FOREWORD market growth trends, market share, and market occupancy rate Market growth Market share Occupancy rate

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1 FOREWORD This report presents the findings of our study of the economics of publicly subsidized convention headquarters hotels. In three parts, it seeks to answer three specific economic and financial questions: 1. Does a new convention headquarters hotel generate additional market demand? 2. Are they financially feasible? 3. What is the impact on other downtown hotels? The conclusion is that convention headquarters hotels are far riskier than most municipal leaders think. In their scramble to compete for convention business, cities throughout the country have bought into an assertion, even a myth - build it, and they will come - to justify the building of large convention headquarters hotels. This research study scientifically explodes this myth. The increase in market demand generated by these hotels is an absolute zero. On that question, the study examines the economic impact of every large convention hotel built and opened in Texas, since 1980, a total of 16 large properties in four major cities (Houston, San Antonio, Austin, and Dallas). For each hotel, the study used three barometers of demand: market growth trends, market share, and market occupancy rate. Market growth trends refer to the annual percent of increase in hotel room revenues before and after the new hotel opened. If the new convention hotel is generating its own market demand, its opening would spike total market revenues and therefore the growth trend. In none of the sixteen hotels studied did this happen. Market growth trends remained constant. Market share refers to the percent share a downtown convention business district has of the total metropolitan area market. If the new convention hotels in their respective downtown business districts were creating increased demand, downtown market share would be expected to increase. It did not. In all four cities, the market share of the downtown business district stayed the same. Occupancy rate is the percent usage of the total available rooms. If the new convention hotels were generating their own market demand, it would be predicted that the occupancy rates in the cities studied would either go up or at least be unaffected, as the new hotels carried their own water in terms of demand. They didn t. Instead, the occupancy rates in all four cities dropped dramatically whenever a major quantity of fresh new hotel rooms was dumped on a market where demand trends remained constant. On the second question of financial feasibility, the proposed convention headquarters hotel in Dallas is a case study. We examined the cost of the project as outlined in the city s own economic analysis and realistically projected its performance based on existing market occupancy and average daily rates not the overly optimistic projections based on the specious build it and they will come theory. We assumed it would carry the Marriott name and marketing prowess. As a result of our research, we conclude: No private developer would undertake to develop this hotel project, as it is not a sound investment. The study examines the project as a private investor would. It finds that the total cost of the hotel would be approximately $276

2 million, and based on a sound market projection, would generate a 6% return on investment, compared to an industry standard of about 14%. With the investors borrowing $193 million, at a typical 9%, the equity holders would realize only a 3% return on the $83 million they would have to put up in cash. If the (Marriott) hotel were publicly subsidized, in order to give these investors a reasonable return, we estimate the cost to the city of Dallas at $108 million. There would also be an additional hidden cost of $10+ million a year in lost revenue from real estate taxes, as the property values of the existing hotels is diminished due to lost business. The third question the study asks deals with this very issue the negative impact on existing hotels, again using Dallas as a case study. Given that the convention headquarters hotel will be absorbing existing demand, the study reports that the existing hotels stand to lose $450 million in revenue and $190 million in cash flow in the first five years after the new convention hotel opens. For many, these losses will be unsupportable, resulting in closures and bankruptcies. Thus, instead of revitalizing the downtown business district, a new convention headquarters hotel will cause a decline of real estate values with more buildings standing empty. The findings of this study can be summarized as follows: Convention Headquarters hotels do not generate their own market demand. They absorb existing demand. Using the investment criteria of a private developer applied to the Dallas Convention Headquarters hotel as a case study, the study finds that it is not a sound investment. As a publicly subsidized project, the city would assume massive financial risk for a minimal return. As a case study of the impact of a Convention Headquarters hotel on existing hotels in the same district, the Dallas hotel will be financially devastating to the existing hotels in the downtown district, causing extensive loss of revenues, reduced real estate values (and diminished tax base), and in some cases bankruptcies and closures. We gratefully acknowledge the editorial and research contributions of Professor Heywood Sanders, Chairman of the Department of Public Administration, University of Texas, San Antonio, and Stan Hodges, Director of Tourism Research for the Texas Department of Economic Development, Austin, Texas. Bruce H. Walker, President Source Strategies, Inc.

3 PART 1 MARCH 5, 2003 CONVENTION HEADQUARTERS HOTELS: DO THEY GENERATE ADDITIONAL MARKET DEMAND? Source Strategies was asked by Citizens for a Sound Economy (CSE) to research whether or not convention headquarters hotels create additional market demand. The background for this study is the debate currently taking place in several large Texas cities about whether to proceed with such hotels. While this study focuses on the major state of Texas, approximately 80 cities in the United States are currently upgrading or considering upgrading their convention facilities, all with the hope and expectation of attracting more visibility, more conventions and more economic activity. This assignment and the resultant study enable CSE to provide useful research to legislators and municipalities considering such initiatives. The following are our key findings, a discussion of the background of the issue, the methodology used, and the body of the study itself. KEY FINDING: THE OPENING OF LARGE, FULL-SERVICE HOTELS NEAR CONVENTION CENTERS CLEARLY DO NOT INCREASE DEMAND IN THE LOCAL AREA MARKET AROUND CONVENTION CENTERS. CONSEQUENTLY, SUCH OPENINGS ONLY DILUTE THE BUSINESS OF OTHER EXISTING HOTELS, DRIVING DOWN THEIR REVENUES AND PROFITABILITY. Since this study will show that overall demand for hotels does not increase with new convention hotel openings, the development of such hotels should be limited to markets generating high-revenues per room and/or those with existing high rates of growth, markets that can readily absorb the additional hotel rooms. This conclusion is based on actual market revenue history of the four largest convention markets in Texas, San Antonio, Houston, Dallas and Austin, from 1980 to the present. The opening of every large convention hotel in these markets - amounting to sixteen new full-service, convention-size hotels - was intensively examined. The effects on market demand of opening these sixteen hotels was inconsequential; the evidence shows that in themselves, these hotels generated no additional or measurable demand. In no case did the opening of these new convention hotels cause a significant change in the pre-existing demand trends in these markets.

4 This fact is confirmed by the market performance in the adjacent non-convention areas of each of the four Metropolitan Statistical Areas; the metro market outside the convention area grew at quite similar rates to the convention area market in all cases.

5 REAL WORLD PERFORMANCE OF CONVENTION HOTELS IN TEXAS Page 5 The Source Strategies, Inc. (SSI) database of Texas hotel performance is the most comprehensive and most accurate hotel revenue database in the United States. 1 The database tracks 3,681 hotels and motels, with 315,000 rooms and $4.4 billion in room revenues in the latest year (fiscal year ending September 30, 2002). Consequently, almost any question about hotel performance in the state of Texas can be answered, either historically or prospectively. BACKGROUND There has been public disagreement of late about the viability of constructing large convention headquarters hotels, and backing or subsidizing these ventures with public funds. There now exist creative municipal funding options that no longer require approval of the voters: consequently, cities can assume a potentially massive financial risk while damaging existing hotels at the same time. The core of this debate is whether or not headquarters convention hotels generate additional demand, increasing total market demand and visitation to the area. Can new convention center sized hotels create their own demand because they are near a convention facility, are large enough to host sizable conventions as a headquarters hotel, and can they attract business to the city that would normally have gone elsewhere? If the answer to this question is no, or if a new hotel does not generate significant new demand, its opening will dilute and depress the performance of all hotels in the area, creating financial difficulties for hotels that do not have the benefit of taxpayer subsidization. Proponents of municipally-funded developments claim that the new hotel is able to pay for itself with user funds and to generate additional demand (thus not negatively impacting the rest of the market). In high-demand, high-revpar 2 markets such as San Antonio, very large convention oriented hotels have been added successfully, generating a good return on investment and attracting enough private capital to be built. 3 In weaker markets, financial results have not been as favorable, making financially responsible hotel development difficult if not impossible. DATA READILY AVAILABLE TO SHOW AFFECT OF CONVENTION HOTELS The data to show the affect on overall demand on introduction of a convention hotel is readily available in Texas, covering the period from 1980 to the present. Data is available from SSI (covers 98% of market, on an individual hotel basis), and from 1988 in most states from Smith Travel Research (covers 80% of the market, aggregated data only). If a new convention hotel generated 1 This database is a census of all hotels and motels in Texas. It is based on the Texas State Comptroller s audited room revenue reports for all hotels and motels, available under the state open-records law. It covers 98% of room revenues and is the most comprehensive, accurate hotel database in the nation. By comparison, Smith Travel Research claims to cover about 80%, of the industry, but its data is based on voluntary, unaudited reporting. Pannell Kerr Forster (PKF) reports in Texas covers about one-third of hotels according to their listed room counts, and are also based on voluntary reporting. See Exhibit 1 for methodology of Source Strategies, Inc. database. 2 A 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. In a non-technical sense, REVPAR is the same as rent. 3 For example, the financial feasibility study for the successful San Antonio Westin Riverwalk was developed by Source Strategies, Inc. for Alamosa Development, San Antonio.

6 Page 6 additional demand to an area, studies clearly proving same should and could have been produced. Considering the significant financial resources that municipalities have poured into promoting these types of hotel ventures, we believe the absence of such studies speaks volumes. The lack of supporting studies raises major questions about the efficacy of convention center hotel feasibility studies in general. For example, in a recent study, a major consultant used New Orleans hotel results as support for projected convention center hotel success in Fort Worth, Texas. It should be noted that the average REVPAR in the New Orleans metropolitan statistical area September 2002 Year-to-date was $73.54, an indication of high demand by travelers and generally high hotel rents in the area. Conversely, the Fort Worth/Arlington metro averaged $39.26 in the same period, virtually half the rent level and indicating no need for new hotel supply (and no legitimate way to attain funding for new hotel supply). METHODOLOGY OF STUDY A total of sixteen major new hotels openings in Texas are examined. The sixteen include each and every new full-service, major meeting and convention hotel opened in the downtown/convention areas of the four major metro markets in Texas: San Antonio, Houston, Dallas, and Austin. 4 These hotels range in size from 280 to 1,000 units. The period covered is from 1980 through the present, representing the entire period captured in the Source Strategies, Inc. database of Texas lodging performance. The key question to be answered is: Are there any instances out of the sixteen case studies when the opening of a new full-service, convention-oriented hotel has increased the size of the downtown/convention area market? The question can be answered with high probability if three related questions are asked about the opening of each of the sixteen major hotels that actually opened in Texas since 1980: 1. Was there any change from the pre-opening to the post-opening market trends associated with the opening? In other words, did the market revenue trends continue uninterrupted and unchanged on the opening, or did the trends improve, which might indicate the hotel opening increased market demand due to an increased number of overnight visitors? 2. Did the market share of the downtown/convention area hotels and motels increase upon opening of the large hotel? In other words, did the revenues in the downtown/convention area grow faster than the revenues in the metro outside of downtown? 3. Did the opening appear to affect occupancy of existing hotels in the downtown/convention market? Why or why not? For instance, if the dollar revenue trend in the market remained unchanged, if the downtown share of market remained unchanged, and if occupancy declined due to dilution of demand from the supply increase, it would be a virtual certainty that the opening did not increase market demand, but merely took business from existing hotels and motels. Conversely, if dollar revenues in the market 4 The definition of each downtown/convention area is geographic (rather than by a less-objective measure such as property type). Full data on each is included in the exhibits. Each market exhibit contains: a) an aggregated history of the metropolitan statistical area; b) an aggregated history of the convention / CBD area; c) the definition of each convention / CBD market including all hotels and motels and their individual performance for the Third Quarter of 2002; and d) the individual histories for each of the sixteen case study convention-size hotels.

7 Page 7 spiked upwards upon opening of said hotel, than there might be support for such an expansion-in-demand scenario. Market room revenues were used to measure hotel performance throughout this study. Revenues are the most reliable indicator of true market growth because they encompass both demand for hotel rooms and prices; the combination of the two is revenues. Daily rates, occupancy, and REVPAR could all paint a distorted picture if significant new supply on either the high or low end of the pricing scale were introduced into the market. SUMMARY OF FOUR METRO CONVENTION AREAS AND THE SIXTEEN HOTEL CASE STUDIES The sixteen hotel studies follow this summary in full detail and substantiation, with exhibits showing all the data used. The summary of findings is as follows for each opening: SAN ANTONIO CONVENTION CENTER AREA - THREE NEW CONVENTION HOTELS The convention center area in San Antonio 5 has had three major convention hotel openings since These hotels are the 631 unit Hyatt Regency Riverwalk, which opened in 1981, the 1,000 room Marriott Rivercenter, which opened in 1988, and the 473 room Westin Riverwalk, which opened in After a thorough examination of hotel data, it is apparent that none of these hotel openings has had a noticeable impact on the long term growth trend in market revenues. Other factors such as major theme park openings, a weakening economy, or terrorist attacks do cause very clear shifts in the existing revenue trends. However, a new hotel, by itself, does not independently influence market demand in any substantive manner. The San Antonio market is unique among Texas markets. It is the strongest tourist and convention destination in Texas, with the Riverwalk, the Alamo, Seaworld, and Fiesta Texas among its many attractions. The downtown San Antonio market around the Riverwalk and the Convention Center is very strong in terms of its REVPAR average. The area has been able to adequately absorb new supply, which has been added at a pace that does not put too much downward pressure on rates or occupancy. Supply growth in this market has been held to a reasonable level by the difficulty in obtaining suitable land, the high cost of development, and the strict oversight of the San Antonio Historical Society. San Antonio is typical of a 'best case scenario' for developing a convention hotel property. The market has historically 'tolerated' the addition of convention hotel properties, but these properties have not generated their own demand. 5 The San Antonio convention area market is defined as the and zip-codes, comprising 51 hotels and motels, 9,211 rooms, and $295,553,000 in room revenues in the Year ending 9/30/02. See Exhibit 2I for a detailed market break-down by brand.

8 HOUSTON CORE AREA LODGING MARKET - FIVE NEW CONVENTION HOTELS Page 8 The Houston Core Area market 6 has added five convention-size hotels to the market since These properties included a 383 unit upscale independent property (now the Omni) in 1981, The Four Seasons (399 rooms) in 1982, The Doubletree (448 rooms) in 1982, The Intercontinental, formerly a Crowne Plaza (486 rooms) in 1984, and the J.W. Marriott (508 rooms) in An analysis of these five property openings revealed no evidence to support the claim that any of these hotels generated a notable portion of their own demand. What the analysis reveals is a market that suffered greatly upon the opening of these properties, generating less (not more) room revenue, losing a notable amount of metro revenue market share, and posting a serious decline in average occupancy. Occupancy here fell steadily from 76.1% in 1981 to 45.3% in The Houston Core Area market was plainly not prepared to accept this level of new supply, and took years to recover from this unwise building boom. In fact, from 1981 to 1986, only about 100 net new rooms were added, indicating that many hotels were forced out of business in the severely depressed marketplace, being unable to compete with the influx of new supply. It is also fair to mention that downtown core Houston revenues spiked upwards in 1987 on opening of the George R. Brown Convention Center, albeit the spike was less downtown than it was in the balance of the metro. DOWNTOWN DALLAS MARKET - THREE NEW CONVENTION-SIZE HOTELS The three hotel additions that were examined in the Downtown Dallas market 7 are the 542 unit Renaissance which opened in 1983, the 1,340 room Adams Mark expansion which was completed in 1998, and the 330 room Magnolia Hotel which opened in In a detailed review of this market, there was no visible correlation between adding or expanding convention hotels to the market and increased room revenues. In fact, the Dallas Metro market outside the downtown area fared better after these convention hotels opened, easily gaining more room revenue than the downtown market. Further, notable occupancy downturns after the opening of each of these hotels demonstrate the detrimental impact these openings had on other hotels in their respective market. There is no indication of any overall financial gains brought about in downtown Dallas through the openings of any of these convention hotels. AUSTIN CENTRAL BUSINESS DISTRICT MARKET - FIVE NEW CONVENTION HOTELS The Austin CBD market 8 added the 448 room Hyatt Regency in 1982, the 249 room Sheraton in 1985, the 365 room Marriott in 1986, the 315 room Omni in 1986, and the 292 room Four Seasons in An analysis of these five hotel additions indicate that there was more notable room revenue growth in the Austin metro 6 The Houston Core Area market is defined as 77002/03/05/06/10/19/27/46/56 and part of 77024, and includes Downtown, The Galleria, Greenway, and Riverway areas, comprising 37 hotels and motels, 9,141 rooms, and $273,954,000 in room revenues in the Year ending 9/30/02. 7 The Downtown Dallas market is defined as the 75201, 75202, 75207, part of 75215, and part of zip-codes, comprising 38 hotels and motels, 12,198 rooms, and $258,495,000 in room revenues in the Year ending 9/30/02. See Exhibit 2I for a detailed market break-down by hotel and brand. 8 The Austin Central Business District market is defined as the 78701, and part of zip-codes, comprising 16 hotels and motels, 3,752 rooms, and $108,418,000 in room revenues in the Year ending 9/30/02. See Exhibit 2I for a detailed market break-down by hotel and brand.

9 Page 9 'outside' the CBD area after these hotels entered the market than took place in the CBD. Essentially 'straight line' growth in revenues in the Austin CBD market was accompanied by a serious influx of new hotel rooms from 1985 through 1987, when most of these convention properties were developed. The market struggled to incorporate this new supply into the existing demand trend. Further, there was no indication that any additional demand was generated by these convention hotels. It took until 1992 for occupancy in the downtown market to return to levels which preceded the massive supply influx which began in ********

10 OTHER FINDINGS Page 10 REVPAR 9 OF CONVENTION HOTELS ALWAYS CLOSE TO LOCAL MARKET AVERAGES An examination of the performance of every existing major convention hotel in Texas clearly shows that convention hotels perform within a close range of the local market REVPAR average. This finding directly contradicts the typical consultant s claim that a headquarters convention hotel will far outperform local market REVPAR averages because it generates its own additional demand (as a result of making the convention venue more attractive). Such consultant predictions are often for REVPAR performance that is twice as high as the respective local market average. Actual REVPAR indices 10 of convention hotels nearest to major Texas convention centers range from a low of 85 to a high of 151 in their local markets. This performance range shows that convention hotels do not outperform the local market average by enormous margins. 11 The fact that each specific hotel below varies in performance against its local market reflects differences in brand name, product type and quality, room count, location, age of property, management competence, etc. However, these performance variances are explainable without any credence to the idea that hotels generate their own demand. Actual Hotel Performance of Nearest/Largest Hotel to Convention Center 12 Ft. Worth Houston San Antonio Austin Dallas Year End Radisson Hyatt Marriott Radisson Hyatt 9/30/02 Conv Ctr Regency Riverwalk Hotel Regency # Rooms ,122 $ REVPAR $ Market REVPAR REVPAR Index Additionally, there is clear proof of the above conclusion in that virtually identical Hyatt Hotels range in REVPAR from $86.95 in Houston, to $82.94 in Dallas, compared to $ for the Hyatt Riverwalk in San Antonio, almost 40% higher in the year ending September 30, Three Adam s Mark hotels provide very similar results, with the Dallas Adam s Mark generating REVPAR of $46.05, Houston $55.05, and San Antonio $71.94, 45% higher than Dallas. These comparisons would support a conclusion that: it s the market, the destination, and not the hotel, that drives hotel success. 9 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). 10 Property REVPAR divided by overall Market average REVPAR, times 100. The index clearly and simply demonstrates variances to the market average of Most current feasibility studies assert that new convention hotels will significantly outperform market averages. This finding contradicts that assertion. 12 See Exhibit 2 C, 3C, 4C and 5C for market definitions and detailed print-outs of each of these markets. All data from the SSI database.

11 WHY PERFORMANCE OF CONVENTION HOTELS IS ALWAYS TIED TO LOCAL HOTEL MARKET AVERAGES Page 11 The reason all of these hotels are within the above range is because all hotels and motels in a market compete with each other for the available demand, and no property can outperform the averages to any major degree (e.g. twice the averages). It is one hotel s sales department against another s. No hotel gives up; no hotel is exempt; no hotel can escape from this competition. If a hotel is doing poorly, it cuts its rates to the point that it does some business, taking that business from other hotels. So, while a new headquarters convention hotel built for $200,000 or more per room has a product advantage over older, existing hotels, this advantage is limited by competition and price. For example, an existing hotel with a value of $100,000 per room can dramatically lower its rates in relationship to the $200,000+ per room hotel and draw significant business away from the newcomer. Both offer high quality rooms to the consumer. AN EXAMPLE OF MAJOR HOTELS PERFORMING SIMILARLY The San Antonio hotel market performance clearly demonstrates a number of guidelines that contradict any expectation of a convention headquarter hotel dramatically out-performing the existing hotels: 1. No three or four star hotel outperformed another three or four star hotel in the market by more than 15 or 20 percent (the reason for the 20 percent variance in San Antonio being the pervasive Marriott name, preference for this brand, and the relative newness of the their hotels). 2. The ability of downtown hotels to generate REVPAR is a relative ability; they are limited by the overall average REVPAR in the local market. There are markets that generate high prices and high occupancy (high REVPAR) and there are markets that do not. There is no magical ability of a special headquarters hotel to generate demand unrelated to general / existing demand in the local market. All hotels offer rooms and other services at a location and compete with other hotels and motels in the area. A hotel may be of higher quality or of a stronger brand and generate more REVPAR, but the overall variance from the average is limited by the existing market averages. 3. Close proximity to the Convention Center in no way creates a major advantage for a hotel, as indicated by the performance of San Antonio s Hilton, across the street from the Convention Center, versus the further removed Hyatt and Westin. San Antonio CVB Major Full Service Hotels; Year Ending 9/30/02 Marriott Marriott Hilton Hyatt Westin Riverwalk Rivercenter Riverwalk Riverwalk Riverwalk # Rooms $ REVPAR $ Market REVPAR REVPAR Index The San Antonio convention area market is defined as the and zip-codes, comprising 51 hotels and motels, 9,211 rooms, and $295,553,000 in room revenues in the Year ending 9/30/02. See Exhibit 2A for a detailed market break-down.

12 Page 12 OTHER EVIDENCE Separately, Mr. Stan Hodge, Director of Research, Market Texas, Texas Department of Economic Development, surveyed research directors in 27 state economic development offices. None of these state officials offered any market result to indicate that the introduction of a convention-size hotel generated additional market demand. Heywood Sanders, Professor of Public Administration, University of Texas, San Antonio, has determined, after long and careful study, that convention facilities have been vastly over-supplied in the United States during the 1990 s. In the face of flat demand, demand that has not grown for many years, this over-supply has caused convention centers to become less and less utilized every year. In other words, when measured versus the real costs, convention centers probably do not increase the health of local economies significantly. 14 Professor Sanders is undertaking a companion study, examining recent convention hotel openings outside of Texas and hotels often used by consultants as success stories. WHERE PRIVATE ENTERPRISE FEARS TO TREAD, BEWARE! A further indicator that convention hotels do not generate demand is that large, headquarter hotels have not been opened by private enterprise in weak markets such as downtown Dallas, Houston, Fort Worth, or Buffalo, New York. If the assumption that additional visitors will arrive with every new convention hotel were correct, then private enterprise would build those convention hotels, and would outperform the downtown market dramatically by generating their own demand. In fact, no rational private enterprise investment organization would ever build such a hotel in a weak market because large, upscale, full-service hotels are notoriously bad investments in weak markets. 15 HOW THE MYTHS BECOME A NEW CONVENTION HOTEL MEETING PLANNERS OPINION; THE SOFTEST EVIDENCE OF ALL Convention directors all collect Lost Business Reports, commonly to include the real reasons meeting planners have rejected their city. These reasons often include a lack of space or the absence of a headquarters hotel, the same reasons reported in city after city. It is clear that fixing either of these omissions will not increase demand. Convention directors feel that many of these lost meetings can be converted to convention sales if only a new Headquarters Convention Hotel existed. However, as the incontrovertible proof herein counters this argument, the real reasons for turning down the city must lie elsewhere. While speculative, we believe the easiest way to say no to a convention salesperson is to tell them they 14 Conversely, tourism certainly increases the size of local economies (e.g. tourism is San Antonio s second-largest industry after health care and accounts for 70% of the hotel demand). 15 For example, the Bass family claims never to have made a profit on the Fort Worth Worthington Renaissance, fine hotel that it is. This hotel is rated a Four Star hotel by the American Automobile Association, the recognized authority in ranking lodging quality.

13 Page 13 lack something, something the salesperson can t fix. No one feels bad and there is a wonderful excuse for a convention center that is probably underperforming its own feasibility projections. UNFULFILLED PROMISES We believe there are often a series of promises that delay accountability for unfulfilled promises: To wit, if we spend nearly $100 million on rebuilding a convention center, more conventions and overnight visitors will come to our wonderful city. When more conventions do not come, the next reason becomes, we don t have a headquarters hotel or they would come. The data just does not support either promise. Alternatively, there are many worthwhile ways to generate economic development in metropolitan areas. Unfortunately, the evidence is clear that a new, luxurious convention hotel will not increase the area s fortunes. What will? A new manufacturing plant, clearly. A new national service center office, sure. A new theme park, absolutely. A tourism advertising campaign, highly probable. But a new hotel, no. IF HEADQUARTER HOTELS DO NOT GENERATE ADDITIONAL DEMAND, THEN HOW DO THEY GET BUILT WITH PUBLIC FUNDS AND OR TAX SUBSIDIES? Understandably, city-center business people and politicians want to revitalize downtowns everywhere. And when the convention center manager is not meeting his budget, a budget based on the last convention center expansion feasibility study, and requests a new hotel to solve the problem, 16 he gains at least a five year grace period on delivering the forecasted visitor count. A nationally recognized convention center and hotel consultant is then hired to produce a financial feasibility study. As hoped for by the client, the consultants deliver a promising study, with additional visitors, a financially successful hotel, and a positive economic impact to the community. They receive a large fee. The consultant essentially repeats the study in city after city, using the same examples but never analyzing the real historical affect on the market of opening a convention headquarters hotel. The consulting company invests no money and takes no risk. A national franchisor and manager such as Hilton or Marriott endorses the study and gains a management contract. A major hotel company wants royalties and management fees. It invests no money in the hotel and takes no risk. A Wall Street firm underwrites the city s bonds, funding the hotel. In the event of financial default, the bondholders look to the credit of the city and its taxpayers, not to the hotel. The Wall Street firm invests no money and takes no risk. 16 The real problem is probably flat demand for convention facilities and services since the 1990 s, a probable permanent reduction in the frequency and duration of association and business conventions, and a massive oversupply by American cities of convention space and services. Almost every city in the country will do less convention business than they did in the 1990 s because of the vastly increased number of competing convention facilities.

14 In most of these cases, the owners of hotel real estate are the only certain losers. Everyone else has incorrectly told them to expect market expansion. Page 14 STUDY CONCLUSIONS: IT S THE DESTINATION! Empirical hotel data does not in any way support the contention that Convention Center 'Headquarters' Hotels create a significant portion of their own demand. In fact, the evidence clearly indicates that these hotels enter the market, create no additional demand, and are finally and painfully absorbed. In the process, they compete directly for revenues with the existing hotels in that market, and certainly take revenue from them. While there is clear support for the significant positive impact that opening venues such as major theme parks have on a market, it is apparent that hotels are a product of the local economy, supporting visitors while they are there, but not serving to attract them to the market. Hotels support destinations, but with very few exceptions, 17 hotels are not a 'destination' in and of themselves, regardless of size. For a prospective hotel to be viable, the local market around the hotel must clearly generate a Revenue Per Available Room (REVPAR) that would result in a financially viable addition. Some of the hotels described herein are financially successful, but successful because the market itself was a high REVPAR market, with good growth characteristics historically and prospectively. Such a market growth outlook comes from the destination characteristics, including such items as theme parks, historical monuments like a Riverwalk, an Alamo, or a Capitol building, museums and zoos, historic neighborhoods, entertainment districts, events of national or regional interest, and to a lesser extent convention centers. Every market must have performance numbers which would support the introduction of new supply, whether that supply comes in the form of a 1,000 room convention hotel, or ten 100 unit properties. ************* 17 Resorts particularly.

15 Page 15 THE FOUR MAJOR DOWNTOWN/CONVENTION AREAS MARKETS IN TEXAS SAN ANTONIO, HOUSTON, DALLAS, AUSTIN In the following analysis we will examine the sixteen upscale convention-size hotels in Texas major convention destinations. All opened many years apart, providing independent cases for study of demand growth. To properly determine what impact the opening of these hotels had on the local market, we closely examined performance in each Convention Center area market, as well as the entire remaining balance of the Metropolitan Statistical Area, for years before and years after each of these subject hotels opened. We considered convention traffic, major theme park openings (tourism), and market inflationary trends in our analysis. It is also critical to compare the respective Convention Center area market performance to the performance of the remainder of each metro area. This allows us to look for growth rates in the convention area and - based on convention area factors - to see if these areas were different than the nonconvention hotel market area revenue growth patterns. We determined what growth, if any, could be attributed to the opening of the convention center properties, and what growth must be attributed to other outside factors such as inflation, the general economy, or the opening of local attractions unrelated to the subject hotel. SAN ANTONIO CONVENTION AREA 18 Three Major New Hotels Open Since 1980 QUESTION: WHAT HAS DRIVEN DEMAND IN MAJOR CONVENTION DESTINATION SAN ANTONIO? ANSWER: THEME PARK OPENINGS AND ONGOING, NORMAL ECONOMIC GROWTH The openings of the 631 Hyatt Regency in 1981, the 1,000 room Marriott Rivercenter in 1988, and the 473 room Westin Riverwalk in 1999 did not increase total demand in the convention area market. Market demand increased dramatically with the opening of Seaworld in 1988 (before the Marriott opened), and in 1992 upon the opening of Fiesta Texas. Market demand in the Balance of the metro area increased at nearly the same rates as downtown. Our comprehensive study data is attached as EXHIBIT 1V. In the following graph, both the Convention Area market and the Balance of the Metro markets show a clear upward trend exceeding typical growth starting in the Second Quarter of At the beginning of 1988, the major event occurring in the San Antonio market was the opening of the Seaworld theme park on the far northwest side of San Antonio, far removed from the downtown Convention Center area. Further, the Texas Department of Tourism commenced major hotel advertising - on a national basis - for the first time in the Spring of Downtown postal zip-codes and 78205

16 Page 16 Seaworld opened in the Second Quarter of 1988; simultaneously, a new growth trend commenced in both markets at that time. This surge in demand occurred in both markets six months before the opening of the Marriott Rivercenter. Continuing in time, Fiesta Texas (now a Six Flags Theme Park) opened in the First Quarter of It is in the far north side of San Antonio along Interstate 10, and like Seaworld, is far from the Convention Center area. The opening of Fiesta Texas in 1992 clearly caused an upward spike in demand, a spike that affected the market outside of downtown to a greater degree than the downtown convention area. The Third event highlighted in the graph below is the downward spike that took place because of the tragedy of 9/11. In reality, market revenues began to lag prior to as a result of the recessionary national economy; hotel revenues in Texas started to erode in the Second Quarter of It is clear that additional visitors to the San Antonio market were attracted to new local theme parks, causing market revenues to climb. Performance spikes in the both markets correspond exactly to the opening dates of Seaworld and Fiesta Texas. Other than the 2002 economic recession and the 9/11 tragedy, there appears to be no other event that caused total market demand to change from prior trends. We will examine the specific cases of major hotel openings, and their inability to affect the total market, below. It is apparent that economic conditions play a major role in hotel performance. What is not apparent from this review is that opening a new convention center hotel has had any impact at all in increasing revenue in a given market. Convention area growth trends, while highly positive, basically matched the balance of the metro in the long-term. In 1988, the opening of the Marriott Rivercenter appears to have absorbed unfulfilled demand to be on or near the

17 Page 17 Riverwalk. The long-term trend appears to set the convention area market size at nearly half of the total metro room revenues. SAN ANTONIO OCCUPANCY The recovery in San Antonio occupancy from the doldrums of the 1980 s occurred well before the opening of the Marriott Rivercenter. When the Rivercenter opened, the pre-existing growth trend in the market allowed for its absorption.

