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Recent Economic and Value Trends for the U.S. Lodging Industry. Presented by: Stephen Rushmore, MAI, CHA President and Founder HVS International 516-248-8828 ext. 204 [email protected] www.hvsinternational.com. Hotel Value Trends - USA . 1994. 1995. 1996. 1997. Per Room Value.

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Recent Economic and Value Trendsfor the U.S. Lodging Industry

Presented by:Stephen Rushmore, MAI, CHAPresident and FounderHVS International516-248-8828 ext. [email protected]


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Hotel Value Trends - USA

1994

1995

1996

1997

Per Room Value

$34,000

$44,000

$52,000

$67,000

Percentage Change

23%

28%

19%

28%

Per Room Change

$6,000

$10,000

$8,000

$15,000

1998

1999

2000

2001

Per Room Value

$67,000

$68,000

$80,000

$61,000

Percentage Change

0%

1%

17%

-23%

Per Room Change

$0

$1,000

$12,000

($19,000)

2002

2003

2004

2005

Per Room Value

$58,000

$63,000

$69,000

$81,000

Percentage Change

-5%

7%

10%

18%

Per Room Change

($3,000)

$5,000

$6,000

$12,000


Value per room 2002 l.jpg

1. New York $223,000

2. Las Vegas $187,000

3. Oahu $174,000

4. San Diego $133,000

5. San Francisco $132,000

6. San Antonio $122,000

7. New Orleans $120,000

8. Long Island $103,000

9. Sacramento $ 96,000

10. Boston $ 96,000

Value Per Room - 2002

21. United States $ 58,000

Source: HVS International


Change in value per room l.jpg

1. New York ($159,000)

2. San Francisco ($113,000)

3. Boston ($ 87,000)

4. San Jose ($ 82,000)

5. Chicago ($ 46,000)

6. Oahu ($ 41,000)

7. Oakland ($ 34,000)

8. Austin ($ 32,000)

9. Orlando ($ 32,000)

Dallas ($ 28,000)

Change in Value Per Room

2001

2002

1. San Jose ($62,000)

2. San Francisco ($62,000)

3. Oakland ($40,000)

4. Boston ($33,000)

5. Long Island ($30,000)

6. Austin ($21,000)

7. Chicago ($18,000)

8. Miami ($13,000)

9. Houston ($13,000)

10. New York ($13,000)

18. United States ($ 18,000)

31. United States ($ 3,000)

Source: HVS International


Change in value per room5 l.jpg

37. Memphis($5,033)

38. Anaheim($4,619)

39. Jacksonville($3,951)

40. Albuquerque($2,659)

41. San Antonio ($1,942)

42. Tampa($1,566)

43. Las Vegas($1,390)

44. Sacramento($1,240)

45. Salt Lake City($ 642)

46. Houston $6,838

Change in Value Per Room

2001

2002

37. Orlando $ 1,403

38. Jacksonville $ 1,666

39. San Diego $ 2,015

40. Sacramento $ 2,147

41. Philadelphia $ 7,544

42. Las Vegas $ 8,478

43. Baltimore $10,407

44. Oahu $11,119

45. San Antonio $19,506

46. Salt Lake City $34,292

Source: HVS International


Change in value per room 2001 2002 l.jpg

1. San Francisco ($175,000)

2. New York ($172,000)

3. San Jose ($144,000)

4. Boston ($120,000)

5. Oakland ($ 74,000)

6. Chicago ($ 64,000)

7. Austin ($ 52,000)

8. Long Island ($ 47,000)

9. Dallas ($ 39,000)

Miami ($ 34,000)

Change In Value Per Room – 2001 & 2002

37. Houston ($ 6,000)

38. St. Louis ($ 5,000)

39. Memphis ($ 4,000)

40. Albuquerque ($ 3,000)

41. Jacksonville ($ 2,000)

42. Baltimore ($ 500)

43. Sacramento $ 1,000

44. Las Vegas $ 7,000

45. San Antonio $ 18,000

46. Salt Lake City $ 34,000

24. United States ($ 21,000)

Source: HVS International


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1988198919901991

26 17 34 32

1992199319941995

11 13 6 3

1996199719981999 11 4 22 26

2000200120022003 10 45 32 16

Number of Markets With Decline in Value

Based on 47 Markets


Comparison of per room change in two downturn markets l.jpg

1. New York ($99,840)

2. Long Island($38,888)

3. Boston($33,261)

4. Los Angeles ($28,565)

5. Washington,DC($24,385)

6. Las Vegas($20,210)

7. Baltimore($17,703)

8. San Jose($17,338)

9. San Diego($16,798)

10. Oahu($16,323)

14. USA($12,840)

Comparison of Per Room Change in Two Downturn Markets

Per Room1989-1991

Per Room2000-2002

1. San Francisco($175,425)

2. New York($172,097)

3. San Jose($144,206)

4. Boston($120,361)

5. Oakland($ 73,692)

6. Chicago($ 64,358)

7. Austin($ 52,454)

8. Long Island($ 47,018)

9. Dallas($ 39,272)

10. Miami($ 33,952)

14. USA($ 21,240)

Source: HVS International


Comparison of per room change in two downturn markets9 l.jpg

37 Salt Lake City $ 4,352

38. Dallas $ 4,906

39. Albuquerque $ 5,503

40. Portland $ 5,767

41. San Antonio $ 7,308

42. Minneapolis $ 7,869

43. Denver $10,026

44. New Orleans $11,339

45. Austin $15,883

46. Houston $16,244

Comparison of Per Room Change in Two Downturn Markets

Per Room1989-1991

Per Room2000-2002

  • Houston ($ 5,975)

