Transcript Slide 1

2010 Convention & Trade Show
October 11, 2010
Christopher A. Kraus, MAI
Senior Vice President
[email protected] | 406.582.8189
Accelerating success.
Colliers PKF Consulting USA
Presentation Outline
I.
II.
National Economy and Hotel
Market Overview
Seattle Market Overview and Four
Year Forecast
III. Spokane Four Year Forecast
2
Accuracy Assessment
Accuracy Assessment
2009 Actual
2010 Reforecast
YE 2009 Projections YE 2009 Projections YE 2010 Projections YE 2010 Projections
as of October 2009
Actual
as of October 2009 as of October 2010
National
-18.5%
-16.8%
-2.7%
4.6%
Seattle MSA
-19.6%
-19.8%
1.8%
1.9%
Spokane MSA
-8.1%
-7.7%
-0.5%
4.9%
Source: Colliers PKF Consulting and Hospitality Research
3
U.S. Lodging Market Overview
4
The Great Recession is Over…
Recessions since World War II
Duration in Months
Peak-to-Trough % Change
Peak
Trough
Recession
Peak to
Trough
Expansion
Trough to
Peak
Dec-07
Aug-09
20
73
-3.9%
-19.2%
Mar-01
Nov-01
8
120
-0.4%
Jul-90
Mar-91
8
92
Jul-81
Nov-82
16
Jan-80
Jul-80
Nov-73
Real
Industrial
Nonfarm
GDP Production Employment
Jobless Rate
Low
Chang
High
e
-6.1% 4.4% 10.2%
5.9%
-6.3%
-2.0% 3.8%
6.3%
2.5%
-1.3%
-4.3%
-1.5% 5.0%
7.8%
2.8%
12
-2.9%
-9.5%
-3.1% 7.2% 10.8%
3.6%
6
58
-2.2%
-6.2%
-1.3% 5.6%
7.8%
2.2%
Mar-75
16
36
-3.1%
-14.8%
-2.7% 4.6%
9.0%
4.4%
Dec-69
Nov-70
11
106
-1.0%
-5.8%
-1.4% 3.4%
6.1%
2.7%
Apr-60
Feb-61
10
24
-1.3%
-6.2%
-2.3% 4.8%
7.1%
2.3%
Aug-57
Apr-58
8
39
-3.8%
-12.7%
-4.4% 3.7%
7.5%
3.8%
Jul-53
May-54
10
45
-2.7%
-9.0%
-3.3% 2.5%
6.1%
3.6%
Nov-48
Oct-49
11
37
-1.7%
-8.6%
-5.1% 3.4%
7.9%
4.5%
10
57
-2.0%
-8.3%
-2.7% 4.4%
7.6%
3.2%
Average
Sources: NBER, BEA, FRB, BLS, Moody’s Economy.com
5
145.00
1988Q1
1988Q3
1989Q1
1989Q3
1990Q1
1990Q3
1991Q1
1991Q3
1992Q1
1992Q3
1993Q1
1993Q3
1994Q1
1994Q3
1995Q1
1995Q3
1996Q1
1996Q3
1997Q1
1997Q3
1998Q1
1998Q3
1999Q1
1999Q3
2000Q1
2000Q3
2001Q1
2001Q3
2002Q1
2002Q3
2003Q1
2003Q3
2004Q1
2004Q3
2005Q1
2005Q3
2006Q1
2006Q3
2007Q1
2007Q3
2008Q1
2008Q3
2009Q1
2009Q3
2010Q1
2010Q3
2011Q1
2011Q3
2012Q1
2012Q3
2013Q1
2013Q3
U.S. Total Employment Levels
8.3 Million Jobs Lost – 5 Years From
Peak-to-Peak
17 Quarters
135.00
130.00
2000 Q4
132.5
115.00
1990 Q2
109.8
2003 Q2
129.8
We’re Here
20 Quarters
140.00
2008 Q1
137.9
2013 Q1
137.6
2009 Q4
129.6
125.00
120.00
12 Quarters
110.00
1991 Q3
108.3
105.00
100.00
6
Economic Assumptions Driving
Better Quicker
Our Forecasts:
Payroll
Real Personal
Employment
Income
Real GDP
CPI (Inflation)
2009 -4.3%
-4.3%
-1.9%
-2.0%
-2.6%
-2.4%
-0.3%
-0.3%
2010 -0.5%
-0.7%
0.8%
0.6%
2.7%
2.3%
1.6%
1.5%
