cbre hotels & pkf hospitality...

HOTEL Technology

CBRE HOTELS & PKF HOSPITALITY RESEARCH MAY 2015

ECONOMETRIC ADVISORS

1. Mobile keys 1. Download an app and have access to you room.

2. Starwood Hotels has already started rolling this out across the U.S.

2. Wearable technology 3. PMS mobility

1. Managers can remotely manage occupancy, housekeeping, and rate-and-inventory channels.

2. Guest can wirelessly control temperature, lighting, TV, and order room service.

4. Cloud reduces costs 5. Innovation in guest acquisition

5 TECHNOLOGY TRENDS

Source: HotelNewsNow.com - http://www.hotelnewsnow.com/Article/14016/5-tech-trends-that-will-shape-hospitality


TECHNOLOGY DISRUPTION?

Big Data & Emerging Research

HOTEL PERFORMANCE A Sweet Spot


A Year Ago

THE HOTEL MARKET CYCLE

Rapid Development

Occupancy Declines, ADR Follows

Development at Minimum

Levels

Lodging Decline, Leads Other Sectors

Occupancy Recovers

ADR and Margins Recover

Development Picks Up

Development Slows

Lodging Recovers, Lags Other Sectors (Not this

Time!)

Long Run Occupancy

Accelerated Development ?

Equilibrium ADR

U.S. is Here

2014

2015

2016/7


Record Occupancy Levels & Increasing ADR Growth U.S. OCCUPANCY & ADR

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

0.54

0.56

0.58

0.6

0.62

0.64

0.66

Occupancy (4 qrt Moving Avg.) - Left Change in Average Daily Rate -Right

Source: STR, Inc., PKF Hospitality Research


2014-2016 NATIONAL FORECAST – ALL U.S. HOTELS

Long Run

Average 2012 2013 2014 2015F 2016F

Supply 1.9% 0.5% 0.7% 0.9% 1.2% 1.7%

Demand 2.1% 3.0% 2.2% 4.5% 3.1% 1.9%

Occupancy

61.9% 61.4% 62.2% 64.4% 65.6% 65.8%

ADR 2.9% 4.2% 3.9% 4.6% 5.3% 6.3%

RevPAR 2.9% 6.8% 5.4% 8.3% 7.3% 6.5%

RevPAR driven by ADR Growth

Source: PKF Hospitality Research - Hotel Horizons® March-May, 2015, STR, Inc.


Change in Telecommunications and Movie Rental Revenue U.S. HOTELS - DISRUPTION

-48.8%

-42.4%

-12.3%

-4.8%

-60% -40% -20% 0%

Movie Rental

Telecommunications

Change: 2013 to 2014 Change: 2007 to 2014

Source: PKF Hospitality Research, a CBRE Company Trends® in the Hotel Industry Report

$1.72 – $0.92

$0.83 – $0.39


Distribution of Unit-Level Marketing Department Expenses* MARKETING DEPARTMENT EXPENSES*

Salaries & Wages 43.6%

Employee Benefits 14.0%

E Commerce

1.2%

Advertising 10.0%

Other Marketing

5.0%

Selling 26.4%

2007

Salaries & Wages 44.8%

Employee Benefits 15.3%

E Commerce

2.4%

Advertising 5.9%

Other Marketing

4.7%

Selling 27.0%

2013

Note: * Exclusive of franchise related costs.

Source: PKF Hospitality Research, Trends® in the Hotel Industry

$2,837 PAR $2,996 PAR


Compound Annual Growth Rate Percentage: 2007 - 2013 MARKETING DEPARTMENT EXPENSES*

1.4%

2.5%

15.7%

-7.5%

0.7%

1.4%

0.5%

3.9%

9.3%

-7.1%

-8.4%

5.0%

-15% -10% -5% 0% 5% 10% 15% 20%

Salaries & Wages

Employee Benefits

E Commerce

Advertising

Other Marketing

Selling

Full-Service

Limited-Service

Note: * Exclusive of franchise related costs, per available room

Source: PKF Hospitality Research, Trends® in the Hotel Industry


Q1 2015 y-o-y Change in Channel Bookings TRANSIENT HOTEL BOOKING BY CHANNEL

Brand Website, 33.6%

CRO-Central Reservation

Office, 14.3%

Direct to Hotel, 21.0%

GDS, 15.2%

OTA, 15.9%

+7.1%

+15.1%

+1.1%

-8.4% -6.1%

Source: TravelClick


INTERNATIONAL HOTEL BOOKINGS

Source: International Trade Administration


International Visitation to the United States 2005 - 2013 INTERNATIONAL TRAVELERS

Source: Department of Commerce


ONLINE TRAVEL AGENCIES Online Travel Agency Market Share for the U.S.

14

Source: PhoCusWright U.S. Online Travel Overview

75%


EXPEDIA In addition to it’s U.S. site, Expedia has localized websites for 30 countries…

Argentina Denmark India Mexico Spain Australia Finland Ireland Netherlands Sweden Austria France Italy New Zealand Taiwan Belgium Germany Japan Norway Thailand Brazil Hong Kong South Korea Philippines UK

Canada Indonesia Malaysia Singapore Vietnam

… and multiple consumer brands to choose from:


CHANGING DEMOGRAPHICS “I generally book accommodations…”

Millennials %

Xers%

Boomers %

Matures%

Through hotel provided website 40 49 51 60

Through an OTA 42 31 27 14

Over the phone, from a traditional travel agent 8 7 8 10

Haven’t booked a Hotel 3 5 7 8


TRIPBAM

GLOBAL RESEARCH AND CONSULTING ● PKF Hospitality Research

A NEW DISRUPTOR?


