State of the Industry OH&LA Hospitality 2010 It s not all BLACK & WHITE Duane Vinson Vice President
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Supply Growth Stubborn Strong Demand Rebound U.S. Room Supply/Demand Percent Change Twelve Month Moving Average 1990 to October 2010 8 6 4 2 0 22 4 66 8 Supply % Change Demand % Change Supply Demand Oct 1.4% 8.4% YTD 21% 2.1% 76% 7.6% 12mo 2.2% 6.4% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
ADR Growth Slow in Returning U.S. Occupancy/ADR Percent Change Twelve Month Moving Average 1990 to October 2010 10 8 6 4 2 0 2 4 6 8 10 12 Occ ADR Oct 6.9% 1.2% YTD 54% 5.4% -0.5% 05% Occ % Chg 12mo 4.1% -1.4% ADR % Chg 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
10.00 ADR Declines Accelerate In Each Downturn 5.0 0.0 +0.1% 5.0 ADR % Change Demand % Change 4.7%% 8.9% 10.0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Overall improvement from last year! Key Performance Indicators Percent Change October YTD 2010 10 76 7.6 5 3.1 2.1 5.4 4.9 0-0.5-5 -10-6.9 69-9.7-8.8-15 2009 2010-20 -17.7 Supply Demand Occupancy ADR RevPAR
STR Chain Scales Selected chains from each segment Luxury Four Seasons, Ritz Carlton, Fairmont, Upper Upscale Embassy, Hilton, Marriott, Sheraton, Hyatt Upscale Hilton Garden Inn, Courtyard, Crowne Plaza Mid with F&B Holiday Inn, Ramada, Best Western Mid w/o F&B Hampton Inn, Holiday Inn Express, La Quinta Economy Red Roof, Days Inn, Super 8
Chain Scale Recovery Skewed Toward Higher End Supply / Demand Percent Change October 2010 YTD 20 15 14.6 Supply Demand 10 5 0 28 2.8 11.6 2.0 8.8 9.1 6.7-0.4 3.2 4.2 0.4 5.0-5 Luxury Upper Upscale Upscale Mid w/ F&B Mid w/o F&B Economy
Despite Stronger Occupancy, ADR Growth Lacking Occupancy / ADR Percent Change October 2010 YTD 10 8.6 6.7 7.4 Occupancy ADR 5 3.6 4.7 4.7 1.1 0-1.2-2.0-1.2-1.2-5 Luxury Upper Upscale -3.5 Upscale Mid w/ F&B Mid w/o F&B Economy
RevPAR up in the East and Mid West, Room rates a big issue in the South Atlantic and West October 2010 YTD Occupancy: 5.9% ADR: -0.7% RevPAR: 5.2% Occupancy: 4.2% ADR: -2.1% RevPAR: 2% Occupancy: 73% 7.3% ADR: -0.9% RevPAR: 6.3% Occupancy: 8.3% ADR: 0.9% Occupancy: 3.7% RevPAR: 9.2% ADR: 0.9% RevPAR: 4.7% Occupancy: 6.6% ADR: 2.7% RevPAR: 9.5% TOTAL US Occupancy: 5.4% ADR: -0.5% RevPAR: 4.9% Occupancy: 2.7% ADR: -1.5% RevPAR: 1.1% Occupancy: 5.4% ADR: -0.4% RevPAR: 4.9% Occupancy: 5.6% ADR: -1.6% RevPAR: 4%
Ohio Trends
Ohio - Key Statistics YTD Through October 2010 % Change Hotels 1,369 Room Supply 37.5 mil.6% Room Demand 20.3 mil 6.7% Occupancy 54.1% 6.1% A.D.R. $77.11 -.7% RevPAR $41.72 5.3% Room Revenue $1.6 bil 5.8%
Ohio Room Supply/Demand Percent Change Twelve Month Moving Average 1999 to Oct 2010 6.0 4.0 2.0 Aug 04 2.4% 53% 5.3% 0.6% 0.0-2.0-4.0-6.0-8.0 Nov 01-4.1% Supply Demand Oct 0.5% 7.5% Supply % Change YTD 06% 0.6% 67% 6.7% Demand % Change 12mo 0.6% 5.3% -7.3% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Ohio Active Development Pipeline - Rooms Change From Last Year October October Phase 2010 2009 Difference %Ch Change In Construction 1,606 1,196-410 -34% Final Planning 1,051 1,688-637 -38% Planning 5,351 3,733 1,618 43% Active Pipeline 8,008 6,617 1,391 21% Pre-Planning Planning 1,510 3,527-2,017-57% Total 9,518 10,144-626 -6% Source: STR / TWR / Dodge Construction Pipeline
