Hotel Industry Performance Overview Washington Lodging Convention

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1 Hotel Industry Performance Overview Washington Lodging Convention Valerie Woods Director of Business Development, Hotels Valerie_STR 2016 STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively STR ) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR. No strategic advice or marketing recommendation is intended or implied.

2 Data Dashboard>View All Data Presentations

3 Agenda Total U.S. Review Market Comparison Washington State Looking Forward: Pipeline & Forecast

4 About STR The Data

5 Total U.S. Review

6 September 2016 Jewish Calendar shift lifted results RevPAR +5.6% ADR +3.9% First time that September demand was ~105 Million Rooms Sold Group RevPAR +12.1%

7 September 2016 YTD: Occupancy Has Never Been Higher % Change Room Supply 1.5% Room Demand 1.5% Occupancy 67.1% 0% ADR $ % RevPAR $84 3.2% Room Revenue 4.8% September 2016 YTD, Total US Results

8 Demand Growth Slows. Supply Growth Increases To 1.5% Supply % Change Demand % Change Total U.S., Supply & Demand % Change, 12 MMA Jan 1990 Sep 2016

9 Occupancy Growth Rapidly Approaching 0% Occ % Change ADR % Change Total U.S., ADR & OCC % Change, 12 MMA Jan 1990 Sep

10 Occupancies Still Close to Peak Occupancy (%) ADR ($) Prior Peak: Oct Total US, Occupancy and ADR, 12 MMA Jan 1997 Sep 2016

11 RevPAR Growth: Slowing Down After 6 Yrs. Of Growth Months 31 Mo 56 Months 79 Mo Total U.S., RevPAR % Change, Jan 1990 Sep 2016

Quarterly RevPAR % Change: Slow is the New Normal 2013 2014 2015 2016 7.8 8.0 9.1 8.8 6.0 6.7 4.

12 Quarterly RevPAR % Change: Slow is the New Normal Q1 Q2 Q3 Q4 Total US, RevPAR % Change, by Quarter, Q Q3 2016

13 Growth of RevPAR Growth Is Slowing 60% Growth of Growth RevPAR % Change 15% 40% 9% 20% 0% -20% -40% -60% RevPAR % Change Growth of Growth Aug Sep Oct Nov Dec Jan Feb Mar Apr May June 3% -3% -9% -15% Total U.S., RevPAR % Change and 12MMA Change of Change, 7/ /2016

14 2016 STR Chain Scales *Full list available at Luxury Fairmont, Four Seasons, Ritz Carlton, JW Marriott Upper Upscale Hilton, Hyatt, Marriott, Kimpton Hotels Upscale Radisson, Hilton Garden Inn, Residence Inn, Springhill Suites, Homewood Suites, Courtyard, Best Western Premier Upper Midscale Fairfield Inn/Suites, Holiday Inn, Clarion, Hampton Inn/Suites, Best Western PLUS Midscale Best Western, Candlewood Suites, Quality Inn/Suites, Ramada Economy Extended Stay America, Red Roof, Days Inn, Microtel

15 Scales: Demand Growth is Not Keeping Pace With Supply Growth Supply % Change Luxury Upper Upscale Upscale Upper Midscale Supply / Demand % Change, by Scale, September 2016 YTD -0.5 Midscale Economy Independents

16 Independents Outperform Brands Part of the Cycle ADR % Change Occupancy % Change Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independents *RevPAR % Change by Contribution of OCC / ADR % Change, by Scale, September 2016 YTD

High End Hotels Still Very Busy (But A Little Less So) 75.976.2 75.775.8 75.675.9 2016 2015 69.269.4 61.061.3 59.259.7 64.

