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TABLE OF CONTENTS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 2
1HISTORICAL RESULTS
2THE ECONOMY
3BUSINESS CYCLES
4AUSTIN PIPELINE
5GEOGRAPHIC SUBMARKETS
6AUSTIN SUMMARY
7 8GEOGRAPHIC SUBMARKETS
CLOSING THOUGHTS
CBRE HOTELSThe World’s Leading Hotel Experts.
THE ROAD AHEAD ….
Time to Focus
STATE OF THE U.S. LODGING INDUSTRY
Jeff Binford – Managing Director | Advisory LeaderCBRE Hotels South Central Division
September 20, 2019
ECONOMIC FACTORS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 5
-30%
-20%
-10%
0%
10%
20%
30%
40%
'75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
Non-Recession
Change in GOP*
Note: * Before Management Fees and Non-Operating Income and Expenses Source: Trends® in the Hotel Industry
Average GOP* growth during non-recession
periods8.8%
HISTORICAL RESULTS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 8
YEAR END 2018 SUBMARKET COMPARISONAll Hotels – Austin Submarket Analysis
Year End 2018 Compared to Year End 2017
Submarket Percent Pt. Change $ Amount % Change $ Amount % Change
CBD 74.8% -2.4% $224 1.5% $167 -0.9%
US-290 / I-35 Area 70.3% -1.3% $92 0.7% $65 -0.5%
Round Rock / Georgetown 67.1% -1.2% $93 -0.8% $62 -2.0%
South Austin / Airport 72.9% 0.1% $125 -4.8% $91 -4.8%
Northwest / Arboretum 73.0% -2.5% $126 0.5% $92 -2.0%
San Marcos / Surrounding Area 53.8% -4.6% $86 -4.4% $46 -8.8%
Average / Change 70.3% -2.0% $141 1.2% $99 -0.9%Source: STR, Inc.
Occupancy ADR RevPAR
HISTORICAL RESULTS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 9
SECOND QUARTER 2019 SUBMARKET COMPARISONAll Hotels – Austin Submarket Analysis
Q2 2019 Compared to Q2 2018
Submarket Percent Pt. Change $ Amount % Change $ Amount % Change
CBD 81.1% 4.9% $241 2.5% $195 7.5%
US-290 / I-35 Area 75.0% 2.9% $96 -0.4% $72 2.5%
Round Rock / Georgetown 71.2% 2.6% $96 -0.3% $69 2.2%
South Austin / Airport 75.9% 1.3% $131 1.1% $99 2.4%
Northwest / Arboretum 74.5% -3.1% $130 -0.5% $97 -3.6%
San Marcos / Surrounding Area 59.1% 6.5% $86 -1.1% $51 5.4%
Average / Change 76.7% 2.0% $145 2.1% $112 4.1%Source: STR, Inc.
Occupancy ADR RevPAR
ECONOMIC FACTORS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 11
Employment Personal Income GDP CPI (Inflation)
2019 1.5% 2.1% 2.3% 1.7%
2020 0.4% 1.6% 1.5% 1.8%
2021 -0.2% 1.6% 1.5% 1.6%
2022 0.2% 2.3% 2.3% 1.7%
2023 1.0% 2.8% 2.6% 2.0%Source: CBRE EA, Moody’s Analytics, Q2 2019
UNITED STATES: ECONOMIC OUTLOOK
ECONOMIC FACTORS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 12
Employment Personal Income GDP CPI (Inflation)
2019 1.9% 4.5% 2.3% 1.7%
2020 2.1% 3.6% 1.5% 1.8%
2021 1.7% 3.3% 1.5% 1.6%
2022 1.4% 4.2% 2.3% 1.7%
2023 2.1% 4.8% 2.6% 2.0%
AUSTIN: ECONOMIC OUTLOOK
Source: CBRE EA, Moody’s Analytics, Q2 2019
ECONOMIC FACTORS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 13
ECONOMIC OUTLOOK COMPARISON
Source: CBRE EA, Moody’s Analytics, Q2 2019
Employment Personal Income GDP CPI (Inflation)
2019 1.5% 1.9% 2.1% 4.5% 2.3% 2.3% 1.7% 1.7%
2020 0.4% 2.1% 1.6% 3.6% 1.5% 1.5% 1.8% 1.8%
2021 -0.2% 1.7% 1.6% 3.3% 1.5% 1.5% 1.6% 1.6%
2022 0.2% 1.4% 2.3% 4.2% 2.3% 2.3% 1.7% 1.7%
2023 1.0% 2.1% 2.8% 4.8% 2.6% 2.6% 2.0% 2.0%
AUSTIN HOTEL MARKET UPDATE | SLIDE | 25
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-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
