CBRE HOTELS...CBRE HOTELS The World’s Leading Hotel Experts. CBRE HOTELS The World’s Leading...
Transcript of CBRE HOTELS...CBRE HOTELS The World’s Leading Hotel Experts. CBRE HOTELS The World’s Leading...
CBRE HOTELS
The World’s Leading Hotel Experts.
CBRE HOTELSThe World’s Leading Hotel Experts.
CURRENT STATE OF AUSTIN LODGING MARKETPRESENTED BY JEFF BINFORD
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 2
“Trying to predict the direction of the market over one year, or even two years is impossible”
- Peter Lynch, Magellan Fund Manager – Fidelity Investments
”Hotel markets are as much impossible as mutual funds in trying to predict occupancies,
rates and RevPAR”- Me
QUOTATIONS
PRESENTATIONOUTLINE
01ECONOMIC OUTLOOK
0203AUSTIN LODGING MARKET
04SUBMARKET PERFORMANCE
05AIRBNB UPDATE
C B R E © 2 0 1 7 A l l R i g h t s R e s e r v e d . A l l i n f o r m a t i o n i n c l u d e d i n t h i s l e t t e r / p r o p o s a l p e r t a i n i n g t o C B R E , I n c . — i n c l u d i n g b u t n o t l i m i t e d t o i t s o p e r a t i o n s , e m p l o y e e s , t e c h n o l o g y a n d c l i e n t s — i s p r o p r i e t a r y a n d c o n f i d e n t i a l a n d s u p p l i e d w i t h t h e u n d e r s t a n d i n g t h a t s u c h i n f o r m a t i o n w i l l b e h e l d i n c o n f i d e n c e a n d n o t d i s c l o s e d t o a n y t h i r d p a r t y w i t h o u t C B R E ’ s p r i o r w r i t t e n c o n s e n t . T h i s l e t t e r / p r o p o s a l i s i n t e n d e d s o l e l y a s a p r e l i m i n a r y e x p r e s s i o n o f g e n e r a l i n t e n t i o n s , i s f o r d i s c u s s i o n p u r p o s e s o n l y , a n d d o e s n o t c r e a t e a n y a g r e e m e n t o r o b l i g a t i o n b y C B R E t o n e g o t i a t e o r c o n t i n u e n e g o t i a t i o n s . C B R E s h a l l h a v e n o c o n t r a c t u a l o b l i g a t i o n w i t h r e s p e c t t o t h e m a t t e r s r e f e r r e d t o h e r e i n u n l e s s a n d u n t i l a d e f i n i t i v e , f u l l y - e x e c u t e d a g r e e m e n t h a s b e e n d e l i v e r e d b y t h e p a r t i e s . P r i o r t o d e l i v e r y o f a d e f i n i t i v e e x e c u t e d a g r e e m e n t , a n d w i t h o u t a n y l i a b i l i t y t o t h e o t h e r p a r t y , e i t h e r p a r t y m a y ( 1 ) p r o p o s e d i f f e r e n t t e r m s f r o m t h o s e s u m m a r i z e d h e r e i n , ( 2 ) e n t e r i n t o n e g o t i a t i o n s w i t h o t h e r p a r t i e s a n d / o r ( 3 ) u n i l a t e r a l l y t e r m i n a t e a l l n e g o t i a t i o n s w i t h t h e o t h e r p a r t y h e r e t o .
NATIONAL/STATE LODGING TRENDS
01ECONOMIC OUTLOOK
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 5
What Could End the Current Cycle?
