Hotel Developer’s Toolkit for Lexington,

Tourism Supply Lexington and Regional Hotel Rooms Supply 12,000 • Hotel supply in Lexington and the regional 1 10,000 area has remained relatively steady in 2018, 3,127 3,189 3,331 3,344 3,135 following an increase of 6.4% from 2014 until 8,000 2017. 6,000 Rooms 4,000 7,935 • Lexington has a 70% share of the regional area 7,310 7,763 7,784 7,873 hotel market. 2,000

- • Within the city of Lexington, 7,873 rooms are 2014 2015 2016 2017 2018 (April) Lexington Non-Lexington contained within 71 hotels. Source: Smith Travel Research Fig. 1

Lexington Hotels - Service Levels

• Nearly 56% of Lexington hotel rooms – 4,452 units – are in 54 limited-service hotels. 17 Full-Service 54 Limited- hotels, 3,421 • Units in 17 full-service hotels make up 44% Service Hotels, rooms (3,421 rooms) of Lexington hotel supply. 4,452 rooms • Full-service brands include Marriott, Hyatt Regency, Hilton, 21c, Embassy Suites, and DoubleTree, among others.

Source: Smith Travel Research, VisitLEX Fig. 2

Total Meeting Space in Lexington Hotels Sq. Footage Properties Representative Brands • Six out of 31 Lexington hotels with meeting 20,000 or more 4 Marriott, Hilton, Hyatt, Curio 15,000-20,000 0 None space have more than 10,000 square feet. 10,000-15,000 2 Embassy Suites, Clarion 5,000-10,000 5 Ramada, Four Points, 21c, Clarion, DoubleTree • Four Lexington hotels have more than 20,000 1,000-5,000 10 Fairfield, Hilton Suites, Courtyard, Hyatt Place square feet of meeting space. Less than 1,000 10 Homewood, Hilton Garden, Residence, Hampton Source: VisitLEX Fig. 3

1 Lexington region includes hotels in Berea, Georgetown, Lexington, Paris, Richmond, Wilmore, and Winchester.

VisitLEX | Mary Quinn Ramer, President | 859-233-1221 | [email protected]

Page 1 of 7 Hotel Developer’s Toolkit for Lexington, Kentucky

Tourism Supply (cont.) Comparable Hotel Sales • Since 2014, 26 hotel properties in Lexington Number Total Average Sale have sold garnering an average sales price per Year of Sales Rooms Price per Room room of more than $69,000. 2018 5 478 $41,458 2017 8 659 $63,848 • 2015 was a peak year for Lexington hotel sales 2016 2 236 $70,269 in terms of properties and price per room – nine 2015 9 1,077 $88,494 hotels and $88,494, respectively. 2014 2 488 $63,593

Source: Fayette County, KY PVA Fig. 4

Proposed Hotels Project Name Neighborhood Rooms Projected Open Project Phase • Holiday Inn Lexington CBD/Southwest Loop 123 6/1/2018 In Construction By 2023, 1,194 new hotel rooms in 10 Fairfield Inn & Suites East Northeast Loop 84 10/5/2018 In Construction properties may be open in Lexington. Origin Hotel at the Summit CBD/Southwest Loop 120 1/30/2019 In Construction Avid Lexington CBD/Southwest Loop 95 10/1/2019 Planning Marriott CBD/Southwest Loop 203 11/4/2019 In Construction • A total of 650 new hotel rooms are under Residence Inn City Center CBD/Southwest Loop 120 2/25/2020 In Construction Home2 Suites Hamburg CBD/Southwest Loop 107 3/25/2020 Final Planning construction and expected to open by early 2020. Tru by Hilton Hamburg Northeast Loop 82 10/23/2020 Planning Springhill Suites North Northeast Loop 125 1/30/2021 Planning Aloft Hotel University CBD/Southwest Loop 135 4/2/2023 Planning • If proposed development happens as planned, total Lexington hotel supply would reach 8,807 Source: Smith Travel Research Fig. 5 rooms by the end of 2019.

Tourism Demand

Lexington Hotel Supply Growth vs. Demand Growth 8% • In 2012 through 2014 and again in 2017, Lexington hotel demand growth outpaced 6% growth in Lexington hotel supply. 4% 2% • As new hotels came on the market in 2015 and 0% 2016, supply growth caught up with demand 2011 2012 2013 2014 2015 2016 2017 -2% growth.

-4%

-6% Roomnights Occupied Roomnights Available

Source: Smith Travel Research Fig. 6

VisitLEX | Mary Quinn Ramer, President | 859-233-1221 | [email protected]

Page 2 of 7 Hotel Developer’s Toolkit for Lexington, Kentucky

Tourism Demand (cont.)

