Hospitality Firing on All Cylinders in 2016

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1 Research & Forecast Report LAS VEGAS HOTEL Q Hospitality Firing on All Cylinders in 2016 > > Visitor volume and gaming revenue are on track to hit new highs in 2016 Economic Indicators > > Room inventory growth is light, and will remain so until 2019 > > Sales of hospitality properties rebounded in the fourth quarter of 2016 AIR Passengers CONVENTION Attendance -5.2 RevPAR Oct 2016 Southern Nevada s hospitality market posted strong numbers in 2016, and looks poised for mild expansion in Visitor volume in the first ten months of 2016 was an improvement over the first ten months of 2015, with 856,000 more visitors in the 2016 period than Gaming revenue was also stronger in 2016 than 2015, with $149.8 million taken in in the first ten months of 2016 than during the same period in The average daily room rate (ADR) and revenue per available room (RevPAR) were also up year-over-year. Room inventory did not increase in any meaningful way in 2016, although 2017 should see more completions than While gaming revenue continued to lag behind the peak levels it reached in 2006 and 2007, it has showed improvement since the Great Recession. Gaming revenue in 2016 averaged year-over-year growth of 2.1 percent for Clark County as a whole, and 1.6 percent growth on the Las Vegas Strip. Downtown gaming revenue was 6.0 percent higher in 2016 than at this point in 2015, and the Boulder Strip, which primarily plays host to local casino patrons, posted 2.9 percent gaming revenue growth. Revenue Per Available Room (RevPar) 149, , , , % +4.2% Market Indicators Relative to prior period Now Future* Room Inventory Room Occupancy Average Daily Rate Revenue Per Available Room *Projected Summary Statistics Q Las Vegas Market Q4, 2015 Q3, 2016 Q4, 2016 Room Inventory 144, , ,684 Room Occupancy 85.9% 92.0% 92.7% Average Daily Rate $ $ $ Revenue Per Available Room $ $ $ , , , ,000 3 Q Q Q Q Q Q Q Q Q 2016

2 Room inventory expanded in the fourth quarter of 2016 with the completion of the Lucky Dragon in the Resort Corridor. Counteracting this was the closure of the 159-unit Gold Palms to make way for redevelopment into two new limited service properties totaling 248 units. Resorts World Las Vegas remained under construction, with completion of the first phase planned for 2019, along with Steve Wynn s 1,000-room Paradise Park project that will be constructed on the former site of the Desert Inn Golf Course. Southern Nevada s non-gaming construction boom continued in 2016, with recent additions to Southern Nevada s entertainment complex including Topgolf International s four-story golf entertainment complex at the MGM Grand, a 415,085 square foot IKEA store along the I-215 Beltway, new retail fronting the Treasure Island, the Rock N Rio festival, and the 20,000 seat MGM Resorts International Arena behind New York-New York and Monte Carlo which will host Las Vegas NHL hockey franchise the Golden Knights. Perhaps more impressive is the announced intention of the Raiders NFL football franchise to move in 2019 to Southern Nevada to become the Las Vegas Raiders. Still to come are a $75 million renovation of Caesars Palace s original Roman Tower, a new 5,000-seat theatre at the Monte Carlo and a $47 million renovation of the Thomas & Mack Center. The Las Vegas Convention Center is planning a major expansion of the convention center to keep Southern Nevada at the forefront of convention destinations in the United States. In all, we expect approximately $1.1 billion will have been spent on Southern Nevada s hospitality market by the end of 2016, before another $10 billion is spent on hospitality development between 2017 and Hospitality sales lagged in the middle of 2016, but ended the year on a high. A total of 4,415 rooms sold in Southern Nevada in 2016, with total sales volume of $1.18 billion and an average sales price of $268,000 per room. Recent years with more than $1 billion in sales volume include 2014, which saw the sale of 7,614 rooms and 2011, which saw the sale of 7,507 rooms. As with those other years, sales were dominated in 2016 by large resort sales, including the Tropicana Las Vegas, Aliante Hotel and Casino and Palms Casino Resort. Sales Volume $800,000,000 $700,000,000 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0 3 Q Q Q Q Q Q Q Q Q 2016 Sales vs. Price Per Unit 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, $0 3 Q Q Q Q Q Q Q Q Q 2016 Sales (Units) Sales vs. Price Per Unit Average Price Per Unit $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 Southern Nevada s hospitality market was firing on all cylinders in 2016, and 2017 looks as though it will be a repeat, at least in terms Market Health Data Point YTD* Visitor Volume (Millions) Room Occupancy 84.4% 84.3% 86.8% 87.7% 90.4% ADR $ $ $ $ $ RevPAR $91.17 $93.27 $ $ $ Convention Attendance (Millions) Passengers McCarran Int l (Millions) Gaming Revenue (Clark County, Billions) $9.4 $10.0 $9.6 $9.6 $8.1 Gaming Revenue ( Strip, Billions) $6.2 $6.5 $6.4 $7.5 $5.3 Data from Las Vegas Convention & Visitors Authority * Data from January to October 2 Las Vegas Research & Forecast Report Q Hospitality Colliers International

