www.strglobal.com

The Industry Landscape Elizabeth Winkle Managing Director, STR Global IHIF Berlin

3 March 2014

Global Trends

• Global Overview

• Top Trends to Watch for Europe

• Outlook

RevPAR growth in most regions YE 2013, % change USD, Europe (€)

- 4.1%

+ 5.3%

+ 4.7%

+ 1.7% €

Demand growth outpaced supply growth

-2%

0%

2%

4%

6%

8%

10%

NorthAmerica

Central- SouthAmerica

Europe Middle East Africa Asia Australia &Oceania

SupplyDemand

% change YE 2013

Back to Peak? Revenue generator index on YE 2008

0.7

0.8

0.9

1

1.1

1.2

2007 2008 2009 2010 2011 2012 2013Europe € USA $

Europe Demand Accelerating? 12 MMA % change

-6%

-4%

-2%

0%

2%

4%

6%

8%

Jan 10 Jan 11 Jan 12 Jan 13

USA Europe

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Demand, demand and more demand

Demand growth for 46/49 months; since Dec ‘09 Monthly Demand % change

-15

-10

-5

0

5

10

Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13

Limited Supply Growth; Strong Demand Growth

-6%-4%-2%0%2%4%6%8%

2010 2011 2012 2013

Supply % ChgDemand % Chg

12 MMA Nov ‘10 +6.8%

Dec ‘13 +3.3%

Similar Supply/Demand Trends by Class

0%1%2%3%4%5%6%

Luxury UpperUpscale

Upscale UpperMidscale

Midscale Economy

Supply % ChgDemand % Chg

YE 2013

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Rate: the only way is Up?

Incongruence between Demand and ADR performance

-12%

-9%

-6%

-3%

0%

3%

6%

2010 2011 2012 2013

Occ % Chg ADR % Chg

12MMA

Dec ‘13 2.4%

May ‘11 5.8%

Jan ‘11 5.4%

Dec ‘13 -1.0%

Negative ADR limiting RevPAR

-16%-12%-8%-4%0%4%8%

12%

2010 2011 2012 2013

RevPAR % Chg

12MMA May ‘11 10.9%

Dec ‘13 1.7%

Occ growth; ADR declines across all classes

20 €

70 €

120 €

170 €

220 €

270 €

60%

62%

64%

66%

68%

70%

72%

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Occ 13 ADR 13

+2.0%

+2.4%

+2.5% +1.5%

+4.1%

-1.6% -0.4%

-1.5%

0.0%

-1.9% -0.4%

+2.2%

Actual Occ & ADR & YOY % change

Occupancy ADR

Southern Europe Signs of Recovery YE 2013

Western Europe

Occ 67% +1.1%

ADR € 108 +0.3%

RevPAR €72 +1.4%

Northern Europe

Occ 73% +3.4%

ADR € 96 -3.5%

RevPAR € 70 -0.2%

Southern Europe

Occ 64% +2.2%

ADR € 104 +2.2%

RevPAR € 66 +4.4%

Eastern Europe

Occ 61% +3.0%

ADR € 85 -4.0%

RevPAR € 52 -1.0%

Source: Quartz.com, European Commission Predominantly domestic demand

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Limited Pipeline

Pipeline growth consistent with LTA

6% 15%

23%

18%

6%

11%

21% LuxuryUpper UpscaleUpscaleUpper MidscaleMidscaleEconomyUnaffiliated

+143k rooms +3%

2014-2016

UK, Russia, Germany have largest pipelines Top 10 by rooms

38%

21%

11% 10% 4%

4% 4%

3%

3%

2%

12%

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Outlook

Demand & GDP in step, GDP forecast more positive (GDP Source: Oxford Economics)

-15%

-10%

-5%

0%

5%

10%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f 2015f

Demand GDP

2013 Actual Markets telling an Occupancy Story

2014 Forecast: Time for rate growth Feb 2014 edition – local currency

Summary

• Demand: Remains strong – increasing international

arrivals; EU economic improvements

• ADR: No real rate recovery, opportunities exist

• Supply: Limited growth in most markets

• Forecast: ADR growth across most markets

STR Global

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Elizabeth Winkle

+44 (0)207 922 1930 info@strglobal.com

STR Global, Ltd is the exclusive owner of all rights in this presentation and its content. Reproduction of all or a portion of this presentation for any purpose without prior approval of STR Global is strictly prohibited. This presentation is based on information compiled by STR Global Ltd. No strategic or marketing recommendations or advice are intended or implied.