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Resort Conference March 21 st , 2006

Resort Conference March 21 st , 2006. Jan D. Freitag, VP SMITH TRAVEL RESEARCH. Agenda Total US Overview Resort Locations Destination Resorts Condo Hotels Total US Projections. Total United States Estimated Revenue and Profitability Years 1999 – 2005P. Life is good !.

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Resort Conference March 21 st , 2006

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  1. Resort ConferenceMarch 21st, 2006 Jan D. Freitag, VPSMITH TRAVEL RESEARCH

  2. Agenda • Total US Overview • Resort Locations • Destination Resorts • Condo Hotels • Total US Projections

  3. Total United StatesEstimated Revenue and ProfitabilityYears 1999 – 2005P Life is good !

  4. U.S. Lodging Industry - Key StatisticsLatest 12 Months - January 2006 % Change • Hotels 47,735 0.6% • Rooms 4.4mm 0.3% • Occupancy 63.3% 2.9% • A.D.R. $91.28 5.5% • RevPar $57.76 8.6% • Room Revenue $94B 9.0%

  5. Total United StatesRoom Supply/Demand Percent ChangeTwelve Month Moving Average – 1989 to January 2006 3.3% 0.3% Cyclicality Clearly Visible – Recent S/D Imbalance Spells Opportunity

  6. Total United StatesOccupancy/ADR Percent ChangeTwelve Month Moving Average – 1989 to January 2006 Divergence? Divergence If History Repeats Itself, Strong ADR Gains are Here to Stay

  7. Total United StatesOccupancy Percent, Average Daily Rate, RevPARTwelve Month Moving Average – 1989 to January 2006 $91.28 $86.36 63.3% 64.9% Robust OCC and ADR Gains post 9/11

  8. STR Chain ScalesSelected chains from each segment • Luxury – Four Seasons, Ritz Carlton, Fairmont, W Hotels • Upper Upscale – Doubletree, Hilton, Hyatt, Sheraton • Upscale – Hilton Garden Inn, Courtyard, Crowne Plaza, Radisson • Mid with F&B – Holiday Inn, Ramada, Best Western, Quality Inn • Mid no F&B – Comfort Inn, HI Express, Country Inns & Suites • Economy – Motel 6, Days Inn, ESA, Travelodge, Ramada Limited

  9. Chain ScalesSupply/Demand Percent ChangeTwelve Months Ended January 2006 Business Traveler Drives Demand for Big Boxes

  10. Chain ScalesOccupancy/ADR Percent Change Twelve Months Ended January 2006 Above Inflation Rate Growth Across all Chain Scales

  11. Chain ScalesRevPAR/Room Revenue Percent Change Twelve Months Ended January 2006 Life is Good!

  12. Agenda • Total US Overview • Resort Locations • Destination Resorts • Condo Hotels • Total US Projections

  13. Resort Locations Key Statistics12 Month Moving Average January 2006 % Change • Hotels 3,890 -2.5% • Room Nights 214.6 m -1.8% • Demand 143.3 m -0.8% • Occupancy 66.7% 1.1% • ADR $127.06 6.0% • RevPAR $85.11 7.1% • Room Rev $18.3 b 5.2%

  14. Resort LocationsRoom Supply/Demand Percent ChangeTwelve Month Moving Average – 1989 to January 2006 -0.8% -1.8% Supply Increase Used to be Somewhat Constant – Until 9/11

  15. Resort LocationsRoom Demand Percent Change PeaksTwelve Month Moving Average – 1989 to January 2006 42 months 48 months 48 months Demand Peaks Every 48 months – Or Does it?

  16. Resort LocationsOccupancy/ADR Percent ChangeTwelve Month Moving Average – 1989 to January 2006 Despite Decreasing OCC Growth, ADR Growth Should be Here to Stay

  17. Resort LocationsOccupancy Percent, Average Daily RateTwelve Month Moving Average – 1989 to January 2006 Jan 2006: $127 July 2001: $115 July 1997: 69.1% Jan 2006: 66.7% OCC & ADR Rebound after 9/11 – but OCC still has a way to go

  18. ResortsDay of Week Analysis – Occupancy 2003 - 2005 Nice Increases Midweek - but Have Weekends Peaked?

  19. ResortsDay of Week Analysis – ADR 2003 - 2005 ~$8 Rate Growth Across the Board – a Good Sign for 2006

  20. ResortsGroup vs. Transient ADR 2003 - 2005 Group Rate Growth Lags Transient Rate Growth

  21. ResortsDay of Week ADR - Group 2003 - 2005 2005 vs 2004: Moderate Daily Rate Growth (~3%) For Groups

  22. ResortsDay of Week ADR – Transient2003 - 2005 2005 vs 2004: Healthy Rate Increases Across All Days (~10%)

  23. Agenda • Total US Overview • Resort Locations • Destination Resorts • Condo Hotels • Total US Projections

  24. Destination Resort Key Statistics12 Month Moving Average January 2006 % Change • Hotels 317 1.0 % • Room Nights 57.7m - 0.5 % • Demand 38.8 m 1.2 % • Occupancy 67.3% 1.7 % • ADR $182.98 6.3 % • RevPAR $123.14 8.1 % • Room Rev $7.1 b 7.6 % 0.7% of US Hotel Supply generates 7.6 % of US Rooms Revenue

