Economic Trends Affecting Hospitality Sellers in Today s Turbulent Marketplace

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Economic Trends Affecting Hospitality Sellers in Today s Turbulent Marketplace webinar will be begin shortly. If you need technical assistance with the webcast, contact us at hsmai@commpartners.

1 Economic Trends Affecting Hospitality Sellers in Today s Turbulent Marketplace webinar will be begin shortly. If you need technical assistance with the webcast, contact us at hsmai@commpartners.com and we will assist you immediately. Economic Trends Affecting Hospitality Sellers in Today s Turbulent Marketplace Tuesday, December 2, :30 a.m. EST presented as part of the series Leading Through the Economic Crisis and Preparing for Recovery by Hospitality Sales and Marketing Association International (HSMAI) 2

2 Today s Moderator John Parke, CMP President/CEO Leadership Synergies, LLC jparke@leadershipsynergies.com Leadership Synergies, LLC is a company that specializes in sales strategy consulting, sales training and sales audits. Before forming Leadership Synergies, John Parke worked for Marriott International for more than 18 years, most recently as Vice President of the Global Account Sales Organization. In that capacity, he was responsible for overseeing more than 200 senior sales executives and $1.3 billion of annual revenues. Under Mr. Parke's leadership, the Marriott sales force was rated Number 1 by Sales & Marketing Magazine for 3 consecutive years. Mr. Parke was profiled in the March 2004 and June 2007 issues of Selling Power Magazine. Mr. Parke is a visiting lecturer at Cornell University and teaches the Sales and Marketing Management program. Mr. Parke is a frequent public speaker on sales cultures, organizational branding, and personal branding. He has published articles in Velocity (Strategic Account management Association) Board Member (Center for Nonprofit Boards), Executive Update (American Society of Association Executives), The Meeting Professional (Meeting Professionals International), Convene (Professional Convention management Association) and CMP Update (Certified Meeting Professionals). 3 HSMAI Alliance Partner 4

3 HSMAI Alliance Partner 5 POLL QUESTION #1 How many people are participating in this webinar at your location today? or more 6

4 Program Goals Help your team understand the macro trends and how they relate to the current marketplace Outline a forecast for 2009 Let you know the key indicators to watch 7 Speaker Bjorn Hanson, Ph.D. Clinical Associate Professor Preston Robert Tisch Center for Hospitality, Tourism & Sports Management bjorn.hanson@nyu.edu Bjorn is well known for his research, statistical and econometric analysis of the travel and lodging industries. Professional experience Bjorn retired from PricewaterhouseCoopers LLP in June 2008 as the founder of PwC s Hospitality and Leisure businesses. Just a few of his positions with PricewaterhouseCoopers included: Global Industry Chairman Hospitality & Leisure Global Industry Chairman Real Estate Director of Appraisal Services Global Financial Advisory Services Management Committee, Member Selected honors One of the 33 Most Influential People in the Travel Industry, Travel Weekly One of the 25 Most Influential People in the Meetings Industry, Meeting News One of the Lodging Industry s 75 Leaders, AH&LA Profiles in Leadership Cornell s Hotelier of the Year Speeches and publications Bjorn is one of the most cited industry executives with multiple citations in Forbes, Fortune, Business Week, Time, Newsweek, The Wall Street Journal, The New York Times, Financial Times, US News & World Report, Barron s, Cornell Hotel and restaurant Administration Quarterly, and many others. He has authored chapters in multiple textbooks, appeared on the Today Show, Wall Street Journal Business Report, WCBS, CNBC, Fox Business, CNN, Bloomberg, Nightly Business Report, National Public Radio s Marketplace and other televisions and radio broadcasts. 8

5 U.S. Lodging Industry Update Bjorn Hanson, Ph.D. Clinical Associate Professor, Tisch Center, NYU December 2008 Agenda 1. Recent U.S. Lodging Trends 2. U.S. Recessions 3. Lodging Industry Issues 4. Forecasts 5. Implications

6 Recent U.S. Lodging Trends Recent U.S. Lodging Trends 140 ADR ` RevPAR Supply Demand Occupancy * * Forecast Source: Smith Travel Research and PricewaterhouseCoopers

7 Recent U.S. Lodging Trends As of December 2008, there have been 14 consecutive months of occupancy decline 12 months following September 2001 The longest period since (18 months) U.S. Recessions

8 National U.S. Recessions Dates Duration Aug to March months May 1937 to June months Feb to Oct months Nov to Oct months July 1953 to May months Aug to April months April 1960 to Feb months Dec to Nov months Nov to March months Jan to July months July 1981 to Nov months July 1990 to March months March 2001 to Nov months Source: National Bureau of Economic Research National U.S. Recessions Source: National Bureau of Economic Research

9 U.S. Recessions and Lodging Cycles U.S. Recessions Months Lodging Cycles Months Dec to Nov Feb to Feb Nov to March Aug to May Jan to July Oct July 1981 to Nov to May July 1990 to March Feb to March March 2001 to Nov Sept to Sept Source: Smith Travel Research and National Bureau of Economic Research U.S. Recessions and Stock Market