2011 1.0%
0.1%
2.6%
2.4%
3.1%
1.4%
1.6%
0.8%
2012 2.5%
1.9%
4.8%
3.6%
5.0%
3.8%
2.5%
2.8%
2013 3.3%
3.2%
4.7%
3.8%
4.2%
4.5%
2.9%
3.1%
Source: Moody’s Economy.com, September 2010
(July 2010)
7
The Hotel Market Cycle
Moving Past the Trough
Rapid
Development
Equilibrium
ADR
Development
Picks Up
Lodging
Decline, Leads
Other Sectors
Rapid
Development
2013-2014
U.S. is Here
Long Run
Occupancy
A Year Ago
Occupancy
Declines,
ADR Follows
Development
Slows
Development
at Minimum
Levels
2011-2012
ADR and
Margins
Recover
Occupancy
Recovers
Lodging Recovers,
Lags Other Sectors
8
Current Forecast – October 2010
- a Quicker Turnaround
2009
2010
Q1
Q2
Q3
Q4
Q1
Q2
Supply
3.2%
3.1%
3.2%
3.1%
2.9%
2.3%
1.8%
1.4%
Demand
-8.1% -8.1% -5.0% -1.4%
5.3%
2.3%
8.7%
8.6%
6.4%
6.2%
6.7%
5.0%
-7.7% -9.7% -9.8% -7.6%
-4.3%
0.0%
0.8%
0.8%
-17.8% -19.6% -16.9% -11.7%
-2.1%
6.2%
7.6%
5.9%
Occupancy -11.0% -10.9% -7.9% -4.4%
ADR
RevPAR
Q3F
Q4F
?
9
National Horizon
October 2010 Update
Long Term
Average
2006
2007
2008
2009
2010F
2011F
2012F
Supply
2.2%
0.2%
1.3%
2.5%
3.1%
2.0%
1.1%
.08%
Demand
1.5%
0.5%
0.8%
-2.1%
-5.9%
7.3%
3.2%
4.9%
Occupancy
62.2%
63.1%
62.8%
60.0%
54.7%
57.5%
58.7%
61.0%
ADR
2.9%
7.6%
6.4%
2.8%
-8.8%
-0.6%
3.8%
6.3%
RevPAR
2.3%
7.9%
5.9%
-1.9%
-16.8%
4.6%
5.9%
10.6%
Record Decline
A Quicker
Turnaround?
Record Increase
Source: Colliers PKF Hospitality Research – September-November 2010 Hotel Horizons® Report, Smith Travel Research
10
Recovery Will Be Strong Through 2013
80%
+64.6% - 1943
+10.8% - 2011F
+17.9% - 2012F
+21.7% - 2013F
40%
0%
-19.4% - 2001
-22.4% - 1938
-35.4% - 2009
-40%
1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2013F
Note: * Before deductions for capital reserve, rent, interest, income taxes, depreciation, and amortization.
Source: Colliers PKF-HR, Trends® in the Hotel Industry sample.
11
Seattle Lodging Market Overview
12
Seattle Lodging Market Overview
Long
Term
Average
2002
2003
2004
2005
2006
2007
2008
2009
Supply
3.4%
3.5%
1.7%
1.8%
0.3%
2.9%
2.5%
2.7%
3.1%
Demand
3.1%
0.2%
3.8%
5.1%
6.2%
6.3%
3.2%
-2.7%
-6.9%
Occupancy 71.1%
61.8%
63.0%
65.1%
68.9%
71.2%
71.7%
68.0%
61.4%
ADR
3.3%
-3.5%
-1.5%
2.6%
6.1%
11.5%
7.5%
3.5%
-11.1%
RevPAR
3.1%
-6.6%
0.5%
5.9%
12.3%
15.2%
8.3%
-1.9%
-19.8%
Source: Colliers PKF Hospitality Research – September-November 2010 Hotel Horizons® Report, Smith Travel Research
13
Factors Impacting Lodging Demand
LOCAL ECONOMY
LODGING SUPPLY
WASHINGTON STATE
CONVENTION AND
TRADE CENTER
SEA-TAC AIRPORT
14
Employment Levels and Unemployment Rate
Employment levels return to 2008 levels in 2012.
