Jamie LaneSr. Director, Economics & Forecasting

US HOTEL OUTLOOKNAVIGATING THE STORM

5/20/2020

https://pip.cbrehotels.com/presentations

ItalySouth Korea

China Spain

Germany

UK

France

Japan

New York State

USA excl. NY (right axis)

0

5,000

10,000

15,000

20,000

25,000

30,000

0

2,000

4,000

6,000

8,000

10,000

12,000

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

Num

ber o

f Cas

esWE ARE GENERALLY PAST THE PEAK IN NEW INFECTIONSDaily new cases in 7-day moving averages

Source: CBRE Research, European Centre for Disease Prevention, COVID Tracking Project, Macrobond, 19 May 2020.Note: Number reported as a 7-day moving average.

USA, UK slow off the mark to control the virus

Days Since Daily Increase Exceeds 100

Restaurants

Restaurants -

20

40

60

80

100

(38)

(36)

(34)

(32)

(30)

(28)

(26)

(24)

(22)

(20)

(18)

(16)

(14)

(12)

(10) (8)

(6)

(4)

(2)

- 2 4 6 8 10

12

14

16

18

20

22

24

26

28

30

32

34

36

38

40

42

44

46

48

50

52

54

56

58

60

62

64

66

68

70

72

74

76

78

80

82

84

86

88

90

92

94

96

98

100

Days to/from Peak

Europe United Kingdom China Italy Germany United States

Source: CBRE Research, European Centre for Disease Prevention, Macrobond, 20 May 2020.Note: Number reporting as a 7-day moving average with each country indexed and aligned from its peak.

RATE OF NEW CASE NUMBERS NOW PEAKINGDaily new cases confirmed, Indexed and aligned from historical peak

Re-opening to Travel 8-12 Weeks after Peak

June 3rd

ECONOMY

80

85

90

95

100

105

- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Quarters to Recover

Base 1990 2001 2008 2020 Baseline 2021 Downside 2022 SevereDownside

US EMPLOYMENTCURRENT FORECAST SCENARIOS COMPARED TO PAST RECESSIONS

Source: BLS, CBRE Research, April 2020.Note: Employment Indexed to Pre-recession levels

ALTERNATE SCENARIOS

Scenario Upside Baseline Downside Severe Downside

Likelihood Low High High/Medium Low / Medium

COVID-19 Situation

Social distancing measures cause the number of new cases to quickly fall by May/June 2020. Future spread is mitigated by test-and-trace and release of a vaccine by early 2021.

The number of new cases drops enough to allow a slow reopening of the economy commencing in late May / June. Progress will vary by region.

COVID-19 cases and hospitalization rates remain high into the summer and crowd-out resources from other parts of the economy. Viral flare-ups are commonplace in different regions of the country.

After governments ease ‘lockdown’ rules the virus makes a worldwide resurgence. Meanwhile, the development of a vaccine takes years.

Time to Full Economic Recovery

5 quarters 2 years 3 years 4 years

Economic Impact

A quickly falling case count, swift reopening of the economy and robust government stimulus will unleash a wave of pent-up demand that drives an impressive recovery.

24 million jobs will be lost in 2020q2, pushing the unemployment rate to about 15%. Government stimulus will keep many firms afloat during the lockdown period. Improved consumer sentiment and functioning financial markets will

The reopening of the economy proves to be a slow process and many firms are unable to reopen. High bankruptcies and unemployment will prevent a strong recovery from gaining traction. Pre-virus employment levels are not regained before

A prolonged recession causes a wave of bankruptcies that severely stress the financial system. Pre-virus employment levels are not regained during the next four years.

2019 2020 2021 2022 2023

GDP UPSIDE

2019 2020 2021 2022 2023

BASELINE

2019 2020 2021 2022 2023

DOWNSIDE

2019 2020 2021 2022 2023

SEVERE DOWNSIDE

Source: CBRE Research, April 2020.

