTION COSTS Good value for the money Travel costs to destination Food and lodging costs CONVENIENCE CLEAN/ ATTRACTIVE Easy for delegates to get to Convenient airline service # of hotel rooms available Attractive conference hotels Clean/attractive city % 60% 70% 80% 90% 100% 28

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31 3 U.S. Market Performance 162 markets

32 RevPAR September 2015 YTD: Low Oil Price = Lower RevPAR Market RevPAR % Change Market RevPAR % Change Macon/Warner Robbins, GA 19.0 New York, NY (1.6) San Jose/Santa Cruz, CA 18.9 West Virginia (1.8) Oakland, CA 16.6 Texas North (1.9) Portland, OR 15.1 New Mexico South (2.1) Phoenix, AZ 14.9 Houston, TX (2.4) Chattanooga, TN-GA 14.7 Augusta, GA-SC (7.1) Fort Myers, FL 14.5 Texas South (7.3) Greenville/Spartanburg, SC 14.3 Oklahoma Area (9.4) Melbourne/Titusville, FL 14.1 Texas West (14.9) California North Central 13.7 North Dakota (16.2) *September 2015 YTD RevPAR: Best / Worst Performing Markets 32

33 ADR September 2015 YTD: West Coast Very Strong, NYC Still Weak Market ADR % Change Market ADR % Change San Jose/Santa Cruz, CA 15.2 Jackson, MS 1.0 Oakland, CA 12.2 Texas North 1.0 Portland, OR 10.9 New Mexico South 0.8 Sarasota/Bradenton, FL 10.1 Bergen/Passaic, NJ 0.1 Phoenix, AZ 9.6 McAllen/Brownsville, TX Nashville, TN 9.2 Oklahoma Area Melbourne/Titusville, FL 9.0 New York, NY Seattle, WA 9.0 North Dakota Savannah, GA 8.7 Texas South Wyoming 8.5 Texas West * September 2015 YTD ADR : Best / Worst Performing Markets (0.1) (0.9) (1.4) (3.1) (4.3) (5.8) 33

34 3 U.S. Market Performance 50 markets

35 September 2015 YTD: Houston and NYC Perform Poorly Market OCC % ADR % Change Phoenix, AZ Tampa/St Petersburg, FL Nashville, TN Seattle, WA Orlando, FL New Orleans, LA Minneapolis/St Paul, MN-WI Oahu Island, HI New York, NY Houston, TX * September 2015 YTD ADR % Change in Top 25: 5 Best / 5 Worst Performing ADR % Markets 35

36 Markets 26-50: Markets Around SF Lead Market OCC % ADR % Change San Jose/Santa Cruz, CA Oakland, CA Portland, OR Richmond/Petersburg, VA Austin, TX Fort Worth/Arlington, TX San Antonio, TX Pittsburgh, PA Oklahoma City, OK Baltimore, MD *September 2015 YTD ADR % Change, Markets 26-50: 5 Best / 5 Worst Performing ADR % Markets 36

37 Making the Grade: Top 25 Markets Brad Garner SVP August, 2015

38 Methodology of Grades Data from June 2009, 2011, 2013, and MMA Calculated the relative position (rank) of supply, demand, ADR Applied weighted factors to each of the metrics (in each year) Averaged all the metrics to come up with the index Averaged the index for all four years Gave 1-3 points based on average index Gave 1-3 points based on RevPAR forecast for 2015 & 2016 Totaled points to come up with grades

39 Top 25 markets A Grade Dallas Denver Los Angeles Nashville Orlando San Francisco Seattle Tampa

40 Most Likely to be Famous: Nashville Highest ADR and RevPAR growth at 10.5% and 14.9% Highest group RevPAR growth at 14.3% Its Own TV Show (Get on Board) *forecast is preliminary *all metrics reported are as of June 15 12MMA

41 Most Athletic: Phoenix Super Bowl XLIX & Phx. Open 2/2015 January RevPAR up 43% February RevPAR up 18% 2 nd largest RevPAR growth as of June 12MMA Highest forecast RevPAR growth for 2015 at 12.8% *forecast is preliminary

42 Most Likely to enter Rehab: Houston Occ down 3.8% YTD RevPAR down 1.7% YTD 2 nd lowest RevPAR forecast for 2015 at 2.5% *forecast is preliminary

43 4 Pipeline Accelerates

44 Under Contract STR Pipeline Phases 4. In Construction Vertical construction on the physical building has begun. (This does not include construction on any sub-grade structures.) 3. Final Planning construction will begin within the next 12 months. 2. Planning construction will begin in more than 13 months. 1. Unconfirmed (formerly Pre-Planning) - Potential projects that remain unconfirmed at this time. 44

45 US Pipeline: Construction Today Will Impact 2016 / 2017 Phase % Change In Construction % Final Planning % Planning % Under Contract % *Total US Pipeline, by Phase, 000s Rooms, September 2015 and

Limited Service Construction Has Been Strong For 2 Years 46.2 42.9 67% 18.6 11.9 5.9 5.0 1.

46 Limited Service Construction Has Been Strong For 2 Years % Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated *US Pipeline, Rooms In Construction, 000s Rooms, by Scale, September

Pipeline ( 000s rooms): Top 26 Markets Have ~50% Of U/C Rooms In Construction(132) Final Planning (175) Planning (134) 103.9 64.

