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Moderator: Lyle Hall, HLT Advisory Inc. Panel: David Larone , Director, PKF Consulting Inc

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

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Moderator: Lyle Hall, HLT Advisory Inc. Panel: David Larone , Director, PKF Consulting Inc

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  1. Sick Patient or Post-Mortem? Diagnosing the Canadian Hotel Investment IndustryWhat 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

  2. Betsy MacDonald Managing Director

  3. Occupancy (2007-2015) Source: HVS • 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

  4. Projected Average Rate Source: HVS

  5. Projected RevPAR 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

  6. U.S. Hotel Transactions

  7. Historical Cap Rates Source: HVS

  8. Value Trend for a Typical U.S. Hotel Source: HVS

  9. Valuing Hotels in Today’s Uncertain Market

  10. 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 Market vs. Liquidation Value

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