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1

Setting Your Market Sights: New YorkSetting Your Market Sights: New YorkPresented by HSMAI University, Presented by HSMAI University,

HotelNewsNowHotelNewsNow, and Smith Travel Research, and Smith Travel ResearchSeptember 22, 2009September 22, 2009

Overview of Format and TopicOverview of Format and Topic

Webinar ModeratorsFran BrasseuxExecutive Vice President, HSMAI

Panel Moderator: Jeff Higley, VP,

Digital Media & Communications

HotelNewsNow/STR STR/STR Global

2 www.hsmaiuniversity.org

3

HSMAI University Alliance PartnersHSMAI University Alliance Partners


TodayToday’’s Presenters: s Presenters:

4

Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:Brad Garner

VP, Operations

Smith Travel Research

Jay H. Shah, CEO

Hersha Hospitality Trust

David Bowd,

President,Amsterdam

Hospitality

Michael Silberstein General Manager

Crowne Plaza Times Square


HSMAI – New YorkMarket Overview

22 September 2009 Brad Garner

Smith Travel Research /

STR Global

-9.0

4.1

-0.5

-2.8

1.22.3 3.2

-10.3

-7.4

-18.3-20

-10

0

10

Supply Demand Occupancy ADR RevPAR

2008 2009

Total United StatesKey Performance Indicators Percent ChangeAugust YTD

-8

-6

-4

-2

0

2

4

6

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Supply % Change

Demand % Change

Total United StatesRoom Supply/Demand Percent ChangeTwelve Month Moving Average – 1989 to August 2009

2008 Smith Travel Research, Inc.

3.1%

-6.4%

-1.1%

- 4.8%

-20

-15

-10

-5

0

5

10

15

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

RevPAR % Chg

-2.7%

Total United StatesRevPAR Percent ChangeTwelve Month Moving Average – 1989 to August 2009


-10.5% - 15.1%

-11.4

-5.9

-11.1

-9.7

-11.5-10.2

-9.8

-12.6

-5.7

-16.8

-9.9

-5.0

-20

-15

-10

-5

0

Luxury UpperUpscale

Upscale Mid w F&B Mid wo F&B Economy

OccupancyADR

Chain ScalesOccupancy/ADR Percent ChangeAugust 2009 YTD

-16.6

-20.9

-16.0-17.8

-9.4

-14.0

-20.0

-15.5

-19.1

-27.3

-15.1

-11.8

-30

-25

-20

-15

-10

-5

0

Luxury UpperUpscale

Upscale Mid w F&B Mid wo F&B Economy

RevPARRoom Revenue

Chain ScalesRevPAR/Room Revenue Percent ChangeAugust 2009 YTD

Total United StatesActive Development Pipeline - RoomsChange From Prior Year

Aug 2009 Aug 2008 Change % Chg

In Construction 130,471 195,947 -65,476 -33.4%

“Planned” Pipeline 345,050 463,843 -118,793 -25.6%

Planned Pipeline includes projects in Final Plannin g and Planning phases

Source: STR / TWR / Dodge Construction Pipeline

60

80

100

120

140

160

180

200

220

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2009 2008 2007 2006 2005 2004 2003


Total United StatesIn Construction – Rooms in ThousandsJanuary 2003 – August 2009

352

507

729

843

683

350

28.0

35.9

50.6

66.9

54.2

30.9

21.521713.5

125

0100200300400500600700800900

1000

Number of Hotels Rooms (thousands)

2002 2003 2004 20052006 2007 2008 2009E

Total US - Closed HotelsAnnual 2002 through 2009


66,946 rooms in 2005 to 13,500 rooms in 2009

JQH: “not over developed, just under demolished”

-0.6

-9.7

-5.5

-8.4

-17.1

3.01.8

-3.4

1.3

-4.0

-20

-15

-10

-5

0

5

10

Supply Demand Occ ADR RevPAR

2009 F 2010 F

Total United States - ForecastKey Performance Indicators Percent ChangeFull Year 2009 & 2010

