Key Owner Meeting: HP HotelsHampton/Hilton Garden Inn

August 17, 2010

Conversation Outline

-Industry Supply and Demand: Trends and Insights

-ADR Trends: How resilient are the chain-scales?

-ADR by Segment: Transient versus Group

-RevPAR at Levels not seen since…

-The “Upscale” Chain-Scale

-HP Hotels: “Competition” by brand, parent-company, and chain-scale

-Top 50 Markets: Reasons for Optimism, and ACTION!

-Forecast Comparison: May, June, July

-BONUS SLIDE: New STR product (time permitting)

Industry Commentary – Supply & Demand

SUPPLY: Hotels opened through June of 2009… 1,134. Through June 2010…780. Projected through June 2011… 102. Nearly all of it in 2 chain-scales…

Demand in June grew by 9.2%, the seventh consecutive month of growth and the second largest month-over-month demand increase in the Smith Travel era (since 1987).

7.9 million more rooms were sold in June 2010 than in June 2009.

Industry Commentary – OCCUPANCY

THE LAST 20 YEARS: The long-run industry average for occupancy is 62.1%.

HOW ABOUT NOW: As of the June 2010, T12 industry occupancy was 55.8%.

For the Trailing 12 month period ending June 2010, how many more ROOM NIGHTS would have to be sold for the industry to have achieved the long-run average of 62.1%?

110 MILLION

Every hotel in the United States, all 52,000+ of them, would have to sell-out…

FOR 23 CONSECUTIVE DAYS.

?

Industry/Chain-Scale Highlights – ADR

June 2010 broke a string of 20 consecutive months of declining ADR.

Based upon Trailing-Twelve month results ending June 2010, ADR in the U.S. lodging industry is at OCTOBER 2006 levels.

CHAIN-SCALE T12 ADR ($) SAME ADR AS:

Luxury 240.94 August 2005

Upper-Upscale 139.42 November 2005

Upscale 105.26 April 2006

Mid-scale WITH 82.29 February 2007

Mid-scale WITHOUT 84.29 June 2007

Economy 49.39 November 2005

Industry/Chain-Scale Highlights: RevPAR

Based upon Trailing-Twelve month results ending June 2010, RevPAR in the U.S. lodging industry is at February 2002 levels.

CHAIN-SCALE T12 RevPAR ($)

SAME ADR AS:

Luxury 155.35 November 2004

Upper-Upscale 92.15 February 2002

Upscale 66.55 February 2005

Mid-scale WITH 40.55 April 2004

Mid-scale WITHOUT 47.49 August 2005

Economy 24.52 August 1995

Upscale Chain-Scale Commentary, June 2010

Upscale RevPAR: +7.3%

DEMAND grew by 14.7%, and has been positive for 12 straight months. With nearly 250 more hotels online in June 2010 compared to the year prior, many travelers are taking a trial run of the new product.

The segment has NEVER sold more rooms than it did in June of 2010.

INSIGHTS:

The average age of the rooms in the upscale chain-scale is half that of the mid-scale WITH and economy chain-scales. New wins, and we expect that the new rooms added during the last 18-24 months will shift demand from these older segments.

HP “Competition” by Brand…

By Parent Company…

By Chain-Scale…

RevPAR Inflection Date by Market

Hilton Worldwide: Top 50 U.S. Markets

Only 1 market grew occupancy

in 2009. Every market experience a decline in ADR.

CommentaryTop 50 Markets – Hilton Worldwide, June 2010

Occupancy: The compset grew occupancy in 47 markets. 11 of these markets realized an increase of AT LEAST 10%.

Atlanta was up 9.7%; Charlotte up 6.8%. The big winner was Minneapolis/St. Paul, up 20.5%.

ADR: DOWN 1.5% for the aggregated group of Top 50 Markets. The index of 110.8 is flat to 2009.

Declines of more than 5.0% have continued in Ft. Lauderdale and Detroit.

2010 Industry Forecasts

BONUS SLIDE: STR Analytics