2014 Texas Trends® Hotel Industry Report
Austin Hotel & Lodging Association
October 1, 2014
Presentation Outline
I.
The Economy
II. Lodging Forecasts – U.S.
III. Lodging Forecasts - Texas
IV. Austin Submarkets
V. Hotel Market Cycle
United States: Economic Outlook
Employment
Personal
Income
GDP
CPI
(Inflation)
2013
1.7%
1.7%
1.9%
1.5%
2014
1.8%
2.4%
1.7%
1.9%
2015
2.3%
4.3%
3.7%
2.2%
2016
2.4%
4.7%
3.3%
2.5%
2017
1.6%
3.5%
2.9%
2.9%
2018
0.6%
2.2%
2.2%
2.8%
Source: Moody’s Analytics, July 2014
Austin: Economic Outlook
Employment
Personal
Income
GMP
CPI
(Inflation)
2013
4.6%
2.9%
5.5%
1.6%
2014
3.5%
4.0%
5.2%
2.2%
2015
4.2%
6.8%
5.4%
2.4%
2016
4.1%
6.4%
4.9%
2.7%
2017
3.6%
5.1%
4.2%
3.0%
2018
2.6%
4.0%
3.5%
2.9%
Source: Moody’s Analytics, July 2014
Unemployment Comparison*
June 2013
June 2014
United States
7.5%
6.3%
Texas
6.9%
5.5%
Austin
5.7%
4.4%
Dallas/Fort Worth
6.7%
5.4%
Houston
6.7%
5.4%
San Antonio
6.6%
5.1%
* Not seasonally adjusted
Source: Texas Work Force Commission
What Could Derail the Economy?
•
Unpredictable World Event
•
Price of Oil & Gas
•
International Crises
Presentation Outline
I.
The Economy
II. Lodging Forecast – U.S.
III. Lodging Forecast - Texas
IV. Austin Submarkets
V. Hotel Market Cycle
Hotel Horizons®
•
Econometric Forecasting Model
− Smith Travel Research – historical lodging data,
pipeline data
− Moody’s Economy.com – economic forecasts
•
Five-Year Forecasts of Supply, Demand,
Occupancy, ADR, RevPAR
− 55 Major U.S. Markets
•
Updated Quarterly
United States: 2nd Quarter 2014
= Below/Above Long Run
Average
Long
Term
Average
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
Supply
1.9%
1.7%
0.5%
0.4%
0.7%
0.9%
1.3%
1.7%
2.1%
2.4%
Demand
1.9%
7.2%
4.7%
2.8%
2.2%
4.5%
2.2%
1.6%
1.1%
0.4%
61.9%
57.5%
59.9%
61.3%
62.2%
64.4%
65.0%
64.9%
64.3%
63.0%
ADR
3.0%
0.0%
3.8%
4.2%
3.9%
4.5%
5.7%
5.9%
5.4%
4.1%
RevPAR
3.0%
5.4%
8.1%
6.6%
5.4%
8.2%
6.7%
5.8%
4.3%
2.1%
Occupancy
Source: PKF Hospitality Research – Hotel Horizons® Report, Smith Travel Research
2015 US Hotel Industry Achievements
•
Six consecutive years of increasing
occupancy, the longest since 1988.
•
An occupancy level of 65%, the highest
level of occupancy ever recorded by STR,
Inc.
•
14 of the 55 markets in the Hotel Horizons®
universe will achieve their highest
occupancy levels in the past 25 years.
•
49 of 55 markets are above their long run
average occupancy level.
10.0%
8.0%
-2.0%
-4.0%
Austin
Pittsburgh
New York
West Palm Beach
Miami
Raleigh-Durham
Houston
Cincinnati
Nashville
Boston
Columbus
Louisville
San Jose-Santa Cruz
Salt Lake City
Charleston
Chicago
New Orleans
Cleveland
Denver
Savannah
Baltimore
Washington DC
Anaheim
Fort Lauderdale
Seattle
Dallas
San Diego
Indianapolis
Orlando
Richmond
Portland
Memphis
Jacksonville
Charlotte
Los Angeles
San Antonio
Saint Louis
Atlanta
Albuquerque
Minneapolis
Hartford
Philadelphia
Phoenix
Detroit
Tampa
Kansas City
Newark
Fort Worth
San Francisco
Oahu
Norfolk-VA Beach
Tucson
Sacramento
Oakland
Long Island
Net Supply Change 2009 vs. 2015
United States
48,000 New Rooms in 2014
65,000 New Rooms in 2015
130,800 New Rooms in 2009
6.0%
4.0%
2.0%
0.0%
2015
2009
Source: PKF-HR Hotel Horizons® September-November 2014 Edition, STR, Inc..
