Visitor industry outlook Conference Southern California Lodging Forecast Riding the wave October 20, 2017 CBRE Hotels | CONSULTING

Much to think about – the economy Our National forecast Topics for today Operating at a high level Much to think about – the economy Our National forecast The supply story regional lodging forecasts Databases used

Why be concerned? Why be happy? Much to think about High Occupancy Levels Supply growth accelerating Inflation & interest rates are low Inflation & interest rates going up? Wages increasing Wages increasing Profits continue to grow Expense growth accelerating

WHAT IS AND WILL HAPPEN? THE HOTEL MARKET CYCLE 2017 Rapid Development Development Picks Up Accelerated Development Lodging Decline, Leads Other Sectors 2017 Equilibrium Occupancy ADR and Margins Recover Occupancy Declines, ADR Follows Developmen t Slows Equilibrium ADR Occupancy Recovers Development at Minimum Levels Source: CBRE Hotels’ Americas Research, Q2 2017. Lodging Recovers, Lags Other Sectors (Not this Time!) 4 CBRE HOTELS’ AMERICAS RESEARCH

THE OUTLOOK FOR THE DRIVERS THAT ARE MOST IMPORTANT TO HOTELS REMAINS FAVORABLE Source: BEA, Moody’s Analytics, CBRE Hotels Americas’ Research Hotel Horizons: July 2017, STR

Some Thoughts on the Economy No Recession Any Time Soon Energy/Trucking/Railroads Are Hurting All Else = Fine Economy Not Growing Fast Retail Sales: Volume Good; Too Many Stores Main Takeaway: WE’RE SLOWING DOWN, NOT STOPPING

Our National forecast

U.S. National Forecast 1.9% 0.6% 1.0% 1.5% 2.0% 4.0% 2.6% 1.6% 2.2% Continued RevPAR Growth, Albeit at a Slower Pace Long Run Average 2014 2015 2016 2017F 2018F Supply 1.9% 0.6% 1.0% 1.5% 2.0% Demand 4.0% 2.6% 1.6% 2.2% Occupancy 62.2% 64.4% 65.4% 65.6% 65.7% ADR 3.1% 4.6% 4.5% 2.5% 2.3% RevPAR 3.3% 8.2% 6.2% 3.2% 2.8% 2.4% . Source: CBRE September 2017 Hotel Horizons® , STR

RevPAR Growth Driven by ADR Forecast

REVPAR FORECAST BY CHAIN-SCALE ECONOMY HOTELS CONTINUE UP THE RECOVERY CURVE – OUTPACING ALL OTHERS 2016 2017F 2018F Luxury 1.3% 2.0% 2.8% Upper-Upscale 1.9% 1.5% 2.4% Upscale 2.2% 0.8% Upper-Midscale 2.3% 3.4% Midscale Economy 3.0% 2.6% 3.7% All Hotels 3.2% Source: CBRE Hotels’ Americas Research - Hotel Horizons® September – November 2017; STR, Inc. 10

WHAT EXPLAINS LACKLUSTER ADR GROWTH? SHORTENED BOOKING LEAD TIMES. GROWTH OF THE SHARING ECONOMY AND THEIR IMPACT ON PRICING POWER DURING PEAK DEMAND PERIODS. CHAINS INCENT MANAGERS TO MAXIMIZE OCCUPANCY AND NOT NECESSARILY REVENUE. INTERMEDIARIES CAPTURING A GREATER PORTION OF THE PRICE INCREASES THAT THE CONSUMER PAYS (YET THE HOTEL DOES NOT RECEIVE). NEW SUPPLY IN MANY OF THE LARGER MARKETS ERODES PRICING POWER.

Supply Story

SUPPLY FORECAST INCREASE IN SUPPLY OVER THE NEXT 4 QUARTERS 13 13

PIPELINE PEAKING – U.S. ROOMS UNDER CONSTRUCTION 210,000 194,455 190,000 192,132 170,000 150,000 130,000 110,000 90,000 2014 2015 2016 2017 Source: STR, CBRE Hotels’ Americas Research, Q2 2017. 14 14

RECENT NEW U.S. SUPPLY Source: STR, CBRE Hotels’ Americas Research, Q2 2017. 10

Our regional forecasts

Southern California Hotel Markets Comparison Area YE 2016 YE 2017E YoY Change National 65.4% 65.6% 0.3% Los Angeles County 83.0% 81.7% -2.3% Orange County 78.6% 0.0% San Diego County 79.6% 1.0% $127.16 $130.11 2.3% $204.00 $205.28 0.6% $161.04 $166.90 3.6% $181.84 $189.29 4.1% Source: CBRE Hotels’ Americas Research - Hotel Horizons® September – November 2017; STR, Inc.; CBRE Hotels 2018 Southern California Lodging Forecast 17

