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HOTEL OPERATOR MARKET INFORMATION

Chicago O’Hare International Airport

www.flychicago.com

Table of Contents

INTRODUCTION 5

CHICAGO ECONOMIC OVERVIEW 9

O’HARE AIRPORT INFORMATION 15

Introduction

5

FULL SERVICE HOTEL (CORE)860 rooms (current)42,300 sf of conference and meeting space and ballroom

Post-renovation program TBD, will include leisure facilities, room service, upscale all-day dining outlets, and other amenities

FULL SERVICE HOTEL (T5)300-400 rooms25,000-65,000 sf of conference space, meeting space, and ballroom

Includes a spa, room service, upscale all-day dining outlets, and other amenities

Exact location TBD

6

Introduction

7

EXISTING HOTELThe Existing Hotel was developed in 1970. It is the only hotel on Airport-owned land. The Upper Up-scale hotel currently offers 860 rooms and approx-imately 44,000 square feet of meeting space. It is directly connected to Terminals 1, 2, and 3 by walk-way, and by the Airport Transit System (“ATS”) to Terminal 5. The Existing Hotel also features:

• All-day dining outlet• Variety of retail outlets• Marketplace café• Sports bar• In-room dining• Indoor pool• Fitness center• Business center• Connectivity to Chicago Transit Authority Blue

Line train to the Loop (Downtown)• huttle available for local travel and international

terminals• Close proximity to regional bus center with

access to Milwaukee, Springfield, Champaign-Ur-bana, etc.

The current lease agreement for the Existing Hotel expires on December 31, 2018, and the anticipated effective date for a new Management Agreement is January 1, 2019. Operations with the selected Op-erator will begin on this date, and CDA will conduct renovations to the Existing Hotel in phases to ensure a portion of the Existing Hotel remains operational at all times.

NEW HOTELCDA will develop the New Hotel near Terminal 5, with an anticipated construction start of 2019. The anticipated opening date of the New Hotel is 2022. The anticipated effective date for a new Manage-ment Agreement is January 1, 2019, the Technical Services Assistance would commence upon contract award. These dates are subject to change.

The City of Chicago Department of Aviation (“CDA”) is considering the renovation of an existing hotel (“Existing Hotel”) and development of a new hotel (“New Hotel”), both of which would be CDA-owned and privately managed, to further enhance the overall offering of accommodations at Chicago O’Hare International Airport (“ORD”, “O’Hare”, or the “Airport”) (together the “Hotels”).

Accordingly, CDA is issuing this Request for Proposals (“RFP”), to which hotel operators or teams (each a “Respondent”) can propose for consideration to become the selected hotel operator.

For more information, please refer to the Request for Proposals.

9

Chicago Economic Overview

10


CHICAGO ECONOMIC OVERVIEW From its earliest days, Chicago has held an integral position as a center of transportation, commerce, and communication. In the era of globalization, Chicago maintains this strategic position, sitting at the nexus of virtually every major data network in the world. While the city has become a center of professional and service-sector employment, its industrial and manufacturing sectors are still vibrant, bolstered by the largest intermodal-container capacity in the Western Hemisphere.

Key trends include:

• The number of new hires in the Midwestincreased by 127,000 year-over-year from 1.16M inFebruary 2015 to 1.29M in February 2016.

• The Chicago (city) economy added an estimated15,077 jobs year-over-year, led by increases inthe leisure & hospitality and education & healthsectors.

• Venture capital investment into Chicagocompanies increased by 81.8%, moving up from$97.6M in Q1 2015 to $177.5M in Q1 2016.

• The number of major expansions in the Chicagoarea increased by 11.7%, from 624 expansionsin 2014 to 697 in 2015. This significant increaseinfluenced Chicago’s ranking as “Top Metro” inthe United States for corporate investment for thethird consecutive year by Site Selection Magazine

The city generates a gross regional product (GRP) of over $575 billion annually, and is home to 400+ corporate headquarters. Chicago’s largest industries include manufacturing, printing and publishing, finance and insurance, and food processing. Beyond the corporate juggernauts and the Fortune 500, Chicago’s diverse and innovative economic ecosystem is also home to digital startups, bio and clean technology companies, as well as a robust population of institutions of higher education and healthcare providers.

10.9% New Hires-MidwestYOY Growth, Feb 2016

Venture Capital InvestmentMSA YOY Growth, Q1-2016

11.2%Patents Issued-CityYOY Growth, Match 2016

11.7% Major Business ExpansionsMSA YOY 2015

81.8%

“...Chicago has led the nation in corporate relocations. The capacity and connectivity facilitated by O'Hare have undoubtedly played a significant role in companies deciding to put down roots here. From transportation and technology to talent and transparency, businesses move to cities that invest in their own future and the future of their residents.”

