US Hotel Industry Overview Chris Crenshaw ccrenshaw@str.com
July 2014 (12 MMA): All Signs Point To A Sellers Market % Change Room Supply* 1.8 bn 0.8% Room Demand* 1.1 bn 3.4% Occupancy 63 % 2.6% A.D.R.* $113 4.0% RevPAR* $72 6.7% Room Revenue* $128 bn 7.5% July 12 MMA 2014, Total US Results * All Time High
Quarterly RevPAR % Change: ADR Drives Growth 2011 2012 2013 2014 8.7 8.1 8.2 8.0 7.7 7.8 7.8 6.4 6.8 6.4 4.9 5.0 5.5 5.1 Q1 Q2 Q3 Q4 * Total US, RevPAR % Change, by Quarter, Q1 2011 Q2 2014
Demand Growth Accelerates. How Long Can That Last? 8 8.0% 4 3.4% 0-0.9% -4 Supply Demand - 4.7% -8 1990 2000 2010-6.9% Total U.S., Supply & Demand % Change, 12 MMA 1/1990 7/2014
Hawaii has a unique supply story 130% 120% 110% 100% 90% 80% US Oahu HI less Oahu 70% 60% 50% 2001 2006 2011 Total U.S., Oahu and HI less Oahu, Supply indexed to Jan 2001 through Jul 2014
Steady ADR Growth As Room Demand Growth Continues 6.8% 7.5% 5 4.0% 0-5 Demand % Change ADR % Change -4.5% -10 1990 2000 2010 Total U.S., ADR & Demand % Change, 12 MMA 1/1990 7/2014-8.7%
2014 Shows Healthy Growth Rates 6.8% 7.5% 5 4.0% 0-5 OCC % Change ADR % Change -6.7% -10 1990 2000 2010-9.7% Total U.S., ADR & OCC % Change, 12 MMA 1/1990 7/2014
20 OCC Performance of Various International Resort Markets 15 10 5 0-5 -10-15 Oahu HI Less Oahu Mexico Resorts Thailand Bali -20 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jun 14 12MMA OCC% change compared to one year prior.
15 OCC Performance of Various Domestic High OCC Markets 10 5 0-5 -10 Oahu HI Less Oahu Total US New York San Francisco Miami -15 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jun 14 12MMA OCC% change compared to one year prior.
25 20 15 10 5 0-5 -10-15 -20 ADR Performance of Various International Jan 10 Jan 11 Resort Markets Jan 12 Jan 13 Jan 14 Jun 14 Oahu HI Less Oahu Mexico Resorts Thailand Bali 12MMA ADR% change compared to one year prior. All % change in local currency
20 ADR Performance of Various Domestic High Occ Markets 15 10 5 0-5 -10-15 Oahu HI Less Oahu Total US New York San Francisco Miami -20-25 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jun 14 12MMA ADR% change compared to one year prior. All % change in local currency
30 RevPAR Performance of Various International Resort Markets 20 10 0-10 -20-30 Oahu HI Less Oahu Mexico Resorts Thailand Bali -40 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jun 14 12MMA RevPAR % change compared to one year prior. All % change in local currency
30 RevPAR Performance of Various Domestic High OCC Markets 20 10 0-10 -20 Oahu HI Less Oahu Total US New York San Francisco Miami -30 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jun 14 12MMA RevPAR % change compared to one year prior. All % change in local currency
Chain Scale Review
Scales: A Tale of 2 Supply Growth Scenarios Supply % Change Demand % Change 6.6 3.8 3.5 4.0 3.0 4.3 0.8 1.6 1.5 0.4 0.4-0.7 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy *Supply / Demand % Change, by Scale, July 2014 YTD
