Research & Forecast Report LAS VEGAS HOTEL Q2 2015 Inventory Down, Occupancy Up > > Southern Nevada s hospitality market continues to re-tool for a new generation of visitors > > Room inventory is shrinking, driving up occupancy in remaining projects > > Hospitality sales continue to be sporadic Southern Nevada s hospitality market continued to impress in the second quarter of 2015. Visitor volume for the first four months of 2015 stood at 13.7 million people, approximately even with visitor volume in the first four months of 2014, and putting Southern Nevada on track to host more than 40 million people in 2015. While room occupancy was down in April 2015 compared to April 2014, ADR (average daily room rate) and RevPAR (revenue per available room) both increased year-over-year. The first four months of 2015 have also experienced a rise in gaming revenue, convention attendance and employment in the leisure and hospitality sector, though passenger traffic through McCarran International Airport is down slightly. Market Indicators Relative to prior period Market Q2 2015 Market Q3 2015* Room Inventory Room Occupancy Average Daily Rate Revenue Per Available Room *Projected Revenue Per Available Room (RevPar) $120.00 $100.00 $80.00 $60.00 $40.00 RevPAR Summary Statistics Q2 2015 Las Vegas Market Q2-2015 Q1-2015 Q2-2014 Room Inventory 149,552 152,540 150,975 Room Occupancy 88.8% 85.0% 89.5% Average Daily Rate $118.51 $124.46 $119.75 Revenue Per Available Room $105.24 $105.79 $107.17 $20.00 $0.00 2 Q 2013 3 Q 2013 4 Q 2013 1 Q 2014 2 Q 2014 3 Q 2014 4 Q 2014 1 Q 2015 2 Q 2015
The improvement in gaming revenue over 2014, however slight, is welcome news. While visitor volume and most other measures of the hospitality economy had recovered nicely since the Great Recession, gaming revenue had remained stubbornly below par. Fortunately, visitors to Southern Nevada did increase their spending on non-gaming activities, including shows, shopping and dining. This change in spending patterns may be due to the Great Recession, with visitors being more cautious and conservative and preferring entertainment and dining to gaming, or it could be a generational change, with the Gen-Xers and Millennials showing less interest in gaming than did the Baby Boomers and Bob Hope Generation. Either way, it does not appear to have especially hurt hospitality operators. Las Vegas s major gaming operators appear to have solid pricing power, with MGM absorbing increases in resort fees in 2014 without difficulty. Room inventory in Southern Nevada increased by 1,955 rooms in 2014, the region s largest increase since 2010. So far in 2015, though, the trend is closures as a prelude to redevelopment. In 2015, room inventory has decreased by 3,190 rooms, due primarily to the closures of the Riviera and Clarion properties for demolition and redevelopment. The Genting Group s Resorts World Las Vegas project has started preliminary construction this year, with completion expected by 2017. This should increase room inventory by 3,500 rooms. While Southern Nevada s previous hospitality boom came as a result of massive new resort developments, beginning with the Mirage, the current recovery and expansion of the hospitality market appears to be driven by reinvention, redevelopment and diversification of the entertainment landscape in Southern Nevada. Recent non-hospitality completions on the Strip and in the Resort Corridor include the LINQ retail district and High Roller attraction, the new three story mall in front of the Treasure Island hotel, and two new zip-line attractions on the Strip and in Downtown. Other coming attractions include a $375 million MGM Resorts International Arena behind New York-New York and Monte Carlo, the 1,100 room Alon at the old site of the New Frontier, and an expansion of the convention center facilities at the