2. Mark Woodworth Senior Managing Director A CBRE COMPANY RESEARCH TRENDS

3. HOTEL SECTOR UPDATE – SEPTEMBER 28, 2015 Mark Woodworth Senior Managing Director PKF Hospitality Research, a CBRE Company The Very Good ……Will Continue

4. WHAT COULD DERAIL THE GOOD TIMES? Is the economy: Good? Okay? Bad? What about a year from today? Question:

5. WHAT COULD DERAIL THE GOOD TIMES? 4.Oil/Energy Price Increases 5. Over Building 1. The Economy 2.Asset Price Bubble 3.Unpredictable Demand Shock Okay, moving to better ??? Not on the horizon Mostly no, some yes. ? Lessons from History:

6. LEADING ECONOMIC INDICATORS August 2015 Looks good for at least another six months!

7. THE OUTLOOK FOR HOTEL INDUSTRY DRIVERS THAT ARE MOST IMPORTANT REMAINS FAVORABLE Source: BEA; Moody’s Analytics; PKF-HR, a CBRE Company; STR, Inc. 7

8. #2014IAC THE VERY GOOD…. 9/12/2014 WILL GET EVEN BETTER R. Mark Woodworth mark.woodworth@pkfc.com A Year Ago

9. 2014F2015F2016F2014F2015F2016F Supply 0.9%1.3%1.7%0.9%1.3%1.7% Demand4.5%2.2%1.6%4.5%2.2%1.6% Occupancy 64.4%64.9%64.4%64.9% ADR 4.5%5.7%5.9%4.5%5.7%5.9% RevPAR8.2%6.7%5.8%8.2%6.7%5.8% #2014IAC U.S. NATIONAL FORECAST 2014-2016 Source: PKF Hospitality Research – Hotel Horizons ® September –November 2014, STR, Inc. What We Said at The Del

10. TITLE TEXT 2014F2015F2016F Supply 0.9%1.3%1.7% Demand4.5%2.2%1.6% Occupancy 64.4%64.9% ADR 4.5%5.7%5.9% RevPAR8.2%6.7%5.8% 2014-2016 National Forecast – All U.S. Hotels Source: PKF Hospitality Research - Hotel Horizons ® September-November, 2014,2015, STR, Inc. Forecast Today What We Said at The Del

11. TITLE TEXT 2014F2015F2016F 20142015F2016F Supply 0.9%1.3%1.7% 0.8%1.1%1.8% Demand4.5%2.2%1.6% 4.4%3.3%2.2% Occupancy 64.4%64.9% 64.4% ADR 4.5%5.7%5.9% 4.5%5.0%5.9% RevPAR8.2%6.7%5.8% 8.2%7.2%6.3% 2014-2016 National Forecast – All U.S. Hotels Source: PKF Hospitality Research - Hotel Horizons ® September-November, 2014,2015, STR, Inc. Forecast Today What We Said at The Del

12. HAPPY THOUGHTS Lodging Industry is at a Record Occupancy Level 15 Cities are at a Record Occupancy Many by a Substantial Amount:

13. MORE HAPPY THOUGHTS Some Markets are Experiencing Significant New Hotel Construction (NYC, Austin, Houston). Most, however, are in balance. Limited New Supply, Along with Continued Demand Growth, will Lead to Even Greater Room Rate Increases in 2016 and 2017. Pricing Power will Remain with Hotels.

14. MORE HAPPY THOUGHTS Many Markets will Realize Big Price Increases for the Next Two Years.

15. MORE HAPPY THOUGHTS Luxury Hotels Set an All-Time High Occupancy Record of 75.0% in 2014. 2015 and 2016 will be even better! Room Rates Increases will Exceed the Long Run Average of 4.6% this Year and Next as a Result.

16. MORE HAPPY THOUGHTS Luxury Resorts are Forecast to Set an all-time High Occupancy of 71.3% this Year. 2016 and 2017 will be even better as new construction lags demand growth. Room Rate Increases will be well-above the Long Run Average of 2.9% this Year and Next as a Result.

17. TITLE TEXT Long Run Average 2012201320142015F2016F Supply 1.9% 0.4%0.7%0.8%1.1%1.8% Demand 2.0% 2.8%2.0%4.4%3.3%2.2% Occupancy 62.0% 61.4%62.2%64.4% ADR 3.0% 4.2%3.9%4.5%5.0%5.9% RevPAR 3.2% 6.6%5.2%8.2%7.2%6.3% 2014-2016 National Forecast – All U.S. Hotels Source: PKF Hospitality Research - Hotel Horizons ® September-November, 2015, STR, Inc. RevPAR driven by ADR Growth

18. TITLE TEXT Long Run Average 2012201320142015F2016F Supply 4.4% -0.3%-0.1%1.1%0.5%1.5% Demand 4.9% 2.8%1.8%2.0%1.2%1.7% Occupancy 70.0% 73.0%74.3% ADR 3.9% 4.5%5.4%5.3%5.6%6.7% RevPAR 4.6% 7.8%7.3%6.2%6.4%7.0% 2014-2016 National Forecast – All Luxury Hotels Source: PKF Hospitality Research - Hotel Horizons ® September-November, 2015, STR, Inc. Limited Supply Growth in the Near Term

19. TITLE TEXT Long Run Average 2012201320142015F2016F Supply 2.2% -0.2% 1.0%1.1%1.4% Demand 2.3% 1.4%1.3%4.9%3.0%2.4% Occupancy 66.6% 66.3%67.3%69.9% ADR 3.0% 4.8%4.9%3.2%4.6%6.8% RevPAR 3.3% 6.6%6.4%7.2%6.6%7.8% 2014-2016 National Forecast – All U.S. Resorts Source: PKF Hospitality Research - Hotel Horizons ® Custom Forecast September, 2015, STR, Inc. Large RevPAR Increases will be Sustained

20. A NEW DISRUPTOR?

21. AIRBNB AND OTHER SHORT-TERM RENTALS Google Trends – Search Data Source: Google Trends; PKF Hospitality Research, a CBRE Company

22. AIRBNB – U.S. Source: Insideairbnb.com (July 2015); PKF Hospitality Research, a CBRE Company Roughly 215,000 Units available in the U.S. (July 2015)

23. HOW MANY ARE COMPETITIVE WITH HOTELS? We Estimate 68% of Airbnb Units Are Competitive with U.S. Hotels 233,146 Competitive Rooms in the U.S. Source: Insideairbnb.com (July 2015); PKF Hospitality Research, a CBRE Company

24. INDUCED SUPPLY? Source: Insideairbnb.com (July 2015); PKF Hospitality Research, a CBRE Company, STR, Inc.

25. INCREASING THREAT FROM AIRBNB Competitive Airbnb Rooms as a Percent of Hotel Rooms Source: Insideairbnb.com (July 2015); PKF Hospitality Research, a CBRE Company, STR, Inc.

26. DESTINATION RESORTS AND AIRBNB Not Just Major Cities Source: Insideairbnb.com (July 2015); PKF Hospitality Research, a CBRE Company, STR, Inc.

27. WHERE IS THE MOST AIRBNB SUPPLY OCCURING? Source: PKF-HR, a CBRE Company; STR, Inc.; insideairbnb.com

28. WHAT RATES ARE AIRBNB PROPERTIES CHARGING?

29. WHERE IS THE MOST AIRBNB SUPPLY OCCURING? Hotels & Airbnb Source: Insideairbnb.com (July 2015); PKF Hospitality Research, a CBRE Company, STR, Inc. A Look at Miami Beach

30. 1.The fundamentals are solid across the vast majority of markets. 2.Elevated industry growth will persist comfortably through 2017 and likely beyond. 3.High occupancy levels will provide the leverage needed to achieve large real ADR increases for the next two-three years, particularly at Resorts and Luxury Hotels. Summary Thoughts: The Very Good……………Will Continue

31. 1.Competition for building materials and labor will continue to present challenges for developers in most markets. Below average hotel construction will be the result for the next three years. 2.Above long run average occupancy levels will lead to strong profit growth comfortably through 2017, enough to off-set increasing labor costs. 3.It is a great time to be in the hotel business! Summary Thoughts: The Very Good……………Will Continue

32. 32 Thanks for Your Time