U.S. Hotel Industry Performance. Brad Garner Chief Operating Officer

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1 U.S. Hotel Industry Performance Brad Garner Chief Operating Officer 1

2 Agenda Total US Review Scale Review Segmentation Markets Supply Pipeline 2013 / 2014 Forecast 2

3 Click on Hotel Data Presentations 3

4 Total US Review 4

5 Demand Growth Strong. RevPAR Driven by ADR. Fiscal Cliff, Election, Hurricane, 4 th QTR calendar comps, Uncertainty resiliency/resolve Record levels of demand/persistent rougly60m rooms over 2007 % Change ALIS 12 Room Supply* 1.8 bn 0.5% 0.8% Room Demand* 1.1 bn 3.0% 1.3% Occupancy 61.4% 2.5% 0.5% A.D.R. $ % 3.8% RevPAR $65 6.8% 4.3% Room Revenue* $115 bn 7.3% Full year 2012, Total US Results * All Time High 5

6 Favorable Supply / Demand Fundamentals for % Unencumbered by supply growth 4 3.0% 0-0.9% -4 Supply Demand - 4.7% % Total U.S., Supply & Demand % Change, 12 MMA 1/ /2012 6

7 ADR Growth Stalls. Smooth Sailing From Here? 5 4.1% 0-0.9% -0.2% % -4.6% Demand ADR -6.9% % Total U.S., ADR & Demand % Change, 12 MMA 1/ /2012 7

8 Positive RevPAR Growth: Four More Years (?) 10 9% 8.6% Months 65 Months 28 Mo % % % Total U.S., ADR & Demand % Change, 12 MMA 1/ /2012 8

9 ADR Discounting at Twice The Speed of ADR Increases 110 Sept 08 $108 12/12 $ % Dec 11 $ Months Apr 10 $97 19 Months +4.9% *Total US, ADR $, 12 MMA 1/07 8/12 9

Inflation Adjusted ADRs Still Out Of Reach Nominal ADR 2000 / 2008 Grown by CPI $107 6 Years in 2008 ADR Grown By CPI $119 7 Years $101 2000 ADR Grown By CPI $85 $85 $104 $107

10 Inflation Adjusted ADRs Still Out Of Reach Nominal ADR 2000 / 2008 Grown by CPI $107 6 Years in 2008 ADR Grown By CPI $119 7 Years $ ADR Grown By CPI $85 $85 $104 $107 $ F Total U.S., ADR $ and Inflation Adjusted ADR $, F CPI from bls.gov, CPI from Blue Chip Economic Indicators 10

11 Chain Scale Review 11

12 Scales: Strong Demand Growth, Supply Not An Issue Supply Demand Luxury Upper Upscale Upscale Upper Midscale** Midscale** Economy *Supply / Demand % Change, by Scale, 2012 **Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification 12

13 ADR Growth > OCC Growth Occupancy ADR Luxury Upper Upscale Upscale Upper Midscale** Midscale** Economy *OCC / ADR % Change, by Scale, 2012 **Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification 13

14 RevPAR Slowly Catches Up To Prior Record Highs $213 $ $113 $112 $84 $84 $62 $62 $44 $41 $31 $29 Luxury Upper Upscale Upscale Upper Midscale** Midscale** Economy *RevPAR $, by Scale, 2007 & 2012 **Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification 14

15 Segmentation 15

16 70% US Industry Segmentation Mix (Occupancy Share) 60% 50% 40% Group mix 30% Trans Mix 20% 10% 0% Contract not included ne 100% NOTE: Data is for upper tier hotels only (luxury chains, upper upscale chains, and upper tier independent hotels). 16

17 Group Demand Never Recovered After The Downturn 19.0% +30 mm rooms -3 mm rooms -2.7% Transient Group *Segmentation Demand % Change, 2012 (vs. 2007) NOTE: Data is for upper tier hotels only (luxury chains, upper upscale chains, and upper tier independent hotels). 17

We Expect Transient ADR Growth To Continue 8.0 6.0 4.0 2011: 5.1% 2.0 2012: 4.2% 0.

18 We Expect Transient ADR Growth To Continue : 5.1% : 4.2% 0.0 Jan-11 Jul-11 Jan-12 Jul-12 *Transient ADR % by Month, 1/11 12/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 18

Group ADR Expectation Still Muted 5.0 4.0 3.0 2.0 1.0 2011: 2.5% 2012: 2.5% 0.0-1.

19 Group ADR Expectation Still Muted : 2.5% 2012: 2.5% Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 *Group ADR % by Month, 1/11 12/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 19

20 Markets 20

21 2012 RevPAR: Best / Worst Performing Markets Market RevPAR % Change Market RevPAR % Change Texas West 24.9 Chattanooga, TN-GA 0 Oahu Island, HI 16.7 Colorado Springs, CO -0.1 Oakland, CA 16.3 Hartford, CT -0.1 Louisiana South 15.7 Washington, DC-MD-VA -0.5 Oklahoma City, OK 14.9 Augusta, GA-SC -1.3 San Jose-Santa Cruz, CA 14.8 Albuquerque, NM -1.3 New Orleans, LA 14.6 Alabama North -2.1 Indianapolis, IN 13.8 Birmingham, AL -2.6 Houston, TX 13.8 Scranton-Wilkes-Barre, PA -4.3 Charlotte, NC-SC 13.4 Louisiana North

