U.S. Hotel Industry Performance Jan D. Freitag Senior Vice President jan@str.com @jan_freitag 2016 STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively STR ) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR. No strategic advice or marketing recommendation is intended or implied. 1
Agenda Total US Review Scale Review Markets Pipeline Comparing Cycles: 1990s vs. Today 2016 / 2017 Forecast AirBnB 2
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Total U.S. Review 4
April RevPAR +5% Group RevPAR +10.8% 5
March 2016 YTD: A Slow Start To 2016 % Change Room Supply 1.5% Room Demand 1.0% Occupancy 57.6% -0.5% A.D.R. $119 3.2% RevPAR $68 2.7% Room Revenue 4.2% March 2016 YTD, Total US Results 6
Total US March 2016 RevPAR: NYC and Houston Dragged Total US YTD: +2.7% NYC: -1.2% Houston: -9.5% Total US excluding NYC & Houston: +3.5% *RevPAR % Change March 2016 YTD 7
Quarterly RevPAR % Change: Weak Q1 2016 2013 2014 2015 2016 8.0 7.9 9.1 8.9 6.1 6.6 4.7 6.5 5.4 5.9 4.9 4.8 2.7 Q1 Q2 Q3 Q4 * Total US, RevPAR % Change, by Quarter, Q1 2013 Q1 2016 8
Demand Growth Slows. Supply Growth Increases To 1.3%. 8 7.7 4 0-0.8-4 Supply % Change -4.7-8 Demand % Change -7.1 1990 2000 2010 Total U.S., Supply & Demand % Change, 12 MMA 1/1990 03/2016 9
ADR Growth Softer. Occ Growth Decelerating Rapidly. 6.8 7.5 5 4.1 0-3.4-5 Occ % Change ADR % Change -6.7-10 1990 2000 2010 Total U.S., ADR & OCC % Change, 12 MMA 1/1990 03/2016-9.7 10
15 10 5 RevPAR Growth: Slowing Down After 6 Yrs. Of Growth 0-5 -10 80 Months 31 Mo 56 Months 73 Mo. -15-20 -25 1990 2000 2010 Total U.S., RevPAR % Change, 1/1990 03/2016 11
Chain Scale Review - March YTD - 12
Scales: Supply Growth Drives Results For All Scales Supply % Change Demand % Change 4.8 3.9 1.6 1.3 1.8 1.0 1.4 1.4 0.9 0.5-0.4-1.0 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy *Supply / Demand % Change, by Scale, March 2016 YTD 13
Scale Occ: Slight Declines Across The Board 73.6 73.8 70.7 71.3 70.2 70.8 2015 2014 61.6 61.9 54.2 53.2 53.0 53.8 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy *OCC %, by Scale, March YTD 2015 & 2014 14
Markets 15
RevPAR March YTD 2016: Winner: California. Loser: Oil Markets. Market RevPAR % Change Market RevPAR % Change California North Central 21.9 Syracuse, NY (9.7) Los Angeles/Long Beach, CA 16.6 Oklahoma Area (12.5) Myrtle Beach, SC 15.9 Vermont (12.7) San Francisco/San Mateo, CA 15.7 Wyoming 13.5) Greenville/Spartanburg, SC 14.7 New Mexico South (14.9) Colorado Springs, CO 13.9 Pittsburgh, PA (16.1) Knoxville, TN 13.4 Texas South (18.1) Sacramento, CA 13.1 West Virginia (24.6) Oakland, CA 12.9 Texas West (29.2) South Carolina Area 12.5 North Dakota (34.0) *March 2016 YTD RevPAR: Best / Worst Performing Markets 16
March 2016 : SFO Very Strong. New Supply Hits NYC, Miami, Houston. Market OCC % ADR % Change San Francisco/San Mateo, CA 80.5 13.0 Los Angeles/Long Beach, CA 81.6 11.3 Tampa/St Petersburg, FL 80.2 7.4 Atlanta, GA 69.6 7.2 Orlando, FL 81.0 6.4 Phoenix, AZ 80.3-1.1 Houston, TX 65.8-1.5 Miami/Hialeah, FL 83.2-1.7 Chicago, IL 55.4-1.9 New York, NY 77.4-3.1 * March 2016 YTD ADR % Change in Top 25: 5 Best / 5 Worst Performing ADR % Markets 17
