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Hotel Industry Trends for the U.S. and Virginia
Jennifer Foster
Business Development Executive, Destinations
jfoster@str.com© 2019 STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively “STR”) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR. No strategic advice or marketing recommendation is intended or implied.
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Total U.S. Review
Virginia Overview
Virginia Markets & Regional Breakouts
Pipeline
Forecast
Q&A
Agenda
© 2019 STR. All Rights Reserved.
5© 2019 STR. All Rights Reserved.
| The world’s largest hotel performance sample
© 2019 STR. All Rights Reserved. 6
STR Building Blocks
Supply(rooms available)
Demand(rooms sold)
Revenue(rooms revenue)
OCC ADR
RevPAR
Total U.S. Review
© 2019 STR. All Rights Reserved. .
8
September 2019: RevPAR declines Second Time This Year
% Change
Room Supply 2.1%
Room Demand 1.2%
Occupancy 67.4% -0.9%
ADR $132 0.6%
RevPAR $89 -0.3%
Room Revenue 1.7%
Total US Results, September 2019
© 2019 STR. All Rights Reserved. .
9
September YTD 2019: RevPAR Growth Now at 1%
% Change
Room Supply 2.0%
Room Demand 2.0%
Occupancy 67.6% 0.0%
ADR $133 1.0%
RevPAR $89 1.0%
Room Revenue 3.0%
Total US Results, September YTD 2019
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10
Number of Months with Positive ADR % Change of Less Than 1%
2011 – 2018
0YTD 2019
5
© 2019 STR. All Rights Reserved. .
11
Quarterly RevPAR % Change: The Slow Growth Quarters Continue
2.5
3.4 3.3 3.2
3.4
2.7
1.9
4.1
3.5
4.1
1.8
2.4
1.4 1.1
0.7
Q1 Q2 Q3 Q4
2016 2017 2018 2019
* Total US, RevPAR % Change, by Quarter, Q1 2016 – Q3 2019
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12
Supply & Demand Growth In Equilibrium Will Drive 2019 /2020 Results
-0.7
-4.7
-7.1
7.8
-8
-4
0
4
8
1990 2000 2010
Supply % Change
Demand % Change
Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 09/2019
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13
Long Run Trends Point In One Direction: Down!
-3.4
-6.7
-9.7
-0.0
6.8 7.5
1.4
-10
-5
0
5
1990 2000 2010
Occ % Change
ADR % Change
Total U.S., ADR & OCC % Change, 12 MMA 1/1990 – 09/2019
© 2019 STR. All Rights Reserved. 14
RevPAR Growth: Longest RevPAR Upcycle (with two small interruptions)
-25
-15
-5
5
15
1990 2000 2010
Total U.S., RevPAR % Change, 1/1990 – 09/2019
56 Months112 Months(out of 115)
111 Months(out of 112)
© 2019 STR. All Rights Reserved. 15
RevPAR Growth: Slow Growth / No Growth Story Continues
-1
1
3
5
2017 2018 2019
Monthly 12MMA
*Total U.S., RevPAR % Change by month and 12 MMA, 1/2016 – 09/2019
Class Review YTD
LuxuryUpper Upscale
Upscale Upper Midscale
Midscale Economy
Four Seasons & Ritz-Carlton
Marriott & Hilton
DoubleTree, Courtyard & Wyndham
Hampton, Fairfield & Holiday Inn Express
Best Western, Candlewood Suites & Ramada
Days Inn, Red Roof Inn, Super 8, Econo Lodge
© 2019 STR, Inc. All Rights Reserved
© 2019 STR. All Rights Reserved. 17
Class: Supply Growth Will Impact Results Going Forward
2.72.4
3.6 3.6
1.0
-0.3
2.7
1.7
3.0
3.4
0.9
0.4
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy
Supply % Change
Demand % Change
*Supply / Demand % Change, by Class, YTD September 2019
© 2019 STR. All Rights Reserved. 18
Class RevPAR Results: 5 Classes lose OCC, but All Gain ADR
-0.1
-0.7 -0.6
-0.2 -0.1
0.71.1
1.4
0.7 0.60.4
0.4
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy
ADR % Change
Occ % Change
*RevPAR % Change by Contribution of OCC / ADR % Change, by Class, YTD September 2019
© 2019 STR. All Rights Reserved. 19
Class RevPAR Results: Growth (But Barely)
1.0
0.7
0.1
0.5
0.3
1.1
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy
*RevPAR % Change, by Class, YTD September 2019
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Class Occupancy: Occupancy Will Remain Flat (Or Decline) In 2019
72.373.9 72.9
69.2
61.5 60.9
72.374.5 73.3
69.4
61.660.4
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy
2019 2018
*OCC %, by Class, YTD September 2019 & 2018
SegmentationLuxury & Upper Upscale
Group Transient Contract
Segmentation
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Transient Performance: Annualized ADR Growth Now Well Below 2% (And Dropping)
0%
1%
2%
3%
4%
Jan-18 Jan-19
Demand % Change
ADR % Change
*Transient Demand and ADR % Change, 12 MMA, 1/2018 – 09/2019
© 2019 STR. All Rights Reserved. 23
Group Performance: ADR Growth Holds Steady – For Now
-2%
-1%
0%
1%
2%
3%
4%
Jan-18 Jan-19
Demand % Change
ADR % Change
*Group Demand and ADR % Change, 12 MMA, 1/2018 – 09/2019
Easter Shift
Easter Shift
© 2019 STR. All Rights Reserved. 24
Segmentation ADR % Change: Transient ADR Growth Noticeably Weaker Than Group ADR Growth
0.0%
1.0%
2.0%
3.0%
Jan-18 Jan-19
Transient ADR % Change
Group ADR % Change
*ADR % Change, Transient & Group, 12MMA, 1/2017 – 09/2019
Markets
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26
September YTD Top 25 Market Performance: Despite High Occupancies a Very Mixed Bag
Market OCC % RevPAR % Change Influenced By
Phoenix, AZ 71.2 4.7 0.6% Supply Growth
Atlanta, GA 71.0 4.7 Super Bowl LIII = ADR +5.2%
Denver, CO 76.6 3.9 8.1% Demand Growth
San Francisco/San Mateo, CA 83.0 3.4 Moscone Reopens = ADR +5.3%
Nashville, TN 74.9 3.4PBS’s “Country Music” + NFL Draft =
+8.6% Demand Growth
Miami/Hialeah, FL 76.2 -3.0 Supply Growth +3.8%
Orlando, FL 76.2 -3.1 ADR only +0.3%
New York, NY 85.4 -3.2 Surprisingly Weak, ADR -1.9%
Houston, TX 63.8 -4.5 Supply Growth +4.1%
Seattle, WA 76.1 -5.0 Supply Growth +6.5%
*RevPAR % Change and absolute OCC in Top 25: 5 Best / 5 Worst Performing RevPAR % Markets, YTD September 2019
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Mississippi PerformanceVirginia Performance
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STR Hotel Participation:85.4%
Hotels: 1,540Rooms: 155,603
© 2019 STR. All Rights Reserved. .
29
September 2019 - Virginia YoY Percent Change
6.9% 0.6%
4.2%
7.5%
3.2%
3.6%
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30
Virginia: ADR Growth Drives RevPAR Growth
Total VA Results, September 2019 12MMA
Occ
64%
0.3%
ADR
$112
1.5%
RevPAR
$72
1.8%
Raw Data % chg
Supply
0.4%
Demand
0.7%
Revenue
2.2%
© 2019 STR. All Rights Reserved. .
