MPI Nashville Chapter Monthly Meeting Embassy Suites Cool Springs September 20, 2017 Veronica Andrews Director, Digital Data Solutions vandrews@str.com @STR_Data 2017 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.
Agenda Industry Update Pipeline Nashville Market Performance Segmentation Insights Forecasts Hotel F&B Performance
A few of notes before we begin
One We are Brand now
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) 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 & Women s March (January 2016) Philadelphia: DNC (July 2016) Cleveland: RNC (July 2016) East Tennessee: Wild Fires (November 2016) East Coast: Hurricane Matthew (October 2016) Texas/Florida: Hurricanes Harvey and Irma (August/September 2017)
U.S. Industry Performance
August 2017 YTD: Demand Growth Continues To Hold % Change Room Supply 1.8% Room Demand 2.4% Occupancy (*Record*) 67.1% 0.5% A.D.R. $127 2.1% RevPAR $85 2.7% Room Revenue 4.5% Total US Results - August 2017 YTD
August YTD 2017: New Supply Hits NYC, Miami. Market OCC % ADR % Change Influenced By Washington, DC-MD-VA 74.0 5.5 Inauguration / Women s March Nashville, TN 74.8 5.3 Bachelorette Parties Seattle, WA 79.4 4.7 Phoenix, AZ 69.1 4.4 Detroit, MI 67.5 4.3 New Supply (Watch for future Harvey Impact) Houston, TX 62.1-0.9 New York, NY 85.3-1.8 New Supply Superbowl L 2016 / Moscone Center Closed April - August San Francisco/San Mateo, CA 84.1-2.0 Philadelphia, PA-NJ 68.8-3.5 DNC 2016 Miami/Hialeah, FL 78.7-3.7 New Supply *August 2017 YTD ADR % Change in Top 25: 5 Best / 5 Worst Performing ADR Growth Markets
August 2017 12MMA: Steady RevPAR Growth % Change Room Supply 1.8% Room Demand 2.4% Occupancy (*Record*) 65.7% 0.6% A.D.R. $126 2.4% RevPAR $83 3.0% Room Revenue 4.8% Total US Results - August 2017 12MMA
What Defines Success? ($) RevPAR Rooms Available (supply) Rooms Revenue ($)
US Industry RevPAR Growth: Erratic Monthly Numbers, But Overall Current Trend Is Steady 20 16 12 8 4 0 Monthly 12MMA -4 2015 2016 2017 *Total U.S. - RevPAR % Change by month and 12MMA, 1/2015 8/2017
Nashville, TN Market RevPAR Growth: Erratic Monthly Numbers; Overall Downward Trend 20 16 12 8 4 0 Monthly 12MMA -4 2015 2016 2017 *Nashville, TN Market - RevPAR % Change by month and 12MMA, 1/2015 8/2017
Demand Growth Stronger Than Expected. 8 Supply % Change Demand % Change 7.7 4 0-0.8-4 -4.7-8 1990 2000 2010-7.1 Total U.S., Supply & Demand % Change, 12 MMA 1/1990 8/2017
Nashville, TN Supply Growth Begins to Outpace Demand Growth. 15 10 Supply % Change Demand % Change 5 0 4.8 3.5 2.4-5 -3.7-10 Nashville, TN Market Supply & Demand % Change, 12 MMA 1/2002 8/2017-8.8 1990 1995 2000 2005 2010 2015
Pipeline
US Pipeline: I/C Growth Still Strong (But Growth Rates Used to be 30%+) Phase 2017 2016 % Change In Construction 192 170 13% Final Planning 220 198 11% Planning 178 174 2% Under Contract 590 542 9% *Total US Pipeline, by Phase, 000s Rooms, August 2017 and 2016
Thousands I/C Pipeline Is Growing But Still Below Prior Peak 250 200 150 100 High: Dec 07 211K 19K August 17 192K 50 Low: May 11 50K 0 2006 2008 2010 2012 2014 2016 *Total US Pipeline; Rooms In Construction, in 000s; 1/2006 7/2017
