U.S. Hotel Industry Overview
Vail R. Brown, CHMS
Vice President, Global Business Development & Marketing
IARE
September 22, 2014
vail_str
vbrown@str.com
About STR
• Founded in 1985
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• The recognized leader in hotel performance benchmarking - Impartial,
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• Sample over 70% of total U.S. room supply; 52% of total global room
supply.
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representing close to 8 million rooms worldwide
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5 Things to Know …..
1. Industry Pulse from 30,000 ft.
2. Group Demand ‘Comeback’?
3. Best & Worst Market Performance
4. Pipeline Growth
5. Where Are We Headed?
1. Visit www.HotelNewsNow.com
2. Create Free Login
3. Click on “Data Presentations”
1 U.S. Pulse - Positive So Far
U.S. Records Set in 2013!
Most Rooms Available
Most Rooms Sold
Highest Rooms Revenue
Highest ADR ($110)
Highest RevPAR ($70)
Full Year 2013
May 2014 RevPAR Growth
10%
Highest May of any on
record…ever!
June 2014 Occupancy
71.7%
Highest June occupancy
this century!
July 2014:
Most Rooms Sold Ever!
113 Million
Strong Demand Drives Very Strong RevPAR
% Change
•
•
•
•
•
•
Room Supply*
Room Demand*
Occupancy
A.D.R.*
RevPAR*
Room Revenue*
Total U.S. As of July 2014 YTD
*All Time High for First 7 Months
65.1%
$115
$75
0.8%
4.2%
3.4%
4.3%
7.8%
8.6%
Demand Growth Accelerates. How Long Can That Last?
