Lodging Industry Update The Pulse of the Hospitality Industry - - PowerPoint PPT Presentation

21st Annual Lodging Industry Update The Pulse of the Hospitality Industry

Pinkowski & Company Metropolitan Memphis Hotel & Lodging Association HotelNewsNow.com STR

February 22, 2019 Memphis, Tennessee

21th Annual Lodging Industry Update Presented by:

Wayne Tabor

President/CEO MMHLA

Lodging Industry Update

Program

Introduction Wayne Tabor – President MMHLA Doug Browne – Chairman MMHLA Memphis Lodging Market Chuck Pinkowski – Pinkowski & Company Convention Center Update/Memphis Tourism Rebranding Kevin Kane, CEO – Memphis Tourism State of the National Lodging Market Jeff Higley – HotelNewsNow a division of STR, Inc. Keynote Speaker Mitch Patel -President & CEO, Vision Hospitality Group, Inc

Thank You to Our Sponsors

Doug Browne

Chairman MMHLA

President, Peabody Hotels & Resorts

Chuck Pinkowski

Pinkowski & Company

In Case You Missed it

Memphis

In Case You Missed it

Memphis

• Travel Lemming called Memphis “the next hot Southern City”
• Travel Channel – “Hottest Southern Destination of 2019”
• Trip Savvy named Memphis the Best Overall Travel Destination of 2019”

Source: Bureau of Labor Statistics

Memphis Development Activity

• Brooks Museum
• Riverfront Park
• Loews Convention Center Hotel
• St Jude Expansion
• Union Row
• One Beale
• FedEx Logistics/Gibson Guitar
• Grove @ GPAC
• Pink Palace Reopening
• Sports – Football/Soccer

Big Things Are Happening In Memphis

BICENTENNIAL MEMPHIS MAKES FROMMER’S LIST OF PLACES TO VISIT IN 2019 AIRPORT IMPROVEMENTS CONVENTION CENTER RENOVATION OVER $8.0 BILLION CAPITAL INVESTMENT

Data Provided by

What Makes a Healthy Hospitality Market

Economic Impact At a Glance

• 11.7 million visitors
• $3.5 billion annual visitor expenditures
• 67,900 hospitality/leisure jobs
• $1.51b MSA wages
• $514 average nightly spending
• 67% first time visitors

Memphis Lodging Market

Continuing the Positive Trend

(just barely) Another Record Breaking Year

What Is On The Horizon For 2019 & Beyond

% RevPAR Change

2014 2015 2016 2017 2018 12.5% 4.2% 4.3% 5.1% 0.1%

P&C Forecast vs Actual – 2018

Definitely Not An Exact Science

Forecast Actual

• Occ

65.0% (-0.3%) 64.9% (0.4%)

• ADR

$99.25 (3.6%) $96.38(0.5%)

• RevPAR

$64.52 (3.2%) $62.56(0.1%)

What happened to ADR?

Memphis Lodging Market

Every Day 157 more rooms sold Revenue up $22,049 For the Year 57,226 more rooms sold* $8,047,818 more in revenue**

How good was 2018 vs 2017 2018 Recap Room Supply Continues to Grow(+120,124) Rooms Sold - Most Ever Sold Revenue - Highest on Record ADR +0.5% over 2017 OCC -0.4% over 2017

*¼ the increase of 2017 **21% of 2017 increase

Memphis Lodging Market

Key Statistics

YE 2018 YE 2017 % Change Room Supply (Daily) 23,421 23,092 1.4% Room Demand (Daily) 15,204 15,046 1.0% Room Revenue (Daily) $1,465,308 $1,443,259 1.5% Occupancy 64.9% 65.2%

• 0.4%

ADR $96.38 $95.92 0.5% RevPAR $62.56 $62.50 0.1%

Memphis Lodging Market

Total Revenue

$300,000,000 $350,000,000 $400,000,000 $450,000,000 $500,000,000 $550,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Revenues Stagnating? +58%

Memphis Lodging Market

% Change Key Indicators

0.3%

• 0.2%

1.4% 1.1% 2.4% 1.4% 0.5% 6.4%

• 0.7%

1.8% 4.1% 1.0% 2.7% 12.4% 5.6% 5.4% 7.6% 1.5% 2.2% 5.6% 6.3% 3.6% 3.4% 0.5%

• 5.0%

0.0% 5.0% 10.0% 15.0% 2013 2014 2015 2016 2017 2018 Supply Demand Revenue ADR

Memphis Lodging Market

Change in Room Night Demand by Month Over Prior Year

• 30,000
• 20,000
• 10,000

10,000 20,000 30,000 40,000 50,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2016 2017 2018

