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NYU Tisch Center Economic Recovery Briefing
- 1. NEW YORK UNIVERSITY
School of Continuing and
Professional Studies
Preston R b t Ti h C t f
P t Robert Tisch Center for
Hospitality, Tourism, and Sports Management
The U S E
Th U.S. Economic Recovery:
i R
Chain Scale Segments,
Top 25 Markets,
Demand Segments and Profits
The Fourth in a Series of
NYU Tisch Center Economic Briefings
February 2010
©NYU 2010
- 2. Steven M. L
St M Lambert, M A
b t M.A.
Director of Administration and Industry Relations
NYU Tisch Center
©NYU 2010
- 4. Agenda
1. U.S. Recessions
2. U.S. Lodging Industry: Cycles and Performance
3. Analysis of U.S. Lodging Recoveries
y g g
4. U.S. Lodging RevPAR Trends: Implications for this
Recovery
5. Two RevPAR Recovery Analyses
6. RevPAR Forecasts
7. Structural Changes
l h
8. Conclusions
©NYU 2010
- 6. U.S. Recessions
Dates
D t Duration
D ti
Aug. 1929 to March 1933 43 months
May 1937 to June 1938 13 months
Feb. 1945 to Oct. 1945 8 months
Nov. 1948 to Oct. 1949 11 months
July
J l 1953 t M 1954
to May 10 months
th
Aug. 1957 to April 1958 8 months
April 1960 to Feb. 1961 10 months
Dec. 1969 to Nov. 1970 11 months
Nov. 1973 to March 1975 16 months
Jan.
Jan 1980 to July 1980 6 months
July 1981 to Nov. 1982 16 months
July 1990 to March 1991 8 months
March 2001 to Nov. 2001 8 months
December 2007 to Feb. 2010 26 months*
*To date
Source: National Bureau of Economic Research ©NYU 2010
- 9. Long-Term U.S. Occupancy
g p y
Occupancy Percentage
95%
1946 Long-Term Trend 1987 to 2007 Trend
90% 92.5% 63.34% (81 Years) 62.7% (20 Years)
85%
80%
75% 1979
72.2%
70% 1995
64.8% 2008
65% 60.3%
60%
1971 1991
1933 61.9% 2002 2009
55% 53.4%
50.6% 59.0% 55.2%
50%
28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 '00 '03 '06 '09
Sources: PricewaterhouseCoopers LLP (1928 to 1986 and 2008), Smith Travel Research (1987 to 2009).
Sources: PricewaterhouseCoopers LLP (1928 to 1986 and 2008), Smith Travel Research (1987 to 2009) ©NYU 2010
- 10. Timeline of Recessions & Historic Events
1962
Cuban Missile 2002
U.S. invasion
Crisis
Ci i
of Iraq
1953 1973
Korean 1963 Oil Embargo 1982
War Ends 1991
JFK Falklands War Persian Gulf War
Assassinated 2003
SARS
1950 1960 1970 1980 1990 2000 2010
1987 2001 2008
1979 Black September H1N1
Iranian Monday 11th Attacks
Oil 2008
1967 1995
1958 Lehman
6 Day War in
Crisis 1991 Oklahoma
First domestic Brothers
Middle East USSR City Bombing
jet airline Chapter 11 2008
1963 Collapse
Bear
LBJ Expands 1991 Stearns
War in Vietnam Yugoslav Wars Collapse
©NYU 2010
- 12. U.S. Recessions and Lodging Cycles
g g y
U.S. Recessions Months Lodging Cycles Months
Dec. 1969 to Nov. 1970 11 Feb. 1969 to Feb. 1971 12
Nov.
Nov 1973 to March 1975 16 Aug.
Aug 1974 to May 1975 9
Jan. 1980 to July 1980 6 Oct. 1979… -
July 1981 to Nov. 1982 16 … to May 1982 19
July 1990 to March 1991 8 Feb.
