US LODGING INDUSTRY OVERVIEW Mark V. Lomanno President SMITH TRAVEL RESEARCH
Presentation Outline US Lodging Industry Macro Trends Daily Data Chain Scales Resort Performance Construction Pipeline Forecast Questions & Discussion Source: STR
Total United States Occupancy and ADR Twelve Month Moving Average February 2005 90 85 80 75 70 Occupancy (%) ADR ($) Peak $86.48 June 2001 $86.75 Feb 2005 65 60 55 50 Peak 64.6% 61.6% Feb 2005 1997 1998 1999 2000 2001 2002 2003 2004 2005
Total United States Room Supply/Demand Percent Change Twelve Month Moving Average 1989 to February 2005 6 4 2 0-2 -4 Supply % Change Demand % Change -6 1989 1991 1993 1995 1997 1999 2001 2003 2005
Total United States Room Demand Percent Change Jan 2001 February 2005 14 9 4-1 -6-11 -16 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 J F
Total United States Room Demand (Rooms Sold in Millions) Year End 2000-2004 1025 1000 1000.1 975 950 925 969.6 936.3 939.3 953.3 900 2000 2001 2002 2003 2004 Source: STR
Total United States Occupancy/ADR Percent Change Twelve Month Moving Average 1989 to February 2005 8 6 4 2 0-2 -4-6 Occ % Chg ADR % Chg -8 1989 1991 1993 1995 1997 1999 2001 2003 2005
Total United States Room Rate Percent Change Jan 2001 February 2005 6 4 2 0-2 -4-6 -8-10 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 J F
Total U.S. Real ADR Growth Nominal Change + Inflation = Real Growth 6% 3% 0% Nominal Change -4.2% -3.0% -1.4% -1.4% Inflation 1.3% 4.0% -2.1% 0.2% -2.3% -2.7% -3% -2.8% -1.6% -6% 2001 2002 2003 2004
15 Luxury/Upper Upscale Chains Demand Segments Demand, ADR and Revenue Year End 2004 Percent Change Demand ADR Revenue 10 7.9 10.1 11.2 8.1 7.7 6.1 5 4.8 2.0 0 Group Transient Contract -0.1-5
Total United States Key Performance Indicators Percent Change Twelve Months Ending February 2005 10 2004 2005 8.1 5 4.5 3.7 4.3 0 1.1 2.0 0.8 0.8 1.3 0.4 Supply Demand Occupancy ADR RevPAR
Total U.S. Average Daily Lodging Demand in Millions Year End 2000, 2002 and 2004 3.0 2000 2002 2004 2.871 2.881 3.013 2.686 2.731 2.6 2.566 2.2 2.031 1.987 2.130 1.8 Sunday Weekday Weekend
Total United States Rooms Sold/Day Differential (Thousands) Year End 2000 Vs. 2004 250 219 200 150 100 50 0 99 102 62 62 42 16 Sun Mon Tue Wed Thur Fri Sat Source: STR
Total United States Rooms Sold/Day Differential (Thousands) Year End 2003 Vs. 2004 250 200 216 150 100 132 114 126 70 103 50 40 0 Sun Mon Tue Wed Thur Fri Sat Source: STR
Total U.S. Average Daily Lodging Room Revenue in Millions Year End 2000, 2002 and 2004 2000 2002 2004 259.1 250.0 231.7 234.8 235.2 235.5 214.4 200.0 172.7 163.5 181.7 150.0 Sunday Weekday Weekend
Total United States Day of Week Analysis Occupancy/ADR Percent Change Year End 2000 vs. Year End 2004 8 4 Supply Up 6.3% 4.9 4.4 0 0.2-0.1 0.4 0.5 1.1-4 -4.3-5.2-4.5-5.1-5.3-2 -2.1 OCC ADR -8 Sun Mon Tue Wed Thu Fri Sat Source: STR
