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The Lodging Industry. The Ritz-Carlton Naples, Florida. Industry Scope. 35,000 Hotels in U.S. 3.7 million Rooms in U.S. Annual Revenues of $95 Billion Profit of $19 Billion. Hotel Industry Profits Net Profit or Loss. $Billion. Changing Sentiment in the Capital Markets.

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the lodging industry

The Lodging Industry

The Ritz-Carlton

Naples, Florida

industry scope
Industry Scope
  • 35,000 Hotels in U.S.
  • 3.7 million Rooms in U.S.
  • Annual Revenues of $95 Billion
    • Profit of $19 Billion
changing sentiment in the capital markets
Changing Sentiment in theCapital Markets
  • General anxiety over trouble abroad and their impact on the US economy.
  • Concerns about overbuilding.
  • General feeling that easy money has been made in the sector.
  • Growth and momentum investors have sold their positions and have not been replaced by value investors.
  • Capital market response has led to equilibrium.
1992 1998 lodging equity offerings
1992 - 1998 Lodging Equity Offerings

Source: NationsBanc Montgomery Securities

key players
Key Players
  • Management Company
    • e.g. Marriott, Sheraton, Hyatt
  • Franchisor
    • e.g. Holiday Inn, Best Western, Sheraton
  • Owner - numerous possibilities
    • REIT
    • Hotel Co.
    • Private Owner or Ownership Group
    • Joint Ventures
reit structures
REIT Structures
  • Normal REIT
  • Paired Share
  • Stapled or Paper Clip REIT
private hotel companies
Private Hotel Companies
  • Hyatt
  • Destination Hotels & Resorts
  • KSL Resorts
  • Kimpton Group
  • Joie de Vivre Hospitality
structure example 1 hyatt regency kauai

Owner

Mgmt Co.

Hotel

Structure Example #1Hyatt Regency Kauai
  • Hyatt Hotels
  • Hyatt Regency
  • Kauai
structure example 2 san francisco marriott

Owner

Mgmt Co.

Hotel

Structure Example #2San Francisco Marriott

Host Marriott REIT

  • Marriott International
  • San Francisco Marriott
structure example 3 best western victorian inn monterey
Structure Example #3Best Western Victorian Inn, Monterey

Owner/Operator

Mom & Pop

Franchisor

  • Best Western

Hotel

  • Best Western Victorian Inn
structure example 4 los angeles marriott
Structure Example #4Los Angeles Marriott

Owner

Meristar Hospitality Corp (REIT)

Mgmt Co.

  • MeriStar Hotel & Resorts

Franchisor

  • Marriott Int’l.

Hotel

  • Los Angeles Marriott
structure example 5 ritz carlton philadelphia
Structure Example #5Ritz-Carlton, Philadelphia

Owner

Starwood Hotels

Mgmt Co.

  • Ritz-Carlton/Marriott Int’l.

Hotel

  • The Ritz-Carlton Philadelphia
slide19

Ritz-Carlton

Renaissance

Hotels

limited service
No Food & Beverage

Midscale

Economy

Budget

Suites/Extended Stay

Food & Beverage

Deluxe

Luxury

Upscale

Midscale

Resorts

Convention

Suites/Extended Stay

LIMITED SERVICE

FULL SERVICE

deluxe

Ritz-Carlton

Deluxe
  • Four Seasons
  • Regent
  • Ritz-Carlton
  • The St. Regis Luxury Collection

The Regent Beverly Wilshire

full service luxury
Full ServiceLuxury
  • Hilton
  • Hotel Sofitel
  • Hyatt
  • Meridien
  • Inter-Continental
  • Nikko
  • Omni
  • Marriott Hotels
  • Westin
  • Renaissance
  • Sheraton
  • Wyndham

Omni Mandalay

Las Colinas, Texas

full service upscale
Full ServiceUpscale
  • Doubletree
  • Crowne Plaza
  • Hotel Novotel
  • Radisson
  • Embassy Suites
  • Red Lion

Double Tree

San Diego -Mission Valley

full service midscale with f b
Full ServiceMidscale with F&B
  • Best Western
  • Courtyard
  • Sheraton Four Points
  • Holiday Inn
  • Holiday Inn Select
  • Howard Johnson
  • Ramada

Howard Johnson’s, Vermont

full service resort
Full ServiceResort
  • Lots of recreational activities.
  • Trend towards mixing business (conferences) with pleasure.

Ritz-Carlton Kapalua

full service conference center
Full ServiceConference Center
  • Typically located near convention centers.
  • Large meeting and banquet areas.
  • High volume.

San Antonio Marriott Rivercenter

full service casino
Full ServiceCasino
  • Cost: $1.6 Billion
  • 3005 Rooms @ $185 ADR.
  • $300 Million Art Collection.
  • 15 Restaurants.
  • Estimated EBITDA of $309 million on $950 million in revenue.

Bellagio, Las Vegas

Mirage Resorts

limited service mid scale without f b
Limited ServiceMid Scale without F&B
  • Comfort Inn
  • Hampton Inn
  • Hilton Garden Inn
  • Holiday Inn Express
  • La Quinta

Comfort Inn, West Virginia

limited service economy
Limited ServiceEconomy
  • Days Inn
  • Fairfield Inn
  • Budgetel
  • Red Roof Inn
  • Travelodge

Red Roof Inn, Ohio

limited service budget
Limited ServiceBudget
  • Motel 6
  • Budget Host Inn
  • Budget Inn
  • Econo Lodge
  • Great Western
  • Super 8
  • Knights Inn

Motel 6 Prototype

extended stay upper tier
Extended StayUpper Tier
  • Hawthorn Suites
  • Homewood Suites
  • Residence Inn
  • Candlewood Suites

Comfort Inn, West Virginia

hotel census
Hotel Census

As of 9/98

hotel lingo
Hotel Lingo
  • Average Daily Rate (ADR) =Total Room Revenue / # of Rooms x 365
  • Occupancy % =Total Room Nights / # of Rooms x 365
  • Revenue Per Available Room (RevPAR) =ADR x Occupancy %
  • EBITDA =Earnings before Interest, Taxes, Depreciation and Amortization
hotel organization chart
Hotel Organization Chart

General Manager

General Manager

payroll costs
Payroll Costs

Source: PKF Hotel Industry Trends 1998

occupancy by segment
Occupancy % by Segment

Source: Bear, Stearns & Co. 1999

adr revpar by segment
ADR & RevPAR by Segment

Source: Bear, Stearns & Co. 1999

cap rates
Cap Rates

Source: PKF Consulting