february 2018 • nyse: inn · fye 2016 ebitda margin (1) top tier hotel ebitda margin 12 (1) based...

Investor PresentationFebruary 2018 • NYSE: INN

Forward-Looking Statements

2

We make forward-looking statements in this presentation that are subject to risks and uncertainties. These forward-

looking statements include information about possible or assumed future results of our business, financial condition,

liquidity, results of operations, plans, and objectives. When we use the words “believe,” “expect,” “anticipate,” “estimate,”

“plan,” “continue,” “intend,” “should,” “may,” or similar expressions, we intend to identify forward-looking statements.

Statements regarding the following subjects, among others, may be forward-looking by their nature:

• our ability to increase our dividend per share of common stock;

• the state of the U.S. economy generally or in specific geographic regions in which we operate, and the effect of

general economic conditions on the lodging industry and our business in particular;

• market trends in our industry, interest rates, real estate values and the capital markets;

• our business and investment strategy and, particularly, our ability to identify and complete hotel acquisitions and

dispositions;

• our projected operating results;

• actions and initiatives of the U.S. government and changes to U.S. government policies and the execution and

impact of such actions, initiatives and policies;

• our ability to manage our relationships with our management companies and franchisors;

• our ability to maintain our existing and future financing arrangements;

• changes in the value of our properties;

• the impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar

matters;

• our ability to satisfy the requirements for qualification as a REIT under the U.S. Tax Code;

• our ability to repay or refinance our indebtedness as it matures or becomes callable by lenders;

• the availability of qualified personnel;

• our ability to make distributions to our stockholders in the future;

• the general volatility of the market price of our securities; and

• the degree and nature of our competition.

Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into

account information currently available to us. You should not place undue reliance on these forward-looking statements.

These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which

are known to us. These factors are discussed under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the

year ended December 31, 2016, and in other documents we have filed with the Securities and Exchange Commission. If a

change occurs, our business, financial condition, liquidity and results of operations may vary materially from those

expressed in our forward-looking statements. Any forward-looking statement is effective only as of the date on which it is

made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may

affect us. Except as required by law we are not obligated to, and do not intend to, publicly update or revise any forward-

looking statements, whether as a result of new information, future events or otherwise.

Additionally, this presentation contains certain unaudited historical and pro forma information and metrics which are based

or calculated from historical data that is maintained or produced by the Company or third parties. This presentation contain

statistics and other data that may have been obtained from, or compiled from, information made available by third-parties.

Investment Thesis

3

Focused and efficient operating model

Best in-class operators and unique revenue management platform

Targeted capital allocation through external growth and capital recycling

Conservative and prudently crafted balance sheet

Broad geographic diversification

99%

70%

-60%

0%

60%

120%

180%

Oct-2012 Dec-2012 Dec-2013 Dec-2014 Dec-2015 Dec-2016 Dec-2017

5-Year Total Shareholder Return (5)

Summit SNL U.S.REIT Hotel Index

Company Overview

4

(1) Based on hotels and guestrooms owned as of December 31, 2017. (5) Based on financial data and Summit’s diluted share count as of September 30, 2017, and Summit’s closing share(2) Based on the most recent renovation date weighted by guestroom count as of September 30, 2017. price as of December 31, 2017.(3) Based on pro forma financial data for the trailing twelve months ended September 30, 2017. (6) Based on pro forma hotel EBITDA for the trailing twelve months ended September 30, 2017.(4) Based on reported financial data for the trailing twelve months ended December 31, 2016.

Leading publicly-traded REIT focused on owning premium-branded hotels with efficient operating models

Corporate Overview

Headquarters: Austin, Texas

Ticker Symbol: NYSE: INN

Hotels (1): 83 hotels

Guestrooms (1): 12,242 keys

States (1): 26 states

Markets (1): 38 MSAs

Avg. Effective Age (2): 3.2 years

Financial Overview

RevPAR (1,3): $116

Hotel EBITDA per Key (1,3): $17,100

Adjusted FFO per share (4): $1.41

Total Enterprise Value (TEV) (5): $2.6 B

Market Capitalization (5): $1.6 B

Total Debt / TEV (5): 29.5 %

Total Debt + Pref. / TEV (5): 41.6 %

Dividend Yield (5): 4.5 %

Premium Franchisors (1,6)

Marriott International: 49.5 %

Hilton Worldwide: 24.8 %

Hyatt Hotel Corp: 18.4 %

IHG: 7.5 %

Other: 0.3 %

Top Markets (1,6)

