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US Lodging Industry Overview and State and Market Overview

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  1. US Lodging Industry Overview and State and Market Overview The SHARE Center Supporting Hotel-related Academic Research and Education

  2. Total US Update US Drill Down Booking Channel Update Sample State Overview - Tennessee Sample Market Overview - Nashville Projections Agenda

  3. Total US Review

  4. Global Occupancy Percent Change - Continents & American subcontinents Annual 2009, 2010 & 2011 & April YTD 2012 North America 2009 2010 2011 2012 -8.8% 5.5% 4.2% 3.0% Europe 2009 2010 2011 2012 -6.0% 5.4% 3.0% 0.8% Central America 2009 2010 2011 2012 -16.7% 6.6% 1.2% -0.5% Asia Pacific 2009 2010 2011 2012 -5.7% 9.3% 0.1% 2.5% Caribbean 2009 2010 2011 2012 -4.6% -2.1 4.4% 3.8% South America 2009 2010 2011 2012 -7.0% 9.4% 2.3% -1.8 Middle East & Africa 2009 2010 2011 2012 -12.3% 0.3% -7.0% 9.0% Occupancy rebounded from 2009, still growing in most regions

  5. Global ADR Percent Change - Continents & American subcontinents Annual 2009, 2010 & 2011 & April YTD 2012 North America $ 2009 2010 2011 2012 -8.9% 0.6% 3.7% 3.9% Europe $ 2009 2010 2011 2012 -16.9%-2.1% 9.3% -2.8% Central America $ 2009 2010 2011 2012 -6.3% -0.8% -0.6% 1.4% Asia Pacific $ 2009 2010 2011 2012 -14.7% 9.1%9.3% 4.4% Caribbean $ 2009 2010 2011 2012 -12.9% 4.3% 3.2% 4.8% South America $ 2009 2010 2011 2012 -5.3% 8.6% 16.4% 6.7% Middle East & Africa $ 2009 2010 2011 2012 -3.1% 2.1% 5.3% -0.8% ADR growth improving - some areas of the world slower than others

  6. Global RevPAR Percent Change - Continents & American subcontinents Annual 2009, 2010, 2011, & April YTD 2012 North America $ 2009 2010 2011 2012 -16.9% 6.0% 8.1% 7.1% Europe $ 2009 2010 2011 2012 -21.8%3.0% 12.5% -2.0% Central America $ 2009 2010 2011 2012 -21.9% 5.4% 0.5% 0.9% Asia Pacific $ 2009 2010 2011 2012 -19.8% 18.5%9.4% 6.9% Caribbean $ 2009 2010 2011 2012 -16.8% 2.1% 7.6% 8.8% South America $ 2009 2010 2011 2012 -12.0% 18.8% 19.1% 4.8% Middle East & Africa $ 2009 2010 2011 2012 -14.9% 2.6% -2.1% 8.0% RevPAR strong in most areas

  7. 2011: The World Recovered Number of Markets with Positive REVPAR Percent Changes: Americas: 194 of 212 Europe: 84 of 98 AsiaPac: 38 of 47 Middle East / Africa 19 of 33 *RevPAR in local currency Source: STR Global

  8. Most Major Global Markets Did Well *2011 % Change, ADR & RevPAR in local currency Source: STR Global

  9. Value% Change Hotels 52,300 Supply 1.8 B 0.6% Demand 1.1 B 5.0% Room Revenue $107.6 B 8.8% Occupancy 60.1% 4.4% ADR $101.64 3.7% RevPAR $61.06 8.2% Total US - Key StatisticsDecember YTD 2011 All percent changes are positive, record demand numbers and low supply %chg

  10. Total US - Key Performance IndicatorsAnnual 2007, 2008, 2009, 2010, and 2011 Occupancy back to 2008 level, ADR ½ way, RevPAR ⅔ way

  11. Total US - Key Performance Percent Change Indicators Annual 2008, 2009, 2010, and 2011 Big Demand & Occ turn around; ADR negative in 2010, but positive in 2011

  12. 2010 saw strongest Demand increase in history and sharp Supply decrease Total US - Supply and Demand Percent Change Twelve Month Moving Average, January 1989 to April 2012 Supply: 3.0% (Sep 09) 0.4% (Apr 12) -0.9% • Demand: • 7.0% (Aug 09) • 7.8% (Feb 11) • 4.1% (Apr 11) - 4.6%

  13. Total US - Actual Monthly Room Supply • Millions of Room Nights, Seasonally Adjusted, Jan 1998 to Dec2011 Supply has levelled off, for the first time since 2004

  14. Total US - Actual Monthly Room Demand • Millions of Room Nights, Seasonally Adjusted, Jan 1998 to Dec2011 Demand at record high level for most of 2011!