18 1981 CASE STUDY 1: The Opening of the Hyatt Regency Hotel Page 18 The 631 unit Hyatt Regency opened in the Fourth Quarter of 1981 on the Riverwalk. The opening was preceded and followed by strong levels of marketwide room revenue growth. If the Hyatt had prompted a notable amount of new demand in the Convention Center market, a revenue spike would be readily apparent. This did not happen. Specifically, the three quarters prior to opening the Hyatt, the Convention area market gained an average of 22.9% over the prior year. Following the Hyatt s opening, the quarterly, average rate of growth dropped to 20.3%. Most importantly, one can see from the graph that there was clearly no marked change in the demand trend when the Hyatt opened. In Hyatt s First year of operation, the Convention area market grew by 17.7%, from $48,167,000 to $56,710,000. In the same time period, the Balance of the metro grew at virtually the same rate, by 15.8%, from $63,342,000 to $73,348, Considering the fact that consumers will typically switch to the shiny new hotel, the fact that the downtown area did not significantly outperform the Balance of the metro again illustrates the fact that a new hotel does not increase market demand. 19 See Exhibits immediately following the text of this exhibit to see the raw data detail used herein, from the SSI database.

19 1988 CASE STUDY 2: The Opening of the Marriott River Center Page 19 The 1,000 room Marriott Rivercenter opened at the beginning of the Fourth Quarter of The hotel opened six months after the opening of the Seaworld theme park and the start of national Texas tourism advertising. The hotel also opened alongside a major expansion of the fabled Riverwalk, Texas number one tourist attraction, and the new Rivercenter Mall. According to San Antonio Convention Bureau research, shopping is a major activity of tourists. The Rivercenter Mall and a new and improved Riverwalk should both have contributed to additional tourist visitation and roomnight revenues beyond the effects of the Seaworld theme park. The major surge and change in room revenue growth trends took place starting in the Second Quarter of 1988, a full 6 months prior to the Marriott opening, a surge entirely due to the opening of Seaworld and state-funded national Tourism advertising (e.g. It s Like a Whole Other Country ). This surge created a new trend-line shown in the graph, one that the opening of the Rivercenter Marriott does not appear to affect. The Balance of the metro increased 25.6% in the Second Quarter of 1988 and 41.3% in the Third Quarter of 1988, to $24,453,000. The Convention area market increased 20.2% in the Second Quarter of 1988 and 27.6% in the Third Quarter of 1988, to $23,920,000, failing to keep pace with overall metro growth. For the twelve months prior to opening the Marriott Rivercenter, the Convention area room revenue market grew by 16.1%, from $74,535,000 to $86,563,000. The next twelve month period, including the opening of the Marriott Rivercenter, the expanded Riverwalk and the Rivercenter Mall, saw revenues rise by 31.6%, to $113,949,000. In a sense, the Convention area growth caught up with the Balance of the metro as new room supply grew by 20% in the Convention area market. Again, it is highly probable that some consumers switched to the new hotel downtown from hotels in the Balance of the metro.

20 Page 20 The Balance of the metro, the area outside of the Convention area, added room revenues at lesser but still-strong rates, strongly arguing for the ability of Seaworld to attract additional visitors (but not a new hotel). In the Balance of the metro, over the twelve months prior to opening the Marriott Rivercenter, room revenues grew by 20.9%, from $95,306,000 to $115,210,000. The next twelve month period, the time of the opening of the Riverwalk expansion, the Rivercenter Mall and the Marriott Rivercenter, saw room revenues in the Balance of the metro rise by 7.9%, to $124,280,000. Further, the impact of Seaworld is more apparent outside the convention center area. While some visitors to the San Antonio area stayed in the downtown market for their Seaworld vacations, a larger percentage opted to stay in the areas closer to the new theme park. This is apparent in the notably larger growth spike in the Balance of the metro market. If we compare the twelve months after the Marriott Rivercenter opened with the twelve month period two years prior to the Marriott opening, we find that the Convention area revenues rose by 53.3% and the area outside the Convention area by 30.0%. Covering the same time period, from the Third Quarter of 1987, two years prior, supply in the Convention area rose 20.6% to 6,192 rooms in the Third Quarter of In the Balance, no new supply whatsoever was added to the market. This means that pent up demand to stay near the Riverwalk and the subsequent supply increase was the most likely reason for the downtown growth exceeding the Balance by twenty points. If the additional growth in the Convention area was due to the Marriott introduction, which the evidence indicates as being doubtful, the amount of additional growth over the 30% Balance rate translates to an additional $17,053,000. If the Marriott gained all of this, its REVPAR would have been $ In this hypothetical analysis, for the hotel to survive financially it would have had to find another $17,000,000 from its local competitors, drastically impacting their respective revenues. This $17,000,000 would have amounted to about a 17% revenue loss for the existing downtown competition, based on the previous year s revenues. However, five reasons make it unlikely that additional demand was generated by the Marriott Rivercenter opening: 1. Natural consumer shifting to the new hotel, to the detriment of other hotels outside the downtown area. This would depress the growth rate in the Balance and inflate the Convention area growth rate. 2. The fact that the Seaworld opening dramatically accelerated the room revenue growth rates six months prior to the opening. This shows the trend shift in the graph was caused by Seaworld. 3. The additional attractions downtown almost certainly added to demand for downtown accommodations. 4. The downtown market was operating near capacity in 1988 and so the Marriott merely absorbed existing but unfulfilled demand when it added 1,000 new rental units to the downtown supply (a 20% increase). In the Second Quarter of 1988, for example, the Convention area occupancy averaged 74.3%, well above the 65% typical equilibrium level occupancy 20 $17,053,000 divided by 365 days divided by 1,000.

21 Page 21 for most large downtown markets in Texas. Visitors could now find accommodations along the Riverwalk where few were previously available. 5. Texas tourism advertising commenced in 1988 and featured the Alamo and the Riverwalk CASE STUDY 3: The Opening of the Westin Riverwalk The opening of the 473 room Westin Riverwalk in the Fourth Quarter of 1999 followed the same pattern as our first two case studies. The opening of this hotel is also preceded and followed by a very stable long term trend of growth. No noticeable revenue fluctuations can be attributed to the hotel's opening.

22 HOUSTON CORE AREA LODGING MARKET Page 22 QUESTION: WHAT HAS DRIVEN DEMAND IN HOUSTON'S CORE AREA LODGING MARKET? ANSWER: FLAT OR SLOW ECONOMIC GROWTH IN THE 1980'S, FOLLOWED BY SLIGHTLY HIGHER LEVELS OF GROWTH IN THE 1990'S. The following graph plainly depicts a very modest level of long term revenue growth in Houston's Core Area lodging market. It is difficult to find support for the premise that adding large, convention-size hotels in any way positively impacted market demand. The data actually shows that the downtown market receded slightly, losing room revenues in the years immediately following the opening of five notable convention-size hotels in the early 1980's. If these hotels drew a moderate number of additional overnight visitors to the area, the downtown market should have posted a modest gain. However, there was no identifiable increase in the revenue trend; rather the revenue trend in the Core Areas declined moderately from 1981 through Market revenue growth did accelerate slightly later in the 1990 s, at a time when no prominent convention hotels entered the market. SHARE OF HOUSTON METRO ROOM REVENUES Even with the introduction of these four convention-size hotel properties, Houston's Core Area market rapidly lost revenue market share to the rest of the Houston Metro from 1980 to After a slight recovery in the later 1980's, core market revenue market share resumed its losing trend throughout the 1990's. This picture of continuous loss is a reality in any market where the major growth takes place outside the central core or downtown area. The data indicates that adding hotels, without outside demand generators, will in no way change the trend.

23 Page 23 HOUSTON CORE OCCUPANCY Looking at occupancy performance in the market also clearly highlights the performance degradation that occurred in the local Core Area. Occupancy fell steadily from 76.1% in 1981 to 45.3% in At first glance, it would be assumed that a large influx of new supply in the local market created more competitive pressure, dividing the existing demand among an increasing number of players. Surprisingly, that is not the case. Over the six year period from 1981 through 1986, only 100 net new rooms were added to the Core Area market, as substantial hotel closures took place, offsetting supply additions. The remainder of the metro market experienced similar drops in occupancy, but as a result of over 9,000 net new units added, rather than shrinking demand seen in the Core Area.

24 Page 24 The Houston Core Area market added a 383 unit upscale independent property (now the Omni) in the Second Quarter of 1981, followed closely by four additional convention center hotels from 1982 through These properties included the Four Seasons (399 rooms), Doubletree (448 rooms), Inter-Continental (formerly a Crowne Plaza, 486 rooms), and the JW Marriott (508 rooms). Since the opening dates of these properties are so tightly grouped, we studied all five hotels together. CASE STUDIES 4-8, : The Openings of five convention hotels in Houston, the Omni, the Four Seasons, the Doubletree, the Intercontinental, and the J.W.Marriott. These five new 'convention hotels' added over 2,200 new upscale rooms in the Houston core lodging area market in a relatively short period of time, from the Second Quarter of 1981 through the First Quarter of After the first of these hotels was added in 1981 (the Omni), market revenues began a five year pattern of gradual erosion that was not interrupted in any way by the subsequent openings of four additional convention properties (the Four Seasons, the Doubletree, the Intercontinental, and the Marriott). Core Area market revenues dropped continuously from $132,614,000 in 1981, to a low of $95,906,000 in 1986, a 28% total decline over the period. Compare this to the remainder of the Houston metro, which dropped erratically from $234,845,000 in 1981 to $198,101,000 in 1986, a notably smaller 16% decline. If convention hotels are not simply a product of their environment, and have some innate ability to generate their own demand, one would expect the local Core Area market in Houston to outperform the surrounding metro with the introduction of these new hotels. Unfortunately for Houston, these new, expensive, upscale hotels had to operate in a market in the midst of a large decline in overall revenues.

25 Page 25 HOUSTON MARKET CONCLUSION Nothing in the available hotel data indicates that the Houston Core Market was positively influenced by the development of convention hotel properties. An analysis of revenue growth trends, revenue market share, and occupancy in the subject market indicate that these hotels entered the market and were forced to capture a portion of existing market demand. There is absolutely no evidence to support the contention that new convention hotels add demand to their local Core Area market in Houston, Texas.

26 DALLAS DOWNTOWN MARKET Page 26 QUESTION: WHAT HAS DRIVEN DEMAND IN DOWNTOWN DALLAS? ANSWER: GENERAL ECONOMIC PROSPERITY IN THE MID-TO-LATE 1990S. In the graph that follows, it is evident that the downtown Dallas market growth trends have consistently trailed the remainder of the metro. There is no visible correlation between adding or expanding convention hotels in the market and a subsequent increase in room revenues, either in the short or long term. In fact, the three hotel additions studied in Dallas indicate that the market outside the downtown area fared better after these convention hotels opened, easily growing faster than the downtown market. One could argue that the expansions to the Dallas convention center in 1984 and 1994 were followed by modest bumps in the market growth trend. However, in both cases growth in revenues outside the convention center area in 1984 and 1994 expanded at a greater rate. The remainder of the metro enjoyed notable growth at both these times, and as a subset of the overall metro, it is far more likely that the convention area market simply took advantage of this general prosperity in the industry. SHARE OF DALLAS METRO ROOM REVENUES The Downtown Dallas market drastically lost share of market revenues versus the total Dallas Metro from 1980 through In the late 1990's the downtown market did make up a little ground after the 1,340 room expansion of the Adam's Mark and the opening of the 330 unit Magnolia Hotel. However, these gains were quickly given back starting in The trend is clearly pointing to the migration of revenues away from the downtown area, and that the opening of new convention-size hotels did little or nothing to stop this long term trend.

27 Page 27 DALLAS DOWNTOWN OCCUPANCY The following graph clearly illustrates occupancy downturns immediately after the opening of all three subject hotels, demonstrating the tightening of competition as the existing market attempts to absorb additional rooms. One must simply ignore existing evidence to make the claim that other hotels in a given market are not adversely impacted when this type of hotel is added without actual and ongoing growth in demand.

28 Page 28 Using our standard methodology, we looked closely at the period preceding and following the opening of each major convention hotel in downtown Dallas since 1980, highlighting any shifts in demand that took place. The three hotels examined are the Renaissance (formerly the Wyndham), the Adam's Mark expansion, and the Magnolia Hotel CASE STUDY 9: The Opening of the Renaissance, Dallas The 542 room Renaissance opened in the First Quarter of 1983 (as a Wyndham). In the first year following its opening, the local downtown area market dropped 7.5% in room revenues from $114,720,000 in 1982, to $106,148,000 in This decline was is even more negative when one considers that the remainder of the metro actually posted a respectable 4.3% gain in room revenues for the period. Looking at two year growth in both the Dallas metro and Downtown markets further illustrates this widening performance gap, with the balance of the metro easily outperforming downtown Dallas despite the opening of the Renaissance, a new convention hotel. With 24.7% growth in the balance of the metro far exceeding the 10.5% growth in the downtown area, it is clear that Downtown Dallas did not keep pace with the market as a whole. There is no indication of any financial prosperity brought about in downtown Dallas by the Renaissance's opening in In fact, with occupancy in the downtown market plummeting 10.6 'points' from 60.1% to 49.5% in the year following the Renaissance opening, it is clear that existing demand was merely spread across a larger number of rooms, making the local market more competitive and less profitable for existing hotels.

29 Page CASE STUDIES 10 & 11: Adam's Mark and Magnolia Opening, Dallas In 1998 and 1999, both the 1340 room expansion of the Adam's Mark Hotel and the opening of the 330 unit Magnolia Hotel impacted the Downtown Dallas market. The Adam's Mark completed its expansion in the Fourth Quarter of 1998, and the Magnolia opened three quarters later in the Third Quarter of There appeared to be only a notably negative effect when these convention-size hotels were added to the downtown Dallas market. Indeed, when these hotels were added, the market became 'soft' with sharply falling occupancies followed by a very gradual recovery from this increased supply. In the two years following the opening of the Adam's Mark Hotel, the Downtown market increased revenues 26.9%, with market supply increasing by 16%. This compares to 16.9% revenue growth over the period in the Balance of the metro, with market supply increasing by 21%. However, the northern metro area (Richardson, Plano, etc.) suffered major visitation reductions due to the decline in the telecom and dot.com industries. DALLAS OCCUPANCIES Both the Downtown and Balance of metro markets suffered declining occupancies from 1997 through 2000, with the downtown market dropping from 65.1% in 97 to 61.4% in 2000, and the balance of the metro dropping from 65.3% in 1997 to a still healthy 63% in While a 62% or greater occupancy could be considered very healthy for a suburban metro market, a healthy downtown or CBD area usually performs at 65% or better.

30 AUSTIN CENTRAL BUSINESS DISTRICT MARKET Page 30 QUESTION: WHAT HAS DRIVEN DEMAND IN AUSTIN'S CENTRAL BUSINESS DISTRICT? ANSWER: SLOW, STEADY, LONG TERM ECONOMIC GROWTH. As in the other metros studied, there is no notable variation from the long term revenue growth trend when convention hotels were added to the Austin CBD market. However, their addition caused sharply declining occupancies, with major financial consequences for the owners. In the following graph, a picture of steady, long term growth in the Austin CBD market is very apparent. As in our previous case studies, it is difficult to find support for the premise that adding convention hotels in any way positively impacts market demand. Rather, the five hotel additions studied in Austin indicate that there was more notable revenue growth in the Austin metro 'outside' the CBD area after these hotels entered the market. Furthermore, CBD market occupancy suffered after these hotels were introduced. SHARE OF AUSTIN METRO ROOM REVENUES Unlike Houston and Dallas, the Austin CVB has enjoyed healthy growth in the expansion of its share of metro market revenues. In the early 1980's there was a notable shortage of available lodging in the Austin CVB area despite the attractions of the Sixth Street entertainment district, the State Capitol, and The University of Texas. This is supported by the fact that the CBD market accounted for less than 20% of metro revenues in 1980 and 1981, growing to about one-third of the market in the late 1980 s in response to inadequate supply growth. As high quality lodging was added to the market, filling this void, the CBD increased its share of total metro revenues by over 10 percentage points.

31 Page 31 In more recent history, and now that the market is being more reasonably supplied with available rooms, the Central Business District has begun a normal pattern of slowly declining market share. AUSTIN OCCUPANCY The graph that follows clearly depicts the occupancy declines that correspond to the introduction of the new convention area hotels that were added to the Austin CBD market. Existing properties in the market were not immune to the increased market competition brought about by the added hotels, and their performances suffered drastically as a result. The market did see significant occupancy increases from 1990 to Looking at occupancy shows how the market struggled to incorporate all of this new supply into the existing demand trend. It took until 1992 for occupancy in

32 the downtown market to return to levels which preceded the massive supply influx which began in Page 32 The Austin CBD market added a 448 unit Hyatt Regency to the CBD market in 1982, and a cluster of convention center hotels in 1985 to 1987, including the Sheraton (249 rooms), Marriott (365 rooms), Radisson (315 rooms), and Four Seasons (292 rooms). We will examine the openings in two phases: the Hyatt as an individual opening, and the remaining four hotels together CASE STUDY 12: The Opening of the Hyatt Regency, Austin The 448 unit Hyatt Regency opened in Austin's CBD market in the First Quarter of For the first two years following the opening, the downtown market grew at a faster pace than the remainder of the metro. However, in the third and fourth years following the Hyatt's opening, the balance of the metro more than made up this lost ground, growing at a healthy pace that the relatively stagnant CBD market did not enjoy. Further, corresponding with the Hyatt's opening, Austin CBD occupancy plummeted almost 10 points from 65.6% in 1981 to 55.9% in In subsequent years the Austin CBD market began a gradual recovery, increasing occupancy to 60.5% by CASE STUDIES 13-16, : The Openings of the Sheraton, Marriott, Radisson and Four Seasons, Austin In 1985 a significant building boom began in the Austin metro and Texas in general. Over the three years from , 3,815 new hotel rooms were added to the total Austin metro. Among these new rooms were four new convention center hotels: the 249 unit Sheraton which opened in the Third Quarter of 1985; the 365 unit Marriott at the Capital which opened in the Second Quarter of 1986; the 315 unit Radisson (now an Omni) which opened in the Fourth Quarter of 1986; and the 292 unit Four Seasons Hotel which opened in the First Quarter of

33 Page By themselves these four hotels accounted for over 1,200 of Austin's new rooms, or about one third of the total supply increase. The following graph depicts a continuation of the slow and steady revenue growth trend after these properties were added to the market, with no notable departures from historical performance. The graph shows essentially 'straight line' growth in revenues in the Austin CBD market. **********

34 Page 34 January 31, 2003 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. It is our opinion that this report fairly and conservatively represents the true history and effect of opening major convention-oriented hotels in areas in and near central business districts and convention centers. This is a comprehensive study that analyzes the effect of every large conventionoriented hotel opened since 1981 in the state of Texas. We expect similar results from future research into the performance of hotels not yet opened in Texas, and from large convention-oriented hotels that have opened in other states ( provided the researcher can obtain data similar to that now available in Texas). Please contact us with any questions at (210) Respectfully Submitted, Source Strategies, Inc. Bruce H. Walker, Todd Walker, Douglas W. Sutton, President Vice President Vice President

35 Page 35 TABLE OF EXHIBITS 1. Methodology of Texas Hotel & Motel Database, Page San Antonio Lodging Markets, Page 35 A. Convention Center Area History, Aggregated Market Data, by Quarter and Year, 1980 to Present B. Convention Center Area Performance Past 12 Months, by hotel, brand and segment, Year Ending September 30, 2002 C. Convention Center Area Listing of Properties, Third Quarter 2002 D. History of New Convention-size Hotels in Convention Center Area: Hyatt Regency Riverwalk, Marriott Rivercenter, Westin Riverwalk E. Balance of Metro History, Aggregated Market Data, by Quarter and Year, 1980 to present 3. Houston Lodging Markets, Page 50 A. Core Area History, Aggregated Market Data, by Quarter and Year, 1980 to Present B. Core Area Performance Past 12 Months, by hotel, brand and segment, Year Ending September 30, 2002 C. Core Area Listing of Properties, Third Quarter 2002 D. History of New Convention-size Hotels in Core Area: Omni, Four Seasons, Doubletree, InterContinental, J.W. Marriott E. Balance of Metro History, Aggregated Market Data, by Quarter and Year, 1980 to present 4. Dallas Lodging Markets, Page 69 A. Downtown Area History, Aggregated Market Data, by Quarter and Year, 1980 to Present B. Downtown Area Performance Past 12 Months, by hotel, brand and segment, Year Ending September 30, 2002 C. Downtown Area Listing of Properties, Third Quarter 2002 D. History of New Convention-size Hotels in Downtown Area: Renaissance, Adam s Mark Expansion, Magnolia E. Balance of Metro History, Aggregated Market Data, by Quarter and Year, 1980 to present 5. Austin Lodging Markets, Page 85 A. Central Business District Area History, Aggregated Market Data, by Quarter and Year, 1980 to Present B. Central Business District Area Performance Past 12 Months, by hotel, brand and segment, Year Ending September 30, 2002 C. Central Business District Area Listing of Properties, Third Quarter 2002 D. History of New Convention-size Hotels in Central Business District: Hyatt Regency, Sheraton, Marriott at the Cap, Radisson, Four Seasons E. Balance of Metro History, Aggregated Market Data, by Quarter and Year, 1980 to present 6. Credentials of Source Strategies, Inc., Page 103 A. Resumes B. Consulting: 148 Feasibility Projects, C. Consulting: Other Projects D. Consulting Client Listing

36 EXHIBIT 1 Page 36 Methodology of Texas Hotel/Motel Reports Texas Hotel/Motel Quarterly Reports are prepared on a custom basis for private clients, including Market Texas, Texas Economic Development (formerly Tourism Division, TDED), and the Texas Attorney General. Reports are prepared by Source Strategies Inc. of San Antonio, Texas, based on Texas State Comptroller revenue records and independent research. Data sources include the following: Room Revenues: State of Texas Comptroller records are the source of taxable room revenues for all properties. All properties exceeding $16,800 in the current quarter are included; the below-$16,800 units result in 2% of the total state revenues being initially excluded from the Source Strategies database. As a result, the database covers 98% of Texas. Gross (including Non-taxable) revenues were reported to the Comptroller starting in the Third Quarter of To account for the missing non-taxable revenues prior to the Third Quarter of 1990, Source Strategies increases each individual property's taxable-only, reported revenues by variable factors averaging 12% to reflect this untaxed volume (government business, over 30-day stayers, charitable and educational purchases). The same adjustments are made to all historical periods, insuring comparability over time. "Apartment-type" revenues are typically not reflected. Starting in the Third Quarter of 1990, hotels and motels were required by the Texas Comptroller to report both taxable and gross room revenues. Approximately 80% of properties have complied, allowing the development of adjustment factors for all hotels and motels, even if only taxable revenues are reported. Non-reporting properties are estimated based on the past five quarter trends. If and when they subsequently report, their actual revenues 'overwrite' the estimate in the database. Room Counts: these are checked annually in chain directories and the Texas American Automobile Association tour book; those properties checked account for approximately 85% of revenues. For independent properties too small to be listed, the room counts reported to the state are used (unless they appear unreasonable). As a result, the 'CHAIN' occupancies and room counts appear to be very close to 'actual', while independent room counts could be slightly overstated. Reports are split into CHAIN and INDEPENDENT categories. Average Daily Rates are estimated with the aid of financial reports, appraisers, private S.S.I. surveys, chain and AAA directories and another reliable industry database. Roomnights sold are derived from the above revenues, divided by Average Daily Rates. Roomnights available are calculated from Room Counts (times days in the period).

37 EXHIBIT 1, continued Page 37 Methodology of Texas Hotel/Motel Reports Occupancy is calculated from roomnights sold and roomnights available. All occupancy figures represent fully-weighted averages, as calculations are always made after sub-totaling or totaling roomnights sold and available. "CHAINS" are defined as one of the "Top 70+" brands followed, and include the following names: Four Seasons, Westin, Doubletree, Hyatt, Marriott, Inter- Continental, Renaissance, Wyndham; AmeriSuites, Embassy, Guest Quarters, Hawthorn, Residence, Homewood, Staybridge, Sumner, Bradford, Candlewood, Comfort Suites, Quality, Homestead Village and Radisson Suites; Hilton, Radisson, Omni, Renaissance, Sumner, Adam's Mark, Red Lion, Holiday Express, Sleep, Shoney's. Also, Sheraton, Four Points, Clarion, Harvey, Wyndham, Best Western, Courtyard, Crown Plaza, Hilton Garden, Howard Johnson, Holiday Inn, Quality, Ramada, Comfort, Drury, Hampton, Country Inn & Suites, Doubletree Club, Fairfield, Holiday Express, Wellesley, Wingate, Country Hearth, La Quinta, Rodeway, Days, Econo Lodge, Exel, Motel 6, Red Roof, Super 8, and Travelodge. Plus numerous additional low-price extended stay and budget brands. New chains and defunct chains are added or deleted from time to time. Accuracy: On an overall basis, the change in average daily rates reported by Source Strategies Inc. is within a few tenths of one-percent of Smith Travel Research, another private research firm that gets average daily rate reports from up to about 80% of all hotel/motels nationally and publishes conglomerated results. Revenues are within 2% of actual in our experience.

38 EXHIBIT 2 A LODGING MARKET: SAN ANTONIO CONVENTION CENTER AREA INCLUDES ZIP-CODES AND Page 38 # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , ,

39 EXHIBIT 2 A LODGING MARKET: DOWNTOWN SAN ANTONIO CONVENTION CENTER AREA INCLUDES ZIP-CODES AND Page 39 # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , ,

40 EXHIBIT 2 A LODGING MARKET: DOWNTOWN SAN ANTONIO CONVENTION CENTER AREA INCLUDES ZIP-CODES AND Page 40 # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , *TOTAL 2002 YTD 1, , *TOTAL PERIOD ABOVE 35, ,437, 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)

41 Page 41 EXHIBIT 2 B PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2002 SAN ANTONIO CONVENTION CENTER MARKET, INCLUDES ZIPS: AND # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR CHAINS WESTIN , ADMS MARK , HILTON , HYATT , MARRIOTT , WYNDHAM , TOT UPSCALE , HOMEWOOD , OTH SUITE , RESIDENCE , TOT SUITES , POINTS , COURTYARD , HOLID INN , SHERATON , TOT MID/UPS , AMERI STS , COMFO STE , HAWTH LTD , TOT MIN STE , BEST WEST , DRURY INN , FAIRFIELD , HAMPTON , HOLID EXP , LA QUINTA , TOT LTD SVE , DAYS INN , HO JO , RAMAD INN , RAMAD LTD RED ROOF , TRAVELODG , TOT BUDGET , TOT CHAINS , , INDEPENDENTS , TOT MARKET , ,

42 Page 42 EXHIBIT 2 C LODGING MARKET: SAN ANTONIO CONVENTION CENTER AREA INCLUDES ZIP-CODES AND 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 SAN ANTONIO 102 TURNER AARON PANCOAST CARRIAGE H ,000 12, E GUENTHER BECKMANN INN & CARRIAGE H ,036 37, WOODWARD PL BED & BREAKFAST ON THE RI ,866 34, EL PASO ST BEST WESTERN INN & SUITES BWEST 319, , MADISON BRACKENRIDGE HOUSE BED & ,690 16, LAREDO STR COMFORT SUITES C COMFS 317, , S SANTA ROS COURTYARD MKT SQU 149 RMS COURT 1,064,744 1,140, IH 35 SOUT DAYS INN LAREDO HOSPITALIT DAYS 267, , S SANTA ROS FAIRFIELD INN SAN ANTONIO FAIRF 395, , BEAUREGARD GARDENIA INN ,689 13, W DURANGO B HOLIDAY INN SAN ANTONIO D HOLID 1,025,855 1,652, WASHINGTON OGE HOUSE ON THE RIVERWAL ,589 58, S LAREDO S RAMADA LIMITED RALTD 200, , S SANTA ROS RESIDENCE INN - SAN ANTON RESID 197, , OLD GUILBEA RIVERWALK INN ,089 44, MADISON ST THE JACKSON HOUSE B & B ,902 18,

43 Page 43 EXHIBIT 2 C 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 SAN ANTONIO 229 MADISON THE SAN ANTONIO YELLOW RO ,506 20, E DURANGO B WOODFIELD SUITES X.STE 575, , PECAN STREE ADAMS MARK HOTEL AMARK 1,681,737 2,211, BROADWAY ST ALAMO TRAVELODGE TRAVL 282, , N MAIN AVE ALPHA HOTEL ,606 30, SOUTH ST MA AMERISUITES SAN ANTONIO S AMSTE 794, , S PRESA ARBOR HOUSE / ,000 51, E COMMERCE BEST WESTERN SUNSET STATI BWEST 260, , EAST HOUSTO DAYS INN ALAMO/DOWNTOWNER DAYS 312, , N SAINT MAR DRURY INN & SUITES RIVERWA DRURY 902,325 1,039, BOWIE ST HAMPTON INN ALAMO HAMPT 706, , NORTH SAINT HAWTHORN LTD RIVERWALK HALTD 737, , S ALAMO ST HILTON PALACIO DEL RIO HILTO 3,995,058 4,443, VILLITA ST HO JO PLAZA LAVILLITA FMR HO JO 705, , S SAINT MAR HOLIDAY EXPRESS HOTEL HIEXP 430, , BONHAM HOLIDAY INN CROCKETT HOLID 824, ,

44 Page 44 EXHIBIT 2 C 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 SAN ANTONIO 217 N SAINT MAR HOLIDAY INN OF SAN ANTONI HOLID 2,056,202 2,228, WEST MARKET HOMEWOOD SUITES SAN ANTON HOMEW 966,556 1,140, ALAMO PLZ HOTEL MENGER ,640,116 1,834, NAVARRO ST HOTEL NAVARRO ,000 32, LOSOYA ST HYATT REGENCY HYATT 5,392,418 5,736, COLLEGE ST LA MANSION DEL RIO HOTEL ,242,785 3,321, EAST COMME LA QUINTA INN # LAQUN 920,329 1,039, BOWIE ST MARRIOTT RIVERCENTER MARRT11,644,594 12,820, E RIVER WAL MARRIOTT RIVERWALK 503 RMS MARRT 5,841,467 6,510, S ALAMO PLAZA SAN ANTONIO HOTEL MARRT 1,783,611 2,213, E HOUSTON RED ROOF INN # REDRF 725, , BONHAM RESIDENCE INN ALAMO 220 ST RESID 1,270,866 1,925, LOSOYA ST RIVERWALK VISTA BED & BRE ,488 73, LEXINGTON A SHERATON FOUR POINTS RIVER PTS 1,170,107 1,220, E HOUSTON S SHERATON GUNTER HOTEL SHERA 1,430,746 1,678, E HOUSTON S THE EMILY MORGAN HOTEL FMR , ,

45 Page 45 EXHIBIT 2 C 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 SAN ANTONIO 1015 NAVARRO ST THE HAVANA RIVERWALK INN , , W MARKET ST WESTIN RIVERWALK HOTEL WESTN 3,809,428 4,432, SOUTH ALAMO WYNDHAM FAIRMOUNT HOTEL WYNDH 256, , E TRAVIS ST WYNDHAM ST ANTHONY FMR CRO WYNDH 1,793,526 2,238, FOOTNOTES: Factor used to adjust taxable to gross revenues. Area factor used if property data not available. Taxable equals 89% of gross Statewide. 2. A number or a 'Y' indicates quarter's revenues were estimated. 3. Estimated Average Daily Rate (e.g % 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).

