July 2018

Company Name K.K. Hospitality Partners

Head Office 8F New Nakoji Building, 2-5-16, Nishiki-choChiyoda-ku, Tokyo, Japan 101-0054

TEL : 03-5755-5515 FAX : 03-5755-5517URL: http://www.hospitality-partners.co.jp/

Date of Establishment July 22, 2005

Capital 30,000,000 Yen

Main Business Activities： ・Hotel Consulting ・Hotel Consideration・Market Report ・Real Estate Appraisal・Asset Management ・Property Management・Due Diligence ・Brokerage ・M&A advisory

CEO Akio Tanaka

Number of Employeesin HPG Group

Approx. 2,000 (as of May 2018)

■ About K.K. Hospitality Partners2

Company Profile

Hospitality Partners

・Hotel Consulting

・Hotel Consideration

・Market Report

・Real Estate Appraisal

・Asset Management

・Property Management

Hospitality Operations

・Hotel Management

・Hotel Rebranding

・Hotel Investment

Hospitality Communications

・Rebranding

・Advertising

Hospitality Agent

・Travel Agent (MICE)

A Card Hotel System

・Loyality Program

Hospitality Partners Group (HPG)

Specialized in Hotel Businessincluding Development, Management, Travel Agent, and Loyality Program.

■ Corporate Profile3

■ Financial Figures of Hospitality Partners Group

Total Revenue and Operating Income of Hospitality Partners GroupFY2017： Total Revenue ¥27.7 billion, Operating Income ¥2.1 billion（Hospitality Operations： Revenue ¥17.3 billion, Operating Income ¥1.2 billion）

4

3,210

7,192 7,299 8,882

9,965 11,736

13,907

17,813 19,088

23,478

27,784

0

5,000

10,000

15,000

20,000

25,000

30,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

【Total Revenue】（Million Yen）

134 189 265 246 387

747

1,072

1,923 1,982

2,615

2,176

0

500

1,000

1,500

2,000

2,500

3,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

【Operating Income】（Million Yen）

■ Brand Positioning in Hotel Industry (U.S.-Japan Comparison)

United States JapanLuxury

JW Marriott, The Ritz-Carlton, Four Seasons Hotels and Resorts, Grand Hyatt, Loews Hotels & Resorts, Waldorf

Astoria Hotels & Resorts, Fairmont Hotels & Resorts, InterContinental Hotels & Resorts, W Hotels

Imperial Hotels, The Ritz-Carlton, HOSHINOYA,Hyatt Regency, Hotel Okura, InterContinental, Westin,

Mariott, Sheraton, Hotel New Otani

35,000 yen or more per night

Upper Upscale Hyatt, Kimpton Hotels, Marriott Hotels & Resorts, Hilton

Hotels & Resorts, Embassy Suites Hotels, Omni Hotels & Resorts, Hyatt Regency, Renaissance Hotels, Westin Hotels & Resorts, Wyndham Hotels & Resorts, Delta

Hotels & Resorts, Sheraton Hotels & Resorts

RISONARE, Nikko Hotels, Rihga Royal Hotels,Royal Park, Fujiya Hotel, Tokyo Dome Hotel,

Hotel Associa, La Vista, ANA Crown Plaza, Tokyu Hotel, Hotel Granvia, Grand Prince, Metropolitan Hotel,

Mitsui Garden Hotel, Odakyu Hotel, Excel Hotel Tokyu, Miyako Hotel, Keio Plaza Hotel, Hotel Monterey,

Hotel Gracery, Hotel Keihan, Prince Hotel,Hankyu Hanshin Daiichi Hotel,Daiwa Royal Hotel, Kowakien

15,000 yen to less than 35,000 yen per night

Upscale Hilton Garden Inn, Hyatt Place, Springhill Suites, Courtyard, DoubleTree by Hilton, Hotel Indigo, Crowne

Plaza Hotels & Resorts, Four Points by Sheraton, Radisson

Upper MidscaleHoliday Inn Express, Wyndham Garden, Fairfield Inn &

Suites, Comfort Suites, Clarion, Holiday Inn, Best Western Plus, Country Inns &Suites, Comfort Inn, Ramada Plaza

Richmond Hotel, Vessel Hotel/Vessel Inn, Keikyu EX Inn, Hotel JAL City, JR Kyushu Hotel, Candeo Hotels, Hotel

Mets, Daiwa Roynet Hotel, Dormy Inn, Sotetsu Fresa Inn, Sunroute, Washington Hotel, Tokyu REI Hotel,

