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Government Travel’s Largest Sector: Hospitality
Copyright © 2009, The Rubicon Group, Inc. Proprietary & Confidential
This report and its contents are proprietary information and may not be disclosed or discussed with any third party, except as permitted by the Publisher, The Rubicon Group, Inc. Neither the contents of the report, actions taken based upon the report nor implications of the report may be shared with anyone outside of the Subscriber’s organization. The contents of the report are based upon data provided to Rubicon by third parties and the report is provided “as is.” Rubicon makes no representation expressed or implied regarding the accuracy or completeness of the contents of the report and the recipient of the report expressly assumes all risk, whether known to the Subscriber, in relying upon the contents of the report.
2
Where does information come from?
3
Rubicon Data Sources This presentation is based on reservation data
provided by hotel companies participating in Rubicon’s MarketVision® Demand Position product.
The scope of the reporting:• Four major brands• All booking channels (direct, voice, travel agency,
brand.com, online travel agency)• 14 major US markets
94.5 million annual room nights $15.5 billion in annual room revenue
• Q1, 2009 – Q2, 2010• As of July 31, 2009
4
Size and Scope of Government Hospitality What do we know?
• Characteristics of reservations• Certain metro areas• Our definition of metro area• Government transient segment
What don’t we know?• Behavior of travelers• All cities, towns, rural areas• CVB definition of metro area• Government groups
SCOPE GOVERNMENT TRANSIENT TRANSIENT EXCL GOV
TY ROOM NIGHTS 4,188,909 42,967,697 38,778,788 LY ROOM NIGHTS 3,599,438 42,419,365 38,819,927
TY REVENUE $603,712,612 5,921,439,485 $5,317,726,873 LY REVENUE $536,321,571 $6,942,405,052 $6,406,083,480
5
What’s Happening with Government Hospitality? How is the hospitality industry doing overall? And how is
government doing by comparison? How has government demand for hotels shaped up throughout
the year, leading up to now? Is demand shifting? Growing or shrinking? What is the relative share of government hotel business, as
compared to overall business? Corporate business? Is government hotel business as affected, more affected, or less
affected by the current recession than overall hotel business? What are the current pricing conditions? Has pricing behavior changed? What do the upcoming months look like for government hotel
business?
6
How is the hospitality industry doing overall? And how is government doing by comparison?
7
Performance Trends1/
11/
181/
151/
221/
29 2/5
2/12
2/19
2/26 3/5
3/12
3/19
3/26 4/2
4/9
4/16
4/23
4/30 5/7
5/14
5/21
5/28 6/4
6/11
6/18
6/25 7/
27/
97/
167/
237/
30
-25%
-20%
-15%
-10%
-5%
0% 365 Day Future Horizon
Tran-sient RevPA...
As of Date (2009)
Varia
nce
% v
s Las
t Yea
r
Jan-July 2009
The above graph shows the variance % versus last year RevPAR, across all markets, for a rolling 365 day future horizon, as of the start of each week since January 1, 2009.
8
Performance Trends1/
11/
81/
151/
221/
29 2/5
2/12
2/19
2/26 3/5
3/12
3/19
3/26 4/2
4/9
4/16
4/23
4/30 5/7
5/14
5/21
5/28 6/4
6/11
6/18
6/25 7/2
7/9
7/16
7/23
7/30
-25%-20%-15%-10%
-5%0%5%
10%15% 365 Day Future Horizon
Transient Room Nights excl Gov
Transient ADR excl Gov
Gov-ern-ment Room NightsGovern-ment ADR
As of Date (2009)
Varia
nce
% v
s Las
t Yea
r
Jan-July 2009
The above graph shows the variance % versus last year committed occupancy and ADR, across all markets, for a rolling 365 day future horizon, as of the start of each week since January 1, 2009.
9
How has government demand for hotels shaped up throughout the year, leading up to now?
