resort conference march 21 st, 2006 jan d. freitag, vp smith travel research
TRANSCRIPT
![Page 1: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/1.jpg)
Resort ConferenceMarch 21st, 2006
Jan D. Freitag, VP
SMITH TRAVEL RESEARCH
![Page 2: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/2.jpg)
Agenda
• Total US Overview
• Resort Locations
• Destination Resorts
• Condo Hotels
• Total US Projections
![Page 3: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/3.jpg)
Total United StatesEstimated Revenue and ProfitabilityYears 1999 – 2005P
Life is good !
102.9
112.1
103.5 102.6105.3
123
22.1 22.516.2 14.2 12.8
16.720.8
113.7
39.2%
40.9%
37.1%
35.7%35%
36.6%37.5%
0
20
40
60
80
100
120
140
1999 2000 2001 2002 2003 2004 2005P25%
30%
35%
40%
45%
50%Revenue Income GOP
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U.S. Lodging Industry - Key StatisticsLatest 12 Months - January 2006
% Change• Hotels 47,735 0.6%• Rooms 4.4mm 0.3%• Occupancy 63.3% 2.9%• A.D.R. $91.28 5.5%• RevPar $57.76 8.6%• Room Revenue $94B 9.0%
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-6
-4
-2
0
2
4
6
1989 1991 1993 1995 1997 1999 2001 2003 2005
Supply % Change
Demand % Change
Total United StatesRoom Supply/Demand Percent ChangeTwelve Month Moving Average – 1989 to January 2006
Cyclicality Clearly Visible – Recent S/D Imbalance Spells Opportunity
0.3%
3.3%
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-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
1989 1991 1993 1995 1997 1999 2001 2003 2005
Occ % Chg
ADR % Chg
Total United StatesOccupancy/ADR Percent ChangeTwelve Month Moving Average – 1989 to January 2006
Divergence
Divergence?
If History Repeats Itself, Strong ADR Gains are Here to Stay
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50
60
70
80
90
100
1989 1991 1993 1995 1997 1999 2001 2003 2005
Occupancy ADR
Total United StatesOccupancy Percent, Average Daily Rate, RevPARTwelve Month Moving Average – 1989 to January 2006
$86.36
$91.28
64.9%63.3%
Robust OCC and ADR Gains post 9/11
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STR Chain ScalesSelected chains from each segment
• Luxury – Four Seasons, Ritz Carlton, Fairmont, W Hotels
• Upper Upscale – Doubletree, Hilton, Hyatt, Sheraton
• Upscale – Hilton Garden Inn, Courtyard, Crowne Plaza, Radisson
• Mid with F&B – Holiday Inn, Ramada, Best Western, Quality Inn
• Mid no F&B – Comfort Inn, HI Express, Country Inns & Suites
• Economy – Motel 6, Days Inn, ESA, Travelodge, Ramada Limited
![Page 9: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/9.jpg)
-0.1
1.1 1.3
-2.6
1.2
0.0
3.8 3.6 3.7
0.6
5.0
3.6
-5
0
5
10
Luxury UpperUpscale
Upscale Mid w F&B Mid wo F&B Economy
SupplyDemand
Chain ScalesSupply/Demand Percent ChangeTwelve Months Ended January 2006
Business Traveler Drives Demand for Big Boxes
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4.03.6
7.37.0
7.7 7.8
4.03.6
2.5 3.32.5
5.2
0
5
10
Luxury UpperUpscale
Upscale Mid w F&B Mid wo F&B Economy
OccupancyADR
Chain ScalesOccupancy/ADR Percent Change Twelve Months Ended January 2006
Above Inflation Rate Growth Across all Chain Scales
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11.3 10.911.7
5.9
13.1
7.88.79.7
11.810.2
11.4
7.8
0
10
20
Luxury UpperUpscale
Upscale Mid w F&B Mid wo F&B Economy
RevPARRoom Revenue
Chain ScalesRevPAR/Room Revenue Percent Change Twelve Months Ended January 2006
Life is Good!
