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					Selling BT Courageously
Current US Forecasts
 In June of 2009 for 2010
     PKF -3.5%
     STR -3.7%
 In January of 2010 for year end 2010, and
 2011
     PKF -1.1% for 2010, and 5.8% for 2011
     STR -3.2% for 2010, and +4.2% for 2011
 In June of 2010 for year end 2010 and 2011
     PKF +1.7% for year end 2010, and 7.8%
     in 2011
     STR +3% for year end 2010, and 6.5% in
     2011
What does BT mean to Sage
Current Sage Performance and
Forecast
 June YTD
    RevPAR +$1.47 to budget
    RevPAR +.45 to last year
 Full year Forecast
    RevPAR +$1.22 to budget
    RevPAR +.47 to last year
 YTD June Market Share for Sage
    YTD RevPAR Index 100.6%, -0.5%
    -1.9% in occupancy, and +1.3% in ADR
    index
Sage Historical
BT production
mid year
• 2010
   o 246,754 $109 $27m
• 2009
   o 204,566 $122 $25m
• 2008
   o 219,608 $126 $28m
• 2007
   o 193,847 $115 $22m
Sage Historical
BT production
Full Year
• 2010 F
   o 500,106 $108 $54m
• 2009
   o 420,125 $117 $49m
• 2008
   o 370,389 $126 $47m
• 2007
   o 326,358 $116 $38m
Current Markets
       How Did We Get Here
• 2009 and 2010 were both very difficult years for
  the BT market
  o Many financial companies put into place travel
    freezes through the first half of 2009
  o The big companies that continued to travel demanded
    decreases as much as 15%
  o An over saturation of hotel supply caused many
    hotels to undercut each other and further drive down
    BT rates
  o 2010 began the quest for occupancy and hotels were
    doing anything possible to capture new business
    including giving away many value adds along with
    lower rates
What Does the Current Market Look Like

• 2010 has already started to see a turnaround
  o   Hotels are beginning to see a bump in occupancy, however this
      demand is very elastic and price sensitive
        Marriott reported a 9.9% growth in RevPAR for the second
         quarter, with ADR growing a slim 1.6% compared to last
         year
  o   Most markets are beginning to notice that the bleed on ADR
      has started to slow
        Much of this slowing is due to a shift in business
        With more BT coming into the market, hotels are able to rely
         less heavily upon discounts
  o   The increase in supply has started to slow
        This means there will be less rooms in the market as demand
         continues to grow
        Eventually compression will start occurring which will allow
         hotels to yield for more rate
How do we make this a dynamic shift?

• Aggressive Revenue Management is
  key
   – Ability to limit other discounts quickly when
     demand is surfacing
• Demand is increasing already, moving
  from northeast to the west
• Know your market, and your
  accounts
• Forecast your high demand
• ADR crossed over prior year for first
Looking ahead to 2011
What are the brands, peers,
and customers predicting for
         next year
  What do the Brands Expect Next
        Year to Look Like
• 2011 will be the year to grow ADR
  o Historically BT rates have a slower rebound than retail rates
  o The largest players in the market may continue to want rate
    decreases or flat rates for next year and possibly into 2012
  o Most rate growth will be captured through small to mid production
    business from the local area rather than global and national
    accounts
       Marriott is targeting an 8-10% increase for BT accounts
       Hilton is bracing for some resistance on their major accounts and
        therefore expects a 3-5% increase
       IHG is focusing on the value adds attached to accounts to show
        value to any rate increases they may propose
       Starwood is being cautiously optimistic, however has not given any
        figures regarding a target increase for BT accounts
What some of our peers are saying…

• Destination Hotels and Resorts
   o 5%-8% Revenue increase through room
     night production, flat in rate
• White Lodging
   o 5%-6%, RVP Signature required for 'Flat
     Account Rates'
• Interstate
   o 10%-15% expected growth, mostly rate
     Customer Expectations
Current Feedback

• IBM RFP has come out, 3 to 5% decrease to 2010 rates.
• JPMC and Oracle projecting flat
• Accenture an PWC are forecasting flat, with a possible slight
  increase
• FedRooms - slow ADR lift, but not forecasting peak until
  2013.
• Bank of America - Expecting flat ADR, with 40% increase in
  occupancy. Also expecting on doubling meeting planners for
  2012.
• Pepsi - Expecting occupancy growth, but flat ADR and
  looking to grow number of hotels in travel program.
Expectations - pg 2

• Starwood GSO Quote-Customers are expecting increases
  from hotels, therefore, they will come out of the gate
  aggressively to keep rates down.

• Fair amount of Blackstone customers, according to Ryan
  Buck, are expecting flat, for those that did not already sign a
  two year deal.

• Local accounts may provide additional rate opportunity, but
  may be slower in developing their RFP process.

• Some hotels are re-evaluating 2010 with their accounts, and
  cannot get a read from customers on 2011.
Project Business Expectations
 Project overview

•Companies like Accenture, Deloitte,
Capgemini, KPMG, PricewaterhouseCoopers
represent a great opportunity for special
corporate and project business

•The average consultant is on pace to travel
about 88 days in 2010, down from 91 days in
2009 and 99 days in 2008, according to
Consulting’s survey.
Consultant Survey
     Travel projections 2010

• Accenture : $332 Million hotel spend
  – 84% compliant to preferred hotel program
• Deloitte : 800,000 room nights
  – 60% complaint to preferred hotel program
• KPMG : 500,000 room nights
  – 75% compliant to preferred hotel program
The Cycle of Emotions




            2007
                        2008 – 1st
                          Half

                                                  2011-12
                         2008 – 2nd
                            Half
     2004
                                                    2011
                                      2009-2010
                THE HOTEL MARKET CYCLE
                              Moving Past the Trough
                   Rapid                                                               Rapid Development
                Development                                  Development
                                Lodging Decline,               Picks Up
  Equilibrium                     Leads Other
     ADR                            Sectors
                                                                                                    2013-2014




    Long Run
                                                     U.S. is Here
   Occupancy                                 A Year Ago
                                                                                             2011-2012
                                                                                 ADR and
                   Occupancy                                                     Margins
                   Declines, ADR                                                 Recover
                   Follows


                              Development                                  Occupancy
                              Slows                                        Recovers

July 2010                                   Development at
                                            Minimum Levels     Lodging Recovers, Lags
                                                               Other Sectors


                                                                                                 www.pkfc.com
Given what you
have seen…

• Where do you think we
  will finish 2010?
• Where do you think
  2011 will end?

				
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posted:5/26/2012
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