Feb 1990 to March 1991 13
March 2001 to Nov. 2001 8 Sept. 2000 to Sept. 2003 36
Dec 2007 to Feb. 2010 26
Source: Smith Travel Research and National Bureau of Economic Research
©NYU 2010
- 15. 3. Return to a prior performance level
Years from Years from prior
trough peak to
to recovery
y recovery from prior
Years from from
Y f f Years f
Y i
trough to peak to recovery
recovery
2/5 years
©NYU 2010
- 17. Total U.S. Occupancy
1969 Recession 1991 R
Recession
i 2007 R
Recession
i
1973 Recession 1980 Recession 2001 Recession
125
centage
115
cupancy Perc
105
Indexed Occ
95
Trough
85
4 3 2 1 1 2 3 4 5
Years Prior to Trough Years Past Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
- 18. Total U.S. Nominal ADR
1991 R
Recession
i 2001 R
Recession
i
1973 Recession 1980 Recession 2007 Recession
140
130
erage Daily Rate $
120
R
110
100
Indexed Ave
90
80
Trough
70
4 3 2 1 1 2 3 4 5
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
- 19. Total U.S. Real ADR
1991 R
Recession
i 2001 R
Recession
i
1973 Recession 1980 Recession 2007 Recession
140
130
erage Daily Rate $
120
R
110
100
Indexed Ave
90
80
70
Trough
Trough
60
4 3 2 1 1 2 3 4 5
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
- 20. Total U.S. Nominal RevPAR
1991 R
Recession
i 2001 R
Recession
i
1973 Recession 1980 Recession 2007 Recession
140
130
120
110
Indexed RevPAR $
100
90
80
70
Trough
Trough
60
4 3 2 1 1 2 3 4 5
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
- 21. Total U.S. Real RevPAR
1991 R
Recession
i 2001 R
Recession
i
1973 Recession 1980 Recession 2007 Recession
Indexed RevPAR $
Trough
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
- 22. Total U.S. Demand
1991 R i
Recession 2001 R i
Recession
1973 Recession 1980 Recession 2007 Recession
Trough
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
- 23. Total U.S. Supply
1991 R i
Recession 2001 R i
Recession
1973 Recession 1980 Recession 2007 Recession
Trough
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
- 24. Total U.S. Supply Change
Total U.S. Supply Change
12
10
8
rcent
6
Per
4
2
0
1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008
-2
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
- 26. Graphs Provided For:
Graphs Provided For: Graphs Of:
Graphs Of:
Total U.S. Occupancy
Luxuryy Nominal Average Daily Rate
g y
Upper Upscale Real Average Daily Rate
Upscale Nominal RevPAR
Midscale with Food and Beverage Real RevPAR
Midscale without Food and Beverage Supply
Economy Supply Percentage Change
Top 25 Markets Demand
©NYU 2010
- 27. Luxury Occupancy
2007 Recession 2001 Recession 1991 Recession
2006:
71.5% 4/8 years
centage
1997:
74.1%
cupancy Perc
1.5/4.5 years
Indexed Occ
1988:
67.1%
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 28. Luxury Nominal ADR
2007 Recession 2001 Recession 1991 Recession
erage Daily Rate $
R
2007:
$290.41
1.5
1 5/4.5 years
Indexed Ave
2000:
$236.04 1990: .25/1.25 years
$128.68
$128 68
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 29. Luxury Real ADR
2007 Recession 2001 Recession 1991 Recession
erage Daily Rate $
2007:
2007
R
$290.41
1.5/4.5years
Indexed Ave
2000:
$228.06
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
- 30. Luxury Nominal RevPAR
2007 Recession 2001 Recession 1991 Recession
2007: $ 0 0
00 $207.40
Indexed RevPAR $
3/5 years
2000:
$172.26
1990: .5/1.5 years
$84.21
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
- 31. Luxury Real RevPAR
y
2007 Recession 2001 Recession 1991 Recession
Indexed RevPAR $
2/5 years
y
2000:
$166.43
1990: .25/1.25 years
$79.67
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
- 32. Luxury Demand
y
2007 Recession 2001 Recession 1991 Recession
Millions
145
2007: 23.879
135
125
115
105 1994: .25/1.25 years
95 13.931 2000: 1/1.5 years
16.864
85
Trough
75
4 3 2 1 1 2 3 4 5 6
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
- 33. Luxury Supply
