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Us Thl Hospitality Vision Us Performance Review 020911

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  • 1. Hospitality VisionUS Performance Review
  • 2. ContentsOverview 3 Atlanta 5 Chicago 5 Dallas 6 Fort Lauderdale 6 Las Vegas 7 Los Angeles 7 Miami 8 Minneapolis 8 New Orleans 9 New York 10 Oahu Island 10 Orlando 11 Phoenix 12 San Francisco 12 Washington DC 13Conclusion 14Contacts 15
  • 3. OverviewFollowing a lengthy downturn, the hotel industry entered a Figure 1 - Recovery in hotel metrics began in early 2010recovery in 2010, with gains continuing to strengthen as theyear progressed. On the heels of a three-year decline in 15% 15%occupancy and a two-year drop in revenue per available room % change from same month year ago(revPAR), occupancy for the first 11 months of 2010 improved 10% 10%5.7 percentage points compared with the same period in 5% 5%2009. RevPAR, which experienced a record 16.6% decline in2009, rose 5.4% for the first 11 months of 2010, according to 0% 0%Smith Travel Research (STR). In particular, November’s 11.8% -5% -5% Occupancyincrease in revPAR was the best monthly performance for the revPARindustry since late 2005. -10% -10% -15% -15%The global economic recovery has contributed to animprovement in the demand for hotel rooms. The Department -20% -20%of Commerce’s Office of Travel and Tourism Industries (OTTI) -25% -25%has estimated that 50.4 million international visitors traveled to Nov-2006 Nov-2007 Nov-2008 Nov-2009 Nov-2010the U.S. during the first 10 months of 2010, representing an11% increase over the same period in 2009. Further, these Source: Smith Travel Researchoverseas visitors spent 11% more in the U.S. than they did in2009. OTTI also reported that total tourist (domestic andforeign) spending has been rising since the second half of2009. And the National Business Travel Association estimatedthat business travel spending rose 2.3% in 2010.Mostly as a result of the multi-year decline in demand, supplygrowth was limited in 2010. STR data shows that hotel roomsupply advanced only 2.0% in the year-to-November. Thiswas lower than the 3.0% growth of 2009 and the 2.5% gainof 2008. Weak construction is expected to continue into2011. The December 2010 STR/McGraw Hill ConstructionDodge Pipeline report showed that the total active pipeline ofhotel development was down 20.9% from a year ago. Severalmetropolitan areas, including New York, Dallas, Atlanta andChicago, had room construction figures that were down40% - 50% from their year-ago levels. Hospitality Vision US Performance Review 3
  • 4. Figure 2 - Hotel performance in key U.S. cities: January – November 2010 versus January – November 2009 Occupancy Percentage point change Average Room Rate $ RevPAR $ 2010 2009 % change 2010 2009 % change 2010 2009 % change Anaheim-Santa Ana, CA 68.5 64.0 7.1 109 110 -1.2 75 70 5.8 Atlanta, GA 58.5 53.2 10 83 84 -0.8 49 45 9.1 Boston, MA 70.6 63.8 10.7 143 140 2.4 101 89 13.4 Chicago, IL 63.3 57.4 10.3 113 114 -0.8 72 66 9.4 Dallas, TX 55.4 51.9 6.8 85 87 -2.8 47 45 3.8 Denver, CO 64.5 58.9 9.4 95 94 1.0 61 55 10.4 Detroit, MI 55.0 48.2 14.2 75 79 -5.6 41 38 7.8 Fort Lauderdale, FL 67.1 62.4 7.6 108 110 -1.3 73 68 6.2 Houston, TX 55.9 56.3 -0.7 89 93 -4.1 50 52 -4.7 Las Vegas, NV 59.4 58.0 2.4 90 93 -3.4 53 54 -1.1 Los Angeles-Long Beach, CA 68.9 64.7 6.4 117 115 1.3 80 75 7.8 Miami-Hialeah, FL 69.9 64.8 8.0 143 139 2.8 100 90 11.0 Minneapolis-St. Paul, MN-WI 62.3 57.0 9.3 91 92 -0.5 57 52 8.7 Nashville, TN 59.0 55.1 7.0 86 90 -4.4 51 50 2.3 New Orleans, LA 66.0 57.8 14.1 117 113 3.3 77 65 17.9 New York, NY 81.2 76.8 5.8 228 211 7.7 185 162 14.0 Norfolk-Virginia Beach, VA 54.6 54.3 0.6 87 88 -1.0 47 48 -0.4 Oahu Island, HI 78.0 72.4 7.8 148 149 -1.0 115 108 6.8 Orlando, FL 63.0 59.6 5.7 92 94 -2.5 58 56 3.1 Philadephia, PA-NJ 65.5 62.3 5.1 108 112 -3.1 71 70 1.9 Phoenix, AZ 56.4 52.9 6.7 102 108 -5.3 58 57 1.0 San Diego, CA 68.0 64.2 5.9 123 127 -2.8 84 81 2.9 San Francisco/San Mateo, CA 76.3 72.3 5.5 136 135 1.3 104 97 6.9 Seattle, WA 67.4 62.8 7.3 111 114 -2.4 75 72 4.7 St. Louis, MO-IL 58.4 55.5 5.2 82 82 -1.0 48 46 4.2 Tampa-St. Petersburg, FL 56.1 52.6 6.6 92 100 -7.4 52 52 -1.3 Washington, DC-MD-VA 69.0 66.3 4.0 145 147 -1.4 100 97 2.6 TOTAL United States 58.7 55.5 5.7 98 98 -0.2 58 55 5.4 Source: Smith Travel Research4
