str: hotel industry overview

Source: 2011 Smith Travel Research, Inc.

Hotel InduSTRy OverviewVail R. Brown

Vice President, Global Sales & Marketing


Agenda: 18 May 2011

U.S. Hotel Performance

Indiana Hotel Performance

Indiana Markets & Beyond

Outlook


U.S. Hotel Performance2011 – So far, so … blah


Total U.S.: Key Statistics1st Quarter 2011

% Change• Hotels 52k • Room Supply 432 mm 1.0%• Room Demand 237 mm 6.7%• Occupancy 54.9% 5.7%• A.D.R. $99 3.1%• RevPAR $55 9.0%• Room Revenue $23.6 bn 10.0%

ADR Finally Contributing to RevPAR Growth


1989199019911992199319941995199619971998199920002001200220032004200520062007200820092010 2011-10

-5

0

5

10

Demand ADR8.0%

Demand Leads ADR….Swings Get More Extreme

-6.9%

-4.7%

-0.9%

-4.6%

-0.2%

-8.7%

1.6%

Total U.S.: ADR & Demand % ChangeTwelve Month Moving Average : Jan. 1989 – March 2011


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$70

$80

$90

$100

$110

41 Months

30 Months

Total U.S.: Actual ADRTwelve Month Moving Average: Jan. 2000 – March 2011

Absolute ADR Will Not Recover for At Least 2 Years

-$3.70

-$10.60


Hopeful ADR growth will continue to drive RevPAR growth

Total U.S.Low

Growth Forecast HighGrowth

Supply 1.0 0.7 0.4

Demand 2.1 2.5 3.0

Occupancy 1.1 1.8 2.6

ADR 3.7 4.2 4.8

RevPAR 4.8 6.1 7.4

2011 Total U.S. Outlook


Indiana Overview


Indiana: Key Statistics 1st Quarter 2011

%Change• Hotels 961• Rooms 85,285• STR Sample 76.2%• Occupancy 46.5% 4.6%• ADR $76.42 3.4%• RevPAR $35.54 8.2%• Room Revenue $271.4M 9.9%

State’s RevPAR driven by OCC & ADR…good thing.


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-8

-4

0

4

8

Supply % Chg. Demand % Chg.

7.1%

1.2%

Indiana: Supply & Demand % ChangeTwelve Month Moving Average: Jan. 2001 – March 2011

Historically: Builds Into Downturns…


Indiana: Active Development PipelineMarch 2011

Phase Properties Rooms

In Construction 10 895

Final Planning 12 1,196

Planning 31 2,936

Active Pipeline 53 5,027

Pre-Planning 15 1,389

Total 68 6,416

IF All Active Pipeline Opens…over 5.5% Room Supply Increase!


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-10

-5

0

5

10

OCC% Chg. ADR % Chg.

Indiana: OCC & ADR % ChangeTwelve Month Moving Average: Jan. 2001 – March 2011

OCC Growth is Back…ADR Growth much Slower!?


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$30

$50

$70

$90

31 Months

Indiana: Actual ADR ($) Twelve Month Moving Average: Jan. 2001 – March 2011

ADR discounts not as extreme as U.S…BUT still takes time!

-$4.81


Indiana Segments

Customer Segmentation:o Transient – Third party, rack rate, government rate, etc.o Group – Rooms booked in blocks of 10 or more.

Combine Chain Class: Aggregate of branded hotels & independents.o Luxury/Upper Upscale/Upscaleo UpperMidscale/Midscale/Economy


Transient Demand back since 1Q 2010…ADR Growth?

2004 2005 2006 2007 2008 2009 2010 2011-20

-10

0

10

20

30

40Trans. Demand % Chg Trans. ADR % Chg

Indiana: Transient Room Demand & ADR % ChangeBy Month: Jan. 2004 – March 2011


Group Demand & ADR Growth pretty in-sync…A good thing.