46 EXHIBIT 2 D THREE SAN ANTONIO CONVENTION SIZE HOTELS, OPENING SINCE 1980 Page 46 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 SAN ANTONIO 123 LOSOYA ST HYATT REGENCY HYATT 56,908 62, HYATT 2,597,706 2,831, HYATT 2,854,128 3,111, HYATT 1,975,758 2,153, HYATT 2,243,755 2,445, HYATT 3,406,322 3,474, HYATT 3,386,367 3,454, HYATT 2,694,885 2,748, HYATT 2,936,505 2,995, HYATT 3,272,870 3,390, HYATT 4,003,207 4,147, HYATT 3,607,135 3,736, HYATT 3,408,802 3,531, HYATT 3,508,222 3,823, HYATT 4,239,415 4,620, HYATT 3,230,213 3,520, HYATT 3,321,133 3,620, HYATT 3,526,913 3,597, HYATT 3,899,012 3,976, HYATT 3,483,593 3,553, HYATT 3,576,487 3,648, HYATT 3,341,070 3,641, HYATT 3,851,916 4,198, HYATT 3,202,125 3,490, HYATT 3,296,730 3,593, HYATT 3,717,240 4,051, HYATT 4,132,565 4,504, HYATT 3,507,495 3,823, HYATT 3,264,124 3,557, HYATT 3,165,821 3,450, HYATT 3,991,212 4,350, HYATT 3,262,427 3,556, HYATT 3,642,882 3,970, HYATT 4,164,822 4,539, HYATT 4,435,998 4,835, HYATT 3,022,118 3,611, HYATT 3,879,866 4,073, HYATT 4,327,083 4,626, HYATT 4,803,926 5,156, HYATT 3,709,660 4,233, HYATT 4,143,744 4,467, HYATT 4,600,000 5,014, HYATT 5,171,662 5,637, HYATT 4,489,563 4,758, HYATT 4,871,400 5,309,

47 Page 47 EXHIBIT 2 D 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 SAN ANTONIO 123 LOSOYA ST HYATT REGENCY HYATT 5,068,415 5,519, HYATT 5,329,005 5,825, HYATT 4,585,603 4,998, HYATT 5,011,353 5,307, HYATT 5,606,843 6,111, HYATT 5,319,347 5,701, HYATT 4,401,159 4,902, HYATT 5,328,265 5,807, HYATT 5,972,379 6,246, HYATT 5,817,278 6,340, HYATT 4,828,385 5,387, HYATT 4,741,734 5,168, HYATT 5,834,655 6,010, HYATT 5,572,143 6,330, HYATT 5,279,451 5,607, HYATT 5,996,153 6,233, HYATT 5,974,653 6,337, HYATT 6,580,952 6,713, HYATT 4,534,032 5,449, HYATT 6,399,063 6,603, HYATT 6,858,524 7,282, HYATT 6,017,774 6,849, HYATT 5,461,467 5,749, HYATT 6,210,915 6,545, HYATT 6,575,350 6,984, HYATT 6,381,268 6,859, HYATT 5,122,397 5,643, HYATT 6,198,518 6,510, HYATT 6,766,412 7,241, HYATT 6,018,591 6,760, HYATT 5,633,074 6,015, HYATT 5,933,711 6,162, HYATT 6,597,274 6,998, HYATT 6,449,248 6,638, HYATT 5,111,930 5,358, HYATT 5,883,389 6,059, HYATT 7,157,378 7,466, HYATT 6,671,565 6,992, HYATT 5,392,418 5,736, BOWIE ST MARRIOTT RIVERCENTER 1000* MARRT 4,094,297 4,217, MARRT 5,628,807 5,797, MARRT 6,230,023 6,416, MARRT 7,321,996 7,541, MARRT 5,692,106 5,862, MARRT 6,904,190 7,111,

48 Page 48 EXHIBIT 2 D 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 SAN ANTONIO 101 BOWIE ST MARRIOTT RIVERCENTER* MARRT 8,026,425 8,267, MARRT 8,623,343 8,882, MARRT 6,313,395 6,512, MARRT 7,279,757 7,498, MARRT 8,118,798 8,250, MARRT 8,600,000 8,896, MARRT 6,607,302 6,731, MARRT 7,474,550 7,899, MARRT 8,512,589 8,968, MARRT 9,267,080 9,820, MARRT 7,641,858 8,071, MARRT 8,459,929 8,713, MARRT 9,200,000 9,551, MARRT10,610,490 10,891, MARRT 7,622,148 7,926, MARRT 8,500,000 8,755, MARRT 8,760,701 9,023, MARRT10,310,306 10,703, MARRT 7,342,978 7,742, MARRT 9,136,068 9,518, MARRT 9,492,611 9,804, MARRT10,627,795 11,675, MARRT 8,779,075 8,673, MARRT 9,411,962 9,694, MARRT 9,764,900 9,960, MARRT11,060,531 11,825, MARRT 8,642,823 8,859, MARRT10,379,188 10,699, MARRT10,266,001 10,644, MARRT 8,481,667 8,951, MARRT13,592,056 13,845, ** MARRT11,361,700 11,565, MARRT11,000,752 11,439, MARRT11,939,056 12,798, MARRT 9,156,730 9,819, MARRT11,127,060 11,635, MARRT11,088,921 11,387, MARRT11,887,060 12,688, MARRT 9,543,135 9,742, MARRT11,291,299 11,610, MARRT11,410,348 11,619, MARRT11,546,607 12,947, MARRT10,536,141 10,731, MARRT11,639,632 12,093, MARRT10,899,154 11,301, MARRT 9,757,349 10,718, MARRT 9,472,926 9,777,

49 Page 49 EXHIBIT 2 D 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 SAN ANTONIO 101 BOWIE ST MARRIOTT RIVERCENTER* MARRT11,788,590 12,271, MARRT12,149,733 12,696, MARRT11,644,594 12,820, W MARKET ST WESTIN RIVERWALK HOTEL WESTN 738, , WESTN 4,345,826 4,501, WESTN 4,226,783 4,250, WESTN 3,923,909 3,948, WESTN 4,059,547 4,326, WESTN 4,477,643 5,040, WESTN 4,699,437 4,921, WESTN 3,904,880 4,060, WESTN 4,335,156 4,480, WESTN 5,434,457 5,680, WESTN 5,303,244 5,782, WESTN 3,809,428 4,432, FOOTNOTES: Factor used to adjust taxable to gross revenues. Area factor used if property data not available. Taxable equals 89% of gross Statewide. 2. A number or a 'Y' indicates quarter's revenues were estimated. 3. Estimated Average Daily Rate (e.g % 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). *Marriott accounting period requires adjusting room counts by quarter in order for algebraic formulas to create accurate REVPAR, occupancy and rate calculations. Actual roomcount is 1000.

50 EXHIBIT 2 E LODGING MARKET: SAN ANTONIO METRO EXCLUDING ZIP CODES AND Page 50 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , ,

51 EXHIBIT 2 E LODGING MARKET: SAN ANTONIO METRO EXCLUDING ZIP CODES AND Page 51 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , ,129 1, , , , *TOTAL , , , , , , ,985 1, , , , *TOTAL , , , , , , ,107 1, , , , *TOTAL , ,

52 EXHIBIT 2 E LODGING MARKET: SAN ANTONIO METRO EXCLUDING ZIP CODES AND Page 52 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR , , ,886 1, , ,363 1, , , , *TOTAL , , , , ,033 1, , ,214 1, , , , *TOTAL , , ,738 1, , ,339 1, , ,698 1, , , , *TOTAL , , , , ,968 1, , ,770 1, , , , *TOTAL , , ,215 1, , ,677 1, , ,926 1, , , , *TOTAL , , ,954 1, , ,553 1, , ,711 1, , , , *TOTAL , , ,362 1, , ,057 1, , ,445 1, , *TOTAL , , *TOTAL 72, ,800, 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)

53 EXHIBIT 3 A: HOUSTON CORE AREA LODGING INCLUDES ZIP-CODES: 77002/03/05/06/10/19/24(PART)/27/46/56; AREAS: DOWNTOWN, GALLERIA, GREENWAY, RIVERWAY Page 53 # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , ,

54 EXHIBIT 3 A: HOUSTON CORE AREA LODGING INCLUDES ZIP-CODES: 77002/03/05/06/10/19/24(PART)/27/46/56; AREAS: DOWNTOWN, GALLERIA, GREENWAY, RIVERWAY Page 54 # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , ,

55 Page 55 HOUSTON CORE AREA LODGING INCLUDES ZIP-CODES: 77002/03/05/06/10/19/24(PART)/27/46/56; AREAS: DOWNTOWN, GALLERIA, GREENWAY, RIVERWAY # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , EXHIBIT 3 A: , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , *TOTAL , , *TOTAL 45, ,750, 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)

56 EXHIBIT 3 B: PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2002 HOUSTON CORE AREA LODGING INCLUDES ZIP-CODES: 77002/03/05/06/10/19/24(PART)/27/46/56; Page 56 # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR CHAINS FOURSEAS , WESTIN , TOT LUXURY , DOUBLTREE , HYATT , MARRIOTT , OMNI , RENAISSAN , TOT UPSCALE , DOUBL STE , EMBASSY , OTH SUITE , RESIDENCE , STAYB , TOT SUITES , COURTYARD , CROWNPLZA , TOT MID/UPS , BRADFORD , BEST WEST , DRURY INN , FAIRFIELD , HAMPTON , HOLID EXP , LA QUINTA , TOT LTD SVE , EXT AMERI , HOMESTEAD , TOT EXT STA , DAYS INN , OTHER BUD , TOT BUDGET , TOT CHAINS , , INDEPENDENTS , TOT MARKET , , * All figures annualized. Includes taxed and est non-tax room revenues.

57 Page 57 HOUSTON CORE AREA LODGING INCLUDES ZIP-CODES: 77002/03/05/06/10/19/24(PART)/27/46/56; 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 HOUSTON 1700 SMITH ST CROWNE PLAZA FMR WHITEHALL CROWN 1,283,642 1,353, MAIN ST DAYS INN FMR HOLID 150 OF DAYS 273, , DALLAS ST DOUBLETREE HOTEL AT ALLEN DOUBL 2,601,740 2,893, EXHIBIT 3 C: 1200 LOUISIANA HYATT REGENCY HOUSTON TO HYATT 6,147,206 6,291, LOUISIANA THE LANCASTER , , BELL ST DOWNTOWN HOLIDAY EXPRESS HIEXP 514, , MAIN ST THE WARWICK PARK PLAZA CL ,381 1,107, MONTROSE LA COLOMBE D'OR ,133 34, LOVETT BLVD THE LOVETT INN ,238 87, LAMAR ST FOUR SEASONS HOTEL EQUITY FOURS 4,364,206 4,615, W DALLAS ST BEST WESTERN - DOWNTOWN I BWEST 354, , NORTH POST HOUSTONIAN HOTEL ,805,774 3,939, WEST LOOP COURTYARD GALLERIA COURT 1,211,252 1,232, WEST LOOP DRURY INN GALLERIA DRURY 634, , WESTHEIMER EXTENDED STAY AMERICA # EXTSA 301, ,

58 Page 58 HOUSTON CORE AREA LODGING INCLUDES ZIP-CODES: 77002/03/05/06/10/19/24(PART)/27/46/56; 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 HOUSTON 3131 WEST LOOP FAIRFIELD INN HOUSTON GAL FAIRF 458, , POST OAK P HAMPTON INN GALLERIA HAMPT 1,140,000 1,200, SOUTHWEST HAWTHORN INN & SUITES-GREE X.BUD 230, , WEST LOOP HOMESTEAD VILLAGE-GLR HOMES 447, , EXHIBIT 3 C: 2525 WEST LOOP HOTEL DEREK FMR RED LION/F ,024,767 1,039, WEST LOOP INTERCONTI FMR CROWN/HOLID INT-C 1,823,725 1,869, SOUTHWEST LA QUINTA INN # LAQUN 417, , WEST LOOP LA QUINTA INN & SUITES GAL LAQUN 1,036,872 1,092, WEST LOOP MARRIOTT WEST LOOP MARRT 2,086,037 2,090, WEST LOOP SHERATON SUITES HOUSTON X.STE 1,765,980 1,815, BRIAR OAKS ST REGIS FMR RITZ/FMR THE ,915,411 1,951, GREENWAY PLAZ RENAISSANCE PLAZA EAST RENAS 2,687,257 2,765, SAGE RD BRADFORD HOMESUITES BRADF 440, , WESTHEIMER DOUBLETREE GUEST SUITES DBLST 1,500,000 2,800, SAGE RD EMBASSY SUITES GALLERIA EMBAS 1,315,933 1,382, WESTHEIMER JW MARRIOTT # RMS M MARRT 4,980,858 5,147,

59 Page 59 HOUSTON CORE AREA LODGING INCLUDES ZIP-CODES: 77002/03/05/06/10/19/24(PART)/27/46/56; 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 HOUSTON 4 RIVERWAY OMNI RIVERWAY HCD HOUSTON OMNI 2,042,791 2,075, MCCUE RD A RESIDENCE INN GALLERIA RESID 532, , HIDALGO ST STAYBRIDGE SUITE HOUSTON STAYB 393, , EXHIBIT 3 C: 2001 POST OAK B THE DOUBLETREE HOTEL POST DOUBL 2,878,412 2,964, GALLERIA-XOST O WESTIN GALLERIA HOUSTON WESTN 2,376,729 2,513, GALLERIA-POST O WESTIN OAKS HOUSTON WESTN 2,507,339 2,647, FOOTNOTES: Factor used to adjust taxable to gross revenues. Area factor used if property data not available. Taxable equals 89% of gross Statewide. 2. A number or a 'Y' indicates quarter's revenues were estimated. 3. Estimated Average Daily Rate (e.g % 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).

60 EXHIBIT 3 D: HOUSTON CORE AREA LODGING - SUBJECT HOTELS ONLY INCLUDES ZIP-CODES: 77002/03/05/06/10/19/24(PART)/27/46/56; 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 HOUSTON 1300 LAMAR ST FOUR SEASONS HOTEL EQUITY FOURS 1,123,013 1,151, FOURS 928, , FOURS 1,229,601 1,260, FOURS 1,425,108 1,453, FOURS 1,604,064 1,636, FOURS 1,465,136 1,494, FOURS 1,678,236 1,711, FOURS 1,912,856 1,981, FOURS 1,655,575 1,715, FOURS 1,551,240 1,607, FOURS 1,597,868 1,655, FOURS 1,877,162 1,924, FOURS 1,882,692 1,929, FOURS 1,554,266 1,593, FOURS 1,562,646 1,601, FOURS 1,495,766 1,525, FOURS 1,482,260 1,511, FOURS 1,384,915 1,412, FOURS 1,710,889 1,745, FOURS 1,794,826 1,839, FOURS 1,809,427 1,854, FOURS 1,709,605 1,752, FOURS 1,600,762 1,640, FOURS 2,538,978 2,602, FOURS 2,129,569 2,182, FOURS 1,752,033 1,795, FOURS 1,970,630 2,019, FOURS 2,234,461 2,290, FOURS 2,127,129 2,180, FOURS 1,930,430 1,978, FOURS 2,254,056 2,310, FOURS 2,495,568 2,557, FOURS 2,518,428 2,581, FOURS 2,482,097 2,544, FOURS 2,403,712 2,463, FOURS 2,584,265 2,648, FOURS 2,676,881 2,743, FOURS 2,162,887 2,216, FOURS 2,583,165 2,647, FOURS 2,632,091 2,697, FOURS 2,655,960 2,722, FOURS 2,700,000 2,767, FOURS 2,500,000 2,562, FOURS 2,687,400 2,754, Page 60

61 EXHIBIT 3 D: 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 HOUSTON 1300 LAMAR ST FOUR SEASONS HOTEL EQUITY FOURS 2,646,869 2,713, FOURS 2,232,472 2,288, FOURS 2,673,304 2,740, FOURS 2,857,265 2,928, FOURS 2,922,180 3,020, FOURS 2,530,140 2,657, FOURS 2,548,842 2,638, FOURS 3,287,863 3,463, FOURS 2,836,858 3,017, FOURS 2,648,344 2,699, FOURS 3,019,396 3,112, FOURS 3,887,138 3,984, FOURS 3,187,555 3,266, FOURS 3,026,261 3,137, FOURS 3,215,431 3,352, FOURS 4,078,461 4,169, FOURS 3,585,200 3,674, FOURS 3,554,050 3,685, FOURS 3,985,003 4,084, FOURS 4,220,845 4,498, FOURS 4,145,538 4,227, FOURS 3,932,640 4,164, FOURS 4,446,450 4,658, FOURS 4,690,790 4,798, FOURS 4,491,719 4,662, FOURS 4,256,402 4,732, FOURS 4,675,739 4,931, FOURS 5,507,804 5,675, FOURS 5,249,308 5,415, FOURS 4,840,780 5,102, FOURS 4,735,681 4,889, FOURS 5,636,177 5,948, FOURS 5,087,305 5,842, FOURS 4,191,169 4,907, FOURS 4,737,884 5,175, FOURS 5,304,638 5,745, FOURS 4,788,773 5,549, FOURS 4,364,206 4,615, WEST LOOP INTERCONTI FMR CROWN/HOLID HOLID 616, , HOLID 872, , HOLID 874, , HOLID 1,024,462 1,061, HOLID 1,299,008 1,331, HOLID 1,330,110 1,363, HOLID 967, , Page 61

62 EXHIBIT 3 D: 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 HOUSTON 2222 WEST LOOP INTERCONTI FMR CROWN/HOLID HOLID 962, , HOLID 977, , HOLID 1,054,417 1,075, HOLID 931, , HOLID 991,962 1,011, HOLID 1,047,865 1,074, HOLID 913, , HOLID 965, , HOLID 952, , HOLID 1,508,390 1,546, HOLID 1,200,892 1,230, HOLID 1,250,951 1,282, HOLID 1,496,012 1,533, HOLID 1,521,848 1,559, HOLID 1,567,991 1,607, HOLID 1,480,137 1,517, HOLID 1,512,052 1,549, HOLID 1,902,293 1,949, HOLID 2,013,792 2,064, HOLID 1,763,918 1,808, HOLID 1,629,862 1,670, HOLID 1,851,858 1,898, HOLID 2,082,005 2,134, HOLID 1,763,098 1,807, HOLID 1,867,510 1,914, HOLID 1,927,821 1,976, HOLID 1,945,964 1,994, HOLID 1,874,367 1,921, HOLID 2,044,640 2,095, HOLID 2,065,808 2,117, HOLID 2,081,352 2,133, HOLID 1,622,419 1,662, HOLID 2,021,243 2,071, HOLID 2,000,812 2,050, HOLID 2,114,204 2,167, HOLID 1,788,088 1,832, HOLID 1,897,609 1,945, HOLID 2,348,550 2,407, HOLID 1,964,963 2,014, HOLID 1,874,833 1,921, HOLID 2,179,692 2,234, HOLID 2,550,995 2,614, HOLID 2,036,641 2,087, HOLID 2,045,034 2,096, HOLID 3,047,046 3,123, HOLID 2,500,000 2,562, HOLID 2,412,718 2,473, Page 62

63 EXHIBIT 3 D: 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 HOUSTON 2222 WEST LOOP INTERCONTI FMR CROWN/HOLID HOLID 2,092,491 2,144, HOLID 2,400,671 2,460, CROWN 2,273,511 2,330, CROWN 2,523,793 2,586, CROWN 2,270,512 2,327, CROWN 2,859,719 2,931, CROWN 2,430,987 2,456, CROWN 2,451,089 2,512, CROWN 1,705,772 1,748, CROWN 2,137,629 2,191, CROWN 2,290,346 2,359, CROWN 2,522,578 2,585, CROWN 2,320,855 2,378, CROWN 2,075,665 2,127, CROWN 2,435,626 2,496, CROWN 2,354,431 2,413, CROWN 1,903,552 1,951, CROWN 596, , INT-C 2,067,925 2,119, INT-C 1,823,725 1,869, RIVERWAY OMNI RIVERWAY HCD HOUSTON ,256,213 1,293, ,609,719 1,658, ,967,584 2,026, ,315,809 2,385, ,158,561 2,223, ,515,466 1,560, ,539,885 1,586, ,468,164 1,497, ,784,950 1,820, ,438,579 1,467, ,623,782 1,656, ,731,227 1,793, ,338,337 1,386, ,291,305 1,337, ,494,471 1,548, ,595,699 1,643, ,581,468 1,628, ,126,758 1,160, ,233,769 1,270, ,265,426 1,290, ,396,475 1,424, ,046,642 1,067, ,191,002 1,214, FOURS 1,273,254 1,311, FOURS 1,486,124 1,530, Page 63

64 EXHIBIT 3 D: 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 HOUSTON 4 RIVERWAY OMNI RIVERWAY HCD HOUSTON FOURS 1,216,055 1,252, FOURS 1,292,922 1,331, FOURS 1,643,054 1,692, FOURS 1,759,356 1,812, FOURS 1,389,283 1,430, FOURS 1,595,695 1,643, FOURS 1,898,902 1,955, FOURS 1,817,155 1,871, FOURS 1,593,299 1,641, FOURS 1,929,443 1,987, FOURS 2,051,587 2,113, FOURS 2,173,458 2,238, FOURS 2,036,423 2,238, FOURS 2,065,633 2,241, FOURS 1,947,878 2,086, FOURS 2,235,748 2,441, FOURS 1,781,639 2,064, FOURS 1,923,752 2,133, OMNI 1,719,267 1,923, OMNI 1,550,703 1,820, OMNI 1,494,932 2,140, OMNI 1,615,067 1,946, OMNI 1,695,727 1,871, OMNI 1,925,307 2,059, OMNI 1,836,977 2,007, OMNI 1,894,055 2,045, OMNI 2,335,055 2,405, OMNI 2,306,925 2,396, OMNI 2,110,946 2,134, OMNI 2,099,590 2,162, OMNI 2,679,976 2,760, OMNI 2,369,296 2,447, OMNI 2,180,657 2,246, OMNI 2,452,794 2,528, OMNI 1,886,075 2,500, OMNI 2,656,996 2,736, OMNI 2,270,857 2,338, OMNI 2,525,287 2,601, OMNI 2,869,422 2,955, OMNI 2,919,251 2,997, OMNI 2,684,461 2,798, OMNI 2,930,690 3,018, OMNI 3,366,984 3,568, OMNI 3,308,022 3,407, OMNI 2,696,009 2,778, OMNI 3,019,262 3,109, OMNI 3,101,348 3,152, Page 64

65 EXHIBIT 3 D: 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 HOUSTON 4 RIVERWAY OMNI RIVERWAY HCD HOUSTON OMNI 2,849,304 2,983, OMNI 2,176,016 2,308, OMNI 2,704,572 2,783, OMNI 3,281,677 3,480, OMNI 3,271,901 3,411, OMNI 2,929,231 3,036, OMNI 2,976,705 3,066, OMNI 3,513,051 3,639, OMNI 3,014,695 3,202, OMNI 2,373,266 2,594, OMNI 2,694,560 2,898, OMNI 3,178,579 3,280, OMNI 2,739,059 2,918, OMNI 2,042,791 2,075, POST OAK B THE DOUBLETREE HOTEL POST , , , , , , ,138,429 1,161, ,754 1,012, ,358,760 1,385, ,307,368 1,354, ,053,982 1,091, , , LINCN 1,433,630 1,476, LINCN 1,923,526 1,981, LINCN 1,034,019 1,065, LINCN 1,400,156 1,442, LINCN 1,412,140 1,440, LINCN 1,570,891 1,602, LINCN 1,070,166 1,091, LINCN 1,531,795 1,562, LINCN 1,612,579 1,660, LINCN 1,575,563 1,622, LINCN 1,505,418 1,550, LINCN 1,512,099 1,557, DOUBL 1,826,210 1,880, DOUBL 1,595,336 1,643, DOUBL 1,600,000 1,648, DOUBL 1,711,454 1,762, DOUBL 1,136,093 1,170, DOUBL 2,073,413 2,135, DOUBL 1,855,999 1,911, DOUBL 2,067,464 2,129, DOUBL 2,368,819 2,439, DOUBL 2,528,718 2,604, Page 65

66 Page 66 EXHIBIT 3 D: 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 HOUSTON 2001 POST OAK B THE DOUBLETREE HOTEL POST DOUBL 2,312,988 2,382, DOUBL 2,214,701 2,281, DOUBL 2,280,609 2,349, DOUBL 2,462,111 2,535, DOUBL 2,343,664 2,413, DOUBL 2,599,655 2,677, DOUBL 2,473,585 2,547, DOUBL 2,426,901 2,580, DOUBL 2,299,802 2,368, DOUBL 2,313,276 2,437, DOUBL 2,250,000 2,317, DOUBL 2,745,937 2,828, DOUBL 2,382,807 2,454, DOUBL 2,503,201 2,578, DOUBL 2,503,201 2,578, DOUBL 2,736,372 2,818, DOUBL 2,386,993 2,458, DOUBL 2,543,230 2,619, DOUBL 2,849,795 2,954, DOUBL 2,648,799 2,728, DOUBL 2,499,275 2,600, DOUBL 2,589,123 2,666, DOUBL 3,010,212 3,100, DOUBL 2,768,405 2,884, DOUBL 2,675,517 2,797, DOUBL 2,730,494 2,812, DOUBL 3,296,677 3,395, DOUBL 3,261,921 3,860, DOUBL 3,195,736 3,315, DOUBL 3,238,272 3,275, DOUBL 3,581,682 3,658, DOUBL 3,696,334 3,807, DOUBL 3,251,812 3,472, DOUBL 3,540,358 3,612, DOUBL 3,457,471 3,583, DOUBL 3,367,301 3,422, DOUBL 2,993,789 3,076, DOUBL 3,201,733 3,286, DOUBL 3,670,592 3,723, DOUBL 3,547,281 3,589, DOUBL 3,186,457 3,389, DOUBL 3,351,852 3,380, DOUBL 3,896,493 4,013, DOUBL 3,907,107 4,024, DOUBL 3,313,387 3,775, DOUBL 3,094,794 3,565, DOUBL 3,695,349 3,838,

67 EXHIBIT 3 D: 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 HOUSTON 2001 POST OAK B THE DOUBLETREE HOTEL POST DOUBL 3,662,850 3,731, DOUBL 2,878,412 2,964, HOUSTON 5150 WESTHEIMER JW MARRIOTT # RMS M INT C 555, , INT C 1,721,865 1,783, INT C 1,441,135 1,493, INT C 1,765,350 1,828, INT C 2,336,807 2,406, INT C 1,988,482 2,048, INT C 1,261,317 1,299, INT C 1,417,334 1,459, INT C 1,243,720 1,268, INT C 1,389,800 1,417, INT C 939, , INT C 1,406,006 1,434, INT C 1,262,025 1,299, INT C 1,490,083 1,534, INT C 1,197,524 1,233, INT C 1,251,127 1,288, INT C 1,885,591 1,942, INT C 1,443,956 1,487, INT C 1,188,432 1,224, INT C 1,679,473 1,729, MARRT 1,900,000 1,957, MARRT 1,500,000 1,545, MARRT 1,213,650 1,250, MARRT 2,221,064 2,287, MARRT 2,707,067 2,788, MARRT 2,800,077 2,884, MARRT 3,325,299 3,425, MARRT 2,454,569 2,528, MARRT 2,703,334 2,784, MARRT 2,823,450 2,908, MARRT 3,434,160 3,537, MARRT 2,980,528 3,069, MARRT 2,948,160 3,036, MARRT 2,746,190 2,828, MARRT 3,578,960 3,686, MARRT 2,735,072 2,817, MARRT 3,078,354 3,170, MARRT 3,032,391 3,123, MARRT 3,613,150 3,721, MARRT 2,720,418 2,802, MARRT 3,169,810 3,264, MARRT 3,050,000 3,141, Page 67

68 Page 68 EXHIBIT 3 D: 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 HOUSTON 5150 WESTHEIMER JW MARRIOTT # RMS M MARRT 3,660,024 3,769, MARRT 3,026,044 3,116, MARRT 3,464,663 3,573, MARRT 3,074,748 3,202, MARRT 3,855,652 4,028, MARRT 3,444,198 3,547, MARRT 3,888,160 4,004, MARRT 3,621,777 3,730, MARRT 3,621,777 3,671, MARRT 3,705,353 3,800, MARRT 4,380,399 4,511, MARRT 4,085,293 4,205, MARRT 3,654,636 3,759, MARRT 5,213,225 5,414, MARRT 4,953,907 5,048, MARRT 4,665,380 4,823, MARRT 5,392,879 5,571, MARRT 4,188,834 4,243, MARRT 4,623,968 4,673, MARRT 4,405,609 4,572, MARRT 5,772,025 5,993, MARRT 3,630,075 3,682, MARRT 4,953,362 4,996, MARRT 4,834,672 4,981, MARRT 6,322,580 6,492, MARRT 4,189,535 4,300, MARRT 4,974,179 5,043, MARRT 4,697,793 4,804, MARRT 5,618,396 5,845, MARRT 4,150,240 4,238, MARRT 4,645,535 4,903, MARRT 4,474,325 4,566, MARRT 4,980,858 5,147, FOOTNOTES: Factor used to adjust taxable to gross revenues. Area factor used if property data not available. Taxable equals 89% of gross Statewide. 2. A number or a 'Y' indicates quarter's revenues were estimated. 3. Estimated Average Daily Rate (e.g % 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).