31
Virginia Demand Growth & Supply Growth Lines Have Crossed Twice in Past Year
-6
-2
2
6
2006 2008 2010 2012 2014 2016 2018
Supply % Change
Demand % Change
Total VA: Supply & Demand % Change; 12 MMA 2006 – September 2019
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32
Virginia Occ Growth Trends Down & ADR Growth On The Rise in 2019
-7.8
6.0
-8
-6
-4
-2
0
2
4
6
2006 2008 2010 2012 2014 2016 2018
OCC % Change ADR % Change
0.3
Total VA: ADR & OCC % Change; 12 MMA 2006 – September 2019
1.5
© 2019 STR. All Rights Reserved. 33
Virginia RevPAR Growth: Overall Positive Trend
-10
-5
0
5
10
15
2016 2017 2018 2019
Monthly 12MMA
Virginia State., RevPAR % Change by month and 12 MMA, 1/2016 – 09/2019
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34
Day of Week Occupancy12 MMA – September 2019
50.1%
61.4%
66.9% 67.4%
64.0%
68.9%
71.1%
Sunday Monday Tuesday Wednesday Thursday Friday Saturday
Virginia, Occupancy, 12MMA September 2019
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35
Day of Week Rates12 MMA – September 2019
$103
$114
$119 $118
$110 $110 $111
Sunday Monday Tuesday Wednesday Thursday Friday Saturday
Virginia, ADR, 12MMA September 2019
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36
Virginia Submarkets (22)
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37
STR Markets in Virginia (4) and Surrounding Area
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38VA Markets Supply/Demand % change, September 2019 YTDeptember 2018
1.8 1.9
0.3
-0.3
-0.9
0.1
0.6
0.1
0.7
0.3
Washington, DC-MD-VA
Virginia Area Virginia (state) Richmond-Petersburg Norfolk-VirginiaBeach
Supply Demand
Supply and Demand Growth Across the Markets
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39
VA Markets, OCC % Change, September 2019 YTD
-1.6
-1.3
-0.2
0.0
1.0
1.2
Washington, DC-MD-VA
Virginia Area
Virginia (state)
Total US
Richmond-Petersburg
Norfolk-Virginia Beach
Positive Occupancy Growth in 2 of the 4 Markets
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40
VA Markets : ADR % Change; September 2019 YTD
-0.1
1.0
1.7
1.7
2.1
2.4
Richmond-Petersburg
Total US
Virginia (State)
Washington, DC-MD-VA
Norfolk-Virginia Beach
Virginia Area
Virginia Area Leads in ADR Growth
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41
Absolute Occ / ADR – Rooms Full 3 Out of 5 Nights
Occupancy ADR
Washington, DC-MD-VA 72% $160
Virginia (state) 66% $114
Norfolk-Virginia Beach 66% $110
Virginia Area 59% $99
Richmond-Petersburg 67% $96
VA Markets, Absolute Occupancy / ADR September 2019 YTD
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42
VA Markets, RevPAR % Change, September 2019 YTD
0.0
0.9
1.0
1.1
1.4
Washington, DC-MD-VA
Richmond-Petersburg
Total US
Virginia Area
Virginia (state)
Norfolk-Virginia Beach
Positive RevPAR Growth Across All Markets
3.3
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Mississippi Performance
Virginia Regional Breakouts
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44
VA Regional Breakouts, OCC % Change, September 2019 YTD
-5.2
-1.2
-1.1
-0.7
0.2
0.4
0.5
1.2
2.1
3.1
Southern Virginia
Northern Virginia
Shenandoah Valley
SW - Heart of Appalachia
Virginia Mountains
Central Virginia
SW - Blue Ridge Highlands
Coastal - Hampton Roads
Coastal - Eastern Shore
Chesapeake Bay
Occupancy Growth Across The Regions
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45
VA Regions : ADR % Change; September 2019 YTD
0.5
0.7
1.7
1.8
1.9
2.1
3.0
3.5
4.0
7.1
Central Virginia
Shenandoah Valley
Chesapeake Bay
Virginia Mountains
Northern Virginia
Coastal - Hampton Roads
SW - Blue Ridge Highlands
SW - Heart of Appalachia
Coastal - Eastern Shore
Southern Virginia
Southern Virginia Leads in ADR Growth
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46
VA Regional Breakouts, RevPAR % Change, September 2019 YTD
-0.4
0.7
0.9
1.6
2.0
2.9
3.4
3.5
4.9
6.2
Shenandoah Valley
Northern Virginia
Central Virginia
Southern Virginia
Virginia Mountains
SW - Heart of Appalachia
Coastal - Hampton Roads
SW - Blue Ridge Highlands
Chesapeake Bay
Coastal - Eastern Shore
Positive RevPAR Growth Across (almost) All The Regions
In Construction: Vertical construction on the physical building has begun.