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Markets in Expansion Markets in ContractionMarkets in Recovery
REAL REVPAR CHANGE FROM PRE-RECESSION PEAK
Not All Markets Have Fully Recovered From the Last Recession
As of Q4 2018 As of Q4 2020Source: STR, CBRE Hotels’ Americas Research, Hotel Horizons® June-August 2019
AUSTIN PIPELINE
AUSTIN HOTEL MARKET UPDATE | SLIDE | 28
AUSTIN PIPELINE – BY THE NUMBERSProperties Factor Rooms
PROJECT PHASE129 TOTAL Austin Pipeline 15,502
7 Abandoned 710 3 Deferred 195
48 Planning 5,281 36 Final Planning 4,095 35 Start 5,221
PRICE TIER78 Lower Priced 7,56951 Upper Priced 7,933
TIMELINE6 No Dates 540
20 Open by YE 2019 2,179 46 Open by YE 2020 6,213 57 Open 2021 and Beyond 6,570
AUSTIN PIPELINE
AUSTIN HOTEL MARKET UPDATE | SLIDE | 29
All Hotels – Austin Submarket Analysis PIPELINE
AUSTIN PIPELINE – BY THE NUMBERS
ALL HOTELSAustin Hotel Submarket Analysis
PIPELINESubmarket Hotels Rooms
CBD 17 2,919
US-290/I-35 15 1,526
Round Rock / Georgetown 15 1,429
South Austin/ Airport 24 2,655
Northwest / Arboretum 23 2,494
San Marcos / Surrounding 12 1,905
Total 106 16,418 Source: STR, Inc.
GEOGRAPHIC SUBMARKETS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 33
CENTRAL BUSINESS DISTRICT
69.5%
72.8%
71.4% 71.2%
70.3%
71.0%70.6%
68.0%
69.0%
70.0%
71.0%
72.0%
73.0%
74.0%
2014 2015 2016 2017 2018 2019 2020
Occupancy
2014 2015 2016 2017 2018 2019 2020ΔSupply -0.2% 1.8% 2.4% -2.1% 6.2% 8.6%ΔDemand 4.4% -0.2% 2.2% -3.3% 7.2% 8.1%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Supply and Demand Change
$203.69
$214.85$217.94
$220.22
$223.62$226.12
$231.13
$200.00
$205.00
$210.00
$215.00
$220.00
$225.00
$230.00
$235.00
2014 2015 2016 2017 2018 2019 2020
ADR
$161.53
$167.13$168.54 $168.91
$167.33
$170.72
$173.62
$155.00
$157.00
$159.00
$161.00
$163.00
$165.00
$167.00
$169.00
$171.00
$173.00
$175.00
2014 2015 2016 2017 2018 2019 2020
RevPAR
GEOGRAPHIC SUBMARKETS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 35
US-290 / I-35
69.5%
72.8%
71.4% 71.2%
70.3%
71.0%70.6%
68.0%
69.0%
70.0%
71.0%
72.0%
73.0%
74.0%
2014 2015 2016 2017 2018 2019 2020
Occupancy
2014 2015 2016 2017 2018 2019 2020ΔSupply -0.2% 1.8% 2.4% -2.1% 6.2% 8.6%ΔDemand 4.4% -0.2% 2.2% -3.3% 7.2% 8.1%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Supply and Demand Change
$83.53
$88.93
$91.16 $91.13$91.81
$92.83
$94.89
$80.00
$85.00
$90.00
$95.00
$100.00
2014 2015 2016 2017 2018 2019 2020
ADR
$58.09
$64.74 $65.08 $64.91 $64.56$65.87
$66.99
$55.00
$57.00
$59.00
$61.00
$63.00
$65.00
$67.00
$69.00
2014 2015 2016 2017 2018 2019 2020
RevPAR
GEOGRAPHIC SUBMARKETS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 37
ROUND ROCK / GEORGETOWN
67.8%
69.0%68.9%
67.9%
67.1%
67.8%
67.4%
66.0%
66.5%
67.0%
67.5%
68.0%
68.5%
69.0%
69.5%
2014 2015 2016 2017 2018 2019 2020
Occupancy
2014 2015 2016 2017 2018 2019 2020ΔSupply 4.4% 6.8% 7.8% 2.5% 6.2% 8.6%ΔDemand 6.3% 6.5% 6.4% 1.3% 7.1% 8.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Supply and Demand Change
$87.61
$91.09
$92.08
$93.51$92.72
$93.76
$95.83
$86.00
$88.00
$90.00
$92.00
$94.00
$96.00
$98.00
2014 2015 2016 2017 2018 2019 2020
ADR
$59.40
$62.89$63.41 $63.53
$62.26
$63.52
$64.60
$56.00
$57.00
$58.00
$59.00
$60.00
$61.00
$62.00
$63.00
$64.00
$65.00
