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U.S. Hotel Industry Performance - ALIS 2016 Edition -

Jan D. Freitag

Senior Vice President

@jan_freitag jan@str.com

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What Wall Street Expects:

2016 What STR Expects:

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What to say to an analysts who does not believe our 2016 +5.0% RevPAR forecast:

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Agenda • Total US Review

• Scale Review

• Segmentation

• Markets

• Pipeline

• 2016 / 2017 Forecast

• AirBnB

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www.hotelnewsnow.com Click on “Data Presentations”

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Total US Review

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Full Year 2015: Decelerating Occ / ADR Growth Rates

% Change

• Room Supply 1.1% • Room Demand 2.9% • Occupancy 65.6% 1.7% • A.D.R. $120 4.4% • RevPAR $79 6.3% • Room Revenue 7.4%

December 2015 YTD, Total US Results

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Total US RevPAR: NYC and Houston Dragged

Total US : +6.3% NYC: -1.7% Houston: -3.3% Total US excluding NYC & Houston: +6.9%

*RevPAR % Change December 2015 YTD

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Quarterly RevPAR % Change: Slowing Down Off Record Highs

7.7 7.7

5.0

6.4 6.1

4.7 5.4

4.9

6.6

7.9

9.1 8.9 8.0

6.5 5.9

4.8

Q1 Q2 Q3 Q4

2012 2013 2014 2015

* Total US, RevPAR % Change, by Quarter, Q1 2012 – Q4 2015

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Supply Growth Now Back Over 1%. Demand Growth Slows.

-0.8

-4.7

-7.1

7.7

-8

-4

0

4

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1990 2000 2010

Supply % Change

Demand % Change

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

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RevPAR Growth: It’s Going To Be OK (but Not Great)

-25

-20

-15

-10

-5

0

5

10

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1990 2000 2010

Total U.S., RevPAR % Change, 1/1990 – 12/2015

56 Months 70 Mo. 80 Months 31 Mo

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Why Wall Street Is So Blue: Growth of RevPAR Growth Is Slowing

-7%

-2%

4%

9%

14%

-25%

-15%

-5%

5%

15%

25%

35%

45%

55%

65%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RevPAR % Change Growth of Growth

Growth of Growth

RevPAR % Change

Total U.S., RevPAR % Change and 12MMA “Change of Change”, 1/2015 – 12/2015

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Chain Scale Review

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Scales: Demand Growth Healthy. Upscale Supply Increases

0.7

1.3

4.1

1.3

0.1 0.2

1.2

2.0

4.8

3.3

2.1

1.6

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Supply % Change Demand % Change

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

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Scales RevPAR Composition: ADR Driven

0.5 0.7 0.7

1.9 2.1 1.4

4.2 4.0 4.9

4.3 4.2 5.0

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

ADR % Change Occupancy % Change

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

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Scales: Upper End Hotels Are Very Busy

75.3 74.2 74.3

67.6

59.5 58.3

75.0 73.6 73.8

66.4

58.3 57.5

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

2015 2014

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

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Segmentation

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Transient ADR Growth Subsides Despite High Occupancies

0%

1%

2%

3%

4%

5%

6%

2012 2013 2014 2015

Demand % Change

ADR % Change

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

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Group Demand Growth Slows Rapidly

-2%

-1%

1%

2%

3%

4%

5%

6%

7%

2012 2013 2014 2015

Demand % Change

ADR % Change

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

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Markets

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RevPAR December 2015 YTD: Winner: CA. Loser: Oil Markets.

Market RevPAR %

Change Market RevPAR %

Change

Macon/Warner Robbins, GA

18.6 Ohio Area

(1.9)

San Jose/Santa Cruz, CA

17.3 Houston, TX

(3.3)

Oakland, CA

15.7 Texas North

(4.1)

Chattanooga, TN-GA

15.5 West Virginia

(4.5)

California North Central

14.9 New Mexico South

(5.4)

Fort Myers, FL

14.7 Augusta, GA-SC

(6.7)

Knoxville, TN

14.5 Oklahoma Area

(10.0)

Portland, OR

14.2 Texas South

(11.4)

Tampa/St Petersburg, FL

13.8 Texas West

(19.2)

Greenville/Spartanburg, SC

13.7 North Dakota

(20.9)

*December 2015 YTD RevPAR: Best / Worst Performing Markets

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December 2015 YTD: High Occ = Higher ADR. (Except in NYC ???)

