FINANCIAL FEASIBILITY STUDY: Homewood Suites Downtown Dallas Xxxxxx Xxxxxxx Xxxx XXXX Xxx Xxxx Dallas, Texas 75202

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1 Page 1 of 111 FINANCIAL FEASIBILITY STUDY: Homewood Suites Downtown Dallas Xxxxxx Xxxxxxx Xxxx XXXX Xxx Xxxx Dallas, Texas November 15, 2011 This study has been prepared to determine the financial feasibility of renovating and operating a Homewood Suites hotel in the United Fidelity Building in downtown Dallas, Texas. The property is expected to open as a 130 unit Homewood Suites Hotel in January of The site has easy access and is convenient to all downtown Dallas area attractions, nearby interstates, and to the Dallas Convention Center. The hotel suite breakdown is as follows: 101 of 460 square feet; 6 of 608 s.f.; 8 of 684 s.f.; 12 of 640 s.f.; and 3 two bedroom suites of 1,340 s.f. Project quality is set to meet the physical and operating standards of the Homewood Suites hotel brand, a product of Hilton Hotels, one of the most successful hotel companies in the world. Hilton brands include: Hilton & Doubletree, Embassy Suites, Hilton Garden, Hampton Inns, Homewood Suites, and Home2Suites. All projections herein are based on operating this hotel as a Homewood Suites, and retaining the brand in good standing at the time of an assumed sale after 10 years. Actual market acceptance for a Homewood Suites hotel has been quantified versus market averages, and has been assumed in developing this study. Operating costs are set at the level of similar suite hotels in the region. KEY FINDING: Developing and opening a Homewood Suites Hotel at this site should generate an unleveraged, pre-tax return on total invested capital exceeding 15%, with a return on equity of 25%. This return on invested capital also assumes that improvements (purchase and renovation) per unit are completed at the estimated cost of $128,077, plus $2,850,000 for land. This is a good hotel investment. Project details follow: PO Box Laurel Heights, San Antonio, TX Fax

2 Page 2 of 111 Total Investment Land & Building Cost $ 2,850,000 for 0.56 acres Improvements Budget Total Investment $19,500,000 Pre-Tax Project Return 15.1% 1 Pre-Tax Return on Equity 25.2% 2 $128,077 per key This study incorporates the current downturn in the Texas hotel market, caused by the broader national recession, which began in late In our Market section, we highlight the historical hotel performance in Texas, noting the effect of past recessions. While every market has its own unique characteristics, our projections for the local area market consider how the lodging industry reacts in times of economic downturn and in normal times. We anticipate that the current upturn will continue to impact subject markets through 2011, followed by a slow, long-term period of recovery. See the Market section for more details. With a January 2013 opening, cash flow market projections for the Homewood Suites Hotel Downtown Dallas, before taxes and after renovation reserves, should be available for debt service, income tax and dividends as follows: Project Summary Occupancy Average $ Total Percent $ Rate REVPAR Revenue CashFlow** Year I 63.2% $128.77* $81.44 $4,057,307 $2,093,492 Year II 72.1% $ $98.45 $4,904,820 $2,676,538 Year III 74.7% $ $ $5,281,600 $2,911,950 Year IV 74.1% $ $ $5,440,048 $2,987,175 Year V 74.1% $ $ $5,603,248 $2,931,105 Year VI 72.6% $ $ $5,674,964 $2,931,944 Year VII 72.6% $ $ $5,747,599 $2,996,205 Year VIII 72.0% $ $ $5,821,162 $3,056,831 Year IX 71.9% $ $ $5,895,667 $2,964,652 Year X 71.7% $ $ $5,967,745 $26,092,809*** *Year I ADR equates to approximately $125 in current market dollars.**before Income Tax & Financing expense, but reflecting $3,207,257 in reserves for capital expenditures / property renovation ($24,671 per unit). ***assumes valuing property at Year 10 cash flow at an 11% return-to-buyer, less 4% expense of sale, plus year 10 cash flow. 1. After reserve for on-going renovations. 2. Assuming 50% equity and 50% debt at a 5% pre-tax debt cost; calculated weighted average.

3 Page 3 of 111 The above cash flow, assuming a Year 10 sale, has been discounted at the rate of 15.1% to a present value of $19,504,780, approximating the total budgeted investment of $19,500,000. This 15.1% is the project's unleveraged return, provided capital is kept at this level. An estimated capital budget for construction and FF&E of $128,077 per unit 'turn-key' costs for a hotel of this size and quality is well above average for this brand and quality of product, but reasonable for a downtown hotel in a renovated historical building, in our experience. If capital outlays vary from budget for this project, returns will vary accordingly. The following table illustrates the linear nature of financial returns as capital requirements escalate or decline and revenue streams remain stable. Effect on Returns if Capital Investment Changes 3 Improvements Budget Land Total Discounted Cash Flow Variance Per Unit Total Cost Investment Total Proj On Equity (85%) $108.9 $14,152 $2,850 $17, % 30.48% (90%) $115.3 $14,985 $2,850 $17, % 28.60% (95%) $121.7 $15,817 $2,850 $18, % 26.86% BUDGET $128.1 $16,650 $2,850 $19, % 25.20% (105%) $134.5 $17,482 $2,850 $20, % 23.66% (110%) $140.9 $18,315 $2,850 $21, % 22.20% (115%) $147.3 $19,147 $2,850 $21, % 20.84% 3. Discounted Cash Flow / Internal Rate of Return.

4 Page 4 of 111 A detailed look at Year III shows the following: Year III 2015 Room Revenues $5,030,095 Total Revenues $5,281,600 Income Before Fixed Costs $3,413,665 (64.6%) Net Income Before Tax & Fin. $2,654,038 (50.3%) Cash Flow Before Financing $2,911,950 (55.1%) 4 Occupancy % 74.7% Average Daily Rate $ $ REVPAR $ Per Occupied Room Cost $ The critical statistic used in this study is REVPAR. REVPAR means revenue per available room per day, and reflects the average daily room revenue yield of every room in a property or market (not just occupied rooms). REVPAR is generated by multiplying occupancy times rate (i.e. REVPAR = % occupancy times average daily rate), and is the most effective and important tool in the evaluation of the success of any lodging concern. SUMMARY OF CRITICAL ASSUMPTIONS: Critical assumptions are summarized as follows, with the Market History and Projection study (page 11) following the Methodology section (page 7). 1. Projections of the local Downtown Dallas Area Market 5 reflect a mixture of mostly very old and some significant brand new hotels. The average hotel room in the local market is 32 years old, at the end of the life cycle of the typical hotel building, and well past its peak performing years. The typical hotel building becomes stylistically and structurally obsolete after 30 years, though this figure is larger for typical downtown high-rise/concrete structures which undergo complete remodeling. The local market has 2,204 rooms built since 1995, and 8,678 rooms built before There is typically a wide and dramatic gap between the performance of new and older properties, with the typical hotel in the area either being relatively new and competitive or older and on its way to closure. Of significant note is the recent opening of the 1,001 room downtown Dallas Omni convention hotel. This significant property is included in all market analysis and is reflected in the subject hotel s projections. 4. Before deductions of loan principal and interest, before income tax deductions, and before any equity payout. 5. Zipcodes 75201/202/207/215/204/219.

5 Page 5 of 111 We are comfortable with market projections, and expect market demand in the area to continue to rise steadily. After rising strongly since the start of 2010, occupancy is expected to fall slightly towards an equilibrium level of 60% by Further, REVPAR in this market is projected to grow by 3% annually over the next nine years, reflecting a steady market and the expectation of the replacement of obsolete hotel products. Detailed local market history and projections commence on page 16. DOWNTOWN DALLAS AREA MARKET Year Occupancy % $ REVPAR % $ % $ % $ % $ % $ 81 6 Projected % $ % $105 Historical Annual Compound Growth Rates Past 9 YearAverage 1.5% 2.9% Past 4 YearAverage 1.1% 0.7% Past YearAverage 8.2% 13.4% Future Annual Compound Growth Rates Next 9 Years -0.1% 3.0% Next 5 Years -0.2% 3.0% 2. Versus the local market's REVPAR dollar projections, the REVPAR index of the proposed Homewood Suites Hotel ramps upwards, peaking at 115% of the market average REVPAR in Years III-V. Thereafter, the REVPAR Index declines due to the normal aging cycle. Detailed REVPAR derivation and subsequent projections commence on page 32. HOMEWOOD SUITES HOTEL DERIVATION Data in 2011 $ s Year I Year II Year III Base: Name & Quality x Brand Age Adjustment x Site Value Adjustment x Size Adjustment x Other Adjustments x Newness Adjustment = Performance Factor 94% 110% 115% x Market REVPAR $81.36 $81.36 $81.36 = Projected Performance $76.75 $89.27 $ months ending September 30, 2011.

6 Page 6 of 111 The projected REVPAR performance of the subject hotel, versus the local area market average REVPAR reflects the fact that this hotel is expected to perform at a level above the market average. The hotel's REVPAR index starts in Year I at 94% of the market, rises to it s peak of 115% of the market in Years III-V, then slowly loses ground versus the local area's inflationary growth: 3. Expenses are set at the level of similar, high-quality select service hotel products from Smith Travel Research Host Reports operating statistics, inflated at 3% per annum. See page 46 for details.

7 Page 7 of 111 METHODOLOGY To develop Pro Forma financial results for the proposed project, two major sets of assumptions have been developed. First, the future market's average REVPAR is forecast on a reasonable and economically-sound basis; the performance of the project is dependent on this market forecast and varies from it only due to specific variables of the project. Second, the specific variables of the project are combined and expressed as an index for each quarter ofthe forecast, an index that is used to adjust the overall market performance to the specific project. MARKET REVPAR FORECAST The large Dallas Metro market is examined historically and projected. The key in the market projections is to stabilize the metro market in the future at a sustainable, average equilibrium for occupancy, a level which we have determined to be approximately 59% in markets of this type, and lower for non-metro and highway areas. Over the 20 years from 1987 through 2007, according to the Source Strategies, Inc. database, hotel occupancy in Texas has averaged 59%, and 60% in overall Texas metros. This occupancy level is highly relevant as a long-term, equilibrium occupancy, a level where investors are neutral about adding new hotel rooms to the market and an average that will reoccur over long periods of time (e.g. 20 years). After the wider market area is forecast, we forecast the performance of the local Downtown Dallas Area Market on a similar basis. Market projections are based on growth rates in real demand (room-nights sold), prices (average daily rates), and supply (rooms available). The key in this projection is to stabilize the local market in the future at a sustainable, average equilibrium for occupancy, a level which we have determined to be approximately 60% in markets of this type. The REVPAR projection of the local market is then the pro forma market environment of the proposed subject development; the project will vary from the norm for only project-specific differences, and then only relatively. PROJECT SPECIFIC VARIABLES: DEVELOPMENT OF PROJECT REVPAR INDICES The first variable from the averages to be developed has to do with the fact that each product type and brand have a typical and identifiable influence on REVPAR performance. This variable is based on its consumer acceptance, its product definition, its level

8 Page 8 of 111 of quality, the price it can command from the consumer, its marketing efforts, and other factors. The value of the brand and product type is termed the Base Value. The second adjustment used on the dollar value of the local area's REVPAR is the Brand Age Adjustment. This is made to reflect the average age of similarly branded hotels on the subject property's performance versus the market average. The opening dates of Homewood Suites hotels in similar areas were examined in order to quantify this factor. The next step to developing a project REVPAR index is to determine any further adjustment based on any deviation from a normal project Size. If the number of proposed rooms in the project is significantly above or below the average for that brand and product-type, its performance will also vary from the norm. A lower than average number of rooms should increase per room performance and vice versa. This is due to the fact that consumer demand for a single brand is demand at the project's site, regardless of the number of rooms offered by the hotel (a minor exception here would be a convention hotel). An empirical proof of this evaluation of Size is the major increase in volume enjoyed by numerous hotels throughout Texas that have split into two branded operations, using two different names. For example, the Hilton Hotel Towers Austin added $1,000,000 annually to revenues by splitting off its adjacent, ground-based rooms as a Super 8 Motel. By creating another brand, the Super 8 began to fill demand for budget properties in the immediate area, while the Hilton Towers kept its current upscale customer base. Hence, smaller room counts than average generate higher occupancy than average. Further proof is the correlation between project size and occupancy: the smaller the property, the higher the occupancy. 7 A further, 'Other,' segment adjustment may be made if the proposed product type is under- or over- supplied in the local market, or for other factors. For example, a product type commanding 10% of the Texas market - but zero locally - would command a higher daily rate or occupancy locally because it is a relatively scarce commodity. Further, a subject product far exceeds the product quality of the brand average, then a positive adjustment should be made to 7 Study detailed in size factor derivation in analysis section.

9 Page 9 of 111 reflect a better product than normal. While there is usually a reasonably consistent pattern of site factors for the nearby local chain properties selected, these factors often vary because of unique situations, including: 1) visibility and access differences between nearby sites; 2) any large variation from the norm in the usual number of rooms for a local chain property at a site; 3) a nearby property's quality, the quality of management, last renovation, etc.; and 4) any major new commercial development nearby (e.g. shopping, office complex, hospital). Adjustments can be made for these differences within forecast site factor, based on industry experience. This is the Segment, or Other adjustment. Then the REVPAR potential of the subject Site, regardless of brand, is developed in two ways. First, all other property factors except site are calculated for nearby competitors, the site factor then being used to bring the calculated REVPAR into a match with actual REVPAR performance. In other words, combining all factors including a 'plugged' site factor results in the theoretical REVPAR projection equaling actual REVPAR for each property studied, revealing the mathematical value of individual hotel sites. With the development of the adjustments for Brand/product type, overall Brand Age, Segment, project Size, and Site, a revenue projection for the proposed operation begins to take form by combining these factors into a combined index that is applied to the overall market-wide REVPAR projection, resulting in the forecast of the project's dollar REVPAR. However, this combined index changes with the cumulative age the project. Then, the physical Age of the individual project impacts this REVPAR index. A +12% increase factor is applied to the combined REVPAR index in the operating Years III-V. A first-year start-up adjustment of -8% and a second year adjustment of +7%, followed by a +12% adjustment for years III-V. This factor reflects the major revenue-generating power of new versus old properties. In the sixth year and thereafter, the REVPAR index is then diminished at a rate of 1.67% per annum in order to reflect aging and the normal life-cycle of a hotel. As a renovated property, this factor is slightly different. This pattern of declining performance with property aging is based on major studies of economic life-cycle patterns. The first study was conducted on a census of all 25,000 Texas rooms built

10 Page 10 of 111 between 1980 and 1982 (study published in September 1994 issues of MarketShare 8 and the October 1994 issue of Hotel & Motel Management); the second investigation was conducted on all 17,231 rooms built in Texas from 1990 through These Source Strategies, Inc. studies confirm a similar, major study conducted in 1982 at the Holiday corporation on 160 companyowned and company-operated Holiday hotels. Combining all of these factors - Product Type, Brand Age, Site, Size, Segment (other), and Newness (Age) - results in the REVPAR stream for the project. A REVPAR stream from which room revenues, estimated rate, occupancy and roomnights sold are derived. At this point, the investment and operational costs can be laid against the revenue line to generate pro forma financial performance and discounted cash flow analysis. The calculation of the statistic of Operating Costs Per Occupied Room (before fixed/capital costs are deducted) is typically the important cost to examine carefully because it is highly stable and predictable, regardless of occupancy and rate. The Smith Travel Research Host Report of Hotel Operating Statistics, 2011 edition (2010 data) with dollar costs inflated, and Source Strategies, Inc. financial models are the source of operating cost statistics. From national average occupancies, costs are categorized as fixed, semi-variable or variable, resulting in the highly-leveraged profit performance characteristic of lodging products, depending on occupancy and REVPAR performance (i.e. variable costs increase proportionately with higher occupancy levels while fixed costs do not). Furthermore, with a capital expenditures profile provided by the International Society of Hospitality Consultants' CapEx, A Study of Capital Expenditures in the U.S. Hotel Industry, a method has been applied to determine an appropriate amount of renovation reserves to ensure that the property is maintained at the franchisor's required level. All study-area individual hotel/motel five year histories are included in the study, using the Source Strategies, Inc. database of all Texas hotels and motels (includes each hotel s brand, room count, room revenue, occupancy, rate and REVPAR). The methodology of this database is attached as an exhibit. 8 Now Hotel Brand Report.