New York, NY Market

480 props w/ 90K rooms

1.6

11.0

-25.1

12.8

4.12.5 2.9

8.0

0.73.6

7.3

-9.7

4.6

-32.4

-5.5

-40-35-30-25-20-15-10

-505

10152025

Supply Demand Occupancy ADR RevPAR

2007 2008 2009

New YorkKey Performance Indicators Percent ChangeAugust YTD

-20

-15

-10

-5

0

5

J F M A M J J A S O N D J F M A M J J A

New York Occupancy - Monthly Percent ChangeJanuary 2008 – August 2009

20092008

Stabilization in occ

-35

-30

-25

-20

-15

-10

-5

0

5

10


New York Average Rate - Monthly Percent ChangeJanuary 2008 – August 2009

20092008

-40-35-30-25-20-15-10-505

1015


New YorkRevPar - Monthly Percent ChangeJanuary 2008 – August 2009

20092008

Deterioration from rate/discounting

-28.4

-11.0

-33.8

-25.7-23.5

-6.5

-40

-35

-30

-25

-20

-15

-10

-5

0

5

10

Occ ADR RevPAR

Weekday Weekend

New YorkWeekday / Weekend Percent ChangeAugust 2009 YTD

Weekends = Friday / Saturday

-8

-6

-4

-2

0

2

4

6

2006 2007 2008 J FM AM J J A

WeekdayWeekend

New YorkDemand Percent Change Weekday vs. WeekendTwelve Month Moving Average – Jan 2006 to August 2009

WD = Business

WE = Leisure

-20

-15

-10

-5

0

5

10

15

20

2006 2007 2008 J FMAM J J A

WeekdayWeekend

New YorkADR Percent Change Weekday vs. WeekendTwelve Month Moving Average – Jan 2006 to August 2009

WD = Business

WE = Leisure ?

