WELCOME REMARKS AND INTRODUCTION

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2 WELCOME REMARKS AND INTRODUCTION Cliff Risman Partner, Gardere Wynne Sewell LLP

3 10 YEARS STRONG DHC CONTINUES TO GET BIGGER AND BETTER! Attendance * *Based on pre-registration

4 MARKET UPDATE Dan Lesser President and CEO, LW Hospitality Advisors LLC

5 U.S. Lodging Industry Offensive or Defensive Game Plan? 2015 Dallas Hotel Conference Presented by: Daniel Lesser, President & CEO LW Hospitality Advisors 570 Seventh Avenue, Suite 805 New York, NY USA (212) X101 October 21, 2015

6 Random Dan Lesser Thoughts If you bought between 09 and 11 consider selling now Hotels are fundamentally long term hold assets Off market does not equal below market Be vigilantly aware of new supply Brand overload A hotel company should merge with Airbnb LW Hospitality Advisors Page 2

7 Random Dan Lesser Thoughts LW Hospitality Advisors Page 3

8 U.S. Hotel Industry Macro Overview Economy Contracting Expanding Jobs Declining Declining 1/1/2009 1/1/ /1/ /1/2015 Expanding (Slowly) Increasing (Slowly) Expanding (Modestly) Increasing (Modestly) Consumer Spending Declining Expanding Increasing Increasing Business Spending Declining Expanding Increased (Now Stagnant) Accelerating Supply Growth Accelerating Stabilized Muted Accelerating Room Night Demand Declining Growing Record Levels Continued Record Levels U.S. Hotel Performance Projected Projected Supply 2.6% 3.2% 2.0% 0.6% 0.5% 0.7% 0.9% 1.2% 1.4% Demand 1.9% 5.8% 7.8% 5.0% 3.0% 2.2% 4.5% 2.9% 2.2% Occupancy 4.4% 8.7% 5.7% 4.4% 2.5% 1.5% 3.6% 1.7% 0.8% ADR 2.7% 8.8% 0.1% 3.7% 4.2% 3.9% 4.6% 5.1% 5.2% RevPAR 1.8% 16.7% 5.5% 8.2% 6.8% 5.4% 8.3% 6.8% 6.0% Source: (Data Only) STR, Inc. LW Hospitality Advisors Page 4

9 U.S. Hotel Industry SWOT Analysis- Strengths Few economists believe the U.S. is near recession LW Hospitality Advisors Page 5

10 U.S. Hotel Industry SWOT Analysis- Strengths The industry is in a Goldilocks equilibrium LW Hospitality Advisors Page 6

11 U.S. Hotel Industry SWOT Analysis- Strengths Construction is limited, but escalating LW Hospitality Advisors Page 7

12 U.S. Hotel Industry SWOT Analysis- Strengths Gasoline prices are declining LW Hospitality Advisors Page 8

13 U.S. Hotel Industry SWOT Analysis- Strengths Increasing International air traffic to/from U.S. LW Hospitality Advisors Page 9

14 U.S. Hotel Industry SWOT Analysis- Strengths USA is the world s beacon for safety and security LW Hospitality Advisors Page 10

15 U.S. Hotel Industry SWOT Analysis- Strengths Industry experiencing strong group demand, and record high occupancy levels LW Hospitality Advisors Page 11

16 U.S. Hotel Industry SWOT Analysis- Strengths Abundant availability of equity and low cost debt LW Hospitality Advisors Page 12

17 U.S. Hotel Industry SWOT Analysis- Strengths Inbound overseas capital chasing yield LW Hospitality Advisors Page 13

18 U.S. Hotel Industry SWOT Analysis- Strengths Record setting hotel prices LW Hospitality Advisors Page 14

19 U.S. Hotel Industry SWOT Analysis- Strengths Technology helps increase efficiency and maximize profits LW Hospitality Advisors Page 15

20 U.S. Hotel Industry SWOT Analysis- Weaknesses Underwhelming U.S. economic recovery (Rapidly changing technology) LW Hospitality Advisors Page 16

