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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?