30

40

50

60

70

80

Detroi

t, MI

Dallas

, TX

Phoen

ix, A

Z

Atlanta,

GA

Tam

pa-St P

eter

sburg

, FL

Nashvi

lle, T

N

St Louis

, MO-I

L

Chicag

o, IL

Tota

l Unit

ed S

tate

s

Norfol

k -Vir g

inia

Bea

ch, V

A

Minn

eapo

l is-S

t Pau

l , M

N-WI

Housto

n, TX

Denver

, CO

New O

rl ean

s, LA

Boston,

MA

Philad

elphia,

PA-N

J

Seattle

, WA

Orlando

, FL

Los A

ngel

es-L

ong B

each

, CA

Anaheim

-San

ta A

na, C

A

San D

iego, C

A

Miam

i -Hial

eah,

FL

Was

hingto

n, DC-M

D-VA

San F

ranc

isco /S

an M

ateo,

CA

Oahu

Island

, HI

New Y

ork,

NY

Top 25 MarketsOccupancy PercentAugust 2009 YTD

75.0%

-20

-14

-8

-2

4

Detroit

, MI

Phoenix,

AZ

Chicag

o, IL

Atlanta

, GA

Dallas,

TX

Los A

nge le

s-Lo

ng B

each

, CA

Minn

eapo

lis-S

t Pau

l , M

N-WI

Housto

n, TX

San D

iego,

CA

Denve

r, CO

Nashvil

le, T

N

Miam

i-Hial

eah,

FL

Seattl

e, W

A

Tota

l Unite

d Sta

tes

Tam

pa-St P

etersb

urg

, FL

New O

rlean

s, LA

Anaheim

-Santa

An a,

CA

Orlando

, FL

New Y

ork, N

Y

Bosto

n, M

A

St Louis

, MO-IL

San F

rancis

co/S

an M

ateo,

CA

Philad

elphia

, PA-N

J

Oahu Is

land

, HI

Norfo

lk-Virg

inia B

each

, VA

Was

hingto

n, DC-M

D-VA

Top 25 MarketsOccupancy Percent ChangeAugust 2009 YTD

-9.7%

$50

$100

$150

$200

Detroit

, MI

St Louis,

MO-IL

Atlanta

, GA

Dallas

, TX

Norfol

k-Virg

inia

Beach

, VA

Nashvil

l e, T

N

Min

neapo

lis-S

t Pau

l , M

N-WI

Denve

r, CO

Housto

n, T

X

Orlando

, FL

Total

Unit

ed Sta

tes

Tampa-

St Pete

r sbu

rg, F

L

Philad

elphi

a, P

A-NJ

Phoeni

x, A

Z

Chicag

o, IL

Anaheim

-San

ta A

na, C

A

New O

rl ean

s, LA

Seattle

, WA

Los A

ngele

s-Lo ng

Bea

ch, C

A

San D

iego, C

A

San F

ranc

isco /S

an M

ateo,

CA

Bosto

n, M

A

Miam

i -Hial

eah,

FL

Was

hingto

n, DC-M

D-VA

Oahu

Island

, HI

New Y

ork,

NY

Top 25 MarketsADR August 2009 YTD

$194.23

-30

-20

-10

0

New Y

ork, N

Y

San F

ranc

isco/S

an M

ateo,

CA

Phoenix

, AZ

Chicago

, IL

Miami-H

ialea

h, F

L

San D

iego, C

A

Oahu Is

land,

HI

Denver

, CO

Orland

o, FL

Los A

ngele

s-Lo

ng B

each

, CA

Anaheim

-San

ta A

na, C

A

Boston,

MA

Philad

elphia

, PA-N

J

Seattle

, WA

Minn

eapo

lis-S

t Pau

l, M

N-WI

Total U

nited S

tate

s

Detroit,

MI

Dallas

, TX

Atlanta

, GA

Tampa-

St Pete

rsburg

, FL

Norfo

lk-V

irgin

ia B

each,

VA

St Louis

, MO-IL

Nashvil

le, T

N

Housto

n, TX

New O

rlean

s, LA

Was

hington

, DC-M

D-VA

Top 25 MarketsADR Percent ChangeAugust 2009 YTD

-25.1%

-35

-20

-5

New Y

ork,

NY

Phoenix

, AZ

Chica

go, IL

Detroit

, MI

San D

iego,

CA

Miam

i- Hial

eah, F

L

Los A

ngele

s-Long

Bea

ch, C

A

Denve

r, CO

San F

ranc

isco/S

a n M

ateo

, CA

Orlando

, FL

Min

neapol

is-St P

aul,

MN-W

I

Anaheim

-Sant

a Ana

, CA

Atlant

a, G

A

Seattle

, WA

Dallas,

TX

Boston, M

A

Oahu

Island

, HI

Total U

nited S

tates

Philad

elphia,

PA-N

J

Tam

pa-S

t Pete

rsbu

rg, F

L

Nashvil

le, T

N

Housto

n, TX

New O

rlean

s, LA

St Loui

s, MO-IL

Norfo

lk-V

irgin

ia B

each,

VA

Wash

ington

, DC-M

D-VA

Top 25 MarketsRevPAR Percent ChangeAugust 2009 YTD

-32.4%

New York Sub-Markets

Occupancy Absolute Levels (%)New York Sub-marketsYTD – August 2009

Source: Smith Travel Research

84.3

65.6

80.0

86.585.0

56.6

79.277.5

76.4

69.6

50

60

70

80

90

100

Lower Manhattan Rockland/Westchester New York City Ar ea Times Square Area Uptown/Midtown East

