Monday Report
Utah Hospitality Industry - Recession 2008: What Would It Mean for Real Estate? January 28th 2008




Utah Hospitality Industry

Occupancy Rates and Revenue per Available Room (RevPAR) 2007

The "Top 20% Months":

  1. March
  2. February
  3. January

The "Bottom 10%":

  1. December
  2. November

Occupancy Rates and Revenue per Available Room (RevPAR) 2007

MonthOccupancy % 2007Occupancy % 2006 Revenue per Available Room (RevPAR) 2007 Revenue per Available Room (RevPAR) 2006
January67.5%61.1% $74.93$59.10
February70.0% 69.1% $75.07$66.41
March75.3%77.9% $79.54$75.42
April63.7%66.1% $55.93$52.89
May65.4%62.3% $56.02$47.19
June78.5%75.9% $71.78$61.05
July75.6%73.2% $67.44$59.08
August77.0%79.6% $72.63$69.01
September71.7% 72.4% $65.61$60.31
October66.8%68.5% $59.81$58.66
November57.9% 57.4% $50.86$46.25
December51.6% 55.3% $50.80$51.74
Year to Date68.4% 68.3% $65.00$58.91

The "Top 20%" RevPAR Areas Statewide include:

  1. Utah Mtn Resorts $103.91
  2. SLC Downtown $72.57
  3. South Valley SLCo $65.12

The Bottom 10% include:

  1. Cedar City $42.48
  2. Logan $47.21

Source: Rocky Mountain Lodging Report, December 2007

The Ten Things Everyone Should Know About Science Part IX

  • You may be able to quote Shakespeare, but what are you like on Big Bang theory?
  • The Financial Times gives non-scientifically minded readers a leg up the tree of knowledge.

Digital data

  • The world of computing, telecommunications and electronics is going digital. Information, whether it is the human voice, a television picture or a computer program, is stored and processed as strings of binary digits or ''bits'' (0s and 1s). The real world, in contrast, works on analogue signals. Its sights and sounds are not a series of numbers but vary continuously in space and time.
  • Converting the analogue world to digital signals involves some loss of information, because digitisation means taking a sample of the original rather than transmitting the whole thing. But this loss is a price worth paying, because digital data is so much easier to transmit, store and process electronically.
  • Think of a top-quality analogue recording of music on vinyl. It can provide an aural experience unmatched by a digital CD, as long as the record is new and unscratched. But frequent playing distorts and degrades the analogue signals on vinyl, whereas a CD with digital bits hardly loses any sound quality.
  • In broadcasting and telecommunications, the greater resistance of digital signals to fading, static and distortion is even more important - and so is the fact that digital transmissions take up less bandwidth than analogue. In practice all modern computing is digital and therefore any information fed into a computer must be digital too.
    Why does it matter?
  • Consumer electronics are going or have gone digital. In the UK, all television broadcasts will be digital by 2012 - and old TV sets will be useless without an electronic box to convert the digital signals to analogue.
    What next?
  • Millions of scientists, electronic engineers and information technology specialists around the world are developing new ways to use and process digital data - from super-fast computers to do-everything mobile devices.
    Fear factor: dilated pupils
    What's next? - Statistical significance
    Source: The Financial Times, 2008