Scales: ADR Growth Strong Across The Board 5.0 4.7 4.7 3.6 Occupancy % Change ADR % Change 3.9 3.7 3.7 3.9 4.4 3.0 2.3 0.7 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy *OCC / ADR % Change, by Scale, July 2014 YTD
Top 25 US Markets: ADR
Wide Discrepancy In Absolute $ ADR Recovery 68.20 67.39 Occupancy levels of top 4 markets 47.20 41.67 83.9 Oahu 82.6 NYC 80.0 SF 76.3 MIA 34.46 31.83 28.54 25.18 25.01 23.21 20.59 19.10 16.46 16.31 15.70 14.62 13.33 13.25 13.24 12.05 12.00 10.31 7.70 6.11 2.89 * Top 25 Markets, ADR $ Change From Prior Trough, as of July 2014
27.1% 24.9% 11 Markets Asking: What Recovery? 14 have made the recovery 20.6% 16.9% 11.4% 10.5% 9.0% 8.1% 6.5% 4.3% 4.2% 2.6% 2.0% 0.5% -1.1% -1.6% -1.6% -1.8% -1.9% -2.1% -2.1% -3.4% -7.6% -7.9% -10.4% Top 25 Markets, ADR % Change From Prior Peak, as of July 2014
Peak ADRs Still Off Peak By Over $12 for 3 Of Top Markets $42.93 $42.50 $24.65 $18.53 $16.16 $14.09 $13.52 $8.03 $7.02 $5.31 $4.34 $2.69 $2.14 $0.42 -$0.94 -$1.74 -$1.80 -$1.97 -$2.00 -$2.57 -$2.83 -$3.71 -$12.36 -$13.14 -$21.51 Top 25 Markets, ADR $ Change From Prior Peak, as of July 2014
Wide Discrepancy In Absolute $ ADR Recovery 68.20 67.39 Occupancy levels of top 4 markets 47.20 41.67 83.9 Oahu 82.6 NYC 80.0 SF 76.3 MIA 34.46 31.83 28.54 25.18 25.01 23.21 20.59 19.10 16.46 16.31 15.70 14.62 13.33 13.25 13.24 12.05 12.00 10.31 7.70 6.11 2.89 * Top 25 Markets, ADR $ Change From Prior Trough, as of July 2014
Peak ADRs Still Off Peak By Over $12 for 3 Of Top Markets $42.93 $42.50 $24.65 $18.53 $16.16 $14.09 $13.52 $8.03 $7.02 $5.31 $4.34 $2.69 $2.14 $0.42 -$0.94 -$1.74 -$1.80 -$1.97 -$2.00 -$2.57 -$2.83 -$3.71 -$12.36 -$13.14 -$21.51 Top 25 Markets, ADR $ Change From Prior Peak, as of July 2014
Segmentation
Transient Occupancy Share Increases 2005 2013 57% 43% Group Transient 64% 36% Group Transient *Transient and Group Occupancy as Share of Total OCC, 2005 and 2013
ADR Segmentation by Class: Strong Transient Room Rate Growth 5.6 Transient % Change Group % Change 5.5 3.1 2.1 Luxury Upper Upscale *Segmentation ADR % Change, by Class, July 2014 YTD
Group Demand Is (Finally!) Recovering 5% 4% 3% 2% 1% -1% Demand % Change ADR % Change *2013 Easter Comp -2% 2012 2013 2014 *Group Demand and ADR % Change, 12 MMA, 1/2012 7/2014
Pipeline
US Pipeline: Construction Accelerates Phase 2014 2013 % Change In Construction 108 75 44% Final Planning 124 126-1% Planning 155 144 8% Under Contract 388 345 12% *Total US Pipeline, by Phase, 000s Rooms, July 2014 and 2013
Under Construction Rooms Mostly In Limited Service Segments 42.0 31.0 67% 10.6 15.3 3.6 5.0 1.1 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated *US Pipeline, Rooms Under Construction, 000s Rooms, by Scale, July 2014