10 U.S. Recessions and Stock Market Year Magnitude of Decline Months of Decline Months Until Full Recovery 1929 to % % % % % % % % % 13*?? * To date. Source: Center For Research In Security Prices (University of Chicago) Lodging Industry Issues

11 U.S. Lodging Demand Upscale Midscale without F&B Luxury Upper Upscale ` Economy Midscale with F&B * * Forecast Source: Smith Travel Research and PricewaterhouseCoopers U.S. Lodging Rate Midscale with F&B ` Midscale without F&B Luxury Upscale Upper Upscale Economy * * Forecast Source: Smith Travel Research and PricewaterhouseCoopers

12 Demand Elasticity and Correlation to Real GDP 1987 value = US Real GDP '00 '01 '02 '03 '04 '05 '06 '07 Sources: Lodging demand PricewaterhouseCoopers LLP based on Smith Travel Research data; Real GDP- U.S. Bureau of Economic Analysis; Air travel demand - Air Transport Association Demand Elasticity and Correlation to Real GDP 1987 value = US Real GDP Lodging Demand (Room Nights Sold) '00 '01 '02 '03 '04 '05 '06 '07 Sources: Lodging demand PricewaterhouseCoopers LLP based on Smith Travel Research data; Real GDP- U.S. Bureau of Economic Analysis; Air travel demand - Air Transport Association.

13 Long-Term U.S. Occupancy Occupancy Percentage 95% 90% 85% % Long-Term Trend 66.5% (79 Years) 1987 to 2007 Trend 62.7% (20 Years) 80% 75% 70% 65% % % 60% 55% 50% % % % '00 '03 '06 Sources: PricewaterhouseCoopers LLP (1928 to 1986 and 2008), Smith Travel Research (1987 to 2007) % 2008 Forecast 62.8% Long-Term Occupancy Levels and Profits Income Before Income Taxes, Billions of Dollars $30 Aggregate Profits Occupancy Occupancy Percentage 66% $25 $20 $15 $10 64% 62% 60% $5 $0 ($5) 58% 56% ($10) % Sources: Smith Travel Research Note: STR change in method in 2002.

14 Which Demand Segment Will Lead The Recovery? Business Domestic Business International Leisure Domestic Leisure International Groups / Conventions Ultra-wealthy Forecasts

15 2009 U.S. Lodging RevPAR Forecasts Source 2009 RevPAR Growth (%) Goldman Sachs (10.0) PricewaterhouseCoopers (5.8) Deutsche Bank (4.8) Morgan Stanley (4.5) PKF Research (4.3) JP Morgan (3.0) to (6.5) Smith Travel Research (2.5) Source: Individual organizations and analyst reports Implications

16 Implications For 2009 This recession may be most similar to the 1970s recession Four years Four years for the stock market to recover Occupancy of 58.6 %, (3.5 %), lowest level since 1971 Average daily rate (2.4 %), largest decline ever Recompression of average daily rates Reduced spending on capital expenditures The buyer balance of power best in 33 years Industry profits will decline, second occurrence since 1980 U.S. Lodging Industry Update Bjorn Hanson, Ph.D. Clinical Associate Professor, Tisch Center, NYU December 2008

17 Questions & Answers After the webinar session is adjourned you are welcome to additional questions for Bjorn Hanson to Kathy Tindell at HSMAI 33 Today s speaker Bjorn Hanson, Ph.D. Clinical Associate Professor Preston Robert Tisch Center for Hospitality, Tourism & Sports Management bjorn.hanson@nyu.edu 34

18 Leading Through the Economic Crisis and Preparing for Recovery series Later today, December 2, 2008 Segment #2: Maximizing Revenue in a Downturn, 2 3:30 p.m. EST Bill Caroll, Senior Lecturer, Cornell University: School of Hotel Administration Bonnie Buckhiester, President/CEO, Buckhiester Management USA, Inc. Dan Kowalewski, Vice President Revenue Management Services, Wyndham Hotel Group Tom Walker, Managing Director, RoomRevenew 35 Leading Through the Economic Crisis and Preparing for Recovery series Wednesday, December 3, 2008 Segment #3: Getting Your Message Across with an Integrated Marketing Strategy, 10 11:30 a.m. Susan Thronson, SVP Global Marketing, Marriott International Kim Schaller, VP, Chief Marketing Officer, Hershey Entertainment & Resorts Jim Wood, President/CEO, Louisville CVB Segment #4: Ten Actions Your Sales Team Must Take in the Next 90 days, 2 3:30 p.m. Serge Asensio, Managing Director, Topline Group, LLC Mark Tunney, Managing Director, Convention Sales, Chicago Convention & Tourism Bureau John Washko, VP of Sales & Marketing, The Broadmoor 36

19 Conclusion LINKS box Webinar Evaluation Form Please take a moment now to click on this link and complete the evaluation. Be sure to click on Submit when you have completed the evaluation to send us your responses. Your comments & suggestions are very important to us, and they help us to provide you with this kind of quality programming. You will also find links to the HSMAI and HSMAI University websites in the LINKS section, should you be interested in more information about the association who presented this webinar today. 37

The CFA Society of Austin Presents 2010 Annual Forecast Dinner CURRENCIES, COMMODITIES, & EMERGING MARKETS

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