US LODGING INDUSTRY OVERVIEW Louisville, KY

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US LODGING INDUSTRY OVERVIEWLouisville, KY
Brad GarnerVice PresidentSMITH TRAVEL RESEARCH
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brad_at_smithtravelresearch.com
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Presentation Outline

• U.S. Lodging Industry Macro Trends
• U.S. Chain Scales
• Louisville
• Total Market
• Louisville versus 2000
• Derby
• Chain Scales
• Location
• Comp Cities
• 2006 Forecast Total U.S.

Source STR
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U.S. Lodging Industry - Key StatisticsMay 2006
YTD

• Change
• Hotels 48,837 0.3
• Rooms 4.5mm 0.4
• Demand 2.7mm 2.7
• Occupancy 62.0 2.3
• A.D.R. 96.42 6.6
• RevPAR 59.79 9.0
• Room Revenue 40.0B 9.4

STR samples 65 of all rooms available in the
industry
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Total United StatesRoom Supply/Demand Percent
ChangeTwelve Month Moving Average 1989 to May
2006
3.0
0.3
Cyclicality Clearly Visible Recent S/D
Imbalance Spells Opportunity
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Total United States Occupancy, ADR and RevPAR
Percent Change12 MMA to May 2006
Recession 9/11 Afghanistan SARS


Recession
Iraq

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Total United StatesRoom Supply Percent
ChangeJan 2002 May 2006
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Total United StatesRoom Demand Percent
ChangeJan 2002 May 2006
37 Consecutive Months of Demand Growth
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Total United StatesOccupancy/ADR Percent
ChangeTwelve Month Moving Average 1989 to May
2006
Divergence?
Divergence
If History Repeats Itself, Strong ADR Gains are
Here to Stay
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Total United StatesRoom Demand / ADR Percent
ChangeTwelve Month Moving Average 1989 to May
2006
6.1
Divergence
3.0
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Source SHA Center for Hospitality Research,
Smith Travel Research
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Total United StatesOccupancy Percent, Average
Daily RateTwelve Month Moving Average 1989 to
May 2006
Robust OCC and ADR Gains post 9/11
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Total United StatesRevPAR Percent ChangeTwelve
Month Moving Average 1989 to April 2006
6.5 Feb 01
6.5
9.0
Feb 97
-2.6 Oct 91
-10.6 Jun 02
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Total United StatesKey Performance Indicators
Percent ChangeFull Year 2004, 2005 May 2006 YTD
2nd Part of the Recovery Cycle Rate Growth
Accelerates
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U.S. Chain Scales
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STR - U.S. Chain ScalesLTM May 2006 Room Revenue
Share

Total Room Revenue 95 Billion
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Chain ScalesSupply/Demand Percent ChangeMay
2006 YTD
Supply / Demand Imbalance Across All Chain Scales

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Chain ScalesOccupancy/ADR Percent ChangeMay
2006 YTD
Creates Pricing Power For Hotel Companies
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Chain Scale SegmentsOccupancy PercentMay 2006
YTD
And The Resulting Very High Occupancies .
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Chain Scale SegmentsAverage Daily Rate (US)May
2005 YTD
.Lead to Higher Room Rates
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Louisville
Total 152 Props w/ 19,242 Rooms
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Louisville - Key StatisticsMay 2006 YTD

• Change
• Hotels 152
• Rooms 19,242 3.6
• Demand 1.56mm 3.0
• Occupancy 54.0 0.6
• A.D.R. 86.22 8.1
• RevPAR 46.55 7.5
• Room Revenue 134mm 11.4

Note, STR samples 83.2 of all rooms in
Louisville
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LouisvilleKey Performance Indicators Percent
ChangeTwelve Months Ending May 2006
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LouisvilleKey Performance Indicators Percent
ChangeYear to Date May 2006
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LouisvilleRoom Supply/Demand Percent
ChangeTwelve Month Moving Average 1989 to May
2006
4.3
3.9

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Total Pipe 19 props 1,794 rooms (9 to total
rooms)
1.5 to total rooms
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LouisvilleOccupancy, ADR RevPAR Percent Change
Twelve Month Moving Average 1989 to May 2006
7.3
7.0

