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Hotel InduSTRy Overview

Lauren Faulkner, CHIA Business Development Executive, STR

Tennessee Business Travel Association August 11, 2015

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STR provides monthly, weekly and daily reports to more than

worldwide hotels, which represents

rooms.

50,000

6.7 million

3

Agenda

Total U.S. Review

Comparative Markets

Tennessee Performance

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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Industry Pulse: Hoteliers Are …

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June 2015

Highest Occupancy Ever: 73.1%

Highest Room Demand Ever: 109 million

Highest Annualized Occupancy: 65.2%

All KPIs Are At All-time Highs

5,000,000 Census Rooms Available

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YTD June 2015: Healthy Room Rate Growth

% Change

• Room Supply 1.0%

• Room Demand 3.3%

• Occupancy 65.2% 2.3%

• A.D.R. $119 4.8%

• RevPAR $78 7.2%

• Room Revenue 8.2%

June 2015 YTD, Total US Results

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The Best Fundamentals (Maybe In Our Lifetime)

-0.8

-4.7

-7.1

7.7

4.1

-8

-4

0

4

8

1990 2000 2010

Supply % Change

Demand % Change

Total U.S., Supply & Demand % Change, 12 MMA 1/1990 – 06/2015

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2015 Growth Rates Are Healthy. OCC continues to climb.

-3.4

-6.7

-9.7

3.1

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 – 06/2015

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Expect More Of The Same: Positive Growth!

-25

-20

-15

-10

-5

0

5

10

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1990 2000 2010

Total U.S., RevPAR % Change, 1/1990 – 06/2015

56 Months 64 Mo. 80 Months 31 Mo

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Chain Scale Review

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Luxury – Fairmont, Four Seasons, Ritz Carlton, JW Marriott

Upper Upscale – Hilton, Hyatt, Marriott, Kimpton Hotels

Upscale – Radisson, Hilton Garden Inn, Residence Inn, Springhill Suites, Homewood Suites, Courtyard, Best Western Premier

Upper Midscale – Fairfield Inn/Suites, Holiday Inn, Clarion, Hampton Inn/Suites, Best Western PLUS

Midscale – Country Inn & Suites, Best Western, Candlewood Suites, Quality Inn/Suites

Economy – Extended Stay America, Red Roof, Days Inn, Microtel

2014 STR Chain Scales *Full list available at www.str.com/resources/documents

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Scales: Year Starts Out As It Ended – Strong Demand Growth

0.4

1.2

3.8

1.4

-0.3

0.1

1.0

2.1

5.0

4.0

2.6 2.4

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

Supply % Change

Demand % Change

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

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Scales: Absolute OCC Very Healthy On The Upper End

76.1 74.8 74.7

67.1

58.9 57.8

75.7 74.1 73.9

65.5

57.2 56.5

Luxury Upper Upscale Upscale Upper Midscale Midscale Economy

2015 2014

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

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Markets

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RevPAR June 2015 YTD: Oil Markets Loose, Coasts (FL / CA) Win

Market RevPAR %

Change Market RevPAR %

Change

San Jose/Santa Cruz, CA 21.9 Jackson, MS -0.5

Macon/Warner Robbins, GA 20.1 Scranton/Wilkes-Barre, PA -0.9

Melbourne/Titusville, FL 18 Texas North -1.4

Oakland, CA 17.2 Houston, TX -1.7

Phoenix, AZ 17.1 New York, NY -2.8

Fort Myers, FL 15.5 Texas South -5.7

Portland, OR 15.2 Augusta, GA-SC -6.2

Rhode Island 14.2 Oklahoma Area -8.9

Tampa/St Petersburg, FL 13.9 Texas West -9.5

Oregon Area 13.7 North Dakota -10.6

*June 2015 YTD RevPAR: Best / Worst Performing Markets

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ADR June 2015 YTD: West Coast Still Strong, NYC Still Weak

