US LODGING INDUSTRY OVERVIEW Randy Smith SMITH TRAVEL

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US LODGING INDUSTRY OVERVIEW Randy Smith SMITH TRAVEL RESEARCH

US LODGING INDUSTRY OVERVIEW Randy Smith SMITH TRAVEL RESEARCH

Total U. S. Monthly Room Supply – Actual and Seasonally Adjusted January 1989 to

Total U. S. Monthly Room Supply – Actual and Seasonally Adjusted January 1989 to March 2006 4. 4 Million Rooms CAGR 0. 8% 3. 1 Million Rooms CAGR 3. 5% CAGR – 2. 07%

Total U. S. Monthly Room Demand – Seasonally Adjusted January 1989 to March 2006

Total U. S. Monthly Room Demand – Seasonally Adjusted January 1989 to March 2006 6. 1% Peak CAGR – 2. 7% CAGR – 2. 07%

Total United States Room Demand Percent Change Jan 2002 – March 2006 35 Consecutive

Total United States Room Demand Percent Change Jan 2002 – March 2006 35 Consecutive Months of Demand Growth

Total United States Room Supply/Demand Percent Change Twelve Month Moving Average – 1989 to

Total United States Room Supply/Demand Percent Change Twelve Month Moving Average – 1989 to March 2006 3. 3% 0. 3%

Total United States Occupancy Percent Twelve Month Moving Average – 1989 to March 2006

Total United States Occupancy Percent Twelve Month Moving Average – 1989 to March 2006 64. 9% Sep 95 & May 96 63. 3% Feb 2001 61. 9 % December 1991 58. 5% Aug 02 & May 03 Feb 06 63. 5%

Total United States Occupancy/ADR Percent Change Twelve Month Moving Average – 1989 to March

Total United States Occupancy/ADR Percent Change Twelve Month Moving Average – 1989 to March 2006 Divergence? Divergence 5. 9% 3. 0%

Total United States Room Demand / ADR Percent Change Twelve Month Moving Average –

Total United States Room Demand / ADR Percent Change Twelve Month Moving Average – 1989 to March 2006 5. 9% 3. 3%

Total United States Average Daily Rate Twelve Month Moving Average – 1989 to March

Total United States Average Daily Rate Twelve Month Moving Average – 1989 to March 2006 Peak CAGR – 4. 4% $86. 33 $92. 27 Mar 06 June 2001 $54. 94 Jan 1989 Long Term CAGR – 3. 1%

Total United States Rev. PAR Percent Change Twelve Month Moving Average – 1989 to

Total United States Rev. PAR Percent Change Twelve Month Moving Average – 1989 to March 2006 6. 5% Feb 01 Feb 97 -2. 6% Oct 91 -10. 6% Jun 02 9. 1%

Total U. S. Monthly Seasonally Adjusted Room Revenues January 1989 to February 2006 Peak

Total U. S. Monthly Seasonally Adjusted Room Revenues January 1989 to February 2006 Peak CAGR – 7. 1% Long-Term CAGR – 5. 2%

Total United States Key Performance Indicators Percent Change Twelve Months Ending March 2006

Total United States Key Performance Indicators Percent Change Twelve Months Ending March 2006

Total United States Key Performance Indicators Percent Change March YTD

Total United States Key Performance Indicators Percent Change March YTD

Chain Scales Supply/Demand Percent Change March 2006 YTD

Chain Scales Supply/Demand Percent Change March 2006 YTD

Chain Scales Occupancy/ADR Percent Change March 2006 YTD

Chain Scales Occupancy/ADR Percent Change March 2006 YTD

Luxury Chains Monthly Room Supply – Actual and Seasonally Adjusted January 1989 to February

Luxury Chains Monthly Room Supply – Actual and Seasonally Adjusted January 1989 to February 2006 74, 000 Rooms 43, 000 Rooms CAGR – 3. 8 %

Luxury Chains Monthly Room Demand – Seasonally Adjusted January 1989 to February 2006 CAGR

Luxury Chains Monthly Room Demand – Seasonally Adjusted January 1989 to February 2006 CAGR – 4. 1%

Luxury Chains Occupancy/ADR Percent Change Twelve Month Moving Average – 1989 to February 2006

Luxury Chains Occupancy/ADR Percent Change Twelve Month Moving Average – 1989 to February 2006 7. 2% 3. 7%

Midscale With F&B Chains Room Supply – Actual and Seasonally Adjusted January 1989 to

Midscale With F&B Chains Room Supply – Actual and Seasonally Adjusted January 1989 to February 2006 547, 000 Rooms 641, 000 Rooms CAGR – -0. 8%

Midscale With F&B Chains Room Demand – Seasonally Adjusted January 1989 to February 2006

Midscale With F&B Chains Room Demand – Seasonally Adjusted January 1989 to February 2006 CAGR – -1. 1%

Economy Chains Room Supply – Actual and Seasonally Adjusted January 1989 to February 2006

Economy Chains Room Supply – Actual and Seasonally Adjusted January 1989 to February 2006 731, 000 Rooms 459, 000 Rooms CAGR – 3. 0%

Economy Chains Room Demand – Seasonally Adjusted January 1989 to February 2006 CAGR –

Economy Chains Room Demand – Seasonally Adjusted January 1989 to February 2006 CAGR – 2. 4%

Key 15 Markets Room Supply Percent Change Twelve Months Ending March 2006

Key 15 Markets Room Supply Percent Change Twelve Months Ending March 2006

Total U. S. Summary of Condotel Pipeline – March 2006 • 232 Projects with

Total U. S. Summary of Condotel Pipeline – March 2006 • 232 Projects with a total of 98, 237 reported* rooms Rooms are broken out as follows ( % of total): • Hotel Rooms: 33, 270 33. 9% • Condo Hotel Rooms: 49, 068 49. 9% Total Affecting Nightly Room Supply: 82, 338 83. 8% • Non-rental Residences: 14, 436 14. 7% 1, 463 1. 5% • Timeshare Rooms: * Some projects have not yet reported room counts Source: STR Condotel Pipeline, part of the STR / TWR / Dodge Construction Pipeline

Total United States Development Pipeline – Rooms March 2006 Hotels vs. Hotel Rooms in

Total United States Development Pipeline – Rooms March 2006 Hotels vs. Hotel Rooms in Condotels Phase Hotel Rooms in Condo Hotels In Construction 111, 456 10, 267 9. 2% Final Planning 17, 741 1, 533 8. 6% Planning 208, 377 14, 020 6. 7% Active Pipeline 337, 574 25, 820 7. 6% Pre-Planning 63, 219 7, 450 11. 8% Total 400, 793 33, 270 8. 3% % For Reference: STR Supply Increase Forecast 2006: 54 k rooms (1. 2%) Source: STR / TWR / Dodge Construction Pipeline

Total United States Hotel Rooms vs. Condotel Rooms vs. All Rooms March 2006 Phase

Total United States Hotel Rooms vs. Condotel Rooms vs. All Rooms March 2006 Phase Hotel Rooms in Pipeline Condo Rooms in Pipeline Total Potential Hotel Pipeline In Construction 111, 456 15, 626 127, 082 Final Planning 17, 741 4, 409 22, 150 Planning 208, 377 17, 904 226, 281 In Pre. Planning 63, 219 11, 129 74, 348 Total Development 400, 793 49, 068 449, 861

Total United States All Rooms vs. Condotel Rooms March 2006 Phase Total Potential Pipeline

Total United States All Rooms vs. Condotel Rooms March 2006 Phase Total Potential Pipeline Total Condotel Pipeline Ratio: Condo vs Total In Construction 127, 082 28, 691 23% Final Planning 22, 150 8, 040 36% Planning 226, 281 41, 643 18% In Pre. Planning 74, 348 19, 863 27% Total Development 449, 861 98, 237 22%

Annual Occupancy 2003 - 2005 Total US vs. Condo Hotels vs. Destination Resorts %

Annual Occupancy 2003 - 2005 Total US vs. Condo Hotels vs. Destination Resorts %

Annual ADR 2003 - 2005 Total US vs. Condo Hotels vs. Destination Resorts $

Annual ADR 2003 - 2005 Total US vs. Condo Hotels vs. Destination Resorts $

Annual ADR Percent Change 2002 - 2005 Total US vs. Condo Hotels vs. Destination

Annual ADR Percent Change 2002 - 2005 Total US vs. Condo Hotels vs. Destination Resorts %

Total United States Active Development Pipeline - Rooms Change From Last Year Phase March

Total United States Active Development Pipeline - Rooms Change From Last Year Phase March 2006 Mach 2005 Difference In Construction 111, 456 99, 526 11, 930 12. 0% Final Planning 17, 741 14, 928 2, 813 18. 8% Planning 208, 377 173, 048 35, 329 20. 4% Active Pipeline 337, 574 287, 502 50, 072 17. 4% Pre-Planning 63, 219 83, 178 (19, 959) -24. 0% Total 400, 793 370, 680 30, 113 -7% Source: STR / TWR / Dodge Construction Pipeline % Change

Total United States Rooms Opened – In Thousands 2000 – 2006 P Slight Increase

Total United States Rooms Opened – In Thousands 2000 – 2006 P Slight Increase in Supply Still is No Threat Source: STR / TWR / Dodge Construction Pipeline

Total United States Supply/Demand Percent Change 2002 – 2006 P

Total United States Supply/Demand Percent Change 2002 – 2006 P

Total United States Occupancy Percent Change 2002 – 2006 P

Total United States Occupancy Percent Change 2002 – 2006 P

Total United States Occupancy Percent 2002 – 2006 P

Total United States Occupancy Percent 2002 – 2006 P

Total United States ADR Percent Change 2002 – 2006 P

Total United States ADR Percent Change 2002 – 2006 P

Total United States Rev. PAR Percent Change 2002 – 2006 P

Total United States Rev. PAR Percent Change 2002 – 2006 P

Lodging Industry Issues Construction Costs Interest Rates Steel, Concrete, Lumber - Availability Land (Competition

Lodging Industry Issues Construction Costs Interest Rates Steel, Concrete, Lumber - Availability Land (Competition for Sites) Hurricanes IMPACT – Cap on Supply Growth Source: STR

Lodging Industry Issues Rising Operating Costs Energy - Natural Gas, Electricity Insurance – Health

Lodging Industry Issues Rising Operating Costs Energy - Natural Gas, Electricity Insurance – Health Care, Property, Liability Labor - Visa caps, union contracts, aging work force IMPACT – Higher operating costs Source: STR

Lodging Industry Issues Amenity Creep “Bed Wars” HDTV, Flat Screens, Plasma, In-Room Entertainment Internet

Lodging Industry Issues Amenity Creep “Bed Wars” HDTV, Flat Screens, Plasma, In-Room Entertainment Internet Access (Land Based, Wi-Fi) Office Away from the Office Custom/Branded Amenities Changing Ownership/Flag IMPACT – Higher operating/capital expense Source: STR

Lodging Industry Issues Demand Leakage – Particularly in Specific Markets Condo Hotels Cruise Ships

Lodging Industry Issues Demand Leakage – Particularly in Specific Markets Condo Hotels Cruise Ships Timeshare Friends and Relatives Associated with Experience Travel – Dude Ranches, Fishing Camps IMPACT – Slower Revenue Growth Source: STR

Lodging Industry Issues Transportation Problems Airlines – Consolidation, Losses, Inconvenience, Crowds Fuel Costs –

Lodging Industry Issues Transportation Problems Airlines – Consolidation, Losses, Inconvenience, Crowds Fuel Costs – High Gasoline Costs Infrastructure – Highway Construction, Traffic Jams IMPACT – Inhibit demand Source: STR

Lodging Industry Issues Global Issues Terrorism Bird Flu (other outbreaks) Natural Disasters Currency Fluctuations

Lodging Industry Issues Global Issues Terrorism Bird Flu (other outbreaks) Natural Disasters Currency Fluctuations Domestic Unrest Wars IMPACT - Varies Source: STR

Lodging Industry Issues Supply/Demand/Pricing Supply Growth Remains Benign – Condo Hotels Solid Demand Growth

Lodging Industry Issues Supply/Demand/Pricing Supply Growth Remains Benign – Condo Hotels Solid Demand Growth – Degrees of Good, Some Not So Good Changing Demand – Experience Travel, Baby Boomers Occupancy Growth Slows – Varies Widely by Market Aggressive Pricing – Could Double CPI, Control Internet Higher Industry Profits – More Difficult for each Property IMPACT – Higher Revenues Source: STR

Market props rooms Rev. PAR % Chg Louisiana South 275 24445 48. 6% Seattle,

Market props rooms Rev. PAR % Chg Louisiana South 275 24445 48. 6% Seattle, WA 333 37357 13. 4% Jackson, MS 103 8890 38. 0% Maui Island, HI 107 15361 13. 2% Houston, TX 582 60598 28. 1% Fort Lauderdale, FL 294 28640 13. 1% Mississippi 416 35061 24. 0% Phoenix, AZ 389 53745 13. 0% Louisiana North 183 16671 22. 9% Memphis, TN-AR-MS 214 20423 12. 5% Oahu Island, HI 96 29807 21. 7% Denver, CO 274 37663 12. 5% Mobile, AL 94 8320 21. 5% Salt Lake City-Ogden, UT 160 19400 12. 4% Austin, TX 223 25361 20. 3% Little Rock, AR 119 10583 12. 4% Augusta, GA-SC 104 8043 19. 6% Birmingham, AL 143 14774 12. 0% California North Central 263 16303 18. 4% Arizona Area 455 28873 11. 8% Fort Worth-Arlington, TX 243 24798 18. 2% San Diego, CA 447 53309 11. 7% Anaheim-Santa Ana, CA 426 52308 17. 0% Utah Area 366 21833 11. 7% Texas East 851 55476 16. 9% Los Angeles-Long Beach, CA 978 95751 11. 6% Miami-Hialeah, FL 354 45784 16. 5% New Orleans, LA 174 27799 11. 3% Charlotte, NC-SC 276 30101 16. 4% Tulsa, OK 127 12224 16. 1% Albany/Schenectady, NY 128 10825 0. 9% New York, NY 382 79646 15. 7% Savannah, GA 126 11723 0. 8% Atlanta, GA 745 91979 14. 7% Hartford, CT 116 11824 0. 8% San Antonio, TX 304 33350 14. 4% Nevada (Exc Las Vegas) 291 35407 0. 6% San Jose-Santa Cruz, CA 312 29490 14. 3% Alaska 221 16061 0. 0% Greenville-Spartanburg, SC 160 14545 14. 3% Maine 365 21007 -0. 7% Dallas, TX 558 70556 14. 2% Vermont 293 16850 -2. 0% Wyoming 344 20081 14. 0% Georgia South 475 32729 -2. 2% Tucson, AZ 136 15216 13. 5% Rhode Island 111 9166 -2. 9% Portland, OR 252 24294 13. 4% Scranton--Wilkes-Barre, PA 151 12142 -7. 2%