NYU Tisch Center Economic Recovery Briefing for the US Hospitality IndNYU Tisch Center Economic Recovery Briefing for the US Hospitality Industryustry
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NYU Tisch Center Economic Recovery Briefing for the US Hospitality Industry

NYU Tisch Center Economic Recovery Briefing for the US Hospitality Industry

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NYU Tisch Center Economic Recovery Briefing for the US Hospitality IndNYU Tisch Center Economic Recovery Briefing for the US Hospitality Industryustry NYU Tisch Center Economic Recovery Briefing for the US Hospitality IndNYU Tisch Center Economic Recovery Briefing for the US Hospitality Industryustry Presentation Transcript

  • NEW YORK UNIVERSITY School of Continuing and Professional Studies Preston R b t Ti h C t f P t Robert Tisch Center for Hospitality, Tourism, and Sports Management The U S E Th U.S. Economic Recovery: i R Chain Scale Segments, Top 25 Markets, Demand Segments and Profits The Fourth in a Series of NYU Tisch Center Economic Briefings February 2010 ©NYU 2010
  • Steven M. L St M Lambert, M A b t M.A. Director of Administration and Industry Relations NYU Tisch Center ©NYU 2010
  • Bjorn Hanson, Ph.D. j , Clinical Associate Professor NYU Tisch Center ©NYU 2010
  • Agenda 1. U.S. Recessions 2. U.S. Lodging Industry: Cycles and Performance 3. Analysis of U.S. Lodging Recoveries y g g 4. U.S. Lodging RevPAR Trends: Implications for this  Recovery 5. Two RevPAR Recovery Analyses 6. RevPAR Forecasts 7. Structural Changes l h 8. Conclusions ©NYU 2010
  • Section 1 ‐ U.S. Recessions ©NYU 2010
  • U.S. Recessions Dates D t Duration D ti Aug. 1929 to March 1933 43 months May 1937 to June 1938 13 months Feb. 1945 to Oct. 1945 8 months Nov. 1948 to Oct. 1949 11 months July J l 1953 t M 1954 to May 10 months th Aug. 1957 to April 1958 8 months April 1960 to Feb. 1961 10 months Dec. 1969 to Nov. 1970 11 months Nov. 1973 to March 1975 16 months Jan. Jan 1980 to July 1980 6 months July 1981 to Nov. 1982 16 months July 1990 to March 1991 8 months March 2001 to Nov. 2001 8 months December 2007 to Feb. 2010 26 months* *To date Source: National Bureau of Economic Research ©NYU 2010
  • For further information on “The U.S. Economy, the  Stock Market and its Effect on the Lodging Industry ,  Stock Market and its Effect on the Lodging Industry”, please refer to the Tisch Center NYU February Podcast  at: http://www.scps.nyu.edu/tischpodcast 
 ©NYU 2010
  • Section 2 ‐ The U.S. Lodging Industry:  Cycles and Performance Relative to  C l dP f R l i Recessions ©NYU 2010
  • Long-Term U.S. Occupancy g p y Occupancy Percentage 95% 1946 Long-Term Trend 1987 to 2007 Trend 90% 92.5% 63.34% (81 Years) 62.7% (20 Years) 85% 80% 75% 1979 72.2% 70% 1995 64.8% 2008 65% 60.3% 60% 1971 1991 1933 61.9% 2002 2009 55% 53.4% 50.6% 59.0% 55.2% 50% 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 '00 '03 '06 '09 Sources: PricewaterhouseCoopers LLP (1928 to 1986 and 2008), Smith Travel Research (1987 to 2009). Sources: PricewaterhouseCoopers LLP (1928 to 1986 and 2008), Smith Travel Research (1987 to 2009) ©NYU 2010
  • Timeline of Recessions & Historic Events  1962 Cuban Missile 2002 U.S. invasion Crisis Ci i of Iraq 1953 1973 Korean 1963 Oil Embargo 1982 War Ends 1991 JFK Falklands War Persian Gulf War Assassinated 2003 SARS 1950 1960 1970 1980 1990 2000 2010 1987 2001 2008 1979 Black September H1N1 Iranian Monday 11th Attacks Oil 2008 1967 1995 1958 Lehman 6 Day War in Crisis 1991 Oklahoma First domestic Brothers Middle East USSR City Bombing jet airline Chapter 11 2008 1963 Collapse Bear LBJ Expands 1991 Stearns War in Vietnam Yugoslav Wars Collapse ©NYU 2010
