1. No category

2011
Southern California
Lodging Forecast
Presented by:
Bruce Baltin, Senior Vice President
Mark Van Stekelenburg, Vice President
Brandon Feighner, Associate
COLLIERS PKF CONSULTING
Los Angeles, CA
.
Expectations…..Uncertainty
1. Macro Overview
2. 2011Southern California
Lodging Forecast
3. Q & A
2
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
3
Current Forecast – September 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
?
Source: Colliers PKF Hospitality Research – September-November 2010 Hotel Horizons® Report, Smith Travel Research
4
National Horizon
September 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
5
National Hotel Horizons
(Preliminary 2011 Data)
National vs. Regional Lodging Comparison
2010 Year-End Estimates
Occ
ADR
RevPA
R
United States
57.5%
$97.33
$55.93
4.6%
Los Angeles
County
68.9%
$119.17
$82.12
7.2%
Orange County
67.7%
$108.58
$73.51
2.4%
San Diego County
66.9%
$125.18
$83.76
2.7%
Location
%Increas
e
Source: Colliers PKF Hospitality Research – Preliminary 2011 Hotel Horizons® Report, Smith Travel Research
6
National Hotel Horizons
(Preliminary 2011 Data)
National vs. Regional Lodging Comparison
2011 Year-End Forecasts
Occ
ADR
RevPA
R
United States
58.7%
$100.98
$59.32
5.9%
Los Angeles
County
71.5%
$124.77
$89.17
8.6%
Orange County
68.6%
$114.29
$78.45
6.7%
San Diego County
69.8%
$132.97
$92.87
10.9%
Location
%Increas
e
Source: Colliers PKF Hospitality Research – Preliminary 2011 Hotel Horizons® Report, Smith Travel Research
7
Recovery Timelines Mixed Across
Markets:
Distance to Long Run Average Occupancy Level
2010
2011
2012
2013
2014
Source: Colliers PKF Hospitality Research – September-November 2010 Hotel Horizons® Report, Smith Travel Research
8
Recovery Timelines Mixed Across Markets:
Year When ADR Levels Return to Previous Peak
2010
2011
2012
2013
2014
Source: Colliers PKF Hospitality Research – September-November 2010 Hotel Horizons® Report, Smith Travel Research
9
Recovery Timelines Mixed Across Markets:
Year When Nominal RevPAR Returns to Previous Peak
2010
2011
2012
2013
2014
Source: Colliers PKF Hospitality Research – September-November 2010 Hotel Horizons® Report, Smith Travel Research
10
Revenue & Expenses
2009 Annual Trends®
The worst year on record
is now behind us!
11
Summary
Headwinds Against the Economy – Uncertainty:
* The November elections
* Tax policy as of January 1, 2011
* Persistent high levels of unemployment
* Continued weakness in housing
* Airline capacity constraints
Forecast bias = slight negative.
12
Los Angeles County
Los Angeles County 2010
Historical Market Performance of the Competitive Supply
Year
2005
2006
2007
2008
2009
Annual
Supply
35,323,605
35,607,575
35,178,700
34,804,210
36,215,440
Percent
Change
N/A
1.5%
0.8
-1.2
4.1
Occupied
Rooms
26,754,099
27,475,833
27,003,018
25,863,600
24,402,840
Percent
Change
N/A
2.7%
-1.7
-4.2
-5.6
Market
Occupancy
75.7%
77.2
76.8
74.3
67.4
Average
Daily Rate
$136.89
153.54
165.88
170.74
151.45
Percent
Change
N/A
12.2%
8.0
2.9
-11.3
REVPAR
$103.68
118.48
127.33
126.88
102.05
Percent
Change
N/A
14.3%
7.5
-0.4
-19.6
2010 E
2011 F
37,402,023
37,674,414
3.3
0.7
26,876,082
27,438,387
10.1
2.1
71.9
72.8
152.23
160.95
0.5
5.7
109.39
117.22
7.2
7.2
CAAG
1.1%
0.4%
2.7%
2.1%
Source: Colliers PKF Consulting
•
JW Marriott/Ritz LA Live fully absorbed into downtown market, inducing
additional demand – 24.8% RevPAR growth estimated for 2010
•
Westside showing strong occupancy recovery, rate following.
•
West Hollywood, Hollywood, and West LA has a number of newly renovated
hotels, poised for recovery.
Los Angeles County
•
Santa Monica submarket expected to achieve highest 2010 submarket
occupancy, followed by LAX and Arcadia/Monrovia.
•
281,000 definite and tentative room nights on the 2011 convention calendar,
300,000+ for 2012 and 2013 as LA Inc and Downtown drive new business.