1. The Economy
2. Over Building
3. Unpredictable Demand Shock
4. Oil/Energy Prices
5. Natural Disasters – Hurricanes, Fires, Earthquakes
ECONOMIC OUTLOOK
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 6
ECONOMIC OUTLOOK
Employment Personal Income GDP CPI (Inflation)
2017 1.6% 1.0% 2.3% 2.1%
2018 1.5% 1.5% 2.7% 2.6%
2019 1.0% 2.3% 1.7% 1.9%
2020 -0.3% 1.9% 0.3% 1.4%
2021 0.2% 1.4% 2.2% 1.5%
2022 1.2% 2.0% 2.7% 1.9%
Source: CBRE Economic Advisors, Moody’s Analytics, Q2 2018
UNITED STATES: ECONOMIC OUTLOOK
ECONOMIC OUTLOOK
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 7
ECONOMIC OUTLOOKAUSTIN: ECONOMIC OUTLOOK
Employment Personal Income GMP CPI (Inflation)
2017 3.2% 2.1% 4.7% 2.1%
2018 3.4% 2.8% 4.2% 2.6%
2019 2.2% 4.4% 4.4% 1.9%
2020 1.4% 3.5% 2.5% 1.4%
2021 1.6% 3.1% 4.5% 1.5%
2022 2.5% 4.2% 4.9% 1.9%
Source: CBRE Economic Advisors, Moody’s Analytics, Q2 2018
ECONOMIC OUTLOOK
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 8
ECONOMIC OUTLOOK COMPARISON
Employment Personal Income
GDP CPI (Inflation)
2017 1.6% 3.2% 1.0% 2.1% 2.3% 4.7% 2.1% 2.1%
2018 1.5% 3.4% 1.5% 2.8% 2.7% 4.2% 2.6% 2.6%
2019 1.0% 2.2% 2.3% 4.4% 1.7% 4.4% 1.9% 1.9%
2020 -0.3% 1.4% 1.9% 3.5% 0.3% 2.5% 1.4% 1.4%
2021 0.2% 1.6% 1.4% 3.1% 2.2% 4.5% 1.5% 1.5%
2022 1.2% 2.5% 2.0% 4.2% 2.7% 4.9% 1.9% 1.9%
Source: CBRE Econometric Advisors & Moody’s Analytics, Q2 2018
ECONOMIC OUTLOOK
02NATIONAL/STATE LODGING TRENDS
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 10
NATIONAL/STATE LODGING TRENDS
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 11
THE OUTLOOK FOR THE DRIVERS THAT ARE MOST IMPORTANT TO HOTELS REMAINS FAVORABLE E DRIVERS THAT ARE MOST IMPORTANT TO HOTELS REMAINS FAVORABLE
-2.7%
2.0%
-1.9%
-8.2%
-5.4%
-0.5%
1.3%
3.9%
1.7%
3.9%
2.7%2.5%
-1.5%
2.9%
0.8%
4.6%
2.7%
1.9%
0.5%0.1%
2.8%
0.8%
3.1%
4.0%
-0.9%
4.6%5.2%
2.0%
3.2%
2.7%1.6%
0.5%0.6%
2.2% 2.8%1.8%
1.2%
3.1%3.2%2.9%
2.2%
3.0%3.4%3.1%
2.7%2.0%
1.6%
0.9%0.0%
0.4%1.6%
2.6%
-10
-8
-6
-4
-2
0
2
4
6
8
10
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(GOVERNMENT) Government consumption expenditures and grossinvestmentTRADE (Net exports of goods and services)
BUSINESS (Gross private domestic investment)
CONSUMERS (Personal consumption expenditures)
Lodging Demand
Source: BEA, Moody’s Analytics, CBRE Hotels Americas’ Research Hotel Horizons, STR, May 2018
NATIONAL/STATE LODGING TRENDS
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 12
Leading Economic IndicatorsPercent Change In the Last 6 Months
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
Leading Economic Indicators (% change in the last 6 months) U.S. Hotel Demand
6 to 8 month lag
Economic indicators trended
up in 2017
Source: The Conference Board, CBRE Hotels’ Americas Research, STR, May 2018
NATIONAL/STATE LODGING TRENDS