15 Largest Projects in the Active Pipeline Hotel Name Address Rooms Anticipated Open Date Phase Hilton Columbus Downtown 401 N High St, Columbus, OH 43215-2005 532 Sep-12 Under Construction Holiday Inn & Suites Cincinnati 8th & Sycamore St, Cincinnati, OH 45206 200 May-12 Planning Unnamed Hotel @ The Banks 100 Walnut St, Cincinnati, OH 45216-2455 200 Planning Holiday Inn & Suites Cleveland 1118 Euclid Ave, Cleveland, OH 44119 180 Jul-12 Planning Crowne Plaza Columbus Airport Morrison Rd & Waterbury Ct, Gahanna, OH 43230 171 Jun-12 Planning Hampton Inn & Suites Columbus University Area 3160 Olentangy River Rd, Columbus, OH 43214 158 Feb-12 Planning Doubletree Hotel Cleveland Clinic University Circle Area 10600 Carnegie Ave, Cleveland, OH 44106-3019 157 Feb-11 Under Construction Aloft Hotel Cleveland Downtown 1111 W 10th St, Cleveland, OH 44113 150 Jan-13 Planning Courtyard By Marriott University Circle Cornell Dr, Cleveland, OH 44106 150 Nov-12 Planning Unnamed Hotel Conference Center @ Westford Lifestyle Community Us Rt 224, Canfield Township, OH 44406 150 Planning Courtyard By Marriott Cincinnati Norwood I-71 & Smith Edwards, Cincinnati, OH 45209 146 Planning Hotel Indigo Cleveland Downtown 2017 E 9th St, Cleveland, OH 44115-1302 140 Dec-11 Planning Holiday Inn & Suites Dayton Airport 3330 Terminal Rd, Vandalia, OH 45377-1039 140 Nov-11 Planning Kimpton Schofield Hotel 2000 E 9th St, Cleveland, OH 44115-1301 140 Planning Springhill Suites Columbus 1421 Olentangy River Rd, Columbus, OH 43212-1449 140 Jul-11 Under Construction Source: STR / TWR / Dodge Construction Pipeline
Ohio Occupancy/ADR Percent Change Twelve Month Moving Average 1999 to Oct 2010 8 6 4 2 0-2 -4-6 -8-10 Occ % Chg ADR % Chg Feb 05 2.9% Apr 07 6% Occ ADR Oct 7.0% 1.1% YTD 6.1% -0.7% 12mo 4.7% -1.2% Mar 10-4.7% Oct 09-8% 47% 4.7% -1.2% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Ohio Occupancy and ADR Twelve Month Moving Average Oct 2010 85.0 80.00 Occupancy (%) 75.0 70.00 65.0 60.00 55.0 50.00 ADR ($) Peak $80.46 Oct Dec 08 $76.51 51.8% 45.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Ohio Classes Supply / Demand Percent Change October 2010 YTD 15 10 10.6 9.5 Supply Demand 7.4 5 4.6 5.2 0 2.5 2.5 1.8 0.9 1.1 0.0 0.0 Luxury Upper Upscale Upscale Mid w/ F&B Mid w/o F&B Economy
Same general pattern as US.high end leads recovery Ohio Classes Occupancy / ADR Percent Change October 2010 YTD 15 10 9.5 7.6 Occupancy ADR 5 2.5 3.5 4.8 5.2 0-5 -0.2-0.5-0.2-1.5 15-1.8 18-2.5 Luxury Upper Upscale Upscale Mid w/ F&B Mid w/o F&B Economy
