US LODGING INDUSTRY OVERVIEW

Greg Hartmann, MAI, CHA

Managing Director
STR Analytics

2010 Smith Travel Research, Inc.

 Agenda
Last Few Weeks
This Year
Supply & Demand
Locations
Markets
Chain Scales
Takeaways

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 The Last Few Weeks
U.S. RevPAR Percent 28-Day Moving Average
February 6, 2010 – April 24, 2010

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 Month by Month
US Room Demand Percent Change
Jan 2003 – March 2010

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 Month by Month
US Room Rate Percent Change
Jan 2003 – March 2010

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 Quarter by Quarter
US Quarterly RevPAR Percent Change: 2007 – Prelim 1Q 2010

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4Q 2009 is preliminary
 Total United States
Key Performance Indicators Percent Change
March 2010 – Trailing 12 Months & Trailing 3 Months

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Demand is Up Worldwide Too
Rolling-12 demand % change

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Global Performance: Asia Pacific leads the way
RevPAR % change YOY USD

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Global Regions
Construction / Active Pipeline as % of existing supply

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 United States: Building Into The Downturn

3.1%

-2.9%

-4.8%

-6.6%

Total United States

Twelve Month Moving Average1989 through March 2010 2010 Smith Travel Research, Inc.
2010 Smith Travel Research, Inc.
 Hotels Closing Slowly
Under Demolished

Bucks for
“ 2002
2006
2003
2007
2004
2008
2005
2009E

Bunkers!”
1000
900 843
66,946 rooms in 2005 to 13,500 rooms in 2009
800 729
683
700 66.9

600 507 50.6

54.2
500
400 352 350 35.9
30.9
28.0
300
217 21.5
200 13.5
125
100
0
Number of Hotels Rooms (thousands)
2010 Smith Travel Research, Inc.
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A Tale of Two Segments
Group vs. Transient

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Total United States – Transient Segment
Room Demand Percent Change
Jan 2003 – March 2010

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Total United States – Group Segment
Room Demand Percent Change
Jan 2003 – March 2010

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Where are they Staying?
Urban, Urban, Urban

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 Location Segments
Occupancy / ADR Percent Change
March 2010 YTD

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 Location Segments
RevPAR/ Room Revenue Percent Change
March 2010 YTD

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In which Markets are they
Staying (and Paying)?

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 Key 15 Markets
Room Demand Percent Change
March 2010 YTD

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Key 15 Markets
ADR Percent Change
March 2010 YTD

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 Key 15 Markets
RevPAR Percent Change
March 2010 YTD

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Chain Scales

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 Chain Scales
Supply / Demand Percent Change
March 2010 YTD

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 Chain Scales
Occupancy / ADR Percent Change
March 2010 YTD

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 Chain Scales
RevPAR / Room Revenue Percent Change
March 2010 YTD

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 Reflective Influence – Upscale vs. Economy

U.S. Chain Scales

Demand % Change by Month through March 2010 2010 Smith 2010
Travel Research, Inc.
Smith Travel Research, Inc.
 $300
1987
$250 Luxury
Upper Upscale
$200 Upscale
Independent
$150 Midscale with F&B
Midscale w/o F&B
D
A
R
($
)

1
$100 Economy
2
4 3
$50 5
6 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1992
$250 Luxury
Upper Upscale
$200 Upscale
Independent
$150 Midscale with F&B
1
Midscale w/o F&B
D
A
R
($
)

$100 Economy
2
4
3
$50 5
6
7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1993
$250 Luxury
Upper Upscale
$200 Upscale
Independent
$150 Midscale with F&B 1
Midscale w/o F&B
D
A
R
($
)

$100 Economy 2
3
4
$50 5
6
7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
2000
$250 Luxury
1
Upper Upscale
$200 Upscale
Independent
$150 Midscale with F&B
2
Midscale w/o F&B 3
D
A
R
($
)

$100 Economy 4
5
6
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
2001
$250 Luxury
1
Upper Upscale
$200 Upscale
Independent
$150 Midscale with F&B
2
Midscale w/o F&B 3
D
A
R
($
)

$100 Economy 4
5
6
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
2002
$250 Luxury
Upper Upscale 1
$200 Upscale
Independent
$150 Midscale with F&B
Midscale w/o F&B 3 2
D
A
R
($
)

$100 Economy 4
6 5
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1
2007
$250 Luxury
Upper Upscale
$200 Upscale
Independent
3 2
$150 Midscale with F&B
Midscale w/o F&B
D
A
R
($

4
)

$100 Economy
6 5

$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1
2008
$250 Luxury
Upper Upscale
$200 Upscale
Independent
3 2
$150 Midscale with F&B
Midscale w/o F&B
D
A
R
($

4
)

$100 Economy
6 5

$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300

2009
$250 Luxury 1
Upper Upscale
$200 Upscale
Independent
$150 Midscale with F&B 3 2
Midscale w/o F&B
D
A
R
($
)

