hospitality sales and marketing association · top 10 revpar markets - 2012 $61.17 $87.27 $90.10...

Hospitality Sales and Marketing Association

February 21, 2013

Lodging Market Overview

United States

United States Occupancy Performance

63.7%

59.8% 58.9% 59.2%

61.3%

63.1% 63.3% 63.1%

60.3%

55.1%

57.5%

59.9% 60.4%

50%

55%

60%

65%

70%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Occupancy

Source: Smith Travel Research

United States ADR Performance

$84.66 $83.62 $82.54 $82.67 $86.19

$91.04

$97.82

$104.32 $107.40

$98.07 $98.06 $101.70

$106.15

Inflated $114.00

$50

$60

$70

$80

$90

$100

$110

$120

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Average Daily Rate

Note: 2000 ADR inflated to 2012 equals $114.00. Source: Smith Travel Research

United States RevPAR Performance

$54.80

$50.49 $48.89 $49.11

$52.93

$57.39

$61.69

$65.61 $64.49

$53.71

$56.43

$61.06

$65.17

Inflated $73.70

$40

$45

$50

$55

$60

$65

$70

$75

$80

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

RevPAR

Note: 2000 RevPAR inflated to 2012 equals $73.70. Source: Smith Travel Research

United States Top 10 RevPAR Markets - 2012

$61.17

$87.27

$90.10

$93.70

$97.02

$97.53

$113.50

$122.98

$136.99

$153.68

$208.09

$0 $50 $100 $150 $200 $250

Phoenix

Anaheim

New Orleans

San Diego

Washington D.C.

Los Angeles

Boston

Miami

San Francisco

Oahu

New York

Note: Phoenix ranked 19th in RevPAR among the United States lodging markets. Source: Smith Travel Research

United States Top 10 RevPAR % Change Markets - 2012

1.6%

8.9%

9.6%

9.8%

10.2%

10.9%

12.3%

12.4%

13.9%

16.5%

16.7%

0% 5% 10% 15% 20%

Phoenix

Anaheim

San Diego

Nashville

Chicago

Los Angeles

Tampa/St. Pete

San Francisco

Houston

Oahu

New Orleans

Note: Phoenix ranked 24th in RevPAR growth among the United States lodging markets (down from 17th in 2011). Source: Smith Travel Research

United States % Change in Key Performance Indicators

3.2%

-5.8

%

-8.7

%

-8.8

%

-16.

7%

2.0%

7.8%

5.7%

-0.2

%

5.4%

0.6%

5.0

%

4.4%

3.7%

8.2%

0.4%

3.0%

2.6%

4.1%

6.8%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Supply Demand Occupancy ADR RevPAR

2009 2010 2011 2012


United States % Change in Key Performance Indicators

1.3

%

3.4

%

2.1

%

3.9

%

6.1

%

1.5

%

4.0

%

2.5

%

3.5

%

6.1

%

0.5

%

3.2

%

2.7

%

3.9

%

6.7

%

-0.2

%

2.8

%

3.1

%

4.3

%

7.5

%

-0.6

%

1.5%

2.1

%

5.0

%

7.2

%

-10%

0%

10%

20%

30%


2012


5.4%

17.3

%

11.3

%

10.7

% 2

3.1%

4.7%

18.0

%

12.3

%

8.2

%

21.4

%

0.9

%

14.

5%

13.6

%

8.9%

23.8

%

-0.2

%

12.5

%

14.1

%

7.2%

22.2

%

-0.6

%

10.8

%

12.9

%

8.3%

22.

4%

-10%

0%

10%

20%

30%


Recovery January 2010 to Present

Luxury Upscale Mid-Price Economy Budget

United States 2013 Forecast Summary

Supply 0.9% 0.8% 0.8%

Demand 1.2% 1.7% 1.7%

Occupancy 0.3% 0.9% 0.9%

ADR 4.6% 5.2% 4.4%

RevPAR 4.9% 6.1% 5.4%

Source: Smith Travel Research (as of November 11, 2012)

Lodging Market Overview

Metropolitan Phoenix

Metropolitan Phoenix Total Available Rooms

52,200 52,490 52,853 54,103 53,590 53,288 53,395 53,844

56,247

59,261 60,572 61,054 61,603

45,000

50,000

55,000

60,000

65,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Available Rooms

Supply growth continued to moderate in 2012 providing further opportunity for occupancy growth.

Source: Smith Travel Research, Warnick + Company

Supply Summary

Since the market peak in 2007, 53 hotels have opened in Metropolitan Phoenix • Of the 53 new hotels, 10 are full-service

Renaissance Glendale Hotel & Spa (2007) Sheraton Phoenix Downtown Hotel (2008) The W Scottsdale (2008) InterContinental Montelucia Resort & Spa (2008) Hilton Chandler (2009) Wild Horse Pass Hotel & Casino (2009) Talking Stick Resort (2010) Westin Phoenix Downtown (2010) The Saguaro (re-opened 2010) Hotel Palomar (2012)

• The remaining openings are comprised of various select-service hotels located throughout the Valley

U. S. Top 25 Markets Room Supply % Change – YTD Nov 2012

0.9%

-2%

-1%

0%

1%

2%

3%

4%

5%


Metropolitan Phoenix Occupied Rooms Per Day

32,447

30,776 30,585

32,197

34,192

35,713 36,461

35,171

32,598

31,075

33,813

35,575 35,717

25,000

27,500

30,000

32,500

35,000

37,500

40,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Occupied Rooms

Growth in demand continued in 2012 albeit at a far more moderate pace compared to 2011 (0.6% versus 5.2%).