Memphis Lodging Market

Monthly for 2018

$91.41 $93.07 $97.51 $101.22 $108.18 $98.20 $93.79 $92.88 $95.46 $98.82 $91.79 $90.06 51.5% 58.0% 68.7% 67.9% 69.8% 73.3% 69.3% 65.5% 67.8% 70.0% 61.9% 54.8%

45% 55% 65% 75% 85% 95% $80 $85 $90 $95 $100 $105 $110

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

ADR Occ

Memphis in May

Memphis Lodging Market

Monthly ADR Comparison 2018/2017

$86.59 $92.23 $96.69 $97.74 $104.58 $96.32 $93.33 $97.40 $98.15 $98.21 $91.88 $93.38 $91.41 $93.07 $97.51 $101.22 $108.18 $98.20 $93.79 $92.88 $95.46 $98.82 $91.79 $90.06

$80 $85 $90 $95 $100 $105 $110

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2017 2018

4 of last 5 months in 2018 had lower ADR

Memphis Lodging Market

12 Month Moving Average Supply/Demand

4,000,000 4,500,000 5,000,000 5,500,000 6,000,000 6,500,000 7,000,000 7,500,000 8,000,000 8,500,000 9,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 Supply Demand

Peak Supply 12/2018 Peak Demand 12/2018 28.0% increase 6.8 % increase

Memphis Lodging Market

12 Month Moving Average Supply/Demand

4,500,000 5,000,000 5,500,000 6,000,000 6,500,000 7,000,000 7,500,000 8,000,000 8,500,000 9,000,000 2014 2015 2016 2017 2018 Supply Demand

Memphis Lodging Market

12 MMA Demand

5,000,000 5,100,000 5,200,000 5,300,000 5,400,000 5,500,000 5,600,000

j f m a m j j a s

• n

d

2015 2016 2017 2018

Memphis Lodging Market

Supply/Demand

4,000,000 4,500,000 5,000,000 5,500,000 6,000,000 6,500,000 7,000,000 7,500,000 8,000,000 8,500,000 9,000,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Supply Demand

8,426,113 5,494,494 4,304,951 8,377,658

Memphis Lodging Market

Monthly Room Nights

325,000 375,000 425,000 475,000 525,000 jan feb mar apr may june july aug sept

• ct

nov dec 2013 2014 2015 2016 2017 2018

Memphis Lodging Market

Change in Room Night Supply & Demand

418,421 65,313 94,805 24,637 312,101

• 35,514

90,957 215,374 57,226 208,375

• 183,559
• 175,438

25,239

• 12,462

110,120 86,966 200,130 120,124

• 275,000
• 175,000
• 75,000

25,000 125,000 225,000 325,000 425,000 2010 2011 2012 2013 2014 2015 2016 2017 2018

Demand Supply

Supply outpaces demand growth

Memphis Lodging Market

Average Daily Change - Supply/Demand

444 724 932 571

• 503
• 481

69

• 34

302 238 541 329 55

• 812
• 305

1146 179 260 68 855

• 97

249 600 157

• 1,000
• 500

500 1,000 1,500

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Supply Demand

Memphis Lodging Market vsTotal U.S.

% Change 2018 vs 2017

Memphis U.S. Room Supply 1.4% 2.0% Room Demand 1.0% 2.5% Room Revenue 1.5% 5.0% Occupancy

• 0.4%

0.5% ADR 0.5% 2.4% RevPAR 0.1% 2.9%

Memphis Lodging Market

% Change

• 2.5%
• 1.5%
• 0.5%

0.5% 1.5% 2.5% 3.5% 4.5% 5.5% 6.5% 2012 2013 2014 2015 2016 2017 2018

Occ ADR Demand Supply

What is this trend?