11 Page 11 of 111 MARKET REVPAR HISTORY: TEXAS 1. Since 1980, the State of Texas (and the wider U.S. market) has experienced other instances of economic turmoil such as the current recession. In the Texas market suffered through six consecutive quarters of major demand declines, with a sharp plummet of 24% in the first quarter of Two years later, every quarter in 1986 posted significant demand decreases of 19% or more. Before the recent recession, the most recent period of decline was in 2001, during which the onset of a recession was coupled, and accelerated by, the terrorist attacks of 9/11. Beginning in the Third quarter of 2001, seven of the next eight quarters showed declining room demand, and it was not until the first quarter of 2004 that healthy levels of growth resumed. We have considered the historical market patterns in formulating our projections for all market projections. Though there are differences in each economic downturn, and areas across the state are impacted differently depending on factors driving demand, there is much that can be discerned from historical negative trending performances and the patterns of subsequent periods of recovery. Historical quarterly periods of economic decline and recession are highlighted in the Texas market data that follows overleaf:

12 Page 12 of 111 HOTEL MARKET: STATE OF TEXAS # Room-1 Total Htls nites Rooms % Growth Vs Yr Ago Year & and # sold Revenue % 2 $ 3 $ 4 Quarter Mtls Rooms 000's $ 000's Occ. Rate RPAR Sply Real ADR $ Rev 801 1, ,446 9, , , ,967 9, , , ,589 10, , , ,272 9, , , ,062 10, , , ,783 11, , , ,359 12, , , ,855 10, , , ,719 11, , , ,022 11, , , ,756 11, , , ,962 9, , , ,393 8, , , ,954 9, , , ,281 9, , , ,046 8, , , ,074 9, , , ,838 9, , , ,581 10, , , ,042 8, , , ,426 11, , , ,832 12, , , ,876 12, , , ,122 10, , , ,942 8, , , ,430 9, , , ,313 9, , , ,530 8, , , ,297 9, , , ,846 10, , , ,226 11, , , ,113 8, , , ,646 10, , , ,194 11, , , ,718 12, , , ,487 10, , , ,433 10, , , ,409 12, , , ,464 13, , , ,991 10, , Room nights sold (derived from est. rate and actual revenues) 2. Occupancy nights sold divided by nights available for sale. 3. Avg. price for room nights sold; Directories, Surveys, & experience. 4. $ Revenue per available room per day (room sales per day)

13 Page 13 of 111 HOTEL MARKET: STATE OF TEXAS # Room-1 Total Htls nites Rooms % Growth Vs Yr Ago Year & and # sold Revenue % 2 $ 3 $ 4 Quarter Mtls Rooms 000's $ 000's Occ. Rate RPAR Sply Real ADR $ Rev 901 2, ,419 11, , , ,824 12, , , ,343 12, , , ,581 10, , , ,607 11, , , ,230 12, , , ,280 13, , , ,777 11, , , ,438 11, , , ,368 12, , , ,434 13, , , ,803 11, , , ,328 11, , , ,631 12, , , ,580 14, , , ,392 11, , , ,471 12, , , ,497 13, , , ,187 13, , , ,119 12, , , ,028 12, , , ,116 13, , , ,593 14, , , ,201 12, , , ,619 13, , , ,156 14, , , ,809 14, , , ,679 12, , , ,315 13, , , ,349 14, , , ,368 14, , , ,088 13, , , ,388 14, , , ,497 15,481 1,057, , ,763 15,927 1,053, , ,238 14, , , ,678 15,010 1,023, , ,933 15,996 1,125, , ,145 16,562 1,111, , ,149 14, , Roomnights sold (derived from est. rate and actual revenues) 2. Occupancy nights sold divided by nights available for sale. 3. Avg. price for roomnights sold; Directories, Surveys, & experience. 4. $ Revenue per available room per day (room sales per day)

14 Page 14 of 111 HOTEL MARKET: STATE OF TEXAS # Room-1 Total Htls nites Rooms % Growth Vs Yr Ago Year & and # sold Revenue % 2 $ 3 $ 4 Quarter Mtls Rooms 000's $ 000's Occ. Rate RPAR Sply Real ADR $ Rev 001 3, ,046 15,883 1,114, , ,709 17,001 1,232, , ,371 17,187 1,219, , ,047 15,228 1,064, , ,343 16,517 1,188, , ,089 17,222 1,239, , ,957 16,802 1,164, , ,914 14, , , ,745 15,867 1,110, , ,166 17,012 1,225, , ,226 16,541 1,158, , ,988 14, , , ,723 15,361 1,057, , ,836 16,737 1,169, , ,624 16,776 1,162, , ,212 14, , , ,147 16,239 1,145, , ,926 17,518 1,237, , ,549 17,679 1,264, , ,158 15,951 1,082, , ,449 17,015 1,214, , ,254 18,593 1,391, , ,115 19,173 1,449, , ,144 18,561 1,383, , ,912 18,910 1,479, , ,788 19,328 1,609, , ,093 19,733 1,606, , ,556 18,004 1,439, , ,745 19,366 1,614, , ,178 19,916 1,756, , ,440 20,324 1,743, , ,908 18,594 1,564, , ,555 19,690 1,738, , ,217 20,654 1,919, , ,163 21,246 1,907, , ,500 19,285 1,694, , ,440 18,710 1,592, , ,553 18,627 1,613, , ,834 18,572 1,598, , ,224 17,174 1,367, , ,457 19,015 1,544, , ,775 20,075 1,725, , ,315 18,692 1,537, , ,150 21,015 1,780, , ,144 21,940 1,942, CGR% 28 yrs 3.0% 2.8% 5.8% -0.2% 2.9% 2.6% 20yrs 3.0% 2.8% 5.6% -0.2% 2.7% 2.5% 10yrs 2.8% 2.2% 4.0% -0.5% 1.8% 1.2% 5yrs 3.4% 1.7% 3.4% -1.7% 1.7% 0.0% 1yr 2.9% 10.2% 12.2% 7.2% 1.9% 9.2% 1. Roomnights sold (derived from est. rate and actual revenues) 2. Occupancy nights sold divided by nights available for sale. 3. Avg. price for roomnights sold; Directories, Surveys, & experience. 4. $ Revenue per available room per day (room sales per day)

15 REVPAR $'s Page 15 of 111 Texas Lodging Market: Projection Room- Yr nights $ Room % Changes to Prior Year & # # Sold Revenues % $ $ # Rooms $ Qtr Hotels Rooms (000's) (000's) Occ Rate REVPAR Rms Sold ADR Revs 113 4, ,648 22,063 1,934, $87.68 $ , ,387 19,656 1,692, $86.11 $ , ,961 21,456 1,902, $88.68 $ , ,643 22,339 2,096, $93.87 $ , ,720 22,946 2,092, $91.18 $ , ,375 20,442 1,830, $89.55 $ , ,060 22,315 2,058, $92.23 $ Texas REVPAR Growth History & Projection $70 $60 $50 $40 $30 $20 Projection Begins $10 $0 Year

16 Page 16 of 111 Market REVPAR History & Forecast: 2. Over the past nine years, the Dallas Metro Market has shown an average annual real growth of 2.4% (room-nights sold), annual growth of 3.5% in total room revenues, and a 2.4% annual gain in REVPAR; note that the severe recession of 2009 depressed the longterm performance numbers. Occupancy rose 1.3% per year over the nine years. Supply rose by 1.1% per year, with room rates also rising 1.1% annually. Over the past four years, a gain of 1.5% per year in demand was coupled with higher levels of supply growth, at +1.8% annually. Revenues over this period rose an average of 0.2% per year, while REVPAR slipped 1.6% annually. Room rates fell 1.3% per year. Occupancy decreased over the last four years by 0.3% per year. Over the last two years, demand rose by 7.7% annually. Results also were good due to a moderate 2.1% annual increase in supply. These results caused occupancy to rise by 5.5% annually, and REVPAR to rise 4.5% year over year. Rates fell 1% per year, and yearly revenues rose 6.7%. Most recent history, the 12 months ending September 30, 2011, show even more positive results. Real demand rose by 10.4%, rates rose by 3.2%, revenues rose by 13.9%; occupancy gained 9.4%, as supply grew by only 0.9%. REVPAR gained 13% for the average hotel. For comparison, revenues rose 13.2% for the state of Texas in the latest year. Dallas Metro market occupancy averaged 59.4%, above the 58.2% for the overall state of Texas.

17 Page 17 of 111 LODGING MARKET HISTORY: DALLAS METRO # Room 1 Total Htls nites Rooms Year & and # sold Revenue % 2 $ 3 $ 4 % Growth Vs Yr Ago Quarter Mtls Rooms 000's $000's Occ. Rate RevPar Sply Real ADR $Rev ,913 2, , ,170 3, , ,739 3, , ,791 3, , ,713 3, , ,412 2, , ,110 3, , ,069 3, , ,223 3, , ,243 3, , ,385 3, , ,556 3, , ,436 3, , ,054 3, , ,034 3, , ,143 3, , ,340 3, , ,510 3, , ,320 3, , ,837 3, , ,407 3, , ,929 3, , ,096 3, , ,475 3, , ,022 3, , ,258 3, , ,006 3, , ,375 3, , ,642 3, , ,997 3, , ,335 3, , ,810 3, , ,702 3, , ,531 3, , ,099 3, , ,810 3, , ,996 3, , ,870 4, , ,256 3, , ,505 3, , CGR% Past 9 yrs 1.1% 2.4% 3.5% 1.3% 1.1% 2.4% 4 yrs 1.8% 1.5% 0.2% -0.3% -1.3% -1.6% 2 yrs 2.1% 7.7% 6.7% 5.5% -1.0% 4.5% 1 yr 0.9% 10.4% 13.9% 9.4% 3.2% 13.0% 1.Roomnights sold (derived from est. rate and actual revenues) 2. Occupancy nights sold divided by nights available for sale. 3. Avg. price for roomnights sold; Directories, Surveys, & experience. 4. $ Revenue per available room per day (room sales per day)

18 Page 18 of In the future, overall Dallas Metro market occupancy is projected to return to the estimated long-term equilibrium occupancy level of 59% by For the next nine years, real demand (room nights sold) is projected at an average 2.2% growth rate, below the projected net supply growth of 2.4%. With 2.7% average daily rate inflation, market gross revenues should gain 4.9%, and REVPAR should rise 2.5% annually during the nine year forecast. These assumptions relative to demand, supply, and occupancy reflect the fact that over the past 20 years overall occupancy in Texas has averaged about 59%, a level considered to be 'Equilibrium Occupancy' state-wide. This fact considers that larger and more successful metro area markets generate higher overall occupancy and REVPAR numbers than state averages, while rural areas lag these averages (Source Strategies, Inc. database). 'Equilibrium Occupancy' is further explained by the fact that new investment money will eventually be attracted to an under-supplied market until market occupancy falls and lower returns on capital are the result. The equilibrium occupancy point is where net, new supply is being added at about the same rate as growth in demand, and where return on investment is in balance with the cost of capital. Fueled by moderate, steady demand growth, the Dallas Metro has room for appropriatelypositioned new development, added at similar rates to demand. Higher quality new lodging products at or above mid-priced levels are performing very well in the market despite overall performance numbers being moderated by the large number of older, obsolete, budget and independent hotels. These older, existing competitors are highly vulnerable to the superior attractiveness of newly-built lodging. This pattern can be seen in the success of chain operations at or above the mid-priced levels. Given this growth scenario, room supply consequently grows from 71,407 rooms currently to 87,001 in 2019, 22% higher and representing 15,595 net new rooms (gross new openings, less closings). Note that REVPAR growth for every individual hotel unit is well below the total revenue growth of the market, with average REVPAR in our projection rising by 2.5% per annum over the next five years (compared to 2.4% REVPAR average growth of the past nine years). Revenues are forecast to grow by 5.3% per year on the strength of 2.4% growth in real demand and 2.8%

19 Page 19 of 111 growth in price (room-rates). Occupancy over the next five years is expected to fall by 0.3% per year, as supply rises 2.7% per year. If supply should grow 8,700 rooms over forecast (+10%), without demand also growing faster than forecast, average individual hotel REVPAR would decline by 9% versus forecast, dropping from the forecast REVPAR of $65 to $59 by Real growth for hotel rooms in the metro is expected to slowly continue the recovery that began in the 1st Quarter of 2010.

20 Page 20 of 111 DALLAS METRO PROJECTION # Room 1 Total Htls nites Rooms Year & and # sold Revenue % 2 $ 3 $ 4 % Growth Vs Yr Ago Quarter Mtls Rooms 000's $000's Occ. Rate RevPar Sply Real ADR $Rev ,416 3, , ,287 4, , ,681 4, , ,955 4, , ,588 3, , ,456 4, , ,862 4, , ,174 4, , ,826 3, , ,690 4, , ,107 4, , ,459 4, , ,131 3, , ,990 4, , ,421 4, , ,813 4, , ,505 3, , ,360 4, , ,009 4, , ,429 4, , ,135 4, , ,987 4, , ,629 4, , ,078 4, , ,798 4, , ,647 4, , ,282 4, , ,759 4, , ,493 4, , ,340 4, , ,967 4, , ,474 4, , ,223 4, , ,067 4, , ,687 4, , ,224 4, , ,988 4, , ,828 4, , ,441 4, , ,008 4, , ,788 4, , ,625 5, , ,229 5, , ,828 5, , yr CGR % 2.4% 2.2% 4.9% -0.2% 2.7% 2.5% 5yrs 2.7% 2.4% 5.3% -0.3% 2.8% 2.5% HISTORY CGR% Past 9 yrs 1.1% 2.4% 3.5% 1.3% 1.1% 2.4% 4 yrs 1.8% 1.5% 0.2% -0.3% -1.3% -1.6% 1 yr 0.9% 10.4% 13.9% 9.4% 3.2% 13.0% 1.Roomnights sold (derived from est. rate and actual revenues). 2. Occupancy nights sold divided by nights available for sale. 3. Avg. price for roomnights sold; Directories, Surveys, & experience. 4. $ Revenue per available room per day (room sales per day.