0.4
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Louisville vs. 2000
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Louisville Supply Percent Change ()Annual 2000
2005 w/ YTD 12 MMA May 2006
Source STR
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Louisville Demand Percent Change ()Annual 2000
2005 w/ YTD 12 MMA May 2006
Source STR
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LouisvilleOccupancy Absolute Level ()Annual
2000 2005 w/ YTD 12 MMA May 2006
Source STR
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Louisville Occupancy Percent Change ()Annual
2000 2005 w/ YTD 12 MMA May 2006
Source STR
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Louisville ADR Absolute Level ()Annual 2000
2005 w/ YTD 12 MMA May 2006
Source STR
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Louisville ADR Percent Change ()Annual 2000
2005 w/ YTD 12 MMA May 2006
Source STR
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LouisvilleADR Nominal Annual 2000 2006
Assume ADR Growth of 3 YOY (Base Year 2000)
Source STR
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Louisville RevPAR Absolute Level ()Annual 2000
2005 w/ YTD 12 MMA May 2006
Source STR
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Louisville RevPAR Percent Change ()Annual 2000
2005 w/ YTD 12 MMA May 2006
Source STR
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Derby Saturday, May 6th, 2006
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Derby!!! (May 6th)Occupancy Absolute2003 - 2006
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Derby!!!ADR2003 - 2006
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Derby!!!Total Room Revenue()2003 - 2006
Thursday, Friday, Saturday Nights
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DOW
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Louisville Day of Week Analysis Occupancy
Percent Change2006 vs. 2005 YTD (Jan. 1 July 8)
Ramp up period for Marriott??
Source STR
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Louisville Day of Week Analysis Absolute
Levels of ADR ()2006 vs. 2005 YTD (Jan. 1
June 8)
Source STR
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Louisville Day of Week Analysis ADR Percent
Change2006 vs. 2005 YTD (Jan. 1 June 8)
4th Street Live?!!
Source STR
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Chain Scales
Upper Upscale 6 Props w/ 2,236 Rooms Upscale
15 Props w/ 1,885 Rooms Mid w/ FB 20 Props w/
3,488 Rooms Mid w/o FB 37 Props w/ 3,190
Rooms Economy 42 Props w/ 4,044 Rooms Total
152 Props w/ 19,242 Rooms
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Louisville - Chain ScalesSupply/Demand Percent
ChangeYear to Date May 2006
Marriott 616 Rooms - 200503
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Louisville - Chain ScalesOccupancy/ADR Percent
ChangeYear to Date May 2006
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Louisville - Chain ScalesRevPAR/Room Revenue
Percent ChangeYear to Date May 2006
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Location
Urban 20 Props w/ 4,985 Rooms Suburban 103
Props w/ 10,998 Rooms Airport 12 Props w/ 2,125
Rooms Interstate 17 Props w/ 1,134 Rooms Total
152 Props w/ 19,242 Rooms
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Louisville - Location SegmentsSupply/Demand
Percent ChangeYear to Date May 2006

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Louisville - Location SegmentsOccupancy/ADR
Percent ChangeYear to Date May 2006

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Louisville - Location SegmentsRevPAR/Room
Revenue Percent ChangeYear to Date May 2006

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Louisville - Location SegmentsOccupancy
PercentYear to Date May 2006

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Louisville - Location SegmentsAverage Daily Rate
()Year to Date May 2006
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Comp Cities
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Supply Percent Change ()Competitive CitiesYTD
May 2006
Source Smith Travel Research
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Demand Percent Change () Competitive CitiesYTD
May 2006
Source Smith Travel Research
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Occupancy Absolute Levels (Occ ) Competitive
CitiesYTD May 2006
Source Smith Travel Research
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Occupancy Percent Change () Competitive
CitiesYTD May 2006
Source Smith Travel Research
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ADR Absolute Levels ()Competitive CitiesYTD
May 2006
Source Smith Travel Research
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ADR Percent Change () Competitive CitiesYTD
May 2006
Source Smith Travel Research
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RevPAR Percent Change ()Competitive CitiesYTD
May 2006
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Tracts
Louisville Dtown/Aport 48 Props w/ 8,559
Rooms Louisville Area 55 Props w/ 4,806
Rooms Louisville East 49 Props w/ 5,877
Rooms Total 152 Props w/ 19,242 Rooms
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0.1
-0.8
1.4
Occupancy Change 12 MMA May 2006
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5.4
2.9
8.2
ADR Change 12 MMA May 2006
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69.26
65.63
92.80
Absolute Levels of ADR 12 MMA May 2006
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5.5
2.2
9.7
Occupancy Change 12 MMA Feb 2006
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U.S. Forecast
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Lodging Industry Issues

• Supply Growth Remains Benign High Construction
  Costs, Condo Conversions
• Higher Operating Costs Insurance, Labor,
  Amenities, Energy
• Solid Demand Growth
• Changing Demand Experience Travel, Baby
  Boomers, Demand Competition
• Aggressive Pricing Could Double CPI, Hotel
  Chains Control Online Pricing
• Transportation Problems Troubled Airlines,
  Gasoline, Infrastructure
• Global Issues Terrorism, Bird Flu, Currency
  Fluctuations
• Outlook Great through 08!

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U.S. Economic OutlookBlue Chip Economic
Indicators June 2006

• 2005A 2006F 2007F
• Real GDP 3.6 3.4 2.9
• CPI (Inflation Rate) 3.4 3.3 2.5
• Corporate Profits 17.1 15.5
  3.9
• Disp Personal Income 1.5 2.7 3.3
• Unemployment Rate 5.1 4.8 4.8

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Total United StatesSupply/Demand Percent
Change2002 2007P
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Total United StatesOccupancy Percent2002 2007P
76
Total United StatesOccupancy Percent Change2002
2007P
77
Total United StatesNominal Room Rates2000
2006P
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Total United StatesADR Percent Change2002
2007P
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Total United StatesNominal Room Rates2000
2006P
If Yr. 2000 ADR Had Inflated at 3 over 6 years
US Hotel Rooms Are Still a Bargain
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Total United StatesReal Room Rates (Inflation
Adjusted) Year End 2000 - 2005
Base Year 2000
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United States Lodging Industry - Estimated
Profits (Billions ) 1982 2007 Estimated

In 2005 500M revenue increase due to
Katrina. 75M increase to profits
Source PWC 2006 2007 Estimates
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Questions?
Brad Garnerbrad_at_smithtravelresearch.comwww.sm
ith.travelwww.smithtravelresearch.com
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Total United States Hotel Industry Estimated
Revenue and Pre-Tax Income (In Billions)Years
1999 2007F

Revenue Growth vs. Profit Growth