  • 5. AtlantaIn 2010, Atlanta’s hotel industry turned around appreciably,following a multi-year slump. For the first 11 months of 2010,revPAR grew 9.1% and occupancy expanded 10.0%. Both2010 growth rates are ranked in the top one-third of all majormarkets followed by STR. In contrast, full-year 2009 sawoccupancy drop 10.2 percentage points and revPAR decline17.9%. The recovery in 2010 is reflected in increasedconvention attendance, which pushed hotel/motel taxcollections up 10% over 2009, the Atlanta Convention andVisitors Bureau reported.The Bureau also noted that the area’s hotel industry hasresponded to increased demand for convention facilities byadding space for meetings with 1,000 or fewer attendees – asizable part of new hotel industry growth. The uptick in Chicagodemand is in part attributed to “citywides,” conventions In 2009, Chicago was one of the lowest-performing metroslarge enough to fill rooms in hotels throughout a metro area for hotels, based on STR results. RevPAR, for example,but not large enough to require a major convention facility. dropped 23.4% from 2008, which in turn was down 4.9%Metro Atlanta had 19 citywides on the books in 2010 from 2007. The market however has experienced ancompared with 12 in 2009, according to The Atlanta improvement in 2010. STR metrics show that occupancy forJournal-Constitution. the year-to-date through November was 63.3%, compared with 57.4% for the same period in 2009, a 5.9 percentageThe U.S. Department of Transportation recently awarded point change. RevPAR was up 9.4% to $72. The year-to-dateAtlanta a $47.6 million grant to build a modern, ADA gain in revPAR was ranked among the top third for the 27(Americans with Disabilities)-compliant, eco-friendly streetcar major markets followed by STR.system. The system will be designed in part to increaseAtlanta tourism by linking the city’s business, tourism, and When “Travel + Leisure Magazine” unveiled its 2010 World’sconvention destinations, and will allow a direct transfer to Best Awards four Chicago hotels ranked among the top tenMetropolitan Atlanta Rapid Transit Authority (MARTA) rail large-city hotels in the U.S. and Canada. These lodgings wereand express bus services. Construction is slated to begin in also included in the top 100 hotels in the world.2012, and it is anticipated that the streetcars will be in serviceby 2013. Radisson announced that it will build the first North American hotel in its signature luxury ‘Blu’ line, atop 18 floors of an upscale Chicago high-rise. Completion of the hotel is estimated for 2011. In 2012, a new luxury hotel, the Langham Chicago, is expected to open with 330 rooms and suites in an existing riverfront mixed-use property. The City Council approved a $1 billion bond issue for the continuing expansion of O’Hare International Airport. At year-end 2010, however, two major airline tenants were opposing the bond deal, which included two new runways and a new terminal. While the project was targeted for completion in 2014, its end date currently is uncertain. Hospitality Vision US Performance Review 5
  • 6. Dallas Fort Lauderdale The Dallas hotel market in 2009 experienced double-digit Fort Lauderdale’s metrics are encouraging after two years of declines in both occupancy and revPAR. The first 11 months declines in revPAR and four years of contraction in occupancy. of 2010 improved, with occupancy up 6.8% from the same For the first 11 months of 2010, occupancy was up 7.6% from period in 2009 and revPAR gaining 3.8%. However, the the same period in 2009, while revPAR improved 6.2%. year-to-date increase in revPAR was below the average gain Florida’s difficult economic climate is likely continuing to for the top 27 markets followed by STR. dampen room demand for several of the state’s coastal cities. Florida’s unemployment rate in November 2010 was The area’s slower recovery in hotel demand has hurt 12.0%,which was higher than the 9.8% average for the entire profitability. According to Foreclosure Listing Service, 94 U.S., according to the Department of Labor. And resale prices North Texas hotel foreclosure filings were recorded in the for homes in the Miami-Fort Lauderdale area have fallen by year through September 2010. This was up from 30 filings in roughly half from their 2005 peak according to the National the same period of 2009. Association of Realtors. Looking ahead, the picture may be brightening for the In an effort to boost travel to the area, The Greater Fort industry. Significant investments are being made including Lauderdale Convention & Visitors Bureau has designed a the new $1.2 billion Dallas Cowboys Stadium in nearby $3.5 million marketing plan for 2011. Its approach Arlington, allowing North Texas to serve as the host for emphasizes affordable luxury to attract tourism, business Super Bowl XLV in February 2011. Other tourist attractions meetings, and convention groups. include the AT&T Performing Arts Center’s Winspear Opera House and Wyly Theatre which join the other existing In another effort to expand tourism, Fort Lauderdale in 2010 venues in the city’s Arts District. The Dallas Convention began looking into revamping its beach to attract tourists Center’s new anchor hotel, the 1,000-room Omni Dallas, is who want activities other than swimming and sunning. This scheduled to open for business in early 2012. These projects effort, expected to cost as much as $63 million, could entail are expected to provide a boost to the city’s tourism expansion and remodeling of the International Swimming business. Hall of Fame.1 The addition of Virgin America flights to the Dallas/Fort The Atlantic Hotel was included in Travel + Leisure’s 15th Worth International Airport in December 2010 also was good annual Top 50 Resorts survey in 2010. The Atlantic was the news for the city’s tourism industry. The airline started flying only lodging facility in South Florida to make the list. nonstop between Dallas and Los Angeles or San Francisco. The new hotel group B Hotels & Resorts unveiled its flagship property in September 2010, ahead of its December opening date. The upscale lodging has 240 rooms. The 51st Annual Fort Lauderdale International Boat Show was held from October 28 to November 1, 2010. While the show’s organizers do not release attendance figures, its prominence as the world’s largest in-water boat show and capacity to attract guests from all over the world make it a significant event for Fort Lauderdale hotels.6
