Hotel InduSTRy Overview

Hotel InduSTRy Overview Brittany Baldwin CSGP, CHIA Director of Business Development, Destinations DMAI Webinar October 7, 2014

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5 Things to Know.. 1. Industry Pulse from 30,000 ft. 2. Group Demand Comeback? 3. Best & Worst Market Performance 4. Pipeline Growth 5. Where Are We Headed?

1 U.S. Pulse - Positive So Far

U.S. Records Set in 2013! Most Rooms Available Most Rooms Sold Highest Rooms Revenue Highest ADR ($110) Highest RevPAR ($70) Full Year 2013

May 2014 RevPAR Growth 10%

May 2014 RevPAR Growth 10% Highest May of any on record ever!

June 2014 Occupancy 71.7%

June 2014 Occupancy 71.7% Highest June occupancy this century!

July 2014: Most Rooms Sold Ever! 113 Million

August 2014 YTD: Strong Demand Drives Very Strong RevPAR % Change Room Supply* 0.8% Room Demand* 4.3% Occupancy 66% 3.4% ADR* $115 4.4% RevPAR* $76 8.0% Room Revenue* 8.9% August 2014 YTD, Total US Results * All Time High for First 8Months

Demand Growth Accelerates Again. Smooth Sailing Ahead! 8 8.0% 4 3.5% 0-0.9% -4 Supply % Change - 4.7% Demand % Change -8 1990 2000 2010-6.9% Total U.S., Supply & Demand % Change, 12 MMA 1/1990 8/2014

Steady ADR Growth As Room Demand Growth Continues 6.8% 7.5% 5 4.1% 0-5 Demand % Change ADR % Change -4.5% -10 1990 2000 2010-8.7% Total U.S., ADR & Demand % Change, 12 MMA 1/1990 8/2014

2 Group Demand Comeback? Group Transient Contract

2 Group Demand Comeback? Group Transient Contract Segmentation

2 Group Demand Comeback? Group Transient Contract Segmentation

Total U.S.: Transient Occupancy Share Increases 2005 2013 57% 43% Group Transient 64% 36% Transient and Group Occupancy as Share of Total OCC, 2005 and 2013 (Share does not include contract)

Transient Continues To Grow Share of Occupancy 70% Group mix Trans Mix 60% 50% 40% 30% 2005 2007 2009 2011 2013 U.S. Transient and Group Occupancy Mix of Total OCC 2005 thru August 2014

Group Demand Is Roaring Back 5% 4% 3% 2% 1% Demand % Change ADR % Change *2013 Easter Comp -1% -2% 2012 2013 2014 Group Demand and ADR % Change, 12 MMA, 1/2012 8/2014

As of July 2014 1.8 million more group rooms sold than in the prior 12 months

August 2014 Group ADR 4.1% Highest Monthly Group Rate Growth This Year

What Do Meeting Planners Say?

Relative to Previous Years, was Attendance for your Largest Meeting Up Unchanged Down 46% 35% 42% 36% 46% 38% 19% 22% 16% Overall Association Corporate DestinationMAP 2013 Vol. 1; 40 North American Meeting Mkts; Largest meeting = 300+ attendees

DestinationMAP 2013 Vol. 1; 40 North American Meeting Mkts

What Planners Consider Very Important in Meeting Site Selection Good hotels Food and lodging costs Travel costs to location Convenient airline service Easy for delegates to get to 87% 81% 81% 81% 80% Good value for the money Security/crime rate Clean/attractive city Number of hotel rooms available Willing to make financial/other concessions Attractiveness of conference hotels Good restaurants 73% 66% 64% 64% 62% 62% 57% DestinationMAP 2013 Vol. 1; 40 North American Meeting Mkts; Selection from 26 Characteristics

Wi-Fi Required for Largest Meeting Sees Exponential Growth 94% 46% 57% 2009 2011 2013 DestinationMAP 2013 Vol. 1; 40 North Am. Meeting Mkts; Largest =300+ attendees; Last 12 months