RevPAR is all Occ driven on high end, Rm Rev could be even better Ohio Classes RevPAR / Room Revenue Percent Change October 2010 YTD 10 7.9 89 8.9 7.6 RevPAR Room Revenue 7.2 5.7 5 4.0 4.6 2.4 2.3 2.9 2.6 2.6 0 Luxury Upper Upscale Upscale Mid w/ F&B Mid w/o F&B Economy
Most OH cities have seen 5%+ Demand Growth YTD October 2010, Supply & Demand & Change 12 9 Supply Chg Demand Chg 6 3 0-3
Rate growth still a challenge in most areas YTD October 2010, Occ & ADR % Change 12 9 6 3 0-3 -6 Occ Chg ADR Chg
Very little rate differential in larger vs. smaller markets YTD October 2010, Absolute Occ & ADR 100 90 Occ % ADR $ 80 70 60 50 40 30 20 10 0
Columbus Room Supply/Demand Percent Change Monthly Year-Over-Year 2004 October 2010 20 15 10 5 0-5 -10-15 -20 Supply % Change Demand % Change Supply Demand Oct 1.6 10.6 YTD 1.7 7.5 12mo 2.3 6.3 2004 2005 2006 2007 2008 2009 2010
Columbus Occupancy / ADR Percent Change Monthly Year-Over-Year 2004 October 2010 20 Occ ADR 15 Oct 8.8 0.2 YTD 5.7-2.1 10 12mo 3.8-2.9 5 0-5 -10-15 -20 Occupancy % Chg ADR % Chg 2004 2005 2006 2007 2008 2009 2010
Cleveland Room Supply/Demand Percent Change Monthly Year-Over-Year 2004 October 2010 20 15 10 5 0-5 -10-15 -20 Supply % Change Demand % Change Supply Demand Oct -0.6 7.8 YTD -0.8 8.7 12mo -0.7 7.7 2004 2005 2006 2007 2008 2009 2010
Cleveland Occupancy / ADR Percent Change Monthly Year-Over-Year 2004 October 2010 20 15 10 5 0-5 -10-15 -20 Occupancy % Chg ADR % Chg Occ ADR Oct 85 8.5-2.5 25 YTD 9.7-2.8 12mo 8.6-3.1 2004 2005 2006 2007 2008 2009 2010
Cincinnati Room Supply/Demand Percent Change Monthly Year-Over-Year 2004 October 2010 20 15 10 5 0-5 -10-15 -20 Supply % Change Demand % Change Supply Demand Oct 1.0 2.9 YTD 1.4 5.1 12mo 1.5 4.2 2004 2005 2006 2007 2008 2009 2010
Cincinnati Occupancy / ADR Percent Change Monthly Year-Over-Year 2004 October 2010 20 Occupancy % Chg 15 ADR % Chg 10 5 0-5 -10 Occ ADR Oct 1.9 2.6-15 YTD 36 3.6-0.1 01-20 12mo 2.6-0.8 2004 2005 2006 2007 2008 2009 2010
Group & Transient Occupancy showing fast recovery Ohio Group vs. Transient Occupancy 2007 2009, April 2009 YTD vs. April 2010 YTD 10 5 Group Transient 8.3 5.9 0-5 -2.4-1.6-2.8-6.4-6.0-6.8-10 -15-12.3-12.4 2007 2008 2009 YTD Oct 2009 YTD Oct 2010
Group vs. Transient Occupancy Ohio 2007 2009, July 2009 YTD vs. July 2010 YTD 40 2007 2008 2009 Oct YTD 2009 Oct YTD 2010 35 30 33.5 32.6 30.6 31.4 33.2 25 20 15 19.6 18.3 16.1 17.1 18.5 10 5 0 Group Transient
In spite of steep transient ADR drop, group stayed high in 09 and 10 Ohio Group and Transient ADR 90 Transient runs avg. $5.39 premium Group runs avg. $1.23 premium 80 70 Group ADR Trans ADR 60 2006 2007 2008 2009 2010
Group vs. Transient ADR Ohio 2007 2009, April 2009 YTD vs. April 2010 YTD 85 2007 2008 2009 Oct YTD 2009 Oct YTD 2010 83.90 82.82 80 79.50 79.82 80.44 79.20 81 78.19 78.81 78.41 76.15 75 70 Group Transient
Pipeline & Projections
