Upload
etravel-project
View
320
Download
0
Tags:
Embed Size (px)
DESCRIPTION
NYU Tisch Center Economic Recovery Briefing for the Hospitality Industry in the USA
Citation preview
NEW YORK UNIVERSITYSchool of Continuing andSchool of Continuing and
Professional Studies
P t R b t Ti h C t fPreston Robert Tisch Center forHospitality, Tourism, and Sports Management
Th U S E i RThe U.S. Economic Recovery: Chain Scale Segments,
Top 25 Markets,Demand Segments and Profits
The Fourth in a Series ofNYU Tisch Center Economic Briefings
February 2010©NYU 2010
St M L b t M ASteven M. Lambert, M.A.Director of Administration and Industry Relations
NYU Tisch CenterNYU Tisch Center
©NYU 2010
Bjorn Hanson, Ph.D.j ,Clinical Associate Professor
NYU Tisch Center
©NYU 2010
AgendaAgenda
1. U.S. Recessions2. U.S. Lodging Industry: Cycles and Performance3. Analysis of U.S. Lodging Recoveriesy g g4. U.S. Lodging RevPAR Trends: Implications for this
Recovery5. Two RevPAR Recovery Analyses6. RevPAR Forecasts
l h7. Structural Changes8. Conclusions
©NYU 2010
Section 1 ‐ U.S. Recessions
©NYU 2010
U.S. RecessionsD t D tiDates Duration
Aug. 1929 to March 1933 43 months
May 1937 to June 1938 13 monthsMay 1937 to June 1938 13 months
Feb. 1945 to Oct. 1945 8 months
Nov. 1948 to Oct. 1949 11 months
J l 1953 t M 1954 10 thJuly 1953 to May 1954 10 months
Aug. 1957 to April 1958 8 months
April 1960 to Feb. 1961 10 months
Dec. 1969 to Nov. 1970 11 months
Nov. 1973 to March 1975 16 months
Jan 1980 to July 1980 6 monthsJan. 1980 to July 1980 6 months
July 1981 to Nov. 1982 16 months
July 1990 to March 1991 8 months
March 2001 to Nov. 2001
December 2007 to Feb. 2010
8 months
26 months*Source: National Bureau of Economic Research*To date
©NYU 2010
For further information on “The U.S. Economy, the Stock Market and its Effect on the Lodging Industry”,Stock Market and its Effect on the Lodging Industry , please refer to the Tisch Center NYU February Podcast at:
http://www.scps.nyu.edu/tischpodcast
©NYU 2010
Section 2 ‐ The U.S. Lodging Industry: C l d P f R l iCycles and Performance Relative to
Recessions
©NYU 2010
Long-Term U.S. Occupancyg p yOccupancy Percentage
90%
95%1946
92.5%Long-Term Trend63.34% (81 Years)
1987 to 2007 Trend62.7% (20 Years)
75%
80%
85%
65%
70%
75%
199564.8%
197972.2%
2008 60.3%
55%
60% 199161.9%
197153.4%
193350.6%
2002 59.0%
200955.2%
50%28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 '00 '03 '06 '09
Sources: PricewaterhouseCoopers LLP (1928 to 1986 and 2008), Smith Travel Research (1987 to 2009).Sources: PricewaterhouseCoopers LLP (1928 to 1986 and 2008), Smith Travel Research (1987 to 2009) ©NYU 2010
Timeline of Recessions & Historic Events
1962 Cuban Missile C i i
2002 U.S. invasionCrisis
1963JFK
1973 Oil Embargo
U.S. invasionof Iraq
1982Falklands War 1991
Persian Gulf War
1953Korean War Ends
Assassinated 2003SARS1950 1960 1990 20001970 2010
Persian Gulf War
1980
2001 September 11th Attacks
1987Black
Monday
2008H1N11979
Iranian Oil
19676 Day War in Middle East
1963
1991 USSR
Collapse
1995 Oklahoma City Bombing
1958First domesticjet airline
Oil
Crisis2008
2008Lehman
Brothers Chapter 11
1963LBJ Expands War in Vietnam 1991
Yugoslav Wars
Collapse
©NYU 2010
Bear Stearns
Collapse