10
Occupancy Outlook Q1, 2009AT
LBO
SCH
IDA
LHN
LLA
XM
IANY
CM
CO PHX
SAN
SFO
SEA
WAS
-30%
-20%
-10%
0%
10%
20%
30%
40%
Transient
Government
Variance - Transient (All)
Variance - Government (All)Va
rianc
e %
vs L
ast Y
ear
11
ADR Outlook Q1, 2009AT
LBO
SCH
IDA
LHN
LLA
XM
IANY
CM
CO PHX
SAN
SFO
SEA
WAS
-25%
-20%
-15%
-10%
-5%
0%
5%
Transient
Gov-ern-mentVariance - Transient (All)
Variance - Govern-ment (All)
Varia
nce
% v
s Las
t Yea
r
12
Occupancy Outlook Q2, 2009AT
LBO
SCH
IDA
LHN
LLA
XM
IANY
CM
CO PHX
SAN
SFO
SEA
WAS
-10%
0%
10%
20%
30%
40%
50%
Transient
Gov-ern-mentVariance - Transient (All)
Variance - Govern-ment (All)Va
rianc
e %
vs L
ast Y
ear
13
ADR Outlook Q2, 2009AT
LBO
SCH
IDA
LHN
LLA
XM
IANY
CM
CO PHX
SAN
SFO
SEA
WAS
-30%
-25%
-20%
-15%
-10%
-5%
0%Transient
Government
Variance - Transient (All)
Variance - Government (All)
Varia
nce
% v
s Las
t Yea
r
14
Occupancy Outlook Q3, 2009AT
LBO
SCH
IDA
LHN
LLA
XM
IANY
CM
CO PHX
SAN
SFO
SEA
WAS
-10%
0%
10%
20%
30%
40%
50%
60%
Transient
Government
Variance - Transient (All)
Variance - Government (All)Va
rianc
e %
vs L
ast Y
ear
15
ADR Outlook Q3, 2009AT
LBO
SCH
IDA
LHN
LLA
XM
IANY
CM
CO PHX
SAN
SFO
SEA
WAS
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
Transient
Government
Variance - Transient (All)
Variance - Government (All)Va
rianc
e %
vs L
ast Y
ear
16
Occupancy Outlook YTD Summary
ATL
BOS
CHI
DAL
HNL
LAX
MIA
NYC
MCO PH
XSA
NSF
OSE
AW
AS
-10%-5%0%5%
10%15%20%25%30%35%40%
Transient
Gov-ern-mentVariance - Transient (All)
Variance - Govern-ment (All)Va
rianc
e %
vs L
ast Y
ear
17
ADR Outlook YTD Summary
ATL
BOS
CHI
DAL
HNL
LAX
MIA
NYC
MCO PH
XSA
NSF
OSE
AW
AS
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
Transient
Government
Variance - Transient (All)
Variance - Government (All)Va
rianc
e %
vs L
ast Y
ear
18
Is demand shifting? Growing or shrinking?
19
Q1, 2
009
Q2, 2
009
Q3, 2
009
Q4, 2
009
Q1, 2
010
Q2, 2
010-4,000,000
-2,000,0000
2,000,0004,000,0006,000,0008,000,000
10,000,00012,000,00014,000,00016,000,000
-30%-15%0%15%30%45%60%75%90%105%120%
Transient LY
Transient TY
Gov LY
Gov TY
Transient Var % vs LY
Gov Var % vs LY
Room
Nig
hts
Variance % vs Last Year
Demand Shift
20
Revenue20
09-0
120
09-0
220
09-0
320
09-0
420
09-0
520
09-0
620
09-0
720
09-0
820
09-0
920
09-1
020
09-1
120
09-1
220
10-0
120
10-0
220
10-0
320
10-0
420
10-0
520
10-0
6-50%-40%-30%-20%-10%
0%10%20%30%
Transient excl Gov
Government
Varia
nce
% v
s Las
t Yea
r
22
Revenue vs. Room Nights – Future
-40% -30% -20% -10% 0% 10% 20% 30% 40%-50%-40%-30%-20%-10%
0%10%20%30%40%50%
Washington DC
Atlanta
Boston Chicago
Dallas
Honolulu Los Angeles
Miami
New York
Orlando
Phoenix
San Diego
San Francisco
Seattle
Variance % vs Last Year Room Nights
Varia
nce
% v
s Las
t Yea
r Rev
enue
23
What is the relative share of government hotel business, as compared to overall business? Corporate business? How is this shifting?