US Existing Supply Hotels Rooms Room Revenues Luxury 237 75,839 $ 4,355,964,131.00 Upper Up 1,363 526,684 $ 17,294,304,829.00 Upscale 2,344 370,122 $ 8,995,367,993.00 Mid with 4,637 581,712 $ 9,079,193,531.00 Mid w/o 6,923 618,359 $ 10,232,529,431.00 Economy 9,916 770,373 $ 7,447,570,228.00 Independent 22,725 1,507,679 $ 28,818,539,443.00 48,145 4,450,768 86,223,469,586 Hotels Rooms Room Revenues Luxury 0.5% 1.7% 5.1% Upper Up 2.8% 11.8% 20.1% Upscale 4.9% 8.3% 10.4% Mid with 9.6% 13.1% 10.5% Mid w/o 14.4% 13.9% 11.9% Economy 20.6% 17.3% 8.6% Independent 47.2% 33.9% 33.4% 100% 100% 100%
Chain Scales Supply/Demand Percent Change 12 Months Ending February 2005 10 5 6.7 6.1 4.9 Supply Demand 6.2 1.5 1.8 1.8 2.1 2.4 0 0.2-0.5-1.8-5 Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy
Chain Scales Occupancy/ADR Percent Change 12 Months Ending February 2005 8.0 4.0 5.1 6.0 4.4 4.6 4.5 4.9 3.8 2.8 3.9 4.1 Occupancy ADR 3 2.1 0.0 Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy
Chain Scales RevPAR/Room Revenue Percent Change 12 Months Ending February 2005 20 15 13.2 RevPAR Room Revenue 10 11.5 9 11.0 9.810.1 6.7 8.3 10.6 5 4.7 5.0 4.5 0 Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy
Total United States Chain Scales Occupancy Percent Twelve Month Moving Average To February 2005 80 Luxury Upper Upscale Upscale Midscale W F&B Midscale WO Economy 70 60 50 1998 1999 2000 2001 2002 2003 2004 2005
Total United States Chain Scales Average Daily Rate Percent Change Twelve Month Moving Average To February 2005 10 8 6 4 2 0-2 -4-6 -8-10 Luxury Upper Upscale Upscale Midscale W F&B Midscale WO Economy 1998 1999 2000 2001 2002 2003 2004 2005
Destination Resort Locations
Destination Resorts Key Performance Indicators Percent Change Twelve Months Ending February 2005 10 8.6 6.3 5 2.3 1.0 4.1 1.8 5.2 3.1 1.0 0 2004 2005-0.7-5 Supply Demand Occupancy ADR RevPAR
Resort Comparisons Supply % Change Year End 2001-2004 5 2001 2002 2003 2004 4 3.3 3 2 1 2.4 1.6 1.2 0.9 2.6 1.9 2.2 1.3 1.7 0.8 0.8 2.2 2.5 1.4 0 Total US Upper Upscale Resort Dest. Resort 0.2
Resort Comparisons Demand - % Change Year End 2001 2004 10 2001 2002 2003 2004 7.1 5 4.5 2.6 5.6 2.4 2.5 4.9 2.7 3.9 0 0.4 1.5 0-5 -3.4-7.0-5.7-6.6-10 Total US Upper Upscale Resort Dest. Resort
Resort Comparisons Revenue - % Change Year End 2001-2004 15 2001 2002 2003 2004 10 8.7 9.8 8.6 9.9 5 0-5 -4.7-1.1 1.6-2.0 0.1-0.5 4.3-5.0-4.5 1.6 2.8-10 -9.5-15 Total US Upper Upscale Resort Dest. Resort
Resort Comparisons Occupancy Absolute Levels Year End 2001-2004 75 2001 2002 2003 2004 70 68.9 65 60 66.1 66.2 65.6 61.3 59.7 59.0 59.2 65.9 62.4 62.9 61.9 62.3 61.9 62.7 66.3 55 Total US Upper Upscale Resort Dest. Resort
