1

InduSTRy Overview

Anaheim Hotel & Lodging Association

June 27, 2012

Brittany Baldwin Director of Business Development - Destinations

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Agenda : • Total U.S. Overview

• Anaheim Market

• Pipeline

• 2012 / 2013 Forecast

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www.hotelnewsnow.com Click on “Hotel Data Presentations”

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Total U.S. Review

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Supply / Demand Drive Results. Pricing Power is Back (?)

% Change

• Room Supply* 727 mm 0.3% • Room Demand* 430 mm 3.5% • Occupancy 59% 3.2% • ADR $104 4.2% • RevPAR $62 7.5% • Room Revenue* $45 bn 7.9%

YTD May 2012, Total U.S. Results * All Time High

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On An Annualized Basis: Most Rooms Sold - EVER

0.7

0.8

0.9

1.0

1989 1994 1999 2004 2009

Billi

ons

Total U.S. Number of Rooms Sold, 12 MMA, 1/89 – 12/11

7

YTD May 2012: Highest Demand - EVER

(430 Million Rooms Sold)

8

-8

-4

0

4

8

1990 2000 2010

Supply Demand

Demand Growth Expected To Revert To Mean. Supply Not An Issue

-6.9%

-0.9%

- 4.7%

Total US, Supply & Demand % Change, 12 MMA 1990 – 5/2012

8.0%

4.0%

9

-10

-5

0

5

1990 2000 2010

Demand ADR

ADR Changes More Erratic in Each Downturn

-6.9%

-4.7%

-0.9%

-4.6%

-0.2%

-8.7%

4.0%

Total US, ADR & Demand % Change, 12 MMA 1990 – 5/2012

10

ADR Discounting at Twice The Speed of ADR Increases

95

100

105

110

2008 2009 2010 2011

Total US, ADR $, 12 MMA 2007 - 2011

Apr ‘10 $97

Sept ‘08 $108

Dec ‘11 $102

+4.6%

-10%

19 Months

19 Months

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2000 2002 2004 2006 2008 2010 2012F

Nominal ADR

2000 / 2007 Grown by CPI

2000 ADR Grown By CPI

Total US, ADR $ and Inflation Adjusted ADR $, 2000 – 2013F 2000 – 2010 CPI from bls.gov, 2011 – 2013 CPI from Blue Chip Economic Indicators

$85

$101

$104

$85

$107 $109

$107

$117

2013F

Inflation Adjusted ADRs Well Out Of Reach

2007 ADR Grown By CPI

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U.S. Chain Scales

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• Luxury – Fairmont, Four Seasons, Ritz Carlton, JW Marriott

• Upper Upscale – Sheraton, Embassy Suites, Hyatt, Marriott

• Upscale – Radisson, Hilton Garden Inn, Residence Inn, Springhill Suites, Homewood Suites, Courtyard, Best Western Premier

• Upper Midscale – Fairfield Inn/Suites, Holiday Inn, Clarion, Hampton Inn/Suites, Best Western PLUS, Country Inn & Suites

• Midscale –, Best Western, Candlewood Suites, Quality Inn/Suites

• Economy – Extended Stay America, Red Roof, Days Inn, Microtel

2012 STR Chain Scales

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Scales: Strong Demand Growth, Supply Not An Issue

-0.9

0.2

1.5 1.8

0.6

-0.2

2.8 3.1

4.3

5.8

3.9

1.7

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Supply Demand

Supply / Demand % Change, by Scale, YTD May‘12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification

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Q1: Strong Beginning to 2012

3.7

2.9 2.8

3.9

3.3

2.0

4.9

4.0 4.3

3.8

3.2

4.3

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Occupancy ADR

OCC / ADR % Change, by Scale, Q1 ‘12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification

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Upper End Sells 7 out of 10 Rooms Every Night

72.5

70.5 69.6

65.6

59.0 57.0

72.1 70.1 70.3

62.2

54.3 53.9

Luxury Upper Upscale Upscale Upper Midscale* Midscale* Economy

2007 12 Months end 5/12

Absolute OCC %, by Scale, YE 2007 & 12 Months ending 5/12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification

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ADR Growth Is Strong – But Not Strong Enough (...yet)

$293

$159

$121

$94 $75

$54

$266

$150

$114 $95

$73 $51

Luxury Upper Upscale Upscale Upper Midscale* Midscale* Economy

2007 12 Months end 5/12

Absolute ADR $, by Scale, YE 2007 & 12 Months ending 5/12 Upper Mid / Midscale: Same Store Basis to Account for Best Western Reclassification

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U.S. Segmentation

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Transient Demand Breaks Records, But....