8.0%
8
4
3.4%
0.8%
0
-0.9%
-4
Supply
Demand
- 4.7%
-6.9%
-8
1990
1992
1994
1996
1998
2000
2002
Total U.S. Supply & Demand % Change
12 Month Moving Average Jan. 1990 – July 2014
2004
2006
2008
2010
2012
2014
Steady ADR Growth As Room Demand Growth Continues
10
7.5%
6.8%
5
4.0%
0
Demand % Change
-4.5%
ADR % Change
-5
-8.7%
-10
1990
1992
1994
1996
1998
2000
2002
Total U.S., ADR & Demand % Change
12 Month Moving Average Jan. 1990 – July 2014
2004
2006
2008
2010
2012
2014
Room Revenue > $128bn
$130
Billions
$110
$90
$70
$50
$30
2007
2009
2011
Total U.S.: Rooms Revenue
12 Month Moving Average: January 2005 – July 2014
2013
Total U.S.: 2013 Revenue Variance from 2012
Source: 2014 STR Analytics HOST Almanac
2014 STR Chain Scales
*Full list go to www.str.com
• Luxury – Fairmont, Four Seasons, Ritz Carlton, JW Marriott
• Upper Upscale – Sheraton, Hilton, Hyatt, Marriott,
• Upscale – Radisson, Hilton Garden Inn, Residence Inn, Springhill Suites,
Homewood Suites, Courtyard, Best Western Premier
• Upper Midscale – Fairfield Inn/Suites, Holiday Inn, Clarion, Hampton
Inn/Suites, Best Western PLUS
• Midscale – Country Inn & Suites, Best Western, Candlewood Suites,
Quality Inn/Suites
• Economy – Extended Stay America, Red Roof, Days Inn, Microtel
A Tale of 2 Supply Growth Scenarios
Supply % Change
Demand % Change
6.6
3.8
4.3
4.0
3.5
3.0
1.6
1.5
0.8
0.4
0.4
-0.7
Luxury
Upper Upscale
Upscale
U.S. Chain Scales: Supply / Demand % Change
As of July 2014 YTD
Upper Midscale
Midscale
Economy
ADR Growth Strong Across The Board
Occupancy % Change
ADR % Change
5.0
4.7
4.7
4.4
3.9
3.6
3.7 3.7
3.9
3.0
2.3
0.7
Luxury
Upper Upscale
Upscale
U.S. Chain Scales: OCC / ADR % Change
As of July 2014 YTD
Upper Midscale
Midscale
Economy
Actual RevPAR Catches Up To Prior Record Highs
$226
$213
$217
2007
2013
2014F
$123
$113 $116
$93
$84 $87
$68
$62 $64
Luxury
Upper Upscale
Upscale
U.S. Chain Scales: Absolute RevPAR $
2007 & 2013 & 2014 Forecast as of August 2014
Upper Midscale
$44$43$46
Midscale
$31 $30$32
Economy
2 Group Demand ‘Comeback’?
Group
Transient
Segmentation
Contract
Total U.S.: Group Occupancy Share Decreases
2005
57%
2013
43%
Group
Transient
U.S. Transient and Group Occupancy as Share of Total OCC
2005 and 2013 (Share does not include contract)
36%
64%
Group Demand Is (Finally!) Recovering
5%
4%
3%
2%
*2013 Easter
Comp
Demand
1%
ADR
-1%
-2%
2012
2013
Group Demand and ADR % Change, 12 MMA, 1/2012 – 7/2014
2014
July 2014
1.8 million
more group rooms sold
than in the prior 12 month
Transient Continues To Grow Share of Occupancy
70%
Group mix
Trans Mix
60%
50%
40%
30%
2005
2007
2009
U.S. Transient and Group Occupancy Mix of Total OCC
2005 thru July 2014
2011
2013
Transient Room Premium Back to 2008 Levels
$204
Transient
Group
$194
$194
$186
$177
$178
$173
$172
$168
$164
$161
2008
2009
$166
$161
$157
2010
U.S. Customer Segmentation ADR $
2008 – YTD July 2014
2011
2012
2013
YTD 2014
3
U.S. Market Performance
Markets With Demand Growth > 4%
Top U.S. Markets
Demand Growth %, July 2014 YTD
The Chinese Guest Still to Come…
Not all growth or declines are created equal…many factors
Market
OCC %
ADR % Change
Nashville, TN
72.8
13.2
San Francisco/San Mateo, CA
83.2
11.3
Denver, CO
76.2
8.1
Seattle, WA
75.4
7.6
Boston, MA
74.3
7.1
Chicago, IL
67.9
1.7
Norfolk/Virginia Beach, VA
55.5
1.7
New Orleans, LA
71.2
1.6
Philadelphia, PA-NJ
68.5
0.2
Washington, DC-MD-VA
70.3
-1.2
Actual OCC & ADR % Change in Top 25
5 Best / 5 Worst Performing Markets ending July 2014 YTD
4
Pipeline Accelerates
Under Contract
STR Pipeline Phases
In Construction – Vertical construction on the physical
building has begun. (This does not include construction
on any sub-grade structures.)
Final Planning – construction will begin within the next
12 months.
Planning – construction will begin in more than 13
months.
Unconfirmed (formerly Pre-Planning) - Potential projects
that remain unconfirmed at this time.