Market ADR % Change Market

ADR % Change

San Jose/Santa Cruz, CA 15.8 Central New Jersey 0.9

Phoenix, AZ (Superbowl 50) 11.7 McAllen/Brownsville, TX 0.8

Oakland, CA 11.7 Newark, NJ 0.7

Sarasota/Bradenton, FL 11.4 Maryland Area 0.5

Melbourne/Titusville, FL 10.1 Oklahoma Area 0.0

Portland, OR 10 Bergen/Passaic, NJ -0.8

San Francisco/San Mateo, CA 9.57 North Dakota -1.4

Seattle, WA 9.57 Texas West -2.2

Fort Myers, FL 9.54 New York, NY -2.5

Wyoming 9.47 Texas South -4.1

* June 2015 YTD ADR : Best / Worst Performing Markets

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June 2015 YTD: Varied Performance, Phoenix Wins, NYC Looses

Market OCC % ADR % Change Phoenix, AZ (Superbowl 50) 72.1 11.7

San Francisco/San Mateo, CA 83.1 9.6

Seattle, WA 74.6 9.6

Nashville, TN 73.5 9.3

Tampa/St Petersburg, FL 77.1 8.5

New Orleans, LA 74.1 3.7

Oahu Island, HI 83.9 2.9

Houston, TX 71.4 2.2

Norfolk/Virginia Beach, VA 54.5 1.9

New York, NY 82.2 -2.5

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

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Tennessee Key Statistics - YTD June 2015 *All Time High for First 6 Months

% Change

• Hotels 1,432

• Room Supply 22.2 mn 0.6%

• Room Demand 13.7 mn 4.5%

• Occupancy* 77.1% 5.0%

• ADR $123.29 8.5%

• RevPAR* $94.99 13.9%

• Room Revenue* $1.3 bn 11.7%

Strong Performance for 1st Half of 2015

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-12

-6

0

6

12

2003 2005 2007 2009 2011 2013

Supply % Change

Demand % Change

5.4%

0.3%

7.2%

-7.5%

3.0%

State of Tennessee: Supply & Demand % Change 12 MMA, January 2003 – June 2015

Positive Supply/Demand Fundamentals

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ADR Growth has Surpassed OCC Growth for Past 2 Yrs

-16

-8

0

8

2003 2006 2009 2012 2015

OCC % Change

ADR % Change

7.2%

5.1%

-0.7%

-9.6%

7.0%

State of Tennessee: Occ & ADR % Change 12 MMA, January 2003 – June 2015

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Fri/Sat – Nearly 10% Occ Premium Over Weekdays

47.0

61.2

68.4 71.3 71.6

78.3 80.5

52.5

68.5

74.7 76.0 77.4

85.1 86.3

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

12 MMA ending August 2014 12 MMA ending June 2015

Day of Week Metrics : State of Tennessee Occupancy 12 MMA ending June 2014 vs. 2015

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Relatively Consistent ADRs

$80.77 $88.67

$95.59

$108.49 $113.54 $111.93 $110.88

$87.63

$96.06 $99.58 $100.71 $101.50

$107.85 $107.82

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

12 MMA ending June 2014 12 MMA ending June 2015

Day of Week Metrics : State of Tennessee ADR 12 MMA ending June 2014 vs. 2015

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Tennessee Markets: Occ & Occ % Change YTD June 2015

53.6

73.5

64.9

53.4

63.8

Tennessee Area

Nashville

Memphis

Knoxville

Chattanooga 8.3%

5.8%

-4%

2.1%

8.5%

Highest Occupancy Growth in TN Area Market

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Tennessee Markets: ADR & ADR % Change YTD June 2015

$126.26

$89.50

$83.57

$79.43

$73.81

10 30 50 70 90 110 130

Nashville

Memphis

Chattanooga

Knoxville

Tennessee Area

5.0%

7.6%

5%

5.5%

9.3%

2.7%

Nashville Continues ADR Surge

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Hotel Pipeline

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In Construction – Vertical construction on the physical building has begun. (This does not include construction on any sub-grade structures.) Final Planning – construction will begin within the next 12 months. Planning – construction will begin in more than 13 months. Unconfirmed – Potential projects that remain unconfirmed at this time (formerly Pre-Planning).

