U.S. Hotel Industry Performance HBI Annual Conference February 17, 2017 Jeff Higley VP/Editorial Director jeff@str.com @jeffhigley1 2016 STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively STR ) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR. No strategic advice or marketing recommendation is intended or implied. 1
www.hotelnewsnow.com Data Dashboard>View All Data Presentations 2
About STR The Data 3
Total U.S. Review 4
2016: Incredibly Average % Change 29 Yr. Avg. Change Room Supply 1.6% +1.8% Room Demand 1.7% +2.0% Occupancy 66.7% 0.1% +0.2% A.D.R. $124 3.1% +3.1% RevPAR $83 3.2% +3.3% Room Revenue 4.8% +5.2% December 2016 YTD, Total US Results 5
US 2016 RevPAR: 3 Markets Dragged US Results Total US YTD: +3.2% NYC: - 1.8% Miami: - 5.5% Houston: -12.4% Total US excluding NYC, Miami & Houston: +3.8% *RevPAR % Change December 2016 YTD 6
Demand Growth Slows; Supply Growth Increases To 1.6% 8 7.7 4 0-0.8-4 Supply % Change Demand % Change -8-4.7-7.1 1990 2000 2010 Total U.S., Supply & Demand % Change, 12 MMA 1/1990 12/2016 7
Occupancy Growth Rapidly Approaching 0% 6.8 7.5 5 0 3.1 0.1-5 -3.4 Occ % Change ADR % Change -6.7-10 1990 2000 2010 Total U.S., ADR & OCC % Change, 12 MMA 1/1990 12/2016-9.7 8
Declining Occupancies & Rising ADRs: Not Unprecedented 8 6 4 OCC % Change ADR % Change 2 0-2 24 Months 42 Months -4 1990 1992 1994 1996 1998 Total U.S., ADR & OCC % Change, 12 MMA 1/1990 12/1999 9
RevPAR Growth: Slowing Down After 6 Years Of Growth 15 10 5 0-5 -10-15 -20 80 Months 31 Mo 56 Months 82 Months -25 1990 2000 2010 Total U.S., RevPAR % Change, 1/1990 12/2016 10
RevPAR: Erratic Monthly Numbers, But Trend Is Slowing 10 8 Monthly 12MMA 6 4 2 0 2015 2016 *Total U.S., RevPAR % Change by month and 12 MMA, 1/2015 12/2016 11
Chain Scale & Location Review Year-end 2016 12
2016 STR Chain Scales: Sample of brands Luxury Fairmont, Four Seasons, Ritz Carlton, JW Marriott Upper Upscale Sheraton, Embassy Suites, Hyatt, Marriott Upscale Radisson, Hilton Garden Inn, Residence Inn, Springhill Suites, Homewood Suites, Courtyard, Best Western Premier Upper Midscale Fairfield Inn/Suites, Holiday Inn, Clarion, Hampton Inn/Suites, Best Western Plus, Country Inn & Suites Midscale Best Western, Candlewood Suites, Quality Inn/Suites, La Quinta, Sleep Inn, Red Lion Economy Americas Best Value Inn, Country Hearth Inn, Jameson Inn, Extended Stay America, Motel 6, Red Roof, Days Inn, Microtel Complete list: www.hotelnewsnow.com/chainscales 13
Scales: Supply Growth Outpaces Demand Growth For Most 5.6 Supply % Change 5.0 Demand % Change 2.8 2.4 1.6 1.4 2.1 1.9 1.2 1.1 1.0 0.3 0.2-0.1 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independents *Supply / Demand % Change, by Scale, December 2016 YTD 14
High End Hotels Still Very Busy (But A Little Less So) 74.9 75.2 74.2 74.3 73.8 74.3 2016 2015 67.4 67.5 59.4 59.4 57.9 58.1 62.3 61.8 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independents *OCC %, by Scale, December YTD 2016 & 2015 15
Locations: Urban Leads Supply & Demand 5 4 3 2 1 0-1 Supply Demand 2.9 3.0 1.8 1.4 1.6 1.5 1.4 1.5 1.0 0.8 0.9 0.4 Urban Suburban Airport Interstate Resort Small Metro *Supply / Demand % Change, by Location, December 2016 YTD 16
Locations: What s Up With Interstate Occupancy? 4 3 2 1 0-1 -2 3.7 3.4 Occupancy ADR 2.8 2.9 1.9 2.1 0.9 0.1 0.2 0.1-0.2-1.1 Urban Suburban Airport Interstate Resort Small Metro Occupancy / ADR Percent Change; December 2016 YTD 17
Locations: Rev, Rev, Revved Up Revenue Across Board 6 5 4 3 2 2.1 5.0 3.9 5.4 RevPAR 3.3 4.2 Room Revenue 2.5 3.8 4.7 3.1 4.5 1 0.9 0 Urban Suburban Airport Interstate Resort Small Metro RevPAR/ Room Revenue Percent Change; December 2016 YTD 18