Under Contract Pipeline- 12% Increase
Phase
2014
2013
% Change
In Construction
108
75
44%
Final Planning
124
126
-1%
Planning
155
144
8%
Under Contract
388
345
12%
Total U.S. Pipeline, by Phase, ‘000s Rooms
July 2014 and 2013
Most In Upscale & Upper Midscale
40.4
30.9
67%
15.4
10.3
5.1
3.5
Luxury
0.8
Upper
Upscale
Upscale
Upper
Midscale
Total U.S. Pipeline, Rooms Under Construction
‘000s Rooms, by Scale, June 2014
Midscale
Economy
Unaffiliated
Construction In Top 26 Markets: 15 With 2%+ Of Supply
Rooms U/C
% Of Existing
Chicago, IL
2,292
2.1%
Minneapolis-St Paul, MN-WI
832
2.2%
New Orleans, LA
826
2.2%
Los Angeles-Long Beach, CA
2,187
2.2%
San Diego, CA
1,381
2.3%
Dallas, TX
1,826
2.3%
Washington, DC-MD-VA
2,507
2.3%
Boston, MA
1,379
2.7%
Denver, CO
1,250
2.9%
Nashville, TN
1,157
3.1%
Anaheim-Santa Ana, CA
2,394
4.4%
Seattle, WA
1,937
4.7%
Miami-Hialeah, FL
2,653
5.4%
Houston, TX
4,672
6.2%
New York, NY
13,989
12.5%
Market
U.S. Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, July 2014
New Hotels w/ 50,000+ Sqft Meeting Space
12
9
5
2
2
2
2013
YTD 2014
0
2008
2009
2010
2011
Total U.S. Count of New Hotels with 50k+ Sqft of meeting space
By year, 2008 – YTD 2014
2012
5 Where are we headed?
Positive RevPAR Growth For The Foreseeable Future
9%
10
8.6%
5
112 Months
0
-5
46 Mo.
65 Months
-2.6%
-10
-10.1%
-15
-16.8%
-20
1990
2000
Total U.S., RevPAR % Change, 12 MMA 1/1990 – 7/2014
2010
U.S. Outlook
2014
Forecast
2015
Forecast
Supply
1.0%
1.3%
Demand
3.6%
2.1%
Occupancy
2.6%
0.7%
ADR
4.2%
4.4%
RevPAR
6.9%
5.2%
Total United States
Key Performance Indicator Outlook (% Change vs. Prior Year)
2014 - 2015
2014 Year End Outlook
Occupancy
(% chg)
ADR
(% chg)
RevPAR (%chg)
Luxury
-0.1%
4.6%
4.5%
Upper Upscale
2.0%
4.4%
6.5%
Upscale
2.0%
4.4%
6.5%
Upper Midscale
2.6%
3.3%
6.0%
Midscale
3.0%
3.5%
6.6%
Economy
2.9%
3.9%
6.8%
Independent
2.8%
4.6%
7.5%
Total United States
2.6%
4.2%
6.9%
U.S. Chain Scales
As of August 12th , 2014
2015 Year End Outlook
Occupancy
(% chg)
ADR
(% chg)
RevPAR (%chg)
Luxury
0.2%
4.8%
5.0%
Upper Upscale
0.5%
4.8%
5.3%
Upscale
0.2%
4.7%
5.0%
Upper Midscale
0.1%
3.5%
3.6%
Midscale
1.0%
3.6%
4.6%
Economy
1.0%
3.5%
4.5%
Independent
0.9%
4.3%
5.2%
Total United States
0.7%
4.4%
5.2%
U.S. Chain Scale
*as of August 12th , 2014
2014 Year End RevPAR Forecast
-5% to 0%
0% to 5%
5% to 10%
10% to 15%
15%+
Chicago
Anaheim
Atlanta
Nashville
New Orleans
Detroit
Boston
New York
Houston
Dallas
Norfolk
Los Angeles
Denver
Philadelphia
Miami
San Francisco
Washington
Minneapolis
Seattle
Oahu
Tampa
Orlando
Phoenix
San Diego
St. Louis
Top 25 U.S. Markets, August 2014 Forecast (Markets sorted alphabetically)
2015 Year End RevPAR Forecast
-5% to 0%
0% to 5%
5% to 10%
10% to 15%
New York
Atlanta
New Orleans
Norfolk
Philadelphia
Washington
Anaheim
Boston
Chicago
Dallas
Denver
Detroit
Houston
Los Angeles
Miami
Minneapolis
Oahu
Orlando
Phoenix
San Diego
San Francisco
Seattle
St. Louis
Tampa
Nashville
Top 25 U.S. Markets, August 2014 Forecast (Markets sorted alphabetically)
To Recap…
•
•
•
•
•
Life is Great! ‘Fish While the Fishing is Good’
Demand Growth: Strong & Steady
Group Demand: Still Wild Card (but better!)
Supply growth: Not an Issue, yet
YE RevPAR Forecast: Rosy!
Questions: vbrown@str.com
Slides: www.HotelNewsNow.com
Thank you!