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US Hotel Industry Update

Vantage Hospitality Annual Conference & Trade Show

December 9, 2014

Jeff Higley, VP/Editorial Director, STR/Hotel News Now

@jeffhigley1 jeff@str.com

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www.hotelnewsnow.com Click on “Data Presentations”

(free registration/login required)

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Total US Review

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October 2014 YTD: Yep, things are pretty good!

% Change

• Room Supply* 0.8%

• Room Demand* 4.5%

• Occupancy 66% 3.6%

• A.D.R.* $116 4.6%

• RevPAR* $77 8.4%

• Room Revenue* 9.3%

October 2014 YTD, Total US Results * All Time High for First 10 Months

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2014 Room Revenue Will Set Record

Total 2008: $107 Billion

Total 2013: $122 Billion

YTD 2014: $115 Billion (October 2104)

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RevPAR Growth YTD: +8.4%

Strongest YTD growth EVER!

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Quarterly RevPAR % Change: Its keeps getting better

8.7

8.1 8.0 7.8 7.7 7.8

5.0

6.4 6.4

4.9 5.5

5.1

6.8

8.2

9.2

Q1 Q2 Q3 Q4

2011 2012 2013 2014

* Total US, RevPAR % Change, by Quarter, Q1 2011 – Q3 2014

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The Best Fundamentals (Maybe In Our Lifetime)

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-4

0

4

8

1990 2000 2010

Supply % Change

Demand % Change

-6.9%

-0.9%

- 4.7%

Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 10/2014

8.0%

4.3%

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2014 Growth Rates Are Healthy. OCC continues to climb.

-10

-5

0

5

1990 2000 2010

OCC % Change

ADR % Change -6.7%

7.5% 6.8%

-9.7%

Total U.S., ADR & OCC % Change, 12 MMA 1/1990 – 10/2014

4.4%

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Expect More Of The Same: Positive Growth!

-25

-20

-15

-10

-5

0

5

10

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1990 2000 2010

Total U.S., RevPAR % Change, 1/1990 – 10/2014

56 Months 56 Mo. 80 Months 31 Mo

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Chain Scale Review

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Scales: A Tale of 2 Supply Growth Scenarios

0.9 1.4

3.5

0.6

-0.7

0.3

1.8

3.8

7.1

4.6

3.6

4.3

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Supply % Change

Demand % Change

*Supply / Demand % Change, by Scale, October 2014 YTD

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Scales: Absolute OCC Very High On Upper End

76.5 75.4 75.8

68.4

60.1 58.5

75.8

73.6 73.2

65.8

57.6 56.3

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

2014 2013

*OCC %, by Scale, October YTD 2013 & 2014

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Scales: Absolute ADR Very Strong At The Luxury End

304

170

128

105

80

57

288

162

122

101

77

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Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

2014 2013

*ADR $, by Scale, October YTD 2013 & 2014

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

• Upper Upscale – Sheraton, Embassy Suites, Hyatt, Marriott

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

• Upper Midscale – Lexington, 3 Palms, Fairfield Inn/Suites, Holiday Inn, Clarion, Hampton Inn/Suites, Best Western PLUS, Country Inn & Suites

• Midscale –Signature Inn, Best Western, Candlewood Suites, Quality Inn/Suites

• Economy – Americas Best Value Inn, America’s Best Inn, Country Hearth Inn, Jameson Inn, Extended Stay America, Red Roof, Days Inn, Microtel

• Complete list: www.HotelNewsNow.com/chainscales.pdf

2014 STR Chain Scales

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Segmentation

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Occupancy Segmentation by Class: Groups Are Finally Returning!

1.2

1.9

3.0

3.8

Luxury Upper Upscale

Transient % Change Group % Change

*Segmentation Occupancy % Change, by Class, October 2014 YTD

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ADR Segmentation by Class: Strong Transient Room Rate Growth

5.9 5.8

3.6

2.6

Luxury Upper Upscale

Transient % Change Group % Change

*Segmentation ADR % Change, by Class, October 2014 YTD

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Group Demand Is Roaring Back.

-2%

-1%

1%

2%

3%

4%

5%

6%

2012 2013 2014

Demand % Change

ADR % Change

*Group Demand and ADR % Change, 12 MMA, 1/2012 – 10/2014

*2013 Easter Comp

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Markets

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October 2014 YTD ADR % Change in Top 25: 5 Best / 5 Worst Performing Markets

Market OCC % ADR % Change

Nashville, TN 73.8 13.1

San Francisco/San Mateo, CA 85.5 11.3

Denver, CO 78.1 9.3

Seattle, WA 77.9 8.6

Los Angeles/Long Beach, CA 80.6 7.6

New York, NY 85.1 2.5

New Orleans, LA 69.9 2.0

Norfolk/Virginia Beach, VA 57.0 1.7

Philadelphia, PA-NJ 69.3 1.2

Washington, DC-MD-VA 71.2 0.3

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October 2014 YTD ADR % Change in Secondary Markets (26-50): 5 Best / 5 Worst Performing Markets

