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1

H2-Hotel

Development

Situation Overview

by Market Segments

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Situation Overview by Market Segments

1. HRIs Segmentation Performance

2. Contract Segment Mix

3. Average Daily Rate + Incremental Spend by Market Segment

4. Market Segment Opportunity Summary

5. Facility Requirements by Market Segment

6. Hyatt Regency Incheon Assumptions

Future Vision with Addition of H2

8. Future Vision

9. Rooms Configuration

10. F & B Configuration

11. HRI New Business Model

Appendix

12. HRI Function Rooms Utilization 2006 January ~ 2010 February

13. Lost Business Main Reasons 2006 January ~ 2010 February

14. Total Catering Lost Business - 2006 January ~ 2010 February

15. Total MICE Lost Business 2006 January ~ 2010 February

16. Catering Lost Business Due to Space Constrains 2006 January ~ 2010 February

17. MICE Lost Business due to space constrains 2006 January ~ 2010 February

18. Target Market ing Rooms

19. Total Passenger Growth by Region 20. Target Market ing F & B

21. KAL & Hanjin Production

22. IFEZ Large Function Space Competitors Stats

23. Large Function Space Projections

24. Domestic MICE Group Demand Trend (by actual number)

25. Domestic MICE Group Demand Trend (by portion)

26. YoungJong Island Distribution of Potential Large Convention Space Competition and Campus Concept Market Demand

27. Songdo-Distribution of Potential Large Convention Space Competition and Campus + Residence Concept Market Demand

28. Cheongra-Distribution of Potential Large Convention Space Competition and Campus Concept Market Demand

Index

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* Total No. of Room Nights by Market Segment

IT

Gro

Contract

Total

0

0,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2004 2005 2006 2007 2008 2009 2010 YT

IT Gro Contract Total

2

0%20%

72%68%

8%12%

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Main Contracted Accounts

-

20,000

40,000

60,000

80,000

100,000

120,000

2004 2005 2006 2007 2008 2009

RoomN

ights

Polar / Atlas

Northwest

Cathay Pacific

Hanjin

KAL

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3. Average Daily Rate + Incremental Spend by Market Segment

5 ,

,

5 ,

,

5 ,

3 ,

35 ,

,

Airline asin siness

r p

eis re r p siness IT eis re IT

Won

AD v. r ight

Contr t roup FI

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4. Market Segment Opportunity Summary

After reviewing the statistics we believe that there will be a strong demand

in the next 3 10 years in the following segments:

Market Segment Potential rowth ield Incremental Spend

ontract:

Casino High High High

Hanjin Layover High Low Low

KAL High Low Low

roup:

MICE 50-300pax High Med Med - High

MICE 300+ Medium Low-Med Med

Wedding 300+ Medium Med - High Med

FIT:

Fit Leisure High Med High Med - High

FIT Business High High N/A

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5. Facility Requirements by MarketSegment

Fit Leisure: Seasonal Leisure options (Spa/Swimming Pool / Ice

Rink), Shopping/Duty Free/Retail, F&B alternatives,

Transportation, Residential, Kids facilities

FIT Business: Leisure options (Spa), Shopping/Duty Free /Retail

Transportation, Executive Recreational options

asino: Shopping/Duty Free/Retail, F&B alternatives (with

private room facilities), More smoking areas, Additional

guest rooms, Additional floor space for the casino,

Entertainment options.

Hanjin Layover: Leisure options (Spa), Shopping/Duty Free/Retail,

F & B alternatives ( low medium spend), Group

Check in, Tour options

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5. Facility Requirements by MarketSegment continued

Airline : Shopping/Duty Free/Retail (Low Price), Networking Area dedicated

to Airline Personnel (e.g. Table Tennis, Tennis, Pool Table), Storage

space

MI E: Leisure options (Spa), F&B alternatives, Transportation,

Additional guest rooms, Medium Size Meeting rooms ( Regency

Size ), High Tech A.V./Quality, Corporate Team Building Alternatives,Destination Venue

Weddings: 1 Stop Shopping, Show Room with photo Dress etc. Bridal room,

Garden Photo facilities, Kids facilities, Transportation

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There will no doubt be new emerging markets, but we should continue to focus on those that are continually

building and how we can yield them better.