3 of overall hospitality numbers. Years in which hospitality investment sales top $1 billion are usually followed by years with lower sales volume, although the good economic news coming from Southern Nevada might make its hospitality sector irresistible to investors. Inventory expansion will remain light for the next two years, which should keep the existing properties prosperous. We will have to stay tuned to see what impact the addition of major league professional sports has on Southern Nevada s hospitality economy, as well as the impact of the recent approval of recreational marijuana use by voters. Hospitality Sales* Year Volume Units Sold Price/Unit 2016 $1,182 MM 4,415 $268, $466 MM 5,445 $86, $2,001 MM 7,614 $263, $61 MM 1,335 $46, $160 MM 3,120 $51, $3,005 MM 7,507 $400, $858 MM 8,883 $97, $1,226 MM 4,913 $249,000 * Only includes properties with 100 or more units, arm s-length sales 3 Las Vegas Research & Forecast Report Q Hospitality Colliers International

4 Significant Hotel Sale Activity NORTHWEST 215 NORTH LAS VEGAS Aliante Hotel and Casino Casino Hotel - $380,000, Units - $1,881,000/Unit 95 September 2016 Casino Hotel - North Vegas 15 Tropicana Las Vegas Casino Hotel - $360,000,000 1,497 Units - $240,000/Unit December 2016 SUMMERLIN WEST CENTRAL DOWNTOWN RESORT CORRIDOR EAST LAS VEGAS Casino Hotel - Strip Palms Casino Resort Resort Corridor - $315,500,000 THE STRIP Units - $440,000/Unit Oct 2016 Casino Hotel - Resort Corridor 215 AIRPORT Westin-Las Vegas Casuarina Resort Corridor - $66,530,000 SOUTHWEST SOUTH LAS VEGAS HENDERSON 826 Units - $81,000/Unit January 2016 Casino Hotel - Resort Corridor Westin-Lake Las Vegas Resort Corridor - $25,000, Units - $51,000/Unit Dec 2016 Full Service - Henderson Sale Activity Continued Property Name Sale Date Units Price Price/Unit Submarket Property Type Element Hotel Apr $17,100,000 $139,000 Summerlin Full Service Holiday Home May $6,500,000 $31,000 South Vegas Full Service Rodeway Inn Jan $6,100,000 $60,000 Resort Corridor Limited Service Stay Suite of America Dec $4,865,000 $38,000 West Vegas Limited Service Extended Stay America Dec $3,049,000 $25,000 East Vegas Limited Service * Indicates a redevelopment sale 4 Las Vegas Research & Forecast Report Q Hospitality Colliers International

5 Market Comparisons - Las Vegas Hospitality Market TYPE TOTAL INVENTORY UNITS SOLD SALES VOLUME PRICE/UNIT COMPLETIONS THIS QUARTER COMPLETIONS YTD PLANNED DOWNTOWN CAS 7,589 - $0 n/a LS $0 n/a Total 8,527 - $0 n/a LAS VEGAS STRIP CAS 79,309 - $0 n/a - - 4,500 FS 5,815 - $0 n/a LS $0 n/a Total 85,705 - $0 n/a - - 4,500 RESORT CORRIDOR CAS 11, $312,500,000 $439, FS 5,091 - $0 n/a LS 6,181 - $0 n/a Total 22, $312,500,000 n/a AIRPORT CAS - - $0 n/a LS $0 n/a Total $0 n/a EAST LAS VEGAS SUBMARKET CAS 1,913 - $0 n/a LS 2,573 - $0 n/a Total 4,486 - $0 n/a HENDERSON SUBMARKET CAS 2,281 - $0 n/a FS $0 n/a LS 1,480 - $0 n/a Total 4,629 - $0 n/a NORTH LAS VEGAS SUBMARKET CAS 1, $380,000,000 $1,881, LS 1,611 - $0 n/a Total 2, $380,000,000 $1,881, SOUTH LAS VEGAS SUBMARKET CAS 2,853 - $0 n/a FS 2,704 - $0 n/a LS 1,330 - $0 n/a Total 6,887 - $0 n/a SUMMERLIN SUBMARKET CAS 1,789 - $0 n/a FS $0 n/a LS $0 n/a Total 2,769 - $0 n/a WEST CENTRAL SUBMARKET CAS 3,433 - $0 n/a LS 2,029 - $0 n/a (159) (159) 574 Total 5,462 - $0 n/a (159) (159) 574 MARKET TOTAL CAS 111, $692,500,000 $758, ,500 FS 14,601 - $0 n/a LS 18,421 - $0 n/a (159) (159) 699 Total 144, $692,500,000 $758, ,521 QUARTERLY COMPARISON AND TOTALS Q , $692,500,000 $758, ,521 Q ,642 - $0 n/a ,137 Q , $23,600,000 $70, ,167 Q ,518 3,168 $465,543,841 $146, ,925 Q ,518 - $0 n/a 0 2,376 3,634 Q , $151,000,000 $157, ,376 3,634 Q ,928 1,854 $89,055,000 $48,034-2,988 2,786 4,169 5 Las Vegas Research & Forecast Report Q Hospitality Colliers International

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