Tom Huffsmith, Senior Managing Director, CBRE Hotels

Travel Trends:It’s About What’s Next

US Travel: Historical OverviewTHE BIG PICTURE:U.S. – 2000 to 2018 (STR 2000-2018)

• Supply rose 1.3% CAGR adding 1m rooms

• Demand rose 1.4% CAGR adding 250m room nights

“Good, but not great”

Domestic Demand grew by 1.3% CAGR/190m RN(AH&LA 2000-2018, Otus & Co Ltd.)

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Foreign Inbound Demand grew by 1.5% CAGR/60m RN(US Dept of Commerce Intl Trade Admin; National Travel and Tourism Office, 2000-2017)

Looking back:• Boomers and Millenials were key

to the growth in leisure demand; THE NUMBER OF LEISURE RN’S INCREASED BY 4X MORE THAN ALL BUSINESS RN’S.

• But...Millenials and young Gen-Xers were not buying houses and starting families during this period…they are now.

Looking forward:• Pressure on Leisure Travelers:

• Dis-Equilibrium in personal finances• Record debt and low savings rate• Implications of a rise in interest rates on

credit card debt• Inflationary pressure on hotel prices• Dilution from growth in outbound leisure • Shift in disposable income by demographic

Closer Look: Domestic Leisure Demand

Historical Context:• In 2017, domestic leisure demand = 43% of total demand• 2000 – 2017 CAGR of 1.6%• Occurred during period of decline in real income• Largely funded by unsecured short-term and credit card debt (Otus & Co Ltd)

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Looking back:• Service Business sector = 41% of

national employment in 2000+ Grew by 2.3% from WWII to 2000+ Grew by only 0.4% from 2000 to 2015 + 3 of the largest segments of Business

Services are in decline (financial services, retailing and communications).

Looking forward:• All indications point to even slower

growth in service business employment

• US government policies geared toward regressing the microeconomic structure of the economy back into more physical and blue collar work. (Otus & Co Ltd)

Closer Look: Domestic Business Demand

Historical Context:• From 1950 to 2000, domestic business demand grew at 4% CAGR;• From 2000 to 2017, domestic business demand collapsed, growing

at a paltry 1% CAGR

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US Travel: Outbound and Inbound Demand

Globally, the fastest growing export market +3.6% CAGR globally, 2000 to 2017; US grew at only 1.5%.

U.S. Outbound• Outbound nights rose from 944m

to 1,379m/+2.4% CAGR during 2000-2016; +435m RN; as compared to +190m/+1.3% CAGR in domestic RN (The US Department of Commerce International Trade Association, National Travel & Tourism Office, 2000-2017)

• Dominated by Leisure travelers

U.S. Inbound• Bumpy Ride in the US

• Down following 9/11, Great Recession• 2012 Introduction of National Strategy for Travel

and Tourism led to explosive growth (5%PA)

• In 2017, worldwide international arrivals grew by 7%(UNWTO Tourism Highlights) but only 2% in the US (Int’l Trade Assoc).

(In January 2018, the NTTO estimated that international arrivals fell by 4%, representing 7 million room nights. (NTTO, Travel and Tourism-Related Imports; UNWTO World Tourism Barometer January 2018; Otus & Co. LTD.)

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In-Bound US TravelApril 9, 2018

International Trade Administration Announces Suspension of 2017 I-94 Overseas Arrivals Data ReleasesThe International Trade Administration’s National Travel and Tourism Office (NTTO) announces the suspension of data releases on overseas arrivals to the United States pending resolution of underlying technical issues with a significant number of I-94 records received from the Department of Homeland Security’s (DHS) U.S. Customs and Border Protection (CBP).

Recognizing that many of you rely on these numbers for high-level reports and that this delay may negatively impact your business processes, your patience is appreciated during this U.S. arrivals data release lag. Once NTTO determines there is a reliable, accurate and dependable data source for arrivals to the United States, delivery of 2017 U.S. arrivals data will be resumed.

September 13, 2018

U.S. Department of Commerce Reports Record Spending by International Visitors in 2017

Posted by: Lodging Staff in Featured, Hot Topics, Industry News

WASHINGTON—The U.S. Department of Commerce International Trade Administration’s National Travel and Tourism Office (NTTO) this week announced that the United States welcomed nearly 77 million international visitors into the country in 2017. Those visitors collectively spent a record-setting $251.4 billion in 2017, a 2 percent increase when compared to 2016. Over the course of 2017, travel and tourism exports helped support more than 1.2 million American jobs across the United States.

It has taken from last September to work out the mess and last year they achieved a 70% discount to the global market.

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September 9, 2018

14 Industry Leaders Press Trump To Help Grow Inbound TravelThe travel industry finally got a much coveted audience with President Trump last week at the White House, and 14 industry leaders used the opportunity to make a case for why the administration needs to help increase inbound visitors.