Resort Comparisons Occupancy - % Change Year End 2001-2004 10 2001 2002 2003 2004 5 3.5 4.1 4.8 5.7 0-1.2 0.3 0.8 0.2 1.6-0.8-0.6 1.3-5 -10-5.7-9.4-7.3-8.5-15 Total US Upper Upscale Resort Dest. Resort
Resort Comparisons ADR - % Change Year End 2001-2004 10 2001 2002 2003 2004 5 4.0 4.0 3.6 0.8 1.7 2.2 2.5 0 0.1-1.4-1.5-2.6-2.2-0.5-1.0-1.1-5 -4.6 Total US Upper Upscale Resort Dest. Resort
Resort Comparisons RevPAR - % Change Year End 2001-2004 15 10 2001 2002 2003 2004 7.8 8.3 8.5 8.3 5 3.5 0 0.4 0.3-5 -2.7-3.9-2.0-1.3-1.6-10 -15-7.0-11.8-6.5-6.6 Total US Upper Upscale Resort Dest. Resort
Resorts with & without Spa s Key Indicators Percent Change 12 Months Ending February 2005 10% 8% 6% 6.7% 6.2% 5.3% With Spa 5.4% No Spa 8.8% 8.2% 4% 3.4% 2.7% 2% 1.3% 0.9% 0% Supply Demand Occupancy ADR RevPar
Resorts with & without Spa s Key Indicators Absolute Values 12 Months Ending February 2005 250 200 With Spa No Spa $228.07 150 $154.42 $150.42 100 50 66.0% 66.9% $103.24 0 Occupancy ADR RevPar
Total United States Active Development Pipeline - Rooms Change From Last Year Feb 2005 Feb 2004 Change % Chg In Construction 101,335 73549 27,786 37.8% Final Planning 15,676 16,927 (1,251`) -7.4% Planning 169,709 181,046 (11,337) -6.3% In Pre-Planning 80,449 135,767 (55,318) -40.7% Total Development 367,169 407,289 (40,120) (9.9%) Source: STR / TWR / Dodge Construction Pipeline
30 25 Total United States Rooms Under Construction by Scale In Thousands February 2005 23 23.5 26.9 20 15 17.6 10 5 0 5.3 2.7 2.2 Luxury Upper Upscale Upscale Mid w F&B Mid w/o F&B Economy Unaffiliated Source: STR / TWR / Dodge Construction Pipeline
Total United States In Construction Rooms in Thousands January 2002 February 2005 140 130 120 110 2005 2004 2003 2002 100 90 80 70 60 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: STR / TWR / Dodge Construction Pipeline
Historic Attrition Rates STR/PPR/FW Dodge Pipeline 20.0% 5.0% 53.0% 74.0% 80.0% 95.0% 47.0% 26.0% PrePlanning Planning Final Planning Under Constrution Opened Abandoned
Top Development Markets Active Pipeline (In Construction, Final Planning and Planning) Market Rooms Percent of Existing Supply ------------------------------------------------------------------------------------------- Boston 8,022 12.5 Washington D.C. 7,955 8.9 New York 7,415 9.2 Chicago 7,222 7.2 San Diego 5,762 10.7 Orlando 4,647 4.0 Miami 4,461 9.2 Tampa 4,387 10.4 Phoenix 3,997 7.3 Dallas 3,842 5.5
Resort* Pipeline by Phase Project Phase Start Final Planning Planning Pre-Planning Projects 26 4 80 33 Rooms 10,390 763 16,121 11,873 * Only Projects with the word Resort in the Project Title Source: STR / TWR / Dodge Construction
U.S. Economic Outlook Blue Chip Economic Indicators February 2005 2004P 2005F 2006F Real GDP +4.4% +3.6% +3.4% CPI +2.7% +2.5% +2.3% Corporate Profits +15.0% +10.1% +6.0% Disp Personal Income +3.1% +3.3% +3.5% Unemployment Rate 5.5% 5.3% 5.2%
