OWNER’S BRIEFING

Welcome to our new hotel leadership. We hope the following information will provide a clear picture of
our current situation and future expectations for the property.

CURRENT SITUATION

Our property, along with the other hotels in our competitive set, has experienced a steady performance
decline over the last two years. A soft economy, along with increased competition from other cities, has
combined to erode occupancy, average daily rate, and gross operating profit. Finance and credit have
been nearly impossible to obtain. It is clearly a ‘buyer’s market’, where both Individual and group clients
expect exceptional value at discounted prices.

The erosion over the last three years has been: (rounded)

Previous Year Last Year This Year

Occupancy 78% 62% 54%
ADR 180 € 170 € 160 €
GOP 31% 24% 17%

In the absence of available financing, and with dramatic decreases in profits from operations, area
hotels have been unable to fund refurbishment or capital investment projects, which would add the
value required to compete with neighboring market areas.

As is the case with other hotels these days, our lending bank closely observes our operations, requesting
both monthly reports and financial statements. While they recognize the area-wide revenue challenges,
they nonetheless remain critical of our operating cost structure.

FUTURE OUTLOOK

Fortunately, developments in key three areas - the economy, our market area, and our hotel - are all
indicating opportunities for better business performance this year.

The Economy:

Four of the key economic indicators are on the rise.

Retail Sales Job Growth Energy Equities

Positive Market Area Developments:

§ Last year’s government tax incentives have successfully attracted twelve companies to move
into the area this year.
§ The airport authority has announced increased regional jet services through contracts with one
new legacy carrier and one new discount airline.
§ The regional hospital will double in size and services this year.
§ Following last year’s successful funding vote, the new Civic and Conference Center will open in
June.
§ The Tourism Authority and Hotel Association have joined resources to triple the regional
promotional budget for leisure travelers.

Annual Plan:

Once you have completed a site visit to the property and read the information available about our
property and our market place, we would ask you to start your leadership year by estimating the
revenue for January. In doing so, please keep our annual ownership priorities in mind:

§ Achieve and maintain an above-fair-market room share and an ADR higher than our
competitors.
§ Generate an annual Gross Operating Profit in excess of 50%.
§ Generate a ROE in excess of 10%.