U. S. Top 25 Markets Room Demand % Change – YTD Nov 2012

0.6

%

-2%

0%

2%

4%

6%

8%

10%

12% Room Demand Percent Change


Metropolitan Phoenix % Change in Supply and Demand

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Supply 5.0% 0.6% 0.7% 2.4% -1.0% -0.8% 0.2% 0.2% 4.4% 6.2% 2.9% 0.8% 0.9%

Demand 5.9% -5.1% -0.6% 5.3% 6.2% 4.4% 1.8% -1.7% -7.3% -6.3% 10.3% 5.2% 0.6%

-10%

-5%

0%

5%

10%

15%

Percent Change in Supply and Demand

While modest, supply growth outpaced demand.


Metropolitan Phoenix Occupancy

62.1%

58.5% 57.7%

59.4%

63.7%

67.1% 68.2%

66.9%

59.4%

52.1%

55.8%

57.9% 57.7%

50%

55%

60%

65%

70%

75%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Occupancy

Occupancy declined in 2012 (reversing a three year growth trend) and remains at post 9/11 levels and well below market peak of 2006.


U. S. Top 25 Markets: Occupancy Year-to-Date November 2012

58.7

%

55%

60%

65%

70%

75%

80%

85%

90%

Occupancy


U. S. Top 25 Markets: Occupancy % Change Year-to-Date November 2012

-0.3

%

-2%

0%

2%

4%

6%

8%

10%

12% Occupancy % Change


Metropolitan Phoenix Average Daily Rate

$98.49 $96.89 $92.22 $92.66

$95.74

$102.83

$113.27

$120.80 $124.93

$106.41 $100.62

$103.96 $105.97

$50

$75

$100

$125

$150

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Average Daily Rate

For the second year in a row, the market achieved growth in ADR. Since bottoming out in 2010, rate growth has been minimal (5.2 percent). Building rate remains the #1 challenge for the market (factoring inflation, 2000 ADR equals $132.45 today).


U. S. Top 25 Markets Average Daily Rate – YTD Nov 2012

$107

.02

$75

$100

$125

$150

$175

$200

$225

$250

$275

Average Daily Rate


U. S. Top 25 Markets Average Daily Rate % Change – YTD Nov 2012

2.0%

-2%

0%

2%

4%

6%

8%

10%

12% ADR Percent Change

Metropolitan Phoenix Revenue Per Available Room

$61.10 $56.70

$53.26 $55.03 $60.97

$68.98

$77.22 $80.76

$74.15

$55.42 $56.17 $60.22 $61.17

$0

$20

$40

$60

$80

$100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Revenue Per Available Room

A combination of modest increases in occupancy and ADR has resulted in RevPAR growth over the past three years; that said, RevPAR remains well below the 2007 peak and 2000 level when factoring inflation (2000 RevPAR equals $82.17 today).

Note: RevPAR decline in 2009 was second only to New York as the worst decline by U.S. Top 25 Markets-Impact of the economic decline, AIG , new supply (local, regional), with further impact in 2010 by SB1070 and tourism budget cuts. Source: Smith Travel Research, Warnick + Company

U. S. Top 25 Markets Revenue Per Available Room – YTD Nov 2012

$62.

84

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220 RevPAR

U. S. Top 25 Markets RevPAR % Change – YTD Nov 2012

1.7%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Metropolitan Phoenix % Change in Key Performance Indicators

6.2%

-6.3

%

-11.

8%

-15.

4%

-25.