4
$100 Economy
6 5

$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

Animated Market Snapshots
Year by Year

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 $300
1987
$250 Luxury
Upper Upscale
$200 Upscale
Independent
$150 Midscale with F&B
Midscale w/o F&B
D
A
R
($
)

1
$100 Economy
2
4 3
$50 5
6 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1988
$250

$200

$150
D
A
R
($
)

1
$100
2
4 3
$50 5
76

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1989
$250

$200

$150
D

1
A
R
($
)

$100
2
4 3
$50 5
7 6

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1990
$250

$200

$150
1
D
A
R
($
)

$100
2
4 3
$50 5
7 6

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1991
$250

$200

$150
1
D
A
R
($
)

$100
2
4 3
$50 5
6
7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1992
$250

$200

$150
1
D
A
R
($
)

$100
2
4
3
$50 5
6
7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1993
$250

$200

$150
1
D
A
R
($
)

$100
2
3
4
$50 5
6
7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1994
$250

$200

$150 1
D
A
R
($
)

$100 2
3
4
$50
5
6
7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1995
$250

$200

1
$150
D
A
R
($
)

$100 2
4
3
5
$50 6
7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1996
$250

$200
1

$150
D
A
R
($
)

2
$100
3
4
5
$50 6
7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1997
$250

$200
1

$150
D
A
R
($

2
)

$100 3
4
5
6
$50
7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1998
$250

$200
1

$150

2
D
A
R
($
)

3
$100
4
5
6
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1999
$250

1
$200

$150
2
D
A
R
($
)

3
$100 4
5
6
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
2000
$250
1

$200

$150
2
3
D
A
R
($
)

$100 4
5
6
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
2001
$250
1

$200

$150
2
3
D
A
R
($
)

$100 4
5
6
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
2002
$250

1
$200

$150

3 2
D
A
R
($
)

$100
4
6 5
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300

2003
$250

1
$200

$150

3 2
D
A
R
($
)

$100
4
6 5
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300

2004
$250
1

$200

$150
3 2
D
A
R
($
)

$100 4
6 5
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300

2005
$250 1

$200

$150
3 2
D
A
R
($
)

$100 4
6 5
$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300

2006 1
$250

$200

$150 3 2
D
A
R
($
)

4
$100
6 5

$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1
2007
$250

$200

3 2
$150
D
A
R
($

4
)

$100
6 5

$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300
1
2008
$250

$200

3 2
$150
D
A
R
($

4
)

$100
6 5

$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

 $300

2009
$250
1

$200

$150 3 2
D
A
R
($
)

4
$100
6 5

$50 7

$0
40 45 50 55 60 65 70 75 80

Occupancy(%)

2010 Smith Travel Research, Inc.

Projections

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 Total United States
Supply/Demand Percent Change
2004 – 2011P

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 Total United States
Key Performance Indicator Outlook Scenario
2010E by Chain Scale

2010 Year End Outlook 2010 Year End Scenarios

Chain Scale Occupancy ADR RevPAR Occupancy ADR RevPAR
(% chg) (% chg) (%chg) (% chg) (% chg) (% chg)
High Low High Low High Low

Luxury 4.2 -3.7 0.4 5.8% 3.2% -2.3% -4.7% 3.4% -1.6%

Upper 3.3 -2.0 1.2 4.8% 2.3% -0.5% -3.0% 4.3% -0.8%

Upscale
Upscale 2.6 -4.5 -2.0 4.1% 1.6% -3.1% -5.5% 1.0% -3.9%

Midscale w/ -1.0 -2.3 -3.4 0.5% -2.0% -0.8% -3.3% -0.4% -5.3%

FMidscale
&B w/o F&B 1.3 -2.0 -0.7 2.8% 0.3% -0.5% -3.0% 2.4% -2.6%

Economy 1.2 -4.3 -3.2 2.7% 0.2% -2.9% -5.3% -0.3% -5.1%

Independent 1.9 -2.3 -0.4 3.4% 0.9% -0.8% -3.3% 2.6% -2.4%
2010 Smith Travel Research, Inc.
What Can’t be Forecast – Ash Clouds
Daily results 13 April to 21 April 2010

2010 Smith Travel Research, Inc.

 Takeaways
• Performance Metrics are Improving and/or Declining Less
• Expect to outperform most (public) predictions


• This Recession Priced Differently vs. Previous Recessions

• Upscale Discounts Capture Midscale and Economy Guests


• Demand is back, No need to buy Guests cheap.



• Market Threats Change in 2010 from Demand Declines to Recent

and/or Immediate Supply Increases


• Capital Still Needed to Improve Competitive Performance, Property

Condition and Ward off CMBS Balloons (11/12)
2010 Smith Travel Research, Inc.
For a copy of this presentation, please go to:

www.hotelnewsnow.com
Click on “Industry Presentations”

2010 Smith Travel Research, Inc.