21 Page 21 of 111 LOCAL MARKET PERFORMANCE 4. The subject hotel s market of the local Downtown Dallas Area 9 currently generates a REVPAR of $81 compared to the Texas average of $50: PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2011 HOTEL MARKET: DOWNTOWN DALLAS AREA #* EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR ALOFT , CROWNPLZA , INDIGO , SPRNGHILL , SUMMERFLD , TOTAL COMPS , RITZ CARL , W HOTEL , WESTIN , ZA ZA , TOT LUXURY , HILTON , HYATT , RENAISSAN , TOT UPSCALE , EMBASSY , HOMEWOOD , OTH SUITE , TOT SUITES , COURTYARD , DOUBLTREE , HILT GARD , HOLID INN , SHERATON , TOT MID/UPS , BEST WEST , FAIRFIELD , TOT LTD SVE , STUDIO , RAMADA TOT CHAINS , , TOT INDEP , TOTAL MARKET , , * All figures annualized. Includes taxed and est non-tax room revenues. 9. Zipcodes 75201/202/207/215/204/219.

22 Page 22 of 111 Local Market REVPAR History & Forecast: 5. Over the past nine years, the local Downtown Dallas Area Market has shown real growth (room-nights sold) of 1.7%, and annual growth of 3.2% in total room revenues, and a 2.9% annual gain in REVPAR; note that the severe recession of 2009 depressed the longterm performance numbers. Occupancy rose 1.5% per year over the nine years. Supply rose by 0.3% per year, with room rates rising 1.5% per year. Over the past four years, 1.5% annual demand gains were coupled with a very small gain in supply of 0.4% annually. Revenues over this period rose an average of 1.1% per year, while REVPAR rose 0.7% annually. Room rates fell 0.5% per year. Occupancy increased over the last four years, by 1.1% per year. Over the last two years, demand rose by 7.7% annually, and supply rose only 0.7%. These results caused occupancy to rise by 7% annually, followed by REVPAR rising 7.1% per year. Rates fell 0.1% per year, and yearly revenues rose 7.8%. Most recent history, the 12 months ending September 30, 2011, shows a solid recovery underway for the area. Real demand rose 28.1, rates rose by 4.5%, revenues rose by 13.3% and occupancy rose by 8.2%. With a no supply increase (changing in the fourth quarter with the addition of the downtown Omni), market occupancy averaged 61% versus 58% for the state.

23 Page 23 of 111 LODGING MARKET HISTORY: DOWNTOWN DALLAS AREA # Room 1 Total Htls nites Rooms Year & and # sold Revenue % 2 $ 3 $ 4 % Growth Vs Yr Ago Quarter Mtls Rooms 000's $000's Occ. Rate RevPar Sply Real ADR $Rev , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , CGR% Past 9 yrs 0.3% 1.7% 3.2% 1.5% 1.5% 2.9% 4 yrs 0.4% 1.5% 1.1% 1.1% -0.5% 0.7% 2 yrs 0.7% 7.7% 7.8% 7.0% -0.1% 7.1% 1 yr 0.0% 8.1% 13.3% 8.2% 4.5% 13.4% Wider Market History CGR% Past 9 yrs 1.1% 2.4% 3.5% 1.3% 1.1% 2.4% 4 yrs 1.8% 1.5% 0.2% -0.3% -1.3% -1.6% 1. Roomnights sold (derived from est. rate and actual revenues). 2. Occupancy nights sold divided by nights available for sale. 3. Average price for roomnights sold; Directories, Surveys, & experience. 4. $ Revenue per available room per day (room sales per day).

24 Page 24 of Overall market occupancy is projected to recover as the general economy continues to rebound. This translates to a gradual gain in occupancies to the long-term equilibrium level of 58% over the next ten years (by 2015). REVPAR should grow 3% annually in the period, coupled with room revenue growth of 5.7% annually, 3.1% annual rate increases, and 0.1% annual occupancy losses. Over the next nine years, real demand (room nights sold) is projected at an average 2.5% growth rate, with supply rising 2.6%. These assumptions relative to demand, supply, and occupancy reflect the fact that over the past 20 years overall occupancy in Texas has averaged about 59%, a level considered to be 'Equilibrium Occupancy' state-wide. This fact considers that larger and more successful metro area markets generate higher overall occupancy and REVPAR numbers than state averages, while rural and Interstate highways areas lag these averages (Source Strategies, Inc. database). 'Equilibrium Occupancy' is further explained by the fact that new investment money will eventually be attracted to an under-supplied market until market occupancy falls and lower returns on capital are the result. The equilibrium occupancy point is where net, new supply is being added at about the same rate as growth in demand, and where return on investment is in balance with the cost of capital. The Downtown Dallas Area Market has room for selectively-positioned new development. Higher quality new lodging products at or above mid-priced levels are performing very well in the market despite overall performance numbers being moderated by the large number of older, obsolete, budgets. These older, existing competitors are highly vulnerable to the superior attractiveness of newly-built, major-branded lodging. This pattern can be seen in the success of chain operations at or above the mid-priced levels. Given our growth assumptions, room supply consequently grows from 11,629 rooms currently to 14,405 in 2019, 24% higher and representing 2,776 net new rooms (gross new openings, less closings). Note that REVPAR growth for every individual hotel unit is well below the total revenue growth of the market, with average REVPAR in our projection rising by 3% per annum over the next five years. Revenues during this upcoming period are forecast to grow at 6.1% per year on the strength of 2.8% growth in real demand starting from the trough of and

25 Page 25 of % growth in price (room-rates). Occupancy over the next five years is expected to lose 0.2% annually, as supply rises by 3% per year. If supply should grow 1,450 rooms over forecast (+10%), without demand also growing faster than forecast, average individual hotel REVPAR would decline by 9% versus forecast, dropping from the forecast REVPAR of $111 to $101 in 2019.

26 Page 26 of 111 LODGING MARKET PROJECTION: DOWNTOWN DALLAS AREA # Room 1 Total Htls nites Rooms Year & and # sold Revenue % 2 $ 3 $ 4 % Growth Vs Yr Ago Quarter Mtls Rooms 000's $000's Occ. Rate RevPar Sply Real ADR $Rev , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , yr CGR % 2.6% 2.5% 5.7% -0.1% 3.1% 3.0% 5 yrs 3.0% 2.8% 6.1% -0.2% 3.2% 3.0% HISTORY CGR% Past 9 yrs 0.3% 1.7% 3.2% 1.5% 1.5% 2.9% 4yrs 0.4% 1.5% 1.1% 1.1% -0.5% 0.7% 1yr 0.0% 8.1% 13.3% 8.2% 4.5% 13.4% 1. Roomnights sold (derived from est. rate and actual revenues) 2. Occupancy nights sold divided by nights available for sale. 3. Avg. price for roomnights sold; Directories, Surveys, & experience. 4. $ Revenue per available room per day (room sales per day)

27 Page 27 of Overall, the local market REVPAR index history has varied from 147% to 162% of the Dallas Metro average over the past 10 years: MARKET REVPAR HISTORY Year & Total Local Local/Total Market Quarter Mkt Area Market Index Annualized CGR% 9 yrs 2.4% 2.9% 4 yrs -1.6% 0.7% 2 yrs 4.5% 7.1% 1 yr 13.0% 13.4%

28 Page 28 of The REVPAR forecast calls for the local market REVPAR index to initially fall, before it rises over time versus the MSA: MARKET REVPAR PROJECTION Year & Total Local Local/Total Market Quarter Mkt Area Market Index Annualized CGR% 9 Yrs 2.5% 3.0% First 5 Yrs 2.5% 3.0%

29 Page 29 of A graph of the REVPAR history and projection for the local and wider markets shows the recent recovery trend of overall REVPAR, and our future expectations. Note that in the projection, local market REVPAR does not return to 2007/2008 levels until roughly 2014:

30 Page 30 of The occupancy projection for the Downtown Dallas Area Market is reasonable: our projection is for the local market to fall to the 60% equilibrium level by 2014:

31 Page 31 of Graphing the Room Nights Sold history and projection also shows the reasonable nature of the expectations for the local market, given a normal level of population growth and investment expected in the area, as well as an expected slow national economic recovery:

32 Page 32 of 111 PROJECT REVPAR - DEVELOPMENT OF INDICES Within the above market REVPAR forecast, the expected performance of the proposed hotel is based on six factors. All six factors are independent and modify the market's projected REVPAR average to reflect the subject property's particular characteristics. First, what is the Base Value? It is the effect of the Brand, including specified product quality levels. Second, what is the effect of the brand's overall Age on its average performance? Third, what is the effect of the project's Size, or room-count, on results? Fourth, are there any Other adjustments needed to account for various factors, including under- or over-supply in the product's Segment in which the project will compete? Fifth, what is the effect of the normal Life Cycle patterns on the project (e.g. the effect of the project's Newness compared to older competition on its unstoppable way to obsolescence)? And sixth, what is the likely influence of the selected Site on results? 1. The Base Value factor sets property type/brand/product quality for a Homewood Suites Hotel in this type of market at 105% of the market average REVPAR. This valuation is based on the actual REVPAR performance of all 16 Homewood Suites Hotels currently operating in the Exhibit IV market. 10 These hotels produced a REVPAR of $84.17 in the year ending September 30, 2011, compared to the Exhibit IV market average REVPAR of $79.88, as follows: $84.17 / $79.88 = or 105% This sample of Homewood Suites Hotel firmly grounds the basic REVPAR performance that can be expected when operating such a hotel in a comparable market, such as the proposed location. 2. The second adjustment factor, Brand Aging, is set at 0.99 (99%), a very slight decrease in performance projections because of the age of the 16 Homewood Suites hotels in the Exhibit IV market. Homewood Suites hotels were built on average in 2001, making the brand fairly typical in terms of age. This factor adjusts for the effect of the average age of the existing 10. Texas High Priced Zipcode markets.

33 Page 33 of 111 hotels on the brand's current performance. 11 The brand age adjustment, or life-cycle adjustment, for other brands examined includes: BRAND AGING: TEXAS MARKETS Average Brand Aging Brand Opening Adjustment Comfort Inn Best Western Holiday Inn Hotel The property Size factor - reflecting room count - calls for a significant performance adjustment for this property, as we add a -6% premium (94% factor). The average Homewood Suites hotel in the Exhibit IV market has 105 rooms, significantly less than the subject, at 130 units, giving this hotel a disadvantage. The size factor assigns a premium if the property is smaller than average and a penalty to the property if it is larger than average. The size adjustment is necessary because demand is not affected by the number of rental rooms offered, as the individual consumer only needs one room: customers do not care whether a hotel offers 100, 125 or 150 rooms and their purchasing behavior will be the same regardless of how many rooms the property offers. Keeping a project conservatively sized assures a higher per-unit revenue yield, particularly in very competitive markets like the local area. The highly-positive effect on revenues and return on capital due to building small, and not 'over-sizing' projects is best explained by the following study, a study that can be replicated with any brand, in almost any situation. The net effect of building small is to run higher occupancy and rate, thereby increasing brand REVPAR by building a below-average number of rental units. A STUDY OF THE EFFECT OF HOTEL SIZE ON PERFORMANCE IN THE TEXAS HOTEL INDUSTRY THE CASE FOR DOWNSIZING NEW HOTELS 12 Source Strategies, Inc., has long contended that the number of rooms a developer offers in a new property is one of the key factors in determining a venture's relative success or failure. It is every bit as important to size a hotel project properly as it is to select the appropriate brand, and to have chosen to develop in a suitable market and location. 11. Point #5, below, adjusts for the physical life-cycle of the subject property, a different and additional consideration. 12. Analyzed and compiled by Douglas W. Sutton and Bruce H. Walker.

34 Page 34 of 111 For the purposes of this study, we analyzed two separate samplings of hotels. We first looked at Comfort Inns across Texas as a selected brand sampling; then we examined all branded hotels built during a set period of time for a wider sampling. 1) COMFORT INN - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE In our initial analysis, we selected a group [55 properties] of Texas Comfort Inn branded properties ranging in size from 36 to 75 rooms. The following chart of performance statistics clearly illustrates the fact that on average, the smaller property will perform better, in terms of REVPAR and occupancy, than a larger property of the same brand: 12 Months Ending September 30, 1999 Rooms Occupancy Rate REVPAR Combined: Further, properties with lower room counts were clearly able to sustain a higher level of occupancy. Average occupancy ranged from 66.9% for properties of rooms, downward to a much lower 43.8% average occupancy for properties in the room size bracket. The above chart and graph clearly illustrate that developers often miss the mark, building more rooms than 'optimum'. 'Optimum' is defined as generating the highest return on invested capital,

35 Page 35 of 111 and is closely tied to occupancy and REVPAR. Analyzing the above data provides a measure of the effect of over-building. For the typical range of rooms for Comfort Inn projects occupancy dropped 23 points (a full 35%) from 67% to 44% as room counts escalated. The key question is, 'how to apply this principle to a given hotel project.' Naturally, each project would have to be judged on its individual merits, but looking at an 'average' project for a single brand and product is very revealing. BRANDED HOTELS - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE In our second analysis, we looked at a sampling [91 properties] of Texas branded hotels of less than 135 rooms which were constructed from For our analysis we examined performance results from the year 1985 when all subject hotels were 10 to 15 years old, to well into their aging life cycles. The following table of performance statistics from 1985 for branded properties throughout Texas clearly illustrates the downward curve, with a pronounced and methodical erosion of performance as room counts increased: # of Hotels Rooms Occupancy Rate REVPAR Combined: The following graph provides a clear picture of descending performance as room counts increase. Average occupancy ranged from 70% for properties of 44 rooms or less, downward to a much lower 55.5% average occupancy for properties in the size bracket, after peaking at 73.9% in the size range.

