Hotel Industry Performance Overview Washington Lodging Convention Valerie Woods Director of Business Development, Hotels vwoods@str.com Valerie_STR 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.
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Agenda Total U.S. Review Market Comparison Washington State Looking Forward: Pipeline & Forecast
About STR The Data
Total U.S. Review
September 2016 Jewish Calendar shift lifted results RevPAR +5.6% ADR +3.9% First time that September demand was ~105 Million Rooms Sold Group RevPAR +12.1%
September 2016 YTD: Occupancy Has Never Been Higher % Change Room Supply 1.5% Room Demand 1.5% Occupancy 67.1% 0% ADR $125 3.2% RevPAR $84 3.2% Room Revenue 4.8% September 2016 YTD, Total US Results
Demand Growth Slows. Supply Growth Increases To 1.5% 8 7.7 4 0-0.8 2.9 1.7 1.5-4 Supply % Change Demand % Change -8-4.7-7.1 1990 2000 2010 Total U.S., Supply & Demand % Change, 12 MMA Jan 1990 Sep 2016
Occupancy Growth Rapidly Approaching 0% 6.8 7.5 5 3.3 0 0.3-5 -3.4 Occ % Change ADR % Change -6.7-10 1990 2000 2010 Total U.S., ADR & OCC % Change, 12 MMA Jan 1990 Sep 2016-9.7
Occupancies Still Close to Peak 130 110 Occupancy (%) ADR ($) Prior Peak: Oct 2008 107.73 123.29 90 70 65.5 50 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Total US, Occupancy and ADR, 12 MMA Jan 1997 Sep 2016
15 10 5 RevPAR Growth: Slowing Down After 6 Yrs. Of Growth 0-5 -10-15 -20 80 Months 31 Mo 56 Months 79 Mo. -25 1990 2000 2010 Total U.S., RevPAR % Change, Jan 1990 Sep 2016
Quarterly RevPAR % Change: Slow is the New Normal 2013 2014 2015 2016 7.8 8.0 9.1 8.8 6.0 6.7 4.7 6.4 5.3 5.8 4.8 4.8 2.6 3.5 3.3 Q1 Q2 Q3 Q4 Total US, RevPAR % Change, by Quarter, Q1 2013 Q3 2016
Growth of RevPAR Growth Is Slowing 60% Growth of Growth RevPAR % Change 15% 40% 9% 20% 0% -20% -40% -60% RevPAR % Change Growth of Growth Aug Sep Oct Nov Dec Jan Feb Mar Apr May June 3% -3% -9% -15% Total U.S., RevPAR % Change and 12MMA Change of Change, 7/2015 07/2016
2016 STR Chain Scales *Full list available at www.str.com/resources/documents Luxury Fairmont, Four Seasons, Ritz Carlton, JW Marriott Upper Upscale Hilton, Hyatt, Marriott, Kimpton Hotels 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 Midscale Best Western, Candlewood Suites, Quality Inn/Suites, Ramada Economy Extended Stay America, Red Roof, Days Inn, Microtel
Scales: Demand Growth is Not Keeping Pace With Supply Growth Supply % Change 5.4 4.9 2.2 1.9 1.5 1.5 1.9 1.6 1.2 0.6 0.3 0.3 1.0 Luxury Upper Upscale Upscale Upper Midscale Supply / Demand % Change, by Scale, September 2016 YTD -0.5 Midscale Economy Independents
Independents Outperform Brands Part of the Cycle ADR % Change Occupancy % Change 1.6 2.4-0.3 0.0 3.5 2.9 2.6 2.6-0.4-0.2-0.6-0.8 3.8 0.7 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independents *RevPAR % Change by Contribution of OCC / ADR % Change, by Scale, September 2016 YTD
High End Hotels Still Very Busy (But A Little Less So) 75.976.2 75.775.8 75.675.9 2016 2015 69.269.4 61.061.3 59.259.7 64.063.6 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independents *OCC %, by Scale, September YTD 2016 & 2015
Segmentation: Group Transient Contract Segmentation
