SLOVENIA HOTEL MARKET SENTIMENT SURVEY INTRODUCTION. February 2009

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1 SLOVENIA HOTEL MARKET SENTIMENT SURVEY February 2009 SHARE OF RESPONDENTS INTRODUCTION 35.7% BY STAR CLASSIFICATION 57.1% The Horwath HTL Hotel Market Sentiment Survey for Slovenia has been designed to provide the hotel industry in this country a quick assessment of the market outlook for the coming 12 months. The survey, as part of the global initiative, focuses on the outlook for occupancy, average room rates and total revenue. Five Star Four Star Three star and other 7.1% Hoteliers have also been asked to make comments on the impact of key factors that drive room night growth as well as rate the outlook for each major demand segment. This report summarizes the outcome of the survey, gathered from 14 respondents, which represent 40 percent of total Slovenian hotel sample. 21 percent of them came from Ljubljana and the rest from other destinations. The majority of the contributions were from 3-star and other hotels (57 percent), followed by 4-star (36 percent) and 5-star (7 percent). In the time when the crisis affects the world, it is not surprising to find most markets in South East Europe, including Slovenia, having the same negative assessment of the outlook for However, the following analysis provides some useful information for the different hotel types in Slovenia.

2 SLOVENIA HOTEL MARKET SENTIMENT SURVEY FEBRUARY 2009 PAGE 2 SENTIMENT RANKINGS SENTIMENT RANKINGS By Star Classification Score 1. Three Star and Other Four Star Five Star As a way to measure and compare the results across markets, we have created an index to formulate an overall average sentiment score from all survey questions. Points were assigned to each corresponding response and compounded accordingly. The index utilized a scale of negative 150 to positive 150 in which a score of negative 150 denotes a sentiment of absolute pessimism; a zero score indicates unchanged expectations from the previous year whereas a positive 150 signifies a very optimistic outlook. An average sentiment score of negative 40 clearly indicates that hoteliers across country are expecting major declines in performance in RANKING SCORE KEY Much Worse Worse Same 0 The purpose of creating a sentiment index or score is also to better track changes in market sentiment in future surveys to be conducted by Horwath HTL. The sentiments of hoteliers across all markets have been clearly affected by the global economic crisis, visible from the results. The market sentiment in Slovenia was rather pessimistic with an average score of negative 40. The average national score is by 55 percent lower than the regional average (-25.8) and for 17 percent lower than average global score. The reasoning for this difference between regional and national score is in higher pessimism of Slovenian hoteliers as a consequence of global crisis that is not yet completely visible in the region. Looking to the level of optimism among the hotels of different category, the three star and lower categorized hotels had the highest sentiment score. On the other side, the hoteliers from five star hotels were more pessimistic with the score much bellow national and global average. Better 75.0 Much Better 150.0

3 SLOVENIA HOTEL MARKET SENTIMENT SURVEY FEBRUARY 2009 PAGE 3 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% RATIO OF RESPONSES Occ ADR Rev Much Better Better Same Worse Much Worse 71 percent of the respondents stated that market-wide occupancy performance is going to be worse than 2008 and none of the others that the performance would get better. MARKET PERFORMANCE RANKING 1. Three Star and Others Occ ADR Rev Four Star MARKET PERFORMANCE The first survey question dealt with the contributors outlook on their markets performance in 2009 compared to The index was used to gauge the average scores. In response to expectations on market-wide occupancy performance, 71 percent of the hoteliers replied that matters will get worse and 29 percent stated that there will be no changes. Slovenian hoteliers were the most pessimistic among all hoteliers in the South East Europe since none of them expected better market performance. The majority of hoteliers, except of those from four star hotels, do not expect better market performance in 2009 compared to Less pessimistic were the hoteliers from four star hotels since 40 percent of them thought that the market-wide occupancy will stay the same as in The average market-wide occupancy ranking score for Slovenian hoteliers was negative 64. The hoteliers from 5- and 4-star hotels have the same expectations about ADR performance as for market-wide occupancy. Less pessimistic were only the hoteliers from 3-star and hotels with lower category since they do not expect any major ADR changes in Their opinion was the main reason of higher average ranking score (-54) for ADR performance in The majority or 86 percent of the respondents had bleak sentiments about the market s future revenue performance while merely 14 percent stated that revenue will follow last year s trend. The most optimistic hoteliers were from four star hotels since 20 percent of them responded that the revenue situation will stay the same as in The average market performance sentiment score, by the opinion of the respondents from Slovenia, is Five Star

4 SLOVENIA HOTEL MARKET SENTIMENT SURVEY FEBRUARY 2009 PAGE 4 RATIO OF RESPONSES 100% 90% 80% 70% HOTEL PERFORMANCE The second question asked respondents to estimate the growth or decline in the performance of their hotel for 2009 compared with % 50% 40% 30% 20% 10% 0% Occ ADR Rev -15% plus -10% to -15% -5% to -10% 0% to -5% 0% to +5% +5% to +10% The majority of 71 percent of the hoteliers stated that their hotels will likely suffer a decline in occupancy. Another 57 percent believed that ADR will experience the same fate while 71 percent replied that revenues will follow the same trend. However, 28 percent of the respondents believed that the occupancy in their hotels will improve up to 10 percent. Slovenian hoteliers were more optimistic about ADR since 43 percent of them expect better ADR in 2009 than in Because of this optimism, 30 percent of the respondents believed that the revenues in their hotels will increase for almost 5 percent in % plus Based on the averages of three performance indicators measured for 2009, the hotel performance in the country will decline by almost 6 percent. HOTEL PERFORMANCE RANKING Based on the Slovenian averages, the hotel occupancy will decline in 2009 compared to 2008, by 6.4 percent, ADR by 5 percent and revenue by 6.4 percent. According to star classification, the most concerned of their performance in 2009 were the hoteliers from 4-star hotels where all three hotel performance indicators will decline by 7 percent. For the same period, 5-star hotels have forecasted the average decline of all three indicators by 5 percent while the 3-star hotels and others predicted average decrease for 1.7 percent. The average hotel performance sentiment score, by the opinion of the respondents from Slovenia, is Occ ADR Rev. 1. Three Star and Other Five Star Four Star

