Transcript Slide 1

Where Are We Headed?
April 18, 2012
Thomas E. Callahan, CPA, CRE, FRICS, MAI
Co-President & Chief Executive Officer -West
[email protected]
San Francisco Lodging Market
2
Historical Occupancy and ADR of the
San Francisco Lodging Market
$200
85%
80.3%
78.9%
$190
75.1%
74.9%
$180
75%
75.0%
71.2%
72.7%
$170
67.8%
71.4%
64.8%
$160
$156
61.0%
$150
62.7%
$150
$155
65%
$149
$143
$138
$140
$136
55%
$134
$130
$123
$125
$118
$120
$117
45%
$110
$100
35%
3
2010 RevPAR Growth
50 Major Markets
-5.0%
-3.0%
-1.0%
1.0%
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
New Orleans
Boston
New York
Miami
Denver
Charlotte
Chicago
Atlanta
Minneapolis
Detroit
Oahu
Los Angeles
San Francisco
Pittsburgh
Newark
West Palm Beach
Oakland
Cleveland
Fort Lauderdale
Anaheim
Hartford
Portland
Total US
Columbus
Albuquerque
Seattle
Kansas City
Dallas
San Antonio
Baltimore
Salt Lake City
Saint Louis
Fort Worth
Cincinnati
San Diego
Orlando
Jacksonville
Raleigh-Durham
Sacramento
Long Island
Austin
Nashville
Washington DC
Indianapolis
Philadelphia
Richmond
Phoenix
Memphis
Tucson
Tampa
Houston
Source: Smith Travel Research
4
2011 RevPAR Growth
50 Major Markets
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
San Francisco
Oakland
Nashville
Hartford
Miami
Oahu
Detroit
Tampa
West Palm Beach
Dallas
Los Angeles
Houston
Newark
Charlotte
Minneapolis
Austin
Richmond
Orlando
Philadelphia
Anaheim
Indianapolis
Seattle
Fort Worth
Portland
Columbus
Chicago
Cincinnati
Pittsburgh
Total US
Boston
Phoenix
Raleigh-Durham
Denver
Long Island
Fort Lauderdale
San Diego
Sacramento
Salt Lake City
Saint Louis
New York
Cleveland
Kansas City
New Orleans
Baltimore
Jacksonville
San Antonio
Memphis
Atlanta
Washington DC
Tucson
Albuquerque
Source: Smith Travel Research
5
San Francisco MSA Economic
Assumptions
Payroll
Real Personal
Employment
Income
Real GDP
CPI (Inflation)
2009
-5.2%
-0.2%
-3.7%
0.7%
2010
-1.1%
1.2%
2.2%
1.4%
2011
0.7%
3.5%
1.4%
2.6%
2012F
2.2%
2.3%
4.7%
2.7%
2013F
1.6%
2.3%
2.1%
2.9%
L.R.A.
0.2%
2.9%
1.9%
3.0%
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San Francisco MSA
All Hotels
Improved Occupancy = Better ADR Performance in 2012
2008
2009
2010
2011
2012F
2013F
2014F
Long-Run
Average
Occupancy 75.0%
71.2%
75.1%
78.9%
79.7%
79.9%
80.2%
71.9%
0.1%
-5.1%
5.5%
5.1%
0.9%
0.3%
0.5%
-
$133.52
$136.21
$155.07
$171.17
$181.61
$191.58
-
-14.6%
2.0%
13.8%
10.4%
6.1%
5.5%
3.1%
$95.02
$102.28
$122.42
$136.38
$145.08
$153.73
-
-19.0%
7.6%
19.7%
11.4%
6.4%
6.0%
3.7%
% Change
ADR $156.41
% Change
5.3%
RevPAR $117.25
% Change
5.4%
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San Francisco MSA
Upper-Priced Hotels
Improved Occupancy = Better ADR Performance in 2012
Long-Run
2008
2009
2010
2011
2012F
2013F
2014F
Average
Occupancy 76.3%
73.3%
77.7%
80.6%
80.8%
80.6%
80.7%
73.0%
0.3%
-4.0%
6.0%
3.8%
0.3%
-0.3%
0.1%
-
$157.60
$160.81
$182.53
$201.92
$214.85
$226.63
-
-15.0%
2.0%
13.5%
10.6%
6.4%
5.5%
2.5%
$115.49
$124.88
$147.09
$163.25
$173.22
$182.86
-
-18.4%
8.1%
17.8%
11.0%
6.1%
5.6%
3.2%
% Change
ADR $185.46
% Change
4.1%
RevPAR $141.51
% Change
4.4%
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San Francisco MSA
Lower-Priced Hotels
Improved Occupancy = Better ADR Performance in 2012
Long-Run
2008
2009
2010
2011
2012F
2013F
2014F
Average
Occupancy 72.5%
67.3%
70.4%
75.9%
77.5%
78.5%
79.4%
69.6%
-0.4%
-7.2%
4.6%
7.8%
2.1%
1.3%
1.2%
-
$85.43
$86.76
$101.36
$111.62
$118.00
$125.32
-
-14.8%
1.6%
16.8%
10.1%
5.7%
6.2%
1.9%
$57.49
$61.09
$76.95
$86.51
$92.63
$99.53
-
-20.9%
6.3%
26.0%
12.4%
7.1%
7.4%
2.1%
% Change
ADR $100.29
% Change
6.2%
RevPAR $72.71
% Change
5.8%
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San Francisco Projected Performance
2012 Quarterly Performance
