Zurich hotel market in figures. Hotels Beds 14 thousand 14 thousand. Arrivals 1.6 million 1.5 million. Overnights 2.8 million 2.

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1 Photos from top to bottom: Dorint Airport Hotel, The Dolder Grand Hotel, Steigenberger Hotel Bellerive au Lac, Swissôtel [PKF city ticker] [ ] Among Europe s top destinations Slight growth in demand: The hotel market experienced a slight increase in demand in 213, shown by a plus of 4 % in arrivals and 3 % in overnights. Slight growth is also the trend in 214: overnights from January to August were 1.92 million, a rise of around 1.5 % year-on-year. German visitors continue to dominate the statistics: At 14 %, visitors from Germany continue to account for the largest proportion of international overnights; however, their numbers are declining, while the highest growth year-on-year was registered for visitors from the source markets of Qatar, Singapore and Saudi Arabia. Supply continues to grow: While showed only moderate year-onyear growth in supply in 213, the coming years will bring a significant increase in capacity given the numerous hotel projects currently in the planning stage. 2,1 hotel rooms from budget to luxury: At present there are nine hotel projects in the concrete stages of planning or construction. They span all categories from low budget to luxury. RevPAR in second place after Geneva in a European comparison: showed a year-on-year growth in RevPAR of around 8 %, ranking second after Geneva in a European comparison (source: STR Global). This growth is primarily accounted for by the 6.7 % rise in net room rates. A slightly positive trend in RevPAR also emerged in the first six months of 214. hotel market in figures Hotels thousand 14 thousand Arrivals 1.6 million 1.5 million 2.8 million 2.8 million Ø length of stay International overnights total 2.2 million 2.2 million Share of total overnights 79.3% 79.6% Information refers to hotels and health establishments Swiss Federal Statistical Office Issue

2 China Germany France Italy Spain Russia UK USA [PKF city ticker] Hotel demand still growing In the past five years the hotel market in has shown steady growth in demand, peaking once again in 213 at 1.6 million arrivals and 2.8 million overnights equivalent to year-on-year growth of around 4 % in arrivals and 3 % in overnights. have seen growth totalling 14.6 % since 29, with average annual growth at approximately 3.5 %. The average length of stay has been stable since 211 at approximately 1.8 nights. Arrivals/ 's Nights 3. 2, 1,6 2. 1,2 1.,8,4, Arrivals Length of stay 1,33 1,383 1,44 1,518 1,58 2,469 2,575 2, , , Information refers to hotels and health establishments Swiss Federal Statistical Office Germans dominate the guest mix Around 2.2 million overnights were generated by international visitors to in 213, representing 79.3 % of total demand. At around 14 %, Germany remains the most important source market; however, its share has fallen slightly year-on-year (-.8 % points). Although the strong Swiss franc had a negative impact on tourism in Switzerland to some extent, the city s status as one of the world s most important financial centres continues to boost its attraction. 5, 4, 3, 2, 1, The most important tourism source markets after Germany are primarily the United States (1 %) and the United Kingdom (7 %). The highest growth rates (up to 4 %) were shown by Qatar, Singapore and Saudi Arabia s Information refers to hotels and health establishments, China (excluding Hong Kong) Swiss Federal Statistical Office Issue

3 Risk from increase in bed supply Hotel supply rose slightly year-on-year by.8 % in 213, while bed capacity rose by approx. 2 %. A continuous increase in bed supply totalling 16.2 % has been registered since 29. The number of beds per hotel has also risen from 16 in 29 to 115 in 213. Hotels /H , , 16 9, 12 6, 8 4 3, Hotels ,871 11,944 p. H ,875 13, , Information refers to hotels and health establishments Swiss Federal Statistical Office Growth in number of four-star hotels Over the past five years s hotel market has shown little change with respect to the star classifications. Three-star hotels account for the largest proportion of starred hotels with 36 hotels, followed closely by four-star hotels, of which there were 34 in 213. The number of non-classified accommodation operations has remained largely stable in recent years at around 26 %. Hotels/ Health 1 Star Star Star Star Star unclassified establishments s Information refers to hotels and health establishments, as of December Swiss Federal Statistical Office Issue