    • Bahama Breeze
    • Darden Restaurants, Inc. trades as Bahama Breeze at 23 locations nationwide.
    • The restaurants occupy spaces of 8,000 sq.ft. to 8,600 sq.ft. in endcaps, freestanding locations and power and strip centers.
    • Plans call for one to two openings nationwide during the coming 18 months.
    • For more information, contact
      • John Doshna,
      • Darden Restaurants, Inc.,
      • 5900 Lake Ellenor Drive,
      • Orlando, FL 32809;
      • 407-245- 4000,
      • Fax 407-245-5627.
    • Arby's
    • Arby's Restaurant Group trades as Arby's at 1,100 locations nationwide.
    • The fast food restaurants, offering roast beef and chicken sandwiches, occupy spaces of 3,000 sq.ft. to 3,500 sq.ft. in freestanding locations, malls, power centers and urban/downtown areas.
    • Growth opportunities are sought nationwide during the coming 18 months.
    • Typical leases run 20 years.
    • Preferred cotenants include Wal*Mart.
    • Preferred demographics include a population of 20,000 within five miles earning $45,000 as the average household income.
    • Major competitors include Burger King, Chick-Fil-A, McDonald's and Wendy's.
    • A land area of 32,000 sq.ft. to 40,000 sq.ft. is required for freestanding locations.
    • For more information, contact
      • Dan James,
      • 9311 North Meridian Street,
      • Suite 100,
      • Indianapolis, IN 46260;
      • 317-705-3010,
      • Fax 317-705-3003;
      • Email: djames@arbys.com;
      • eb site: www.rtminc.com.


  • Ronald McDonald House Charities Announces Deadlines for Grants to Aid Children

    • Deadline: April 28, 2008; and September 8, 2008 (Letters of Inquiry)
    • Ronald McDonald House Charities and its global network of local RMHC Chapters provide grants and program services designed to make an immediate, positive impact on children in need around the world.
    • RMHC provides grants to nonprofit, tax-exempt organizations whose national or global programs help improve the health and well-being of children. Programs that focus on a specific com- munity or area should submit grant requests to a local RMHC Chapter ( http://www.rmhc.org/search_cm/ ) for consideration.
    • To be considered for funding, an applicant must be designated a not-for-profit, tax-exempt charitable organization. U.S. charities must have a 501(c)(3) tax-exempt status letter on file with the Internal Revenue Service. The RMHC board of trustees is most interested in national or international org- anizations that have a specific program related to children's health and well- being.
    • Organizations seeking funding should have a specific program that directly improves the health and well-being of children; addresses a significant funding gap or critical opportunity; has long-term impact in terms of replication or reach; and produces measurable results. Organizations seeking funding should have a broad base of funding support, management capa- city to effectively execute the project, and a clear, concise plan for project evaluation with outcome measurement.
    • RMHC does not fund advertising or fundraising drives; partisan, political, or denominational programs; ongoing general and administrative costs (including salaries, travel, and overhead); intermediary funding agencies; endowment campaigns; individual funding requests; programs that are strictly local in focus and not replicable; or medical research.
    • Visit the RMHC Web site for complete application procedures.
  • Grants for Telecommunications Facilities!

    • Public Telecommunications Facilities Program (PTFP)
    • POSTED: 1/11/2008
    • FUNDING SOURCE: Department of Commerce
    • ELIGIBILITY: Nonprofit and public agencies
    • $ AVAILABLE: $16,800,000
    • DEADLINE: 2/22/2008
    • CONTACT INFORMATION: Larry Dyer, 202-482- 1762
    • DESCRIPTION: Grants for the planning and construction of public telecommunications facilities in order to extend the delivery of services to as many citizens as possible and increase the availability of public telecommunications services and facilities.
  • Get Schools Ready for Emergencies!

    • Readiness and Emergency Management for Schools
    • POSTED: 1/11/2008
    • FUNDING SOURCE: Dept. of Education
    • $ AVAILABLE: $24,000,000
    • MAX GRANT SIZE: $500,000
    • DEADLINE: 2/19/2008
    • CONTACT INFORMATION: Sara Strizzi, 303-346- 0924
    • DESCRIPTION: Funding to enable LEAs to improve and strengthen their school emergency management plans, including training school personnel and students; communicating with parents about emergency plans; and coordinating with local law enforcement and other agencies.
  • Arts in Education Grants!

