US LODGING INDUSTRY OVERVIEW

Mark V. Lomanno
President

Global RevPAR
% Change

UK £
H1, 08

YE 08

L3M

2.5%

-0.4%

-10.2%

Europe €
H1, 08

YE 08

L3M

-0.4%

-5.1%

-19.2%

United States $
H1, 08

YE 08

L3M

1.6%

-1.9%

-14.3%

Note: L3M = December 08 to February 09

A i P
Asia
Pacific
ifi $
ME & A $
H1, 08

YE 08

L3M

25 7%
25.7%

17%

-12.6%
12 6%

H1, 08 YE 08

L3M

12.5%

-24.4%

1.8%

Total United States
Key
ey Performance
e o a ce Indicators
d ca o s Percent
e ce C
Change
a ge
Full Year 2008 / March 2009 YTD

10
5

2008
2.6

YTD 2009

3.2

2.5

0
-1.8

-1.8

-5

-4.2
-7 7
-7.7

-8.0
80

-10

-10.9

-15
-17.7

-20
Supply

Demand

Occ

ADR

RevPAR

Total United States
Room Supply/Demand
pp y
Percent Change
g
Twelve Month Moving Average – 1989 to March 2009
6
4
2.8%

2
0
-2
-1.1%

-4

Supply % Change

- 4.8%

-3.4%

Demand % Change

-6
1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2008 S
Smith
ith T
Travell R
Research,
h IInc.

Total United States
Occupancy/ADR
p
y
Percent Change
g
Twelve Month Moving Average – 1989 to March 2009
10
8
6

Occ % Chg
ADR % Chg

4

0 1%
0.1%
-0.4%

2
0
-2
-3.4%

-4

-4.7%

-6
6

-6.1%

-6.8%

-8
1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Total United States
Monthly Room Demand (In Millions) – Seasonally Adjusted
January 2001 – to March 2009
90

85

80

75

70
2001

2003

2005

2007

2009

Total United States
Occupancy
p
y Percent
Twelve Month Moving Average – 1989 to March 2009
70

65

58 8%
58.8%

60
58 5%
58.5%

55
1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Total United States
RevPAR Percent Change
g
Twelve Month Moving Average – 1989 to March 2009
12
10
8
6
4
2
0
-2
-4
-6
-8
-10
-12
1989

-2.7%
11.91

- 6.4%
RevPAR % Chg
g

1991

1993

1995

1997

1999

-10.5%
10 5%
6.02

2001

2003

2005

2007

2009

2008 S
Smith
ith T
Travell R
Research,
h IInc.

Total United States
Weekday
ee day / Weekend
ee e d Percent
e ce C
Change
a ge
April 25th, 2009 YTD

10

Weekday

Weekend

5
0
-5
-7.8

-10

-7.7

8.0
0
-8

-15

-15.0

-14.4

-20
20
-21.1

-25
Occ

Weekends = Friday / Saturday

ADR

RevPAR

Total US Room Rates
Actual vs Inflation Adjusted
2000 - 2007

110
If year 2000 ADR had
increased by CPI each year
year…

103 97
103.97
102.76

100

99.77
97.96

Nominal ADR
Yr 2000, Grown by CPI

96 65
96.65
93.48

91.14

91.06

90

89.03
85.22
85.22

86.39

87.64
83.99
82.75

82.94

80
2000

2001

2002

2003

2004

2005

Rate Cuts on ’01
01 Were Felt for 6 Years

2006

2007

A Little Positive News

Total United States
Room Supply
pp y Percent Change
g
Jan 2003 – March 2009
3.5
30
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0
0.5
5
-1.0
2 003

200 4

2 005

200 6

20 07

200 8

J FM

Total United States
28 Day Moving Average
Demand & ADR % Change
Jan 1, 2009 – April 25, 2009

0
Demand
ADR

-2
-4
-6
-8
-10
-12
1/1/09

1/31/09

3/2/09

4/1/09

Total United States
Hotel Rooms Sold vs. ADR Change
Q t l Change
Quarterly
Ch
– 1988 tto Q1 2009
10
8

Demand % Chg

6

ADR % CHG

4
2
0
1988q1
-2
-4
-6
-8
-10

1991q1

1994q1

1997q1

2000q1

2003q1

2006q1

2009 q

U.S. Lodging Industry
Chain Scales

STR Chain Scales
Selected chains from each segment

Luxury – Four Seasons, Ritz Carlton, Fairmont

Upper Upscale – Hyatt Regency, Hilton, Marriott, Sheraton

Upscale – Residence Inn, Hilton Garden Inn, Courtyard

Mid with
ith F&B – Holiday
H lid IInn, R
Ramada,
d Q
Quality
lit IInn

Mid no F&B – Hampton Inn, Holiday Inn Express, Comfort Inn

Economy – Econolodge, Red Roof, Days Inn

Chain Scales
Supply/Demand
pp y
Percent Change
g
March 2009 YTD
15
10

9.1

7.8

6.8

5.9

5
1.6

0
-1.6

-5
-10

-4.6

-5.2

-6.8
68

-7.4

-8.6

-15

Supply
Demand

-13.0

-20
Luxury

Upper
Upscale

Upscale

Mid w F&B

Mid wo
F&B

Economy

Chain Scales
Occupancy/ADR
p
y
Percent Change
g
March 2009 YTD
0
-3.2
-4.5

-5

-4.4

-7 5
-7.5
-8.9

-8.4

-10
-12.0

-11.5

-11.5

-11.2

-13.2

-15

Occupancy
ADR

-16.3

-20
20
Luxury

Upper
Upscale

Upscale

Mid w F&B

Mid wo F&B

Economy

Chain Scales
RevPar Percent Change
April 25, 2009 YTD

0

-10

-16.1
-17.7

-20
20
-21.2

-30
30

-14.9

-19.8

-28.5
28 5

Luxury

Upper
Upscale

Upscale

Mid w F&B

Mid wo
F&B

Economy

Chain Scales
Weekday vs..
vs Weekend Occupancy Percent Change
April 25, 2009 YTD
0
-5
-7.6