New Orleans, LA: 6.7 %

Atlanta, GA: 6.4 %

San Francisco, CA: 6.2 %

Nashville, TN: 6.0 %

Minneapolis, MN: 4.8 %

Phoenix, AZ: 4.8 %

Miami, FL: 4.2 %

Baltimore, MD: 4.0 %

Dallas-Fort Worth, TX: 3.9 %

Chicago, IL: 3.9 %

Executive Background

Daniel P. Hansen

Chairman, President

& Chief Executive Officer

Prior to joining Summit, Mr. Hansen spent 11 years with Merrill Lynch in various leadership positions,

culminating as a Vice President and Regional Sales Manager in the Texas Mid-South Region. He served

previously as the President and Chief Financial Officer of the Company’s predecessor, Summit Hotel

Properties, LLC, after prior roles as Chief Development Officer and Vice President of Investor Relations.

Mr. Hansen holds a B.A. in Economics from South Dakota State University and serves on various boards

and advisory councils for the lodging industry and hotel brands.

Craig J. Aniszewski

Executive Vice President

& Chief Operating Officer

Prior to joining Summit, Mr. Aniszewski spent 13 years with Marriott International, Inc. (NYSE: MAR),

holding sales and operations positions in both select-service and full-service convention and resort hotels.

Mr. Aniszewski joined The Summit Group in January 1997 as Vice President of Operations and

Development. Mr. Aniszewski then served as Executive Vice President and Chief Operating Officer

overseeing the 1,800 employee management company and was responsible for all facets of owning and

operating US hotels in 19 states.

Greg A. Dowell


& Chief Financial Officer

Prior to joining Summit, Mr. Dowell held the position of Senior Executive Vice President and Chief

Operating Officer at American Campus Communities (NYSE: ACC). During his 13-year tenure, Mr. Dowell

managed all aspects of operations, facilities management, human resources, information technology and

various aspects of accounting and systems development. He played a key role in the development of

ACC’s specialized operating platform which facilitated American Campus Communities becoming the first

student housing REIT to be publicly traded in 2004. Prior to joining ACC, Mr. Dowell spent ten years in

progressive capacities with Century Development.

Jonathan P. Stanner


& Chief Investment Officer

Prior to joining Summit, Mr. Stanner was Chief Executive Officer at Strategic Hotels & Resorts. In this

role, Mr. Stanner was responsible for capital market transactions, corporate financial planning and

analysis. Before serving as Chief Executive Officer, Mr. Stanner held various senior positions with

Strategic Hotels, including Director of Corporate Finance, and as Senior Vice President - Capital Markets,

Acquisitions, and Treasurer, and Chief Financial Officer. Prior to his time at Strategic Hotels, Mr. Stanner

was an investment banking analyst for Banc of America Securities. Mr. Stanner holds both a B.S. in

Management and an MBA from the Krannert School of Management at Purdue University.

Experienced Leadership Driving Success

5

Diversified Portfolio

6

(1) Based on hotel EBITDA as of September 30, 2017, for the hotels owned as of December 31, 2017.

No single market contributes more than 7% to our portfolio hotel EBITDA, and

no single hotel contributes more than 4% to our portfolio hotel EBITDA (1)

6%

7%

6%

6%

5%

5%

4%4%

4%

3%

3%

3%

3%

2%

2%

2%

2%

2%

2%

1%2%

1%

1%1%

1%

1%

1%

2%

1%

1%

1%

2%

Minneapolis, MN

San Francisco, CA

Nashville, TN

Atlanta, GA

New Orleans, LA

2%

Phoenix, AZ

2%

4%

2%

2%

1%

Premium StandardsConsistency of exceptional

service, valued amenities,

and attractive design

result in a quality guest

experience

Global BrandsProvides access to over

268 million enrolled loyalty

members and nearly 50%

of room nights

Reservation SystemsGlobal booking systems

enable guests to easily

find and reserve

accommodations

Brand SegmentationFranchise partners operate a

diverse portfolio across multiple

chain scales

Customer LoyaltyCustomer loyalty

programs drive

recurring visits

We Believe in the Value of Loyalty

7

(1) Based on JD Power and Associates 2017 North America Hotel Guest Satisfaction Index Study.(2) Based on total number of hotels as of December 31, 2017.

