Transcript Slide 1

US LODGING INDUSTRY OVERVIEW
Mark V. Lomanno
President
SMITH TRAVEL RESEARCH
Total United States
Occupancy and ADR
Twelve Month Moving Average To March 2004
90
85
Peak $86.46
June 2001
Occupancy (%)
ADR ($)
80
$83.57
March 2004
75
70
65
60
Peak 64.9%
June 1996
55
59.6%
March 2004
50
1996
Source: STR
1997
1998
1999
2000
2001
2002
2003
2004
Total United States
Estimated Revenue and Profitability
Years 1993 – 2003E
120
50%
112.1
Revenue
Pre-Tax Income
GOP
100
77.4
80
70.4
66.7
63.5
60
103.5
102.9
102.6
104.0
93.1
45%
85.6
40.3%
40.9%
40.2%
39.2%
40%
38.2%
36.2%
37.1%
37.0%
33.5%
35%
32.5%
40
30.5%
17
20
2.4
5.5
8.5
12.5
20.9
22.1
22.5
16.2
14.2
15.0
0
30%
25%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003E
Source: Smith Travel Research
Total United States
Room Supply/Demand Percent Change
Twelve Month Moving Average To March 2004
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
Supply % Change
Demand % Change
1998
Source: STR
1999
2000
2001
2002
2003
2004
Total United States
Room Supply/Demand Percent Change
Monthly Year-Over-Year 2000 – March 2004
10
5
0
-5
Supply % Change
Demand % Change
-10
-15
-20
2000
Source: STR
2001
2002
2003
2004
Current Lodging Demand
* 2,648,200 – annualized daily rooms sold
* Off 15,000 daily - from peak
* Peak demand – 1st Quarter 2001
* New Demand High Reached in Q2 2004
Total United States
Occupancy / ADR Percent Change
Twelve Month Moving Average To March 2004
8
6
4
2
0
-2
-4
Occ % Change
ADR % Change
-6
-8
1998
Source: STR
1999
2000
2001
2002
2003
2004
Total United States
Occupancy Percent Change
Jan 2000 – March 2004
10
5
0
-5
-10
-15
-20
2 0 0 0
Source: STR
2 0 0 1
2 0 0 2
2 0 0 3
Total United States
Room Rate Percent Change
Jan 2000 – March 2004
10
5
0
-5
-10
-15
2 0 0 0
Source: STR
2 0 0 1
2 0 0 2
2 0 0 3
ADR % change
2003 vs 2002
Total United States
Key Performance Indicators Percent Change
10
8.5
Total 2003
8
Q1 2004
6
7.3
5.5
4.3
4
2.9
2
1.7
1.8
1.2 1.1
0.5
0.1
0.6
0
Supply
Source: STR
Demand
Occupancy
ADR
RevPAR
Revenue
Total United States
Daily Occupancy*
2000 - 2003
75%
2000
2001
2002
2003
70%
68.8%
67.0%
65%
66.5%
64.4%
60%
59.9%
59.2%
59.4%
55%
50%
Weekday
* Excluding Sunday
Weekend
66.9%
Total U.S.
Average Daily Lodging Demand in Millions
2000 - 2003
3.2
3.1
3.0
2000
2001
2002
2003
2.954
2.885 2.876 2.900
2.9
2.8
2.7
2.6
2.702
2.569 2.583
2.623
2.5
2.4
Weekday
Weekend
Total U.S.
