Hotel Industry Overview 2019 Lodging Conference Vail Ross Senior VP, Global Business Development & Marketing vross@str.com @vail_STR

Agenda Total U.S. Review Class & Customer Segmentation Review Pipeline Outlook Forecast

Data Dashboard>View All Data Presentations No Need To Take Notes Download This Presentation www.hotelnewsnow.com Data Dashboard>View All Data Presentations

Total U.S. Review

Longest RevPAR Upcycle (with two small interruptions) 111 Months (out of 112) 112 Months (out of 114) 56 Months Simple look at RevPAR growth over the past 29 years. Longest RevPAR upcycle 111 out of 113. Two months we saw interruptions…Sept. 2018 and June 2019. Month of June RevPAR growth was down -0.4%. There was an extra Sunday in June which played a role in this decline. Extra Wednesday in July...positive impact Total U.S., RevPAR % Change by month, 1/1990 – 08/2019

Little (or no growth) Story Continues LIIC ALIS 2014 Little (or no growth) Story Continues Actual % Change Room Supply 2.0% p Room Demand 2.1% Occupancy 67.6% 0.1% ADR $132 1.1% RevPAR $90 1.2% Total U.S. Results, August YTD 2019

Demand and Supply growth in sync 2.0% Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 8/2019

ADR growth positive however slowing 1.4% -0.0% Total U.S., ADR & OCC % Change, 12 MMA 1/1990 – 8/2019

Real ADR Growth (ADR% minus CPI%) Negative For Four Qtrs 12MMA July 2019 1.5% growth…take into account inflation adjusted, ADR growth is negative. Likely not going to be a different picture in 3 Quarter Total U.S., Real ADR % Change (ADR minus CPI), by quarter, Q1/1990 – Q2/2019

18 of the top 25 markets have Occ declines… Street corner business. Taking a look at the top 25 markets YTD Aug 2019, 72% (18 markets) of the top 25 markets now have negative occupancy growth from YTD Aug 2018. Some of these markets are lagging due to YoY comps, some impacted by large events such as Super Bowl, or for Nashville for example the NFL draft, and others absorbing new supply into the market place. Occupancy % Change, August 2019 YTD

… Of those, 5 also have ADR declines Occupancy & ADR % Change, August 2019 YTD

Top 25 Market Performance: Despite High Occupancies a Very Mixed Bag RevPAR % Change Influenced By Atlanta, GA 71.3 65.6 Super Bowl LIII Phoenix, AZ 72.1 4.9 0.6% Supply Growth San Francisco/San Mateo, CA 82.5 4.4 Groups Return Full Force Denver, CO 76 3.9 8.3% Demand Growth Nashville, TN 74.5 3.6 NFL Draft +Bachelorettes   Seattle, WA 75.5 -5.4 6.6% Supply Growth Houston, TX 64.2 -5.0 Hurricane Comp & 4% Supply Growth New York, NY 84.9 -3.6 Surprisingly Weak Minneapolis/St Paul, MN-WI 68.7 -3.1 Superbowl LII Orlando, FL 78.1 -2.3 -4.1% Group OCC Decline RevPAR % Change & absolute OCC in Top 25 Markets: 5 Leading / 5 Lagging Performing RevPAR % Markets, YTD August 2019

STR monitoring the Number of Submarkets with Negative RevPAR % U.S. Tipping Point 43.5% YTD ‘18 YTD ‘19 Submarkets with Negative RevPAR % Change out of all 649 Submarkets, by year 1991 – 2018, YTD 2018/2019

Class and Customer Segmentation

All RevPAR growth coming from ADR…except Economy RevPAR % Change by Contribution of OCC / ADR % Change, by Class, Aug YTD 2019

Still somewhat high actual occupancy levels OCC %, by Class, Aug YTD 2019 & 2018

Transient Segment – Rooms reserved at rack rate, corporate negotiated, package, government rate or rooms booked via third party websites. Group Segment – Rooms sold simultaneously in blocks of 10 or more.

Gap between Group and Transient has continued 16.5 28.4 32.6 Group and Transient Mix, 12 MMA January 2005 – August 2019 (Luxury and Upper Upscale Class only)

Demand Growth positive however slowing Add Feb 2018 Group: Demand and ADR % Change, Luxury and Upper Upscale Classes, 12 MMA, 1/2016 – 8/2019 (Luxury and Upper Upscale Class only)

ADR growth falling with Demand is steady Transient: Demand and ADR % Change, Luxury and Upper Upscale Classes, 12 MMA, 1/2016 – 8/2019 (Luxury and Upper Upscale Class only)

Top 10 Destinations For Future Meetings STR 2019 DestinationMAP: % of meetings planners who plan to use destination for a meeting in the next two years

Pipeline

Under Construction Rooms Increase. Only 4K off from 2007/2008 Peak Phase 2019 2018 % Change In Construction 207 188 10.4% Final Planning 238 215 10.6% Planning 216 203 5.9% Under Contract 661 607 9.0% Attrition rates: In construction: 96% Final Planning: 76% Planning: 65% Total U.S. Pipeline, by Phase, ‘000s Rooms, August 2019 and 2018

