Fairmas Hotel Report SEPTEMBER 2017 EDITION PERFORMANCE ANALYSIS: AUGUST 2017 IN SOME IMPORTANT GERMAN DESTINATIONS AND A VIEW

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1 Fairmas Hotel Report SEPTEMBER 2017 EDITION PERFORMANCE ANALYSIS: AUGUST 2017 IN SOME IMPORTANT GERMAN DESTINATIONS AND A VIEW OF THE NEXT THREE MONTHS INFINITY - fotolia.com

2 August 2017 Pleased with growth Occ: 80.6%, ADR: 82.10, RevPar: 66.2 Berlin hotels performed well in every category this August. Above all, as in previous months, it was also possible to achieve a higher average room rate. With this, RevPar rose by 6.3% with occupancy up by 3.1%. The pre-nights booked for IFA also boosted the business sector, which greatly contributed to the increase in ADR. September Occ: -1.3%; ADR: -10.1%; RevPar: -11.3% Despite IFA opening its doors on 1st September and a few trade fairs such as the CMS (International Trade Fair for Cleaning Systems, Building Management and Services) and the German Comic Con taking place within the month, the bi-annual InnoTrans with its almost 150,000 visitors and approx. 3,000 exhibitors will only be held in 2018, thus, is a missing force driving ADR this year. The last two weeks of September will unlikely change. Overall, the average room rate is quite stable during these weeks given the Berlin Marathon boosts demand, as usual. October Occ: -0.2%; ADR: +5.5%; RevPar: +5.3% The positive development in average room rates is primarily due to the World Congress of Psychiatry (EPA). Hotels near the event will also have their ADR increased by the Motorworld Classic which attracted around 26,000 visitors in 2016, and will be held on 5 to 8 October. In the leisure sector, the Festival of Lights will ensure demand, and the nationwide public holiday on 31 October (Reformation Day) will draw more tourists to the German capital. November Occ: -3.9%; ADR: +2.3%; RevPar: -1.7% As November is characterized by good MICE sector business during the week and leisure business at the weekends, changes to this trend are still expected.

3 August 2017 Prices could be maintained Occ: 66.7%, ADR: 88.3, RevPar: 58.9 The August ended negatively for the hotel sector. This was mainly due to the decline in occupancy compared to the same month last year. However, average room rates were maintained, therefore the 2.6% decline in RevPar was comparatively moderate. September Occ: -1.2%; ADR: -5.3%; RevPar: +6.4% In contrast to the forecast made in July, a moderate decline in occupancy of 1.2% is now expected. It had still been -6.7% in the last Trendbarometer. One hotel in the region even reported positive figures for September. The majority, however, are now expecting a stronger decline in ADR of -5.3% (previously -3.6%). The Düsseldorf hotel sector is suffering from event schedule changes in October (e.g. Rehacare) and the absence of trade fairs like the bi-annual glasstec. October Occ: -2.5%; ADR: -22.2%; RevPar: -24.2% Although the decline is no longer expected to be as strong, the ADR is expected to be down by 22.2% compared to last year s. RevPar will drop by almost a quarter. Reasons for this have not been mentioned, so it remains to be seen as to what the next trend survey will reveal. November Occ: -1.7%; ADR: -5.4%; RevPar: -7.0% In November, negative growth is expected for all three key figures while the level of RevPar decline, at -7.0%, is quite clear. The MICE sector business is estimated to be guaranteed in some cases.

4 August 2017 Early end of school holidays helped Occ: 63.9%, ADR: 87.4, RevPar: 55.9 Unlike 2016, the summer holidays ended in mid-august this year. Thus corporate and conference business had almost 2.5 weeks more time to have a positive effect on the key figures in August In addition, there was a great deal of layover business due to flight cancellations, and the numerous booth constructors who arrived prior to the IAA also boosted the occupancy figures (though without affecting prices). September Occ: +7.3%; ADR: +3.1%; RevPar: +10.6% Compared with the forecast made the previous month (July), the expected growth in occupancy improves from +6.9% to +7.3 %. The ADR decreased from +3.7 % to +3.1 %. Nevertheless, all three key figures show a positive development compared to last year. In addition, the International Automobile Exhibition (IAA) is taking place from 14 to 24 September. However, despite the international interest in the new models and developments in the automotive sector and flanked by relatively strong days open to the press, it will not be possible for all hotels to reach the ADR levels that were achieved in connection with the 2016 Automechanika. October Occ: +1.6%; ADR: +14.9%; RevPar: +16.8% In October, the expected major increase in ADR will be evident, and it will lead to significant growth in RevPar on a year-on-year basis. This is primarily due to the CPHI Congress that takes place in Frankfurt from 24 to 26 October This pharmaceutical industry congress generates extraordinarily high room rates (and in a variety of segments, from individual to groups). The CPHI Congress is thus clearly one of the year s top events. November Occ: +0.4%; ADR: +1.9%; RevPar: +2.3% Expectations in terms of occupancy are slightly higher than last year s. The mood in the hotel sector is between wait and see and positive. It is a full business month, which is already marked by good demand in the MICE segment, even without the Health Ingredients trade fair.