17 High End Hotels Still Very Busy (But A Little Less So) Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independents *OCC %, by Scale, September YTD 2016 & 2015

18 Segmentation: Group Transient Contract Segmentation

19 Transient ADR Growth: Slow Despite High Occupancy 6% 5% 4% 3% 2% 1% 0% Demand % Change ADR % Change Transient Demand and ADR % Change, 12 MMA, Jan 2012 Sep % 1.7%

20 Group Demand Growth Slows 6% 5% 4% 3% 2% Demand % Change ADR % Change 3.6% 1.5% 1% -1% -2% Jewish Holiday Shift Group Demand and ADR % Change, 12 MMA, Jan 2012 Sep 2016

21 Group ADR increase making up for slowing demand this year 7.5% Transient RevPAR % change Group RevPAR % change 7.0% 6.7% 5.1% 4.6% 3.2% 2.2% 1.9% YTD

22 Markets

23 September 2016 : New Supply Hits NYC, Houston, Miami Market OCC % ADR % Change Los Angeles/Long Beach, CA Nashville, TN Atlanta, GA Denver, CO Tampa/St Petersburg, FL Chicago, IL New Orleans, LA Miami/Hialeah, FL Houston, TX New York, NY * September 2016 YTD ADR % Change in Top 25: 5 Best / 5 Worst Performing ADR % Markets

24 Supply Growth Amplifies RevPAR Declines 8 Pittsburgh, PA Supply% Change Texas West 6 North Dakota West Virginia 4 2 Melbourne/Titusville, FL Colorado Springs, CO RevPAR % Change * September 2016 YTD Supply & RevPAR % Change, All Markets -4 Hawaii/Kauai Islands

25 Majority Of Markets With Positive ADR % Change 38% ADR % Change 15 Oakland, CA 10 54% California North Central Wyoming 5 Occ% Change New Jersey 10 Missouri Shore -5 South West Virginia -10 North Dakota Texas West -15 6% -20 * September 2016 YTD ADR & Occupancy % Change, All Markets. % are respective share of all 168 markets 2%

26 Houston Performance: Terrible. That is All. $/gal $100 $90 $80 $70 $60 $50 $40 $30 Crude Oil Futures Price / Barrel (LHS) Demand % Change (RHS) *Monthly Oil price Future / Barrel vs. Houston, TX Room Demand % Change 1/ / %

NYC Monthly RevPAR % Change: Declining Entire Year 3.2 0.5-2.4-1.5-1.7-4.1-4.3-4.5-4.

27 NYC Monthly RevPAR % Change: Declining Entire Year * NYC RevPAR % Change, by Month, 9/2015 8/2016

28 Select West Coast Markets: Occupancies Near Peak San Francisco +0.1% 85.6% Los Angeles Vancouver San Diego Seattle Portland +2.6% +3.2% -0.4% -0.6% +1.5% 83.2% 80.1% 79.0% 78.4% 78.1% Select West Coast markets, Occ & Occ % Change, YTD Sep 2016

Select West Coast Markets: ADR Still Growing, but Not as Fast San Francisco +5.0% $235.

29 Select West Coast Markets: ADR Still Growing, but Not as Fast San Francisco +5.0% $ Los Angeles San Diego Seattle Vancouver Portland +9.3% +2.7% +3.5% +5.7% +5.4% $ $ $ $ $ Select West Coast markets, ADR ($) & ADR % Change, YTD Sep 2016

Select West Coast Markets: RevPAR YTD 2015 YTD 2016 $201 $191 $99 $105 $111 $102 $120 $124 $122 $125 $145 $130 +7.0% +9.1% +2.9% +3.1% +12.

