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US LODGING INDUSTRY OVERVIEW

US LODGING INDUSTRY OVERVIEW. Randy Smith SMITH TRAVEL RESEARCH. Industry Analysis. Total U.S. Monthly Room Supply – Actual and Seasonally Adjusted January 1989 to March 2006. 4.4 Million Rooms. 3.1 Million Rooms. CAGR 0.8%. CAGR 3.5%. CAGR – 2.07%.

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US LODGING INDUSTRY OVERVIEW

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  1. US LODGING INDUSTRY OVERVIEW Randy SmithSMITH TRAVEL RESEARCH

  2. Industry Analysis

  3. Total U.S.Monthly Room Supply – Actual and Seasonally AdjustedJanuary 1989 to March 2006 4.4 Million Rooms 3.1 Million Rooms CAGR 0.8% CAGR 3.5% CAGR – 2.07%

  4. Total U.S.Monthly Room Demand – Seasonally AdjustedJanuary 1989 to March 2006 6.1% Peak CAGR – 2.7% CAGR – 2.07%

  5. Total United StatesRoom Demand Percent ChangeJan 2002 – March 2006 35 Consecutive Months of Demand Growth

  6. Total United StatesRoom Supply/Demand Percent ChangeTwelve Month Moving Average – 1989 to March 2006 3.3% 0.3%

  7. Total United StatesOccupancy PercentTwelve Month Moving Average – 1989 to March 2006 64.9% Feb 06 63.5% 63.3% Feb 2001 Sep 95 & May 96 61.9 % December 1991 58.5% Aug 02 & May 03

  8. Total United StatesOccupancy/ADR Percent ChangeTwelve Month Moving Average – 1989 to March 2006 Divergence? 5.9% Divergence 3.0%

  9. Total United StatesRoom Demand / ADR Percent ChangeTwelve Month Moving Average – 1989 to March 2006 5.9% 3.3%

  10. Total United StatesAverage Daily RateTwelve Month Moving Average – 1989 to March 2006 $92.27 Mar 06 Peak CAGR – 4.4% $86.33 June 2001 $54.94 Jan 1989 Long Term CAGR – 3.1%

  11. Total United StatesRevPAR Percent ChangeTwelve Month Moving Average – 1989 to March 2006 6.5% Feb 01 6.5% 9.1% Feb 97 -2.6% Oct 91 -10.6% Jun 02

  12. Total U.S.Monthly Seasonally Adjusted Room RevenuesJanuary 1989 to February 2006 Peak CAGR – 7.1% Long-Term CAGR – 5.2%

  13. Total United StatesKey Performance Indicators Percent ChangeTwelve Months Ending March 2006

  14. Total United StatesKey Performance Indicators Percent ChangeMarch YTD

  15. Segment and Market Performance

  16. Chain ScalesSupply/Demand Percent ChangeMarch 2006 YTD

  17. Chain ScalesOccupancy/ADR Percent ChangeMarch 2006 YTD

  18. Luxury ChainsMonthly Room Supply – Actual and Seasonally AdjustedJanuary 1989 to February 2006 74,000 Rooms 43,000 Rooms CAGR – 3.8 %

  19. Luxury ChainsMonthly Room Demand – Seasonally AdjustedJanuary 1989 to February 2006 CAGR – 4.1%

  20. Luxury ChainsOccupancy/ADR Percent ChangeTwelve Month Moving Average – 1989 to February 2006 7.2% 3.7%

  21. Midscale With F&B ChainsRoom Supply – Actual and Seasonally AdjustedJanuary 1989 to February 2006 547,000 Rooms 641,000 Rooms CAGR – -0.8%

  22. Midscale With F&B ChainsRoom Demand – Seasonally AdjustedJanuary 1989 to February 2006 CAGR – -1.1%

  23. Economy ChainsRoom Supply – Actual and Seasonally AdjustedJanuary 1989 to February 2006 731,000 Rooms 459,000 Rooms CAGR – 3.0%

  24. Economy ChainsRoom Demand – Seasonally AdjustedJanuary 1989 to February 2006 CAGR – 2.4%

  25. Key 15 MarketsRoom Supply Percent ChangeTwelve Months Ending March 2006

  26. 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% • Timeshare Rooms: 1,463 1.5% • * Some projects have not yet reported room counts Source: STR Condotel Pipeline, part of the STR / TWR / Dodge Construction Pipeline

  27. Total United StatesDevelopment Pipeline – Rooms March 2006 Hotels vs. Hotel Rooms in Condotels For Reference: STR Supply Increase Forecast 2006: 54k rooms (1.2%) Source: STR / TWR / Dodge Construction Pipeline

  28. Total United StatesHotel Rooms vs. Condotel Rooms vs. All RoomsMarch 2006

  29. Total United StatesAll Rooms vs. Condotel RoomsMarch 2006

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

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

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

  33. Construction

  34. Total United StatesActive Development Pipeline - RoomsChange From Last Year Source: STR / TWR / Dodge Construction Pipeline

  35. Projections

  36. Total United StatesRooms Opened – In Thousands2000 – 2006P Slight Increase in Supply Still is No Threat Source: STR / TWR / Dodge Construction Pipeline

  37. Total United StatesSupply/Demand Percent Change2002 – 2006P

  38. Total United StatesOccupancy Percent Change2002 – 2006P

  39. Total United StatesOccupancy Percent2002 – 2006P

  40. Total United StatesADR Percent Change2002 – 2006P

  41. Total United StatesRevPAR Percent Change2002 – 2006P

  42. Issues

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

  44. 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

  45. 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

  46. 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

  47. 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

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

  49. 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

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