In Construction down sharply, Rooms in Planning steady U.S. Development Pipeline - Rooms Change From Last Year Phase October 2010 October 2009 Difference %Ch Change In Construction 56,132 111,927-55,795-49.8% Final Planning 56,621 70,318-13,697-19.5% Planning 228,288 253,020-24,732-9.8% Active Pipeline 341,041 435,265-94,224-21.6% Pre-Planning 102,675 119,115-16,440-13.8% Total 443,716 554,380-110,664-20.0% Source: STR/McGraw-Hill Construction Dodge Pipeline
120 100 Many brands in the Upscale and Mid w/f&b segments continue to build aggressively In Thousands - October 2010 Planning Final Planning In Construction 80 60.2 60 48.7 97.2 40 20 0 27.8 17.2 3 5.1 12.2 1.5 25.8 04 0.4 92 9.2 7.6 14.8 23 15 1.6 6.9 4.7 2.3 1.5 2.3 8.8 Luxury Upper Upscale Upscale Mid w F&B Mid w/o F&B Economy Unaffiliated Source: STR/McGraw-Hill Construction Dodge Pipeline
Midscale & Upscale brands lead development Top 15 Brands All Active Phases October 2010 Holiday Inn Express Hampton Inn Suites Holiday Inn Hilton Garden Inn La Quinta Inn & Suites Courtyard Candlewood Suites Fairfield Inn Staybridge Suites Residence Inn Springhill Suites Hampton Inn Home2 Suites Homewood Suites Embassy Suites 15,544 12,799 11,861 11,683 10,484 10,182 9,491 9,487 8,584 7,614 6,124 5,898 5,157 20,412 25,208 0 5,000 10,000 15,000 20,000 25,000 30,000 Source: STR/McGraw-Hill Construction Dodge Pipeline Rooms
Total United States Closed Hotels Annual 2002 through 2009 1000 100 843 800 729 683 600 507 80 60 66,946 rooms in 2005 to 12,746 rooms in 2009 66.9 54.2 50.6 400 352 350 40 35.9 28.0 30.9 217 21.5 200 116 20 12.7 0 0 Number of Hotels Number of Rooms (in thousands) JQH: Not over developed, just under demolished.
Total United States Opened Hotels Annual 2002 through 2009 1,600 1,400 1,200 1,000 800 600 400 200-855 Large number of abandonments in 2009 698 630 742 827 1,031 1,379 1,315 160 140 120 100 80 60 40 20 0 90.3 152,001 rooms in 2008. 144,451 rooms in 2009. 99.8 152.0 144.4 72.7 73.5 82.3 77.4 60.5 Number of Hotels Number of Rooms (in thousands)
U.S. Economic Outlook Blue Chip Economic Indicators November 2010 2009 2010F 2011F Real GDP +2.6% +2.7% +2.5% CPI -0.4% +1.6% +1.5% Corporate Profits -3.8% +30.3% 3% +6.3% Disp. Personal Income +0.6% +1.2% +1.9% Unemployment Rate 9.3% 9.6% 9.4%
Total United States Supply/Demand Percent Change 2004 2011P 8 7.4 4 0 0.4 3.9-0.1 2.8 0.2 0.4 13 1.3 0.8 2.5 3.0 2.0 2.5 1.9 0.9 12 1.2-4 Supply % Chg -2.4-8 Demand % Chg 2004 2005 2006 2007 2008 2009 2010P 2011P 20 Yr Average -6.1
Total United States Occupancy Percent Change 2004 2011P 7.5 50 5.0 2.5 3.5 2.9 5.3 1.6 0.0-2.5 20 Year Average: -0.8% 02 0.2-0.5-5.0-4.8-7.5 75-10.0 2004 2005 2006 2007 2008 2009 2010P 2011P -8.8
Total United States Occupancy Percent 2004 2011P 70 65 63.0 63.2 62.8 61.3 60 59.8 57.4 58.3 55 54.7 50 2004 2005 2006 2007 2008 2009 2010P 2011P
Total United States ADR Percent Change 2004 2011P 10 8 7.6 64 6.4 5.6 6 4.2 4 2.9 2 0-2 -4-6 -8-10 -12 20 Year Average: 2.8% -0.1-8.6 2004 2005 2006 2007 2008 2009 2010P 2011P 3.9
Total United States Average Daily Rate (In Dollars) 2004 2011P $125 $100 $86.25 $91.05 $97.96 $104.23 $107.27 $98.00 $97.92 $101.73 $75 $50 2004 2005 2006 2007 2008 2009 2010P 2011P
