Southern Innkeepers 104 th Annual Meeting Lodging Overview. Jan D. Freitag Senior Vice President

Southern Innkeepers 104 th Annual Meeting Lodging Overview Jan D. Freitag Senior Vice President 1

Agenda Total US Review Scales Segmentation Markets Pipeline Southern Innkeepers Hotels Performance 2012 / 2013 Forecast 2

www.hotelnewsnow.com Click on Hotel Data Presentations 3

Total US Review 4

Supply / Demand Drive Results. Pricing Power Is Back (?) % Change Room Supply* 727 mm 0.3% Room Demand* 430 mm 3.5% Occupancy 59% 3.2% A.D.R. $104 4.2% RevPAR $62 7.5% Room Revenue* $45 bn 7.9% YTD May 2012, Total US Results * All Time High 5

YTD May 2012: Highest Demand - EVER (430 Million Rooms Sold) 6

Demand Growth Expected To Revert To Mean. Supply Not An Issue 8 8.0% 4 4.0% 0-0.9% -4 Supply Demand - 4.7% -8-6.9% 1990 2000 2010 *Total US, Supply & Demand % Change, 12 MMA 1990 5/2012 7

ADR Rebound Trajectory Flattens Out (Too?) Early 5 4.0% 0-0.2% -0.9% -5 Demand ADR -4.7% -4.6% -10-6.9% -8.7% 1990 2000 2010 *Total US, ADR & Demand % Change, 12 MMA 1990 5/2012 8

ADR Discounting at Twice The Speed of ADR Increases 110 Sept 08 $108 105-10% Dec 11 $102 100 +4.6% 95 19 Months Apr 10 $97 2008 2009 2010 2011 19 Months *Total US, ADR $, 12 MMA 2007-2011 9

Inflation Adjusted ADRs Well Out Of Reach Nominal ADR 2000 / 2007 Grown by CPI $107 2007 ADR Grown By CPI $117 $101 2000 ADR Grown By CPI $85 $85 $104 $107 $109 2000 2002 2004 2006 2008 2010 2012F 2013F * Total US, ADR $ and Inflation Adjusted ADR $, 2000 2013F 2000 2010 CPI from bls.gov, 2011 2013 CPI from Blue Chip Economic Indicators 10

ADRs Are Growing (But Comps Get More Difficult) 3.9 4.1 3.7 4.0 3.5 4.2 4.0 4.4 3.5 4.2 4.1 3.9 3.7 3.6 3.1 2.6 2.9 Jan-11 Jul-11 Jan-12 * Total US, ADR $ % Change, by Month, 1/11 5/12 11

Do You Really Know Your Competitors? National Nameback %:??% * % of hotels that use hotels in their compset which have named them Source: STR Analytics 12

Do You Really Know Your Competitors? Comp Set Competior Competior Subject? Competior Competior Competior Competior Source: STR Analytics 13

Do You Really Know Your Competitors? National Nameback %: 45% * % of hotels that use hotels in their compset which have named them Source: STR Analytics 14

Chain Scale Review 15

Scales: Strong Demand Growth, Supply Not An Issue 2.8 3.1 4.3 5.8 3.9 Supply Demand 1.5 1.8 1.7 0.2 0.6-0.9-0.2 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy *Supply / Demand % Change, by Scale, YTD May 12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification 16

Good Beginning to 2012 4.9 Occupancy ADR 3.7 2.9 4.0 2.8 4.3 3.9 3.8 3.3 3.2 4.3 2.0 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy *OCC / ADR % Change, by Scale, YTD May 12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification 17

Upper End Sells 7 out of 10 Rooms Every Night 72.5 72.1 70.5 70.1 70.3 69.6 2007 12 Months end 5/12 65.6 62.2 59.0 57.0 54.3 53.9 Luxury Upper Upscale Upscale Upper Midscale* Midscale* Economy *Absolute OCC %, by Scale, YE 2007 & 12 Months ending 5/12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification 18

ADR Growth Is Strong But Not Strong Enough (...yet) $293 $266 2007 12 Months end 5/12 $159 $150 $121 $114 $94 $95 $75 $73 $54 $51 Luxury Upper Upscale Upscale Upper Midscale* Midscale* Economy *Absolute ADR $, by Scale, YE 2007 & 12 Months ending 5/12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification 19