Presentation Outline
I.
The Economy
II. Lodging Forecast – U.S.
III. Lodging Forecast – Texas
IV. Austin Submarkets
V. Hotel Market Cycle
Texas Summary
Occupancy
60.4%
54.6%
$91.79
63.4%
66.0%
$89.72
$92.06
RevPAR
237,491
2009
68.5%
56.5%
$94.38
$99.63
ADR
$50.09
68.0%
$50.70
$55.60
$59.81
$65.76
247,971
251,917
254,933
257,555
2010
2011
2012
2013
Supply
$105.00
$71.36
261,111
2014F
$110.00
$75.50
267,248
2015F
Dallas: 2nd Quarter 2014
= Below/Above Long Run
Average
Long
Term
Average
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
Supply
2.5%
2.7%
0.8%
1.4%
0.3%
0.6%
1.7%
1.9%
2.8%
3.4%
Demand
3.4%
9.5%
9.1%
4.8%
5.7%
5.4%
3.3%
3.2%
2.9%
2.5%
60.7%
54.5%
59.0%
61.0%
64.2%
67.3%
68.3%
69.2%
69.2%
68.6%
ADR
2.1%
-2.6%
3.4%
1.1%
5.1%
5.0%
6.5%
5.4%
4.0%
3.2%
RevPAR
3.1%
3.9%
11.9%
4.4%
10.7%
10.0%
8.2%
6.8%
4.1%
2.3%
Occupancy
Source: PKF Hospitality Research – Hotel Horizons® Report, Smith Travel Research
Fort Worth: 2nd Quarter 2014
= Below/Above Long Run
Average
Long
Term
Average
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
Supply
3.1%
3.7%
1.3%
1.2%
0.5%
1.5%
0.3%
2.1%
3.8%
4.4%
Demand
3.5%
7.7%
7.1%
3.0%
3.9%
3.7%
3.3%
2.7%
2.8%
2.7%
60.9%
56.1%
59.3%
60.3%
62.3%
63.7%
65.5%
66.0%
65.3%
64.3%
ADR
3.2%
-0.9%
1.1%
-1.4%
1.5%
4.3%
4.4%
3.8%
3.8%
3.3%
RevPAR
3.8%
2.8%
6.9%
0.3%
4.9%
6.6%
7.5%
4.5%
2.8%
1.6%
Occupancy
Source: PKF Hospitality Research – Hotel Horizons® Report, Smith Travel Research
Houston: 2nd Quarter 2014
= Below/Above Long Run
Average
Long
Term
Average
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
Supply
2.5%
6.1%
1.8%
0.9%
0.6%
1.5%
3.0%
2.8%
2.5%
1.8%
Demand
3.9%
5.4%
10.6%
10.4%
6.2%
4.1%
2.2%
2.0%
1.5%
1.1%
61.8%
55.0%
59.7%
65.4%
69.1%
70.8%
70.3%
69.8%
69.1%
68.6%
ADR
3.0%
-4.0%
2.6%
3.7%
7.8%
7.0%
4.1%
1.4%
1.6%
1.9%
RevPAR
4.6%
-4.6%
11.5%
13.6%
13.8%
9.7%
3.3%
0.7%
0.6%
1.1%
Occupancy
Source: PKF Hospitality Research – Hotel Horizons® Report, Smith Travel Research
San Antonio: 2nd Quarter 2014
= Below/Above Long Run
Average
Long
Term
Average
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
Supply
3.4%
8.5%
2.5%
1.6%
0.5%
1.4%
1.1%
1.2%
2.4%
3.3%
Demand
3.6%
12.4%
7.1%
5.5%
-0.1%
.
