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U.S. Hotel Industry Performance

Jan D. Freitag

Senior Vice President

@jan_freitag jan@str.com

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Agenda • Total US Review

• Scale Review

• Markets

• Pipeline

• 2015 / 2016 Forecast

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www.hotelnewsnow.com Click on “Data Presentations”

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Total US Review

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August 2015

RevPAR (only) +2.2%

Occupancy -1.4%

Labor Day Comp Skewed The Data

All YTD KPIs Are Still At All-time Highs

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... a Labor Day calendar comp...

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YTD August 2015: Healthy Room Rate Growth

% Change

• Room Supply 1.0% • Room Demand 2.8% • Occupancy 67.2% 1.8% • A.D.R. $120 4.8% • RevPAR $81 6.7% • Room Revenue 7.7%

August 2015 YTD, Total US Results

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Demand Growth Rates Slow. It’s hard To Grow Off Records.

-0.8

-4.7

-7.1

7.7

3.4

-8

-4

0

4

8

1990 2000 2010

Supply % Change

Demand % Change

Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 08/2015

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ADR Growth Healthy. OCC Growth Will Now Start To Slow.

-3.4

-6.7

-9.7

2.5

6.8 7.5

4.8

-10

-5

0

5

1990 2000 2010

OCC % Change ADR % Change

Total U.S., ADR & OCC % Change, 12 MMA 1/1990 – 08/2015

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RevPAR Growth: Smooth Sailing For The Next 2 Years

-25

-20

-15

-10

-5

0

5

10

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1990 2000 2010

Total U.S., RevPAR % Change, 1/1990 – 08/2015

56 Months 66Mo. 80 Months 31 Mo

Labor Day Hiccup

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Chain Scale Review

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Scales: Strong Demand Growth. Upscale Supply Increases

0.4

1.2

3.9

1.3

-0.2

0.1

0.9

1.9

4.7

3.3

2.1 1.8

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Supply % Change Demand % Change

*Supply / Demand % Change, by Scale, August 2015 YTD

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Scales RevPAR Composition: ADR Driven

0.5 0.6 0.8

1.9 2.3 1.7

4.9 4.8 5.2

4.5 4.4

5.1

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

ADR % Change Occupancy % Change

*RevPAR % Change by Contribution of OCC / ADR % Change, by Scale, August 2015 YTD

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Scales: Absolute OCC Very Healthy On The Upper End

76.5 75.7 76.0

69.3

61.3 59.9

76.1 75.2 75.4

68.0

59.9 58.9

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

2015 2014

*OCC %, by Scale, August YTD 2015 & 2014

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Markets

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RevPAR August 2015 YTD: Oil Markets Continue To be Soft

Market RevPAR %

Change Market RevPAR %

Change

Macon/Warner Robbins, GA 19.6 New Mexico South -1.5

San Jose/Santa Cruz, CA 19.6 Houston, TX -1.9

Oakland, CA 16.3 Texas North -2.0

Phoenix, AZ 16.0 Syracuse, NY -2.3

Portland, OR 15.3 New York, NY -2.4

Melbourne/Titusville, FL 14.2 Augusta, GA-SC -6.5

Greenville/Spartanburg, SC 14.2 Texas South -7.2

Fort Myers, FL 13.8 Oklahoma Area -9.1

Chattanooga, TN-GA 13.5 Texas West -13.4

California North Central 12.9 North Dakota -14.8

*August 2015 YTD RevPAR: Best / Worst Performing Markets

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Houston

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Houston: Oil Price Predicts Houston Room Demand

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

$40

$50

$60

$70

$80

$90

$100

$110

2014 2015

Crude Oil Futures Price / Barrel (LHS)

Demand % Change (RHS)

*Monthly Oil price Future / Barrel vs. Houston, TX Room Demand % Change 1/2014 – 08/2015 http://www.investing.com/commodities/crude-oil

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Houston: ADR Growth Is Slowing Considerably

50.0

55.0

60.0

65.0

70.0

75.0

80.0

-5

0

5

10

2014 2015

OCC % (RHS) ADR % Change (LHS)

*Houston, TX; ADR % Change & Occupancy %, 1/2014 – 08/2015

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Midland / Odessa

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Midland/ Odessa: Is The Party Over?