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12.5

15

17.5

20

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2011 2012

Transient Demand in Millions of Rooms; 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

Mill

ions

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… Transient ADR Still Lags 2007 Results

$140

$150

$160

$170

$180

$190

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2011 2012

Transient ADR $, 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

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5.3

4.6

6.4

5.4 5.9

5.1 5.0

3.7

4.7 4.3

4.6

3.7 3.8 3.4

4.0

5.5

4.2

Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12

*Transient ADR % by Month, 1/11 – 5/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

We Expect Transient ADR Growth To Continue

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Group Demand Has Not Changed Over Time, But…

4

6

8

10

12

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mill

ions

2007 2011 2012

Group Demand in Millions of Rooms, 2007, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

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… Group ADRs Still Depressed (& Could Dampen Future Absolute ADRs)

$130

$140

$150

$160

$170

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2008 2011 2012

Group ADR $, 2008, 2011, 2012 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

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2.6 2.4 2.4

0.3

3.7

2.0 2.0 1.7

3.0 2.7

3.7

-0.5

2.8 2.6

2.2

4.2

2.3

Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12

Group ADR % by Month, 1/11 – 4/12 Data is for upper tier hotels only (LUX & UU chains, & Upper Tier independents)

Group ADR Expectation Still Depressed

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Market Review

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Top 25 26 - 50 51 - 75 76 - 94

Top 94 Metro Markets By Size

Orlando, FL Chicago, IL Washington, DC-MD-VA New York, NY Los Angeles-Long Beach, CA Atlanta, GA Dallas, TX Houston, TX Phoenix, AZ San Diego, CA Anaheim-Santa Ana, CA San Francisco/San Mateo, CA Boston, MA Miami-Hialeah, FL Tampa-St Petersburg, FL Philadelphia, PA-NJ Detroit, MI Seattle, WA Denver, CO St Louis, MO-IL Norfolk-Virginia Beach, VA Minneapolis-St Paul, MN-WI New Orleans, LA Nashville, TN Oahu Island, HI

San Antonio, TX Riverside-San Bernardino, CA Baltimore, MD Kansas City, MO-KS Charlotte, NC-SC Indianapolis, IN Fort Worth-Arlington, TX Knoxville, TN Fort Lauderdale, FL Austin, TX San Jose-Santa Cruz, CA Myrtle Beach, SC Cincinnati, OH-KY-IN Jacksonville, FL Raleigh-Durham-Chapel Hill, NC Portland, OR Columbus, OH Sacramento, CA Oakland, CA Pittsburgh, PA Oklahoma City, OK Memphis, TN-AR-MS Richmond-Petersburg, VA Cleveland, OH Salt Lake City-Ogden, UT

Louisville, KY-IN Greensboro-Winston Salem, NC Newark, NJ Charleston, SC Albuquerque, NM Birmingham, AL Tucson, AZ Milwaukee, WI West Palm Beach-Boca Raton, FL Greenville-Spartanburg, SC Savannah, GA Tulsa, OK Maui Island, HI Long Island Daytona Beach, FL Harrisburg, PA Hawaii-Kauai Islands Omaha, NE Hartford, CT Buffalo, NY Scranton--Wilkes-Barre, PA Mobile, AL Little Rock, AR Fort Myers, FL Albany/Schenectady, NY

Columbia, SC Dayton-Springfield, OH Grand Rapids, MI Lexington, KY Des Moines, IA Colorado Springs, CO Jackson, MS Rochester, NY Macon/Warner Robbins, GA Bergen-Passaic, NJ Chattanooga, TN-GA Allentown-Reading, PA Florida Keys Augusta, GA-SC Madison, WI Melbourne-Titusville, FL Sarasota-Bradenton, FL Syracuse, NY

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-10

-5

0

5

10

2002 2007 2012

Top 25 26-50 51-75 76-94

Demand Performance Distinctly Different This Time

Metro markets by size, in 25 market increments, Demand % Change, 12 MMA 1990 – 5/2012

