Industry Trends May 2019 Jessica Haywood Director, Research & - PowerPoint PPT Presentation

Industry Trends May 2019 Jessica Haywood Director, Research & Development jhaywood@str.com

Agenda US hotel industry performance • The competitive landscape • Comparing hotel and vacation rental data • Looking forward •

Who We Are 3

STR is the leading provider of premium, global data benchmarking, analytics and marketplace insights Ø 35 years in business Ø Privately-held company Arne Sorenson CEO, Marriott Ø All data is collected directly from source International Ø Confidentiality is the core of STR’s business “STR has provided incredible value in its strategic partnership with the industry and provided insights that allow us to improve responses to market conditions.” *Marriott, a $37bn+ company, is the largest hotel operator worldwide with >1,000,000 rooms in its portfolio Select snapshot of STR customers

The evolution of hotel revenue management Two important things happened in 1985: 1. Robert Crandall, CEO of American Airlines, implemented the first yield management platform. 2. Randy & Carolyn Smith started Smith Travel Research.

The world’s largest hotel performance sample

STR business model Beautifully simple: Collect 3 numbers, compute 3 numbers Supply Occupancy Rooms Available % Rooms Occupied = RevPAR Demand Rooms sold/ Rooms Available Rooms Sold Revenue Per Available Room ADR = Rooms revenue/ Rooms available Revenue Average Daily Rate = Rooms revenue/ Rooms Sold Rooms Revenue

Why we’re here Supply Occupancy Demand Revenue

US Hotel Industry Performance 9

12 months ending March 2019: US hotels still breaking records Highest % Change Ever? Room Supply 2.0% þ Room Demand 2.4% þ Occupancy 66.2% 0.3% þ ADR $130 2.1% þ RevPAR $86 2.5% þ Room Revenue 4.5% þ Total US Results, 12 MMA March 2019

Demand growth trajectory slows. Supply growth still at 2%. Supply % Change Demand % Change 8 7.8 4 0 -0.7 -4 -4.7 -7.1 -8 1990 2000 2010 Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 03/2019

Occupancy growth still positive nine years into the cycle (…but barely) 7.5 6.8 5 2.1 0.3 0 -3.4 Occ % Change -5 ADR % Change -6.7 -9.7 -10 1990 2000 2010 Total U.S., ADR & OCC % Change, 12 MMA 1/1990 – 03/2019

RevPAR growth: Positive in 108 out of 109 last months (= Nine Years!) 15 5 -5 111 Months 108 Months 56 Months -15 -25 1990 2000 2010 Total U.S., RevPAR % Change, 1/1990 – 03/2019

4 of 6 classes now with higher supply than demand growth Supply % Change Demand % Change 3.8 3.8 3.8 3.0 3.0 2.8 2.6 1.6 1.5 1.4 1.0 -0.6 Luxury Upper Upscale Upscale Upper Midscale Economy Midscale Supply / Demand % Change, by Class, YTD March 2019

Compression nights decreasing 3,168 2,813 2,776 2,626 2,603 2,014 1,771 1,343 978 2010 2011 2012 2013 2014 2015 2016 2017 2018 # of compression nights for all 165 US markets combined

However, compression night pricing premiums increasing 79.8% 77.8% 77.4% 76.2% 75.8% 70.1% 67.8% 67.0% 66.9% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Compression night rate premium over non-compression nights for all 165 US markets combined; compression >=95%

Top 10 markets by sellout nights 186 104 104 82 75 73 59 54 53 49 Y A A A L I O s A A H y F N C C M C C C e , , , K , , , , o d , k o z d o , r d u n n e a e n r g o n a r o v d t a e C l Y a t a n l i s i r s D M k l e I w a o r o a O u D t n l B O e F n n h a N a a a S S S O / / e o s c o s i J c n n a a S r F n a S Top 10 markets with most compression nights in 2018. Compression >=90%

Hotel Types 18

Condotel Individually and wholly-owned condominium unit typically located in leisure-heavy resort areas . Inventory is included in a rental pool operated and serviced by a management company. 62.3% $214.20 $133.47 Occupancy ADR RevPAR +0.5% +3.1% +3.6% Total US– 12 months ending March 2019, year-over-year % chg

Resort A self-contained accommodation establishment focused on providing for all of a leisure traveler ’s needs on premises. Resorts are typically located in recreation areas (beaches, mountains) and focus on leisure travelers. 70.5% $214.70 $151.40 ADR RevPAR Occupancy +2.3% +1.8% -0.4% Total US – 12 months ending March 2019, year-over-year % chg