47 Pipeline ( 000s rooms): Top 26 Markets Have ~50% Of U/C Rooms In Construction(132) Final Planning (175) Planning (134) Top 26 Markets Rest of the US *US Pipeline, Rooms ( 000s), Top 26 Markets vs. All Other Markets, September

48 Construction In Top 26 Markets: 11 Markets w/4%+ Of Supply Market Rooms U/C % Of Existing 1 New York, NY 13,107 11% 2 Houston, TX 6,639 9% 3 Miami/Hialeah, FL 3,314 7% 4 Denver, CO 2,404 6% 5 Nashville, TN 1,703 4% 6 Dallas, TX 3,427 4% 7 Anaheim/Santa Ana, CA 2,291 4% 8 Los Angeles/Long Beach, CA 4,052 4% 9 Boston, MA 2,144 4% 10 Philadelphia, PA-NJ 1,846 4% 11 Minneapolis/St Paul, MN-WI 1,548 4% *US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, September

49 Construction In Top 26 Markets: Eight With 2%+ Of Supply Market Rooms U/C % Of Existing 12 Washington, DC-MD-VA 3,588 3% 13 Seattle, WA 1,334 3% 14 San Diego, CA 1,785 3% 15 Detroit, MI 1,126 3% 16 Phoenix, AZ 1,577 3% 17 Chicago, IL 2,753 2% 18 Las Vegas, NV 3,905 2% 19 Tampa/St Petersburg, FL 1,012 2% 20 New Orleans, LA 792 2% 21 Atlanta, GA 1,398 1% 22 Orlando, FL 1,645 1% 23 Norfolk/Virginia Beach, VA 394 1% 24 St Louis, MO-IL 332 1% 25 San Francisco/San Mateo, CA 430 1% 26 Oahu Island, HI 0% *US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, September

50 5 Where Are We Headed? 50

51 Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) Outlook 2015 Forecast 2016 Forecast Supply 1.2% 1.4% Demand 2.9% 2.2% Occupancy 1.7% 0.8% ADR 5.1% 5.2% RevPAR 6.8% 6.0% *As of 8/1/15 51

52 Total United States Chain Scale Key Performance Indicator Outlook 2015F by Chain Scale 2015 Year End Outlook Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (% chg) Luxury 0.4% 5.4% 5.9% Upper Upscale 0.9% 5.0% 5.9% Upscale 0.6% 5.4% 6.1% Upper Midscale 1.9% 5.0% 7.0% Midscale 2.0% 4.5% 6.5% Economy 1.9% 5.3% 7.2% Independent 2.0% 4.8% 6.9% Total United States 1.7% 5.1% 6.8% *As of 8/1/15 52

Total United States Chain Scale Key Performance Indicator Outlook 2016F by Chain Scale 2016 Year End Outlook Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (% chg) Luxury 0.5% 5.3% 5.

53 Total United States Chain Scale Key Performance Indicator Outlook 2016F by Chain Scale 2016 Year End Outlook Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (% chg) Luxury 0.5% 5.3% 5.8% Upper Upscale 0.7% 5.6% 6.4% Upscale 0.7% 5.2% 5.9% Upper Midscale 0.8% 4.6% 5.4% Midscale 0.9% 4.1% 5.0% Economy 1.0% 4.4% 5.4% Independent 0.4% 5.1% 5.5% Total United States 0.8% 5.2% 6.0% *As of 8/1/15 53

54 2015 Year End RevPAR Forecast (Total U.S. 6.8%) Top 25 US Markets, August 2015 Forecast (Markets sorted alphabetically) -5% to 0% 0% to 5% 5% to 10% 10% to 15% New York Houston Anaheim Phoenix Oahu Atlanta Tampa Philadelphia Boston Chicago Dallas Denver Detroit Los Angeles Miami Minneapolis Nashville New Orleans Norfolk Orlando San Diego San Francisco Seattle St. Louis Washington, DC 54

55 2016 Year End RevPAR Forecast (Total U.S. 6.0%) Top 25 US Markets, August 2015 Forecast (Markets sorted alphabetically) -5% to 0% 0% to 5% 5% to 10% 10% to 15% Atlanta Boston Chicago Los Angeles Miami New Orleans New York Norfolk Anaheim Dallas Denver Detroit Houston Minneapolis Nashville Oahu Orlando Philadelphia Phoenix San Diego San Francisco Seattle St. Louis Tampa Washington, DC 55

56 In sum.. (mostly) 56

57 5 Things to Know.. 1. Industry Record Breaking Continues And Continues 2. Group and Transient Pricing Power Is All Good What do Meeting Planners Think? Tough Bunch 3. Highest & Lowest Growth Markets Some Challenged 4. Pipeline Growth Scattered 5. Where Are We Headed? Up 57

58 Other Items of Interest 58

There are four core content areas: o o o o Hotel Industry Foundations Hotel Math Fundamentals the metrics used by the

59 Certification in Hotel Industry Analytics (CHIA) STR and AHLEI have partnered to launch the Certification in Hotel Industry Analytics for a variety of industry professionals. There are four core content areas: o o o o Hotel Industry Foundations Hotel Math Fundamentals the metrics used by the hotel industry Property Level Benchmarking (STAR Reports) Hotel Industry Performance Reports One or two-day CHIA workshops are available To find out more please contact us at sharecenter@str.com 59

60 Airbnb 60

61 Questions: Slides: Thank you! 61

62 2015 DESTINATIONMAP MARKETS Anaheim Atlanta Austin Baltimore Boston Charlotte Chicago Dallas Denver Fort Lauderdale Houston Indianapolis Jacksonville Las Vegas Los Angeles Louisville Miami Minneapolis Montreal Nashville New Orleans New York Oahu Orlando Philadelphia Phoenix Portland Sacramento Salt Lake City San Antonio San Diego San Francisco San Jose Scottsdale Seattle St. Louis Tampa Toronto Vancouver Washington, D.C. 62