    38. St. Louis ($ 5,263)

    39. Memphis ($ 3,866)

    40. Albuquerque ($ 2,895)

    41. Jacksonville ($ 2,285)

    42. Baltimore ($ 442)

    43. Sacramento $ 901

    44. Las Vegas $ 7,088

    45. San Antonio $ 17,564

    46. Salt Lake City $ 33,650

Source: HVS International


Change in value per room 2002 2006 l.jpg

1. New York $149,000

2. Oahu $140,000

3. San Francisco $109,000

4. San Diego $ 90,000

5. Las Vegas $ 86,000

6. Washington, DC $ 69,000

7. San Antonio $ 68,000

8. Long Island $ 64,000

9. Miami $ 62,000

San Jose $ 58,000

Change in Value Per Room – 2002 - 2006

37. Denver $18,000

38. Oakland $15,000

39. Ft. Lauderdale $13,000

40. Charlotte $11,000

41. Cincinnati $ 8,000

42. Salt Lake City $ 6,999

43. Austin $ 4,000

44. Dallas $ 4,000

45. Cleveland $ 4,000

46. Detroit $ 3,000

18. United States $ 38,000

Source: HVS International


Percent change in value 2002 2006 l.jpg

1. Pittsburgh 226%

2. Nashville 180%

3. Chicago 179%

4. Portland 165%

5. Albuquerque 158%

6. Kansas City 130%

7. Cincinnati 117%

8. Minneapolis 104%

9. Los Angeles 86%

Indianapolis 85%

Percent Change in Value 2002 - 2006

37. Sacramento 42%

38. New Orleans 40%

39. Boston 37%

40. Ft. Lauderdale 30%

41. Oakland 25%

42. Dallas 24%

43. Cleveland 21%

44. Detroit 13%

45. Salt Lake City 8%

46. Austin 7%

25. United States 65%

Source: HVS International


Number of years for values to recover to 2000 levels l.jpg

1. Las Vegas 2

2. San Antonio 2

3. Sacramento 2

4. Salt Lake City 2

5. San Diego 3

6. Baltimore 3

7. Jacksonville 3

8. Oahu 4

9. St. Louis 4

10. Memphis 4

16. United States 5

Number of Years for Values to Recover to 2000 Levels

30. New York 7+

31. San Francisco 7+

32. Boston 7+

33. San Jose 7+

34. Austin 7+

35. Oakland 7+

36. Ft. Lauderdale 7+

37. Denver 7+

38. Atlanta 7+

39. Cleveland 7+

40. Chicago 7+

41. Dallas 7+

42. Charlotte 7+

43. Detroit 7+

44. Cincinnati 7+

Source: HVS International


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Replacement Costs vs. Value per Room

Luxury Market Segment

300,000

250,000

200,000

Luxury

150,000

Replacement Cost

100,000

50,000

0

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006


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Replacement Costs vs. Value per Room

Upscale Market Segment

140,000

120,000

100,000

80,000

Upscale

Replacement Cost

60,000

40,000

20,000

0

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006


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Replacement Costs vs. Value per Room

Midprice Market Segment

100,000

90,000

80,000

70,000

60,000

Midprice

50,000

Replacement Cost

40,000

30,000

20,000

10,000

0

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006


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Replacement Costs vs. Value per Room

Economy Market Segment

70,000

60,000

50,000

40,000

Economy

Replacement Cost

30,000

20,000

10,000

0

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006


Slide17 l.jpg

% Change % Change AR/CPIYearOccupancyAv RateCPIIndex

1975 64%

1976 66% 8.2% 5.7% 1.44

1977 67% 8.1% 6.5% 1.25

1978 70% 14.0% 7.7% 1.82

1979 72% 17.0% 11.3% 1.50

1993 63%

1994 65% 3.8% 2.6% 1.46

1995 65% 4.8% 2.8% 1.71

1996 65% 6.5% 3.0% 2.17

1997 64% 5.9% 2.3% 2.57

1998 64% 4.6% 1.6% 2.88

Source: Smith Travel Research


Ten largest sales by price per room in 2002 l.jpg
Ten Largest Sales by Price per Room in 2002

# of PriceIndividualHotelLocationRoomsperRoomBuyer

Montage Resort & Spa Laguna Beach, CA 260 $730,000 Laguna Beach Resorts

Monarch Hotel Washington, DC 416 $353,000 Legacy Hotel REIT

Box Tree Inn New York, NY 13 $307,000 252 East 49 (LLC)

Eden Roc Miami Beach, FL 347 $277,000 Blackacre Capital

Hotel Wales New York, NY 87 $276,000 DLJ Capital RECP II

Hyatt Regency Lahaina, HI 837 $275,000 Blackstone Group

The Orchid at Mauna Lani Kahola Coast, HI 539 $260,000 Fairmont Hotels&Resorts

La Costa Resort & Spa Carlsbad, CA 479 $251,000 KSL Recreation Corp.

British Airways Hotel New York, NY 124 $250,000 Affiliate Hotel Properties

Holiday Inn on the Hill Washington, DC 343 $233,000 LaSalle Hotel Properties

Source: HVS International


Rushmore s observations l.jpg

It should not get any worse than this.

Rushmore’s Observations

Supply growth is slowing

War is wrapping up

Economy should recover

When occupancy starts to recover look for-

Rapid growth in room rate

Escalating profits

Increased property level spending Particularly FF&E

Transaction volume will rise rapidly

Transactions equate to renovations

Now is the time to position yourself for a strong recovery


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