Hotel InduSTRy Overview
Vail R. Brown
Vice President,
Global Sales & Marketing
Source: 2011 Smith Travel Research, Inc.
Agenda: 18 May 2011
 U.S. Hotel Performance
 Indiana Hotel Performance
 Indiana Markets & Beyond
 Outlook
Source: 2011 Smith Travel Research, Inc.
U.S. Hotel Performance
2011 – So far, so … blah
Source: 2011 Smith Travel Research, Inc.
ADR Finally Contributing to RevPAR Growth
% Change
•
•
•
•
•
•
•
Hotels
Room Supply
Room Demand
Occupancy
A.D.R.
RevPAR
Room Revenue
Total U.S.: Key Statistics
1st Quarter 2011
52k
432 mm
237 mm
54.9%
$99
$55
$23.6 bn
1.0%
6.7%
5.7%
3.1%
9.0%
10.0%
Source: 2011 Smith Travel Research, Inc.
Demand Leads ADR….Swings Get More Extreme
10
Demand
8.0%
ADR
5
1.6%
0
-0.2%
-0.9%
-5
-4.7%
-4.6%
-6.9%
-10
1989
-8.7%
1991
1993
1995
1997
1999
2001
Total U.S.: ADR & Demand % Change
Twelve Month Moving Average : Jan. 1989 – March 2011
2003
2005
2007
2009
2011
Source: 2011 Smith Travel Research, Inc.
Absolute ADR Will Not Recover for At Least 2 Years
$110
30 Months
-$10.60
$100
$90
41 Months
-$3.70
$80
$70
20
20
20
20
20
20
20
00
01
02
03
04
05
06
Total U.S.: Actual ADR
Twelve Month Moving Average: Jan. 2000 – March 2011
20
07
20
08
20
09
20
10
20
11
Source: 2011 Smith Travel Research, Inc.
Hopeful ADR growth will continue to drive RevPAR growth
Low
Growth
Forecast
High
Growth
Supply
1.0
0.7
0.4
Demand
2.1
2.5
3.0
Occupancy
1.1
1.8
2.6
ADR
3.7
4.2
4.8
RevPAR
4.8
6.1
7.4
Total U.S.
2011 Total U.S. Outlook
Source: 2011 Smith Travel Research, Inc.
Indiana Overview
Source: 2011 Smith Travel Research, Inc.
State’s RevPAR driven by OCC & ADR…good thing.
%Change
•
•
•
•
•
•
•
Hotels
Rooms
STR Sample
Occupancy
ADR
RevPAR
Room Revenue
961
85,285
76.2%
46.5%
$76.42
$35.54
$271.4M
4.6%
3.4%
8.2%
9.9%
Indiana: Key Statistics
1st Quarter 2011
Source: 2011 Smith Travel Research, Inc.
Historically: Builds Into Downturns…
8
7.1%
4
1.2%
0
-4
Supply % Chg.
Demand % Chg.
-8
200
1
200
2
200
3
200
4
200
5
200
6
Indiana: Supply & Demand % Change
Twelve Month Moving Average: Jan. 2001 – March 2011
200
7
200
8
200
9
201
0
Source: 2011 Smith Travel Research, Inc.
IF All Active Pipeline Opens…over 5.5% Room Supply Increase!
Phase
Properties
Rooms
In Construction
10
895
Final Planning
12
1,196
Planning
31
2,936
Active Pipeline
53
5,027
Pre-Planning
15
1,389
Total
68
6,416
Indiana: Active Development Pipeline
March 2011
Source: 2011 Smith Travel Research, Inc.
OCC Growth is Back…ADR Growth much Slower!?
10
OCC% Chg.
ADR % Chg.
5
0
-5
-10
200
1
200
2
200
3
200
4
200
5
200
6
Indiana: OCC & ADR % Change
Twelve Month Moving Average: Jan. 2001 – March 2011
200
7
200
8
200
9
201
0
Source: 2011 Smith Travel Research, Inc.
ADR discounts not as extreme as U.S…BUT still takes time!
$90
31 Months
-$4.81
$70
$50
$30
2001
2002
2003
2004
2005
2006
Indiana: Actual ADR ($)
Twelve Month Moving Average: Jan. 2001 – March 2011
2007
2008
2009
2010
2011
Source: 2011 Smith Travel Research, Inc.
Indiana Segments
Customer Segmentation:
o Transient – Third party, rack rate, government rate, etc.
o Group – Rooms booked in blocks of 10 or more.
Combine Chain Class: Aggregate of branded hotels & independents.
o Luxury/Upper Upscale/Upscale
o UpperMidscale/Midscale/Economy
Source: 2011 Smith Travel Research, Inc.
Transient Demand back since 1Q 2010…ADR Growth?
40
Trans. Demand % Chg
Trans. ADR % Chg
30
20
10
0
-10
-20
2004
2005
2006
2007
Indiana: Transient Room Demand & ADR % Change
By Month: Jan. 2004 – March 2011
2008
2009
2010
2011
Source: 2011 Smith Travel Research, Inc.
Group Demand & ADR Growth pretty in-sync…A good thing.
30
Group Demand % Chg
Group ADR % Chg
20
10
0
-10
-20
-30
2004
2005
2006
2007
Indiana: Group Room Demand & ADR % Change
By Month: Jan. 2004 – March 2011
2008
2009
2010
2011
Source: 2011 Smith Travel Research, Inc.
