US LODGING INDUSTRY OVERVIEW

Mark V. Lomanno
President
 Global RevPAR
% Change

UK £
H1, 08 YE 08 L3M
Europe €
2.5% -0.4% -10.2% H1, 08 YE 08 L3M
-0.4% -5.1% -19.2%

United States $
H1, 08 YE 08 L3M
A i P
Asia Pacific
ifi $
1.6% -1.9% -14.3%
ME & A $ H1, 08 YE 08 L3M
H1, 08 YE 08 L3M 12.5% 1.8% -24.4%
25 7%
25.7% 17% -12.6%
12 6%

Note: L3M = December 08 to February 09

Total United States
Key
ey Performance
e o a ce Indicators
d ca o s Percent
e ce C Change
a ge
Full Year 2008 / March 2009 YTD
10
2008 YTD 2009
5 3.2
2.6 2.5

0
-1.8 -1.8
-5 -4.2

-8.0
80 -7 7
-7.7
-10
-10.9
-15
-17.7
-20
Supply Demand Occ ADR RevPAR
Total United States
Room Supply/Demand
pp y Percent Change
g
Twelve Month Moving Average – 1989 to March 2009
6

4
2.8%
2

-2

Supply % Change
-3.4%
-4 -1.1% - 4.8%
Demand % Change
-6
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

2008 S
Smith
ith T
Travell R
Research,
h IInc.
Total United States
Occupancy/ADR
p y Percent Change
g
Twelve Month Moving Average – 1989 to March 2009
10
8 Occ % Chg
ADR % Chg
6
4
0 1%
0.1%
2 -0.4%
0
-2
-4 -3.4% -4.7%
-6.1%
-6
6
-6.8%
-8
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Total United States
Monthly Room Demand (In Millions) – Seasonally Adjusted
January 2001 – to March 2009
90

85

80

75

70
2001 2003 2005 2007 2009
Total United States
Occupancy
p y Percent
Twelve Month Moving Average – 1989 to March 2009
70

65

58 8%
58.8%
60

58 5%
58.5%

55
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Total United States
RevPAR Percent Change
g
Twelve Month Moving Average – 1989 to March 2009
12
10
8
6
4
2
0
-2
-4 -2.7%
-6 11.91
- 6.4%
-8 RevPAR % Chg
g -10.5%
10 5%
-10 6.02
-12
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
2008 S
Smith
ith T
Travell R
Research,
h IInc.
Total United States
Weekday
ee day / Weekend
ee e d Percent
e ce C Change
a ge
April 25th, 2009 YTD

10
Weekday Weekend
5

-5
-7.8 -7.7
-10 8.0
-8 0

-15
-14.4 -15.0
-20
20
-21.1
-25
Occ ADR RevPAR

Weekends = Friday / Saturday

 Total US Room Rates
Actual vs Inflation Adjusted
2000 - 2007
110
If year 2000 ADR had
increased by CPI each year
year… 103 97
103.97
102.76

100 99.77
97.96
Nominal ADR 96 65
96.65
Yr 2000, Grown by CPI
93.48
91.14
91.06
90 89.03
87.64 86.39
85.22
85.22 83.99
82.94
82.75

80
2000 2001 2002 2003 2004 2005 2006 2007
Rate Cuts on ’01
01 Were Felt for 6 Years
A Little Positive News
 Total United States
Room Supply
pp y Percent Change
g
Jan 2003 – March 2009
3.5
30
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0
0.5
5
-1.0
2 003 200 4 2 005 200 6 20 07 200 8 J FM
Total United States
28 Day Moving Average
Demand & ADR % Change
Jan 1, 2009 – April 25, 2009
0
Demand
-2 ADR

-4

-6

-8

-10

-12
1/1/09 1/31/09 3/2/09 4/1/09
Total United States
Hotel Rooms Sold vs. ADR Change
Q t l Change
Quarterly Ch – 1988 tto Q1 2009
10

8 Demand % Chg

6 ADR % CHG

0
1988q1 1991q1 1994q1 1997q1 2000q1 2003q1 2006q1 2009 q
-2

-4

-6

-8

-10
U.S. Lodging Industry
Chain Scales
STR Chain Scales
Selected chains from each segment

• Luxury – Four Seasons, Ritz Carlton, Fairmont

• Upper Upscale – Hyatt Regency, Hilton, Marriott, Sheraton

• Upscale – Residence Inn, Hilton Garden Inn, Courtyard

• Mid with
ith F&B – Holiday
H lid IInn, R
Ramada,
d Q Quality
lit IInn

• Mid no F&B – Hampton Inn, Holiday Inn Express, Comfort Inn

• Economy – Econolodge, Red Roof, Days Inn

Chain Scales
Supply/Demand
pp y Percent Change
g
March 2009 YTD
15
9.1
10 7.8
6.8
5.9
5
1.6

0
-1.6
-5 -4.6 -5.2
-6.8
68 -7.4
-10 -8.6

-15 Supply -13.0

Demand
-20
Luxury Upper Upscale Mid w F&B Mid wo Economy
Upscale F&B
 Chain Scales
Occupancy/ADR
p y Percent Change
g
March 2009 YTD
0

-3.2
-5 -4.5
-4.4

-7 5
-7.5
-8.4 -8.9
-10
-12.0 -11.5 -11.2
-11.5
-13.2
-15 Occupancy
-16.3
ADR

-20
20
Luxury Upper Upscale Mid w F&B Mid wo F&B Economy
Upscale
Chain Scales
RevPar Percent Change
April 25, 2009 YTD
0