5 SLOVENIA HOTEL MARKET SENTIMENT SURVEY FEBRUARY 2009 PAGE 5 RATIO OF RESPONSES 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Stock Market Local Economy Global Economy Very Positive Impact Positive Impact No Impact Negative Impact Very Negative Impact Local Tourism New Supply Global Oil Prices Exchange Rates Global economic growth trends and currency exchange rates are the primary concerns for the hoteliers from Slovenia in FACTORS AFFECTING PERFORMANCE RANKING 1. Global Oil Prices Local Economic Trends Local Tourism Trends New Competitive Supply 5. Local/Global Stock Market 6. Global Economic Growth Trends 7. Currency Exchange Rates FACTORS AFFECTING PERFORMANCE Hoteliers were also asked to gauge their attitude towards seven factors and their influence on the hotels performance in Based on the opinion of hoteliers from Slovenia, the most negative impact on hotel performance have global economic trends since 86 percent responses indicate their negative influence in The second of which the hoteliers were concerned are the exchange rate and stock market performance, which had equal negative response rate of 71 percent. On the other hand, more than 43 percent of hoteliers foresee global oil prices' trend as the most positive factor for the growth of hotel performance. Utilizing the index, all choices registered negative results, indicating that all factors will negatively affect performance. The contributors perceived that the worsening of global economy and currency exchange rate will likely have the most harmful impact on hotel performance (the lowest scores of negative 64 points). All Slovenian regions are concerned with almost all listed factors except with global oil prices. For the hoteliers from 5-star hotels, the local economic and tourism trends are the most relevant factors for declines in The most positive factors for 3-star hoteliers are new competitive supply and global oil prices while the hoteliers from 4-star hotels have neutral opinion about all factors. The average score for all listed factors, by the opinion of the respondents from Slovenia, is

6 SLOVENIA HOTEL MARKET SENTIMENT SURVEY FEBRUARY 2009 PAGE 6 100% 90% 80% 70% 60% 50% RATIO OF RESPONSES MARKET SEGMENT PERFORMANCE The last question dealt with each participant s opinion with regard to primary market demand segments and their expected performance in % 30% 20% The majority of the respondents (52 percent) had negative opinions about the future performance of MICE and Corporate segments. Equal 10% 0% C o r p o r a te L e isu re F IT L e isiu re G ro u p M IC E share of the Slovenian hoteliers (41 percent) stated that the demand from leisure segments will be either negatively harmed or stay the same as in On the other side, only 13 percent of the hoteliers believe that the demand from all primary segments will get better. Much Better Better Same Worse Much Worse 46 percent stated that performance of all segments will get worse, mainly because of the lesser demand from corporate guests MARKET SEGMENT PERFORMANCE 1. Leisure FIT Leisure Group Employing the scoring system to obtain an average score, all segments yielded negative results, indicating that respondents generally think performance across all segments will suffer this year. The participants believe that the leisure segments will be less affected this year as they scored the highest points. All market segments achieved negative scores in all destinations. All hoteliers from 5-star hotels believe that the demand from MICE and corporate segments will get worse. The Leisure FIT segment achieved high positive score from 5-star hoteliers because of their optimistic expectations from this type of demand. MICE segment got the highest but neutral score from 3-star hoteliers, while the demand from corporate guests is of their highest concern. Four star hoteliers have the highest expectations from Leisure Groups since 50 percent of their respondents believe in the equal or better performance of this segment in The average score for the performance of primary segments, by the opinion of the respondents from Slovenia, is MICE Corporate -48.2

7 SLOVENIA HOTEL MARKET SENTIMENT SURVEY FEBRUARY 2009 PAGE 7 CONCLUSIONS Hoteliers in Slovenia generally expect a tough year with respect to overall hotel market situation. The expectations of the hoteliers from this country are more pessimistic than the expectations of an average hotelier questioned in this survey. Market-wide will get worse and the majority of the contributors projected that the average individual property performance in all three measures, room occupancy, average room rates and total revenue will decline in 2009 for 6 percent. The main reason for this is that Slovenian hoteliers expect major declines of revenues in 2009 affected primary by high decrease of demand. Almost all of the seven factors were estimated to have a negative effect on performance but global economic trends and exchange rates were perceived to have the most severe effect. Positive factors, perceived by Slovenian hoteliers, are global oil prices. The most concerns of the hoteliers from this region are related with the decline of demand from corporate and MICE segments in The most pessimistic were the hoteliers from five star hotels that foreseen the majority of declines. Among all primary demand segments heavily affected in 2009, the Leisure FIT segment had the lowest degree of decrease in Other Market Sentiment Reports BY REGION ASEAN Benelux Europe Northeast Asia South East Europe BY COUNTRY Australia Austria Belgium Bulgaria Canada China Croatia Czech Republic France Hungary India Indonesia Italy Japan Macedonia Montenegro Mexico Netherlands Norway Romania Serbia Singapore Slovenia South Africa Spain BY CITY/ DESTINATION Beijing Hong Kong Shanghai Shenzhen

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