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 13
Well in Excess of What Historical Trends Would Suggest
More people renting rooms
3
3.5
4
4.5
5
5.5
Mar
-88
Aug
-88
Jan-
89Ju
n-89
Nov
-89
Apr
-90
Sep
-90
Feb-
91Ju
l-91
Dec
-91
May
-92
Oct
-92
Mar
-93
Aug
-93
Jan-
94Ju
n-94
Nov
-94
Apr
-95
Sep
-95
Feb-
96Ju
l-96
Dec
-96
May
-97
Oct
-97
Mar
-98
Aug
-98
Jan-
99Ju
n-99
Nov
-99
Apr
-00
Sep
-00
Feb-
01Ju
l-01
Dec
-01
May
-02
Oct
-02
Mar
-03
Aug
-03
Jan-
04Ju
n-04
Nov
-04
Apr
-05
Sep
-05
Feb-
06Ju
l-06
Dec
-06
May
-07
Oct
-07
Mar
-08
Aug
-08
Jan-
09Ju
n-09
Nov
-09
Apr
-10
Sep
-10
Feb-
11Ju
l-11
Dec
-11
May
-12
Oct
-12
Mar
-13
Aug
-13
Jan-
14Ju
n-14
Nov
-14
Apr
-15
Sep
-15
Feb-
16Ju
l-16
Dec
-16
May
-17
Rooms sold including Airbnb Rooms sold Linear (Rooms sold)
Source: STR, Airdna, U.S. Census, CBRE Hotels’ Americas Research, Q4 2017.
RATIO OF ANNUAL ROOMS SOLD TO WORKING-AGE POPULATION OF THE U.S.
NATIONAL/STATE LODGING TRENDS
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 14
(2.0)%(1.0)%
0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%
Aus
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est P
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ark
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34 markets where the average supply growth over the past year was greater than 2%
Source: CBRE Hotels’ Americas Research; STR, Q4 2017.
SUPPLY CHANGE 2016-2017
NATIONAL/STATE LODGING TRENDS
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 15
0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Aust
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Supply Change 2018 - Forecast
42 markets where the average supply growth is forecast to be greater than 2%.
Source: CBRE Hotels’ Americas Research Q4 2017
NATIONAL/STATE LODGING TRENDS
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 16
NUMBER OF ROOMS UNDER CONSTRUCTION
Pipeline is Slowing
194,455 190,260
0
50,000
100,000
150,000
200,000
250,000
2014 2015 2016 2017 2018Source: STR, July 2018.
NATIONAL/STATE LODGING TRENDS
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 17
Dallas Summary
$90.53
$93.66
$99.13
$103.57$105.93
$109.75
$112.52
$90.00
$95.00
$100.00
$105.00
$110.00
$115.00
2013 2014 2015 2016 2017 2018 2019
ADR
77,704 77,891 78,78280,493
83,448
88,087
93,825
75,00077,00079,00081,00083,00085,00087,00089,00091,00093,00095,000
2013 2014 2015 2016 2017 2018 2019
Supply
$58.22
$63.51
$69.87
$73.89 $73.67$75.72 $76.81
$55.00
$60.00
$65.00
$70.00
$75.00
$80.00
2013 2014 2015 2016 2017 2018 2019
RevPAR
DALLAS LODGING MARKET
64.3%
67.8%
70.5%71.3%
69.5%69.0%
68.3%
62%
63%
64%
65%
66%
67%
68%
69%
70%
71%
72%
2013 2014 2015 2016 2017 2018 2019
Occupancy
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 18
Fort Worth Summary
FORT WORTH LODGING MARKET
62.6%
64.3%
66.9%
69.4%69.8%
70.4%
69.1%
62.0%