  • 7. Las Vegas Las Vegas continues to be viewed favorably by travelers.Las Vegas is one of the largest hotel markets in the world. The An online survey by Travel-Ticker.com of 6,200 web userslast several years have been very challenging for the market. revealed that Las Vegas is America’s most desired summerUntil 2008, Las Vegas experienced almost uninterrupted destination. New York came in second, followed by thegrowth in new rooms, with the addition of several significant Caribbean, Europe, and Hawaii.integrated casino resorts along the Las Vegas Strip. Los AngelesThe first signs of decline in visitor volumes in 2008 coincided After a disappointing 2009 where occupancy declined 9.3with the global economic downturn.2 In 2009, STR metrics percentage points and revPAR was off 19.5%, Los Angelesrevealed the city’s revPAR through November 2009 had saw a revPAR increase of 7.8% for the year-to-Novemberplummeted 31% from the first 11 months of 2008. The 2010 to $80. The area’s hotels in 2010 managed to hold upmetrics in 2010 have improved for the same period, with an relatively well, with occupancy gaining 6.4 percentage pointsincrease in occupancy of 2.4 percentage points to 59.4%. to 68.9%. Average room rates rose 1.3% to $117. ConsideredRevPAR declined a slight 1.1% to $53. an international gateway market for Far East visitors, Los Angeles remains a sought-after travel destination.Las Vegas has historically enjoyed strong year-round demandas both a leisure and convention destination. The Las Vegas In 2009, tourism and travel surpassed international trade asConvention and Visitors Authority (LVCVA) reported that Los Angeles’ number-one job generator.3 According to thevisitor volume grew slightly by 2.6% year-to-November 2010. Los Angeles Times, the region’s hotel owners in AugustHowever, following the recent resort developments in Macau 2010 called for the addition of a new 1.5% fee on hoteland additional competition from other U.S. casino bills that would generate more money to help promote thedestinations, there is a degree of demand pressure on Las city as a tourist destination.4 The city already levies a 14%Vegas with a large supply of room inventories. As the U.S. transient occupancy tax, or bed tax, on hotel guests.5 Theeconomy continues to recover and consumer confidence proposed fee of 1.5% would be imposed only on travelerspicks up, visitation to the area is expected to pick up. staying in hotels with more than 50 guest rooms. It is estimated that the new tax would generate $10 million toThe Cosmopolitan is a new luxury resort featuring 2,995 $11 million annually.resort condos, with one-of-a-kind private terraces anddesigns by acclaimed interior architects David Rockwell,Jeffrey Beers, Adam D.Tihany and the Friedmutter Group.The resort has entered into an agreement with MarriottInternational to help steer Marriott customers its way. It will,in addition, become the largest property in MarriottInternationals Autograph Collection, a new brand thatincludes independently-owned and operated hotels seekingto tap Marriotts customer database.MGM Resorts International expanded its multi-languageweb sites and booking engines to attract overseas travelersand help ensure an easy trip-planning experience. While afew Las Vegas hotels offer Spanish versions of their sites’main pages, MGM Resorts International gives travelers theopportunity to research U.S. destinations and book roomsonline in at least five languages including Japanese, Italian,German, French, Spanish and Chinese. Hospitality Vision US Performance Review 7