Mandalay Bay. The LVCVA is currently undertaking a 750,000 square foot expansion of the convention center to keep Southern Nevada at the Visitor Volume 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 Visitor Volume 0 2 Q 2013 3 Q 2013 4 Q 2013 1 Q 2014 2 Q 2014 3 Q 2014 4 Q 2014 1 Q 2015 2 Q 2015 Sales vs. Price Per Unit 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Sales vs. Price Per Unit 0 $0 2 Q 20133 Q 20134 Q 2013 1 Q 2014 2 Q 20143 Q 20144 Q 20141 Q 2015 2 Q 2015 Sales (Units) Average Price Per Unit $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Market Health Data Point 2015 YTD* 2014 2013 2012 2011 Visitor Volume (Millions) 13.7 41.6 39.9 39.7 38.9 Room Occupancy 86.9% 86.8% 84.3% 84.4% 83.8% ADR $121.49 $116.48 $110.64 $108.02 $104.97 RevPAR $105.51 $101.05 $93.27 $91.17 $87.96 Convention Attendance (Millions) 2.29 5.17 5.11 4.93 4.87 Passengers McCarran Int l (Millions) 13.6 42.9 41.8 41.7 41.5 Gaming Revenue (Clark County, Billions) $3.2 $9.6 $10.0 $9.4 $9.2 Gaming Revenue ( Strip, Billions) $2.1 $6.4 $6.5 $6.2 $6.1 Data from Las Vegas Convention & Visitors Authority * Data from January to April 2 Las Vegas Research & Forecast Report Q2 2015 Hospitality Colliers International
forefront of convention destinations in the United States. In all, we expect that approximately $4.7 billion will be spent on Southern Nevada s hospitality market between 2014 and 2016, before another $4 billion is spent developing the first phase of Resorts World Las Vegas in 2017. A total of 2,787 rooms sold in Southern Nevada in the second quarter of 2015, including 2,481 rooms in the Hooters Casino Hotel at a price of $101,000 per room, and 306 rooms in two limited service properties located in East Las Vegas and South Las Vegas at an average price of $39,222 per room. It has been announced that the 1,785 room Tropicana Las Vegas is being purchased by Penn National Gaming, with the sale to be finalized in the fourth quarter of 2015. The first phase after a recession ends is recovery. After recovery comes, one hopes, growth. In the case of Southern Nevada s hospitality market, recovery is being followed by reinvention. This is actually nothing new for Las Vegas. The resorts of the 1950 s and 1960 s, with their large set-backs and famously inexpensive shrimp cocktails made way for a more corporate Las Vegas in the 1980 s and 1990 s, with larger, themed resorts and attached shopping malls. The emphasis on gaming was reduced then, and is being reduced even more now as Las Vegas changes again to serve a new generation of vacationers. Hospitality Sales* Year Volume Units Sold Price/Unit 2015 YTD ** $685 MM 5,387 $127,000 2014 $1,864 MM 7,749 $241,000 2013 $55 MM 1,129 $49,000 2012 $121 MM 2,613 $46,000 2011 $3,009 MM 7,369 $408,000 2010 $858 MM 8,883 $97,000 2009 $1,226 MM 4,913 $249,000 2008 $86 MM 889 $97,000 * Only includes properties with 100 or more units, arm s-length sales ** Data from January to April Recent non-hospitality completions on the Strip and in the Resort Corridor include the LINQ retail district and High Roller attraction, the new three story mall in front of the Treasure Island hotel, and two new zip-line attractions on the Strip and in Downtown. 3 Las Vegas Research & Forecast Report Q2 2015 Hospitality Colliers International