Segmentation 19
Transient: ADR Growth Slowing Despite High Occupancy 6% 5% 4% 3% 2% 1% 0% Demand % Change ADR % Change Jan-14 Jan-15 Jan-16 *Transient Demand and ADR % Change, 12 MMA, 1/2014 12/2016 20
6% 5% 4% 3% Group Performance: No Demand Growth To Speak Of Demand % Change ADR % Change 2% Jewish Holiday Shift 1% -1% -2% Jan-14 Jan-15 Jan-16 *Group Demand and ADR % Change, 12 MMA, 1/2014 12/2016 21
Markets 22
New Supply Affects NYC, Houston, Miami Market OCC % ADR % Change Los Angeles/Long Beach, CA 81.3 8.5 Nashville, TN 74.8 6.0 Atlanta, GA 69.9 5.8 Tampa/St Petersburg, FL 71.6 5.6 Denver, CO 73.7 5.5 Phoenix, AZ 67.2 1.8 Chicago, IL 69.1 1.4 New Orleans, LA 68.8 0.0 New York, NY 85.9-2.5 Miami/Hialeah, FL 75.9-2.9 Houston, TX 62.3-3.6 * December 2016 YTD ADR % Change in Top 25: 5 Best / 5 Worst Performing ADR % Markets 23
NYC RevPAR: Mostly Bad. New Supply Looming Large 8.8 3.2 3.7-2.4-4.5-4.9-4.0-1.5-1.7-3.7-6.5-7.5 Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec * NYC RevPAR % Change, by Month, 12/2015 12/2016 24
Houston: As Oil Goes, So Does Demand $/gal % $100 $90 $80 $70 $60 $50 $40 $30 Crude Oil Futures Price / Barrel (LHS) Demand % Change (RHS) 2014 2015 2016 *Monthly Oil price Future / Barrel vs. Houston, TX Room Demand % Change 1/2014 12/2016 http://www.investing.com/commodities/crude-oil 8.0 6.0 4.0 2.0 0.0-2.0-4.0-6.0-8.0-10.0 25
Pipeline 26
Pipeline: Is This When Overbuilding Happened? Phase 2016 2015 % Change In Construction 187 140 33% Final Planning 198 180 10% Planning 174 147 17% Under Contract 560 469 19% *Total US Pipeline, by Phase, 000s Rooms, December 2015 and 2016 27
Thousands U/C Pipeline Is Growing But Still Below Prior Peak 250 200 24K 150 100 50 High: Dec 07 211K Low: May 11 50K 0 2006 2008 2010 2012 2014 2016 Dec 16 187K *Total US Pipeline; Rooms In Construction, in 000s; Jan 2006 December 2016 28
Limited Service Construction Is The Name Of The Game 61.6 60.0 65% 23.6 22.8 7.5 8.8 2.6 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated *US Pipeline, Rooms Under Construction, 000s Rooms, by Scale, December 2016 29
Construction In Top 26 Markets: 23 With 2%+ Of Supply Market Rooms U/C % Of Existing Norfolk/Virginia Beach, VA 456 1% Orlando, FL 1,552 1% Oahu Island, HI 410 1% Minneapolis/St Paul, MN-WI 763 2% St Louis, MO-IL 876 2% Las Vegas, NV 3,950 2% Chicago, IL 3,212 3% New Orleans, LA 1,211 3% Phoenix, AZ 1,962 3% San Francisco/San Mateo, CA 1,825 4% Atlanta, GA 3,421 4% Washington, DC-MD-VA 4,069 4% Detroit, MI 1,662 4% San Diego, CA 2,371 4% Anaheim/Santa Ana, CA 2,533 4% Tampa/St Petersburg, FL 2,114 5% Boston, MA 2,764 5% Houston, TX 4,664 5% Los Angeles/Long Beach, CA 6,069 6% Philadelphia, PA-NJ 3,004 6% Miami/Hialeah, FL 3,579 7% Nashville, TN 3,401 9% Dallas, TX 7,101 9% Denver, CO 4,596 10% Seattle, WA 5,219 12% New York, NY 15,333 13% *US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, December 2016 30
Top 26 Markets Have 47% Of U/C Rooms In Construction Final Planning 121.5 Planning 88.1 77.2 69.5 98.8 105.0 Top 26 Markets Rest of the US *US Pipeline, Rooms ( 000s), Top 26 Markets vs. All Other Markets, December 2016 31
YE 2016 Transaction Almanac 32
Billions Transaction Volume: A Step Back $35 $30 $29.8 $26.3 $25 $22.8 $23.4 $20 $19.4 $16.8 $18.6 $15 $10 $5 $5.1 $3.5 $3.3 $6.9 $13.2 $9.5 $3.1 $13.1 $12.5 $10.4 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 33