U.S. Lodging Demand and Recessions
2700
2400
2700
1800
2100
1500
1800
1200
900
Source: National Bureau of Economic Research & Smith Travel Research ©NYU 2010
U.S. Recessions and Lodging Cyclesg g yU.S. Recessions Months Lodging Cycles Months
Dec. 1969 to Nov. 1970 11 Feb. 1969 to Feb. 1971 12
Nov 1973 to March 1975 16 Aug 1974 to May 1975 9Nov. 1973 to March 1975 16 Aug. 1974 to May 1975 9
Jan. 1980 to July 1980 6 Oct. 1979… -
July 1981 to Nov. 1982 16 … to May 1982 19
July 1990 to March 1991 8 Feb 1990 to March 1991 13July 1990 to March 1991 8 Feb. 1990 to March 1991 13
March 2001 to Nov. 2001 8 Sept. 2000 to Sept. 2003 36
Dec 2007 to Feb. 2010 26
Source: Smith Travel Research and National Bureau of Economic Research ©NYU 2010
S i 3 U S L d i R iSection 3 ‐ U.S. Lodging Recoveries
©NYU 2010
Definitions of Recovery
1. Return to a prior trend line
2. Favorable trend following a trough
3. Return to a prior performance level
©NYU 2010
3. Return to a prior performance level
Years from priorYears from
Y f i Y f f
Years from priorpeak to recovery
Years from trough to recovery
Years from prior peak to recovery
Years from from trough to recovery
recoveryy
2/5 years
©NYU 2010
Total U.S. Lodging Industry
©NYU 2010
Total U.S. Occupancy2007 R i1991 R i
125
2007 Recession
2001 Recession
1991 Recession
1980 Recession1973 Recession
1969 Recession
115
cent
age
105
cupa
ncy P
erc
95
Inde
xed
Occ
854 3 2 1 1 2 3 4 5
Trough
4 3 2 1 1 2 3 4 5
Source: Smith Travel Research and PricewaterouseCoopers
Years Prior to Trough Years Past Trough
©NYU 2010
Total U.S. Nominal ADR2001 R i1991 R i
140
1980 Recession 2007 Recession
2001 Recession
1973 Recession
1991 Recession
120
130
140
Rate
$
110
120
erag
e Dail
y R
90
100
Inde
xed A
ve
70
80
4 3 2 1 1 2 3 4 5
Trough
4 3 2 1 1 2 3 4 5Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
Total U.S. Real ADR2001 R i1991 R i
1980 Recession 2007 Recession
2001 Recession
1973 Recession
1991 Recession
140
120130
Rate
$
100110
erag
e Dail
y R
8090
Inde
xed A
ve
Trough6070
4 3 2 1 1 2 3 4 5
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
4 3 2 1 1 2 3 4 5
Total U.S. Nominal RevPAR2001 R i1991 R i
1980 Recession 2007 Recession
2001 Recession
1973 Recession
1991 Recession
140
120
130
140
100
110
120
evPA
R $
80
90
Inde
xed
R
Trough60
70
4 3 2 1 1 2 3 4 5
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers
4 3 2 1 1 2 3 4 5
©NYU 2010
Total U.S. Real RevPAR2001 R i1991 R i
1980 Recession 2007 Recession
2001 Recession
1973 Recession
1991 Recession
evPA
R $
Inde
xed
R
TroughTrough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
Total U.S. Demand2001 R i1991 R i
1980 Recession 2007 Recession
2001 Recession
1973 Recession
1991 Recession
TroughTrough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
Total U.S. Supply2001 R i1991 R i
1980 Recession 2007 Recession
2001 Recession
1973 Recession
1991 Recession
TroughTrough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
Total U.S. Supply ChangeTotal U.S. Supply Change
12
8
10
6
8
rcen
t
2
4
Per
0
2
-21968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
U S L d i Ch i S l SU.S. Lodging Chain Scale Segments
©NYU 2010
Graphs Provided For: Graphs Of:Graphs Provided For: Total U.S.
