Hotel Industry: Key Trends That Impact Congress Centres

1. Hotel Industry:Key Trends That Impact Congress Centres International Association of Congress Centres Graz, Austria 17 July 2007 Stephen D. Powell SVP Worldwide Sales

2. Topics • Industry Performance • Consolidation • Key Growth Areas • Outlook for 2009 • Hotel Operations – Pricing Strategies • Hotels and Convention Centres • Relationships

3. 2007 is shaping up to be another strong year in the global hotel industry • Global demand drivers are robust • Best global economy in 40 years • Inflation is in check • Unemployment is at multi-decade lows • Corporate profits moderating but still growing • Supply growth is increasing, but remains modest • Occupancy stable at levels enabling continued rate gains

4. The global economy is very strong and is expected to remain so for the next two years Worldwide Real GDP Growth Source: International Monetary Fund World Economic Outlook Database, April 2007

5. Unemployment remains low, and in industrialized countries is well below the mid-1990’s peak G7 Global Unemployment Source: International Monetary Fund World Economic Outlook Database, April 2007

6. Tourism is up 6.3% April YTD, above the prior two years, and ahead of the 4% gain expected at year end International Tourist Arrivals Change Over Prior Period Source: UNWTO World Tourism Barometer

7. Rate growth continues to be the primary driver of performance around the world RevPAR Change by Region May YTD Source: HotelBenchmark; Smith Travel Research/The Bench

8. Most key global cites are also seeing substantial rate growth RevPAR Change by Market May YTD Source: HotelBenchmark; Smith Travel Research

9. In Europe, demand grew at a slightly lower rate in the first quarter while supply growth remained flat European Supply & Demand Monthly Change Source: Smith Travel Research/The Bench

10. U.S. demand growth has slowed while supply is on the increase U.S. Supply & Demand Monthly Change Source: Smith Travel Research

11. Buyer’s Market Seller’s Market Rapid Development Development Increases Occupancy Declines Long Run Occupancy ADR Increases ADR Declines Occupancy Increases Development Slows Where we are Minimal Development Where we were Recognise Where We Are! Source: PKF

13. Industry Performance : Summary • Sound global fundamentals are driving demand • Industry is doing well and will continue to through Qtr 3 of 2008 • Supply has started to grow, but remains at modest levels • Supply and Demand forecasted to intersect in late 2008 • Demand growth in most markets is unprecedented • High occupancies supporting continued rate growth • Rate growth is beginning to slow down in many markets • RevPar growth driven by rate rather than occupancy • 2008 looks positive for the industry, but growth will continue to decline Continued Strength of Global Lodging Market

14. Mergers/Acquisitions/Consolidation • Hilton Deal • Blackstone buys Hilton for $26bn • Purchase price exceeds stock value by 40% • 15x Multiple EBIT for Hilton vs. 7-12x Multiple • Blackstone claims strategic vs. financial investment • Comments from the financial analysts • Too much capital for too few assets • Assets yield cash • More purchase opportunities in the industry • Starwood, Marriott, IHG and others are appealing to investors

15. Key Growth Areas • China • All major brands represented • 88,000 rooms added by 2009 • India • All major brands represented • 45,000 rooms added by 2009 • North America • Lodging Supply Growth: 1.1% to 3.5% from 2006 to 2009 • United Kingdom • Middle East

16. Growth by Segment • Balanced Growth Globally • Luxury/Upscale to Midscale to Budget • Number of Hotels • Indexes to limited service • Number of Rooms • Indexes to Upscale (larger room inventory) • Urban growth • Suburban growth outpaces CBD development

17. Outlook for 2009 • Supply Begins to Meet Demand • Rate growth begins to decline • Occupancy growth declines • Pressure on profit margins • Pressure for improved hotel performance from those owners that paid high multiples for the asset • Some hotels preparing now by optimising levers and adjusting overheads

18. Current Pricing StrategiesThe Impact on the Convention Market • Corporate Transient Demand • Pricing Strategies • Preference for Corporate Transient • Rate Yield • Drives Less Flexibility • Internet Drives Transparent Pricing • Connectivity: Less Allocations • Real time availability and pricing

19. Corporate Transient vs. Meetings Sunday Monday Tuesday Wednesday Thursday Friday Saturday Price Point 1 $350 Price Point 2 $280

20. Future Pricing StrategiesThe Impact on the Convention Market • Dynamic Pricing (Flex Rates) • Value to the Customer • % Discount rather than Fixed Discount Rate • % Discount from BAR (Best Available Rate or Market Rate) • Supply and Demand Pricing • Customer Protection: BAR must be competitive in the market • Confluence of Negotiated Corporate Transient Rate Programs with Volume Meeting Rate

21. Hotels and Convention CentresThe Relationship • What are the Key Performance Drivers? • For the Convention Centre? • For the Hotel? • Marketing and Sales Plan Alignment? • Local Trade Events or Meetings/Exhibitions with inbound travelling delegates? • Focus on destination marketing • Price Sensitivity in Peak and Off-Peak • Real Estate? What is the primary focus? • Guest Rooms or Function/Exhibition Space? Or • Delicate Balance of Both?

22. Hotels and Convention CentresFuture Development • Increasing preference for branded hotels in the business segment • Brand alignment and distribution with meetings market • Brand fit with the destination • Luxury, Upscale, Midscale • New property inventories decreasing • “Asset-light” branded hotel companies • Major branded hotels companies prefer NOT to own • Investor Concerns • Can hotel stand alone and achieve financial performance targets? • Accessibility of the destination? • Preference for mixed use development: exhibition space, office, retail, hotel, etc. • Land prices • Local planning agreed: planning and parking regulations, local government support, tax incentives or inducements

23. Hotel Industry:Key Trends That Impact Congress Centres International Association of Congress Centres Graz, Austria 17 July 2007