Market OCC % ADR % Change Nashville, TN 73.5 8.7 Phoenix, AZ 65.9 8.0 Seattle, WA 76.2 7.8

Tampa/St Petersburg, FL 71.8 7.7 Los Angeles/Long Beach, CA 79.7 7.5

Washington, DC-MD-VA 70.7 3.0

Oahu Island, HI 85.3 3.0 New Orleans, LA 69.7 2.3

Houston, TX 68.5 1.6 New York, NY 84.7 -1.6

* December 2015 YTD ADR % Change in Top 25: 5 Best / 5 Worst Performing ADR % Markets

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NYC

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12.4 6.0 5.8 3.8 2.2

-1.7

80.8 81.2 83.7 84.4 84.7 84.7

2010 2011 2012 2013 2014 2015

RevPAR % Change Occupancy

NYC YTD RevPAR & Occupancy: Full House But No RevPAR Growth

* NYC RevPAR % Change & Absolut Occupancy, December YTD, by year

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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

$35

$45

$55

$65

$75

$85

$95

$105

2014 2015

Crude Oil Futures Price / Barrel (LHS)

Demand % Change (RHS)

*Monthly Oil price Future / Barrel vs. Houston, TX Room Demand % Change 1/2014 – 12/2015 http://www.investing.com/commodities/crude-oil

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Pipeline

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US Pipeline: Construction Today Will Impact 2016 / 2017

Phase 2015 2014 % Change

In Construction 141 120 17%

Final Planning 180 122 47%

Planning 147 170 -13%

Under Contract 469 413 14%

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

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Limited Service Construction Has Been Strong For 2 Years

7.4 11.5

49.2 48.0

5.3 1.5

17.7

Luxury Upper Upscale

Upscale Upper Midscale

Midscale Economy Unaffiliated

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

69%

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Construction In Top 26 Markets: 20 With 2%+ Of Supply

*US Pipeline, Top 26 Markets, U/C Rooms as % of Existing Supply, December 2015

Market Rooms U/C % Of Existing Oahu Island, HI 175 0.6%

Norfolk/Virginia Beach, VA 300 0.8% St Louis, MO-IL 407 1.1%

Atlanta, GA 1,255 1.3% San Francisco/San Mateo, CA 751 1.5%

New Orleans, LA 618 1.6% Orlando, FL 2,600 2.1% Detroit, MI 954 2.3%

Las Vegas, NV 3,905 2.3% Phoenix, AZ 1,536 2.5% Chicago, IL 2,964 2.7%

Tampa/St Petersburg, FL 1,233 2.8% Washington, DC-MD-VA 3,339 3.1%

San Diego, CA 1,951 3.2% Denver, CO 1,794 4.1%

Anaheim/Santa Ana, CA 2,328 4.2% Los Angeles/Long Beach, CA 4,240 4.3% Minneapolis/St Paul, MN-WI 1,949 5.0%

Boston, MA 2,627 5.0% Philadelphia, PA-NJ 2,343 5.1%

Nashville, TN 1,982 5.1% Dallas, TX 4,177 5.2%

Seattle, WA 2,232 5.3% Houston, TX 5,710 7.1%

Miami/Hialeah, FL 3,920 7.6% New York, NY 14,090 12.0%

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2016 / 2017 Forecast

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Notable Calendar Shifts Impacting Lodging Performance Data in 2016:

Super Bowl: From Phoenix to San Francisco Easter: From April to March Jewish Holidays: From September to October April and December will have two more Weekend days (Net +) May will have two fewer Weekend days (Net -) Leap Day February 29th (No Impact To Results) See: http://www.str.com/Media/Default/Documents/STR_leap_year_methodology.pdf

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Total United States Key Performance Indicator Outlook (% Change vs. Prior Year) 2016 - 2017 Outlook

2016 Forecast

2017 Forecast

Supply 1.7% 1.9%

Demand 2.3% 2.1%

Occupancy 0.6% 0.2%

ADR 4.4% 4.3%

RevPAR 5.0% 4.5%

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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 0.4% 4.5% 4.9% Upper Upscale 0.5% 4.6% 5.2%

Upscale -0.2% 4.5% 4.3% Upper Midscale 0.4% 4.1% 4.5%

Midscale 0.5% 3.5% 4.0% Economy 0.9% 3.7% 4.6%

Independent 0.6% 4.4% 5.1%

Total United States 0.6% 4.4% 5.0%

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Total United States Chain Scale Key Performance Indicator Outlook 2017F by Chain Scale 2017 Year End Outlook

Chain Scale Occupancy

(% chg) ADR

(% chg) RevPAR (% chg)

Luxury 0.1% 4.7% 4.8% Upper Upscale 0.1% 4.6% 4.7%

Upscale -0.6% 3.8% 3.2% Upper Midscale -0.1% 3.7% 3.6%

Midscale 0.6% 4.1% 4.7% Economy 0.4% 3.4% 3.9%

Independent 0.3% 4.4% 4.7%

Total United States 0.2% 4.3% 4.5%

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