Investor Presentation March, 2008

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Piers Welch
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1 Investor Presentation March, 2008

2 Business Plan Overview Repositioning Strategy Repositioning Portfolio Lowering Leverage Internal Growth Fully Renovating Portfolio Redevelopment Projects New Asset Management Approach External Growth Improving Overall Quality of Portfolio 2

3 Portfolio Market Distribution Geographically diverse portfolio located within the Top 50 markets Largest Markets (1) Minneapolis Boston San Francisco Bay Area Chicago Northern New Jersey Philadelphia DC / Baltimore Ventura Los Angeles Area San Diego Phoenix Dallas Atlanta Myrtle Beach Embassy Suites Doubletree / Hilton Sheraton / Westin Marriott / Renaissance Holiday Inn San Antonio Tampa Orlando Southern Florida (1) Markets named contribute at least $7 million of hotel EBITDA during

4 High Quality, Diversified Portfolio Sheraton - Phoenix, AZ Hotel 480 (Marriott) - San Francisco (Union Square), CA Sheraton Premiere - D.C. (Tysons Corner), VA Embassy Suites - Mandalay Beach, CA Westin Dallas, TX Embassy Suites Ft. Lauderdale, FL 4

5 High Quality, Diversified Portfolio Sheraton Suites Atlanta, GA Holiday Inn - San Diego on the Bay, CA Sheraton Philadelphia (Society Hill), PA Embassy Suites Los Angeles, CA Embassy Suites - New Orleans, LA Doubletree Guest Suites Walt Disney World, FL 5

6 Renovating Entire Portfolio Renovating all 83 hotels Guest rooms and baths, corridors, public areas, meeting space, exterior and mechanical Guest room renovations include such things as new furniture, ergonomic chairs and work desks, lighting, flat panel TVs and soft goods; updated baths with new fixtures, counters and tile Total expenditures of approximately $440 million; Guest impact areas total approximately $300 million Capital expenditures represent almost $20k per key (1) (1) Based on pro rata core room count of 22,036 rooms for the 83 hotels 6

7 Renovating Entire Portfolio Embassy Suites Napa Valley, CA Embassy Suites Minneapolis, MN Embassy Suites Piscataway, NJ Embassy Suites Dallas (Market Center), TX 7

8 Renovating Entire Portfolio Historic Mills House - Charleston, SC Embassy Suites Burlingame, CA 8

9 Renovation Program Schedule Renovation program winding down, 80% of portfolio now completed ROOS significantly falling with fewer hotels under renovation # of Hotels Total % Total ROOS (1) 2006 Completions % 104,000 First Quarter % 116,000 Second Quarter % 122,000 Third Quarter % 125,000 Fourth Quarter % 85,000 First Quarter % 31,000 Remaining % TBD (1) ROOS represents total room nights out of service, due to renovation, during the quarter 9

10 Exceeding Return Targets Completed renovations at 49 hotels as of September 30, 2007 Hotels, on average, exceeded budget in RevPAR and EBITDA during the fourth quarter 2007 Q4 vs. Prior Year RevPAR Change 13.9% RSI Growth 5.5% ADR Growth 6.2% EBITDA Margin Change 404 bps EBITDA $ Change 30.7% 10

11 RevPAR Growth RevPAR Growth is growing at a significantly higher rate than the industry Subsiding displacement Earning returns from capital spent 12% 10% RevPAR Occ 8% 6% 4% 2% 0% -2% -4% -6% -8% Q Q Q Q Q Q Q (1) Based on mid-point of guidance 11

12 Redevelopment Projects Adding significant value through maximization of real estate and added EBITDA growth Expecting an average of 18% return on investment Projects commencing over the next three years Projects include: Adding meeting rooms, guest rooms and/or spas Utilizing excess land at beach front properties for condominium development Re-branding opportunities Looking at additional value-added enhancements such as new restaurant concepts, maximizing usable public area space 12

