hotels quarterly market report - arrangemy · accor, hilton, ihg and marriott international...

HOTELS QUARTERLY MARKET REPORTJANUARY TO MARCH 2019

in association with

32

HOTEL MARKET UPDATEJanuary to March 2019

EXECUTIVE SUMMARY

Hotels Quarterly Market Report

In association with Advantage Travel Partnership

The business world continues to travel, and our first quarter statistics once again demonstrate an increase in hotel business. Room nights booked from January to March 2019 saw a 6.14% increase, following a positive 2018 where room nights were +8.74% for the full year. Year-to-date, 2019 has seen an increase in UK room nights booked of 5.10%, whilst the rest of the world experienced growth of 7.66%. These figures are underpinned by our membership’s core business, SME (Small and Medium Enterprise) corporate accounts, proving resilience and continued growth in this important sector.

The number of bookings in the first quarter of this year was up by 4.91%, and the average length of stay was 1.93 nights per booking, which is marginally up from quarter one of 2018 where the average length of stay was 1.91 nights. This validates our experience that clients are, on average, staying longer per hotel booking.

The average daily rate (ADR) for January to March 2019 across the globe for hotels was down from the same period in 2018 by nearly USD5 to USD164.27. This was driven by a general softening of occupancy levels and growing supply of new hotel openings; in 2018 a total of 2,675 new hotels, offering 403,153 bedrooms, opened around the world. Increased supply and lower occupancy can lead to hotels decreasing rates to encourage sales.

NUMBER OF ROOM NIGHTS BOOKED FROM JANUARY TO MARCH 2019 WAS UP BY

6.14 %VERSUS 2018

1.93 nights was avg. length of stay

4.91% increase in number of bookings

ADR was down to USD164

RESOURCES:CBRE Hotels Research, Forbes, IATA, TravelClick, STR, PwC, Lodging Econometrics, WIN

Please note this is just a view and we cannot be held responsible for any of the figures or comments contained in the summary. This is a summary of the hotel market, designed to provide an overview. Further information can be provided on request.



54

The current challenges facing the hotel industry are similar to those across many others – uncertainty with the slowdown of the global economy, rising costs of salaries and utilities, the trade tariff war between China and the US, and the still unresolved Brexit negotiations. So, despite a strong start to the year for hotels with our members, there are signs that overall economic factors could have an effect through the rest of the year.

IATA (International Air Transport Association) has downgraded its forecast to a USD28 billion profit for airlines, down from the USD35.5 billion which was forecast in December 2018. It will still be the tenth consecutive year in the black for the airline industry, but it is an indication of a slowing in the travel market.

Many hotel watchers are starting to talk down any major increases in the sector following ten successive years of occupancy expansion. US hotel occupancy is expected to remain flat this year and to decline in both 2020 and 2021, as increased supply will outpace limited growth in demand, according to the latest CBRE Hotels Research lodging report. The occupancy rate in 2018 was 66.2%, and it’s projected to remain there for the rest of 2019 too. This is supported by PwC’s latest Hospitality Directions US outlook, with the 2019 and 2020 lodging industry expected to remain stable and GDP growth anticipated to slow, alongside slower growth for business investments and an expected rise in inflation.

According to STR, occupancy in Europe was marginally down in April this year versus the same month last year at -0.3%, giving an occupancy rate of 72%, with an increased ADR of +3.3% year-on-year. This is compared to Asia-Pacific where occupancy was down by 2.2% in the same month and ADR was marginally up by 0.2%. The Middle East saw occupancy rise 4.1% but against an ADR decrease of 7.1%, whilst Africa was up 0.8% on occupancy with an 8.1% increase on ADR.

PwC’s UK Hotels Forecast 2019 predicts that trading growth is set to flatten in the year ahead due to economic uncertainty,

weakening business travel demand although there is an influx of new rooms scheduled to open across the UK. The report forecasts that the outlook for London, our top city by room nights booked, will level out with a year-on-year occupancy growth of only 0.3%, which would see occupancy levels hit an amazing 83.6% in 2019, and there will be a credible rise in ADR of 1.4% for the year. The findings from PwC revealed that occupancy levels in the regions across the UK have been averaging 76% since 2015 and are forecast to see no growth for 2019.