2% is the number to watch! Hotel Rooms Sold vs. ADR Change Quarterly Change 1988 to 2010 Q3 10.0 8.0 6.0 Demand % Chg ADR % CHG 4.0 2.0 0.0-2.0 1988q1 1991q1 1994q1 1997q1 2000q1 2003q1 2006q1 2009q1-4.0-6.0-8.0-10.0
Total United States RevPAR Percent Change 2004 2011P 15 10 5 7.8 86 8.6 7.8 5.9 5.2 5.5 20 Year Average: 2.1% 0-5 -2.0-10 -15-20 -16.7 2004 2005 2006 2007 2008 2009 2010P 2011P
Total United States Key Performance Indicator Outlook Scenario (% change vs. Prior Year) 2010F Hotel Industry Performance Scenarios 2010 Low Growth Forecast High Growth Supply 21 2.1 20 2.0 18 1.8 Demand 7.0 7.4 7.9 Occupancy 4.9 5.3 6.0 ADR -0.5 05-0.1 01 04 0.4 RevPAR 4.4 5.2 6.3
Total United States Key Performance Indicator Outlook Scenario (% change vs. Prior Year) 2011F Hotel Industry Performance Scenarios 2011 Low Growth Forecast High Growth Supply 12 1.2 09 0.9 07 0.7 Demand 2.1 2.5 3.0 Occupancy 0.9 1.6 2.2 ADR 34 3.4 39 3.9 44 4.4 RevPAR 4.3 5.5 6.6
Total United States Chain Scale Key Performance Indicator Outlook 2010F by Chain Scale Chain Scale Occupancy (% chg) 2010 Year End Outlook ADR (% chg) RevPAR (%chg) Luxury 8.1 1.3 9.4 Upper Upscale 6.7 0.2 7.3 Upscale 6.3 0.5 6.8 Midscale w/ F&B 3.0 0.3 2.7 Midscale w/o F&B 4.4 0.0 4.4 Economy 3.4 3.2 0.2 Independent 4.0 0.8 4.9
Total United States Chain Scale Key Performance Indicator Outlook 2011F by Chain Scale Chain Scale Occupancy (% chg) 2011 Year End Outlook ADR (% chg) RevPAR (%chg) Luxury 0.4 6.7 7.1 Upper Upscale 1.6 5.4 7.0 Upscale 2.1 4.4 6.5 Midscale w/ F&B 1.0 2.5 1.5 Midscale w/o F&B 1.8 4.0 5.8 Economy 1.3 2.3 3.6 Independent 2.4 3.7 6.1
Total United States Supply & Demand Outlook Quarterly 2010 11vs. Same Quarter Prior Year 10.0% 9.0% 8.0% 2010Q1 A 2010Q2 A 2010Q3 2010Q4 8.6% 8.5% 2011Q1 2011Q2 2011Q3 2011Q4 7.0% 60% 6.0% 5.0% 4.0% 5.0% 5.5% 4.1% 3.0% 2.0% 1.0% 0.0% 2.6% 2.3% 1.7% 1.7% A 1.5% 1.7% 1.3% 1.0% 0.8% A A A A A 2.6% 1.9% Supply % Chg Demand % Chg Note: Q1-Q3 2010 data is actual
Total United States Occupancy & ADR Outlook Quarterly 2010 11vs. Same Quarter Prior Year 9.0% 7.0% 5.0% 3.0% 2.3% 67% 6.2% 6.7% 3.8% 2.6% 2010Q1A 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 32% 3.2% 1.6% 1.7% 1.9% 1.1% 3.5% 4.1% 5.0% 1.0% 0.4% A A A A 0.0% 1.0% A A 3.0% 5.0% 4.3% Occupancy % Chg ADR % Chg Note: Q1-Q3 2010 data is actual
Total United States RevPAR Outlook Quarterly 2010 11vs. Same Quarter Prior Year 12.0% 2010Q1A 2010Q2 2010Q3 10.0% 0% 2010Q4 2011Q1 2011Q2 8.5% 2011Q3 2011Q4 8.0% 60% 6.0% 4.0% 6.2% 5.8% 5.8% 5.7% 3.9% 6.1% 20% 2.0% 0.0% 2.0%% 4.0% A 2.1% A A RevPAR % Chg
Takeaways The Good News: Full Recovery is Underway! New Supply Not Really An Issue yet. Demand Improving Across The Board Pricing Is Slowly Returning Unemployment will continue to impact travel Yield Management Discipline (???) Value proposition is critical New Frugality
Questions duane@smithtravelresearch.com www.strglobal.com www.hotelnewsnow.com