U.S. Hotel Industry Performance Brad Garner Chief Operating Officer 1
Agenda Total US Review Scale Review Segmentation Markets Supply Pipeline 2013 / 2014 Forecast 2
www.hotelnewsnow.com Click on Hotel Data Presentations 3
Total US Review 4
Demand Growth Strong. RevPAR Driven by ADR. Fiscal Cliff, Election, Hurricane, 4 th QTR calendar comps, Uncertainty resiliency/resolve Record levels of demand/persistent rougly60m rooms over 2007 % Change ALIS 12 Room Supply* 1.8 bn 0.5% 0.8% Room Demand* 1.1 bn 3.0% 1.3% Occupancy 61.4% 2.5% 0.5% A.D.R. $106 4.2% 3.8% RevPAR $65 6.8% 4.3% Room Revenue* $115 bn 7.3% Full year 2012, Total US Results * All Time High 5
Favorable Supply / Demand Fundamentals for 2013 8 8.0% Unencumbered by supply growth 4 3.0% 0-0.9% -4 Supply Demand - 4.7% -8-6.9% 1990 2000 2010 Total U.S., Supply & Demand % Change, 12 MMA 1/1990 12/2012 6
ADR Growth Stalls. Smooth Sailing From Here? 5 4.1% 0-0.9% -0.2% -5-4.7% -4.6% Demand ADR -6.9% -10 1990 2000 2010-8.7% Total U.S., ADR & Demand % Change, 12 MMA 1/1990 12/2012 7
Positive RevPAR Growth: Four More Years (?) 10 9% 8.6% 5 0 112 Months 65 Months 28 Mo. -5-2.6% -10-10.1% -15-16.8% -20 1990 2000 2010 Total U.S., ADR & Demand % Change, 12 MMA 1/1990 12/2012 8
ADR Discounting at Twice The Speed of ADR Increases 110 Sept 08 $108 12/12 $106 105-10% Dec 11 $102 100 19 Months Apr 10 $97 19 Months +4.9% 95 2008 2009 2010 2011 2012 *Total US, ADR $, 12 MMA 1/07 8/12 9
Inflation Adjusted ADRs Still Out Of Reach Nominal ADR 2000 / 2008 Grown by CPI $107 6 Years in 2008 ADR Grown By CPI $119 7 Years $101 2000 ADR Grown By CPI $85 $85 $104 $107 $115 2000 2002 2004 2006 2008 2010 2012 2014F Total U.S., ADR $ and Inflation Adjusted ADR $, 2000 2014F 2000 2012 CPI from bls.gov, 2013 2014 CPI from Blue Chip Economic Indicators 10
Chain Scale Review 11
Scales: Strong Demand Growth, Supply Not An Issue 3.9 4.7 Supply Demand 3.1 3.1 2.1 1.9 1.8 1.6 0.8 0.0 0.0-0.2 Luxury Upper Upscale Upscale Upper Midscale** Midscale** Economy *Supply / Demand % Change, by Scale, 2012 **Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification 12
ADR Growth > OCC Growth 4.6 4.3 4.6 3.8 Occupancy ADR 4.0 3.2 2.9 3.3 2.1 1.9 2.4 1.8 Luxury Upper Upscale Upscale Upper Midscale** Midscale** Economy *OCC / ADR % Change, by Scale, 2012 **Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification 13
RevPAR Slowly Catches Up To Prior Record Highs $213 $202 2007 2012 $113 $112 $84 $84 $62 $62 $44 $41 $31 $29 Luxury Upper Upscale Upscale Upper Midscale** Midscale** Economy *RevPAR $, by Scale, 2007 & 2012 **Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification 14
Segmentation 15
70% US Industry Segmentation Mix (Occupancy Share) 60% 50% 40% Group mix 30% Trans Mix 20% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 Contract not included ne 100% NOTE: Data is for upper tier hotels only (luxury chains, upper upscale chains, and upper tier independent hotels). 16
Group Demand Never Recovered After The Downturn 19.0% +30 mm rooms -3 mm rooms -2.7% Transient Group *Segmentation Demand % Change, 2012 (vs. 2007) NOTE: Data is for upper tier hotels only (luxury chains, upper upscale chains, and upper tier independent hotels). 17
We Expect Transient ADR Growth To Continue 8.0 6.0 4.0 2011: 5.1% 2.0 2012: 4.2% 0.0 Jan-11 Jul-11 Jan-12 Jul-12 *Transient ADR % by Month, 1/11 12/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 18
Group ADR Expectation Still Muted 5.0 4.0 3.0 2.0 1.0 2011: 2.5% 2012: 2.5% 0.0-1.0 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 *Group ADR % by Month, 1/11 12/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 19
Markets 20
2012 RevPAR: Best / Worst Performing Markets Market RevPAR % Change Market RevPAR % Change Texas West 24.9 Chattanooga, TN-GA 0 Oahu Island, HI 16.7 Colorado Springs, CO -0.1 Oakland, CA 16.3 Hartford, CT -0.1 Louisiana South 15.7 Washington, DC-MD-VA -0.5 Oklahoma City, OK 14.9 Augusta, GA-SC -1.3 San Jose-Santa Cruz, CA 14.8 Albuquerque, NM -1.3 New Orleans, LA 14.6 Alabama North -2.1 Indianapolis, IN 13.8 Birmingham, AL -2.6 Houston, TX 13.8 Scranton-Wilkes-Barre, PA -4.3 Charlotte, NC-SC 13.4 Louisiana North -6.1 21