2007 Recession 2001 Recession 1991 Recession
Millions
150
140
130 2008:
35.059 million
120
110
.25/1.25 years
100
1994:
90 19.851 million
Trough
80
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
- 34. Luxury Supply Change
Luxury Supply Change
14
12
10
8
6
rcent
Per
4
2
0
1988
1991
1994
1997
2000
2003
2006
2009
-2
1
1
1
1
2
2
2
2
-4
Source: Smith Travel Research
©NYU 2010
- 35. Upper Upscale Occupancy
2007 Recession 2001 Recession 1991 Recession
111 2007: 71.2% 5/7 years
109
ndexed Occupancy Percentage
2000:
107
72.2%
105
1.5/3.5 years
103
1991:
1991
101 66.2%
99
In
97
95
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 36. Upper Upscale Nominal ADR
2007 Recession 2001 Recession 1991 Recession
erage Daily Rate $
2008:
R
2000: $109.85
$138.43 2/4.75 years
Indexed Ave
1990: .5/1.5 years
$92.29
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 37. Upper Upscale Real ADR
2007 Recession 2001 Recession 1991 Recession
130
erage Daily Rate $
R
120
2000: 2008:
$153.92 1.75/
110 $133.75
$133 75 4.75 years
Indexed Ave
100
1990:
$87.32
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 38. Upper Upscale Nominal RevPAR
2007 Recession 2001 Recession 1991 Recession
140
130 2007:
$112.49
2000: 2/5.25 years
Indexed RevPAR $
120 $100.00
110
100 1990: 1.25/2.25 years
y
$62.56
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 39. Upper Upscale Real RevPAR
2007 Recession 2001 Recession 1991 Recession
2007:
00
$109.26
2000: 2/5 years
Indexed RevPAR $
$96.62
1990:
1990
.5/1.50 years
y
$59.18
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 40. Upper Upscale Demand
2007 Recession 2001 Recession 1991 Recession
Millions
2007:
141.229
135
125
115 2000:
125.958
2.75/3.75 years
105
1990: .25/1.25 years
95
99.255
Trough
85
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 41. Upper Upscale Supply
1991 Recession 2001 Recession 1991 Recession
Millions
2008: 205.811
1992:
152.027
152 027 1.5/3.5
1 5/3 5 years
2002:
183.883
183 883
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 43. Upscale Occupancy
2007 Recession 2001 Recession 1991 Recession
115 2005:
70.3%
110
entage
upancy Perce
1998:
1998
105
70.8%
100
1/2 years
Indexed Occu
1994:
1994
95 73.1%
90
Trough
85
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 44. Upscale Nominal ADR
2007 Recession 2001 Recession 1991 Recession
erage Daily Rate $
R
2008:
2000: $119.62 1.5/4.5 years
$98.52
Indexed Ave
1990: .5/1.5 years
y
$68.59
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 45. Upscale Real ADR
2007 Recession 2001 Recession 2007 Recession
130
erage Daily Rate $
120
R
2008:
110 2000: $115.01 1.5/4.5 years
$95.19
$95 19
Indexed Ave
100
1990:
$64.89
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 46. Upscale Nominal RevPAR
2007 Recession 2001 Recession 1991 Recession
2007:
$81.75
1.5/4.5
1 5/4 5 years
Indexed RevPAR $
2000:
$69.30
1990: .25/1.25 years
$45.39
$45 39
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 47. Upscale Real RevPAR
2007 Recession 2001 Recession 1991 Recession
135
2007:
125
$79.42
2000:
Indexed RevPAR $
1.5/4.5 years
115 $66.95
105
1990:
95
$42.94
Trough
85
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 48. Upscale Demand
2007 Recession 2001 Recession 1991 Recession
Millions
145 2008:
108.627
135
125
115
2000:
105 82.052
95
1990:
85 37.018
75
Trough
65
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 49. Upscale Supply
2007 Recession 2001 Recession 1991 Recession
Millions
150
140
2008:
130 162.660
120
110 2004:
142.292
100
90 1991:
59.173
59 173
80
Trough
70
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 51. Midscale with F&B Occupancy
2007 Recession 2001 Recession 1991 Recession
2006:
59.5%
113
entage
110 2000: 60.3% 3/6 years
y
upancy Perce
107 1989:
62.6% 4/6 years
104
Indexed Occu
101
98
Trough
95
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 52. Midscale with F&B Nominal ADR