2011 STR Chain Segments
Selected Brands from each segment
• Luxury – Four Seasons, Ritz Carlton, Fairmont, InterContinental
• Upper Upscale – Hyatt, Embassy Suites, Hilton, Marriott
• Upscale – Hyatt Place, Hilton Garden Inn, Courtyard, Hotel Indigo
• Upper Midscale – Best Western PLUS/Premier, Hampton Inn, Fairfield Inn
• Midscale – Best Western, Country Inn & Suites, La Quinta Inn, Sleep Inn
• Economy – America’s Best Inn, Econolodge, Red Roof, Days Inn
Source: 2011 Smith Travel Research, Inc.
Appears to be a Top Down Recovery…
20
10
0
-10
Lux/Upper Up/Upscale
UpperMid/Midscale/Economy
Total Indiana
Jan 09
Jul 10
-20
Jan 07
Jul 07
Jan 08
Jul 08
Indiana: Combine Chain Class
Demand % Change by Month through March 2011
Jul 09
Jan 10
Jan 11
Source: 2011 Smith Travel Research, Inc.
ADR Data is “Less Bad”…need consistent growth.
20
Luxury/Upper Up/Upscale
UpperMid/Midscale/Economy
Total Indiana
10
0
-10
-20
Jan 07
Jul 07
Jan 08
Jul 08
Indiana: Combine Chain Class
ADR % Change by Month through March 2011
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Source: 2011 Smith Travel Research, Inc.
Indiana Markets
& Beyond….
Source: 2011 Smith Travel Research, Inc.
Indy new room supply leader…
6
3
0
-3
IndianaNorth
Indianapolis
IndianaSouth
-6
2002
2004
2006
Indiana Markets: Room Supply % Change
12 Month Moving Average Jan. 2002 – March 2011
2008
2010
Source: 2011 Smith Travel Research, Inc.
Good News: Strong room demand across the board!
12
8
4
0
-4
-8
IndianaNorth
Indianapolis
IndianaSouth
-12
2002
2004
2006
Indiana Markets: Room Demand % Change
12 Month Moving Average Jan. 2002 – March 2011
2008
2010
Source: 2011 Smith Travel Research, Inc.
Indy highest OCC % but Gary MSA largest OCC Growth
Indianapolis, IN Market
7.0%
Evansville-Henderson MSA
0.9%
Gary MSA
2.3%
Fort Wayne MSA
Indiana North Market
Indiana Markets & Sub-Markets: Occupancy & % Change
1st Quarter 2011
2.5%
3.3%
51.0
49.7
8.7%
Indiana South Market
51.1
46.9
44.1
41.3
Source: 2011 Smith Travel Research, Inc.
Strong ADR Growth for Evansville-Henderson MSA
Indianapolis, IN Market
3.6%
Gary MSA
3.4%
Indiana South Market
4.2%
Evansville-Henderson MSA
Indiana North Market
Fort Wayne MSA
Indiana Markets & Sub-Markets: Actual ADR & % Change
1st Quarter 2011
7.0%
2.1%
2.8%
$81.21
$74.30
$74.27
$73.10
$71.13
$69.20
Source: 2011 Smith Travel Research, Inc.
2012 Outlook
…What May Be
Source: 2011 Smith Travel Research, Inc.
Minimal Supply Growth in 2012
10
Supply % Chg
Demand % Chg
7.6
5
2.8
0.2
0
3.0
2.5
0.4
1.3 0.7
2.2
2.5
1.9
0.7
0.5
2011P
2012P
1.9
1.2
-0.1
-2.4
-5
-6.1
-10
2005
2006
2007
Total U.S.: Supply/Demand % Change
2005 – 2012P
2008
2009
2010
20 Yr
Average
Source: 2011 Smith Travel Research, Inc.
2012: Hit RevPAR peaks of 2006 (hopefully!)
Occupancy
(% chg)
ADR
(% chg)
RevPAR (%chg)
Luxury
-0.8
11.5
10.7
Upper Upscale
2.2
8.4
10.6
Upscale
1.9
7.3
9.2
Upper Midscale
2.5
6.9
9.4
Midscale
1.2
5.9
7.1
Economy
2.0
4.9
6.9
Independent
1.6
6.5
8.1
Total U.S.
1.7
6.8
8.5
Total U.S. & Chain Scale: 2012 Outlook
Source: 2011 Smith Travel Research, Inc.
Occupancy hitting 60%+ Remains Elusive
63.0
63.2
62.8
59.8
59.5
58.5
57.4
54.7
2005
2006
Total U.S.: Annual Occupancy %
2005 – 2012P
2007
2008
2009
2010
2011P
2012P
Source: 2011 Smith Travel Research, Inc.
What If since 2000 ADR had increased by CPI each year?
$111.54
$109.46
$106.41 $106.04
Nominal ADR
Yr 2000, Grown by CPI
$107.63
$102.48
$99.64
$96.53
$93.36
$90.92
$87.52
$88.91
$85.11
$85.10 $83.90 $82.68 $82.79 $86.25 $91.06 $97.98 $104.26 $107.30 $98.17 $98.08 $102.21 $109.16
Total U.S.: Annual ADR
2000 – 2012P
Note: 2011 & 2012 CPI forecast from Blue Chip Economic Indicators
Source: 2011 Smith Travel Research, Inc.
Takeaways
New Hotel Supply Muted in ‘11 & ‘12
Demand Rebounds (Strongly)
ADR Growth Started Strong…Keep It Up!?
Indiana Transient Rate Growth Needed
Source: 2011 Smith Travel Research, Inc.
Thank you!
vail@str.com
For a copy of this presentation go to
www.hotelnewsnow.com
Source: 2011 Smith Travel Research, Inc.