-6.2

-7.7

10
-10

8.5
-8.5

-9.3
-10.8

-15
-20

-14.8

-19.5

-15.6

-14.9

-14.1

Weekday
Weekend

-25
25
Luxury

-14.4

Upper
Upscale

Upscale

Mid w F&B

Mid wo F&B

Economy

Chain Scales
Weekday vs
vs.. Weekend ADR Percent Change
April 25, 2009 YTD
0

-5

-5.1 -4.8

-4.4 -4.2

-8.2 -8.3

-10

-15

-3.6 -4.1

-9.6 -9.6

-13.7
-15.5

Weekday
Weekend

-20
20
Luxury

Upper
Upscale

Upscale

Mid w F&B

Mid wo F&B

Economy

Chain Scales
Weekday Occupancy/ADR Premium (%)
April 25, 2009 YTD
20

Occupancy

14 7
14.7
12.8

ADR

11.1

10

6.2
20
2.0

3.4 4.2

22
2.2

0.7

0
-4.0
-7.0

-10

-6.3
63

-11.6
-18.2

-20
Luxury

Upper
Upscale

Upscale

Mid w F&B

Mid wo
F&B

Economy

Total US

Chain Scales
Weekday RevPAR Premium (%)
April 25, 2009 YTD
30

27.3

% Premium over Weekend
15.3

15

7.8

0
-0.6

-2.1
-12.1

-15

-23.8

-30
Luxury

Upper
Upscale

Upscale

Mid w F&B

Mid wo
F&B

Economy

U.S. Lodging Industry
Projections
As of April 22nd, 2009

U.S. Economic Outlook
Blue Chip Economic Indicators – April 2009

Real GDP

2008
+1.1%

2009F
-2.6%

2010F
+1.8%

CPI

+3.8%

-0.7%

+1.6%

Corporate Profits

-10.1%

-16.6%

+7.0%

Disp Personal Income

+1.3%

+1.9%

+1.8%

5.8%
%

8.9%
%

9.4%
%

Unemployment
p y
Rate

Total United States
Active Development Pipeline - Rooms
Change From Last Year
Phase

March 2009 March 2008

Difference

% Change

In Construction

175,147

207,488

-32,341

-15.6%

Final Planning

73 507
73,507

113 419
113,419

-39,915
39 915

-35.2%
35 2%

Planning

302,959

344,363

-41,404

-12.0%

Active Pipeline

551,610

665,250

-113,640

-17.1%

Pre-Planning

134,872

141,761

-6,889

-4.9%

T t l
Total

686 482
686,482

807 011
807,011

-120,529
120 529

-14.9%
14 9%

Source: STR / TWR / Dodge Construction Pipeline

Total United States
Supply/Demand Percent Change
2003 – 2010P
5

4.0

4

2.8

3
2

1.0 1.3

1

0.5
04
0.4

0

2.7

2.6

1.4 1.4

1.3 1.0

1.9
1.3

0.2
-0.1

-1
-2

Supply % Chg

-3

Demand % Chg

-1 2
-1.2

-4

-3 9
-3.9

-5
2003

2004

2005

2006

2007

2008

2009P

2010P

20 Yr
Average

Total United States
Occupancy Percent
2003 – 2010P
70

63.1

63.3

63.1

61 4
61.4
60.4

60

59.2
56.5

56.5

2009P

2010P

50
2003

2004

2005

2006

2007

2008

Total United States
Occupancy Percent Change
2003 – 2010P
4

3.6
2.9

2
0.4

0.3
0

0.0
-0.2

20 Year Average: -0.6%

-2
-4
-4.2
-6
-6.5
-8
2003

2004

2005

2006

2007

2008

2009P

2010P

Total United States
Average Daily Rate (In Dollars)
2003 – 2010P
$125
$106.68
$103.97

$102.89

$104.41

2009P

2010P

$97.96

$100
$91.14
$86.39
$82.94

$75

$50
2003

2004

2005

2006

2007

2008

Total United States
ADR Percent Change
2003 – 2010P
8

7.5
6.1

5.5

6

4.2
4
20 Year Average: 3.5%

2.5

15
1.5

2

0.2
0
-2
-4

-3.6
36

-6
2003

2004

2005

2006

2007

2008

2009P

2010P

Total United States
RevPAR Percent Change
2003 – 2010P
8.5
7.9
8

7.8
57
5.7

3

1.5

20 Year Average: 2.9%

05
0.5
-2

-1.8

-7

-9.8
-12
2003

2004

2005

2006

2007

2008

2009P

2010P

Total US Industry
Consecutive Quarterly Declines
Key Indicators

1990/
1991

2001/
2002

Current
(Q1-09)

Estimate
2008/09

Demand

3

5

5

7

Occupancy

7

6

6

10

ADR

0

5

2

4

RevPAR

5

5

3

6

Room Revenue

2

5

3

5

2008 Smith Travel Research, Inc.

Takeaways
• Decline is Global – visibility difficult
• Risk averse / capital tight - supply increases slow
• Value proposition is critical – “New Frugality”
• Summer travel may show relative improvement
• Leisure leads rebound?
• H1N1 – Swine / The flu or the media?

For a copy of this presentation, please go to:

www.HotelNewsNow.com
Click on “Industry Presentations”

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