Midscale – Fairfield Inn/Suites, Holiday Inn, Clarion, Hampton Inn/Suites, Best Western Plus, Country Inn & Suites
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U.S. Hotel Industry Performance HBI Annual Conference February 17, 2017 Jeff Higley VP/Editorial Director [email protected] @jeffhigley1 © 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 www.hotelnewsnow.com Data Dashboard>View All Data Presentations © 2016 STR. All Rights Reserved. 2 About STR – The Data © 2016 STR. All Rights Reserved. 3 Total U.S. Review © 2016 STR. All Rights Reserved. 4 2016: Incredibly Average % Change 29 Yr. Avg. Change • Room Supply 1.6% +1.8% • Room Demand 1.7% +2.0% • Occupancy 66.7% 0.1% +0.2% • A.D.R. $124 3.1% +3.1% • RevPAR $83 3.2% +3.3% • Room Revenue 4.8% +5.2% December 2016 YTD, Total US Results © 2016 STR. All Rights Reserved. 5 US 2016 RevPAR: 3 Markets Dragged US Results Total US YTD: +3.2% NYC: - 1.8% Miami: - 5.5% Houston: -12.4% Total US excluding NYC, Miami & Houston: +3.8% *RevPAR % Change December 2016 YTD © 2016 STR. All Rights Reserved. 6 Demand Growth Slows; Supply Growth Increases To 1.6% 8 7.7 4 0 -0.8 -4 Supply % Change -4.7 Demand % Change -7.1 -8 1990 2000 2010 Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 12/2016 © 2016 STR. All Rights Reserved. 7 Occupancy Growth Rapidly Approaching 0% 7.5 6.8 5 3.1 0.1 0 -3.4 -5 Occ % Change ADR % Change -6.7 -10 -9.7 1990 2000 2010 Total U.S., ADR & OCC % Change, 12 MMA 1/1990 – 12/2016 © 2016 STR. All Rights Reserved. 8 Declining Occupancies & Rising ADRs: Not Unprecedented 8 OCC % Change 6 ADR % Change 4 2 42 Months 0 24 Months -2 -4 1990 1992 1994 1996 1998 Total U.S., ADR & OCC % Change, 12 MMA 1/1990 – 12/1999 © 2016 STR. All Rights Reserved. 9 RevPAR Growth: Slowing Down After 6 Years Of Growth 15 10 5 0 80 Months 31 Mo 56 Months 82 Months -5 -10 -15 -20 -25 1990 2000 2010 Total U.S., RevPAR % Change, 1/1990 – 12/2016 © 2016 STR. All Rights Reserved. 10 RevPAR: Erratic Monthly Numbers, But Trend Is Slowing 10 Monthly 12MMA 8 6 4 2 0 2015 2016 *Total U.S., RevPAR % Change by month and 12 MMA, 1/2015 – 12/2016 © 2016 STR. All Rights Reserved. 11 Chain Scale & Location Review Year-end 2016 © 2016 STR. All Rights Reserved. 12 2016 STR Chain Scales: Sample of brands • Luxury – Fairmont, Four Seasons, Ritz Carlton, JW Marriott • Upper Upscale – Sheraton, Embassy Suites, Hyatt, Marriott • Upscale – Radisson, Hilton Garden Inn, Residence Inn, Springhill Suites, Homewood Suites, Courtyard, Best Western Premier • Upper Midscale – Fairfield Inn/Suites, Holiday Inn, Clarion, Hampton Inn/Suites, Best Western Plus, Country Inn & Suites • Midscale – Best Western, Candlewood Suites, Quality Inn/Suites, La Quinta, Sleep Inn, Red Lion • Economy – Americas Best Value Inn, Country Hearth Inn, Jameson Inn, Extended Stay America, Motel 6, Red Roof, Days Inn, Microtel • Complete list: www.HotelNewsNow.com/chainscales 13 Scales: Supply Growth Outpaces Demand Growth For Most 5.6 Supply % Change 5.0 Demand % Change 2.8 2.4 2.1 1.9 1.6 1.4 1.2 1.1 1.0 0.3 0.2 -0.1 Luxury Upper Upscale Upper Midscale Economy Independents Upscale Midscale *Supply / Demand % Change, by Scale, December 2016 YTD © 2016 STR. All Rights Reserved. 14 High End Hotels Still Very Busy (But A Little Less So) 75.2 74.9 74.2 74.3 73.8 74.3 2016 2015 67.4 67.5 62.3 61.8 59.4 59.4 57.9 58.1 Luxury Upper Upscale Upper Midscale Economy Independents Upscale Midscale *OCC %, by Scale, December YTD 2016 & 2015 © 2016 STR. All Rights Reserved. 15 Locations: Urban Leads Supply & Demand 5 Supply Demand 4 2.9 3.0 3 1.8 1.6 2 1.4 1.5 1.4 1.5 1.0 1 0.8 0.9 0.4 0 -1 Urban Suburban Airport Interstate Resort Small Metro *Supply / Demand % Change, by Location, December 2016 YTD © 2016 STR. All Rights Reserved. 16 Locations: What’s Up With Interstate Occupancy? 4 3.7 3.4 Occupancy ADR 2.9 3 2.8 1.9 2.1 2 0.9 1 0.1 0.2 0.1 0 -0.2 -1 -1.1 -2 Urban Suburban Airport Interstate Resort Small Metro Occupancy / ADR Percent Change; December 2016 YTD © 2016 STR. All Rights Reserved. 