Southern California Hotel Markets Comparison Area YE 2017E YE 2018F YoY Change National 65.6% 65.7% 0.1% Los Angeles County 81.7% 81.0% -0.7% Orange County 78.6% 78.3% -0.3% San Diego County 79.6% 79.3% $130.11 $132.58 1.9% $205.28 $210.05 2.3% $166.90 $172.48 3.3% $189.29 $195.94 3.5% Source: CBRE Hotels’ Americas Research - Hotel Horizons® September – November 2017; STR, Inc.; CBRE Hotels 2018 Southern California Lodging Forecast 18

Historical Market Performance of the Competitive Supply Los Angeles County Los Angeles County Historical Market Performance of the Competitive Supply   Daily Annual Percent Occupied Market Average Year Supply Change Rooms Occupancy Daily Rate REVPAR 2012 97,081 35,434,565 N/A 27,650,242 78.0% $154.47 $120.53 2013 96,922 35,36,530 -0.2% 28,284,856 2.3% 80.0% 161.73 4.7% 129.31 7.3% 2014 97,565 35,611,225 0.7% 28,885,130 2.1% 81.1% 173.35 7.2% 140.61 8.7% 2015 98,030 35,780,950 0.5% 29,252,299 1.3% 81.8% 187.77 8.3% 153.51 9.2% 2016 97,925 35,742,625 -0.1% 29,660,676 1.4% 83.0% 204.00 8.6% 169.29 10.3% 2017E 100,581 36,711,955 2.7% 29,988,604 1.1% 81.7% 205.28 0.6% 167.68 -0.9% 2018F 103,830 37,898,026 3.2% 30,687,110 81.0% 210.05 170.08 CAAG 1.8% 5.3% 5.9% Source: CBRE Hotels Porter Ranch gas leak impacted the market significantly (10/15-05/16) Nearly all Submarkets peaked in 2016, well above average supply growth will lead to declines in occupancy and slowed ADR Growth Projected rate growth is Below the national average for 2017 Most of the New Supply Will get Absorbed; the most activity is in DTLA, then LAX Long-run supply growth (1988-2016) was 0.8% 19

Historical Market Performance of the Competitive Supply San Diego County San Diego County Historical Market Performance of the Competitive Supply   Annual Percent Occupied Market Average Year Supply Change Rooms Occupancy Daily Rate REVPAR 2012 13,495,510 N/A 9,952,240 73.7% $155.86 $114.94 2013 13,642,301 1.1% 10,150,124 2.0% 74.4% 160.72 3.1% 119.58 4.0% 2014 13,748,455 0.8% 10,530,018 3.7% 76.6% 169.77 5.6% 130.03 8.7% 2015 13,968,307 1.6% 10,877,483 3.3% 77.9% 178.53 5.2% 139.02 6.9% 2016 14,229,282 1.9% 11,182,004 2.8% 78.6% 181.84 142.90 2017E 14,466,000 1.7% 11,518,882 3.0% 79.6% 189.29 4.1% 150.72 5.5% 2018F 14,821,464 2.5% 11,753,692 79.3% 195.94 3.5% 155.38 CAAG 3.9% Source: CBRE Hotels Uncertainty of San Diego Convention Center and San Diego County Credit union Stadium (formerly Qualcomm) Continued enhancements to airport & New customs facility New attractions/enhancements at Seaworld and legoland Significant Supply Growth Expected through 2018 Long-run supply growth (1988-2016) 1.9% 20

Historical Market Performance of the Competitive Supply Orange County Orange County Historical Market Performance of the Competitive Supply   Annual Percent Occupied Market Average Year Supply Change Rooms Occupancy Daily Rate REVPAR 2012 15,632,950 N/A 11,424,281 73.1% $130.94 $95.69 2013 15,748,260 0.7% 11,766,245 3.0% 74.7% 138.02 5.4% 103.12 7.8% 2014 16,061,990 2.0% 12,231,119 4.0% 76.1% 146.46 6.1% 111.53 8.2% 2015 16,270,655 1.3% 12,709,222 3.9% 78.1% 154.39 120.59 8.1% 2016 16,726,559 2.8% 13,149,769 3.5% 78.6% 161.04 4.3% 126.60 5.0% 2017E 16,974,492 1.5% 13,348,765 166.90 3.6% 131.25 3.7% 2018F 17,295,160 1.9% 13,550,347 78.3% 172.48 3.3% 135.13 CAAG 1.7% 2.9% 4.7% 5.9% Source: CBRE Hotels Over 2.5 million square feet of office space under construction new and under construction hotel additions Convention Center Expansion unveiled September 2017 OC Submarkets showing rate stabilization Long-run supply growth (1988-2016) was 1.5% 21

