1. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS How are we performing, where is the pain (and the gain) and what lies ahead? David Bailey Deputy Managing Director TRI Hospitality Consulting

2. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Hotel trading performance – and what lies ahead? What history tells us 2010 – the story so far Are we in recovery? Where is the pain and gain? Where are the opportunities for development? What lies ahead?

3. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Annual Average Room Occupancy Recession Unemployment hits almost 2m IRA bombs ‘Black Monday’ US visitors down Recession Gulf War 9/11 SARS Iraq War 7/7 attacks Recession

4. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Actual Average Room Rate Recession Gulf War SARS Iraq War 7/7 attacks 9/11

5. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS, TOURISM AND LEISURE UK Full-Service RevPAR 12 months to December 2009 v 2008 Edinburgh - 3.2% Aberdeen - 12.6% Leeds -9.0% Liverpool - 20.4% Manchester - 17.8% London -6.4% Southampton - 13.6% Cardiff - 4.8% Portsmouth -6.6% Birmingham -15.7% Provinces -10.8% Brighton - 3.9% Source:

6. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS, TOURISM AND LEISURE UK Full-Service RevPAR 7 months to July 2010 v 2009 Edinburgh - 1.0% Aberdeen - 6.0% Leeds - 0.3% Liverpool - 5.8% Manchester - 6.2% London +11.6% Southampton - 1.5% Cardiff - 6.4% Portsmouth +4.3% Birmingham +4.7% Provinces +0.9% Brighton - 3.0% Source:

7. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS, TOURISM AND LEISURE Europe Full-Service RevPAR 12 months to December 2009 vs 2009 Prague - 25.0% Frankfurt -16.7% Paris -13.6% Amsterdam -20.1% Vienna -17.6% Hamburg -13.7% Budapest -22.5% Berlin -10.4% Rome -16.8% Source: London -6.4% Barcelona -24.0% Warsaw -6.9%

8. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS, TOURISM AND LEISURE Europe Full-Service RevPAR 7 months to July 2010 vs 2009 Prague - 14.7% Frankfurt +21.2% Paris +6.6% Amsterdam +15.7% Vienna +13.0% Hamburg +10.5% Budapest -1.9% Berlin +19.5% Rome +1.6% Source: London +11.6% Barcelona +2.1% Warsaw +3.3%

9. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS 2010 – Challenges

10. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Are we in recovery? RECOVERY Improving fundamentals and returns GDP Growth Increased international travel Increased demand for commercial lettings Domestic consumer spend recovery GROWTH Demand outpaces supply Increasing access to capital Rapid supply growth Hotel earnings grow but values stabilise PEAK Overbuilding occurs Supply starts to exceed demand Hotel earnings decelerate and stabilise DECLINE GDP decline Reduction in consumer spend Visitor levels decrease Corporate spend reduced Returns decline Funding reduces Supply growth slows Profit margins contract Source: Merrill Lynch / TRI Recessionary Period

11. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Where is the Pain? Hotel Performance Summary 7 months to July 2010 v 2009 LiverpoolManchesterCardiff Occupancy-0.5 pts-1.2 pts-0.6 pts ARR-5.2%-4.5%-5.6% RevPAR-5.8%-6.2%-6.4% TrevPAR-6.0%-3.4%-6.1% Payroll+0.1 pts+0.8 pts+1.2 pts GOP/IBFC-6.7%-14.5% Source:

12. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Where are the Gains? Hotel Performance Summary 7 months to July 2010 v 2009 LondonHeathrowBirmingham Occupancy+2.3 pts+7.0 pts+4.9 pts ARR+8.4%+0.7%-3.3% RevPAR+11.6%+10.5%+4.7% TrevPAR+8.4%+8.8%+2.3% Payroll-1.5 pts-1.3 pts-1.1 pts GOP/IBFC+15.3%+18.8%+7.5% Source:

13. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Development Opportunities London continues to be a strong focus of development Keen appetite from brands for expansion persists Strategic locations inc. primary cities, airports, major attractions are of interest Opportunities in the budget sector

14. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Which market is performing? London Headline Performance Comparison 7 months to July 2010 v 2009 London 3 star London 4 star London 5 star Occupancy+1.2 pts+1.4 pts+5.7 pts ARR+7.3%+8.6%+7.1% RevPAR+8.9%+10.5%+15.1% TrevPAR+6.1%+7.6%+10.6% Payroll-1.8 pts-2.6 pts-2.2 pts GOP/IBFC+10.6%+13.8%+18.6% Source:

15. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS London Hotel Development Monitor New Room Supply by Grade 2010-2013f Source:

16. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Focus on UK Branded Budget Room Supply

17. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Budget sector growth continues UK Budget Hotels Annual Rooms Revenue

18. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Full-Service Hotel Market v Budget Hotel Market Performance 2009 v 2008 BudgetFull-service Occ +/- ARR +/- RevPAR +/- Occ +/- ARR +/- RevPAR +/- London -2.5 pts-2.6%-5.5%-0.4 pts-6.0%-6.4% Provinces -6.1 pts-0.2%-8.7%-2.3 pts-7.8%-10.8% Source:

19. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Full-Service Hotel Market v Budget Hotel Market Performance July10 YTD v July09 YTD BudgetFull-service Occ +/- ARR +/- RevPAR +/- Occ +/- ARR +/- RevPAR +/- London +6.6 pts+1.6%+10.4%+2.3 pts+8.4%+11.6% Provinces +4.2 pts-3.3%+3.0%+2.1 pts-2.2%+.09% Source:

20. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Future Operating Environment Government spending cuts 2012 London Olympics Double-dip recession?????? Primary hotel markets stabilising allowing growth VAT up to 20% Further polarisation between those who get the proposition right and those who do not

21. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS Q3 2010 The Confidence Monitor Source:

22. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS TRI Forecasts v Actual to July 2010 LondonTRI Forecasts Actual to July 2010 Occupancy+1.5 pts+2.2pts ARR+0.6%+8.4% RevPAR+2.5%+11.6% Provincial UKTRI Forecasts Actual to July 2010 Occupancy+0.1pts+2.1pts ARR-1.6%-2.2% RevPAR-1.4%+0.9%

23. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS TRI Forecasts 2011 LondonTRI Forecasts Occupancy+1.0 pp ARR+2.6% RevPAR+3.8% Provincial UKTRI Forecasts Occupancy+1.9 pp ARR+0.2 % RevPAR+3.0 %

24. TRI HOSPITALITY CONSULTING INTERNATIONAL EXPERTS IN HOTELS www.trihospitality.com www. HotStats.com david.bailey@trihc.com