Hotel & Leisure Advisors Hotels & Waterpark Industry - PowerPoint PPT Presentation

Hotel & Leisure Advisors Hotels & Waterpark Industry – Insights, Trends and Valuation Keys g , y Presented by David J. Sangree, MAI, CPA, ISHC – Hotel & Leisure Advisors Presentation by David J. Sangree, MAI, CPA, ISHC

Hotel & Leisure Advisors Presentation Outline: 1. National Hotel Overview 2. National Waterparks Overview 3 3. Appraisal and Market Analysis for Hotels and Appraisal and Market Analysis for Hotels and Waterparks Presentation by David J. Sangree, MAI, CPA, ISHC

National Hotel Overview Operating Perform ance Forecasts • Smith Travel Research (STR) reported 2015 was the strongest on record for the hotel industry. Records were set for supply (more than 1.8 billion room nights) and demand (almost 1.2 billion room nights). Performance metrics were the highest STR has ever benchmarked with occupancy at metrics were the highest STR has ever benchmarked with occupancy at 65.5% , ADR at $120.01 and RevPAR at $78.67. Overall U.S. Lodging Performance Occupa ncy % Cha nge ADR % Cha nge Re v PAR % Cha nge 2011 60.0% 4.2% $101.71 3.8% $61.03 8.1% 2012 61.4% 2.3% $105.96 4.2% $65.06 6.6% 2013 62.2% 1.3% $110.09 3.9% $68.49 5.3% 2014 2014 64.4% 64.4% 3.5% 3.5% $115.03 $115.03 4.5% 4.5% $74.04 $74.04 8.2% 8.2% 2015 65.5% 1.7% $120.01 4.4% $78.67 6.3% Source: Sm ith Travel Research Presentation by David J. Sangree, MAI, CPA, ISHC

National Hotel Overview Regional Hotel Overview • Smith Travel Research also tracks key performance metrics by region. The following table shows the performance of U.S. hotels by region for the past four years, based on statistics from Smith Travel Research’s Hotel Review . Hotel Review U .S . H o te l P e r f o r m a n ce b y Re g io n s O ccu p a n cy AD R Re v P AR 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 N e w En g la n d 6 1 .4 % 6 2 .4 % 6 3 .5 % 6 4 .8 % $ 1 2 7 .1 8 $ 1 3 1 .8 5 $ 1 3 9 .1 5 $ 1 4 5 .8 4 $ 7 8 .1 1 $ 8 2 .2 2 $ 8 8 .3 7 $ 9 4 .4 8 M id d le Atla n tic 6 6 .5 % 6 5 .9 % 6 6 .9 % 6 7 .6 % $ 1 5 0 .6 4 $ 1 5 5 .9 0 $ 1 6 0 .8 7 $ 1 6 2 .1 3 $ 1 0 0 .1 2 $ 1 0 2 .7 3 $ 1 0 7 .5 8 $ 1 0 9 .6 1 S o u th Atla n tic 6 0 .8 % 6 1 .9 % 6 4 .9 % 6 6 .6 % $ 1 0 3 .4 9 $ 1 0 6 .6 3 $ 1 1 0 .7 7 $ 1 1 6 .3 6 $ 6 2 .8 9 $ 6 5 .9 6 $ 7 1 .9 1 $ 7 7 .4 9 Ea st N o r th Ce n tr a l 5 8 .4 % 5 9 .0 % 6 0 .5 % 6 1 .5 % $ 9 2 .4 7 $ 9 5 .5 4 $ 9 9 .6 8 $ 1 0 4 .7 2 $ 5 3 .9 7 $ 5 6 .4 7 $ 6 0 .3 4 $ 6 4 .3 7 Ea st S o u th Ce n tr a l 5 6 .2 % 5 6 .8 % 5 9 .2 % 6 1 .1 % $ 7 9 .4 8 $ 8 2 .0 0 $ 8 5 .9 6 $ 9 0 .6 2 $ 4 4 .6 9 $ 4 6 .5 4 $ 5 0 .9 2 $ 5 5 .3 4 W e st N o r th Ce n tr a l W e st N o r th Ce n tr a l 5 7 3 % 5 7 .3 % 5 7 7 % 5 7 .7 % 5 9 6 % 5 9 .6 % 5 9 .7 % 5 9 7 % $ 8 4 2 0 $ 8 4 .2 0 $ 8 6 5 2 $ 8 6 .5 2 $ 8 9 9 6 $ 8 9 .9 6 $ 9 3 .0 6 $ 9 3 0 6 $ 4 8 2 3 $ 4 8 .2 3 $ 4 9 9 7 $ 4 9 .9 7 $ 5 3 6 3 $ 5 3 .6 3 $ 5 5 5 6 $ 5 5 .5 6 W e st S o u th Ce n tr a l 6 0 .5 % 6 1 .4 % 6 3 .9 % 6 3 .1 % $ 8 8 .8 7 $ 9 3 .0 6 $ 9 6 .0 5 $ 9 8 .2 1 $ 5 3 .7 5 $ 5 7 .1 0 $ 6 1 .3 6 $ 6 1 .9 4 M o u n ta in 5 9 .1 % 6 0 .2 % 6 3 .1 % 6 5 .0 % $ 9 6 .2 0 $ 9 8 .9 7 $ 1 0 3 .0 7 $ 1 0 8 .6 9 $ 5 6 .8 6 $ 5 9 .6 2 $ 6 5 .0 5 $ 7 0 .6 6 P a cific 6 7 .8 % 6 9 .4 % 7 1 .4 % 7 3 .3 % $ 1 2 6 .3 0 $ 1 3 3 .7 5 $ 1 4 1 .9 0 $ 1 5 0 .7 9 $ 8 5 .6 5 $ 9 2 .8 3 $ 1 0 1 .3 2 $ 1 1 0 .5 4 T o ta l U .S . 6 1 .3 % 6 2 .2 % 6 4 .4 % 6 5 .6 % $ 1 0 6 .2 5 $ 1 1 0 .3 0 $ 1 1 4 .9 2 $ 1 2 0 .0 1 $ 6 5 .1 5 $ 6 8 .5 8 $ 7 4 .0 4 $ 7 8 .6 7 So u rce : Sm it h Tra v e l Re s e a r ch Presentation by David J. Sangree, MAI, CPA, ISHC

