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Industry overview

From growing consumer demand for branded hotels, to an expanding middle class and greater disposable incomes, we operate in an industry with high growth potential.

Despite a more challenging global economic backdrop, leading to RevPAR growth moderating, increasing room supply illustrates the positive fundamentals for the industry overall, such as increasing disposable incomes and growing appetite for branded hotels.

The $535 billion hotel industry continues to be fragmented, with 54% of rooms affiliated with a global or regional chain. Competition among branded players continues to increase as companies seek growth through acquisitions, organic expansion and diversification in their offer.

Evolving consumer expectations in areas such as sustainability, luxury and technology continue to influence how the industry operates, whilst increasing digital commerce has led to a broader competitive landscape involving online travel intermediaries, serviced apartments and peer-to-peer home rental companies.

2019 Industry performance

In terms of key performance metrics, room supply reflects how attractive the hotel industry is as an investment from an owner’s perspective. RevPAR is an important indicator of the value guests ascribe to a given hotel, brand or market, and grows when guests stay more often or pay higher rates.

2019 saw the industry delivering its 10th year of consecutive RevPAR growth at +1% globally, slower than previous years due in part to lower growth in the global economy. In a slower RevPAR environment, rooms supply growth becomes an important driver of value creation for hotel groups. In 2019, global rooms supply grew by +2%, driven by attractive owner returns across a number of segments.

The hotel industry is cyclical; long-term fluctuations in RevPAR tend to reflect the interplay between industry demand, supply and the macroeconomic environment. At a local market level, political, economic and factors such as terrorism, oil market conditions and hurricanes can impact demand and supply in the short term.

Overview of global hotel industry

Geography

The US is the largest hotel market, whilst Greater China continues to growa
% of room revenue

Region Open rooms
Americas (39.9%) 39.9
Rest of the world (51.0%) 51.0
Greater China (9.1%) 9.1%

Branded hotels

The top fivec hotel groups have increased their market shareby 5 percentage pointsa

Years Footprint
   
2019 24.9%
2018 24.4%
2017 23.3%
2016 22.7%
2015 19.8%

Segment

The hotel industry can be categorised by price levela
% rooms

Region Open rooms
Luxury (6.2%) 6.2
Upper Upscale (15.7%) 15.7
Upscale (22.1%) 22.1
Upper Midscale (23.7%) 23.7
Midscale (12.9%) 12.9
Economy (19.4%) 19.4%

a Source: STR, Inc
c IHG, Marriott International, Inc., Hilton Worldwide Holdings Inc., Wyndam Hotels & Resorts Inc., Accor S.A

Hotel industry growth drivers: 10-year annual growth rate

Global GDP
 

+3.1% CAGRb

Indicator of economic growth – hotel performance correlates with GDP

Global household disposable income

+3.0% CAGRb

Growing consumer spending and leisure travel, supported by cheaper air travel

Global corporate profits
 

+6.1% CAGRb

Good indicator of business travel - continues to grow

b Source: Oxford Economics

Global hotel industry performance

Global Industry RevPAR ($)a

RevPAR growth suggests solid lodging demand

Years Footprint
   
2019 79.9
2018 79.2
2017 76.8
2016 74.2
2015 72.8

Global rooms supply (m rooms)a

Supply growth reflects the attractiveness of the hotel industry

Years Footprint
   
2019 18.7
2018 18.3
2017 17.9
2016 17.5
2015 17.2

a Source: STR, Inc