us lodging industry overview mark v. lomanno president smith travel research
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US LODGING INDUSTRY OVERVIEW
Mark V. Lomanno President
SMITH TRAVEL RESEARCH
Total United StatesOccupancy and ADRTwelve Month Moving Average To March 2004
50
55
60
65
70
75
80
85
90
1996 1997 1998 1999 2000 2001 2002 2003 2004
Occupancy (%)ADR ($)
Peak $86.46June 2001
$83.57 March 2004
Peak 64.9%June 1996 59.6%
March 2004
Source: STR
63.566.7
70.4
77.4
85.6
93.1
102.9
112.1
103.5 102.6 104.0
2.45.5
8.512.5
1720.9 22.1 22.5
16.2 14.2 15.0
30.5%
36.2%37.0%
38.2%
40.3% 40.2%39.2%
40.9%
37.1%
32.5%33.5%
0
20
40
60
80
100
120
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003E
25%
30%
35%
40%
45%
50%
Revenue
Pre-Tax Income
GOP
Total United States Estimated Revenue and Profitability Years 1993 – 2003E
Source: Smith Travel Research
Total United StatesRoom Supply/Demand Percent ChangeTwelve Month Moving Average To March 2004
-6-5-4-3-2-1012345
1998 1999 2000 2001 2002 2003 2004
Supply % Change
Demand % Change
Source: STR
Total United StatesRoom Supply/Demand Percent ChangeMonthly Year-Over-Year 2000 – March 2004
-20
-15
-10
-5
0
5
10
2000 2001 2002 2003 2004
Supply % ChangeDemand % Change
Source: STR
* 2,648,200 – annualized daily rooms sold
* Off 15,000 daily - from peak
* Peak demand – 1st Quarter 2001
* New Demand High Reached in Q2 2004
Current Lodging Demand
Total United StatesOccupancy / ADR Percent ChangeTwelve Month Moving Average To March 2004
-8
-6
-4
-2
0
2
4
6
8
1998 1999 2000 2001 2002 2003 2004
Occ % Change
ADR % Change
Source: STR
Total United StatesOccupancy Percent ChangeJan 2000 – March 2004
-20
-15
-10
-5
0
5
10
2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3
Source: STR
Total United StatesRoom Rate Percent ChangeJan 2000 – March 2004
-15
-10
-5
0
5
10
2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3
Source: STR
ADR % change2003 vs 2002
Total United StatesKey Performance Indicators Percent Change
1.2
0.5 0.6
1.8
1.1
5.5
4.3
2.9
7.3
8.5
1.7
0.1
0
2
4
6
8
10
Supply Demand Occupancy ADR RevPAR Revenue
Total 2003
Q1 2004
Source: STR
Total United StatesDaily Occupancy* 2000 - 2003
64.4%
59.2%
66.5%
59.4%
68.8%
67.0%
59.9%
66.9%
50%
55%
60%
65%
70%
75%
Weekday Weekend
2000 2001 2002 2003
* Excluding Sunday
Total U.S.Average Daily Lodging Demand in Millions 2000 - 2003
2.8762.885
2.702
2.569
2.900
2.5832.623
2.954
2.4
2.5
2.6
2.7
2.8
2.9
3.0
3.1
3.2
Weekday Weekend
2000 2001 2002 2003
Total U.S.Average Daily Room Revenue in Millions2000 - 2003
$238.4$234.7 $236.2
$221.4
$238.7
$217.2
$244.6
$219.7
200
210
220
230
240
250
Weekday Weekend
2000 2001 2002 2003
STR Chain ScalesSelected chains from each segment
• Luxury – Four Seasons, Ritz Carlton, Fairmont
• Upper Upscale – Embassy, Hilton, Marriott, Sheraton
• Upscale – Radisson, Courtyard, Crowne Plaza
• Mid with F&B – Holiday Inn, Ramada, Best Western