Transient ADR Growth: Slow Despite High Occupancy 6% 5% 4% 3% 2% 1% 0% Demand % Change ADR % Change 2013 2014 2015 2016 Transient Demand and ADR % Change, 12 MMA, Jan 2012 Sep 2016 2.1% 1.7%
Group Demand Growth Slows 6% 5% 4% 3% 2% Demand % Change ADR % Change 3.6% 1.5% 1% -1% -2% 2012 2013 2014 2015 2016 Jewish Holiday Shift Group Demand and ADR % Change, 12 MMA, Jan 2012 Sep 2016
Group ADR increase making up for slowing demand this year 7.5% Transient RevPAR % change Group RevPAR % change 7.0% 6.7% 5.1% 4.6% 3.2% 2.2% 1.9% 2013 2014 2015 2016 YTD
Markets
September 2016 : New Supply Hits NYC, Houston, Miami Market OCC % ADR % Change Los Angeles/Long Beach, CA 83.2 9.3 Nashville, TN 76.4 6.3 Atlanta, GA 71.5 6.2 Denver, CO 76.8 6.1 Tampa/St Petersburg, FL 73.4 6.0 Chicago, IL 70.4 0.6 New Orleans, LA 69.5-0.3 Miami/Hialeah, FL 77.5-1.9 Houston, TX 64.0-2.6 New York, NY 85.1-3.1 * September 2016 YTD ADR % Change in Top 25: 5 Best / 5 Worst Performing ADR % Markets
Supply Growth Amplifies RevPAR Declines 8 Pittsburgh, PA Supply% Change Texas West 6 North Dakota West Virginia 4 2 Melbourne/Titusville, FL Colorado Springs, CO RevPAR % Change 0-30 -25-20 -15-10 -5 0 5 10 15-2 * September 2016 YTD Supply & RevPAR % Change, All Markets -4 Hawaii/Kauai Islands
Majority Of Markets With Positive ADR % Change 38% ADR % Change 15 Oakland, CA 10 54% California North Central Wyoming 5 Occ% Change 0-15 -10-5 0 5 New Jersey 10 Missouri Shore -5 South West Virginia -10 North Dakota Texas West -15 6% -20 * September 2016 YTD ADR & Occupancy % Change, All Markets. % are respective share of all 168 markets 2%
Houston Performance: Terrible. That is All. $/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 09/2016 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
NYC Monthly RevPAR % Change: Declining Entire Year 3.2 0.5-2.4-1.5-1.7-4.1-4.3-4.5-4.9-4.0-3.7-6.5 1 2 3 4 5 6 7 8 9 10 11 12 * NYC RevPAR % Change, by Month, 9/2015 8/2016
Select West Coast Markets: Occupancies Near Peak San Francisco +0.1% 85.6% Los Angeles Vancouver San Diego Seattle Portland +2.6% +3.2% -0.4% -0.6% +1.5% 83.2% 80.1% 79.0% 78.4% 78.1% Select West Coast markets, Occ & Occ % Change, YTD Sep 2016
Select West Coast Markets: ADR Still Growing, but Not as Fast San Francisco +5.0% $235.11 Los Angeles San Diego Seattle Vancouver Portland +9.3% +2.7% +3.5% +5.7% +5.4% $174.67 $158.64 $158.02 $138.82 $135.06 Select West Coast markets, ADR ($) & ADR % Change, YTD Sep 2016
Select West Coast Markets: RevPAR YTD 2015 YTD 2016 $201 $191 $99 $105 $111 $102 $120 $124 $122 $125 $145 $130 +7.0% +9.1% +2.9% +3.1% +12.1% +5.1% Portland Vancouver Seattle San Diego Los Angeles San Francisco Select West Coast markets, RevPAR $ and RevPAR % Change YTD Sep 2014 & 2015
State of Washington
September 2016 YTD: Supply Outpacing Demand % Change Room Supply 2.6% Room Demand 2.0% Occupancy 70.8% -0.6% ADR $131 3.4% RevPAR $93 2.8% Room Revenue 5.5% September 2016 YTD, Washington State Results
Last 12 Months: RevPAR Driven by ADR Growth % Change Room Supply 2.8% Room Demand 2.8% Occupancy 68.0% -0% ADR $128 3.3% RevPAR $87 3.2% Room Revenue 6.2% September 2016 12MMA, Washington State Results