69 EXHIBIT 3 E: HOUSTON METRO EXCLUDING CORE AREA LODGING Page 69 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR ,821 1, , ,532 1, , ,410 1, , ,607 1, , *TOTAL , , ,072 1, , ,406 1, , ,238 1, , ,364 1, , *TOTAL , , ,011 1, , ,173 1, , ,386 1, , ,501 1, , *TOTAL , , ,489 1, , ,649 1, , ,022 1, , ,488 1, , *TOTAL , , ,152 1, , ,775 1, , ,617 1, , ,815 1, , *TOTAL , , ,084 1, , ,592 1, , ,373 1, , ,294 1, , *TOTAL , , ,330 1, , ,137 1, , ,158 1, , ,260 1, , *TOTAL , , ,116 1, , ,982 1, , ,065 1, , ,848 1, , *TOTAL , ,

70 EXHIBIT 3 E: HOUSTON METRO EXCLUDING CORE AREA LODGING Page 70 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR ,302 1, , ,386 1, , ,432 1, , ,428 1, , *TOTAL , , ,289 1, , ,344 1, , ,669 1, , ,494 1, , *TOTAL , , ,637 1, , ,998 1, , ,216 1, , ,546 1, , *TOTAL , , ,513 1, , ,712 1, , ,020 1, , ,900 1, , *TOTAL , , ,051 1, , ,621 1, , ,738 1, , ,602 1, , *TOTAL , , ,570 1, , ,738 1, , ,774 1, , ,612 1, , *TOTAL , , ,625 1, , ,864 1, , ,293 1, , ,762 1, , *TOTAL , , ,689 1, , ,766 1, , ,153 1, , ,435 1, , *TOTAL , ,

71 EXHIBIT 3 E: HOUSTON METRO EXCLUDING CORE AREA LODGING Page 71 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR ,686 1, , ,109 1, , ,819 1, , ,770 1, , *TOTAL , , ,465 1, , ,092 2, , ,771 2, , ,731 1, , *TOTAL , , ,549 2, , ,733 2, , ,558 2, , ,072 2, , *TOTAL , , ,939 2, , ,827 2, , ,679 2, , ,727 2, , *TOTAL , , ,787 2, , ,209 2, , ,745 2, , ,790 2, , *TOTAL , , ,578 2, , ,055 2, , ,173 2, , ,294 2, , *TOTAL , , ,998 2, , ,416 2, , ,168 2, , *TOTAL , , *TOTAL PERIOD ABOVE 157, ,774, 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)

72 Page 72 EXHIBIT 4 A: LODGING MARKET: DOWNTOWN DALLAS INCLUDES ZIP-CODES 75201/02/07/15(PART)/47(PART) # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , ,

73 EXHIBIT 4 A: LODGING MARKET: DOWNTOWN DALLAS INCLUDES ZIP-CODES 75201/02/07/15(PART)/47(PART) Page 73 # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , ,

74 Page 74 EXHIBIT 4 A: LODGING MARKET: DOWNTOWN DALLAS INCLUDES ZIP-CODES 75201/02/07/15(PART)/47(PART) # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , *TOTAL 2002 YTD 1, , *TOTAL PERIOD ABOVE 47, ,080, 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)

75 EXHIBIT 4 B: PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2002 LODGING MARKET: DOWNTOWN DALLAS INCLUDES ZIP-CODES 75201/02/07/15(PART)/47(PART) Page 75 # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR CHAINS ADMS MARK , HYATT , RENAISSAN , WYNDHAM , TOT UPSCALE , , EMBASSY , HAWTHORN , HOMEWOOD , OTH SUITE , RESIDENCE , TOT SUITES , CLARION COURTYARD , CROWNPLZA , HOLID INN , SHERATON , TOT MID/UPS , AMERI STS , BRADFORD , CANDLWOOD , TOT MIN STE , BEST WEST , FAIRFIELD , HAMPTON , WINGATE , TOT LTD SVE , STUD , TOT EXT STA , RAMAD INN , RAMAD LTD TOT BUDGET , TOT CHAINS , , INDEPENDENTS , TOT MARKET , , * All figures annualized. Includes taxed and est non-tax room revenues.

76 Page 76 EXHIBIT 4 C: LODGING MARKET: DOWNTOWN DALLAS INCLUDES ZIP-CODES 75201/02/07/15(PART)/47(PART) 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 ADAM'S MARK DALLAS AMARK 6,967,360 7,867, HARRY HINE BRADFORD HOMESUITES BRADF 322, , N AKARD ST FAIRMONT DALLAS HOTEL ,794,858 3,993, MAIN ST HOLIDAY INN ARISTOCRAT HOLID 511, , CRESCENT CT HOTEL CRESCENT COURT ,935,098 2,969, MAPLE AVEN HOTEL ST GERMAIN INC ,865 42, N PEARL ST LE MERIDIEN DALLAS ,100,000 2,400, MAPLE AVE MAPLE MANOR ,000 13, MAPLE AVE STONELEIGH HOTEL , , COMMERCE S THE MAGNOLIA HOTEL ,397,807 1,860, N LAMAR ST AMERISUITES DW AMSTE 740, , ELM HAMPTON INN DNTN WESTSIDE HAMPT 1,177,511 1,267, COMMERCE S THE ADOLPHUS HOTEL ,793,833 1,920, S HOUSTON S THE HOTEL LAWRENCE FMR PAR , , MARKET CEN BEST WESTERN MARKET CENTE BWEST 266, , MARKET CEN COURTYARD MARKET CTR COURT 1,068,134 1,074,

77 Page 77 E 3 YR AVG EXHIBIT 4 C: LODGING MARKET: DOWNTOWN DALLAS 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 DALLAS MARRIOTT SUITES X.STE 2,005,811 2,064, N STEMMONS EMBASSY SUITES HOTEL # EMBAS 1,208,174 1,416, MARKET CEN FAIRFIELD INN BY MARRIOTT FAIRF 561, , MARKET CEN HOLIDAY INN MARKET CENTER HOLID 437, , N STEMMONS HOMEWOOD SUITES MKT CTR # HOMEW 553, , E REUNION B HYATT REGENCY TO 1122 EXPA HYATT 7,525,370 8,024, MARKET CEN RAMADA LIMITED - MARKET C RALTD 62,086 71, N STEMMONS RENAISSANCE DALLAS HOTEL RENAS 3,648,658 3,893, N STEMMONS SHERATON X.STE 1,025,235 1,118, N STEMMONS STUDIO 6 FMR HOMESTEAD VIL STUD6 227, , N STEMMONS WILSON WORLD SUITES-DALLA X.STE 272, , N STEMMONS WYNDHAM ANATOLE HOTEL WYNDH 8,990,770 9,691, MARKET CEN WYNDHAM MARKET CEN WYNDH 844, , S AKARD ST RAMADA PLAZA HOTEL RAMAD 276, , N STEMMONS CANDLEWOOD SUITES MARKET C CANDL 253, , N STEMMONS CLARION INN CLARI 196, , E 3 YR AVG

78 Page 78 EXHIBIT 4 C: LODGING MARKET: DOWNTOWN DALLAS 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 7050 N STEMMONS CROWNE PLAZA MKT CTR FMR H CROWN 1,047,301 1,088, BROOKRIVER HAWTHORN SUITES HAWTH 160, , REGAL ROW RAMADA MARKET CENTER LEBAR RAMAD 240, , LUCKY LN RELAX INN ,716 42, N STEMMONS RESIDENCE MKT CTR 140 STES RESID 760,949 1,087, W MOCKINGB SHERATON BROOKHOLLOW SHERA 621, , N STEMMONS WINGATE INN WINGT 231, , FOOTNOTES: Factor used to adjust taxable to gross revenues. Area factor used if property data not available. Taxable equals 89% of gross Statewide. 2. A number or a 'Y' indicates quarter's revenues were estimated. 3. Estimated Average Daily Rate (e.g % 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).

79 EXHIBIT 4 D: LODGING MARKET: DOWNTOWN DALLAS - SUBJECT HOTELS INCLUDES ZIP-CODES 75201/02/07/15(PART)/47(PART) Page 79 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 ADAM'S MARK DALLAS SHERA 1,656,396 1,805, SHERA 1,632,600 1,779, SHERA 1,287,893 1,403, SHERA 1,539,495 1,678, SHERA 1,704,466 1,857, SHERA 1,373,172 1,496, SHERA 1,222,755 1,332, SHERA 1,290,095 1,406, SHERA 1,132,523 1,155, SHERA 1,987,014 2,058, SHERA 1,633,214 1,692, SHERA 1,643,702 1,702, SHERA 1,549,991 1,605, SHERA 1,756,817 1,914, SHERA 2,015,750 2,197, SHERA 1,457,792 1,588, SHERA 1,846,481 2,012, SHERA 1,897,761 1,935, SHERA 1,795,168 1,831, SHERA 1,427,845 1,456, SHERA 1,603,860 1,635, SHERA 1,511,623 1,647, SHERA 1,466,155 1,598, SHERA 1,121,839 1,222, SHERA 1,440,000 1,569, SHERA 1,798,757 1,960, SHERA 1,460,222 1,591, SHERA 1,232,679 1,343, SHERA 1,907,631 2,079, SHERA 1,767,103 1,926, SHERA 1,871,544 2,039, SHERA 1,163,622 1,268, SHERA 1,943,976 2,118, SHERA 1,537,814 1,676, SHERA 1,370,331 1,493, SHERA 1,082,281 1,179, ,189,143 1,263, ,275,000 1,389, , , ,582 1,016, ,000,000 1,090, ,582 1,016, ,160,944 1,297, , ,

80 Page 80 EXHIBIT 4 D: 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 ADAM'S MARK DALLAS ,412,179 1,491, ,023,305 1,115, , , ,196 1,193, ,022,711 1,142, ,091,086 1,320, ,146,060 1,276, ,184,749 1,310, ,365,150 1,488, HARVE 1,158,123 1,224, HARVE 1,359,360 1,764, HARVE 1,392,617 1,656, HARVE 1,559,812 1,837, HARVE 1,895,699 2,272, HARVE 1,725,967 2,143, HARVE 1,681,993 2,102, HARVE 1,688,788 2,098, AMARK 1,339,926 1,743, AMARK 1,190,059 1,628, AMARK 1,425,255 1,556, AMARK 2,061,632 2,212, AMARK 2,685,168 2,898, AMARK 2,188,564 2,328, AMARK 1,643,230 1,703, AMARK 8,215,724 8,608, AMARK11,907,842 11,999, AMARK14,267,928 14,457, AMARK 9,111,116 9,722, AMARK 9,756,863 10,100, AMARK13,999,276 14,850, AMARK 9,616,910 10,193, AMARK 9,272,965 9,590, AMARK 9,301,776 9,995, AMARK13,481,285 13,979, AMARK 6,188,483 7,631, AMARK 4,715,180 7,344, AMARK 4,186,728 5,318, AMARK 9,200,180 9,763, AMARK 7,299,583 7,993, AMARK 6,967,360 7,867, COMMERCE S THE MAGNOLIA HOTEL , , ,063,610 1,210, ,495,376 1,842, ,727,671 2,152, ,529,605 2,032,

81 Page 81 EXHIBIT 4 D: 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 ,677,356 2,064, ,687,767 2,268, ,031,363 1,976, ,121,768 1,762, ,161,756 1,739, ,917,755 2,462, ,525,701 2,224, ,397,807 1,860, N STEMMONS RENAISSANCE DALLAS HOTEL WYNDH 1,524,373 1,554, WYNDH 1,488,204 1,517, WYNDH 1,888,675 1,926, WYNDH 1,600,583 1,632, WYNDH 2,301,125 2,383, WYNDH 1,705,073 1,766, WYNDH 2,395,054 2,481, WYNDH 2,126,157 2,202, WYNDH 2,715,491 2,796, WYNDH 2,432,609 2,505, WYNDH 2,255,326 2,322, WYNDH 2,082,297 2,144, WYNDH 2,679,048 2,732, WYNDH 2,706,875 2,761, WYNDH 2,543,699 2,594, WYNDH 2,216,962 2,261, WYNDH 2,875,107 2,961, STOUF 1,683,890 1,734, STOUF 2,334,905 2,404, STOUF 1,929,501 1,987, STOUF 3,024,348 3,115, STOUF 2,021,597 2,082, STOUF 2,168,758 2,233, STOUF 2,674,804 2,755, STOUF 3,144,678 3,239, STOUF 2,387,258 2,458, STOUF 2,604,716 2,682, STOUF 2,353,393 2,423, STOUF 2,943,677 3,031, STOUF 1,939,312 1,997, STOUF 2,667,199 2,703, STOUF 2,456,729 2,515, STOUF 2,572,101 2,649, STOUF 2,250,352 2,361, STOUF 1,924,964 2,159, STOUF 2,537,124 2,613, STOUF 2,860,120 2,945,

82 Page 82 EXHIBIT 4 D: 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 2222 N STEMMONS RENAISSANCE DALLAS HOTEL STOUF 2,351,241 2,534, STOUF 2,163,381 2,228, STOUF 2,658,042 2,842, STOUF 2,685,063 2,765, STOUF 2,375,139 2,562, STOUF 2,399,354 2,544, STOUF 2,549,589 2,626, STOUF 3,017,304 3,107, STOUF 3,192,146 3,317, STOUF 2,863,712 2,950, STOUF 2,952,483 3,123, RENAS 3,867,839 4,024, RENAS 3,280,658 3,399, RENAS 2,512,611 2,636, RENAS 3,267,958 3,365, RENAS 4,322,321 4,451, RENAS 3,019,375 3,140, RENAS 3,144,968 3,185, RENAS 3,602,634 3,688, RENAS 4,046,659 4,168, RENAS 2,778,819 2,928, RENAS 4,221,581 4,297, RENAS 2,936,905 3,024, RENAS 3,824,731 3,955, RENAS 3,196,844 3,421, RENAS 4,457,645 4,585, RENAS 2,990,417 3,081, RENAS 3,389,825 3,545, RENAS 3,265,945 3,395, RENAS 3,958,687 4,198, RENAS 3,149,757 3,263, RENAS 4,184,808 4,298, RENAS 3,419,430 3,495, RENAS 4,512,393 4,652, RENAS 3,087,321 3,220, RENAS 3,881,923 3,954, RENAS 2,595,857 2,784, RENAS 3,334,445 3,540, RENAS 2,120,363 2,181, RENAS 3,616,887 3,786, RENAS 2,576,412 2,726, RENAS 3,648,658 3,893,

83 Page 83 EXHIBIT 4 D: 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 1914 COMMERCE S DALLAS GRAND 125 OF 710 PO HILTO 2,207,008 2,427, HILTO 2,293,336 2,522, HILTO 1,479,534 1,627, HILTO 1,963,216 2,159, HILTO 2,571,384 2,828, HILTO 1,860,819 2,046, HILTO 1,584,890 1,743, HILTO 2,253,470 2,478, HILTO 2,673,572 2,940, HILTO 2,123,053 2,335, HILTO 1,529,931 1,682, HILTO 1,781,210 1,959, HILTO 2,102,914 2,144, HILTO 2,047,300 2,088, HILTO 1,531,568 1,562, HILTO 1,446,454 1,475, HILTO 2,110,763 2,186, HILTO 1,838,592 1,904, HILTO 1,702,564 1,763, HILTO 1,434,612 1,486, HILTO 2,045,290 2,249, HILTO 2,092,583 2,301, HILTO 1,895,571 2,085, HILTO 1,811,682 1,992, HILTO 1,782,756 1,818, HILTO 1,778,647 1,814, HILTO 1,422,962 1,451, HILTO 1,583,671 1,615, HILTO 1,945,897 2,140, HILTO 1,241,461 1,365, HILTO 753, , HILTO 792, , HILTO 1,892,582 2,081, HILTO 1,384,166 1,522, X.BUD 860, , X.BUD 1,235,939 1,359, X.BUD 1,393,737 1,533, X.BUD 1,145,789 1,260, X.BUD 800, , X.BUD 1,093,859 1,203, X.BUD 947,258 1,041, X.BUD 909,414 1,000, X.BUD 810, , X.BUD 856, , E 3 YR AVG

84 Page 84 EXHIBIT 4 D: 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 1914 COMMERCE S DALLAS GRAND 125 OF 710 PO X.BUD 821, , , , , , , , , , , , , , , , , , , , , , , , ,035,183 1,138, , , , , ,206,612 1,327, ,550,126 1,741, ,450,345 1,660, , , ,427,304 1,536, ,734,506 1,807, ,075,481 1,175, ,046,864 1,104, ,506,057 1,686, HO JO 1,159,679 1,197, HO JO 1,062,903 1,408, HO JO 1,059,030 1,168, ,483,845 1,593, ,556,273 1,709, ,472,089 1,519, , , ,332,336 1,465, , , , , , , ,423,422 1,454, , , , , , , , , FOOTNOTES: Factor used to adjust taxable to gross revenues. Area factor used if property data not available. Taxable equals 89% of gross Statewide. 2. A number or a 'Y' indicates quarter's revenues were estimated. 3. Estimated Average Daily Rate (e.g % of 'rack single'); 4. Occupancy derived from calculated roomnights sold

85 EXHIBIT 4 E: LODGING MARKET: DALLAS METRO EXCLUDING DOWNTOWN CBD AREA Page 85 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR ,405 1, , ,201 1, , ,494 1, , ,842 1, , *TOTAL , , ,244 1, , ,562 1, , ,692 1, , ,538 1, , *TOTAL , , ,901 1, , ,193 1, , ,316 1, , ,289 1, , *TOTAL , , ,060 1, , ,537 1, , ,790 1, , ,407 1, , *TOTAL , , ,458 1, , ,954 1, , ,846 1, , ,437 1, , *TOTAL , , ,447 1, , ,177 1, , ,983 1, , ,016 1, , *TOTAL , , ,187 1, , ,339 1, , ,112 1, , ,001 1, , *TOTAL , , ,747 1, , ,514 1, , ,006 1, , ,021 1, , *TOTAL , ,

86 EXHIBIT 4 E: LODGING MARKET: DALLAS METRO EXCLUDING DOWNTOWN CBD AREA Page 86 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR ,158 1, , ,410 1, , ,274 1, , ,076 1, , *TOTAL , , ,422 1, , ,434 1, , ,742 1, , ,605 1, , *TOTAL , , ,346 1, , ,291 1, , ,883 1, , ,571 1, , *TOTAL , , ,554 1, , ,725 1, , ,763 1, , ,578 1, , *TOTAL , , ,673 1, , ,746 1, , ,913 1, , ,517 1, , *TOTAL , , ,604 1, , ,765 1, , ,797 1, , ,856 1, , *TOTAL , , ,844 1, , ,039 2, , ,661 2, , ,415 1, , *TOTAL , , ,174 1, , ,424 2, , ,419 2, , ,679 1, , *TOTAL , ,

87 EXHIBIT 4 E: LODGING MARKET: DALLAS METRO EXCLUDING DOWNTOWN CBD AREA Page 87 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR ,235 2, , ,147 2, , ,106 2, , ,927 2, , *TOTAL , , ,595 2, , ,604 2, , ,301 2, , ,128 2, , *TOTAL , , ,884 2, , ,681 2, , ,131 2, , ,075 2, , *TOTAL , , ,105 2, , ,210 2, , ,782 2, , ,925 2, , *TOTAL , , ,223 2, , ,675 2, , ,627 2, , ,389 2, , *TOTAL , , ,143 2, , ,910 2, , ,211 2, , ,382 2, , *TOTAL , , ,683 2, , ,249 2, , ,283 2, , *TOTAL , , *TOTAL PERIOD ABOVE 164, ,704, 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)

88 EXHIBIT 5 A: AUSTIN CENTRAL BUSINESS DISTRICT Includes zips: 78701/02/04(PART) Page 88 # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , *TOTAL , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL ,

89 EXHIBIT 5 A: AUSTIN CENTRAL BUSINESS DISTRICT Includes zips: 78701/02/04(PART) Page 89 # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL ,

90 EXHIBIT 5 A: AUSTIN CENTRAL BUSINESS DISTRICT Includes zips: 78701/02/04(PART) Page 90 # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , *TOTAL , *TOTAL PERIOD ABOVE 14, ,342, 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)

91 EXHIBIT 5 B: PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2002 AUSTIN CENTRAL BUSINESS DISTRICT INCLUDES ZIPS: 78701/02/04(PART) Page 91 # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR CHAINS FOURSEAS , HYATT , INT-C , MARRIOTT , OMNI , TOT UPSCALE , DOUBL STE , EMBASSY , TOT SUITES , HOLID INN , RADIS HTL , SHERATON , TOT MID/UPS , DOUBL CLB , LA QUINTA , TOT LTD SVE , EXT AMERI , TOT EXT STA , SUPER TOT BUDGET TOT CHAINS , INDEPENDENTS , TOT MARKET , * All figures annualized. Includes taxed and est non-tax room revenues.

92 Page 92 EXHIBIT 5 C: AUSTIN CENTRAL BUSINESS DISTRICT Includes zips: 78701/02/04(PART) 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 AUSTIN 303 W 15TH ST DOUBLETREE GUEST SUITES A DBLST 1,396,750 1,523, BRAZOS ST DRISKILL HOTEL ,651,095 2,143, GUADALUPE S EXTENDED STAY AMERICA EXTSA 329, , SAN JACINTO FOUR SEASONS HOTEL AUSTIN FOURS 3,542,361 3,630, N INTERREGIO HOLIDAY INN TOWN LAKE HOLI HOLID 1,101,133 1,259, CONGRESS AV INTER-CONTINENTAL STEPHEN INT-C 1,286,984 1,351, EAST 11TH S LA QUINTA INN # LAQUN 411, , E 11TH ST THE CAP MARRT 2,673,577 3,466, SAN JACINTO OMNI AUSTIN HOTEL AT FIC OMNI 2,149,665 2,581, N I H SHERATON AUSTIN HOTEL SHERA 1,100,000 1,300, W MLK THE INN AT PEARL ST ,226 38, FIRST ST THE RADISSON HOTEL & SUITE RADIS 1,964,643 2,150, IH 35 NORT DOUBLETREE CLUB HOTEL DCLUB 574, , N IH SUPER 8 CENTRAL SUPR8 203, , S CONGRESS EMBASSY SUITES OF AUSTIN EMBAS 1,840,928 1,931, BARTON SPRI HYATT REGENCY AUSTIN HYATT 2,812,097 3,000, FOOTNOTES: Factor used to adjust taxable to gross revenues. Area factor used if property data not available. Taxable equals 89% of gross Statewide. 2. A number or a 'Y' indicates quarter's revenues were estimated. 3. Estimated Average Daily Rate (e.g % 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).

93 EXHIBIT 5 D: AUSTIN CENTRAL BUSINESS DISTRICT - SUBJECT HOTELS INCLUDES ZIPS: 78701/02/04(PART) Page 93 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 AUSTIN 98 SAN JACINTO FOUR SEASONS HOTEL AUSTIN FOURS 754, , FOURS 1,178,500 1,239, FOURS 1,278,512 1,344, FOURS 1,167,776 1,228, FOURS 1,365,717 1,436, FOURS 1,476,984 1,553, FOURS 1,396,198 1,468, FOURS 1,424,743 1,498, FOURS 1,554,315 1,635, FOURS 1,862,376 1,959, FOURS 1,618,540 1,702, FOURS 1,642,801 1,728, FOURS 1,888,589 1,986, FOURS 1,932,474 2,032, FOURS 1,870,029 1,940, FOURS 1,778,814 1,860, FOURS 1,937,913 2,038, FOURS 2,157,420 2,277, FOURS 2,079,190 2,187, FOURS 1,953,703 2,055, FOURS 2,104,244 2,214, FOURS 2,262,193 2,379, FOURS 2,182,599 2,296, FOURS 2,008,895 2,154, FOURS 2,331,836 2,473, FOURS 2,466,763 2,644, FOURS 2,126,618 2,352, FOURS 2,283,645 2,403, FOURS 2,557,893 2,690, FOURS 2,647,469 2,809, FOURS 2,505,561 2,650, FOURS 2,532,182 2,663, FOURS 2,904,547 3,072, FOURS 3,061,512 3,175, FOURS 3,078,156 3,238, FOURS 3,042,746 3,200, FOURS 3,164,647 3,265, FOURS 3,263,968 3,364, FOURS 3,069,519 3,156, FOURS 3,129,802 3,307, FOURS 3,527,083 3,653, FOURS 3,709,376 3,880, FOURS 3,759,957 3,906, FOURS 3,565,636 3,678,

94 Page 94 EXHIBIT 5 D: 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 AUSTIN 98 SAN JACINTO FOUR SEASONS HOTEL AUSTIN FOURS 3,816,280 3,953, FOURS 4,228,335 4,339, FOURS 3,887,057 4,132, FOURS 3,847,683 3,945, FOURS 4,337,707 4,567, FOURS 4,441,307 4,666, FOURS 3,989,093 4,230, FOURS 4,190,098 4,333, FOURS 4,719,535 4,859, FOURS 5,259,750 5,413, FOURS 4,629,050 4,804, FOURS 4,513,375 4,660, FOURS 4,485,094 4,670, FOURS 4,513,003 4,673, FOURS 3,178,904 3,392, FOURS 3,100,089 3,363, FOURS 3,400,314 3,687, FOURS 4,159,312 4,338, FOURS 3,542,361 3,630, E 11TH ST THE CAP MARRT 399, , MARRT 1,715,005 1,749, MARRT 903, , MARRT 1,236,758 1,298, MARRT 1,255,648 1,318, MARRT 1,241,438 1,303, MARRT 1,048,500 1,100, MARRT 955,386 1,003, MARRT 1,189,135 1,248, MARRT 1,100,000 1,155, Y MARRT 971,748 1,020, MARRT 1,177,859 1,236, MARRT 1,209,792 1,270, MARRT 1,585,400 1,664, MARRT 1,416,863 1,487, MARRT 1,437,393 1,509, MARRT 1,631,898 1,713, MARRT 1,892,570 1,987, MARRT 1,410,908 1,678, MARRT 1,560,772 1,638, MARRT 1,936,342 2,033, MARRT 2,047,052 2,149, MARRT 1,584,510 1,663, MARRT 1,743,151 1,830, MARRT 1,924,696 2,020, MARRT 2,227,229 2,338,

95 Page 95 EXHIBIT 5 C: 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 AUSTIN 701 E 11TH ST THE CAP MARRT 1,705,245 1,790, MARRT 2,029,361 2,130, MARRT 2,107,014 2,212, MARRT 2,441,005 2,563, MARRT 1,665,199 1,748, MARRT 1,943,467 2,040, MARRT 2,189,505 2,298, MARRT 2,537,767 2,826, MARRT 1,930,990 2,106, MARRT 2,257,816 2,605, MARRT 2,320,601 2,613, MARRT 2,913,891 3,037, MARRT 2,125,593 2,326, MARRT 2,345,862 2,567, MARRT 2,552,462 2,739, MARRT 2,995,622 3,148, MARRT 2,335,702 2,419, MARRT 2,640,457 2,910, MARRT 2,650,280 2,835, MARRT 2,441,607 2,540, MARRT 3,230,137 3,395, MARRT 2,767,207 2,959, MARRT 2,964,566 3,108, MARRT 3,335,014 3,527, MARRT 2,484,648 2,597, MARRT 3,116,426 3,402, MARRT 3,009,366 3,269, MARRT 3,717,698 3,924, MARRT 2,749,951 2,950, MARRT 3,155,438 3,459, MARRT 3,315,231 3,609, MARRT 4,045,777 4,309, MARRT 3,267,336 3,403, MARRT 3,294,138 3,551, MARRT 2,837,494 3,043, MARRT 2,546,359 3,014, MARRT 1,543,828 2,370, MARRT 2,008,736 2,762, MARRT 2,115,645 2,587, MARRT 2,673,577 3,466, SAN JACINTO OMNI AUSTIN HOTEL AT FIC RADIS 225, , RADIS 725, , RADIS 766, , RADIS 578, , RADIS 604, ,

96 Page 96 EXHIBIT 5 D: 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 AUSTIN 700 SAN JACINTO OMNI AUSTIN HOTEL AT FIC RADIS 688, , RADIS 801, , RADIS 749, , RADIS 777, , RADIS 1,000,238 1,150, RADIS 989,602 1,138, RADIS 886,418 1,019, RADIS 839, , RADIS 811, , RADIS 1,052,922 1,210, RADIS 792, , RADIS 883,980 1,016, RADIS 1,007,256 1,380, RADIS 1,058,812 1,462, RADIS 799,586 1,134, RADIS 987,510 1,279, OMNI 979,194 1,328, OMNI 1,091,795 1,560, OMNI 901,462 1,161, OMNI 1,045,205 1,333, OMNI 1,365,192 1,658, OMNI 1,387,970 1,731, OMNI 1,207,587 1,506, OMNI 1,119,288 1,427, OMNI 1,476,905 1,765, OMNI 1,779,348 2,027, OMNI 1,665,342 1,932, OMNI 1,686,605 1,770, OMNI 1,928,972 2,218, OMNI 1,999,045 2,228, OMNI 1,786,460 2,038, OMNI 1,871,568 1,953, OMNI 1,943,137 2,187, OMNI 2,036,563 2,315, OMNI 1,965,495 2,068, OMNI 2,041,006 2,084, OMNI 2,271,986 2,404, OMNI 2,238,635 2,538, OMNI 2,077,449 2,299, OMNI 2,087,514 2,287, OMNI 2,646,818 2,819, OMNI 2,706,974 2,821, OMNI 2,417,130 2,574, OMNI 2,297,345 2,554, OMNI 3,070,988 3,271, OMNI 2,734,877 2,984, OMNI 2,309,040 2,532,