National Hotel Overview Occupancy by Dem and Segm ent • According to the 2015 TRENDS in the Hotel Industry report from CBRE Hotels/ PKF, transient business dominates segmentation across all property types (except convention hotels), followed by group/ contract business. Of note is that from 2014 to 2015, transient demand at resort properties decreased while group demand increased. Contract demand makes up a very small portion of demand and was included in the group segment since those rooms are usually booked by the group sales team. Other demand makes up less than 1.3% in each category. Hotel Custom er Segm entation 100% 80% 60% 9 4 .7 % 3 .5 % Other 4 % 4 % 40% % 5 3 .4 % 8 3 9 7 2 . 7 2 . 4 0 .1 % Group/Contract 20% Transient 0% Source: CBRE Hotels Presentation by David J. Sangree, MAI, CPA, ISHC

National Hotel Overview New Supply of Lodging Room s • With demand at an all-time high, the potential for oversupply of rooms is a concern; however, current projections point to continued absorption of new supply and steady occupancy rates. In late 2015, Lodging Econometrics reported that new hotel openings will accelerate over the Econometrics reported that new hotel openings will accelerate over the next two years and peak in 2018-19. Hotel Openings 2 0 1 2 - 2 0 1 7 Ye a r No. of Hote ls 2012 412 2013 488 2014 557 2015 2015 742 742 2016 845 2017 998 Source: Lodging Econom etrics Presentation by David J. Sangree, MAI, CPA, ISHC