36 Page 36 of 111 The data is clear: in almost every case small hotels outperform larger ones. Common sense explains this occurrence: a successful 100 room hotel will inevitably prompt the development of one or more new, small hotels of similar quality in the immediate area. In a competitive market environment, the smaller hotel has a distinct advantage and wins - almost every time. The fact remains that if one builds a smaller than average property for a given brand, results should be improved over the average: the converse of this fact is also true. 4. Fourth, the Segment or Other adjustment factor is set at 105% (1.05), with a small premium given for the fact that this hotel is being developed as an all suite hotel, a segment under-represented in the local market. Furthermore, the hotel will be the only Hilton product in the core of Downtown Dallas, giving it a strong advantage. 5. Fifth, the Aging Adjustment factor reflects the standard hotel life cycle: 92% (-8%) in Year I; 107% for Year II; 112% for Years III through V; followed by a 1.67% annual decline in the REVPAR index starting in Year VI. We assume the building and interior will be like new. The aging factor also mirrors extensive studies of hotel life-cycles conducted by Source Strategies, Inc.'s principal, Bruce Walker, when heading the Holiday Corporation's strategic planning department ( ). It also reflects recent research on the life cycles of 25,000 Texas hotel rooms, developed from 1980 through 1982, and then again in 1990 through

37 Page 37 of , with each group's performance versus the market tracked to the present (MarketShare newsletter, "The Hotel Life Cycle - It's Very Real" published September 1994). 6. The last factor, Site, is set at 1.00 (100%), or average for the local market, but very close to the average of the nearby competition. The site is convenient to all downtown area attractions and to nearby highway corridors. As we have selected a broad local area market around the property for our analysis, it is our determination that the value of the subject s location is near that of many other existing hotel sites in the area. With the evaluation of the current sites around this location, we have an easy analysis of the site potential. The site values for this property, as well as for nearby existing competitors have been developed by quantifying the influence site has had on their performance. Applying known adjustment factors to existing properties, except for a site factor, lets us solve for the site value itself. Source Strategies' site methodology 'backs into' the value of the site by matching actual performance against known factors, using the site factor as the 'plugged number.' The differences between the closest key competitors appear to be both explainable and reasonable. The site value is 'plugged' so that projected REVPAR versus market approaches the actual REVPAR over the past 12 months. Overall, current performance of nearby existing competition and the supply change would indicate that a 100 site value for the Homewood Suites hotel would be a responsible estimate: COMPETITION DERIVATION Crowne Springhill Summrfld Data in 2010/11 $ s Aloft Plaza Courtyard Suites Suites Base: Name & Quality x Brand Age Adjustment x Site Value Adjustment x Size Adjustment x Other Adjustments x Newness Adjustment = Performance Factor 94% 78% 81% 93% 97% x Market REVPAR $81.36 $81.36 $81.36 $81.36 $81.36 = Projected Performance $76.65 $63.68 $66.16 $75.27 $79.01 Actual REVPAR 2011 $76.78 $63.78 $65.87 $75.44 $79.08 Index (Proj. Vs Actual) Units in Above Subject Average Units Size Adjustment (33%) Year Built

38 Page 38 of 111 Combining all six factors that affect a hotel's REVPAR performance, we calculate that the proposed hotel's REVPAR will achieve 115% of the market average REVPAR in Years III- V, declining slowly thereafter: HOMEWOOD SUITES HOTEL DERIVATION Data in 2011 $ s Year I Year II Year III Base: Name & Quality x Brand Age Adjustment x Site Value Adjustment x Size Adjustment x Other Adjustments x Newness Adjustment = Performance Factor 94% 110% 115% x Market REVPAR $81.36 $81.36 $81.36 = Projected Performance $76.75 $89.27 $93.44

39 Page 39 of 111 COMBINING THE ABOVE MARKET REVPAR PROJECTION AND THE HOTEL'S REVPAR INDEX TO DEVELOP REVENUES, OCCUPANCY, AND RATE Using the projected Year III REVPAR index of 115%, the above process generates a theoretical REVPAR of $93.44 (in latest year market dollars). This is the result of the Year III performance index of 115% (1.15) multiplied by the current market average REVPAR of $ Therefore, if the property were open today and were in its third year of operation, it should theoretically be operating at the following level against the latest year's market results: a $93.44 REVPAR computes to gross room revenues of approximately $4,433,728 ($93.44 times 130 units times 365 days). Please note that the actual effect on the market due to the introduction of this project and other new hotels is fully reflected in subsequent pro forma market projections and financials. In the latest year's dollars, this projection for the project's Year III revenue breaks down seasonally as follows: Quarter First Second Third Fourth Year III Room Revenues $1,347,262 $1,068,363 $983,830 $1,034,273 $4,433,728 % of Year 30.4% 24.1% 22.2% 23.3% 100 Seasonal Index REVPAR$ $ $90.31 $82.26 $86.48 $93.44 Source Strategies, Inc.'s projections of a reasonable rate and occupancy mix, a split of the Homewood Suites Hotel's REVPAR for occupancy and rate, in latest year dollars, would be as follows: Quarter First Second Third Fourth Year III ADR - $ $ $ $ $ $ Occupancy % 75.7% 74.7% 74.0% 74.5% 74.7% REVPAR$ $ $90.31 $82.26 $86.48 $93.44

40 Page 40 of 111 Tests For REASONABILITY Comparisons can be made to assess the reasonable nature of the above market and subject projections: 1. Individual property projections depend importantly on the projection of local market REVPAR - forecast to rise at a reasonable, conservative rate through 2019, starting at the current level. Over the next nine years market REVPAR is projected to grow 3% per year. REVPAR encompasses the net effects of supply and demand. Over the next nine years, we are comfortable with the 2.5% real compound growth projected for the local market, higher than the projected net supply growth of 2.6% annually, and resulting in the return to the expected equilibrium occupancy level of 60% by the early years of our projection. 2. The derived Base Value of 1.05% (105%) for a Homewood Suites Hotel in the Exhibit IV market area is reasonable when compared to the Base Values of other hotels in these same markets. The hierarchy of REVPAR indices for various brands is shown below: REVPAR Index Comparison 13 Omni 134 Hyatt 129 Homewood Suites 105 Holiday Express 86 Super Developing actual adjustment factors for the existing properties - so that their projected REVPAR equals actual REVPAR - indicates why the REVPAR index projection has a high probability of being achieved. The REVPAR differences between the closest key competitors appear to be both explainable and reasonable, using the standard, Source Strategies' adjustment factor quantification. For each property, revenues are driven first by chain name affiliation and product type, and are further adjusted for size, segment, hotel age and site location. The REVPAR Index is then multiplied by the actual local area market average to generate dollar REVPAR. We also include the theoretical Year III performance of the subject hotel, as follows: 13 Unadjusted for physical aging of each brand.

41 Page 41 of 111 REVPAR COMPARISON Homewood Crowne Springhill Data in 2010/11$ Yr III Aloft Plaza Courtyard Suites Base: Name & Quality x Brand Age Adjustment x Site Value Adjustment x Size Adjustment x Other Adjustments x Newness Adjustment = Performance Factor 115% 94% 78% 81% 93% x Market REVPAR $ = Projected Performance $ Actual Past Year n/a Index (Proj. Vs. Actual n/a The projected REVPAR performance of the Homewood Suites versus the local market average reflects the fact that this hotel s physical quality will be high, with the highest performance in its segment, and with unfulfilled demand for Hilton products in downtown Dallas:

42 Page 42 of The graphically projected Occupancy performance of the Homewood Suites Hotel versus the local market average reflects the fact that this hotel will be well above the overall market average because of its brand, location, smaller than average size, and its newness: 6. In the overall market, any new hotel will have an inordinate advantage over the old; the playing field here is not level as the lodging consumer almost always votes for 'new' versus old. The average hotel room in the local market is 32 years old, at the end of the life cycle of the typical hotel building, and well past its peak performing years. The typical hotel building becomes stylistically and structurally obsolete after 30 years, though this figure is larger for

43 Page 43 of 111 typical downtown high-rise/concrete structures which undergo complete remodeling. The local market has 2,204 rooms built since 1995, and 8,678 rooms built before There is typically a wide and dramatic gap between the performance of new and older properties, with the typical hotel in the area either being relatively new and competitive or older and on its way to closure. Of significant note is the recent opening of the 1,001 room downtown Dallas Omni convention hotel. This significant property is included in all market analysis and is reflected in the subject hotel s projections.. DOWNTOWN DALLAS AREA MARKET PROPERTIES Year # Open Rooms Local Hotel ALOFT DALLAS DOWNTOWN HOTEL JOULE A LUXURY COLLECTIO RITZ-CARLTON DALLAS MCKINNEY A W DALLAS-VICTORY HOTEL HOTEL ZA ZA + MAGNIFICENT HYATT SUMMERFIELD SUITES FMR B MARRIOTT SUITES MARKET CENTER THE MAGNOLIA HOTEL HOMEWOOD SUITES MKT CTR # SPRINGHILL SUITES FMR AMERISUI HILTON GARDEN INN FMR WILSON W FAIRFIELD INN BY MARRIOTT STUDIO 6 FMR HOMESTEAD VIL # HOTEL ST GERMAIN INC SHERATON SUITES MARKET CENTER COURTYARD MARKET CENTER HOTEL CRESCENT COURT RENAISSANCE DALLAS HOTEL EMBASSY SUITES HOTEL # MANSION OF TURTLE CREEK MARRIOTT CITY CTR FMR WESTIN/M HILTON ANATOLE HOTEL FMR WYNDH HYATT REGENCY DNTN EXP THE ADOLPHUS HOTEL DOUBLETREE FMR WYNDHAM MARKET HOTEL INDIGO FMR HOLIDAY INN A BEST WESTERN CITYPLACE FMR DAY BEST WESTERN MARKET CENTER DAYS INN MARKET CENTER FMR RAL HOLIDAY INN MARKET CTR THE FAIRMONT DALLAS HOTEL WARWICK MELROSE HOTEL CROWNE PLAZA FMR WESTEND/HAMPT SHERATON DALLAS FMR ADAMS MARK THE STONELEIGH HOTEL & SPA THE HOTEL LAWRENCE FMR PARAMOU

44 Page 44 of 111 PRO FORMA: Applying the project derivation factor (115% Years III-V) to the quarterly local market REVPAR forecast results in the following progression: PROJECT REVPAR PROJECTION Subject/ Year & Local Subject Market Index Quarter Market Hotel Qtr Year CGR% 9 Yrs 2.9% 4.3% First 5 Yrs 3.1% 6.9% -CGR% measured from open date-

45 Page 45 of 111 This REVPAR forecast is then extended to room revenues - multiplying REVPAR by the number of days in each quarter and by the number of rooms in the project - and to occupancy, estimated rate and to roomnights sold: RESULTING PROJECTION: Homewood Suites Hotel Resulting Aver. Room- Year& Room Annual % Daily nghts Annual Basis Quarter Revenues Basis Occ Rate Sold RMNTES Occ. Rate 131 $1,166, $ , $933, $ , $859, $ , $904,061 $3,864, $ ,534 30, % $ $1,419, $ , $1,125, $ , $1,036, $ , $1,089,682 $4,671, $ ,567 34, % $ $1,528, $ , $1,212, $ , $1,116, $ , $1,173,390 $5,030, $ ,913 35, % $ $1,574, $ , $1,248, $ , $1,149, $ , $1,208,592 $5,180, $ ,827 35, % $ $1,621, $ , $1,285, $ , $1,184, $ , $1,244,849 $5,336, $ ,827 35, % $ $1,642, $ , $1,302, $ , $1,199, $ , $1,260,782 $5,404, $ ,722 34, % $ $1,663, $ , $1,319, $ , $1,214, $ , $1,276,919 $5,473, $ ,644 34, % $ $1,684, $ , $1,335, $ , $1,230, $ , $1,293,262 $5,543, $ ,582 34, % $ $1,706, $ , $1,352, $ , $1,245, $ , $1,309,815 $5,614, $ ,564 34, % $ $1,728, $ , $1,370, $ , $1,261, $ , $1,323,359 $5,683, $ ,525 34, % $ $1,745, $ , $1,384, $ , $1,274, $ , $1,337,044 $5,742, $ ,485 33, % $ $1,763, $ , $1,398, $ , $1,288, $ , $1,321,503 $5,772, $ ,304 33, % $ CGR% 9 Yrs 4.3% 1.4% 2.9% 1.4% First 5 Yrs 6.9% 3.0% 3.9% 3.0% -CGR% measured from open date-

46 Page 46 of 111 OPERATING COSTS 14 Profitability and returns reflect the above revenue projections and the following other critical assumptions: operating costs per occupied room approximate Limited Service hotels of similar size, rate, and occupancy and include appropriate fixed, semi-fixed and variable costs (Smith Travel Research's 2011 Host Report for year 2010 data, and Source Strategies, Inc.). Estimates of operating costs take into account the lower costs of the West South Central United States, which had an average Per Occupied Room Cost of $43.08 (including 5% royalties) in 2010 in Limited Service hotels - versus a national average of $ or 86.7% of the U.S. average. The following cost comparisons have all been adjusted to reflect this 13% lower-cost environment that may be expected in operating a hotel in the West South Central Region. Rooms only Operating Costs per Occupied Room (before Fixed Charges and excluding Food and Beverage expenses) are estimated at $48.91 for Year I ($1,467,630 divided by 30,007 roomnights sold); $50.97 for Year II ($1,743,409 divided by 34,204), and $52.68 for Year III ($1,867,934 divided by 35,458. These numbers compare to industry-wide data as follows: a) $61.74 in the Host Report for Urban hotels, 2010 edition (average rate of $130.66), adjusted to Southwest. This POR cost translates to $65.50 when inflated to Year 2013 dollars. b) $54.44 in the Host Report for Upscale hotels, 2010 edition (average rate of $111.24), adjusted to Southwest. This POR cost translates to $57.70 when inflated to Year 2013 dollars. c) $59.60 in the Host Report for Resort hotels, 2010 edition (average rate of $114.41), adjusted to Southwest. This POR cost translates to $63.23 when inflated to Year d) $36.53 in the Host Report for Mid-Priced hotels in 2010 (average rate of $76.13), adjusted to Southwest. This POR cost translates to $39.92 when inflated to Year 2013 dollars - Versus room revenues: a necessary marketing expense of 7% in Year I and thereafter. Marketing includes reservation and advertising fees, sales expense, local advertising and the always important outdoor billboards. An annual royalty fee of 4% has been applied, and no annual management fee has been charged. 14 The calculation of the statistic of Operating Costs Per Occupied Room (before fixed/capital costs are deducted) is typically the important cost to examine carefully because it is highly stable and predictable, regardless of occupancy and rate. Looking at costs on a percentage basis can be highly misleading because of the high variability in average room revenues.

