Hilton Owners Conference 2010

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Eunice Williams
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1 Hilton Owners Conference 2010 Mark Lomanno President Smith Travel Research / STR Global

2 Global Overview U.S. Performance Chain Scales Group/Transient Pipeline Forecast/Takeaways Today s Agenda

3 Positive Occupancy Growth around the Globe... Canada - 2.1% -7.6% 2.9% USA -4.6% -8.8% 5.0% Caribbean -3.9% -4.1% 1.3% Mexico -2.0% -16.1% 10.1% Europe -3.6% -6.2% 5.4% ME & A 0.7% -10.9% -0.5% Occupancy % Change Full Year 2008, 2009, August YTD 2010 Asia Pacific -7.2% -6.9% 11.6% 2010 STR Global Limited

4 ADR Increases everywhere but USA and Mexico.... Canada C$ 3.1% -5.1% 2.4% USA $ 2.7% -8.7% -1.0% Caribbean $ -10.2% -13.5% 4.6% Mexico P$ 5.2% -0.2% -9.7% Europe -1.4% -11.2% 2.9% ME & A $ 16.2% -2.7% 3.6 % Asia Pacific $ 9.5% -13.5% 10.3% ADR % Change Full Year 2008, 2009, August YTD STR Global Limited

5 Global RevPAR Recovers Primarily Occupancy Driven Canada C$ 0.9% -12.3% 5.3% USA $ -1.9% -16.7% 4.0% Caribbean $ -14.4% -17.1% 6.0% Mexico P$ 2.9% -16.1% -0.5% Europe -4.9% -16.7% 8.4% ME & A $ 17.1% -13.3% 3.1% Asia Pacific $ 1.6% -19.4% 23.1% RevPAR % Change Full Year 2008, 2009, August YTD STR Global Limited

6 Strong Demand Rebound Supply Slowing 4.3% % Supply % Change Demand % Change -4.7% % Total United States: Twelve Month Moving Average 1989 thru August 2010

7 Total United States Monthly Room Demand Seasonally Adjusted 1998 to August

8 10.0 ADR Declines Accelerate In Each Downturn % -5.0 ADR % Change Demand % Change -4.7% Total United States: Twelve Month Moving Average 1989 thru August %

9 Total United States ADR Seasonally Adjusted 1998 to August Seas Adj $ Sep $86.59 Oct 2000 $86.79 Oct

10 Absolute ADR Will Not Recover for At Least 2 Years Months 100 -$ Months -$ Total United States: ADR Twelve Month Moving Average 2000 August 2010

11 Total United States RevPAR Seasonally Adjusted 1998 to August $55.29 Nov 2000 $55.67 Mar

12 U.S. Chain Scales

13 STR Chain Scales Selected chains from each segment Luxury Conrad, Waldorf Astoria, Four Seasons, Ritz Carlton Upper Upscale Hilton, Embassy, Hyatt, Marriott, Kimpton Upscale Homewood, Doubletree, Hilton Garden Inn, Hyatt Place, aloft Mid with F&B Best Western, Holiday Inn, Ramada, Quality Inn Mid no F&B Hampton Inn, HI Express, Country Inn & Suites Economy Econolodge, Red Roof, Days Inn

14 U.S. Chain Scales Supply/Demand Percent Change August 2010 YTD Supply Demand Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy

15 Total United States Rooms Under Construction by Scale Thousands August % = Upscale & Mid w/o F&B Luxury Upper Upscale Upscale Mid w F&B Mid w/o F&B Economy Unaffiliated Source: STR / Dodge Construction Pipeline

16 15 U.S. Chain Scales Occupancy/ADR Percent Change August 2010 YTD Occupancy ADR Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy

17 Group vs. Transient Performance Transient Customer: Third party, rack rate, government rate. Group Customer: Rooms booked in blocks of 10 or more.

18 Transient Occupancy is back Jan Mar May Jul Sep Nov U.S. Upper Tier Hotels 2010 data through August Upper Tier = Luxury, Upper Upscale Chains and Upper Tier Independents

19 .... But Transient ADR is not $195 $185 $175 $165 $155 $145 $135 $ Jan Mar May Jul Sep Nov U.S. Upper Tier Hotels 2010 data through August Upper Tier = Luxury, Upper Upscale Chains and Upper Tier Independents

20 Group Occupancy Below Peak 2007 Levels Jan Mar May Jul Sep Nov U.S. Upper Tier Hotels 2010 data through August Upper Tier = Luxury, Upper Upscale Chains and Upper Tier Independents