Very Likely Deterrents for Destination/City Site Selection 94% 89% 85% 61% 56% 51% 45% 44% 27% 20% DestinationMAP 2013 Vol. 1; 40 North American Meeting Mkts; Selection from 22 Characteristics

High and Low Perception Ratings for 2013 DestinationMAP 2013 Vol. 1; 40 North American Meeting Mkts

3 U.S. Market Performance

Highest Growth Mkts Market August 2014 YTD RevPAR: RevPAR % Change Lowest Growth Mkts Market RevPAR % Change Nashville, TN 18.9 Maui Island, HI 1.9 Augusta, GA-SC 18.3 Central New Jersey 1.6 Denver, CO 16.5 Buffalo, NY 1.6 San Jose-Santa Cruz, CA 14.9 Connecticut Area 1.4 Fort Myers, FL 14.9 Oklahoma City, OK 1.3 Oakland, CA 14.6 New Jersey Shore 0.4 Sarasota-Bradenton, FL 14.3 Texas South 0 Las Vegas, NV 14.2 Long Island -1.3 Memphis, TN-AR-MS 14.1 North Dakota -1.7 Wyoming 13.6 Rochester, NY -2.7

Highest Growth Mkts Market August 2014 YTD ADR: ADR % Change Lowest Growth Mkts Market ADR % Change Nashville, TN 13.1 New York State 1.3 San Jose-Santa Cruz, CA 12.5 Texas South 1.3 San Francisco/San Mateo, CA 11.5 Milwaukee, WI 1.2 Florida Keys 10.5 California North Central 0.9 Oakland, CA 10.1 Philadelphia, PA-NJ 0.7 Denver, CO 8.4 Maryland Area 0.5 Seattle, WA 8.4 Harrisburg, PA -0.1 Portland, OR 7.7 Washington, DC-MD-VA -0.6 Boston, MA 7.5 North Dakota -1.3 Los Angeles-Long Beach, CA 7.5 Rochester, NY -1.8

Highest / Lowest YTD Rate Growth Top 25 Mkts Market OCC % ADR % Change Nashville, TN 73.0 13.1 San Francisco/San Mateo, CA 84.5 11.5 Denver, CO 77.3 8.4 Seattle, WA 77.6 8.4 Boston, MA 76.1 7.5 New York, NY 84.1 2.2 Norfolk/Virginia Beach, VA 57.8 2.2 Chicago, IL 69.5 2.0 New Orleans, LA 69.6 1.9 Philadelphia, PA-NJ 68.9 0.7 Washington, DC-MD-VA 70.6-0.6 August 2014 YTD ADR % Change for Top 25 markets

Highest / Lowest YTD Rate Growth Secondary Mkts Market OCC % ADR % Change San Jose/Santa Cruz, CA 77.0 12.5 Oakland, CA 77.8 10.1 Portland, OR 73.6 7.7 Austin, TX 73.8 6.9 Fort Lauderdale, FL 79.9 6.5 Pittsburgh, PA 68.8 3.3 San Antonio, TX 67.3 2.8 Salt Lake City/Ogden, UT 68.2 2.7 Richmond/Petersburg, VA 61.6 2.1 Baltimore, MD 69.0 1.9 August 2014 YTD ADR % Change in Secondary Markets (26 50)

4 Pipeline Accelerates

STR Pipeline Phases Under Contract In Construction Vertical construction on the physical building has begun. (This does not include construction on any sub-grade structures.) Final Planning construction will begin within the next 12 months. Planning construction will begin in more than 13 months. Unconfirmed (formerly Pre-Planning) - Potential projects that remain unconfirmed at this time.

