The Hospitality Research Group

The Hospitality Research Group

Financial Benchmarking Your Resort & & U.S. Resort Industry Overview Presented by Mark Woodworth [email protected] Robert Mandelbaum [email protected] Presentation Outline

Industry Overview Benchmarking defined When did benchmarking start? How to benchmark! Why use benchmark$ Resort financial benchmarking Uniform System of Accounts Methods of financial comparison Case study HRGs Benchmarker

U.S. Resorts Annual Change In Total Revenue 12% 8% 7.1% 6.5% 8.9% 8.6% 5.0% 5.2% 4% 2.5%

3.1% 0% -4% -3.5% -8% -8.4% -12% 1995 1996 1997 1998 1999 Resorts

Source: PKF/HRG Trends in the Hotel Industry 2000 2001 All Hotels 2002 2003 EST 2004 PROJ U.S. Resorts Change In Total Revenue By Region Region

2001 2002 2003 Preliminary Northeast -5.4% -6.2% -5.8% North Central -1.7% 3.6%

-2.8% Southeast -7.6% -5.6% -1.3% South Central -9.2% 3.4% 0.3% Mountain/ Pacific

-9.3% -3.3% 0.0% Source: PKF/HRG Trends in the Hotel Industry U.S. Resorts Annual Change In Rooms RevPAR 12% 8% 8.1% 7.7% 6.2% 8.0%

4.0% 3.2% 2.5% 4% 2.2% 0% -4% -4.1% -8% -8.0% -12% 1995 1996

1997 1998 Occupancy 1999 ADR 2000 2001 2002 All Hotels RevPAR Source: PKF/HRG Trends in the Hotel Industry

2003 EST 2004 PROJ U.S. Resorts Annual Change In Total Revenue And Expenses 12% 8.9% 8% 4% 7.1% 4.3% 6.5% 8.6%

6.5% 5.0% 4.8% 4.3% 5.2% 5.5% 6.7% 2.8% 3.1% 3.1% 2.5% 0% -1.1% -4% -3.5% -6.0%

-8% -8.4% -12% 1995 1996 1997 1998 1999 Revenues 2000 Expenses

Source: PKF/HRG Trends in the Hotel Industry 2001 2002 C.P.I. 2003 EST 2004 PROJ U.S. Resorts Annual Change In Net Income* 24% 18% 17.0%

15.9% 12.2% 12% 13.8% 6.9% 3.2% 4.4% 6% 1.6% 0% -6% -12% -10.5%

-18% -14.7% -24% 1995 1996 1997 1998 1999 Resorts 2000 2001 2002

2003 EST 2004 PROJ All Hotels Note:* - Before capital reserve, rent, debt service, income taxes, amortization, and depreciation Source: PKF/HRG Trends in the Hotel Industry Comparative Operating Performance Other Property Types 2003 Estimates Total RevPAR % Rooms Revenue % F&B Revenue

% Other Operated Revenue Total Payroll and Related Costs % Operated Dept. Income Income Before Fixed Charges N.O.I.* % Revenue N.O.I.* $ PAR Resorts $66,257 56.3% 33.1% 8.8% 33.7% 54.9% 31.2% 23.6% $15,623 Full Service $36,435

65.5% 28.7% 3.0% 33.9% 58.0% 30.9% 23.3% $8,502 % - Percent of total revenue * - Before capital reserve, rent, debt service, and income taxes. Source: PKF/HRG Trends in the Hotel Industry Limited Service $14,739 96.4% N/A 1.7% 25.5%

72.1% 42.5% 32.5% $4,790 Convention $58,417 61.0% 32.2% 3.0% 32.6% 58.3% 36.8% 27.8% $16,217 Comparative Operating Performance Comparable Full-Service Hotels Average Number of Rooms

Occupancy ADR Total RevPAR % Rooms Revenue % F&B Revenue % Other Operated Revenue Total Payroll and Related Costs % Operated Dept. Income Income Before Fixed Charges N.O.I.* % Revenue N.O.I.* $ PAR Resorts 374 66.3% $154.25 $66,257 56.3% 33.1% 8.8% 33.7%

54.9% 31.2% 23.6% $15,623 Full Service 367 66.9% $146.75 $55,957 63.1% 31.1% 2.3% 35.6% 59.0% 32.4% 25.2% $14,049 % - Percent of total revenue

* - Before capital reserve, rent, debt service, and income taxes. Source: PKF/HRG Trends in the Hotel Industry Definition bench-mark-ing Noun (1976): the study of a competitors product in order to improve the performance of ones own company Merriam-Websters Collegiate Dictionary When & Who Started Hotel Benchmarking?

Harris Kerr & Foster [PKF Consulting] Laventhol & Horwath Smith Travel Research The Hospitality Research Group [HRG] Benchmarker The COMP Set vs. Competitive - Sub Market Geography - Top Line - Market Share

Comparable / Criteria - Also Geography - Occ ADR RevPAR - Mix of Revenues - Bottom Line Comparison * Segment * Size * Location How To Benchmark! Subject / Pro Forma Property COMP Set 'A'

$ 197,000 + 9.1% vs. $ 170,000 'B' $ 192,000 $ 722,000 'C' 'D'

$ 176,000 / 4 = $ 184,000 $ 180,500 Why Use Benchmarking?

Loan Application Insurance loss Tax - reduction Measure management Budgeting Applying Financial Benchmarking To The Hotel Industry Common Language Uniform System of Accounts for the Lodging Industry 9th Edition Current 10th Edition

Release in 2004 For Use in 2005 Uniform System of Accounts Operating Departments Rooms, Food, Beverage, Minor Operated, Rental and Other Income Undistributed Departments A&G, Marketing, P.O.M., Utilities Fixed Charges Management Fees, Property Taxes, Insurance

Methods of Financial Comparison Total Dollars Percent of Department Revenue Percent of Total Revenue Dollars Per Available Room Dollars Per Occupied Room Comparable Property Selection Criteria Property Type

Geography Affiliation Rooms Occupancy Comparable Criteria Subject Hotel Resort Resort Florida Chain Affiliated 252 67.6% Southeast Chain Affiliated 200 - 300 60% - 70%

Comparable Property Selection Criteria Recreation Other Operated Dept. % Of Total Revenue Subject Hotel Tennis No Golf 6.8% Comparabl e Criteria Tennis No Golf 5% - 15%

The Hospitality Research Group of PKF Consulting Benchmarker of Hotel Profits Benchmarker

Customer selects properties Choice of 7 segments All U.S. cities 24 hour delivery $175 on up Excel XLS format Thank You Contact Information (404) 842-1150 [email protected] [email protected]

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