Hotel rates are clearly determined by local market conditions, and supply and demand. According to Lodging Econometrics, there is a record high of 6,352 hotels with 1,172,591 bedrooms currently under construction worldwide; plus, there are 3,860 hotels with 572,483 rooms scheduled to start construction in the next 12 months; and 3,361 hotels with 520,718 rooms in the early planning stage – also an all-time high.

The top countries by project count are the US, with 5,530 hotels and 669,456 rooms, and China, whose pipeline reached a new high with 2,761 hotels and 580,635 rooms. The US accounts for 41% of hotels in the total global construction pipeline while China accounts for 20%, resulting in 61% of all global hotels being focused in just these two countries. Distantly following are Indonesia with 387 hotels and 65,405 rooms; Germany with 283 hotels and 52,569 rooms; and the UK with 266 hotels and 38,590 rooms.

Around the world, the cities with the top three largest pipeline counts are: New York with 171 hotels and 29,457 rooms; Dubai with 168 hotels and 49,943 rooms; and Dallas with 163 hotels and 19,476 rooms. Los Angeles follows with 147 hotels and 23,404 rooms, while Guangzhou in China has 132 hotels and 28,694 rooms in its pipeline. Accor, Hilton, IHG and Marriott International combined currently make up more than half of this pipeline of new hotels worldwide.

2019 – THE OUTLOOK

Record high of 6,352 hotels under

construction worldwide

83.6% occupancy forecast for

London in 2019

US hotel occupancy

expected to remain flat in 2019

EXETER





76

✪ Economic growth is slowing in some regions but is still predicted to remain positive. As a result, hotel performance is also now being predicted to slow and level out.

✪ Rate increases/decreases will vary by destination with supply and demand contributing to hotel pricing levels. For example, according to PwC, Dublin saw hotel occupancy at an average of 83.8% in 2018 with an ADR increase of 6.5%, mainly due to the lack of new hotel building in the Irish capital. This results in hotel pricing remaining high. However, where new hotel openings in cities continue to increase, this is usually accompanied by a lowering of prices to reflect the rise in supply.

✪ Uncertainty around Brexit has depressed exchange rates between the pound, the euro and other currencies. London will remain attractively priced for international clients and overseas hotels will be broadly more expensive.

✪ Hotel group loyalty points still cannot be earned when booking through OTAs/bedbanks. However, most hotel partners we work with are offering their loyalty card benefits when booking through a TMC and the GDS.

✪ As traveller safety and duty of care are now high priorities for TMCs, hotels will have to play their part in this process. Initiatives like Maiden Voyage, which undertakes checks on properties and promotes female and LGBTQ-friendly hotels, are becoming more widely used.

✪ Upgrades for faster Wi-Fi and resort and city taxes are creeping into ancillary costs payable directly by clients on departure. The average resort fee is now over USD20.

✪ Major chains all have brands for ‘independent’ hotels to align to, offering the customer access to hotel loyalty schemes and the hotels access to central systems and marketing power e.g. Unbound by Hyatt and Curio by Hilton. These softer brands are made to appeal to the younger traveller market where there is a growing appetite for independent-style accommodation.

✪ The major hotel chains will get larger through acquisition and there will be further consolidation. The top ten hotel chains now have 135 brands between them.

✪ There is a global trend towards personalising the guest experience via

technology. Through Amazon Alexa or similar, customers will be able to adjust the in-room lighting, schedule wake-up calls, and request room service. Increasingly tech-savvy guests will use apps to check in and out, unlock their hotel room door, operate the television remotely and stream their own content through the hotel TV.

✪ Environmental issues and eco-friendly positioning are moving up the agenda for travellers and corporate accounts. Hotels will step up their efforts to go green and showcase their eco credentials.

✪ Most hotel groups now have cancellation penalties for bookings cancelled within two days of arrival.

TRENDS TO WATCH:

ACTIONS

Rate decreases can be achieved by looking at limited service properties or trading down on room and hotel categories.

We have many properties in our hotel programme that include added extras as part of the price - for example, breakfast, Wi-Fi etc. We also have access to an increasing number of special offers. Speak to your travel professional for more information.

The hotel sector’s predicted growth will mean that rates are likely to increase for 2019. As always city/location differences will occur due to supply versus demand.