2007 Recession 2001 Recession 1991 Recession
125
120
erage Daily Rate $
115
R
110
2008:
2000: $88.33
105 1/4 years
Indexed Ave
$73.86
100
1991:
95 $53.25
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 53. Midscale with F&B Real ADR
2007 Recession 2001 Recession 1991 Recession
125
120
erage Daily Rate $
115
R
110
2008:
105 2000:
Indexed Ave
$84.92
$71.36
100 1/4 years
1991:
95 $50.19
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 54. Midscale with F&B Nominal RevPAR
2007 Recession 2001 Recession 1991 Recession
130
125
120 2007:
$50.57
$
115 2000:
Indexed RevPAR $
$44.55
110 3/4.5 years
105
100 1990: 1.5/2.5 years
$32.83
$32 83
95
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 55. Midscale with F&B Real RevPAR
2007 Recession 2001 Recession 1991 Recession
130
125
120 2007:
115 2000: $49.13
Indexed RevPAR $
$43.04 1.5/4.5 years
110
105
100 1990: .5/1.5 years
95 $31.06
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 56. Midscale with F&B Demand
2007 Recession 2001 Recession 1991 Recession
Millions
170
160 2005: 119.116
150
140
130
1998:
120 144.008
110 1989:
147.845
8 5 1.25/2.25 years
100
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 57. Midscale with F&B Supply
Millions 2007 Recession 2001 Recession 1991 Recession
150
2008: 201.743c
140
130
120
2000: ©NYU 2010
©NYU 2010
2000:
2000
110 228.800
228.800
1/2.5 years
100
1994:
90 243.433
Trough
80
4 3 2 1 1 2 3 4 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
- 59. Midscale Without F&B Occupancy
2007 Recession 2001 Recession 1991 Recession
115 2006: 66.10%
centage
110
1.5/5.5
1 5/5 5 years
cupancy Perc
105
1997
66.0%
Indexed Occ
100
1989: .25/2.25 years
65.9%
95
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 60. Midscale Without F&B Nominal ADR
2007 Recession 2001 Recession 1991 Recession
135
erage Daily Rate $
125
R
115
2007:
$90.19
$
Indexed Ave
105
95 2001: 1.5/2.5 years
1990:
1990 $67.51
$43.81
Trough
85
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 61. Midscale Without F&B Real ADR
2007 Recession 2001 Recession 1991 Recession
135
erage Daily Rate $
125
R
115
2008:
2008
Indexed Ave
105 $120.80
.25/1.25 years
95 1990:
$44.03
Trough
85
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 62. Midscale Without F&B Nominal RevPAR
2007 Recession 2001 Recession 1991 Recession
135
125
2007:
Indexed RevPAR $
$57.02
115
105 1.5/3.5 years
2000:
95 $41.91
$41 91
1993:
$39.21 Trough
85
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 63. Midscale Without F&B Real RevPAR
2007 Recession 2001 Recession 1991 Recession
2007:
Indexed RevPAR $
$55.40
.25/4.25 years
2000:
$40.77
$40 77 1998:
1998
$38.60 Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 64. Midscale Without F&B Demand
2007 Recession 2001 Recession 1991 Recession
Millions
190
170
150 2008:
2008
170.462
130
110 1999:
1999
116.139
90
1992:
70 49.473
Trough
50
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 65. Midscale Without F&B Supply
Millions 2007 Recession 2001 Recession 1991 Recession
2008:
273.913
1990:
59.108
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 67. Economy Occupancy
2007 Recession 2001 Recession 1991 Recession
115 2005:
2005
57.4%
centage
2000:
110
58.5% 3/6 years
y 2/5 years
y
cupancy Perc
105 1989:
64.7%
Indexed Occ
100
95
Trough
90
4 3 2 1 1 2 3 4 5 6
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 68. Economy Nominal ADR
2007 Recession 2001 Recession 1991 Recession
120
115
erage Daily Rate $
110
2008:
$54.37
105
Indexed Ave
2002:
$46.81 .75/2.75 years
100
1990:
1990 .5/4.5 years
5/4 5
$37.59 Trough
95
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 69. Economy Real ADR
2007 Recession 2001 Recession 1991 Recession
erage Daily Rate $
R
2008:
2008
Indexed Ave
$52.28
1991:
$35.56
2002: .5/1.5 years
$46.07
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 70. Economy Nominal RevPAR