5 August 2017 The North on an upturn Occ: 83.4%, ADR: 107.5, RevPar: 89.6 Due to last year s high occupancy levels, the hotels in Hamburg have largely refrained from offering summer discounts and price reductions to increase demand, and have even managed to successfully increase average room rates by almost 10% over last year s prices. The result has been a 9.6% increase in RevPar with a small (0.2%) drop in occupancy... September Occ: +0.5%; ADR: -13.9%; RevPar: -13.5% What had been a negative forecast has now become a prediction of a 0.5% growth, compared to the forecast made in July. However, ADR is expected to drop by -13.9%. Business sector trade will be marked by the absence of the SMM and Wind Energy events, as well as 12 other profitable congresses (the DGK, Historikertag and the Viszeralmedizinkongress). October Occ: -4.5%; ADR: -1.5%; RevPar: -5.9% In October, all three key figures are expected to be down on a year-on-year basis. The reason for this is the limited corporate and MICE business due to the public holidays (and subsequent bridging days) with the day of German Unity on 3 October and the Reformation Day on 31 October, both of which fall on a Tuesday. November: Occ: -4.9%, ADR: +0.4%, RevPar: -4.5% A decline in occupancy of almost 5% is expected in November with a slight decrease in the average room price. The first week of November will still be influenced by the Reformation Day holiday and the leisure sector will be missing the 1st of Advent, which was at the end of November in in cooperation with Solutions Dot WG

6 August 2017 A lot of games Occ: 67.0%, ADR: 105.3, RevPar: 70.5 The school holidays in North Rhine-Westphalia only finished at the end of August, which limited the MICE sector business. However, the Gamescom, with 350,000 visitors from 106 countries, was again a great success this year. This also benefited Cologne s hotel industry. ADR grew by 5.8% compared to last year, and this was able to offset the small decline in demand. September Occ: -0.6%; ADR: -11.8%; RevPar: -12.3% September is now expected to be much more positive than what has been forecasted the previous month, although declines in occupancy and double-digit falls in ADR and RevPar are still expected. This is mainly because the Photokina and the World Congress of Pathology are not taking place. Otherwise, September is characterized by extremely strong demand for the Spoga, Gafa, Demexco and Zukunft Personal events. October Occ: -2.3%; ADR: +17.6%; RevPar: +14.9% A significant increase in average room rates is expected in October. However, due to the lower occupancy expected compared to last year, RevPar will not rise in line with ADR. This is mainly due to the Anuga, the world s largest and most important trade fair for food and beverages. In the final report two years ago (2015), there was talk of a record number of exhibitors and a total of 160,000 visitors, a scale that had a positive impact on the key hotel figures and which explains the high growth in the average room rate. November: Occ: -0.7%, ADR: +6.7%, RevPar: +6.0% In mid- August it had already become clear that there would not be any rooms free in Bonn during the Climate Change summit. Cologne will greatly benefit from the 23rd UN Conference on Climate Change from 6 to 17 November 2017, where diplomats, politicians and representatives from all over the world will meet together and led by this year s chairperson, the president of Fiji Islands.

7 August 2017 More and more tourists from Asia Occ: 76.6%, ADR: 110.1, RevPar: 84.3 August is a full month of school holidays and traditionally marked by the leisure sector trade. During the same period in 2016, travel warnings due to terrorist attacks, as well as the shooting incident at the Olympia shopping center led to a slump. This year, the situation has normalized once again. This was confirmed by Josef Schmid, Head of the Labour and Economic Affairs desk at the Süddeutsche Zeitung on 18 July, with the words The development of tourism in Munich has picked up again. September Occ: +1.2%; ADR: +2.6%; RevPar: +3.8% Compared with the trend forecast of the previous month (July), occupancy growth has risen by 1.1% points to 1.2%. In the current Trendbarometer, the predicted ADR has also risen by 2.1% to 2.6%. Due to the shift in the calendar, there will be one day less of the Oktoberfest and one day less of the school holidays in September. This strengthens the positive expectations for occupancy and ADR. October Occ: -2.3%; ADR: +5.3%; RevPar: +2.8% In relation to occupancy, expectations remain unchanged, while the ADR trend has been revised upwards to 5.3%. November Occ: - 4.8%; ADR: -4.6%; RevPar: -9.1% In November, negative growth is expected for all three key figures while the level of the RevPar decline (down by 9.1%), is quite significant. Traditionally, the Productronica and Electronica take place in November (in alternate years) and this year is the turn of the weaker Productronica trade show.

8 Your contact in editorial team: Verena Bock, Marketing & Communication Fairmas GmbH. The is published by Fairmas GmbH, Sachsendamm 2, Berlin, Germany Solutions Dot WG GmbH, Kranzer Strasse 6-7, Berlin, Germany Fairmas GmbH specializes in the development of planning and controlling software for the hotel industry. The company offers its international clientele a hotel benchmarking platform and a variety of software applications for the fields of budgeting, forecasting, controlling, management reporting, and the optimization of working operations. As a strategic management consultant, Solutions Dot WG develops individual and customized strategies and solutions for companies in the hotel, catering and tourism industry and provides support in the implementation of concepts. Solutions also takes on the realization of projects on its own, and is active in the fields of support management and interim management, as well as in the Total Quality Management (TQM) sector. Disclaimer No warranty or guarantee is given for the accuracy or completeness of the information contained in this publication. To the fullest extent permitted by law, neither Fairmas GmbH nor Solutions Dot WG GmbH assume any liability or responsibility for the possible consequences of actions, omissions or decisions that are based on this publication.