Rahm Emanuel, 2016

11

Company Product/Service Headquarters Revenue(Millions)

Employees (Chicago)

Advocate Health Care Teaching Hospital & Trauma Center Yes $4,600 22,000

JPMorgan Chase & Co. Commercial Banking No $102,100 11,497

University of Chicago Higher Ed Yes $3,130 11,400

Presence Health Healthcare No $1,240 10,987

Northwestern University Higher Ed Yes $1,860 10,846

Walgreens Retail Convenience & Drug Stores Yes $76,390 9,484

NorthShore University HealthSystem Healthcare Yes $849 9,464

AT&T Marketing, Consulting & Accounting Services No $132,450 9,367

Abbott Industrial & Agricultural Chemical Products Yes $20,250 7,977

Allstate Automotive, Life, Renters & Homeowners Insurance Yes $35,240 7,866

United Airlines Commercial Airline Yes $38,900 7,691

Northwestern Memorial Hospital Healthcare Yes $1,710 7,586

AbbVie Pharmaceutical Manufacturing No $19,960 6,826

Health Care Service Corporation Healthcare Yes $19,670 6,660

Sears Holdings Corp. Retail Department Store Yes $31,200 6,427

Bank of America Commercial Banking No $95,180 6,170

Loyola University Health System Healthcare Yes $4.00 6,000

UPS Package Delivery Service No $58,230 6,000

Motorola Mobility Holdings, Inc. Smartphone and Telecom Manufacturing and Design Yes $13,060 5,915

Rush University Medical Center Healthcare Yes $2.40 5,759

University Of Chicago Medical Center Healthcare No $763.80 5,250

Employco Employment Placement Agencies Yes $45.00 5,000

Ford Motor Co., Chicago Assembly Plt. Automobile Manufacturing No $144,080 4,992

Northern Illinois University Higher Ed Yes $588 4,985

Loyola University Of Chicago Higher Ed Yes $540 4,893

CHICAGO’S TOP 25 EMPLOYERS

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107%Occupancy

129%Average Daily Rate

NATIONAL HOTEL MARKET OVERVIEW

ON-AIRPORT HOTEL PREMIUM OVER REST OF AIRPORT SUBMARKET

• Hotels are substantial amenity to airports in terms of convenience to travelers and elevating profile and positioning of airport.

• Airport authorities across U.S. have reinvigorated their push to develop hotels on airport land now following 5-6 years of growth in airport and suburban markets.

• Half of nation’s busiest airports feature a hotel on airport property today or have one in planning phases. Prominent examples include ATL, MSP, JFK, SFO, and now ORD.

• 519-room Westin Denver International Airport is most recent high-profile opening.

• In order to evaluate how the convenience of on-airport hotels translates to occupancy and rate, JLL analyzed the performance of on-airport hotels located at various major U.S. airports. A survey of primary airport markets with on-airport hotels shows that their proximity to an airport’s core facilities is directly correlated to a performance premium relative to their off-airport competitors.

• On-airport hotels in close proximity to terminals achieve on average a 138% premium in revenue per available room over rest of competitive airport market.

138%Revenue per Available Room

O’HARE HOTEL MARKET OVERVIEW

• Full service hotels in Chicago’s O’Hare and Rosemont hotel submarkets have posted 12% annual growthin revenue per available room since 2010, nearly double the national growth rate. The new supplypipeline is low by historic standards.

• O’Hare and Rosemont submarkets have seen only limited supply growth in recent years.

• Prior to opening of 158-room Hampton Inn & Suites Rosemont Chicago O’Hare in late 2015 andopening of 200-room Hyatt Place Chicago O’Hare Airport in mid-2016, the market had not seen anynew hotel openings since 2009.

• O’Hare and Rosemont hotel submarkets have seen nearly $390 million in hotel transaction volumesince 2013, evidencing investor interest.

• Chicago’s O’Hare International Airport is the world’s busiest in terms of aircraft operations.

• The 860-room Hilton O’Hare enjoys strong gross operating profit per room given its strategic locationand terminal connection.

13

0

2,000

4,000

6,000

8,000

10,000

12,000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Hote

l Roo

ms

O'Hare and Rosemont Submarket Hotel Room CountO’Hare and Rosemont Submarket Hotel Room Count

Ho

tel R

oo

ms

Source: STR Inc., JLL

O’HARE/ROSEMONT HOTEL SUBMARKET PERFORMANCE

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O’HARE HOTEL MARKET OVERVIEW (CONT’D)

The Hilton Chicago O’Hare International Airport is the average daily rate and occupancy leader in the airport market given its physical connection to the airport terminal. The Hotel competes with a set of full service, upper upscale branded hotels in the airport submarket, as outlined below. In addition, when it comes to group and day meetings business, the Hotel also has a secondary competitive set which is comprised of other prime airport terminal hotels across the country, such as the Westin Denver International Airport, the Grand Hyatt Dallas Fort Worth International Airport and the Westin Detroit International Airport. The proposed 350-room hotel will compete with the same competitive set.