Final Planning:Construction will begin within the next 12 months.
Planning:Construction will begin in more than 13 months.
Under Contract
Pipeline
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48
US Pipeline: I/C Rooms Increase, But Still Manageable
Phase 2019 2018 % Change
In Construction 204 188 8.2%
Final Planning 231 207 11.5%
Planning 221 218 1.6%
Under Contract 656 614 7.0%
*Total US Pipeline, by Phase, ‘000s Rooms, September 2019 and 2018
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Number of I/C Rooms: Hovering Around the +10% Growth Mark
-10
-5
0
5
10
15
20
25
30
35
150
175
200
225
2017 2018 2019
Rooms ('000s) (LHS)
% Change YoY (RHS)
*Total U.S Pipeline, Rooms In Construction and % Change from Same Month Prior Year, 1/2017 – 09/2019
Rooms (000s)% Change
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50
Limited Service Construction Is The Name Of The Game
13.8
28.9
62.9 61.0
13.6
3.2
20.3
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated
*US Pipeline, Rooms In Construction , ‘000s Rooms, by Scale, September 2019
69%
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51
In Construction Rooms Are Dominated By Two Players: Hilton & Marriott
59%41%Hilton + Marriott
All Other
*US Pipeline, Rooms In Construction, Share of HLT & MAR of total, Q3 2019
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52
Total Active Pipeline Rooms: Over 80% Are Branded By The “Big 6”
82%
18%IHG, Choice,Hilton, Hyatt,Marriott,Wyndham
All Other
*US Active Pipeline, Share of IHG, CHH, HLT, H, MAR, WYN of total, Q3 2019
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53
Large Markets Grow Rapidly
Market Rooms In Construction % Of ExistingNashville, TN 5,642 12%
New York, NY 13,907 11%
Minneapolis/St Paul, MN-WI 3,233 7%
Miami/Hialeah, FL 3,489 6%
Phoenix, AZ 3,924 6%
Dallas, TX 5,426 6%
Los Angeles/Long Beach, CA 6,117 6%
Boston, MA 3,439 6%
Tampa/St Petersburg, FL 2,712 6%
Las Vegas, NV 9,163 5%
*US Pipeline, Rooms I/C and as % of Existing Supply, Largest % In Top 26 Markets, September 2019
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54
Total United StatesSTR Pipeline Attrition RateLong Term Average (2013 – 2016)
65%76%
96%
36%24%
4%
Planning Final Planning In Construction
Opened Abandoned
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Phase Projects Rooms
In Construction 29 3,073
Final Planning 39 4,223
Planning 44 4,557
Total Under Contract Pipeline
112 11,853
Total Virginia State Pipeline, by Project Phase, October 2019
Increases in Supply to Come – Virginia
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57
Cities with the most hotel rooms in STR Pipeline
1,157
845712
628 585467
Richmond CharlottesvilleVirginia Beach Herndon Harrisonburg Winchester
Virginia Pipeline, Rooms Under Contract, by city, October 2019
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58
Upper Midscale = Most Rooms Coming
80
1,035
2,422
4,536
2,104
836 841
Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated
Virginia Pipeline, Rooms Under Contract, by Scale, October 2019
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In Construction Properties (29) - Virginia
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60
Marriott Virginia Beach Oceanfront
305 Rooms
Open Date: March 2020
Homewood Suites by Hilton Reston
134 Rooms
Open Date: Oct 2020
Residence Inn Richmond
131 Rooms
Open Date: July 2020
Hampton by Hilton Richmond
128 Rooms
Open Date: Sept 2020
Tru by Hilton Ashburn
One Loudoun
125 Rooms
Open Date: Nov 2020
Virginia Pipeline, In Construction, 5 largest by room count, October 2019
Largest In Construction Properties
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61
When to Expect the New Rooms in Virginia
183
2,911
3,825
2,065
463
2019 2020 2021 2022 2023
Virginia State Under Contract Pipeline, by room, by projected open date, October 2018
Forecast
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63
Notable Calendar Shifts Impacting US Lodging Performance Data in 2019:
Easter: Shift from March to April (also affects Q1/Q2)
Passover: Shift from March to April (also affects Q1/Q2)
Hanukkah: Shift from 12/3 to 12/23, impacting weekly results
Weekend Night: May/Sept/Dec lose. Jul/Aug/Nov gain.