Memphis Lodging Market

% Change Key Indicators

2.6

• 2.2
• 2.1

0.3

• 0.2

1.4 1.1 2.4 1.4 9.7 1.4 2 0.5 6.4

• 0.07

1.8 4.1 1 7 3.7 4.2 0.2 6.5

• 2

0.7 1.7

• 0.4
• 5.2

0.3 4.1 2.2 5.6 6.3 3.7 3.3 0.5

• 6.5
• 4.5
• 2.5
• 0.5

1.5 3.5 5.5 7.5 9.5 11.5 2010 2011 2012 2013 2014 2015 2016 2017 2018

Supply Demand Occupancy ADR

Memphis Lodging Market

Average Rate

$69.16 $76.20 $81.91 $84.15 $78.82 $74.70 $74.90 $78.00 $79.71 $84.21 $89.52 $92.75 $95.92 $96.38 $60.00 $65.00 $70.00 $75.00 $80.00 $85.00 $90.00 $95.00 $100.00 $105.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

+$0.46

Memphis Lodging Market

Occupancy

63.4% 63.4% 62.3% 56.4% 52.7% 56.4% 58.4% 60.9% 61.0% 65.0% 63.7% 64.1% 65.2% 64.9%

50.0% 55.0% 60.0% 65.0% 70.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Memphis Lodging Market

RevPAR

$43.86 $48.30 $51.03 $47.46 $41.54 $42.12 $43.77 $47.50 $48.64 $54.73 $57.01 $59.49 $62.50 $62.56

$35 $40 $45 $50 $55 $60 $65 $70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

+$0.06

Memphis Lodging Market

12 Month Moving Avg Revenue

$325,000,000 $375,000,000 $425,000,000 $475,000,000 $525,000,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

• 12.5%

57.6% Plateau?

Memphis Lodging Market

12 MMA RevPAR

$40.00 $45.00 $50.00 $55.00 $60.00 $65.00 2012 2013 2014 2015 2016 2017 2018

+42.1% Stagnant

Memphis Lodging Market

RevPAR % Change

• 10.0%
• 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 2012 2013 2014 2015 2016 2017 2018

5 monthly declines in 2018

Memphis Lodging Market

RevPAR Growth

• 20
• 15
• 10
• 5

5 10 15 20 25 2010 2011 2012 2013 2014 2015 2016 2017 2018

108 months with only 20 negative months of RevPAR Growth – 1/2010 thru 12/2018 (2 in 2017/5 in 2018)

Memphis Lodging Market

RevPAR Composition- % Change by Contribution

7 3.7 4.2 0.2 6.5

• 2

0.7 1.6

• 0.4

1.4 0.3 4.1 2.2 5.6 6.3 3.7 3.4 0.5

• 4
• 2

2 4 6 8 10 12 14 2010 2011 2012 2013 2014 2015 2016 2017 2018

Occ ADR

Memphis Lodging Market

Weekday/Weekend for 2018

51.3% 61.8% 67.3% 68.0% 64.0% 69.7% 72.4% $86.51 $96.84 $101.05 $100.90 $94.68 $95.68 $96.57

$82.00 $87.00 $92.00 $97.00 $102.00 $107.00 $112.00 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% 75.0% 80.0% Sun Mon Tue Wed Thur Fri Sat

Occ ADR (Highest Rates Monday – Wednesday)

Occupancy Trend Comparison

Memphis/U.S.

50.0% 55.0% 60.0% 65.0% 70.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Memphis U.S.

20.2%

• 12.7%
• 16.9%

23.2% Gap is growing

Memphis Lodging Market

Properties by Size

# Rooms # Properties 600+ 1 400 – 599 3 300 - 399 1 200 - 299 9 100 - 199 70 99 or less 169

64 properties with 50 or fewer rooms

Memphis Lodging Market

Properties by Opening Date

Year # Properties # Rooms

U/C 15 1,675 2018 4 362 2017 6 469 2016 4 604 2015 5 477 2014 2013 1 105 2012 2011 2010 3 265 2009 9 737 2008 13 1,176 2007 6 574

Only 2 hotels with more than 200 rooms opened during this period; 60 hotels with 5,629 rooms, average size 96 rooms

Memphis Lodging Market

Current Pipeline or Pipedream

Arkansas 4 Properties 568 Rooms Arlington 2 Properties 210 Rooms Collierville 3 Properties 300 Rooms Downtown 15 Properties 2,156+ Rooms East Memphis 14 Properties 1,035+ Rooms Lakeland 2 Properties ? Rooms Midtown 1 Property 107 Rooms Mississippi 13 Properties 1,144 Rooms Total Memphis Pipeline (U/C & Proposed) 54 Properties w/5,520+ Rooms