•
2009 openings include AVIA Long Beach Hotel with 138 guestrooms and the
178-room Residence Inn, as well as the June 2009 opening of the 582-room
Terranea.
•
2010 openings include JW Marriott and Ritz LA Live, the W Hollywood, and the
re-opening of Best Western Jamaica Bay in Marina Del Rey in December.
•
No openings expected for 2011.
Orange County
Orange County
Historical Market Performance of the Competitive Supply
Year
2005
2006
2007
2008
2009
Annual
Supply
17,192,230
18,214,595
18,976,715
19,139,823
19,463,908
Percent
Change
N/A
5.9%
4.2
0.9
1.7
Occupied
Rooms
12,326,014
13,245,130
13,825,532
13,580,431
12,520,143
Percent
Change
N/A
7.5%
4.4
-1.8
-7.8
Market
Occupancy
71.7%
72.7
72.9
71.0
64.3
Average
Daily Rate
$104.69
118.16
128.17
128.16
115.51
Percent
Change
N/A
12.9%
8.5
0.0
-9.9
REVPAR
$75.06
85.92
93.38
90.94
74.30
Percent
Change
N/A
14.5%
8.7
-2.6
-18.3
2010 E
2011 F
19,701,945
19,729,358
1.2
0.1
13,501,934
13,848,941
7.8
2.6
68.5
70.2
113.35
118.82
-1.9
4.8
77.68
83.41
4.6
7.4
CAAG
2.3%
2.0%
2.1%
1.8%
Source: Colliers PKF Consulting
•
Affordable, accessible leisure destinations out performed all other
market segments (Anaheim)
•
SNA passenger counts down 3.8% year-to-date, but well positioned for
future years given current $0.5 billion expansion
•
Convention Center activity remains robust
•
Recent passage of 2% TID in Anaheim Resort Area
Orange County
• Coastal resorts achieving significant RevPAR recovery
• Costa Mesa and Airport submarkets posting highest 2010 occupancies
• Disneyland Resort continues to be a driving force for hotel demand
• Expansion/Renovation of the Grand Californian & Disneyland Hotel
• $1 Billion expansion of California Adventure
• SpringHill Suites Anaheim opening in mid-2011
(NE of Disneyland SEC Ball & Walnut)
• Only addition to supply, But the immediate Anaheim Area remains the most
studied area in the County for proposed hotels
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San Diego County
San Diego County
Historical Market Performance of the Competitive Supply
Year
2005
2006
2007
2008
2009
Annual
Supply
11,500,420
11,676,761
11,858,850
12,244,412
12,974,655
Percent
Change
N/A
1.5%
1.6
3.3
6.0
Occupied
Rooms
8,632,244
8,829,077
8,894,775
8,819,188
8,601,369
Percent
Change
N/A
2.3%
0.7
-0.8
-2.5
Market
Occupancy
75.1%
75.6
75.0
72.0
66.3
Average
Daily Rate
$149.82
161.70
171.95
174.98
151.58
Percent
Change
N/A
7.9%
6.3
1.8
-13.4
REVPAR
$112.46
122.27
128.97
126.03
100.49
Percent
Change
N/A
8.7%
5.5
-2.3
-20.3
2010 E
2011 F
13,183,435
13,221,030
1.6
0.3
9,175,595
9,504,970
6.7
3.6
69.6
71.9
147.64
156.00
-2.6
5.7
102.76
112.14
2.3
9.1
CAAG
2.4%
1.6%
0.7%
0.0%
Source: Colliers PKF Consulting
- Only new addition for 2011 is Hampton Inn Mission Valley in December2011/
January2012 (87 keys)
- Marriott Escondido still on hold
- 94-room Towne Place Vista and the 112-room Residence Inn San Marcos,
both of which opened mid-2010 in I-15 Kearny Mesa market
- Compression markets such as Mission Valley and South Bay posting slower
recovery
San Diego County
• Downtown on its ways to absorbing 1,500 rooms annualized in 2009, including
the Hilton, Se, and Residence Inn Gaslamp, market expected to reach 75% by
2011
• Other Changes in supply
• Projects in pipeline still year+ away from breaking ground
• Convention Center expansion lease still active, plans for $753 million
expansion
• Narco-terrorism and continued economic pressure drives demand from Mexico
and other resort locations to SoCal.