![Page 12: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/12.jpg)
Agenda
• Total US Overview
• Resort Locations
• Destination Resorts
• Condo Hotels
• Total US Projections
![Page 13: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/13.jpg)
Resort Locations Key Statistics12 Month Moving Average January 2006
% Change• Hotels 3,890 -2.5%• Room Nights 214.6 m -1.8%• Demand 143.3 m -0.8%• Occupancy 66.7% 1.1%• ADR $127.06 6.0%• RevPAR $85.11 7.1%• Room Rev $18.3 b 5.2%
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-10
-8
-6
-4
-2
0
2
4
6
8
1989 1991 1993 1995 1997 1999 2001 2003 2005
Supply % Change
Demand % Change
Resort LocationsRoom Supply/Demand Percent ChangeTwelve Month Moving Average – 1989 to January 2006
Supply Increase Used to be Somewhat Constant – Until 9/11
-0.8%
-1.8%
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-10
-8
-6
-4
-2
0
2
4
6
8
1989 1991 1993 1995 1997 1999 2001 2003 2005
Demand % Change
Resort LocationsRoom Demand Percent Change PeaksTwelve Month Moving Average – 1989 to January 2006
Demand Peaks Every 48 months – Or Does it?
48 months 48 months 42 months
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-10
-8
-6
-4
-2
0
2
4
6
8
1989 1991 1993 1995 1997 1999 2001 2003 2005
Occ % Chg
ADR % Chg
Resort LocationsOccupancy/ADR Percent ChangeTwelve Month Moving Average – 1989 to January 2006
Despite Decreasing OCC Growth, ADR Growth Should be Here to Stay
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50
60
70
80
90
100
110
120
130
1989 1991 1993 1995 1997 1999 2001 2003 2005
OccupancyADR
Resort LocationsOccupancy Percent, Average Daily RateTwelve Month Moving Average – 1989 to January 2006
July 1997: 69.1%
OCC & ADR Rebound after 9/11 – but OCC still has a way to go
July 2001: $115
Jan 2006: $127
Jan 2006: 66.7%
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ResortsDay of Week Analysis – Occupancy 2003 - 2005
54.2%
57.2%
60.2%
62.0%
63.6%
72.4%
76.0%
57.7%
63.9%65.4%
67.1%
61.1%
64.9%
66.6%67.8%
75.2%
78.3%
60.7%
78.4%
75.1%
57.5%
50%
55%
60%
65%
70%
75%
80%
Sun Mon Tue Wed Thu Fri Sat
200320042005
Nice Increases Midweek - but Have Weekends Peaked?
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ResortsDay of Week Analysis – ADR 2003 - 2005
$113.20
$111.22 $111.07$112.37 $112.41
$113.92
$115.71
$118.63
$115.50 $115.95
$117.87
$126.76
$124.11 $124.02$125.68
$128.77
$131.71
$115.99
$122.27$120.85
$123.63
$100
$105
$110
$115
$120
$125
$130
$135
Sun Mon Tue Wed Thu Fri Sat
200320042005
~$8 Rate Growth Across the Board – a Good Sign for 2006
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ResortsGroup vs. Transient ADR 2003 - 2005
$166.95$172.02$168.48
$172.92
$201.73
$183.02
$50
$100
$150
$200
Group Transient
2003 2004 2005
Group Rate Growth Lags Transient Rate Growth
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ResortsDay of Week ADR - Group 2003 - 2005
$170.38
$166.79
$165.50$164.86
$166.54 $166.72
$168.67
$172.14
$166.81$166.17
$168.44
$177.00
$173.17
$171.77
$172.74
$171.56
$173.48
$168.49
$170.50
$167.69
$171.87
$160
$162
$164
$166
$168
$170
$172
$174
$176
$178
Sun Mon Tue Wed Thu Fri Sat
2003 2004 2005
2005 vs 2004: Moderate Daily Rate Growth (~3%) For Groups
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ResortsDay of Week ADR – Transient2003 - 2005
$173.38
$170.34 $169.63
$172.37 $171.98 $172.54 $173.40
$183.55
$178.87$180.01
$184.33
$201.10
$197.95 $197.74
$202.25
$205.39$207.52
$179.73
$185.72$187.03
$197.50
$160
$170
$180
$190
$200
$210
Sun Mon Tue Wed Thu Fri Sat
2003 2004 2005
2005 vs 2004: Healthy Rate Increases Across All Days (~10%)
![Page 23: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/23.jpg)
Agenda
• Total US Overview
• Resort Locations
• Destination Resorts
• Condo Hotels
• Total US Projections