30 Select West Coast Markets: RevPAR YTD 2015 YTD 2016 $201 $191 $99 $105 $111 $102 $120 $124 $122 $125 $145 $ % +9.1% +2.9% +3.1% +12.1% +5.1% Portland Vancouver Seattle San Diego Los Angeles San Francisco Select West Coast markets, RevPAR $ and RevPAR % Change YTD Sep 2014 & 2015

31 State of Washington

32 September 2016 YTD: Supply Outpacing Demand % Change Room Supply 2.6% Room Demand 2.0% Occupancy 70.8% -0.6% ADR $ % RevPAR $93 2.8% Room Revenue 5.5% September 2016 YTD, Washington State Results

33 Last 12 Months: RevPAR Driven by ADR Growth % Change Room Supply 2.8% Room Demand 2.8% Occupancy 68.0% -0% ADR $ % RevPAR $87 3.2% Room Revenue 6.2% September MMA, Washington State Results

34 Demand Growth = Supply Growth Supply % Change Demand % Change Washington, Supply & Demand % Change, 12 MMA Jan 2006 Sep 2016

35 Occupancy Declining Slightly Occ % Change ADR % Change Washington, ADR & OCC % Change, 12 MMA Jan 2006 Sep 2016

36 But Still High! Occupancy (%) ADR ($) Washington, Occupancy and ADR, 12 MMA Jan 1997 Sep 2016

37 Transient ADR Growth: State Outpacing US 10% US Demand % Change US ADR % Change WA Demand % Change WA ADR % Change 8% 6% 4% 2% % Transient Demand and ADR % Change, 12 MMA, Jan 2012 Sep 2016

38 Group Demand Slowed to a Halt; ADR Steady 10% US Demand % Change WA Demand % Change US ADR % Change WA ADR % Change 5% 0% 3.4% 0.5% -5% Group Demand and ADR % Change, 12 MMA, Jan 2012 Sep 2016

39 Washington: ADR Growing in Both Segments $137 Transient Group $122 $129 $121 $126 $112$111 $108 $102 $102$103 $104 $105 $108$107 $113 $111 $ YTD Washington, Transient & Group ADR, Full Year , YTD Sep 2016

40 Washington: Room Counts by Class 1033 Properties Upper Upscale, 13% Luxury, 3% Economy, 28% 92K Rooms Upscale, 17% Upper Midscale, 24% Midscale, 14%

41 Washington Class Segments: ADR Growing in All Classes 3.9% 2.1% 2.3% Occupancy ADR 2.9% 2.9% 1.1% 3.7% -0.2% -0.3% -2.0% -0.7% -5.4% Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Washington: Class Segments, Occ & ADR % Change, YTD Sep 2016

42 Washington Classes: Occupancies At/Near Peaks 79.1% 78.8% 78.6% 79.2% 79.0% 74.8% 73.5% 72.0% % 66.4% 63.4% 62.9% Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Washington OCC %, by Class, Sep YTD 2015 & 2016

43 RevPAR Growth From ADR $200 $196 $154 $ $124 $126 $65 $46-1.7% +1.9% +2.0% +0.9% +4.0% +2.9% $88 $89 $67 $48 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Washington: RevPAR $, by Class, Sep YTD 2015 & 2016

Washington: Supply Growth Greater Than Demand Series1 Series2 4.9 4.7 8.0 7.1 2.1 2.0 2.

44 Washington: Supply Growth Greater Than Demand Series1 Series Washington Tracts, Supply & Demand % Change, YTD Sep 2016

45 Supply Growth Keeping Occupancies Flat 84.4% 84.3% 81.6% 80.1% 77.7% % 69.3% 70.6% 65.1% 64.6% 71.4% 72.5% Seattle CBD Seattle Airport Bellevue/ East, WA Tacoma/ Olympia, WA Spokane Kent/ Renton, WA Washington tracts OCC %, Sep YTD 2015 & 2016

Washington: RevPAR (still) Driven by Rate 3.0 3.1-0.1 2.8 2.8 2.9 4.7 4.3 1.1-1.8-1.