  • U.S. Lodging Demand and Recessions 2700 2400 2100 1800 1500 1200 900 Source: National Bureau of Economic Research & Smith Travel Research ©NYU 2010
  • U.S. Recessions and Lodging Cycles g g y U.S. Recessions Months Lodging Cycles Months Dec. 1969 to Nov. 1970 11 Feb. 1969 to Feb. 1971 12 Nov. Nov 1973 to March 1975 16 Aug. Aug 1974 to May 1975 9 Jan. 1980 to July 1980 6 Oct. 1979… - July 1981 to Nov. 1982 16 … to May 1982 19 July 1990 to March 1991 8 Feb. Feb 1990 to March 1991 13 March 2001 to Nov. 2001 8 Sept. 2000 to Sept. 2003 36 Dec 2007 to Feb. 2010 26 Source: Smith Travel Research and National Bureau of Economic Research ©NYU 2010
  • Section 3 ‐ U.S. Lodging Recoveries S i 3 US L d i R i ©NYU 2010
  • Definitions of Recovery 1. Return to a prior trend line 2. Favorable trend following a trough 3. Return to a prior performance level ©NYU 2010
  • 3. Return to a prior performance level Years from Years from prior trough peak to to recovery y recovery from prior Years from from Y f f Years f Y i trough to peak to recovery recovery 2/5 years ©NYU 2010
  • Total U.S. Lodging Industry ©NYU 2010
  • Total U.S. Occupancy 1969 Recession 1991 R Recession i 2007 R Recession i 1973 Recession 1980 Recession 2001 Recession 125 centage 115 cupancy Perc 105 Indexed Occ 95 Trough 85 4 3 2 1 1 2 3 4 5 Years Prior to Trough Years Past Trough Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
  • Total U.S. Nominal ADR 1991 R Recession i 2001 R Recession i 1973 Recession 1980 Recession 2007 Recession 140 130 erage Daily Rate $ 120 R 110 100 Indexed Ave 90 80 Trough 70 4 3 2 1 1 2 3 4 5 Years Prior to Trough Years Post Trough Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
  • Total U.S. Real ADR 1991 R Recession i 2001 R Recession i 1973 Recession 1980 Recession 2007 Recession 140 130 erage Daily Rate $ 120 R 110 100 Indexed Ave 90 80 70 Trough Trough 60 4 3 2 1 1 2 3 4 5 Years Prior to Trough Years Post Trough Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
  • Total U.S. Nominal RevPAR 1991 R Recession i 2001 R Recession i 1973 Recession 1980 Recession 2007 Recession 140 130 120 110 Indexed RevPAR $ 100 90 80 70 Trough Trough 60 4 3 2 1 1 2 3 4 5 Years Prior to Trough Years Post Trough Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
  • Total U.S. Real RevPAR 1991 R Recession i 2001 R Recession i 1973 Recession 1980 Recession 2007 Recession Indexed RevPAR $ Trough Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
  • Total U.S. Demand 1991 R i Recession 2001 R i Recession 1973 Recession 1980 Recession 2007 Recession Trough Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
  • Total U.S. Supply 1991 R i Recession 2001 R i Recession 1973 Recession 1980 Recession 2007 Recession Trough Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
  • Total U.S. Supply Change Total U.S. Supply Change 12 10 8 rcent 6 Per 4 2 0 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 -2 Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
  • U.S. Lodging Chain Scale Segments U S L d i Ch i S l S ©NYU 2010
  • Graphs Provided For:  Graphs Provided For: Graphs Of: Graphs Of: Total U.S. Occupancy Luxuryy Nominal Average Daily Rate g y Upper Upscale Real Average Daily Rate Upscale Nominal RevPAR Midscale with Food and Beverage Real RevPAR Midscale without Food and Beverage Supply Economy Supply Percentage Change Top 25 Markets Demand ©NYU 2010
