New York City Hotel Marketview

www.cbre.com/research Autumn 2012

highs as office buildings have been All major hotel metrics have shown acquired, renovated and repositioned to improvement over the first half of 2012, absorb a growing technology and media especially in the Lower Manhattan and Quick Stats: YTD June 2012 industry. This influx of new tenants has Change from 2011 Times Square markets, which have bolstered commercial demand in the Current Year exhibited year-over-year RevPAR growth Room Supply 79,351 area. International travel has also of 9.7% and 7.55%, respectively, Occupied Rooms 66,336 continued to grow at record pace despite Occupancy 83.60% compared with mid-year 2011. City-wide economic uncertainty in Europe and ADR $255.90 RevPAR has grown 6.95%, amid RevPAR $215.90 slower-than-expected growth in China. increases in supply in several The World Trade Center area has had its neighborhoods, speaking to the City’s impact on demand, as tourists as well as potential to absorb new product as it local residents have crowded the area comes to market. since the opening of the National Market demand has continued to grow September 11 Memorial Plaza. The in 2012 as a result of growing following chart illustrates the historical neighborhoods and office markets, as ADR, occupancy and RevPAR in well as continued growth in U.S. and Manhattan for the first two quarters of international tourism. The Midtown South the last seven years. office market has experienced leasing

velocity that has surpassed historical MANHATTAN ADR, REVPAR AND OCCUPANCY

350 95 A O D 300 90 C R C 250 U 85 For more information regarding & P 200 A the MarketView, please contact: R 80 N E 150 C V Y 75 P 100 Edward Eschmann, MAI A R Director 50 70 Hospitality and Gaming Group T. 212 207 6092 0 65

F. 212 207 6169 2006 2007 2008 2009 2010 2011 2012 [email protected] ADR RevPAR Occupancy Source: Smith Travel Research, CBRE Econometric Advisors Roger Plourde Associate Hospitality and Gaming Group T. 212 207 6104 F. 212 207 6169 [email protected]

CBRE One Penn Plaza, Suite 1835 New York, NY 10119

The also isin

scale

$116 - is , as, the

and million.

months.

is planned

$734,749 $420,290 $787,879 $439,583 2012and beyond, with Price Per Room

capitalized sponsors that -

the HotelLola inJuly for

Sale Price Sale HNAProperty Holdings, ofChina ,

luxury product $380,600,000 $116,000,000 $130,000,000 $211,000,000

with plans rebrand to the hotel as a JW

518 276 165 480 acquired ,

Rooms orecasts, developers havebeen willing to in acquisition price to $380.8 - and of visitors in and2010 2011, surpassing all

InJanuary, ,

RevPAR has continued grow, to speaking to the , while Langham Hotels,of Hong Kong, has been . In addition,

Date Jul-12 Aug-12 Jan-12 Jan-12 room property room - dated.

. sorbed, while a record number 2003

somewhat

hosted by 2015. Theby graph below serves to underscore the vitality and growth 3 million, bringing thel al

been ab

. s

er key for the 518 er key the for p

and

visitors 807 for$32,350,000, or $505,469 key per

for $130 $787,879million, or key per , or $699, or

a controlling stake of the iconic Plaza Hotel and Plaza retail $570 million for NewYork City hotel

million

Property Name Jumeirah Essex House (JW Marrott Essex House New York) York) New Grove & (King Lola Hotel Cassa Hotel Novotel Times Square inBrooklyn .5

Manhattan Hotel Transactions Hotel Manhattan Compiled by CBRE , al to reach 55 million at a cost of approximately $18 t prominent t buyersof hotel assets in 2012 have been foreign buyers.The Sahara Group, of India,

upplygrowth has picked paceup the City’s go that New York City tourism has experienced since resilienceof the Manhattan hotel market and the opportunity for further development. well with deals Financial financing institutions are construction currently considering previous high watermarks in both years. Tourismisexpected to continue to grow through reported to bein contract toacquire the Dream Hotel Downtown. acquired the Cassa Hotel typically consist of recourse debt with a percentage of the recourse burning off and completion guarantees. Given the historical supply and demand relationships and positive RevPAR f accept theseterms and numerous new hotelprojects have beenplanned areor proposed. Newsupply growth is spreadwidely across several Manhattan neighborhoods, withsome concentration in theareas south and westof Times Square, now known as Times Square South. There is also a push to developnew branded mid actively seeking an acquisition opportunity to expand its brand into Manhattan. product as it has proven successful in several neighborhoods existing Manhattan luxury supply has become In February, King and Grove Hotels, backed by Joseph Chetrit, has also been an active buyer,acquiring the Hotel Williamsburg

Focus on: Tourism on: Focus As depicted below, contract to acquire Future Increases in Supply S Themos Climate Investment million, or $420,290 per key.King and Grove also purchased the Hotel Chelsea in May 2011 for $88 million. Most recently, Strategic Hotels and Resorts acquired the Jumeirah Essex House Central at Park South for a reported $362 Marriott following chart illustrates the recent transactions that have occurred in Manhattan overthe last six MarketView New York City Hotel Autumn 2012

U.S. wide - the inbound

and

51.5 2012

40.3 10.6 2011 -6% 90% 11% -21% -13% 109% 126% 147% 208% 364% Change (in 1,000's) 39 9.7 2010 d over the same time period. period. time same the over d 214 259 376 636 327 533 234 701 2011 37 8.6 1,014 2009 40,300

76 9.5 37.5 270 275 198 305 145 216 151 2008 International 2006 1,169 36,450

8.8 37.1 2007 Domestic 7.3 36.5 2006 6.8 35.8 2005 6.2 33.8 2004 year amid significant increases in supply and continued uncertainty across Ireland U.K. Domestic Japan Mexico France Chinaand Hong Kong Australia VISITORSNEWYORK TO CITY (MILLIONS) Argentina Brazil Visitors by Nation of Origin of Nation by Visitors Source: NYC & Company - apeof international tourism haschanged over the pastfive years. Inbound tourismfrom over 33 4.8 - 364%since 2006 as theBrazilian economy has continued expand. to Tourism from 2003 2012 figureincludes Domesticand International and Source:NYC and Co. * represents a projection by NYC and Co. 0 10 40 30 20 60 50 hotel market has exhibited strong growth in demand and ADR over the course of 2012. City

Manhattan

The Conclusion Asillustrated, the landsc Brazilhas increased Argentina, China and Hong Kong, Australia and France has also double RevPAR increased year The chart below provides a breakdown of international travel New to York City by nation of origin, and illustrates the percentage increase of inbound travel each country has exhibited over the last five years.

and internationaland economies. Tourism has continued increase to and the outlook for U.S. MarketView New York City Hotel Autumn 2012 continues tosee strong growthin demand, hotelmarket

New York City City York New

The

positive.

international travelremains

ADR and RevPAR.