✔

✔

✔





98

TOP UK LOCATIONS January to March 2019

TOP UK LOCATIONSJanuary to March 2019

APPENDIX 1

In quarter one of 2019 we saw continued strong growth for UK cities and towns, with an increase in room nights of 5.1%. Our top city was London which was 5.0% up in January to March, following 10% growth for the full year of 2018. Table 1 demonstrates that there were some extraordinary regional UK performances in the Top 40 UK Locations; York and Portsmouth lead the way with an increase of 82% and 68% respectively, whilst a further ten towns were also up by over 20%. Eight locations in the top 40 are down versus 2018, with the worst performer being Blackpool. The ADR for quarter one is mixed across UK destinations; Oxford is at +12%, but at the other end of the scale Blackpool is at -20%. The lower ADRs are due in part to the strengthening of the US dollar - i.e. all our figures are reported in USD and in the first quarter of 2019 the dollar strengthened versus many other world currencies including the pound.

LOCATIONROOM NIGHTS JAN - MAR 18

ROOM NIGHTS JAN - MAR 19

ROOM NIGHTS +/-%

ADR (USD) JAN - MAR 19

ADR +/-

London 101,348 106,055 5% $223.83 -2%

Birmingham 24,937 28,819 16% $117.75 -4%

Manchester 16,800 21,496 28% $128.64 -3%

Leeds 15,600 17,403 12% $114.93 -4%

Aberdeen 17,485 17,311 -1% $106.74 -8%

Bristol 12,602 14,135 12% $131.04 -4%

Newcastle 11,733 13,147 12% $108.70 -5%

Glasgow 12,659 13,132 4% $114.04 -8%

Edinburgh 11,543 11,757 2% $130.47 -6%

Liverpool 9,901 10,027 1% $114.06 2%

Nottingham 6,787 7,177 6% $103.17 -4%

Cardiff 5,507 6,966 26% $109.20 -7%

Milton Keynes 6,007 6,060 1% $137.59 4%

Belfast 3,983 5,506 38% $111.17 -13%

Sheffield 5,079 5,327 5% $100.71 -5%

Heathrow Airport/Hounslow

5,136 4,673 -9% $124.11 -13%

York 2,536 4,616 82% $110.34 -9%

Southampton 3,179 3,940 24% $107.93 -8%

Crawley/ Gatwick Airport

3,000 3,909 30% $144.25 -5%

Coventry 4,393 3,823 -13% $112.60 -7%

Reading 3,515 3,504 0% $154.60 -2%

Cambridge 2,868 3,319 16% $176.04 -6%

Derby 2,570 3,210 25% $121.80 1%

Bradford 2,995 3,111 4% $78.78 -1%

Leicester 2,401 3,039 27% $113.19 -4%

Norwich 2,882 2,746 -5% $116.70 1%

Exeter 2,863 2,706 -5% $115.04 -4%

Oxford 2,597 2,623 1% $142.09 12%

Plymouth 2,022 2,432 20% $106.66 -5%

Bournemouth 2,295 2,324 1% $116.88 -5%

Doncaster 2,081 2,278 9% $89.16 0%

Inverness 2,435 2,214 -9% $101.85 -3%

Luton 2,397 2,189 -9% $106.84 -12%

Portsmouth 1,273 2,143 68% $114.78 -7%

Swindon 1,905 2,124 11% $118.46 -2%

Salford 1,450 2,068 43% $108.69 0%

Chester 1,544 2,024 31% $109.35 -12%

Blackpool 2,955 1,914 -35% $90.16 -20%

Warrington 1,508 1,822 21% $131.99 1%

Winchester 1,532 1,812 18% $118.01 -6%

Table 1. Source: TravelClick/WIN

London room nights up by 5.0%

8 of the top 40 UK locations

saw room night decreases

5.1% increase in UK room nights





1110

TOP LOCATIONS WORLDWIDE (EXCLUDING UK) January to March 2019

Across the globe (excluding the UK) we have seen an increase in room nights of 7.6% for January to March 2019, compared to the same period in 2018. New York continues to be our top city with over 23,000 room nights booked and again at a very high average value of USD301. Table 2 highlights that there were some outstanding performances for the Top 40 Locations Worldwide (excluding UK); Stavanger (Norway) deserves special recognition for 112% growth in room nights, plus Aguascalientes (Mexico) and Miami (Florida, US) both posted increases of over 50%.

