US Lodging Industry Overview Amanda W. Hite President STR
Agenda Total US Review Scales Segmentation Pipeline 2012 / 2013 Forecast
Total US Review
Supply / Demand Drive Results. Pricing Power Is Back (?) % Change Room Supply* 727 mm 0.3% Room Demand* 430 mm 3.5% Occupancy 59% 3.2% A.D.R. $104 4.2% RevPAR $62 7.5% Room Revenue* $45 bn 7.9% YTD May 2012, Total US Results * All Time High
YTD May 2012: Highest Demand - EVER (430 Million Rooms Sold)
Demand Growth Expected To Revert To Mean. Supply Not An Issue 8 8.0% 4 4.0% 0-0.9% -4 Supply Demand - 4.7% -6.9% -8 1990 2000 2010 *Total US, Supply & Demand % Change, 12 MMA 1990 5/2012
ADR Rebound Trajectory Flattens Out (Too?) Early 5 4.0% -0.2% 0-0.9% -5 Demand ADR -4.7% -4.6% -6.9% -8.7% -10 1990 2000 2010 *Total US, ADR & Demand % Change, 12 MMA 1990 5/2012
ADR Discounting at Twice The Speed of ADR Increases 110 Sept 08 $108 105-10% Dec 11 $102 100 19 Months Apr 10 $97 19 Months +4.6% 95 2008 2009 2010 2011 *Total US, ADR $, 12 MMA 2007-2011
Inflation Adjusted ADRs Well Out Of Reach Nominal ADR 2007 ADR Grown By CPI $117 2000 / 2007 Grown by CPI $107 $101 2000 ADR Grown By CPI $85 $85 $104 $107 $109 2000 2002 2004 2006 2008 2010 2012F 2013F * Total US, ADR $ and Inflation Adjusted ADR $, 2000 2013F 2000 2010 CPI from bls.gov, 2011 2013 CPI from Blue Chip Economic Indicators
ADRs Are Growing (But Comps Get More Difficult) 3.9 4.1 3.7 4.0 3.5 4.2 4.0 4.4 3.5 4.2 4.1 3.9 3.7 3.6 3.1 2.6 2.9 Jan-11 Jul-11 Jan-12 * Total US, ADR $ % Change, by Month, 1/11 5/12
Chain Scale Review
Scales: Strong Demand Growth, Supply Not An Issue 2.8 3.1 4.3 5.8 3.9 Supply Demand 1.5 1.8 1.7 0.2 0.6-0.9-0.2 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy *Supply / Demand % Change, by Scale, YTD May 12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification
Good Beginning to 2012 4.9 Occupancy ADR 3.7 2.9 4.0 2.8 4.3 3.9 3.8 3.3 3.2 4.3 2.0 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy *OCC / ADR % Change, by Scale, YTD May 12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification
Upper End Sells 7 out of 10 Rooms Every Night 72.5 72.1 70.5 70.1 70.3 69.6 2007 12 Months end 5/12 65.6 62.2 59.0 57.0 54.3 53.9 Luxury Upper Upscale Upscale Upper Midscale* Midscale* Economy *Absolute OCC %, by Scale, YE 2007 & 12 Months ending 5/12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification
ADR Growth Is Strong But Not Strong Enough (...yet) $293 $266 2007 12 Months end 5/12 $159 $150 $121 $114 $94 $95 $75 $73 $54 $51 Luxury Upper Upscale Upscale Upper Midscale* Midscale* Economy *Absolute ADR $, by Scale, YE 2007 & 12 Months ending 5/12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification
Segmentation Review
Transient Demand Breaks Records, But... 20 2007 2011 2012 Millions 17.5 15 12.5 10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec *Transient Demand in Millions of Rooms; 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)
Transient ADR Still Lags 2007 Results $190 2007 2011 2012 $180 $170 $160 $150 $140 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec *Transient ADR $, 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)
We Expect Transient ADR Growth To Continue 5.3 4.6 6.4 5.4 5.9 5.1 5.0 3.7 4.7 4.3 4.6 3.7 3.8 3.4 4.0 5.5 4.2 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 *Transient ADR % by Month, 1/11 5/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)
Group Demand Has Not Changed Over Time, But 12 2007 2011 2012 10 Millions 8 6 4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec *Group Demand in Millions of Rooms, 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)
Group ADRs Still Depressed (& Could Dampen Future Absolute ADRs) $170 2008 2011 2012 $160 $150 $140 $130 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec *Group ADR $, 2008, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)
Group ADR Expectation Still Depressed 3.7 3.7 4.2 2.6 2.4 2.4 2.0 2.0 1.7 3.0 2.7 2.8 2.6 2.2 2.3 0.3 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12-0.5 *Group ADR % by Month, 1/11 4/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)
Pipeline
Rooms Pipeline Still Not An Issue in 2012 Phase May 2012 May 2011 Dec 2007 In Construction 60 50 211 Planned Pipeline 230 261 204 Active Pipeline 290 311 415 *Total US Pipeline, in 000s of rooms, by Phase by Year Planned Pipeline includes projects in Final Planning and Planning phases Source: STR / McGraw-Hill Construction Dodge
Upscale / Upper Midscale Sees Activity 17.4 19.5 7.7 12.0 1.6 3.0 1.0 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated *Rooms In Construction by Scale ( 000s), 5/12 Source: STR / McGraw-Hill Construction Dodge
2012 / 2013 Forecast
Total United States Forecast 2012 / 2013 Key Performance Indicator % Change 2012 Forecast 2013 Forecast Supply 0.5% 1.1% Demand 2.0% 1.8% Occupancy 1.5% 0.7% ADR 4.0% 4.6% RevPAR 5.5% 5.4%
Hotel Industry Forecasts STR Revisions 2012 Demand ADR ALIS 11 2.2 6.8 NYU 11 2.5 6.0 HDC 11 2.5 4.9 Hotel Show 11 1.1 3.7 ALIS 12 1.3 3.8
2012 Scale Forecast Is Closer To Guidance Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (%chg) Luxury +2.6% +5.1% +7.9% Upper Upscale +1.5% +4.2% +5.7% Upscale +2.3% +4.6% +7.1% Upper Midscale +1.4% +4.0% +5.5% Midscale +2.8% +1.4% +4.3% Economy +1.4% +3.1% +4.5% Independent +0.5% +3.5% +4.0% Total United States 1.5% 4.0% 5.5% *Key Performance Indicator Forecast, by Scale, 2012