  • Luxury Occupancy 2007 Recession 2001 Recession 1991 Recession 2006: 71.5% 4/8 years centage 1997: 74.1% cupancy Perc 1.5/4.5 years Indexed Occ 1988: 67.1% Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Luxury Nominal ADR 2007 Recession 2001 Recession 1991 Recession erage Daily Rate $ R 2007: $290.41 1.5 1 5/4.5 years Indexed Ave 2000: $236.04 1990: .25/1.25 years $128.68 $128 68 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Luxury Real ADR 2007 Recession 2001 Recession 1991 Recession erage Daily Rate $ 2007: 2007 R $290.41 1.5/4.5years Indexed Ave 2000: $228.06 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Luxury Nominal RevPAR 2007 Recession 2001 Recession 1991 Recession 2007: $ 0 0 00 $207.40 Indexed RevPAR $ 3/5 years 2000: $172.26 1990: .5/1.5 years $84.21 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Luxury Real RevPAR y 2007 Recession 2001 Recession 1991 Recession Indexed RevPAR $ 2/5 years y 2000: $166.43 1990: .25/1.25 years $79.67 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Luxury Demand y 2007 Recession 2001 Recession 1991 Recession Millions 145 2007: 23.879 135 125 115 105 1994: .25/1.25 years 95 13.931 2000: 1/1.5 years 16.864 85 Trough 75 4 3 2 1 1 2 3 4 5 6 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Luxury Supply 2007 Recession 2001 Recession 1991 Recession Millions 150 140 130 2008: 35.059 million 120 110 .25/1.25 years 100 1994: 90 19.851 million Trough 80 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Luxury Supply Change Luxury Supply Change 14 12 10 8 6 rcent Per 4 2 0 1988 1991 1994 1997 2000 2003 2006 2009 -2 1 1 1 1 2 2 2 2 -4 Source: Smith Travel Research ©NYU 2010
  • Upper Upscale Occupancy 2007 Recession 2001 Recession 1991 Recession 111 2007: 71.2% 5/7 years 109 ndexed Occupancy Percentage 2000: 107 72.2% 105 1.5/3.5 years 103 1991: 1991 101 66.2% 99 In 97 95 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upper Upscale Nominal ADR 2007 Recession 2001 Recession 1991 Recession erage Daily Rate $ 2008: R 2000: $109.85 $138.43 2/4.75 years Indexed Ave 1990: .5/1.5 years $92.29 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upper Upscale Real ADR 2007 Recession 2001 Recession 1991 Recession 130 erage Daily Rate $ R 120 2000: 2008: $153.92 1.75/ 110 $133.75 $133 75 4.75 years Indexed Ave 100 1990: $87.32 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upper Upscale Nominal RevPAR  2007 Recession 2001 Recession 1991 Recession 140 130 2007: $112.49 2000: 2/5.25 years Indexed RevPAR $ 120 $100.00 110 100 1990: 1.25/2.25 years y $62.56 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upper Upscale Real RevPAR 2007 Recession 2001 Recession 1991 Recession 2007: 00 $109.26 2000: 2/5 years Indexed RevPAR $ $96.62 1990: 1990 .5/1.50 years y $59.18 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upper Upscale Demand 2007 Recession 2001 Recession 1991 Recession Millions 2007: 141.229 135 125 115 2000: 125.958 2.75/3.75 years 105 1990: .25/1.25 years 95 99.255 Trough 85 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upper Upscale Supply 1991 Recession 2001 Recession 1991 Recession Millions 2008: 205.811 1992: 152.027 152 027 1.5/3.5 1 5/3 5 years 2002: 183.883 183 883 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upper Upscale Supply Change 6 5 4 3 rcent 2 Per 1 0 1989 1993 1997 2001 2005 2009 -1 -2 Source: Smith Travel Research ©NYU 2010