![Page 24: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/24.jpg)
Destination Resort Key Statistics12 Month Moving Average January 2006
% Change• Hotels 317 1.0 %• Room Nights 57.7m - 0.5 %• Demand 38.8 m 1.2 %• Occupancy 67.3% 1.7 %• ADR $182.98 6.3 %• RevPAR $123.14 8.1 %• Room Rev $7.1 b 7.6 %
0.7% of US Hotel Supply generates 7.6 % of US Rooms Revenue
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-10
-8
-6
-4
-2
0
2
4
6
8
10
1989 1991 1993 1995 1997 1999 2001 2003 2005
Supply % Change
Demand % Change
Destination ResortsRoom Supply/Demand Percent ChangeTwelve Month Moving Average – 1989 to January 2006
Segment Always Attracts New Supply – Except in the Most Recent Past
1.2%
-0.5%
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-12-10
-8-6-4-202468
10
1989 1991 1993 1995 1997 1999 2001 2003 2005
Occ % Chg
ADR % Chg
Destination ResortsOccupancy/ADR Percent ChangeTwelve Month Moving Average – 1989 to January 2006
Above 6% Rate Growth Lasts Not Forever… But for Now
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0
25
50
75
100
125
150
175
200
1989 1991 1993 1995 1997 1999 2001 2003 2005
OccupancyADR
Destination ResortsOccupancy Percent, Average Daily RateTwelve Month Moving Average – 1989 to January 2006
Still Room For Improvement Post 9/11 in Both Measures
May 1997: 70.6%
July 2001: $171
Jan 2006: $182
Jan 2006: 67.3%
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50
55
60
65
70
75
80
January February M arch April M ay June July August Septem ber October Novem ber Decem ber
20002005
Destination ResortsMonthly Occupancy2000 vs. 2005
In the Off Season, Year 2000 Still Is the Benchmark To Beat
76.8%75.8%
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130
140
150
160
170
180
January February M arch April M ay June July August Septem ber October Novem ber Decem ber
20002005
Destination ResortsMonthly ADR2000 vs. 2005
December Rate Differential Still $6
-$6
+$14
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Destination ResortsDay of Week Analysis – Occupancy 2003 - 2005
54.7%
59.1%
62.4%
64.2%65.5%
71.0%
74.3%
66.7%67.9%
69.0%
58.8%
64.0%
68.2%69.5%
70.3%
74.3%
77.0%
58.9%
63.3%
77.1%
74.1%
50%
55%
60%
65%
70%
75%
80%
Sun Mon Tue Wed Thu Fri Sat
200320042005
Strong “Long Weekends” (Thu – Sat) But Have Fr/Sat Reached Their Peak?
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Destination ResortsDay of Week Analysis – ADR 2003 - 2005
$145.74
$142.07$141.13
$142.44$143.62 $143.45
$144.43
$148.91
$143.75 $144.08
$147.31
$157.19
$153.11$152.18
$155.05
$156.61
$145.04
$148.75$148.19
$158.63
$151.83
$130
$135
$140
$145
$150
$155
$160
Sun Mon Tue Wed Thu Fri Sat
200320042005
Second Part of the Cycle: Rate Increase ‘04/’03: 2% - Rate Increase ‘05/’04: 6%
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Agenda
• Total US Overview
• Resort Locations
• Destination Resorts
• Condo Hotels
• Total US Projections
![Page 33: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/33.jpg)
Definitions
• Condo Hotel Rooms:Rooms placed in Rental Pool
• Residences:Rooms not placed in Rental Pool
![Page 34: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/34.jpg)
Total U.S.Summary of Condotel Pipeline – March 2006
Source: STR Condotel Pipeline, part of the STR / TWR / Dodge Construction Pipeline
229 Projects with a total of 98,142 reported* rooms
Rooms are broken out as follows ( % of total):
• Hotel Rooms: 34,166 35%
• Condo Hotel Rooms: 48,678 50%
Total Affecting Nightly Room Supply: 82,844 85%
• Non-rental Residences: 13,938 14%
• Timeshare Rooms: 1,360 1%
* Some projects have not yet reported room counts
![Page 35: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/35.jpg)
Total U.S.Top 10 Condotel MSAsMarch 2006
28,288
11,576
10,084
6,880
3,712 3,699 3,215 3,073 2,911 2,672