63.0%
64.0%
65.0%
66.0%
67.0%
68.0%
69.0%
70.0%
71.0%
72.0%
2013 2014 2015 2016 2017 2018 2019
Occupancy
$92.26
$98.80
$102.43$103.89
$105.40
$108.88$111.02
$90.00
$95.00
$100.00
$105.00
$110.00
$115.00
2013 2014 2015 2016 2017 2018 2019
ADR
31,09131,581 31,672 31,721
32,579
33,633
35,912
31,000
32,000
33,000
34,000
35,000
36,000
37,000
2013 2014 2015 2016 2017 2018 2019
Supply
$57.78
$63.56
$68.48
$72.10$73.61
$76.66 $76.69
$55.00
$60.00
$65.00
$70.00
$75.00
$80.00
2013 2014 2015 2016 2017 2018 2019
RevPAR
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 19
HOUSTON LODGING MARKET
69.3%
72.0%
68.5%
62.3%
66.7%
65.0% 64.8%
60%
62%
64%
66%
68%
70%
72%
74%
2013 2014 2015 2016 2017 2018 2019
Occupancy
$100.96
$107.14$108.73
$104.65
$107.98 $108.18
$111.13
$95.00
$100.00
$105.00
$110.00
$115.00
$120.00
2013 2014 2015 2016 2017 2018 2019
ADR
75,038 75,97877,716
82,183
86,13189,354
93,568
70,000
75,000
80,000
85,000
90,000
95,000
100,000
105,000
2013 2014 2015 2016 2017 2018 2019
Supply
$70.00
$77.11$74.48
$65.15
$71.97$70.29
$72.01
$60.00
$65.00
$70.00
$75.00
$80.00
$85.00
2013 2014 2015 2016 2017 2018 2019
RevPAR
Houston Summary
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 20
San Antonio SummarySUBMARKET PERFORMANCE
SAN ANTONIO LODGING MARKET
63.1%
64.9% 64.8% 64.7%65.0%
65.6% 65.6%
62%
63%
64%
65%
66%
67%
2013 2014 2015 2016 2017 2018 2019
Occupancy
$63.82
$67.18$69.33 $70.21
$72.49
$76.51$78.58
$60.00
$65.00
$70.00
$75.00
$80.00
$85.00
2013 2014 2015 2016 2017 2018 2019
RevPAR
$101.17
$103.57
$106.99$108.50
$111.47
$116.59
$119.82
$100.00
$105.00
$110.00
$115.00
$120.00
$125.00
2013 2014 2015 2016 2017 2018 2019
ADR
44,425 44,632 44,590
45,53146,288
47,176
48,061
42,000
43,000
44,000
45,000
46,000
47,000
48,000
49,000
50,000
2013 2014 2015 2016 2017 2018 2019
Supply
03AUSTIN LODGING MARKET
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 22
DEMAND FACTORSScoring Tech Talent• Austin #6 of the top 50 tech markets in U.S.• Total tech occupations now 69,610, a 20.3%
increase 2012 – 2017 • AVG tech occupation wage is $94,954, a
11.9% increase 2012 – 2017• Tech degree from local universities has grown
44.2% from 2012 – 2016• Tech labor now 7 % of Austin’s workforce,
making Austin one of the top Tech-Talent Momentum Markets
Austin Q3 Retail MarketView• Austin’s retail market remains strong• South Congress• 3% unemployment• Downtown boom
AUSTIN LODGING MARKET
• Austin Q3 Office MarketView• Office absorption rebounded in Q3 from a relatively flat
first half of the year, registering 575,000-square-feet of positive space during the quarter.
• Quarterly absorption and dip in vacancy, causes developers to continue to read Austin’s position positively.
• 9.97 M sq. ft. of demand during Q3 2018, a quarter-over-quarter increase of more than 2 million sq. ft.