  • Upscale Occupancy 2007 Recession 2001 Recession 1991 Recession 115 2005: 70.3% 110 entage upancy Perce 1998: 1998 105 70.8% 100 1/2 years Indexed Occu 1994: 1994 95 73.1% 90 Trough 85 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upscale Nominal ADR 2007 Recession 2001 Recession 1991 Recession erage Daily Rate $ R 2008: 2000: $119.62 1.5/4.5 years $98.52 Indexed Ave 1990: .5/1.5 years y $68.59 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upscale Real ADR 2007 Recession 2001 Recession 2007 Recession 130 erage Daily Rate $ 120 R 2008: 110 2000: $115.01 1.5/4.5 years $95.19 $95 19 Indexed Ave 100 1990: $64.89 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upscale Nominal RevPAR 2007 Recession 2001 Recession 1991 Recession 2007: $81.75 1.5/4.5 1 5/4 5 years Indexed RevPAR $ 2000: $69.30 1990: .25/1.25 years $45.39 $45 39 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upscale Real RevPAR 2007 Recession 2001 Recession 1991 Recession 135 2007: 125 $79.42 2000: Indexed RevPAR $ 1.5/4.5 years 115 $66.95 105 1990: 95 $42.94 Trough 85 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upscale Demand 2007 Recession 2001 Recession 1991 Recession Millions 145 2008: 108.627 135 125 115 2000: 105 82.052 95 1990: 85 37.018 75 Trough 65 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upscale Supply 2007 Recession 2001 Recession 1991 Recession Millions 150 140 2008: 130 162.660 120 110 2004: 142.292 100 90 1991: 59.173 59 173 80 Trough 70 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Upscale Supply Change Upscale Supply Change rcent Per Source: Smith Travel Research ©NYU 2010
  • Midscale with F&B Occupancy 2007 Recession 2001 Recession 1991 Recession 2006: 59.5% 113 entage 110 2000: 60.3% 3/6 years y upancy Perce 107 1989: 62.6% 4/6 years 104 Indexed Occu 101 98 Trough 95 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale with F&B Nominal ADR 2007 Recession 2001 Recession 1991 Recession 125 120 erage Daily Rate $ 115 R 110 2008: 2000: $88.33 105 1/4 years Indexed Ave $73.86 100 1991: 95 $53.25 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale with F&B Real ADR 2007 Recession 2001 Recession 1991 Recession 125 120 erage Daily Rate $ 115 R 110 2008: 105 2000: Indexed Ave $84.92 $71.36 100 1/4 years 1991: 95 $50.19 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale with F&B Nominal RevPAR 2007 Recession 2001 Recession 1991 Recession 130 125 120 2007: $50.57 $ 115 2000: Indexed RevPAR $ $44.55 110 3/4.5 years 105 100 1990: 1.5/2.5 years $32.83 $32 83 95 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale with F&B Real RevPAR 2007 Recession 2001 Recession 1991 Recession 130 125 120 2007: 115 2000: $49.13 Indexed RevPAR $ $43.04 1.5/4.5 years 110 105 100 1990: .5/1.5 years 95 $31.06 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale with F&B Demand 2007 Recession 2001 Recession 1991 Recession Millions 170 160 2005: 119.116 150 140 130 1998: 120 144.008 110 1989: 147.845 8 5 1.25/2.25 years 100 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale with F&B Supply Millions 2007 Recession 2001 Recession 1991 Recession 150 2008: 201.743c 140 130 120 2000: ©NYU 2010 ©NYU 2010 2000: 2000 110 228.800 228.800 1/2.5 years 100 1994: 90 243.433 Trough 80 4 3 2 1 1 2 3 4 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale with F&B Supply Change Midscale with F&B Supply Change rcent Per Source: Smith Travel Research ©NYU 2010