  • 8. The Los Angeles Times also noted that the city already condo hotel residences to individual buyers, using a spends $11.4 million a year to attract visitors, but voluntary hotel rental program.11 proponents of the new fee compare this figure to the annual advertising budgets of other major tourist towns Marriott opened in October 2010 its first JW Marriott including Las Vegas, which is spending about $71 million, Marquis, in downtown Miami. An upgrade of a JW Marriott, San Diego (about $24 million), and Orlando (about $31 the Marriott’s Marquis brand represents one of the million).6 The Los Angeles Convention and Visitors Bureau company’s upscale properties. The 313-room hotel has has been promoting the city through a campaign tied to the 80,000 square feet of meeting space by JW Marriott. Hotel slogan "Thats so LA" since 2008, in an effort to strengthen Beaux Arts Miami, a new luxury brand within the JW the city’s brand image. Marriott Collection is an exclusive, ultra-modern hotel ascending 39 stories above Miamis skyline. Los Angeles is also a sought-after lodging investment destination to both domestic and international investors, in The group hotel business, a foundation of South Floridas particular investors from Asia.7 Recent upscale and luxury visitor industry, began coming back slowly in 2010. As a supply additions and renovations at high-profile assets are result of the economic downturn, corporate meetings were expected to boost average daily rates in the market.8 less elaborate than they were before the recession. These events were arranged with an emphasis on keeping costs Los Angeles is a convention destination, and recently won a down; they were shorter and often included charitable major convention opportunity. The NAACP (National activities to soften the image. Most hotel sales directors said Association for the Advancement of Colored People) chose that downsizing of conventions was typical, and that they the city as the site of its 2011 national conference; the news were being booked with a shorter time frame, as opposed to was announced by Mayor Antonio Villaraigosa. The the 12-month advance bookings of past years.12 conference will be held at the Los Angeles Convention Center in July 2011. Attendees are expected to fill about 13,000 hotel rooms and generate more than $11 million in revenue.9 Miami Miami’s hotel industry was hard hit in 2009. The global economic downturn held back tourist travel to Miami. With business travel also down, Miami’s revPAR declined double digits in the year-to-November 2009. However, the market is showing signs of recovery in 2010. Along with improvements in tourism, cruise ship arrivals have also helped fill hotel rooms. According to the South Florida Business Journal, the Port of Miami reported a 10 % increase during the July-September quarter, which marked the arrival of the highly anticipated Norwegian Epic cruise ship.10 For January – November 2010, revPAR increased 11%, while occupancy grew 8 percentage points. Room rates have inched up 2.8% Minneapolis to $143. Minneapolis-St. Paul hotels have rebounded from the steep downturn of 2008-2009. For the 11 months of 2010, metrics Hyatt Hotels & Resorts opened the Hyatt Miami at The Blue from STR show occupancy up 9.3 percentage points and in April 2010. The new complex includes 15 three-story villas, revPAR advancing 8.7% from January – November 2009. each with 16 terraced suites that have fully equipped Both these gains are above the 27-metro average reported kitchens. The 17-acre property also features 1,700 square by STR. feet of meeting space. Hyatt Miami at The Blue also sells8
  • 9. In line with the improvement in room demand, the platforms. These efforts may have contributed to theMinneapolis – St. Paul International Airport reported that improvement in hotel demand in New Orleans.passenger traffic for the first 11 months of 2010 was up 1%from 2009. It was the first increase in business in five years. The metropolitan area began 2010 in high style with theThe Hilton Minneapolis was acquired by DiamondRock Super Bowl win by the NFL football team, the New OrleansHospitality Co., a Bethesda, MD-based real estate investment Saints. And in November 2010 the area saw the return of atrust (REIT), for about $156 million in June 2010. With 821 cruise line out of the local port, according to the Timesrooms and 77,000 square feet of meeting space, the Hilton Picayune.Minneapolis is the largest hotel in Minnesota. In step with the improvement in hotel room demand, LouisAlso in mid-2010, a second major sale occurred: HEI Hotels & Armstrong New Orleans International Airport reported thatResorts purchased a majority equity interest in the Hotel in the first 10 months of 2010 it processed 6.8 millionMinneapolis, a 222-room boutique-style hotel. The hotel will passengers compared with 6.5 million through the samebe converted to Marriott’s Autograph Collection brand. In time last year.September, Pebblebrook Hotel Trust acquired the 140-roomGrand Hotel Minneapolis, located in downtown New Orleans officials broke ground in August 2010 for theMinneapolis, for $33 million. redevelopment of the Hyatt Regency New Orleans, which has been closed since August 2005 due to extensiveCarlson Hotels announced in September 2010 that it plans to damage from Hurricane Katrina. The $275 million projectbuild a 501-room Radisson Blu hotel at the Mall of America. entails redesign of the 31-story building, adjacent to theThe opening is currently slated for the end of 2012. Louisiana Superdome. The Hyatt Regency New Orleans is slated to reopen in the fall of 2011.New OrleansHotel demand in New Orleans grew the fastest of any In 2010, the New Orleans Metropolitan Convention andmarket followed by STR during 