Placeholder

Industry and market trends

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.

The global hotel industry is a $525bn industry, made up of 18 million rooms. 54% of rooms are affiliated with a global or regional chain (‘branded’), up from 50% in 2012, and 46% are unaffiliated (‘independent’). The top five hotel groups, IHG, Marriott, Hilton, Wyndham and Accor account for 25% of market share, up from 19% in 2012, and for 58% of the global development pipeline of hotels in planning or under construction.

In what is a fragmented market, competitor pressures in the branded space are intensifying as all major players pursue growth strategies through acquisitions, organic growth or diversification. As the digital landscape has evolved, consumer choice of where to stay and how to book has developed and hotel companies compete in an environment that includes Online Travel Intermediaries and alternative lodging solutions, such as peer-to-peer home rental companies and serviced apartments.

There are several metrics that recognise industry performance. 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. Rooms supply is significant because it is reflective of the attractiveness of investing in the hotel industry from an owner perspective and is influenced mainly by the profitability of a brand or market.

Driven by strong economic fundamentals, the global hotel industry has seen growth in both RevPAR and rooms supply for the past nine years as part of a larger travel and tourism sector. It also plays an important role economically, accounting for 1 in 10 jobs around the world.

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

Overview of global hotel industry

Geography

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

Region Open rooms
Americas (40%) 40
Rest of the world (51%) 51
Greater China (9%) 9%

Branded hotels

The top five hotel groups have increased their market share by 6%a
% rooms

Years Footprint
   
2018 24.9%
2017 23.8%
2016 23.2%
2015 22.7%
2014 19.8%
2013 19.2%
2012 19.0%

Segment

The hotel industry can be categorised by price levela

Region Open rooms
Luxury (6%) 6
Upper Upscale (16%) 16
Upscale (23%) 23
Upper Midscale (22%) 22
Midscale (14%) 14
Economy (19%) 19%

a Source: STR, Inc

Hotel industry growth drivers: 10-year trend

Global GDP

+2.5% CAGRb

Indicator of economic growth – hotel performance correlates with GDP

Global household income

+2.8% CAGRb

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

Global corporate profits

+4.2% CAGRb

Good indicator of business travel demand – continues to grow

b Source: Oxford Economics

Global hotel industry performance

Global Industry RevPAR ($) CAGRa

RevPAR growth suggests solid lodging demand

Years Footprint
   
2018 82.8
2017 79.8
2016 76.7
2015 75.2
2014 71.9

Global Rooms Supply (m Rooms) CAGRa

Supply growth reflects attractiveness of hotel industry

Years Footprint
   
2018 17.8
2017 17.4
2016 17.0
2015 16.7
2014 16.4

a Source: STR, Inc