2014 2015 2016 2017 2018 2019 2020
RevPAR
GEOGRAPHIC SUBMARKETS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 39
SOUTH / AIRPORT
73.0%
74.4%
72.6%72.8% 72.9%
73.5%
73.2%
72.0%
72.5%
73.0%
73.5%
74.0%
74.5%
75.0%
2014 2015 2016 2017 2018 2019 2020
Occupancy
2014 2015 2016 2017 2018 2019 2020ΔSupply 3.6% 2.7% 6.9% 2.9% 6.2% 8.6%ΔDemand 5.5% 0.3% 7.2% 3.0% 7.1% 8.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Supply and Demand Change
$128.24
$134.90 $135.27
$131.12
$124.79$126.19
$128.98
$120.00
$125.00
$130.00
$135.00
$140.00
2014 2015 2016 2017 2018 2019 2020
ADR
$93.63
$100.33
$98.21
$95.48
$90.93
$92.77
$94.35
$88.00
$90.00
$92.00
$94.00
$96.00
$98.00
$100.00
$102.00
2014 2015 2016 2017 2018 2019 2020
RevPAR
GEOGRAPHIC SUBMARKETS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 41
NORTHWEST / ARBORETUM
75.1%
77.3%
74.0%
74.9%
73.0%
73.7%73.3%
72.0%
73.0%
74.0%
75.0%
76.0%
77.0%
78.0%
2014 2015 2016 2017 2018 2019 2020
Occupancy
2014 2015 2016 2017 2018 2019 2020ΔSupply 4.0% 7.8% 7.7% 2.7% 6.2% 8.6%ΔDemand 7.0% 3.2% 9.0% 0.2% 7.1% 8.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Supply and Demand Change
$112.56
$117.41
$123.35$125.50 $126.08
$127.49$130.31
$100.00
$105.00
$110.00
$115.00
$120.00
$125.00
$130.00
$135.00
2014 2015 2016 2017 2018 2019 2020
ADR
$84.54
$90.73 $91.32
$94.01
$92.09
$93.95
$95.55
$80.00
$82.00
$84.00
$86.00
$88.00
$90.00
$92.00
$94.00
$96.00
$98.00
2014 2015 2016 2017 2018 2019 2020
RevPAR
GEOGRAPHIC SUBMARKETS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 43
SAN MARCOS / SURROUNDING
61.9% 61.8%
58.1%
56.4%
53.8% 54.3% 54.0%
48.0%
50.0%
52.0%
54.0%
56.0%
58.0%
60.0%
62.0%
64.0%
2014 2015 2016 2017 2018 2019 2020
Occupancy
2014 2015 2016 2017 2018 2019 2020ΔSupply 1.9% 9.9% 9.1% 14.8% 6.2% 8.6%ΔDemand 1.8% 3.2% 5.9% 9.5% 7.2% 8.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Supply and Demand Change
$88.94
$87.39
$91.15
$89.66
$85.73
$86.69
$88.61
$83.00
$84.00
$85.00
$86.00
$87.00
$88.00
$89.00
$90.00
$91.00
$92.00
2014 2015 2016 2017 2018 2019 2020
ADR
$55.05$54.04
$52.95
$50.58
$46.15$47.08
$47.88
$45.00
$47.00
$49.00
$51.00
$53.00
$55.00
$57.00
2014 2015 2016 2017 2018 2019 2020
RevPAR
AUSTIN SUMMARY
AUSTIN HOTEL MARKET UPDATE | SLIDE | 48
72.4%
73.7%
72.1%71.7%
70.3%
70.9%70.6%
70.3%
71.0%
71.6%
69%
70%
71%
72%
73%
74%
75%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Occupancy
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023ΔSupply 5.9% 6.4% 6.0% 5.7% 6.2% 8.6% 4.0% 1.8% 2.2%ΔDemand 7.8% 4.1% 5.5% 3.6% 7.2% 8.1% 3.6% 2.8% 3.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Supply and Demand Change
ΔSupply ΔDemand
$126.63
$134.69
$138.98 $139.06$140.68
$142.26$145.41 $145.76
$148.19
$152.72
$120.00
$125.00
$130.00
$135.00
$140.00
$145.00
$150.00
$155.00
$160.00
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
ADR
$91.65
$99.27$100.23 $99.77
$98.91
$100.92
$102.63 $102.48
$105.27
$109.35
$90.00
$92.00
$94.00
$96.00
$98.00
$100.00
$102.00
$104.00
$106.00
$108.00
$110.00
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
RevPAR
SHARING ECONOMY
AUSTIN HOTEL MARKET UPDATE | SLIDE | 52
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,00019
89
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Source: STR, CBRE Hotels’ Americas Research, Q1 2019.