Brand loyalty and distribution drive guest behavior

Brands Guests Trust

JD Power and Associates

Upscale Segment

Guest Satisfaction Rankings (1)

Brand Ranking Hotel Count

Over 56% of our portfolio is concentrated in brands

that rank in the top tier for guest satisfaction. (2)

6

16

15

9#1

#4

#3

#5

1#6

Evolving Guest Preference

8

From dark and stuffy

Hyatt Place Chicago Downtown-The LoopFull-Service Product

to high-quality efficient

menu & bar

From underutilized, costly amenities

to modern functionality

From full-service restaurant

to modern, guest-focused offerings

Guest preferences continue to shift toward newer, cleaner,

and more functional hotels that offer authentic experiences

Creating Value Through “Summitization”

9

Revenue and asset management expertise driven by nearly seven decades

of combined experience at Summit and an average of over 25 years in the industry

• Utilization of in-house Corporate Revenue Managers

• Consistent on-site presence and collaboration with local management

• Industry benchmarking and data analysis

• Intensive asset management process provides better oversight and accountability of management companies

• Exhaustive due diligence approach facilitates value creation

• Business intelligence tools facilitate real-time data analytics

• Data analytics used to implement revenue and asset management strategies designed to maximize hotel profitability

• Flexible and favorable management terms

• Utilization of eleven independent management companies

• Use of independent platforms eliminates conflicts of interest

Upscale Outperformance

10

(1) Based on Smith Travel Research Quarterly & Monthly Hotel Review for the applicable years.

An enhanced guest experience results in outperformance of the Upscale

segment and a continuing shift in guest preference to Upscale hotels

STR Upscale RevPAR (1) STR Upper-Upscale RevPAR (1)

$70

$102

$65

$85

$105

2000 2016

$113

$133

$105

$120

$135

2000 2016

+46% +18%

Track Record of Outperformance

11

(1) Based on Smith Travel Research Lodging Review and as reported pro forma RevPAR growth for the applicable years.

Pro forma portfolio RevPAR growth outperformance of the the STR Upscale RevPAR

growth benchmark by an average margin of 186 basis points every year for the past five years

RevPAR Performance: Summit Pro Forma Portfolio vs. STR Upscale (1)

9.7%

5.7%

10.9%

7.3%

3.8%

6.7%

5.3%

8.4%

5.6%

2.1%

7.5%

5.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2012 2013 2014 2015 2016

Summit Pro Forma STR Upscale Summit Pro Forma Average STR Upscale Average

186 bps

FYE 2016 EBITDA Margin (1)

Top Tier Hotel EBITDA Margin

12

(1) Based on data reported as of December 31, 2016, from each company’s Form 10-K. “Hotel EBITDA” is defined as total hotel revenues less hotel operating expenses, which include real estate taxes, insurance, and other expenses as applicable.

Excludes Park Hotels & Resorts (PK).

High-quality hotels with efficient operating models

and lower cost structures continue to drive superior margins

37.6%36.9%

30.3%

28.0%

30.0%

32.0%

34.0%

36.0%

38.0%

40.0%

Summit Select-Service Avg Full-Service Avg

+660

bps

+70

bps

Managing Through Supply Growth

(1) Data represents hotel performance for the trailing twelve months ended September 30, 2014.(2) Data represents hotel performance for the trailing twelve months ended September 30, 2017.(3) Market RevPAR data represents the downtown, upper-priced hotel submarket for Austin, Texas, for the year ended December 31, 2014 and 2016, respectively.

13

Sep 2014 (1) Sep 2017 (2) CAGR

Our RevPAR: $150 $161 2.4 %

Comp RevPAR: $131 $134 0.9 %

Market RevPAR (3): $178 $180 0.6 %

Total Revenue: $12.4 million $13.2 million 2.2 %

Hotel EBITDA: $ 5.1 million $ 5.7 million 4.0 %

Hotel EBITDA Margin: 41.0 % 43.2 %

EBITDA Yield on Cost: 9.5 % 10.1 %

Guestroom Supply: 31,204 rooms 37,885 rooms 6.7 %

Hampton Inn & Suites – Austin, TX

• Acquired the hotel in September 2014

• Austin CBD supply versus overall market has

increased 6.7% since the hotel was acquired

Growth Accomplishments:

• Invested nearly $3.5 million in guestroom and public

space enhancements

• Restructured management agreement resulting in

$0.2 million of annual savings and 125 basis points of

EBITDA margin expansion

• Implemented revenue and asset management

strategies that increased RevPAR index to 120% and

drove overall EBITDA margin expansion of nearly

220 basis points

• The hotel currently generates an EBITDA yield of

over 10%

$104.34

$139.85

$178.09

20%

24%

28%

32%

36%

40%

$0

$40

$80

$120

$160

$200

Acquisition Post-Conversion FYE 2016

Ho

tel E

BIT

DA

Mar

gin

Rev

PA

R

RevPAR Hotel EBITDA Margin

Brand Conversion

14

(1) Based on actual performance for the year, ended December 31, 2013.(2) Based on actual performance for the year ended December 31 2014..(3) Represents a post-renovation capitalization rate for the year ended December 31, 2014.(4) Based on actual performance for the year ended December 31, 2016, capitalized at an 8.0% capitalization rate.