Demand Growth = Supply Growth 8 7.0 4 2.8 0-4 -8 Supply % Change Demand % Change -7.7 2006 2008 2010 2012 2014 2016 Washington, Supply & Demand % Change, 12 MMA Jan 2006 Sep 2016
Occupancy Declining Slightly 12 10.0 8.0 6 3.3 0 0.0-6 -12 Occ % Change ADR % Change -9.8-7.1 2006 2008 2010 2012 2014 2016 Washington, ADR & OCC % Change, 12 MMA Jan 2006 Sep 2016
But Still High! 150 130 Occupancy (%) ADR ($) 127.51 110 106.51 90 70 65.9 68.0 57.3 50 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Washington, Occupancy and ADR, 12 MMA Jan 1997 Sep 2016
Transient ADR Growth: State Outpacing US 10% US Demand % Change US ADR % Change WA Demand % Change WA ADR % Change 8% 6% 4% 2% 2013 2014 2015 2016 2.5% Transient Demand and ADR % Change, 12 MMA, Jan 2012 Sep 2016
Group Demand Slowed to a Halt; ADR Steady 10% US Demand % Change WA Demand % Change US ADR % Change WA ADR % Change 5% 0% 3.4% 0.5% -5% 2012 2013 2014 2015 2016 Group Demand and ADR % Change, 12 MMA, Jan 2012 Sep 2016
Washington: ADR Growing in Both Segments $137 Transient Group $122 $129 $121 $126 $112$111 $108 $102 $102$103 $104 $105 $108$107 $113 $111 $114 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD Washington, Transient & Group ADR, Full Year 2008 2014, YTD Sep 2016
Washington: Room Counts by Class 1033 Properties Upper Upscale, 13% Luxury, 3% Economy, 28% 92K Rooms Upscale, 17% Upper Midscale, 24% Midscale, 14%
Washington Class Segments: ADR Growing in All Classes 3.9% 2.1% 2.3% Occupancy ADR 2.9% 2.9% 1.1% 3.7% -0.2% -0.3% -2.0% -0.7% -5.4% Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Washington: Class Segments, Occ & ADR % Change, YTD Sep 2016
Washington Classes: Occupancies At/Near Peaks 79.1% 78.8% 78.6% 79.2% 79.0% 74.8% 73.5% 72.0% 2015 2016 65.7% 66.4% 63.4% 62.9% Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Washington OCC %, by Class, Sep YTD 2015 & 2016
RevPAR Growth From ADR $200 $196 $154 $156 2015 2016 $124 $126 $65 $46-1.7% +1.9% +2.0% +0.9% +4.0% +2.9% $88 $89 $67 $48 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Washington: RevPAR $, by Class, Sep YTD 2015 & 2016
Washington: Supply Growth Greater Than Demand Series1 Series2 4.9 4.7 8.0 7.1 2.1 2.0 2.1 0.3 3.4 2.9 0.0 1.5 1 2 3 4 5 6 Washington Tracts, Supply & Demand % Change, YTD Sep 2016
Supply Growth Keeping Occupancies Flat 84.4% 84.3% 81.6% 80.1% 77.7% 2015 2016 76.6% 69.3% 70.6% 65.1% 64.6% 71.4% 72.5% Seattle CBD Seattle Airport Bellevue/ East, WA Tacoma/ Olympia, WA Spokane Kent/ Renton, WA Washington tracts OCC %, Sep YTD 2015 & 2016
Washington: RevPAR (still) Driven by Rate 3.0 3.1-0.1 2.8 2.8 2.9 4.7 4.3 1.1-1.8-1.4 ADR % Change Occupancy % Change Revpar % change 1.8 0.9 1.8-0.8 3.3 1.7 1.5 Seattle CBD Seattle Airport Bellevue/ East, WA Tacoma/ Olympia, WA Spokane Washington tracts RevPAR % Change by Contribution of OCC / ADR % Change, by State, Aug 2016 YTD Kent/ Renton, WA
Under Contract Pipeline In Construction Vertical construction on the physical building has begun. (This does not include construction on any sub-grade structures.) Final Planning construction will begin within the next 12 months. Planning construction will begin in more than 13 months.