Based on the historical data where we have seen FIT business decline and Group business plateau. We see a

opportunity for potential growth in the market segments of FIT, Group and Contract especially as we emerge

from a global economic recession.

The potential for high yield growth will come from two market segments 1. Group , and 2. FIT, and this is likely

to be sustained if the planned visionary develops for the greater Songdo and Yong Jeong -do areas develop asplanned.

The following recommendations are based on the statistics and information that has been made available to us

from the various government agencies. Although there is no guarantee as to the timeframe, a cautious approach

should be made when considering the timeframe of the development of these projects and potentially the

financial commitment in lieu of the recent global recession.

The opportunity to position the hotel at this early stage of development and concept , means that we must

understand the environment around us and the developments that are planned for the future before any detailedcommitment is confirmed.

We must also assume that surrounding developments may be delayed as we have already seen since the

opening of Hyatt Regency Incheon in 2003.

In order to be attractive to both the Incheon market and greater Seoul Market we must be able to offer a superior

product that is attractive to the MICE, FIT, and Leisure market year round.

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7. Hyatt Regency Incheon Assumptions continued

Most importantly , we need to be self sufficient in all aspects of our facilities in order to attract the target markets

which compare us to city locations.

The facilities are already world class , but with the potential developments and long term vision for the island , we

should proactively look at other markets that can support the hotel to be a market leader in the next 10-20 years.

After a detailed review of the environment developing around us and the renewed access to the island, we

suggested the following options that could be considered for further development.

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H2-Hotel

Development

Hyatt Regency Incheon

Future Vision with Addition ofH2

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8. Future Vision

Hyatt Regency Incheon is the leading deluxe 5 star hotel in the airport area and Incheon.

With authentic hospitality, we serve International and Korean travelers the most dynamic

pragmatic lifestyle experience.

We want to be the market leader and compete with no one else. Concepts will cater to the

international and local market but will be original in the thought process, pragmatic and

catering for the local market. Our designed concepts will focus on the best utilization of

our space to generate the best return on investment for the areas.

It is generally thought that demand for a 1000 pax Ballroom will only be when then the

Songdo and Yong Jeong do areas have reached the full maturity of their development

stages which is likely to be in 10 15 years. In the immediate future 5 10 years, the

demand would be for medium to large size function rooms.

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It is understood that the new H2 project will need to target new markets and future

potential business opportunities in order to expand the current business in the area.

In conclusion to the review of the future developments in the area, we see the area to

potentially become self sufficient and a sought after leisure destination. We should

anticipate that there is potentially a bigger picture in the long term, but not to over

invest for little return on investment in the short term ( 5 10 years).

If the design scope permits , venues should be specifically designed and segregated ,

taking into consideration noise and pre-function area space allocation.

8. Future Vision

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9. Rooms onfiguration

Sqm Total Sqm

(215) King Rooms 36 7,740

(105) Twin Rooms 36 3,780

(5) Disabled Rooms 36 180

(66) Regency Club King Rooms 36 2,376

(34) Regency Club Twin Rooms 36 1,224 (20) 1bedroom Service Apartments 72 1,440

(15) 2 bedroom Service Apartments 90 1,350

(25) Suites 72 1,800

(13) Executive Suites 108 1,404

(1) Presidential Suites 144 144

(1) Chairman Suites 180 180

Club Lounge, Boardroom, & Pantry 288 288

Guest Floor Service Areas (estimate of 25) 15 375

500 Total uest Rooms & Suites 22 281

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10. F & B onfiguration

Option 1 F & B ADD

1 - Restaurant 200 seats

1 - Ballroom 800sqm ( divisible into 3 sections )

8 - Smaller function rooms

1 Lounge

Target the small/medium sized MICE ie. 500 persons and less as the number of these types of event are greater in

volume and trends show event sizes are generally getting smaller.