-10

-14.9
-16.1
-20
20 -17.7
-19.8
-21.2

-30
30 -28.5
28 5

Luxury Upper Upscale Mid w F&B Mid wo Economy

Upscale F&B
 Chain Scales
Weekday vs..
vs Weekend Occupancy Percent Change
April 25, 2009 YTD
0

-5
-6.2
-7.6 -7.7
10
-10 8.5
-8.5
-9.3
-10.8

-15 -14.8 -14.4 -14.1

-14.9
-15.6

-20 -19.5 Weekday

Weekend
-25
25
Luxury Upper Upscale Mid w F&B Mid wo F&B Economy
Upscale
 Chain Scales
Weekday vs
vs.. Weekend ADR Percent Change
April 25, 2009 YTD
0

-3.6 -4.1
-5 -4.4 -4.2
-5.1 -4.8

-8.2 -8.3
-10 -9.6 -9.6

-15 -13.7
-15.5
Weekday
Weekend
-20
20
Luxury Upper Upscale Mid w F&B Mid wo F&B Economy
Upscale
 Chain Scales
Weekday Occupancy/ADR Premium (%)
April 25, 2009 YTD
20
14 7
14.7 Occupancy ADR
12.8
11.1
10
6.2

20
2.0 3.4 4.2
22
2.2
0.7
0

-4.0
-7.0 -6.3
63
-10
-11.6

-18.2
-20
Luxury Upper Upscale Mid w F&B Mid wo Economy Total US
Upscale F&B
 Chain Scales
Weekday RevPAR Premium (%)
April 25, 2009 YTD
30 27.3
% Premium over Weekend
15.3
15
7.8

0
-0.6
-2.1

-15 -12.1

-23.8
-30
Luxury Upper Upscale Mid w F&B Mid wo Economy
Upscale F&B
U.S. Lodging Industry
Projections
As of April 22nd, 2009
U.S. Economic Outlook
Blue Chip Economic Indicators – April 2009

2008 2009F 2010F

Real GDP +1.1% -2.6% +1.8%

CPI +3.8% -0.7% +1.6%

Corporate Profits -10.1% -16.6% +7.0%

Disp Personal Income +1.3% +1.9% +1.8%

Unemployment
p y Rate 5.8%
% 8.9%
% 9.4%
%
 Total United States
Active Development Pipeline - Rooms
Change From Last Year
Phase March 2009 March 2008 Difference % Change

In Construction 175,147 207,488 -32,341 -15.6%

Final Planning 73 507
73,507 113 419
113,419 -39,915
39 915 -35.2%
35 2%

Planning 302,959 344,363 -41,404 -12.0%

Active Pipeline 551,610 665,250 -113,640 -17.1%

Pre-Planning 134,872 141,761 -6,889 -4.9%

T t l
Total 686 482
686,482 807 011
807,011 -120,529
120 529 -14.9%
14 9%

Source: STR / TWR / Dodge Construction Pipeline

 Total United States
Supply/Demand Percent Change
2003 – 2010P
5
4.0
4
3 2.8 2.6 2.7
1.9
2 1.4 1.4 1.3
1.0 1.3 1.3 1.0
1 0.5
04
0.4 0.2
0
-0.1
-1
-2 -1 2
-1.2
Supply % Chg
-3 Demand % Chg
-4
-3 9
-3.9
-5
2003 2004 2005 2006 2007 2008 2009P 2010P 20 Yr
Average
Total United States
Occupancy Percent
2003 – 2010P
70

63.1 63.3 63.1

61 4
61.4
60.4
60 59.2

56.5 56.5

50
2003 2004 2005 2006 2007 2008 2009P 2010P
Total United States
Occupancy Percent Change
2003 – 2010P

4 3.6
2.9
2
0.4
0.3 0.0
0
-0.2
20 Year Average: -0.6%

-2

-4
-4.2

-6
-6.5
-8
2003 2004 2005 2006 2007 2008 2009P 2010P
Total United States
Average Daily Rate (In Dollars)
2003 – 2010P
$125

$106.68
$102.89 $104.41
$103.97
$97.96
$100
$91.14
$86.39
$82.94

$75

$50
2003 2004 2005 2006 2007 2008 2009P 2010P
Total United States
ADR Percent Change
2003 – 2010P
8 7.5
5.5 6.1
6
4.2
4
20 Year Average: 3.5% 2.5
2 15
1.5
0.2
0

-2

-4
-3.6
36
-6
2003 2004 2005 2006 2007 2008 2009P 2010P
Total United States
RevPAR Percent Change
2003 – 2010P
8.5 7.8
7.9
8
57
5.7

3 20 Year Average: 2.9% 1.5

05
0.5

-2
-1.8

-7

-9.8
-12
2003 2004 2005 2006 2007 2008 2009P 2010P
Total US Industry
Consecutive Quarterly Declines
Key Indicators

1990/ 2001/ Current Estimate

1991 2002 (Q1-09) 2008/09

Demand 3 5 5 7

Occupancy 7 6 6 10

ADR 0 5 2 4

RevPAR 5 5 3 6

Room Revenue 2 5 3 5

2008 Smith Travel Research, Inc.

 Takeaways

• Decline is Global – visibility difficult

• Risk averse / capital tight - supply increases slow

• Value proposition is critical – “New Frugality”

• Summer travel may show relative improvement

• Leisure leads rebound?

• H1N1 – Swine / The flu or the media?

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