47 Page 47 of 111 A reserve for renovations is taken and subtracted from projected cash flows annually; such renovation reserves amount to $3,207,257 in the first ten years ($24,671 per unit). Reserves insure that future revenue streams continue by maintaining product quality at excellent levels as required by the franchisor. Reserves are based on an extensive 2001 study, CapEx, by the International Society of Hospitality Consultants. The study shows that required reserves average 5.5% over a 20 year period. - Total capital of $19,500,000 is allocated for the development of the project. The estimated total turn-key cost (excluding land) of $128,077 per unit is higher than typical for a hotel of this size and quality, in our experience. Current structure and land are valued at $2,850,000. Should capital needs vary, then returns would change proportionately. The estimates of necessary capital include: Total Investment Land & Building Cost $ 2,850,000 for 0.56 acres Improvements Budget Total Investment $19,500,000 $128,077 per key The pro forma profit and cash flow statements are shown overleaf:

48 Page 48 of 111 HOMEWOOD SUITES HOTEL Land Value: $2,850,000 Starts 1/1/2013 #Rooms: 130 CostPerKeY: $128,077 QUARTER: First Second Third Fourth Year Rmnites Sold 7,524 7,471 7,478 7,534 30,007 Rmnites Avail 11,700 11,830 11,960 11,960 47,450 Occupancy % 64.3% 63.2% 62.5% 63.0% 63.2% Avg Rate $ $ $ $ $ REVPAR $99.68 $78.94 $71.90 $75.59 $81.44 % Revenues Room Revenues $1,166,212 $933,860 $859,969 $904,061 $3,864, % Misc. Sales 58,311 46,693 42,998 45, , % Total Sales $1,224,523 $980,553 $902,967 $949,264 $4,057, % Operating Expe-Payroll Administration 33,674 26,965 24,832 26, , % Housekeeping 37,620 37,355 37,390 37, , % Laundry 15,048 14,942 14,956 15,068 60, % Front Desk 41,382 41,091 41,129 41, , % Misc. 24,490 19,611 18,059 18,985 81, % Taxes/Benefits 15,221 13,996 13,637 13,927 56, % Total Payroll 167, , , , , % -Room Expense S:Linen & Laun 8,653 8,592 8,600 8,664 34, % CompFood&Bev. 22,572 22,413 22,434 22,602 90, % Total Room 31,225 31,005 31,034 31, , % -Other Expense Phone/Telecom. 11,253 11,253 11,253 11,253 45, % Elec/Utility 22,572 22,413 22,434 22,602 90, % Maint. & Repai 24,490 19,611 18,059 18,985 81, % Total Other 58,315 53,277 51,746 52, , % -Gen & Admin Adver. & Sales 81,635 65,370 60,198 63, , % Royalty 46,648 37,354 34,399 36, , % Credit Card 23,324 18,677 17,199 18,081 77, % Tot Admin & Ge 151, , , , , % -Total Operati 408, , , ,825 1,467, % Expenses Gross Oper. 815, , , ,439 2,589, % Profit -Fixed Charges Insurance 35,501 35,501 35,501 35, , % Property Tax 42,900 42,900 42,900 42, , % DeprecSL 39Yrs 106, , , , , % Tot Capital Ex 185, , , , , % Net Income Bef 630, , , ,306 1,849, % Tax & Financing Depreciat. Add 106, , , , , % Renovation Res (55,104) (44,125) (40,634) (42,717) (182,579) -4.5% Cash Flow Befo 682, , , ,320 2,093, % Tax & Financing -see following 2 pages for the next 9 years-

49 Page 49 of 111 HOMEWOOD SUITES HOTEL Compound #Rooms: 130 Growth Year Yr 2-10 Rmnites Sold 34,204 35,458 35,159 35,159 34,471 34,428 34,185 34,111 34, % Rmnites Avail 47,450 47,450 47,450 47,450 47,450 47,450 47,450 47,450 47, % Occupancy % 72.1% 74.7% 74.1% 74.1% 72.6% 72.6% 72.0% 71.9% 71.7% 1.4% Avg Rate* $ $ $ $ $ $ $ $ $ % REVPAR $98.45 $ $ $ $ $ $ $ $ % RoomRevenues 4,671,257 5,030,095 5,180,998 5,336,427 5,404,728 5,473,904 5,543,964 5,614,921 5,683, % Misc. Sales 233, , , , , , , , , % Total Sales 4,904,820 5,281,600 5,440,048 5,603,248 5,674,964 5,747,599 5,821,162 5,895,667 5,967, % Operating Expense - Payroll Administration 130, , , , , , , , , % Housekeeping 176, , , , , , , , , % Laundry 70,460 75,235 76,838 79,144 79,923 82,218 84,086 86,422 88, % Front Desk 193, , , , , , , , , % Miscellaneous 95, , , , , , , , , % Taxes/Benefits 66,664 71,182 72,699 74,880 75,617 77,788 79,557 81,766 83, % Total Payroll 733, , , , , , , , , % -Room Expense Linen & Laundry 40,515 43,260 44,182 45,508 45,956 47,275 48,350 49,692 51, % CompFood&Bev. 105, , , , , , , , , % Total Room 146, , , , , , , , , % -Other Expense Phone Lines 52,845 56,426 57,629 59,358 59,942 61,663 63,065 64,816 66, % Electric/Util. 105, , , , , , , , , % Repairs & Maint 98, , , , , , , , , % Total Other 256, , , , , , , , , % -Gen & Admin Adver. & Sales 326, , , , , , , , , % Royalty 186, , , , , , , , , % Credit Card 93, , , , , , , , , % Total G & A 607, , , , , , , , , % -TotOperExp. 1,743,409 1,867,934 1,914,345 1,971,776 1,993,568 2,037,824 2,075,935 2,121,052 2,165, % GrossOpProfit 3,161,411 3,413,665 3,525,702 3,631,473 3,681,397 3,709,775 3,745,227 3,774,615 3,801, %

50 Page 50 of 111 HOMEWOOD SUITES HOTEL Compound #Rooms: 130 Growth Year Yr 2-10 Rmnites Sold 34,204 35,458 35,159 35,159 34,471 34,428 34,185 34,111 34, % Rmnites Avail 47,450 47,450 47,450 47,450 47,450 47,450 47,450 47,450 47, % Occupancy % 72.1% 74.7% 74.1% 74.1% 72.6% 72.6% 72.0% 71.9% 71.7% 1.4% Avg Rate* $ $ $ $ $ $ $ $ $ % REVPAR $98.45 $ $ $ $ $ $ $ $ % RoomRevenues 4,671,257 5,030,095 5,180,998 5,336,427 5,404,728 5,473,904 5,543,964 5,614,921 5,683, % Misc. Sales 233, , , , , , , , , % Total Sales 4,904,820 5,281,600 5,440,048 5,603,248 5,674,964 5,747,599 5,821,162 5,895,667 5,967, % IncomeBefore 3,161,411 3,413,665 3,525,702 3,631,473 3,681,397 3,709,775 3,745,227 3,774,615 3,801, % Fixed Charges -Fixed Charges Insurance 146, , , , , , , , , % Property Tax 176, , , , , , , , , % Depr. SL 39 Yrs 426, , , , , , , , , % Total Fixed Ch. 749, , , , , , , , , % Income Before 2,411,474 2,654,038 2,756,094 2,851,584 2,890,918 2,908,390 2,932,608 2,950,426 2,965, % Tax & Financing Depr. AddBack 426, , , , , , , , , % RenovReserve (161,859) (169,011) (195,842) (347,401) (385,898) (339,108) (302,700) (412,697) (710,162) 16.3% Cash Before 2,676,538 2,911,950 2,987,175 2,931,105 2,931,944 2,996,205 3,056,831 2,964,652 2,682, % Tax&Financing

51 Page 51 of 111 November 15, 2011 OPINION This report is based on independent opinion, surveys and research from sources considered reliable. No representation is made as to accuracy or completeness and no contingent liability of any kind can be accepted. The study projections are dependent on the developer building and operating a Homewood Suites Hotel hotel, including certain amenities, and spending the appropriate operating funds necessary to generate projected revenues, most especially budgeted funds for aforementioned amenities and for marketing, including a listing in the American Automobile Association Texas Tourbook. It is our opinion that this report fairly and conservatively represents the room revenues, profitability and return on investment performance that can be achieved by developing and operating a 130 unit Homewood Suites Hotel at the aforementioned site in Downtown Dallas, Texas. Please contact us with any questions at (210) Respectfully submitted, Todd Walker, Senior Vice President Bruce H. Walker, President PO Box Laurel Heights, San Antonio, TX Fax

52 Page 52 of 111 EXHIBITS: I Dallas Metro & Local Market Histories, Aggregated Basis II Local Market: By Segment and Brand, Past Five Years, Annual Basis III Individual Hotel/Motel Histories For the Local Market IV Texas Lower Priced Market V The Case For Downsizing Hotels VI Start-up Performance of New Hotels VII CAPEX Study of Capital Expenditures VIII Preparer Qualifications and Client List IX Source Strategies Database Methodology X Hotel Brand Report Newsletter

53 Page 53 of 111 EXHIBIT I LODGING MARKET: DALLAS PMSA # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR ,913 2, , *TOTAL , , ,170 3, , ,739 3, , ,791 3, , ,713 3, , *TOTAL , , ,412 2, , ,110 3, , ,069 3, , ,223 3, , *TOTAL , , ,243 3, , ,385 3, , ,556 3, , ,436 3, , *TOTAL , , ,054 3, , ,034 3, , ,143 3, , ,340 3, , *TOTAL , ,089, ,510 3, , ,320 3, , ,837 3, , ,407 3, , *TOTAL , ,241, ,929 3, , ,096 3, , ,475 3, , ,022 3, , *TOTAL , ,309, ,258 3, , ,006 3, , ,375 3, , ,642 3, , *TOTAL , ,342,

54 Page 54 of 111 LODGING MARKET: DALLAS PMSA # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR ,997 3, , ,335 3, , ,810 3, , ,702 3, , *TOTAL , ,102, ,531 3, , ,099 3, , ,810 3, , ,996 3, , *TOTAL , ,179, ,870 4, , ,256 3, , ,505 3, , *TOTAL , ,019, *TOTAL 138,547.2 ********* Roomnights sold (derived from est. rate and actual room revenues) 2. Occupancy: nights sold divided by nights available for sale(x 100) 3. Average price for each roomnight sold;from Directories and surveys 4. $ Revenue per available room per day (room sales per day)

55 INCLUDES ZIP-CODES: 75201, 75202, 75207, 75215, 75204, Page 55 of 111 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , ,

56 INCLUDES ZIP-CODES: 75201, 75202, 75207, 75215, 75204, Page 56 of 111 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , *TOTAL , , *TOTAL 23, ,991, Roomnights sold (derived from est. rate and actual room revenues) 2. Occupancy: nights sold divided by nights available for sale(x 100) 3. Average price for each roomnight sold;from Directories and surveys 4. $ Revenue per available room per day (room sales per day)

57 Page 57 of 111 EXHIBIT II PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2011 INCLUDES ZIP-CODES: 75201, 75202, 75207, 75215, 75204, # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR CHAINS ALOFT , CROWNPLZA , INDIGO , SPRNGHILL , SUMMERFLD , TOT NEARBY , RITZ CARL , W HOTEL , WESTIN , ZA ZA , TOT LUXURY , HILTON , HYATT , RENAISSAN , TOT UPSCALE , EMBASSY , HOMEWOOD , OTH SUITE , TOT SUITES , COURTYARD , DOUBLTREE , HILT GARD , HOLID INN , SHERATON , TOT MID/UPS , BEST WEST , FAIRFIELD , TOT LTD SVE , STUDIO , TOT EXT STA , RAMADA TOT BUDGET TOT CHAINS , , TOT INDEP , TOT MARKET , , * All figures annualized. Includes taxed and est non-tax room revenues. Independents are categorized by price: $100+, $ , and under $60)

58 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2010 INCLUDES ZIP-CODES: 75201, 75202, 75207, 75215, 75204, Page 58 of 111 # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR CHAINS ALOFT , CROWNPLZA , INDIGO , SPRNGHILL , SUMMERFLD , TOT NEARBY , RITZ CARL , W HOTEL , WESTIN , ZA ZA , TOT LUXURY , HILTON , HYATT , RENAISSAN , TOT UPSCALE , EMBASSY , HOMEWOOD , OTH SUITE , TOT SUITES , COURTYARD , DOUBLTREE , HILT GARD , HOLID INN , SHERATON , TOT MID/UPS , BEST WEST , FAIRFIELD , TOT LTD SVE , STUDIO , RAMADA TOT CHAINS , , INDEPENDENTS $100+ ADR , $60-99ADR , TOT INDEP , TOT MARKET , , * All figures annualized. Includes taxed and est non-tax room revenues. Independents are categorized by price: $100+, $ , and under $60)

59 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2009 INCLUDES ZIP-CODES: 75201, 75202, 75207, 75215, 75204, Page 59 of 111 # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR CHAINS INDIGO , SPRNGHILL , SUMMERFLD , TOT NEARBY , RITZ CARL , W HOTEL , WESTIN , ZA ZA , TOT LUXURY , HILTON , HYATT , RENAISSAN , TOT UPSCALE , EMBASSY , HOMEWOOD , OTH SUITE , TOT SUITES , COURTYARD , DOUBLTREE , HILT GARD , HOLID INN , SHERATON , TOT MID/UPS , BEST WEST , FAIRFIELD , TOT LTD SVE , STUDIO , RAMADA TOT CHAINS , , INDEPENDENTS $60-99ADR , $100+ ADR , $60-99ADR , LT $60ADR TOTAL INDEP , TOT MARKET , , * All figures annualized. Includes taxed and est non-tax rooms revenues. Independents are categorized by price: $100+, $ , and under $60)

60 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2008 INCLUDES ZIP-CODES: 75201, 75202, 75207, 75215, 75204, Page 60 of 111 # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR CHAINS INDIGO , SPRNGHILL , SUMMERFLD , TOT NEARBY , RITZ CARL , W HOTEL , WESTIN , ZA ZA , TOT LUXURY , HILTON , HYATT , RENAISSAN , TOT UPSCALE , EMBASSY , HOMEWOOD , OTH SUITE , TOT SUITES , COURTYARD , DOUBLTREE , HILT GARD , HOLID INN , OTHER MUP , TOT MID/UPS , BEST WEST , FAIRFIELD , TOT LTD SVE , STUDIO , QUALITY RAMADA TOT BUDGET , TOT CHAINS , , INDEPENDENTS $60-99ADR , $100+ ADR , $60-99ADR , LT $60ADR TOTAL INDEP , TOT MARKET , , * All figures annualized. Included taxed and est non-tax rooms revenues. Independents are categorized by price: $100+, $ , and under $60)

61 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2007 INCLUDES ZIP-CODES: 75201, 75202, 75207, 75215, 75204, Page 61 of 111 # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR CHAINS HAMPTON , HOLID INN , SPRNGHILL , OTHER MIN , TOT NEARBY , W HOTEL , WESTIN , ZA ZA , TOT LUXURY , HILTON , HYATT , RENAISSAN , TOT UPSCALE , EMBASSY , HOMEWOOD , OTH SUITE , TOT SUITES , COURTYARD , DOUBLTREE , HILT GARD , OTHER MUP , TOT MID/UPS , BEST WEST , FAIRFIELD , TOT LTD SVE , STUDIO , QUALITY , RAMADA TOT BUDGET , TOT CHAINS , , INDEPENDENTS $100+ ADR , $60-99ADR , LT $60ADR , TOTAL INDEP , TOT MARKET , , * All figures annualized. Included taxed and est non-tax rooms revenues. Independents are categorized by price: $100+, $ , and under $60)

62 Page 62 of 111 EXHIBIT III INCLUDES ZIP-CODES: 75201, 75202, 75207, 75215, 75204, E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 400 CRESCENT CT HOTEL CRESCENT COURT ,068,726 4,156, ,087,137 4,123, ,036,911 4,109, ,806,193 2,876, ,076,382 4,186, ,720,999 3,786, ,618,815 3,683, ,925,353 3,060, ,264,543 3,348, ,905,590 2,977, ,408,833 2,446, ,980,632 2,090, ,925,607 3,043, ,838,620 2,916, ,494,602 2,571, ,136,542 2,209, ,149,937 3,293, ,351,898 3,456, ,010,191 3,074, ,889,666 1,977, MAIN ST FL HOTEL INDIGO FMR HOLIDAY I INDIG 698, , INDIG 1,028,225 1,092, INDIG 755, , INDIG 725, , INDIG 755, , INDIG 824,377 1,024, INDIG 776, , INDIG 809, , INDIG 726, , INDIG 880, , INDIG 661, , INDIG 645, , INDIG 553, , INDIG 738, , INDIG 834, , INDIG 662, , INDIG 641, , INDIG 1,009,256 1,080, INDIG 866, , INDIG 627, , MAIN ST HOTEL JOULE A LUXURY COLLE , ,