    • Arts in Education Model Development and Dissemination Program
    • POSTED: 1/15/2008
    • FUNDING SOURCE: Department of Education
    • $ AVAILABLE: $3,500,000
    • DEADLINE: 2/13/08 (LOI) 3/14/08 (deadline)
    • CONTACT INFORMATION: Diane Austin, 202-260- 1280
    • DESCRIPTION: Grants to support the enhancement, expansion, documentation, evaluation and dissemination of innovative, cohesive models to integrate standards-based arts education into the core elementary and middle school curricula, as well as strengthen standards-based arts instruction in these grades.
  • Job Training Grants for Native Americans!

    • Indian and Native American Employment and Training Programs
    • POSTED: 1/11/2008
    • FUNDING SOURCE: Dept. of Labor
    • ELIGIBILITY: Indian Tribes and Native American Organizations
    • $ AVAILABLE: $54,000,000
    • DEADLINE: 2/4/2008
    • CONTACT INFORMATION: Serena Boyd, 202-693- 3338
    • DESCRIPTION: Grants to provide employment and training services to Indians, Alaska Natives and Native Hawaiians under Section 166 of the Workforce Investment Act for Program Years 2008 and 2009.


  • Volunteer Coordinator

    • The Salt Lake City Bicycle Collective (www.slcbikecollective.org) is looking for a full-time volunteer coordinator.
    • The ideal candidate would be a well organized and social person that needs meaning in what they do -- and wants to be community builder.
    • The mission of the Salt Lake City Bicycle Collective is to promote cycling as an effective and sustainable form of transportation and as a cornerstone of a cleaner, healthier, and safer society.
    • The Bicycle Collective provides refurbished bicycles and educational programs to the community, focusing on children and lower income households.
    • The Volunteer Coordinator will be in charge of meeting and expanding our network of volunteers to staff four key programs:
      • The Community Bike Shop,
      • Valet Bicycle Parking,
      • Youth Earn-a-Bike classes and
      • special events such as the International Bicycle Film Festival.
    • The benefits package includes health and educational funds.
    • If you are interested in fighting the good fight, send an email to jobs@slcbikecollective.org including your resume and personal mission statement.

    Non-Profit Chief Executive Officer

    • National Ability Center
    • After watching this non-profit organization grow and develop for more than two decades the CEO has announced she will be stepping aside. Much has been accomplished but the work is not finished. This is an opportunity to touch the lives of individuals with disabilities and their families by providing affordable outdoor sports and recreational experiences in a nurturing environment. They are committed to the development of lifetime skills for people of all ages and abilities. As a national role model this organization promotes the concept of ability through integration, public awareness and education.
    • The CEO is responsible for directing and managing all of the activities of this non-profit organization under the supervision of the Board of Directors. Primary responsibilities include working with the Board and staff in the implementation and consistent execution of strategic goals. All operations of this Organization roll up to the CEO including fundraising, programs, fiscal, public relations, facilities, and employee morale.
    • Additional Responsibilities include:
      • Insure organizational culture, values and reputation are maintained within its market(s) as well as with all staff, members, suppliers, and partners.
      • Develop and maintain a strategic plan for development of programs and fund-raising.
      • Directly seek and solicit donations.
      • Oversee and evaluate public relations/marketing strategy including presenting interviews/speeches/presentations as need be with the press and public.
      • Oversee preparation and management of budget.
      • Work with executive team to develop short and long term goals.
      • Interact with board of directors on strategy, vision, and direction of organization.
    • Requirements
      • Minimum 10 years experience in management performance including personnel supervision, program planning, and financial management.
      • Preferred experience in non-profit arena
      • Must have a demonstrated ability to fund-raise.
      • Experience/active in sports and recreation required.
      • Bachelors or Masters degree in related field. .
    • Position located in Park City, Utah
  • For confidential consideration, please send your resume in Word format to patresume@mrislc.com, noting the job title in the subject line of your email or contact Pete Taylor at Management Recruiters of Salt Lake City, 800-622-2085x327.


Utah Hospitality Industry

  • How are we doing?
  • What months do we make the most money?
  • What months should we just close up?
  • Where and when should we be spending tourism promotion money?

