Hilton Owners Conference 2010 Mark Lomanno President Smith Travel Research / STR Global
Global Overview U.S. Performance Chain Scales Group/Transient Pipeline Forecast/Takeaways Today s Agenda
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
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 2010 2010 STR Global Limited
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 2010 2010 STR Global Limited
6.0 4.0 Strong Demand Rebound Supply Slowing 4.3% 2.0 0.0 2.5% -2.0-4.0-6.0 Supply % Change Demand % Change -4.7% -8.0-6.9% 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Total United States: Twelve Month Moving Average 1989 thru August 2010
Total United States Monthly Room Demand Seasonally Adjusted 1998 to August 2010 90 85 80 75 70 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
10.0 ADR Declines Accelerate In Each Downturn 5.0 0.0 +0.1% -5.0 ADR % Change Demand % Change -4.7% -10.0 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Total United States: Twelve Month Moving Average 1989 thru August 2010-8.9%
Total United States ADR Seasonally Adjusted 1998 to August 2010 110 100 Seas Adj $107.91 Sep 2008 90 80 $86.59 Oct 2000 $86.79 Oct 2004 70 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Absolute ADR Will Not Recover for At Least 2 Years 110 23 Months 100 -$10.25 90 80 41 Months -$3.70 70 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total United States: ADR Twelve Month Moving Average 2000 August 2010
Total United States RevPAR Seasonally Adjusted 1998 to August 2010 70 60 50 $55.29 Nov 2000 $55.67 Mar 2005 40 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
U.S. Chain Scales
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
U.S. Chain Scales Supply/Demand Percent Change August 2010 YTD 20 15 12.3 15.3 Supply Demand 10 9.5 7.4 8.9 5 0 2.8 2.2-0.2 2.6 4.7 0.5 4.5-5 Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy
Total United States Rooms Under Construction by Scale Thousands August 2010 30 20 60% = Upscale & Mid w/o F&B 14.5 20.4 10 0 8.0 7.6 4.8 1.3 2.0 Luxury Upper Upscale Upscale Mid w F&B Mid w/o F&B Economy Unaffiliated Source: STR / Dodge Construction Pipeline
15 U.S. Chain Scales Occupancy/ADR Percent Change August 2010 YTD 10 9.1 Occupancy ADR 7.0 7.4 5 2.7 4.0 4.0 0 0.2-5 -2.1-2.8-1.6-1.8-4.3-10 Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy
Group vs. Transient Performance Transient Customer: Third party, rack rate, government rate. Group Customer: Rooms booked in blocks of 10 or more.
Transient Occupancy is back.... 50 45 40 35 30 25 2007 2008 2009 2010 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
.... But Transient ADR is not $195 $185 $175 $165 $155 $145 $135 $125 2007 2008 2009 2010 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
Group Occupancy Below Peak 2007 Levels.... 35 30 25 20 15 10 5 0 2007 2008 2009 2010 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
... And Group ADR Below Depressed 2009 Levels $175 $165 $155 $145 $135 $125 2007 2008 2009 2010 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
Low Transient Rate will hold Group Rate Hostage $120 $115 $110 $105 $100 $95 $90 $85 $80 $75 $70 Transient Group 2003 2004 2005 2006 2007 2008 2009 2010 US Transient vs. Group Monthly ADR ($) - Jan 2003 August 2010
Industry Forecast
Active Pipeline is Emptying Phase August 2010 August 2009 Difference % Change In Construction 58,609 130,471-71,862-55.1% Final Planning 64,317 70,811-6,494-9.2% Planning 237,580 274,239-36,659-13.4% Active Pipeline 360,506 475,521-115,015-24.2% Pre-Planning 96,147 114,986-18,839-16.4% Total 456,653 590,507-133,854-22.7% U.S. Active Development Pipeline - Rooms Change From Last Year
Total United States Key Performance Indicators Percent Change Full Year 2009 Actual & 2010 / 2011 Forecast 15 10 5 0 3.0 2.2 1.1 6.6 2009 2010 F 2011 F 2.5 4.4 1.4-0.1 3.9 4.3 5.3-5 -10-6.0-8.8-8.7-15 -20-16.7 Supply Demand Occ ADR RevPAR
Total United States Occupancy Percent 2004 2011P 70 65 63.0 63.2 62.8 61.3 60 59.9 57.1 57.9 55 54.7 50 2004 2005 2006 2007 2008 2009 2010P 2011P
Total United States Average Daily Rate 2004 2011P $125 $100 $86.25 $91.05 $97.96 $104.23 $107.18 $97.87 $97.74 $101.55 $75 $50 2004 2005 2006 2007 2008 2009 2010P 2011P
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 8.1 1.3 9.4 Upper Upscale 6.7 0.2 7.3 Upscale 6.3 0.5 6.8 Midscale w/ F&B 3.0-0.3 2.7 Midscale w/o F&B 4.4 0.0 4.4 Economy 3.4-3.2 0.2 Independent 4.0 0.8 4.9
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 0.4 6.7 7.1 Upper Upscale 1.6 5.4 7.0 Upscale 2.1 4.4 6.5 Midscale w/ F&B -1.0 2.5 1.5 Midscale w/o F&B 1.8 4.0 5.8 Economy 1.3 2.3 3.6 Independent 2.4 3.7 6.1
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
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
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)
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)
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
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