  • Midscale Without F&B Occupancy 2007 Recession 2001 Recession 1991 Recession 115 2006: 66.10% centage 110 1.5/5.5 1 5/5 5 years cupancy Perc 105 1997 66.0% Indexed Occ 100 1989: .25/2.25 years 65.9% 95 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale Without F&B Nominal ADR 2007 Recession 2001 Recession 1991 Recession 135 erage Daily Rate $ 125 R 115 2007: $90.19 $ Indexed Ave 105 95 2001: 1.5/2.5 years 1990: 1990 $67.51 $43.81 Trough 85 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale Without F&B Real ADR 2007 Recession 2001 Recession 1991 Recession 135 erage Daily Rate $ 125 R 115 2008: 2008 Indexed Ave 105 $120.80 .25/1.25 years 95 1990: $44.03 Trough 85 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale Without F&B Nominal RevPAR 2007 Recession 2001 Recession 1991 Recession 135 125 2007: Indexed RevPAR $ $57.02 115 105 1.5/3.5 years 2000: 95 $41.91 $41 91 1993: $39.21 Trough 85 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale Without F&B Real RevPAR 2007 Recession 2001 Recession 1991 Recession 2007: Indexed RevPAR $ $55.40 .25/4.25 years 2000: $40.77 $40 77 1998: 1998 $38.60 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale Without F&B Demand 2007 Recession 2001 Recession 1991 Recession Millions 190 170 150 2008: 2008 170.462 130 110 1999: 1999 116.139 90 1992: 70 49.473 Trough 50 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale Without F&B Supply Millions 2007 Recession 2001 Recession 1991 Recession 2008: 273.913 1990: 59.108 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Midscale without F&B Supply Change pp y g rcent Per Source: Smith Travel Research ©NYU 2010
  • Economy Occupancy 2007 Recession 2001 Recession 1991 Recession 115 2005: 2005 57.4% centage 2000: 110 58.5% 3/6 years y 2/5 years y cupancy Perc 105 1989: 64.7% Indexed Occ 100 95 Trough 90 4 3 2 1 1 2 3 4 5 6 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Economy Nominal ADR 2007 Recession 2001 Recession 1991 Recession 120 115 erage Daily Rate $ 110 2008: $54.37 105 Indexed Ave 2002: $46.81 .75/2.75 years 100 1990: 1990 .5/4.5 years 5/4 5 $37.59 Trough 95 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Economy Real ADR 2007 Recession 2001 Recession 1991 Recession erage Daily Rate $ R 2008: 2008 Indexed Ave $52.28 1991: $35.56 2002: .5/1.5 years $46.07 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Economy Nominal RevPAR 2007 Recession 2001 Recession 1991 Recession 2007: $30.62 Indexed RevPAR $ 2000: $27.54 2/3.5 years 1989: 2.25/5.25 years $23.81 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Economy Real RevPAR 2007 Recession 2001 Recession 1991 Recession 2007: $29.74 $29 74 2000: Indexed RevPAR $ $26.60 1.5/4.5 years 1.75/4.75 years 1989: $22.65 $22 65 Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Economy Demand Millions 2007 Recession 2001 Recession 1991 Recession 150 2007: 153.392 2007 153 392 140 130 120 2000: 110 153.481 4/6 years 100 1990: 90 115.785 80 Trough 70 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Economy Supply 2007 Recession 2001 Recession 1991 Recession Millions 2008: 274.449 130 120 110 2002: 271.002 100 1990: 1/1.5 years 90 183.024 80 70 Trough 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Economy Supply Change Economy Supply Change rcent Per Source: Smith Travel Research ©NYU 2010
  • Top 25 Markets ©NYU 2010