2010. RevPAR advanced an Visitors Bureau, in partnership with the New Orleans Ernestexceptional 17.9% for the year-to-November; while N. Morial Convention Center, reportedly secured six majoroccupancy grew 14.1 percentage points. Respectively, these conventions that are expected to generate nearly $80represented the fastest and second-fastest growth rates for million to the local economy between 2012 and 2014.the top 27 markets. In comparison, occupancy in NewOrleans fell 8.1 percentage points in 2009, while revPARdecreased 11.8%.Following the spring 2010 gulf oil spill, Greater New OrleansInc. estimated the gross revenue loss to the 10-parishregional economy from 2011 – 2013 would be between$115 - $173 million. However, it appears that the demandfor hotel rooms strengthened in 2010 due in part to aninflux of cleanup workers into the area, along with increasedmarketing funds from the state.In 2010, Louisianas Office of Tourism launched “ReelLouisiana,” a user-generated marketing effort to counter thenegative impact on tourism from the oil spill. Agencies areworking with local businesses to encourage visitors andresidents to post live videos of their experiences onYouTube, Facebook, Twitter, and other social networking Hospitality Vision US Performance Review 9
  • 10. New York American Airlines plans to expand its New York network and With a 14% gain, New York reported the second-highest direct presence in the city with seven new destinations that revPAR increase of the top U.S. markets for the year-to- will be served by 23 additional flights to and from JFK and November 2010. New York also posted the largest ADR LaGuardia airports. Plans are also underway to upgrade increase, up 7.7%, to U.S. $228. The ADR increase drove the aircraft and improve terminal facilities in the metropolitan area. bulk of New York’s revPAR growth. The 25.5 million room nights sold represented a record for an 11-month period, and exceeded the previous high by more than 2 million room nights, according to STR results. Late spring 2010, the global travel market was disrupted by the volcano eruption in Iceland. Since international tourists make up 20 percent of the market’s total visitor population,13 New York tourism officials worried such travel disruptions could cost the city. According to NYC & Co., international tourist activity accounts for over half of all tourism spending. In the end, New York managed to outpace the other top markets in both ADR and revPAR gains. Additionally, the improvement in New York City’s hotel metrics has meant an upsurge in new hotel openings over the past 18 months, with the addition of 37 properties and 6,425 rooms, according to Cushman & Wakefield. Oahu Island Hotel room demand on the island rose during the first 11 Mayor Bloomberg’s office reported over 48.7 million people months of 2010, according to STR metrics. Occupancy visited New York City in 2010, up 6.8% from 2009 and gained 7.8 percentage points over January – November surpassing early projections. The 2010 tourist count 2009 and revPAR advanced 6.8%. These gains follow a included 39 million U.S. visitors and 9.7 million from weakened 2009 when occupancy fell 2.0 percentage points abroad.14 Tourists brought $31 billion into the city’s hotels, and revPAR dropped a large 13.5%. restaurants, shops and cultural institutions. The state of Hawaii experienced an upturn in visitors in The business travel environment is also improving. In New 2010, with growth rates improving as the year progressed. York, the upscale, full-service hotels that have long been The Hawaii Tourism Authority (HTA) reported that for the favored by business travelers are rebounding.15 first 11 months of 2010, arrivals to the state were up 8.6% from a year ago and expenditures were up 16%. However, New York City is investing time and funds in the quest for for the single month of November, expenditures were up a more visitors. In October 2010, NYC & Co., the city’s official sharp 30.4% from November 2009. It was the third marketing and tourism bureau, launched “The Live More consecutive month that spending rose by double digits. Tour,” a partnership with Miami, Chicago, Los Angeles, and American Airlines. The campaign is intended to increase A 2010 report from the University of Hawaii noted that Oahu tourism and more frequent travel between the cities during Island would be the primary beneficiary of the state’s tourism the winter months through flight deals and other consumer recovery in 2011. HTA data show that a rebound in tourists promotions. from the U.S. and Japan are contributing to the upturn. Room rate discounts are also helping to draw visitors.10