18
Inland Empire
Year
2005
2006
2007
2008
2009
Annual
Supply
2,002,390
2,245,480
2,344,030
2,483,825
2,725,455
Percent
Change
N/A
12.1%
4.4
6.0
9.7
2010 E
2011 F
2,814,515
2,892,990
3.3
2.8
CAAG
6.3%
Inland Empire
Historical Market Performance of the Competitive Supply
Occupied
Percent
Market
Average
Rooms
Change
Occupancy
Daily Rate
1,485,862
N/A
74.2%
$92.54
1,623,821
9.3%
72.3
98.97
1,674,191
3.1
71.4
101.14
1,629,444
-2.7
65.6
99.80
1,557,313
-4.4
57.1
87.50
1,721,681
1,807,765
10.6
5.0
61.2
62.5
3.3%
82.11
83.42
-1.7%
Percent
Change
N/A
7.0%
2.2
-1.3
-12.3
REVPAR
$68.67
71.57
72.24
65.47
49.99
Percent
Change
N/A
4.2%
0.9
-9.4
-23.6
-6.2
1.6
50.23
52.13
0.5
3.8
-4.5%
Source: Colliers PKF Consulting
•
•
•
•
•
•
Greater impact as a result of reliance mainly on commercial demand
Rate wars and lack of product differentiation lead to depressed Average
Daily Rates
Significant supply added in 2005-2009 still being absorbed and will
lengthen recovery period
Airlift remains contentious; Ontario exploring plans to take over
But 2010 WILL exhibit positive growth for the 1st time since 2007
Short term, will be painful, but long-term fundamentals remain in tact as
it is the only market for real growth in SoCal
Coachella Valley
Year
2005
2006
2007
2008
2009
Annual
Supply
3,422,088
3,353,955
3,272,590
3,509,597
3,736,642
Percent
Change
N/A
-2.0%
-2.4
7.2
6.5
2010 E
2011 F
3,787,970
3,796,000
1.4
0.2
CAAG
1.7%
Coachella Valley Market
Historical Market Performance of the Competitive Supply
Occupied
Percent
Market
Average
Rooms
Change
Occupancy
Daily Rate
2,179,480
N/A
63.7%
$135.90
2,180,476
0.0%
65.0
143.81
2,008,832
-7.9
61.4
150.14
2,018,203
0.5
57.5
147.44
1,884,957
-6.6
50.4
133.81
1,926,154
2,015,385
2.2
4.6
50.8
53.1
-1.3%
128.20
132.58
-0.4%
Percent
Change
N/A
5.8%
4.4
-1.8
-9.2
REVPAR
$86.55
93.50
92.16
84.79
67.50
Percent
Change
N/A
8.0%
-1.4
-8.0
-20.4
-4.2
3.4
65.19
70.39
-3.4
8.0
-3.4%
Source: Colliers PKF Consulting
•
•
•
•
•
•
Three Distinct Markets - Based on quality and level of facilities
(Down Valley Resorts, Palm Springs/Cathedral City and other Limited-Service)
Dependency on tourism and group demand has resulted in lower occupied rooms,
discounted rates, and clever packaging
Continued RevPAR decline estimated for 2010, slower rate turnaround projected
than other SoCal markets
Convention Calendar looks promising with 100K+ Room Nights for 2010 & 2011
The group market should be returning in time for the 2011 peak season, which it
missed in 2009 and 2010
At long last, The Ritz Carlton will be reopening…
Ventura County
Ventura County
Historical Market Performance of the Competitive Supply
Year
2005
2006
2007
2008
2009
Annual
Supply
1,508,180
1,574,610
1,603,810
1,620,965
1,574,610
Percent
Change
N/A
4.4%
1.9
1.1
-2.9
Occupied
Rooms
1,011,029
1,085,348
1,080,962
1,069,734
983,532
Percent
Change
N/A
7.4%
-0.4
-1.0
-8.1
Market
Occupancy
67.0%
68.9
67.4
66.0
62.5
Average
Daily Rate
$ 93.19
98.27
102.81
103.21
98.32
Percent
Change
N/A
5.4%
4.6
0.4
-4.7
REVPAR
$62.47
67.74
69.29
68.11
61.41
Percent
Change
N/A
8.4%
2.3
-1.7
-9.8
2010 E
2011 F
1,634,835
1,650,530
3.8
1.0
1,079,374
1,126,798
9.7
4.4
66.0
68.3
98.04
100.73
-0.3
2.8
64.73
68.77
5.4
6.2
CAAG
1.5%
1.8%
1.3%
1.6%
Source: Colliers PKF Consulting
•
Competitively priced coastal destination resulted in one of the smaller 2008/09
declines in Southern California
•
Leading SoCal markets in growth in occupied rooms for 2010
•
Upward positioning of properties to maintain rate positioning
Santa Barbara County
Year
2005
2006
2007
2008
2009
2010 E
2011 F
CAAG
•
•
•
•
•
Annual
Supply
1,853,835
1,860,040
1,856,025
1,880,480
1,939,975
1,950,925
1,950,925
0.9%
Percent
Change
N/A
0.3%
-0.2
1.3
3.2
0.6
0.0
Santa Barbara County
Historical Market Performance of the Competitive Supply
Occupied
Percent
Market
Average
Rooms
Change
Occupancy
Daily Rate
1,318,299
N/A
71.1%
$153.39
1,329,952
0.9%
71.5
171.75
1,321,922
-0.6
71.2
183.05
1,305,699
-1.2
69.4
182.47
1,239,684
-5.1
63.9
168.84
1,310,981
5.8
67.2
171.25
1,356,617
3.5
69.5
178.37
0.5%
2.5%
Source: Colliers PKF Consulting
Percent
Change
N/A
12.0%
6.6
-0.3
-7.5
1.4
4.2
REVPAR
$109.08
122.81
130.38
126.70
107.89
115.08
124.03
2.2%
Set represents approximately 60% of Santa Barbara supply
Coastal Resorts leading recovery, return in group market.