Recession 2008: What Would It Mean for Real Estate?

The Ten Things Everyone Should Know About Science, Pt IX

Bob Springmeyer

Bonneville Research

    • Global Business Confidence
    • The global economy is stalling according to last week's business confidence survey results. Sentiment is consistent with a contracting U.S. economy, soft European and South America economies, and an Asian economy that is expanding at the low end of its potential. Expectations regarding the six-month outlook have never been as negative in the over five years of the survey. Confidence is weakest among real estate firms and financial institutions, but it has declined considerably in recent weeks among business service firms and even heretofore more optimistic manufacturers. Pricing pressures remain very subdued despite the currently high oil prices.
    • Risk of Recession
    • With the fallout from the housing correction and last summer's subprime financial shock intensifying, the risk of recession has increased appreciably since August. In December, the Moody's Economy.com probability of recession increased to 56%, up from November's unrevised 52% and its highest since 2001. With risks rising, additional monetary easing is coming, and the odds of some fiscal stimulus are increasing.
    • Mass Layoffs
    • The number of layoff actions involving at least 50 workers from a single establishment in December was 1,433, compared with 1,300 in November. As such, they involved 141,750 workers, compared to 136,924 in November. All numbers are seasonally adjusted. Mass layoffs are expected to remain elevated over the next several months.
    • Initial Jobless Claims
    • In a surprise move, initial jobless claims dropped 21,000 to 301,000 for the week ending January 12, far below expectations for the week. Take this number with a grain of salt, as recent numbers have been impacted by the holidays. A spell of warm weather is likely to have also played a role. For the week ending January 19th, initial claims surprised on the downside yet again, dropping 1,000 to 301,000 for the week ending January 19. Recent claims numbers need to be interpreted with caution, as history shows this time of year to be very volatile.
    • Quarterly Household Credit Report
    • Household credit quality eroded sharply at the end of 2007. Delinquency and default rates rose substantially for first and second mortgages, auto loans, and credit cards. Taking all household liabilities together, delinquency and default rates are now much higher than they were in the 2001 recession. Balance growth remains surprisingly strong and accelerated in the quarter as consumers reduced prepayments and took advantage of falling interest rates.
    • Federal Open Market Committee (FOMC)
    • The Federal Open Market Committee, in a rare intermeeting decision, cut the fed funds target rate by 75 basis points to 3.5%. The cut was in response to the current turmoil in global financial markets and increasing concern that the U.S. economy is headed toward recession. The FOMC also cut the discount rate 75 basis points to 4%. One member dissented.
    • Existing Home Sales
    • The housing market remains mired in weakness, according to the National Association of Realtors' report for December. Existing home sales declined by 2.2% from November to an annualized 4.89 million units, even worse than expectations. The median existing house price is down by 6% from one year ago. The inventory situation, however, is looking slightly better, with about nine months of available inventories.
    • New Residential Construction (C20)
    • Housing starts decreased 14.2% to 1.006 million units in December, more than Moody's Economy.com had expected. Housing permits decreased 8.1% during the month. Expect the market to remain soft throughout at least the first half of the year, even with continued rate cuts by the FOMC.
    • MBA Mortgage Applications Survey
    • The indexes finished mixed for the week ending January 18. The composite index increased to 981.5, an increase of 8.3% from the previous week, rather slow growth from the gain of the previous two weeks. The bulk of the gain came from the refinance index, which ended at 4,178.2, an increase of 16.9% over the previous week. By contrast, the purchase index ended at 439.9, down 4.6% from the previous week.
    • Chain Store Sales
    • Chain store sales improved modestly in the week ending January 19 according to the ICSC. Sales rose 0.7%, reversing most of the prior week's decline, and year-over-year growth rose to 1.6%. Cold weather, which discouraged shopping, and high gasoline prices were blamed for the weak performance.
    • Oil and Gas Inventories
    • Crude oil inventories rose by 2.3 million barrels for the week ending January 18 according to the Energy Information Administration, slightly besting expectations. Distillate supplies fell by 1.3 million barrels, below expectations of a 0.1 million barrel build. Gasoline inventories soared by 5.0, surpassing expectations of a 1.6 million barrel build. Refinery operating capacity fell to 86.5% from 87.1%. This mixed report should support prices.
    • Weekly Natural Gas Storage Report
    • Underground storage of natural gas decreased by 155 billion cubic feet during the week ending 18 January. The consensus forecast was for a decrease of 158 billion cubic feet. Inventories currently stand 8.9% lower than a year ago, but 7.4% above the five- year average.