Historical Market Performance of the Competitive Supply Ventura County Ventura County Historical Market Performance of the Competitive Supply   Annual Percent Occupied Market Average Year Supply Change Rooms Occupancy Daily Rate REVPAR 2012 1,673,890 N/A 1,115,862 66.7% $100.03 $66.69 2013 0.0% 1,138,217 2.0% 68.0% 101.71 1.7% 69.16 3.7% 2014 1,673,525 1,207,169 6.1% 72.1% 108.45 6.6% 78.22 13.1% 2015 1,652,720 -1.2% 1,233,496 2.2% 74.6% 116.80 7.7% 87.17 11.4% 2016 1,279,653 77.4% 125.26 7.2% 96.99 11.3% 2017E 1,651,990 1,245,457 -2.7% 75.4% 126.18 0.7% 95.13 -1.9% 2018F 1,252,979 0.6% 75.8% 129.09 2.3% 97.91 2.9% CAAG -0.2% 4.3% Source: CBRE Hotels Positive impact from Porter Ranch gas leak no longer in the market in 2017, thus forecast to return to more normalized levels No supply growth expected in the next two years NFL Training Camp for the Dallas Cowboys extended through 2018 22

Historical Market Performance of the Competitive Supply Santa Barbara County Santa Barbara County Historical Market Performance of the Competitive Supply   Annual Percent Occupied Market Average Year Supply Change Rooms Occupancy Daily Rate REVPAR 2012 1,980,855 N/A 1,415,645 71.5% $174.72 $124.87 2013 2,011,241 1.5% 1,460,900 3.2% 72.6% 182.57 4.5% 132.61 6.2% 2014 2,015,165 0.2% 1,517,573 3.9% 75.3% 196.45 7.6% 147.94 11.6% 2015 1,986,573 -1.4% 1,533,045 1.0% 77.2% 207.13 5.4% 159.84 8.0% 2016 1,986,391 0.0% 1,528,988 -0.3% 77.0% 214.59 3.6% 165.18 3.3% 2017E 2,060,651 3.7% 1,560,904 2.1% 75.7% 221.45 167.74 1.6% 2018F 2,265,190 9.9% 1,683,419 7.8% 74.3% 226.89 2.5% 168.62 0.5% CAAG 2.3% 2.9% 5.1% Source: CBRE Hotels INCREASED PASSENGER TRAFFIC AT SANTA BARBARA AIRPORT DUE TO MORE NON-STOP FLIGHTS AND EXISTING FLIGHTS USING LARGER JETS WITH GREATER SEAT CAPACITY SLIGHT DECLINE IN OCCUPANCY AMID EXCITING ADDITIONS TO SUPPLY, both at the luxury level in santa Barbara and select-service in Goleta CONTINUED GROWTH OF THE FUNK ZONE/LOWER STATE STREET 23

Historical Market Performance of the Competitive Supply Coachella valley Coachella Valley Historical Market Performance of the Competitive Supply   Annual Percent Occupied Market Average Year Supply Change Rooms Occupancy Daily Rate REVPAR 2012 3,698,629 N/A 2,107,203 57.0% $142.28 $81.06 2013 3,703,079 0.1% 2,130,949 1.1% 57.5% 150.98 6.1% 86.88 7.2% 2014 3,748,659 1.2% 2,234,847 4.9% 59.6% 161.90 96.52 11.1% 2015 3,756,945 0.2% 2,234,785 0.0% 59.5% 165.01 1.9% 98.16 1.7% 2016 2,376,368 6.3% 63.3% 176.11 6.7% 111.39 13.5% 2017E 3,785,520 0.8% 2,453,636 3.3% 64.8% 180.29 2.4% 116.86 2018F 3,907,690 3.2% 2,526,251 3.0% 64.6% 184.39 2.3% 119.21 2.0% CAAG 0.9% 3.1% 4.4% 6.6% Source: CBRE Hotels Demand continues to increase, finally returning to pre-recession peak Tourism drives local hotel demand; Festivals & events Palm Springs leading the way, select-service closely behind Airlift capacity increases (2M in ‘17) but will continue to be a group restraint Strong developer interest & economic incentives Ritz-Carlton Rancho Mirage absorbed, hotel pipeline growing 24