Austin Q3 Industrial MarketView400K sq. ft. absorption in Q3, 552K sq. ft. newPipeline 1.6M sq. ft. Flex/R&D and Warehouse/Distribution
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 23
SUBMARKET COMPARISON YEAR-END 2017All Hotels – Austin Submarket Analysis
Year-End 2017 Compared to Year-End 2016
Occupancy ADR RevPARSubmarket Percent Pt. Change $ Amount % Change $ Amount % Change
Downtown 76.5% 0.0% $220 0.8% $168 0.8%
Northwest Arboretum 70.3% -0.3% $124 1.7% $93 1.3%
Round Rock / Georgetown 67.9% 1.0% $93 1.5% $64 0.1%
San Marcos / Surrounding 55.9% -3.9% $90 -0.7 $50 -4.6%
South / Airport 72.9% 0.3% $131 -3.0% $96 -2.6%
US-290 / I-35 71.3% -0.2% $91 -0.1% $65 -0.3%
Austin Average / Change 71.7% -0.4% $139 0.1% $100 -0.5%Source: STR, Inc.
SUBMARKET PERFORMANCE
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 24
SUBMARKET COMPARISON MID YEAR 2018All Hotels – Austin Submarket Analysis
Mid-Year 2018 Compared to Mid-Year 2017
Occupancy ADR RevPARSubmarket Percent Pt. Change $ Amount % Change $ Amount % Change
Downtown 77.3% -4.8% $234 0.3% $181 -5.7%
Northwest Arboretum 76.9% 0.7% $129 1.1% $99 2.1%
Round Rock / Georgetown 69.5% 0.4% $97 1.0% $67 1.5%
San Marcos / Surrounding 53.6% -2.4% $89 -3.1% $47 -7.3%
South / Airport 74.9% -0.6% $157 -6.3% $121 -5.5%
US-290 / I-35 72.9% 0.9% $96 2.9% $70 4.1%
Austin Average / Change 72.7% 2.0% $146 0.1% $106 -1.9%Source: STR, Inc.
AUSTIN LODGING MARKET
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 25
SUBMARKET PERFORMANCE
AUSTIN LODGING MARKET
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 26
DALLAS LODGING MARKETAUSTIN PIPELINE – BY THE NUMBERSProperties Factor Rooms
STATUS115 TOTAL Austin 13,706
3 Abandoned 2852 Deferred 196 1 Unconfirmed -
49 Planning 5,066 40 Final Planning 4,312 22 Start 3,943
PRICE TIER49 Upper 7,02766 Lower 6,679
TIMELINE8 No Dates 718
10 Open by YE 2018 1,24636 Open by YE 2019 3,452 61 Open 2020 and Beyond 8,290
AUSTIN LODGING MARKET
04SUBMARKET PERFORMANCE
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 28
AUSTIN GEOGRAPHIC SUBMARKETS
SUBMARKET PERFORMANCE
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 29
Central Business District
SUBMARKET PERFORMANCE
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 30
Central Business District / DowntownSUBMARKET PERFORMANCE
SUBMARKET PERFORMANCE
78.4%
79.3%
77.5%
76.5% 76.5%76.1% 75.9%
70.0%
71.0%
72.0%
73.0%
74.0%
75.0%
76.0%
77.0%
78.0%
79.0%
80.0%
2013 2014 2015 2016 2017 2018 2019
Occupancy
$188.39
$203.71
$214.88$217.97
$219.66$223.10
$226.20
$188.00
$193.00
$198.00
$203.00
$208.00
$213.00
$218.00
$223.00
$228.00
2013 2014 2015 2016 2017 2018 2019
ADR
6,674 6,746
7,974
9,0229,437
10,015
10,543
6,500
7,000
7,500
8,000
8,500
9,000
9,500
10,000
10,500
11,000
2013 2014 2015 2016 2017 2018 2019
Supply