Luxury
Graphs Of:Occupancy
Nominal Average Daily Ratey
Upper Upscale
Upscale
g y
Real Average Daily Rate
Nominal RevPAR
Midscale with Food and Beverage
Midscale without Food and Beverage
Real RevPAR
Supply
Economy
Top 25 Markets
Supply Percentage Change
Demand
©NYU 2010
Luxury Occupancy2001 Recession 1991 Recession2007 Recession
2006: 4
1997:74.1%
71.5% 4/8 years
cent
age
1.5/4.5 years
cupa
ncy P
erc
1988: 67.1%
Inde
xed
Occ
Trough
Years Prior to Trough Years Post TroughSource: Smith Travel Research ©NYU 2010
Luxury Nominal ADR1991 Recession2001 Recession2007 Recession
Rate
$
1 5
2007: $290.41
erag
e Dail
y R
1.5/4.5 years
1990: $128 68
2000:$236.04 .25/1.25 yearsIn
dexe
d Ave
Trough
$128.68
Years Prior to Trough Years Post TroughSource: Smith Travel Research ©NYU 2010
Luxury Real ADR2007 Recession 2001 Recession 1991 Recession
2007 Rate
$
2007: $290.41
1.5/4.5yearserag
e Dail
y R
2000: $228.06
1.5/4.5years
Inde
xed A
ve
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Luxury Nominal RevPAR2007 Recession 2001 Recession 1991 Recession
2007: $207.4000 $ 0 0
2000:
3/5 years
evPA
R $
1990: $84.21
2000: $172.26
.5/1.5 yearsInde
xed
R
Trough
$84.21
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Luxury Real RevPARy2001 Recession 1991 Recession2007 Recession
2/5 yearsevPA
R $
1990:
y
2000: $166.43
.25/1.25 years
Inde
xed
R
Trough$79.67
.25/1.25 years
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Luxury Demandy1991 Recession2007 Recession 2001 Recession
Millions
135
1452007: 23.879
115
125
85
95
105 1994: 13.931 2000:
16.864
.25/1.25 years
1/1.5 years
75
85
4 3 2 1 1 2 3 4 5 6
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Luxury Supply1991 Recession2007 Recession 2001 RecessionMillions
140
150
120
130 2008: 35.059 million
90
100
110
1994:
.25/1.25 years
80
90
4 3 2 1 1 2 3 4 5 6 7
Trough19.851 million
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Luxury Supply ChangeLuxury Supply Change
14
1012
rcen
t
68
Per
24
-20
1988
1991
1994
1997
2000
2003
2006
2009
Source: Smith Travel Research ©NYU 2010
-4
1 1 1 1 2 2 2 2
Upper Upscale Occupancy2001 Recession 1991 Recession2007 Recession
107
109
111
2000:
2007: 71.2% 5/7 years
ntag
e
103
105
107
1991
72.2%
1.5/3.5 years
panc
y Per
ce
99
1011991:66.2%
ndex
ed O
ccu
95
97
4 3 2 1 1 2 3 4 5 6 7
In
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upper Upscale Nominal ADR1991 Recession2007 Recession 2001 Recession
Rate
$
2008: $109.852000:
$138.43 2/4.75 years
erag
e Dail
y R
1990: .5/1.5 yearsInde
xed A
ve
Trough$92.29
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upper Upscale Real ADR2001 Recession 1991 Recession2007 Recession
130
Rate
$
110
1202008: $153.92
2000: $133 75 1.75/
erag
e Dail
y R
100
110 $133.75
1990:
4.75 years
Inde
xed A
ve
904 3 2 1 1 2 3 4 5 6 7
1990: $87.32 Trough
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upper Upscale Nominal RevPAR
140
1991 Recession2001 Recession2007 Recession
130
140
2007:
120$112.492000:
$100.002/5.25 years
evPA
R $
100
110
1990: 1.25/2.25 years
Inde
xed
R
90
100
4 3 2 1 1 2 3 4 5 6 7
Trough$62.56
y
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upper Upscale Real RevPAR1991 Recession2001 Recession2007 Recession
2007:00$109.262000:
$96.622/5 years
evPA
R $
1990 .5/1.50 years
Inde
xed
R
Trough1990: $59.18
y
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upper Upscale Demand1991 Recession2001 Recession2007 Recession
2007:
Millions
125
135141.229
115
125
2000: 125.958
95
105125.958
1990: .25/1.25 years
2.75/3.75 years
85
95
4 3 2 1 1 2 3 4 5 6 7
Trough99.255
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upper Upscale Supply1991 Recession2001 Recession1991 RecessionMillions
2008: 205.811
1992: 152 027 1 5/3 5 152.027 1.5/3.5 years
2002: 183 883
Trough
183.883
Years Prior to Trough Years Post TroughSource: Smith Travel Research ©NYU 2010