Market OCC % ADR % Change

Austin, TX 77.7 12.7

Baltimore, MD 78.8 10.8

Charlotte, NC-SC 74.3 8.1

Cincinnati, OH-KY-IN 74.1 8.1

Cleveland, OH 77.7 6.3

Riverside/San Bernardino, CA 70.1 3.5

Sacramento, CA 65.7 2.9

Salt Lake City/Ogden, UT 61.7 2.5

San Antonio, TX 69.8 2.4

San Jose/Santa Cruz, CA 68.3 2.3

Most Submarkets Above Previous RevPAR Peak

A Few Obvious Laggards …

… and Some Big Winners

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Pipeline

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Supply Growth Slowly Creeps Up

-1

0

1

2

3

4

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

20 Year CAGR: 1.7%

Total U.S.: Supply % Change 12 Month Moving Average: 2005 to September 2014

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US Pipeline: Construction Accelerates, But Is Still Muted

Phase 2014 2013 % Change

In Construction 113 86 31%

Final Planning 119 130 -9%

Planning 171 133 28%

Under Contract 403 351 15%

*Total US Pipeline, by Phase, ‘000s Rooms, October 2014 and 2013

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Under Construction Rooms Mostly In Limited Service Segments

3.5

11.1

43.8

33.0

5.7

0.7

15.8

Luxury UpperUpscale

Upscale UpperMidscale

Midscale Economy Unaffiliated

*US Pipeline, Rooms Under Construction , ‘000s Rooms, by Scale, October 2014

68%

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2015 Under Construction Rooms Projected: Same Story

2.6

7.3

31.6

24.5

3.7

0.4

9.0

Luxury UpperUpscale

Upscale UpperMidscale

Midscale Economy Unaffiliated

*US Pipeline, Rooms Under Construction w/ Open Date 2015 , ‘000s Rooms, by Scale

71%

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Construction In Top 26 Markets: 16 With 2%+ Of Supply

*US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, October 2014

Market Rooms U/C % Of Existing

Las Vegas, NV 0 0%

Norfolk-Virginia Beach, VA 104 0%

Tampa-St Petersburg, FL 211 0%

St Louis, MO-IL 182 0%

Oahu Island, HI 144 0%

Philadelphia, PA-NJ 384 1%

San Francisco/San Mateo, CA 453 1%

Atlanta, GA 883 1%

Orlando, FL 1,200 1%

Los Angeles-Long Beach, CA 1,431 1%

Detroit, MI 677 2%

Minneapolis-St Paul, MN-WI 671 2%

Phoenix, AZ 1,160 2%

Dallas, TX 1,875 2%

New Orleans, LA 922 2%

Chicago, IL 2,923 3%

Boston, MA 1,379 3%

Nashville, TN 1,107 3%

Anaheim-Santa Ana, CA 1,707 3%

San Diego, CA 1,880 3%

Denver, CO 1,350 3%

Washington, DC-MD-VA 3,440 3%

Miami-Hialeah, FL 2,653 5%

Seattle, WA 2,302 6%

Houston, TX 4,428 6%

New York, NY 12,962 11%

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October 2014 YTD: Top 5 Markets With Highest Supply Growth

Market Supply Growth %

New York, NY 5.6

Nashville, TN 2.7

Denver, CO 2.3

San Diego, CA 1.8

Philadelphia, PA-NJ 1.6

*Top 5 Markets in Top 25 Markets, Supply Growth %, October 2014 YTD

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2014 / 2015 Forecast

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U.S. Forecast summary (% Change)

2014 Supply 0.8 0.9 0.9

Demand 4.6 4.5 4.3

Occupancy 3.7 3.6 3.4

ADR 4.6 4.5 4.7

RevPAR 8.5 8.2 8.2

2015 Supply 1.3 1.3 1.4

Demand 2.4 2.2 2.5

Occupancy 1.1 0.9 1.1

ADR 5.0 5.7 6.2

RevPAR 6.2 6.7 7.4

Updated 11/10/14 9/5/14 11/10/14

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Total United States Chain Scale Key Performance Indicator Outlook 2015F by Chain Scale

2015 Year End Outlook

Chain Scale Supply

(% Change) Occupancy

(% chg) ADR

(% chg) RevPAR (% chg)

Luxury 1.7% 0.6% 5.4% 6.0%

Upper Upscale 1.1% 1.0% 5.1% 6.1%

Upscale 4.1% 1.0% 5.4% 6.4%

Upper Midscale 1.8% 1.5% 4.7% 6.3%

Midscale 0.2% 1.3% 3.8% 5.1%

Economy 0.1% 1.3% 4.6% 6.0%

Independent 0.8% 0.6% 4.9% 5.6%

Total United States

1.3% 1.1% 5.0% 6.2%

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