Select Service Construction Is The Name Of The Game 70% U.S. Pipeline, Rooms In Construction , ‘000s Rooms, by Scale, August 2019

In Construction Rooms Are Dominated By Two Players: Hilton & Marriott U.S. Pipeline, Rooms In Construction, Share of HLT & MAR of total, Q2 2019

Large Markets Grow Rapidly Rooms In Construction % Of Existing Nashville, TN 5,572 12% New York, NY 14,437 11% Minneapolis/St Paul, MN-WI 3,482 8% Tampa/St Petersburg, FL 3,137 7% Boston, MA 3,826 6% Dallas, TX 5,913 Los Angeles/Long Beach, CA 6,130 Philadelphia, PA-NJ 2,866 Phoenix, AZ 3,964 Orlando, FL 7,099 Las Vegas has 9,139 = >5% of existing supply U.S. Pipeline, Rooms In Construction and as % of Existing Supply, Largest % In Top 26 Markets, Aug 2019

2019 / 2020 Forecast

Other Operated Departments Miscellaneous Income saw biggest gain in 2018 Rooms +2.4% Other F&B +3.9% Miscellaneous Income +11.3% Total Revenue +2.9% Other Operated Departments +5.2% Food +2.4% Beverage +3.2% Beverage +3.2% So with Pricing power slowing down, Compression nights slowing down Other department revenue gains that feed into overall profitability are becoming more and more important. Total Revenues were up 2.9% based on our 2019 HOST Almanac Miscellaneous Income had the largest revenue increase at 11.3% - the highest we’ve seen. This item is made up of largely fee-based revenues including cancellation fees and resort fees From an expense stand point… Labor costs increased 4.0% in 2018, up again to higher levels as seen in 2015 and 2016. Also much higher than revenue growth – the 3rd consecutive year labor growth outpaced revenue growth While hotel profits continue to grow in most cases, profit margins have somewhat declined for the third year in a row. Total U.S. Revenue Variance, 2018 vs. 2017 Source: 2019 HOST Almanac

Outlook Metric 2019 Forecast 2020 Supply 1.9% Demand 2.1% 1.6% Occupancy 0.2% -0.3% ADR 1.4% RevPAR 1.1% Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2019F – 2020F

2019 Year End RevPAR Forecast Top North American Markets, August 2019 Forecast (Markets sorted alphabetically) - 3% to 1% 1% to 3% 3% to 6% Chicago, IL Anaheim/Santa Ana, CA Atlanta, GA Dallas, TX Boston, MA Montreal, QC Detroit, MI Denver, CO Nashville, TN Houston, TX Los Angeles/Long Beach, CA San Francisco/ San Mateo, CA Miami/Hialeah, FL Norfolk/Virginia Beach, VA Tampa/St Petersburg, FL Minneapolis/St Paul MN-WI Phoenix, AZ Vancouver, BC New Orleans, LA St Louis, MO-IL New York, NY Toronto, ON Oahu Island, HI Orlando, FL Philadelphia, PA-NJ San Diego, CA Seattle, WA Washington, DC-MD-VA Note: RevPAR Growth forecast estimates are in local currency

2020 Year End RevPAR Forecast Top North American Markets, August 2019 Forecast (Markets sorted alphabetically) - 3% to 1% 1% to 3% 3% to 6% Atlanta, GA Anaheim/Santa Ana, CA Miami/Hialeah, FL New York, NY Boston, MA Montreal, QC Philadelphia, PA-NJ Chicago, IL San Francisco/ San Mateo, CA Tampa/St Petersburg, FL Dallas, TX Vancouver, BC Denver, CO Detroit, MI Houston, TX Los Angeles/Long Beach, CA Minneapolis/St Paul MN-WI Nashville, TN New Orleans, LA Norfolk/Virginia Beach, VA Oahu Island, HI Orlando, FL Phoenix, AZ San Diego, CA Seattle, WA St Louis, MO-IL Washington, DC-MD-VA Toronto, ON Note: RevPAR Growth forecast estimates are in local currency

Slower Profitability Growth Threats looming on the horizon Slower Profitability Growth Anemic ADR Growth Low Unemployment Overall Economy This leads me to one of the threats looming on the horizon. Slower (and potential lower) profitability growth With Anemic ADR growth. What impact that has on the bottom line, as well. Lodging is the largest employer of the travel sector. - Low unemployment levels in most markets, particularly the top 25 largest metropolitan areas have been driving these costs upward at a much greater pace than the overall rate of inflation. - Finding and keep quality staff is becoming more and more difficult 3rd largest oversee travel market to the U.S. With their currency instabilities making the dollar strong…expensive to come to the U.S. This trade war is evolving into a financial and currency war. What impact will both of these have on cost of goods and travel.

SVP, Global Business Development & Marketing Vail Ross SVP, Global Business Development & Marketing vross@str.com @vross_STR www.linkedin.com/in/vailross