Upper Upscale Supply Change
6
4
5
2
3
rcen
t
1
2
Per
-1
01989 1993 1997 2001 2005 2009
-2©NYU 2010Source: Smith Travel Research
Upscale Occupancy
115
1991 Recession2007 Recession 2001 Recession
2005:
110
11570.3%
1998 enta
ge
100
105 1998: 70.8%
1994 1/2 yearsupan
cy P
erce
90
951994:73.1%
1/2 years
ndex
ed O
ccu
85
90
4 3 2 1 1 2 3 4 5 6 7
Trough
I
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upscale Nominal ADR1991 Recession2007 Recession 2001 Recession
Rate
$
2000: $98.52
2008: $119.62 1.5/4.5 years
erag
e Dail
y R
$98.52
1990: .5/1.5 yearsInde
xed A
ve
1990: $68.59
Trough
y
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upscale Real ADR
130
2001 Recession 2007 Recession2007 Recession
120
130
Rate
$
110 2000: $95 19
2008: $115.01 1.5/4.5 years
erag
e Dail
y R
100
$95.19
1990: Inde
xed A
ve
904 3 2 1 1 2 3 4 5 6 7
Trough
1990: $64.89
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upscale Nominal RevPAR2001 Recession 1991 Recession2007 Recession
2007: $81.75
1 5/4 5
2000:
1.5/4.5 years
evPA
R $
1990: $45 39
2000: $69.30
.25/1.25 yearsInde
xed
R
$45.39
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upscale Real RevPAR1991 Recession2001 Recession2007 Recession
125
135
2007:
115
125 $79.422000: $66.95
1.5/4.5 years
evPA
R $
95
105
1990:
Inde
xed
R
85
95
4 3 2 1 1 2 3 4 5 6 7
Trough$42.94
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upscale Demand1991 Recession2001 Recession2007 Recession
Millions
135145 2008:
108.627
105115125
2000:
8595
105 82.052
1990: 37.018
6575
4 3 2 1 1 2 3 4 5 6 7
Trough
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Upscale Supply2001 Recession 1991 Recession2007 Recession
Millions
140150
2008:
110120130
2008: 162.660
2004:
90100110 2004:
142.292
1991: 59 173
7080
4 3 2 1 1 2 3 4 5 6 7
Trough
59.173
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research©NYU 2010
Upscale Supply ChangeUpscale Supply Changerc
ent
Per
©NYU 2010Source: Smith Travel Research
Midscale with F&B Occupancy
2006:59.5%
1991 Recession2001 Recession2007 Recession
110
113
2000: 60.3%
59.5%
3/6 yearsenta
ge
104
107 1989: 62.6% 4/6 years
y
upan
cy P
erce
98
101
104
ndex
ed O
ccu
95
98
4 3 2 1 1 2 3 4 5 6 7
Trough
I
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale with F&B Nominal ADR
125
1991 Recession2007 Recession 2001 Recession
115
120
125
Rate
$
105
110
115
2008: $88.332000: 1erag
e Dail
y R
100
105 $88.332000:$73.86
1991:
1/4 years
Inde
xed A
ve
90
95
4 3 2 1 1 2 3 4 5 6 7
Trough$53.25
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale with F&B Real ADR
125
1991 Recession2007 Recession 2001 Recession
115
120
125
Rate
$
105
110
115
2008: 2000: erag
e Dail
y R
100
105 $84.922000: $71.36
1/4 years1991: In
dexe
d Ave
90
95
4 3 2 1 1 2 3 4 5 6 7
Trough
1991: $50.19
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale with F&B Nominal RevPAR
130
2007 Recession 1991 Recession2001 Recession
120
125
130
2007:$
110
115
3/4.5 years
2000: $44.55
$50.57
evPA
R $
100
1051.5/2.5 years1990:
$32 83
Inde
xed
R
90
95
4 3 2 1 1 2 3 4 5 6 7
Trough
$32.83
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale with F&B Real RevPAR
130
1991 Recession2001 Recession2007 Recession
120
125
130
2007:
110
1152007: $49.132000:
$43.04 1.5/4.5 years
evPA
R $
100
105
1990: .5/1.5 yearsInde
xed
R
90
95
4 3 2 1 1 2 3 4 5 6 7
Trough$31.06
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale with F&B Demand
Millions 1991 Recession2001 Recession2007 Recession
170
150
160170
2005: 119.116
130
140150
1998:
110120
1989: 147.845 1.25/2.25 years
1998: 144.008
90100
4 3 2 1 1 2 3 4 5 6 7
8 5
Trough
1.25/2.25 years
Years Prior to Trough Years Post TroughSource: Smith Travel Research ©NYU 2010
4 3 2 1 1 2 3 4 5 6 7
Midscale with F&B Supply
1991 Recession2001 Recession2007 RecessionMillions
140