21 ... And Group ADR Below Depressed 2009 Levels $175 $165 $155 $145 $135 $ Jan Mar May Jul Sep Nov U.S. Upper Tier Hotels 2010 data through August Upper Tier = Luxury, Upper Upscale Chains and Upper Tier Independents

22 Low Transient Rate will hold Group Rate Hostage $120 $115 $110 $105 $100 $95 $90 $85 $80 $75 $70 Transient Group US Transient vs. Group Monthly ADR ($) - Jan 2003 August 2010

23 Industry Forecast

24 Active Pipeline is Emptying Phase August 2010 August 2009 Difference % Change In Construction 58, ,471-71, % Final Planning 64,317 70,811-6, % Planning 237, ,239-36, % Active Pipeline 360, , , % Pre-Planning 96, ,986-18, % Total 456, , , % U.S. Active Development Pipeline - Rooms Change From Last Year

25 Total United States Key Performance Indicators Percent Change Full Year 2009 Actual & 2010 / 2011 Forecast F 2011 F Supply Demand Occ ADR RevPAR

26 Total United States Occupancy Percent P P 2011P

27 Total United States Average Daily Rate P $125 $100 $86.25 $91.05 $97.96 $ $ $97.87 $97.74 $ $75 $ P 2011P

28 Total United States Chain Scale Key Performance Indicator Outlook 2010F by Chain Scale Chain Scale Occupancy (% chg) 2010 Year End Outlook ADR (% chg) RevPAR (%chg) Luxury Upper Upscale Upscale Midscale w/ F&B Midscale w/o F&B Economy Independent

29 Total United States Chain Scale Key Performance Indicator Outlook 2011F by Chain Scale Chain Scale Occupancy (% chg) 2011 Year End Outlook ADR (% chg) RevPAR (%chg) Luxury Upper Upscale Upscale Midscale w/ F&B Midscale w/o F&B Economy Independent

30 2010 Year End RevPAR Forecast -10% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20% Houston Dallas Anaheim-Santa Ana Boston Nashville Atlanta Denver Norfolk-Virginia Beach Chicago New Orleans Oahu Island Detroit New York Orlando Philadelphia Phoenix San Diego St Louis Los Angeles-Long Beach Miami-Hialeah Minneapolis-St Paul San Francisco-San Mateo Seattle Tampa-St Petersburg Washington, DC

31 2011 Year End RevPAR Forecast -10% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20% Miami-Hialeah Boston Anaheim-Santa Ana Orlando Denver Atlanta Phoenix Los Angeles-Long Beach Nashville Oahu Island San Diego San Francisco-San Mateo Washington DC Chicago Dallas Detroit Houston Minneapolis-St Paul New Orleans New York Norfolk-Virginia Beach Philadelphia Seattle St Louis Tampa-St Petersburg

32 2010 Year End revpar Forecast -10% to -15% -10% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20% 20% + Copenhagen Athens Dublin Istanbul Birmingham Berlin Dusseldorf Munich Glasgow Milan Brussels Cologne Frankfurt Stuttgart Leeds Reg. UK Amsterdam Edinburgh Malmo Reg. UK Up Up Budapest Heathrow Manchester Reg. UK up Gatwick London Moscow Reg. UK mid Hamburg London Lux Oslo Lisbon London Up Up London Up London Mid Newcastle Prague Reg. UK Lux Madrid Paris Stockholm Vienna Warsaw Rome (local currency, except where noted)

33 2011 Year End revpar Forecast -10% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15% to 20% 20% + Munich Berlin Amsterdam Budapest Dusseldorf Rome Moscow Birmingham Athens Copenhagen Madrid Prague Frankfurt Brussels Dublin Milan Heathrow Cologne Edinburgh London Up Up Glasgow Gatwick London Up Hamburg London Mid Newcastle Istanbul Malmo Stockholm Leeds Oslo Vienna Lisbon Reg. UK Lux London Reg. UK Mid London Lux Warsaw Manchester Paris Reg. UK Reg. UK Up Up Reg. UK Up Stuttgart (local currency, except where noted)

34 Takeaways Value is King Performance trough likely past Supply growth slowing Demand improving Pricing conditions improving slowly Second Half 2010 improvement into 2011 Performance reset dig out of the hole

35 Thank you. Click on Industry Presentations

Fact sheet DTZ Fair Value Index TM methodology

Fact sheet DTZ Fair Value Index TM methodology DTZ Fair Value Index TM launched to measure investor opportunity in world s commercial property markets First ever forward-looking commercial property value