1. Hotel Industry Overview
2019 Lodging Conference
Vail Ross
Senior VP, Global Business Development & Marketing
@vail_STR

2. Agenda Total U.S. Review Class & Customer Segmentation Review
Pipeline Outlook
Forecast

3. Data Dashboard>View All Data Presentations
No Need To Take Notes
Download This Presentation
Data Dashboard>View All Data Presentations

4. Total U.S. Review

5. Longest RevPAR Upcycle (with two small interruptions)
111 Months
(out of 112)
112 Months
(out of 114)
56 Months
Simple look at RevPAR growth over the past 29 years.
Longest RevPAR upcycle 111 out of 113. Two months we saw interruptions…Sept and June 2019.
Month of June RevPAR growth was down -0.4%. There was an extra Sunday in June which played a role in this decline. Extra Wednesday in July...positive impact
Total U.S., RevPAR % Change by month, 1/1990 – 08/2019

6. Little (or no growth) Story Continues
LIIC ALIS 2014
Little (or no growth) Story Continues
Actual
% Change
Room Supply
2.0% p
Room Demand
2.1%
Occupancy
67.6%
0.1%
ADR
$132
1.1%
RevPAR
$90
1.2%
Total U.S. Results, August YTD 2019

7. Demand and Supply growth in sync
2.0%
Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 8/2019

8. ADR growth positive however slowing
1.4%
-0.0%
Total U.S., ADR & OCC % Change, 12 MMA 1/1990 – 8/2019

9. Real ADR Growth (ADR% minus CPI%) Negative For Four Qtrs
12MMA July % growth…take into account inflation adjusted, ADR growth is negative.
Likely not going to be a different picture in 3 Quarter
Total U.S., Real ADR % Change (ADR minus CPI), by quarter, Q1/1990 – Q2/2019

10. 18 of the top 25 markets have Occ declines…
Street corner business. Taking a look at the top 25 markets
YTD Aug 2019, 72% (18 markets) of the top 25 markets now have negative occupancy growth from YTD Aug 2018.
Some of these markets are lagging due to YoY comps, some impacted by large events such as Super Bowl, or for Nashville for example the NFL draft, and others absorbing new supply into the market place.
Occupancy % Change, August 2019 YTD

11. … Of those, 5 also have ADR declines
Occupancy & ADR % Change, August 2019 YTD

12. Top 25 Market Performance: Despite High Occupancies a Very Mixed Bag
RevPAR % Change
Influenced By
Atlanta, GA
71.3
65.6
Super Bowl LIII
Phoenix, AZ
72.1
4.9
0.6% Supply Growth
San Francisco/San Mateo, CA
82.5
4.4
Groups Return Full Force
Denver, CO 76
3.9
8.3% Demand Growth
Nashville, TN
74.5
3.6
NFL Draft +Bachelorettes
Seattle, WA
75.5
-5.4
6.6% Supply Growth
Houston, TX
64.2
-5.0
Hurricane Comp & 4% Supply Growth
New York, NY
84.9
-3.6
Surprisingly Weak
Minneapolis/St Paul, MN-WI
68.7
-3.1
Superbowl LII
Orlando, FL
78.1
-2.3
-4.1% Group OCC Decline
RevPAR % Change & absolute OCC in Top 25 Markets:
5 Leading / 5 Lagging Performing RevPAR % Markets, YTD August 2019

13. STR monitoring the Number of Submarkets with Negative RevPAR %
U.S. Tipping Point
43.5%
YTD ‘18
YTD ‘19
Submarkets with Negative RevPAR % Change out of all 649 Submarkets, by year 1991 – 2018, YTD 2018/2019

14. Class and Customer Segmentation

15. All RevPAR growth coming from ADR…except Economy
RevPAR % Change by Contribution of OCC / ADR % Change, by Class, Aug YTD 2019

16. Still somewhat high actual occupancy levels
OCC %, by Class, Aug YTD 2019 & 2018

17. Transient Segment – Rooms reserved at rack rate, corporate negotiated, package, government rate or rooms booked via third party websites.
Group Segment – Rooms sold simultaneously in blocks of 10 or more.

18. Gap between Group and Transient has continued
16.5
28.4
32.6
Group and Transient Mix, 12 MMA January 2005 – August 2019 (Luxury and Upper Upscale Class only)

19. Demand Growth positive however slowing
Add Feb 2018
Group: Demand and ADR % Change, Luxury and Upper Upscale Classes,
12 MMA, 1/2016 – 8/2019 (Luxury and Upper Upscale Class only)

20. ADR growth falling with Demand is steady
Transient: Demand and ADR % Change, Luxury and Upper Upscale Classes, 12 MMA, 1/2016 – 8/2019
(Luxury and Upper Upscale Class only)

21. Top 10 Destinations For Future Meetings
STR 2019 DestinationMAP: % of meetings planners who plan to use destination for a meeting in the next two years

22. Pipeline

23. Under Construction Rooms Increase. Only 4K off from 2007/2008 Peak
Phase
2019
2018
% Change
In Construction
207
188
10.4%
Final Planning
238
215
10.6%
Planning
216
203
5.9%
Under Contract
661
607
9.0%
Attrition rates:
In construction: 96%
Final Planning: 76%
Planning: 65%
Total U.S. Pipeline, by Phase, ‘000s Rooms, August 2019 and 2018