Un

de

r C

on

trac

t STR Pipeline Phases

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US Pipeline: Construction Today Will Impact 2016 / 2017

Phase 2015 2014 % Change

In Construction 128 106 21%

Final Planning 172 124 38%

Planning 124 152 -18%

Under Contract 426 383 11%

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

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Limited Service Construction Has Been Strong For 2 Years

5.5

13.5

46.9

38.9

4.1 1.0

19.0

Luxury UpperUpscale

Upscale UpperMidscale

Midscale Economy Unaffiliated

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

66%

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Construction In Top 26 Markets: 21 With 2%+ Of Supply

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

Market Rooms U/C % Of Existing

Oahu Island, HI 144 1%

St Louis, MO-IL 392 1%

Norfolk/Virginia Beach, VA 404 1%

San Francisco/San Mateo, CA 635 1%

Orlando, FL 1,814 1%

Atlanta, GA 1,422 2%

Tampa/St Petersburg, FL 746 2%

Phoenix, AZ 1,094 2%

New Orleans, LA 789 2%

Las Vegas, NV 3,929 2%

Washington, DC-MD-VA 2,665 2%

Minneapolis/St Paul, MN-WI 971 3%

Chicago, IL 2,916 3%

Detroit, MI 1,134 3%

San Diego, CA 1,882 3%

Dallas, TX 2,594 3%

Philadelphia, PA-NJ 1,618 4%

Los Angeles/Long Beach, CA 3,616 4%

Boston, MA 2,019 4%

Denver, CO 1,664 4%

Nashville, TN 1,607 4%

Anaheim/Santa Ana, CA 2,682 5%

Seattle, WA 2,079 5%

Miami/Hialeah, FL 3,320 7%

Houston, TX 6,838 9%

New York, NY 14,630 13%

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Supply Accelerating in Tennessee

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Nashville Market Pipeline .. Sneak peak

Project Name Room Count Open Date

Westin Nashville 450 January 2017

Home 2 Suites Franklin Cool Springs 105

August 2016

JW Marriott Nashville 450

December 2017

AC Hotels by Marriott Nashville Downtown 180

April 2017

Holiday Inn Express Goodlettsville 100

December 2016

Hampton Inn & Suites Hendersonville 100

January 2017

*Select list of projects in pipeline. For more complete listing, contact LFaulkner@STR.com

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2014 / 2015 Forecast

2015 / 2016 Forecast

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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 0.5% 5.5% 6.1%

Upper Upscale 1.1% 5.0% 6.2%

Upscale 0.6% 5.4% 6.0%

Upper Midscale 1.9% 5.1% 7.1%

Midscale 1.8% 4.2% 6.1%

Economy 1.8% 5.2% 7.1%

Independent 1.0% 5.1% 6.1%

Total United States 1.4% 5.2% 6.6%

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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% 5.2% 5.7%

Upper Upscale 0.5% 5.6% 6.1%

Upscale 0.6% 5.1% 5.7%

Upper Midscale 0.6% 4.3% 4.9%

Midscale 0.9% 4.1% 5.1%

Economy 1.0% 4.2% 5.2%

Independent 0.7% 4.4% 5.1%

Total United States 0.8% 5.0% 5.8%

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Nashville, TN Forecast - 2015 – 2016 Source: STR & Tourism Economics

Outlook

2015 Forecast

2016 Forecast

Occupancy 2.3% 0.6%

ADR 7.5% 6.8%

RevPAR 10% 7.4%

Nashville Projections

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Nashville, TN Market Forecast – 2015 -2016 Source: STR & Tourism Economics

Outlook

2015 Forecast

2016 Forecast

Occupancy 73.8% 74.2%

ADR $125.34 $133.83

RevPAR $92.45 $99.33

Nashville Projections

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To Recap…

• Life is Great! ‘Fish While the Fishing is Good’

• Demand Growth: Strong & Steady

• Supply growth: Not an Issue - For Now

• YE RevPAR Forecast: Rosy!

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