28

-12

-8

-4

0

4

8

12

2002 2007 2012

Top 25 26-50 51-75 76-94

ADR Swings in Top 25 Markets Most Erratic

Metro markets by size, in 25 market increments, ADR % Change, 12 MMA 1990 – 5/2012

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California Areas

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1.4

2.3

-0.3

1.0

2.3

0.1 0.4

-0.3

0.4 0.2 0.3 0.5

-0.3

0.1

-0.5

YTD 2010 YTD 2011 YTD 2012

Supply % Chng vs. LY May YTD 2010 – 2012

Supply Growth Muted Everywhere

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7.1

5.0

7.4 6.2

7.2

5.8 6.0 6.8

3.7

7.5

2.4 3.5

1.8

4.5 4.1

YTD 2010 YTD 2011 YTD 2012

Demand Growth on Par With Total U.S.

Demand % Chng vs. LY May YTD 2010 – 2012

32

5.7

2.6

7.7

5.1 4.9 5.7 5.6

7.1

3.2

7.2

2.1 3.0

2.1

4.4 4.7

YTD 2010 YTD 2011 YTD 2012

L.A. & San Diego Largest OCC Growth YTD

OCC % Chng vs. LY ; May YTD 2010 -2012

33

-5.1 -4.8

-2.5

-7.5

-1.7

4.7

2.7

12.8

4.2 6.1

4.3 3.1

10.1

3.9 4.3

YTD 2010 YTD 2011 YTD 2012

San Fran/Mateo Largest ADR Growth for YTD Again

ADR % Chng vs. LY ; May YTD 2010 -2012

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0.3

-2.3

5.0

-2.8

3.0

10.7

8.5

20.9

7.6

13.8

6.5 6.3

12.4

8.5 9.2

YTD 2010 YTD 2011 YTD 2012

RevPAR Growth Mixed of ADR & OCC …

RevPAR % Chng vs. LY; May YTD 2010 – 2012

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Anaheim/Santa Ana Market

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Anaheim/ Santa Ana Market:

Hotels 427 Rooms 53,761 STR Sample 80% Occupancy 69.6% 2.1% ADR $115.11 4.3% RevPAR $80.15 6.5% Room Revenue $650m 6.8%

YTD May 2012

37

-11

-8

-5

-2

1

4

7

10

2007 2008 2009 2010 2011 2012

Supply % Change

Demand % Change

Anaheim Demand Far Exceeding Supply

Anaheim/Santa Ana Market: Supply & Demand % Change; 12MMA 2007 - May 2012

38

-16

-13

-10

-7

-4

-1

2

5

8

11

2007 2008 2009 2010 2011 2012

OCC % Chg ADR % Chg

-10.6%

ADR Taking the Lead Back; Lagging Since 2009

Anaheim Market: OCC & ADR & Demand % Change; 12MMA 2007- May 2012

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Anaheim/Santa Ana By Class

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Definition of Class: …….an industry categorization which includes both chain-

affiliated and independent hotels. An independent hotel is assigned a class based on its

annual ADR, relative to that of the chain hotels in their geographic proximity.

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-0.1 -0.0

2.2

4.0

0.0

-0.4

6.3

3.2

6.2 6.0

1.5

-2.5

Luxury Upper Up Upscale Upper Mid Midscale Economy

Supply Demand

Upper End Leading in Demand Growth

Anaheim/Santa Ana: Class Segments Supply & Demand % Change, YTD May 2012

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6.4

3.3 4.0 4.0

1.5

-2.1

7.4

0.6

4.3

1.9

3.4

5.2

Luxury Upper Up Upscale Upper Mid Midscale Economy

OCC ADR

Anaheim/Santa Ana: Class Segments OCC & ADR % Change, YTD May 2011

Economy Class – Large Rate Growth

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Anaheim/Santa Ana

Segmentation & Weekday vs. Weekend

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Transient Demand Back...ADR Catching Up!

-25

-15

-5

5

15

25

2007 2008 2009 2010 2011 2012

Trans. Demand % Chg Trans. ADR % Chg

Anaheim Market: Transient Room Demand & ADR % Change By Month Jan. 2007 – May 2012

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Group ADR ????