Mielparque, Hearton Hotel

9,000 yen to less than 15,000 yen per night

Midscale Wingateby Wyndham, Best Western, AmerincInn, La QuintaInns & Suites, Baymont Inn & Suites, Sleep Inn,

Red Lion, Quality, RamadaEconomy

Americas Best Value Inn, Microtel Inn, Days Inn, Howard Johnson, Super 8, Red Roof Inn, Econo Lodge, Motel 6,

Travelodge, Rodeway Inn, Knights Inn

Super Hotel, Hotel Hokke Club, Comfort Hotel, Nishitetsu Inn, Hotel Route Inn, Ark Hotel, Viainn Hotel, Smile Hotel, Chisun Inn, R&B Hotel, Apa Hotel, Toyoko

Inn, Hotel Alpha-1, HOTEL AZ, Hotel Livemax, Washington Hotel Plaza, Hotel 1-2-3, Kuretake Inn

Less than 9,000 yen per night

Source: J. D. Power 2017 North America Hotel Guest Satisfaction Index Study J. D. Power Japan Hotel Guest Satisfaction Study (2016)

5

■ Hotel Chain Ranking in Japan 2017 (Number of Rooms)

Source: Bridal Industry Newspaper Spring 2017 Japan Hotel Chains Ranking （国際ホテル旅館 2017年新春・全国ホテルチェーンランキング）

6

1 Toyoko Inn Co., Ltd. Toyoko Inn Limited-Service 48,309 2492 Route Inn Japan co., Ltd. Route Inn Hotels Limited-Service, Full-Service, Resort 43,993 270

3 A Card Hotel System,inc A Card Hotel Network(Voluntary Chain) Limited-Service, Full-Service 42,580 418

4 APA GROUP Apa Hotel & Resorts Limited-Service, Resort 32,673 1555 PRINCE HOTELS, INC. Prince Hotel Full-Service, Resort 17,249 426 Okura Nikko Hotel Management Co., Ltd. Okura Nikko Hotels Full-Service, Limited-Service 13,639 497 Super Hotel Co., Ltd. Super Hotel Limited-Service 13,323 1188 TOKYU HOTELS CO., LTD. Tokyu Hotels Full-Service, Limited-Service, Resort 12,084 44

9 MYSTAYS HOTEL MANAGEMENT Co.,Ltd. Hotel Mystays, Flexstay Inn Limited-Service 11,997 76

10 Amaze Co., Ltd. HOTEL AZ Limited-Service 10,329 7611 Sunroute Co., Ltd. Sunroute Hotel Chain Limited-Service, Full-Service, Resort 10,242 56

12 FUJITA KANKO INC. WHG Hotels, Washington Hotel,Hotel Gracery Limited-Service 10,095 31

13 IHG ANA Hotels Group Japan LLC, IHG ANA Hotels, InterContinental,Holiday Inn, ANA Hotels Full-Service, Limited-Service 9,881 33

14 Kyoritsu Maintenance Co., Ltd. Dormy Inn Limited-Service 9,851 6015 Hotel Alpha-One Hotel a-1 Limited-Service 9,524 4816 DAIWAROYAL CO., LTD. Daiwa Roynet Hotels Limited-Service 9,405 44

17 Washington Hotel Corporation Washington Plaza, R&B Hotel,International Hotel Nagoya Limited-Service, Full-Service 9,117 41

18 Choice Hotels Japan Comfort Hotel, Comfort Inn Limited-Service 8,261 5219 BREEZBAY HOTEL Co., Ltd. BBH Hotel Group Limited-Service, Resort, Other 8,221 94

20 Hankyu-Hanshin-Daiichi Hotel Group Hankyu-Hanshin-Daiichi HotelGroup Full-Service, Limited-Service, Resort 8,090 33

21 DAIWA RESORT Co.Ltd. Daiwa Royal Hotels Resort 7,700 2822 RNT HOTELS Co.Ltd. Richmond Hotels Full-Service 7,384 36

23 K.K. Hospitality Operations Smile Hotel, Premier Inn,Emishia

Limited-Service, Full-Service,Resort 6,936 54

24 Starwood Hotels and Resorts Worldwide Starwood Hotels & Resorts,Sheraton, Westin, St Regis Full-Service 6,930 20

25 Hilton Worldwide Hilton Hotels & Resort, Hilton,Conrad, Doubletree by Hilton Full-Service, Resort 6,540 13

26 Resorttrust Baycourt Club, XIV, Sun Members,Pia Resort, Trusty Limited-Service, Resort 6,293 45

27 Hotel Management International Co., Ltd. HMI Hotel Group, Hotel CrownPalace, Hotel Pearl City, Creston Limited-Service, Full-Service, Resort 5,853 52