  • 11. Disney announced in July 2010 plans to open its first resorton Oahu, in 2011. The property, with 800-plus units and aPolynesian village design, will be called Aulani, a DisneyResort & Spa. The 21-acre leisure spot is being built in KoOlina, in an area that has a man-made beach carved out ofthe rocky coastline. Aulani is a departure for Disney becauseit is the company’s first project not linked to a theme park orits cruise line.A new luxury hotel, the Waikiki Edition, opened in Honoluluin the fall of 2010. The 353-room Edition is the first of a newbrand being offered by Marriott International, in partnershipwith high-end hotelier Ian Schrager.OrlandoOrlando remains a favorite family destination. Results of thelatest annual Travel Trends survey 2010 revealed thatvacationers prefer the family-oriented attractions of Orlandosuch as Walt Disney World and Universal Studios.16 Theaddition of The Wizarding World of Harry Potter to Universal area that are promoting eco-friendly initiatives will also seekStudios possibly helped tourism in 2010. to be rated.18While the Greater Orlando Aviation Authority reports that The Marriott Vacation Club announced in June 2010 thethe Orlando International Airport saw a 7.9% increase in opening of Marriotts Lakeshore Reserve at Grande Lakes inpassenger traffic in the month of October 2010, hotel Orlando. This resort is the first Marriott Vacation Club to bemetrics remain relatively flat. Year-to-November 2010 located with a JW Marriott and a Ritz-Carlton. For the firstrevPAR increased a slight 3.1%, but the average room rate time in North America, a Marriott Vacation Club haswas down 2.5%, primarily due to an increase in supply in introduced two-story town homes in addition to two- andthe marketplace. three-bedroom villas.19The opening of Northwest Florida Beaches International After a decade of planning and two-and-a-half years ofAirport near Panama City Beach in May 2010 created a new construction, The Peabody Orlando in September 2010air-travel corridor between the Panhandle and Central unveiled its $450 million expansion. The upscale resortFlorida meant to draw more tourists and conventions.17 features 1,641 guestrooms and 300,000 square feet of flexible meeting space. One of the goals of the expansionFourteen Orlando hotels were awarded the Green Eco-Leaf was to make the Peabody a destination for more, and larger,rating as of June 2010. All Green Eco-Leaf-rated properties business meetings and conventions. Guestrooms feature,are committed to environmentally-friendly eco-initiatives, among other amenities, Wi-Fi Internet access and 42-inch,some of which include installation of low-energy lighting high definition televisions.20and energy sensors, conservation of water, use of off-gridenergy sources, and optional reuse of sheets and towels for Air France announced in September 2010 that it wouldmultiple-night stays. While the number of Orlando begin nonstop service from Orlando to Paris. Orlandoproperties that have achieved Green Eco-Leaf status may be tourism officials said international travel to Orlando wasrelatively small, it is anticipated that many lodgings in the expected to increase in the next two years.21 Hospitality Vision US Performance Review 11
  • 12. Phoenix Beginning in the summer of 2010, the threat of a travel The state of Arizona remained weak in 2010 as it struggled boycott in response to the states new immigration law through a major housing downturn. At year-end 2010, became a growing concern in the business community. The housing prices in Phoenix were down more than 50% from state’s tourism office estimated that conventions and tourists their high point in mid-2007, according to the S&P/ brought $16.6 billion to the state in 2009. Although there Case-Shiller Home Price Index. With a depressed housing were a number of meeting cancellations, the Governor’s Task market continuing to weigh on the economy, hotel demand Force on Tourism noted that it was difficult to determine the has experienced only a mild upturn. true economic loss from this development. The courts eventually struck down certain aspects of the immigration In the year-to-November 2010, occupancy in the Phoenix bill, and several boycotts were called off by year-end 2010. market was 6.7 percentage points higher than the same period in 2009, but revPAR was up only 1.0%, representing In a move to help the travel and tourism industry, the one of the worst performances of the markets followed by Phoenix City Council in the summer of 2010 approved a STR. Heavy room rate discounting likely contributed to the package that allows Phoenix’s Sky Harbor International small gain in revPAR. Airport to provide financial support to airlines that start new international flights to the city. It also began working on Demand for rooms has been weak for several years. financing a five-mile automated transit system linking Sky Occupancy rates declined 11.6 percentage points in 2009 Harbor International Airports terminal to the citys new and in 2008, and fell 2.2 percentage points in 2007. As a light-rail line as well as parking and rental car facilities. result, minimal new hotel construction has been taking place in the local market, although Starwood Hotels is expected to San Francisco open its first Westin hotel in downtown Phoenix in February Unlike many other markets that began experiencing 2011. Additionally, the Hyatt Regency Phoenix completed a weakness in their travel sectors in 2007 or 2008, the $15 million renovation in mid-2010. The extensive renewal downturn in hotel demand came later to the San Francisco included its 693 guestrooms, 37,000 square feet of meeting market. Following increases in both those years, revPAR space, and its rooftop restaurant. declined a sharp 18.8% for all of 2009. However, since February 2010 the area has enjoyed consecutive12