97 Page 97 EXHIBIT 5 D: 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 AUSTIN 700 SAN JACINTO OMNI AUSTIN HOTEL AT FIC OMNI 2,943,166 3,047, OMNI 3,394,117 3,773, OMNI 3,953,346 4,109, OMNI 3,246,042 3,512, OMNI 3,567,193 3,733, OMNI 3,133,618 3,608, OMNI 2,940,993 3,301, OMNI 2,020,140 2,320, OMNI 2,223,999 2,424, OMNI 2,621,232 2,789, OMNI 2,856,119 3,189, OMNI 2,149,665 2,581, N I H SHERATON AUSTIN HOTEL , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , SHERA 497, , SHERA 522, , SHERA 450, , SHERA 525, , SHERA 608, , SHERA 637, , SHERA 578, , SHERA 698,714 1,086, SHERA 644,156 1,105, SHERA 600, ,

98 Page 98 EXHIBIT 5 D: 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 AUSTIN 500 N I H SHERATON AUSTIN HOTEL SHERA 640, , SHERA 748,402 1,169, SHERA 877,788 1,311, SHERA 1,016,022 1,273, SHERA 1,009,231 1,268, SHERA 1,305,886 1,704, SHERA 1,198,430 1,654, SHERA 1,207,398 1,375, SHERA 1,030,400 1,441, SHERA 1,119,696 1,578, SHERA 1,266,640 1,652, SHERA 1,300,000 1,430, SHERA 1,163,443 1,347, SHERA 1,359,243 1,630, SHERA 1,307,132 1,694, SHERA 1,339,163 1,505, SHERA 1,340,042 1,389, SHERA 1,442,923 1,725, SHERA 1,557,215 1,836, SHERA 1,404,871 1,577, SHERA 1,445,709 1,625, SHERA 1,858,420 2,029, SHERA 1,708,983 1,897, SHERA 1,512,274 1,657, SHERA 1,610,156 1,667, SHERA 1,898,738 2,087, SHERA 1,996,346 2,288, SHERA 1,484,428 1,726, SHERA 1,899,723 2,101, SHERA 1,967,271 2,128, SHERA 1,549,694 1,820, SHERA 1,185,807 1,395, SHERA 1,226,800 1,363, SHERA 1,111,128 1,431, SHERA 1,398,220 1,693, SHERA 1,100,000 1,300, FIRST ST THE RADISSON HOTEL & SUITE SHERA 693, , SHERA 864,809 1,114, SHERA 842,668 1,086, SHERA 848,990 1,094, SHERA 1,007,087 1,298, SHERA 1,060,794 1,367, SHERA 979,157 1,262, SHERA 760, , SHERA 951,647 1,226,

99 Page 99 EXHIBIT 5 D: 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 AUSTIN 111 FIRST ST THE RADISSON HOTEL & SUITE SHERA 957,995 1,234, SHERA 825,514 1,064, SHERA 727, , SHERA 923, , SHERA 990,050 1,009, SHERA 877, , SHERA 842, , SHERA 1,029,733 1,066, SHERA 1,108,139 1,148, SHERA 926, , SHERA 894, , SHERA 1,050,826 1,354, SHERA 1,069,872 1,379, SHERA 789,401 1,017, SHERA 808,189 1,041, SHERA 654, , SHERA 725, , SHERA 691, , SHERA 585, , SHERA 639, , SHERA 614, , SHERA 573, , SHERA 436, , SHERA 410, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,345 1,028, RADIS 776, , RADIS 694, , RADIS 972,579 1,281, RADIS 1,099,835 1,322, RADIS 1,048,138 1,243, RADIS 887, ,

100 Page 100 EXHIBIT 5 D: 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 AUSTIN 111 FIRST ST THE RADISSON HOTEL & SUITE RADIS 1,112,166 1,325, RADIS 1,259,438 1,487, RADIS 1,172,667 1,400, RADIS 1,051,966 1,192, RADIS 1,270,861 1,471, RADIS 1,415,692 1,611, RADIS 1,325,016 1,489, RADIS 1,230,097 1,320, RADIS 1,396,355 1,554, RADIS 1,442,261 1,707, RADIS 1,602,618 1,672, RADIS 1,460,116 1,601, RADIS 1,663,309 1,895, RADIS 1,625,277 1,993, RADIS 1,912,249 1,969, RADIS 1,668,272 1,807, RADIS 1,891,716 2,093, RADIS 1,863,020 2,096, RADIS 1,998,508 2,175, RADIS 2,287,936 2,371, RADIS 2,798,162 3,068, RADIS 2,750,104 3,069, RADIS 2,711,669 2,955, RADIS 2,482,843 2,673, RADIS 3,139,426 3,444, RADIS 3,435,016 3,824, RADIS 3,122,803 3,272, RADIS 3,041,370 3,293, RADIS 3,040,822 3,412, RADIS 2,853,690 3,169, RADIS 1,858,320 2,127, RADIS 1,912,790 2,133, RADIS 2,233,122 2,475, RADIS 2,758,164 3,172, RADIS 1,964,643 2,150, BARTON SPRI HYATT REGENCY AUSTIN HYATT 49,150 53, HYATT 1,737,378 1,893, HYATT 1,880,547 2,049, HYATT 1,874,379 2,043, HYATT 2,214,624 2,258, HYATT 2,319,740 2,366, HYATT 2,317,985 2,364, HYATT 2,186,580 2,230, HYATT 2,534,629 2,625, HYATT 2,654,723 2,750,

101 Page 101 EXHIBIT 5 D: 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 AUSTIN 208 BARTON SPRI HYATT REGENCY AUSTIN HYATT 2,533,701 2,624, HYATT 2,214,458 2,294, HYATT 2,517,855 2,744, HYATT 2,818,883 3,072, HYATT 2,458,359 2,679, HYATT 2,239,686 2,441, HYATT 2,152,194 2,195, HYATT 2,181,659 2,225, HYATT 2,229,331 2,273, HYATT 1,706,685 1,740, HYATT 1,735,419 1,891, HYATT 1,600,000 1,744, HYATT 1,590,273 1,733, HYATT 1,385,106 1,509, HYATT 1,281,467 1,396, HYATT 1,379,571 1,503, HYATT 1,366,692 1,489, HYATT 1,322,308 1,441, HYATT 1,513,837 1,650, HYATT 1,624,142 1,770, HYATT 1,410,809 1,537, HYATT 1,371,937 1,495, HYATT 1,616,926 1,762, HYATT 1,723,851 1,878, HYATT 1,701,288 1,854, HYATT 1,766,864 1,925, HYATT 1,718,483 1,873, HYATT 1,992,244 2,171, HYATT 1,860,967 2,028, HYATT 1,884,986 2,054, HYATT 1,869,062 2,037, HYATT 2,141,703 2,334, HYATT 1,745,302 1,902, HYATT 1,875,212 2,043, HYATT 2,036,086 2,398, HYATT 2,327,659 2,537, HYATT 1,942,117 2,116, HYATT 2,100,000 2,289, HYATT 2,074,518 2,261, HYATT 2,322,445 2,531, HYATT 1,857,556 2,024, HYATT 2,127,047 2,303, HYATT 2,470,021 2,840, HYATT 2,564,539 2,795, HYATT 2,547,143 2,776, HYATT 2,642,678 2,880, HYATT 2,931,798 3,195,

102 Page 102 EXHIBIT 5 D: 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 AUSTIN 208 BARTON SPRI HYATT REGENCY AUSTIN HYATT 2,890,163 3,150, HYATT 2,851,848 3,108, HYATT 2,536,872 2,765, HYATT 2,991,552 3,260, HYATT 3,129,703 3,411, HYATT 2,893,892 3,154, HYATT 3,020,813 3,258, HYATT 3,383,568 3,702, HYATT 3,283,211 3,776, HYATT 3,164,112 3,520, HYATT 3,231,511 3,432, HYATT 3,833,715 4,172, HYATT 3,470,835 3,940, HYATT 3,054,609 3,292, HYATT 3,165,554 3,492, HYATT 4,080,679 4,323, HYATT 3,886,359 4,280, HYATT 3,462,721 3,794, HYATT 3,605,923 3,891, HYATT 3,873,323 4,210, HYATT 3,600,929 3,883, HYATT 2,649,256 2,778, HYATT 2,676,678 2,862, HYATT 3,280,883 3,425, HYATT 3,468,482 3,801, HYATT 2,812,097 3,000, FOOTNOTES: Factor used to adjust taxable to gross revenues. Area factor used if property data not available. Taxable equals 89% of gross Statewide. 2. A number or a 'Y' indicates quarter's revenues were estimated. 3. Estimated Average Daily Rate (e.g % 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).

103 EXHIBIT 5 E: AUSTIN METRO EXCLUDING CENTRAL BUSINESS DISTRICT Page 103 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , ,

104 EXHIBIT 5 E: AUSTIN METRO EXCLUDING CENTRAL BUSINESS DISTRICT Page 104 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , ,

105 EXHIBIT 5 E: AUSTIN METRO EXCLUDING CENTRAL BUSINESS DISTRICT Page 105 # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , ,799 1, , ,126 1, , , , *TOTAL , , ,720 1, , ,342 1, , , , , , *TOTAL , , , , ,872 1, , , , *TOTAL , , *TOTAL PERIOD ABOVE 52, ,225, 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)

106 Page 106 BRUCE H. WALKER 1987-Present: Source Strategies, Inc. Founder and President of consultancy in research, strategy and marketing, specializing in lodging. Practice includes 75 hotel feasibility studies annually for individual developers. Other clients include Texas Department of Economic Development, Banks, major accounting firms and appraisers. Database of 3,500+ Texas hotel/motels created and maintained continuously. Testify regularly. Publisher and writer of The Hotel Brand Report (formerly MarketShare) and the Texas Hotel Performance Factbook : La Quinta Motor Inns, Inc. Senior Vice President, Marketing. Repositioned brand with the ad campaign "Just Right Overnight," new corporate logo, extensive couponing and premium-quality king rooms : Portel Videotex Network LP. President. Home-banking, home-shopping start-up : Holiday Corporation. Hotel Group Vice President, Marketing ( ), President of subsidiaries ( ), Senior Vice President, Central and Strategic Planning( ). Started the first hotel frequent traveler's program, and the classic ad campaign, "The Best Surprise is No Surprise." Developed and launched the Hi-Net satellite reception network to 350 Holiday Inn hotels, offering HBO, CNN and ESPN. Created prototypes and strategic plans for new chains Hampton Inns and Embassy Suites, and recommended sale of Holiday Inn chain (sold 1989 to Bass PLC) : Howard Johnson Company. Assistant to the President, Director Disney World Development, Director Restaurant Marketing : Procter & Gamble Company. International Brand Manager. Took Scope mouthwash, Secret deodorant and Crisco Oil into Canada, Crest toothpaste and Tempo deodorant into the United Kingdom. EDUCATION Amherst College. BA, Economics Harvard Business School. MBA. Ongoing seminars throughout career include strategic studies with the Boston Consulting Group. Appraisal Institute Hotel/Motel Valuation and Investment Seminar, April 1992 PUBLICATIONS AND SEMINARS: * The Cornell Quarterly, October 1993, "What's Ahead: A Strategic Look at Lodging Trends." * Hotel & Motel Management, October 3, 1994, "Curious Hoteliers Should Examine Hotels' Life Cycles." * The Brand Report and MarketShare newsletter, written and published quarterly since Over sixty issues to-date. * All About Business Enterprise Value of Hotels and Motels, a Seminar given to the Real Estate Counseling Group of America, a consortium of international experts in real estate decision issues. October 1996.

107 Page FEASIBILITY STUDIES CONSULTING PROJECTS AmeriSuites Oklahoma City Midwest City, OK McAllen Austin Berstrom Carrollton Fort Worth North Round Rock San Antonio 410 West Houston Hwy 249N Best Western El Paso Airport InterContinental Airport Crockett Castroville Pleasanton Best Western Inn & Suites/Suites McKinney Temple Glen Rose Van Burleson Shenandoah Brazoria Copperas Cove San Antonio NE Fort Worth NW San Antonio I37S San Antonio Airport Baymont Inn Dallas NW Highway Candlewood Suites Waco Comfort Inn McCarty Lane Houston Brenham Katy Corpus Christi Hwy 77 Houston McCarty Comfort Suites Houston InterContinental Galveston Plainview North Waco Kingwood Houston Beltway 8 Kemah Country Inn & Suites Dallas Houston Hobby Austin North Addison Dallas North San Antonio CBD Crowne Plaza Downtown Dallas Days Inn Post Brenham Embassy Suites Houston CBD Fairfield Inn by Marriott Round Rock Hampton Inn & Suites Galveston San Antonio CBD Pearland Lufkin Houston CBD Kemah Hawthorn Suites Ltd San Marcos San Antonio I-35 Lewisville Amarillo Houston InterContinental Waco Bellmead DFW Airport North Houston Greenway Austin Bergstrom DFW Airport South Dallas Forest Lane New Braunfels San Antonio CBD Hilton Garden Inn McAllen Austin NW Houston Beltway 8 Holiday Express El Paso East Mesquite Houston InterContinental Houston Galleria Clifton Canton Austin Bergstrom La Marque Boerne Athens

108 Feasibilities Continued Holiday Express Hotel & Suites Lampassas Austin NW Pfleugerville Cedar Park Mount Pleasant Lubbock Texas City Allen Houston CBD Homewood Suites Dallas CBD Houston Brookhollow Kingwood Howard Johnson Haltom City Independent Suite Hotels Humble Suites Express Inn Dallas Garland Inn Holtze Hotel Houston Downtowner Houston Harbour Inn Matagorda San Antonio Seven Oaks San Antonio Scottish Inn San Antonio Best Value Executive Inn New Braunfels Delux Inn & Suites McAllen Central Hotel Fredericksburg Ashley Suites Grapevine Delux Inn Raymondville Downtowner Houston 59S Mainstay Suites Las Cruces, NM Clute Aransas Pass Microtel San Antonio I-35N Texarkana Motel 6 Austin Bergstrom Killeen Quality Inn & Suites Grapevine Waco Quality Suites Rockport InterContinental Airport McAllen Pfluegerville Waco Ramada Limited Dallas Forest Lane Big Spring Red Roof Inn Harlingen Austin Bergstrom Residence Inn by Marriott Corpus Christi Shoreline Shoney's Inn & Suites Weimar Killeen Sleep Inn DFW Airport Texas Motor Speedway Texarkana Grapevine Staybridge Suites Round Rock Super 8 InterContinental Airport Lubbock Port Arthur Austin Bergstrom Manvel Georgetown San Marcos Travelodge San Antonio CBD Red Oak Wingate Inn & Suites San Antonio I-10 East Port Arthur Page 108

109 Page CONSULTING STUDIES, DATA AND LITIGATION SUPPORT 1. Over 500, detailed five-year custom data histories prepared for MAI appraisers. 2. Numerous studies of subject hotels to determine their historical, competitive REVPAR performance versus the market average. This unique analysis technique highlights trends and deviations in performance, regardless of market movement; a REVPAR index versus market average shows how well a property competes. Such deviations are then related to specific, causal events such as management problems or outside influence (e.g. new highway construction or new competition); if there is no effect from an event, studies confirm the absence of any impact). This is among Source's most important work, frequently the basis for expert witness testimony by Source's principal Bruce Walker. Litigation clients have included the Texas Department of Transportation (through Texas Attorney General's Office) for condemnation valuation and damage cases, including: the Days Inn Houston I- 45N, Motel 6 Ft. Worth, Holiday Inn Houston I-45N, La Quinta Houston I-45N, Holiday Inn Lubbock, and Austin Hawthorn Suites South, Chariot Inn, Malibu Grand Prix). Other litigating clients have included USAA, Bexar County Appraisal District, Capital Income Properties (Hilton Nassau Bay, Austin Marriott North), American Liberty, Dosani Brenham Inn, Wes-Tex Management El Campo. Hospitality (Homeplace Inn), Ramada Bannister Austin (Lock manufacturer), Rodeway Inn I-10 West (bank's non-funding of a committed loan), Homer J. Rader, and Siu Ft Worth and San Antonio Inn (bankruptcies), Holiday/Clarion (loss due to change of brand). 3. Numerous studies to determine the effect on revenues and cash flow of brand name alternatives, whether in new builds or in changing to- or from- a brand name. This technique is used extensively in feasibility work to predict revenue performance of new hotel projects under various brand name alternatives. 4. Studies to separate and quantify hotel Business Value - and the separate Real Estate Value - (for tax assessment disputes). The most important study here was to determine the average revenue effect of adding or removing the "Marriott Hotel" name to numerous hotel properties. Source Strategies has produced values for the Marriott Austin hotel and the Marriott Rivercenter hotel San Antonio, both with- and without- the Marriott name for real property tax disputes. Clients include USAA and the Bexar County Appraisal District. 5. Represented Host Marriott before Real Estate Tax Appeal Board for five properties in Fairfax, Virginia.

110 Page 110 Continued CONSULTING STUDIES, DATA AND LITIGATION SUPPORT 6. Drafted national lending guidelines for Heller Small Business Finance for lodging projects under $5 million. 7. Presentations to bank lending committees to explain the dynamic economics of the lodging industry, particularly the effect of market demand and supply, equilibrium occupancy, cost structures, and the effect of brand name on REVPAR and ROIC. 8. Development of competitive marketing strategies for individual properties, including outdoor advertising campaigns. Projects have included: Hampton, Super 8, Howard Johnson, Holiday, Ramada, Days, Econo Lodge and Best Western. 9. Contracted supplier of hotel data and data analysis to Texas' Tourism Division, since 1988: sole supplier of lodging market statistics used to assess tourism promotion efforts and market Texas nationally. 10. Analysis of alternative markets to determine their potential for new lodging: alternative metro areas, alternative sites, and strategically for an expanding chain. 11. Impact studies on client hotels due to a nearby chain expansion of the same name. Two studies both resulted in the franchisor cancelling nearby license approvals to the client's benefit. 12. Consumer intercept and secondary data studies, including the effect of a potential name change, the effect of new hotel regulations, and the importance of federal traveler groups. 13. Optimized hotel size for Amerisuites chain in secondary markets.

111 DOUGLAS W. SUTTON Present Source Strategies, Inc. Vice president specializing in development of hotel feasibility studies and software development. Market, revenue generation and cash flow forecasts. Successfully completed over 150 feasibility studies for new hotels and motels. Program database of 2,500 Texas hotel/motels. Contributing analyst and writer to Brand Report newsletter and the Texas Hotel Performance Factbook University Health System, San Antonio Texas. Decision Support Analyst. Provided data analysis support to all levels of hospital management. Prepared numerous medical studies, grant support documents, cost-analysis studies, staffing studies, and other analysis needed. Developed a number of software applications to allow various departments to track and study their individual patient populations Systems IV Professionals, Inc., San Antonio. President. Consulting firm specializing in data analysis and customized software development. Created major applications, including a long distance network analysis system for a major carrier; system allowed the carrier to determine the effect of various network changes before implementation to facilitate selection of the most cost efficient network possible United States Air Force. Information Services Officer, Directorate of Special Weapons, Kelly AFB. Duties included writing and maintaining software to manage the Air Force's Nuclear weapons arsenal, analyzing component supplies, and maintaining unit training publications. EDUCATION Troy State University, Troy Alabama, BS in Computer and Information Science. **********

112 TODD ANDERSON WALKER 1997-Present Source Strategies, Inc. Vice president, Business Operations. Over 200 Financial Feasibility studies successfully completed. Responsibility for sales and operation of Subscriber Database, including Texas Hotel Performance Factbook and Brand Report Newsletter. Accounts Receivable management and collections Contributing analyst, writer and editor to Brand Report newsletter and the Texas Hotel Performance Factbook The Globe & Mail. Assistant to the Editor of Business Publications. The Globe & Mail is Canada's national newspaper, a division of Thomson Publishing Corporation. Wrote business articles and edited publications. Edited InfoGlobe from April to October Source Strategies, Inc., San Antonio. Senior Consultant. Developed hotel feasibility studies. Market, revenue generation and cash flow forecasts. Completed over 60 studies for new hotels and motels throughout Texas. Circulation Director for Brand Report newsletter and the Texas Hotel Performance Factbook. Generated renewals at 85% rate. Part time from 1989 during education. EDUCATION University of Toronto, Ontario, Canada. Bachelor of Science with Honors in English and History. Part 2 ********** FINANCIAL FEASIBILITY STUDY: MARCH 5, 2003

113 PROPOSED DALLAS CONVENTION CENTER HOTEL This study has been prepared to determine the feasibility and the financial result of building a 1,200 unit convention headquarters hotel adjacent to the expanded Dallas Convention Center. The study incorporates a realistic projection of the downtown hotel market and assumes the project will carry a Four-Diamond quality rating from the American Automobile Association and a Marriott Hotel franchise (the most likely choice). BACKGROUND Source Strategies was asked by Citizens for a Sound Economy (CSE) to produce a feasibility study of a Dallas Convention Center Hotel. The background for this study is the ongoing debate in large cities of whether or not to proceed with large publicly financed investments, in this case headquarters hotels which serve a convention center. While this study focuses on a potential Dallas convention hotel, approximately 80 cities in the United States are currently upgrading or considering upgrading their convention facilities, all with the hope and expectation of attracting more visibility, more conventions and more economic activity. This study represents the results of this assignment in order for CSE to provide useful research to legislators, municipalities, and business leaders considering such initiatives. The following are our key findings on a potential Dallas convention headquarters hotel. KEY FINDINGS OF THIS STUDY: 1) HEADQUARTERS HOTEL AS A PRIVATE INVESTMENT: No private developer would undertake to develop this hotel project, as it is not a sound investment. The pre-tax, 'cash-on-cash' return on investment approximates 6% in an industry where at least a 14% return is required to gain developer interest. The total investment is estimated at $276,000,000, or $220,000 per rental unit plus an estimated $12,000,000 for land.

114 2) HEADQUARTERS HOTEL AS A PRIVATE / PUBLIC INVESTMENT: To construct and open the hotel, Public funds of at least $108,000,000 would have to be contributed to the development in order to attract the interest of a private developer. If the developer were to receive a 14% return, his investment would be a maximum of $168,000,000, just 61% of the total investment required. This finding is predicated on how much public money would be necessary as a 'no strings attached' subsidy in order to insure that private investor(s) receive a 14% 'cash-on-cash return;' Such a return is appropriate to the risk involved, in our opinion. 3) ADDITIONAL TAXPAYER SUBSIDIES / LOST REAL ESTATE TAXES: There will be a significant loss of real estate taxes from downtown hotels if a 1,200 room headquarters hotel is opened. Two other SSI studies clearly show that a new Marriott headquarters hotel will not create its own demand, 21 will gain its volume from other existing hotels, causing them to lose over $190,000,000 in profit during the Marriott s first five years of operation. 22 The real estate taxes paid by these hotels will consequently drop dramatically as their business and values decline. EXECUTIVE SUMMARY: Building a Marriott Hotel of 1,200 units in downtown Dallas would generate a pre-tax return on total invested capital of only 6%. This assumes a total hotel investment of $276,000,000, regardless of funding sources. This study methodology reveals the real economic result of building the hotel, eliminating any hidden subsidies such as free land, tax abatements, use of city credit and lender recourse to the taxpayer rather than the hotel. Further, a private project without subsidization would result in a return on investor equity of only 3%, making the project clearly infeasible as a private development. Investment Est. Land Investment $ 12,000,000 Improvements $264,000,000 at $220,000 per unit Total Investment $276,000,000 Pre Tax Project Return % Return on Developers Equity % 21 CONVENTION HEADQUARTERS HOTELS: DO THEY GENERATE ADDITIONAL MARKET DEMAND? by Bruce H. Walker, President, Source Strategies, Inc. January 31, 2003, prepared for Citizens for a Sound Economy, Austin, Texas. 22 PREDICTED IMPACT OF OPENING A DALLAS CONVENTION HEADQUARTERS HOTEL ON OTHER DOWNTOWN HOTELS by Bruce H. Walker, President, and Douglas W. Sutton, Vice President, February 7, 2003, prepared for Citizens for a Sound Economy, Austin, Texas. 23 after reserves for renovations. 24 after renovation reserve, and assuming 70% debt and 30% equity at a 7.5% pre-tax debt cost in 2006; calculated weighted average.

115 Page 115 In light of the above findings, it is only with a $108,000,000 subsidy by the taxpayers that this hotel could be built. For the project to generate an un-leveraged, pre-tax return on total invested capital of 14%, a level of return that should attract a qualified independent developer, the taxpayers would have to contribute $108,000,000 in whatever form, amounting to 39% of the total hotel investment. This would leave $168,000,000 in private equity and debt, or 61% of the total, to be provided by a developer. Capital requirements for a private/public project are approximately as follows: Investment Est. Land Investment $ 12,000,000 Improvements $264,000,000 at $220,000 per unit Total Investment $276,000,000 Taxpayer Subsidy (108,000,000) or 39% Private Developer $168,000,000 or 61% Pre Tax Project Return to Developer % Return on Equity % The actual level of revenue generation by Marriott Hotel products has been quantified versus the market average and has been assumed for the Marriott Dallas in developing this financial feasibility study. As an American Automobile Association four-diamond headquarters hotel, with the Marriott name and systems, project quality and revenue performance is set to exceed the typical Marriott Hotel branded property by about 3%. Operating costs are set at the level of similar, very large urban Full-Service hotels. 25 after reserves for renovations 26 after reserves for renovations, and assuming 70% debt and 30% equity at a 7.5% pre-tax debt cost in 2006; calculated weighted average.

116 Page 116 The hotel s cash flow projection, before-tax and after renovation reserves, would be available for debt service, income tax and dividends as follows: % Average $ Total Occupancy Rate REVPAR 27 Revenue Cash Flow 28 Year I 64.0% $ $ $75,407,558 $12,374,379 Year II 71.2% $ $ ,506,035 $19,951,594 Year III 72.6% $ $ ,411,595 $23,457,900 Year IV 72.3% $ $ ,990,032 $25,834,185 Year V 72.3% $ $ ,775,169 $24,873,961 Year VI 72.1% $ $ ,842,878 $24,383,383 Year VII 71.2% $ $ ,299,952 $23,345,494 Year VIII 70.4% $ $ ,775,677 $21,737,457 Year IX 69.6% $ $ ,270,289 $24,457,011 Year X 68.7% $ $ ,784,029 $230,013, REAL RETURN ON TOTAL INVESTMENT: The above cash flow, assuming a Year 10 sale, has been discounted at a rate of 6.07% to a present value of $275,928,561, approximating the actual total investment of $276,000,000. This 6.07% is the project's un-leveraged return, provided capital investment is kept at this level. In our experience, a capital requirement of $220,000 per unit is realistic for a hotel of this size and quality. If actual investment varies from budget, returns would vary accordingly. The following table and graph illustrate the linear change in financial returns as capital requirements escalate or decline. Note the negative return on equity if costs rise more than 5% above a budget of $276,000,000: 27 A 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. In a non-technical sense, REVPAR is the same as rent. 28 Before Income Tax & Financing expense, but reflecting $50,034,103 in reserves for renovation ($41,695 per unit) 29 $148 in today's market in current dollars; 30 includes valuing property at Year 10 CAP rate of 10% return-to-buyer, less 4% expense of sale, plus Year 10 cash flow.

117 Page 117 Effect on Returns of Capital Investment Changes 31 Per Unit Total Investment DCF Returns on Investments Improve. Improvement Land Total Tot Proj. Equity %Change $187.0 $224,400 $12,000 $236, % 10.50% (85%) $198.0 $237,600 $12,000 $249, % 7.73% (90%) $209.0 $250,800 $12,000 $262, % 5.17% (95%) $220.0 $264,000 $12,000 $276, % 2.73% Planned $231.0 $277,200 $12,000 $289, % 0.47% (105%) $242.0 $290,400 $12,000 $302, % -1.60% (110%) $253.0 $303,600 $12,000 $315, % -3.67% (115%) Graphing the projected REVPAR performance of the Marriott Hotel versus the Downtown Dallas lodging market 32 demonstrates a realistic revenue stream: the hotel peaks in Years III through V, then slowly levels off. Versus the 31 All Dollar amounts in thousands. 32 The local hotel market is made up of hotels in zipcodes 75201/202/207/247, and one property in This selection excludes a few small, low priced independents. This database is a census of all hotels and motels in Texas. It is based on the Texas State Comptroller s audited room revenue reports for all hotels and motels, available under the state open-records law. It covers 98% of room revenues and is the most comprehensive, accurate hotel database in the nation. By comparison, Smith Travel Research claims to cover about 80%, of the industry, but its data is based on voluntary, unaudited reporting. Pannell Kerr Forster (PKF) reports in Texas covers about one-third of hotels according to their listed room counts, and are also based on voluntary reporting. See Exhibit for methodology of Source Strategies, Inc. database.

118 Page 118 depressed market average, the new hotel should dramatically outperform the area's REVPAR average: A detailed look at Year III, the first 'going' year shows the following: Year III Total Revenues $101,411,595 Room Revenues $ 60,950,329 Income Before Fixed Expense $33,446,943 (33.0%) Profit B.T. Before Financing $19,883,135 (19.6%) Cash Flow Before Financing* $23,457,900 (23.1%) 33 Occupancy % 72.6% Avg. Rate $ $ REVPAR $ Before financing deductions of principal and interest, before income tax deductions, and before any equity payout.