US Pipeline: Overbuilding? Phase 2016 2015 % Change In Construction 178 132 35% Final Planning 197 175 13% Planning 174 134 30% Under Contract 549 441 24% Total US Pipeline, by Phase, 000s Rooms, September 2015 and 2016
171K In Construction Is Nearing The Prior Peak (2008) 250 200 150 Mar 08: 207.5K Sep 16: 178K 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total US Pipeline, Rooms In Construction Jan 2005 Sep 2016
Focus on Middle Tiers 61.2 55.7 22.5 66% 22.9 6.0 6.9 3.1 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated US Pipeline, Rooms Under Construction, 000s Rooms, by Scale, August 2016
Pipeline ( 000s rooms): Top 26 Markets Have 48% Of U/C Rooms Series1 Series3 84.8 Series2 76.6 72.5 93.5 120.2 101.5 1 2 US Pipeline, Rooms ( 000s), Top 26 Markets vs. All Other Markets, September 2016
Construction In Top 26 Markets: 23 With 2%+ Of Supply Market Rooms U/C % Of Existing Orlando, FL 1,129 1% Norfolk/Virginia Beach, VA 456 1% Oahu Island, HI 410 1% St Louis, MO-IL 864 2% Atlanta, GA 2,210 2% Las Vegas, NV 3,859 2% Washington, DC-MD-VA 3,137 3% Detroit, MI 1,270 3% San Diego, CA 1,866 3% San Francisco/San Mateo, CA 1,580 3% Phoenix, AZ 2,019 3% Minneapolis/St Paul, MN-WI 1,401 3% Chicago, IL 4,175 4% Anaheim/Santa Ana, CA 2,127 4% Boston, MA 2,292 4% Tampa/St Petersburg, FL 1,966 4% New Orleans, LA 1,786 5% Philadelphia, PA-NJ 2,659 6% Los Angeles/Long Beach, CA 5,921 6% Miami/Hialeah, FL 3,377 6% Houston, TX 5,305 6% Dallas, TX 5,567 7% Nashville, TN 3,549 9% Denver, CO 4,470 10% Seattle, WA 4,955 12% New York, NY 16,462 15% *US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, September 2016
Washington Pipeline Phase Projects Rooms % Supply In Construction 35 6431 7.0% Final Planning 26 4891 5.3% Planning 27 3611 3.9% Under Contract 88 14,933 16.2% Washington Pipeline, by Phase, Rooms, September 2016
Washington Pipeline Details: Focus on Seattle CBD & Bellevue/East 6000 4000 5662 Planning Final Planning In Construction 2587 2000 0 Bellevue/ East, WA 1028 Seattle Airport Seattle CBD 730 690 Seattle North/ Everett, WA University/ Lynnwood, WA 190 Spokane 1332 Tacoma/ Olympia, WA Select WA Tracts: In Construction & Final Planning & Planning September 2016
2016 / 2017 Forecast
Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2016-2017 Outlook 2016 Forecast 2017 Forecast Supply 1.6% 2.0% Demand 1.6% 1.6% Occupancy 0.0% -0.3% ADR 3.2% 3.1% RevPAR 3.2% 2.8%
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 -0.4% 2.8% 2.3% Upper Upscale -0.1% 3.0% 2.9% Upscale -0.4% 3.0% 2.6% Upper Midscale -0.1% 2.8% 2.7% Midscale -0.3% 2.8% 2.5% Economy -0.5% 3.3% 2.8% Independent 0.4% 3.3% 3.6% Total United States 0.0% 3.2% 3.2%
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 -0.3% 3.5% 3.2% Upper Upscale -0.3% 3.4% 3.0% Upscale -1.1% 2.7% 1.5% Upper Midscale -0.8% 2.7% 1.9% Midscale 0.1% 2.7% 2.8% Economy 0.0% 2.6% 2.6% Independent -0.4% 3.2% 2.8% Total United States -0.3% 3.1% 2.8%
2016 Year End RevPAR Forecast Top 25 US Markets, Aug 2016 Forecast (Markets sorted alphabetically) -10% to -5% -5% to 0% 0% to 5% 5% to 10% Houston, TX Miami-Hialeah, FL Anaheim-Santa Ana, CA Dallas, TX New Orleans, LA Atlanta, GA Los Angeles-Long Beach, CA New York, NY Boston, MA Nashville, TN Chicago, IL Norfolk-Virginia Beach, VA Denver, CO San Francisco/San Mateo, CA Detroit, MI Tampa, FL Minneapolis-St. Paul, MN-WI Oahu Island, HI Orlando, FL Philadelphia, PA-NJ Phoenix, AZ San Diego, CA Seattle, WA St. Louis, MO-IL Washington, D.C.
2017 Year End RevPAR Forecast Top 25 US Markets, Aug 2016 Forecast (Markets sorted alphabetically) -5% to 0% 0% to 5% 5% to 10% Houston, TX Atlanta, GA Anaheim-Santa Ana, CA Boston, MA Detroit, MI Chicago, IL Washington, D.C. Dallas, TX Denver, CO Los Angeles-Long Beach, CA Miami-Hialeah, FL Minneapolis-St. Paul, MN-WI Nashville, TN New Orleans, LA New York, NY 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 Tampa, FL
Seattle, WA Market: 2016 Projections Series1 3.9% 3.7% 2.6% 2.4% 76.0% 65.8% $112 $74-0.2% $154 $117 1 2 3 4 5 Seattle Annual Percentage Change from Prior Year & Estimated KPIs as of August 2016
Seattle, WA Market: 2017 Projections Series1 4.8% 4.4% 3.2% 2.8% 75.7% 65.8% $112 $74-0.4% $159 $120 1 2 3 4 5 Seattle Annual Percentage Change from Prior Year & Estimated KPIs as of August 2016
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.
Thank You! Valerie Woods Director of Business Development, Hotels vwoods@str.com Valerie_STR Valerie Woods 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.