Construction In Top 26 Markets: 15 With 2%+ Of Supply Market Rooms U/C % Of Existing Las Vegas, NV 0 0.0% Norfolk-Virginia Beach, VA 104 0.3% Tampa-St Petersburg, FL 211 0.5% Orlando, FL 595 0.5% Oahu Island, HI 144 0.5% San Francisco/San Mateo, CA 333 0.6% Atlanta, GA 852 0.9% Philadelphia, PA-NJ 525 1.1% St Louis, MO-IL 465 1.2% Detroit, MI 587 1.4% Phoenix, AZ 1,060 1.7% Chicago, IL 2,292 2.1% Minneapolis-St Paul, MN-WI 832 2.2% New Orleans, LA 826 2.2% Los Angeles-Long Beach, CA 2,187 2.2% San Diego, CA 1,381 2.3% Dallas, TX 1,826 2.3% Washington, DC-MD-VA 2,507 2.3% Boston, MA 1,379 2.7% Denver, CO 1,250 2.9% Nashville, TN 1,157 3.1% Anaheim-Santa Ana, CA 2,394 4.4% Seattle, WA 1,937 4.7% Miami-Hialeah, FL 2,653 5.4% Houston, TX 4,672 6.2% New York, NY 13,989 12.5% *US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, July 2014
Forecasts
Total United States Chain Scale Key Performance Indicator Outlook 2014F by Chain Scale 2014 Year End Outlook Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (%chg) Luxury -0.1% 4.6% 4.5% Upper Upscale 2.0% 4.4% 6.5% Upscale 2.0% 4.4% 6.5% Upper Midscale 2.6% 3.3% 6.0% Midscale 3.0% 3.5% 6.6% Economy 2.9% 3.9% 6.8% Independent 2.8% 4.6% 7.5% Total United States 2.6% 4.2% 6.9% *as of August 12 th, 2014
Total United States Chain Scale Key Performance Indicator Outlook 2015F by Chain Scale 2015 Year End Outlook Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (%chg) Luxury 0.2% 4.8% 5.0% Upper Upscale 0.5% 4.8% 5.3% Upscale 0.2% 4.7% 5.0% Upper Midscale 0.1% 3.5% 3.6% Midscale 1.0% 3.6% 4.6% Economy 1.0% 3.5% 4.5% Independent 0.9% 4.3% 5.2% Total United States 0.7% 4.4% 5.2% *as of August 12 th, 2014
Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2014-2015 Outlook 2014 Forecast 2015 Forecast Supply 1.0% 1.3% Demand 3.6% 2.1% Occupancy 2.6% 0.7% ADR 4.2% 4.4% *as of August 12 th, 2014 RevPAR 6.9% 5.2%
Oahu Key Performance Indicator Outlook (% Change vs. Prior Year) 2014-2015 Outlook 2014 Forecast 2015 Forecast Supply -1.1% 0.9% Demand -0.4% 2.7% Occupancy 0.8% 1.8% ADR 4.9% 7.4% *as of August 12 th, 2014 RevPAR 5.7% 9.3%
Hawaii without Oahu Key Performance Indicator Outlook (% Change vs. Prior Year) 2014-2015 Outlook 2014 Forecast 2015 Forecast Occupancy -0.3% 1.7% ADR 5.3% 5.9% RevPAR 5.0% 7.7% *as of August 20th, 2014 Source: STR Analytics Custom Forecast
2014 Year End RevPAR Forecast Top 25 US Markets, August 2014 Forecast (Markets sorted alphabetically) -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15%+ Chicago Anaheim Atlanta Nashville New Orleans Detroit Boston New York Houston Dallas Norfolk Los Angeles Denver Philadelphia Miami San Francisco Washington Minneapolis Seattle Oahu Tampa Orlando Phoenix San Diego St. Louis Hawaii less Oahu
2015 Year End RevPAR Forecast Top 25 US Markets, August 2014 Forecast (Markets sorted alphabetically) -5% to 0% 0% to 5% 5% to 10% 10% to 15% New York Atlanta Anaheim Nashville New Orleans Norfolk Philadelphia Washington Boston Chicago Dallas Denver Detroit Houston Los Angeles Miami Minneapolis Oahu Orlando Phoenix San Diego San Francisco Seattle St. Louis Tampa Hawaii less Oahu
And Thank You! Questions?