$147.64
$161.56
$166.58 $166.76$168.12
$169.67$171.66
$145.00
$150.00
$155.00
$160.00
$165.00
$170.00
$175.00
2013 2014 2015 2016 2017 2018 2019
RevPAR
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 31
Northwest / Arboretum
SUBMARKET PERFORMANCE
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 32
SUBMARKET PERFORMANCE
SUBMARKET PERFORMANCE
Northwest / Arboretum
77.6%
75.1%
77.7%
75.4%75.1%
74.7% 74.5%
72.0%
73.0%
74.0%
75.0%
76.0%
77.0%
78.0%
2013 2014 2015 2016 2017 2018 2019
Occupancy
$103.56
$112.56
$117.27
$121.60$123.62
$125.56$127.30
$100.00
$105.00
$110.00
$115.00
$120.00
$125.00
$130.00
2013 2014 2015 2016 2017 2018 2019
ADR
4,9635,210
5,3875,646
6,097
6,470
6,811
4,800
5,300
5,800
6,300
6,800
7,300
2013 2014 2015 2016 2017 2018 2019
Supply
$80.37
$84.54
$91.10 $91.66$92.88 $93.74 $94.84
$75.00
$80.00
$85.00
$90.00
$95.00
$100.00
2013 2014 2015 2016 2017 2018 2019
RevPAR
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 33
Round Rock / Georgetown
SUBMARKET PERFORMANCE
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 34
SUBMARKET PERFORMANCE
SUBMARKET PERFORMANCE
65.4%
67.8%
69.0% 68.9%
67.9%67.5% 67.4%
64.0%
65.0%
66.0%
67.0%
68.0%
69.0%
70.0%
71.0%
72.0%
2013 2014 2015 2016 2017 2018 2019
Occupancy
Round Rock / Georgetown
$82.73
$87.61
$91.09$92.08
$93.49$94.95
$96.28
$80.00
$85.00
$90.00
$95.00
$100.00
2013 2014 2015 2016 2017 2018 2019
ADR
3,502 3,5033,657
3,905
4,210
4,468
4,703
3,400
3,600
3,800
4,000
4,200
4,400
4,600
4,800
5,000
2013 2014 2015 2016 2017 2018 2019
Supply
$54.10
$59.40
$62.89 $63.48 $63.53 $64.11$64.86
$50.00
$52.00
$54.00
$56.00
$58.00
$60.00
$62.00
$64.00
$66.00
2013 2014 2015 2016 2017 2018 2019
RevPAR
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 35
San Marcos Surrounding
SUBMARKET PERFORMANCE
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 36
SUBMARKET PERFORMANCE
SUBMARKET PERFORMANCE
San Marcos Surrounding
59.0%
61.7% 61.7%
58.2%
55.9% 55.6% 55.4%
52.0%
54.0%
56.0%
58.0%
60.0%
62.0%
2013 2014 2015 2016 2017 2018 2019
Occupancy
$83.18
$87.66$86.96
$90.71$90.06
$91.46$92.74
$80.00
$85.00
$90.00
$95.00
2013 2014 2015 2016 2017 2018 2019
ADR
2,703 2,724 2,775
3,054
3,335
3,539
3,725
2,500
2,700
2,900
3,100
3,300
3,500
3,700
3,900
2013 2014 2015 2016 2017 2018 2019
Supply
$49.05
$54.10 $53.68$52.79
$50.35$50.82
$51.41
$45.00$46.00$47.00$48.00$49.00$50.00$51.00$52.00$53.00$54.00$55.00
2013 2014 2015 2016 2017 2018 2019
RevPAR
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 37
South / Airport
SUBMARKET PERFORMANCE
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 38
SUBMARKET PERFORMANCE
SUBMARKET PERFORMANCE
South / Airport
71.6%
73.0%
74.4%
72.6%72.9%
72.5% 72.3%
70.0%
71.0%
72.0%
73.0%
74.0%
75.0%
2013 2014 2015 2016 2017 2018 2019
Occupancy
$123.33
$128.24
$134.90 $135.27
