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Agenda
Nounthe point at which a series of small changes or incidents becomes significant enough to cause a larger, more important change.
Tipping points:
1. Hotel performance
2. Competitive landscape
3. Sustainability and climate change
Tipping points:
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2.1%1.2% 1.3% 1.4%
6.1%
1.1%
3.5%
2.0%1.9%
-2.4%
3.6%
1.7%
7.9%
3.0%1.9%
0.6%
North America &Caribbean
Central America South America Europe Middle East Africa Asia Australia &Oceania
Supply Demand
Supply now outpacing demand growth in regions around the worldGlobal Supply & Demand % Change, September 2019 YTD
Supply > Demand Supply > Demand Supply > Demand Supply > Demand
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Middle East
Southern Africa
Northern Africa
-36.6%
… driving RevPAR declines in most cases Constant Currency, September 2019 YTD
Europe
Asia
+0.9%
+4.0%
+2.3%
+10.0%
+1.2%
-6.2%-2.4%
Australia & Oceania
-2.2%
North America
Central America
South America
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-2%
0%
2%
4%
6%
8%
10%
2017 2018 2019 Aug-19
Occ % chg ADR % chg
… but occupancy growth has stalled and ADR growth is followingEurope – ADR & Occupancy % Change, CC, EUR, Jan 2017 – Aug 2019
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0.8%
0.6%0.7%
0.6%0.6%
0.9%
1.2%
1.4%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
2012 2013 2014 2015 2016 2017 2018 2019 YTD
Supply % change
Supply growth has been acceleratingEurope – New rooms as a % existing supply, August 2019 YTD
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… with supply growth much higher than average in certain citiesEurope – Supply increase in 2019 as a percentage of total supply
Vienna
Madrid
LondonBrussels
Dublin
Edinburgh
Paris
Lisbon
HelsinkiSt. Petersburg
Moscow
Zurich
Barcelona
Amsterdam
IstanbulBelgradeBucharest
Kiev
Budapest
BerlinWarsaw
Prague
1
1
0
3
7
4
1
2 3
4
3
1
0
3
0
0
8
5
Copenhagen
01
0Rome
Athens2
Tel Aviv 11
Tbilisi6
Nursultan 0
2
2
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Spain strong outside resort marketsRevPAR % Change, Local Currency, August 2019 YTD
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UK struggling outside of LondonRevPAR % Change, Local Currency, September 2019 YTD
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Russia – significantly ahead of 2017RevPAR % Change (versus 2017), Local Currency, September 2019 YTD
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Germany impacted by new supply and slower economyRevPAR % Change, Local Currency, September 2019 YTD
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Supply growth will continue and accelerate in many marketsActive pipeline as a % of existing supply - September 30, 2019
Vienna
Madrid
LondonBrussels
Dublin
Edinburgh
Paris
Lisbon
HelsinkiSt. Petersburg
Moscow
Zurich
Barcelona
Amsterdam
IstanbulBelgradeBucharest
Kiev
Budapest
BerlinWarsaw
Prague
17
6
24
6
39
12
2
14 14
62
18
11
10
9
5
6
26
13
Copenhagen
230
4Rome
Athens3
Tel Aviv 346
Tbilisi78
Nursultan 18
35
14
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The industry is consolidating but still very fragmentedWorldwide Independent vs Chain Hotels, By Total Number of Rooms, as of September 2018
32.6%
61.4% 59.8% 57.1%
46.7%
67.4%
38.6% 40.2% 42.9%
53.3%
North America Central & SouthAmerica
Europe Middle East & Africa Asia Pacific
Independent Chain
5% chg 8% chg 11% chg5% chg 7% chg
Percentage point change in last decade
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Group #Hotels NA International
8,977 75% 25%
7,941 6% 94%
7,071 89% 11%
7,029 75% 25%
5,929 84% 16%
5,632 71% 29%
5,151 0% 100%
4,853 2% 98%
3,766 60% 40%
The big global hotel groups are no longer just US chainsNumber of hotels as of September 2018
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Group #Hotels NA International
8,977 75% 25%
7,071 89% 11%
7,029 75% 25%
5,929 84% 16%
5,632 71% 29%
4,854 2% 98%
3,766 60% 40%
5,151 0% 100%
7,941 6% 94%
+ 35,000 0% 100%
… and a new disruptor has entered the fray
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OYO has more than 2,000 software engineers and data scientists
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6000
13301128 944 867 820 804 696 579
So perhaps the total competitive landscape looks more like this….Largest hotel groups by number of rooms in 2019 (‘000)
525
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The trend is to blend…. but so far hotel groups are only dipping their toes in the water
+ +
+ +
+
+
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Google Trend: Climate ChangeOver the past 5 years
0
20
40
60
80
100
120
+260%
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Google Trends: sustainable travel & carbon footprintTrend growth over the past year
0
20
40
60
80
100
120Sustainable travel: (Worldwide)
0
20
40
60
80
100
120
Carbon footprint: (Worldwide)
+60% +60%
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Emissions from different modes of transportEmissions per passenger per km travelled
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Making it more important to think about source markets … and how they get to your hotels
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How many plastic bottles are use a day in the UK?
?21 million a day
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Tipping points
1. Hotel performance cycle
• Supply growth outpacing demand in many regions around the world
• Next few years likely to be challenging but opportunities for growth exist
2. Technology
• Expect more consolidation of our fragmented industry through technology
• The lines of competition will continue to blur across total paid accommodation
3. Sustainability and Climate Change
Source: Giphy.com
• Sustainability credentials and carbon footprint will play an increase role in the purchasing decisions of certain segments of consumers
• Don’t underestimate the ability for one individual to change a whole family’s purchasing decision
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Thank You!
www.str.com
Robin Rossmann – Managing Director, STR