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How are we performing, where is the pain (and the gain) and what lies ahead? David Bailey

How are we performing, where is the pain (and the gain) and what lies ahead? David Bailey Deputy Managing Director TRI Hospitality Consulting. Hotel trading performance – and what lies ahead?. What history tells us 2010 – the story so far Are we in recovery?

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How are we performing, where is the pain (and the gain) and what lies ahead? David Bailey

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  1. How are we performing, where is the pain (and the gain) and what lies ahead? David Bailey Deputy Managing Director TRI Hospitality Consulting

  2. Hotel trading performance – and what lies ahead? • What history tells us • 2010 – the story so far • Are we in recovery? • Where is the pain and gain? • Where are the opportunities for development? • What lies ahead?

  3. Annual Average Room Occupancy Recession Unemployment hits almost 2m IRA bombs Recession Gulf War Recession SARS Iraq War 7/7 attacks ‘Black Monday’ US visitors down 9/11

  4. Actual Average Room Rate 7/7 attacks SARS Iraq War Recession Gulf War 9/11 Recession

  5. UK Full-Service RevPAR 12 months to December 2009 v 2008 TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS, TOURISM AND LEISURE Provinces -10.8% Aberdeen - 12.6% Leeds -9.0% Edinburgh - 3.2% Liverpool - 20.4% Birmingham -15.7% Manchester - 17.8% London -6.4% Cardiff - 4.8% Southampton - 13.6% Brighton - 3.9% Portsmouth -6.6% Source:

  6. UK Full-Service RevPAR 7 months to July 2010 v 2009 TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS, TOURISM AND LEISURE Provinces +0.9% Aberdeen - 6.0% Leeds - 0.3% Edinburgh - 1.0% Liverpool - 5.8% Birmingham +4.7% Manchester - 6.2% London +11.6% Cardiff - 6.4% Southampton - 1.5% Brighton - 3.0% Portsmouth +4.3% Source:

  7. Europe Full-Service RevPAR 12 months to December 2009 vs 2009 TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS, TOURISM AND LEISURE Hamburg -13.7% Berlin -10.4% Amsterdam -20.1% Warsaw -6.9% London -6.4% Prague - 25.0% Paris -13.6% Budapest -22.5% Barcelona -24.0% Frankfurt -16.7% Rome -16.8% Vienna -17.6% Source:

  8. Europe Full-Service RevPAR 7 months to July 2010 vs 2009 TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS, TOURISM AND LEISURE Hamburg +10.5% Berlin +19.5% Amsterdam +15.7% Warsaw +3.3% London +11.6% Prague - 14.7% Paris +6.6% Budapest -1.9% Barcelona +2.1% Frankfurt +21.2% Rome +1.6% Vienna +13.0% Source:

  9. 2010 – Challenges

  10. Are we in recovery? RECOVERY • Improving fundamentals and returns • GDP Growth • Increased international travel • Increased demand for commercial lettings • Domestic consumer spend recovery GROWTH • Demand outpaces supply • Increasing access to capital • Rapid supply growth • Hotel earnings grow but values stabilise PEAK • Overbuilding occurs • Supply starts to exceed demand • Hotel earnings decelerate and stabilise DECLINE • GDP decline • Reduction in consumer spend • Visitor levels decrease • Corporate spend reduced • Returns decline • Funding reduces • Supply growth slows • Profit margins contract Recessionary Period Source: Merrill Lynch / TRI

  11. Where is the Pain?Hotel Performance Summary7 months to July 2010 v 2009 Source:

  12. Where are the Gains?Hotel Performance Summary7 months to July 2010 v 2009 Source:

  13. Development Opportunities • London continues to be a strong focus of development • Keen appetite from brands for expansion persists • Strategic locations inc. primary cities, airports, major attractions are of interest • Opportunities in the budget sector

  14. Which market is performing?London Headline Performance Comparison7 months to July 2010 v 2009 Source:

  15. London Hotel Development Monitor New Room Supply by Grade 2010-2013f Source:

  16. Focus on UK Branded Budget Room Supply

  17. Budget sector growth continuesUK Budget Hotels Annual Rooms Revenue

  18. Full-Service Hotel Market v Budget Hotel Market Performance2009 v 2008 Source:

  19. Full-Service Hotel Market v Budget Hotel Market PerformanceJuly10 YTD v July09 YTD Source:

  20. Future Operating Environment • Government spending cuts • 2012 London Olympics • Double-dip recession?????? • Primary hotel markets stabilising allowing growth • VAT up to 20% • Further polarisation between those who get the proposition right and thosewho do not

  21. Q3 2010 The Confidence Monitor Source:

  22. TRI Forecasts v Actual to July 2010

  23. TRI Forecasts 2011

  24. www.trihospitality.comwww.HotStats.comdavid.bailey@trihc.com

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