$131.18
$133.23$135.08
$120.00
$125.00
$130.00
$135.00
$140.00
2013 2014 2015 2016 2017 2018 2019
ADR
5,4535,576
5,7785,934
6,343
6,732
7,087
5,2005,4005,6005,8006,0006,2006,4006,6006,8007,0007,200
2013 2014 2015 2016 2017 2018 2019
Supply
$88.28
$93.63
$100.33$98.21
$95.66$96.54
$97.67
$85.00$87.00$89.00$91.00$93.00$95.00$97.00$99.00
$101.00$103.00$105.00
2013 2014 2015 2016 2017 2018 2019
RevPAR
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 39
US-290 / I-35
SUBMARKET PERFORMANCE
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 40
SUBMARKET PERFORMANCE
SUBMARKET PERFORMANCE
US-290 / I-35
68.1%
69.5%
72.8%
71.5% 71.3%70.8% 70.7%
66.0%
67.0%
68.0%
69.0%
70.0%
71.0%
72.0%
73.0%
74.0%
2013 2014 2015 2016 2017 2018 2019
Occupancy
$78.91
$83.53
$88.93
$91.20 $91.15$92.57
$93.86
$75.00
$80.00
$85.00
$90.00
$95.00
2013 2014 2015 2016 2017 2018 2019
ADR
6,8347,017 7,000
7,1247,297
7,743
8,151
6,5006,7006,9007,1007,3007,5007,7007,9008,1008,3008,500
2013 2014 2015 2016 2017 2018 2019
Supply
$53.71
$58.09
$64.74 $65.16 $64.95 $65.55 $66.32
$50.00$52.00$54.00$56.00$58.00$60.00$62.00$64.00$66.00$68.00$70.00
2013 2014 2015 2016 2017 2018 2019
RevPAR
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 41
AUSTIN LODGING MARKET
Austin Summary
71.5%
72.4%
73.7%
72.2%71.8%
71.3% 71.1% 71.0% 71.1%70.9%
69%
70%
71%
72%
73%
74%
75%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Occupancy
$118.98
$126.64
$134.77
$139.02 $139.23$141.40
$143.37 $144.81$146.67
$149.98
$115.00
$120.00
$125.00
$130.00
$135.00
$140.00
$145.00
$150.00
$155.00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
ADR
30,42331,12032,956
35,07137,184
39,46341,546
43,03844,159
45,448
30,00032,00034,00036,00038,00040,00042,00044,00046,00048,00050,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Supply
$85.01
$91.66
$99.34 $100.36 $99.90 $100.82 $102.00 $102.84$104.35
$106.35
$80.00
$85.00
$90.00
$95.00
$100.00
$105.00
$110.00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
RevPAR
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 42
LODGING FORECASTS
NATIONAL/STATE LODGING TRENDS
05AIRBNB UPDATE
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 44
AIRBNB UPDATE
Sources: Airbnb, Bookings.com, HomeAway, TripAdvisor
Airbnb Update
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 45
AIRBNB UPDATE
Year Hotel Rooms Hotel^ Airbnb Units Airbnb^ Airbnb+Hotels Airbnb+Hotels^
2012 4,849,352 0.30% 13,000 150% 4,862,352 0.50%
2013 4,875,064 0.50% 28,000 115% 4,903,064 0.8%
2014 4,905,305 0.60% 58,000 107% 4,963,305 1.2%
2015 4,953,177 1.00% 115,235 99% 5,068,412 2.1%
2016 5,027,238 1.50% 224,630 95% 5,251,868 3.6%
2017 5,119,907 1.80% 347,748 55% 5,467,655 4.1%
Source: CBRE Hotels’ Americas Research, Airdna, Google Trends, Dec 2017.
Average Daily Supply in the U.S.