Thousands Average Price per Room: Keep on Climbing! $300 $250 $251 $238 $219 $200 $174 $189 $181 $190 $150 $152 $122 $124 $125 $100 $87 $94 $87 $76 $100 $72 $50 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 34
Thousands Total Investment per Room (Including Additional Capital) $300 $250 $249 $257 $277 $200 $206 $187 $203 $221 $217 $150 $133 $158 $143 $134 $100 $102 $110 $97 $101 $96 $50 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 35
2016 / 2017 Forecast 36
Notable Calendar Shifts Impacting Lodging Performance Data in 2017: Easter: Jewish Holidays: From March to April (affects Q1/Q2) From October to September (affects Q3/Q4) January had two fewer Weekend days (Net -) Notable Market Level Events / Comps: Super Bowl: From San Francisco To Houston San Francisco: Super Bowl Shift and Moscone Center Renovation Los Angeles: Porter Ranch Gas Leak Washington, D.C.: Inauguration (January) East Tennessee: Wild Fires (November) East Coast: Hurricane Matthew (October) 37
Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2017F 2018F Outlook 2017 Forecast 2018 Forecast Supply 2.0% 2.2% Demand 1.7% 2.0% Occupancy -0.3% -0.2% ADR 2.8% 2.8% RevPAR 2.5% 2.6% 38
Total United States Chain Scale Key Performance Indicator Outlook 2017F by Chain Scale 2017 Year End Outlook Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (% chg) Luxury -0.4% 2.5% 2.1% Upper Upscale -0.2% 2.5% 2.3% Upscale -1.1% 2.5% 1.3% Upper Midscale -0.7% 2.3% 1.6% Midscale 0.1% 2.4% 2.5% Economy 0.0% 2.7% 2.7% Independent -0.3% 3.0% 2.7% Total United States -0.3% 2.8% 2.5% 39
Total United States Chain Scale Key Performance Indicator Outlook 2018F by Chain Scale 2018 Year End Outlook Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (% chg) Luxury -0.2% 3.0% 2.8% Upper Upscale -0.1% 2.8% 2.7% Upscale -0.7% 2.5% 1.7% Upper Midscale -0.6% 2.5% 1.9% Midscale -0.2% 2.5% 2.2% Economy -0.1% 2.3% 2.3% Independent -0.2% 2.8% 2.7% Total United States -0.2% 2.8% 2.6% 40
2017 Year End RevPAR Forecast -5% to 0% 0% to 5% 5% to 10% Houston, TX Miami-Hialeah, FL New York, NY Anaheim-Santa Ana, CA Atlanta, GA Boston, MA Chicago, IL Dallas, TX Denver, CO Detroit, MI Los Angeles-Long Beach, CA Minneapolis-St. Paul, MN-WI Nashville, TN New Orleans, LA Norfolk-Virginia Beach, VA Oahu Island, HI Orlando, FL Philadelphia, PA-NJ Phoenix, AZ San Diego, CA San Francisco/San Mateo, CA Seattle, WA St. Louis, MO-IL Top 25 US Markets, Nov 2016 Forecast (Markets sorted alphabetically) 41
Odds and Ends 42
The new Marriott House Of Brands 12/2016 43
World s Largest Hotel Companies Scale Matters! Parent Company Properties Rooms Marriott International 5,890 115,2034 Hilton Worldwide 4,819 785,087 InterContinental Hotels Group 4,998 721,816 Wyndham Worldwide 7,707 675,552 Accor 3,886 526,729 Choice Hotels International 6,417 510,551 Best Western Hotels & Resorts 3,728 295,872 Carlson Hospitality Company 1,135 178,576 Hyatt Hotels Corp. 651 170,053 Jinjiang Holding 1,180 147,078 44
The Email That Started Airbnb: * Joe Gebbia/Brian Chesky 45
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Compression Nights in 7 US Markets, July YTD 2013 61 2014 75 2015 76 2016 71 Hotel Supply Change ( 14-16) Airbnb +2.60mm +2.68mm +3% +127% Airbnb and Hotel Performance - Full Report at str.com 48
Questions? Presentation is available for download. To view this presentation, click STR Data Presentations from the drop-down menu on www.hotelnewsnow.com. 2016 STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively STR ) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR. No strategic advice or marketing recommendation is intended or implied. 49