21 U.S. Hotel Industry SWOT Analysis- Weaknesses The U.S. dollar value is rising, making travel to America more costly (Rapidly changing technology) LW Hospitality Advisors Page 17

22 U.S. Hotel Industry SWOT Analysis- Weaknesses OTA s are propagating negative pressure on room pricing (Rapidly changing technology) LW Hospitality Advisors Page 18

23 U.S. Hotel Industry SWOT Analysis- Weaknesses Rising influence of unions LW Hospitality Advisors Page 19

24 U.S. Hotel Industry SWOT Analysis- Weaknesses Hotel property taxes are rising (Rapidly changing technology) LW Hospitality Advisors Page 20

25 U.S. Hotel Industry SWOT Analysis- Weaknesses Entry of international brands increasing competition (Rapidly changing technology) LW Hospitality Advisors Page 21

26 U.S. Hotel Industry SWOT Analysis- Opportunities Industry well positioned to react to any inflation Rapidly changing technology Opportunities Industry well positioned to react to any inflationary increases Ancillary revenue opportunities similar to airline industry Hotel brands morph into experiential identities expanding into retail goods and other services No shortage of old functionally obsolete hotel product situated on excellent sites/locations Rapidly changing technology LW Hospitality Advisors Page 22

27 U.S. Hotel Industry SWOT Analysis- Opportunities Pricing power rests owners/operators negotiating corporate rates Rapidly changing technology Opportunities Industry well positioned to react to any inflationary increases Ancillary revenue opportunities similar to airline industry Hotel brands morph into experiential identities expanding into retail goods and other services No shortage of old functionally obsolete hotel product situated on excellent sites/locations Rapidly changing technology LW Hospitality Advisors Page 23

28 U.S. Hotel Industry SWOT Analysis- Opportunities There are physical and/or functionally obsolete hotel products situated on excellent sites/locations Rapidly changing technology Opportunities Industry well positioned to react to any inflationary increases Ancillary revenue opportunities similar to airline industry Hotel brands morph into experiential identities expanding into retail goods and other services No shortage of old functionally obsolete hotel product situated on excellent sites/locations Rapidly changing technology LW Hospitality Advisors Page 24

29 U.S. Hotel Industry SWOT Analysis- Opportunities Hotel REITs are looking for ripe for M&A Rapidly changing technology Opportunities Industry well positioned to react to any inflationary increases Ancillary revenue opportunities similar to airline industry Hotel brands morph into experiential identities expanding into retail goods and other services No shortage of old functionally obsolete hotel product situated on excellent sites/locations Rapidly changing technology LW Hospitality Advisors Page 25

30 U.S. Hotel Industry SWOT Analysis- Opportunities Exhibition and trade show business is helping to drive convention hotel developments Rapidly changing technology Opportunities Industry well positioned to react to any inflationary increases Ancillary revenue opportunities similar to airline industry Hotel brands morph into experiential identities expanding into retail goods and other services No shortage of old functionally obsolete hotel product situated on excellent sites/locations Rapidly changing technology LW Hospitality Advisors Page 26

31 U.S. Hotel Industry SWOT Analysis- Opportunities Industry blowback against Airbnb LW Hospitality Advisors Page 27

32 U.S. Hotel Industry SWOT Analysis- Opportunities Rise of secondary markets provides opportunities Rapidly changing technology Opportunities Industry well positioned to react to any inflationary increases Ancillary revenue opportunities similar to airline industry Hotel brands morph into experiential identities expanding into retail goods and other services No shortage of old functionally obsolete hotel product situated on excellent sites/locations Rapidly changing technology LW Hospitality Advisors Page 28

33 U.S. Hotel Industry SWOT Analysis- Threats U.S. economic expansion ages entering its seventh year Current expansion now 18 months longer than average since WW II, and none has lasted longer than a decade LW Hospitality Advisors Page 29

34 U.S. Hotel Industry SWOT Analysis- Threats Volatile overseas economies could result in a unpredictable U.S. economy LW Hospitality Advisors Page 30