28 Solare Hotels and Resorts Co., Ltd. Chisun Hotels, Loisir Hotel, HotelAvanshell Limited-Service, Full-Service, Resort 5,622 39

29 Mitsui Fudosan Co., Ltd. Mitsui Garden Hotels Limited-Service 5,337 2030 Nishi - Nippon Railroad Co., Ltd. Nishitetsu Hotel Group Full-Service, Limited-Service 4,865 17

Operating Company Brands Service Number ofPropertiesNumber of Rooms

Number of Hotel Properties under Management (as of July 2018)

We are managing 61 hotels in Japan

7

5 6

15 1721

27

3336

43 44

5357

61

0

10

20

30

40

50

60

70

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

■ About Hospitality Operations

8

61 Hotels (8,262 Rooms in total) and 48 Other Hospitality Facilitiesunder Our Management

As of July 2018

Hotels• 52 Economy/Limited

Service Hotels• 4 City Hotels• 5 Resort Hotels

Others• 6 Ski Resorts• 2 Golf Resorts• 31 Takoyaki and Crepe Shops• 2 Restaurants• 6 Solar Power Plants

■ About Hospitality Operations

Brand's philosophy:

Hospitality begins with a smile.

We provide safe, relaxing, clean, and comfortable

environments and smiles with a reasonable price.

Number of Smile Hotels under Management (as of May 2018)

Our Main Limited-Service Hotel Brand： “Smile Hotel”

9

787 787 983 1,043

2,510 2,542 2,921 3,159

3,873 4,018

5,008 5,415

6,564

5 5 7 8

21 2124 26

3132

3942

48

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

10

20

30

40

50

60

(Upper Brand)

■ About Hospitality Operations

Hakata Ekimae opened in April 2017, Osaka Minami-Senba opened in December 2017

10

・Opened on December 15, 2017 ・Construction completed in November 2017・Owner: MITSUBISHI ESTATE CO., LTD.・8 Minutes from Shinsaibashi Station(Subway Midosuji Line) by walk・296 Rooms (double, twin, etc.)

・Opened on April 15, 2017・Construction completed in March 2017・4 Minutes from JR Hakata Station by walk・118 Rooms （single, double, twin, etc. ）

Smile Hotel Hakata Ekimae

Smile Hotel Premium Osaka Honmachi

10■ About Hospitality Operations

Sapporo Susukino opened in March 2018, Osaka Higashi-Shinsaibashi opened in July 2018

11

・Opened on July 14, 2018・Construction completed in June 2018・Owner: MITSUBISHI ESTATE CO., LTD.・5 Minutes from Nagahoribashi Station(Subway Sakaisuji Line) by walk・216 Rooms (double, twin, etc.)

・Opened on March 1, 2018・Construction completed in February 2018・1 Minute from Hosui-Susukino Station by walk・270 Rooms (double, twin, etc. )

Smile Hotel Premium Sapporo Susukino

Smile Hotel Premium Osaka Higashi-Shinsaibashi

11■ About Hospitality Operations

12

Fixed Rent

About 70%～75% of GOP

Operating Expense

GOR

GOP

① Lease

GOPFixed Rent

Operator's Income

Oowner's Residual Income

About 85%～90%of GOP

GOR

GOP

③ Management Contract

IBFCIncome

Before

Fixed

Charge

（Fee）

About 80%～85% of

GOP

(Changes with GOP)

＋

Variable Rent

Fixed Rent

MinimumFixed

Guaranteed Rent

②MC-Type Lease

50%Fixed

（Guaranteed）

50%VariableGOP

Operator's Income（Fee）

④ Franchise Agreement

GOR

GOP

（Fee）

■ Management Models of Smile Hotel

Variable Rent

Operator's Income

Operator's Income

Cash-Flow Structures by Hotel Management Types

Opex Opex Opex Opex

IBFCIncome

Before

Fixed

Charge

Oowner's Residual Income

About 90%～92%of GOP

13

Loyality Program： A Card 469 Properties, Approx. 890K MembersNumber of A Card Hotel Network Member Hotels

Ａ Card Hotel Network： 433 Hotels, 53 RestaurantsNumber of Members： 892,883 （as of June 2018）

A Card Hotel Network Distribution

Number of A Card Members

■ A Card: The Largest Loyality Program for Independent

Limited-Service Hotels in Japan