2007 Recession 2001 Recession 1991 Recession
2007:
$30.62
Indexed RevPAR $
2000:
$27.54 2/3.5 years
1989: 2.25/5.25 years
$23.81
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 71. Economy Real RevPAR
2007 Recession 2001 Recession 1991 Recession
2007:
$29.74
$29 74
2000:
Indexed RevPAR $
$26.60 1.5/4.5
years
1.75/4.75 years
1989:
$22.65
$22 65
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 72. Economy Demand
Millions 2007 Recession 2001 Recession 1991 Recession
150 2007: 153.392
2007 153 392
140
130
120
2000:
110 153.481 4/6 years
100
1990:
90 115.785
80
Trough
70
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 73. Economy Supply
2007 Recession 2001 Recession 1991 Recession
Millions
2008: 274.449
130
120
110 2002:
271.002
100
1990: 1/1.5 years
90 183.024
80
70 Trough
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 76. Top 25 Markets Occupancy
2007 Recession 2001 Recession 1991 Recession
113 2007:
68.02% 2/5 years
centage
110
2000:
cupancy Perc
68.74%
%
107
2/4.25 years
104
1990:
Indexed Occ
66.28%
101
98
Trough
95
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 77. U.S. Top 25 Markets Nominal ADR
2007 Recession 2001 Recession 1991 Recession
135
125
erage Daily Rate $
R
2007:
115
2000: $123.36 1.5/4.5
$99.45 years
Indexed Ave
105
95 1990:
$68.02
Trough
85
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 78. U.S. Top 25 Markets Real ADR
2007 Recession 2001 Recession 1991 Recession
140
130
erage Daily Rate $
R
120
2007:
2000:
2000 1.25/4.25
1 25/4 25
Indexed Ave
110 $118.61 years
$96.09
100
1990:
$64.35 Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 79. U.S. Top 25 Markets Nominal RevPAR
2007 Recession 2001 Recession 1991 Recession
140
130
2007:
2007
2000: $84.86 1.5/4.5 years
Indexed RevPAR $
120 $70.99
110 1991:
$45.82
100 .75/1.75 years
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 80. U.S. Top 25 Markets Real RevPAR
2007 Recession 2001 Recession 1991 Recession
140
130
2007: 1.75/4.75
2000:
120 $81.82
Indexed RevPAR $
$68.59 years
110
100 .5/1.50 years
y
1990:
$43.35 Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 81. U.S. Top 25 Markets Demand
2007 Recession 2001 Recession 1991 Recession
Millions
190 2000:
43.821
170 1990:
32.405
150
130
110
2007:
90
29.113
Trough
70
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 82. U.S. Top 25 Markets Supply
2007 Recession 2001 Recession 1991 Recession
Millions
110
105
1991:
2000: 32.5101
100
38.982
38 982
95
2007:
40.756
90 Trough
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 85. Top 25 Markets and Total U.S. Occupancy
Total U.S. 2007 Total U.S. 2001 Total U.S. 1991
Top 25 2007 Top 25 2001 Top 25 1991
115
centage
110
cupancy Perc
105
Indexed Occ
100
Trough
95
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research
©NYU 2010
- 86. Top 25 Markets and Total U.S. Nominal RevPAR
Total U.S. 2007
S Total U.S. 2001
S Total U.S. 1991
S
Top 25 2007 Top 25 2001 Top 25 1991
Indexed RevPAR $
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
- 87. Top 25 Markets and Total U.S. Nominal ADR
Top 25 2001 Total U.S. 2001 Total U.S. 1991
Total U.S. 2007 Top 25 2001 Top 25 1991
130
erage Daily Rate $
R
120
Indexed Ave
110
100
Trough
90
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
- 88. Top 25 Markets and Total U.S. Demand
Total U.S. 2007 Total U.S. 2001 Total U.S. 1991
Millions Top 25 2007 Top 25 2001 Top 25 1991
190
170
150
130
110
90
Trough
70 Trough
4 3 2 1 1 2 3 4 5 6 7
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
- 89. Top 25 Markets and Total U.S. Supply
Total U.S. 2007 Total U.S. 2001 Total U.S. 1991
Millions Top 25 2007 Top 25 2001 Top 25 1991
Trough
Trough
Years Prior to Trough Years Post Trough
Source: Smith Travel Research ©NYU 2010
- 90. Total U.S. and Top 25 Market Supply Change
Total U.S. and Top 25 Market Supply Change
Top 25 Markets Total U.S.