Part of the new “share economy” – putting stranded assets to work. • List a spare room, an extra couch, your vacation home, etc… on

their website. 1,000,000+ rooms in inventory world wide.

• 3,000+ castles, 2,000 treehouses, 900 islands and 400 lighthouses. Who benefits:

• Host receives “found money”. • Guest has a different experience, often at a attractive price. • Airbnb earns a fee from both.

Headwinds: • Jurisdictional compliance issues, business travelers

WHAT IS AIRBNB?


• In 2007, San Francisco’s Occupancy Level was 74.5% • There was a design conference coming to San Francisco

and the city’s hotels were fully booked, so a few guys came up with the idea of renting out three airbeds on their living-room floor and cooking their guests breakfast.

• The next day they created a website, airbedandbreakfast.com

• 6 days later they had their first guests • In 2014 San Francisco’s occupancy level was 84.1% and

there are now roughly 6,000 hosts in the city.

Origins INCENTIVES FOR NEW SUPPLY


INDUCED SUPPLY?

Dark Green Circle Indicates Record Occupancy levels by 2015

Source: PKF-HR Hotel Horizons® June – August 2014 Edition, Airbnb.com as of July 2014

Size of circle reflects hotel supply


• Roughly 1 Million units available worldwide • Latest round of funding values them at $20 billion

IS AIRBNB A THREAT?

“Our belief is that lodging rental websites are stimulating demand, rather than displacing existing demand,” – Ian Carter , Hilton’s President of Development

0

5000

10000

15000

20000

25000

30000

2009 2010 2011 2012 2013 2014

NYC Airbnb Monthly Reviews


SHOULD WE BE WORRIED? • Only seeing large number of

hosts in major MSAs with high occupancy levels

• According to Airbnb 20% of guests stay 30 days or longer1, 39% of guests wouldn’t have otherwise made a trip if it wasn’t available on Airbnb2.

• Increase your cities ability to host large events (~120,000 people stayed in Airbnb rooms for the World Cup equating to $38 million in Revenue)

According to “Airbnb in the city” from the New York State Attorney General • Revenues collected by Airbnb and

its host were roughly $200 million in 2013. This is equivalent to a average performing 2000 room hotel in the city. ~1.8% of NYC supply. Up to 300 million in 2014.

• 6% of Hosts make of 37 percent of revenues

• 72% of Airbnb rentals are in violation of state and local laws

• In April 2014, in direct response to NYAG’s investigation, Airbnb publically claimed it had barred many large commercial users.

1 - Quote from Skift interview with Chip Conley 2 - From Airbnb survey on Portland, OR


Airbnb Units as a Percent of Hotel Supply INCREASING THREAT FROM AIRBNB

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

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Bal

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18 Markets above 5%

Source: PKF Hospitality Research, STR, Airbnb.com


Percent increase in Airbnb Units over the Past Year (Left) & 2014 ADR Change (Right)

INCREASING THREAT FROM AIRBNB

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0%

50%

100%

150%

200%

250%

Pho

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Nor

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Bea

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Sav

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Data indicates that increases in Airbnb supply negatively

impacts ADR growth.

Source: PKF Hospitality Research, STR, Airbnb.com


INCREASING THREAT FROM AIRBNB

Source: Insideairbnb.com

~ 20,000 Reviews Per Month in Q4 2014 at an average stay of 5.8 nights = 116,000 Room Nights or 4% of total demand for New York City Hotels


New York City INCREASING THREAT FROM AIRBNB



New York City INCREASING THREAT FROM AIRBNB

• 76% of NYC Listings are less than $200 • Current Listing are only about 15% occupied

Price Levels

# of Units



A TOOL TO FIND UNSATISFIED DEMAND?

219 Properties = 30% of Atlanta’s Airbnb supply


A TOOL TO FIND UNSATISFIED DEMAND? Only Hotel within a 2 Mile Radius

EMERGING TECHNOLOGIES


REVIEWPRO

33

Online Reputation Guest Surveys

GUEST INTELLIGENCE = ORM + GSS


INFORMATION IS POWER

34

Information is power. You already apply rigorous financial analysis on your hotel projects, and now you can supplement that with trend information from online reviews to provide guidance on how those hotels will perform in the future. ReviewPro synthesizes millions of pieces of hotel guest feedback from hundreds of sources into competitive benchmarking and trending consumer preferences to help you make the best transaction recommendations. Hotel guests today are more talkative than ever, saying anything they want about any aspect of a hotel, neighborhood or city - at any time. It's time to turn all that feedback into intelligence that gives you and your clients the advantage.


Home Locations for Visitors AIRSAGE – CHARLESTON, SC ON JULY 4TH


Length of Stay AIRSAGE – CHARLESTON, SC ON JULY 4TH


Income of Visitors AIRSAGE – CHARLESTON, SC ON JULY 4TH


AIRSAGE - FINAL FOUR ANALYSIS


AIRSAGE – FINAL FOUR ANALYSIS

PKF Hospitality Research 3475 Lenox Road, Suite 720 Atlanta, GA 30326 Tel: +1 404 842 1150 www.pkfc.com

Thank you

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