Hotel Performance: Must have insights. Robin Rossmann, Managing Director at STR

Transcription

1 Hotel Performance: Must have insights Robin Rossmann, Managing Director at STR

2 Agenda 1. Demand for hotels significantly up across the world 2. Middle East hotels weathering the perfect storm? 3. Pick of the resorts 4. UAE - demand continues to deliver

3 Demand for hotels significantly up across the world

4 Significant demand growth across the world 2017 supply & demand % change Supply Demand 7.0% 6.2% 4.9% 5.2% 1.9% 2.8% 1.2% 3.3% 2.6% 0.8% 3.2% 4.0% 1.3% 3.3% 1.6% 2.5% North America & Caribbean Central America South America Europe Middle East Africa Asia Australia & Oceania

5 2017 RevPAR up everywhere, with the exception of the Middle East USD Constant Currency, Full year 2017 North Africa +38%

6 Sea of positivity across Europe Constant Currency, Full Year 2017 RevPAR % Change

7 Europe 2017 occupancies now almost 10% above previous peak Occupancy 2008, 2016 & % % 75% 70% 65% 60% 55% 50% 45% 40% January February March April May June July August September October November December

8 Thanks to 7 years of limited supply and good demand growth Europe Supply, Demand, RevPAR % Change 10% Supply % change Demand % change RevPAR % change 5% 0%

9 US Concerns. Trumped up Despite many uncertainties, US RevPAR should grow 3% 10% Supply % change Demand % change RevPAR % change USA insert 5% 0% (F)

10 Intra-APAC travel continues to drive demand Asia Pacific Supply, Demand % Change, RevPAR % Change, USD, CC, Full Year % 4% Supply % change Demand % change RevPAR % change 2% 0% -2%

11 Conclusion Globally, hotel performance has and should continue to grow strongly due to strong fundamental demand drivers. This is despite the headwinds of hotel supply growth, the rise of alternative accommodation and continued global political uncertainty.

12 Middle East Hotels weathering the perfect storm?

13 The three things that keep hotel investors up at night Economic downturn Traveller perceptions Supply increase

14 What do the following destinations have in common (it s not the weather) Aberdeen Houston Riyadh Dubai Abu Dhabi

15 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% The oil prices decline hurt but this recovery is certainly helping RevPAR change USD Constant Currency, Full Year Oil Price Aberdeen Abu Dhabi Dubai Riyadh Houston % 30% 20% 10% 0% -10% -20% -30% -40% -50% -60%

16 Middle East supply growth has outpaced demand for the past 3 years USD Constant Currency, Full Year % Supply % change Demand % change RevPAR % change 10% 5% 0% -5% -10% -15%

17 Significant supply growth is still on the way across the Middle East Demand will need to grow significantly to keep pace 105,616 more rooms by seats on A380 & 4 days Length of Stay 42 more A380s daily in the sky

18 but supply growth has differed on a market by market basis Full Year 2017, Supply % Change Manama Beirut Cairo Abu Dhabi Muscat Amman Doha Central Kuwait City Dubai Ras Al-Khaimah 0% 2% 4% 6% 8% 10%

19 and future supply growth will also vary significantly by market Supply Pipeline

20 and will also vary significantly by location in markets Supply Pipeline 2022

21 Unsurprisingly, 2017 has been a tough year in many markets Full Year 2017, RevPAR % Change, Local Currency Cairo 72 Beirut 18 Amman -10 Riyadh -6 Jeddah -11 Kuwait City 4 Manama Abu Dhabi -4 Doha Dubai -3-4 Ras Al-Khaimah -5 Muscat

22 Some smaller markets have fared better, but not all. USD, RevPAR % Change, Full Year Dead Sea -1 Aqaba Yanbu Ajman 8 Al Khobar/ Dammam 2-25 Sharjah 0 Al Ain Fujairah 12 Salalah

23 30% 2018 has started with some green shoots but other markets remain challenged Q12018, RevPAR % Change, Local Currency % 10% 0% % % % -40% Doha Centre Jeddah Manama Abu Dhabi Dubai Beirut Muscat Ras Al- Khaimah Riyadh Amman Kuwait City

24 Conclusion Middle East hotel markets are incredibly profitable but has had a challenging last three years. Performance does appear to be stabilising in markets without severe supply increases and should be helped by the oil price recovery.

25 Pick of the resorts

26 The Gulf and Indian Ocean has compelling resort markets Which would you pick?

27 Occupancy Mauritius, Dubai & Ras Al Khaimah come out tops 2017 Occupancy (Dubai, Oman & Sri Lanka are resort hotels only)

28 ADR and RevPAR Maldives, Dubai & Seychelles move to the top USD, ADR and RevPAR, Full Year 2017 USD 700 USD 600 ADR RevPAR USD 500 USD 400 USD 300 USD 200 USD 100 USD 0 Sri Lanka Resorts Goa Ras Al-Khaimah Oman Resorts Mauritius Seychelles Dubai Resorts Maldives

29 Long-term performance Goa, Mauritius & Sri Lanka growing the most RevPAR Indexed from 2011 to Strong performers: Goa, Mauritius & Maldives 1.0 Stable performance: Ras Al-Khaimah In decline: Dubai & Oman Recovering: Seychelles & Sri Lanka Goa Maldives Mauritius Sri Lanka Seychelles Dubai Resorts Oman Ras Al-Khaimah

30 Conclusion Resort markets are showing strong growth around the world. The Gulf and Indian Ocean has compelling options both for customers and investors

31 UAE - demand continues to deliver

32 Millions 40 Dubai supply has doubled in the last 10 years but so has demand 12 MMA, December 1996 December 2017 Supply Demand RevPAR AED 1, AED 900 AED 800 AED 700 AED 600 AED 500 AED 400 AED 300 AED 200 AED 100

33 Dubai is now the 4 th most visited city in the world Visitors in Millions, 2017 International Overnight Visitors Bangkok London Paris Dubai Singapore Tokyo Seoul New York Kuala Lumpur Hong Kong Source: Business Insider

34 Occupancy has risen across the UAE despite significant supply increases Occupancy, Full Year % Abu Dhabi Dubai Ras Al Khaimah Sharjah Al Ain Fujairah 80% 75% 70% 65% 60% 55%

35 Despite supply increases, compression nights have grown Full Year 2017 vs 2010 # Compression Nights (>90% Occ) ADR Premium Abu Dhabi % Ras Al-Khaimah % Dubai % Note: ADR premium compares compression nights (>=90% occupancy) compared to all other days

36 Individual hotels can and have outperformed the market Dubai individual hotel 2017 Occ and ADR % Change ADR % Change 20% 15% 10% 5% Occ % Change 0% -20% -15% -10% -5% 0% 5% 10% 15% 20% -5% -10% -15% -20%

37 Strong F&B revenues have also helped total revenue growth to remain + ve Full Year 2017, % Change, Local Currency 20% Occupancy ADR RevPAR F&B + Other Total Revenue 15% 10% 5% 0% -5% -10% Dubai Abu Dhabi

38 Conclusion The UAE has absorbed new supply well, with occupancies remaining strong. ADR has come under pressure and this is likely to remain challenging as supply continues to grow. Good revenue management and focus on total revenues will enable individual properties to outperform.

39 Thank You! Robin STRGlobal.com