2008 2009

Occupancy Percent Change (%)New York Sub-marketsYTD – August 2009


0.7

-7.0

2.71.6

1.0

-8.5 -8.8

-13.6 -13.0

-9.3

-15

-12

-9

-6

-3

0

3


2008 2009

ADR Absolute Levels ($)New York Sub-marketsYTD – August 2009


256.10

160.88

142.19

278.56

322.07

236.27

207.84

138.84

186.56

117.63

$100

$125

$150

$175

$200

$225

$250

$275

$300

$325

$350


2008 2009

ADR Percent Change (%)New York Sub-marketsYTD – August 2009


8.8

0.9

6.8 7.5 8.0

-25.4-26.6

-13.7

-17.3

-27.2-30

-25

-20

-15

-10

-5

0

5

10

15


2008 2009

RevPAR Percent Change (%)New York Sub-marketsYTD – August 2009


9.6

-6.1

9.7 9.2 9.1

-31.7 -33.1

-25.5-28.1

-34.0

-40-35-30-25-20-15-10

-505

101520


2008 2009

New York MarketActive Development Pipeline - RoomsChange From Prior Year

Aug 2009 Aug 2008 Change % Chg

In Construction 11,921 10,567 1,354 12.8%

“Planned” Pipeline 10,370 13,042 -2,672 -20.5%

Planned Pipeline includes projects in Final Plannin g and Planning phases


Markets with Most Rooms In-ConstructionAugust 2009

Market # Rooms % Existing Supply

New York 11,409 12.6

Las Vegas 7,011 4.4

Houston 4,681 6.9

Washington, DC 4,064 4.0

Orlando 3,563 3.1

Phoenix 3,288 5.6

Atlanta 3,204 3.4


New York, NY MarketRooms Under Construction Sub Market August 2009

1,090

2,678

4,492

3,661

00

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Uptown/Midtow n East Times Square Area Lower Manhattan Rockland/Westchester New City Area

Source: STR / Dodge Construction Pipeline

Takeaways

• Supply growth still an issue• Demand declines may be near bottom• ADR weakness continues • “Less Worse” 2H 2009• Moderate improvement 2010• Meaningful growth anticipated 2011

Jay H. Shah, CEO, Hersha Hospitality Trust


•Hersha Hospitality Trust’s (NYSE: HT) Chief Executive Officer and member of its Board of Trustees.

•Involved in all areas of the business with a particular emphasis on investor relations, capital transactions and acquisitions.

•Previously, President and Chief Operating Officer and prior to that served as the Managing Director of the Hersha Group, a private affiliate of HershaHospitality Trust that provides hotel management, development and construction management services to hotel owners.

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42


Manhattan Actual Manhattan Actual RevPARRevPAR

43

$13.47

$32.88

$95.23$85.31

$186.36

$137.25

$258.48

$175.90

$278.82

$0

$50

$100

$150

$200

$250

$300

1968 1978 1989 1991 2000 2003 2008 2010F 2014F

Source: Smith Travel Research (historical) HVS and Company (forecasts)

44


� Bringing it back to the basics “Sales 101”

� Focusing on business development

� Engaging the hotel team as your sales team

� Aligning the area sales team structure

� Booking incentives for key accounts

Sales StrategiesSales Strategies

45


� Increased focus on online travel agencies

� Added new niche international channels

� Optimized our branded and independent websites

� Created social media pages

� Targeted promotions

EE--CommerceCommerce

46


SegmentationSegmentation

47

� International

� Corporate

� SMERF

� Tour & Travel


� Freefall Period – Winter 2008 to Spring 2009

� Stabilization Period – Summer to Fall 2009

� Looking Forward

PricingPricing

48

David Bowd, President, Hotels DivisionAmsterdam Hospitality


•President of the Hotels Division of Amsterdam Hospitality, owners of nine boutique hotels in New York, New Jersey, and North Carolina, comprising 2,140 rooms in central locations.

•With six hotels in New York City, AHG has 1,290 rooms located across the city.

•Of the six hotels, three (Empire, Marcel, and Bentley) have been completely renovated and converted to full service boutique properties with cutting edge interior design.

49

*First half 2009, AHG occupancy maintained 2008 levels at 80%

*Decline in ADR of 30%

*Forecasted occupancy second half 2009: 89%, an increase of 9% over 2008

*ADR expected to grow by 34% over first half of year but a decline of 15% over 2008

www.hsmaiuniversity.org50

Key Actions taken, or being taken, to reduce the downturn of the market:



**Diversification

•What markets were we not in?

•What countries were we not represented in?

52


**Partnerships

•Build relationships and solid partners in all markets

•Online partnerships

53


**Positioning

•How are we positioned versus the comp set?

•How are we positioned against our own hotels?

•How are we positioned on line?

54


**Direct Sales

•Everyone is a Sales Person

•Review deployments

•Chase every opportunity

•GM involvement

55


**URL / Websites

•Win back own URL’s

•Key word purchasing

www.www.

www.