Total United States Supply/Demand Percent Change 2000 2005P 6 4.7 4.0 3 2.8 3.5 2.3 1.6 1.5 1.2 1 1.2 0 0.3-3 -3.4 Supply % Chg Demand % Chg -6 2000 2001 2002 2003 2004 2005P
Total United States Occupancy Percent 2000 2005P 70 65 63.3 63 60 59.7 59.1 58.9 61.3 55 2000 2001 2002 2003 2004 2005P
Total United States Average Daily Rate 1998 2005P 95 90 89.68 85 85.37 84.2 83.01 83.12 86.24 80 75 2000 2001 2002 2003 2004P 2005P Source: STR
Total United States ADR Percent Change 2000 2005P 6 5.4 4 4.2 3 0 0.2-1.4-1.4-3 2000 2001 2002 2003 2004 2005P
60 Total United States RevPAR Year End 2000 2005P $56.73 55 $54.00 $52.95 50 $50.25 $48.90 $49.10 45 2000 2001 2002 2003 2004 2005P Source: STR
Total United States RevPAR Percent Change 2000 2005P 10 5 6.1 7.8 7.1 0 0.4-5 -10-6.9-2.7 2000 2001 2002 2003 2004 2005P
United States Lodging Industry - Estimated Profits (Billions $) 1982 2005E $ 25 22.1 22.5 20.9 20.8 20 17 16.2 14.2 12.8 16.3 15 12.5 10 8.5 5 2.5 1.9 1.7 2.4 5.5 0 0.1 0-0.9-1.1-1.3-2.1-5 -2.8-5.7-10 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04E 05E Source: PWC (2004 & 2005 Estimates)
U.S. Lodging Outlook * Supply Growth Remains Benign * Demand Strength Broadens * Occupancy Gains Continue * Aggressive Pricing Strategies * Increased Profitability
Lodging Industry Issues Rising Costs Energy (Gas), Insurance, Labor (visa caps) Amenity Creep Bed Wars Rising Interest Rates Currency Exchange Airline Problems Hiring from Outside (Sr. Level) - Coke, Schweppes, Kraft Demand Leakage Condo Hotels, Cruise, Timeshare Demand Growth where are we in the cycle? Benign Supply Growth Old Habits Hard to Break? Terrorists Threats Source: STR
Selected Segment Occupancy / ADR Percent Change Peak vs. Current * Total U.S. Resort Properties Luxury Chains Resort Locations 5% 3.4% 2% 0.6% -1% -4% -2.2% -7% -4.6% -4.6% -6.3% -4.4% -7.0% -10% Occupancy ADR * 12 Months Ending March 2001 vs. 12 Months Ending May 2004
Selected Segment RevPar / Room Revenue Percent Change Peak vs. Current * Total U.S. Resort Properties Luxury Chains Resort Locations 10% 7.5% 5% 4.5% 0% -5% -3.8% -1.1% -2.0% -0.3% -10% -6.7% -15% -13.0% RevPar Room Revenue * 12 Months Ending March 2001 vs. 12 Months Ending May 2004
Selected Segment ADR Analysis Peak vs. Current * Resort Properties Luxury Chains Resort Locations $275 $250 $225 $200 $242.72 $225.62 $175 $166.99 $168.05 $150 $125 $138.77 $143.51 $100 Peak Current * 12 Months Ending March 2001 vs. 12 Months Ending May 2004
Selected Segment Occupancy Analysis Peak vs. Current * 75% Total U.S. Resort Properties Luxury Chains Resort Locations 71.2% 70% 65% 63.1% 67.8% 67.6% 64.7% 66.7% 64.6% 60% 60.2% 55% 50% Peak Current * 12 Months Ending March 2001 vs. 12 Months Ending May 2004