-40

-20

0

20

40

60

2007 2008 2009 2010 2011 2012

Group Demand % Chg Group ADR % Chg

Anaheim Market: Group Room Demand & ADR % Change By Month Jan. 2007 – May 2012

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Weekday = Sunday – Thursday

Weekend = Friday & Saturday

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50

60

70

80

90

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2010 2011 2012

Weekday Occupancy: WAS Off To A Strong Start ….

Anaheim Market Weekday Occupancy by Month, Jan’07 – May’12

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Weekday ADR: May YOY Increase of $2.54 …..

Anaheim Mkt Weekday ADR by Month, Jan’07 – May’12

$95

$105

$115

$125

$135

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2010 2011 2012

$121.56

$114.17

$111.63

$105.38

49

50

60

70

80

90

100

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2008 2009 2010 2011

Weekend Occupancy: Demand is Back

Anaheim Mkt Weekend Occupancy by Month, Jan’07 – May’12

50

$90

$100

$110

$120

$130

$140

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 2010 2011 2012

$123.16

$114.01

$110.17

$104.31

Weekend ADR: May YOY Increase of $3.84 …..

Anaheim Mkt Weekend ADR by Month, Jan’07 – May’12

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Pipeline

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Pipeline Definitions:

In Construction: Ground broken or bids on general contractor being made

Final Planning: project out for bids, or construction to start

within 4 months Planning: An architect/engineer selected & plans are underway. (Initial approvals have usually been granted) Pre-Planning: No architect has been selected

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Rooms Pipeline Still Not An Issue in 2012

Phase May 2012 May 2011 Dec 2007

In Construction 60 50 211 “Planned Pipeline” 230 261 204

Active Pipeline 290 311 415

*Total US Pipeline, in ‘000s of rooms, by Phase by Year Planned Pipeline includes projects in Final Planning and Planning phases Source: STR / McGraw-Hill Construction Dodge

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Upscale / Upper Midscale Sees Activity

1.6

7.7

17.4 19.5

3.0 1.0

12.0

Luxury Upper Upscale Upscale Upper Midscale

Midscale Economy Unaffiliated

Rooms In Construction by Scale (‘000s), 5/12 Source: STR / McGraw-Hill Construction Dodge

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Anaheim/Santa Ana Active Development Pipeline

Phase Projects

Rooms

In Construction 2 186

Final Planning 6 901

Planning 5 853

Active Pipeline 13 1940

Pre-Planning 4 1620

Total 17 3560

As of May 2012

56

Anaheim New Room Supply = Independent Hotels

275

562

335

1,141

UpperUpscale

Upscale

UpperMidscale

Independent

Anaheim/Santa Ana Market – May 2012 Active Pipeline: planning/final planning/in-construction by chain scale *Chain scales not shown do not have projects in the active pipeline at this time.

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2012 / 2013 Forecast

58

Total United States Forecast 2012 / 2013 Key Performance Indicator % Change 2012

Forecast 2013

Forecast

Supply 0.5% 1.1%

Demand 2.0% 1.8%

Occupancy 1.5% 0.7%

ADR 4.0% 4.6%

RevPAR 5.5% 5.4%

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2012 Scale Forecast

Chain Scale Occupancy

(% chg) ADR

(% chg) RevPAR (%chg)

Luxury +2.6% +5.1% +7.9%

Upper Upscale +1.5% +4.2% +5.7%

Upscale +2.3% +4.6% +7.1%

Upper Midscale +1.4% +4.0% +5.5%

Midscale +2.8% +1.4% +4.3%

Economy +1.4% +3.1% +4.5%

Independent +0.5% +3.5% +4.0%

Total United States 1.5% 4.0% 5.5%

Key Performance Indicator Forecast, by Scale, 2012

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2012 Year End RevPAR Forecast (as of 3rd QTR 2011 forecast)

-5% to 0% 0% to 5% 5% to 10% 10% to 15%

Nashville St Louis

Los Angeles-Long Beach Miami-Hialeah

Philadelphia Detroit

Anaheim-Santa Ana Boston

Orlando Minneapolis-St Paul

Washington DC New Orleans

Atlanta San Diego

Norfolk-Virginia Beach Oahu Island

Tampa-St Petersburg

Seattle

Phoenix

Houston

Dallas

San Francisco-San Mateo

Chicago

New York

Denver

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Takeaways

Supply Muted Demand Back Pricing Power Slow to Improve Need Rate to Start Driving RevPAR Overall Positive Environment

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Brittany@STR.com