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Hotel Industry Overview Statistics, Trends and Projections for 2013

& Beyond

Vail R. Brown

Vice President, Global Business Development & Marketing

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www.hotelnewsnow.com Click on “Hotel Data Presentations”

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Agenda: 3 October 2012 • Current Hotel Performance

• Chain Scale Performance

• Customer Segmentation

• Market Overview

• 2012 / 2013 Forecast

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30,000 Foot View… Current Hotel Performance

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Through 8/12: Strong Results Despite Headwinds

% Change

• Room Supply* 1.2 bn 0.4% • Room Demand* 741 mm 3.3% • Occupancy 63% 2.9% • A.D.R. $106 4.3% • RevPAR $67 7.3% • Room Revenue* $78 bn 7.7%

YTD August 2012, Total U.S. Results * All Time High

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Total U.S.: Room Supply/Demand Percent Change Twelve Month Moving Average – 1989 to August 2012

-10

-5

0

5

10

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Demand % Change Supply % Change Feb ‘11 7.7%

Aug ‘09 -7.1%

Mar ‘02 -4.6%

Oct ‘91 -0.9%

Demand Growth Expected To Slow to ~2%. Supply Not An Issue

Aug ‘09 2.9%

Oct ‘99 4.0%

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-15

-10

-5

0

5

10

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Occupancy % Chg ADR % Chg

June ’91 -3.4

Jan ’92 0.1

Mar ’02 -6.7

Aug ’02 -4.5

Sept ’09 -9.7

Jan ’10 -8.9

Apr ’11 6.2

Total U.S.: Occupancy/ADR Percent Change Twelve Month Moving Average – 1989 to August 2012

ADR Rebound Trajectory Flattens Out (Too?) Early

Aug ‘12 4.2

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Total U.S.: Seasonally Adjusted Real ADR ($) vs. Seasonally Adjusted Occupancy 1989 to August 2012

50

54

58

62

66

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Real ADR Occupancy

OCC Have Recovered To Pre-2008 Levels…Not the case for ADR

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Chain Scale Performance

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• Luxury – Fairmont, Four Seasons, Ritz Carlton, JW Marriott

• Upper Upscale – Dolce, Hilton, Hyatt, Marriott, Gaylord

• Upscale – Radisson, Hilton Garden Inn, Residence Inn, Springhill Suites, Homewood Suites, Courtyard

• Upper Midscale – Fairfield Inn/Suites, Holiday Inn, Clarion, Hampton Inn/Suites, Best Western Premier/PLUS

• Midscale – Country Inn & Suites, Best Western, Candlewood Suites, Quality Inn/Suites

• Economy – Extended Stay America, Red Roof, Days Inn, Microtel

2012 STR Chain Scales Selected chains from each segment

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Overall, Strong Demand & Little Supply

-0.5

0.1

1.7

3.3

-4.8

-0.3

0.5

3.1 2.6

4.1

6.5

-1.4

1.8

3.4

Luxury Upper Upscale Upscale Upper Midscale*

Midscale* Economy Indep.

Supply Demand

Supply & Demand % Change, by Scale, YTD August 2012 *Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification

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Total U.S.: Rooms In Construction by Scale – In Thousands August 2012

4.1

8.8

20.4 19.8

2.4 1.3

9.4

Luxury Upper Upscale

Upscale Upper Midscale

Midscale Economy Unaffiliated

Most New Rooms Being Built In Upscale & Upper Midscale

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2nd Stage Of Recovery Where ADR % > OCC %

3.6

2.5 2.4

3.1

3.6

2.1

2.9

4.7 4.4

4.6

3.8

2.8

4.1 4.1

Luxury Upper Upscale Upscale Upper Midscale*

Midscale* Economy Indep.

Occupancy ADR

OCC & ADR % Change, by Scale, YTD August 2012 *Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification

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Upper End Has Reached New Occupancy Peaks

71.7 70.5

69.6

65.3

58.4 57.0

61.0

72.8

70.5 70.6

62.7

54.7 54.2

58.0

Luxury Upper Upscale Upscale Upper Midscale*

Midscale* Economy Indep.