119 Page 119 SUMMARY OF CRITICAL ASSUMPTIONS Critical assumptions are summarized as follows, with detailed study and support following the Methodology section Local area market projections are reasonable and realistic, characterized by moderate levels of REVPAR growth for the average room. Occupancy declines in the short term as new room supply is introduced, then gradually returns towards the expected equilibrium occupancy level. Local market REVPAR grows by 4.4% annually in the next nine years, above the expected rate of inflation. DOWNTOWN DALLAS LODGING MARKET 35 Year Occupancy % $REVPAR 2001/ Future Annual Growth Rate Next 9 Years Average 1.4% 4.4% Next 5 Years Average 1.4% 4.2% Historical CGR% Past 9 Years Average -1.3% 2.6% Past 4 Years Average -6.0% -3.6% Note that the new Marriott Dallas will not appreciably increase market demand in downtown Dallas. Proponents of projects like this one argue that introducing a new headquarters hotel into the local market in conjunction with the Convention Center expansion will create a significant level of new demand, making the project viable: 'If You Build It, They Will Come.' We found no credence to this premise in our objective research. 36 This study of Convention Center Hotel expansion shows demand not being influenced by the availability of new 'headquarters' hotel properties. 34 The most 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. 35 Projection commences on page CONVENTION HEADQUARTERS HOTELS: DO THEY GENERATE ADDITIONAL MARKET DEMAND? by Bruce H. Walker, President, Source Strategies, Inc. January 31, 2003, prepared for Citizens for a Sound Economy. Please see attached exhibit.

120 Page Versus the market average REVPAR projections above, the REVPAR index 37 of the proposed Marriott Headquarters Hotel in Downtown Dallas should generate 184% of the local market average REVPAR in Years III through V. The REVPAR index quantifies by how much the hotel will trail or exceed the market s dollar REVPAR average. After Year V, the REVPAR index erodes slowly due to the normal effects of aging. The detailed Marriott Hotel REVPAR index projection derivation commences on page 26. Marriott Hotel All Data in 2002$s Year I Year II Year III Base: Name & Quality xbrand Age Adjustment xsite Value Adjustment xsize Adjustment xother Adjustments xnewness Adjustment =Theoretical Index 151% 176% 184% xmarket REVPAR $58.26 $58.26 $58.26 =Projected Performance $88.24 $ $ A REVPAR index at 184% of the market average approaches the upper limits of what can be realistically expected of a convention hotel in Texas. This hotel s index will be higher than any convention hotel in Texas, including the highly successful Marriott Riverwalk hotel in San Antonio. Actual REVPAR indices 38 of convention hotels nearest to major Texas convention centers range from a low of 85 to a high of 151 in their local markets Operating expenses are based on the Smith Travel Research Host Reports, 2002 edition covering 2001 data, and typically inflated at 3% annually. Details page the REVPAR index quantifies by how much the hotel will trail or exceed the market s REVPAR average. 38 Property REVPAR divided by overall Market average REVPAR, times 100. The index clearly and simply demonstrates variances to the market average of CONVENTION HEADQUARTERS HOTELS: DO THEY GENERATE ADDITIONAL MARKET DEMAND? by Bruce H. Walker, President, Source Strategies, Inc. January 31, 2003, prepared for Citizens for a Sound Economy, Austin, Texas.

121 Page 121 METHODOLOGY To develop Pro Forma financial results for the proposed project, two major sets of assumptions are developed. First, the future market's average REVPAR is forecast on a reasonable and economically-sound basis; the specific performance of the project is dependent on this overall market forecast and varies from it only due to specific variables of the project. As survivors of the over supply of hotels in the early 1980's can testify, hotel occupancy and rate are dependent on local market averages, and no hotel is immune from these averages. Second, the specific REVPAR variables of the project are expressed as an index for each quarter of the forecast, an index that is used to adjust the overall market dollar REVPAR performance to the specific project under study. MARKET REVPAR FORECAST The large Dallas metropolitan area is first projected. We have used this larger market because the smaller downtown Dallas market is ultimately subject to larger market trends. Market projections are based on growth rates in real demand (roomnights sold), prices (average daily rates), and supply (rooms available). The key in this projection is to stabilize the total market in the future at a sustainable, average equilibrium for occupancy, a level which we have determined to be approximately 60% in most large, metro market areas, and lower for smaller metro areas. Over the past 20 years, according to the Source Strategies, Inc. database, from 1981 through 2001, overall hotel occupancy in Texas has averaged 58%, and 60% in 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 total Dallas metro area is forecast, we forecast the performance of the downtown / local market on a similar basis (see Exhibit III for a specific listing of existing hotels and motels in this market). Based upon notably sluggish historical performance in this local market, we expect recovery to just a 59% occupancy at the end of the ensuing ten years, still well below the metro and below the level in most healthy downtown markets. We then compare the relationship of the local area's REVPAR to the entire metro market REVPAR (as an index), both historically and in the future, to confirm the reasonableness of the smaller market's projection. Any unusual differences that may exist relative to each market area are taken into account (e.g. a faster or slower economic growth outlook). The REVPAR projection of the local market is then the pro forma market environment of the proposed subject development; 40 the project will vary from the norm for only project-specific differences, and then only relatively. 40 And because of the huge supply impact of this project, the projected market includes the additional 1,200 rooms in 2006.

122 Page 122 Project Specific Variables Development of the 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 of quality, the price it can command from the consumer, its marketing efforts, and other factors. The value of the brand 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 adjustment is made to reflect the average age of similarly branded hotels on the subject property's performance versus the market average. In this case the opening dates of Marriott branded properties in similar markets throughout Texas 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 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 further adjustment would be made for a convention hotel. An empirical proof of this evaluation of Size is the major increase in volume enjoyed by the numerous hotels throughout Texas that have split into two branded operations, using two different brand 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 at the same site, the Super 8 began to fill demand for budget properties in the immediate area, while the Hilton Towers kept its current customer base of upscale consumers. 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. A further, 'Other,' segment adjustment may be made if the proposed product type is under- or over- supplied in the local market. In other words, 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. Other adjustments may also include significant quality variances from the subject hotel brand's average. 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 existing 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 equalling actual REVPAR for each property studied, revealing the mathematical value of individual hotel sites. While there is usually a reasonably consistent pattern of site factors for the nearby local chain properties selected, these factors may vary because of

123 Page 123 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 center, office complex, hospital, convention hall). Adjustments can be made for these differences within forecast site factor, based on industry experience. With the development of the adjustments for Brand/product type, overall Brand Age, Other/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 specific project. 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 minus 8% and a second year positive adjustment of 7%. 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. 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 between 1980 and 1982 (study published in September 1994 issues of MarketShare 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 company-owned and company-operated Holiday Inn 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, 2002 edition (2001 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, semivariable 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

124 Page 124 franchisor's required level. Adjustments are made for any expected cost deviations from the norm (i.e. delivering higher- or lower- levels of quality). All-study area chain and independent hotel/motel revenue, occupancy, rate and REVPAR histories are included in the study, using the Source Strategies, Inc. database of all Texas hotels and motels. The methodology of this database is attached as an exhibit.

125 Page 125 MARKET REVPAR HISTORY & FORECAST: 1. Over the past nine years the Dallas Metropolitan Statistical Area has shown an average annual real growth of 3.2% (roomnights sold), annual growth of 6% in total room revenues, and 0.8% in REVPAR. Occupancy declined 1.8% annually over the measured period. Supply rose by 5.1% per year over the period, with room rates rising 2.7% as an influx of budget level hotels were added (i.e. Budget Suites of America). Over the past four years, demand growth fell to only 0.9% annually, and was easily exceeded by new supply growth of 6.8%. Despite this high level of supply growth, revenue over this period actually fell by 0.1% per year. REVPAR fell 6.4% annually over the past four years due to flat room rates and an unfavorable supply / demand ratio. Metro occupancy declined notably in the period, dropping 5.5% per year. Over the last two years, supply increased by 3.7% year over year, outpacing new demand, which actually fell 5.1% per year. This trend caused occupancy to plummet over the period by 8.5% annually, and REVPAR to drop a notable 10.9% annually. We expect that this scenario of occupancy and REVPAR declines will continue until market demand growth recommences and exceeds supply growth consistently. Without outside interference, market pressures will prompt investors, developers and lenders to curtail new building plans in response to the current lower level of profitability of building hotels in the Dallas area marketplace. A reduced level of supply growth would allow demand to absorb current supply levels. The most recent history poignantly illustrates the effects of national economic woes on the local market. It is easy to attribute this downturn to the events of September 11th, but it is clear from the numbers that the negative performance trend began in the first quarter of 2001 then demand growth dropped to 0.5% followed by -4.3% in the second quarter and by -10.8% in the third quarter of that year. Over the past year, demand fell by 7.8%, coupled with supply growth of 2.4%. In the latest year, REVPAR plunged 14% as market revenues declined by 11.8%. Due to the unfavorable supply / demand balance, occupancy lost a very significant 10%, while room rates fell 4.2%. With these recent levels of weak demand growth, it is our expectation that the lower than average profitability in the metro will encourage many potential new projects to be put on hold until market conditions are more favorable for development. Furthermore, with revenues shrinking, a few existing hotels are expected to be temporarily or permanently closed.

126 Page 126 DALLAS METROPOLITAN AREA HOTEL MARKET # Room 41 Total Htls nites Rooms % Growth Vs Yr Ago Year& and # sold Revenue % 42 $ 43 $ 44 Qtr 45 Mtls Rooms 000's $ 000's Occ. Rate RPAR Sply Real ADR $Rev ,566 2, , ,686 2, , ,845 2, , ,921 2, , ,010 2, , ,968 2, , ,163 2, , ,785 2, , ,634 2, , ,042 2, , ,291 2, , ,341 2, , ,665 2, , ,182 2, , ,993 2, , ,940 2, , ,132 2, , ,155 2, , ,161 2, , ,873 2, , ,998 2, , ,757 3, , ,663 3, , ,191 3, , ,278 3, , ,866 3, , ,051 3, , ,160 3, , ,583 3, , ,881 3, , ,415 3, , ,761 3, , ,775 3, , ,409 3, , ,172 3, , ,514 3, , ,642 2, , ,946 3, , ,643 3, , ,774 3, , CGR%Past9yrs 5.1% 3.2% 6.0% -1.8% 2.7% 0.8% 46 4yrs 6.8% 0.9% -0.1% -5.5% 0.0% -6.4% 2yrs 3.7% -5.1% -7.6% -8.5% -2.6% -10.9% 1yr 2.4% -7.8% -11.8% -10.0% -4.2% -14.0% 41 Roomnights sold derived from est. rate and actual revenues. 42 Occupancy nights sold divided by nights available for sale. 43 Average price for roomnights sold; Directories, Surveys, & experience. 44 $ Revenue per available room per day (room sales per day) 45 Year & Quarter. 924 translates to fourth quarter of Compound Growth Rate (CGR%).

127 Page Overall market occupancy will likely continue to erode for a year until economic conditions begin to turn and existing supply is absorbed into the market. We project that occupancy will recover to a 58% level near the end of our projection, near historic equilibrium levels. For the next five years, real demand (room nights sold) is projected at an average 1.9% growth rate, higher than the projected net supply growth of 1.3%. With 2.2% average daily rate inflation, market gross revenues should gain 4.1% annually during the first five years of the forecast. Equilibrium occupancy has been calculated to 58% for the metro by the end of the nine year projection. These assumptions relative to demand, supply, and occupancy reflect the fact that over the past 20 years overall occupancy in Texas has averaged about 58%, a level considered to be 'Equilibrium Occupancy.' This considers successful metro area hotel markets generate higher overall occupancy and REVPAR numbers than state averages, while rural and less successful areas lag these averages (Source Strategies, Inc. database). 'Equilibrium Occupancy' is explained by the fact that new investment money tends to 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. Given this growth scenario, room supply consequently grows from 65,501 rooms currently to 75,534 by 2012, only 15% higher and representing 10,032 net new rooms (gross new openings, less closings). The realistic scenario is for the building boom of the last four years to slow to a nominal level, reacting to the awful market conditions currently in play. The Dallas metro area hotel market has performed at a far lower level than overall Texas averages in recent years, being particularly hard hit by the telecom, dot.com, and airline economic downturn of the past two years. 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 growing at 3.3% per annum over the next nine years (well above the 0.8% average of the past nine years). Revenues are forecast to grow at 4.8% per year on the strength of 2.3% growth in demand and 2.4% growth in price (room-rates). Occupancy over the period is expected to climb 0.9% per year after a short term decline. If supply should grow 7,600 rooms over forecast (+10%), without demand also growing faster than forecast, average individual hotel REVPAR would decline by 9% versus forecast, dropping from the forecasted $57 to $51 in 2012.

128 Page 128 DALLAS METROPOLITAN AREA HOTEL MARKET PROJECTION # Room 47 Total Htls nites Rooms % Growth Vs Yr Ago Year& and # sold Revenue % 48 $ 49 $ 50 Qtr 51 Mtls Rooms 000's $ 000's Occ. Rate RPAR Sply Real ADR $Rev ,288 2, , ,595 3, , ,971 3, , ,108 3, , ,615 2, , ,923 3, , ,301 3, , ,443 3, , ,943 3, , ,583 3, , ,964 3, , ,118 3, , ,602 3, , ,580 3, , ,973 3, , ,161 3, , ,600 3, , ,609 3, , ,008 3, , ,214 3, , ,629 3, , ,653 3, , ,058 3, , ,282 3, , ,674 3, , ,713 3, , ,124 3, , ,366 3, , ,734 3, , ,788 3, , ,205 4, , ,467 3, , ,810 3, , ,880 3, , ,304 4, , ,584 3, , ,902 3, , ,989 3, , ,418 4, , CGR%9yrs 1.4% 2.3% 4.8% 0.9% 2.4% 3.3% 5yrs 1.3% 1.9% 4.1% 0.5% 2.2% 2.7% HISTORY CGR%Past9yrs 5.1% 3.2% 6.0% -1.8% 2.7% 0.8% 4yrs 6.8% 0.9% -0.1% -5.5% 0.0% -6.4% 2yrs 3.7% -5.1% -7.6% -8.5% -2.6% -10.9% 47 Roomnights sold derived from est. rate and actual revenues. 48 Occupancy nights sold divided by nights available for sale. 49 Average price for roomnights sold; Directories, Surveys, & experience. 50 $ Revenue per available room per day (room sales per day) 51 Year & Quarter. 122 translates to second quarter of 2012.

129 Page 129 DOWNTOWN DALLAS MARKET ANALYSIS & PROJECTION 3. The local downtown Dallas market 52 currently generates the same occupancy as the Dallas metro (52%), and a far higher REVPAR ($58 downtown versus $40 average in the total metro). These levels of performance in both the metro and downtown markets are well below what is considered to be the 'norm' for metros, and particularly CBD, markets: PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2002 DALLAS DOWNTOWN MARKET # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR AMERISUITES , HAMPTON INN , RENAISSANCE , WYNDHAM , SUB-TOTAL , ADMS MARK , HYATT , WYNDHAM , TOTAL UPSCALE , EMBASSY , HAWTHORN , HOMEWOOD , OTH SUITE , RESIDENCE , TOTAL SUITES , CLARI COURTYARD , CROWNPLZA , HOLID INN , SHERATON , TOTAL MID/UPS , BRADFORD , CANDLWOOD , TOTAL MIN STE , BEST WEST , FAIRFIELD , WINGATE , TOTAL LTD. SERV , LP EXT STAY , RAMAD INN , RAMAD LTD TOTAL BUDGET , The local hotel market is made up of hotels in zipcodes 75201/202/207/247, and one property in This selection excludes several properties that are small, low priced independents. It consists of 38 hotels and motels, with 12,200 rooms, generating room revenues of over $250,000,000 annually.

130 Page 130 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2002 DALLAS DOWNTOWN MARKET # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR TOTAL CHAINS , , INDEPENDENTS FAIRMONT , LE MERIDIEN , THE MAGNOLIA , THE ADOLPHUS , OTHER LARGE , OTHER SMALL TOTAL INDEP , TOTAL MARKET , , The local Downtown Dallas market has been more negatively effected by overbuilding and by economic trends than most other areas in Texas. An average REVPAR of $58 is 19% lower than the $69 REVPAR of the broader and similar high priced Texas markets shown in Exhibit IV (twelve months ending September 30, 2000). Local downtown demand growth over the last nine years was 1.4% annually, compared to 2.8% growth in supply. Revenue growth over this period was 5.4% per year, and REVPAR growth was steady at 2.6%, compared to 0.8% annual REVPAR growth for the metro market. Occupancy fell 1.3% over each year of the measured period, while metro occupancy dropped 1.8%. Over the past four years, supply in the local market has risen by 4.4% annually, compared to an annual 1.8% decline in demand. This has caused occupancy to fall 6% annually in each of the past four years. Average daily rates rose 2.3% per year over the period, while REVPAR fell by 3.6% due mainly to waning demand. In the past two years the negative trend continued, with demand and supply declines escalating to 9.2% and 1.1% annually, respectively. This negative supply / demand balance caused occupancy to fall sharply by 8.2% per year for the period. No increase in average daily rates, combined with falling occupancy, resulted in REVPAR falling by a punishing 8% per year. In the last twelve months the local market performed very poorly, though it appears that the worst of the declines appears to be over. Demand continued its plummet, with a 6.7% slide, while supply fell 0.2%. Average daily rates fell 1.4%, while occupancy dropped 6.5%, to 51.8%. This combination resulted in REVPAR falling 7.7% in the latest year. Over the past six months, demand turned and has begun to recover, rising by 10.2% in the Second quarter, and by 5% in the Third quarter of These two quarters of gains have followed a full year of double digit demand decreases. 53 * All figures annualized. Includes taxed and est non-tax room revenues. Independents are categorized L=large (+$100 ADR), M=medium ($61- $99), and S=small (-$60).

131 Page 131 LODGING MARKET: DOWNTOWN DALLAS # Room 54 Total Htls nites Rooms % Growth Vs Yr Ago Year& and # sold Revenue % 55 $ 56 $ 57 Qtr Mtls Rooms 000's $ 000's Occ. Rate RPAR Sply Real ADR $Rev , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , CGR%Past9yrs 2.8% 1.4% 5.4% -1.3% 3.8% 2.6% 4yrs 4.4% -1.8% 0.6% -6.0% 2.3% -3.6% 2yrs -1.1% -9.2% -9.0% -8.2% -0.0% -8.0% 1yr -0.2% -6.7% -7.9% -6.5% -1.4% -7.7% Wider Market History CGR%Past9yrs 5.1% 3.2% 6.0% -1.8% 2.7% 0.8% 4yrs 6.8% 0.9% -0.1% -5.5% 0.0% -6.4% 54 Roomnights sold derived from est. rate and actual revenues. 55 Occupancy nights sold divided by nights available for sale. 56 Average price for roomnights sold; Directories, Surveys, & experience. 57 $ Revenue per available room per day (room sales per day)

132 Page In the local downtown market we expect future supply growth to be inhibited by the results of the past four years. However, we also assume that the proposed Marriott Hotel opens in This will allow the market to begin a recovery to a more healthy performance level prior to the Marriott opening, followed again by an occupancy dip due to the introduction of 1,200 more rooms. Subsequently, market occupancy will slowly rise to 59% by Over the next 9 years, growth in room revenue is forecast at a normal 6.8% per annum. REVPAR growth is expected to be 4.4% for the average room in the market. REVPAR growth will only be able to attain this level because few hotel developments are expected to open. If additional supply is added, we would expect some properties whose financial integrity has been compromised over the past four years to go out of business. Overall, supply over the projection period is expected to grow by 2.4% per year, with almost half of these additions attributed to the 1,200 unit Marriott. Demand is expected to grow faster, at 3.8%, allowing for a very gradual long term market recovery. Average daily rates are expected to rise by 2.9% per year. The current 52% occupancy level is considered to be well below 'equilibrium' in most markets of this type. Investment money is more dificult to obtain when developing in what is an over-supplied market (one operating well below equilibrium level), until occupancy climbs to the point where only average returns on capital are available. The viability of any new project in the local market is likely to be seriously questioned by prospective lenders. Our projection is for local occupancy to rise to 55% by 2006, dipping four points upon the opening of the Marriott, and gradually continuing this recovery and rising to 59% in the later years of our forecast. By comparison, a healthy downtown hotel market should operate at an equilibrium occupancy level approaching 65%. The overall projection reflects a supply growth of 3,224 net new rooms over the next nine years (gross new rooms less closures). This is a net supply increase of 26%, from 12,198 in the latest year to 15,224 in Net, the local market area forecast assumes that net new rooms (building less closing) beyond the 3,224 rooms plus closures projected increase in the local area market will not take place because of the constraints of financing and the general caution regarding Texas real estate in general. If greater building did occur, then all REVPAR projections would be reduced. For example, REVPAR could decline by 9% in 2012, from $89 to $81, if an additional 1,500 (+10%) rooms were built over forecast. The local market projection follows:

133 Page 133 PROJECTION: DOWNTOWN DALLAS # Room 58 Total Htls nites Rooms % Growth Vs Yr Ago Year& and # sold Revenue % 59 $ 60 $ 61 Qtr Mtls Rooms 000's $ 000's Occ. Rate RPAR Sply Real ADR $Rev , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , CGR%9yrs 2.4% 3.8% 6.8% 1.4% 2.9% 4.4% 5yrs 2.6% 4.1% 7.0% 1.4% 2.8% 4.2% HISTORY CGR%Past9yrs 2.8% 1.4% 5.4% -1.3% 3.8% 2.6% 4yrs 4.4% -1.8% 0.6% -6.0% 2.3% -3.6% 2yrs -1.1% -9.2% -9.0% -8.2% -0.0% -8.0% 58 Roomnights sold derived from est. rate and actual revenues. 59 Occupancy nights sold divided by nights available for sale. 60 Average price for roomnights sold; Directories, Surveys, & experience. 61 $ Revenue per available room per day (room sales per day)

134 Page The downtown local market REVPAR index remained well above the overall metro area throughout the late 1990's. In the latest year, the local market significantly exceeded the metro area REVPAR average; the 2002 index is more typical of downtown markets: MARKET REVPAR HISTORY Local/Total Market Year & Total Local Quarter Year Quarter Metro Market Index Index CGR%9yrs 0.8% 2.6% 4yrs -6.4% -3.6% 2yrs -10.9% -8.0% 1yr -14.0% -7.7%

135 Page The forecast calls for the local market REVPAR to rise slowly versus the Dallas metro REVPAR average, until it drops upon the opening of the Marriott. In 2006, the projected opening year for this project, average REVPAR in the local market should stabilize versus the metro area: MARKET REVPAR PROJECTION Local/Total Market Year & Total Local Quarter Year Quarter Metro Market Index Index CGR%9yrs 3.3% 4.4% 5yrs 2.7% 4.2%

136 Page Graphing the REVPAR history and projection clearly illustrates the local downtown market crash and recovery. It includes a very slight local market dip after the proposed Marriott opens. We anticipate that the local market will continue to exceed the metro market averages:

137 Page Graphing the occupancy history and projection for both the metro and local markets clearly illustrates the significant decline in occupancy in both areas. It also expresses the four point occupancy drop downtown after the subject hotel opens in 2006, followed by a gradual recovery:

138 Page 138 PROJECT REVPAR - DEVELOPMENT OF INDICES Within the above market REVPAR forecast, the expected performance of the proposed Marriott 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 property's Base Value; the effect of the brand, including product type and quality? Second, what is the effect of the current age of the brand's properties on Base Value performance? Third, what is the effect of the project's size, or room-count, on results? Fourth, what is the effect of the project's newness (versus older competition on its way to obsolescence)? Fifth, are there any other adjustments needed? And lastly, what is the likely influence of the selected site on results? 1. The Base Value factor, setting property type/brand/product quality at 1.56 in Texas High Priced Market areas, the Exhibit IV Market. 62 This valuation is based on the performance of eight existing Marriott Hotels in these markets, and the ratio of their performance versus the overall Exhibit IV market average REVPAR. These eight Marriott properties consist of about 3,900 rental units and generated a combined average REVPAR of $ for the latest twelve months. This REVPAR is 156% of the overall Exhibit IV market average REVPAR of $66.76: $ / $66.76 = 1.56 This sample of eight Marriott Hotels throughout the state firmly grounds the basic REVPAR performance of operating a Marriott Hotel in a market such as the Exhibit IV market (of which the Downtown Dallas area is a part). 2. The second adjustment factor, Brand Aging, is set at 1.15, (+15%). The Brand Age Adjustment represents the overall average age of each studied brand names. This factor is used to neutralize the effects of the average physical age of all of that brand s hotels on brand performance. In this case, the average Marriott hotel in Texas high priced areas is 20 years old (opening date of 1983). Through our extensive studies of hotel aging, we found that a brand with a twenty year old physical plant is past its peak performing years. Consequently, a new addition requires a notable positive age adjustment to offset this inherent disadvantage in overall brand performance. This factor adjusts for the effect of the average age of the existing hotels on the brand's current performance. 63 The brand age adjustment, or life-cycle adjustment, for this and other brands examined includes: 62 The Exhibit IV hotel market is selected to closely mimic the local market situation/mix and to provide a wide body of information from which to draw the characteristics of specific brand performance. This huge market of 62,000 rooms is drawn from Texas Metro Areas, whose high priced areas produced a REVPAR of $67 and an occupancy of 59% in the latest year. These zipcodes include: 79102,78701/704/732/723/735/669/640/734/597/401/403/410/412/362/373/204/205/251, 77541/650/551/554/ 565/002/010/024 /027/030/042/056/380, 79423, 75076/201/202/207/219/225/240/034/024, & 76107/ Point #5, below, adjusts for the physical life-cycle of the specific property, a different and additional consideration.

139 Page 139 BRAND AGING: TEXAS HIGH PRICED MARKETS Average Brand Age Built Adjustment Hyatt High Priced Indep Hampton Marriott Clarion Renaissance Courtyard The Property Size factor - reflecting room count - calls for a notable negative adjustment for this property; it is assigned 0.80 (80% or a -20% adjustment). This is due to the fact that the typical Marriott Hotel in similar markets averaged only 483 rental units per hotel, far smaller than the proposed 1,200 unit project. This factor penalizes the property for being significantly larger than average. By the same token, were the property to be less than 483 units, it would earn a premium. The size adjustment is necessary because demand is seldom affected by the number of rental rooms offered, the individual consumer only seeking one room; customers don't care whether one offers 100, 125 or 150 units and their behavior and resulting demand should be the same regardless of the number of rooms. Hence, keeping a project conservatively sized assures a higher per-unit revenue yield. 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 64 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. 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. 64 Analyzed and compiled by Doug Sutton and Bruce Walker, 11/30/1999.

140 Page 140 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 June 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 table 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, and is closely tied to occupancy and REVPAR. Analyzing the above data provides a measure of the effect of overbuilding. 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.

141 Page 141 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 room size bracket, after peaking at 73.9% in the size range. 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 you build a smaller than average property for a given brand, project results should be improved over the average: the converse of this fact is also true. Thus, the subject hotel warrants a twenty percent penalty for being larger than the typical Marriott Hotel in this type of high priced market.

142 Page Fourth, the Segment/Other-adjustment factor is set at 100%, with no premium being warranted and given. 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 starting after Year VI. The life-cycle or aging factor illustrates consumer demand being greater for new hotels than for old, and reflects comprehensive Source Strategies Inc. research into the performance of new hotels opened in the state of Texas since The aging factor also mirrors extensive studies of hotel life-cycles conducted by Source Strategies' principal, Bruce Walker, when heading the Holiday Inn 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, with their performance versus the market tracked to the present (MarketShare newsletter, "The Hotel Life Cycle - It's Very Real" published September 1994). Full analysis is shown in Exhibit VI. 6. The last factor, Site, is set at 1.15, or 15% above average for the local market. Looking at the derived site values for local competition in the past year supports this valuation. In our assessment, the proposed site is among the best in the market, and would be considered marginally better than the Hyatt site due to its location by the main entrance to the Convention Center. However, with the added competition in the market due to vastly increased room supply in the core of downtown, all site values will decline significantly when the Marriott opens. Site Value Quantification: The site values of 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, as follows:

143 Page 143 LOCAL COMPETITION All Data in 2002 Dollars HAMPTON AMERSTE HYATT CRTYARD FAIRMNT ADOLPHUS Base: Name & Quality xbrand Age Adjustment xsite Value Adjustment xsize Adjustment xother Adjustments xnewness Adjustment =Theoretical Index 78% 120% 142% 115% 137% 133% xmarket REVPAR $58.26 $58.26 $58.26 $58.26 $58.26 $58.26 =Projected Performance $45.73 $70.20 $82.82 $66.76 $80.04 $77.25 ActualPerformance2002 $45.84 $70.49 $82.94 $66.67 $79.77 $77.12 Index(Proj.Vs.Actual) Units in Above Subject Average Units by Brand Size Adjustment (15) (4) (11) (7) (11) (5) Year Built SUMMARY OF RESULTS OF REVPAR FACTORS Combining all six factors that affect a hotel's REVPAR performance, we calculate that the proposed Marriott Hotel's REVPAR will achieve 151% of the local market average REVPAR for Year I, 176% for Year II, and 184% for Years III through V; in Year VI and thereafter, REVPAR indices will slowly decline: Marriott Hotel REVPAR Performance All Data in 2002$s Year I Year II Year III Base: Name & Quality xbrand Age Adjustment xsite Value Adjustment xsize Adjustment xother Adjustments =Theoretical REVPAR Index % 176% 184% xmarket REVPAR $58.26 $58.26 $58.26 =Projected Performance $88.24 $ $ The REVPAR index quantifies by how much the hotel will trail or exceed the market's dollar REVPAR average.