22 2012 ADR: Best / Worst Performing Markets Market ADR % Change Market ADR % Change Texas West 20.8 Colorado Springs, CO 0.8 Oahu Island, HI 11.2 Tulsa, OK 0.5 San Francisco/San Mateo, CA 10.8 Fort Worth-Arlington, TX -0.2 North Dakota 10.4 Augusta, GA-SC -0.3 San Jose-Santa Cruz, CA 9.8 Scranton-Wilkes-Barre, PA -0.4 Charlotte, NC-SC 9.4 New Jersey Shore -0.6 Oakland, CA 9.2 Washington, DC-MD-VA -0.7 Indianapolis, IN 9 California North Central -0.8 New Mexico South 8.9 Tucson, AZ -1.1 New Orleans, LA 8.6 Melbourne-Titusville, FL

Peak ADRs Still Elusive For Most Top 25 MSAs 7 have made the recovery by the end of 2012 10.9% 9.6% 6.3% 1.4% 1.3% 0.8% 0.8% -1.5% -2.7% -3.4% -3.

23 Peak ADRs Still Elusive For Most Top 25 MSAs 7 have made the recovery by the end of % 9.6% 6.3% 1.4% 1.3% 0.8% 0.8% -1.5% -2.7% -3.4% -3.4% -3.8% -5.1% -5.1% -6.3% -6.3% -6.6% -7.6% -7.8% -7.9% -8.9% -9.5% -9.7% -11.0% -15.7% * Top 25 Markets, ADR % Change From Prior Peak, as of

24 -$3.02 -$3.35 -$3.86 -$4.24 -$5.38 Peak ADRs Still Off Peak By Over $5 for Majority Of Top Markets $15.03 $13.05 $10.81 $1.99 $1.31 $1.31 $1.07 -$1.27 -$6.04 -$6.37 -$6.53 -$8.25 -$8.38 -$8.40 -$8.41 -$ $ $ $ $31.02 Top 25 Markets, ADR $ Change From Prior Peak, as of

25 Supply Pipeline 25

26 US Pipeline: Construction Accelerates Phase YE 2012 YE 2011 % Change In Construction % Final Planning % Planning % Active Pipeline % Pre-Planning % Total % *Total US Pipeline, by Phase, 000s Rooms, 2012 and

27 250 Total United States Monthly Rooms In Construction In Thousands January 2005 December K K 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Under Construction Rooms Mostly In Middle Segments 22.4 20.4 7.3 8.8 4.5 3.3 1.

28 Under Construction Rooms Mostly In Middle Segments Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated *US Pipeline, Rooms Under Construction, 000s Rooms, by Scale, YE

Total United States Top 15 Brands All Active Phases December 2012 Holiday Inn Express Hampton Inn & Suites Courtyard Residence Inn Hilton Garden Inn Fairfield Inn Holiday Inn Homewood Suites Home2

29 Total United States Top 15 Brands All Active Phases December 2012 Holiday Inn Express Hampton Inn & Suites Courtyard Residence Inn Hilton Garden Inn Fairfield Inn Holiday Inn Homewood Suites Home2 Suites Hampton Inn Springhill Suites La Quinta Inns & Suites TownePlace Suites Candlewood Suites Comfort Suites 7,350 7,131 6,905 6,179 6,064 5,997 4,931 8,675 10,450 10,357 12,159 14,302 13,872 17,698 18, ,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Rooms 29

30 Total United States Markets with Most Rooms In Construction December 2012 New York 10.0 Washington, D.C. Orlando Chicago Nashville Denver Miami-Hialeah San Diego Number of Rooms (in thousands) 30

31 2013 / 2014 Forecast Typo 2012 / 2013 on the original 31

32 Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) Outlook 2013 Forecast 2014 Forecast Supply 1.0% 1.5% Demand 1.8% 2.8% Occupancy 0.8% 1.3% Group? GDP? Unemployment? Inbound Int l? ADR 4.9% 4.6% RevPAR 5.7% 6.0% 32

33 Total United States Chain Scale Key Performance Indicator Outlook 2013F by Chain Scale Chain Scale 2013 Year End Outlook Occupancy (% chg) ADR (% chg) RevPAR (%chg) Luxury 2.3% 6.6% 9.0% Upper Upscale -0.1% 4.5% 4.3% Upscale 1.4% 5.5% 7.0% Upper Midscale 0.5% 4.8% 5.3% Midscale 0.7% 2.4% 3.2% Economy 1.1% 3.3% 4.4% Independent 0.5% 4.8% 5.2% Total United States 0.8% 4.9% 5.7% 33

34 Total United States Chain Scale Key Performance Indicator Outlook 2014F by Chain Scale Chain Scale 2014 Year End Outlook Occupancy (% chg) ADR (% chg) RevPAR (%chg) Luxury 0.2% 5.7% 5.9% Upper Upscale 0.5% 4.8% 5.3% Upscale 0.8% 4.9% 5.7% Upper Midscale 1.4% 3.1% 4.6% Midscale 2.0% 3.9% 5.9% Economy 2.2% 4.5% 6.8% Independent 0.7% 4.7% 5.5% Total United States 1.3% 4.6% 6.0% 34

35 35

Hotel InduSTRy Overview What Lies Ahead

Hotel InduSTRy Overview What Lies Ahead University of Massachusetts Amherst ScholarWorks@UMass Amherst Tourism Travel and Research Association: Advancing Tourism Research Globally 2013 Marketing Outlook Forum - Outlook for 2014 Hotel InduSTRy