3%

2.9%

10.3

%

7.2%

-5.1

%

1.7%

0.8%

5.2%

4.4%

3.3%

7.8%

0.9%

0.6%

-0.4

%

1.9%

1.6%

-30%

-20%

-10%

0%

10%

20%


2009 2010 2011 2012


Metro Phoenix vs. United States % Change in Performance 2011 vs. 2012

Metropolitan Phoenix United States

2011 2012 % Change 2011 2012 % Change

Occupancy 57.9% 57.7% -0.4% 59.6% 61.4% +2.5%

ADR $103.95 $105.97 +1.9% $101.85 $106.10 +4.2%

RevPAR $60.22 $61.17 +1.6% $61.02 $65.17 +6.8%

Supply – – +0.9% – – +0.5%

Demand – – +0.6% – – +3.0%


Resort Market Overview

Metropolitan Phoenix

Metropolitan Phoenix Resort Market Total Available Rooms

10,693 10,844 11,240

13,088 12,888 12,211 12,317 12,317 12,355 12,610

13,084 13,184 13,176

0

3,000

6,000

9,000

12,000

15,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Available Rooms


Metropolitan Phoenix Resort Market Occupancy

66.7%

61.2% 60.4%

62.1%

67.2%

70.6% 69.9%

68.2%

64.2%

58.1%

61.3%

63.5% 63.9%

50%

55%

60%

65%

70%

75%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Occupancy


Metropolitan Phoenix Resort Market Occupancy by Segment

70.3%

61.7%

74.7%

63.0%

68.0% 67.6%

64.7%

67.5%

54.2%

60.2% 61.4%

50%

55%

60%

65%

70%

75%

80%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Occupancy by Segment

Luxury Non-Luxury


Metropolitan Phoenix Resort Market Average Daily Rate

$182.95 $179.62

$166.50 $158.51

$163.88

$177.00

$190.74

$199.23 $204.12

$167.56 $160.24

$166.96 $168.26

$100

$125

$150

$175

$200

$225

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Average Daily Rate

Moderate rate growth was achieved in 2012 (note: 2000 ADR = $240 today).


Metropolitan Phoenix Resort Market Historical Average Daily Rate by Segment

$253.57

$207.93 (-20.0%)

$205.87 (-1.0%)

$216.13 (+5.0%)

$222.90 (+3.1%)

$140.71 $130.76 (-17.3%) $122.44

(-6.3%)

$126.89 (+3.6%)

$125.47 (-1.1%)

$100

$150

$200

$250

$300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Average Daily Rate by Segment

Luxury Non-Luxury Notes: • The number in parentheses represents percent change from prior year. • 2000 luxury/non-luxury ADR equals $332 and $185 today, respectively. Source: Smith Travel Research, Warnick + Company

Metropolitan Phoenix Revenue Per Available Room

$122.02

$109.92

$100.57 $98.43

$110.12

$124.97

$133.41 $135.83

$130.96

$97.30 $98.18

$106.05 $107.64

$50

$75

$100

$125

$150

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Revenue Per Available Room


Metropolitan Phoenix Resort Market Historical RevPAR by Segment

$178.38

$130.93 (-25.4%)

$134.91 (+3.0%)

$146.94 (+8.9%)

$150.66 (+2.5%)

$91.07 $70.87

(-27.3%) $71.14 (+0.4%)

$76.40 (+7.4%)

$77.04 (+0.8%)

$50

$100

$150

$200

$250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Revenue Per Available Room by Segment

Luxury Non-Luxury

Note: The number in parentheses represents percent change from prior year. Source: Smith Travel Research, Warnick + Company

Regional Lodging Market

Issues

National and Global Influences

The country continues in an economic recovery The lodging sector typically follows the economy, but recovery thus

far is not uniform • Signs financial markets are loosening up • Recovery will be prolonged; this downturn extended deeper into all

sectors and was global • Change in Consumer habits

Ongoing national and global issues • Ongoing Middle East activity (war, threat of terrorism) • Impact on oil prices; air and ground travel patterns • European economy and recession • U.S. budget deficit ($1.3 trillion) • China slowdown • Impact of recent U.S. and foreign elections • U.S. unemployment

Metro Phoenix Supply Outlook

New supply will remain soft in foreseeable future • Supportable market dynamics, travel patterns, financing, area

economic conditions, etc. • Absorption of current supply • Continued low rate and profit potential • Development capital remains scarce for larger upscale and full-

service projects; no new full-service projects are anticipated for the next three years

• Lack of quality development sites • Brand availability

Continued focus on capital expenditures and renovations • Brand-required renovation • Competitive positioning

Metro Phoenix Demand Outlook

Positive Influences • Local, regional, national economic recovery • Strength and appeal of destination • Appropriation to AOT budget ($7.0 million) and return of Prop

302 monies

Threats • Future immigration legislation • Residual impact of SB1070 (lessening over time) • Arizona Office of Tourism and convention and visitor bureau

budgets remain vulnerable to future economic downturns • Enhanced competitive pressure (regional, national) • Continuing border issues • Cutback in government travel

Average Rate Dilemma

ADR remains the main challenge for market • Reaction to an increased competitive environment, consumer

expectations, and market uncertainty

2011/2012 first sign of ADR recovery-albeit modest (well behind most major markets) • Deep discounting since market fall in 2009 • Absorption of significant new supply (since 2007) at discounted

rates • Absorption of business booked at discounted rates - likely see

continued impact in foreseeable future • Social perception of our destination - issue is minimizing • Continued pressure from meeting and travel planners seeking

bargains • Overall rebound will depend on building rate integrity

Average Rate Dilemma

Rate integrity

• Key to market recovery

• Need occupancy compression to achieve notable ADR growth

• Effective revenue management is paramount

• Market unification a must

Will likely take years to get back to peak market levels

After 9/11, Metro Phoenix’s RevPAR recovery ranked in the top five of major U.S. markets

This recovery far more challenging – currently ranked last in estimated time to fully recover

RevPAR Peak-Through-Recovery Timeframe


hospitality sales and marketing association · top 10 revpar markets - 2012 $61.17 $87.27 $90.10...

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