4 Fluctuations in bed occupancy Although overnights and bed capacity both rose continuously, the average bed occupancy rate in fluctuated considerably. Over the past five years, bed occupancy rates peaked in 21 at around 59 % before showing a significant decline in the following years to 56.1 % and 55.4 % respectively, owing to disproportionate increases in capacity. In 213 bed occupancy was at 56.2 %, a slight improvement of.8 %-points year-on-year. Bed Occ. Overn. 's % 6, 8 4, 6 4 2, 2 Bed Occ. 4,333 4,36 4,699 4,972 5,36 2,469 2,575 2,638 2,755 2, s Information refers to hotels and health establishments, number of beds accumulated throughout the year Swiss Federal Statistical Office Growth in room capacity In the coming years further growth in capacity on s hotel market is anticipated given the numerous new projects under construction or in the planning stage. They range from the budget category to lifestyle and luxury products. New developments are mainly concentrated in West and the airport region, but new hotels are also planned in central locations (e.g. Motel One on Brandschenkestrasse). The following chart shows a selection of projects in with a reasonable likelihood of realization: Hotel projects Project Location Category (stars) Rooms Opening Ibis Budget Flughofstrasse Kameha Grand Dufaux-Strasse Urban Retreat (former Atlantis) Döltschiweg Boutique Hotel Marktgasse n.a. n.a. 215 Motel One Brandschenkestrasse hours Europaallee Hyatt Place Airport Hyatt Regency Airport Hotel project Greencity 3 23 n.a. Category according to international classification Research PKF hotelexperts Issue

5 Performance indicators Room occupancy rate largely stable The average room occupancy rate in has fluctuated constantly in the past five years. After the crisis year of 29, which also impacted on the hotel industry in given the city s role as a financial centre, room occupancy rose by 4.5 %-points to 72.8 % in 21 and has remained roughly stable since then. After a slight dip in 211 and 212, the most recent figures for 213 showed 72.3 %. Room occupancy % Net room rate rises again Price levels on the hotel market are relatively high. After a significant decline in 212, the net room rate showed a year-onyear rise of around 6.7 % in 213, breaking the negative trend of recent years. However, the increase in 213 was only 2.1 % above the original 29 figure. continues to occupy a top place in European comparisons, ranked second after Geneva and ahead of London in 213. Net room rates CHF Fluctuations in RevPAR RevPAR developments on s hotel market have also been unstable in recent years, driven by fluctuations in net room rates and room occupancy rates. Overall RevPAR rose from around 16 CHF in 29 to around 173 CHF in 213 (+8.1 %). After declining in 212 as a result of falling prices, RevPAR again rose significantly by 8.1 % to its 213 level. As for net room rates, is ranked second between Geneva and London in a European comparison. A slightly positive RevPAR trend can be determined for the first six months of 214. RevPAR CHF Issue STR Global 5

6 Future prospects s hotel market is facing considerable challenges. On the one hand, overnight and arrival figures have shown continuous growth; however, given the large number of hotel projects competition is likely to become more intense. We anticipate that the battle over market share will impact most strongly on smaller privately run hotels with products that are no longer in line with contemporary standards. New brands will expand the hotel market, such as the Kameha Grand, scheduled to open in 215, and the budget brand Motel One, which is planning to enter the Swiss market with projects in Basel and. In addition, the vicinity of the airport is a strong focus of development. After a Dorint hotel with 235 rooms opened there in spring 214, the two Hyatt projects will particularly enlarge hotel capacities in the airport region. It will be interesting to see whether s hotel operators will succeed in generating additional demand over the long term despite the increase in capacity. Growth prospects are offered by the city s potential as a tourist destination, which has not yet reached its peak; by congress and conference business with the planned renovation of the Kongresshaus; and by creating new demand generators in the city s developing areas (e.g. West, Europaallee, The Circle etc.). Given the high number of business visitors, there is also potential in for more varied accommodation products such as boarding houses or serviced apartments, which are currently available only in small numbers in the city. Given the heavy dependence on the financial sector, however, the future development of s hotel industry will continue to be strongly tied to trends in the global economy. PKF hotelexperts GmbH Maximilianstrasse Munich tel: +49 () fax: +49 () info@pkfhotelexperts.com web: Contact for queries and suggestions: Caroline Schade tel: +49 () caroline.schade@m.pkf.de Worldwide hotel consulting Partner for your success. PKF hotelexperts city tickers provide a fast, compact overview of major European cities and their hotel markets. The information publications appear several times per year. The next issue will examine the Leipzig hotel market. Order your personal copy at: info@pkfhotelexperts.com. Disclaimer: This report and the figures, trends and details of possible reasons for change are based on careful market research. Although PKF hotelexperts assembles this information with the utmost care, no guarantee can be given for the completeness and up-to-dateness of the information. As of October 214 Issue