144 Page 144 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 184%, the above process would generate a theoretical REVPAR of $ (in 2002 dollars). This is the result of the Year III index of 184% (1.84) multiplied by a market average of $ Therefore, if the property were open today and were in its third year of operation, it would theoretically be operating at the following level against last year's market: a $ REVPAR computes to gross room revenues of approximately $47,054,340 ($ REVPAR times 1,200 units times 365 days). Please note that the actual expected affect on the market due to the introduction of the Marriott Hotel and other new units is fully reflected in subsequent pro forma market projections and financials. In current year dollars, this projection for the Marriott Hotel's Year III revenue breaks down seasonally as follows: Quarter: First Second Third Fourth Year III Market % 28.7% 25.3% 24.5% 21.5% 100 Seasonal Index REVPAR$ $ $ $ $91.58 $ Room Revenues $13,481,235 $11,918,553 $11,543,904 $10,110,648 $47,054,340 In turn, we believe the optimum rate/occupancy mix, in current dollars, would be as follows: Quarter: First Second Third Fourth Year III REVPAR$ $ $ $ $91.58 $ ADR - $ $ $ $ $ $ Occupancy % 69.5% 63.0% 84.3% 73.7% 72.6%

145 Page 145 TESTS FOR REASONABLENESS OF PROJECTIONS Comparisons can be made to assess the 'reasonableness' of the above projection: 1. The projections depend importantly on the projection of local market REVPAR - forecast to drop short term upon the opening of the proposed Marriott, then begin a gradual recovery over the later years of our projection. Over the course of our projection market REVPAR is projected to grow 4.4% per year, near the expected rate of inflation (versus 2.6% REVPAR growth for the past nine years). REVPAR encompasses the net effect of supply and demand. Over the next nine years, we are also comfortable with the 3.8% real compound growth projected for the local market, exceeding the projected 2.4% supply growth, resulting in a gradual improvement in local occupancy to a 59% level by the end of our projection. 2. The derived Base Value of 156 for the Marriott Hotel in Texas mid- to larger sized metro markets appears to be quite reasonable when compared to the Base Values of other hotel chains in these same markets. The Marriott brand can be expected to perform at a higher level than most of its competitors in this type of market. The hierarchy of REVPAR indices for selected brands is shown below: REVPAR Index Comparison 66 Four Seasons 213 Marriott Hotels 156 Westin Hotels 146 Hilton Hotels 136 Hyatt Hotels 131 Embassy Suites 132 Residence Inn 106 Courtyard 102 Renaissance 96 Holiday Inn 81 Holiday Express 84 La Quinta Developing actual adjustment factors for the existing properties - so that their projected REVPAR equals actual REVPAR - indicates why the Marriott Hotel's REVPAR 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 market average to generate dollar REVPAR, as follows: 66 Uadjusted for the physical aging of each brand.

146 Page 146 MARRIOTT All Data in 2002 Dollars Year III HAMPTON AMERISUITES HYATT FAIRMONT Base: Name & Quality xbrand Age Adjustment xsite Value Adjustment xsize Adjustment xother Adjustments xnewness Adjustment =Theoretical Index 184% 78% 120% 142% 137% xmarket REVPAR $58.26 $58.26 $58.26 $58.26 $58.26 =Projected Performance $ $45.73 $70.20 $82.82 $80.04 Actual Performance Past Yr n/a $45.84 $70.49 $82.94 $79.77 Index (Projected Vs. Actual) n/a A REVPAR index at 184% of the market average approaches the upper limits of what can be realistically expected here. This hotel s index is projected to be higher than any convention hotel in Texas, including the highly-successful Marriott Riverwalk. Here is the actual REVPAR index performance of convention hotels in Texas: 67 Actual REVPAR indices 68 of convention hotels nearest to major Texas convention centers range from a low of 85 to a high of 151 in their local markets. This performance range shows that convention hotels do not outperform the local market average by enormous margins. 69 The fact that each specific hotel below varies in performance against its local market reflects differences in brand name, product type and quality, room count, location, age of property, management competence, etc. However, these performance variances are explainable without any credence to the idea that hotels generate their own demand. Actual Hotel Performance of Nearest/Largest Hotel to Convention Center 70 Year Ft. Worth Houston San Antonio Austin Dallas Ending Radisson Hyatt Marriott Radisson Hyatt 9/30/02 Conv Ctr Regency Riverwalk Hotel Regency # Rooms ,122 $ REVPAR $ Market REVPAR REVPAR Index Excerpt from CONVENTION HEADQUARTERS HOTELS: DO THEY GENERATE ADDITIONAL MARKET DEMAND? 68 Property REVPAR divided by overall Market average REVPAR, times 100. The index clearly and simply demonstrates variances to the market average of Most current feasibility studies assert that new convention hotels will significantly outperform market averages. This finding contradicts that assertion. 70 See Exhibit 2 C, 3C, 4C and 5C for market definitions and detailed print-outs of each of these markets. All data from the SSI database.

147 Page The theoretical Year III REVPAR of $ by a new, Marriott branded 'headquarters' hotel of 1,200 units in markets of this type is at the upper end of being a realistic expectation when compared to the results of current competitors. First, the most comparable property in the downtown market, the Hyatt Regency, had a REVPAR of $83 in the latest year, in 1,122 rooms. The Marriott is projected to outperform the Hyatt s latest year REVPAR by 30%. The Hyatt is older, not as well located (and will not be the primary partner hotel to the convention center), and does not quite have as good a brand behind it as the Marriott. No other branded competitors in the local market have REVPARs above $80. It is our opinion that when this property opens, in 2006, the market will have recovered to an average REVPAR of $69, up from $58 in the latest year. While branded properties do not have REVPARs above $80 in the local market, independents in the downtown market provide stiff competition to upscale, luxury, and similar properties. The Fairmont and the Adolphus had REVPARs of just under $80 in the latest year. 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. From Holiday Inn consumer research, 'new' means 'clean,' and 'old' means 'dirty' to the consumer; cleanliness is the number one consumer selection factor in lodging. Hence, a new, high quality branded hotel entry should operate well above the local chain market average occupancy, currently at 51.6%. Newness is a major factor in a market where some of the competition in this market is old, tired, and approaching obsolescence. On average, the typical hotel in the 38 hotel local market was constructed in 1983, making the typical hotel in this market 20 years old. Further, 53% of hotels in the local market were built before Many hotels are effectively 'finished' in thirty years because their construction was wood-frame, their plumbing and wiring of a limited life, but most importantly, they become stylistically and functionally obsolete compared to new construction. Highrise downtown hotels are admittedly more resistent to this trend of decline because of the more durable construction methods used in their construction. After a hotel's performance peaks in Years III-V, an inevitable gradual decline begins, and will continue until the hotel is obsolete and no longer a viable lodging establishment. 7. The projected 2008 occupancy for the Marriott Hotel of 73% and rate of $192 compares to the Exhibit IV Upscale Hotel Segment brand averages, which had an average occupancy of 62% and a rate of $132 in This level of performance reflects the fact that this project will enter its peak performing years in Offering a well-located, high quality, desirable product and brand gives the Marriott Hotel an advantage over much of its older competition.

148 Page The projected REVPAR performance of the Marriott Hotel versus the downtown Dallas market is near the highest level that could be expected of any new hotel of this quality in most metro areas. Hotel REVPAR climbs sharply in the Years I through III then levels off, growing at a more normal inflationary pace. Being property of the highest quality, it should perform at a level well above the REVPAR average of the local market.

149 Page Graphing the projected occupancy performance of the Marriott Hotel versus the downtown Dallas market demonstrates a realistic pattern: the hotel peaks in Years III through V at a level well above the local market, then begins to recede, steadily losing ground to the market average as the property ages:

150 Page 150 PRO FORMA: The Marriott REVPAR ratio, 184% of the local market in Years III-V, results in the following REVPAR stream: MARRIOTT HOTEL REVPAR PROJECTION Yr & Local Subj Subject / Qtr Market Hotel Market Index CGR%9yrs 3.8% 5.3% 5yrs 4.5% 8.6% 71 From hotel opening.

151 Page 151 This REVPAR forecast is then extended to room revenues (multiplying REVPAR by the number of days in the period and by the number of rooms in the project), and to occupancy, estimated rate and roomnights sold: RESULTING PROJECTION: MARRIOTT HOTEL Resulting Average Room- Year & Room Annual % Daily nights Annual Basis Qtr Revenues Basis Occup Rate Sold RNS Occ. Rate $12,371, $ , $11,804, $ , $10,740, $ , $10,404,049 $45,321, $ , , % $ $16,282, $ , $14,380, $ , $13,084, $ , $11,850,446 $55,597, $ , , % $ $18,419, $ , $15,712, $ , $14,296, $ , $12,521,563 $60,950, $ , , % $ $19,250, $ , $16,422, $ , $14,942, $ , $13,086,874 $63,702, $ , , % $ $20,120, $ , $17,163, $ , $15,616, $ , $13,677,708 $66,578, $ , , % $ $20,677, $ , $17,638, $ , $16,049, $ , $14,056,486 $68,421, $ , , % $ $20,941, $ , $17,864, $ , $16,254, $ , $14,236,395 $69,297, $ , , % $ $21,209, $ , $18,093, $ , $16,462, $ , $14,418,607 $70,184, $ , , % $ $21,481, $ , $18,324, $ , $16,673, $ , $14,603,151 $71,082, $ , , % $ $21,756, $ , $18,559, $ , $16,886, $ , $14,790,057 $71,992, $ , , % $ CGR % First 9 years 5.3% 0.8% 4.4% 0.8% First 5 years 8.6% 2.4% 6.0% 2.4%

152 Page 152 Operating Costs Profitability and returns reflect the above revenue projections and the following other critical assumptions: - operating costs per occupied room approximate Full Service hotels of similar type, size, rate, occupancy and geography. Sources are Smith Travel Research's (STR) 2002 Host Report for 2001 data, and Source Strategies, Inc., data. Full Service Hotel operating cost estimates take into account the lower costs of the West South Central United States, which had an average Per Occupied Rooms-only Cost of $26.10 in versus a national average of $ or 83.9% of the U.S. average. Subsequent cost comparisons have been adjusted to reflect this 16.1% lower-cost environment that may be expected in operating a Full Service hotel in a West South Central area of the U.S. such as Texas. - Specific Food, Beverage, Other Revenue assumptions, and cost assumptions for all revenue items in the study are as follows: Food Volume: was set at 42% of Room Sales, which equates to 25% of total revenues. Full service properties of more than 500 rooms typically have food volume 35% of Room Sales. The 20% increase reflects the convention orientation of the project. Beverage: was set at 8.7% of Room Sales, which equates to 5.2% of total project revenues. This was the same as the norm of for typical U.S. full service hotels of similar size. Other Volume: was set at 12.5% of room revenues, and 7.5% of total revenues. Typically, 'Other' revenue (including 'Other F&B,' 'Other Operated Departments,' 'Rentals,' and 'Cancellation Fees'), amounts to 11.5% of total revenues. Telecommunications Volume: was set at 3.5% of room revenues, and 2.1% of total revenues. This is the average for similar sized properties in the STR sample. Rooms only Expense was set at $40.31 Per Occupied Room for 2006, and compares reasonably to the Host Report sample for similar types of Full-Service operations. Dollars per Occupied Room Host Report Sample 2001 Basis 2006 Basis West South Central $26.10 $30.26 U.S. Urban* $32.30 $37.44 Luxury* $30.83 $35.74 Resort* $35.15 $40.75 Upscale* $24.20 $28.05 Roomcount Over 500* $34.14 $39.58 *adjusted to the South West Central Food & Beverage Expense was set at 74% of Food and Beverage revenues. This compares to the Host Report sample for the following types of Full Service operations:

153 Page 153 Host Report Sample 2001 Basis West South Central 71.9% U.S. Urban 78.6% Luxury 74.1% Upscale 78.2% Roomcount over % Resort 73.8% Average of above: 75.3% Departmental Profit: the resulting Departmental Profit forecast in Year I was 58.8% in comparison to the Host numbers. Departmental Profit 2001 Basis West South Central 64.1% U.S. Urban 57.9% Roomcount % Versus room revenues: a 6% franchise royalty fee; % marketing expense Year I and thereafter, including franchise reservation and brand advertising/frequent traveler fees (in addition to royalties), and property advertising on a national basis; also, a 4% management fee. - an on-going reserve for renovations is taken and subtracted from project cash flows; such renovation reserves and investments insure that future revenue streams continue in a steady fashion by maintaining product quality at the highest levels. Reserves are set at $50,034,103 for the first ten years, or $41,695 per unit. Reserves are based on an extensive 2000 study, CapEx, by the International Society of Hospitality Consultants. The study shows that required reserves average 5.5% over a 20 year period. However, average expenditures vary by year, with peak spending occurring in year ten at over 12% of gross revenues (details in Exhibit VII). - An initial capital investment of $264,000,000 allocated to hotel improvements plus a land value of $12,000,000. The estimated improvement capital estimate of $220,000 per unit is more than adequate for a hotel of this quality, in our experience. Should capital needs prove to be greater or less, then returns would change proportionately. The estimates of necessary capital include: Land Value $ 12,000,000 Improvements $ 264,000,000 Total $ 276,000,000 The pro forma profit and cash flow statements are shown overleaf: 72 With an additional 3% of F&B revenues making this essentially 8% of room revenue.

154 Page 154 Open 1/1/06 DALLAS MARRIOTT CONVENTION CENTER Est Land Value: $12,000,000 # Rooms: 1,200 Investment/room ex.land: $220,000 QUARTER: First Second Third Fourth Year Rmnites Sold 72,350 71,544 69,295 67, ,312 Rmnites Avail 108, , , , ,000 Occupancy % 67.0% 65.5% 62.8% 60.8% 64.0% Avg Rate $ REVPAR $ $ $97.29 $94.24 $ % Revenues RoomRevenue $12,371,850 $11,804,760 $10,740,725 $10,404,065 45,321, % Food 5,166,485 4,929,668 4,485,327 4,344,738 18,926, % Beverage 1,070,165 1,021, , ,952 3,920, % Telephone 432, , , ,518 1,583, % Other 1,544,007 1,473,234 1,340,442 1,298,427 5,656, % TotalRevenu $20,584,779 $19,641,232 $17,870,848 $17,310,700 $75,407, % Room Dept Expen-Payroll Administration 576, , , ,700 2,111, % Head Housekprs 74,231 70,829 64,444 62, , % Housekeeping 264, , , ,999 1,023, % Laundry 257, , , , , % Maintenance 411, , , ,214 1,508, % Front Desk 432, , , ,600 1,752, % Vacation/Holid 80,628 78,282 73,606 71, , % TaxesBenefits 377, , , ,271 1,424, % TotalPayroll 2,473,652 2,401,702 2,258,241 2,204,445 9,338, % OtherRoomExp 506, , , ,861 1,962, % TotalRoomExp 2,980,102 2,902,510 2,743,306 2,674,306 11,300, % F & B Expense Payroll 2,744,126 2,618,343 2,382,336 2,307,663 10,052, % Other 1,870,995 1,785,234 1,624,320 1,573,407 6,853, % TotF&B/OthEx 4,615,121 4,403,577 4,006,656 3,881,070 16,906, % Other, Expense 790, , , ,778 2,895, % Departmental Profits Rooms 9,391,748 8,902,250 7,997,419 7,729,759 34,021, % F & B 1,621,529 1,547,203 1,407,744 1,363,619 5,940, % Other 1,185,768 1,131,415 1,029, ,167 4,343, % Total $12,199,045 $11,580,868 $10,434,597 $10,090,546 44,305, % -Undistributed Op Expense Admin&General 1,440,935 1,374,886 1,250,959 1,211,749 5,278, % Marketing 1,543,858 1,473,092 1,340,314 1,298,302 5,655, % FranchiseFees 1,427, , ,444 1,465,051 3,641, % Energy 843, , , ,739 3,091, % PropertyOps 926, , , ,981 3,393, % TotAdmin&Gen 6,182,790 5,245,410 4,772,609 5,463,823 21,060, % GrossOperProf 6,016,254 6,335,457 5,661,987 4,626,723 22,640, % ManagementFees 494, , , ,163 1,812, % IncBefFixed 5,521,380 5,863,267 5,232,358 4,210,560 20,827, %

155 Page 155 Open 1/1/06 MARRIOTT Est Land Value: $12,000,000 # Rooms: 1,200 Investment/room ex. land: $220,000 QUARTER: First Second Third Fourth Year Rmnites Sold 72,350 71,544 69,295 67, ,312 Rmnites Avail 108, , , , ,000 Occupancy % 67.0% 65.5% 62.8% 60.8% 64.0% Avg Rate $ REVPAR $ $ $97.29 $94.24 $ % Revnues RoomRevenue $12,371,850 $11,804,760 $10,740,725 $10,404,065 45,321, % Food 5,166,485 4,929,668 4,485,327 4,344,738 18,926, % Beverage 1,070,165 1,021, , ,952 3,920, % Telephone 432, , , ,518 1,583, % Other 1,544,007 1,473,234 1,340,442 1,298,427 5,656, % TotalRevenu $20,584,779 $19,641,232 $17,870,848 $17,310,700 $75,407, % -Fixed: Insur 131, , , , , % Property Tax 1,131,113 1,131,113 1,131,113 1,131,113 4,524, % DeprecSL39Yr 1,692,308 1,692,308 1,692,308 1,692,308 6,769, % TotFixedExp 2,955,384 2,955,384 2,955,384 2,955,384 11,821, % NetIncomeBef 2,565,996 2,907,883 2,276,974 1,255,176 9,006, % Tax & Financing DeprecAddBack 1,692,308 1,692,308 1,692,308 1,692,308 6,769, % ReplacReser (850,220) (850,220) (850,220) (850,220) (3,400,881) -4.5% Cash Before Fin & Tax 3,408,083 3,749,970 3,119,062 2,097,264 12,374, % - See overleaf for ensuing 9 years -

156 Page 156 DALLAS MARRIOTT CONVENTION CENTER Compound Growth Year Yr2-10 RmnitesSold 312, , , , , , , , , % RmnitesAvai 438, , , , , , , , , % Occupancy% 71.2% 72.6% 72.3% 72.3% 72.1% 71.2% 70.4% 69.6% 68.7% 0.8% Avg Rate* $ $ $ $ $ $ $ $ $ % REVPAR $ $ $ $ $ $ $ $ $ % RoomRev 55,597,915 60,950,329 63,702,058 66,578,018 68,421,770 69,297,500 70,184,439 71,082,730 71,992, % Food 23,217,689 25,452,857 26,601,979 27,802,980 28,572,931 28,938,636 29,309,022 29,684,148 30,064, % Beverage 4,809,220 5,272,203 5,510,228 5,758,999 5,918,483 5,994,234 6,070,954 6,148,656 6,227, % Telephone 1,942,591 2,129,604 2,225,750 2,326,236 2,390,657 2,421,255 2,452,244 2,483,631 2,515, % Other 6,938,620 7,606,601 7,950,017 8,308,937 8,539,037 8,648,328 8,759,018 8,871,125 8,984, % TotSales 92,506, ,411, ,990, ,775, ,842, ,299, ,775, ,270, ,784, % RoomDeptExp. Admin. 2,174,754 2,239,997 2,307,196 2,376,412 2,447,705 2,521,136 2,596,770 2,674,673 2,754, % HeadHousek 280, , , , , , , , , % Housekeep 1,173,114 1,231,158 1,262,230 1,300,282 1,336,290 1,359,996 1,384,119 1,408,674 1,433, % Laundry 1,080,764 1,134,238 1,184,855 1,237,906 1,290,436 1,329,183 1,352,794 1,360,437 1,351, % Mainten. 1,729,222 1,814,781 1,895,767 1,980,650 2,064,697 2,126,693 2,164,471 2,176,699 2,162, % FrontDesk 2,008,815 2,108,208 2,202,289 2,300,896 2,398,532 2,470,552 2,514,438 2,528,643 2,512, % Vacat/Hol 337, , , , , , , , , % Taxes/Ben 1,581,232 1,650,518 1,712,783 1,778,812 1,844,463 1,896,758 1,936,964 1,964,401 1,978, % TotPayr 10,365,857 10,820,063 11,228,243 11,661,104 12,091,479 12,434,305 12,697,874 12,877,742 12,972, % OtherRoom 2,249,808 2,361,125 2,466,493 2,576,929 2,686,280 2,766,939 2,816,090 2,832,000 2,814, % TotRoomE 12,615,666 13,181,188 13,694,736 14,238,033 14,777,758 15,201,244 15,513,965 15,709,742 15,786, % F&B Exp -12,331,840 13,519,027 14,129,371 14,767,271 15,176,222 15,370,463 15,567,189 15,766,434 15,968, % OtherExp 8,408,073 9,217,518 9,633,662 10,068,594 10,347,424 10,479,861 10,613,993 10,749,841 10,887, % Total 20,739,913 22,736,545 23,763,034 24,835,864 25,523,647 25,850,324 26,181,182 26,516,275 26,855, % OthExpens 3,552,484 3,894,482 4,070,307 4,254,069 4,371,877 4,427,833 4,484,505 4,541,902 4,600, % Departmental Profits Rooms 42,982,249 47,769,141 50,007,322 52,339,985 53,644,012 54,096,256 54,670,474 55,372,988 56,205, % F & B 7,286,996 7,988,516 8,349,174 8,726,115 8,967,768 9,082,546 9,198,794 9,316,529 9,435, % Other 5,328,727 5,841,723 6,105,460 6,381,104 6,557,816 6,641,750 6,726,757 6,812,853 6,900, % Total 55,597,972 61,599,380 64,461,956 67,447,203 69,169,595 69,820,552 70,596,025 71,502,371 72,541, %

157 Page 157 DALLAS MARRIOTT CONVENTION CENTER Compound Growth Year Yr2-10 RmnitesSold 312, , , , , , , , , % RmnitesAvai 438, , , , , , , , , % Occupancy% 71.2% 72.6% 72.3% 72.3% 72.1% 71.2% 70.4% 69.6% 68.7% 0.8% Avg Rate* $ $ $ $ $ $ $ $ $ % REVPAR $ $ $ $ $ $ $ $ $ % -Undistributed Op Expense Admin&Gen 5,436,885 5,599,991 5,767,991 5,941,031 6,119,262 6,302,840 6,491,925 6,686,683 6,887, % Marketing 6,937,953 7,605,870 7,949,252 8,308,138 8,538,216 8,647,496 8,758,176 8,870,272 8,983, % FranchFee 4,370,617 4,705,006 4,883,523 5,069,665 5,194,049 4,157,850 4,211,066 4,264,964 4,319, % Energy 3,544,904 3,720,301 3,886,323 4,060,332 4,232,629 4,359,720 4,437,165 4,462,233 4,434, % PropOps 3,890,749 4,083,257 4,265,477 4,456,462 4,645,569 4,785,059 4,870,059 4,897,573 4,866, % TotAdmin 24,181,108 25,714,424 26,752,566 27,835,628 28,729,725 28,252,965 28,768,391 29,181,724 29,491, % GrOpProf 31,416,864 35,884,956 37,709,390 39,611,576 40,439,871 41,567,587 41,827,635 42,320,647 43,050, % ManageFee 2,223,917 2,438,013 2,548,082 2,663,121 2,736,871 2,771,900 2,807,378 2,843,309 2,879, % IncomBef 29,192,947 33,446,943 35,161,308 36,948,455 37,703,000 38,795,687 39,020,257 39,477,338 40,170, % Fixed Charges -FixedInsur 647, , , , , , , , , % PropTax 5,550,362 6,084,696 6,359,402 6,646,510 6,830,573 6,917,997 7,006,541 7,096,217 7,187, % DeprSL39 6,769,231 6,769,231 6,769,231 6,769,231 6,769,231 6,769,231 6,769,231 6,769,231 6,769, % TotFixEx 12,967,135 13,563,808 13,870,563 14,191,167 14,396,704 14,494,328 14,593,201 14,693,340 14,794, % NetIncom 16,225,812 19,883,135 21,290,745 22,757,288 23,306,296 24,301,360 24,427,056 24,783,998 25,375, % Tax & Financing DeprecAdd 6,769,231 6,769,231 6,769,231 6,769,231 6,769,231 6,769,231 6,769,231 6,769,231 6,769, % RepReser (3,043,449)(3,194,465) (2,225,791) (4,652,557) (5,692,144) (7,725,097) (9,458,830) (7,096,217) (6,588,122) 7.6% Cash Before Fin&Tax 19,951,594 23,457,900 25,834,185 24,873,961 24,383,383 23,345,494 21,737,457 24,457,011 25,557, %

158 Page 158 February 7, 2003 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 projections in this study are dependent on the developer using the name 'Marriott, delivering the level of product quality as required by the franchisor, including certain amenities, and spending the appropriate operating funds necessary to generate projected revenues, most especially budgeted funds for aforementioned Four-Diamond quality and amenities and for marketing. It is our opinion that this fairly and conservatively represents the revenues, profitability and return on investment performance that can be achieved by developing and operating a 1,200 unit Marriott Hotel on a site very near or adjacent to the Dallas Convention Center, either as a private development or as a private/public joint venture. Please contact us with any questions at (210) Respectfully Submitted, Source Strategies, Inc. Bruce H. Walker Todd A. Walker Douglas W. Sutton President Vice President Vice President

159 Page 159 Exhibits: I Market History, Aggregated Basis: -Metro Market -Local Market II Local market By Segment and Brand, Past Five Years, Annual Basis III Individual Hotel/Motel Histories For Local Market: Downtown Dallas IV Texas High Priced Hotel Markets V The Case For Downsizing Hotels VI Start-up Performance of New Hotels VII CAPEX Study of Capital Expenditures VIII Preparer Qualifications, Consulting Projects, Client List & Database Methodology IX Hotel Brand Report, December 2002 (physical hard copy, not on Website)

160 Page 160 EXHIBIT I HOTEL MARKET: DALLAS MSA # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR ,566 2, , *TOTAL , , ,686 2, , ,845 2, , ,921 2, , ,010 2, , *TOTAL , , ,968 2, , ,163 2, , ,785 2, , ,634 2, , *TOTAL , , ,042 2, , ,291 2, , ,341 2, , ,665 2, , *TOTAL , , ,182 2, , ,993 2, , ,940 2, , ,132 2, , *TOTAL , , ,155 2, , ,161 2, , ,873 2, , ,998 2, , *TOTAL , , ,757 3, , ,663 3, , ,191 3, , ,278 3, , *TOTAL , , ,866 3, , ,051 3, , ,160 3, , ,583 3, , *TOTAL , ,055,

161 Page 161 HOTEL MARKET: DALLAS MSA # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR ,881 3, , ,415 3, , ,761 3, , ,775 3, , *TOTAL , ,146, ,409 3, , ,172 3, , ,514 3, , ,642 2, , *TOTAL , ,017, ,946 3, , ,643 3, , ,774 3, , *TOTAL , , *TOTAL 116, ,693, 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)

162 Page 162 LODGING MARKET: DOWNTOWN DALLAS HOTEL MARKET # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , *TOTAL , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , ,

163 Page 163 LODGING MARKET: DOWNTOWN DALLAS HOTEL MARKET # RNIGHTS $ ROOMS Hotels # SOLD 1 REVENUES % $ $ YRQ Motels ROOMS (000S) (000 S) OCC2 Rate3 RPAR , , , , , , , , *TOTAL , , , , , , , , , , *TOTAL , , , , , , , , *TOTAL , , *TOTAL 23, ,385, 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)

164 Page 164 EXHIBIT II PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2002 LODGING MARKET: DOWNTOWN DALLAS HOTEL MARKET # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR AMERISUITES , HAMPTON INN , RENAISSANCE , WYNDHAM , TOTAL COMPS , ADMS MARK , HYATT , WYNDHAM , TOTAL UPSCALE , EMBASSY , HAWTHORN , HOMEWOOD , OTH SUITE , RESIDENCE , TOTAL SUITES , CLARI COURTYARD , CROWNPLZA , HOLID INN , SHERATON , TOTAL MID/UPS , BRADFORD , CANDLWOOD , TOTAL MIN STE , BEST WEST , FAIRFIELD , WINGATE , TOTAL LTD. SERV , LP EXT STAY , RAMAD INN , RAMAD LTD TOTAL BUDGET , TOTAL CHAINS , , INDEPENDENTS LARGE , SMALL FAIRMONT , LE MERIDIEN , THE MAGNOLIA , THE ADOLPHUS , TOTAL INDEP , TOTAL MARKET , , * All figures annualized. Includes taxed and est non-tax room revenues. INDEPENDENTS ARE CATEGORIZED L=LARGE (+$100 AVERAGE DAILY RATE), M=MEDIUM ($60-$99 ADR), AND S=SMALL (-$60 ADR).

165 Page 165 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2001 LODGING MARKET: DOWNTOWN DALLAS HOTEL MARKET # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR CHAINS AMERI STS , HAMPTON , RENAISSAN , WYNDHAM , TOT NEARBY , ADMS MARK , HYATT , WYNDHAM , TOT UPSCALE , EMBASSY , HAWTHORN , HOMEWOOD , OTH SUITE , RESIDENCE , TOT SUITES , CLARI COURTYARD , CROWNPLZA , HOLID INN , SHERATON , TOT MID/UPS , BRADFORD , CANDLWOOD , TOT MIN STE , BEST WEST , FAIRFIELD , WINGATE , TOT LTD SVE , HOMESTEAD , RAMAD INN , RAMAD LTD TOT BUDGET , TOT CHAINS , , INDEPENDENTS LARGE , SMALL FAIRMONT , LE MER , MAGN , ADOL , TOTAL INDEP , TOT MARKET , , * All figures annualized. Includes taxed and est non-tax room revenues. INDEPENDENTS ARE CATEGORIZED L=LARGE ($100+ AVERAGE DAILY RATE), M=MEDIUM ($60-99 ADR), AND S=SMALL (UNDER $60 ADR).

166 Page 166 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2000 LODGING MARKET: DOWNTOWN DALLAS HOTEL MARKET # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR AMERI STS , HAMPTON , RENAISSAN , WYNDHAM , TOT NEARBY , ADMS MARK , HYATT , WYNDHAM , TOT UPSCALE , EMBASSY , HAWTHORN , HOMEWOOD , OTH SUITE , RESIDENCE , TOT SUITES , CLARI COURTYARD , CROWNPLZA , HOLID INN , SHERATON , TOT MID/UPS , BRADFORD CANDLWOOD , TOT MIN STE , BEST WEST , FAIRFIELD , WINGATE , TOT LTD SVE , HOMESTEAD , TOT EXT STA , RAMAD INN , RAMAD LTD TOT BUDGET , TOT CHAINS , , INDEPENDENTS L , S , FAIR , MERI , MAGN , ADOLP , TOTAL INDEP , TOT MARKET , , * All figures annualized. Includes taxed and est non-tax rooms revenues. INDEPENDENTS ARE CATEGORIZED L=LARGE ($100+ AVERAGE DAILY RATE), M=MEDIUM ($60-99 ADR), AND S=SMALL (UNDER $60 ADR).

167 Page 167 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 1999 LODGING MARKET: DOWNTOWN DALLAS HOTEL MARKET # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR AMERI STS , HAMPTON , RENAISSAN , WYNDHAM , TOT NEARBY , ADMS MARK , HYATT , WYNDHAM , TOT UPSCALE , EMBASSY , HAWTHORN , HOMEWOOD , OTH SUITE , RESIDENCE , TOT SUITES , CLARI COURTYARD , CROWNPLZA , HOLID INN , SHERATON , TOT MID/UPS , CANDLWOOD , BEST WEST , FAIRFIELD , WINGATE TOT LTD SVE , HOMESTEAD , RAMAD INN , RAMAD LTD TOT BUDGET , TOT CHAINS , , INDEPENDENTS L , M S , FAIR , MERID , MAGNO ADOLP , TOTAL INDEP , TOT MARKET , , * All figures annualized. Included taxed and est non-tax rooms revenues. INDEPENDENTS ARE CATEGORIZED L=LARGE ($100+ AVERAGE DAILY RATE), M=MEDIUM ($60-99 ADR), AND S=SMALL (UNDER $60 ADR).