  25. Destination ResortsRoom Supply/Demand Percent ChangeTwelve Month Moving Average – 1989 to January 2006 1.2% -0.5% Segment Always Attracts New Supply – Except in the Most Recent Past

  26. Destination ResortsOccupancy/ADR Percent ChangeTwelve Month Moving Average – 1989 to January 2006 Above 6% Rate Growth Lasts Not Forever… But for Now

  27. Destination ResortsOccupancy Percent, Average Daily RateTwelve Month Moving Average – 1989 to January 2006 Jan 2006: $182 July 2001: $171 May 1997: 70.6% Jan 2006: 67.3% Still Room For Improvement Post 9/11 in Both Measures

  28. Destination ResortsMonthly Occupancy2000 vs. 2005 76.8% 75.8% In the Off Season, Year 2000 Still Is the Benchmark To Beat

  29. Destination ResortsMonthly ADR2000 vs. 2005 -$6 +$14 December Rate Differential Still $6

  30. Destination ResortsDay of Week Analysis – Occupancy 2003 - 2005 Strong “Long Weekends” (Thu – Sat) But Have Fr/Sat Reached Their Peak?

  31. Destination ResortsDay of Week Analysis – ADR 2003 - 2005 Second Part of the Cycle: Rate Increase ‘04/’03: 2% - Rate Increase ‘05/’04: 6%

  32. Agenda • Total US Overview • Resort Locations • Destination Resorts • Condo Hotels • Total US Projections

  33. Definitions • Condo Hotel Rooms:Rooms placed in Rental Pool • Residences:Rooms not placed in Rental Pool

  34. Total U.S.Summary of Condotel Pipeline – March 2006 • 229 Projects with a total of 98,142 reported* rooms • Rooms are broken out as follows ( % of total): • Hotel Rooms: 34,166 35% • Condo Hotel Rooms: 48,678 50% • Total Affecting Nightly Room Supply: 82,844 85% • Non-rental Residences: 13,938 14% • Timeshare Rooms: 1,360 1% • * Some projects have not yet reported room counts Source: STR Condotel Pipeline, part of the STR / TWR / Dodge Construction Pipeline

  35. Total U.S.Top 10 Condotel MSAsMarch 2006

  36. Annual Occupancy 2003 - 2005Total US vs. Condo Hotels vs. Destination Resorts %

  37. Annual ADR 2003 - 2005Total US vs. Condo Hotels vs. Destination Resorts $

  38. Condotel:Data Reporting Topics • Reporting Availability Static vs. Fluctuating Rooms Available • Reporting Rooms Sold Issue: Owner Occupied, Non-Revenue Generating Rooms • Reporting Rooms Revenue The Rule: No Restatements after 120 days • Comp Set Issues Choosing a Condotel in your Comp Set will likely do more harm than good

  39. Agenda • Total US Overview • Resort Locations • Destination Resorts • Condo Hotels • Total US Projections

  40. Lodging Industry Issues • Supply Growth Remains Benign – Construction Costs, Condo Conversions • Higher Operating Costs – Insurance, Labor, Amenities, Energy • Solid Demand Growth – Degrees of Good, Some Not So Good • Changing Demand – Experience Travel, Baby Boomers • Occupancy Growth Slows – Varies Widely by Market • Aggressive Pricing – Could Double CPI, Control of Internet Pricing • Transportation Problems – Troubled Airlines, Gasoline, Infrastructure • Higher Industry Profits – More Difficult for each Property • Global Issues – Terrorism, Bird Flu, Currency Fluctuations • Outlook – Great ‘till ‘08?

  41. U.S. Economic OutlookBlue Chip Economic Indicators – March 2006 2005A2006F2007F Real GDP +3.6% +3.4% +3.0% CPI (= Inflation) +3.4% +2.9% +2.4% Corporate Profits + 17.1% +9.5% +4.6% Disp Personal Income +1.5% +3.5% +3.2% Unemployment Rate 5.1% 4.8% 4.7%

  42. Total United StatesSupply/Demand Percent Change2002 – 2006P

  43. Total United StatesOccupancy Percent Change2002 – 2006P

  44. Total United StatesOccupancy Percent2002 – 2006P

  45. Total United StatesADR Percent Change2002 – 2006P

  46. Total United StatesReal Room Rates – (Base Year = 2000)Year End 2000 - 2005

  47. Total United StatesNominal Room Rates2000 – 2006P If Yr. 2000 Rate Had Grown at 3% over 6 years:

  48. Total United StatesRevPAR Percent Change2002 – 2006P

  49. Thank You for Your Attention! jan@smithtravelresearch.com www.smithtravelresearch.com

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