Taking this option would also be conducive to the wedding business which also is seeing a trend of size reduction and

too catering only.

Also given that within the vicinity we have Song-do - CONVENSIA, KINTEX and potentially MILANO (Local

Convention & exhibition centers) this would compliment these facilities rather than directly compete.

PROS

- Flexibility to handle many small to medium MICE/Events Groups

- High restaurant utilization expected with MICE for lunch and Hanjin for dinner

CONS

- Can not handle lunch and dinner demand with full Hotel and Banquet occupancy

- Can not accommodate 500+ MICE meals in one venue only

- Limited room for restaurant growth on week end (Currently reach full capacity)

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Option 2 F & B ADD

1 Buffet Restaurant 200 seats

1 Ballroom 1,600sqm ( divisible into 4 sections )

1 Meeting Room (Type A) 300sqm (divisible into 2 sections)

2 Meeting Room (Type B) 100sqm

3 Meeting Room (Type C) 75sqm

2 Meeting Room (Type D) 50sqm

1 Board Room 45sqm

1 Lounge

A large ballroom potentially long term is what would be required to support large MICE groups of over 500+ persons.

The volume of these types of events using hotel facilities are limited and guest accommodation util ization tends to be

lower.

Should it be decided to target large MICE groups over 500+ persons. It may be anticipated that the volume of these

types of events using hotel facil ities are limited and that the guest room utilization tends to be low.

However this configuration would allow flexibility for the up to 500pax MICE as meeting + meals can be confined to

one area.

Utilization of the whole Ballroom would be low and the tendency would be that these events would be weddings or

social event therefore a meal venue would not be required.

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Option 2 F & B ADD

PROS

- Open opportunities to compliment Song-do CONVENSIA

- Increase restaurant variety offerings.

- Flexibility to handle multiple events at one time e.g. 2 weddings, 2 or more smaller MICE groups

CONS

- Challenge to sell the whole Ballroom on a regular basis

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11. Hyatt Regency Incheon New Business Model

H1

523 Rooms 500 Pax Ballroom

1x Breakout Rooms 100 pax

4x Breakout Rooms

Restaurant 8 401Seats

Spa

1 Restaurant 200 seats + Bar Facility

H1

523 Rooms 500 Pax Ballroom

1x Breakout Rooms 100 pax

4x Breakout Rooms

Restaurant 8 401Seats

Spa

1 Restaurant 200 seats + Bar Facility

H2 Option 1

Rooms

500 Rooms

F & B

1 Ballroom 800sqm ( divisible into 3 sections )

2 Meeting Room (Type A) 120sqm



1 Board Room 45sqm 1 Lounge with R/S pantry + Casino offerings

Other Facilities

Gymnasium Room

Business Centre

Administrative Offices

In flight Catering Production Kitchen

Casino

H2 Option 2

Rooms

500 Rooms

F & B

2 Specialty Restaurant 150 seats 740sqm /660sqm

1 Ballroom 1,600sqm ( divisible into 4 sections )

1 Meeting Room (Type A-divisible into 2 section) 300sqm



2 Meeting Room (Type D) 50sqm

1 Board Room 45sqm

1 Lounge with R/S pantry + Casino offerings

Other Facilities

Gymnasium Room

Business Centre

Administrative Offices

In flight Catering Production Kitchen

Casino

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H2-Hotel

Discussion

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Situation Overview by Market Segments



