2014 Texas Trends® Hotel Industry Report
San Antonio Hotel & Lodging Association
November 13, 2014
Presentation Outline
I.
The Economy
II. Lodging Forecasts – U.S.
III. Lodging Forecasts - Texas
IV. San Antonio 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
San Antonio: Economic Outlook
Employment
Personal
Income
GMP
CPI
(Inflation)
2013
2.7%
2.4%
3.2%
1.6%
2014
2.9%
4.0%
2.0%
2.2%
2015
3.8%
6.1%
4.0%
2.5%
2016
3.7%
5.7%
4.2%
2.8%
2017
2.9%
4.3%
3.8%
3.1%
2018
1.9%
3.1%
3.2%
3.1%
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. San Antonio 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. San Antonio Submarkets
V. Hotel Market Cycle
Texas Summary
Occupancy
54.6%
$91.79
56.5%
$89.72
60.4%
$92.06
63.4%
$94.38
66.0%
$99.63
ADR
RevPAR
$50.09
237,491
2009
$50.70
$55.60
$59.81
$65.76
247,971
251,917
254,933
257,555
2010
2011
2012
2013
Supply
68.0%
$105.00
$71.36
261,111
2014F
68.5%
$110.00
$75.50
267,248
2015F
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
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 – Local Demand Factors
• Economy
• Auto Industry
- Employment – Up 1 pt. to 3.8%
- Tundra – Near Capacity
- Unemployment – 4.8%
- Toyota – Add New Line
- Military Payrolls – Up 2.4%
- Toyotetsu & Arvin Sango
- House Sales/Pricing - Rising
• Eagle Ford Shale
- Calumet Specialty Products
- Tex-Star Midstream Logistics
• Healthcare Industry
- Continued Expansion
- UTSA Faculty Additions
• Caterpillar – New Orders Up
• Tobin Center - Open
• Convention Activity
- 2015 – Transition Year
- 2016 – Renovation Complete
• 300th Anniversary – 2018
• Per Diem Rate Up $5 to $115
San Antonio – Long-Term Average
Year
Average Occupancy %
1988 - 1995
69.0%
1996 - 2013
63.2%
Total (1988 - 2013)
65.0%
Source: PKF Consulting USA
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
San Antonio: Upper-Priced
= Below/Above Long Run
Average
Long
Term
Average
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
Supply
4.1%
13.4%
3.3%
2.1%
0.2%
0.7%
1.1%
1.3%
2.0%
2.5%
Demand
4.6%
16.2%
7.4%
4.8%
0.4%
2.4%
2.5%
2.5%
2.5%
3.0%
70.3%
64.3%
66.9%
68.6%
68.8%
69.9%
70.9%
71.8%
72.1%
72.5%
ADR
2.8%
-0.2%
-0.5%
0.6%
6.0%
2.4%
4.0%
3.5%
3.0%
3.0%
RevPAR
3.4%
2.3%
3.4%
3.2%
6.2%
4.1%
5.5%
4.7%
3.6%
3.5%
Occupancy
Source: PKF Hospitality Research – Hotel Horizons® Report, Smith Travel Research
San Antonio: Lower-Priced
= Below/Above Long Run
Average
Long
Term
Average
2010
2011
2012
2013
2014F
2015F
2016F
2017F
2018F
Supply
3.0%
5.5%
2.0%
1.2%
0.7%
1.8%
1.2%
1.2%
2.6%
3.9%
Demand
3.1%
9.6%
6.9%
6.0%
-0.5%
3.3%
3.0%
3.0%
2.5%
3.0%
61.8%
54.2%
56.9%
59.6%
58.8%
59.7%
60.8%
61.8%
61.8%
61.3%
ADR
2.8%
-1.2%
0.9%
2.8%
2.8%
1.6%
4.0%
3.5%
3.0%
3.0%
RevPAR
3.1%
2.7%
5.7%
7.7%
1.5%
3.1%
5.8%
5.3%
2.9%
2.2%
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. San Antonio Submarkets
V. Hotel Market Cycle
San Antonio Summary
Occupancy
56.2%
$95.51
58.2%
$95.82
60.8%
$95.92
63.2%
$97.15
62.8%
64.0%
65.0%
$101.84
$104.00
$108.00
$63.91
$66.29
ADR
RevPAR
$53.69
38,567
2009
$55.79
40,641
2010
$58.28
41,665
2011
$61.37
42,378
2012
Supply
42,546
2013
43,025
2014F
$69.70
43,504
2015F
San Antonio CBD
Occupancy
62.3%
$127.95
64.6%
$127.59
66.6%
$122.79
68.7%
$123.43
67.4%
$132.48
68.5%
$136.00
69.0%
$142.00
ADR
RevPAR
$79.71
12,746
2009
$82.42
13,118
2010
$81.78
13,592
2011
$84.80
13,797
2012
Supply
$89.29
13,806
2013
$93.16
14,060
2014F
$97.98
14,060
2015F
North San Antonio / Airport
Occupancy
60.9%
$79.07
64.3%
$76.09
64.3%
$75.39
66.5%
$77.57
67.1%
$79.00
ADR
RevPAR
$48.15
7,098
2009
$48.93
7,023
2010
$48.48
7,302
2011
$51.58
7,377
2012
Supply
$53.01
7,363
2013
69.0%
$80.00
$55.20
7,363
2014F
71.0%
$84.00
$59.64
7,363
2015F
Northeast San Antonio
Occupancy
47.2%
$62.63
47.3%
$63.76
50.9%
$67.50
54.0%
52.4%
52.5%
$69.98
$71.47
$72.00
$37.79
$37.45
$37.80
7,610
7,728
53.5%
$75.00
ADR
RevPAR
$29.56
6,760
2009
$30.16
7,360
2010
$34.36
7,485
2011
7,555
2012
Supply
2013
2014F
$40.13
7,867
2015F
Northwest San Antonio
Occupancy
53.8%
$87.55
56.1%
$92.20
59.4%
$97.25
61.0%
$98.83
ADR
RevPAR
$47.10
9,073
2009
$51.72
10,154
2010
$57.77
10,280
2011
$60.29
10,594
2012
Supply
64.5%
62.5%
64.0%
$103.17
$104.50
$64.48
$66.88
$69.34
10,701
10,946
10,594
2013
2014F
$107.50
2015F
South San Antonio
Occupancy
46.5%
$63.70
50.1%
$63.82
55.0%
$67.63
60.3%
58.2%
58.0%
$68.38
$69.32
$69.50
$41.23
$40.34
$40.31
3,173
3,173
59.0%
$73.00
ADR
RevPAR
$29.62
2,890
2009
$31.97
2,986
2010
$37.20
3,006
2011
3,055
2012
Supply
2013
2014F
$43.07
3,268
2015F
Presentation Outline
I.
The Economy
II. Lodging Forecast – U.S.
III. Lodging Forecast – Texas
IV. San Antonio 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