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Michael Silberstein, G.M.Crowne Plaza Times Square


•GM, Crowne Plaza Times Square

•Second generation hotel operator•Significantly enhanced four and five star properties by leading through change

•Converted two landmark hotels to condo hotels – The Raffaello in Chicago and the Ala Moana in Hawaii

•Formerly president of the Hotel Division for Crescent Heights, and VP, The Americas, Crowne Plaza Hotels

57


� Crowne Plaza Times Square

� 770 rooms

� Located in Times Square

� 24,500 sq. ft. of meeting space

� $85 Million renovation completed in January 2009

New York Market Review New York Market Review

58


� Recessionary signs appeared in 2008

� In August 2008 as we were finalizing the 2009 budget, NYC market was clearly supported by ADR growth (7.4% STR YTD and occupancy just +0.4%).

� Limited new rooms supply growth had been favorable to continued rate growth, given favorable market conditions.

� However, by December, market had fallen 1.8% in occupancy, while ADR fell 2.3%.

� As we quoted 2008 rates to achieve ROI, customers found lower rates with our competitors.

� 2009 saw increased supply

and reduced demand – Hence,

THE PERFECT STORM

PKF projections for 2009 - RevPar -33.1%

New York Market ReviewNew York Market Review

59


� Group Segment

� NYC & Co - 2009 lead activity is tracking 25% behind 2008.

� Reduction in group rooms negatively effects Food & Beverage, Meeting Room Rental.

� During soft and shoulder months we compete against all midtown Manhattan group hotels regardless of location.

� Terms and Conditions come in to question during soft and shoulder months, i.e,. cancellation and attrition penalties .

Sales Related Market SegmentsSales Related Market Segments

60


� Tour & Travel

Group

� Series Group business was a foundational

tour and travel group market prior to

this year. During 2009 Series group pick

up only 38%.

� Ad hoc group business has been a filler in 2009 and will continue to be during 2010.

FIT

� FIT room nights have achieved 86% of our YTD room night budget but only 67% of budget revenue in 2009.


61

Sales Related Market Segments/ T&TSales Related Market Segments/ T&T

2009 All Lead % of Rm Nights Av. Stay ADR 2009 ADR 2008 % Change

Times Square Hotels 74.9 31% 4.30 197 247 -25%

Rest of City 56.9 69% 4.32 176 250 -30%

Total 65.9 4.31 187 249


Sales Related Market SegmentsSales Related Market SegmentsTour & TravelTour & Travel� Source Markets Top 10 Times Square Room Nights Top 10 Rest of City Room Nights

� Italy 27228 Italy 44575

� Spain 18456 Spain 45957

� Brazil 17860 Brazil 37300

� United Kingdom 13069 U K 33363

� USA 9226 Ireland 20669

� Ireland 9008 USA 15906

� Israel 6939 Argentina 14182

� Argentina 4390 Germany 13370

� Germany 4647 Denmark 10146

� Mexico 3653 Turkey 10902



� Corporate Negotiated Business

• Client surveys indicate Corporate business is

35% below 2008 though room nights are

trending slightly higher over the next

90 days.

• For the 2010 RFP season, corporations are

consolidating the NY City Hotels in their

program in an attempt to fulfill their

contract commitments.

• In most cases, corporations are asking for flat rates and multi year contracts.


64


� Actions to Mitigate 2009 Shortfalls

� Increased use of Priceline and HotWire channels to replace base missing from Negotiated and Group – experienced fierce rate competition in this segment.

� Solicited Permanent Room Block and Airline contracts to try to minimize weekend / weekday seasonality.

� Dramatically increased focus on e-commerce marketing and sales efforts, both for Groups and Transient.

� Took advantage of Times Square location that

continues to be a strong demand-driver

for room nights. However, rates remain

extremely depressed, more than $80 off

PY levels.


65


� Market Outlook 2010

� Tracking latest STR / PKF data showing mild demand growth but stronger supply growth.

� Forecasts from OTA / FIT / Travel Agency partners all point to rate depreciation for long-lead business in 2010.

� Room night production forecasts from partners range from slightly ahead of pace YOY to slightly behind – Unstable.

� Exchange rates play a big part in forecasting – the weakening dollar in Q2 and Q3 played a role in strengthening leisure demand.