The competitive set hotels have benefited from compound annual growth in revenue per available room (RevPAR) of over 7% since 2009. The set’s occupancy rate of above 73% is several percentage points higher than the national average occupancy rate, indicative of the strong demand fundamentals for well-located upper upscale airport hotels.

$120

70%

90%

$140

2009 2010 2011 2012 2013 2014 20152015 2016

YTD JUN YTD JUN

80%

100%

$110

60%$100

50%$80

40%$60

30%$40

20%

$2010%

$0 0%


MSAApprox. 825 hotels and 119,000 rooms

CBDApproximately 42,000 rooms

O’Hare54 hotels and 11,600 roomsADR RevPAR Occupancy

Source: STR Inc.

I 94

I 290US 12;US 45

I 190

IL 83

I 294

I 90

1.

2.

6.

7.

3.

4. 5.O’HARE

15

1.

5.

2.

6.

3.

7.

4.

O’HARE HOTEL MARKET COMPETITIVE SET

Hilton Chicago O’Hare Hyatt Regency Marriott Chicago

Marriott Chicago Suites Loews Chicago

Westin

Hilton Rosemont Chicago

Rooms: 860

Open Date: 1973

Meeting Space (sf) 42,300

Rooms: 256

Open Date: 1988


Rooms: 1,096

Open Date: 1971


Rooms: 556

Open Date: 2008


Rooms: 470

Open Date: 1984


Rooms: 300

Open Date: 1987


Rooms: 525

Open Date: 1984


17

Airport Information

18

Airport Information

FACTS AND FIGURES

Chicago O’Hare International Airport is one the world’s busiest airports. Located on over 7,200 acres within the City of Chicago, the Airport regularly serves a record number of passengers each year. In 2015, O’Hare was ranked #2 amongst all airports in the United States in total passenger volume (include both departing and arriving passengers), and ranked #2 in total aircraft movements (all aircraft landing and taking off).

Top 5 US Airports by Passenger Volume, 2015 (millions)*

ATL

101.5

78.9 74.764.1

56.8

ORD LAX DFW JFK

Top 5 US Airports by AircraftMovements, 2015 (thousands)*

ATL

882 875

681 656

541

ORD DFW LAX DEN

*Includes all enplaning (departing) and deplaning (arriving) passengers, and direct transit passengers counted once.†Includes all landing and taking-off of aircraft.Source: JLL; Airports Council International

This robust performance will continue to increase, serving both a growing Midwest region and a broader increase in air travel across the world. In 2015, O’Hare enplaned, or boarded, over 35 million passengers departing from the airport. Of these passengers, over 30 million traveled domestically, and roughly 5 million traveled internationally. Due to increasing global demand for air travel, as well as investments in airport infrastructure at O’Hare that will increase throughput capacity of aircraft and passengers, total enplanements will increase to over 50 million passengers by 2040, representing an average year-over-year growth rate of 1.8% beginning in 2016.

19

Total Enplanements, O’Hare, Forecast through 2040

Year

Tota

l Enp

lane

men

tsM

illio

ns

DOMESTIC ENPLANEMENTS

0

10

20

30

40

50

60

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

2039

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

204

0

INTERNATIONAL ENPLANEMENTS

Source: Federal Aviation Administration

20

Airport Information

CONCESSIONS

O’Hare’s robust retail offerings include familiar concessionaires, high profile, local and national restaurateurs, and a broad range of affordable and luxury goods to passengers. Our travelers expect the best from their experience at O’Hare, a philosophy CDA will carry through to the hospitality offerings described here.

O’Hare has one of the most robust concession programs in the United States. Amongst all major airports, O’Hare has the highest food and beverage sale per square foot, exceeding $2,700 in sales for every square foot of space of concession in the terminals. Similarly, O’Hare has the third-highest sales per square foot for specialty retail, news, and gifts, exceeding $2,000 in sales for every square foot of concession space in the terminals.

21

ABOUT THE DEPARTMENT OF AVIATION

The Chicago Department of Aviation (CDA) administers all aspects of two major airports – Chicago O’Hare and Midway International. The CDA is also charged with the management of the O’Hare Modernization Program (OMP), which will overhaul O’Hare’s intersecting runway system into a parallel runway configuration.

The CDA’s central purpose is to:

• Ensure safe and efficient travel through O’Hare and Midway International Airports;

• Successfully implement the O’Hare Modernization Program (OMP);

• Enhance economic activity and job creation of O’Hare and Midway International Airports;

• Manage airport tenant and concessions license agreements; ground transportation facilities; financial administration; research, planning and development activities; and

• Integrate airport-specific, sustainable planning and practices in design, construction, operations, maintenance and daily airport functions.

The CDA is self-supporting, using no local or state tax dollars for operations or capital improvements at O’Hare and Midway International Airports. Together Chicago’s airports generate more than $45 billion in annual economic activity and create 540,000 jobs for the region.

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