sgtp presentation rubicon government hospitality

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


LBO

SCH

IDA

LHN

LLA

XM

IANY

CM

CO PHX

SAN

SFO

SEA

WAS

-10%

0%

10%

20%

30%

40%

50%

Transient


Variance - Govern-ment (All)Va

rianc

e %

vs L

ast Y

ear

13


LBO

SCH

IDA

LHN

LLA

XM

IANY

CM

CO PHX

SAN

SFO

SEA

WAS

-30%

-25%

-20%

-15%

-10%

-5%

0%Transient

Government


Variance - Government (All)

Varia

nce

% v

s Las

t Yea

r

14


LBO

SCH

IDA

LHN

LLA

XM

IANY

CM

CO PHX

SAN

SFO

SEA

WAS

-10%

0%

10%

20%

30%

40%

50%

60%

Transient

Government



rianc

e %

vs L

ast Y

ear

15


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



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


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



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


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 - Govern-ment (All)

Varia

nce

% v

s Las

t Yea

r

35


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 - 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.

38

THANK YOU!

RubiconChristine [email protected]

mailto:[email protected]