3. Average Daily Rate + Incremental Spend by Market Segment 4. Market Segment Opportunity Summary

5. Facility Requirements by Market Segment


Future Vision with Addition of H2

8. Future Vision

9. Rooms Configuration


11. HRI New Business Model

Appendix

12. HRI Function Rooms Utilization 2006 January ~ 2010 February




16. Catering Lost Business Due to Space Constrains 2006 January ~ 2010 February


18. Target Market ing Rooms

19. Total Passenger Growth by Region 20. Target Market ing F & B


22. IFEZ Large Function Space Competitors Stats


24. Domestic MICE Group Demand Trend (by actual number)

25. Domestic MICE Group Demand Trend (by portion)

26. YoungJong Island Distribution of Potential Large Convention Space Competition and Campus Concept Market Demand

27. Songdo-Distribution of Potential Large Convention Space Competition and Campus + Residence Concept Market Demand

28. Cheongra-Distribution of Potential Large Convention Space Competition and Campus Concept Market Demand

Index

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H2-Hotel

Development

Appendix Materials

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8%

5%

3%

16%

9%

18%

41%

Alternate Destination FunctionSpace Issue Customer Budget

Speaker Cancelled Location Competitors

Others

50% of our lost business losses

are somehow related to our function

space competitiveness

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The total number of lost cateringfunctions since 2006is 649

55% (354) were small scale

functions under 100pax

25% (162) were small-medium scale

functions between 100 and 300pax.

7% (46) were medium scale

functions between 300 and 500pax

8% (54) were large scale functions

between 500 and 1000pax

5% (33) were very large scale

functions with more than 1000pax

Catering Lost Business

100 ~ 300

25%

300 ~ 500

7%

500 ~ 1000

8%

More than

1000

5%

Less than

100

55%

Unit : Pax

No. of Function Average No. of Pax

Less than 100 354 41

100 ~ 3 00 162 202

300 ~ 500 46 400

50 0 ~ 1000 54 6 0

More than 1000 33 2,401

Total 649 747

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MICE Lost Business

100 ~ 500

41%

500 ~ 1000

8%

Less than100

4 %

More than

1000

8%

nit ax

MICE Lost Business

100 ~ 00

32%

More than

1000

9%

300 ~ 500

9%

Less than

10042%

500 ~ 1000

8%

nit ax

No. of Function Average No. of ax

Less than 100 239 49

100 ~ 300 176 186

300 ~ 500 49 392

500 ~ 1000 42 692

More than 1000 48 2,053

Total 554 674

The total number of lost MICEBusiness since 2006is 554

42% (239) were small scale

functions under 100pax



9% (49) were medium scale

functions between 300 and 500pax





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16.Catering Lost Business Due to Space Constrains 2006 January ~ 2010 February

No. of Function Average No. of Pax

Less than 100 16 35

100 ~ 300 9 211

300 ~ 500 2 430

500 ~ 1000 5 666

More than 1000 3 1,980

Total 35 664

The total number of catering

functions lost due to space

constrains since 2006is 35

45% (16) were small scale functions

under 100pax



6% (2) were medium scale functions






Catering Lost Business

100 ~ 300

26%

300 ~ 500

6%

500 ~ 1000

14%

More than

1000

9%

Less than

100

45%

nit Pax

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No . of Function Average No. of Pax

Less than 100 4 83

100 ~ 300 8 198

300 ~ 500 2 328

500 ~ 1000 3 708

More than 1000 7 2,825

Total 24 331

The total number of lost MICE

Business due to space constrains

since 2006is 24

17% (4) were small scale functions

under 100pax



8% (2) were medium scale functions




29% (7) were very large scale with

more than 1000pax

MICE Lost Business

100 ~ 300

33%

More than

1000

29%

500 ~ 1000

13%

Less than

100

17%

300 ~ 500

8%

Unit : Pax

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18. Target Marketing Rooms

215 King Rooms / 110 Twin Rooms Transient travelers from growing segments (regional tourist, Chinese tourist, long-haul layovers)