17 Locations: Rev, Rev, Revved Up Revenue Across Board 6 5.4 RevPAR Room Revenue 5.0 4.7 5 4.5 4.2 4 3.9 3.8 3.3 3.1 3 2.5 2.1 2 0.9 1 0 Urban Suburban Airport Interstate Resort Small Metro RevPAR/ Room Revenue Percent Change; December 2016 YTD © 2016 STR. All Rights Reserved. 18 Segmentation © 2016 STR. All Rights Reserved. 19 Transient: ADR Growth Slowing Despite High Occupancy 6% 5% 4% 3% 2% Demand % Change 1% ADR % Change 0% Jan-14 Jan-15 Jan-16 *Transient Demand and ADR % Change, 12 MMA, 1/2014 – 12/2016 © 2016 STR. All Rights Reserved. 20 Group Performance: No Demand Growth To Speak Of 6% Demand % Change 5% ADR % Change 4% 3% 2% Jewish Holiday Shift 1% -1% -2% Jan-14 Jan-15 Jan-16 *Group Demand and ADR % Change, 12 MMA, 1/2014 – 12/2016 © 2016 STR. All Rights Reserved. 21 Markets © 2016 STR. All Rights Reserved. 22 New Supply Affects NYC, Houston, Miami Market OCC % ADR % Change Los Angeles/Long Beach, CA 81.3 8.5 Nashville, TN 74.8 6.0 Atlanta, GA 69.9 5.8 Tampa/St Petersburg, FL 71.6 5.6 Denver, CO 73.7 5.5 Phoenix, AZ 67.2 1.8 Chicago, IL 69.1 1.4 New Orleans, LA 68.8 0.0 New York, NY 85.9 -2.5 Miami/Hialeah, FL 75.9 -2.9 Houston, TX 62.3 -3.6 * December 2016 YTD ADR % Change in Top 25: 5 Best / 5 Worst Performing ADR % Markets © 2016 STR. All Rights Reserved. 23 NYC RevPAR: Mostly Bad. New Supply Looming Large 8.8 3.2 3.7 -1.5 -1.7 -2.4 -4.0 -3.7 -4.5 -4.9 -6.5 -7.5 Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec * NYC RevPAR % Change, by Month, 12/2015 – 12/2016 © 2016 STR. All Rights Reserved. 24 Houston: As Oil Goes, So Does Demand $/gal 8.0 % $100 6.0 $90 4.0 $80 2.0 $70 0.0 -2.0 $60 -4.0 $50 -6.0 Crude Oil Futures Price / Barrel (LHS) $40 -8.0 Demand % Change (RHS) $30 -10.0 2014 2015 2016 *Monthly Oil price Future / Barrel vs. Houston, TX Room Demand % Change 1/2014 – 12/2016 http://www.investing.com/commodities/crude-oil © 2016 STR. All Rights Reserved. 25 Pipeline © 2016 STR. All Rights Reserved. 26 Pipeline: Is This When Overbuilding Happened? Phase 2016 2015 % Change In Construction 187 140 33% Final Planning 198 180 10% Planning 174 147 17% Under Contract 560 469 19% *Total US Pipeline, by Phase, ‘000s Rooms, December 2015 and 2016 © 2016 STR. All Rights Reserved. 27 U/C Pipeline Is Growing But Still Below Prior Peak 250 200 24K 150 High: Dec ‘07 100 Dec‘16 Thousands 211K 187K 50 Low: May ‘11 0 50K 2006 2008 2010 2012 2014 2016 *Total US Pipeline; Rooms In Construction, in ‘000s; Jan 2006 – December 2016 © 2016 STR. All Rights Reserved. 28 Limited Service Construction Is The Name Of The Game 61.6 60.0 65% 23.6 22.8 7.5 8.8 2.6 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated *US Pipeline, Rooms Under Construction , ‘000s Rooms, by Scale, December 2016 © 2016 STR. All Rights Reserved. 29 Construction In Top 26 Markets: 23 With 2%+ Of Supply Market Rooms U/C % Of Existing Norfolk/Virginia Beach, VA 456 1% Orlando, FL 1,552 1% Oahu Island, HI 410 1% Minneapolis/St Paul, MN-WI 763 2% St Louis, MO-IL 876 2% Las Vegas, NV 3,950 2% Chicago, IL 3,212 3% New Orleans, LA 1,211 3% Phoenix, AZ 1,962 3% San Francisco/San Mateo, CA 1,825 4% Atlanta, GA 3,421 4% Washington, DC-MD-VA 4,069 4% Detroit, MI 1,662 4% San Diego, CA 2,371 4% Anaheim/Santa Ana, CA 2,533 4% Tampa/St Petersburg, FL 2,114 5% Boston, MA 2,764 5% Houston, TX 4,664 5% Los Angeles/Long Beach, CA 6,069 6% Philadelphia, PA-NJ 3,004 6% Miami/Hialeah, FL 3,579 7% Nashville, TN 3,401 9% Dallas, TX 7,101 9% Denver, CO 4,596 10% Seattle, WA 5,219 12% New York, NY 15,333 13% 30 *US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, December 2016 © 2016 STR. All Rights Reserved. Top 26 Markets Have 47% Of U/C Rooms In Construction Final Planning 121.5 Planning 105.0 98.8 88.1 77.2 69.5 Top 26 Markets Rest of the US *US Pipeline, Rooms (‘000s), Top 26 Markets vs. All Other Markets, December 2016 © 2016 STR. All Rights Reserved. 31 YE 2016 Transaction Almanac © 2016 STR.