63 Page 63 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 1530 MAIN ST HOTEL JOULE A LUXURY COLLE , , ,811 1,004, ,346,734 1,473, ,273,710 1,394, ,312,019 1,465, ,535,135 1,684, ,504,612 1,566, ,353,351 1,410, ,522,040 1,619, ,366,822 2,384, ,648,821 1,728, ,513,235 1,546, MAPLE AVEN HOTEL ST GERMAIN INC ,135 66, ,650 54, ,085 46, ,895 29, ,735 52, ,024 44, ,855 33, ,023 28, ,980 44, ,110 29, ,091 22, ,710 28, ,625 26, ,915 28, ,300 38, ,485 45, ,475 23, LEONARD ST HOTEL ZA ZA + MAGNIFICENT ZA ZA 2,918,358 2,938, ZA ZA 2,852,646 2,877, ZA ZA 2,817,211 2,839, ZA ZA 2,721,371 2,745, ZA ZA 2,961,886 3,011, ZA ZA 2,661,697 2,718, ZA ZA 2,835,537 2,924, ZA ZA 1,742,662 1,773, ZA ZA 2,362,305 2,405, ZA ZA 2,116,731 2,141, ZA ZA 2,181,262 2,204, ZA ZA 2,151,943 2,179, ZA ZA 2,251,184 2,323, ZA ZA 2,252,114 2,273,

64 Page 64 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 2332 LEONARD ST HOTEL ZA ZA + MAGNIFICENT ZA ZA 2,157,453 2,194, ZA ZA 2,158,320 2,187, ZA ZA 2,360,653 2,428, ZA ZA 2,916,672 2,995, ZA ZA 2,447,724 2,534, ZA ZA 2,366,710 2,383, HARRY HINE HYATT SUMMERFIELD SUITES F BRADF 556, , BRADF 694, , BRADF 475, , BRADF 521, , HYATS 535, , HYATS 644, , HYATS 718, , , , HYATS 603, , HYATS 696, , HYATS 683, , HYATS 601, , HYATS 630, , HYATS 654, , HYATS 688, , HYATS 678, , HYATS 826, , HYATS 759,615 1,075, HYATS 545,758 1,222, HYATS 668, , MAPLE AVE MAPLE MANOR ,003 34, ,781 40, ,525 29, ,987 16, ,943 23, ,050 17, ,719 17, N PEARL ST MARRIOTT CITY CTR FMR WEST WESTN 3,592,904 3,703, WESTN 4,036,005 4,109, WESTN 3,881,558 3,964, WESTN 3,285,628 3,403, WESTN 3,682,022 3,814, WESTN 4,068,002 4,176, WESTN 3,529,845 3,837, WESTN 3,014,678 3,314,

65 Page 65 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 650 N PEARL ST MARRIOTT CITY CTR FMR WEST WESTN 3,014,044 3,257, WESTN 3,444,096 3,614, WESTN 2,982,254 3,209, WESTN 2,530,744 2,718, WESTN 2,330,866 2,435, WESTN 3,064,305 3,171, WESTN 2,962,845 3,163, WESTN 2,513,743 2,730, WESTN 2,394,528 2,420, MARRT 3,519,449 3,625, MARRT 2,509,580 2,749, MARRT 3,000,914 3,181, MCKINNEY A RITZ-CARLTON DALLAS MCKINN RITZ 1,172,721 1,189, RITZ 3,590,716 3,680, RITZ 3,392,191 3,416, RITZ 3,587,017 3,694, RITZ 2,995,338 3,061, RITZ 3,060,307 3,117, RITZ 2,808,608 2,892, RITZ 2,786,762 2,870, RITZ 2,319,568 2,389, RITZ 3,080,376 3,129, RITZ 3,425,982 3,528, RITZ 3,184,860 3,280, RITZ 2,826,582 2,922, RITZ 3,525,500 3,727, RITZ 4,355,460 4,392, RITZ 3,938,490 4,056, RITZ 3,411,061 3,513, OLIVE ST SHERATON DALLAS FMR ADAMS AMARK 8,583,507 9,024, AMARK11,283,490 12,196, AMARK 6,047,969 6,819, AMARK 4,812,973 5,732, AMARK 6,880,109 7,353, SHERA10,221,212 10,534, SHERA 8,126,345 9,278, SHERA 6,914,214 8,720, SHERA 5,949,198 6,571, SHERA 9,220,642 9,602, SHERA 5,814,692 6,463, SHERA 6,473,186 8,043, SHERA 4,815,002 5,854, SHERA10,016,579 10,930,

66 Page 66 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 400 OLIVE ST SHERATON DALLAS FMR ADAMS SHERA10,001,646 11,621, SHERA 6,440,266 8,854, SHERA 7,203,455 7,921, SHERA14,909,245 15,149, SHERA 8,366,196 10,021, SHERA 8,281,161 9,367, N AKARD ST THE FAIRMONT DALLAS HOTEL ,180,877 4,285, ,082,367 5,204, ,346,264 4,621, ,289,950 4,422, ,556,095 4,639, ,211,448 5,358, ,278,726 5,407, ,346,909 4,504, ,598,238 4,062, ,754,186 4,834, ,724,859 4,001, ,627,581 3,742, ,741,954 3,827, ,567,279 4,654, ,042,477 4,237, ,738,121 3,974, ,860,679 4,105, ,004,335 5,109, ,590,149 4,736, ,250,000 4,450, COMMERCE S THE MAGNOLIA HOTEL ,072,095 2,444, ,444,464 2,719, ,933,230 2,368, ,968,637 2,401, ,987,442 2,462, ,321,466 2,812, ,152,778 2,598, ,181,262 2,708, ,837,406 2,446, ,921,087 2,605, ,462,393 2,468, ,541,854 2,247, ,368,261 2,174, ,819,429 2,288, ,831,293 2,374, ,728,160 2,415, ,773,789 2,284,

67 Page 67 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 1401 COMMERCE S THE MAGNOLIA HOTEL ,579,208 2,863, ,156,927 2,492, ,885,509 2,252, MAPLE AVE THE STONELEIGH HOTEL & SPA , , , , , , ,034,816 1,053, , , , , , , ,132,242 1,163, ,242,876 1,266, ,176,100 1,194, ,126,376 1,141, ,426,122 1,445, ,649,763 1,688, ,365,827 1,386, ,234,201 1,259, YOUNG ST ALOFT DALLAS DOWNTOWN ALOFT 643, , ALOFT 997,186 1,091, ALOFT 1,015,103 1,148, ALOFT 933,261 1,083, ALOFT 1,025,894 1,108, ALOFT 1,716,935 1,760, ALOFT 1,362,053 1,413, ALOFT 1,062,686 1,126, ELM ST CROWNE PLAZA FMR WESTEND/H HAMPT 1,468,237 1,609, HAMPT 1,580,526 1,946, HAMPT 1,246,638 1,516, , , , , ,374,978 1,439, ,057,286 1,231, ,196,692 1,458, , , , , , , , , CROWN 585, , CROWN 1,185,890 1,548, CROWN 1,279,604 1,462,

68 Page 68 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 1015 ELM ST CROWNE PLAZA FMR WESTEND/H CROWN 1,257,781 1,561, CROWN 1,311,432 1,491, CROWN 1,935,129 2,198, CROWN 1,604,616 1,778, CROWN 1,171,730 1,446, N LAMAR ST SPRINGHILL SUITES FMR AMER SPRNG 805, , SPRNG 1,014,286 1,123, SPRNG 958,806 1,093, SPRNG 689, , SPRNG 824, , SPRNG 1,076,785 1,254, SPRNG 1,005,433 1,189, SPRNG 835,651 1,170, SPRNG 820,548 1,049, SPRNG 851,044 1,183, SPRNG 647, , SPRNG 767,845 1,052, SPRNG 732, , SPRNG 815,072 1,217, SPRNG 789,644 1,047, SPRNG 781,944 1,048, SPRNG 819, , SPRNG 1,025,775 1,307, SPRNG 893,311 1,008, SPRNG 684, , COMMERCE S THE ADOLPHUS HOTEL ,286,521 3,457, ,735,100 3,944, ,272,538 3,595, ,893,106 3,202, ,414,890 3,596, ,027,788 4,225, ,475,626 3,861, ,974,053 3,224, ,259,461 3,398, ,017,349 3,210, ,505,213 2,729, ,543,301 2,695, ,540,260 2,692, ,621,942 2,654, ,602,037 2,965, ,583,252 2,861, ,886,015 3,052, ,021,160 4,117,

69 Page 69 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 1321 COMMERCE S THE ADOLPHUS HOTEL ,980,868 3,192, ,647,088 2,748, S HOUSTON S THE HOTEL LAWRENCE FMR PAR , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , NORTH CENT BEST WESTERN CITYPLACE FMR BWEST 315, , BWEST 315, , BWEST 326, , BWEST 317, , BWEST 299, , BWEST 325, , BWEST 359, , BWEST 347, , BWEST 305, , BWEST 305, , BWEST 277, , BWEST 250, , BWEST 238, , BWEST 304, , BWEST 312, , BWEST 315, , BWEST 284, , BWEST 329, , BWEST 316, , BWEST 307, , LIVE OAK S DELUX INN FMR BUDGET , ,

70 Page 70 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 4001 LIVE OAK S DELUX INN FMR BUDGET ,597 94, ,085 67, MARKET CEN BEST WESTERN MARKET CENTER BWEST 247, , BWEST 309, , BWEST 291, , BWEST 260, , BWEST 303, , BWEST 369, , BWEST 327, , BWEST 345, , BWEST 248, , BWEST 345, , BWEST 267, , BWEST 273, , BWEST 204, , BWEST 315, , BWEST 283, , BWEST 278, , BWEST 239, , BWEST 321, , BWEST 274, , BWEST 282, , MARKET CEN CLSD QUALITY MKT CTR FMR H QUALY 545, , QUALY 678, , QUALY 609, , QUALY 570, , QUALY 500, , MARKET CEN COURTYARD MARKET CENTER COURT 1,181,114 1,219, COURT 1,487,206 1,507, COURT 1,323,985 1,350, COURT 1,100,000 1,127, COURT 1,276,502 1,319, COURT 1,525,586 1,561, COURT 1,302,787 1,353, COURT 1,233,744 1,294, COURT 1,163,251 1,192, COURT 1,217,352 1,255, COURT 915, , COURT 830, , COURT 742, , COURT 1,055,414 1,073,

71 Page 71 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 2150 MARKET CEN COURTYARD MARKET CENTER COURT 951, , COURT 905, , COURT 897, , COURT 1,320,909 1,356, COURT 1,089,669 1,116, COURT 1,008,994 1,026, MARKET CEN DAYS INN MARKET CENTER FMR RALTD 89, , RALTD 113, , RALTD 101, , RALTD 102, , RALTD 113, , RALTD 167, , RALTD 126, , RALTD 135, , RALTD 83, , RALTD 116, , RALTD 91, , RALTD 88, , RALTD 79,122 94, RALTD 116, , RALTD 95, , RALTD 80,485 96, RALTD 79,982 95, DAYS 135, , DAYS 95, , DAYS 92, , MARKET CTR DOUBLETREE FMR WYNDHAM MAR DOUBL 948, , DOUBL 1,188,346 1,398, DOUBL 1,308,171 1,365, DOUBL 1,223,375 1,282, DOUBL 1,281,693 1,321, DOUBL 1,626,053 1,671, DOUBL 1,435,564 1,461, DOUBL 1,379,579 1,413, DOUBL 1,104,757 1,148, DOUBL 1,226,600 1,277, DOUBL 956,794 1,018, DOUBL 996,178 1,033, DOUBL 953, , DOUBL 1,272,847 1,324, DOUBL 1,121,007 1,141, DOUBL 1,182,236 1,205, DOUBL 1,186,826 1,227,

72 Page 72 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 2015 MARKET CTR DOUBLETREE FMR WYNDHAM MAR DOUBL 1,569,297 1,609, DOUBL 1,352,941 1,404, DOUBL 1,192,436 1,227, N STEMMONS EMBASSY SUITES HOTEL # EMBAS 1,355,040 1,576, EMBAS 1,599,349 1,760, EMBAS 1,297,853 1,476, EMBAS 1,618,102 1,770, EMBAS 1,540,607 1,848, EMBAS 1,809,111 2,009, EMBAS 1,618,704 1,869, EMBAS 1,694,969 1,960, EMBAS 1,438,905 1,600, EMBAS 1,661,316 1,895, EMBAS 1,377,628 1,660, EMBAS 1,392,439 1,658, EMBAS 1,258,402 1,424, EMBAS 1,557,823 1,693, EMBAS 1,389,002 1,639, EMBAS 1,492,994 1,691, EMBAS 1,334,628 1,474, EMBAS 1,900,695 1,986, EMBAS 1,680,098 1,810, EMBAS 1,716,126 1,821, MARKET CEN FAIRFIELD INN BY MARRIOTT FAIRF 615, , FAIRF 858, , FAIRF 719, , FAIRF 714, , FAIRF 677, , FAIRF 831, , FAIRF 744, , FAIRF 648, , FAIRF 606, , FAIRF 656, , FAIRF 467, , FAIRF 456, , FAIRF 398, , FAIRF 566, , FAIRF 498, , FAIRF 475, , FAIRF 415, , FAIRF 715, , FAIRF 551, , FAIRF 467, ,

73 Page 73 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 2201 N STEMMONS HILTON ANATOLE HOTEL FMR W HILTO11,714,571 11,902, HILTO15,231,382 15,581, HILTO11,585,401 12,630, HILTO11,442,656 11,820, HILTO10,498,943 10,952, HILTO16,639,095 17,272, HILTO14,009,052 14,972, HILTO10,727,435 12,291, HILTO11,430,992 12,036, HILTO12,779,778 13,332, HILTO 9,346,342 10,834, HILTO 8,935,682 9,852, HILTO 9,496,842 10,036, HILTO11,587,273 12,456, HILTO 7,965,212 8,664, HILTO 9,130,713 9,441, HILTO 9,338,435 10,065, HILTO14,547,053 14,994, HILTO 9,741,490 10,567, HILTO 9,616,334 10,024, N STEMMONS HILTON GARDEN INN FMR WILS HILTG 1,236,515 1,253, HILTG 1,563,975 1,573, HILTG 1,494,363 1,536, HILTG 1,381,447 1,421, HILTG 1,335,460 1,406, HILTG 1,721,240 1,772, HILTG 1,615,004 1,706, HILTG 1,456,487 1,586, HILTG 1,359,458 1,391, HILTG 1,421,318 1,441, HILTG 1,126,797 1,191, HILTG 1,174,509 1,230, HILTG 1,159,989 1,187, HILTG 1,396,738 1,440, HILTG 1,279,244 1,318, HILTG 1,243,375 1,284, HILTG 1,194,315 1,214, HILTG 1,770,012 1,796, HILTG 1,431,997 1,491, HILTG 1,307,014 1,380, N STEMMONS HOMEWOOD SUITES MKT CTR # HOMEW 606, , HOMEW 750, ,