  15. Total US - Closed HotelsAnnual 2004 through 2011 65,242 rooms in 2005 to 14,265 rooms in 2010 Huge decrease in closed hotels leading up to 2010, small resurge in 2011

  16. Total US - Opened HotelsAnnual 2004 through 2011 153,623 rooms in 2008 38,667 rooms in 2010 Continued decreasein new development in 2011 Significant drop in number of new opens in 2010 and 2011

  17. Total US – Monthly Supply Percent ChangeJanuary 2005 to December 2011 “Close up” of monthly Supply percent changes for last couple of years

  18. Total US – Monthly Demand Percent ChangeJanuary 2005 to December 2011 “Close up” of monthly Demand % changes, positive for most of 2010 & 11

  19. Occupancy leveling, ADR returning, very different recovery than 2002! Total US – Occupancy and ADR Percent Change Twelve Month Moving Average, Jan 1989 to Dec 2011 ADR: -8.9% (Jan 10) 3.7% (Dec 11) -4.5% 0.0% Occupancy: -9.7% (Sep 09) 6.3% (Apr 11) 4.5% (Dec 11) -3.4% -6.7%

  20. Total US - Occupancy & ADR Actual ValuesTwelve Month Moving Average – January 1997 to April 2012 Major challenge for the industry – making up the lost ADR!

  21. ADR Discounting at Twice the Speed of ADR Recovery Sept ‘08 $108 Dec ‘11 $102 -10% +4.6% 19 Months 19 Months Apr ‘10 $97 Total US Actual ADR, 12 Month Moving Average, 2008 - 2011

  22. Inflation Adjusted ADRs Currently Well Out Of Reach $117 2007 ADR Grown By CPI $107 $101 2000 ADR Grown By CPI $85 $107 $109 $85 $104 Total US Actual ADRs and Inflation Adjusted ADR, 2000 – 2013F 2000 – 2010 CPI from bls.gov, 2011 – 2013 CPI from Blue Chip Economic Indicators

  23. Total US -Monthly Occupancy Percent Change January 2005 to December 2011 “Close-up” of monthly Occupancy % Change – strongly positive for 2010 & 11

  24. Total US - Monthly ADR Percent Change • January 2005 to December 2011 “Close-up” of ADR % Change – positive (gradually) since middle of 2010

  25. Total US - Actual Monthly RevPARSeasonally Adjusted, January 1998 to December 2011 $54.86 Nov 2000 $55.38 Feb 2005 RevPAR recovery looks better than ADR recovery

  26. Total US - Monthly RevPAR Percent ChangeJanuary 2005 to December 2011 “Close-up” of RevPAR % Change – positive since middle of 2010

  27. Total US – Post-Recession Demand Percent Change12 Month Moving Average - From Start of Recession, by Month Three very different economic cycles

  28. Total US – 2011 HOST (Hotel Operating Stats/P&L) Update

  29. Total US - Estimated Total Revenue and ProfitabilityAnnual Numbers from 2001 to 2010 Total Revenue and Profit in Billions

  30. US Drill Down (Scales, Locations, Regions, Top Markets, Group/Transient, Weekday/Weekend) Scales

  31. Luxury – W Hotel, Four Seasons, Ritz Carlton, Fairmont, Waldorf, Intercontinental, JW Marriott Upper Upscale – Sheraton,Hyatt, Hilton, Marriott, Westin, Renaissance Upscale – Hilton Garden Inn, Courtyard, Aloft, Indigo, Radisson, Wyndham Upper Midscale- Holiday Inn, Hampton Inn, Fairfield Inn, BW Plus Midscale – LaQuinta, Wingate, Sleep Inn, BW, Quality Inn, Ramada Economy – Econolodge, Red Roof, Days Inn, Motel 6, Super 8 Changes to STR Scales in 2011 Changed to Upper Mid and Midscale from Midscale with and w/o F&B (Also Best Western started converting their hotels to Plus and Premium)