• Hoping to avoid the stronger Dollar-Euro we saw in late Q4 2008 + Q1 2009 – helped to cripple leisure travel.


66


� Q1 still showing weakness� Heavy rate competition for Group and Transient.� Transient pace is substantially above 2009 levels, but mitigated by YOY

decline in the group pipeline by more than 25%.� New Hotels that came online in Q3 + Q4 2009 becomes new YOY

competition in 2010, when demand is softest. � Expecting more than 1700 net new rooms directly into Times Square

between Q3 2009 – Q3 2010� Expecting a shorter group booking window – this could turn the typical

Yield model of Transient on top of Group on its head.

� Concern over “rate lag” effects� Corporate RFP’s looking for 2-year contracts with flat to lower rates.� Groups contracting farther into future – using recession to their

advantage.


67


� Supply growth mandates change in strategy

� Look to compete harder for segments where demand can be directly influenced through sales effort:

• Negotiated;

• Group.

� Supply growth directly affects Online Travel Agency business, where all NYC hotels are competitors.

� Forecasting a reduction of National Corporate / Best Available contribution as well.

• More supply = less compression = less availability to sell “RACK”.


68


Jeff Higley

VP, HotelnewsNow.com/STR/STR Global

•HotelNewsNow.com launched September 2008

•About 50,000 visitors per month

•STR Global launched April 2008 to complement STR’s efforts in North

America

69

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Government per diem rates:

•The nation’s economic downturn has affected per diem lodging rates in many localities, but overall the majority of locations did see an increase or no change in per diem lodging rates.

* According to GSA, there will be a slight increase of 0.6% of the estimated lodging costs compared to FY2009. In contrast, the previous three years (FY2007-09) had an estimated average increase in lodging costs of 6.8%. In FY2010, there are about 400 areas that have per diem rates higher than the standard CONUS rate.


71

Government per diem rates:

•The standard Continental U.S. (CONUS) per diem rate for lodging, which applies to destinations that are not specifically listed on the FY2010 per diem rate schedule, remains the same as last year at $70 per night. GSA reviews the CONUS rate every three years and continues to use market data provided by Smith Travel Research to establish per diem rates. The last adjustment was for fiscal year 2008, which increased the lodging rate that had been in effect since 2005.

* Suggested reading: “Working with the government” article on HotelNewsNow.com. Visit www.hotelnewsnow.com and search for “per diem”to find the article.


72

Select government maximum hotel per diem rates (excluding taxes), Manhattan**effective Oct. 1, 2009; includes the boroughs of Manhattan, Brookilyn, the Bronx, Queens and Staten Island

• October 1, 2009-December 31, 2009: $360

•January 1, 2010-June 30, 2010: $285•July 1, 2010-August 31, 2010: $259•September 1, 2010-September 30, 2010: $360

For complete listing visit: www.gsa.gov/perdiem


TodayToday’’s Presenters: s Presenters:

73

Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:Brad Garner

VP, Operations

Smith Travel Research

Jay H. Shah, CEO

Hersha Hospitality Trust

David Bowd,

President,Amsterdam

Hospitality

Michael Silberstein General Manager

Crowne Plaza Times Square


October 6 – Setting Your Sights – Orlando

October 20 – Setting Your Sights - Chicago

Don’t miss these upcoming webinars for

Orlando and Chicago:


Additional upcoming webinars include:

� September 29 – Social Media Management

with Kimberly Ercius (formerly Ehrlich), Director of Business Development, Milestone Internet Marketing

� October 15 - Hotelier / Planner Communications: Do’s, Don’ts & Pet Peeves

with Tim Brown, Partner, Meeting Sites Resource


EvaluationEvaluation

� Please take a moment now to click on the Evaluationlink in the LINKS box and complete the evaluation.

� Be sure to click on “Submit” when you have completed the evaluation to send us your responses.

� Your comments & suggestions are very important to us, and they help us to provide you with quality programming.

TodayToday ’’s webinar is copyright 2009 by the Hospitality Sale s & Marketings webinar is copyright 2009 by the Hospitality Sale s & MarketingAssociation International with All Rights Reserved.Association International with All Rights Reserved.


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