  • Top 25 Markets Occupancy 2007 Recession 2001 Recession 1991 Recession 113 2007: 68.02% 2/5 years centage 110 2000: cupancy Perc 68.74% % 107 2/4.25 years 104 1990: Indexed Occ 66.28% 101 98 Trough 95 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • U.S. Top 25 Markets Nominal ADR 2007 Recession 2001 Recession 1991 Recession 135 125 erage Daily Rate $ R 2007: 115 2000: $123.36 1.5/4.5 $99.45 years Indexed Ave 105 95 1990: $68.02 Trough 85 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • U.S. Top 25 Markets Real ADR 2007 Recession 2001 Recession 1991 Recession 140 130 erage Daily Rate $ R 120 2007: 2000: 2000 1.25/4.25 1 25/4 25 Indexed Ave 110 $118.61 years $96.09 100 1990: $64.35 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • U.S. Top 25 Markets Nominal RevPAR 2007 Recession 2001 Recession 1991 Recession 140 130 2007: 2007 2000: $84.86 1.5/4.5 years Indexed RevPAR $ 120 $70.99 110 1991: $45.82 100 .75/1.75 years Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • U.S. Top 25 Markets Real RevPAR 2007 Recession 2001 Recession 1991 Recession 140 130 2007: 1.75/4.75 2000: 120 $81.82 Indexed RevPAR $ $68.59 years 110 100 .5/1.50 years y 1990: $43.35 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • U.S. Top 25 Markets Demand 2007 Recession 2001 Recession 1991 Recession Millions 190 2000: 43.821 170 1990: 32.405 150 130 110 2007: 90 29.113 Trough 70 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • U.S. Top 25 Markets Supply 2007 Recession 2001 Recession 1991 Recession Millions 110 105 1991: 2000: 32.5101 100 38.982 38 982 95 2007: 40.756 90 Trough 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Top 25 Markets Supply Change Top 25 Markets Supply Change Source: Smith Travel Research ©NYU 2010
  • U.S. Top 25 Markets Cycles and Recoveries  U S Top 25 Markets Cycles and Recoveries Relative to Total U.S. Lodging ©NYU 2010
  • Top 25 Markets and Total U.S. Occupancy Total U.S. 2007 Total U.S. 2001 Total U.S. 1991 Top 25 2007 Top 25 2001 Top 25 1991 115 centage 110 cupancy Perc 105 Indexed Occ 100 Trough 95 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Top 25 Markets and Total U.S. Nominal RevPAR Total U.S. 2007 S Total U.S. 2001 S Total U.S. 1991 S Top 25 2007 Top 25 2001 Top 25 1991 Indexed RevPAR $ Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Top 25 Markets and Total U.S. Nominal ADR Top 25 2001 Total U.S. 2001 Total U.S. 1991 Total U.S. 2007 Top 25 2001 Top 25 1991 130 erage Daily Rate $ R 120 Indexed Ave 110 100 Trough 90 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Top 25 Markets and Total U.S. Demand Total U.S. 2007 Total U.S. 2001 Total U.S. 1991 Millions Top 25 2007 Top 25 2001 Top 25 1991 190 170 150 130 110 90 Trough 70 Trough 4 3 2 1 1 2 3 4 5 6 7 Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Top 25 Markets and Total U.S. Supply Total U.S. 2007 Total U.S. 2001 Total U.S. 1991 Millions Top 25 2007 Top 25 2001 Top 25 1991 Trough Trough Years Prior to Trough Years Post Trough Source: Smith Travel Research ©NYU 2010
  • Total U.S. and Top 25 Market Supply Change Total U.S. and Top 25 Market Supply Change Top 25 Markets Total U.S. 6 5 4 3 2 1 0 1988 1991 1994 1997 2000 2003 2006 -1 Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
  • Section 4 ‐ U.S. Lodging RevPAR Trends:  S ti 4 U S L d i R PAR T d Implications for this Recovery ©NYU 2010