Soft Brand Collection of hotels that allows owners and operators to affiliate with a major chain while retaining their unique name, design and orientation. Many include a focus on local . These properties cater to business and leisure travelers and are concentrated in urban, suburban and resort areas . $193.95 $127.35 65.7% Occupancy ADR RevPAR +0.6% +6.4% +7.1% Total US – 12 months ending March 2019, year-over-year % chg

Boutique Hotel that appeals to guests because of its unique and local amenity and room configurations. Over half of these properties are in urban areas and cater to business and leisure . Boutique hotels often provide authentic cultural, historic experiences and interesting guest services. 73.5% $222.53 $163.55 ADR RevPAR Occupancy +1.1% +1.4% +0.3% Total US – 12 months ending March 2019, year-over-year % chg

Convention A hotel with a major focus on conference or convention facilities. These properties typically have a large number of rooms and large meeting space. Convention hotels are typically located in urban areas and focus on business guests . 71.9% $185.87 $133.61 Occupancy ADR RevPAR +0.2% +2.4% +2.6% Total US – 12 months ending March 2019, year-over-year % chg

Extended Stay Focuses on attracting guests for extended periods , often quoting weekly rates and providing home-like amenities including a kitchen. Extended stay hotels share many features with serviced apartments but are generally operated by hotel chains. These properties are aimed at business travelers on extended assignment and others that are relocating. $105.05 $78.35 74.6% Occupancy ADR RevPAR -0.2% +2.0% +1.9% Total US – 12 months ending March 2019, year-over-year % chg

Extended Stay supply growing at fastest rate 5.9% 4.1% 3.3% 1.4% 0.8% 0.4% 0.3% US average Boutique Condotel Convention Extended Stay Resort Soft Brand Total US – average annual growth by hotel type, 2014-2018

Boutique and Extended Stay see highest occupancy rates 85.0 80.0 74.6 73.5 75.0 71.9 70.5 70.0 66.2 65.7 65.0 62.3 60.0 55.0 50.0 US average Boutique Condotel Convention Extended Stay Resort Soft Brand Total US, 12 months ending March 2019, year over year % chg

Soft Brands lead in ADR growth ADR % Change 10.0% 250.0 222.50 9.0% 214.70 230.0 214.20 8.0% 210.0 193.90 185.90 7.0% 190.0 6.4% 6.0% 170.0 5.0% 150.0 130.19 4.0% 130.0 105.00 3.1% 3.0% 110.0 2.4% 2.3% 2.1% 2.0% 2.0% 90.0 1.1% 1.0% 70.0 0.0% 50.0 US average Boutique Condotel Convention Extended Stay Resort Soft Brand Total US, 12 months ending March 2019, year over year % chg

Comparing Hotels & Vacation Rentals 28

VRs achieve higher rates than hotels, with exception of Maui All VRs Hotels 558 421 359 320 260 214 206 170 146 131 128 105 Colorado Tahoe Maui Florida Panhandle Orlando/Central Myrtle Beach Ski/Mountains Florida March 2019 ADR Source: RedAwning, STR

Even smaller VRs achieve higher rates than hotels Small VRs (Studio + 1 BR) Hotels 421 331 260 253 220 146 144 131 128 105 64 Colorado Ski/Mountains Tahoe Maui Florida Panhandle Orlando/Central Florida Myrtle Beach March 2019 ADR Source: RedAwning, STR

Colorado Ski/Mountains Vacation Rentals Hotels 600 800 400 1,000,000 700 800,000 600 400 500 Demand Demand 600,000 ADR ADR 400 200 400,000 300 200 200 200,000 100 0 0 0 0 8 8 8 8 8 8 8 8 9 9 8 8 8 8 9 9 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 - - - - - - - - - - - - - - - - r y l p r r y l p r n v n n v n u u a o a a o a a e a e a a a a M J M M J M M M J S N J J S N J Source: RedAwning, STR

Colorado Ski/Mountains Vacation Rentals Hotels 600 800 400 1,000,000 700 800,000 600 400 500 Demand Demand 600,000 ADR ADR 400 200 400,000 300 200 200 200,000 100 0 0 0 0 8 8 8 8 8 8 8 8 9 9 8 8 8 8 9 9 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 - - - - - - - - - - - - - - - - r y l p r r y l p r n v n n v n u u a o a a o a a e a e a a a a M J M M J M M M J S N J J S N J Source: RedAwning, STR

Colorado Ski/Mountains: Condotels most prevalent 20% 18% 16% 14% 14% 12% 10% 8% 6% 3% 3% 3% 4% 1% 1% 2% 0% Boutique Condotel Convention Extended Stay Resort Soft Brand March 2019 Source: RedAwning, STR