Average Daily Room Revenue in Millions
2000 - 2003
250
2000
240
2001
2002
$244.6
2003
$238.7
$238.4
$236.2
$234.7
230
$221.4
220
$219.7
$217.2
210
200
Weekday
Weekend
STR Chain Scales
Selected chains from each segment
• Luxury – Four Seasons, Ritz Carlton, Fairmont
• Upper Upscale – Embassy, Hilton, Marriott, Sheraton
• Upscale – Radisson, Courtyard, Crowne Plaza
• Mid with F&B – Holiday Inn, Ramada, Best Western
• Mid no F&B – Hampton Inn, Country Inns & Suites, HI Express
• Economy – Motel 6, Red Roof, Days Inn
Supply Percent Change
by Chain Scale
6
4.6
4.7
4.3
4
3.6
2.7
2
2.3
1.5
1.3
0
Total 2003
-2
-1
-1.5
-1.8
Q1 2004
-2.3
-4
Luxury
Source: STR
Upper Upscale
Upscale
Mid W/
Mid W/O
Economy
Demand Percent Change
by Chain Scale
12
10.3
Total 2003
Q1 2004
10
8
7.8
6.7
6.6
5.8
6
4
5.4
4.9
2.4
2.0
2
1.3
0
-2
-2.6
-2.3
-4
Luxury
Source: STR
Upper Upscale
Upscale
Mid W/
Mid W/O
Economy
Occupancy Percent Change
by Chain Scale
8
7.4
Total 2003
6
Q1 2004
5.4
4.3
4.1
3.8
4
2.3
2.1
2
1.1
0.2
0
0.2
0
-1.3
-2
Luxury
Source: STR
Upper Upscale
Upscale
Mid W/
Mid W/O
Economy
ADR Percent Change
by Chain Scale
4
3.3
Total 2003
Q1 2004
1.9
2
1.8
1.4
1.1
0.9
0.4
0
-0.1
-0.4
-0.7
-2
-1.8
-2
-4
Luxury
Source: STR
Upper Upscale
Upscale
Mid W/
Mid W/O
Economy
RevPAR Percent Change
by Chain Scale
12
10.7
Total 2003
10
Q1 2004
8
6.8
6.3
6.0
6
4.9
3.5
4
2
1.2
0.5
0
-1
-2
-0.5
-1.2
-1.6
-4
Luxury
Source: STR
Upper Upscale
Upscale
Mid W/
Mid W/O
Economy
STR Destination Resorts - Definitions
-337 Properties in the Continental US and Hawaii
-12.6% of all rooms are associated with Walt Disney Resorts
Breakout by Chain Scale:
Scale
LUXURY CHAINS
UPPER UPSCALE CHAINS
UPSCALE CHAINS
MIDSCALE W/ F&B CHAINS
ECONOMY CHAINS
INDEPENDENTS
Total
Rooms
14,497
54,170
5,152
3,756
445
87,658
165,678
% of Total Rooms
8.8%
32.7%
3.1%
2.3%
0.3%
52.9%
100.0%
Destination Hotels In The US
Resorts - Destination
Key Indicators (Percent Change)
Twelve Month Ending February
8.0%
5.7%
6.0%
4.0%
4.5%
3.5%
2.4%
2.3%
2.1% 2.1%
2.0%
0.9%
0.0%
-0.3%-0.1%
-2.0%
-4.0%
-6.0%
1.8% 1.9%
2002
2003
2004
-8.0%
-8.6%
-10.0%
-12.0%
Supply
Source: STR
-9.9%
-10.7%
Demand
OCC
ADR
RevPAR
Resorts - Destination
Key Indicators
Twelve Month Ending February
167.65 167.14 166.97
170.00
150.00
2002
2003
2004
130.00
110.00
101.95 103.83
105.83
90.00
70.00
60.8
62.1
63.4
50.00
OCC (%)
Source: STR
ADR ($)
RevPAR ($)
Resorts – Destination (Segment Comparisons)
Demand Percent Change
Twelve Month Moving Average To February 2004
20
15
10
5
0
-5
Total US
Luxury
Boutique Hotels
Resorts
-10
-15
-20
2000
Source: STR
2001
2002
2003
2004
Resorts – Destination (Segment Comparisons)
Occupancy Levels
Twelve Month Moving Average To February 2004
75
Total US
Luxury
Boutique Hotels
Resorts
70
65
60
55
2000
Source: STR
2001
2002
2003
2004
Resorts – Destination (Segment Comparisons)
Occupancy Percent Change
Twelve Month Moving Average To February 2004
10
5
0
-5
-10
Total US
Luxury
Boutique Hotels
Resorts
-15
-20
2000
Source: STR
2001
2002
2003
2004
Resorts – Destination (Segment Comparisons)
ADR Percent Change
Twelve Month Moving Average To February 2004
15
10
5
0
Total US
Luxury
Boutique Hotels
Resorts
-5
-10
2000
Source: STR
2001
2002
2003
2004
Resorts – Destination (Segment Comparisons)
RevPAR Percent Change
Twelve Month Moving Average To February 2004
20
15
10
5
0
-5
-10
Total US
Luxury
Boutique Hotels
Resorts
-15
-20
-25
2000
Source: STR
2001
2002
2003
2004
Performance Since The Respective Peak RevPAR Month
0.0%
0.0%
-2.0%
-4.0%
-3.3%
-6.0%
-8.0%
-6.6%
-5.9%
-6.6%
-7.0%
-8.9%
-10.0%
-10.3% -10.6%
-12.0%
-7.4%
Resorts
Luxury Chains
-14.0%
Boutique
-16.0%
Total US
-18.0%
-16.6%
-17.1%
RevPAR
Source: STR
OCC
ADR
Total U.S.
