Financial Benchmarking Your Resort & U.S. Resort Industry Overview

Robert Mandelbaum robert.mandelbaum@pkfc.com Presented by Mark Woodworth mark.woodworth@pkfc.com Robert Mandelbaum robert.mandelbaum@pkfc.com

Presentation Outline Industry Overview Benchmarking defined When did benchmarking start? How to benchmark! Why use benchmark$ Resort financial benchmarking Uniform System of Accounts Methods of financial comparison Case study HRG’s Benchmarker®

U.S. Resorts Annual Change In Total Revenue Source: PKF/HRG Trends in the Hotel Industry

U.S. Resorts Change In Total Revenue By Region 2001 2002 2003 Preliminary Northeast -5.4% -6.2% -5.8% North Central -1.7% 3.6% -2.8% Southeast -7.6% -5.6% -1.3% South Central -9.2% 3.4% 0.3% Mountain/Pacific -9.3% -3.3% 0.0% Source: PKF/HRG Trends in the Hotel Industry

U.S. Resorts Annual Change In Rooms RevPAR 8.1% 7.7% 8.0% 4.0% 6.2% 3.2% 2.5% 2.2% -4.1% -8.0% Source: PKF/HRG Trends in the Hotel Industry

U.S. Resorts Annual Change In Total Revenue And Expenses Source: PKF/HRG Trends in the Hotel Industry

U.S. Resorts Annual Change In Net Income* Note:* - Before capital reserve, rent, debt service, income taxes, amortization, and depreciation Source: PKF/HRG Trends in the Hotel Industry

Comparative Operating Performance Other Property Types Source: PKF/HRG Trends in the Hotel Industry

Comparative Operating Performance Comparable Full-Service Hotels Source: PKF/HRG Trends in the Hotel Industry

Merriam-Webster’s Collegiate Dictionary Definition “bench-mark-ing” Noun (1976): the study of a competitor’s product … in order to improve the performance of one’s own company Merriam-Webster’s Collegiate Dictionary

When & Who Started Hotel Benchmarking? Harris Kerr & Foster [PKF Consulting] Laventhol & Horwath Smith Travel Research The Hospitality Research Group [HRG] Benchmarker® Industry Averages vs Customized

The COMP Set vs. Competitive - Sub Market Geography - Top Line - Market Share Comparable / Criteria - Also Geography - Occ – ADR – RevPAR - Mix of Revenues - Bottom Line Comparison * Segment * Size * Location Criteria driven Physical & Financial Attributes

How To Benchmark!

Why Use Benchmarking? Loan Application Insurance – loss Tax - reduction Measure management Budgeting Today Robert and I are going to talk about FINANCIAL benchmarking.

Applying Financial Benchmarking To The Hotel Industry

Common Language Uniform System of Accounts for the Lodging Industry 9th Edition – Current 10th Edition – Release in 2004 For Use in 2005 Robert Mandelbaum – USALI 10th In addition to CPA’s ~ AH & LA has included ~ Hotel management and financial consultants.

Uniform System of Accounts Operating Departments Rooms, Food, Beverage, Minor Operated, Rental and Other Income Undistributed Departments A&G, Marketing, P.O.M., Utilities Fixed Charges Management Fees, Property Taxes, Insurance Robert Mandelbaum – USALI 10th In addition to CPA’s ~ AH & LA has included ~ Hotel management and financial consultants.

Methods of Financial Comparison Total Dollars Percent of Department Revenue Percent of Total Revenue Dollars Per Available Room Dollars Per Occupied Room Robert Mandelbaum – USALI 10th In addition to CPA’s ~ AH & LA has included ~ Hotel management and financial consultants.

Comparable Property Selection Criteria Subject Hotel Comparable Criteria Property Type Resort Geography Florida Southeast Affiliation Chain Affiliated Rooms 252 200 - 300 Occupancy 67.6% 60% - 70% A.D.R. $294.60 $275 - $325 Robert Mandelbaum – USALI 10th In addition to CPA’s ~ AH & LA has included ~ Hotel management and financial consultants.

Comparable Property Selection Criteria Subject Hotel Comparable Criteria Recreation Tennis No Golf Other Operated Dept. % Of Total Revenue 6.8% 5% - 15% Robert Mandelbaum – USALI 10th In addition to CPA’s ~ AH & LA has included ~ Hotel management and financial consultants.

The Hospitality Research Group of PKF Consulting Benchmarker® …of Hotel Profits Robert Mandelbaum – USALI 10th In addition to CPA’s ~ AH & LA has included ~ Hotel management and financial consultants.

Benchmarker® Customer selects properties Choice of 7 segments All U.S. cities 24 hour delivery $175 on up Excel XLS format

Thank You Contact Information (404) 842-1150 mark.woodworth@pkfc.com robert.mandelbaum@pkfc.com