STR: Hotel Industry Overview

Hotel InduSTRy Overview
Vail 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 Performance
2011 – So far, so … blah

ADR Finally Contributing to RevPAR Growth
% 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%
Total U.S.: Key Statistics1st Quarter 2011

Demand Leads ADR….Swings Get More Extreme
1.6%
-0.2%
-0.9%
-4.6%
-4.7%
-6.9%
-8.7%
Total U.S.: ADR & Demand % Change
Twelve Month Moving Average : Jan. 1989 – March 2011

Absolute ADR Will Not Recover for At Least 2 Years
30 Months
-$10.60
41 Months
-$3.70
Total U.S.: Actual ADR
Twelve Month Moving Average: Jan. 2000 – March 2011

Hopeful ADR growth will continue to drive RevPAR growth
2011 Total U.S. Outlook

Indiana Overview

State’s RevPAR driven by OCC & ADR…good thing.
%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%
Indiana: Key Statistics 1st Quarter 2011

Historically: Builds Into Downturns…
Indiana: Supply & Demand % ChangeTwelve Month Moving Average: Jan. 2001 – March 2011

IF All Active Pipeline Opens…over 5.5% Room Supply Increase!
Indiana: Active Development PipelineMarch 2011

OCC Growth is Back…ADR Growth much Slower!?
Indiana: OCC & ADR % ChangeTwelve Month Moving Average: Jan. 2001 – March 2011

ADR discounts not as extreme as U.S…BUT still takes time!
31 Months
-$4.81
Indiana:Actual ADR ($)
Twelve Month Moving Average: Jan. 2001 – March 2011

Indiana Segments
Customer Segmentation:
Transient – Third party, rack rate, government rate, etc.
Group – Rooms booked in blocks of 10 or more.
Combine Chain Class: Aggregate of branded hotels & independents.
Luxury/Upper Upscale/Upscale
UpperMidscale/Midscale/Economy

Transient Demand back since 1Q 2010…ADR Growth?
Indiana: Transient Room Demand & ADR % ChangeBy Month: Jan. 2004 – March 2011

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

Appears to be a Top Down Recovery…
Indiana: Combine Chain Class
Demand % Change by Month through March 2011

ADR Data is “Less Bad”…need consistent growth.
Indiana: Combine Chain Class
ADR % Change by Month through March 2011

Indiana Markets
& Beyond….

Indy new room supply leader…
Indiana Markets: Room Supply % Change
12 Month Moving Average Jan. 2002 – March 2011

Good News: Strong room demand across the board!
Indiana Markets: Room Demand % Change
12 Month Moving Average Jan. 2002 – March 2011

Indy highest OCC % but Gary MSA largest OCC Growth
0.9%
8.7%
2.3%
2.5%
3.3%
Indiana Markets & Sub-Markets: Occupancy & % Change1st Quarter 2011

Strong ADR Growth for Evansville-Henderson MSA
3.6%
3.4%
4.2%
7.0%
2.1%
2.8%
Indiana Markets & Sub-Markets: Actual ADR & % Change1st Quarter 2011

2012 Outlook
…What May Be

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

2012: Hit RevPAR peaks of 2006 (hopefully!)
Total U.S. & Chain Scale: 2012 Outlook

Occupancy hitting 60%+ Remains Elusive
Total U.S.: Annual Occupancy %
2005 – 2012P

What If since 2000 ADR had increased by CPI each year?
Total U.S.: Annual ADR
2000 – 2012P
Note: 2011 & 2012 CPI forecast from Blue Chip Economic Indicators

Takeaways
New Hotel Supply Muted in ‘11 & ‘12
Demand Rebounds (Strongly)
ADR Growth Started Strong…Keep It Up!?
Indiana Transient Rate Growth Needed

Thank you!
vail@str.com
For a copy of this presentation go to
www.hotelnewsnow.com

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STR: Hotel Industry Overview

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