35 U.S. Hotel Industry SWOT Analysis- Threats There will be another recession between now and 2020 LW Hospitality Advisors Page 31

36 U.S. Hotel Industry SWOT Analysis- Threats Rising interest rates, making repayments of loans more costly LW Hospitality Advisors Page 32

37 U.S. Hotel Industry SWOT Analysis- Threats Labor unrest disrupts the industry LW Hospitality Advisors Page 33

38 U.S. Hotel Industry SWOT Analysis- Threats Security and event risk LW Hospitality Advisors Page 34

39 U.S. Hotel Industry SWOT Analysis- Threats America s crumbling infrastructure: airports, roads, electric LW Hospitality Advisors Page 35

40 U.S. Hotel Industry SWOT Analysis- Threats Brands pushing standards updates, increasing costs for franchisees LW Hospitality Advisors Page 36

41 U.S. Hotel Industry SWOT Analysis- Threats Booking a room on Google will increase OTA dependency Rapidly changing technology Opportunities Industry well positioned to react to any inflationary increases Ancillary revenue opportunities similar to airline industry Hotel brands morph into experiential identities expanding into retail goods and other services No shortage of old functionally obsolete hotel product situated on excellent sites/locations Rapidly changing technology LW Hospitality Advisors Page 37

42 U.S. Hotel Industry SWOT Analysis- Threats Proliferation of new hotel brands is increasing competition LW Hospitality Advisors Page 38

43 U.S. Hotel Industry SWOT Analysis- Threats Airbnb, Homeaway, and other travel industry disrupters all affect the market LW Hospitality Advisors Page 39

44 U.S. Hotel Industry SWOT Analysis- Threats Obsolescence risk that is difficult to understand LW Hospitality Advisors Page 40

45 U.S. Hotel Industry SWOT Analysis- Threats The number of hostels is steadily increasing LW Hospitality Advisors Page 41

46 U.S. Hotel Industry SWOT Analysis- Threats NLRB Browning-Ferris ruling altering definition of joint employer LW Hospitality Advisors Page 42

47 Random Dan Lesser Thoughts LW Hospitality Advisors Page 43

48 U.S. Lodging Industry Offensive or Defensive Game Plan? 2015 Dallas Hotel Conference Presented by: Daniel Lesser, President & CEO LW Hospitality Advisors 570 Seventh Avenue, Suite 805 New York, NY USA (212) X101 October 21, 2015

49 THE CAPITAL MARKETS: WHEN WILL THE BUBBLE BURST? MODERATOR: Chuck Bedsole, Managing Director, Alvarez & Marsal Real Estate Advisory Services, LLC PANELISTS: Monty Bennett, Chief Executive Officer, Ashford Group of Companies Daniel Kwon, Principal, Apollo Global Management LLC Larry Kwon, Managing Director, Moelis & Company Dan Peek, Senior Managing Director, HFF

50 AH&LA AND GOVERNMENT AFFAIRS UPDATE Vanessa Sinders SVP and Department Head of Government Affairs, American Hotel & Lodging Association

51 UNITY, ENGAGEMENT, AND FOCUS DRIVE A REVITALIZED AH&LA Stronger, better alignment Power in numbers Long-term, sustained focus on advocacy

52 ROBUST MEMBERSHIP GROWTH; RECORD ENGAGEMENT Properties Rooms , million , million

53 RECORD HOTELPAC GROWTH $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- $645,055 $445,094 $202,

54 Leading on significant issues with ONE voice; ONE vision.

55 WORKFORCE ISSUES

56 LEADING TO PROTECT THE FRANCHISE MODEL Aug. 27 Browning/Ferris Ruling expands the definition of joint employer AH&LA co-chairs the Coalition to Save Local Businesses House and Senate legislation moving

57 PUSHING BACK AGAINST ONEROUS OVERTIME REGULATION Coalition leader: Partnership to Protect Workplace Opportunities Submitted Federal testimony Salary threshold: $23,660 to $50,440 Changes the primary duties test