24
Share of Room Nights & Revenue – YTD
8.2%26.3
%65.5
%
LY Room Nights
Government
Corp
Transient excl Gov/Corp
10.0%
24.2%65.8%
TY Revenue7.5%
25.7%66.8%
LY Revenue
9.5%
23.1%67.3%
TY Room Nights
25
Share of Room Nights & Revenue – Future
10.0% 19.9%
70.1%
LY Room Nights
Government
Corp
Transient excl Gov/Corp
11.3%16.8%
71.9%
TY Revenue8.9%
18.8%72.3%
LY Revenue
11.0%17.2%71.7%
TY Room Nights
26
What are the current pricing conditions?Has pricing behavior changed?How does pricing stack up as compared to government per diems?
27
2009 Government Per Diem vs. Actual Pricing – Chicago
Oct-0
8No
v-08
Dec-
08Ja
n-09
Feb-
09M
ar-0
9Ap
r-09
May
-09
Jun-
09Ju
l-09
Aug-
09Se
p-09
Oct-0
9No
v-09
Dec-
09
$-
$50
$100
$150
$200
$250
$300 Current Rates
-25%
-20%
-15%
-10%
-5%
0%
5% Variance % vs Last Year Gov UPAny Non Qual UPCorp UPGov MIDAny Non Qual MIDCorp MIDGov ADRTransient ADR (excl gov)Per Diem
28
2009 Government Per Diem vs. Actual Pricing – San Francisco
$-
$50
$100
$150
$200
$250
$300
$350 Current Rates
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
-50%
-40%
-30%
-20%
-10%
0%
10%
20% Variance % vs Last Year Gov UPAny Non Qual UPCorp UPGov MIDAny Non Qual MIDCorp MIDGov ADRTransient ADR (excl gov)Per Diem
29
2009 Government Per Diem vs. Actual Pricing – Washington DC
$- $50
$100 $150 $200 $250 $300 $350 $400 Current Rates
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
-20%-15%-10%
-5%0%5%
10%15%20% Variance % vs Last Year Gov UP
Any Non Qual UPCorp UPGov MIDAny Non Qual MIDCorp MIDGov ADRTransient ADR (excl gov)Per Diem
30
What do the upcoming months look like for government hotel business?
31
Currently, for the month of September, demand is up for both the government and transient sectors at 10.3% and 8.6%, respectively. Government ADR is down by 2.0% while transient ADR is down by 17.4%.
32
08/0
909
/09
10/0
911
/09
12/0
901
/10
02/1
003
/10
04/1
005
/10
06/1
007
/10-100,000
0
100,000
200,000
300,000
400,000
500,000
-30%
0%
30%
60%
90%
120%
150%Room Nights on the Books and Last Year Variance – Future 12 Months
Gov LYGov TYVar % vs LYRo
om N
ight
s
Variance % vs Last Year
12 Month Outlook by Month
33
In the current quarter, with 2 recent months and 1 future month, demand is up 19.1% and 6.4% for government and transient, respectively, and ADR is down by 3.8% and 17.9%, respectively. Not including September, Q3-2009 demand is up by 20.5% year over year while ADR is behind by 3.9%.
34
Occupancy Outlook Q4, 2009AT
LBO
SCH
IDA
LHN
LLA
XM
IANY
CM
CO PHX
SAN
SFO
SEA
WAS
-40%
-20%
0%
20%
40%
60%
80%Transient
Transient Pace
Gov-ern-mentGovern-ment Pace
Variance - Transient (All)
Variance - Govern-ment (All)
Varia
nce
% v
s Las
t Yea
r
35
ADR Outlook Q4, 2009AT
LBO
SCH
IDA
LHN
LLA
XM
IANY
CM
CO PHX
SAN
SFO
SEA
WAS
-30%-25%-20%-15%-10%
-5%0%5%
10%15%
Transient
Government
Variance - Transient (All)
Variance - Government (All)
Varia
nce
% v
s Las
t Yea
r
36
For the 3 future quarters, government room nights are up by 2.7% compared to same time last year while ADR is down by 3.0%. Transient excluding government, on the other hand, is down by 12.2% in room night demand versus same time last year with ADR down by 14.4%.
37
Conclusions Hotel demand has suffered significant
declines in occupancy, ADR and RevPAR through the downturn.
The government segment has been spared to some degree, compared to other hotel segments.
The outlook for the remainder of the year is cautiously optimistic.
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