Previous Peak @ 3.1% Q1 2009
Airbnb Update
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 46
AIRBNB UPDATE
Hotel, Lodging and Private Accommodation Online Distribution Mix, 2017 and 2021
13%
41%
39%
7%
2017
19%
38%
37%
6%
2021
Private Accommodation Intermediaries OTA Hotel & Lodging (excluding private accommodation)Hotel & Lodging Branded Websites/Apps Property Manager Websites
• Sources: Phocuswright’s A Market Transformed: Private Accommodation in the U.S., U.S. Online Travel Overview Seventeenth Edition
Airbnb Update
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 47
AIRBNB UPDATE
171.9%
124.3%111.8%
92.5% 90.1%82.4%
74.6%66.5% 65.9% 65.8% 63.5%
57.9% 55.2% 52.0% 49.0%42.7% 40.6% 38.8% 34.6% 33.1% 30.7%
19.4%12.9%
7.1%
-1.1%-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
200.0%
Source: CBRE Hotels’ Americas Research, Airdna, Dec 2017.
Trends in Airbnb Unit Growth2017 Y-o-Y Change in Active Entire-Home Units
Airbnb Update
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 48
AIRBNB UPDATE
Meet local people
Interact with hosts
Experience local culture
49%Location
53%Value
• Source: Phocuswright’s A Market Transformed: Private Accommodation in the U.S.,
WHY THEY RENTED?
Airbnb Update
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 49
Morgan Stanley Survey & STR Report
Profile of Airbnb Demand
Source: STR, Airbnb, Q1, 2017
Airbnb Update
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 50
Business Travel on Airbnb?
11% of all Airbnb Guests are business travelers
30% of Airbnb Guests in Urban Markets are business travelers
Airbnb Update
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 51
Special events lead to surge in Airbnb supply
-
2,000
4,000
6,000
8,000
10,000
12,000
Active Airbnb Listings
Austin Washington DC
Inauguration &Women's March
SXSW
SXSW
SXSW
Source: Airdna, CBRE Hotels’ Americas Research, Q2 2017.Note: SXSW = South by Southwest Festival
Airbnb Update
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 52
AIRBNB UPDATE
Airbnb Update
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 53
AIRBNB UPDATE
“AIRBNB INSIGHTS” PUBLICATION Published Quarterly By CBRE
Hotels’ Americas Research
Top 60 Markets across the nation
Brief included in CBRE Hotels’ Hotel Horizons
Airbnb Update
TRENDS® IN THE HOTEL INDUSTRY
• Annual voluntary survey of thousands of U.S. hotel financial statements
• First survey conducted in 1937– Occ: 64.4%– ADR: $3.04
• Data converted to USALI to ensure comparability
• 2018 Survey Sample (2017 data)• 7,785 hotels across the U.S.• Occupancy: 75.6%• ADR: $179.25
Annual Benchmarking Survey – Origin: 1937
06CLOSING THOUGHTS
HORIZONS REPORT | AUSTIN HOTEL & LODGING ASSOCIATION| 56
CLOSING THOUGHTS1. The fundamentals within the hotel industry remain solid; therefore attractive.
2. Austin economic indices consistently outperform state and nation, and is expected to continue.
3. Occupancies percentages will remain in the low 70’s, still above the long run average of 67.1%. Additions continue in 2018 and 2019, which will cause occupancies to decline.
4. Average Daily Room Rates are expected to decline from previous years, but below the long term average of 4.0%.
5. RevPAR increases continue to be driven by ADR, NOT Occupancy. (Drive Rate where you can!)
6. Hotel construction will continue; the threat of overbuilding is the exception and not the rule.
7. Creative revenue growth and staffing help cushion cost issues. Profit growth should remain good, not great.
8. Sharing economy will be more of a factor for traditional hotels, but no threat to Austin hotels . . . yet.
9. Create EXPERIENCES, market EXPERIENCES, sell EXPERIENCES.
Closing Thoughts
© Copyright 2018 CBRE Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of the CBRE Global Chief Economist.
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JEFF BINFORDDirectorCBRE Hotels - ConsultingDallas, Texas+1 214 979 [email protected]