2.9%
2.8%
2.8%
2.5%
3.0%
65.0%
58.2%
60.8%
63.2%
62.8%
63.8%
64.8%
65.8%
65.9%
65.7%
ADR
3.0%
0.3%
0.1%
1.3%
4.8%
1.9%
3.9%
3.4%
3.0%
3.0%
RevPAR
3.4%
4.0%
4.6%
5.2%
4.2%
3.5%
5.6%
5.0%
3.2%
2.7%
Occupancy
Source: PKF Hospitality Research – Hotel Horizons® Report, Smith Travel Research
Austin – Supply / Demand Analysis
•
2009 - Supply Up / Demand Down
- Huge Occupancy & Rate Loss
•
Current - Supply Down / Demand Up
- Occ Above Average / Turnaway Up
- Artificially High Rates
•
2015 to 2017 - Supply Up / Demand Up/Slowing
- Turnaway & Compression Down
- Occupancies Normalize
- Rates Normalize
Austin – Local Demand Factors
• Continued IT Expansion
• Festivals / Events
- Apple – 3,600 jobs
- SXSW
- Flextronics – 900 jobs
- Austin City Limits
- Spansion – $200 million upgrade
- Ambiq Micro, Illuminix, Dropbox,
Websense, Roku, Marvell
Semiconductor
- Many Others
• Convention Activity
- JW Marriott (2015)
- Increased Bookings
• Residential Housing Boom
• Hotel Additions – Labor
• UT Expansions
• Reduced Compression
• Sports Activity
• Legislature (2015 & 2017)
• Circuit of the Americas
• Per Diem Rate Up $6 to $126
Austin: 2nd Quarter 2014
= Below/Above Long Run
Average
Long
Term
Average
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
Supply
3.3%
4.8%
2.4%
0.7%
2.8%
2.4%
6.0%
3.1%
2.1%
2.4%
Demand
4.3%
10.3%
6.8%
3.1%
7.7%
3.4%
5.3%
2.0%
1.5%
1.0%
66.2%
63.7%
66.5%
68.0%
71.3%
72.0%
71.5%
70.8%
70.3%
69.4%
ADR
4.0%
-2.6%
5.9%
7.9%
5.5%
6.9%
4.7%
1.7%
1.6%
2.0%
RevPAR
5.3%
2.6%
10.5%
10.4%
10.5%
7.9%
4.1%
0.7%
0.9%
0.6%
Occupancy
Source: PKF Hospitality Research – Hotel Horizons® Report, Smith Travel Research
Austin: Upper-Priced
= Below/Above Long Run
Average
Long
Term
Average
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
Supply
4.2%
4.5%
2.9%
0.2%
2.1%
2.6%
11.8%
4.2%
2.3%
2.1%
Demand
5.5%
10.5%
7.0%
2.6%
5.2%
3.3%
8.0%
2.0%
2.0%
1.0%
70.1%
69.9%
72.7%
74.4%
76.7%
77.2%
74.5%
73.0%
72.8%
72.0%
ADR
4.2%
-1.1%
6.3%
8.3%
6.5%
7.0%
3.3%
1.0%
1.0%
2.0%
RevPAR
5.6%
4.5%
10.6%
10.8%
9.7%
7.7%
-0.3%
-1.1%
0.7%
0.9%
Occupancy
Source: PKF Hospitality Research – Hotel Horizons® Report, Smith Travel Research
Austin: Lower-Priced
= Below/Above Long Run
Average
Long
Term
Average
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
Supply
2.7%
5.0%
2.0%
1.1%
3.3%
2.3%
1.6%
2.2%
1.9%
2.7%
Demand
3.6%
10.1%
6.6%
3.5%
9.8%
3.6%
3.0%
2.0%
1.0%
1.0%
63.8%
59.1%
61.8%
63.3%
67.3%
68.1%
69.0%
69.0%
68.3%
67.2%
ADR
3.3%
-5.2%
5.1%
7.6%
5.9%
6.7%
4.9%
3.0%
2.0%
2.0%
RevPAR
4.5%
-0.5%
9.9%
10.2%
12.7%
8.1%
6.3%
2.8%
1.1%
0.4%
Occupancy
Source: PKF Hospitality Research – Hotel Horizons® Report, Smith Travel Research
Presentation Outline
I.