1502008: 201.743c
2000: ©NYU 2010120
130
20002000:228.800
©NYU 2010
100
1101/2.5 years
2000:228.800
1994:
Trough80
90
4 3 2 1 1 2 3 4 6 7
243.433
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
4 3 2 1 1 2 3 4 6 7
©NYU 2010
Midscale with F&B Supply ChangeMidscale with F&B Supply Changerc
ent
Per
Source: Smith Travel Research ©NYU 2010
Midscale Without F&B Occupancy
115 2006: 66.10%
1991 Recession2007 Recession 2001 Recession
110
115
1 5/5 5 cent
age
105199766.0%
1.5/5.5 years
cupa
ncy P
erc
95
1001989: 65.9%
.25/2.25 years
Inde
xed
Occ
904 3 2 1 1 2 3 4 5 6 7
Trough
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale Without F&B Nominal ADR
1991 Recession2007 Recession 2001 Recession
125
135
Rate
$
1152007:$er
age D
aily R
95
105 $90.19
19902001: 1.5/2.5 yearsIn
dexe
d Ave
85
95
4 3 2 1 1 2 3 4 5 6 7
Trough
1990:$43.81
$67.51
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale Without F&B Real ADR1991 Recession2001 Recession2007 Recession
125
135
Rate
$
115
125
2008 erag
e Dail
y R
95
1052008: $120.80
.25/1.25 years1990: In
dexe
d Ave
85
95
4 3 2 1 1 2 3 4 5 6 7
Trough
1990: $44.03
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale Without F&B Nominal RevPAR
1991 Recession2007 Recession 2001 Recession
125
135
115
1252007: $57.02
evPA
R $
95
1052000:$41 91
1.5/3.5 years
Inde
xed
R
85
95
4 3 2 1 1 2 3 4 5 6 7
Trough
$41.911993:$39.21
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale Without F&B Real RevPAR1991 Recession2007 Recession 2001 Recession
2007:$55.40
evPA
R $
.25/4.25 years
1998 2000: $40 77
Inde
xed
R
Trough1998:
$38.60$40.77
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale Without F&B Demand
Millions 2007 Recession 2001 Recession 1991 Recession
170
190
2008
130
150 2008: 170.462
1999
70
90
110 1999: 116.139
1992:
50
70
4 3 2 1 1 2 3 4 5 6 7
Trough49.473
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale Without F&B Supply
Millions 2007 Recession 2001 Recession 1991 Recession
2008: 273.913273.913
1990:
Trough
1990: 59.108
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Midscale without F&B Supply Changepp y grc
ent
Per
Source: Smith Travel Research ©NYU 2010
Economy Occupancy
115 2005
2007 Recession 2001 Recession 1991 Recession
110
115
2000:58.5%
2005: 57.4%
3/6 years 2/5 yearscent
age
105 1989: 64.7%
y y
cupa
ncy P
erc
95
100
Inde
xed
Occ
904 3 2 1 1 2 3 4 5 6
Trough
4 3 2 1 1 2 3 4 5 6Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Economy Nominal ADR
120
1991 Recession2001 Recession2007 Recession
115
ate $
105
1102008: $54.37erag
e Dail
y R
100
105 $54.37
2002:$46.81
1990
.75/2.75 years
5/4 5 yearsInde
xed A
ve
954 3 2 1 1 2 3 4 5 6 7
Trough1990: $37.59
.5/4.5 years
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Economy Real ADR
1991 Recession2001 Recession2007 Recession
Rate
$
2008erag
e Dail
y R
2008:$52.28
1991: $35.56 5In
dexe
d Ave
2002: $46.07 Trough
.5/1.5 years
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Economy Nominal RevPAR1991 Recession2007 Recession 2001 Recession
2007: $30.62
2000: $27.54 2/3.5 years
evPA
R $
1989: $23.81
2.25/5.25 years
Inde
xed
R
Trough
Years Prior to Trough Years Post TroughSource: Smith Travel Research ©NYU 2010
Economy Real RevPAR1991 Recession2001 Recession2007 Recession
2007: $29 74$29.74
2000: $26.60 1.5/4.5
yearsevPA
R $
1989:$22 65
years
1.75/4.75 years
Inde
xed
R
$22.65
Trough
Years Prior to Trough Years Post TroughSource: Smith Travel Research ©NYU 2010
Economy Demand
150 2007 153 392
1991 Recession2007 Recession 2001 RecessionMillions
130
140
150 2007: 153.392
110
1202000: 153.481 4/6 years
90
1001990:115.785
70
80
4 3 2 1 1 2 3 4 5 6 7
Trough
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Economy Supply1991 Recession2001 Recession2007 Recession
Millions
120
1302008: 274.449
100
110
120
2002: 271.002
80
90