168 Page 168 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 1998 LODGING MARKET: DOWNTOWN DALLAS HOTEL MARKET # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR CHAINS AMERI STS , HAMPTON , RENAISSAN , WYNDHAM , TOT NEARBY , ADMS MARK , HYATT , WYNDHAM , TOT UPSCALE , EMBASSY , HAWTHORN , OTH SUITE , RESIDENCE , TOT SUITES , COURTYARD , HOLID INN , OTHER MUP , TOT MID/UPS , CANDLWOOD BEST WEST , FAIRFIELD , TOT LTD SVE , HOMESTEAD , RAMAD INN , RAMAD LTD TOT BUDGET , TOT CHAINS , , INDEPENDENTS L , M , S , TOTAL INDEP , FAIRM , MERID , ADOLP , TOTAL INDEP , TOT MARKET , , * All figures annualized. Included taxed and est non-tax rooms revenues. INDEPENDENTS ARE CATEGORIZED L=LARGE ($100+ AVERAGE DAILY RATE), M=MEDIUM ($60-99 ADR), AND S=SMALL (UNDER $60 ADR).

169 Page 169 EXHIBIT III LODGING MARKET: DOWNTOWN DALLAS HOTEL MARKET 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 ADAM'S MARK DALLAS AMARK 1,339,926 1,743, AMARK 1,190,059 1,628, AMARK 1,425,255 1,556, AMARK 2,061,632 2,212, AMARK 2,685,168 2,898, AMARK 2,188,564 2,328, AMARK 1,643,230 1,703, AMARK 8,215,724 8,608, AMARK11,907,842 11,999, AMARK14,267,928 14,457, AMARK 9,111,116 9,722, AMARK 9,756,863 10,100, AMARK13,999,276 14,850, AMARK 9,616,910 10,193, AMARK 9,272,965 9,590, AMARK 9,301,776 9,995, AMARK13,481,285 13,979, AMARK 6,188,483 7,631, AMARK 4,715,180 7,344, AMARK 4,186,728 5,318, AMARK 9,200,180 9,763, AMARK 7,299,583 7,993, AMARK 6,967,360 7,867, HARRY HINE BRADFORD HOMESUITES BRADF 49,344 52, BRADF 269, , BRADF 366, , BRADF 396, , BRADF 333, , BRADF 320, , BRADF 338, , BRADF 459, , BRADF 375, , BRADF 322, , COMMERCE S DALLAS GRAND 125 OF 710 PO HO JO 1,159,679 1,197, HO JO 1,062,903 1,408, HO JO 1,059,030 1,168, ,483,845 1,593, ,556,273 1,709, ,472,089 1,519, , , ,332,336 1,465, , ,

170 Page 170 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 1914 COMMERCE S DALLAS GRAND 125 OF 710 PO , , , , ,423,422 1,454, , , , , , , , , N AKARD ST FAIRMONT DALLAS HOTEL ,338,403 4,468, ,717,848 3,964, ,578,142 3,685, ,878,850 3,995, ,390,569 4,509, ,018,949 4,136, ,772,024 3,822, ,060,946 4,122, ,093,429 5,151, ,347,323 5,473, ,849,467 4,159, ,656,868 4,707, ,398,448 5,560, ,113,265 5,203, ,464,090 4,685, ,494,410 4,557, ,452,185 5,615, ,646,370 3,789, ,109,281 3,313, ,199,997 3,247, ,724,882 4,753, ,859,443 4,049, ,794,858 3,993, MAIN ST HOLIDAY INN ARISTOCRAT HOLID 947,210 1,012, HOLID 872, , HOLID 866, , HOLID 944, , HOLID 1,164,190 1,240, HOLID 1,086,011 1,113, HOLID 805, , HOLID 945,446 1,000, HOLID 1,044,529 1,121, HOLID 1,136,156 1,201, HOLID 789, , HOLID 892, , HOLID 1,075,958 1,132,

171 Page 171 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 1933 MAIN ST HOLIDAY INN ARISTOCRAT HOLID 1,013,118 1,052, HOLID 859, , HOLID 956,965 1,015, HOLID 1,070,133 1,121, HOLID 731, , HOLID 588, , HOLID 594, , HOLID 843, , HOLID 763, , HOLID 511, , CRESCENT CT HOTEL CRESCENT COURT ,695,515 2,738, ,117,491 3,179, ,913,716 2,942, ,173,325 3,208, ,252,349 3,310, ,340,243 3,407, ,978,743 2,999, ,388,317 3,432, ,437,370 3,510, ,546,127 3,626, ,954,661 2,978, ,312,241 3,322, ,860,660 3,937, ,470,160 3,539, ,050,090 3,111, ,434,159 3,502, ,302,603 3,439, ,361,726 3,405, ,780,116 2,824, ,330,640 3,392, ,399,764 3,422, ,497,010 3,528, ,935,098 2,969, MAPLE AVEN HOTEL ST GERMAIN INC ,200 63, ,015 68, ,340 66, ,500 91, ,665 83, ,717 78, ,740 60, ,263 87, , , ,230 84,

172 Page 172 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 2516 MAPLE AVEN HOTEL ST GERMAIN INC ,600 67, ,977 83, ,720 94, ,505 95, ,185 77, , , ,335 90, ,525 73, ,070 56, ,105 77, ,175 76, ,300 67, ,865 42, N PEARL ST LE MERIDIEN DALLAS ,470,603 2,700, ,482,145 2,685, ,557,793 2,721, ,602,773 2,810, ,168,387 3,286, ,985,854 3,100, ,317,908 2,388, ,928,867 3,022, ,409,078 3,514, ,507,323 3,618, ,566,050 2,753, ,516,988 2,844, ,469,118 3,562, ,172,123 3,264, ,049,281 3,154, ,938,695 3,072, ,351,080 3,517, ,983,909 2,251, ,785,871 2,656, ,595,784 1,744, ,664,475 2,843, ,322,618 2,568, ,100,000 2,400, MAPLE AVE MAPLE MANOR ,917 31, ,535 25, ,568 11, ,852 13, ,940 19, ,000 15, ,150 10,

173 Page 173 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 2610 MAPLE AVE MAPLE MANOR ,655 19, ,079 29, ,120 17, ,940 16, ,237 21, ,700 31, ,453 14, ,000 13, MAPLE AVE STONELEIGH HOTEL , , , , , , ,941 1,028, ,146,474 1,202, ,015,016 1,176, , , ,011,519 1,138, ,037,105 1,068, ,098,340 1,116, , , ,455 1,030, ,043,443 1,137, ,403 1,012, , , , , , , , , , , , , , , , , , , COMMERCE S THE MAGNOLIA HOTEL , , ,063,610 1,210, ,495,376 1,842, ,727,671 2,152, ,529,605 2,032, ,677,356 2,064, ,687,767 2,268, ,031,363 1,976, ,121,768 1,762, ,161,756 1,739, ,917,755 2,462, ,525,701 2,224,

174 Page 174 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 ,397,807 1,860, N LAMAR ST AMERISUITES DW AMSTE 466, , AMSTE 822, , AMSTE 771, , AMSTE 669, , AMSTE 809, , AMSTE 884, , AMSTE 902,939 1,004, AMSTE 745, , AMSTE 764, , AMSTE 1,026,481 1,097, AMSTE 943,657 1,011, AMSTE 877, , AMSTE 882, , AMSTE 1,017,793 1,096, AMSTE 797, , AMSTE 790, , AMSTE 761, , AMSTE 956,876 1,042, AMSTE 823,210 1,025, AMSTE 740, , ELM HAMPTON INN DNTN WESTSIDE HAMPT 1,125,678 1,259, HAMPT 1,097,495 1,258, HAMPT 1,185,721 1,357, HAMPT 1,195,532 1,325, HAMPT 1,505,369 1,614, HAMPT 1,404,642 1,558, HAMPT 1,235,917 1,314, HAMPT 1,451,217 1,538, HAMPT 1,228,268 1,656, HAMPT 1,402,614 1,824, HAMPT 1,212,462 1,523, HAMPT 1,049,522 1,513, HAMPT 1,384,208 1,514, HAMPT 1,420,411 1,515, HAMPT 1,457,876 1,628, HAMPT 1,364,444 1,423, HAMPT 1,639,500 1,676, HAMPT 1,051,702 1,220, HAMPT 1,074,131 1,165, HAMPT 882, , HAMPT 1,498,199 1,575, HAMPT 1,281,953 1,427,

175 Page 175 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 HAMPTON INN DNTN WESTSIDE HAMPT 1,177,511 1,267, COMMERCE S THE ADOLPHUS HOTEL ,840,401 3,888, ,820,724 3,895, ,278,878 3,365, ,933,136 3,987, ,279,090 4,364, ,058,659 4,152, ,162,325 3,275, ,870,547 3,957, ,106,934 4,233, ,487,326 4,619, ,396,571 3,525, ,403,167 3,490, ,414,989 4,500, ,071,645 4,121, ,391,106 1,496, ,744,102 3,808, ,850,050 3,951, ,716,279 2,978, ,208,311 2,312, ,444,434 2,531, ,383,058 3,620, ,859,156 3,068, ,560,117 2,825, S HOUSTON S THE HOTEL LAWRENCE FMR PAR ,291 64, ,000 61, ,172 46, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,660 82,

176 Page 176 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 302 S HOUSTON S THE HOTEL LAWRENCE FMR PAR ,608 86, , , , , , , MARKET CEN BEST WESTERN MARKET CENTE BWEST 368, , BWEST 331, , BWEST 361, , BWEST 378, , BWEST 452, , BWEST 404, , BWEST 406, , BWEST 354, , BWEST 422, , BWEST 436, , BWEST 323, , BWEST 344, , BWEST 415, , BWEST 358, , BWEST 308, , BWEST 289, , BWEST 393, , BWEST 260, , BWEST 265, , BWEST 242, , BWEST 354, , BWEST 304, , BWEST 266, , MARKET CEN COURTYARD MARKET CTR COURT 1,354,620 1,370, COURT 1,220,601 1,246, COURT 1,306,336 1,332, COURT 1,319,588 1,341, COURT 1,516,010 1,546, COURT 1,388,607 1,416, COURT 1,314,529 1,340, COURT 1,290,380 1,316, COURT 1,522,687 1,553, COURT 1,485,483 1,502, COURT 1,229,950 1,240, COURT 1,287,377 1,303, COURT 1,544,247 1,575, COURT 1,447,703 1,476, COURT 1,265,262 1,277, COURT 1,314,828 1,327,

177 Page 177 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 CTR COURT 1,514,757 1,545, COURT 1,034,251 1,109, COURT 1,011,452 1,045, COURT 902, , COURT 1,331,247 1,357, COURT 1,087,884 1,109, COURT 1,068,134 1,074, N STEMMONS DALLAS MARRIOTT SUITES X.STE 2,044,116 2,105, X.STE 1,926,259 2,003, X.STE 2,357,791 2,414, X.STE 1,722,031 1,746, X.STE 2,363,746 2,434, X.STE 2,039,544 2,094, X.STE 2,363,968 2,412, X.STE 1,858,306 1,881, X.STE 2,332,013 2,401, X.STE 1,614,226 1,638, X.STE 2,074,031 2,131, X.STE 1,299,252 1,316, X.STE 1,989,954 2,049, X.STE 1,436,822 1,479, X.STE 2,005,811 2,064, N STEMMONS EMBASSY SUITES HOTEL # EMBAS 1,963,382 2,007, EMBAS 1,740,779 1,930, EMBAS 2,003,868 2,063, EMBAS 1,658,771 1,692, EMBAS 2,112,097 2,175, EMBAS 1,924,894 2,010, EMBAS 1,780,470 1,855, EMBAS 1,746,668 1,826, EMBAS 2,040,141 2,104, EMBAS 1,706,212 1,789, EMBAS 1,435,352 1,491, EMBAS 1,536,587 1,618, EMBAS 1,842,879 1,923, EMBAS 1,750,860 1,869, EMBAS 1,598,675 1,782, EMBAS 1,618,626 1,717, EMBAS 1,886,333 2,000, EMBAS 1,369,154 1,462, EMBAS 1,244,613 1,385, EMBAS 988,762 1,220, EMBAS 1,693,457 1,813,

178 Page 178 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 2727 N STEMMONS EMBASSY SUITES HOTEL # EMBAS 1,329,474 1,487, EMBAS 1,208,174 1,416, MARKET CEN FAIRFIELD INN BY MARRIOTT FAIRF 586, , FAIRF 493, , FAIRF 580, , FAIRF 463, , FAIRF 685, , FAIRF 610, , FAIRF 622, , FAIRF 586, , FAIRF 680, , FAIRF 609, , FAIRF 568, , FAIRF 553, , FAIRF 666, , FAIRF 590, , FAIRF 569, , FAIRF 536, , FAIRF 730, , FAIRF 569, , FAIRF 485, , FAIRF 455, , FAIRF 657, , FAIRF 555, , FAIRF 561, , MARKET CEN HOLIDAY INN MARKET CENTER HOLID 885, , HOLID 771, , HOLID 844, , HOLID 817, , HOLID 913, , HOLID 944, , HOLID 873, , HOLID 928, , HOLID 997,610 1,021, HOLID 1,002,150 1,024, HOLID 750, , HOLID 800, , HOLID 974,660 1,013, HOLID 894, , HOLID 737, , HOLID 714, , HOLID 967, , HOLID 559, ,

179 Page 179 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 1955 MARKET CEN HOLIDAY INN MARKET CENTER HOLID 511, , HOLID 450, , HOLID 829, , HOLID 669, , HOLID 437, , N STEMMONS HOMEWOOD SUITES MKT CTR # HOMEW 329, , HOMEW 573, , HOMEW 595, , HOMEW 542, , HOMEW 592, , HOMEW 670, , HOMEW 601, , HOMEW 637, , HOMEW 522, , HOMEW 710, , HOMEW 545, , HOMEW 470, , HOMEW 470, , HOMEW 612, , HOMEW 558, , HOMEW 553, , E REUNION B HYATT REGENCY TO 1122 EXPA HYATT 6,707,086 6,994, HYATT 6,683,437 6,930, HYATT 6,912,571 7,092, HYATT 6,991,599 7,146, HYATT 8,362,827 8,507, HYATT 7,806,191 8,127, HYATT 6,521,957 6,887, HYATT 6,849,522 7,069, HYATT 7,822,141 8,120, HYATT 7,891,154 8,396, HYATT 5,935,335 6,338, HYATT 5,934,320 6,088, HYATT 9,011,185 9,369, HYATT 9,136,626 9,520, HYATT 8,544,062 9,012, HYATT 8,322,685 8,666, HYATT10,776,049 11,130, HYATT 6,437,234 7,723, HYATT 5,722,561 6,490, HYATT 6,188,162 6,572, HYATT 9,280,951 9,859, HYATT 9,077,384 9,508,

180 Page 180 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 300 E REUNION B HYATT REGENCY TO 1122 EXPA HYATT 7,525,370 8,024, MARKET CEN RAMADA LIMITED - MARKET C RALTD 166, , RALTD 152, , RALTD 139, , RALTD 143, , RALTD 185, , RALTD 158, , RALTD 132, , RALTD 109, , RALTD 152, , RALTD 134, , RALTD 98, , RALTD 119, , RALTD 133, , RALTD 114, , RALTD 107, , RALTD 115, , RALTD 154, , RALTD 76,200 87, RALTD 80,324 92, RALTD 61,200 70, RALTD 120, , RALTD 90, , RALTD 62,086 71, N STEMMONS RENAISSANCE DALLAS HOTEL RENAS 4,046,659 4,168, RENAS 2,778,819 2,928, RENAS 4,221,581 4,297, RENAS 2,936,905 3,024, RENAS 3,824,731 3,955, RENAS 3,196,844 3,421, RENAS 4,457,645 4,585, RENAS 2,990,417 3,081, RENAS 3,389,825 3,545, RENAS 3,265,945 3,395, RENAS 3,958,687 4,198, RENAS 3,149,757 3,263, RENAS 4,184,808 4,298, RENAS 3,419,430 3,495, RENAS 4,512,393 4,652, RENAS 3,087,321 3,220, RENAS 3,881,923 3,954, RENAS 2,595,857 2,784, RENAS 3,334,445 3,540,

181 Page 181 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 2222 N STEMMONS RENAISSANCE DALLAS HOTEL RENAS 2,120,363 2,181, RENAS 3,616,887 3,786, RENAS 2,576,412 2,726, RENAS 3,648,658 3,893, N STEMMONS SHERATON X.STE 1,752,398 1,804, X.STE 1,338,267 1,378, X.STE 1,520,973 1,566, X.STE 1,801,723 1,855, X.STE 1,914,848 1,976, X.STE 1,502,729 1,547, X.STE 1,432,034 1,451, X.STE 1,548,972 1,595, X.STE 1,830,240 1,863, X.STE 1,779,441 1,814, X.STE 1,343,996 1,379, X.STE 1,459,454 1,510, X.STE 1,741,004 1,783, X.STE 1,625,459 1,679, X.STE 1,424,036 1,456, X.STE 1,549,202 1,596, X.STE 1,673,201 1,720, X.STE 1,156,947 1,201, X.STE 996,558 1,073, X.STE 860, , X.STE 1,538,738 1,603, X.STE 1,197,680 1,232, X.STE 1,025,235 1,118, N STEMMONS STUDIO 6 FMR HOMESTEAD VIL HOMES 216, , HOMES 239, , HOMES 245, , HOMES 243, , HOMES 269, , HOMES 297, , HOMES 293, , HOMES 261, , HOMES 282, , HOMES 202, , HOMES 198, , HOMES 172, , HOMES 207, , HOMES 185, , HOMES 201, , HOMES 156, ,

182 Page 182 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 2395 N STEMMONS STUDIO 6 FMR HOMESTEAD VIL STUD6 200, , STUD6 356, , STUD6 380, , STUD6 197, , STUD6 177, , STUD6 174, , STUD6 227, , N STEMMONS WILSON WORLD SUITES-DALLA X.STE 729, , X.STE 700, , X.STE 657, , X.STE 810, , X.STE 965, , X.STE 907, , X.STE 729, , X.STE 805, , X.STE 808, , X.STE 903, , X.STE 718, , X.STE 585, , X.STE 782, , X.STE 703, , X.STE 439, , X.STE 663, , X.STE 647, , X.STE 354, , X.STE 408, , X.STE 309, , X.STE 544, , X.STE 395, , X.STE 272, , N STEMMONS WYNDHAM ANATOLE HOTEL WYNDH13,006,294 13,278, WYNDH13,029,427 13,306, WYNDH11,931,482 12,531, WYNDH12,344,738 12,934, WYNDH14,488,425 14,728, WYNDH13,044,791 13,305, WYNDH11,952,442 12,191, WYNDH12,755,931 13,011, WYNDH13,854,617 14,166, WYNDH13,899,598 14,177, WYNDH11,757,267 12,473, WYNDH12,240,690 12,443, WYNDH14,602,854 14,925,

183 Page 183 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 WYNDHAM ANATOLE HOTEL WYNDH13,947,810 14,226, WYNDH11,959,030 12,364, WYNDH12,350,483 12,625, WYNDH14,672,384 15,170, WYNDH10,601,897 10,901, WYNDH 7,995,217 8,180, WYNDH 8,470,084 8,753, WYNDH15,353,133 16,024, WYNDH11,593,256 11,834, WYNDH 8,990,770 9,691, MARKET CEN WYNDHAM MARKET CEN WYNDH 386, , WYNDH 777, , WYNDH 996,040 1,026, WYNDH 1,181,866 1,237, WYNDH 1,440,979 1,470, WYNDH 1,366,767 1,407, WYNDH 1,215,195 1,241, WYNDH 953,380 1,233, WYNDH 1,424,155 1,455, WYNDH 1,416,445 1,438, WYNDH 1,045,494 1,073, WYNDH 1,175,530 1,210, WYNDH 1,511,573 1,534, WYNDH 1,415,452 1,457, WYNDH 1,157,698 1,173, WYNDH 1,187,497 1,200, WYNDH 1,488,044 1,505, WYNDH 903, , WYNDH 765, , WYNDH 801, , WYNDH 1,385,625 1,416, WYNDH 1,026,133 1,052, WYNDH 844, , S AKARD ST RAMADA PLAZA HOTEL RAMAD 811, , RAMAD 769, , RAMAD 949, , RAMAD 924, , RAMAD 1,055,483 1,113, RAMAD 1,001,315 1,037, RAMAD 875, , RAMAD 725, , RAMAD 853, , RAMAD 865, ,

184 Page 184 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 RAMADA PLAZA HOTEL RAMAD 611, , RAMAD 612, , RAMAD 651, , RAMAD 483, , RAMAD 556, , RAMAD 592, , RAMAD 678, , RAMAD 371, , RAMAD 411, , RAMAD 348, , RAMAD 631, , RAMAD 602, , RAMAD 276, , N STEMMONS CANDLEWOOD SUITES MARKET C CANDL 195, , CANDL 197, , CANDL 238, , CANDL 349, , CANDL 381, , CANDL 330, , CANDL 460, , CANDL 544, , CANDL 497, , CANDL 463, , CANDL 413, , CANDL 392, , CANDL 336, , CANDL 330, , CANDL 226, , CANDL 317, , CANDL 317, , CANDL 253, , N STEMMONS CLARION INN CLARI 142, , CLARI 168, , CLARI 187, , CLARI 257, , CLARI 216, , CLARI 163, , CLARI 187, , CLARI 248, , CLARI 183, , CLARI 185, , CLARI 210, , CLARI 229, ,

185 Page 185 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 7138 N STEMMONS CLARION INN CLARI 222, , CLARI 196, , N STEMMONS CROWNE PLAZA MKT CTR FMR H HARVE 1,481,399 1,555, HARVE 1,488,830 1,597, HARVE 1,387,336 1,494, HARVE 1,489,062 1,548, HARVE 1,742,059 1,851, HARVE 1,473,965 1,551, CROWN 1,176,358 1,340, CROWN 1,681,995 1,824, CROWN 1,733,929 1,823, CROWN 1,674,387 1,719, CROWN 1,339,928 1,438, CROWN 1,581,754 1,694, CROWN 1,853,406 2,038, CROWN 1,639,393 1,828, CROWN 1,289,823 1,451, CROWN 1,483,527 1,620, CROWN 1,612,665 1,643, CROWN 908, , CROWN 1,305,281 1,572, CROWN 942,776 1,069, CROWN 1,465,842 1,560, CROWN 1,295,372 1,353, CROWN 1,047,301 1,088, BROOKRIVER HAWTHORN SUITES HAWTH 351, , HAWTH 332, , HAWTH 311, , HAWTH 287, , HAWTH 370, , HAWTH 347, , HAWTH 305, , HAWTH 331, , HAWTH 352, , HAWTH 275, , HAWTH 270, , HAWTH 276, , HAWTH 385, , HAWTH 335, , HAWTH 280, , HAWTH 269, , HAWTH 320, , HAWTH 227, ,

186 Page 186 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 7900 BROOKRIVER HAWTHORN SUITES HAWTH 152, , HAWTH 117, , HAWTH 268, , HAWTH 173, , HAWTH 160, , REGAL ROW RAMADA MARKET CENTER LEBAR RAMAD 433, , RAMAD 392, , RAMAD 466, , RAMAD 460, , RAMAD 722, , RAMAD 483, , RAMAD 318, , RAMAD 404, , RAMAD 521, , RAMAD 300, , RAMAD 193, , RAMAD 260, , RAMAD 424, , RAMAD 423, , RAMAD 275, , RAMAD 261, , RAMAD 289, , RAMAD 189, , RAMAD 172, , RAMAD 262, , RAMAD 260, , RAMAD 324, , RAMAD 240, , LUCKY LN RELAX INN ,716 42, N STEMMONS RESIDENCE MKT CTR 140 STES RESID 627, , RESID 544, , RESID 617, , RESID 856,951 1,089, RESID 780, , RESID 682, , RESID 938,785 1,223, RESID 622, , RESID 715, , RESID 683, , RESID 868,656 1,181, RESID 498, ,

187 Page 187 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 6950 N STEMMONS RESIDENCE MKT CTR 140 STES RESID 665, , RESID 586, , RESID 787,924 1,143, RESID 598, , RESID 712, , RESID 529, , RESID 757,562 1,017, RESID 432, , RESID 690, , RESID 550, , RESID 760,949 1,087, W MOCKINGB SHERATON BROOKHOLLOW HOLID 1,397,958 1,518, HOLID 1,232,423 1,257, HOLID 1,160,395 1,428, HOLID 1,071,904 1,155, SHERA 1,363,116 1,480, SHERA 1,366,800 1,479, SHERA 1,093,665 1,167, SHERA 1,027,938 1,186, SHERA 1,439,469 1,561, SHERA 1,472,305 1,497, SHERA 1,026,254 1,197, SHERA 904,741 1,136, SHERA 1,256,738 1,351, SHERA 1,269,008 1,293, SHERA 811, , SHERA 1,113,778 1,133, SHERA 1,275,713 1,291, SHERA 870, , SHERA 707, , SHERA 729, , SHERA 1,038,927 1,096, SHERA 876, , SHERA 621, , N STEMMONS WINGATE INN WINGT 59,542 60, WINGT 128, , WINGT 190, , WINGT 295, , WINGT 304, , WINGT 275, , WINGT 280, , WINGT 342, , WINGT 272, ,

188 Page 188 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 8650 N STEMMONS WINGATE INN WINGT 238, , WINGT 207, , WINGT 301, , WINGT 253, , WINGT 231, , ENDNOTES: 1. Factor used to adjust taxable to gross revenues. Area factor used if property data not available. Taxable equals 89% of gross Statewide. 2. A number or a 'Y' indicates quarter's revenues were estimated. 3. Estimated Average Daily Rate (e.g % 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 $16,500 (OTHERWISE OMITTED).

189 Page 189 EXHIBIT IV PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2002 LODGING MARKET: TEXAS HIGH-PRICED MARKETS # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR FOURSEAS , WESTIN , TOT LUXURY , ADMS MARK , DOUBLTREE , HILTON , HYATT , INT-C , MARRIOTT , OMNI , RENAISSAN , WYNDHAM , TOT UPSCALE , , DOUBL STE , EMBASSY , HAWTHORN , HOMEWOOD , OTH SUITE , RADIS STE , RESIDENCE , STAYB , TOT SUITES , , POINTS , CLARI , COURTYARD , CROWNPLZA , HOLID INN , RADIS HTL , SHERATON , TOT MID/UPS , , AMERI STS , BRADFORD , CANDLWOOD , COMFO STE , HAWTH LTD , TOWNPLACE , TOT MIN STE , COMFO INN , CTRY HRTH DRURY INN , FAIRFIELD , HAMPTON , HOLID EXP , LA QUINTA , WELLESLEY , TOT LTD SVE , ,

190 Page 190 PERIOD: TWELVE MONTHS ENDING SEPTEMBER 30, 2002 LODGING MARKET: TEXAS HIGH-PRICED MARKETS # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000s AMT %OCC RATE RPAR CROSSLAND , EXT AMERI , HOMESTEAD , STUDIO , SUBUR LDG SUNST , X.EXT , TOT EXT STA , BAYMONT , DAYS INN , ECONOLODG , HO JO , MICROTEL , MOTEL , OTHER BUD , QUALITY RAMAD INN , RAMAD LTD , RED ROOF , SUPER , TOT BUDGET , TOT CHAINS , ,184, INDEPENDENTS LARGE , , MEDIUM , SMALL , TOTAL INDEP , , TOT MARKET , ,512, * All figures annualized. Includes taxed and est non-tax room revenues. INDEPENDENTS ARE CATEGORIZED L=LARGE (+$100 AVERAGE DAILY RATE), M=MEDIUM ($60-$99 ADR), AND S=SMALL (-$60 ADR).

191 Page 191 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 reexamine 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 'right-sizing' a property. The premise offered by many inexperienced developers is "If I can make a profit constructing a 50 unit hotel in a given market, it would be twice as profitable to develop 100 units." 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 units cannot be economically justified. To illustrate this point, mentally divide our hypothetical 100 unit project into two 50 unit hotels. The initial 50 units may perform very well, with occupancies over 70% and a very strong rate structure. However, the second 50 units are only utilized when there is overflow from the first hotel because its rooms are 100% occupied. Effectively, the second 50 units 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 unit project operating at this low level, but often times they accomplish the same end by pushing for more units in a project than the market can effectively support. If we now mentally put these two 50 unit properties back together (one operating at 70%, the other at 30% occupancy), what we end up with is an oversized 100 unit hotel that is running a mediocre 50% occupancy. 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 units usually put themselves in unenviable financial situations. Many hotels which we see put up for sale were developed with far too many units. The owners, having had difficulty getting a return on their

192 Page 192 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 units 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 units; 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 June 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: 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 units, downward to a much lower 43.8% average occupancy for properties in the unit size bracket.

193 Page 193 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 50 units. Prior to that, a mild upward trend is experienced. This appears to indicate that, on average, 50 units 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. 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 unit increase in rooms from the unit size bracket to the unit 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 52 units in size. At this size, the average occupancy is 62.8%. If we built 36% fewer rooms (38 units) our average

194 Page 194 occupancy would rise a moderate 6.5% to 66.9%. Conversely, if we built 36% more than average, (71 units) 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 52 units 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 52 units suffer serious occupancy declines. At some point the need for additional units 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 units. 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 44 units or less, downward to a much lower 55.5% average occupancy for properties in the unit size bracket, after peaking at 73.9% in the size range.

195 Page 195 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 52 unit average for our Comfort Inn sample is reasonably close to optimum sizing for that brand, the 98 unit 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 70 units, 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 units 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 units, increasing the size by 30% (135 units) would cause occupancy to slide 10% from 60.9% to 55.5%. On the other hand, making the average project smaller (60 units, 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 60 units. If the project size were increased to 135 units, the largest range in our sample, occupancy would suffer a significant 33% decline from optimum levels. 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.

196 Page 196 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 La Quinta 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% 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 undersupply. 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.

197 Page 197 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. 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

198 Page 198 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. 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 company-operated hotels.

199 Page 199 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 total revenues) over a 25-year time period; the table following the chart identifies the specific ranges of CapEx spending as a%age of total revenues by year.

200 Page 200 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.

201 Page 201 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 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