2004 2005 2006 2007 2008 2009 2010 2011-30

-20

-10

0

10

20

30Group Demand % Chg Group ADR % Chg

Indiana: Group Room Demand & ADR % ChangeBy Month: Jan. 2004 – March 2011


2011 STR Chain SegmentsSelected Brands from each segment

• Luxury – Four Seasons, Ritz Carlton, Fairmont, InterContinental

• Upper Upscale – Hyatt, Embassy Suites, Hilton, Marriott

• Upscale – Hyatt Place, Hilton Garden Inn, Courtyard, Hotel Indigo

• Upper Midscale – Best Western PLUS/Premier, Hampton Inn, Fairfield Inn

• Midscale – Best Western, Country Inn & Suites, La Quinta Inn, Sleep Inn

• Economy – America’s Best Inn, Econolodge, Red Roof, Days Inn


Jan 07

Feb 07

Mar 07

Apr 07

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Jul 07

Aug 07

Sep 07

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Nov 07

Dec 07

Jan 08

Feb 08

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Apr 08

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Nov 08

Dec 08

Jan 09

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Mar 09

Apr 09

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Jul 09

Aug 09

Sep 09

Oct 09

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Dec 09

Jan 10

Feb 10

Mar 10

Apr 10

May 10

Jun 10

Jul 10

Aug 10

Sep 10

Oct 10

Nov 10

Dec 10

Jan 11

Feb 11

Mar 11

-20

-10

0

10

20

Lux/Upper Up/Upscale UpperMid/Midscale/Economy Total Indiana

Appears to be a Top Down Recovery…

Indiana: Combine Chain ClassDemand % Change by Month through March 2011


Jan 07

Feb 07

Mar 07

Apr 07

May 07

Jun 07

Jul 07

Aug 07

Sep 07

Oct 07

Nov 07

Dec 07

Jan 08

Feb 08

Mar 08

Apr 08

May 08

Jun 08

Jul 08

Aug 08

Sep 08

Oct 08

Nov 08

Dec 08

Jan 09

Feb 09

Mar 09

Apr 09

May 09

Jun 09

Jul 09

Aug 09

Sep 09

Oct 09

Nov 09

Dec 09

Jan 10

Feb 10

Mar 10

Apr 10

May 10

Jun 10

Jul 10

Aug 10

Sep 10

Oct 10

Nov 10

Dec 10

Jan 11

Feb 11

Mar 11

-20

-10

0

10

20

Luxury/Upper Up/Upscale UpperMid/Midscale/Economy Total Indiana

ADR Data is “Less Bad”…need consistent growth.

Indiana: Combine Chain ClassADR % Change by Month through March 2011


Indiana Markets & Beyond….


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-6

-3

0

3

6

IndianaNorth Indianapolis IndianaSouth

Indy new room supply leader…

Indiana Markets: Room Supply % Change12 Month Moving Average Jan. 2002 – March 2011


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-12

-8

-4

0

4

8

12

IndianaNorth Indianapolis IndianaSouth

Good News: Strong room demand across the board!

Indiana Markets: Room Demand % Change12 Month Moving Average Jan. 2002 – March 2011


Indianapolis, IN Market

Evansville-Henderson MSA

Gary MSA

Indiana South Market

Fort Wayne MSA

Indiana North Market

51.1

51.0

49.7

46.9

44.1

41.3

7.0%

Indiana Markets & Sub-Markets: Occupancy & % Change1st Quarter 2011

0.9%

8.7%

2.3%

2.5%

3.3%

Indy highest OCC % but Gary MSA largest OCC Growth


Indianapolis, IN Market

Gary MSA

Indiana South Market

Evansville-Henderson MSA

Indiana North Market

Fort Wayne MSA

$81.21

$74.30

$74.27

$73.10

$71.13

$69.20

Indiana Markets & Sub-Markets: Actual ADR & % Change1st Quarter 2011

3.6%

3.4%

4.2%

7.0%

2.1%

2.8%

Strong ADR Growth for Evansville-Henderson MSA


2012 Outlook…What May Be


2005 2006 2007 2008 2009 2010 2011P 2012P 20 Yr Average

-10

-5

0

5

10

-0.1

0.21.3

2.53.0

1.90.7 0.5

1.92.8

0.4 0.7

-2.4

-6.1

7.6

2.5 2.21.2

Supply % Chg Demand % Chg

Total U.S.: Supply/Demand % Change2005 – 2012P

Minimal Supply Growth in 2012

Source: 2011 Smith Travel Research, Inc.Total U.S. & Chain Scale: 2012 Outlook

Occupancy(% chg)

ADR (% chg) RevPAR (%chg)

Luxury -0.8 11.5 10.7

Upper Upscale 2.2 8.4 10.6

Upscale 1.9 7.3 9.2

Upper Midscale 2.5 6.9 9.4

Midscale 1.2 5.9 7.1

Economy 2.0 4.9 6.9

Independent 1.6 6.5 8.1

Total U.S. 1.7 6.8 8.5

2012: Hit RevPAR peaks of 2006 (hopefully!)


Occupancy hitting 60%+ Remains Elusive

2005 2006 2007 2008 2009 2010 2011P 2012P

63.0 63.2 62.8

59.8

54.7

57.458.5

59.5

Total U.S.: Annual Occupancy % 2005 – 2012P


20002001

20022003

20042005

20062007

20082009

20102011P

2012P

$85.10 $83.90 $82.68 $82.79 $86.25 $91.06 $97.98 $104.26 $107.30 $98.17 $98.08 $102.21 $109.16

$85.11 $87.52

$88.91 $90.92

$93.36

$96.53

$99.64

$102.48

$106.41 $106.04 $107.63 $109.46

$111.54

Nominal ADRYr 2000, Grown by CPI

What If since 2000 ADR had increased by CPI each year?

Note: 2011 & 2012 CPI forecast from Blue Chip Economic Indicators

Total U.S.: Annual ADR 2000 – 2012P


Takeaways

New Hotel Supply Muted in ‘11 & ‘12

Demand Rebounds (Strongly)

ADR Growth Started Strong…Keep It Up!?

Indiana Transient Rate Growth Needed


Thank [email protected]

For a copy of this presentation go towww.hotelnewsnow.com

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