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Nyu Tisch Center Economic Recovery Briefing
1.
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
2.
Steven M. L
St M Lambert, M A b t M.A. Director of Administration and Industry Relations NYU Tisch Center ©NYU 2010
3.
Bjorn Hanson, Ph.D.
j , Clinical Associate Professor NYU Tisch Center ©NYU 2010
4.
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
5.
Section 1 ‐ U.S. Recessions
©NYU 2010
6.
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
7.
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
8.
Section 2 ‐ The U.S. Lodging Industry: Cycles and Performance Relative to
C l dP f R l i Recessions ©NYU 2010
9.
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
10.
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
11.
U.S. Lodging Demand and Recessions
2700 2400 2100 1800 1500 1200 900 Source: National Bureau of Economic Research & Smith Travel Research ©NYU 2010
12.
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
13.
Section 3 ‐ U.S. Lodging Recoveries S i
3 US L d i R i ©NYU 2010
14.
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
15.
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
16.
Total U.S. Lodging Industry
©NYU 2010
17.
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
18.
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
19.
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
20.
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
21.
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
22.
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
23.
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
24.
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
25.
U.S. Lodging Chain Scale Segments U S L
d i Ch i S l S ©NYU 2010
26.
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
27.
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
28.
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
29.
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
30.
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
31.
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
32.
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
33.
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
34.
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
35.
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
36.
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
37.
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
38.
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
39.
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
40.
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
41.
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
42.
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
43.
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
44.
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
45.
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
46.
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
47.
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
48.
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
49.
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
50.
Upscale Supply Change
Upscale Supply Change rcent Per Source: Smith Travel Research ©NYU 2010
51.
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
52.
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
53.
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
54.
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
55.
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
56.
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
57.
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
58.
Midscale with F&B Supply Change
Midscale with F&B Supply Change rcent Per Source: Smith Travel Research ©NYU 2010
59.
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
60.
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
61.
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
62.
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
63.
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
64.
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
65.
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
66.
Midscale without F&B Supply Change
pp y g rcent Per Source: Smith Travel Research ©NYU 2010
67.
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
68.
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
69.
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
70.
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
71.
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
72.
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
73.
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
74.
Economy Supply Change
Economy Supply Change rcent Per Source: Smith Travel Research ©NYU 2010
75.
Top 25 Markets
©NYU 2010
76.
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
77.
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
78.
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
79.
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
80.
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
81.
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
82.
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
83.
Top 25 Markets Supply Change
Top 25 Markets Supply Change Source: Smith Travel Research ©NYU 2010
84.
U.S. Top 25 Markets Cycles and Recoveries U S Top
25 Markets Cycles and Recoveries Relative to Total U.S. Lodging ©NYU 2010
85.
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
86.
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
87.
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
88.
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
89.
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
90.
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
91.
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
92.
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
93.
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
94.
Demand Segment Cycles Demand Segment Cycles
and Recoveries ©NYU 2010
95.
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
96.
Perverse Math
Perverse Math Average Daily Rate Average Daily Rate $200 50 percent decline 50 percent decline $100 50 percent increase $ $150 ©NYU 2010
97.
Section Five: Two RevPAR Section Five Two
RevPAR Recovery Analyses ©NYU 2010
98.
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
99.
Section 5 ‐ RevPAR Forecasts
©NYU 2010
100.
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
101.
Section 7 ‐ Structural Changes
©NYU 2010
102.
Structural Changes – Demand
©NYU 2010
103.
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
104.
Structural Changes – Profits
©NYU 2010
105.
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
106.
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
107.
Section 7 ‐ Comments & Conclusions
©NYU 2010
108.
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
109.
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
110.
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
111.
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
112.
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
113.
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
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