Hotel Performance: Must have insights€¦ · Hotel Performance: Must have insights Robin Rossmann,...

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Hotel Performance: Must have insights

Robin Rossmann, Managing Director at STR

Agenda

1. Demand for hotels significantly up across the world

2. Middle East hotels weathering the perfect storm?

3. Pick of the resorts

4. UAE - demand continues to deliver

Demand for hotels significantly up across the world

Significant demand growth across the world2017 supply & demand % change

1.9%

1.2%

2.6%

0.8%

5.2%

1.3%

3.3%

1.6%

2.8%3.3%

4.9%

3.2%

4.0%

7.0%

6.2%

2.5%

North America &Caribbean

Central America South America Europe Middle East Africa Asia Australia & Oceania

Supply Demand

2017 RevPAR up everywhere, with the exception of the Middle EastUSD Constant Currency, Full year 2017

NorthAfrica+38%

Sea of positivity across EuropeConstant Currency, Full Year 2017 RevPAR % Change

Europe 2017 occupancies now almost 10% above previous peakOccupancy 2008, 2016 & 2017

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

January February March April May June July August September October November December

2017 2016 2008

Thanks to 7 years of limited supply and good demand growthEurope – Supply, Demand, RevPAR % Change

0%

5%

10%

2011 2012 2013 2014 2015 2016 2017

Supply % change Demand % change RevPAR % change

USA insert

US Concerns…. Trumped upDespite many uncertainties, US RevPAR should grow 3%

0%

5%

10%

2011 2012 2013 2014 2015 2016 2017 2018 (F)

Supply % change Demand % change RevPAR % change

Intra-APAC travel continues to drive demandAsia Pacific – Supply, Demand % Change, RevPAR % Change, USD, CC, Full Year 2011-2017

-2%

0%

2%

4%

6%

2015 2016 2017

Supply % change

Demand % change

RevPAR % change

Conclusion

Globally, hotel performance has and should continue to grow strongly due to strong fundamental

demand drivers.

This is despite the headwinds of hotel supply growth, the rise of alternative accommodation and

continued global political uncertainty.

Middle East Hotels weathering the perfect storm?

Economic downturn Traveller perceptions Supply increase

The three things that keep hotel investors up at night…

What do the following destinations have in common (it’s not the weather)Aberdeen

Abu DhabiRiyadh Dubai

Houston

The oil prices decline hurt… but this recovery is certainly helpingRevPAR change USD Constant Currency, Full Year 2010 - 2017

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

2014 2015 2016 2017

Oil Price Aberdeen Abu Dhabi Dubai Riyadh Houston

-15%

-10%

-5%

0%

5%

10%

15%

2011 2012 2013 2014 2015 2016 2017

Supply % change Demand % change RevPAR % change

Middle East supply growth has outpaced demand for the past 3 yearsUSD Constant Currency, Full Year 2011-2017

105,616 more rooms by

2020

489 seats on A380 & 4 days Length of Stay

42 more A380s daily in

the sky

Significant supply growth is still on the way across the Middle EastDemand will need to grow significantly to keep pace

… but supply growth has differed on a market by market basisFull Year 2017, Supply % Change

0% 2% 4% 6% 8% 10%

Manama

Beirut

Cairo

Abu Dhabi

Muscat

Amman

Doha Central

Kuwait City

Dubai

Ras Al-Khaimah

Hundreds

… and future supply growth will also vary significantly by marketSupply Pipeline

… and will also vary significantly by location in marketsSupply Pipeline

2022

Cairo 72

Beirut 18

Amman -10

Jeddah -11

Riyadh -6

Muscat -5Abu Dhabi -4

Doha-19Manama -10

Dubai -3 Ras Al-Khaimah-4

Kuwait City 4

Unsurprisingly, 2017 has been a tough year in many marketsFull Year 2017, RevPAR % Change, Local Currency

Some smaller markets have fared better, but not all….USD, RevPAR % Change, Full Year 2017

Fujairah0

Sharjah2

Al Khobar/ Dammam-15Aqaba-1

Dead Sea2

Ajman 8

Al Ain-25

Salalah12

Yanbu -19

2018 has started with some green shoots but other markets remain challengedQ12018, RevPAR % Change, Local Currency

-28.0

-15.4

-8.3-3.7 -2.2

1.1 2.04.4

7.210.4

25.2

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Doha Centre Jeddah Manama Abu Dhabi Dubai Beirut Muscat Ras Al-Khaimah

Riyadh Amman Kuwait City

Conclusion

Middle East hotel markets are incredibly profitable but has had a challenging last three years.

Performance does appear to be stabilising in markets without severe supply increases and should

be helped by the oil price recovery.

Pick of the resorts

The Gulf and Indian Ocean has compelling resort marketsWhich would you pick?

Occupancy – Mauritius, Dubai & Ras Al Khaimah come out tops2017 Occupancy (Dubai, Oman & Sri Lanka are resort hotels only)

ADR and RevPAR – Maldives, Dubai & Seychelles move to the topUSD, ADR and RevPAR, Full Year 2017

USD 0

USD 100

USD 200

USD 300

USD 400

USD 500

USD 600

USD 700

Sri Lanka Resorts Goa Ras Al-Khaimah Oman Resorts Mauritius Seychelles Dubai Resorts Maldives

ADR RevPAR

Long-term performance – Goa, Mauritius & Sri Lanka growing the mostRevPAR Indexed from 2011 to 2017

0.5

1.0

1.5

2017201620152014201320122011

Goa Maldives Mauritius Sri Lanka Seychelles Dubai Resorts Oman Ras Al-Khaimah

Strong performers: Goa, Mauritius & Maldives

Stable performance: Ras Al-Khaimah

Recovering: Seychelles & Sri Lanka

In decline: Dubai & Oman

Conclusion

Resort markets are showing strong growth around the world.

The Gulf and Indian Ocean has compelling options both for customers and investors…

UAE - demand continues to deliver

Dubai supply has doubled in the last 10 years – but so has demand12 MMA, December 1996 – December 2017

AED 100

AED 200

AED 300

AED 400

AED 500

AED 600

AED 700

AED 800

AED 900

AED 1,000

0

5

10

15

20

25

30

35

40

Mill

ion

s

Supply Demand RevPAR

Source: Business Insider

Dubai is now the 4th most visited city in the worldVisitors in Millions, 2017

20.2 20.0

16.1 16.0

13.512.5 12.4 12.4 12.1

9.3

Bangkok London Paris Dubai Singapore Tokyo Seoul New York Kuala Lumpur Hong Kong

International Overnight Visitors

Occupancy has risen across the UAE despite significant supply increasesOccupancy, Full Year 2010-2017

55%

60%

65%

70%

75%

80%

85%

2010 2011 2012 2013 2014 2015 2016 2017

Abu Dhabi Dubai Ras Al Khaimah Sharjah Al Ain Fujairah

# Compression Nights (>90% Occ) ADR Premium

2010 2017 2017

Abu Dhabi 1 25 67%

Ras Al-Khaimah 8 29 41%

Dubai 16 52 41%

Note: ADR premium compares compression nights (>=90% occupancy) compared to all other days

Despite supply increases, compression nights have grownFull Year 2017 vs 2010

Individual hotels can and have outperformed the marketDubai individual hotel 2017 Occ and ADR % Change

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

-20% -15% -10% -5% 0% 5% 10% 15% 20%

Occ % Change

ADR % Change

-10%

-5%

0%

5%

10%

15%

20%

Dubai Abu Dhabi

Occupancy ADR RevPAR F&B + Other Total Revenue

Strong F&B revenues have also helped total revenue growth to remain +’veFull Year 2017, % Change, Local Currency

Conclusion

The UAE has absorbed new supply well, with occupancies remaining strong. ADR has come

under pressure and this is likely to remain challenging as supply continues to grow.

Good revenue management and focus on total revenues will enable individual properties to

outperform.

Thank You!

Robin Rossmann

rrossmann@str.com

@STR_Data

STRGlobal.com

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