2007 12 Months end 8/12

Absolute OCC %, by Scale, 2007 & 12 Months ending August 2012 *Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification

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ADR Growth Strong – But Overall Still Not Strong Enough

$286

$159

$121

$94 $77

$54

$103

$269

$152

$115 $96

$74 $52

$104

Luxury Upper Upscale Upscale Upper Midscale*

Midscale* Economy Indep.

2007 12 Months end 8/12

Absolute ADR $, by Scale, 2007 & 12 Months ending August 2012 *Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification

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Customer Segmentation

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Transient Segment (60%) – Rooms reserved at rack rate, corporate negotiated, package, government rate or rooms booked via third party websites.

Group Segment (35%) – Rooms sold simultaneously in blocks of 10 or more.

Contract Segment (5%) – Rooms sold at rates that are stipulated by contracts – such as airline crews and permanent guests.

Customer Segmentation Categories:

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Transient Demand Led Recovery & Breaks Prior Peaks

10

12.5

15

17.5

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2011 2012

U.S. Transient Demand in Millions of Rooms; 2007, 2011, August 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

Mill

ions

Aug. 19.7mm Trans. Rms

19

25

35

45

55

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2011 2012

NOTE: Data is for upper tier hotels only (luxury chains, upper upscale chains, and upper tier independent hotels). U.S. Transient Occupancy %: 2007, 2011 & Through August 2012

Transient OCC Picture Looks Identical to Demand Trends…

Aug. 2012 48.5%

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… Transient ADR Still Lags 2007 Results

$140

$150

$160

$170

$180

$190

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2011 2012

Aug. 2012 $169.30

U.S. Transient ADR $, 2007, 2011, August 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

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Group Demand Recovered Faster Than Expected…

4

6

8

10

12

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mill

ions

2007 2011 2012

Aug. 8.2mm Group Rms

U.S. Group Demand in Millions of Rooms, 2007, 2011, August 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

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10

15

20

25

30

35

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2011 2012

NOTE: Data is for upper tier hotels only (luxury chains, upper upscale chains, and upper tier independent hotels). U.S. Group Occupancy %: 2007, 2011 & Through August 2012

Group OCC, A Different Picture From Demand…

Aug. 2012 20.2%

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… Group ADRs Still Lagging 2008 Peak

$130

$140

$150

$160

$170

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2008 2011 2012

Aug. 2012 $138.82

Group ADR $, 2008, 2011, August 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

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Market Performance

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Top 25 26 - 50 51 - 75 76 - 94

Top 94 Metro Markets By Size

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

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-10

-5

0

5

10

2002 2004 2006 2008 2010 2012

Top 25 26-50 51-75 76-94

Demand Performance Distinctly Different This Time

Metro markets by size, in 25 market increments, Demand % Change, 12 MMA 2002 – 8/2012

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-12

-8

-4

0

4

8

12

2002 2004 2006 2008 2010 2012

Top 25 26-50 51-75 76-94

ADR Swings in Top 25 Markets Most Erratic

Metro markets by size, in 25 market increments, ADR % Change, 12 MMA 2002 – 8/2012

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$2 $3 $4 $4 $5 $6

$8 $8 $9 $10 $11

$13

$17 $19

$33 $34

Atlanta Dallas DC Houston Tampa Orlando Denver San Diego

Nashville Phily Chicago LA New Orleans

Boston SF NYC

* Selected 16 Markets: ADR $ Change From Prior Trough, as of 8/12

Since 2008: How Much Have ADRs Recover?

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$10 $8

$3 $0

-$1 -$2 -$6 -$7 -$8 -$8 -$9

-$11 -$11 -$12 -$13

-$34

* Selected 16 Markets, ADR $ Change From Prior Peak, as of 8/12

Since 2007: How Much Are Markets Still Off Peak ($)?