Memphis Lodging Market Pipeline

As of 2/19/2019

• Under Construction

15 Properties 1,675 Rooms

• Proposed

39 Properties 3,845+ Rooms

Memphis Lodging Market

Geographic Regions

Memphis Lodging Market

Year End 2018 by Geographic Region

ADR Occ RevPAR # Rooms # Properties

West Memphis $72.14 58.3% $42.04 1,644 26 Poplar/East $102.64 71.7% $73.64 5,300 44 East/I-40 $73.31 59.8% $43.82 3,724 40 Airport/South $73.11 55.6% $40.68 4,774 50 Downtown/Midtown $146.06 68.5% $100.05 4,045 34 Mississippi $93.38 74.5% $69.58 3,201 42 Millington/North/Other $69.20 58.1% $40.19 1,033 19 Citywide $96.38 64.9% $62.56 23,721 255

Memphis Lodging Market

Change in Room Night Demand

• 60,000
• 40,000
• 20,000

20,000 40,000 60,000 80,000 100,000

2014 2015 2016 2017 2018

West Mphs Dtwn/Mid Poplar/East I-40/East Airport South Mississippi Millington/North

West Memphis = 48% of increase Miss = 75% of increase Poplar/East = 26% of increase

• 43,951

Memphis Lodging Market

Change in Room Night Supply

24,480 28,875

• 396

36,269

• 12,760

45,754

• 118

867 16,526 6,309 50,609 28,919

• 11,112

39,574 29,700

• 267

91,037 48,657 26,090

• 19,667

26,919 17,209 22,763 49,810

• 35,000
• 15,000

5,000 25,000 45,000 65,000 85,000 105,000

West Mphs Dtwn/Mid Poplar/East I-40/East Airport South Mississippi Millington/North

2015 2016 2017 2018

Memphis Lodging Market

Chain Scale

Memphis Lodging Market

Year End 2018 by Chain Scale

ADR Occ RevPAR # Rooms # Properties

Upper Upscale/ Upscale $128.84 73.5% $94.73 5,634 34 Upper Midscale $107.65 66.7% $71.82 5,464 56 Midscale $85.98 60.2% $51.79 2,087 26 Economy $48.81 60.0% $29.30 4,692 58 Citywide $96.38 64.9% $62.56 23,726 255

Does not include luxury or independent properties

Memphis Lodging Market

Change in Room Night Demand

77,165 85,292 48,297 60,124

• 14,641

37,226

• 9,653
• 51,927

69,104

• 36,126

10,458 18,656 37,875 45,451 10,106 35,192

• 22,705

49,449 4,136 30,490

• 60,000
• 40,000
• 20,000

20,000 40,000 60,000 80,000 100,000

Upper Upscale/Upscale Upper Midscale Midscale Economy 2014 2015 2016 2017 2018

Memphis Lodging Market

Change in Room Night Supply

• 334

24,118

• 10,910

37,334 54,440 14,968

• 1,849

14,241 4,720 14,962 18,702 25,951 58,893 25,480 192

• 14,008

87,952 29,539

• 466
• 25,000
• 5,000

15,000 35,000 55,000 75,000 95,000

Upper Upscale/Upscale Upper Midscale Midscale Economy

2014 2015 2016 2017 2018

Memphis Lodging Market

Occ % 2018/2017/2016

73.2% 66.9% 63.0% 56.2% 64.1% 74.1% 67.2% 62.1% 58.2% 65.2% 73.5% 66.7% 60.2% 60.0% 64.9%

55.0% 60.0% 65.0% 70.0% 75.0% 80.0%

Upper Upscale/Upscale Upper Midscale Midscale Economy Citywide 2016 2017 2018

Memphis Lodging Market

ADR % 2018/2017/2016

$123.97 $105.16 $82.08 $47.70 $92.75 $126.72 $107.96 $84.04 $49.41 $95.92 $128.84 $107.65 $85.98 $48.81 $96.38

$40.00 $50.00 $60.00 $70.00 $80.00 $90.00 $100.00 $110.00 $120.00 $130.00 $140.00

Upper Upscale/Upscale Upper Midscale Midscale Economy Citywide

2016 2017 2018

Downtown Memphis

Downtown Memphis Hotels

as of 12/31/18

• Hu Hotel
• Springhill Suites
• Hampton Inn & Suites
• River Inn
• Westin Beale St
• Residence Inn
• Courtyard
• Peabody Hotel
• La Quinta Inn & Suites
• Sheraton Hotel
• Sleep Inn
• Comfort Inn
• Doubletree Hotel
• Holiday Inn
• Crowne Plaza
• Big Cypress Lodge
• Ascend Napoleon Hotel
• Hotel Indigo
• Vista Host