24. Select Service Construction Is The Name Of The Game
70%
U.S. Pipeline, Rooms In Construction , ‘000s Rooms, by Scale, August 2019

25. In Construction Rooms Are Dominated By Two Players: Hilton & Marriott
U.S. Pipeline, Rooms In Construction, Share of HLT & MAR of total, Q2 2019

26. Large Markets Grow Rapidly
Rooms In Construction
% Of Existing
Nashville, TN
5,572
12%
New York, NY
14,437
11%
Minneapolis/St Paul, MN-WI
3,482 8%
Tampa/St Petersburg, FL
3,137 7%
Boston, MA
3,826 6%
Dallas, TX
5,913
Los Angeles/Long Beach, CA
6,130
Philadelphia, PA-NJ
2,866
Phoenix, AZ
3,964
Orlando, FL
7,099
Las Vegas has 9,139 = >5% of existing supply
U.S. Pipeline, Rooms In Construction and as % of Existing Supply, Largest % In Top 26 Markets, Aug 2019

27. 2019 / 2020 Forecast

28. Other Operated Departments
Miscellaneous Income saw biggest gain in 2018
Rooms
+2.4%
Other F&B
+3.9%
Miscellaneous Income
+11.3%
Total Revenue
+2.9%
Other Operated Departments
+5.2%
Food
+2.4%
Beverage
+3.2%
Beverage
+3.2%
So with Pricing power slowing down, Compression nights slowing down
Other department revenue gains that feed into overall profitability are becoming more and more important.
Total Revenues were up 2.9% based on our 2019 HOST Almanac
Miscellaneous Income had the largest revenue increase at 11.3% - the highest we’ve seen. This item is made up of largely fee-based revenues including cancellation fees and resort fees
From an expense stand point…
Labor costs increased 4.0% in 2018, up again to higher levels as seen in 2015 and 2016.
Also much higher than revenue growth – the 3rd consecutive year labor growth outpaced revenue growth
While hotel profits continue to grow in most cases, profit margins have somewhat declined for the third year in a row.
Total U.S. Revenue Variance, 2018 vs. 2017
Source: 2019 HOST Almanac

29. Outlook Metric 2019 Forecast 2020 Supply 1.9% Demand 2.1% 1.6%
Occupancy
0.2%
-0.3%
ADR
1.4%
RevPAR
1.1%
Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2019F – 2020F

30. 2019 Year End RevPAR Forecast Top North American Markets, August 2019 Forecast (Markets sorted alphabetically)
- 3% to 1%
1% to 3%
3% to 6%
Chicago, IL
Anaheim/Santa Ana, CA
Atlanta, GA
Dallas, TX
Boston, MA
Montreal, QC
Detroit, MI
Denver, CO
Nashville, TN
Houston, TX
Los Angeles/Long Beach, CA
San Francisco/ San Mateo, CA
Miami/Hialeah, FL
Norfolk/Virginia Beach, VA
Tampa/St Petersburg, FL
Minneapolis/St Paul MN-WI
Phoenix, AZ
Vancouver, BC
New Orleans, LA
St Louis, MO-IL
New York, NY
Toronto, ON
Oahu Island, HI
Orlando, FL
Philadelphia, PA-NJ
San Diego, CA
Seattle, WA
Washington, DC-MD-VA
Note: RevPAR Growth forecast estimates are in local currency

31. 2020 Year End RevPAR Forecast Top North American Markets, August 2019 Forecast (Markets sorted alphabetically)
- 3% to 1%
1% to 3%
3% to 6%
Atlanta, GA
Anaheim/Santa Ana, CA
Miami/Hialeah, FL
New York, NY
Boston, MA
Montreal, QC
Philadelphia, PA-NJ
Chicago, IL
San Francisco/ San Mateo, CA
Tampa/St Petersburg, FL
Dallas, TX
Vancouver, BC
Denver, CO
Detroit, MI
Houston, TX
Los Angeles/Long Beach, CA
Minneapolis/St Paul MN-WI
Nashville, TN
New Orleans, LA
Norfolk/Virginia Beach, VA
Oahu Island, HI
Orlando, FL
Phoenix, AZ
San Diego, CA
Seattle, WA
St Louis, MO-IL
Washington, DC-MD-VA
Toronto, ON
Note: RevPAR Growth forecast estimates are in local currency

32. Slower Profitability Growth
Threats looming on the horizon
Slower Profitability Growth
Anemic ADR Growth
Low Unemployment
Overall
Economy
This leads me to one of the threats looming on the horizon. Slower (and potential lower) profitability growth
With Anemic ADR growth. What impact that has on the bottom line, as well.
Lodging is the largest employer of the travel sector.
- Low unemployment levels in most markets, particularly the top 25 largest metropolitan areas have been driving these costs upward at a much greater pace than the overall rate of inflation.
- Finding and keep quality staff is becoming more and more difficult
3rd largest oversee travel market to the U.S. With their currency instabilities making the dollar strong…expensive to come to the U.S.
This trade war is evolving into a financial and currency war. What impact will both of these have on cost of goods and travel.

33. SVP, Global Business Development & Marketing
Vail Ross
SVP, Global Business Development & Marketing
@vross_STR