Hotel Developer’s Toolkit for Lexington, Kentucky
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 City Center 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 Keeneland 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.) Blue Grass Airport 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 American Airlines 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 Rupp Arena. 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]
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