NYC 18
NYC YTD RevPAR & Occupancy: Full House But No RevPAR Growth RevPAR % Change Occupancy 82.3 82.3 84.9 85.7 85.8 85.5 12.4 5.6 2.6 2.8 1.8-1.7 2010 2011 2012 2013 2014 2015 * NYC RevPAR % Change & Absolut Occupancy, December YTD, by year 19
NYC Monthly RevPAR: Continued Softness (But Easter Helped) 3.5 3.0 3.2 1.0 1.8 0.5-2.4-2.4-4.1-4.3-4.5-6.0-6.1-6.5 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr * NYC RevPAR % Change, by Month, 3/2015 4/2016 20
Houston 21
Houston: Oil Price Predicts Houston Room Demand $100 $90 $80 $70 $60 $50 8.0 6.0 4.0 2.0 0.0-2.0 Crude Oil Futures Price / Barrel (LHS) Demand % Change (RHS) 2014 2015 Jan-16 *Monthly Oil price Future / Barrel vs. Houston, TX Room Demand % Change 1/2014 03/2016 http://www.investing.com/commodities/crude-oil $40 $30-4.0-6.0 22
Pipeline 23
US Pipeline: Construction Today Will Impact 2016 / 2017 Phase 2016 2015 % Change In Construction 153 128 22% Final Planning 177 156 9% Planning 169 150 17% Under Contract 500 435 15% *Total US Pipeline, by Phase, 000s Rooms, March 2015 and 2016 24
Where Are Not Building Ballrooms Anymore! 50.8 52.0 67% 21.3 8.1 12.4 6.6 2.0 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated *US Pipeline, Rooms Under Construction, 000s Rooms, by Scale, March 2016 25
Comparing Cycles: 1990s vs. Today 26
Current Cycle vs. 1992/2001 Cycle: RevPar Growth RevPAR % Change 10 8 6 4 2 5.92-8.01 9.10-3.16 0 1 2 3 4 5 6 7 8 9 *12 MMA RevPAR % Change by Cycle Years 27
Current Cycle vs. 1992/2001 Cycle: Supply Growth Was Worse Back Then Supply % Change 5 4 5.92-8.01 9.10-3.16 4.0% 3 2 2.1% 1 1.3% 0 1 2 3 4 5 6 7 8 9 Years *12 MMA Supply % Change 28
Current Cycle vs. 1992/2001 Cycle: Occupancy Growth Slows Rapidly Occ % Change 7 6.3% 5.92-8.01 5 3 1 2.1% 3.6% 9.10-3.16 1.0% -1-3 1 2 3 4 5 6 7 8 9 *12 MMA Occupancy % Change Years 29
Current Cycle vs. 1992/2001 Cycle: Positive ADR Change Despite Occ Slowing ADR % Change 7 5 6.9% 4.9% 3 1 5.92-8.01 9.10-3.16-1 -3 1 2 3 4 5 6 7 8 9 *12 MMA ADR % Change Years 30
Current Cycle vs. 1992/2001 Cycle: Real ADR Change Remarkably Similar Inflation Adjusted ADR Change Real ADR % Change 6 5.92-8.01 4 2 9.10-3.16 3.7% 3.5% 0-2 -4 1 2 3 4 5 6 7 8 9 Years *12 MMA Real ADR % Change 31
2016 / 2017 Forecast 32
Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2016-2017 Outlook 2016 Forecast 2017 Forecast Supply 1.7% 1.9% Demand 2.3% 2.1% Occupancy 0.6% 0.2% ADR 4.4% 4.3% RevPAR 5.0% 4.5% 33
Airbnb 34
http://www.hotelnewsnow.com/articles/32006/str-analysis-a-look-inside-real-airbnb-data 35
Friday of Kentucky Derby: Healthy ADR $487 $505 $457 $427 $400 2012 2013 2014 2015 2016 *Louisville, KY; ADR by year; Friday before Kentucky Derby 36
Friday of Kentucky Derby: Room Demand Increases 19,760 19,236 19,380 19,507 18,980 2012 2013 2014 2015 2016 *Louisville, KY; Rooms Sold by year; Friday before Kentucky Derby 37
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