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Hot New Trends in Hospitality. Moving From Simmer to Sizzle.

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2010 ULI Fall Meeting Presentation

2010 ULI Fall Meeting Presentation
October 13, 2010
9:00 am to 10:15 am

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    Hot New Trends in Hospitality. Moving From Simmer to Sizzle. Hot New Trends in Hospitality. Moving From Simmer to Sizzle. Presentation Transcript

    • Hot New Trends in Hospitality. Moving from Simmer to Sizzle. Wednesday, October 13 9:00 a.m. - 10:15 a.m.
    • The worst year on record is now behind us. 2
    • National Horizon Where We Have Been Long Term Average 2006 2007 2008 2009 Supply 2.2% 0.2% 1.3% 2.5% 3.1% Demand 1.5% 0.5% 0.8% -2.1% -5.9% Occupancy 62.2% 63.1% 62.8% 60.0% 54.7% ADR 2.9% 7.6% 6.4% 2.8% -8.8% RevPAR 2.3% 7.9% 5.9% -1.9% -16.8% Record Decline Source: Colliers PKF Hospitality Research – September-November 2010 Hotel Horizons® Report, Smith Travel Research 3
    • The Hotel Market Cycle Moving Past the Trough Rapid Rapid Development Development Development Lodging Picks Up Equilibrium Decline, Leads ADR Other Sectors 2013-2014 Long Run U.S. is Here Occupancy A Year Ago 2011-2012 ADR and Occupancy Margins Declines, Recover ADR Follows Development Occupancy Slows Recovers Development at Minimum Lodging Recovers, Levels Lags Other Sectors 4
    • National Horizon U.S. National Forecast Long Term Average 2010F 2011F 2012F Supply 2.2% 2.0% 1.1% .08% Demand 1.5% 7.3% 3.2% 4.9% Occupancy 62.2% 57.5% 58.7% 61.0% ADR 2.9% -0.6% 3.8% 6.3% RevPAR 2.3% 4.6% 5.9% 10.6% Record Increase Source: Colliers PKF Hospitality Research – September-November 2010 Hotel Horizons® Report, Smith Travel Research 5
    • Change in Number of Events Percent of Meeting Planners - More Meetings and Exhibitions 100% 80% 70% 72% 55% 57% 60% 40% 32% 24% 22% 20% 18% 20% 12% 12% 6% 0% Meetings From 2009 to Meetings From 2010 to Exhibitions From 2009 Exhibitions From 2010 2010 2011 to 2010 to 2011 Increase Decrease Stay The Same Source: ConventionSouth, Colliers PKF Hospitality Research 6
    • Recovery Will Be Strong Through 2013 Annual Change in Unit-Level NOI* 80% +64.6% - 1943 +10.8% - 2011F +17.9% - 2012F +21.7% - 2013F 40% 0% -19.4% - 2001 -22.4% - 1938 -35.4% - 2009 -40% 1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2013F Note: * Before deductions for capital reserve, rent, interest, income taxes, depreciation, and amortization. Source: Colliers PKF-HR, Trends® in the Hotel Industry sample. 7
    • Nominal Dollar Operating Profits* Just Back to 2005 $18,000 $17,198 $17,158 $16,506 $16,006 $15,621 $14,124 $14,257 $13,862 $14,000 $12,531 $12,229 $12,095 $10,977 $10,663 $10,912 $10,000 $6,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010F 2011F 2012F Dollars per Available Room Note: * Before capital reserve, debt service, rent, income taxes, depreciation, amortization. Source: Colliers PKF Hospitality Research 8
    • The Cycle of Hotel Real Estate Emotions- What Better Time? 2007 2008 – 1st Half 2011-12 2008 – 2nd Half 2004 2011 2009-2010 9
    • More Profits = More Transactions? Unit Level Hotel Profits* and Hotel Transaction Volume Note: * Before deduction for capital reserve, rent, interest, income taxes, depreciation, and amortization. Sources: Real Capital Analytics July 2010, Colliers PKF Hospitality Research, September 2010 Hotel Horizons® Report 10
    • Summary When will profit growth return and be sustained? a) Supply/demand imbalance; capital market turmoil and depressed market values will keep development at a standstill into 2012/2013. b) Signs are positive that recovery has begun to accelerate; however, a buyer’s market will persist into 2011. Six consecutive quarters of rate declines ended in Q2 2010, leading to c) Profit growth in 2010 – stays well-above average through 2013. 11
    • Thank you for your time. www.pkfc.com 12