74 Page 74 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 2747 N STEMMONS HOMEWOOD SUITES MKT CTR # HOMEW 772, , HOMEW 689, , HOMEW 702, , HOMEW 718, , HOMEW 680, , HOMEW 553, , HOMEW 535, , HOMEW 581, , HOMEW 525, , HOMEW 439, , HOMEW 497, , HOMEW 646, , HOMEW 606, , HOMEW 538, , HOMEW 553, , HOMEW 607, , HOMEW 628, , HOMEW 671, , E REUNION B HYATT REGENCY DNTN HYATT 8,463,314 8,636, HYATT 9,895,203 10,569, HYATT 8,954,078 9,618, HYATT 8,489,785 9,270, HYATT 8,036,733 8,168, HYATT10,242,818 10,702, HYATT 8,512,072 9,194, HYATT 7,156,945 7,771, HYATT 7,991,979 8,931, HYATT 7,385,146 7,799, HYATT 5,850,981 6,639, HYATT 5,800,331 6,438, HYATT 6,344,774 7,260, HYATT 7,250,942 7,554, HYATT 7,722,742 8,475, HYATT 6,191,567 6,979, HYATT 7,691,233 8,042, HYATT 9,946,294 10,142, HYATT 7,521,189 8,609, HYATT 6,373,423 6,784, N STEMMONS MARRIOTT SUITES MARKET CEN X.STE 1,464,490 1,521, X.STE 2,002,175 2,032, X.STE 1,686,045 1,798, X.STE 2,452,412 3,082, X.STE 1,918,609 1,992,

75 Page 75 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 2493 N STEMMONS MARRIOTT SUITES MARKET CEN X.STE 2,177,091 2,233, X.STE 2,000,141 2,091, X.STE 2,617,068 2,799, X.STE 1,777,473 1,938, X.STE 1,737,747 1,800, X.STE 1,570,272 1,648, X.STE 2,092,742 2,222, X.STE 1,480,564 1,568, X.STE 1,860,355 1,915, X.STE 1,635,390 1,712, X.STE 2,233,146 2,317, X.STE 1,434,617 1,522, X.STE 2,221,220 2,305, X.STE 1,671,397 1,748, X.STE 2,316,192 2,516, N STEMMONS RENAISSANCE DALLAS HOTEL RENAS 3,277,329 3,369, RENAS 4,329,311 4,429, RENAS 2,684,738 2,966, RENAS 3,851,678 4,132, RENAS 3,264,698 3,368, RENAS 3,744,605 3,878, RENAS 2,756,233 2,907, RENAS 3,995,254 4,174, RENAS 2,981,031 3,086, RENAS 3,303,390 3,395, RENAS 2,631,235 2,801, RENAS 3,831,246 4,010, RENAS 2,521,840 2,630, RENAS 3,257,423 3,441, RENAS 2,598,903 2,784, RENAS 3,756,251 3,948, RENAS 2,355,415 2,434, RENAS 3,745,439 3,873, RENAS 2,941,628 3,072, RENAS 4,120,041 4,213, N STEMMONS SHERATON SUITES MARKET CEN X.STE 1,411,328 1,521, X.STE 1,701,795 1,782, X.STE 1,727,412 1,869, X.STE 1,316,019 1,447, X.STE 1,308,532 1,352, X.STE 1,543,259 1,579, X.STE 1,015,974 1,146, X.STE 1,138,172 1,330,

76 Page 76 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 2101 N STEMMONS SHERATON SUITES MARKET CEN X.STE 1,256,187 1,304, X.STE 1,461,513 1,488, X.STE 1,246,638 1,346, X.STE 1,183,860 1,230, X.STE 1,238,878 1,269, X.STE 1,383,353 1,427, X.STE 1,262,122 1,370, X.STE 1,184,192 1,229, X.STE 1,338,123 1,358, X.STE 1,658,259 1,801, X.STE 1,313,277 1,357, X.STE 1,182,816 1,260, N STEMMONS STUDIO 6 FMR HOMESTEAD VIL STUD6 214, , STUD6 217, , STUD6 248, , STUD6 243, , STUD6 225, , STUD6 243, , STUD6 244, , STUD6 265, , STUD6 254, , STUD6 207, , STUD6 213, , STUD6 183, , STUD6 179, , STUD6 195, , STUD6 185, , STUD6 176, , STUD6 180, , STUD6 202, , STUD6 214, , STUD6 177, , COLONIAL A COLONIAL HOUSE MOTEL ,650 29, ,611 30, ,831 30, ,200 30, ,820 28, ,408 28, ,815 30, ,892 30, ,442 28, S AKARD ST DALLAS PLAZA FMR RAMA 40 O , ,

77 Page 77 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 1011 S AKARD ST DALLAS PLAZA FMR RAMA 40 O , , , , , , , , , , , , , , , , ,878 30, S CENTRAL WAYSIDE INN ,500 30, ,880 28, ,325 29, ,545 32, ,501 30, MARTIN L K WINNWAY MOTEL ,710 18, ,025 19, ,015 17, ,350 18, ,820 17, HARRY HINE HOLIDAY INN MARKET CTR HOLID 466, , HOLID 795, , HOLID 864, , HOLID 753, , HOLID 841, , HOLID 775, , HOLID 653, , HOLID 672, , HOLID 899, , HOLID 841, , HOLID 689, , HOLID 752, , HOLID 1,151,053 1,192, HOLID 891, , HOLID 784, , TURTLE CRE MANSION OF TURTLE CREEK ,883,785 2,921, ,010,903 3,047, ,841,538 2,893, ,175,698 2,230, ,683,423 2,750,

78 Page 78 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 2821 TURTLE CRE MANSION OF TURTLE CREEK ,379,296 2,423, ,464,934 2,479, ,693,141 1,723, ,955,123 2,004, ,403,099 1,436, ,435,130 1,471, ,140,439 1,168, ,551,002 1,582, ,822,861 1,868, ,825,609 1,848, ,737,581 1,761, ,255,571 2,311, ,369,686 2,414, ,226,880 2,279, ,026 1,884, VICTORY PA W DALLAS-VICTORY HOTEL W 3,778,082 3,815, W 4,082,928 4,123, W 4,228,192 4,270, W 3,998,809 4,038, W 4,290,359 4,333, W 4,464,331 4,508, W 4,417,532 4,461, W 3,447,410 3,481, W 3,493,869 3,528, W 2,685,626 2,712, W 2,781,365 2,809, W 2,850,417 2,894, W 2,894,246 2,911, W 3,208,314 3,232, W 2,971,118 3,014, W 2,787,651 2,939, W 3,422,951 3,501, W 3,930,004 3,969, W 3,500,639 3,521, W 3,263,322 3,295, OAK LAWN A WARWICK MELROSE HOTEL ,836,765 1,908, ,900,325 1,991, ,600,942 1,689, ,357,147 1,395, ,846,412 1,909, ,741,419 1,809, ,538,875 1,612, ,234,067 1,286,

79 Page 79 of 111 E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ T AVG. % # TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR DALLAS 3015 OAK LAWN A WARWICK MELROSE HOTEL ,438,553 1,536, ,333,331 1,389, ,311,631 1,357, ,113,551 1,166, ,406,304 1,433, ,394,827 1,443, ,272,879 1,342, ,174,476 1,212, ,644,017 1,675, ,873,171 1,930, ,565,006 1,604, ,291,012 1,321, ENDNOTES: 1. FACTOR USED TO ADJUST TAXABLE TO GROSS REVENUES. AREA FACTOR USED IF PROPERTY DOES NOT PROVIDE GROSS. TAXABLE IS 89% OF GROSS STATEWIDE. 2. A NUMBER OR A 'Y' INDICATES QUARTERS REVENUES ARE ESTIMATED. 3. ESTIMATED AVERAGE DAILY RATE (IE 60-85% OF RACK SINGLE) 4. Occupancy derived from calculated roomnights sold (gross room revenues divided by Average Daily Rate), divided by roomnights available. 5. Total REVenues Per Available Room per day, or 'REVPAR'; Prepared from State Comptroller, chain directories and private records. Includes all quarterly reports exceeding $14,000 (otherwise omitted).

80 Page 80 of 111 EXHIBIT IV PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2011 INCLUDES ZIP-CODES: TEXAS HIGH PRICED ZIPCODE MARKETS # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR CHAINS FOURSEAS , GAYLORD , RITZ CARL , W HOTEL , WESTIN , ZA ZA , TOT LUXURY , , HILTON , , HYATT , , INT-C , MARRIOTT , , OMNI , RENAISSAN , TOT UPSCALE , , EMBASSY , HOMEWOOD , RESIDENCE , STAYBRIDG , SUMMERFLD , OTH SUITE , TOT SUITES , , ALOFT , COURTYARD , CROWNPLZA , DOUBLTREE , HILT GARD , HOLID INN , HYATT PLC , INDIGO , RADIS HTL , SHERATON , WYNDHAM , OTHER MUP , TOT MID/UPS , , CANDLWOOD , COMFO STE , HAWTHORN , SPRNGHILL , TOWNPLACE , OTHER MIN , TOT MIN STE , ,

81 Page 81 of 111 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2011 INCLUDES ZIP-CODES: TEXAS HIGH PRICED ZIPCODE MARKETS # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR BEST WEST , CNTRY INN , COMFO INN , DRURY INN , FAIRFIELD , HAMPTON , HOLID EXP , LA QUINTA , SLEEP INN , TOT LTD SVE , , EXT AMERI , HOMESTEAD , INTOWN ST , STUDIO , STUDIO , VALUE PLC , OTHER EXT , TOT EXT STA , BAYMONT , BEST VALU , CLARION , DAYS INN , ECONOLODG , HO JO , MICROTEL , MOTEL , QUALITY , RAMADA , RED ROOF , RODEWAY SUPER , TRAVELODG , OTHER BUD , TOT BUDGET , TOT CHAINS , ,605, INDEPENDENTS $100+ ADR , , $60-99ADR , LT $60ADR , TOT INDEP , , TOT MARKET , ,029, * All figures annualized. Includes taxed and est non-tax room revenues. Independents are categorized by price: $100+, $ , and under $60)

82 Page 82 of 111 EXHIBIT V A STUDY OF THE EFFECT OF HOTEL SIZE ON PERFORMANCE IN THE TEXAS HOTEL INDUSTRY THE CASE FOR DOWNSIZING NEW HOTELS 11/30/99 By Douglas W. Sutton and Bruce H. Walker Source Strategies has long contended that the number of rooms a developer offers in a new property is one of the key factors in determining a venture's relative success or failure. It is every bit as important to size a hotel project properly as it is to select the appropriate brand, and to develop in a suitable market and location. We have previously conducted extensive studies of the lodging market that support our hotel sizing contention, and we have taken this opportunity to re-examine the issue using our extensive database of hotel and motel performance for the State of Texas. Before delving into the numbers that define the role of room count in a hotel's performance, we should first highlight the basic industry theory of 'rightsizing' a property. The premise offered by many inexperienced developers is "If I can make a profit constructing a 50 room hotel in a given market, it would be twice as profitable to develop 100 rooms." In virtually all cases nothing could be farther from the truth. At some point adding rooms to a project reaches a point of diminishing returns, and the investment in the additional rooms cannot be economically justified. To illustrate this point, mentally divide our hypothetical 100 room project into two 50 room hotels. The initial 50 rooms may perform very well, with occupancies over 70% and a very strong rate structure. However, the second 50 rooms are only utilized when there is overflow from the first hotel because its rooms are 100% occupied. Effectively, the second 50 rooms may only attain an occupancy of 30% or less. This low level of occupancy may prompt the general manager to lower rates to bolster occupancy, but this is a losing battle. Ultimately, overbuilding causes REVPAR erosion in the property, and in the market as a whole. Today's developers and lenders would not seriously consider involvement in a 50 room project operating at this low level, but often times they accomplish the same end by pushing for more rooms in a project than the market can effectively support. If we now mentally put these two 50 room properties back together (one operating at 70%, the other at 30% occupancy), what we end up with is an oversized 100 room hotel that is running a mediocre 50% occupancy.

83 Page 83 of 111 Over-sizing a hotel makes it difficult, if not impossible, to be competitive in a marketplace. There are a finite number of roomnights sold to be divided among existing hotels in the market, and developing a more conservatively sized property helps insure that a profitable level of those roomnights can be captured. Building a hotel is not the 'Field of Dreams'... If you build it - they won't come... With the exception of destination resorts and some unique convention hotels, people do not go someplace because there is a hotel. Rather, they stay in a hotel because they want to be near someplace. Builders who construct too many rooms usually put themselves in unenviable financial situations. Many hotels which we see put up for sale were developed with far too many rooms. The owners, having had difficulty getting a return on their investment, are often trying to get out from under a bad investment. There are even drastic cases of properties bulldozing entire wings to provide additional parking, because those extra rooms are a financial burden, remaining unsold the vast majority of the time. Now that we've outlined the basic economic benefits of 'building small', let's look into hotel performance numbers and see if they support this development principle. We analyzed two separate hotel samplings: First we will look at Comfort Inns across Texas as a selected brand sampling. Then we will look at all branded hotels built during a given period of time for a more diverse sampling. COMFORT INN - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE In our initial analysis, we selected a sampling of Texas Comfort Inn branded properties ranging in size from 36 to 75 rooms; they are all 'Limited Service' hotels. We excluded those properties located in exclusive, higher priced markets, since they would naturally support larger room counts while maintaining strong performance levels and would distort the findings. The resulting sample included 55 Comfort Inn hotels located across Texas. The following chart of performance statistics from the latest year on file (12 months ending September 30, 1999) clearly illustrates the consistent curve, showing marked declines in performance as room count increases. This decline was exhibited in all three measures shown, Occupancy, Average Daily Rate, and REVPAR:

84 Page 84 of 111 Year Ending 6/30/99 Results Average # of Daily Units Occupancy Rate REVPAR Combined: Looking only at occupancy, the following graph gives a clear depiction of the notable negative impact of larger room counts on a hotel's ability to maintain an acceptable level of roomnights sold. Properties with lower room counts were clearly able to sustain a higher level of occupancy. Average occupancy ranged from 66.9% for properties of rooms, downward to a much lower 43.8% average occupancy for properties in the room size bracket. When looking at REVPAR, the following graph follows a very similar performance curve, ranging from an average REVPAR of $36.95 for properties of units, downward to a mediocre $19.38 average REVPAR for properties in the unit size bracket. Note that the downward slide in both graphs did not begin until room counts exceeded 35 units. Prior to that, a mild upward trend is experienced. This appears to indicate that, on average, 50 rooms is the 'optimum' size for a Comfort Inn in Texas markets (excluding high priced areas). Of course, this is an average number for this type of market. Each project must be examined on an individual basis to determine the proper size to develop within its given market.

