Hotel Association Report – Year 1 Quarter 1

SUPPLY

The slackening demand has led to the cancellation of a planned 4-star hotel development project. Comp set
has retrenched with smaller renovation plans and delayed expansions.

DEMAND

Demand is expected to level out after the first quarter decline, around 55%. Some lingering impact from
cancelled air service will be felt this quarter from leisure segment travelers unable to rebook flights at
affordable airfares.

Leisure

As predicted earlier, this segment slipped further behind Business demand in Q1. This trend is predicted to
mitigate in Quarter 2 due to the increase in drive market leisure within 300 miles of the city. Four star
properties appear to be receiving the most benefit from this years drive demand. Apparently the 4 star price
point appeals to those who saved on family airfares by driving. While normally they might have been
expected to use 3 star properties, due to the airfare savings, many drive customers are using the savings to
upgrade to higher rated hotel than they would normally use especially with the lower room rates now
available.

Business

Demand is predicted to dip 10-15% year-on-year through Q2.

Corporate

Demand is expected increase lightly regarding last year thanks to new company headoffices in the area.

Tour

Anecdotal evidence suggests a slight increase in tour bookings.

Large Group

A slight increase in regional “drive-in” bookings is being realized, perhaps offsetting the decrease in fly-in
bookings.

Small Group

Demand appears to be swelling as gatherings take advantage of the Spring Break period.

Booking Pace
Reports vary. It appears that pace has remained equal for hotels which have lifted their value proposition
but it has decreased compared to last year for those which have not.