Sick Patient or Post-Mortem? Diagnosing the Canadian Hotel Investment Industry What Will It Take To Survive? Moderator: Lyle Hall, HLT Advisory Inc. Panel: David Larone, Director, PKF Consulting Inc Betsy MacDonald, Managing Director, HVS Abid J. Gilani, SVP Treasury, Marriott International Chuck Henry, President, Hotel Capital Advisers, Inc. Craig Wright, Senior VP & Chief Economist, RBC Capital Markets - Real Estate Group Moderator: Lyle Hall, HLT Advisory Inc. Panel: David Larone, Director, PKF Consulting Inc Betsy MacDonald, Managing Director, HVS Abid J. Gilani, SVP Treasury, Marriott International Chuck Henry, President, Hotel Capital Advisers, Inc. Craig Wright, Senior VP & Chief Economist, RBC Capital Markets - Real Estate Group

Betsy MacDonald Betsy MacDonald Managing Director

Occupancy ( ) Year Supply % Change Rooms Available Supply (+000) Demand % Change Demand (+000)Occupancy Occupancy % Change %4,4751.1%2, %-0.8% %4, %2, %-4.2% %4, %2, %-4.3% %4, %2, %-1.4% %4,7963.0%2, %0.4% %4,8154.0%2, %1.6% %4,8445.0%2, %2.9% %4,8935.0%3, %3.5% %4,9663.5%3, %2.2% Occupancy reaches a low point of 54.2% in 2010 – the lowest level in 40 years Occupancy rapidly recovers to 2007 levels in 2015 – due in part to slow supply growth Occupancy reaches a low point of 54.2% in 2010 – the lowest level in 40 years Occupancy rapidly recovers to 2007 levels in 2015 – due in part to slow supply growth Source: HVS

Projected Average Rate YearOccupancyPercent ChangeAverage RatePercent Change %-4.2%$ % %-8.3%$ % %-2.2%$ % %2.4%$ % %3.6%$ % %4.4%$ % %4.0%$ % %2.0%$ % Source: HVS

Projected RevPAR YearOccupancyPercent ChangeAverage RatePercent ChangeRevPARPercent Change %-4.2%$ %$ % %-8.3%$ %$ % %-2.2%$ %$ % %2.4%$ %$ % %3.6%$ %$ % %4.4%$ %$ % %4.0%$ %$ % %2.0%$ %$ % Source: HVS and STR Current recession will see declining RevPAR for a record three years Current recession will see the largest RevPAR decline of 12% in 2009 The hotel market will bottom out during 2011 and then start to recover Strong recovery will commence in 2012 RevPAR will return to record 2007 levels ($66.64) in 2013 Rapid turnaround due to limited supply growth Current recession will see declining RevPAR for a record three years Current recession will see the largest RevPAR decline of 12% in 2009 The hotel market will bottom out during 2011 and then start to recover Strong recovery will commence in 2012 RevPAR will return to record 2007 levels ($66.64) in 2013 Rapid turnaround due to limited supply growth

U.S. Hotel Transactions U.S. Hotel Transactions

Historical Cap Rates Year Cap Rate based on Historical NOI Cap Rate based on 1st Yr. Projected NOI Free and Clear Discount Rate Equity Yield Source: HVS

Value Trend for a Typical U.S. Hotel Value Per Room$37,000 $38,000$32,000$27,000$30,000 Percent Change0.0%2.7%-15.8%-15.6%11.1% Per Room Change$0$1,000-$6,000-$5,000$3, Value Per Room$33,000$37,000$45,000$50,000$59,000$60,000 Percent Change10.0%12.1%21.6%11.1%18.0%1.7% Per Room Change$3,000$4,000$8,000$5,000$9,000$1, Value Per Room$61,000$69,000$52,000 $51,000$65,000 Percent Change1.7%13.1%-24.6%0.0%-1.9%27.5% Per Room Change$1,000$8,000-$17,000$0-$1,000$14, Value Per Room$82,000$100,000$95,000$81,000$73,000$77,000 Percent Change 26.2%22.0%-5.0%-14.7%-9.9%5.5% Per Room Change$17,000$18,000-$5,000-$14,000-$8,000$4, Value Per Room$82,000$95,000$104,000$110,000$116,000 Percent Change 6.5%15.9%9.5%5.8%5.5% Per Room Change$5,000$13,000$9,000$6,000 Source: HVS

Valuing Hotels in Today ’ s Uncertain Market Valuing Hotels in Today ’ s Uncertain Market

Market vs. Liquidation Value Market Value Willing Seller Neither Buyer or Seller under pressure to buy or sell Sufficient time to expose the hotel to all market participants – Current adequate marketing time: 1-2 years Market Value Willing Seller Neither Buyer or Seller under pressure to buy or sell Sufficient time to expose the hotel to all market participants – Current adequate marketing time: 1-2 years Liquidation Value Unwilling Seller – facing foreclosure / bankruptcy Seller under extreme pressure to sell Limited time to adequately market and sell hotel – Inadequate marketing time = less than 1 year Discount 20-50% below market value