Twenty-nine of the top 40 locations posted room night increases in the first quarter of this year, whilst ten locations saw decreases versus 2018, with both Sydney and Melbourne in Australia recording substantially less room nights booked. The ADR for quarter one was mixed, with only 11 positive performances, led by Aguascalientes. Miami saw the largest ADR decrease at -20%, which is partly due to new hotel builds and openings in the Miami area recently.

TOP LOCATIONS WORLDWIDE (EXCLUDING UK) January to March 2019

LOCATION COUNTRYROOM NIGHTS JAN - MAR 18


ROOM NIGHTS +/-%


ADR +/-%

New York United States 20,508 23,024 12% $301.75 -1%

Houston United States 14,608 16,036 10% $157.23 -4%

Paris France 13,154 13,294 1% $275.70 -6%

DubaiUnited Arab Emirates

7,938 8,995 13% $228.91 -5%

Singapore Singapore 6,614 8,350 26% $255.59 -6%

Dublin Ireland 6,314 7,140 13% $196.74 0%

Sydney Australia 8,955 6,247 -30% $257.91 -1%

Amsterdam Netherlands 5,837 6,209 6% $218.27 -6%

Cape Town South Africa 5,786 5,647 -2% $148.28 -16%

Hong Kong Hong Kong 5,997 5,369 -10% $381.18 5%

Chicago United States 3,732 5,002 34% $192.06 -1%

Madrid Spain 4,166 4,917 18% $228.02 -2%

Stavanger Norway 2,260 4,801 112% $155.21 -7%

Johannesburg South Africa 4,055 4,768 18% $137.32 -12%

Melbourne Australia 10,841 4,728 -56% $199.71 13%

Aguascalientes Mexico 2,773 4,668 68% $86.08 27%

Frankfurt Germany 3,590 4,276 19% $239.48 -9%

Berlin Germany 3,306 4,223 28% $226.12 -7%

Milan Italy 3,539 4,189 18% $287.81 -2%

Stockholm Sweden 4,147 4,156 0% $219.26 -10%

San Francisco United States 5,410 4,121 -24% $491.85 25%

Miami United States 2,554 4,017 57% $228.73 -20%

Brussels Belgium 3,589 3,848 7% $216.28 2%

Oslo Norway 3,040 3,836 26% $195.12 -15%

Perth Australia 3,582 3,692 3% $139.56 -12%

Austin United States 3,570 3,644 2% $240.52 7%

Boston United States 2,738 3,632 33% $262.99 -1%

Phoenix United States 3,856 3,506 -9% $155.34 5%

Salt Lake City United States 3,628 3,457 -5% $150.58 4%

Toronto Canada 2,924 3,299 13% $219.46 -1%

Atlanta United States 2,603 3,199 23% $217.55 14%

Munich Germany 2,908 3,171 9% $245.44 10%

Shanghai China 3,544 3,139 -11% $203.52 -10%

San Diego United States 2,394 3,129 31% $223.70 0%

Las Vegas United States 2,639 2,869 9% $257.69 -6%

Tokyo Japan 2,890 2,858 -1% $328.55 0%

Los Angeles United States 2,448 2,665 9% $281.53 6%

Dallas United States 2,351 2,649 13% $201.21 0%

Zurich Switzerland 2,489 2,631 6% $305.25 -3%

Copenhagen Denmark 2,655 2,610 -2% $243.44 -4%

APPENDIX 2


29 of top 40 locations excl. UK

saw room night increases

New York remains top location excl. UK with

23,024 room nights

EXETER

7.6% increase in room nights





1312

Three locations saw amazing growth of over 300% for room nights in quarter one of 2019 versus 2018 – the industrial cities of Kristiansand (Norway), Plano (Texas, US) and Breda (the Netherlands). Each of the Top 40 Locations with The Largest Room Night Increases (Table 3) saw a growth in room nights of over 56% versus quarter one of 2018. The US and the UK each have 12 locations in the top 40 increases, Norway features five times and South Africa three times.

