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Recent Economic and Value Trends for the U.S. Lodging Industry

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 srushmore@hvsinternational.com www.hvsinternational.com. Hotel Value Trends - USA . 1994. 1995. 1996. 1997. Per Room Value.

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Recent Economic and Value Trends for the U.S. Lodging Industry

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  1. Recent Economic and Value Trendsfor the U.S. Lodging Industry Presented by:Stephen Rushmore, MAI, CHAPresident and FounderHVS International516-248-8828 ext. 204srushmore@hvsinternational.comwww.hvsinternational.com

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. % 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

  18. 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

  19. 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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