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Annual
Occupancy
71.5%
82.1%
89.4%
75.7%
79.7%
% Change
1.9%
1.1%
0.2%
0.7%
0.9%
$161.70
$166.98
$177.01
$177.71
$171.17
12.7%
12.4%
8.9%
8.3%
10.4%
$115.65
$137.07
$158.16
$134.55
$136.38
14.9%
13.6%
9.1%
9.0%
11.4%
ADR
% Change
RevPAR
% Change
10
2011 RevPAR Growth
50 Major Markets
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Miami
San Francisco
New Orleans
Charlotte
Tampa
Anaheim
Los Angeles
San Diego
Sacramento
Chicago
Richmond
Seattle
Boston
Detroit
Newark
Houston
Oahu
Oakland
Salt Lake City
Memphis
Austin
Nashville
Portland
Indianapolis
Minneapolis
West Palm Beach
Cleveland
Total US
Long Island
Jacksonville
Phoenix
Fort Lauderdale
Tucson
Hartford
Baltimore
San Antonio
Raleigh-Durham
Albuquerque
New York
Cincinnati
Philadelphia
Orlando
Kansas City
Columbus
Denver
Atlanta
Washington DC
Saint Louis
Dallas
Pittsburgh
Fort Worth
Source: PKF Hospitality Research
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San Francisco Hotel Market ADR
Growth at 3% per Year Based on
Performance in 2011
$260
$260
$240
$240
$227
$220
$220
$200
$192
$200
$182
$180
$171
$156
$150
$160
$155
$180
$160
$149
$143
$140
$138
$128 $135
$134
$123
$120
$100
$136
$140
$125
$117
$118
$120
$100
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San Francisco Major Hotels: Projected Net
Operating Income Dollars per Room and
Ratio to Total Revenue
$50,000 37.0%
40.0%
$45,000
$40,000
35.0%
29.9%
$35,000
24.3%
$30,000 $28,884
$25,000
$20,000
$15,000
$10,000
$5,000
26.8%
25.2%
23.8%
21.1%
20.2%
18.3%
17.6%
15.6%15.8%
30.0%
25.0%
20.2%
20.0%
$19,645
14.1%14.7%
$17,612
$18,047
15.0%
$16,355
$15,812
$12,789
$12,369
$10,922
10.0%
$10,386
$9,785
$8,273
$8,435
$7,739
$7,389
5.0%
$0
0.0%
NOI per Room
NOI
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San Francisco Historical Performance
Occupancy and RevPAR Correlation
Year
OCC
ADR
% Change
RevPAR
% Change
1995
73.4%
$97.35
3.5%
$71.43
7.4%
1996
77.8%
$105.37
8.2%
$81.98
14.8%
1997
79.7%
$117.47
11.5%
$93.62
14.2%
1998
78.0%
$128.15
9.1%
$100.02
6.8%
1999
76.4%
$134.67
5.1%
$102.93
2.9%
2000
80.3%
$149.78
11.2%
$120.29
16.9%
2001
64.8%
$143.09
-4.5%
$92.76
-22.9%
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2011 and 2012 Major San Francisco
Transactions
Hotel Property
Sale Date
Hotel Milano
Marriott SFO
Hotel Abri
Huntington Hotel
Crescent Hotel
Villa Florence
Mandarin Oriental
Hotel Adagio
The Opal Hotel
Westin Market Street
JW Marriott
Tuscan Inn
Argonaut Hotel
4/12
3/12
1/12
11/11
11/11
10/11
8/11
7/11
5/11
3/11
2/11
2/11
2/11
Sales
Price
$30.0 M
$112.7 M
$21.9 M
$52.5 M
$14.0 M
$67.2 M
$63.0 M
$42.3 M
$12.8 M
$170.0 M
$96.0 M
$52.3 M
$84.0 M
Price per
Room
$277,778
$164,526
$240,000
$303,571
$168,675
$369,231
$398,734
$247,076
$83,882
$254,873
$284,866
$236,425
$333,333
Cap.
Rate
1.5%
6.0%
3.8%
5.7%
5.0%
3.5%
3.9%
7.8%
2.0%
6.7%
5.0%
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Some Things To Think About
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1. Personal incomes and corporate profit growth will continue, but
at less robust levels. Lodging demand growth in 2012, while still
positive, will pale relative to the past two years. Higher room
rates will impede demand growth as well.
2. Unemployment will remain high – helps to keep labor costs in
check and profit growth up.
3. Oil is a wild card for 2012 – too big an increase will undermine
the economy – lodging demand will suffer as a result.
4. Overall, the second half of 2012 will be better than the first half
as the future political leadership of the U.S. becomes clear.
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Thank You
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