0
5,000
10,000
15,000
20,000
25,000
30,000
Las Vegas Miami - FortLauderdale
Non-MSA Orlando NYC / NJ Chicago Tampa / ST.Pete
Myrtle Beach Boston San Diego
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59.2
61.363.1
52.7
56.0
59.4
63.4
66.9 67.6
40
45
50
55
60
65
70
2003 2004 2005
Total US
CondoHotels
Destination Resorts
Annual Occupancy 2003 - 2005Total US vs. Condo Hotels vs. Destination Resorts
%
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$82.86 $86.24$90.83
$168.44
$179.26
$194.18
$148.77 $151.85$158.68
40
60
80
100
120
140
160
180
200
220
2003 2004 2005
Total US
CondoHotels
Destination Resorts
Annual ADR 2003 - 2005Total US vs. Condo Hotels vs. Destination Resorts
$
![Page 38: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/38.jpg)
Condotel:Data Reporting Topics• Reporting Availability
Static vs. Fluctuating Rooms Available
• Reporting Rooms SoldIssue: Owner Occupied, Non-Revenue Generating Rooms
• Reporting Rooms RevenueThe Rule: No Restatements after 120 days
• Comp Set IssuesChoosing a Condotel in your Comp Set will likely do more harm than good
![Page 39: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/39.jpg)
Agenda
• Total US Overview
• Resort Locations
• Destination Resorts
• Condo Hotels
• Total US Projections
![Page 40: Resort Conference March 21 st, 2006 Jan D. Freitag, VP SMITH TRAVEL RESEARCH](https://reader035.vdocuments.site/reader035/viewer/2022062716/56649dda5503460f94ad0c49/html5/thumbnails/40.jpg)
Lodging Industry Issues
• Supply Growth Remains Benign – Construction Costs, Condo Conversions
• Higher Operating Costs – Insurance, Labor, Amenities, Energy
• Solid Demand Growth – Degrees of Good, Some Not So Good
• Changing Demand – Experience Travel, Baby Boomers
• Occupancy Growth Slows – Varies Widely by Market
• Aggressive Pricing – Could Double CPI, Control of Internet Pricing
• Transportation Problems – Troubled Airlines, Gasoline, Infrastructure
• Higher Industry Profits – More Difficult for each Property
• Global Issues – Terrorism, Bird Flu, Currency Fluctuations
• Outlook – Great ‘till ‘08?
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U.S. Economic OutlookBlue Chip Economic Indicators – March 2006
2005A 2006F 2007F
Real GDP +3.6% +3.4% +3.0%
CPI (= Inflation) +3.4% +2.9% +2.4%
Corporate Profits + 17.1% +9.5% +4.6%
Disp Personal Income +1.5% +3.5% +3.2%
Unemployment Rate 5.1% 4.8% 4.7%
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1.6
3.1
0.4
1.21.1
0.6
4.2
3.3
0.3
1.4
0
1
2
3
4
5
2002 2003 2004 2005 2006P
Supply % Chg
Demand % Chg
Total United StatesSupply/Demand Percent Change2002 – 2006P
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2.9
3.6
0.3
1.9
-1.2
-2
-1
0
1
2
3
4
2002 2003 2004 2005 2006P
Total United StatesOccupancy Percent Change2002 – 2006P
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59 59.2
63.1
61.3
64.3
55
60
65
70
2002 2003 2004 2005 2006P
Total United StatesOccupancy Percent2002 – 2006P
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4.1
5.3
-1.5
6.0
0.1
-2.0
0.0
2.0
4.0
6.0
8.0
2002 2003 2004 2005 2006P
Total United StatesADR Percent Change2002 – 2006P
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Total United StatesReal Room Rates – (Base Year = 2000)
Year End 2000 - 2005
$81.73
$78.63
$80.43$79.28
$85.31
$77.62
75
80
85
90
2000 2001 2002 2003 2004 2005
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Total United StatesNominal Room Rates2000 – 2006P
85.2283.99
86.24
90.83
96.28
101.75
82.8682.75
75
80
85
90
95
100
105
2000 2001 2002 2003 2004 2005 2006P
If Yr. 2000 Rate Had Grown at 3% over 6 years:
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8.48.07.8
0.4
-2.7
-10.0
-5.0
0.0
5.0
10.0
2002 2003 2004 2005 2006P
Total United StatesRevPAR Percent Change2002 – 2006P