• Mid no F&B – Hampton Inn, Country Inns & Suites, HI Express
• Economy – Motel 6, Red Roof, Days Inn
Supply Percent Changeby Chain Scale
4.64.3
4.7
-1.5
2.7
1.5 1.3
-1.8
3.6
-1
2.3
-2.3
-4
-2
0
2
4
6
Luxury Upper Upscale Upscale Mid W/ Mid W/O Economy
Total 2003
Q1 2004
Source: STR
Demand Percent Changeby Chain Scale
6.6
5.44.9
-2.6
10.3
5.86.7
2.0
7.8
1.3
2.4
-2.3-4
-2
0
2
4
6
8
10
12
Luxury Upper Upscale Upscale Mid W/ Mid W/O Economy
Total 2003Q1 2004
Source: STR
Occupancy Percent Changeby Chain Scale
2.1
1.1
0.2
-1.3
4.33.8
4.1
2.3
0.20
5.4
7.4
-2
0
2
4
6
8
Luxury Upper Upscale Upscale Mid W/ Mid W/O Economy
Total 2003
Q1 2004
Source: STR
ADR Percent Changeby Chain Scale
-0.7
-2
0.4
-0.1
3.3
1.91.4
0.9
1.8
1.1
-1.8
-0.4
-4
-2
0
2
4
Luxury Upper Upscale Upscale Mid W/ Mid W/O Economy
Total 2003
Q1 2004
Source: STR
RevPAR Percent Changeby Chain Scale
1.2
-1
0.5
-1.2
10.7
6.36.8
4.96.0
3.5
-1.6
-0.5
-4
-2
0
2
4
6
8
10
12
Luxury Upper Upscale Upscale Mid W/ Mid W/O Economy
Total 2003
Q1 2004
Source: STR
STR Destination Resorts - Definitions
-337 Properties in the Continental US and Hawaii
-12.6% of all rooms are associated with Walt Disney Resorts
Breakout by Chain Scale:Scale Rooms % of Total Rooms
LUXURY CHAINS 14,497 8.8%UPPER UPSCALE CHAINS 54,170 32.7%
UPSCALE CHAINS 5,152 3.1%MIDSCALE W/ F&B CHAINS 3,756 2.3%
ECONOMY CHAINS 445 0.3%INDEPENDENTS 87,658 52.9%
Total 165,678 100.0%
Destination Hotels In The US
Resorts - DestinationKey Indicators (Percent Change)Twelve Month Ending February
2.3%
-8.6%
-10.7%
0.9%
-9.9%
3.5%
5.7%
2.1%
-0.3%
1.8%2.4%
1.9%
-0.1%
2.1%
4.5%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Supply Demand OCC ADR RevPAR
2002
2003
2004
Source: STR
Resorts - DestinationKey Indicators Twelve Month Ending February
60.8
101.95
62.1
167.14
103.83
63.4
167.65
105.83
166.97
50.00
70.00
90.00
110.00
130.00
150.00
170.00
OCC (%) ADR ($) RevPAR ($)
2002
2003
2004
Source: STR
Resorts – Destination (Segment Comparisons) Demand Percent ChangeTwelve Month Moving Average To February 2004
-20
-15
-10
-5
0
5
10
15
20
2000 2001 2002 2003 2004
Total USLuxuryBoutique HotelsResorts
Source: STR
Resorts – Destination (Segment Comparisons) Occupancy LevelsTwelve Month Moving Average To February 2004
55
60
65
70
75
2000 2001 2002 2003 2004
Total USLuxuryBoutique HotelsResorts
Source: STR
Resorts – Destination (Segment Comparisons) Occupancy Percent ChangeTwelve Month Moving Average To February 2004
-20
-15
-10
-5
0
5
10
2000 2001 2002 2003 2004
Total USLuxuryBoutique HotelsResorts
Source: STR
Resorts – Destination (Segment Comparisons) ADR Percent ChangeTwelve Month Moving Average To February 2004
-10
-5
0
5
10
15
2000 2001 2002 2003 2004
Total USLuxuryBoutique HotelsResorts
Source: STR
Resorts – Destination (Segment Comparisons) RevPAR Percent ChangeTwelve Month Moving Average To February 2004
-25
-20
-15
-10
-5
0
5
10
15
20
2000 2001 2002 2003 2004
Total USLuxuryBoutique HotelsResorts