  • Chain Scale Segment Recovery First to Recover 1991 Recession Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPAR Luxury Luxury Luxury Luxury Midscale w/o F&B Economy Upscale Upper Upscale Last to Recover 1991 Recession Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPAR Midscale w/F&B Midscale w/F&B Midscale w/F&B Upscale Upper Upscale Economy First to Recover 2001 Recession Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPAR Midscale w/o F&B Midscale w/F&B Midscale w/o F&B Upscale Midscale w/o F&B Economy Midscale w/F&B Upper Upscale Last to Recover 2001 Recession Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPAR Upper Upscale Midscale w/o F&B Upper Upscale Luxury Economy Upper Upscale ©NYU 2010
  • Top 25 Market & Total US Recovery First to Recover 1991 Recession Occupancy Nominal ADR Nominal RevPAR Top 25 Markets Total US Top 25 Markets First to Recover 2001 Recession Occupancy Nominal ADR Nominal RevPAR Top 25 Markets Total US Top 25 Markets ©NYU 2010
  • Demand Segment Cycles  Demand Segment Cycles and Recoveries ©NYU 2010
  • Demand Segments – Cycle and Recoveries  Order of decline in demand • Business/Commercial • Group/Convention • SMERF • Leisure Percentage decline of demand • Group/Convention • / Business/Commercial • SMERF • Leisure  Duration to Recovery (first to last) Duration to Recovery (first to last) • Leisure  • SMERF • B i Business/commercial / i l • Group/ Convention ©NYU 2010
  • Perverse Math Perverse Math Average Daily Rate  Average Daily Rate $200 50 percent decline    50 percent decline $100 50 percent increase  $ $150 ©NYU 2010
  • Section Five: Two RevPAR  Section Five Two RevPAR Recovery Analyses ©NYU 2010
  • 1. Long term RevPAR  +3.1 percent 2.  U.S. RevPAR peaked 2007    $63.75 3. Assumed RevPAR trough 2010   $53.40  If RevPAR were to increase by 3.1 percent,  If RevPAR were to increase by 3.1 percent, recovery to 2007 levels would be 2017 (worst  case) 4.    U.S. RevPAR recovery has averaged 7.57  percent for 4 years post trough (since 1968) percent for 4 years post trough (since 1968)  If RevPAR were to increase by 7.57 percent for  four years, 3.1 percent thereafter, recovery to  four years 3 1 percent thereafter recovery to 2007 levels would be 2013 (best case) ©NYU 2010
  • Section 5 ‐ RevPAR Forecasts ©NYU 2010
  • 2009 – 2010 U.S. Lodging RevPAR Forecasts   g g Source S 2010 2011 Smith Travel Research ( ) (3.2) 4.2 PKF Research (1.3) 5.9 PricewaterhouseCoopers (1.5) *Forecasts as of February 13, 2010 Source: Individual organizations ©NYU 2010
  • Section 7 ‐ Structural Changes ©NYU 2010
  • Structural Changes – Demand ©NYU 2010
  • Demand Elasticity and Correlation  to Real GDP 1987 value = 100 180 170 US Real GDP 160 150 140 130 Lodging Demand 120 (Room Nights Sold) 110 100 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 Sources: Lodging demand –– PricewaterhouseCoopers LLP based on Smith Travel Research data; Real GDP- U.S. Sources: Lodging demand PricewaterhouseCoopers LLP based on Smith Travel Research data; Real GDP- U.S. Bureau of Economic Analysis; Air travel demand - Air Transport Association. Bureau of Economic Analysis; Air travel demand - Air Transport Association. ©NYU 2010
  • Structural Changes – Profits ©NYU 2010
  • Long‐Term Occupancy Levels and Profits Income Before Income Taxes, Billions of Dollars Occupancy Percentage $30 68% 66% $25 64% $20 62% $15 60% $10 58% 56% $5 54% $0 52% ($5) Aggregate Profits Occupancy 50% ($10) 48% 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Note: STR Smith Travel Research Sources: change in method in 2002 Sources: Smith Travel Research, 2009 NYU Tisch Center Estimate ©NYU 2010