Downtown Memphis

2006 - 2018

70.5% 68.8% 64.4% 65.1% 65.7% 67.3% 71.2% 68.1% 71.9% 72.7% 73.4% 73.8% 71.5% $129.23 $140.43 $144.21 $133.24 $127.53 $127.79 $129.52 $134.43 $138.20 $146.46 $151.22 $154.37 $159.84 $91.11 $96.63 $92.90 $86.78 $83.75 $86.02 $92.22 $91.49 $99.35 $106.43 $111.05 $113.94 $114.30

62.0% 64.0% 66.0% 68.0% 70.0% 72.0% 74.0% 76.0% $80.00 $100.00 $120.00 $140.00 $160.00 $180.00 $200.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Occ ADR RevPAR

Downtown Memphis

% Change 2017-2018

• 20.0%
• 15.0%
• 10.0%
• 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

Occ ADR RevPAR

Downtown Memphis

12 MMA Demand

720,000.00 740,000.00 760,000.00 780,000.00 800,000.00 820,000.00 840,000.00 860,000.00 880,000.00 2013 2014 2015 2016 2017 2018 Demand

What’s Happening to Downtown Demand

Downtown Memphis

12 MMA RevPAR

$90.00 $95.00 $100.00 $105.00 $110.00 $115.00 $120.00 2013 2014 2015 2016 2017 2018 RevPAR

What’s Happening to Downtown Rates

Downtown Memphis

RevPAR

$55.00 $65.00 $75.00 $85.00 $95.00 $105.00 $115.00 $125.00 $135.00 $145.00 $155.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 RevPAR

Downtown Memphis

Room Revenue

$80,000,000 $130,000,000 $180,000,000 $230,000,000 $280,000,000 $330,000,000 $380,000,000 $430,000,000 $480,000,000 $530,000,000 $580,000,000 2012 2013 2014 2015 2016 2017 2018 Dtwn Mphs

40.4% 30.6%

• 1.6% YTD

Downtown Memphis

Key Statistics

YE 2018 YE 2017 % Change Room Supply (Daily) 3,158 3,220

• 1.9%

Room Demand (Daily) 2,258 2,377

• 5.0%

Room Revenue (Daily) $360,953 $366,881

• 1.6%

Occupancy 71.5% 73.8%

• 3.1%

ADR $159.84 $154.37 3.5% RevPAR $114.30 $113.94 0.3%

Downtown Memphis

% Change ADR

3.8% 2.8% 6.0% 3.3% 2.1% 3.5% 2.2% 5.6% 6.3% 3.6% 3.4% 0.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 2013 2014 2015 2016 2017 2018 Downtown Memphis

Memphis Lodging Market

Downtown Pipeline

Property # Rooms Status

Curio S. Main Train Station 120 u/c Arrive 60 u/c Cambria Hotel & Suites 120 u/c Canopy 170 u/c Aloft 155 u/c Holiday Inn Express 115 Proposed Home2 Suites 115 Proposed West Memphis Casino Hotel 300 Proposed Loews Convention Center Hotel 550 Proposed Clipper/Gibson 250 Proposed Union Row Hotel #1 n/a Proposed Union Row Hotel #2 n/a Proposed Hyatt Centric One Beale 230 Proposed Jolly Royal Bldg n/a Proposed AC Hotel 154 Proposed Extended Stay Hotel 108 Proposed

Memphis Lodging Market

What Does the Future Hold

Memphis Lodging Market 2019YE Projection

 Occupancy – 62.5% (-3.7%)  ADR - $96.00 (-0.3%)  RevPAR - $60.00 (-4.1%)

projection noun pro·jec·tion \ prə-ˈjek-shən \ : an estimate of future possibilities based on a current trend

𝑔 𝑦 = 𝑏0 + ෍

𝑜=1 ∞

𝑏𝑜 cos 𝑜𝜌𝑦 𝑀 + 𝑐𝑜 sin 𝑜𝜌𝑦 𝑀

Memphis Tourism/Convention Center Upgrade

Kevin Kane President/CEO Memphis Travel

How Strong Is The National Hotel Market, Really?

Jeff Higley Editorial Director - Hotel News Now, a division of STR, Inc

Keynote Speaker

Mitch Patel President & CEO Vision Hospitality Group, Inc.

Presented by: Pinkowski & Company and Metropolitan Memphis Hotel & Lodging Association

Memphis Cook Convention Center August 27-28, 2019