Seattle - Job Market Outlook
1,900,000
Historical
Historical
Projection
Projection
10.0%
9.0%
1,850,000
8.0%
1,800,000
7.0%
1,750,000
6.0%
5.0%
1,700,000
4.0%
1,650,000
3.0%
2.0%
1,600,000
1.0%
1,550,000
0.0%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
.Q 7.Q 7.Q 7.Q 8.Q 8.Q 8.Q 8.Q 9.Q 9.Q 9.Q 9.Q 0.Q 0.Q 0.Q 0.Q 1.Q 1.Q 1.Q 1.Q 2.Q 2.Q 2.Q 2.Q 3.Q 3.Q 3.Q 3.Q
7
0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Employment Levels
Unemployment Rate
15
Downtown Seattle
Lodging Supply Change
Property
Sheraton - Union Street Tower
Arctic Club
Four Seasons
The Hyatt at Olive 8
Maxwell Hotel
Hyatt Place
Courtyard by Marriott
Recently Opened
Hampton Inn & Suites
1st & Stewart
Hummingbird Development
Candela Hotel
Greyhound Property
The "1" Hotel
Hotel Ava
Proposed & On Hold
Location
6th & Union
3rd & Cherry
1st & Union
8th & Olive
3rd & Roy
6th & Denny
2nd & Cherry
New Rooms
415
120
147
346
140
158
262
1,588
7th & Jackson
137
1st & Stewart
+/-100
5th & Virginia
185
2nd & Pike
150
8th & Stewart
+/- 1,200
2nd & Pine
120
8th & Pine
190
2,082
Status
Open
Open
Open
Open
Open
Open
Open
Date Open
June 2007
July 2008
November 2008
January 2009
March 2010
June 2010
June 2010
Proposed
Proposed
Proposed
Proposed
Proposed
Proposed
Proposed
TBD
TBD
TBD
TBD
TBD
TBD
TBD
16
Seattle Convention & Visitors Bureau
Convention Calendar Outlook
Total Number of
Booked Room
Nights
2005
453,839
-
2006
485,775
7%
2007
550,184
13%
2008
514,286
-7%
2009
454,717
-12%
2010
400,182
-12%
2011
376,494
-6%
2012
255,579
-32%
2013
217,541
-15%
2014
139,237
-36%
2015
125,129
-10.1%
2016
55,745
-55.4%
2007 was the strongest
convention year on record
600 000
500 000
400 000
300 000
200 000
100 000
0
Total Future Room Nights
Total Room Nights
17
Sea-Tac
Airport Passenger Statistics
Record numbers in 2008 – nearly
32.2 million total passengers
Passenger count
decreased by only
3.0% in 2009
35 000 000
First eight
months of
2010 show
decline of
0.2%
30 000 000
25 000 000
20 000 000
15 000 000
10 000 000
5 000 000
0
Total International Passengers
Total Domestic Passengers
Source: Bureau of Transportation Statistics
18
How Will This Impact Seattle?
19
Seattle Four Year Forecast
All Hotels
Long
Term
Average
2005
2006
2007
2008
2009
Supply
3.4%
0.3%
2.9%
2.5%
2.7%
3.1%
2.4%
Demand
3.1%
6.2%
6.3%
3.2%
-2.7%
-6.9%
7.8%
Occupancy
71.1%
68.9% 71.2% 71.7% 68.0%
ADR
3.3%
6.1%
11.5%
7.5%
RevPAR
3.1%
12.3% 15.2%
8.3%
2010P 2011P
2012P
2013P
0.7%
0.4%
1.0%
4.7%
3.6%
2.9%
61.4%
64.6% 67.2%
69.3%
70.6%
3.5%
-11.1%
-3.2%
5.0%
5.4%
5.9%
-1.9%
-19.8%
1.9%
9.1%
8.8%
7.9%
Source: Colliers PKF Hospitality Research – September-November 2010 Hotel Horizons® Report, Smith Travel Research
Sample represents greater Seattle area consisting of more than 40,000 hotel rooms
20
How About Spokane?
21
Spokane Four Year Forecast
All Hotels
2004
2005 2006 2007 2008
2009 2010P 2011P 2012P 2013P
Supply
0.4%
0.4% -1.9% 5.3% 0.0%
1.3%
5.0%
0.5%
1.0%
1.0%
Demand
8.6%
0.8% 0.3% 7.3% -2.8% -4.5% 8.7%
3.3%
2.6%
2.0%
Occupancy 59.3%
ADR
4.1%
59.6
%
60.9
%
62.0
%
60.3
56.9% 58.9% 60.5% 61.5% 62.1%
%
4.4% 9.2% 8.8% 4.4% -2.1% 1.3%
RevPAR 12.7% 4.8%
11.6
%
10.8
%
1.5% -7.7% 4.9%
3.5%
4.5%
3.0%
6.4%
6.2%
4.0%
Note: Sample represents Spokane County, consisting of more than 7,000 hotel rooms
22
Questions?