Segmentation Review 20

Transient Demand Breaks Records, But... 20 2007 2011 2012 17.5 Millions 15 12.5 10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec *Transient Demand in Millions of Rooms; 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 21

Transient ADR Still Lags 2007 Results $190 2007 2011 2012 $180 $170 $160 $150 $140 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec *Transient ADR $, 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 22

We Expect Transient ADR Growth To Continue 5.3 4.6 6.4 5.4 5.9 5.1 5.0 3.7 4.7 4.3 4.6 3.7 3.8 3.4 4.0 5.5 4.2 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 *Transient ADR % by Month, 1/11 5/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 23

12 Group Demand Has Not Changed Over Time, But 2007 2011 2012 10 Millions 8 6 4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec *Group Demand in Millions of Rooms, 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 24

Group ADRs Still Depressed (& Could Dampen Future Absolute ADRs) $170 2008 2011 2012 $160 $150 $140 $130 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec *Group ADR $, 2008, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 25

Group ADR Expectation Still Depressed 3.7 3.7 4.2 2.6 2.4 2.4 2.0 2.0 1.7 3.0 2.7 2.8 2.6 2.2 2.3 0.3 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12-0.5 *Group ADR % by Month, 1/11 4/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 26

Market Review 27

Top 94 Metro Markets By Size Top 25 26-50 51-75 76-94 Orlando, FL Chicago, IL Washington, DC-MD-VA New York, NY Los Angeles-Long Beach, CA Atlanta, GA Dallas, TX Houston, TX Phoenix, AZ San Diego, CA Anaheim-Santa Ana, CA San Francisco/San Mateo, CA Boston, MA Miami-Hialeah, FL Tampa-St Petersburg, FL Philadelphia, PA-NJ Detroit, MI Seattle, WA Denver, CO St Louis, MO-IL Norfolk-Virginia Beach, VA Minneapolis-St Paul, MN-WI New Orleans, LA Nashville, TN Oahu Island, HI San Antonio, TX Riverside-San Bernardino, CA Baltimore, MD Kansas City, MO-KS Charlotte, NC-SC Indianapolis, IN Fort Worth-Arlington, TX Knoxville, TN Fort Lauderdale, FL Austin, TX San Jose-Santa Cruz, CA Myrtle Beach, SC Cincinnati, OH-KY-IN Jacksonville, FL Raleigh-Durham-Chapel Hill, NC Portland, OR Columbus, OH Sacramento, CA Oakland, CA Pittsburgh, PA Oklahoma City, OK Memphis, TN-AR-MS Richmond-Petersburg, VA Cleveland, OH Salt Lake City-Ogden, UT Louisville, KY-IN Greensboro-Winston Salem, NC Newark, NJ Charleston, SC Albuquerque, NM Birmingham, AL Tucson, AZ Milwaukee, WI West Palm Beach-Boca Raton, FL Greenville-Spartanburg, SC Savannah, GA Tulsa, OK Maui Island, HI Long Island Daytona Beach, FL Harrisburg, PA Hawaii-Kauai Islands Omaha, NE Hartford, CT Buffalo, NY Scranton--Wilkes-Barre, PA Mobile, AL Little Rock, AR Fort Myers, FL Albany/Schenectady, NY Columbia, SC Dayton-Springfield, OH Grand Rapids, MI Lexington, KY Des Moines, IA Colorado Springs, CO Jackson, MS Rochester, NY Macon/Warner Robbins, GA Bergen-Passaic, NJ Chattanooga, TN-GA Allentown-Reading, PA Florida Keys Augusta, GA-SC Madison, WI Melbourne-Titusville, FL Sarasota-Bradenton, FL Syracuse, NY 28

Demand Performance Distinctly Different This Time 10 Top 25 26-50 51-75 76-94 5 0-5 -10 2002 2007 2012 *Metro markets by size, in 25 market increments, Demand % Change, 12 MMA 1990 5/2012 29

ADR Swings in Top 25 Markets Most Erratic 12 Top 25 26-50 51-75 76-94 8 4 0-4 -8-12 2002 2007 2012 *Metro markets by size, in 25 market increments, ADR % Change, 12 MMA 1990 5/2012 30