85 Page 85 of 111 The above chart and graphs clearly illustrates that Developers often missed the mark, building more rooms than 'optimum.' 'Optimum' is defined as generating the highest return on invested capital, and is closely tied to occupancy and REVPAR generation. Analyzing the above data provides a measure of the effect of over building. For the typical range of rooms for Comfort Inn projects (40-75 rooms) outside of higher priced areas, the occupancy dropped 23.1 points (a full 35%) from 66.9% to 43.8% as room counts escalated. With a 35 room increase in rooms from the room size bracket to the room size bracket, a resulting 35% drop in occupancy is experienced. The key question, is how to apply this principle to a given hotel project. Naturally, each project would have to be judged on its individual merits, but looking at an 'average' project for a single brand and product is very revealing. All are Comfort Inns. All are very similar products in similar market environments, leaving size as the major variable in performance. In our sampling, the average project is 65 rooms in size. At this size, the average occupancy is 62.8%. If we built 36% fewer rooms (42 rooms) our average occupancy would rise a moderate 6.5% to 66.9%. Conversely, if we built 36% more than average, (71 rooms) our average occupancy plummets by 42.5% to 43.8%. Clearly there are some basic economic principles at work. Comfort Inns are conservatively-sized. Building smaller than the average of 65 rooms yields slightly higher occupancies, but the ability to charge ever higher rates as size decreases is marginal. As rates rise, some consumers perceive lost value and will stay at another property. On the other side of the coin, properties built larger than the average 65 rooms suffer serious occupancy declines. At some

86 Page 86 of 111 point the need for additional rooms that was envisioned by the optimistic developer is simply not there, and the extra rooms only serve to depress the overall performance of the property. BRANDED HOTELS - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE In our second analysis, we selected a sampling of all Texas branded hotels constructed from ; 91 properties across Texas, predominantly 'Full Service'. Our sampling was limited to hotels of less than 135 rooms. We once again excluded those properties located in exclusive, higher priced markets. For our analysis we examined performance results from the year 1985 when all subject hotels were 10 to 15 years old, well into their aging life cycles. The following chart of performance statistics from 1985 for branded properties throughout Texas clearly illustrates the downward curve, with definite erosion in performance measures as room count increases: 1985 Performance Results Average # of # of Daily Hotels Units Occupancy Rate REVPAR Combined: With occupancy declines being the strongest indicator of the negative impact of building too large, the following graph provides a clear picture of the descending performance slide as room counts increase. Once again, properties with lower room counts were more insulated from market competition and were therefore able to be more competitive in both favorable and depressed market environments. Average occupancy ranged from 70% for properties of 58 rooms or less, downward to a much lower 55.5% average occupancy for properties in the room size bracket, after peaking at 73.9% in the size range.

87 Page 87 of 111 As with the Comfort Inn analysis, the above data provides a measure of the effect of over building. However, since a number of varying brands are considered in this sample, the typical range in size of these projects ranges from about 40 to 135. This is a wider range than the Comfort sampling, since many of the brands in this sample typically have larger room counts than a Comfort Inn. This is partially due to some brands' ability to support higher room counts, and partially due to the tendency to overbuild in the early 1970s, when all hotels in this sample were constructed. While the 65 room average for our Comfort Inn sample is reasonably close to optimum sizing for that brand, the 98 room average for this analysis appears to be oversized. In our assessment, the optimum average number of rooms for this sampling would have been 60 to 41 rooms, depending upon brand. In 1985, this roomcount supported occupancies near 70%, with an average REVPAR of almost $27. Compare this to the average capacity of 98 rooms attaining a much lower average occupancy of 60.9% and REVPAR below $20. Clearly this lower level of performance can be attributed to over-sizing projects in the early 1970s. Looking at our average (oversized) roomcount of 98 rooms, increasing the size by 30% (135 rooms) would cause occupancy to slide 10% from 60.9% to 55.5%. On the other hand, making the average project smaller (58 rooms, or 75% smaller) would improve occupancy to 73.9%, or a healthy 21% increase. For the sake of comparison, let us assume that the average property was more appropriately sized at about 58 rooms. If the project size were increased to 135 rooms, the largest range in our sample, occupancy would suffer a significant 33% decline from optimum levels.

88 Page 88 of 111 Of course this assumes that locational differences are not significant. We believe this is true; the large sample and clear correlation between size and performance support this conclusion. SUMMARY The data is clear. In most cases, small hotels outperform large hotels, with the exception of higher-priced markets where competitive barriers to entry exist (e.g. lack of land, excessive land cost, building restrictions, etc.). Common sense explains this occurrence: a successful 100 room hotel will inevitably prompt the development of one or more new, small hotels of similar quality in the immediate area. In a competitive market environment, the smaller hotel has a distinct advantage and wins - almost every time.

89 Page 89 of 111 EXHIBIT VI START-UP PERFORMANCE OF NEW HOTELS AND MOTELS A new study by Source Strategies, Inc., utilizing all new chain hotels opened in Texas between 1990 and 1994, shows that new hotels and motels provide their peak performance in Years III through V, when they typically reach 112% of their 20- year average REVPAR performance level. In other words, the newness of a property is an advantage on the order of a 12% premium in Years III through V - versus the average REVPAR that would otherwise be expected for that property over a twenty-year period. That's because the consumer almost always picks new over old because, to them, 'new' means 'clean' and 'new' means 'value.' Perhaps this is not news to many, but it is highly important to those who forecast the performance of new properties. Here's what the graph looks like for the first twelve years for new properties opened in the moderately-good and improving markets of the 1990's. The years after peak are projected based on two major previous studies: one by Limited Service in the early 1980's and the second last year by Source Strategies, Inc. Year I at 92% of the 20 Year Average, Year II at 107%

90 Page 90 of 111 The study found that a property could expect a REVPAR at Year I of 92% of the twenty-year average for a project. In Year II, this would move to 107% and to 112% in Years' III through V. For example, if over the twenty-year span of the project, we expect a hypothetical new hotel to generate 105% of the market average REVPAR, this means that in Year I it would generate 97% of market (105% times 92%), and in Year II 112% (105% times Year II's 107%), and then peak at 118% for Years III-V. Study Method The underlying design for this study was to determine what effect a property's age had on its REVPAR during the first five years of operation. From two other studies, we know that properties will decline at 1.67% per year, versus the market average, over long periods of time. The second study sample consisted of all new Texas development in the early 1980's, a time of major under-supply. Consequently, the first few years performance of this group of hotels and motels was probably be overstated - versus the current, more-normal times. The current study confirmed that belief. The current study's design was to develop the REVPAR index for every new chain property (each new property's REVPAR, divided by the REVPAR of all nearby hotels and motels). Then all the resulting indices were averaged. This process was done for each year of development, 1990, 1991, 1992, 1993 and 1994, in order to obtain data for "Year I," "Year II" and so on. These were averaged as well to obtain an over-all, average Year I result. This process produced the graph curve shown above, and is reflective of the particular mix of chain properties, a mix which produced REVPAR slightly above the market average. To eliminate the effect of a specific mix of chains, the scale was moved down slightly, so that the application of the year-by-year REVPAR indices to any project would result in averaging 100 of the first twenty years of the project.

91 Page 91 of 111 REVPAR OF ALL NEW CHAIN HOTELS OPENED INCLUDES THEIR LOCAL MARKET AVERAGES (SAME ZIP-CODES) Opened 1990 Year I Year II Year III Year IV Year V Year VI 9 Chain hotels Local Market Average Index New Chain/Market (Peak) Opened 1991 Year I Year II Year III Year IV Year V Year VI 8 Chain hotels Local Market Average est Index New Chain/Market (Peak) Above assumes Year VI index decline of 1.67% Opened 1992 Year I Year II Year III Year IV Year V Year VI 7 Chain hotels Local Market Average est est Index New Chain/Market (Peak) Above assumes Year V is "flat" and Year VI index declines by 1.67% Opened 1993 Year I Year II Year III Year IV Year V Year VI 16 Chain hotels Local Market Average est est est Index New Chain/Market (Peak) (Peak) Above assumes Year III and IV are Peak, and Year V and Year VI index declines by 1.67% annually Opened 1994 Year I Year II Year III Year IV Year V Year VI 29 Chain hotels Local Market Average est est est est Index New Chain/Market Above assumes Year III and Year IV Peak equals Year II plus 4%, as above, and Year V and Year VI index declines by 1.67% annually Peak COMBINED INDICES Year I Year II Year III Year IV Year V Year VI Average of Raw Data Adjusted 100 over 20 years After Year V, Declines Average 1.67% Per Annum In the sixth year and thereafter, the twenty-year average REVPAR index is diminished at a rate of 1.67% per annum in order to reflect aging and the normal life-cycle of a hotel.

92 Page 92 of 111 This pattern of declining performance with property aging is based on major studies of economic life-cycle patterns, studies which were conducted on a census of all 25,000 Texas rooms built between 1980 and 1982 (study published in September 1994 issues of MarketShare and the October 1994 issue of Hotel & Motel Management). These Source Strategies studies confirm a similar, major study conducted in 1982 at the Holiday corporation on 160 company-owned and companyoperated hotels.

93 Page 93 of 111 EXHIBIT VII CapEx: A STUDY OF CAPITAL EXPENDITURES IN THE US HOTEL INDUSTRY THE FOLLOWING IS A SUMMARY OF THE INTERNATIONAL SOCIETY OF HOSPITALITY CONSULTANTS' 2000 "CAPEX STUDY, A STUDY OF CAPITAL EXPENDITURES IN THE US HOTEL INDUSTRY" AS IT APPLIES TO LIMITED SERVICE PROPERTIES: The objective of our historical analysis in CapEx 2000 was to determine what has been spent in the past to maintain a hotel in good, competitive condition. Hotel owners and management companies were contacted to provide data for the study. Definition of CapEx "Capital Expenditure" is defined as: investments of cash or the creation of liability to acquire or improve an asset, e.g., land, buildings, building additions, site improvements, machinery, equipment; Comparatively, the "reserve for replacement" for a hotel asset has been narrowly defined as the funds set aside for the periodic replacement of furniture, fixtures and equipment (FF&E). The reserve was not contemplated to fund the replacement of major building components, such as roofs, elevators, and chillers. For this study the term has been defined as: the cost of replacing worn out FF&E, as well as the cost of; - updating design and decor - curing functional and economic obsolescence... - complying with franchisors' brand requirements - technology improvements - product change to meet market demands - adhering to government regulatory requirements - replacing all short and long lived building components due to wear and tear Although many equity investors frequently argue against the necessity of a reserve, particularly if the investor does not plan to hold the property for greater than five years, the requirement for and amount of reserves are typically contractual issues between ownership, lender, manager, and/or franchisor/franchisee. Significant Findings of CapEx 2000 The average amount spent per year by limited-service hotels in the survey was determined to be 5.5% of total revenue for the time period covered by CapEx 2000 ( ). As these limited-service hotels have matured, CapEx has increased, underscoring one of our principal findings that CapEx requirements increase as a hotel ages. CapEx Spending is highly dependent upon a hotel's point in its life cycle. The following chart shows the range of CapEx spending (as a percentage of

94 total revenues) over a 25-year time period; the table following the chart Page 94 of 111 identifies the specific ranges of CapEx spending as a% of total revenues by year. Percentage Range of CapEx Spending by Year Year Range Minimum Range Maximum % 4.51% % 3.29% % 3.15% % 3.64% % 6.23% % 6.77% % 5.85% % 5.23% % 7.01% % 11.94% % 6.55% % 9.36% % 9.93% % 7.82% % 5.72% % 12.40% % 10.50% % 9.72% % 8.10% % 8.68% % 6.99% % 6.84% % 16.98% % 12.88% % 10.24% As the data indicates, CapEx spending increases over time for all (U.S.) hotels, with large differences in both the level of CapEx spending and timing across different hotels. The data illustrates that, over time, the minimum and maximum levels of CapEx spending generally widens as a hotel increases in age.

95 Page 95 of 111 For limited-service hotels, the first major increase in spending occurs in the sixth year, which likely represents the replacement of soft goods. The first major spike occurs in year 10, which is likely to be the result of a rooms and corridors renovation. Smaller spikes in CapEx spending occur in the following years, with the next major spending spike occurring in year 17, which is likely building and some mechanical renovation and replacement. The following series of tables illustrates limited-service CapEx spending levels in various demographic categories: CapEx Limited Service Hotels by Location Average Capex/Total CapEx per Location Age Revenue Room per Year All Properties 12.0 yrs 5.5% $1,111 Airport 9.8 yrs 5.4% $1,268 Urban 15.2 yrs 4.3% $ 820 Small City/Hwy 9.2 yrs 5.1% $ 773 Suburban 10.5 yrs 5.7% $1,172

96 Page 96 of 111 CapEx Limited Service Hotels by Average Daily Rate Average Average Capex/Total CapEx per Daily Rate Age Revenue Room per Year All Properties 12.0 yrs 5.5% $1,111 < $ yrs 5.0% $ 687 $60-$ yrs 6.3% $1,134 > $ yrs 5.3% $1,570 CapEx Limited Service Hotels by Property Size Average Capex/Total CapEx per Property Size Age Revenue Room per Year All Properties 12.0 yrs 5.5% $1,111 < 100 rooms 8.7 yrs 3.3% $ rooms 10.3 yrs 5.4% $1,107 > 150 rooms 20.0 yrs 6.9% $1,360 -CapEx Limited Service Hotels by Age of Property Average Capex/Total CapEx per Daily Rate Revenue Room per Year All Properties 5.5% $1,111 > 15 yrs old 6.5% $1, yrs old 4.8% $ 897 < 5 yrs old 3.0% $ 547 Overall, the study details the varying levels of capital required to keep a hotel competitive in its life cycle. Historically, many operators have held no more than 3-4% of gross revenues in reserve, a level which may be sufficient for FF&E replacement, but is woefully inadequate for other required expenditures Data compiled and organized from the CapEx report of the International Society of Hospitality Consultants, copyright 2000.

97 Page 97 of 111 Market Texas Tourism Office of the Governor, Economic Development & Tourism TEXAS HOTEL PERFORMANCE REPORT: FIRST QUARTER 2010 May 30, 2010 Texas lodging room revenues dropped 2.9% in the First quarter of 2010 after an 8.0% decline in the First quarter of The market lost 17.6% for all of 2009 after gaining 8.5% in 2008, 8.9% in 2007, 13% in 2006 and 15% in This First quarter 2010 decline represents an 11.2% point drop versus the First quarter of 2008, two years ago. The Fourth quarter of 2008 marked the end of four years of revenue growth levels above 8%. First quarter 2010 room revenues eroded to $1.546 billion versus $1.593 billion a year ago. Prices declined by 5.1%, on top of a 3.6% decline in the First quarter of Revenue Per Available Room per day (REVPAR) plummeted by 19.3% against the First quarter of However, the most important industry driver, roomnights sold, increased by a modest 2.4% over last year although they are still 2.8% lower than 2008 levels. Room supply in the quarter grew 6.4%, growing in response to high occupancies prior to Due to generally low returns on investment, the development pipeline should soon empty and net supply growth should cease. First quarter occupancy dropped 3.7%, from 56.9% to 54.9% (2 points), well below the 59% long-term industry average, First quarter market results indicate a probable bottoming of the severe recession but do not yet indicate a significant recovery to the normal levels enjoyed in 2008 and earlier. With the important exception of a small increase in Roomnights sold, every