Honeymoon market

Family Leisure in summer & winter school breaks

Hyatt Intl Limiter Time Offers

MICE

66

Regency Club King Rooms / 34

Regency Club Twin Rooms FIT Corporate

MICE VIPs full charge upgrades

Casino regular guests

High OCC upselling

Suites

MICE overseas VIPs

Casino top rollers

Foreign Governments delegates

Residential Suites 2 Bed - Residential Suites 1 Bed

Incheon-Development overseas long-term guests (I.e. Songdo-related)

Foreign delegates on IIAC projects

Airline/IIAC-development, passenger growth projections management staff

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19. Total Passenger rowth by Region

Europe

Asia

N. America

World Wide

Passenger/ Logistic

Passenger/ Logistic

Passenger/ Logistic

Passenger/ Logistic

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1 x 800 ~ 1000 person ballroom with multifunction capabilities 4 x 150 person function rooms

2 x 150 set restaurants

MICE

- Small/Medium or Large Others

- Medical airport related (e.g. Kal training)

- Casino Fit- Business

Leisure F&B

- Wedding

- Social events

- Catering/meeting only events

- Restaurant only business

20. Target Marketing F & B

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0

10000

20000

30000

40000

50000

60000

70000

2004 2005 2006 2007 2008 2009

KAL & Hanjin Production

KAL Crew Hanjin


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22. IFEZ Large Function Space

Competitors StatsAppendix

NA: Non-Announced yet

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24. Domestic MICE roup Demand Trend (by actual number)

2006 2008 International MICE group demand in Korea

Source: Korean Tourism Organization 2009

MICE group with less than 500 pax accounts for 70%.

Groups between 100 and 500 pax accounts for 51%.

0

50

10 0

15 0

20 0

25 0

L e s s t

10 0

100 00 300 500 500 1,000 M ore t

1,000P a x

2006

2007

2008

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26. oungJong Island Distribution of Potential Large Convention Space

Competition and Campus Concept Market Demand

Yongyu & Mui Tour Complex(2020) MGM them e pa rk

Unbook Le i sure com plex

(2014)

Logist ic co mplex (2012~ 2017) Fiera Miilan o In c he o n Comple x

S ky City (202 0)

- Med i- c ity

Wa ter Pa rk

Air City

Fa s h ion Is la nd (2014)

Fa nta s y world (2020)

Magnetic rain (2013)

Youngjong Broadway

(2013)

Yongyu & Mui Tour Complex(2020) MGM them e pa rk

Unbook Le i sure com plex

(2014)

Logist ic co mplex (2012~ 2017) Fiera Miilan o In c he o n Comple x

S ky City (202 0)

- Med i- c ity

Wa ter Pa rk

Air City

Fa s h ion Is la nd (2014)

Fa nta s y world (2020)

Magnetic rain (2013)

Youngjong Broadway

(2013)

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27.Songdo-Distribution of Potential Large Convention Space Competition

and Campus + Residence Concept Market Demand

Co ve s ia

I c

eo

i

o ers( 5

,

)

io, I

ce ter(

)

NE

rade

o er (

)

I ter atio al Sc

oo lJac

Nic

lo s

olf Cl

Co ve s ia

I c

eo

i

o ers( 5

,

)

io, I

ce ter(

)

NE

rade

o er (

)

I ter atio al Sc

oo lJac

Nic

lo s

olf Cl

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28.Cheongra-Distribution of Potential Large Convention Space Competition and

Campus Concept Market Demand

Robot Land (2013)GM Daewoo R&D

Intl. i-tech ar

(2011)

Go lf Pa rk (2010 )

Intl. Hi-te ch Pa rk

(2011)

Interna tiona l Buis nes s

Clus ter (201 )

City Towe r (201 1)

S

U KAIST

(2012)

Robot Land (2013)GM Daewoo R&D

Intl. i-tech ar

(2011)

Go lf Pa rk (2010 )

Intl. Hi-te ch Pa rk

(2011)

Interna tiona l Buis nes s

Clus ter (201 )

City Towe r (201 1)

S

U KAIST

(2012)

final h2-mar 23,10

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