Selected Segment RevPar Analysis Peak vs. Current $200 Resort Properties Luxury Chains Resort Locations $175 $172.86 $150 $150.41 $125 $113.14 $108.79 $100 $93.76 $92.71 $75 Peak Current
Selected Segment Supply / Demand Percent Change Peak vs. Current * Total U.S. Resort Properties Luxury Chains Resort Locations 30% 25% 23.5% 20% 15% 10% 5% 0% 5.0% 8.7% 0.8% 0.2% 3.9% 15.7% -5% -10% -3.6% Supply Demand * 12 Months Ending March 2001 vs. 12 Months Ending May 2004
Percent Change in Room Demand 12 months ending Feb. 2005-4.7 to 0 0 to 3 3.1 to 4.4 4.5 to 6.4 6.5 to 19.2
Occupancy (%) 12 months ending Feb. 2005 49-55 55-58 58-61 61-66 66-82
Percent Change in ADR 12 months ending Feb. 2005-6 to 0 0 to 2.6 2.7 to 3.4 3.5 to 4.4 4.5 to 11.5
Total United States Room Supply Percent Change Jan 2001 February 2005 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 J F
Conference Centers ADR Absolute Levels Year End 2001-2004 $200 2001 2002 2003 2004 $175 170.82 171.79 169.15 167.38 $150 $125 135.80 135.87 132.75 129.67 131.86 128.76 127.5 126.8 132.48 126.27 126.83 125.26 $100 Conf. Centers Upper Upscale Resort Dest. Resort
Conference Centers RevPAR Absolute Levels Year End 2001-2004 2001 2002 2003 2004 114.46 $110 106.74 105.63 105.07 $95 $80 76.04 74.32 73.03 90.90 89.13 85.65 83.9 79.11 77.65 79.71 88.19 68.6 $65 Conf. Centers Upper Upscale Resort Dest. Resort
Resorts with & without Spa s Size and Structure With Spa No Spa Properties 252 274 Ave. Size 316 419 Rooms 79,700 136, 700
Total United States Occupancy Percent Change Jan 2001 February 2005 10 5 0-5 -10-15 -20 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 J F
Total United States RevPAR Percent Change Jan 2001 February 2005 15 10 5 0-5 -10-15 -20-25 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 J F
Resorts with & without Spa s Key Indicators Percent Change from Peak * 25% 20% 15% 10% 5% 0% -5% -10% 18.4% 7.2% 10.9% 2.9% -4.0% -6.4% -0.1% With Spa -0.5% No Spa -4.5% -6.4% 10.8% Supply Demand Occupancy ADR RevPar Room Revenue 2.4% * 12 Months Ending March 2001 vs. 12 Months Ending May 2004
Top 10 Markets Rooms Under Construction (000 s) December 2004 Washington, DC 4.5 Boston 3.0 Chicago 2.6 New York Denver 2.1 2.1 Dallas Tampa Riverside, CA Orlando Norfolk 1.8 1.7 1.7 1.7 1.6 0 1 2 3 4 5
Top 10 Markets Construction as % of Supply December 2004 Hartford 11.3 Providence Savannah, GA Buffalo 7.3 7.1 7.1 Denver Louisville Washington, DC Stamford, CT Tucson Boston 5.6 5.5 5.1 5.0 4.7 4.7 0 5 10 15
Interest as a Percentage of Total Revenue Remains 70 Percent Below Recent Peak 16% 14% 1990 14.2% 12% 10% Interest as a Percent of Revenue 8% 6% 4% 2% 0% 2000 3.5% 2001 4.3% 1987 1989 1991 1993 1995 1997 1999 2001 2003 2004 3.9% Sources: PricewaterhouseCoopers LLP, Smith Travel Research, Macroeconomic Advisers L.L.C.