Unique opportunity to create significant value by converting to a stronger and more valuable brand

DoubleTree by Hilton San Francisco Airport North

Acquisition (1) Post-Conversion (2) FYE 2016

Purchase Price $39.1 million $43.6 million $ 59.5 million (4)

Price Per Key $ 186,000 $ 207,400 $ 283,200

Capitalization Rate 5.6% 6.7% (3) 8.0%

RevPAR $ 104 $ 140 $ 178

Hotel EBITDA Margin 25.7 % 31.9 % 33.7 %

71% RevPAR growth796 bps margin growth

Strategic Renovation

15

(1) Based on actual performance for the year, ended December 31, 2013.(2) Based on actual performance for the year ended December 31 2014..(3) Represents a post-renovation capitalization rate for the year ended December 31, 2014.(4) Based on actual performance for the year ended December 31, 2016, capitalized at an 8.0% capitalization rate

Reconfigured public spaces and guestrooms to drive RevPAR increases of 38% as

compared to the Orlando MSA RevPAR increase of only 22%

Upside from Renovation – Hyatt Place Orlando, FL (Universal Studios & Convention Center) (1)

$79.67

$95.70

$109.59

25%

28%

31%

34%

37%

40%

$0

$25

$50

$75

$100

$125

Pre-Renovation Post-Renovation FYE 2016

Ho

tel E

BIT

DA

Mar

gin

Rev

PA

R

RevPAR Hotel EBITDA Margin

Pre-Renovation (1) Post-Renovation (2) FYE 2016

Purchase Price $24.1 million $27.6 million $ 50.4 million (4)

Price Per Key $ 80,300 $ 91,900 $ 168,000

Capitalization Rate 9.6% 12.4% (3) 8.0%

RevPAR $ 80 $ 96 $ 110

Hotel EBITDA Margin 29.2 % 35.2 % 36.1 %

38% RevPAR growth691 bps margin growth

Capturing Value

16

(1) Based on the 2017E SNL Mean EBITDA Estimate from SNL Financial as of October 31, 2017, and the Company’s total enterprise value as of October 31, 2017.(2) Represents 2017E forecasted performance as of September 30, 2017.

Converted six two-bedroom suites and a fitness center into 13 guestrooms

and repurposed a vacant outbuilding into a new fitness center

Before – 1 Two-Bedroom Suites After – 1 Studio and 1 Standard Room

Guestroom Conversion – Hyatt House Miami, Florida

Implied Value Creation

Miami Hyatt House Hotel EBITDA per Key (2) $16,400

Implied INN 2017E EBITDA Multiple (1) 15.5x

Implied Value per Key $242,700

Guestrooms Added 7 rooms

Implied Value Creation $1,698,900

Return on Investment

Miami Hyatt House Hotel EBITDA per Key (2) $16,400

Renovation Cost per Key $99,600

Implied Cash-on-Cash Return 16.5%

Capital Allocation Strategy

17

Acquisitions

• Locations in “Markets That Matter” with favorable supply/demand

dynamics and multiple demand generators

• Efficient operating models

• Value-add opportunities (i.e. property renovations, brand conversions,

management changes)

Dispositions

• Identify markets with unfavorable supply/demand dynamics

• Identify hotels with functional obsolescence or large capital needs that do

not meet return thresholds

• Opportunistic in response to unsolicited offers

Conservative Balance Sheet

• Target leverage of 3.5x to 4.5x Net Debt to EBITDA

• Maintain and grow sustainable dividends

• Maintain liquidity and flexibility for acquisitive growth

• Well-balanced maturity ladder spread across multiple years to limit near-

term liquidity risk

Opportunistic Development and Mezzanine Lending Activity

• Higher risk-adjusted returns

• Alternative pipeline for growth

Timeline

Sold 53 of 65 original hotels and averaged 1.6 hotel transactions per month

resulting in a $1.3 billion increase in our market capitalization over the past seven years

Note: Proceeds for both common and preferred equity are net proceeds and as such may include both issuances and redemptions within the applicable period.

18

FYE 2011

Hotels – Rooms: 70 – 7,095

Acquisitions: $50.1 million

Dispositions: N/A

Common Equity: $240.8 million

Preferred Equity: $47.9 million

FYE 2012



Dispositions: $26.1 million



FYE 2013






FYE 2015




Common Equity: N/A

Preferred Equity: N/A

FYE 2014




Common Equity: N/A

Preferred Equity: N/A

FYE 2017






FYE 2016



Dispositions: 147.3 million



$73

$116

50

65

80

95

110

125

Dispositions Pro formaPortfolio

RevPAR

Continuous Portfolio Transformation

19

(1) Based on the trailing twelve-month operating results prior to the sale of each of the 56 hotels sold since the Company’s IPO in February 2011.(2) Based on the pro forma trailing twelve-month operating results as of September 30, 2017, for the hotels owned as of December 31, 2017, as if each hotel had been owned by the Company since January 1, 2016.