100 1/1.5 years1990: 183.024
70
80
4 3 2 1 1 2 3 4 5 6 7
Trough
Years Prior to Trough Years Post TroughSource: Smith Travel Research ©NYU 2010
Economy Supply ChangeEconomy Supply Changerc
ent
Per
Source: Smith Travel Research ©NYU 2010
Top 25 Markets
©NYU 2010
Top 25 Markets Occupancy
113
1991 Recession2001 Recession2007 Recession
2007:
110
113 2007: 68.02%
2000: %
2/5 years
cent
age
104
107 68.74%
1990: 2/4.25 years
cupa
ncy P
erc
98
101
1990: 66.28%
Inde
xed
Occ
95
98
4 3 2 1 1 2 3 4 5 6 7
Trough
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
U.S. Top 25 Markets Nominal ADR
135
2001 Recession 1991 Recession2007 Recession
125
135
Rate
$
115 2007: $123.362000:
$99.451.5/4.5 yearser
age D
aily R
95
105
1990:
years
Inde
xed A
ve
854 3 2 1 1 2 3 4 5 6 7
Trough
1990: $68.02
4 3 2 1 1 2 3 4 5 6 7
Source: Smith Travel Research
Years Prior to Trough Years Post Trough
©NYU 2010
U.S. Top 25 Markets Real ADR
140
2001 Recession 1991 Recession2007 Recession
130
140
Rate
$
120
1 25/4 252000 2007: erag
e Dail
y R
100
1101.25/4.25years
2000: $96.09
$118.61
Inde
xed A
ve
904 3 2 1 1 2 3 4 5 6 7
Trough1990:
$64.35
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
U.S. Top 25 Markets Nominal RevPAR
140
2007 Recession 2001 Recession 1991 Recession
130
140
2007
1202000: $70.99
2007: $84.86 1.5/4.5 years
evPA
R $
100
110 1991: $45.82
.75/1.75 yearsInde
xed
R
904 3 2 1 1 2 3 4 5 6 7
Trough
Source: Smith Travel Research
Years Prior to Trough Years Post Trough
©NYU 2010
U.S. Top 25 Markets Real RevPAR
140
1991 Recession2001 Recession2007 Recession
130
140
1202007: $81.822000:
$68.591.75/4.75 years
evPA
R $
100
110
.5/1.50 years
Inde
xed
R
904 3 2 1 1 2 3 4 5 6 7
Trough1990:
$43.35
y
4 3 2 1 1 2 3 4 5 6 7Years Post TroughYears Prior to Trough
Source: Smith Travel Research ©NYU 2010
U.S. Top 25 Markets Demand
190
2007 Recession 2001 Recession 1991 RecessionMillions
2000:
170
190
1990: 32.405
2000: 43.821
130
15032.405
90
110
2007:
70
90
4 3 2 1 1 2 3 4 5 6 7
Trough29.113
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
U.S. Top 25 Markets Supply2001 Recession 1991 Recession2007 Recession
Millions
105
110
100
105
2000: 38 982
1991:32.5101
95
100 38.982
90 Trough
2007: 40.756
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Top 25 Markets Supply ChangeTop 25 Markets Supply Change
Source: Smith Travel Research ©NYU 2010
U S Top 25 Markets Cycles and RecoveriesU.S. Top 25 Markets Cycles and Recoveries Relative to Total U.S. Lodging
©NYU 2010
Top 25 Markets and Total U.S. Occupancy
115
Top 25 2001 Total U.S. 2007 Total U.S. 2001 Total U.S. 1991 Top 25 2007 Top 25 1991
110
115
cent
age
105
cupa
ncy P
erc
100
Inde
xed
Occ
954 3 2 1 1 2 3 4 5 6 7
Trough
4 3 2 1 1 2 3 4 5 6 7Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Top 25 Markets and Total U.S. Nominal RevPARS S STotal U.S. 2007 Total U.S. 2001 Total U.S. 1991
Top 25 1991 Top 25 2001Top 25 2007
evPA
R $
Inde
xed
R
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Top 25 Markets and Total U.S. Nominal ADRTotal U.S. 1991
Total U.S. 2007
Total U.S. 2001
Top 25 1991
Top 25 2001
Top 25 2001
130
Rate
$
120
erag
e Dail
y R
100
110
Inde
xed A
ve
904 3 2 1 1 2 3 4 5 6 7
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
Top 25 Markets and Total U.S. DemandTotal U.S. 1991Total U.S. 2001Total U.S. 2007
Top 25 2001Top 25 2007 Top 25 1991Millions
170
190
130
150
90
110
130
Trough70
90
4 3 2 1 1 2 3 4 5 6 7
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
4 3 2 1 1 2 3 4 5 6 7
©NYU 2010
Top 25 Markets and Total U.S. SupplyTotal U.S. 1991Total U.S. 2001Total U.S. 2007
Top 25 2001Top 25 2007 Top 25 1991Millions
TroughTrough
Years Prior to Trough Years Post TroughSource: Smith Travel Research ©NYU 2010
Total U.S. and Top 25 Market Supply ChangeTotal U.S. and Top 25 Market Supply Change
6Top 25 Markets Total U.S.