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Total U.S.: Markets with Most Rooms In Construction August 2012

Market Rooms % of Existing Supply

New York 9,490 9.2

Orlando 4,006 3.4

Washington, D.C. 3,157 3.0

Chicago 2,114 2.0

Nashville 1,481 4.1

Denver 1,329 3.3

Philadelphia 1,316 3.0

Miami-Hialeah 1,311 2.7

LA-Long Beach 1,005 1.0

How Will New Supply Will Impact RevPAR Growth?

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2012 / 2013 Forecast

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Total U.S.: Occupancy and ADR Percent Change August YTD & Weekly through 9/22

2.9%

3.6%

4.9%

2.7%

0.1%

-0.5% -1.0%

4.3% 4.4%

5.3% 5.4%

4.3%

3.0%

0.3%

Aug YTD 8/18 8/25 9/1 9/8 9/15 9/22

Occupancy % Chg ADR % Chg

Watching Weekly & Daily Data trends, along with Monthly.

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Total U.S.: Active Development Pipeline – Rooms Change From Last Year

Phase August 2012 August 2011 Difference % Change

In Construction 66,236 53,753 12,483 23.2%

“Planned Pipeline” 238,589 261,915 -23,326 -8.9%

Active Pipeline 304,825 315,668 -10,843 -3.4%

“Planned Pipeline” includes projects in Final Planning and Planning phases Active Pipeline includes all projects In Construction, Final Planning & Planning phases.

Overall, New Supply Still Not An Issue for 2012/2013

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Total United States Key Performance Indicator Outlook (% Change vs. Prior Year)

2012 - 2013 Outlook

2012 Forecast

2013 Forecast

Supply 0.5% 0.9%

Demand 2.6% 1.2%

Occupancy 2.1% 0.3%

ADR 4.4% 4.6%

RevPAR 6.5% 4.9%

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Total U.S.: Actual Occupancy Percent 2005 – 2013P

63.0 63.1 62.8

59.8

54.6

57.5

60.0

61.2 61.4

2005 2006 2007 2008 2009 2010 2011 2012P 2013P

Still Not Back to 2006 Levels

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$84.66 $83.62 $82.54 $82.67 $86.19 $91.04 $97.82 $104.32 $107.40 $98.07 $98.06 $101.70

$106.15

$111.01 $84.66

$87.07 $88.45

$90.46

$92.87

$96.02

$99.12

$101.94

$105.85 $105.48

$107.21

$110.59

$112.91

$115.29

Nominal ADR Yr 2000, Grown by CPI

If year 2000 ADR had increased by CPI each year…

Total U.S. Room Rates: Actual vs. Inflation Adjusted 2000 – 2013F Note: 2011 & 2012 CPI forecast from Blue Chip Economic Indicators

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Total United States Chain Scale Key Performance Indicator Outlook

2012 Year End Outlook

Chain Scale Occupancy

(% chg) ADR

(% chg) RevPAR (%chg)

Luxury 3.1% 4.8% 8.0%

Upper Upscale 2.2% 4.5% 6.8%

Upscale 1.7% 4.4% 6.2%

Upper Midscale 2.2% 4.2% 6.5%

Midscale 2.9% 2.4% 5.5%

Economy 1.7% 3.7% 5.4%

Independent 1.7% 4.4% 6.2%

Total United States 2.1% 4.4% 6.5%

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Total United States Chain Scale Key Performance Indicator Outlook

2013 Year End Outlook

Chain Scale Occupancy

(% chg) ADR

(% chg) RevPAR (%chg)

Luxury 1.9% 6.3% 8.3%

Upper Upscale -1.0% 4.2% 3.2%

Upscale 2.2% 5.5% 7.9%

Upper Midscale -0.5% 4.5% 4.0%

Midscale 1.3% 2.3% 3.6%

Economy 0.8% 3.1% 3.9%

Independent -0.6% 4.3% 3.6%

Total United States 0.3% 4.6% 4.9%

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U.S. Budging Tightening? European Financial Crisis? Human Capital – Keeping

Good Dir. Of Revenue?

Demand Growth > Supply Growth

Transient Demand & OCC Strong Upper Scales Reaching New OCC

Peaks

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Thank you!

vail@str.com