5 Seattle CBD Seattle Airport Bellevue/ East, WA Tacoma/ Olympia, WA Spokane Washington

46 Washington: RevPAR (still) Driven by Rate ADR % Change Occupancy % Change Revpar % change Seattle CBD Seattle Airport Bellevue/ East, WA Tacoma/ Olympia, WA Spokane Washington tracts RevPAR % Change by Contribution of OCC / ADR % Change, by State, Aug 2016 YTD Kent/ Renton, WA

47 Under Contract Pipeline In Construction Vertical construction on the physical building has begun. (This does not include construction on any sub-grade structures.) Final Planning construction will begin within the next 12 months. Planning construction will begin in more than 13 months.

48 US Pipeline: Overbuilding? Phase % Change In Construction % Final Planning % Planning % Under Contract % Total US Pipeline, by Phase, 000s Rooms, September 2015 and 2016

49 171K In Construction Is Nearing The Prior Peak (2008) Mar 08: 207.5K Sep 16: 178K Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total US Pipeline, Rooms In Construction Jan 2005 Sep 2016

50 Focus on Middle Tiers % Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated US Pipeline, Rooms Under Construction, 000s Rooms, by Scale, August 2016

Pipeline ( 000s rooms): Top 26 Markets Have 48% Of U/C Rooms Series1 Series3 84.8 Series2 76.6 72.

51 Pipeline ( 000s rooms): Top 26 Markets Have 48% Of U/C Rooms Series1 Series Series US Pipeline, Rooms ( 000s), Top 26 Markets vs. All Other Markets, September 2016

52 Construction In Top 26 Markets: 23 With 2%+ Of Supply Market Rooms U/C % Of Existing Orlando, FL 1,129 1% Norfolk/Virginia Beach, VA 456 1% Oahu Island, HI 410 1% St Louis, MO-IL 864 2% Atlanta, GA 2,210 2% Las Vegas, NV 3,859 2% Washington, DC-MD-VA 3,137 3% Detroit, MI 1,270 3% San Diego, CA 1,866 3% San Francisco/San Mateo, CA 1,580 3% Phoenix, AZ 2,019 3% Minneapolis/St Paul, MN-WI 1,401 3% Chicago, IL 4,175 4% Anaheim/Santa Ana, CA 2,127 4% Boston, MA 2,292 4% Tampa/St Petersburg, FL 1,966 4% New Orleans, LA 1,786 5% Philadelphia, PA-NJ 2,659 6% Los Angeles/Long Beach, CA 5,921 6% Miami/Hialeah, FL 3,377 6% Houston, TX 5,305 6% Dallas, TX 5,567 7% Nashville, TN 3,549 9% Denver, CO 4,470 10% Seattle, WA 4,955 12% New York, NY 16,462 15% *US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, September 2016

53 Washington Pipeline Phase Projects Rooms % Supply In Construction % Final Planning % Planning % Under Contract 88 14, % Washington Pipeline, by Phase, Rooms, September 2016

54 Washington Pipeline Details: Focus on Seattle CBD & Bellevue/East Planning Final Planning In Construction Bellevue/ East, WA 1028 Seattle Airport Seattle CBD Seattle North/ Everett, WA University/ Lynnwood, WA 190 Spokane 1332 Tacoma/ Olympia, WA Select WA Tracts: In Construction & Final Planning & Planning September 2016

55 2016 / 2017 Forecast

56 Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) Outlook 2016 Forecast 2017 Forecast Supply 1.6% 2.0% Demand 1.6% 1.6% Occupancy 0.0% -0.3% ADR 3.2% 3.1% RevPAR 3.2% 2.8%

57 Total United States Chain Scale Key Performance Indicator Outlook 2016F by Chain Scale 2016 Year End Outlook Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (% chg) Luxury -0.4% 2.8% 2.3% Upper Upscale -0.1% 3.0% 2.9% Upscale -0.4% 3.0% 2.6% Upper Midscale -0.1% 2.8% 2.7% Midscale -0.3% 2.8% 2.5% Economy -0.5% 3.3% 2.8% Independent 0.4% 3.3% 3.6% Total United States 0.0% 3.2% 3.2%

Total United States Chain Scale Key Performance Indicator Outlook 2017F by Chain Scale 2017 Year End Outlook Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (% chg) Luxury -0.3% 3.5% 3.