Source: STR
Performance Since The Respective Peak RevPAR Month
-6.6% -6.6%
0.0%
-16.6%
-10.3%
-7.0%
-17.1%
-8.9%
-5.9%
-3.3%
-7.4%
-10.6%
-18.0%
-16.0%
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
RevPAR OCC ADR
Resorts
Luxury Chains
Boutique
Total US
Source: STR
Total U.S.Estimated Lost Room Revenue3rd Party Intermediaries
$1,284.1
$872.3
$375.0
$200.5
100
300
500
700
900
1,100
1,300
1,500
2000 2001 2002 2003*
In Millions
Source: STR
Total U.S.Estimated ADR ChangeImpact of 3rd Party Intermediaries
-1.0% -1.5%
0.1%
2.4%
5.5%
0.6%
3.0%
-0.8%-0.7%
5.8%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
2000 2001 2002 2003* 2004*
Reported
Estimated
Source: STR
Total United StatesIn Construction – Rooms in Thousands2002 - 2003
60
70
80
90
100
110
120
130
140
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
20032002
Source: STR, PPR, Dodge
Total United StatesRooms Under Construction by Scale – In ThousandsDecember 2003
14.7 15.1
4.2
17.4
3.6
15.7
0
5
10
15
20
UpperUpscale
Upscale Mid w F&B Mid w/oF&B
Economy Unaffiliated
Source: STR, PPR, Dodge
Total Pipeline Under Construction By Scale
Luxury
Upper Up
Upscale
Mid w/F&B
Mid w/out F&B
Economy
Independent
Total United StatesActive Development Pipeline - RoomsChange From Last Year
Dec 2003 Dec 2002 Change % Chg
In Construction 70,818 85,463 (14,645) -17.1%
Final Planning 16,446 25,253 (8,807) -34.9%
Planning 185,179 214,260 (29,081) -13.6%
In Pre-Planning 138,065 130,852 7,213 5.5%
Total Development 410,508 455,828 (45,320) -9.9%
Source: STR, PPR, Dodge
STR/PPR/FW Dodge Pipeline Historic Attrition Rates
26.0%
47.0%
80.0%
95.0%
74.0%
53.0%
20.0%5.0%
PrePlanning Planning Final Planning Under Constrution
Opened Abandoned
Source: STR
U.S. Economic OutlookBlue Chip Economic Indicators
2003P 2004F 2005F
Real GDP +3.1% +4.6% +3.7%
CPI +2.3% +1.7% +2.1%
Corporate Profits +16.8% +15.2% +9.2%
Disp Personal Income +2.6% +4.2% +3.4%
Unemployment Rate 6.0% 5.7% 5.4%
Total United StatesSupply/Demand Percent Change1998 – 2004P
2.82.3
1.61.2 1.2
3.5
-3.4
0.3
1.7
4
-5-4
-3-2-1
0123
45
2000 2001 2002 2003 2004P
Supply % Chg
Demand % Chg
Source: STR
Total United StatesOccupancy Percent1998 – 2004P
63.2
59.758.9 59.2
60.8
55
60
65
2000 2001 2002 2003 2004P
Source: STR
Total United StatesADR Percent Change1998 – 2004P
5.4
-1.4 -1.4
0.1
2.4
-5.0
0.0
5.0
10.0
2000 2001 2002 2003 2004P
Source: STR
Total United StatesAverage Daily Rate1998 – 2004P
85.3784.2
83.01 83.12
85.11
70
75
80
85
90
2000 2001 2002 2003P 2004P
Source: STR
Total United StatesRevPAR Percent Change1998 – 2004P
6.1
-6.9
-2.6
0.6
5.2
-10.0
-5.0
0.0
5.0
10.0
15.0
2000 2001 2002 2003 2004P
Source: STR
* Occupancy Rising
* Demand Hits Record Levels
* Economy Rebounding – Return of the King
U.S. Lodging Outlook* Supply Growth Remains Stable
* Long Term Optimism
Source: STR
* Regain Control over Room Rates
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