PKF Hotel Market Demand and Financial Analysis - DIA Business ...
PKF Hotel Market Demand and Financial Analysis - DIA Business ...
PKF Hotel Market Demand and Financial Analysis - DIA Business ...
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The Westin Denver International Airport<strong>Hotel</strong> <strong>Market</strong> <strong>Analysis</strong>A. INTRODUCTIONThe market <strong>and</strong> financial feasibility of a lodging facility is a direct function of thesupply <strong>and</strong> dem<strong>and</strong> for hotel rooms within the market. Accordingly, an analysis ofthe local area lodging market is a key component of the financial process.Presented in this section is an overview of the overall Denver-Aurora area lodgingmarket, followed by a more detailed analysis of the competitive local hotel market ofthe proposed Subject. Based on this analysis, we have projected the occupancy,average daily room rate, <strong>and</strong> revenue per available room for the proposed WestinDenver International Airport for its first ten years of operation (2015 to 2024).B. NATIONAL MARKET OVERVIEWIn addition to <strong>PKF</strong> Consulting, our Firm contains a research division, <strong>PKF</strong>Hospitality Research. <strong>PKF</strong> Hospitality Research owns the database for Trends® inthe <strong>Hotel</strong> Industry, the statistical review of U.S. hotel operations which firstappeared in 1935 <strong>and</strong> has been published every year since. Beginning in 2007,<strong>PKF</strong> unveiled its powerful <strong>Hotel</strong> Horizons®, an economics-based hotel forecastingmodel that projects five years of supply, dem<strong>and</strong>, occupancy, ADR, <strong>and</strong> RevPARfor the U.S. lodging industry with a high degree of accuracy. <strong>Hotel</strong> Horizons ®reports are published on a quarterly basis for 50 markets <strong>and</strong> six national chainscales.Based on the June – August 2012 National Edition of <strong>Hotel</strong> Horizons® prepared by<strong>PKF</strong> Hospitality Research, in 2010 <strong>and</strong> 2011 the U.S. lodging market experiencedan increase in revenue per available room (RevPAR) of 5.4 <strong>and</strong> 8.2 percent,respectively. As a point of comparison, the U.S. lodging market experienced adecline in RevPAR of 16.7 percent in 2009, the largest percentage decline since<strong>PKF</strong> Research began tracking lodging performance back in 1935. This significantdecline in RevPAR was a direct result of the severe national <strong>and</strong> global recessionwhich began in the fall of 2007 <strong>and</strong> lasted well into 2009. Further, this significantdecline in RevPAR resulted in an even greater decline in the net operating income(NOI) of hotels of nearly 40 percent, subsequently impacting hotel valuesthroughout the nation. <strong>PKF</strong> Hospitality Research is projecting RevPAR growth of5.8 percent in 2012 due to gains primarily in ADR. In 2013 <strong>and</strong> 2014, the overallU.S. lodging market is projected to achieve RevPAR growth of 6.6 <strong>and</strong> 7.8 percent,respectively. Thereafter, RevPAR growth is projected to taper to long-run averagerates.The proposed Subject can be identified in the upper upscale hotel segment. TheRevPAR for the U.S. upper upscale hotel segment experienced a decline inRevPAR of 17.2 percent, slightly above the decline for all U.S. hotels during thistime. RevPAR for this segment increased 5.9 percent in 2010 <strong>and</strong> 6.6 percent in2011. In 2012 <strong>and</strong> 2013, RevPAR is projected to increase 5.5 <strong>and</strong> 5.4 percent,IV-1
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