Pipeline 31

Rooms Pipeline Still Not An Issue in 2012 Phase May 2012 May 2011 Dec 2007 In Construction 60 50 211 Planned Pipeline 230 261 204 Active Pipeline 290 311 415 *Total US Pipeline, in 000s of rooms, by Phase by Year Planned Pipeline includes projects in Final Planning and Planning phases Source: STR / McGraw-Hill Construction Dodge 32

Upscale / Upper Midscale Sees Activity 17.4 19.5 7.7 12.0 1.6 3.0 1.0 Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Unaffiliated *Rooms In Construction by Scale ( 000s), 5/12 Source: STR / McGraw-Hill Construction Dodge 33

Developers Are Looking Three Years Out Rooms ( 000s) With Open Dates Reported 1 Year 2 Years 3 Years 4+ Years Date Out Out Out Out Dec-09 124 130 5 140 Dec-10 75 94 4 142 Dec-11 70 91 34 111 Source: STR / McGraw-Hill Construction Dodge 34

2012 / 2013 Forecast 35

Total United States Forecast 2012 / 2013 Key Performance Indicator % Change 2012 Forecast 2013 Forecast Supply 0.5% 1.1% Demand 2.0% 1.8% Occupancy 1.5% 0.7% ADR 4.0% 4.6% RevPAR 5.5% 5.4% 36

Why Are STR s RevPAR Assumptions Lower Than Consensus? 37

Publicly Traded Company 2012 RevPAR Guidance Company Name Guidance 2012 Gaylord Hotels +3-6% Sunstone Hotel Investors +4-6% FelCor Lodging Trust +5-6.5% Choice Hotels HOST Hotels & Resorts +5-7% LaSalle Hotel Properties Wyndham Worldwide +5-8% DiamondRock Hospitality Starwood Hotels Marriott International +6-8% Chatham Lodging Trust Strategic Hotels Chesapeake Lodging Trust +6.5 8.5% Hersha Hospitality +7-9% Pebblebrook Hotel Trust +8-10% 38

1) 2012 Scale Forecast Is Closer To Guidance Chain Scale Occupancy (% chg) ADR (% chg) RevPAR (%chg) Luxury +2.6% +5.1% +7.9% Upper Upscale +1.5% +4.2% +5.7% Upscale +2.3% +4.6% +7.1% Upper Midscale +1.4% +4.0% +5.5% Midscale +2.8% +1.4% +4.3% Economy +1.4% +3.1% +4.5% Independent +0.5% +3.5% +4.0% Total United States 1.5% 4.0% 5.5% *Key Performance Indicator Forecast, by Scale, 2012 39

12 8 4 0-4 2) In General: Independent Hotels Drag Down US RevPAR Number -8-12 -16 Chains Independents -20 2000 2004 2008 2012 *Affiliated vs. Independent Hotels, RevPAR % Change, 12 MMA 1/00 5/12 40

We Expect Transient ADR Growth To Continue 5.3 4.6 6.4 5.4 5.9 5.1 5.0 3.7 4.7 4.3 4.6 3.7 3.8 3.4 4.0 5.5 4.2 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 *Transient ADR % by Month, 1/11 5/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 41

Group ADR Expectation Still Depressed 4.2 3.5 3.7 2.6 2.4 2.4 2.1 2.1 1.8 3.1 2.7 2.8 2.6 2.2 2.3 0.2 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12-0.5 *Group ADR % by Month, 1/11 5/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents) 42

3) In General: Group ADR Drags Down Total ADR ADR Growth Assumptions Share Of Revenue Transient Group Transient Group ADR OCC Assumption RevPAR Estimate 3% 1% 2.3% 4.3% 4% 2% 3.3% 5.3% 5% 3% 66% 34% 4.3% 2.0% 6.3% 6% 4% 5.3% 7.3% 7% 5% 6.3% 8.3% 43

Total United States Forecast 2012 / 2013 Key Performance Indicator % Change 2012 Forecast 2013 Forecast Supply 0.5% 1.1% Demand 2.0% 1.8% Occupancy 1.5% 0.7% ADR 4.0% 4.6% RevPAR 5.5% 5.4% 44

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