Historical Market Performance of the Competitive Supply San Luis Obispo County San Luis Obispo County Historical Market Performance of the Competitive Supply   Annual Percent Occupied Market Average Year Supply Change Rooms Occupancy Daily Rate REVPAR 2012 1,617,680 N/A 1,116,366 69.0% $132.39 $91.36 2013 1,656,735 2.4% 1,182,411 5.9% 71.4% 137.05 3.5% 97.81 7.1% 2014 0.0% 1,213,605 2.6% 73.3% 144.58 5.5% 105.91 8.3% 2015 1,701,813 2.7% 1,248,740 2.9% 73.4% 151.02 4.5% 110.82 4.6% 2016 1,780,105 1,275,184 2.1% 71.6% 156.84 3.9% 112.35 1.4% 2017E 1,786,432 0.4% 1,282,892 0.6% 71.8% 158.70 1.2% 113.97 2018F 1,831,144 2.5% 1,318,925 2.8% 72.0% 162.91 117.34 3.0% CAAG 4.3% Source: CBRE Hotels Continued supply increases; should be absorbed in 1-2 years Higher quality hotel projects opening soon (SLO City & Pismo beach) Increasingly Strong Leisure Demand; aided by newly expanded air service Centrally Located Between LA & SF; significant drive demand typically tempers downside, although highway 1 closures to the north in Monterey county negatively impacted demand in the coastal communities 25

Historical Market Performance of the Competitive Supply Inland empire Inland Empire Historical Market Performance of the Competitive Supply   Annual Percent Occupied Market Average Year Supply Change Rooms Occupancy Daily Rate REVPAR 2012 3,743,075 N/A 2,395,821 64.0% $86.64 $55.46 2013 3,762,055 0.5% 2,525,154 5.4% 67.1% 88.80 2.5% 59.61 7.5% 2014 3,836,880 2.0% 2,731,904 8.2% 71.2% 93.36 5.1% 66.48 11.5% 2015 3,899,295 1.6% 2,914,272 6.7% 74.7% 100.34 74.99 12.8% 2016 3,948,448 1.3% 2,995,452 2.8% 75.9% 107.25 6.9% 81.37 8.5% 2017E 4,029,174 3,067,711 2.4% 76.1% 112.72 85.82 5.5% 2018F 4,224,753 4.9% 3,193,377 4.1% 75.6% 116.84 3.7% 88.32 2.9% CAAG 8.1% Source: CBRE Hotels Economic recovery fueled by new housing and job growth Barring unforeseen events, IE will exhibit some of the strongest growth New and minimal supply additions will be quickly absorbed significant supply growth in Ontario/rancho Cucamonga & Temecula Focus should be on increasing ADR (not yet back to peak) at stabilization Local control of the Ontario Airport offers future potential 26

Southern California coastal Historical Market Performance of the Competitive Supply   Annual Percent Occupied Market Average Year Supply Change Rooms Occupancy Daily Rate REVPAR 2012 3,145,205 N/A 2,167,571 68.9% $305.62 $210.63 2013 3,230,250 2.7% 2,252,619 3.9% 69.7% 321.50 5.2% 224.20 6.4% 2014 3,247,405 0.5% 2,367,800 5.1% 72.9% 341.50 6.2% 249.00 11.1% 2015 3,248,135 0.0% 2,388,284 0.9% 73.5% 353.09 3.4% 259.62 4.3% 2016 3,301,364 1.6% 2,406,293 0.8% 363.31 2.9% 264.81 2.0% 2017E 3,357,011 1.7% 2,441,561 1.5% 72.7% 375.95 3.5% 273.43 3.3% 2018F 3,493,141 4.1% 2,526,754 72.3% 387.03 279.96 4.5% CAAG 2.4% 4.7% Source: CBRE Hotels New supply Forecast to exceed historical highs All Tiers Achieving Record ADR Levels, continued further growth forecasted 2015 was likely peak occupancy for the short to mid-term, but lack of available sites should protect against dramatic declines Hotel Californian Opened September 2017 to be followed by rosewood miramar Future Additions in Huntington Beach and Ritz-Carlton rebranding 27

Summary Thoughts Operating at the Peak The fundamentals remain attractive across the vast majority of markets. industry growth will persist comfortably through 2018 and likely beyond. High occupancy levels will provide the leverage needed to achieve above-average ADR increases for the next two-three years. Hotel construction levels off. Scale of new supply in some markets retards performance. Above long run average occupancy leads to REVENUE GROWTH. Increasing labor costs will pressure performance but profits will continue to grow. Southern California continues to be one of the nation’s leading regional hotel markets!

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