58 Total United States Chain Scale Key Performance Indicator Outlook 2017F by Chain Scale 2017 Year End Outlook Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (% chg) Luxury -0.3% 3.5% 3.2% Upper Upscale -0.3% 3.4% 3.0% Upscale -1.1% 2.7% 1.5% Upper Midscale -0.8% 2.7% 1.9% Midscale 0.1% 2.7% 2.8% Economy 0.0% 2.6% 2.6% Independent -0.4% 3.2% 2.8% Total United States -0.3% 3.1% 2.8%

59 2016 Year End RevPAR Forecast Top 25 US Markets, Aug 2016 Forecast (Markets sorted alphabetically) -10% to -5% -5% to 0% 0% to 5% 5% to 10% Houston, TX Miami-Hialeah, FL Anaheim-Santa Ana, CA Dallas, TX New Orleans, LA Atlanta, GA Los Angeles-Long Beach, CA New York, NY Boston, MA Nashville, TN Chicago, IL Norfolk-Virginia Beach, VA Denver, CO San Francisco/San Mateo, CA Detroit, MI Tampa, FL Minneapolis-St. Paul, MN-WI Oahu Island, HI Orlando, FL Philadelphia, PA-NJ Phoenix, AZ San Diego, CA Seattle, WA St. Louis, MO-IL Washington, D.C.

60 2017 Year End RevPAR Forecast Top 25 US Markets, Aug 2016 Forecast (Markets sorted alphabetically) -5% to 0% 0% to 5% 5% to 10% Houston, TX Atlanta, GA Anaheim-Santa Ana, CA Boston, MA Detroit, MI Chicago, IL Washington, D.C. Dallas, TX Denver, CO Los Angeles-Long Beach, CA Miami-Hialeah, FL Minneapolis-St. Paul, MN-WI Nashville, TN New Orleans, LA New York, NY Norfolk-Virginia Beach, VA Oahu Island, HI Orlando, FL Philadelphia, PA-NJ Phoenix, AZ San Diego, CA San Francisco/San Mateo, CA Seattle, WA St. Louis, MO-IL Tampa, FL

61 Seattle, WA Market: 2016 Projections Series1 3.9% 3.7% 2.6% 2.4% 76.0% 65.8% $112 $74-0.2% $154 $ Seattle Annual Percentage Change from Prior Year & Estimated KPIs as of August 2016

62 Seattle, WA Market: 2017 Projections Series1 4.8% 4.4% 3.2% 2.8% 75.7% 65.8% $112 $74-0.4% $159 $ Seattle Annual Percentage Change from Prior Year & Estimated KPIs as of August 2016

63 Questions? Presentation is available for download. To view this presentation, click STR Data Presentations from the drop-down menu on STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively STR ) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR. No strategic advice or marketing recommendation is intended or implied.

Thank You! Valerie Woods Director of Business Development, Hotels vwoods@str.com Valerie_STR Valerie Woods 2016 STR, Inc.

Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc.

64 Thank You! Valerie Woods Director of Business Development, Hotels Valerie_STR Valerie Woods 2016 STR, Inc. All Rights Reserved. Any reprint, use or republication of all or a part of this presentation without the prior written approval of STR, Inc. or STR Global, Ltd. trading as STR (collectively STR ) is strictly prohibited. Any such reproduction shall specifically credit STR as the source. This presentation is based on data collected by STR. No strategic advice or marketing recommendation is intended or implied.

U.S. Hotel Industry Performance HBI Annual Conference

U.S. Hotel Industry Performance HBI Annual Conference February 17, 2017 Jeff Higley VP/Editorial Director jeff@str.com @jeffhigley1 2016 STR, Inc. All Rights Reserved. Any reprint, use or republication