215 Significant Hotel Sale Activity NORTHWEST NORTH LAS VEGAS Tropicana Hotel & Casino 95 The Strip - $360,000,000 1,497 Units - $240,000/Unit 15 Casino Hotel Hyatt Place - Las Vegas Resort Corridor - $19,000,000 SUMMERLIN WEST CENTRAL DOWNTOWN RESORT CORRIDOR EAST LAS VEGAS 202 Units - $94,000/Unit February 2015 Full Service 95 Crestwood Suites - Flamingo East Las Vegas - $6,000,000 THE STRIP 150 Units - $39,000/Unit Limited Service AIRPORT 215 Hooters Casino Hotel Resort Corridor - $70,000,000 SOUTHWEST HENDERSON 696 Units - $101,000/Unit Casino Hotel SOUTH LAS VEGAS Crestwood Suites - Las Vegas South Las Vegas - $6,000,000 156 Units - $39,000/Unit Limited Service Sale Activity Continued Property Name Sale Date Units Price Price/Unit Submarket Property Type Townplace Suites Feb 2015 228 $20,000,000 $88,000 Henderson Limited Service Riviera Hotel * Feb 2015 2,100 $182,500,000 $87,000 Strip Casino Hotel Hyatt Place-Las Vegas Feb 2015 202 $18,300,000 $91,000 Resort Corridor Full Service Stay Suites of America Dec 2014 128 $5,375,000 $42,000 West Vegas Limited Service Clarion Casino * Sep 2014 202 $22,500,000 $111,000 Resort Corridor Casino Hotel * Indicates a redevelopment site 4 Las Vegas Research & Forecast Report Q2 2015 Hospitality Colliers International
Market Comparisons - Las Vegas Hospitality Market TYPE TOTAL INVENTORY UNITS SOLD SALES VOLUME PRICE/UNIT COMPLETIONS THIS QUARTER COMPLETIONS YTD PLANNED DOWNTOWN CAS 7,646 - $0 n/a - - - LS 982 - $0 n/a (74) (74) - Total 8,628 - $0 n/a (74) (74) - LAS VEGAS STRIP CAS 83,743 1,497 $360,000,000 $240,481 (2,075) (2,075) 3,500 FS 5,817 - $0 n/a - - - LS 581 - $1,950 n/a - - - Total 90,141 1,497 $360,001,950 $240,482 (2,075) (2,075) 3,500 RESORT CORRIDOR CAS 10,231 696 $70,000,000 $100,575 - (202) - FS 5,414 - $0 n/a - - - LS 7,111 - $0 n/a - - - Total 22,756 696 $70,000,000 $100,575 - (202) - AIRPORT CAS - - $0 n/a - - - LS 986 - $0 n/a - - - Total 986 - $0 n/a - - - EAST LAS VEGAS SUBMARKET CAS 1,914 - $0 n/a - - - LS 2,571 150 $5,901,639 $39,344 (839) (839) - Total 4,485 150 $5,901,639 $39,344 (839) (839) - HENDERSON SUBMARKET CAS 2,268 - $0 n/a - - - FS 871 - $0 n/a - - - LS 1,480 - $0 n/a - - - Total 4,619 - $0 n/a - - - NORTH LAS VEGAS SUBMARKET CAS 1,030 - $0 n/a - - - LS 1,611 - $0 n/a - - - Total 2,641 - $0 n/a - - - SOUTH LAS VEGAS SUBMARKET CAS 2,463 - $0 n/a - - 390 FS 2,704 - $0 n/a - - - LS 1,206 156 $6,098,361 $39,092 - - 134 Total 6,373 156 $6,098,361 $39,092 - - 524 SUMMERLIN SUBMARKET CAS 1,247 - $0 n/a - - - FS 695 - $0 n/a - - - LS 857 - $0 n/a - - - Total 2,799 - $0 n/a - - - WEST CENTRAL SUBMARKET CAS 3,673 - $0 n/a - - - LS 2,451 - $0 n/a - - - Total 6,124 - $0 n/a - - - MARKET TOTAL CAS 114,215 2,193 $430,000,000 $196,078 (2,075) (2,277) 3,890 FS 15,501 - $0 n/a - - - LS 19,836 306 $12,001,950 $39,222 (913) (913) 134 Total 149,552 2,499 $442,001,950 $176,872 (2,988) (3,190) 4,024 QUARTERLY COMPARISON AND TOTALS Q2-15 149,552 2,499 $442,001,950 $176,872 (2,988) (3,190) 4,024 Q1-15 152,540 2,888 $243,075,470 $84,167 (202) (202) 4,124 Q4-14 152,742 128 $5,375,000 $41,992 0 1,955 4,124 Q3-14 152,742 590 $48,962,292 $82,987 1,767 1,955 4,124 Q2-14 150,975 6,925 $1,799,600,000 $259,870 188 188 5,891 Q1-14 150,787 106 $10,280,211 $96,983 0 0 4,457 5 Las Vegas Research & Forecast Report Q2 2015 Hospitality Colliers International
502 offices in 67 countries on 6 continents United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108 $2.3 billion in annual revenue COLLIERS INTERNATIONAL LAS VEGAS 3960 Howard Hughes Parkway Suite 150 Las Vegas, Nevada 89169 USA +1 702 735 5700 www.colliers.com/lasvegas MARKET CONTACT: Mike Mixer Executive Managing Director Las Vegas +1 702 735 5700 mike.mixer@colliers.com John Stater Research & GIS Manager Las Vegas +1 702 836 3781 john.stater@colliers.com 1.7 billion square feet under management 16,300 professionals and staff About Colliers International Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is a global leader in commercial real estate services with more than 16,300 professionals operating from 502 offices in 67 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 10 consecutive years, more than any other real estate services firm. For the latest news from Colliers International, visit Colliers.com or follow us on Twitter (@ColliersIntl) and LinkedIn. colliers.com Copyright 2015 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.