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31st European Hotel Industry Conference

Impossible• Robin Rossmann | Wednesday 6 November

© 2019 STR. All Rights Reserved.

Agenda

Nounthe point at which a series of small changes or incidents becomes significant enough to cause a larger, more important change.

Tipping points:

1. Hotel performance

2. Competitive landscape

3. Sustainability and climate change

Tipping points:


Tipping point…

Hotel performance cycle

Source: Giphy.com


Demand growth

Supplygrowth


2.1%1.2% 1.3% 1.4%

6.1%

1.1%

3.5%

2.0%1.9%

-2.4%

3.6%

1.7%

7.9%

3.0%1.9%

0.6%

North America &Caribbean

Central America South America Europe Middle East Africa Asia Australia &Oceania

Supply Demand

Supply now outpacing demand growth in regions around the worldGlobal Supply & Demand % Change, September 2019 YTD

Supply > Demand Supply > Demand Supply > Demand Supply > Demand


Middle East

Southern Africa

Northern Africa

-36.6%

… driving RevPAR declines in most cases Constant Currency, September 2019 YTD

Europe

Asia

+0.9%

+4.0%

+2.3%

+10.0%

+1.2%

-6.2%-2.4%

Australia & Oceania

-2.2%

North America

Central America

South America


-2%

0%

2%

4%

6%

8%

10%

2017 2018 2019 Aug-19

Occ % chg ADR % chg

… but occupancy growth has stalled and ADR growth is followingEurope – ADR & Occupancy % Change, CC, EUR, Jan 2017 – Aug 2019


0.8%

0.6%0.7%

0.6%0.6%

0.9%

1.2%

1.4%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

2012 2013 2014 2015 2016 2017 2018 2019 YTD

Supply % change

Supply growth has been acceleratingEurope – New rooms as a % existing supply, August 2019 YTD


… with supply growth much higher than average in certain citiesEurope – Supply increase in 2019 as a percentage of total supply

Vienna

Madrid

LondonBrussels

Dublin

Edinburgh

Paris

Lisbon

HelsinkiSt. Petersburg

Moscow

Zurich

Barcelona

Amsterdam

IstanbulBelgradeBucharest

Kiev

Budapest

BerlinWarsaw

Prague

1

1

0

3

7

4

1

2 3

4

3

1

0

3

0

0

8

5

Copenhagen

01

0Rome

Athens2

Tel Aviv 11

Tbilisi6

Nursultan 0

2

2


Spain strong outside resort marketsRevPAR % Change, Local Currency, August 2019 YTD


UK struggling outside of LondonRevPAR % Change, Local Currency, September 2019 YTD


Russia – significantly ahead of 2017RevPAR % Change (versus 2017), Local Currency, September 2019 YTD


Germany impacted by new supply and slower economyRevPAR % Change, Local Currency, September 2019 YTD


Supply growth will continue and accelerate in many marketsActive pipeline as a % of existing supply - September 30, 2019

Vienna

Madrid

LondonBrussels

Dublin

Edinburgh

Paris

Lisbon

HelsinkiSt. Petersburg

Moscow

Zurich

Barcelona

Amsterdam

IstanbulBelgradeBucharest

Kiev

Budapest

BerlinWarsaw

Prague

17

6

24

6

39

12

2

14 14

62

18

11

10

9

5

6

26

13

Copenhagen

230

4Rome

Athens3

Tel Aviv 346

Tbilisi78

Nursultan 18

35

14


Tipping point… tech and competitive landscape

Source: Giphy.com


The industry is consolidating but still very fragmentedWorldwide Independent vs Chain Hotels, By Total Number of Rooms, as of September 2018

32.6%

61.4% 59.8% 57.1%

46.7%

67.4%

38.6% 40.2% 42.9%

53.3%

North America Central & SouthAmerica

Europe Middle East & Africa Asia Pacific

Independent Chain

5% chg 8% chg 11% chg5% chg 7% chg

Percentage point change in last decade


Group #Hotels NA International

8,977 75% 25%

7,941 6% 94%

7,071 89% 11%

7,029 75% 25%

5,929 84% 16%

5,632 71% 29%

5,151 0% 100%

4,853 2% 98%

3,766 60% 40%

The big global hotel groups are no longer just US chainsNumber of hotels as of September 2018


Group #Hotels NA International

8,977 75% 25%

7,071 89% 11%

7,029 75% 25%

5,929 84% 16%

5,632 71% 29%

4,854 2% 98%

3,766 60% 40%

5,151 0% 100%

7,941 6% 94%

+ 35,000 0% 100%

… and a new disruptor has entered the fray

© 2019 STR. All Rights Reserved. © 2017 STR. All Rights Reserved.

OYO has more than 2,000 software engineers and data scientists


Hotels also now compete with wider paid accommodation on OTAs


6000

13301128 944 867 820 804 696 579

So perhaps the total competitive landscape looks more like this….Largest hotel groups by number of rooms in 2019 (‘000)

525


The trend is to blend…. but so far hotel groups are only dipping their toes in the water

+ +

+ +

+

+


Tipping point… sustainability & climate change


Google Trend: Climate ChangeOver the past 5 years

0

20

40

60

80

100

120

+260%


Google Trends: sustainable travel & carbon footprintTrend growth over the past year

0

20

40

60

80

100

120Sustainable travel: (Worldwide)

0

20

40

60

80

100

120

Carbon footprint: (Worldwide)

+60% +60%


Emissions from different modes of transportEmissions per passenger per km travelled


Making it more important to think about source markets … and how they get to your hotels


How many plastic bottles are use a day in the UK?

?21 million a day


Major chains ban single use plasticA significant positive trens


Conclusions


Tipping points

1. Hotel performance cycle

• Supply growth outpacing demand in many regions around the world

• Next few years likely to be challenging but opportunities for growth exist

2. Technology

• Expect more consolidation of our fragmented industry through technology

• The lines of competition will continue to blur across total paid accommodation

3. Sustainability and Climate Change

Source: Giphy.com

• Sustainability credentials and carbon footprint will play an increase role in the purchasing decisions of certain segments of consumers

• Don’t underestimate the ability for one individual to change a whole family’s purchasing decision

© 2019 STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively “STR”) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR. No strategic advice or marketing recommendation is intended or implied.

Thank You!

[email protected]

www.str.com

Robin Rossmann – Managing Director, STR

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