TURNING TO HOTELS

CBRE HOTELS - BASELINE FORECAST

Source: CBRE Hotels Research, STR, May 14, 2020.

Year Occ ΔOcc ADR ΔADR RevPAR ΔRevPAR ΔSupply ΔDemand

2018 66.1% 0.4% $129.91 2.4% $85.90 2.9% 2.0% 2.4%

2019 66.1% -0.1% $131.11 0.9% $86.64 0.9% 2.0% 2.0%

2020 41.0% -38.0% $101.67 -22.5% $41.67 -51.9% 1.5% -37.0%

2021 55.9% 36.3% $110.69 8.9% $61.83 48.4% -1.1% 34.8%

2022 65.0% 16.4% $122.93 11.1% $79.95 29.3% 0.0% 16.4%

2023 66.6% 2.4% $130.47 6.1% $86.92 8.7% 0.5% 3.0%

2023 66.5% -0.2% $135.63 4.0% $90.18 3.7% 0.9% 0.7%

FORECASTING THE COVID-19 IMPACT

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2020 2021

Occupancy Index

Note: Indexed to 2019 Levels

Source: CBRE Hotels Research, STR, Q1 2020.

0%

10%

20%

30%

40%

50%

60%

70%

80%

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

2018 2019 2020 2021 2022 2023

OccupancyHistorical Economic Model Covid-Impact Model

FORECASTS OF OCCUPANCY LEVELS BY CHAIN SCALE

0%

10%

20%

30%

40%

50%

60%

70%

80%

2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021

All Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Source: CBRE Hotels Research, STR, May 14, 2020.

TRAVEL DATA –GREEN SHOOTS?ARRIVALIST: US DAILY TRAVEL INDEX

SOURCE: ARRIVALIST, 5/20/2020

ADARA: US HOTEL BOOKING VOLUME

SOURCE:ADARA, 5/20/2020

TSA CHECKPOINTS - WEEK OVER WEEK CHANGE IN NUMBER & PERCENT OF TRAVELERS, 7 DAY MOVING AVERAGE

SOURCE: TSA, CBRE HOTELS RESEARCH, 5/20/2020

-877,189

-100.0%

-80.0%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

-1,000,000

-800,000

-600,000

-400,000

-200,000

0

200,000

Weekly Change in Number of Travelers W-o-w Change in Travelers

Decreasing atDecreasing Rate

Increasing!

Decreasing atIncreasing Rate

-

20.0

40.0

60.0

80.0

100.0

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21Quarters to Recover

1990 2001 2008 2020 Baseline 2020 Downside

US HOTEL REVPARCURRENT FORECAST SCENARIOS COMPARED TO PAST RECESSIONS

Source: STR, CBRE Hotels Research, May 14th, 2020.Note: RevPAR Indexed to Pre-recession levels

2020 REVPAR Y-O-Y % CHANGE

Source: CBRE Hotels Research, STR, May 14th, 2020.