6
5
4
3
2
1
0
1988 1991 1994 1997 2000 2003 2006
-1
Source: Smith Travel Research and PricewaterouseCoopers ©NYU 2010
- 92. Chain Scale Segment Recovery
First to Recover 1991 Recession
Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPAR
Luxury Luxury Luxury Luxury
Midscale w/o F&B Economy Upscale Upper Upscale
Last to Recover 1991 Recession
Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPAR
Midscale w/F&B Midscale w/F&B Midscale w/F&B
Upscale Upper Upscale Economy
First to Recover 2001 Recession
Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPAR
Midscale w/o F&B Midscale w/F&B Midscale w/o F&B Upscale Midscale w/o F&B
Economy Midscale w/F&B Upper Upscale
Last to Recover 2001 Recession
Occupancy Nominal ADR Real ADR Nominal RevPAR Real RevPAR
Upper Upscale Midscale w/o F&B Upper Upscale Luxury Economy
Upper Upscale
©NYU 2010
- 93. Top 25 Market & Total US Recovery
First to Recover 1991 Recession
Occupancy Nominal ADR Nominal RevPAR
Top 25 Markets Total US Top 25 Markets
First to Recover 2001 Recession
Occupancy Nominal ADR Nominal RevPAR
Top 25 Markets Total US Top 25 Markets
©NYU 2010
- 95. Demand Segments – Cycle and Recoveries
Order of decline in demand
• Business/Commercial
• Group/Convention
• SMERF
• Leisure
Percentage decline of demand
• Group/Convention
• /
Business/Commercial
• SMERF
• Leisure
Duration to Recovery (first to last)
Duration to Recovery (first to last)
• Leisure
• SMERF
• B i
Business/commercial
/ i l
• Group/ Convention
©NYU 2010
- 96. Perverse Math
Perverse Math
Average Daily Rate
Average Daily Rate $200
50 percent decline
50 percent decline $100
50 percent increase $
$150
©NYU 2010
- 98. 1. Long term RevPAR +3.1 percent
2. U.S. RevPAR peaked 2007 $63.75
3. Assumed RevPAR trough 2010 $53.40
If RevPAR were to increase by 3.1 percent,
If RevPAR were to increase by 3.1 percent,
recovery to 2007 levels would be 2017 (worst
case)
4. U.S. RevPAR recovery has averaged 7.57
percent for 4 years post trough (since 1968)
percent for 4 years post trough (since 1968)
If RevPAR were to increase by 7.57 percent for
four years, 3.1 percent thereafter, recovery to
four years 3 1 percent thereafter recovery to
2007 levels would be 2013 (best case)
©NYU 2010
- 100. 2009 – 2010 U.S. Lodging RevPAR Forecasts
g g
Source
S 2010 2011
Smith Travel Research ( )
(3.2) 4.2
PKF Research (1.3) 5.9
PricewaterhouseCoopers (1.5)
*Forecasts as of February 13, 2010
Source: Individual organizations ©NYU 2010
- 103. Demand Elasticity and Correlation
to Real GDP
1987 value = 100
180
170
US Real GDP
160
150
140
130
Lodging Demand
120 (Room Nights Sold)
110
100
87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08
Sources: Lodging demand –– PricewaterhouseCoopers LLP based on Smith Travel Research data; Real GDP- U.S.
Sources: Lodging demand PricewaterhouseCoopers LLP based on Smith Travel Research data; Real GDP- U.S.