US Pipeline: Construction Accelerates, But Is Still Muted Phase 2014 2013 % Change In Construction 108 78 38% Final Planning 123 125-1% Planning 159 141 12% Under Contract 391 345 14% Total US Pipeline, by Phase, 000s Rooms, August 2014 and 2013

Construction In Top 26 Markets: 16 With 2%+ Of Supply Market Rooms U/C % Of Existing Las Vegas, NV 0.0% Norfolk-Virginia Beach, VA 104 0.3% Tampa-St Petersburg, FL 211 0.5% Orlando, FL 595 0.5% Oahu Island, HI 144 0.5% San Francisco/San Mateo, CA 333 0.6% St Louis, MO-IL 255 0.7% Atlanta, GA 852 0.9% Philadelphia, PA-NJ 521 1.1% Detroit, MI 587 1.4% Phoenix, AZ 1,240 2.0% Chicago, IL 2,252 2.1% New Orleans, LA 826 2.2% Minneapolis-St Paul, MN-WI 850 2.2% Los Angeles-Long Beach, CA 2,187 2.2% San Diego, CA 1,381 2.3% Washington, DC-MD-VA 2,619 2.4% Dallas, TX 1,974 2.5% Boston, MA 1,379 2.7% Denver, CO 1,250 2.9% Nashville, TN 1,157 3.1% Anaheim-Santa Ana, CA 2,251 4.1% Seattle, WA 1,918 4.7% Miami-Hialeah, FL 2,652 5.4% Houston, TX 4,622 6.1% New York, NY 13,194 11.8% US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, August 2014

Under Construction Rooms Mostly In Limited Service Segments 41.3 31.7 67% 11.0 15.2 3.6 4.9 1.1 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated US Pipeline, Rooms Under Construction, 000s Rooms, by Scale, August 2014

5 Where Are We Headed?

Positive RevPAR Growth For The Foreseeable Future 10 9% 8.6% 5 0 112 Months 65 Months 46 Mo. -5-2.6% -10-10.1% -15-16.8% -20 1990 2000 2010 Total U.S., RevPAR % Change, 12 MMA 1/1990 8/2014

U.S. Outlook 2014 Forecast 2015 Forecast Supply 1.0% 1.3% Demand 3.6% 2.1% Occupancy 2.6% 0.7% ADR 4.2% 4.4% RevPAR 6.9% 5.2% Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2014 2015 (As of August 12, 2014)

2014 Year End Outlook U.S. Chain Scales Occupancy (% chg) ADR (% chg) RevPAR (%chg) Luxury -0.1% 4.6% 4.5% Upper Upscale 2.0% 4.4% 6.5% Upscale 2.0% 4.4% 6.5% Upper Midscale 2.6% 3.3% 6.0% Midscale 3.0% 3.5% 6.6% Economy 2.9% 3.9% 6.8% Independent 2.8% 4.6% 7.5% Total United States 2.6% 4.2% 6.9% As of August 12 th, 2014

2014 Year End RevPAR Forecast Top 25 US Markets, August 2014 Forecast (Markets sorted alphabetically) -5% to 0% 0% to 5% 5% to 10% 10% to 15% 15%+ Chicago Anaheim Atlanta Nashville New Orleans Detroit Boston New York Houston Dallas Norfolk Los Angeles Denver Philadelphia Miami San Francisco Washington Minneapolis Seattle Oahu Tampa Orlando Phoenix San Diego St. Louis

2015 Year End RevPAR Forecast Top 25 US Markets, August 2014 Forecast (Markets sorted alphabetically) -5% to 0% 0% to 5% 5% to 10% 10% to 15% New York Atlanta Anaheim Nashville New Orleans Boston Norfolk Chicago Philadelphia Dallas Washington Denver Detroit Houston Los Angeles Miami Minneapolis Oahu Orlando Phoenix San Diego San Francisco Seattle St. Louis Tampa

To Recap Life is Great! Fish While the Fishing is Good Demand Growth: Strong & Steady Group Demand: Still Wild Card Supply growth: Not an Issue, yet YE RevPAR Forecast: Rosy!

@BrittanyB_STR DMAI Blog Content

Questions: bbaldwin@str.com Slides: www.hotelnewsnow.com Thank you!