5
3
4
1
2
0
1
1988 1991 1994 1997 2000 2003 2006-1 1988 1991 1994 1997 2000 2003 2006
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
S ti 4 U S L d i R PAR T dSection 4 ‐ U.S. Lodging RevPAR Trends: Implications for this Recovery
©NYU 2010
Chain Scale Segment Recovery
Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPARFirst to Recover 1991 Recession
LuxuryMidscale w/o F&B
LuxuryEconomy
LuxuryUpscale
LuxuryUpper Upscale
Last to Recover 1991 Recession Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPARMidscale w/F&BUpscale
Midscale w/F&BUpper Upscale
Midscale w/F&BEconomy
First to Recover 2001 Recession Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPARMidscale w/o F&B Midscale w/F&B Midscale w/o F&B Upscale Midscale w/o F&BMidscale w/o F&B Midscale w/F&B
EconomyMidscale w/o F&BMidscale w/F&B
UpscaleUpper Upscale
Midscale w/o F&B
Last to Recover 2001 Recession Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPAROccupancy Nominal ADR Real ADR Nominal RevPAR Real RevPAR
Upper Upscale Midscale w/o F&B Upper Upscale Luxury EconomyUpper Upscale
©NYU 2010
Top 25 Market & Total US Recovery
Occupancy Nominal ADR Nominal RevPARFirst to Recover 1991 Recession
Top 25 Markets Total US Top 25 Markets
First to Recover 2001 Recession Occupancy Nominal ADR Nominal RevPARTop 25 Markets Total US Top 25 MarketsTop 25 Markets Total US Top 25 Markets
©NYU 2010
Demand Segment CyclesDemand Segment Cycles and Recoveries
©NYU 2010
Demand Segments – Cycle and Recoveries Order of decline in demand
• Business/Commercial
• Group/Convention
• SMERF
• Leisure
Percentage decline of demand• Group/Convention
• Business/Commercial/
• SMERF
• Leisure
Duration to Recovery (first to last)Duration to Recovery (first to last)• Leisure
• SMERF
B i / i l• Business/commercial
• Group/ Convention
©NYU 2010
Perverse MathPerverse Math
Average Daily Rate $200Average Daily Rate $200
50 percent decline $10050 percent decline $100
$50 percent increase $150
©NYU 2010
Section Five Two RevPARSection Five: Two RevPAR Recovery Analyses
©NYU 2010
1. Long term RevPAR +3.1 percent
2. U.S. RevPAR peaked 2007 $63.75
3. Assumed RevPAR trough 2010 $53.40
If RevPAR were to increase by 3.1 percent, If RevPAR were to increase by 3.1 percent, recovery to 2007 levels would be 2017 (worst case)case)
4. U.S. RevPAR recovery has averaged 7.57 percent for 4 years post trough (since 1968)percent for 4 years post trough (since 1968)
If RevPAR were to increase by 7.57 percent for four years 3 1 percent thereafter recovery tofour years, 3.1 percent thereafter, recovery to 2007 levels would be 2013 (best case)
©NYU 2010
Section 5 ‐ RevPAR Forecasts
©NYU 2010
2009 – 2010 U.S. Lodging RevPAR Forecasts g g
S 2010 2011Source 2010 2011
Smith Travel Research (3.2) 4.2( )
PKF Research (1.3) 5.9
PricewaterhouseCoopers (1.5)
Source: Individual organizations*Forecasts as of February 13, 2010
©NYU 2010
Section 7 ‐ Structural Changes
©NYU 2010
Structural Changes – Demand
©NYU 2010
Demand Elasticity and Correlation to Real GDP
1987 value = 100
170
180
1987 value = 100
US Real GDP
150
160US Real GDP
120
130
140
Lodging Demand(Room Nights Sold)
100
110
120
87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08
(Room Nights Sold)
87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08
Sources: Lodging demand – PricewaterhouseCoopers LLP based on Smith Travel Research data; Real GDP- U.S. Bureau of Economic Analysis; Air travel demand - Air Transport Association.