Regional Hotel Market Performance $105 64% • Annual hotel occupancy in Lexington and the 2 $95 regional area has hovered between 62.1% and 63.7% 64% $85 63.7% since 2014. 63.1% 63% $75 63% $65 62.6% •

$97.23 Between 2014 and 2017, ADR grew 10.9%, $93.63 62.1% $93.59 62% $55 $87.66 increasing from $87.66 to $97.23.

$61.35 62% $59.64

$45 $58.59

$54.44 $35 61% • RevPAR has increased 12.7%, from $54.44 to 2014 2015 2016 2017 ADR RevPAR Occ $61.35, since 2014. Source: Smith Travel Research Fig. 7

• Regional hotels in the 70th percentile of ADR 2017 Performance by Segment - Regional Hotels post the highest occupancy rates (roughly 70%), $160 80% relative to lower rated hotels in the region. 69.4% 70.8% $140 64.6% 70% 58.4% $120 60% 51.3% • Hotels in the top 15% of region ADR include $100 50% $80 40% Embassy Suites, Holiday Inn Express & Suites, ADR $60 30% Springhill Suites, 21c, Hilton, Hyatt Regency, Occupancy $137.54 $118.11

$40 $96.60 20% Courtyard, Homewood, Marriott, Staybridge,

$20 $67.93 10% $55.50 Residence Inn, and DoubleTree. $- 0% Top 15% Next 15% Middle 30% Next 20% Lowest 20% ADR ADR ADR ADR ADR • The poorest performing hotels, in terms of ADR Occ occupancy, are those with an ADR of around $68. Source: Smith Travel Research Fig. 8

Seasonality - Lexington Hotels 90% • 80% Lexington visitation peaks three times throughout the year – in April and October 70% during racing and sales and in July. 60% 50% • Hotel Occupancy Monthly hotel occupancy rates have remained 40% relatively stables over the past four years. 30% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 2015 2016 2017

Source: Smith Travel Research Fig. 9

2 The regional area includes Lexington hotels and hotels in Berea, Georgetown, Lexington, Paris, Richmond, Wilmore, and Winchester.

VisitLEX | Mary Quinn Ramer, President | 859-233-1221 | [email protected]

Page 3 of 7 Hotel Developer’s Toolkit for Lexington, Kentucky

Tourism Demand (cont.)

Rolling 12-Month Average Hotel Market Performance $115 69% 67.6% 68% $105 65.0% 66.5% 67.4% 67.1% 67.2% 66.3% 64.8% 64.5% 63.4% 61.7% 62.3% 67% • Analysis of the rolling 12-month average of $95 66% Lexington hotel occupancy, ADR, and RevPAR $85 65% 64% $75 shows positive or neutral trends in all three 63% metrics. $102.91 $102.85 $102.64 $102.47 $65 $102.43 $102.02 $101.83 $99.91 $99.85 $101.27 $101.24 $100.83 62% $70.10 $69.66 $68.79 $68.37 $68.31 $68.16 61% $67.16 $55 $66.79 $65.43 $66.51 $63.07 $62.45 60% $45 • 59% While occupancy and RevPAR are remaining $35 58% steady, ADR is trending upward by 1.2%. May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr ADR RevPAR Occupancy (%) Source: Smith Travel Research Fig. 10

2017 Lexington Hotel RevPAR by Neighborhood 14 I-75 Winchester Rd I-75 Newtown • Although RevPAR is relatively low in the I-75 Richmond Rd airport and I-75 Broadway areas, the lack of supply could indicate the opportunity to induce Hamburg 7 new hotel demand if new supply was added. New Circle/ UK Campus Beaumont Nich Road

number of of properties number I-75 • The Beaumont neighborhood and downtown Broadway Downtown have relatively low supply and high RevPAR, Airport - which may indicate pockets of opportunities for $- $55.00 $110.00 new hotel supply. Size of Circle = Number of Rooms Source: VisitLEX Fig. 11

Lexington Hotel Revenue Market Share by Neighborhood

8.9% 7.8% 7.8% 9.2% 9.4% • While I-75/Newtown Road corridor is the

7.7% 7.4% 7.9% largest sub-market, the neighborhood’s market 9.7% 10.7% 8.5% 8.6% 9.0% share has declined more than the market share 9.3% 9.2% 8.6% 8.9% 9.0% of other neighborhoods since 2013. 7.9% 6.9% • Market share in the New Circle/Nicholasville 28.2% 28.4% 27.4% 25.6% 25.1% Road and Downtown neighborhoods has grown more than other neighborhoods, apparently 2.8% 3.3% 3.2% 2.4% 1.8% capturing demand from other neighborhoods 11.5% 10.7% 11.0% 11.6% 12.0% and inducing its own demand as new supply has been added. 15.9% 16.0% 15.8% 15.8% 17.1%