Limited Service Construction Is The Name Of The Game 61.3 63.0 8.9 26.4 65% 9.9 2.5 20.2 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated *US Pipeline, Rooms In Construction, 000s Rooms, by Scale, August 2017
Pipeline: Top 26 Markets Have 48% Of All Rooms I/C In Construction Final Planning Planning 136.6 92.3 83.3 76.3 99.8 101.7 BNA Mkt: 5.4 6.2 3.4 Top 26 Markets Rest of US *US Pipeline, Rooms ( 000s), Top 26 Markets vs. All Other Markets, August 2017
Projects in the Nashville, TN Pipeline Opening 2017/2018 Under Construction (5,389 rooms) The Unbound Collection Holston House The Bobby Hotel JW Marriott Nashville Dream Nashville Hilton Nashville Green Hills Hilton Franklin Cool Springs Noelle Nashville AC Hotels by Marriott Nashville Downtown Cambria Hotel & Suites Nashville Residence Inn Nashville @ Opryland Residence Inn Nashville Downtown Residence Inn Nashville Green Hills Springhill Suites Nashville Downtown Springhill Suites Mount Juliet Staybridge Suites Mount Juliet *Nashville, TN Market Pipeline, Rooms ( 000s), due to open 2017/2018 - August 2017 Fairfield Inn & Suites Lebanon Hampton Inn & Suites Franklin Hampton Inn & Suites Nashville Goodlettsville Hampton Inn Suites Nashville Downtown Holiday Inn & Suites Nashville Downtown Holiday Inn Express & Suites Springfield Holiday Inn Express Goodlettsville Home2 Suites Mount Juliet Home2 Suites Murfreesboro Home2 Suites Nashville Bellevue Home2 Suites Smyrna Moxy Nashville Downtown My Place Hotel Lebanon Towneplace Suites Goodlettsville Candlewood Suites Goodlettsville Tru By Hilton Murfreesboro Tru By Hilton Smyrna Nashville Woodspring Suites Nashville North
Nashville, TN Market Performance
Nashville, TN Market Performance August 2017 12MMA Nashville, TN Market Market Share of Supply Hotels 345 Rooms 40,557 STR Sample 89% Key Statistics %ch OCC 73.8% -1.0% ADR $139.28 5.3% RevPAR $102.84 4.3% Rm Rev $1.499B 7.9% Supply 14.6M 3.5% Demand 10.8M 2.4%
Other Areas 68.8% - 3.1% 67.9% + 2.4% 81% - 0.6% CBD I-65 N Airport 72% - 2.0% Occupancy 73.8% -1.0% Brentwood/ Franklin I-24 Murfreesboro 74.6% - 1.5% 71.4% - 1.1% Nashville, TN Submarket Occupancy Performance August 2017 12MMA
Other Areas $82 + 7.2% $89 + 10.5% $215 + 5.3% CBD I-65 N Airport $135 + 3.6% ADR $139.28 +5.3% Brentwood/ Franklin I-24 Murfreesboro $122 + 1.3% $85 + 2.8% Nashville, TN Submarket Average Daily Rate Performance August 2017 12MMA
Other Areas $56 + 4.0% $60 + 13.1% $175 + 4.6% CBD I-65 N Airport $98 + 1.5% RevPAR $102.84 +4.3% Brentwood/ Franklin I-24 Murfreesboro $91-0.2% $60 + 1.7% Nashville, TN Submarket RevPAR Performance August 2017 12MMA
Recap: Nashville, TN Market Performance by Submarket Occupancy ADR RevPAR Airport Brentwood/Franklin Central Business District I-24 Murfreesboro I-65 North Other Areas -2.0% 3.6% 1.5% -1.5% 1.3% -0.2% -0.6% 5.3% 4.6% -1.1% 2.8% 1.7% 2.4% 10.5% 13.1% -3.1% 7.2% 4.0% Nashville, TN Market -1.0% 5.3% 4.3% Nashville, TN Market and Submarkets Occupancy, ADR & RevPAR - August 2017 12MMA % Change
Day Of Week Patterns