Sources: Lodging demand – PricewaterhouseCoopers LLP based on Smith Travel Research data; Real GDP- U.S. Bureau of Economic Analysis; Air travel demand - Air Transport Association. ©NYU 2010
Structural Changes – Profits
©NYU 2010
Long‐Term Occupancy Levels and Profits
$30 68%
Income Before Income Taxes, Billions of Dollars Occupancy Percentage
$20
$25
62%
64%
66%
$10
$15
58%
60%
$0
$5
52%
54%
56%
($10)
($5)
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 200848%
50%Aggregate Profits Occupancy
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Sources: Smith Travel ResearchNote: STR change in method in 2002Sources: Smith Travel Research, 2009 NYU Tisch Center Estimate ©NYU 2010
U.S. Lodging Industry Net Income as a R ti t RRatio to Revenue
20
25
15
20
10
0
5
087 89 91 93 95 97 99 01 03 05 07 09
Sources: Smith Travel Research, 2009 NYU Tisch Center Estimate ©NYU 2010
Section 7 ‐ Comments & Conclusions
©NYU 2010
1. Lodging Industry forecasts are more challenging now than ever before – record revisions
2. “Comparable” recessions and long term trends indicate thi “ ” ill b l d l b t ththis “recovery” will be longer and less robust than average
3 The U S Lodging Industry spends more time in declines3. The U.S. Lodging Industry spends more time in declines than in recoveries
4. During declines, occupancy usually precedes average g p y y p gdaily rate
During recoveries, occupancy usually precedes average daily rate
5. Industry RevPAR is unlikely to recover to 2007 levels until 2013 or later2013 or later
©NYU 2010
6. Luxury and Upper Upscale demand has declined during all recessions, Economy during all but one recession
Upscale and Midscale without Food and Beverage demand declined only during the current recessiondemand declined only during the current recession
Midscale with Food and Beverage has experienced a long term trend of demand declineterm trend of demand decline
7. The Top 25 Markets are much more volatile than the U.S. with earlier and greater declines, but frequently with
l dearlier and stronger recoveries8. Luxury may experience a favorable percentage increase,
but is likely to be among the last to recoverbut is likely to be among the last to recover9. Upscale and Midscale without Food and Beverage will
likely emerge as stronger performers based on b l t f l labsolute performance levels
©NYU 2010
10. Leisure demand will remain favorable but is based on di ti i ll f Ldiscounting especially for Luxury
11. Group/convention demand is likely to recover afterbusiness/commercial/
12. It is probable that there will be a structural resetting oflodging demand – less demand relative to GDP
13 It i b bl th t th i d t ill ith13. It is probable that the industry will emerge with structural resetting of profitability – higher profit levels relative to occupancy and RevPARp y
©NYU 2010
NYU Tisch Center ProgramsNYU Tisch Center Programs
Undergraduate Degrees:Undergraduate Degrees: ‐ B.S. in Hotel and Tourism Management‐ B.S. in Sports Management
Graduate Degrees and Graduate Certificates:‐ M.S. Hospitality Industry Studies‐ M.S. Sports Business‐ M.S. Tourism and Travel Management
Continuing Education and Professional Certificates:Food and Beverage Operations‐ Food and Beverage Operations
‐ Hotel Operations‐ Meeting, Conference, and Event Management
For additional information: www.scps.nyu.edu/tischcenter©NYU 2010
32nd Annual NYU International Hospitality Industry
Investment ConferenceJune 6 - 8, 2010June 6 8, 2010
Hosted by the New York University Preston Robert Tisch Centerfor Hospitality Tourism and Sports Managementfor Hospitality, Tourism, and Sports Management
Location: The New York Marriott Marquis, New York Cityocat o e e o a ott a qu s, e o C ty
For additional information: www.nyu.edu/hospitalityconference
©NYU 2010
NEW YORK UNIVERSITYSchool of Continuing andSchool of Continuing and
Professional Studies
P t R b t Ti h C t fPreston Robert Tisch Center forHospitality, Tourism, and Sports Management
Th U S E i RThe U.S. Economic Recovery: Chain Scale Segments,
Top 25 Markets,Demand Segments and Profits
The Fourth in a Series ofNYU Tisch Center Economic Briefings
February 2010©NYU 2010