Redevelopment Projects Completed Projects

13 Redevelopment Projects Completed Projects Embassy Suites - Deerfield Beach Resort & Spa, FL Opened a new spa in March 2008 Hilton Myrtle Beach Resort, SC Opened a 35,000 sq. ft. convention center in January Meeting Space in Kingston Plantation now totals over 125,000 square feet 13

meeting space to be completed in April 2008 San Francisco -

14 Redevelopment Projects Announced Projects Doubletree Guest Suites - Dana Point, CA Adding 5,000 sq. ft. meeting space to be completed in April 2008 San Francisco - Union Square, CA Repositioning & Upbranding to a Marriott to be completed by early

15 Reduced Leverage Reduced leverage from 8.4x in 2003 to 5.0x today ($ in millions) Same Store EBITDA (1) Adjusted EBITDA 2003 Actual $174 $ Sep TTM $214 $ Actual $273 $ Guidance $297 $297 Consolidated Debt $2,037 $1,703 $1,476 $1,476 Net Total Debt (2) $1,898 $1,641 $1,512 $1,512 Consolidated Debt / Adjusted EBITDA 8.4x 6.5x 5.2x 5.0x Interest Expense $168 $139 $105 $103 EBITDA / Interest 1.4x 1.9x 2.8x 2.9x 1) Same-Store EBITDA equals Adjusted EBITDA less gains from condos and EBITDA from Discontinued Operations Same-Store EBITDA includes the full year of Renaissance acquisitions. 2) Includes the pro rata share of unconsolidated debt, less cash on hand. 3) 2008 Debt equals year end balances in

16 Debt Maturities As of Dec. 31, 2007 $800 $700 $600 $500 $400 $300 $200 $100 Debt Maturities Unsecured Secured $

17 Industry Fundamentals Still Strong Supply Growth remains below historical average Demand growth negative only three times in last 35 years (1974,1991,2001) % RevPAR change Industry downturns typically driven by high supply growth % Supply change 10.0% 8.0% 6.0% RevPAR Supply 5% 4% 4.0% 3% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% % 1% 0% -1% Source: Smith Travel Research, January

18 Portfolio Recycling Further improve overall portfolio quality through acquisitions and future asset sales Future Asset Sales Assess supply and demand changes within markets Concentration risk Future capital investments and returns Future Acquisitions Disciplined approach Increase barriers to entry protection Targeting selected urban markets and resort locations Further diversify by customer type, market and brand Improve return on invested cost Minimum Internal Rate of Return exceed WACC 18

19 Portfolio Recycling Improving Overall Quality Non-Strategic 45 Hotels (3) Existing 83 Hotels (1) Renaissance Acquisitions Average Rooms Business Mix % (Group/Transient) 20 / / / 35 Average Sq. Ft. Meeting Space (2) 9,000 11,000 70,000 RevPAR $50 $102 $134 EBITDA per room $4k $13k $18k (1) Based on mid-point of 2008 guidance (2) Excludes 11,000 sq. ft. of outdoor meeting space at the Vinoy. (3) Hotel Stats are TTM September 2005, which is the last year we owned the entire 45 hotels. 19

Renaissance Acquisitions - Description 361-room

ft. of function space 74-slip marina Golf Club with

of meeting space Additional resort amenities including

20 Renaissance Acquisitions - Description 361-room national historical landmark luxury resort 51,000 sq. ft. of function space 74-slip marina Golf Club with 18- hole golf course and clubhouse w/ 9,000 sq ft. of meeting space Additional resort amenities including a day spa Vinoy Club Vinoy Resort & Golf Club St. Petersburg, FL 20

21 Renaissance Acquisitions - Description 560-room resort on 70 acres 90,000 sq. ft. of function space Located in the Indian Wells Golf Resort featuring a 36-hole golf course 12,000 sq. ft. spa Other resort amenities including pool complex Esmeralda Resort & Spa - Indian Wells, CA 21

Forward-Looking Statements

LOGOf 1 Forward-Looking Statements Statements in this presentation that are not reported financial results or other historical information are forward-looking statements within the meaning of the Private