12 MMA of New Hotel Room Added in the U.S.
Well Below Previous Peaks
Do We Have a Problem?
SHARING ECONOMY
AUSTIN HOTEL MARKET UPDATE | SLIDE | 53
0
5,000
10,000
15,000
20,000
25,000
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Avg. New Rooms Added Avg. New Rooms Added w/ Airbnb
Well Below Previous Peaks
Do We Have a Problem?
Source: STR, CBRE Hotels’ Americas Research, Airdna, Q1 2019.
Well Above Previous Peaks
12 MMA of New Hotel Room & Airbnb Units Added in the U.S.
SHARING ECONOMY
AUSTIN HOTEL MARKET UPDATE | SLIDE | 54
Notes: Previous historical peak occupancy 66.2% (2018 Q2), Current occupancy 66.1% (2018 Q3) Sources: CBRE Hotels' Americas Research, STR Q1 2019
Gap
54
56
58
60
62
64
66
68
(20)
(15)
(10)
(5)
0
5
10
1989
1989
1990
1990
1991
1991
1992
1992
1993
1993
1994
1994
1995
1995
1996
1996
1997
1997
1998
1998
1999
1999
2000
2000
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
2012
2012
2013
2013
2014
2014
2015
2015
2016
2016
2017
2017
2018
2018
Occupancy (%)% Change in ADR/Occ/RevPAR
Contribution from ∆RADR Contribution from ∆Occupancy ∆RRevPAR Occ (4-Qtr Moving Average)
Area of Interest
New Supply (Traditional/Non-Traditional is hurting Rate Growth
SHARING ECONOMY
AUSTIN HOTEL MARKET UPDATE | SLIDE | 56
SHARE OF AIRBNB’S US SUPPLY MAJOR MARKETS SHRINKS SUBSTANTIALLY
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2017 2018
Top 10 MSAs Other MSAs Non MSA
1. New York2. Los Angeles3. San Francisco4. Miami5. Washington6. Chicago7. San Diego8. Austin9. Boston10. Seattle
CHANGING SHARE OF THOSE SAME CITES2014 TOP AIRBNB MSA’S
Source: CBRE Hotels’ Americas Research, Airdna, Google Trends, STR, Q1 2019.
CLOSING THOUGHTS
AUSTIN HOTEL MARKET UPDATE | SLIDE | 59
• The U.S. lodging industry has been operating at peak levels for the past three years – 2019 has generally played out as expected, although ADR continues to weaken.
• The fundamentals remain attractive. Hotel construction will continue; the threat of overbuilding (depending on definition) is the exception, not the rule.
• The environment is more volatile – social, political and economic. Elevated uncertainty (among other factors) has impaired pricing power and ADR growth.
• “Blip” or adjustment in 2021 or 2022 – can’t be pushed out much further.
• Austin is in market contraction phase likely until 2022.
• Increasing occupancy requires increasing occupied room nights or decreasing supply increases. STRATEGIC hotel development is critical.
• Austin occupancies are expected to decline to the low-70”s range, still above long run average of 67.2%.
• Average Daily Room Rates are expected to increase at or near inflation, but at a rate less than the long term average of 3.9%.
• RevPAR increases will be difficult, driven by primarily by ADR, not Occupancy. (Drive Rate!)
• Demand is now outpacing new rooms. Room night demand in Austin remains very health.
© Copyright 2019 CBRE Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of the CBRE Global Chief Economist.
2100 McKinney, Suite 700Dallas, Texas 75201 www.cbrehotels.com
JEFF BINFORDManaging Director | Advisory LeaderSouth Central DivisionDallas, Texas+1 214 979 6166Jeff.Binford@CBRE.com
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