Estimated Lost Room Revenue
3rd Party Intermediaries
1,500
In Millions
$1,284.1
1,300
1,100
$872.3
900
700
500
300
$375.0
$200.5
100
2000
Source: STR
2001
2002
2003*
Total U.S.
Estimated ADR Change
Impact of 3rd Party Intermediaries
7%
5.8%
6%
5.5%
5%
4%
3%
2%
1%
0%
-1%
-0.7%
-0.8%
-1.0%
-1.5%
-2%
-3%
2000
Source: STR
2001
2002
Reported
Estimated
3.0%
2.4%
0.6%
0.1%
2003*
2004*
Total United States
In Construction – Rooms in Thousands
2002 - 2003
140
130
2003
2002
120
110
100
90
80
70
60
Jan
Feb
Source: STR, PPR, Dodge
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total United States
Rooms Under Construction by Scale – In Thousands
December 2003
20
17.4
15
14.7
15.7
15.1
10
4.2
5
3.6
0
Upper
Upscale
Source: STR, PPR, Dodge
Upscale
Mid w F&B
Mid w/o
F&B
Economy Unaffiliated
Total Pipeline Under Construction By Scale
Luxury
Upper Up
Upscale
Mid w/F&B
Mid w/out F&B
Economy
Independent
Total United States
Active Development Pipeline - Rooms
Change From Last Year
Dec 2003
Dec 2002
Change
% Chg
In Construction
70,818
85,463
(14,645)
-17.1%
Final Planning
16,446
25,253
(8,807)
-34.9%
Planning
185,179
214,260
(29,081)
-13.6%
In Pre-Planning
138,065
130,852
7,213
5.5%
Total Development
410,508
(45,320)
-9.9%
Source: STR, PPR, Dodge
455,828
STR/PPR/FW Dodge Pipeline
Historic Attrition Rates
5.0%
20.0%
53.0%
74.0%
95.0%
80.0%
47.0%
26.0%
PrePlanning
Planning
Opened
Source: STR
Final Planning
Abandoned
Under Constrution
U.S. Economic Outlook
Blue Chip Economic Indicators
2003P
2004F
2005F
Real GDP
+3.1%
+4.6%
+3.7%
CPI
+2.3%
+1.7%
+2.1%
Corporate Profits
+16.8%
+15.2%
+9.2%
Disp Personal Income
+2.6%
+4.2%
+3.4%
6.0%
5.7%
5.4%
Unemployment Rate
Total United States
Supply/Demand Percent Change
1998 – 2004P
5
4
3
2
1
0
-1
-2
-3
-4
-5
2.8
2.3
1.6
1.2
1.7
1.2
0.3
Supply % Chg
Demand % Chg
-3.4
2000
Source: STR
4
3.5
2001
2002
2003
2004P
Total United States
Occupancy Percent
1998 – 2004P
65
63.2
60.8
59.7
60
58.9
59.2
2002
2003
55
2000
Source: STR
2001
2004P
Total United States
ADR Percent Change
1998 – 2004P
10.0
5.4
5.0
2.4
0.1
0.0
-1.4
-1.4
2001
2002
-5.0
2000
Source: STR
2003
2004P
Total United States
Average Daily Rate
1998 – 2004P
90
85.37
85
85.11
84.2
83.01
83.12
2002
2003P
80
75
70
2000
Source: STR
2001
2004P
Total United States
RevPAR Percent Change
1998 – 2004P
15.0
10.0
6.1
5.2
5.0
0.6
0.0
-2.6
-5.0
-6.9
-10.0
2000
Source: STR
2001
2002
2003
2004P
U.S. Lodging Outlook
* Supply Growth Remains Stable
* Demand Hits Record Levels
* Occupancy Rising
* Regain Control over Room Rates
* Economy Rebounding – Return of the King
* Long Term Optimism
Source: STR