Chain Scales Supply/Demand Percent Change February 2005 YTD 15 10 Supply Demand 5 0 1.5 5.4 2.4 4.9 0.5 3.6-0.6 0.7 4.9-0.3 3.6-5 Luxury Upper Upscale -2.8 Upscale Mid w F&B Mid wo F&B Economy
Chain Scales Occupancy/ADR Percent Change February 2005 YTD 10.0 8.3 7.1 Occupancy ADR 7.5 5.0 5.5 4.7 3.8 4.3 4.0 3.2 2.5 2.3 2.9 0.0 Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy
Chain Scales RevPAR/Room Revenue Percent Change February 2005 YTD 20 15 10 12.4 14.2 8.1 RevPAR Room Revenue 10.7 11.0 10.4 7.1 12.7 12.0 7.0 6.7 5 4.1 0 Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy
Selected Segment Supply / Demand Percent Change February 2005 YTD 10% Total U.S. Destination Resorts Luxury Chains Resort Locations 5% 0% 0.7% -0.6% 5.4% 4.0% 2.8% 1.3% 1.7% -1.0% -5% Supply Demand
Selected Segment Occupancy / ADR Percent Change February 2005 YTD 10% Total U.S. Destination Properties Luxury Chains Resort Locations 8% 7.8% 6% 4% 3.4% 3.5% 4.0% 2.7% 4.2% 5.0% 3.3% 2% 0% Occupancy ADR
Selected Segment RevPar / Room Revenue Percent Change February 2005 YTD 20% Total U.S. Destination Properties Luxury Chains Resort Locations 15% 12.1% 13.6% 10% 7.7% 8.6% 8.4% 8.0% 5% 6.1% 5.0% 0% RevPar Room Revenue
Absolute Occupancy January 2000 February 2005 75 Total U.S. Destination Resorts Luxury Chains Resort Locations 70 65 60 55 2000 2001 2002 2003 2004 2005
Occupancy Percent Change January 2001 February 2005 10 Total U.S. Destination Resorts Luxury Chains Resort Locations 5 0-5 -10-15 2001 2002 2003 2004 2005
ADR Percent Change January 2001 February 2005 10 8 6 4 2 0-2 -4-6 -8-10 Total U.S. Destination Resorts Luxury Chains Resort Locations 2001 2002 2003 2004 2005
RevPar Percent Change January 2001 February 2005 15 10 5 0-5 -10-15 -20 Total U.S. Destination Resorts Luxury Chains Resort Locations 2001 2002 2003 2004 2005
Room Supply Percent Change January 2001 February 2005 12 10 8 6 4 2 0-2 Total U.S. Destination Resorts Luxury Chains Resort Locations 2001 2002 2003 2004 2005
Room Demand Percent Change January 2001 February 2005 15 Total U.S. Destination Resorts Luxury Chains Resort Locations 10 5 0-5 -10 2001 2002 2003 2004 2005
Total United States Room Supply/Demand Percent Change Twelve Month Moving Average To February 2005 6 4 2 0-2 Supply % Change Demand % Change -4-6 1998 1999 2000 2001 2002 2003 2004 2005
Total United States Occupancy / ADR Percent Change Twelve Month Moving Average To February 2005 8 6 4 2 0-2 -4-6 Occ % Change ADR % Change -8 1998 1999 2000 2001 2002 2003 2004 2005
Day of Week Occupancy All U.S. Hotels vs. Resorts 2003 80% 75% 70% 65% 60% 55% 50% 45% 40% Total U.S. Resorts 70.5% 68.9% 66.4% 65.3% 65.9% 61.3% 62.6% 62.1% 60.2% 60.1% 56.2% 54.1% 46.1% 73.7% Sunday Monday Tuesday Wednesday Thursday Friday Saturday
Resort* Pipeline by Selected States State Projects Rooms FL 23 7,748 Query1 CA NV 18 17 3,542 12,516 TX 13 2,498 OR 9 947 AZ 5 667 MS 5 2,350 PA 5 527 * Only Projects with the word Resort in the Project Title Source: STR / TWR / Dodge Construction
Resort* Pipeline by Selected MSAs MSA Las Vegas, NV-AZ (MSA-4120) Tampa-St. Petersburg-Clearwater, FL (MSA-8280) Corpus Christi, TX (MSA-1880) Miami, FL (PMSA-5000) Orlando, FL (MSA-5960) San Diego, CA (MSA-7320) Riverside-San Bernardino, CA (PMSA-6780) Projects 16 6 3 3 3 3 3 Rooms 12,516 501 553 540 5,640 750 1,240 * Only Projects with the word Resort in the Project Title Source: STR / TWR / Dodge Construction