70

90

110

130

150

55

60

65

70

75

80

85

2011 2013 2015

OCC % ADR $

66.9% @$130

*Midland / Odessa, OCC % and ADR $, 12 Month Moving Average 1/11 – 8/15

OCC% $ ADR

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Austin SW w. San Marcos

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Austin SW / San Marco: Healthy Growth

90

100

110

120

60

62

64

66

68

70

72

2011 2013 2015

OCC % ADR $

70.8% @$121

*Austin SW w. San Marco, OCC % and ADR $, 12 Month Moving Average 1/11 – 8/15

OCC% $ ADR

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Amarillo

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Amarillo: Occupancy rebounds. ADR Grows (slowly)

64

66

68

70

72

74

58

59

60

61

62

63

64

65

2011 2013 2015

OCC % ADR $

64.4% @$74

*Amarillo, TX; OCC % and ADR $, 12 Month Moving Average 1/11 – 8/15

OCC% $ ADR

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Nashville

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Nashville: Hot! Hot! Hot!

% Change

• Room Supply 2.2% • Room Demand 4.5% • Occupancy 74.5% 2.3% • A.D.R. $126 9.2% • RevPAR $94 11.7% • Room Revenue 14.2%

Nashville, TN; YTD August 2015

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Nashville: An Easy Story

80

85

90

95

100

105

110

115

120

125

58

62

66

70

74

2011 2013

OCC % ADR $

73.1% @$124

*Nashville, OCC % and ADR $, 12 Month Moving Average 1/11 – 8/15

OCC% $ ADR

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Nashville: Huge Transient ADR Growth Follows The High Occupancies

0%

2%

4%

6%

8%

10%

12%

14%

16%

2012 2013 2014 2015

Demand % Change

ADR % Change

*Nashville, Transient Demand and ADR % Change, 12 MMA, 1/2012 – 08/2015

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Nashville: Group Demand Rebounds. ADR Follows.

-10%

-5%

0%

5%

10%

15%

20%

25%

2012 2013 2014 2015

Demand % Change

ADR % Change

* Nashville, Group Demand and ADR % Change, 12 MMA, 1/2012 – 08/2015

Music City Center Opens

May ‘13

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Pipeline

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US Pipeline: Construction Today Will Impact 2016 / 2017

Phase 2015 2014 % Change

In Construction 132 109 22%

Final Planning 175 123 42%

Planning 132 159 -17%

Under Contract 440 391 12%

*Total US Pipeline, by Phase, ‘000s Rooms, August 2015 and 2014

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Limited Service Construction Has Been Strong For 2 Years

5.9

11.5

47.6

42.0

4.4 1.9

19.0

Luxury Upper Upscale

Upscale Upper Midscale

Midscale Economy Unaffiliated

*US Pipeline, Rooms Under Construction , ‘000s Rooms, by Scale, August 2015

67%

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2015 / 2016 Forecast

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Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2015 - 2016 Outlook

2015 Forecast

2016 Forecast

Supply 1.2% 1.4%

Demand 2.9% 2.2%

Occupancy 1.7% 0.8%

ADR 5.1% 5.2%

RevPAR 6.8% 6.0%

*As of 8/1/15

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Total United States Chain Scale Key Performance Indicator Outlook 2015F by Chain Scale 2015 Year End Outlook

Chain Scale Occupancy

(% chg) ADR

(% chg) RevPAR (% chg)

Luxury 0.4% 5.4% 5.9% Upper Upscale 0.9% 5.0% 5.9%

Upscale 0.6% 5.4% 6.1% Upper Midscale 1.9% 5.0% 7.0%

Midscale 2.0% 4.5% 6.5% Economy 1.9% 5.3% 7.2%

Independent 2.0% 4.8% 6.9%

Total United States 1.7% 5.1% 6.8%

*As of 8/1/15

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Total United States Chain Scale Key Performance Indicator Outlook 2016F by Chain Scale 2016 Year End Outlook

Chain Scale Occupancy

(% chg) ADR

(% chg) RevPAR (% chg)

Luxury 0.5% 5.3% 5.8% Upper Upscale 0.7% 5.6% 6.4%

Upscale 0.7% 5.2% 5.9% Upper Midscale 0.8% 4.6% 5.4%

Midscale 0.9% 4.1% 5.0% Economy 1.0% 4.4% 5.4%

Independent 0.4% 5.1% 5.5%

Total United States 0.8% 5.2% 6.0%

*As of 8/1/15

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Certification in Hotel Industry Analytics (CHIA) STR and AHLEI have partnered to launch the Certification in Hotel Industry Analytics for a variety of industry professionals.

• There are four core content areas: o Hotel Industry Foundations o Hotel Math Fundamentals – the metrics used by the hotel

industry o Property Level Benchmarking (STAR Reports) o Hotel Industry Performance Reports

• One or two-day CHIA workshops are available • To find out more please contact us at sharecenter@str.com

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