  • 13. year-over-year gains in revPAR. For the first 11 months of The city’s status as the nation’s capital and its large number2010, revPAR was up 6.9% from the same period in 2009. of tourist attractions are among the reasons why demandIn a move that is expected to attract more visitors and has not experienced wide swings.strengthen San Francisco’s tourism industry, the CaliforniaWelcome Center at Pier 39 was expanded to be triple its The city’s relatively stable travel and tourism sector has ledoriginal size. Aside from tripling the advertising space for to increased investment in hotels. A new partnership wasmajor city and state names, the new Center is partnering formed in May 2010 to restore DCs Southwest waterfront.with the U.S. Postal Service to allow visitors to more easily It is estimated that the project will cost $1.5 billion, makingsend souvenirs home. it one of Washington’s largest real estate projects. Construction is scheduled to start in 2012. The renovatedTravelers to San Francisco International Airport increased by 26-acre tract is expected to include three hotels, retaildouble-digit percentages in 2010 according to the airport. space, and waterfront promenades.22Part of the increase was due to the airport adding twoEuropean carriers, but visits also rose because of an increase in After a delay of more than a decade, ground was broken inthe number of tourists from Asia. This increase in international late 2010 for the 1,175-room Marriott Marquis which will betourists helped improve room demand in 2010. located next to the Walter E. Washington Convention Center, the area’s largest convention facility. The project isA rebound in the cruise industry may boost San Francisco’s expected to be complete in 2014 at a cost of $550 million.tourist economy in 2011. With the economy slowlyimproving, the industry looks stronger in 2011, according to The famed Watergate Hotel was sold in May 2010 forPeter Dailey, deputy director of the Port of San Francisco’s approximately $45 million to European investors. The newMaritime Department. Fifty-seven ships are planning to owners announced plans to restore the 251-room property,dock in San Francisco in 2011. That would be a 39% increase which had been vacant since 2007, to a luxury hotel that willfrom 2010. Some of the larger ships that use the city’s port include considerable meeting space.23as a home base can provide a $1 million economic boost tothe region, according to the Maritime Department. Pebblebrook Hotel Trust acquired the Monaco Washington DC hotel in September 2010 for $74 million. The upscaleIn mid-2010, Pebblebrook Hotel Trust acquired San Monaco, which opened in 2002, was originally builtFranciscos 416-room Sir Francis Drake Hotel. And on between 1839 and 1842 as the United States Post OfficeJanuary 1, 2011, HEI Hotels & Resorts announced the sale of and is said to be one of the oldest buildings in DC.the 360-room Le Meridien San Francisco for an undisclosedamount to Chesapeake Lodging Trust.Washington, DCSTR metrics for Washington, DC indicate that the marketdid not fall as steeply as most other areas in 2009, and ithas not recovered as strongly in 2010. In Washington DC,year-to-November occupancy improved only 4.0 percentagepoints from the first 11 months of 2009 and revPAR rose aslight 2.6% over the same period. The market is not impactedby the economic downturn as compared with most othercities. The changes in revPAR are due more to price elasticitythan to the economic downturn.The Washington-area metro has been one of the U.S.markets most resistant to economic changes in recent years. Hospitality Vision US Performance Review 13
  • 14. Conclusion At year-end 2010, both the global and U.S. economic contribute to the ease with which consumers today can find recoveries appeared to be strengthening. In particular, U.S. low pricing on hotel rooms. For their part, many hoteliers in consumer spending during the important December holidays 2010 began to embrace mobile technologies in particular as a was stronger than many had expected just a few months way of reaching out to specific customers. earlier. Pent-up demand was thought to be influencing the consumer’s desire to increase spending. The U.S. recession In 2010, business travel also started returning, and this officially began in December 2007, and while it officially recovery is likely to continue. The National Business Travel ended in June 2009, consumers have mostly remained Association expects business travel will rise 5% in 2011. cautious about spending. Instead of spending, they have “Companies are once again