The U.S. Travel Association's first face-to-face with the president was attended by Marriott International's Arne Sorenson, Hilton Worldwide'sChris Nassetta, Hyatt's Mark Hoplamazian and other top executives, including the heads of Universal Studios, Enterprise Rent-A-Car, Wyndham Worldwide and InterContinental Hotels Group, all members of U.S. Travel's CEO Roundtable.

The meeting came at a time when the U.S. travel industry is facing a slowing rate of inbound growth, even though travel is booming globally.Recalling the meeting for Travel Weekly a day after it took place,

U.S. Travel CEO Roger Dow said he told the president that the U.S. has been losing its market share of international travelers; since 2015, the U.S. share has fallen from 13.6% to 12%.

In-Bound US Travel

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Closer Look: Inbound Demand

Historical Context:• Globally, the fastest growing export market at +3.6%

CAGR globally, 2000 to 2017; projected to grow +4%• Bumpy Ride in the US

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• Outbound US demand and inbound foreign demand grew faster than US Domestic demand

• Post 2017 US Government policies do not bode well:+ Extreme vetting+ Scrapping of Brand USA (Otus & Co Ltd)

Looking forward:• Foreign visitors may be the largest single

source of demand growth; but will fortress America change its tune?

Implications for:• Hotel Brands• Tour & Travel Companies

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Where Do We Go From Here?

Opportunities to Consider

9WTTO Economic Impact 2018

WORLD: VISITOR EXPORTS AND INTERNATIONAL TOURIST ARRIVALS

https://www.quicksprout.com/2017/04/26/forget‐millennials‐7‐reasons‐why‐baby‐boomers‐are‐the‐ideal‐target‐market/.  By Neil Patel

“Forget Millennials. 7 Reasons Why Baby Boomers Are the Ideal Target Market.” 

Baby Boomers: 1946 to 1964Dream - MIBBB• Millenial In Baby Boomer Body

• “I will live until I die, and I won’t get the two confused.” (John Maxwell)

Illusion - MISS• M In Slightly Sexy Swimsuit

• I rarely get the two confused.

Reality - MHOWTS• M Who are Okay wearing Tie Dye

Woodstock T-Shirts

• I’m confused (now)!• I’m still looking for that girl named L&H

Product/Service Considerations:• MHOWTS need lighting, lighting, lighting• Functional (MHOWTS) is as important as experiential

(MIBBB and MISS)• Can I bring my family? Multi-generation services (don’t

force me to go to an AirBnB)• Don’t even think about asking if I need a handicap room

(MIBB/MISS) even though I might need a few of the features (MHOWTS)

• Health/Wellness (e.g.Wellness-focused urban brands)?*

Brand Considerations:• Loyalty is paramount…loyalty

clubs have value (all 3)• What is the brand view on

Millenials?• How are existing brands

relevant to MIBBB and MISS?• What brand attributes will

attract or deter MIBBB and MISS

Marketing Considerations:• Relevant testimonials from

demographic cohort• Multi-generational

experiences

Yesterday’s hotels may have been built for BB, but BB’s are changing.

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*Marriott’s Westin repositioned to a become and ‘premium luxury wellness’ hotel brand, with its first opening in London by 2021 (one of the first assets under the new brand identity); IHG’s EVEN Hotels (“Where Wellness is Built In”).

International InboundDream • See the USA in a Chevrolet• Shop ‘Til I Drop

Illusion• It’s Cheap To Fly Anywhere in the

continental US

Reality • It’s A Really Big Country

- Where do I go after NY/LA/MIA?

Product/Service Considerations:• Language assistance

• Infrastructure:• Are we prepared e.g. airports?• Vertical integration of services

• Hotels as retail distribution centers?

Brand Considerations:• Where and how to grow

brand recognition

• How market experiential opportunities to induce/ capture demand?

Marketing Considerations:• Michelin Guide for different countries,

cultures – who is the trusted advisor for different inbound constituencies?

• Simplify the Buy; logistics, costs (NY-Room Sales Tax, Occupany Tax, Javitz Center Tax, City/Local Tax)

This Segment Will Only Grow

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Emerging Markets

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Africa• 40% of world’s population by 2100• 1.1 billion working age population by

2034, overtaking China and India• 40% urbanization rate (15million annually)• Cities such as Kampala, Lusaka and

Nairobi are growing +4% per annum.• Lagos, Kinshasa and Dar es Salaam will

be the three most populous cities in the world at the end of the century.

(Knight Frank, Africa Report 2017; McKinsey)

Southeastern Europe – Balkans, Dalmation Coast• Proximate to major Western

European markets• Significant coastline• But…structural reforms moving

slowly

And:• Viet Nam• Scandinavia• Baltics

The major chains are increasingly focused on growth markets outside of the US. (US Real RevPar growth of only 1.9% / $2 2007-17)

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