58 LOS ANGELES HOTEL-ONLY WAGE FIGHT ONGOING Industry unity on hotel-only battles Los Angeles at center of debate AH&LA, AAHOA lawsuit in motion Stop hotel-only precedent It shows that the people who were promoting this issue were working directly with the City Attorney s Office to write this ordinance, Waldman said. Los Angeles Daily News

59 DISTRIBUTION & OTAS

60 FIGHTING BACK AGAINST EXPEDIA-ORBITZ DEAL

61 ENGAGING VOCAL SUPPORTERS AGAINST DEAL

62 RAISING AWARENESS ABOUT OTA DECEPTIVE PRACTICES Aggressive, Public & Government Pressure

63 SUSTAINED MEDIA ATTENTION: 300 MILLION MEDIA IMPRESSIONS

64 INCREASED AWARENESS LEADS TO GOVERNMENT ACTION

65 SHORT-TERM ONLINE RENTAL COMPANIES

66 LEADING THE CHARGE TO CREATE RULES FOR SHORT-TERM ONLINE RENTALS Level playing field: ensuring equal application of city/state/federal laws, including regulations and taxes; ensuring rogue commercial operators are not allowed to operate Guest safeguards: hotels implement latest safety and security equipment and procedures; short-term rentals do not always offer these Collaborative approach: concerned neighbors, bed & breakfasts, labor, affordable housing proponents, think tanks

67 ROGUE COMMERCIAL OPERATORS DOMINATE AIRBNB IN NEW YORK: 6% of hosts generate 36% of all rental transactions; They collect 37% of total revenue or $168 million 72% of Airbnb listings are illegal IN SAN FRANCISCO: 205 Airbnb super hosts control three or more listings They account for 4.8% of all hosts, but control 18% of listings IN LOS ANGELES: Airbnb hosts with two or more units provide 37% of the revenue

68 ACTIVE LEGISLATION IN 20+ STATES (AND 100+ LOCALITIES)

69 AGGRESSIVE GOVERNMENT OUTREACH & EDUCATION Shaping the debate Broad coalition building Congressional outreach Participation in FTC workshop

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71 THE NEW, REVITALIZED AH&LA Solid foundation Sharper focus Significant force

72 TRANSACTION OF THE YEAR AWARD PRESENTED BY: Tom Corcoran Chairman of the Board, FelCor Lodging Trust

73 ASHFORD GROUP OF COMPANIES

74 CORNELL HOTEL SOCIETY Arzu Molubhoy President, Cornell Hotel Society

75 President First collegiate hospitality program founded in 1922 First stand-alone hospitality program to earn AACSB accreditation 13,000 Hotel School alumni 55 CHS chapters worldwide CORNELL HOTEL SOCIETY Scholarship fundraising Networking and industry panels Events and conferences: Cornell Hospitality Icon & Innovator Awards Cornell Reception at ALIS CHS Reception at The International Hotel, Motel + Restaurant Show CHS Reception at the Dallas Hotel Conference

76 OPERATORS AND BRANDS: WHAT IS COMING NEXT? MODERATOR: Cindy Nelson, Partner, Gardere Wynne Sewell LLP PANELISTS: Jim Chu, SVP, Global Head of Finance Strategy and Owner Relations, Hyatt Hotels Corporation Mike Deitemeyer, President, Omni Hotels & Resorts Dave Johnson, President and CEO, Aimbridge Hospitality L.P. Phil Keb, EVP, Development Americas and Europe, Langham Hospitality Group

77 CLOSING REMARKS AND THANKS Cindy Nelson Partner, Gardere Wynne Sewell LLP

78 THANK YOU FOR BEING OUR GUEST! FOR MORE INFORMATION ON THE DALLAS HOTEL CONFERENCE PRESENTING SPONSORS, PLEASE SEE BELOW. Dave Johnson President and CEO Aimbridge Hospitality LP Chuck Bedsole Managing Director Alvarez & Marsal Real Estate Advisory Services, LLC Clifford J. Risman Partner Gardere Wynne Sewell LLP Dan Peek Senior Managing Director HFF