recognizing the value of been working at lowering their debt levels and increasing face-to-face meetings with customers, prospects, partners, their savings. and colleagues to build relationships and set the state for top-line growth,” said Michael W. McCormick, NBTA’s Pent-up demand also remains a factor in the U.S. hotel executive director.24 industry. However, despite improvements in 2010, occupancy and revPAR have a way to go before they return to prior Hotel sales and acquisitions are also expected to increase in peaks. RevPAR for example peaked in 2007 when for the year 2011. Jones Lang LaSalle Hotels expects hotel deals to rise it averaged $65. For the first 11 months of 2010 it averaged 25% this year. Real estate investment trusts and foreign only $58. investors are said to be fueling the demand for these transactions. Consumer interest in travel has received a boost from the implementation of new technologies over the last two years. With many economists expecting real GDP to continue to “LOSOMO” activities, involving LOcation, SOcial media and advance in 2011, the hotel industry is expected to share in the MObile technologies, have made it easier for travelers to upturn. J.P. Morgan in early 2011 reported in a note to clients research, book, and comment about their travel experiences. that it expects “high-single-digit” revPAR growth in 2011 and Additionally, online “flash sale” and “collective buying” sites 2012.25 Endnotes 1 South Florida Sun-Sentinel, November 20, 2010 14 Bloomberg press release, 2010 2 LVCA 15 NYtimes.com, July 27, 2010 3 Los Angeles Convention and Visitors Bureau official site 16 Las Vegas Sun, January 2010 4 Ibid 17 Orlando Sentinel, April 2010 5 Ibid 18 PRWeb, June 2010 6 Los Angeles Times, August 2010 19 Hotel News Resource, June 2010 7 Ibid 20 Exhibitors Daily, September 2010 8 Hotel News Now, September 2010 21 Associated Press, September 2010 9 The Los Angeles Business Journal, July 2011 22 Washington Post, May 24, 2010 10 The South Florida Business Journal, October 2010 23 Washington Post, May 27, 2010 11 Hyatt Hotels & Resorts, April 2010 24 Bloomberg.com, January 13, 2011 12 The Miami Herald, September 2010 25 Reuters, January 13, 2011 13 NYC & Company, 201114
  • 15. AuthorsAdam Weissenberg John Zamora Diane KutylaVice Chairman, US Tourism, Partner, Hospitality and Cruise Lines Leader Senior ManagerHospitality & Leisure Leader Deloitte & Touche LLP Deloitte Services LPDeloitte & Touche LLP Tel: +1 305 372 3114 Tel: +1 973 602 6814Tel: +1 973 602 6789 johnzamora@deloitte.com dkutyla@deloitte.comaweissenberg@deloitte.comFor more informationFor more information about our Deloitte’s Tourism, Hospitality & Leisure practice, contact:US leader US Functional and sector leadersAdam Weissenberg Mike Gamache Scott RosenbergerVice Chairman, US Tourism, Partner, Audit & Enterprise Risk Services Leader Principal, Tourism, Hospitality & LeisureHospitality & Leisure Leader Deloitte & Touche LLP Consulting LeaderDeloitte & Touche LLP Tel: +1 973 602 6814 Deloitte Consulting LLPTel: +1 973 602 6789 mgamache@deloitte.com Tel: +1 404 942 6535aweissenberg@deloitte.com srosenberger@deloitte.com James C. CasconeGlobal leader Principal, Restaurants Co-Leader Shaya SchimelAlex Kyriakidis Deloitte & Touche LLP Partner, Tourism, Hospitality & LeisureGlobal Managing Partner Tel: +1 213 553 1300 Tax LeaderTourism Hospitality & Leisure cjcascone@deloitte.com Deloitte Tax LLPDeloitte & Touche LLP Tel: +1 602 234 5161Tel: +44 20 7007 0865 Guy Langford sschimel@deloitte.comAlt Tel: +9714 3322 487 (Dubai) Principal, Hospitality Merger &akyriakidis@deloitte.co.uk Acquisitions Leader Steve Steinhauser Deloitte & Touche LLP Director, Restaurants Co-Leader Tel: +1 212 436 3020 Deloitte & Touche LLP glangford@deloitte.com Tel: +1 213 688 3231 ssteinhauser@deloitte.com Jeff Ortwein Director, Gaming Leader John Zamora Deloitte & Touche LLP Partner, Hospitality and Cruise Lines Leader Tel: +1 702 893 3107 Deloitte & Touche LLP jortwein@deloitte.com Tel: +1 305 372 3114 johnzamora@deloitte.comTo learn more about our practice and access our thought leadership, visit us online at www.deloitte.com/us/thlVisit Deloitte.comTo learn more about our services, visit us online at www.deloitte.com/us/thl. Here you can access our complimentary Dbriefs webcast series, DeloitteInsights podcast program, innovative and practical industry research, and a lot more about the issues facing retailers from some of the industry’s mostexperienced minds. Hospitality Vision US Performance Review 15
  • 16. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment,legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basisfor any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult aqualified professional advisor.Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, eachof which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of DeloitteTouche Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLPand its subsidiaries.Copyright © 2011 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited