US LODGING INDUSTRY OVERVIEW

Jan D. Freitag Vice President SMITH TRAVEL RESEARCH

Agenda
Total US Overview Scales and Major Markets Pipeline Projections

U.S. Lodging Industry - Key Statistics June 2008 YTD (Prelim) Hotels Room Supply Room Demand Occupancy A.D.R. RevPAR Room Revenue 49,672 4.5mm 2.7mm 61.5% $107.62 $66.15 $54.3B % Change 2.0% 2.2% - 0.4% - 2.6% 4.3% 1.6% 3.9%

Total United States

Room Supply/Demand Percent Change Twelve Month Moving Average 1989 to May 2008
6 4 2 0 -2 -4 -6
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

5.1%

4.0%

4.2% 1.8%

0.6%
Supply % Change Demand % Change

1.0%

- 4.8%

A Year Ago Fundamentals Were Worse

Total United States

Occupancy/ADR Percent Change Twelve Month Moving Average 1989 to May 2008
10 8 6 4 2 0 -2 -4 -6 -8
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 Occ % Chg ADR % Chg

6.8%

7.6% 5.4%

-0.7%

ADR Growth Is Slowing. But Not Dropping Rapidly

Total United States Room Rate Percent Change Jan 2003 May 2008
10

-5
2003 2004 20 05 2006 200 7 J F M AM

Summer Rate Growth Will Be Closely Watched

Total U.S. Occupancy and ADR Percent Change YTD through 7/5
May YTD 10% 5%
1.8% 4.5% 4.0% 3.0% 3.3% 0.6% 4.7% 5.4%

6/7

6/14

6/21

6/28

7/5

7/12

0%
-2.2% -2.0% -3.9% -3.4% -5.8%

-5% -10% -15%

-9.6%

Occupancy % Chg

ADR % Chg

July 4th Timing Helped and Hurt

Chain Scales and Major Markets

Chain Scales Supply/Demand Percent Change May 2008 YTD

10
5.8 5.0 3.6 1.9 2.2 2.2

3.3 1.7

3.3

0
-1.2

-5

Supply Demand

-2.6 -6.1

-10
Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy

Healthy Demand Growth, Except in Two Scales

Chain Scales Occupancy/ADR Percent Change May 2008 YTD

10

Occupancy ADR
5
3.2 3.2 3.3 4.5 5.0 2.4

0
-1.4 -1.5 -2.2 -3.5 -2.5 -3.3

-5
Luxury Upper Upscale Upscale Mid w F&B Mid wo F&B Economy

Rate Growth Around / Above Inflation Except for Economy Segment

Chain Scale
ADR Percent Change Twelve Month Moving Average January 2008 To May 2008

2008

0
Luxury Upper Upscale Upscale Mid With Mid W/O Economy

Upper End Scales See ADR Deteriorate But at a High Level

Key 15 Markets Occupancy Percent Change May 2008 YTD Year over Year
-8.2 -4.5 -4.4 -3.8 -3.2 -2.4 -2.2 -2.2 -2.0 -1.4 -1.0 0.1 0.4 1.4 1.5 1.8 1.9 Phoenix, AZ Philadelphia, PA-NJ Atlanta, GA Dallas, TX Chicago, IL Los Angeles-Long Beach, CA All Other Markets Total United States Top 25 Markets Washington, DC-MD-VA San Diego, CA New York, NY Orlando, FL Oahu Island, HI Boston, MA Miami-Hialeah, FL San Francisco/San Mateo, CA

-10

-8

-6

-4

-2

Coastal OCC Holds So Far

Key 15 Markets ADR Percent Change May 2008 YTD Year over Year
New York, NY Chicago, IL San Francisco/San Mateo, CA Phoenix, AZ Philadelphia, PA-NJ Boston, MA Los Angeles-Long Beach, CA Top 25 Markets Oahu Island, HI Total United States Dallas, TX San Diego, CA All Other Markets Washington, DC-MD-VA Orlando, FL Atlanta, GA Miami-Hialeah, FL 1.8 2.3 2.7 3.4 3.9 3.9 4.3 4.8 4.5 5.9 5.8 5.7 5.5 5.3 6.5 7.3 7.7

Strong Rate Growth Bodes Well for The Summer

Exchange Rate Impact on 2007 ADR % Change

ADR Atlanta, GA Boston, MA New York, NY Orlando, FL Washington, DC-MD-VA Los Angeles-Long Beach, CA Oahu Island, HI San Diego, CA San Francisco/San Mateo, CA $ % Change 12.7% 6.3% 10.6% -0.7% 3.7% 9.0% 7.4% 2.9% 5.7% Currency Euro Euro Euro Euro Euro Yen Yen Yen Yen % Change 3.4% -2.5% 1.4% -8.9% -4.8% 4.0% 2.5% -1.9% 0.8%

America Is On Sale!

U.S. Pipeline

Total United States Room Supply Percent Change Jan 2003 May 2008
3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5
2003 2004 2005 2006 2007 J F M AM

Summer Will See More Supply Increases

Total United States Active Development Pipeline (Thousands of Rooms) Change From Last Year Phase In Construction Final Planning Planning Active Pipeline Pre-Planning Total May 2008 206 106 359 672 159 831 May 2007 189 50 302 541 94 636 Difference + 17 + 56 + 57 + 131 + 64 + 195 % Change 9.3% 112.3% 19.0% 24.2% 67.9% 30.7%

U/C Rooms Off The High of Dec. 2007

Source: STR / TWR / Dodge Construction Pipeline

Total United States Rooms In Construction by Scale In Thousands May 2008 58.8 60

52.1 50 40 30 23.9 20 10 0 7.3 9.3 11.3 43.9

Luxury

Upper Upscale

Upscale

Mid w F&B

Mid w/o F&B

Economy

Unaffiliated

Development is in Growth Scales

Source: STR / TWR / Dodge Construction Pipeline

Markets with Highest Construction Activity May 2008

Market Las Vegas New York Orlando Phoenix Washington, DC Chicago LA-Long Beach, CA # Rooms 19,212 9,108 5,133 4,622 4,598 4,454 3,801 The Usual Suspects
Source: STR / TWR / Dodge Construction Pipeline

% of Existing Supply 12.5 10.9 4.5 8.5 4.8 4.3 4.1

Projections

Total United States Estimated Revenue and Profitability Years 1997 - 2007
160 50% 140

Revenue GOP

Income
133.4 122.7

139.4
45%

120

40.3%
100

40.2% 93.1

102.9 39.2%

112.1 40.9%

113.7 103.5 102.6 105.3 38.8% 37.1% 35.7% 35.0%

35%

41.3%

41.3%
40%

85.6
80

36.6%

60

40

20

17.0

20.9

22.1

22.5 16.2 14.2 12.8 16.7

22.6

26.6

28.0

30%

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

25%

Total U.S.
Hotel Rooms Sold vs. GDP Change Quarterly Change 1988 to Q1 2008
6 5 4 3 2 1 0 -1 -2
1989q1 1992q1 1995q1 1998q1 2001q1 2004q1 2007q1

GDP % Chg

Demand % Chg

6 4 2 0 -2 -4 -6 -8

Total U.S.
Supply/Demand Percent Change 2002 2009P
5 4 3 2 1 0.3 0 -1 1.6 1.0 0.4 -0.1 0.2 1.3 0.5
Supply % Chg Demand % Chg

4.0 2.8 2.4 1.4 1.2 2.4 1.9 1.8 1.0 1.3

20 07

20 04

20 05

20 03

20 06

20 02

20

Yr

Av er a

20 09

20 08

ge

Total U.S.
Occupancy Percent Change 2002 2009P

4 3 2 1 0.3 0 -1 -1.2 -2 2002 2003

3.6 2.9

0.4
20 Year Average: -0.1%

-0.2 -1.1 2009P

-1.4 2004 2005 2006 2007 2008P

Total US
Occupancy Percent 2002 2009P
70

63.1 61.4

63.3

63.2

62.3

61.6

60

59.0

59.2

50
2002 2003 2004 2005 2006 2007 2008P 2009P

Total U.S.
ADR Percent Change 2002 2009P 7.4 7 5.5 5
20 Year Average: 3.5%

5.9 4.4 4

4.2

1 0.1 -1 -1.5 -3 2002 2003 2004 2005 2006 2007 2008P 2009P

Total U.S.
RevPAR Percent Change 2002 2009P 10 7.9 8.5 7.5 5.7 5
20 Year Average: 3.4%

2.8

0.5 0

-2.7 -5 2002 2003 2004 2005 2006 2007 2008P 2009P

2008 Lodging Industry Takeaways

Accelerating Supply Growth Pipeline Attrition? Slowing Economy = Slower Demand Growth Top Markets may outperform Weak Dollar = U.S. Bargain Leisure feels greater impact than business? Revenue Management Discipline?