Presented by: Rick Pastorino
CapEx Spending in Hotels�
Historical Trends & What the Future Holds
ISHC CapEx 2014
Is 4% enough?
ISHC CapEx 2014 Presentation on the findings from the 4th Edition of
the “ISHC CapEx 2014 – A Study of Capital Expenditures in the Hotel Industry”
Collaboration between the ISHC and HAMA More than 20 industry experts from these two
preeminent industry organizations contributed to the publication • Supported by data collected from over 500 U.S.
hotels Study covers the six-year period from 2007-2012
Road Map Explore CapEx Spending for:
• All Properties• Full Service• Select Service• Extended Stay• Ownership Type
Explore CapEx + R&M Spending for Same Categories
All Properties
All Properties – By Year
9.7%11.6%
7.9%5.5% 6.8%
9.7%
3.9%4.2%
4.7%
4.6%3.9%
4.1%
0%
3%
6%
9%
12%
15%
18%
2007 2008 2009 2010 2011 2012
% of
Tot
al R
even
ue
CapEx% R&M%
All Properties – Ownership Type
Capital Spending by Ownership Type All Properties 2007 – 2012
By Total Revenue Per Room Per YearCapEx CapEx + R&M CapEx CapEx + R&M
Total Sample 8.3% 12.9% $3,702 $5,755
REIT 9.5% 14.0% $4,965 $7,371
Non-REIT 4.0% 8.7% $1,171 $2,518
All Properties – CapEx Spend by Ownership Type
9.5%
4.0%
0%
2%
4%
6%
8%
10%
REIT Non-REIT
All Properties – Property Type
8.3% 8.8%
3.9% 4.9%
4.6% 4.6%
4.6%4.7%
0%
3%
6%
9%
12%
15%
All Properties Full Service Select Service Extended Stay
CapEx % R&M %
All Properties – Spend Percentage by Age
0%
5%
10%
15%
20%
25%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40Year
Capital Expenditures/Total Revenue Reserve for Replacement
*Please note that in Year 33, there is an outlying data point that impacts the results for that year.
All Properties – Percentage by Location
8.3% 8.1% 9.0% 8.0% 8.5%5.7% 6.5%
4.6% 4.5%4.5% 5.0% 4.9%
4.3%4.8%
0%
3%
6%
9%
12%
15%
All Properties Urban Resort Suburban Airport Small Town/Metro
Interstate
Cap Ex / Total Rev R&M / Total Rev
All Properties – Percentage by ADR
6.9%9.5% 8.5%
5.1%
6.3%4.5%
0%
3%
6%
9%
12%
15%
18%
<$100 $100-$125 >$125
Cap Ex / Total Rev R&M / Total Rev
Full-Service
Full Service – Percentage by Year
14
10.0%12.2%
8.1%5.8% 7.4%
10.7%
3.9%4.2%
4.8%
4.6%3.8%
4.2%
0%
3%
6%
9%
12%
15%
18%
2007 2008 2009 2010 2011 2012
CapEx% R&M%
Full Service – Per Available Room
15
$8,625 $9,811
$5,105 $3,898$6,021
$8,043
$3,390$3,350
$3,009$3,097
$3,117
$3,121
$0
$2,500
$5,000
$7,500
$10,000
$12,500
$15,000
2007 2008 2009 2010 2011 2012
CapEx R&M
Full Service – CapEx Spend by Ownership Type�
10.1%
3.6%
0%
3%
6%
9%
12%
REIT Non-REIT
Full Service - CapEx Spend by Age
0.5%
4.6% 4.9%
8.3%9.8% 10.0% 9.6%
0%
3%
6%
9%
12%
1 to 5 yrs 6 to 10 yrs 11 to 15 yrs
16 to 20 yrs
21 to 25 yrs
26 to 30 yrs
31+ yrs
% of
Tot
al R
even
ue
Full Service – 6-Year Running Average
0%
3%
6%
9%
12%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Year
Capital Expenditures/Total Revenue Reserve for Replacement
Select-Service
Select Service - Percentage by Year
20
3.8% 4.2%5.7%
3.3% 2.9%4.3%
3.7% 4.0%
4.5%
4.3% 4.1%3.8%
0%
3%
6%
9%
12%
2007 2008 2009 2010 2011 2012
CapEx% R&M%
Select Service – Per Available Room
$1,418 $1,351 $1,737$981 $938
$1,511
$1,394 $1,271$1,369
$1,292 $1,323
$1,337
$0
$1,000
$2,000
$3,000
$4,000
2007 2008 2009 2010 2011 2012
Total CapEx PAR Total R&M PAR
Select Service - CapEx Spend by Age
0.8%
5.5% 5.2%5.7%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
1 to 5 yrs 6 to 10 yrs 11 to 20 yrs 21+ yrs
% of
Tot
al R
even
ue
Select Service – CapEx Spend by Year
0%
2%
4%
6%
8%
10%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20Year
Capital Expenditures/Total Revenue Reserve for Replacement
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40Year
Capital Expenditures/Total Revenue Reserve for Replacement
Select Service: 6 Year Running Average
Extended-Stay
Extended Stay – Percentage by Year
5.4% 7.0% 6.9%4.0% 2.8%
5.1%
4.4%4.6% 4.7%
4.6%4.4%
4.4%
0%
3%
6%
9%
12%
15%
2007 2008 2009 2010 2011 2012
% of
Tot
al R
even
ue
CapEx% R&M%
Extended Stay – Per Available Room
$2,175 $2,456 $2,334$1,394 $888
$1,740
$1,755 $1,605 $1,604
$1,600$1,424
$1,500
$0
$1,000
$2,000
$3,000
$4,000
$5,000
2007 2008 2009 2010 2011 2012
CapEx PAR R&M PAR
Extended Stay – CapEx Spend by Age
1.0%
4.6%5.3%
9.8%
0%
3%
6%
9%
12%
1 to 5 yrs 6 to 10 yrs 11 to 20 yrs 21+ yrs
% of
Tot
al R
even
ue
Historical Capital Spending
6.9%6.1%
5.1%
8.8%
3.7%
5.5% 4.9%3.9%
5.9%4.9%
0%
3%
6%
9%
12%
CapEx 1995 CapEx 2000 CapEx 2007 CapEx 2014
% of
Tot
al R
even
ue
Full-Service Limited-Service Extended-Stay
ISHC CapEx 2014 – Key Takeaways CapEx Increases with Age Economic Cycles Influence CapEx Spend &
Associated Metrics (% & $ PAR) Year 8: Point of No Return REITs Spend 2 X’s as much as Non-REITs R&M: Narrow range over the course of the study -
3.9% to 4.7%
ISHC CapEx 2014
4% is not enough long term.
ISHC CapEx 2014 can be ordered at:
www.ahlei.org/�
ISHCCapEx2014/