As a result, these pro forma operating results may include data for certain hotels for periods prior to the Company’s ownership.

Continuously upgrading portfolio quality through the acquisition of hotels

with strong growth profiles while disposing of less-strategic hotels

$8,700

$17,100

$5,000

$8,000

$11,000

$14,000

$17,000

$20,000


Hotel EBITDA per Key

98

147

80

95

110

125

140

155


Average Guestrooms per Hotel

31.6%

37.5%

30%

32%

34%

36%

38%

40%


Hotel EBITDA Margin

(2)(2)

(2)

(1)

(1) (1)

(1)

+591

bps

+60%+51%

+97%

(2)

Conservative Capital Structure

20

(1) Debt balances are as of September 30, 2017. (5) SNL Financial data as of September 30, 2017. The Company’s data is as of September 30, 2017.(2) Calculated using 2017E consensus EBITDA as of October 31, 2017. (6) Based on financial data and Summit’s diluted share count as of September 30, 2017, and Summit’s closing price(3) Calculated by dividing 2017E consensus EBITDA by total debt then multiplied by the wt. avg. interest rate. as of December 31, 2017.(4) Based on 2017E S&P CapIQ Mean FFO per share estimate of $1.31 and assumes a common dividend of $0.68 per share.

Summit’s Credit Statistics and Debt Overview

Total Debt (1) $777.5 million

Total Debt / Total Enterprise Value (6) 29.5%

Net Debt / 2017E EBITDA (2) 4.1x

Weighted Average Term Debt Maturity (5) 4.1 years

Weighted Average Interest Rate (5) 3.78%

EBITDA Interest Coverage Ratio (3) 6.0x

2017E Dividend Payout Ratio (4) 52%

Summit’s Debt Maturity Schedule (1)

15%

24%

10%

15%

20%

25%

30%

Summit Lodging REIT Avg

$0 $0

$116

$47 $11

$148$150

$125

$140

$40

$0

$100

$200

$300

$400

2017 2018 2019 2020 2021 2022 2023+

Secured Non-Recourse Loans Unsecured Term Loan (5YR) Unsecured Term Loan (7YR) Unsecured Revolving Credit Facility

Percent of Total Debt Maturing Through 2019 (5)

80%

74% 73%69%

61% 60% 59% 57% 57% 54% 54% 52% 52%48%

40%35%

0%

20%

40%

60%

80%

100%

PK CHSP LHO APLE CLDT PEB RHP SHO RLJ HT XHR INN DRH HST AHP AHT

Well-Covered Dividend

21

(1) Based on the Company’s Q4 2013 annualized dividend of $0.45 per share and the current annualized dividend of $0.68 per share as of September 30, 2017.(2) SNL Financial data is based on the 2017E S&P CapIQ Mean FFO per share estimate for each individual company.(3) Sunstone Hotel Investors, Inc. (SHO) annual dividend is based on the full-year dividend and includes the special dividend paid within the year.

Strong free cash flow has allowed for multiple dividend

increases and a conservative payout ratio

Dividend Payout Ratio (2)

(3)

12.5% dividend CAGR since 2013 (1)

Over $250 million of capital returned to common shareholders since 2011

Superior Total Shareholder Return

22

(1) Based on SNL’s Total Shareholder Return (TSR) as of January 17, 2018.(2) Based on SNL’s TSR for the trailing five years ended January 17, 2018. Apple Hospitality REIT, Inc. (APLE), Ashford Hospitality Prime, Inc. (AHP), Park Hotels & Resorts (PK), and Xenia Hotels & Resorts, Inc. (XHR) have been excluded as the

companies were not publicly traded for the period represented.

143%

115%

97% 93% 93%

70%

57% 55%46%

40% 38%

14%

68%

0%

30%

60%

90%

120%

150%

RHP INN CLDT SHO PEB CHSP DRH HST LHO AHT RLJ HT


6%

12%

0%

5%

10%

15%

INN SNL U.S. REIT Hotel


37%

2%

0%

15%

30%

45%

INN SNL U.S. REIT Hotel


NYSE: INN

february 2018 • nyse: inn · fye 2016 ebitda margin (1) top tier hotel ebitda margin 12 (1) based...

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