  • U.S. Lodging Industry Net Income as a  Ratio to Revenue R ti t R 25 20 15 10 5 0 87 89 91 93 95 97 99 01 03 05 07 09 Sources: Smith Travel Research, 2009 NYU Tisch Center Estimate ©NYU 2010
  • Section 7 ‐ Comments & Conclusions ©NYU 2010
  • 1.   Lodging Industry forecasts are more challenging now  than ever before – record revisions 2. “Comparable” recessions and long term trends indicate   this “recovery” will be longer and less robust than  thi “ ” ill b l dl b t th average 3. The U.S. Lodging Industry spends more time in declines  3 The U S Lodging Industry spends more time in declines than in recoveries  4. During declines, occupancy usually precedes average  g p y yp g daily rate During recoveries, occupancy usually precedes average  daily rate   5. Industry RevPAR is unlikely to recover to 2007 levels until  2013 or later 2013 or later ©NYU 2010
  • 6. Luxury and Upper Upscale demand has declined during    all recessions, Economy during all but one recession Upscale and Midscale without Food and Beverage  demand declined only during the current recession demand declined only during the current recession Midscale with Food and Beverage has experienced a long   term trend of demand decline term trend of demand decline 7. The Top 25 Markets are much more volatile than the U.S.   with earlier and greater declines, but frequently with    earlier and stronger recoveries l d 8. Luxury may experience a favorable percentage increase,  but is likely to be among the last to recover but is likely to be among the last to recover 9. Upscale and Midscale without Food and Beverage will  likely emerge as stronger performers based on    absolute performance levels b l t f l l ©NYU 2010
  • 10. Leisure demand will remain favorable but is based on  discounting especially for Luxury di ti i ll f L 11. Group/convention demand is likely to recover after / business/commercial 12. It is probable that there will be a structural resetting of lodging demand – less demand relative to GDP 13. It is probable that the industry will emerge with     13 It i b bl th t th i d t ill ith structural resetting of profitability – higher profit     p y levels relative to occupancy and RevPAR ©NYU 2010
  • NYU Tisch Center Programs Undergraduate Degrees:  Undergraduate Degrees: ‐ B.S. in Hotel and Tourism Management ‐ B.S. in Sports Management Graduate Degrees and Graduate Certificates: ‐ M.S. Hospitality Industry Studies ‐ M.S. Sports Business ‐ M.S. Tourism and Travel Management Continuing Education and Professional Certificates: ‐ Food and Beverage Operations Food and Beverage Operations ‐ Hotel Operations ‐ Meeting, Conference, and Event Management For additional information: www.scps.nyu.edu/tischcenter ©NYU 2010
  • 32nd Annual NYU International Hospitality Industry Investment Conference June 6 - 8, 2010 Hosted by the New York University Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management Hospitality Tourism Location: The New York Marriott Marquis, New York City ocat o e e o a ott a qu s, e o C ty For additional information: www.nyu.edu/hospitalityconference ©NYU 2010
  • NEW YORK UNIVERSITY School of Continuing and Professional Studies Preston R b t Ti h C t f P t Robert Tisch Center for Hospitality, Tourism, and Sports Management The U S E Th U.S. Economic Recovery: i R Chain Scale Segments, Top 25 Markets, Demand Segments and Profits The Fourth in a Series of NYU Tisch Center Economic Briefings February 2010 ©NYU 2010