Good, Bad, or Ugly? Scott Hermes, CMP Starwood Hotels and Resorts The Group Segment in 2010 Good, Bad, or Ugly? Scott Hermes, CMP Starwood Hotels and Resorts

Reality Check We are dealing with some market certainties as conditions improve On a broad basis customer negotiating posture often lags changes in market trends You will likely have competitors slower to react to changing conditions than you Diverse ownership needs Cash, Occupancy, RevPAR index Some sales people always lead with price Strategic Sourcing is trying to commoditize our industry Easier to just quote a price than to sell the value Are we order takers or sales people?

Some Good News Corporate Meetings and Travel and are coming back! Association and SMERF blocks are coming in much stronger than last year New opportunities are on the upswing Group bookings are gaining momentum across the country each month Leads are up… but group size is down Booking windows continue to compress

What does the future hold? Will large meetings return? Preliminary indications are yes in some segments but it’s still early Insurance and Incentive programs appear to be coming back to life Some segments are starting to source larger meetings that had been put on hold Customer facing and User Group meetings Will demand outpace supply growth for meetings?

I believe the future is bright for San Diego Expect the Corporate Market to present short to mid term group opportunities Corporate has always enjoyed San Diego as a destination A resort location without some of the pure resort stigma Association and other segments will not be tempted by competitive market madness Supply/Demand balance will return to a normal level

Thank you