Topics
Accuracy Assessment You Pick the Forecast ! Cap Rate Outlook
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2012
Hunter
2011
Occupancy ADR RevPAR
Current Forecast F t
Source: PKF Hospitality Research, LLC March-May 2012 Hotel Horizons, Smith Travel Research
in 2012
Main drivers of the demand recovery 2010 - 2011: - Corporate profit growth - Real personal income growth - Low room rates
Forecast
198 89 199 90 199 91 199 92 199 93 199 94 199 95 199 96 199 97 199 98 199 99 200 00 200 01 200 02 200 03 200 04 200 05 200 06 200 07 200 08 200 09 201 10 201 11 201 12 201 13
Hunter 2011
Jan-11 J 11 Apr-11 A 11 Oct-11 Oct O tJanJan J -12
Hunter 2011
Today
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6 to 8 Month Lag
A Contraction Coming? Source: The Conference Board, PKF-HR, STR
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Increasing:
Average Daily Rates 47 0 9 48 50 50 50 50 Occupancy Outliers 4 0 Houston 49 New Orleans 49 44 48 49 48
Outliers
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Sovereign and banking debt problems intensify, intensify causing the European recession to worsen worsen. U.S. business confidence weakens and total U.S. exports level off and begin to decline. Lack of progress on the U.S. fiscal situation further undermines business confidence. A mild second recession occurs during first and second quarters of 2012. U Unemployment rate rises, peaking at 11.1% i Q1 l t t i ki t 11 1% in 2013.
2012 Mild Second Recession Economic Forecast Employment E l t -0.3% CPI 0.8% GDP 0.1%
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Income I 1.5%
Source: Moodys Analytics
Measure
Supply Demand Occupancy Average Daily Rate RevPAR
2011
0.6% 5.0% 60.1% 3.7% 3 7% 8.2%
2012
0.7% -0.1% 0.1% 59.6% 2.7% 2 7% 1.9%
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is expected to remain above 8% through 2012 even with the addition of 2 million jobs jobs. Extend payroll tax holiday and emergency unemployment insurance through the rest of 2012. Housing prices continue to fall through Q2 2012 as foreclosures and short sales increase. Mild European Recession. Business Investment increases 8.9%.
2012 Expected Case Economic Forecast Income 2.5%
Source: Moodys Analytics
Employment 1.1%
CPI 2.1%
GDP 2.6%
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Measure
Supply Demand Occupancy Average Daily Rate RevPAR
2011
0.6% 5.0% 60.1% 3.7% 3 7% 8.2%
2012
0.6% 2.2% 61.0% 4.1% 4 1% 5.8%
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than expected progress on the European sovereign debt crisis and the U S federal fiscal debate U.S. raises business confidence, speeding up fixed investment & hiring. g Consumer sentiment rebounds strongly. No further declines in house prices. Unemployment rate declines to less than 8%. Federal Reserve begins to raise the federal funds rate slowly over th course of 2012. l l the f 2012
2012 Strong Near-term Rebound Economic Forecast Income 3.4%
Source: Moodys Analytics
Employment 1.7%
CPI 2.3%
GDP 3.7%
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Measure
Supply Demand Occupancy Average Daily Rate RevPAR
2011
0.6% 5.0% 60.5% 4.7% 4 7% 5.4%
2012
0.6% 2.9% 61.6% 4.6% 4 6% 7.3%
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Measure
Demand Occupancy Average Daily Rate RevPAR
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60 40 20 0 -20
Variables
Changes in Income
10-Year Treasuries
RevPAR
Change in income
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4.3% 4 3% 4.8% 4.6% 3.7% 3.3% 3.2% 2.8% 2.5% 2 5% 4.0% 5.3%
3.5% 5.0% 5 0% 5.2%
1.8% 1 8% 1.7% 1.9% 3.8% 4.0% 2.8% 2.8% 2.9% 2 9% 2.4% 2.3%
2.4% 2.0% 2 0% 1.7%
2.8% 2 8% 2.0% 1.5% 0.9% 2.0% 1.9% 2.5% 2.3% 2 3% 2.2% 2.7%
Hunter 2011 = RED 2.3% 1.8% 1 8% 1.7%
8.9% 8 9% 8.5% 7.9% 8.4% 9.3% 7.9% 8.1% 8.2% 7.7% 8.8% 7 7% 8 8% 8.6% 8.6% 10.0%
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In Asian Astrology..
rd, 23
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In Asian Astrology..
This should be a year of aggressive p positioning for the future. g Conventional wisdom should not be allowed to stand in the way of progress. Those who are confident i their Th h fid t in th i ideas and ventures should proceed.
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A Final Thought
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