Nashville, TN Market 3 Year Occupancy by Day of Week 12MMA 100.0 75.0 70.0 77.2 77.2 74.7 79.9 81.0 73.8 56.8 50.0 25.0 0.0 Sun Mon Tue Wed Thu Fri Sat Total 3 Yr Sep 14 - Aug 15 Sep 15 - Aug 16 Sep 16 - Aug 17
Nashville, TN 3 Year ADR by Day of Week 12MMA $150.00 $148 $145 $130.00 $128 $127 $134 $139 $139 $132 $133 $131 $137 $137 $139 $132 $139 $121 $110.00 Sun Mon Tue Wed Thu Fri Sat Total Year Total 3 Yr Sep 14 - Aug 15 Sep 15 - Aug 16 Sep 16 - Aug 17
Nashville, TN Market 3 Year RevPAR by Day of Week 12MMA $120.00 +$6 +$6 $109 +$5 $113 +$7 $102 $102 +$5 +$5 $100.00 +$5 $98 $97 $89 $80.00 +$5 $69 $60.00 Sun Mon Tue Wed Thu Fri Sat Total Year Total 3 Yr Sep 14 - Aug 15 Sep 15 - Aug 16 Sep 16 - Aug 17 +$ *RevPAR premium compared to 3 year average
Group Trends
US Industry Group and Transient Mix 12MMA Luxury and Upper-Upscale Classes 70% 60% Transient Mix Group Mix 63.9% 50% 40% 30% 32.2% 20% 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Total US Group and Transient Mix, Occupied Rooms 12MMA, January 2005 August 2017, *Luxury & Upper Upscale Classes Only
Nashville, TN Market Group and Transient Mix 12MMA Luxury and Upper-Upscale Classes 70% Transient Mix Group Mix 60% 50% 49.5% 48.0% 40% 30% 20% 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Nashville, TN Market Group and Transient Mix, Occupied Rooms 12MMA, January 2005 August 2017, *Luxury & Upper Upscale Classes Only
US Industry Group and Transient ADRs 12MMA Luxury and Upper-Upscale Classes $250 Transient ADR Group ADR $225 $200 $219 11.4% $194 $175 $150 7.8% $125 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Total US Group and Transient ADRs 12MMA, January 2005 July 2017, *Luxury & Upper Upscale Classes Only
Nashville, TN Market Group and Transient ADRs 12MMA Luxury and Upper-Upscale Classes $225 Transient ADR Group ADR $218 $200 14.3% $190 $175 $150 1.3% $125 $100 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Nashville, TN Market Group and Transient ADRs 12MMA, January 2005 August 2017, *Luxury & Upper Upscale Classes Only
What markets do you consider hot destinations?
Washington DC Las Vegas New York San Francisco Boston Chicago San Antonio Miami Beach Philadelphia Group Room Nights (000s) Tampa Seattle Charlotte St. Louis Salt Lake City Anaheim Rosemont Houston San Jose Louisville Atlanta Fort Lauderdale Minneapolis Cleveland Pittsburgh Portland Baltimore Dallas Phoenix Denver Los Angeles New Orleans San Diego Nashville Indianapolis Austin Orlando Convention Center Submarkets 2016 Group Demand Variance vs. Prior Peak 500 400 300 200 Net Loss of 300,000 Group Room Nights 100 0-100 -200-300 -400-500 New Convention Center Hotel Developing Convention Center Hotel Proposed Convention Center Hotel
Top 5 Projects In Construction By Meeting Space 3 1 2 5 4 Projected Opening Date Room Count Total SqFt Meeting Space Project Name Market Gaylord Rockies Hotel & Conference Center Denver 12/12/2018 1500 400,000 Fairmont Austin Austin 09/30/2017 1048 107,000 Hyatt Regency Seattle Seattle 06/30/2018 1260 100,000 Omni Louisville Louisville 03/31/2018 600 70,000 JW Marriott Nashville Nashville 07/01/2018 533 60,000
2017 / 2018 Forecasts
Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2017F 2018F Outlook 2017 Forecast 2018 Forecast Supply 2.0% 2.1% Demand 2.0% 1.9% Occupancy 0.0% -0.2% ADR 2.3% 2.5% RevPAR 2.3% 2.3%
Total United States Chain Scale Key Performance Indicator Outlook 2017F by Chain Scale Chain Scale 2017 Year End Outlook Occupancy (% chg) ADR (% chg) RevPAR (% chg) Luxury -0.2% 2.3% 2.1% Upper Upscale -0.2% 2.0% 1.8% Upscale -0.9% 1.8% 1.0% Upper Midscale -0.4% 1.7% 1.3% Midscale 0.1% 2.1% 2.2% Economy 0.2% 2.2% 2.5% Independent 0.4% 2.8% 3.3% Total United States 0.0% 2.3% 2.3%
Total United States Chain Scale Key Performance Indicator Outlook 2018F by Chain Scale Chain Scale 2018 Year End Outlook Occupancy (% chg) ADR (% chg) RevPAR (% chg) Luxury -0.1% 2.6% 2.5% Upper Upscale -0.2% 2.4% 2.2% Upscale -0.8% 2.0% 1.2% Upper Midscale -0.6% 2.0% 1.4% Midscale -0.3% 2.1% 1.8% Economy -0.2% 2.1% 1.9% Independent 0.0% 2.7% 2.6% Total United States -0.2% 2.5% 2.3%
2017 Year End RevPAR Forecast Top North American Markets, August 2017 Forecast (Markets sorted alphabetically) -5% to 0% 0% to 5% 5% to 10% Houston, TX Anaheim-Santa Ana, CA Montreal, QC Miami-Hialeah, FL Atlanta, GA Norfolk-Virginia Beach, VA Minneapolis-St. Paul, MN-WI Boston, MA Seattle, WA New Orleans, LA Chicago, IL Toronto, ON San Francisco-San Mateo, CA Dallas, TX Vancouver, BC Denver, CO Washington, DC-MD-VA Detroit, MI Los Angeles-Long Beach, CA Nashville, TN New York, NY Oahu Island, HI Orlando, FL Philadelphia, PA-NJ Phoenix, AZ San Diego, CA St. Louis, MO-IL Tampa-St. Petersburg, FL Note: RevPAR Forecast numbers are based on local currency
2018 Year End RevPAR Forecast Top North American Markets, August 2017 Forecast Note: RevPAR Forecast numbers are based on local currency; markets sorted alphabetically
Nashville, TN Market Key Performance Indicator Outlook (% Change vs. Prior Year) 2017F 2018F Outlook 2017 Forecast 2018 Forecast Supply 3.6% 5.0% Demand 1.8% 3.1% Occupancy -1.8% -1.8% ADR 2.7% 2.5% RevPAR 0.9% 0.7%
Food for Thought
Total U.S. F&B Performance +2.0% +1.4% +1.4% +1.5% -3.6% Catering & Banquets RevPAS F&B Venues Rev/Avail Seat In-Room Dining Rev/Occ Room Total F&B RevPOR Total F&B Revenue Total U.S. F&B Performance June 2017 12MMA
C&B RevPAS Outpaces Total F&B RevPOR Growth 10.0% Total F&B RevPOR C&B RevPAS 8.0% 6.0% 4.0% 2.0% 0.0% 2015 2016 2017 U.S. Properties 12MMA Percent Change, January 2015 June 2017 Catering & Banquets Revenue Per Available SqFt %ch, F&B Revenue Per Occupied Room %ch *Participating and Eligible Luxury & Upper Upscale Classes Only
C&B RevPAS by Class Food Beverage Other Luxury $0.67 +1.0% $0.12 +1.2% $0.39 +0.4% Upper Upscale $0.40 +3.3% $0.05 +3.5% $0.23 +1.1% Upscale $0.15-0.7% $0.02-4.6% $0.09 +1.3% Total $0.44 +2.5% $0.07 +2.5% $0.25 +0.9% Catering & Banquets RevPAS by Class with Percent Change June 2017 12MMA
C&B Revenue per Group Roomnight Food Beverage Other $91 $29 Luxury $279 $158 Catering & Banquets Revenue Contribution per Group Roomnight, by Class June 2017 12MMA $54 $96 $12 Upper Upscale $163 $22 $35 $4 Upscale $61
Questions?
Thank You Veronica Andrews Director, Digital Data Solutions vandrews@str.com @STR_Data 2017 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.