Financial Benchmarking Your Resort U S Resort Industry

Financial Benchmarking Your Resort & U. S. Resort Industry Overview The Research Affiliate of PKF Consulting

Presented by v Mark Woodworth mark. woodworth@pkfc. com Robert Mandelbaum robert. mandelbaum@pkfc. com The Research Affiliate of PKF Consulting

Presentation Outline v n n n n n 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 HRG’s Benchmarker®

U. S. Resorts Annual Change In Total Revenue Source: PKF/HRG Trends in the Hotel Industry

U. S. Resorts Change In Total Revenue By 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 Rev. PAR 8. 1% 7. 7% 6. 2% 8. 0% 4. 0% 3. 2% 2. 5% 2. 2% -4. 1% -8. 0% Source: PKF/HRG Trends in the Hotel Industry

U. S. Resorts Annual Change In Total Revenue And Expenses Source: PKF/HRG Trends in the Hotel Industry

U. S. Resorts Annual Change In Net Income* 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 Source: PKF/HRG Trends in the Hotel Industry

Comparative Operating Performance Comparable Full-Service Hotels Source: PKF/HRG Trends in the Hotel Industry

Definition v “bench-mark-ing” Noun (1976): the study of a competitor’s product … in order to improve the performance of one’s own company n Merriam-Webster’s Collegiate Dictionary

When & Who Started Hotel Benchmarking? v n n Harris Kerr & Foster [PKF Consulting] Laventhol & Horwath Smith Travel Research The Hospitality Research Group [HRG] Benchmarker®

The COMP Set v vs. n Competitive - Sub Market Geography - Top Line - Market Share n Comparable / Criteria - Also Geography - Occ – ADR – Rev. PAR - Mix of Revenues - Bottom Line Comparison * Segment * Size * Location

How To Benchmark! v

Why Use Benchmarking? v • • • Loan Application Insurance – loss Tax - reduction Measure management Budgeting

Applying Financial Benchmarking To The Hotel Industry The Research Affiliate of PKF Consulting

Common Language v Uniform System of Accounts for the Lodging Industry 9 th Edition – Current 10 th Edition – Release in 2004 For Use in 2005

Uniform System of Accounts v n Operating Departments – Rooms, Food, Beverage, Minor Operated, Rental and Other Income n Undistributed Departments – A&G, Marketing, P. O. M. , Utilities n Fixed Charges – Management Fees, Property Taxes, Insurance

Methods of Financial Comparison v Total Dollars n Percent of Department Revenue n Percent of Total Revenue n Dollars Per Available Room n Dollars Per Occupied Room n

Comparable Property Selection Criteria v Comparable Criteria Property Type Geography Affiliation Rooms Occupancy A. D. R. Subject Hotel Resort Florida Southeast Chain Affiliated 252 200 - 300 67. 6% 60% - 70% $294. 60 $275 - $325

Comparable Property Selection Criteria v Recreation Other Operated Dept. % Of Total Revenue Subject Hotel Tennis No Golf 6. 8% Comparable Criteria Tennis No Golf 5% - 15%