8.4% 8.5% 8.1% 7.8% 8.0% • The Airport hotel market share, 0.3% in 2017, 2013 2014 2015 2016 2017 which is too small to show in the graph, is the Airport Beaumont Downtown Hamburg I-75 Broadway I-75 Newtown I-75 Richmond Rd I-75 Winchester Rd smallest sub-market in Lexington. New Circle/ Nich Road UK Campus Source: VisitLEX Fig. 12

VisitLEX | Mary Quinn Ramer, President | 859-233-1221 | [email protected]

Page 4 of 7 Hotel Developer’s Toolkit for Lexington, Kentucky

Tourism Demand (cont.) 1,350 • Total airline passengers at Lexington’s Blue Grass 1,300 Airport increased by more than 212,000 people, or 1,250 roughly 16.1%, between 2013 and 2017. 1,200 1,316,847 1,314,762 1,150 1,245,251 1,100 • Delta Airlines and carry 1,209,327

Passengers (000) 1,050 roughly 67% of the passengers to and from Blue 1,000 Grass Airport. 1,104,351 950 2013 2014 2015 2016 2017 Total Passengers Source: Blue Grass Airport Fig. 13

Attendance at Major Attractions • 2,900 Attendance at major Lexington leisure 2,800 attractions has remained steady at roughly 2.7 2,700 million people per year. 2,600 2,767,564 2,767,564

2,500 2,741,352 2,721,195 2,721,195 • Major Lexington leisure attractions include 2,400 2,635,151 2,635,151 Keeneland Race Track, the Kentucky Horse People (000) 2,300 Park, Red Mile Race Track, the Lexington 2,200 2,100 Legends baseball team, and . 2,000 2013 2014 2015 2016 Source: Individual attractions Fig. 14

VisitLEX Group Bookings and Leads Total Definitive • Over the past two years, 43% of group business Segment Leads Roomnights Leads Roomnights leads and 27% of associated roomnights have Sports 164 116,109 86 36,289 been converted to definitive bookings. Equine 28 22,846 24 17,556 State 118 39,584 60 14,213 • Corporate 40 15,497 18 11,676 Definitive group bookings have resulted in over Religious 56 72,402 12 9,050 120,000 roomnights in the past two years. Clubs/Hobby 26 15,463 9 5,102 Trade 51 31,486 14 3,672 • Sports, equine, state government, and corporate Education 35 46,770 13 3,405 are the largest group demand segments. Government 26 12,082 8 3,305 Other 154 76,676 58 15,755 Total 698 448,915 302 120,023 Source: VisitLEX Fig. 15

VisitLEX | Mary Quinn Ramer, President | 859-233-1221 | [email protected]

Page 5 of 7 Hotel Developer’s Toolkit for Lexington, Kentucky

Visitor Profile

Income Age • Lexington visitors are typically older – more than half (53.1%) are between the ages of 45 and 64.

• Incomes of Lexington visitors are typically high with 67.2% earning more than $75,000.

• The majority of visitors to Lexington (79.4%) Annual Visitation ALOS stay multiple nights – only 20.6% stay one night.

• Repeat visitation is a hallmark of Lexington tourism with the majority of visitors (57.9%) returning to Lexington two times or more during the course of a year.

Source: 2017 UK Study Fig. 16

Destination Competition

Convention Center • Lexington currently has four hotels with a total Meeting and Meeting Rooms Exhibition Space Ballrooms Within 5 Blocks of 861 rooms within five blocks of the Convention Number Total SF Number Total SF Number Total SF Hotels Rooms Lexington, KY 18 40,040 3 66,000 3 17,070 4 861 Lexington Convention Center. Grand Rapids, MI 26 32,000 3 162,000 4 40,000 6 1,575 Kansas City, MO 45 118,000 5 388,800 4 46,400 6 1,993 Chattanooga, TN 21 25,580 4 100,800 6 18,360 6 1,304 • Among similar cities with comparable Louisville, KY 47 58,924 5 192,768 5 40,256 16 5,212 convention centers, Lexington currently has Covington, KY 10 12,760 2 46,200 5 22,800 3 718 fewer hotels and fewer hotel rooms within close Source: Individual convention centers Fig. 17 proximity to the convention center.

VisitLEX | Mary Quinn Ramer, President | 859-233-1221 | [email protected]

Page 6 of 7