Guam Future Hotel Supply Requirements. Presented By: Damien Little, Horwath HTL

Transcription

1

2 Guam Future Hotel Supply Requirements Presented By: Damien Little, Horwath HTL

3 Outline Current Strengths/Weaknesses of Guam Seasonal Tourism Performance Tourism Growth Projections Future Hotel Supply Requirements

4 CURRENT STRENGTHS & WEAKNESSES

5 Weaknesses Aging Hotel Supply relative to many other Asian destinations Historically dominated by one source market Dominance of wholesale agents Lack of a strong local cultural appeal to market A current lack of hotel rooms during peak periods

6 Weaknesses Aging Hotel Supply relative to many other Asian destinations Average age of the leading hotels is 27 years Most recent leading hotel, Outrigger, is 15 years old Declining hotel supply from market peak

7 Historical Hotel Supply 12,000 10,000 8,000 Growing Market Declining / Stagnant Market 6,000 4,000 2,000 0

8 Weaknesses Aging Hotel Supply relative to many other Asian destinations Average age of the leading hotels is 27 years Most recent leading hotel, Outrigger, is 15 years old A number of hotels have undergone renovations in recent times with more renovation plans underway. Supply that has closed has re-opened New hotel construction finally underway

9 Weaknesses Historically dominated by one source market Japan has historically accounted for 70% to 80% of total visitor arrivals This market is very quick to react to adverse market incidents Korean arrivals again on the rise increasing diversity of demand source. China represents huge demand potential, while Russia can add some higher yielding long stay demand

10 Japanese Share of Total Arrivals 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Japanese Share 67% Korean Share 18%

11 Weaknesses Dominance of wholesale agents Agents control market through control of seats and room allocations in market Wholesale business can limit rate growth potential of the market The way Guam is packaged has a big influence on the perception of the destination Dominance unlikely to change in short to mid term but more FIT travelers are emerging Marketing of the destination s image important

12 Weaknesses Lack of a strong local cultural appeal to market Colonial history of the islands resulted in much local culture being lost = lack of authentic cultural experiences to be had/seen in daily life (food) There is a real emphasis to re-build local cultural traditions and practices in Guam. This will benefit the tourism experience. Tourists also like to experience a western culture close to home.

13 Weaknesses A current lack of hotel rooms during peak periods With hotel supply below historical peaks and tourist arrivals back close to historical highs, room supply is extremely limited in peak periods and is restricting tourism growth New hotel supply is coming This presents a development opportunity

14 Strengths Proximity to major demand sources / short travel time allows for an easy short-break holiday Quality of beaches/water/environment USA Territory A good range of activities

15 Strengths Proximity to major demand sources / short travel time allows for an easy short-break holiday Short flight time reduces travel costs and increases feasibility for short-break holidays A good first time destination and easy for young families May limit perception of destination to being short-stay

16 Strengths Quality of beaches/water/environment #1 attraction is the warm weather, good quality beaches, clean water and clean environment A good range of water activities for tourists from beginners/young children to experienced divers and thrill-seekers Development to date has not spoilt the natural environment (over-development is fast becoming a problem in many other Asian destinations)

17 Strengths USA Territory US Culture is appealing International shopping experience Educational exchanges Tourism visa challenges

18 Strengths A good range of activities In addition to water activities, there are a range of other activities / entertainment options to keep guests busy during their stay. However, perhaps currently nothing that would extend the length of stay

19 SEASONAL TOURISM PERFORMANCE

20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 000s of Arrivals Monthly Arrivals To Guam ( 12 & 13)

21 Seasonality of Arrivals (0.10) (0.20) (0.30) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

22 Seasonality: Guam v Other Destinations Sanya Bali Danang Phuket Guam Okinawa Koh Samui Cebu

23 Guam Monthly Hotel Occupancy ( 12 & 13) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

24 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Monthly Occupancy Variance ( 12 & 13)

25 Monthly Occupancy & Growth Implications There are a number of months per year when market-wide occupancy is very high this is even more so in the leading 10 to 15 hotels in the market Anecdotal evidence suggests that a lot of demand is being lost to the market during these months Without new supply, arrivals growth will be constrained

26 TOURISM GROWTH PROJECTIONS

27 Tourism Arrival Projections Take into account 2020 Vision Historical growth rates and current trends Expected increases in air capacity of each major source market Seasonality of tourism arrivals and limits on hotel room supply New hotel openings Quality and availability of potential future hotel developments

28 Unconstrained Tourism Growth Est. 2,500 2,250 2,000 1,750 1,500 1,250 1, million

29 Room Night Demand Assumptions Room nights generated per visitor arrival Looked at historical ratios Reduced slightly over time to be conservative Monthly arrival seasonality was largely maintained moving forward Did not allow for any significant change in guest behaviours Conservative approach that ALOS and DOF remain more or less the same

30 Room Night Demand Assumptions Capped occupancy performance Market-wide occupancy capped at 90% on a monthly basis beyond this level demand was kicked out. New supply requirements aimed to keep occupancy around 80% on a an annual basis this allows for high occupancy in leading hotels but recognizes the under-performance of other properties in the market Demand growth for following year was based on capped arrivals and not underlying growth numbers

31 Estimated Tourism Growth to Guam 2,500 2,250 2,000 1,750 1,500 1,250 1, million 1.86 million

32 FUTURE HOTEL SUPPLY REQUIREMENTS

33 Future Hotel Supply Requirements 12,000 10,000 8,000 6,000 4,000 2,000 0 Actual Under Construction New Supply

34 Future Hotel Supply Requirements 11,000 10,000 9, ,150 1,350 1,550 2,190 8,000 7,000 6,000 5,000 4, Actual Under Construction New Supply

35 Guam Market Performance Outlook 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $108 $141 $ Occ % ADR

36 THANK YOU!