The Economy
II. Lodging Forecast – U.S.
III. Lodging Forecast - Texas
IV. Austin Submarkets
V. Hotel Market Cycle
Austin Summary
71.3%
Occupancy
63.7%
66.4%
72.0%
71.5%
68.0%
60.5%
ADR
$128.00
RevPAR
$101.99
$99.38
$113.54
$61.72
27,412
2009
28,714
2010
$119.58
$105.24
$77.23
$63.31
$134.00
$85.24
$92.07
$94.72
$69.93
29,392
2011
29,602
2012
Supply
30,773
2013
31,462
2014F
33,468
2015F
Austin CBD
74.5%
77.0%
77.8%
78.4%
77.0%
74.0%
69.2%
Occupancy
$205.00
ADR
$188.53
$173.57
RevPAR
$158.56
$147.54
$200.00
$147.81
$146.18
$157.85
$148.00
$135.04
$122.09
$102.10
$108.90
8,490
6,021
2009
6,038
2010
6,266
2011
6,319
2012
Supply
6,667
2013
6,726
2014F
2015F
North Austin
67.6%
Occupancy
53.8%
57.2%
59.4%
$85.00
RevPAR
$68.95
$73.77
$77.21
6,531
2009
$39.44
6,812
2010
$43.82
6,806
2011
$88.00
$79.63
$53.83
$38.95
68.0%
62.6%
ADR
$72.39
69.0%
$58.65
$59.84
7,019
7,089
$48.33
6,823
2012
Supply
6,821
2013
2014F
2015F
Round Rock / Georgetown
Occupancy
64.7%
57.7%
58.8%
57.9%
$90.00
RevPAR
$75.75
$78.32
$83.04
2,931
2009
$44.54
3,026
2010
$45.35
3,301
2011
$48.50
3,419
2012
Supply
$95.00
$83.98
$61.65
$44.92
70.0%
58.4%
ADR
$77.85
68.5%
$66.50
$54.34
3,504
2013
3,504
2014F
3,504
2015F
Northwest Austin
Occupancy
65.7%
68.5%
72.0%
73.6%
77.6%
$115.00
ADR
RevPAR
$97.53
$88.94
$87.11
76.0%
77.0%
$120.00
$103.45
$90.04
$87.40
$92.40
$80.28
$71.78
$58.43
$59.67
4,791
$64.83
4,921
4,930
5,152
5,520
5,520
4,180
2009
2010
2011
2012
Supply
2013
2014F
2015F
South Austin / San Marcos
Occupancy
57.7%
64.3%
65.6%
67.6%
RevPAR
$57.68
7,749
2009
69.0%
$120.00
$122.00
$83.40
$84.18
8,693
8,865
60.1%
ADR
$99.96
69.5%
$97.37
$58.52
8,047
2010
$109.62
$114.28
$100.50
$64.62
8,098
2011
$71.91
8,111
2012
Supply
$77.25
8,629
2013
2014F
2015F
Presentation Outline
I.
The Economy
II. Lodging Forecast – U.S.
III. Lodging Forecast – Texas
IV. Austin Submarkets
V. Hotel Market Cycle
Hotel Market Cycle
In the Sweet Spot
Rapid
Development
Lodging
Decline, Leads
Other Sectors
Accelerated
Development ?
Development
Picks Up
2016/2017
We are Here
Long Run
Occupancy
2015
2014
Equilibrium
ADR
Occupancy
Declines, ADR
Follows
ADR and
Margins
Recover
A Year Ago
Development
Slows
Occupancy
Recovers
Development at
Minimum
Lodging Recovers, Lags
Levels
Other Sectors (Not this
Time!)
For a Copy of This Presentation
Please Visit
www.pkfc.com/presentations
or
Contact: Randy McCaslin
Email: Randy.McCaslin@pkfc.com
713.621.5252 Ext. 21