    Source: Economy.com 2008

    Recession 2008: What Would It Mean for Real Estate?

    • If the nation slides into a recession this year, commercial real estate investors could see their annual returns shrink slightly or plummet into negative territory, depending on property type and the severity of the economic storm, according to Property & Portfolio Research.
    • Apartment owners are better positioned to hold the value of their real estate holdings through a mild recession than owners of office, warehouse or retail properties, but will likely experience a greater drop in net operating income (NOI), says Hans Nordby, PPR's director of U.S. market research.
    • "What benefits apartments [in a recession] is that everybody believes in apartments as a good port in a capital storm," Nordby says. "While the NOIs on apartments have a lot of volatility in a recession, the cap rates are well-supported by investors."
    • For office, warehouse and retail properties, net operating income often continues to improve through a mild recession due to lease terms that average about five years for those property types. Even if a landlord has to lower the asking rent on a property, tenants renewing a lease will still end up paying more than they had been paying over the course of a lease term that is rolling over. NOI, therefore, remains positive. Not so for apartments, where leases are renewed each year at market rates and the effects of recession are more immediate.
    • Investors tend to favor apartments as a safer investment than office, warehouse or retail, however, so those properties become less attractive during mild recessions despite their stronger NOI growth, Nordby says. As a consequence, investors buying those properties demand a greater initial return on their purchase. That means cap rates on office, warehouse and retail would increase in a recession, but perhaps not by much. The falling benchmark interest rates that usually come with a recession give buyers a better spread over cap rates without a severe increase in overall cap rates.
    • Differences in annual returns by property type in either a mild or severe recession are the subject of alternative forecast scenarios PPR has prepared for its clients. To be clear, the company's baseline forecast still calls for slow economic growth in 2008 without a recession, which is defined as two or more quarters of negative GDP. In response to client requests, however, PPR reran its models to see what returns would likely be under more dire conditions.
    • Retail is the only one of the four major property types that would drop into negative annual returns in the event of a mild recession. That model shows retail entering negative return territory this summer, dipping to a 2% loss for 2008 and gradually recovering to positive returns in 2009. Every property type would suffer negative returns in the event of a severe recession, but retail would bounce hardest with annualized losses of nearly 6% in the summer of 2009, recovering with break-even returns in the summer of 2011.
    • Unlike the early 1990s recession when retail properties performed well, recent deliveries and construction scheduled to deliver this year have primed the sector for a hard fall in the event of a recession. "Retail gets creamed in both a light recession and a severe recession," Nordby says.
    • Hopefully PPR's baseline projection will prove the most prescient, with soft returns of about 4% that gradually improve to about 6% by the end of 2012.
    • Will there be a recession in 2008? The consensus on Wall Street puts the likelihood at 40% for the year, according to Zanny Minton Beddoes, U.S. economics editor at The Economist. Recession risks are rising, Beddoes told attendees at a presentation on the national economy today in Austin.
    • Whether or not the economy meets the technical definition of a recession doesn't matter, because even a slow economy will feel like a recession to consumers, Beddoes says. She predicts further declines in housing construction and home prices, followed by a lengthy period of lackluster economic activity leading into a slow recovery. Nevertheless, a correction is necessary, she says. "This is not a story of disaster," she says. "It is an unwinding of excesses; it's a necessary adjustment."

    Source: NREI, 2008

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