National Hotel Overview U.S. Pipeline by Chain Scale Segm ent U.S. Pipeline by Chain Scale Segment % Cha nge % Cha nge Tota l % Cha nge Tota l Pr e lim ina r y v s. I n v s. v s. Unde r Ex isting Supply Pr e v ious Constr uction Pr e v ious Pr e v ious Contr a ct Ye a r Ye a r Ye a r Cha in sca le Lux ur y 108,485 0.4% 7,440 35.0% 11,549 18.7% Uppe r Upsca le 583,906 2.7% 11,524 -13.5% 38,885 23.4% Upsca le 660,640 4.7% 49,203 10.8% 135,580 18.1% Uppe r Midsca le 888,843 1.4% 47,954 36.1% 157,034 23.9% Midsca le 479,040 -0.8% 5,321 1.3% 29,533 17.0% Econom y 784,149 1.3% 1,512 130.8% 6,801 70.0% 1,533,422 -0.2% 17,749 13.2% 89,757 -11.0% Una ffilia te d 5 038 485 5,038,485 1 2% 1.2% 140 703 140,703 17.2% 17 2% 469 139 469,139 13.6% 13 6% Tota l Tota l Note: Room s under contract includes projects in I n Construction, Final Planning and Planning stages. Source: STR Presentation by David J. Sangree, MAI, CPA, ISHC

National Hotel Overview Financial Perform ance • • These are financial statistics published in Smith Travel Research’s Host These are financial statistics published in Smith Travel Research s Host Almanac 2015, derived from income and expense statements of more than 5,300 hotels for year-end 2014 and trend data from more than 30,000 hotels. Revenue Per Occupied Room Night 2010-14 Full Service Limited Service $300.00 $250.00 $200.00 $278.34 $271.78 $150.00 44.76 40.08 36.13 $24 $23 $100.00 $100 00 $ $ $2 $103.33 $105.59 $91.01 $92.97 $95.13 $50.00 $0.00 2010 2011 2012 2013 2014 Source: STR Host Almanac 2015 Presentation by David J. Sangree, MAI, CPA, ISHC

National Hotel Overview Financial Perform ance Gr oss Oper ating Profit* and NOI 2010-2014 60.0% 50.0% % 50.3% % 48.8% % 49.8% % 48.0% 48.0% 40.0% 39.3% 37.8% 37.8% 35.6% 34.2% 34.6% 34.0% 34.5% 31.5% 30.0% Full ‐ Service GOP 29.9% 7.3% 6.2% Limited ‐ Service GOP % 24.1% 27 2 26 20.0% 20.8% 19.1% Full ‐ Service NOI 10.0% Limited ‐ Service NOI 0.0% 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 Note: NOI is "Amount Available for Debt Service and Other Fixed Charges" which is equivalent to "Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)." *Before Management Fees and Franchise (Royalty) Fees Source: Smith Travel Research Presentation by David J. Sangree, MAI, CPA, ISHC

National Hotel Overview Hotel Sales In its 2015 Hotel Transaction Almanac STR Analytics reported $27 8 billion In its 2015 Hotel Transaction Almanac , STR Analytics reported $27.8 billion in U.S. hotel transactions occurred in 2014. During the year, $18.5 billion in hotel assets changed hands while the remaining $9.3 billion resulted in new hotel openings. • The average price per key was a record $219,000, a 15.3% increase over 2013 • The total investment for acquisitions increased to $249,000, while the average cost for construction was $186,000 • • Distressed sales fell to normal levels with only 4% of hotel trades Distressed sales fell to normal levels, with only 4% of hotel trades involving a struggling asset • The average cap rate declined to 8.2% , the lowest on record Presentation by David J. Sangree, MAI, CPA, ISHC

National Hotel Overview Hotel Sales Hotel Sales by Chain Scale Pe r ce nta ge of Av e r a ge Av e r a ge Room Tr a nsa ction Tr a nsa ction Room Room Pr ice pe r Pr ice pe r Re v e nue Re v e nue Tr a nsa ctions Activ ity Count Room Multiplie r 18 4% 366 $462,000 6.53 Lux ur y 52 11% 381 $214,000 6.92 Uppe r Upsca le 178 40% 153 $227,000 , 6.42 Upsca le Upsca e 61 14% 132 $111,000 4.12 Uppe r Midsca le 30 7% 129 $55,000 2.84 Midsca le 21 5% 96 $40,000 3.24 Econom y 87 19% 196 $296,000 6.82 I nde pe nde nt p 447 100% 189 $219,000 5.50 Tota l Source: STR Hotel Transaction Alm anac 2015 Presentation by David J. Sangree, MAI, CPA, ISHC