  32. Historic Scales – Supply Percent ChangeAnnual 2008, 2009, 2010, and 2011 High 2009 & 2010 supply growth in Luxury and Upscale groups; 2011 Upper Mid and Midscale numbers affected by BW conversion

  33. Historic Scales – Demand Percent ChangeAnnual 2008, 2009, 2010 and 2011 Largest 2010 Demand recovery at upper end

  34. Historic Scales – Occupancy Percent ChangeAnnual 2008, 2009, 2010, and 2011 2009 dropped most at lower end, 2010 recovered most at the upper end

  35. Historic Scales – ADR Percent ChangeAnnual 2008, 2009, 2010, and 2011 Upper end impacted most in 2009, Luxury only positive in 2010

  36. 2011 Update - Strong Demand Growth, Supply Not An Issue Supply and Demand Percent Change, by Scale, Annual 2011 Midscale Supply Change Caused by Best Western Re-classification

  37. 2011 Update - Early Recovery, Occupancy % Chg > ADR % Chg Occupancy and ADR Percent Change by Scale, Annual 2011

  38. 2011 Update - Upper End Sells 7 out 10 Rooms Every Night Absolute Occupancy by Scale, Annual 2007 & 2011

  39. 2011 Update - Demand Recovery Strongest At Upper End Total Room Demand in Millions, by Combined Scales, Annual 2007 & 2011

  40. No Surprise Here: Room Revenue Grows At Upper End As Well Total Room Revenue in Billions $, by Combined Scales, Annual 2007 & 2011

  41. ADR Growth Is Strong – But Not Strong Enough (...yet) Absolute ADR $, by Scale, Annual 2007 & 2011

  42. Recent ADR Compression by Scale : Threat or Opportunity? US Chain Scales, Actual ADRs, Peak (2008) vs. Valley (2009-10) 2008-03 2008-03 2008-04 2009-08 2009-12 2009-12 2008-08 2009-07 2008-08 2009-12 2008-08 2010-01 Compression especially at top end, differences narrowed, trade-up easier

  43. US Drill Down - Locations, Regions, Markets

  44. Locations – Supply Percent ChangeAnnual 2008, 2009, 2010, and 2011 Highest 2009 peaks in Suburban and Interstate

  45. Locations – Demand Percent ChangeAnnual 2008, 2009, 2010, and 2011 Urban, Suburban, and Airport big winners in 2010

  46. Locations – Occupancy Percent ChangeAnnual 2008, 2009, 2010, and 2011 Highest 2010 occupancy in Urban, Suburban, and Airport

  47. Locations – ADR Percent ChangeAnnual 2008, 2009, 2010, and 2011 Urban and Resort down most in 2009 and up most in 2011

  48. US Regions – Occupancy, ADR, & RevPAR Percent ChangeAnnual 2011 Occupancy: 4.9 % ADR: 3.3 % RevPAR: 8.4 % Occupancy: 5.0 % ADR:  3.2 % RevPAR: 8.4 % Occupancy: 5.1 % ADR:3.2 % RevPAR: 8.6 % Occupancy: 2.5 % ADR: 3.8 % RevPAR: 6.5 % Occupancy: 4.6 % ADR: 5.5 % RevPAR: 10.3 % Occupancy: 3.6% ADR:  4.4 % RevPAR: 8.1 % Occupancy: 3.0 % ADR:  2.7 % RevPAR: 5.7 % Occupancy: 5.6 % ADR: 2.8 % RevPAR:8.5 % Occupancy: 4.2% ADR:2.7 % RevPAR: 7.0% TOTAL US Occupancy: 4.3 % ADR: 3.7 % RevPAR: 8.2 % 2011 – positive Occupancy, ADR & RevPAR for all regions

  49. Regions – Supply Percent ChangeAnnual 2009, 2010 and 2011 Largest supply numbers in regions with big cities

  50. Regions – Demand Percent ChangeAnnual 2009, 2010 and 2011 2010 recovery largest in regions with big cities