LOCATIONS WITH THE LARGESTROOM NIGHT INCREASES January to March 2019

LOCATIONS WITH THE LARGEST ROOM NIGHT INCREASES January to March 2019

At least 56% growth for top 40 locations with largest room

night increases

APPENDIX 3




ROOM NIGHTS +/-%


ADR +/-%

Kristiansand Norway 421 1920 356% $113.66 -16%

Plano United States 352 1577 348% $173.44 12%

Breda Netherlands 287 1270 343% $122.03 -7%

Kidderminster United Kingdom 334 903 170% $93.24 -17%

Bedford United Kingdom 460 1049 128% $118.51 -4%

Stavanger Norway 2260 4801 112% $155.21 -7%

Bexley United Kingdom 379 798 111% $123.38 -5%

Washington, Tyne and Wear

United Kingdom 412 866 110% $87.84 -12%

Hinckley United Kingdom 406 839 107% $104.42 -1%

Utsola Norway 805 1629 102% $109.18 -3%

Odessa United States 1205 2435 102% $200.25 -20%

Cannock United Kingdom 317 636 101% $106.75 -3%

Durban South Africa 873 1696 94% $101.60 -16%

Blomsterdalen Norway 1224 2369 94% $122.34 -6%

Albuquerque United States 954 1825 91% $120.44 -2%

East Elmhurst United States 513 962 88% $165.99 1%

Olive Branch United States 379 705 86% $66.65 -2%

Beverly Hills United States 375 685 83% $463.60 -19%

York United Kingdom 2536 4616 82% $110.34 -9%

Nuremberg Germany 281 496 77% $222.56 -28%

Minato Japan 330 576 75% $382.04 -8%

Versailles France 468 815 74% $207.54 -9%

Lebanon United States 259 450 74% $118.17 6%

East London South Africa 344 589 71% $104.11 -22%

Grays United Kingdom 253 431 70% $106.65 -6%

Portsmouth United Kingdom 1273 2143 68% $114.78 -7%

Aguascalientes Mexico 2773 4668 68% $86.08 27%

Sandnes Norway 577 963 67% $114.05 3%

Skipton United Kingdom 314 516 64% $97.73 -1%

Basingstoke United Kingdom 786 1274 62% $140.89 2%

Cincinnati United States 356 573 61% $150.32 10%

Accra Ghana 377 604 60% $265.52 -1%

Cairo Egypt 581 929 60% $167.52 11%

Schaumburg United States 638 1020 60% $117.94 -4%

Fort Lauderdale United States 575 918 60% $217.69 -15%

Doha Qatar 1311 2090 59% $185.92 -7%

Rochester United States 324 510 57% $152.04 4%

Miami United States 2554 4017 57% $228.73 -20%

Dudley United Kingdom 634 992 56% $99.15 -12%

Nelspruit South Africa 273 427 56% $90.40 -12%

Highest growth in room nights seen in Kristiansand,

Norway

EXETER

3 locations saw over 300% increase

in room nights





Top 40 locations with largest room night decreases at least 57% down

1514

LOCATIONS WITH THE LARGESTROOM NIGHT DECREASESJanuary to March 2019

The Top 40 Locations with the Largest Room Night Decreases (Table 4) have all seen a decrease of 57% or more, with 14 different countries featuring and 13 US locations. Cordoba in Argentina has seen the most dramatic decrease in room nights booked, possibly indicating a slowing of the car manufacturing sector.