(80)%

(70)%

(60)%

(50)%

(40)%

(30)%

(20)%

(10)%

0%

New

York

Seat

tleBo

ston

Was

hingt

on D

CPo

rtlan

dM

ilwau

kee

Chica

goPi

ttsbu

rgh

Austi

nDa

llas

San

Dieg

oNa

shvil

leSa

n Jo

se-S

anta

Cru

zNo

rfolk-

VA B

each

Oahu

Minn

eapo

lisSa

n Fr

ancis

coPh

ilade

lphia

Orlan

doBa

ltimor

eDe

nver

New

Orlea

nsAn

aheim

Cinc

innat

iOm

aha

India

napo

lisLo

ng Is

land

Los A

ngele

sCo

lumbu

sKa

nsas

City

Salt L

ake

City

Char

lesto

nCl

evela

ndLo

uisvil

leFo

rt W

orth

Sava

nnah

Newa

rkSa

int L

ouis

Atlan

taSa

cram

ento

San

Anto

nioOa

kland

Mem

phis

Hartf

ord

Hous

ton

Albu

quer

que

Ralei

gh-D

urha

mCh

arlot

teRi

chm

ond

Detro

itM

iami

Jack

sonv

illeCo

lumbia

Alba

nyTu

cson

Phoe

nixFo

rt La

uder

dale

Tam

paW

est P

alm B

each

Dayto

n

HOTEL REVPAR RECOVERY2023 REVPAR FORECAST AS A % OF 2019 LEVELS

Source: STR, CBRE Hotels Research, Q1 2020

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

Oah

uC

hica

goFo

rt W

orth

Hou

ston

Dal

las

Bost

onKa

nsas

City

Col

umbu

sJa

ckso

nville

Col

umbi

aM

inne

apol

isM

ilwau

kee

New

Yor

kAu

stin

New

Orle

ans

Nas

hville

Salt

Lake

City

New

ark

Seat

tleO

akla

ndIn

dian

apol

isSa

n Jo

se-S

anta

Cru

zN

orfo

lk-V

A Be

ach

Om

aha

Ral

eigh

-Dur

ham

Ric

hmon

dTa

mpa

Orla

ndo

Det

roit

Cle

vela

ndLo

s An

gele

sC

inci

nnat

iSa

n Fr

anci

sco

Mia

mi

Balti

mor

eM

emph

isSa

cram

ento

Uni

ted

Stat

esD

ayto

nPh

oeni

xW

ashi

ngto

n D

CPi

ttsbu

rgh

Phila

delp

hia

San

Die

goFo

rt La

uder

dale

Anah

eim

Cha

rlotte

Den

ver

Sava

nnah

Portl

and

San

Anto

nio

Atla

nta

Sain

t Lou

isH

artfo

rdTu

cson

Wes

t Pal

m B

each

Long

Isla

ndLo

uisv

illeAl

buqu

erqu

eC

harle

ston

Alba

ny

A STATE BY STATE APPROACH7-Day Average Daily new cases confirmed

Source: CBRE Research, European Centre for Disease Prevention, COVID Tracking Project, Macrobond, 20 May 2020.Note: Number reported as a 7-day moving average.

0

2,000

4,000

6,000

8,000

10,000

12,000

0

500

1,000

1,500

2,000

2,5003/

83/

103/

123/

143/

163/

183/

203/

223/

243/

263/

283/

30 4/1

4/3

4/5

4/7

4/9

4/11

4/13

4/15

4/17

4/19

4/21

4/23

4/25

4/27

4/29 5/

15/

35/

55/

75/

95/

115/

135/

155/

175/

19

Number of CasesNumber of Cases

Georgia South Carolina Florida Texas Tennessee Oklahoma Massachusetts New York - Right

THANK YOU!PLEASE DON’T HESITATE TO CONTACT ME.

This presentation has been prepared in good faith based on CBRE’s current views of the commercial real-estate market. Although CBRE believes its views reflect market conditions on the date of this presentation,they are subject to significant uncertainties and contingencies, many of which are beyond CBRE’s control. In addition, many of CBRE’s views are opinion and/or projections based on CBRE’s subjective analyses ofcurrent market circumstances. Other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE’s current views to later be incorrect. CBRE has noobligation to update its views herein if its opinions, projections, analyses or market circumstances later change.Nothing in this presentation should be construed as an indicator of the future performance of CBRE’s securities or of the performance of any other company’s securities. You should not purchase or sell securities – ofCBRE or any other company – based on the views herein. CBRE disclaims all liability for securities purchased or sold based on information herein, and by viewing this presentation, you waive all claims against CBREand the presenter as well as against CBRE’s affiliates, officers, directors, employees, agents, advisers and representatives arising out of the accuracy, completeness, adequacy or your use of the information herein.© Copyright 2020 CBRE

Jamie LaneSr. Director, Economics & Forecasting CBRE Hotels ResearchJamie.lane@cbre.com

https://pip.cbrehotels.com/presentations