Top Factors in Choosing Event Location0% Availability of Suitable Hotels Affordability of Destination Safety and Security of Destination Ease of Transportation Transportation Costs Distance Traveled by Attendees Clean and Unspoiled Environment Climate Availability of Recreational Facilities Sightseeing, Cultural Events, Attractions Mandated by By-Laws Glamorous, Popular Image of Location Conventions Association Meetings 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Source: 2006 Meetings Market Report, Meetings and Conventions Magazine

1

Hotel Loan Underwriting: Then and NowHotel lender underwriting criteria are far more conservative today due to overcapitalization in the 1980s, large loan losses, and current financial and lodging market conditionsMid 1980s Construction Loan Debt Service Coverage at Stabilization 85% - 90% LTV 1.20x Mid 2008 60%-65% LTC 1.40x Today 50% LTC 1.60x

The result: 1. Much lower loan as a percentage of project cost 2. Much higher amount of required equity

2

Private Hotel Ownership: Then and NowMid 1980's Total Hotel Budget1 Senior Debt2 Equity3 Capitalization Gap Total Sources1 2

Mid-2008 100,000 60,000 10,000 30,000 100,000 100% $ 60% 10% 30% 100% $

Today 100,000 50,000 10,000 40,000 100,000 100% 50% 10% 40% 100%

$

100,000 85,000 15,000 -

100% $ 85% 15% 0% 100% $

$

100,000

In 2010 dollars. Dollars presented in thousands. Constrained by lesser of minimum debt service coverage at stabilization or maximum loan-to-cost ratio. 3 Constrained by minimum equity investor cash-on-cash and internal rates of return (IRR).

3

Sample of Public/Private TransactionsNorfolk, VA Philadelphia, PA Atlantic City, NJ Miami Beach, FL Wichita, KS Franklin, TN Baltimore, MD Indianapolis, IN Richardson, TX Portsmouth, VA Marriott (1989) Marriott (1992) Sheraton (1995) Loews (1996) Hyatt Regency (1996) Marriott (1997) Marriott (1998) Marriott (1999) Renaissance (1999) Renaissance (1999) Charlotte, NC Jacksonville, FL Sugar Land, TX Westin (2000) Adams Mark (2001) Marriott (2001)

Horseshoe Bay, TX Marriott (2003) Raleigh, NC Fort Worth, TX San Antonio, TX San Juan, PR Boston, MA Lubbock, TX Westin (2004) Omni (2005) Grand Hyatt (2005) Sheraton (2006) Westin (2006) Overton Hotel (2007)

4

Public/Private Hotel Transactions(The Gap)Average public participation in public/private hotel transactions tracked since 2005 is 40%Property MarriottDowntownHartford,CT MarriottPlaceIndianapolis,IN EmbassySuitesHuntsville,AL GaylordWashingtonDC Marriott/EmbassyWinstonSalem,NC EmbassySuitesNorman,OK MarriottCityCenterRaleigh,NC OvertonConferenceHotelLubbock,TX EmbassySuitesFrisco,TX OmniFortWorth,TX WestinBostonWaterfront,MA MarriottLancaster,PA PhoenixGrandSalem,OR HyattSanAntonio,TX SheratonSanJuan,PR Total Rooms 409 1,626 295 2,000 466 283 400 303 330 600 793 294 193 1,003 500 TotalCost (mm) 77 354 40 950 39 54 60 66 40 230 204 45 52 305 205 PublicSupport (mm) 10 49 7 210 10 15 20 22 15 89 80 20 33 208 167 Percentage of Total 13% 14% 18% 22% 26% 28% 33% 34% 38% 39% 39% 44% 63% 68% 82%

5

Sample of Public Hotel TransactionsChicago, IL Pittsburgh, PA Chesapeake, MD Sacramento, CA Austin Airport Hyatt (1996) Marriott (1998) Hyatt (1999) Sheraton (1999) Hilton (1999) Omaha, NE Vancouver, WA Denver, CO Phoenix, AZ Erie, PA Lombard, IL Baltimore, MD Dallas, TX Portland, OR Tucson, AZ Hilton (2002) Hilton (2003) Hyatt Regency (2003) Sheraton (2005) Sheraton (2005) Westin (2005) Hilton (2006) Omni (Underway) Westin (Planned) Sheraton (Planned)

Overland Park, KS Sheraton (2000) Trenton, NJ Houston, TX Austin, TX Bay City, MI Marriott (2000) Hilton (2001) Hilton (2001) Doubletree (2002)

6

Hotel Financing Approaches ComparisonPUBLICLY OWNED - TAX-EXEMPTTWO-TIERED STRUCTURE SINGLE TIER STRUCTURE

PRIVATE OWNERSHIPCONVENTIONAL PUBLIC/PRIVATE

SENIOR LIEN BONDS Senior Lien Project Revenues Only Investment Grade Negotiated Minimum Coverage

SENIOR LIEN BONDS Senior Lien Project Revenues + Credit Enhancement on a portion or all of debt service Investment Grade (AA) Negotiated Minimum Coverage

FIRST MORTGAGE

FIRST MORTGAGE

SUBORDINATE LIEN BONDS Subordinate Lien Project Revenues + Additional Credit Enhancement Investment Grade (AA)

MEZZANINE DEBT

PRIVATE EQUITY

PUBLIC GAP FUNDING

PRIVATE EQUITY

7

7

Hotel Financing Issues to ConsiderPublic Considerations Capital risks Capital contribution requirement Control of upkeep and operations Cost of financing Political risk State of financial markets Financial benefit to community Public/Private Limited and quantified Subsidy Partial 12% plus Less controversial Difficult to execute in recession (need for bank loans and equity) Limited participation in hotel cash flows Public Amplified exposure as sole owner Investment Total 4% to 6% More controversial Public backing ensures success in almost any economy 100% of cash flow plus residual value creates potential significant long term capital flows, greatly in excess of public/private

8