LOCATIONS WITH THE LARGEST ROOM NIGHT DECREASESJanuary to March 2019

APPENDIX 4




ROOM NIGHTS +/-%


ADR +/-%

Cordoba Argentina 825 7 -99% $76.29 -25%

Conley United States 604 27 -96% $116.14 92%

Saraland United States 322 31 -90% $83.47 -22%

Oban United Kingdom 243 39 -84% $101.51 10%

San Ramon United States 352 62 -82% $257.24 33%

Cebu City Philippines 442 78 -82% $145.38 34%

Braddon Australia 239 45 -81% $175.64 3%

Dorval Canada 336 64 -81% $156.36 -1%

Gaithersburg United States 306 59 -81% $178.08 13%

King of Prussia United States 458 89 -81% $158.21 -4%

Glattbrugg Switzerland 218 45 -79% $185.54 5%

Oldbury United Kingdom 264 59 -78% $76.18 -4%

Fox Creek Canada 238 56 -76% $117.61 -2%

Weymouth United Kingdom 346 84 -76% $101.60 -3%

Kendal United Kingdom 285 70 -75% $105.75 -9%

Staines United Kingdom 283 71 -75% $120.39 -22%

Carlton Australia 237 62 -74% $128.40 -18%

Bruges Belgium 318 88 -72% $138.18 -13%

Modesto United States 296 83 -72% $144.00 -5%

New Iberia United States 949 278 -71% $99.03 29%

Hasselt Belgium 594 176 -70% $102.74 -3%

Erfurt Germany 232 71 -69% $104.00 -2%

Phenix City United States 375 115 -69% $120.75 3%

New Haven United States 301 97 -68% $171.66 22%

Beeston United Kingdom 410 134 -67% $122.67 -1%

Valletta Malta 316 104 -67% $144.72 -10%

Porto Alegre Brazil 302 104 -66% $67.81 -15%

Fresno United States 771 269 -65% $130.22 1%

Forrest Australia 218 78 -64% $181.36 -6%

Makati City Philippines 325 119 -63% $168.90 31%

Brielle Netherlands 277 103 -63% $131.47 21%

Terre Haute United States 348 131 -62% $120.08 22%

Aix-en-Provence France 294 111 -62% $146.72 -13%

West Valley City United States 556 210 -62% $100.35 -20%

Docklands Australia 865 327 -62% $176.88 11%

Campinas Brazil 222 85 -62% $71.74 4%

Newcastle Australia 339 137 -60% $147.29 -5%

Al Khobar Saudi Arabia 705 285 -60% $161.40 -21%

Boca Raton United States 905 384 -58% $245.59 42%

Chatham United Kingdom 632 270 -57% $104.70 -2%

Largest decrease in room nights seen in Cordoba,

Argentina

14 countries feature in top 40 locations with largest room

night decreases





16

The highest ADR for quarter one was just short of USD750 per night and was recorded in Cannes in the South of France. Of the 40 destinations showing an ADR of over USD281 (Table 5), half of them are in the US, with an incredible 15 in California. This is not too surprising when you consider that the diverse Californian economy ranges from agriculture to technology and manufacturing. According to Forbes, if California was its own nation, it would be the fifth largest economy in the world. With a GDP of USD2.9 trillion, California would slot between Germany and the UK in the world’s top economies.

LOCATIONS WITH THE HIGHEST AVERAGE DAILY RATES January to March 2019

LOCATION COUNTRYADR (USD) JAN - MAR 19

Cannes France $746.88

Menlo Park United States $616.86

Grand Cayman Cayman Islands $592.30

Nassau Bahamas $584.60

Marrakesh Morocco $550.50

Miami Beach United States $513.34

San Francisco United States $491.85

Beverly Hills United States $463.60

Palo Alto United States $451.11

Santa Monica United States $417.35

Hamilton Bermuda $404.08

Luanda Angola $400.92

Minato Japan $382.04

Hong Kong Hong Kong $381.18

Redwood United States $372.72

Los Altos United States $366.76

Hollywood United States $344.06

Tokyo Japan $328.55

San Juan Puerto Rico $325.07

Geneva Switzerland $324.17

Washington United States $320.58

Monte Carlo Monaco $320.30

Naples United States $320.27

Tel Aviv Israel $320.03

Zug Switzerland $316.64

Scottsdale United States $311.39

Venice Italy $308.92

Santa Clara United States $308.29

Zurich Switzerland $305.25

Burlingame United States $305.09

New York United States $301.75

Sunnyvale United States $297.32

Foster City United States $296.51

Tashkent Uzbekistan $295.08

Herzliya Israel $292.42

Milan Italy $287.81

Marina del Rey United States $284.69

San Jose United States $284.12

Los Angeles United States $281.53

Luxembourg Luxembourg $281.02

40 locations with ADR over

USD281

APPENDIX 5

LOCATIONS WITH THE HIGHESTAVERAGE DAILY RATES January to March 2019


17

15 top ADR locations in

California, US

EXETER

Highest ADR seen in Cannes, France





1918 Hotels Quarterly Market Report




hotels quarterly market report - arrangemy · accor, hilton, ihg and marriott international...

Documents