High barriers to new hotel development, increased by economic pressure
Significant renovations at several properties has mitigated decline
North county has benefited from drive in vacations
Percent
Change
N/A
12.6%
6.2
-2.8
-14.8
6.7
7.8
San Luis ObispoCounty
Year
2005
2006
2007
2008
2009
Annual
Supply
1,216,180
1,312,540
1,417,660
1,503,800
1,522,780
Percent
Change
N/A
7.9%
8.0
6.1
1.3
San Luis Obispo Combined
Historical Market Performance of the Competitive Supply
Occupied
Percent
Market
Average
Rooms
Change
Occupancy
Daily Rate
837,192
N/A
68.8%
$116.49
862,430
3.0%
65.7
128.03
943,524
9.4
66.6
131.06
983,710
4.3
65.4
129.20
951,546
-3.3
62.5
125.27
2010 E
2011 F
1,541,760
1,569,865
1.2
1.8
970,276
999,384
CAAG
4.3%
Source: Colliers PKF Consulting
2.0
3.0
3.0%
62.9
63.7
123.77
127.95
1.6%
Percent
Change
N/A
9.9%
2.4
-1.4
-3.0
REVPAR
$80.19
84.12
87.23
84.51
78.28
Percent
Change
N/A
4.9%
3.7
-3.1
-7.4
-1.2
3.4
77.89
81.45
-0.5
4.6
0.3%
• Popular drive destination for both Southern and Northern California achieved
smallest decline of any SoCal market
• Approximately 82% visitors arrive by automobile according to San Luis Obispo
CVB – minimized impact of declining airline inventory
• Lower starting RevPAR basis – 2007/08 increases in supply still being absorbed
Coastal Market
Coastal Market
Historical Market Performance of the Competitive Supply
Year
2005
2006
2007
2008
2009
Annual
Supply
2,458,701
2,478,411
2,531,427
2,669,488
2,975,358
Percent
Change
N/A
0.8%
2.1
5.5
11.5
Occupied
Rooms
1,701,051
1,748,223
1,782,824
1,789,490
1,703,819
Percent
Change
N/A
2.8%
2.0
0.4
-4.8
Market
Occupancy
69.2%
70.5
70.4
67.0
57.3
Average
Daily Rate
$279.37
305.06
325.58
328.37
284.46
Percent
Change
N/A
9.2%
6.7
0.9
-13.4
REVPAR
$193.28
215.18
229.29
220.12
162.90
Percent
Change
N/A
11.3%
6.6
-4.0
-26.0
2010 E
2011 F
3,086,501
3,086,501
3.7
0.0
1,930,887
2,023,424
13.3
4.8
62.6
65.6
282.35
296.07
-0.7
4.9
176.64
194.10
8.4
9.9
CAAG
3.9%
2.9%
1.0%
0.1%
Source: Colliers PKF Consulting
•
“First Tier ($400+) highest 2010 RevPAR growth estimate at 24.8%, Tier 3 at 7.4%
(>$275) and Tier 2 -0.8% ($275<--<$400)
•
Recent additions include
2007 - Grand Del Mar
2008 - Sheraton Carlsbad and Pelican Hill Resort
2009 - Shorebreak Hotel in Huntington Beach and the Terranea Resort in Rancho
Palos Verdes.
No new hotels opened in 2010 or are expected to in 2011.
-
Coastal Submarkets
• Group demand starting to return, strong ADR growths
expected in 2011, with First Tier leading the way.
• Coastal SoCal continues to develop as a self-standing
international group and leisure destination.
• Significant additions to supply from 2005 to 2009 still being
absorbed, but the good news is there is little in the pipeline
Q&A
What questions can we answer for you?
Thank you for your time.
27