2012 ADR: Best / Worst Performing Markets Market ADR % Change Market ADR % Change Texas West 20.8 Colorado Springs, CO 0.8 Oahu Island, HI 11.2 Tulsa, OK 0.5 San Francisco/San Mateo, CA 10.8 Fort Worth-Arlington, TX -0.2 North Dakota 10.4 Augusta, GA-SC -0.3 San Jose-Santa Cruz, CA 9.8 Scranton-Wilkes-Barre, PA -0.4 Charlotte, NC-SC 9.4 New Jersey Shore -0.6 Oakland, CA 9.2 Washington, DC-MD-VA -0.7 Indianapolis, IN 9 California North Central -0.8 New Mexico South 8.9 Tucson, AZ -1.1 New Orleans, LA 8.6 Melbourne-Titusville, FL -1.9 22
Peak ADRs Still Elusive For Most Top 25 MSAs 7 have made the recovery by the end of 2012 10.9% 9.6% 6.3% 1.4% 1.3% 0.8% 0.8% -1.5% -2.7% -3.4% -3.4% -3.8% -5.1% -5.1% -6.3% -6.3% -6.6% -7.6% -7.8% -7.9% -8.9% -9.5% -9.7% -11.0% -15.7% * Top 25 Markets, ADR % Change From Prior Peak, as of 12 2012 23
-$3.02 -$3.35 -$3.86 -$4.24 -$5.38 Peak ADRs Still Off Peak By Over $5 for Majority Of Top Markets $15.03 $13.05 $10.81 $1.99 $1.31 $1.31 $1.07 -$1.27 -$6.04 -$6.37 -$6.53 -$8.25 -$8.38 -$8.40 -$8.41 -$10.40 -$11.21 -$12.09 -$19.74 -$31.02 Top 25 Markets, ADR $ Change From Prior Peak, as of 12 2012 24
Supply Pipeline 25
US Pipeline: Construction Accelerates Phase YE 2012 YE 2011 % Change In Construction 68 54 25.5% Final Planning 101 111-9.1% Planning 135 143-5.2% Active Pipeline 304 308-1.2% Pre-Planning 89 98-9.2% Total 393 406-3.1% *Total US Pipeline, by Phase, 000s Rooms, 2012 and 2011 26
250 Total United States Monthly Rooms In Construction In Thousands January 2005 December 2012 211.7K 200 150 100 67.9K 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2005 2006 2007 2008 2009 2010 2011 2012 27
Under Construction Rooms Mostly In Middle Segments 22.4 20.4 7.3 8.8 4.5 3.3 1.1 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated *US Pipeline, Rooms Under Construction, 000s Rooms, by Scale, YE 2012 28
Total United States Top 15 Brands All Active Phases December 2012 Holiday Inn Express Hampton Inn & Suites Courtyard Residence Inn Hilton Garden Inn Fairfield Inn Holiday Inn Homewood Suites Home2 Suites Hampton Inn Springhill Suites La Quinta Inns & Suites TownePlace Suites Candlewood Suites Comfort Suites 7,350 7,131 6,905 6,179 6,064 5,997 4,931 8,675 10,450 10,357 12,159 14,302 13,872 17,698 18,701 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Rooms 29
Total United States Markets with Most Rooms In Construction December 2012 New York 10.0 Washington, D.C. Orlando Chicago 2.3 2.8 3.1 Nashville Denver Miami-Hialeah San Diego 1.5 1.3 1.2 1.2 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Number of Rooms (in thousands) 30
2013 / 2014 Forecast Typo 2012 / 2013 on the original 31
Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2013-2014 Outlook 2013 Forecast 2014 Forecast Supply 1.0% 1.5% Demand 1.8% 2.8% Occupancy 0.8% 1.3% Group? GDP? Unemployment? Inbound Int l? ADR 4.9% 4.6% RevPAR 5.7% 6.0% 32
Total United States Chain Scale Key Performance Indicator Outlook 2013F by Chain Scale Chain Scale 2013 Year End Outlook Occupancy (% chg) ADR (% chg) RevPAR (%chg) Luxury 2.3% 6.6% 9.0% Upper Upscale -0.1% 4.5% 4.3% Upscale 1.4% 5.5% 7.0% Upper Midscale 0.5% 4.8% 5.3% Midscale 0.7% 2.4% 3.2% Economy 1.1% 3.3% 4.4% Independent 0.5% 4.8% 5.2% Total United States 0.8% 4.9% 5.7% 33
Total United States Chain Scale Key Performance Indicator Outlook 2014F by Chain Scale Chain Scale 2014 Year End Outlook Occupancy (% chg) ADR (% chg) RevPAR (%chg) Luxury 0.2% 5.7% 5.9% Upper Upscale 0.5% 4.8% 5.3% Upscale 0.8% 4.9% 5.7% Upper Midscale 1.4% 3.1% 4.6% Midscale 2.0% 3.9% 5.9% Economy 2.2% 4.5% 6.8% Independent 0.7% 4.7% 5.5% Total United States 1.3% 4.6% 6.0% 34
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