Bureau of Economic Analysis; Air travel demand - Air Transport Association.
Bureau of Economic Analysis; Air travel demand - Air Transport Association. ©NYU 2010
- 105. Long‐Term Occupancy Levels and Profits
Income Before Income Taxes, Billions of Dollars Occupancy Percentage
$30 68%
66%
$25
64%
$20
62%
$15
60%
$10 58%
56%
$5
54%
$0
52%
($5) Aggregate Profits Occupancy 50%
($10) 48%
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Note: STR Smith Travel Research
Sources: change in method in 2002
Sources: Smith Travel Research, 2009 NYU Tisch Center Estimate ©NYU 2010
- 106. U.S. Lodging Industry Net Income as a
Ratio to Revenue
R ti t R
25
20
15
10
5
0
87 89 91 93 95 97 99 01 03 05 07 09
Sources: Smith Travel Research, 2009 NYU Tisch Center Estimate ©NYU 2010
- 108. 1. Lodging Industry forecasts are more challenging now
than ever before – record revisions
2. “Comparable” recessions and long term trends indicate
this “recovery” will be longer and less robust than
thi “ ” ill b l dl b t th
average
3. The U.S. Lodging Industry spends more time in declines
3 The U S Lodging Industry spends more time in declines
than in recoveries
4. During declines, occupancy usually precedes average
g p y yp g
daily rate
During recoveries, occupancy usually precedes average
daily rate
5. Industry RevPAR is unlikely to recover to 2007 levels until
2013 or later
2013 or later
©NYU 2010
- 109. 6. Luxury and Upper Upscale demand has declined during
all recessions, Economy during all but one recession
Upscale and Midscale without Food and Beverage
demand declined only during the current recession
demand declined only during the current recession
Midscale with Food and Beverage has experienced a long
term trend of demand decline
term trend of demand decline
7. The Top 25 Markets are much more volatile than the U.S.
with earlier and greater declines, but frequently with
earlier and stronger recoveries
l d
8. Luxury may experience a favorable percentage increase,
but is likely to be among the last to recover
but is likely to be among the last to recover
9. Upscale and Midscale without Food and Beverage will
likely emerge as stronger performers based on
absolute performance levels
b l t f l l
©NYU 2010
- 110. 10. Leisure demand will remain favorable but is based on
discounting especially for Luxury
di ti i ll f L
11. Group/convention demand is likely to recover after
/
business/commercial
12. It is probable that there will be a structural resetting of
lodging demand – less demand relative to GDP
13. It is probable that the industry will emerge with
13 It i b bl th t th i d t ill ith
structural resetting of profitability – higher profit
p y
levels relative to occupancy and RevPAR
©NYU 2010
- 111. NYU Tisch Center Programs
Undergraduate Degrees:
Undergraduate Degrees:
‐ B.S. in Hotel and Tourism Management
‐ B.S. in Sports Management
Graduate Degrees and Graduate Certificates:
‐ M.S. Hospitality Industry Studies
‐ M.S. Sports Business
‐ M.S. Tourism and Travel Management
Continuing Education and Professional Certificates:
‐ Food and Beverage Operations
Food and Beverage Operations
‐ Hotel Operations
‐ Meeting, Conference, and Event Management
For additional information: www.scps.nyu.edu/tischcenter
©NYU 2010
- 112. 32nd Annual NYU International
Hospitality Industry
Investment Conference
June 6 - 8, 2010
Hosted by the New York University Preston Robert Tisch Center
for Hospitality, Tourism, and Sports Management
Hospitality Tourism
Location: The New York Marriott Marquis, New York City
ocat o e e o a ott a qu s, e o C ty
For additional information: www.nyu.edu/hospitalityconference
©NYU 2010
- 113. NEW YORK UNIVERSITY
School of Continuing and
Professional Studies
Preston R b t Ti h C t f
P t Robert Tisch Center for
Hospitality, Tourism, and Sports Management
The U S E
Th U.S. Economic Recovery:
i R
Chain Scale Segments,
Top 25 Markets,
Demand Segments and Profits
The Fourth in a Series of
NYU Tisch Center Economic Briefings
February 2010
©NYU 2010