Trends and Analysis Vail R. Brown, CHMS Vice President, Global - PowerPoint PPT Presentation

Beyond Bullet Points: Statistics, Trends and Analysis Vail R. Brown, CHMS Vice President, Global Business Development & Marketing Society of Government Travel Professionals September 18, 2014 vail_str vbrown@str.com

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?

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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* 0.8% • Room Demand* 4.2% • Occupancy 65.1% 3.4% • A.D.R.* $115 4.3% • RevPAR* $75 7.8% • Room Revenue* 8.6% Total U.S. As of July 2014 YTD *All Time High for First 7 Months

Demand Growth Accelerates. How Long Can That Last? 8.0% 8 4 3.4% 0 -0.9% -4 Supply Demand - 4.7% - 6.9% -8 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Total U.S. Supply & Demand % Change 12 Month Moving Average Jan. 1990 – July 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 2004 2006 2008 2010 2012 Total U.S., ADR & Demand % Change 12 Month Moving Average Jan. 1990 – July 2014

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 6.6 Demand % Change 4.3 4.0 3.8 3.5 3.0 1.6 1.5 0.8 0.4 0.4 -0.7 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy U.S. Chain Scales: Supply / Demand % Change As of July 2014 YTD

ADR Growth Strong Across The Board Occupancy % Change ADR % Change 5.0 4.7 4.7 4.4 3.9 3.9 3.7 3.7 3.6 3.0 2.3 0.7 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy U.S. Chain Scales: OCC / ADR % Change As of July 2014 YTD

Actual RevPAR Catches Up To Prior Record Highs $226 $217 $213 2007 2013 2014F $123 $116 $113 $93 $87 $84 $68 $64 $62 $46 $44 $43 $32 $31 $30 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy U.S. Chain Scales: Absolute RevPAR $ 2007 & 2013 & 2014 Forecast as of August 2014

2 Group Demand ‘Comeback’? Group Transient Contract Segmentation

Total U.S.: Transient Occupancy Share Increases 2005 2013 Group 43% 36% 57% 64% Transient U.S. Transient and Group Occupancy as Share of Total OCC 2005 and 2013 (Share does not include contract)

Transient Continues To Grow Share of Occupancy 70% Group mix Trans Mix 60% 50% 40% 30% 2005 2007 2009 2011 2013 U.S. Transient and Group Occupancy Mix of Total OCC 2005 thru July 2014

Group Demand Is (Finally!) Recovering 5% 4% 3% *2013 2% Easter Comp Demand ADR 1% -1% -2% 2012 2013 2014 U.S. Group Demand and ADR % Change 12 Month Moving Average, Jan. 2012 – July 2014

July 2014 1.8 million more group rooms sold than in the prior 12 month

Transient Room Premium Back to 2008 Levels $204 Transient Group $194 $194 $186 $177 $178 $173 $172 $168 $166 $164 $161 $161 $157 2008 2009 2010 2011 2012 2013 YTD 2014 U.S. Customer Segmentation ADR $ 2008 – YTD July 2014

3 U.S. Market Performance

Markets With Demand Growth > 4% Top U.S. Markets Demand Growth %, July 2014 YTD

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

STR Pipeline Phases In Construction – Vertical construction on the physical Under Contract 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 0.8 Luxury Upper Upscale Upper Midscale Economy Unaffiliated Upscale Midscale Total U.S. Pipeline, Rooms Under Construction ‘000s Rooms, by Scale, June 2014

Construction In Top 26 Markets: 15 With 2%+ Of Supply Rooms U/C % Of Existing Market 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% 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 0 2008 2009 2010 2011 2012 2013 YTD 2014 Total U.S. Count of New Hotels with 50k+ Sqft of meeting space By year, 2008 – YTD 2014

5 Where are we headed?

Positive RevPAR Growth For The Foreseeable Future 9% 10 8.6% 5 46 Mo. 112 Months 65 Months 0 -2.6% -5 -10 -10.1% -15 -16.8% -20 1990 2000 2010 Total U.S., RevPAR % Change, 12 Month Moving Average Jan. 1990 – July 2014

U.S. Outlook 2014 2015 Forecast 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 ADR RevPAR U.S. Chain Scales (% chg) (% chg) (%chg) -0.1% 4.6% 4.5% Luxury Upper Upscale 2.0% 4.4% 6.5% Upscale 2.0% 4.4% 6.5% 2.6% 3.3% 6.0% Upper Midscale 3.0% 3.5% 6.6% Midscale 2.9% 3.9% 6.8% Economy 2.8% 4.6% 7.5% Independent Total United States 2.6% 4.2% 6.9% As of August 12 th , 2014

2014 Year End RevPAR Forecast -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15%+ Anaheim Chicago 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 Anaheim Nashville New Orleans Boston Norfolk Chicago Philadelphia Dallas Washington Denver Detroit Houston Los Angeles Miami Minneapolis Oahu Orlando Phoenix San Diego San Francisco Seattle St. Louis Tampa Top 25 U.S. Markets, August 2014 Forecast (Markets sorted alphabetically)

To Recap… • Demand Growth: Strong & Steady • RevPAR strong across all U.S. Chain Scales • 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!