Notable Market Level Events / Comps:
Super Bowl: From Minneapolis to Atlanta
North Carolina: Hurricane Florence 9/14/2018 and thereafter
Florida: Hurricane Michael 10/10/18 and thereafter
California: Wildfires 11/8 through 11/25/2018 and thereafter
© 2019 STR. All Rights Reserved. .
64
Nine Years of Super Bowl Performance (RevPAR Growth)
447%
1082%
361%
115%
344%
234%
356%
626%
387%
0%
200%
400%
600%
800%
1000%
1200%
Dallas -2011
Indianapolis -2012
New Orleans- 2013
New York -2014
Phoenix -2015
SanFrancisco -
2016
Houston -2017
Minneapolis- 2018
Atlanta -2019
RevPAR % Change - Friday, Saturday, and Sunday nights of Super Bowl weekend versus same day-of-week prior year
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Outlook
Metric2019
Forecast2020
Forecast
Supply 2.0% 2.0%
Demand 1.8% 1.5%
Occupancy -0.2% -0.4%
ADR 1.0% 0.9%
RevPAR 0.8% 0.5%
Total United StatesKey Performance Indicator Outlook (% Change vs. Prior Year)2019F – 2020F
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66
- 3% to 1% 1% to 3% 3% to 6%Atlanta, GA Anaheim/Santa Ana, CA Miami/Hialeah, FL
New York, NY Boston, MA Montreal, QCPhiladelphia, PA-NJ Chicago, IL San Francisco/ San Mateo, CA
Tampa/St Petersburg, FL Dallas, TX Vancouver, BCDenver, CODetroit, MI
Houston, TXLos Angeles/Long Beach, CAMinneapolis/St Paul MN-WI
Nashville, TNNew Orleans, LA
Norfolk/Virginia Beach, VAOahu Island, HI
Orlando, FLPhoenix, AZ
San Diego, CASeattle, WA
St Louis, MO-ILWashington, DC-MD-VA
Toronto, ON
2020 Year End RevPAR ForecastTop North American Markets, August 2019 Forecast (Markets sorted alphabetically)
Note: RevPAR Growth forecast estimates are in local currency
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67
Virginia – Key Performance Indicator Outlook (% Change vs. Prior Year)2018 – 2019F - 2020F
Outlook
20182019
Forecast2020
Forecast
Occupancy 0.7% -0.4% -2.3
ADR 0.6% -0.1% 0.3
RevPAR 1.3% -0.6% -2.1
Virginia Lodging Industry Forecast
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68
October 2019 - Virginia YoY Percent Change
-0.1% 0.7%
-0.6%1.1%
-1.3%
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Slow growth: Slow down in RevPAR and Occupancy growth
Travel economy is still resilient: Transient demand strong
Group is holding ADR growth will continue to underwhelm The economy will dictate what happens to the
hotel industry
Virginia (and U.S.) Takeaways:
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