US Lodging Industry

– What Lies Ahead?

Jan D. Freitag
Vice President
STR
Agenda

Total US Overview
Group vs. Transient
Major Markets
Chain Scales
Forecast
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2011 – So far, so … blah
Total US - Key Statistics
Q1 2011

% Change
• Hotels 52k
• Room Supply 432 mm 1.0%
• Room Demand 237 mm 6.7%
• Occupancy 54.9% 5.7%
• A.D.R. $99 3.1%
• RevPAR $55 9.0%
• Room Revenue $23.6 bn 10.0%
 Demand Leads ADR, But Swings Get More Extreme
10
7.9%
Demand ADR

1.6%

0 -0.2%

-0.9%

-5 -4.6%
-4.7%

-6.9%

-10 -8.7%
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

*Total US, ADR & Demand % Change, 12 MMA 1/89 – 3/11

 Gas Price vs. Room Demand: This Means … What?
4.0 $4.50
Room Demand (left scale)
$ / Gallon (right scale)
$4.00
3.5

$3.50
3.0
Millions

$3.00
2.5
$2.50

2.0
$2.00

1.5 $1.50
1/8/06 1/1/07 12/31/07 12/29/08 12/28/09 12/27/10
* Weekly US Room Demand vs. Average Gas Price $ / Gallon (Source: www.eia.gov)
Gas Price vs. Room Demand: Geek Speak

“We note relatively low correlation coefficients and

predictive values (R2) across the time period tested.

In fact, the correlation coefficient between total U.S.

lodging demand and WTI and Brent prices is 0.37
(R2 0.14) and 0.38 (R2 0.14), respectively. “

Joe Greff, J.P. Morgan, 3/10/11

Group vs. Transient
Performance
 YTD ‘11 Transient Room Demand Outpaced Prior Years

2007 2008 2009 2010 2011

18

16
Millions

14

12

10
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

*US High End Hotels, Monthly Transient Demand: Jan. 2007 -March 2011
YTD ‘11 Transient ADR Well Below 2007/08

$190 2007 2008 2009 2010 2011

$180

$170

$160

$150

$140
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

*US High End Hotels, Monthly Transient ADR: Jan. 2007 -March 2011
 YTD ‘11 Group Room Demand Picking Up!
12
2007 2008 2009 2010 2011

10
Millions

4
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

*US High End Hotels, Monthly Group Demand: Jan. 2007 - March 2011
 Negotiated Rates Will Take All Year To “Burn Off”

$170
2007 2008 2009 2010 2011

$160

$150

$140

$130
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

*US High End Hotels, Monthly Group ADR: Jan. 2007 -March 2011
Major Markets
 Demand Change: Pain For All. Recovery For All.
8.7%
8.0 7.8%
7.6%

4.0

0.0

-4.0
BOS/NYC/Miami/LA/SF
-8.0 Top 25 less BOS/NYC/Miami/LA/SF
All Other Markets

-12.0
2000 2002 2004 2006 2008 2010

* Select Geographies, Room Demand % Change, 12 MMA, 1/00 – 3/11

 ADR: Coastal Markets Get Hit Harder, Recover Faster.
12.0

8.0
6.1%

4.0
1.0%
0.8%
0.0

-4.0

-8.0 BOS/NYC/Miami/LA/SF
Top 25 less BOS/NYC/Miami/LA/SF
-12.0 All Other Markets

-16.0
2000 2002 2004 2006 2008 2010

*Select Geographies, ADR % Change, 12 MMA, 1/00 – 3/11

 RevPAR Recovery Part 2: East Coast Markets Lag
SF 22.1
Dallas 19.8
Oahu 19.1
Detroit 16.0
LA 14.9
Orlando 12.6
Chicago 11.8
San Diego 11.7
Denver 10.8
New Orleans 10.4
Phoenix 10.1
Top 25 Markets 9.8
Total US 9.0
All Other Markets 8.3
Boston 7.4
Atlanta 3.5
DC 3.5
Miami 2.8
NYC 1.9

*Major U.S. Markets – RevPAR % Change, Q1 ‘11

Chain Scales
2011 STR Chain Scales
Selected chains from each segment

• Luxury – Four Seasons, Ritz Carlton, Fairmont, InterContinental

• Upper Upscale – Hyatt, Embassy Suites, Hilton, Marriott

• Upscale – Hyatt Place, Hilton Garden Inn, Courtyard, Hotel Indigo

• Upper Midscale – Best Western PLUS/Premier, Hampton Inn

• Midscale – Best Western, Country Inn & Suites, La Quinta Inn

• Economy – America’s Best Inn, Econolodge, Red Roof, Days Inn

 Very Sluggish ADR Recovery

Occupancy ADR

6.4 6.1 6.1 6.2

5.6 5.4
5.3

4.0
3.3 3.1
2.4 2.6

0.8

-0.3

Luxury Upper Upscale Upper Midscale Economy Indep.

Upscale Midscale

*US Chain Scales OCC & ADR % Change: YTD March 2011
 Luxury ADR Premium Increase On Pace
$130 $128

$120

$110

$104 $103
$100
14 Months
14 Mo
$96
$95
$90
2005 2006 2007 2008 2009 2010 2011
* Luxury ADR Premium Over Upper Upscale ADR, 12 MMA, 1/05 – 3/11
 Forecast
- What Lies Ahead?
 Total United States
Top 15 Brands – All Active Phases
March 2011
Holiday Inn Express
23,719
Hampton Inn Suites 16,083
Holiday Inn 14,081
Courtyard 12,589
Residence Inn 11,455
Fairfield Inn 10,984
La Quinta Inn &… 9,831
Hilton Garden Inn 9,612
Candlewood Suites 8,611
Springhill Suites 8,578
Staybridge Suites 8,322
Comfort Suites 6,828
Hampton Inn 6,120
TownPlace Suites 5,502
Home2 Suites 5,294
2011: The Year of The Hotel “Flasher”
 Total US Summer* Outlook 2011

Actual % Change

Supply 0.8

Demand 2.5

Occupancy 66.7% 1.7

ADR $103 4.1

RevPAR $69 6.0

*Summer = June, July, August

Total US Outlook (% Change)

2010
2011 2012
(actual)

Supply 1.9 0.7 0.5

Demand 7.6 2.5 2.2

Occupancy 5.6 1.8 1.7

ADR -0.1 4.2 6.8

RevPAR 5.5 6.1 8.5

RevPAR Chain Scale Outlook (% Change)

2010
2011 2012
(actual)
Chain Scale
Luxury 10.1 8.2 10.7

Upper Upscale 5.7 7.9 10.6

Upscale 5.7 7.6 9.2
Upper Midscale 3.3 6.3 9.4

Midscale 4.3 4.3 7.1

Economy 1.8 4.4 6.9
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