U.S. Outlook for 2020 - Hospitality NetPAST DEMAND SHOCKS - IMPACT ON MARKET HOTEL ADR % Difference from month prior to event 60.0% 65.0% 70.0% 75.0% 80.0% 85.0% 90.0% 95.0% 100.0%

U.S. Outlook for 2020

Coronavirus and the Risk to Hotels

PAST DEMAND SHOCKS - IMPACT ON MARKET HOTEL DEMAND% Difference from month prior to event

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Months After Event

Toronto - SARS New York - 9/11 New York - GFC SFO - TECH Bust

Source: CBRE Hotels Research, STR

PAST DEMAND SHOCKS - IMPACT ON MARKET HOTEL ADR% Difference from month prior to event

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Months After Event

Toronto - SARS New York - 9/11 New York - GFC SFO - TECH Bust

Scenario 1:2-4 month Disruption

Scenario 2:Prolonged Recession

Source: CBRE Hotels Research, STR

-

20

40

60

80

100

120

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Months from Shock

Demand Index ADR Index RevPAR Index

Demand Impacted 6-10 Months

ADR/RevPAR Impacted 12-16 Months

CORONAVIRUS U.S. HOTEL IMPACT – DOWNSIDE SCENARIO 3/11/2020

Source: CBRE Hotels Research, March 2020.

DISRUPTION CURVE – HOTEL OCCUPANCY

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

1 2 3 4 5 6 7 8 9 10

Months Since Impact

U.S. 3/7Italy 2/22China 1/18

U.S. 3/14?Italy 2/29China 1/25

Italy 3/7China 2/1

China 2/8China 3/7

Source: CBRE Hotels Research, STR, March 7, 2020.

Potential Recovery Scenario

STR REPORTS HOTELS IN CHINA RECOVERED QUICKLY, POINTING TO POTENTIAL FOR FAST RECOVERY

Down from -0.6% Down from 1.4% Down from 0.7%

PUBLISHED FORECASTS - NO GROWTH FOR 2020 Before COVID-19 Transmission outside of China

Source: CBRE Hotels Research, STR, February 2020.

UPDATED DOWNSIDE FORECAST – PRELIMINARY 3/12/2020

Year Occ Occ^ ADR ADR^ RevPAR RevPAR^ Supply Supply^ Demand Demand^

2016 65.4% $ 124.06 $ 81.14 5,021,012 3,283,828

2017 65.9% 0.7% $ 126.81 2.2% $ 83.52 2.9% 5,106,199 1.7% 3,363,052 2.4%

2018 66.1% 0.4% $ 129.96 2.5% $ 85.94 2.9% 5,206,614 2.0% 3,442,727 2.4%

2019 66.1% 0.0% $ 131.20 1.0% $ 86.73 0.9% 5,311,653 2.0% 3,511,367 2.0%

2020 59.3% -10.2% $ 117.58 -10.4% $ 69.78 -19.5% 5,418,543 2.0% 3,215,740 -8.4%

2021 61.4% 3.5% $ 124.93 6.2% $ 76.75 10.0% 5,501,826 1.5% 3,380,068 5.1%

2022 64.2% 4.6% $ 134.83 7.9% $ 86.61 12.8% 5,520,763 0.3% 3,546,212 4.9%

Source: CBRE Hotels Research, STR, March 2020.RevPAR Recovery by 2022

UPDATED SEVERE-DOWNSIDE FORECAST – PRELIMINARY 3/12/2020

Year Occ Occ^ ADR ADR^ RevPAR RevPAR^ Supply Supply^ Demand Demand^

2016 65.4% $ 124.06 $ 81.14 5,021,012 3,283,828

2017 65.9% 0.7% $ 126.81 2.2% $ 83.52 2.9% 5,106,199 1.7% 3,363,052 2.4%

2018 66.1% 0.4% $ 129.96 2.5% $ 85.94 2.9% 5,206,614 2.0% 3,442,727 2.4%

2019 66.1% 0.0% $ 131.20 1.0% $ 86.73 0.9% 5,311,653 2.0% 3,511,367 2.0%

2020 55.7% -15.7% $ 113.80 -13.3% $ 63.44 -26.9% 5,418,543 2.0% 3,020,817 -14.0%

2021 57.7% 3.4% $ 107.34 -5.7% $ 61.90 -2.4% 5,501,428 1.5% 3,172,378 5.0%

2022 60.8% 5.4% $ 105.03 -2.2% $ 63.83 3.1% 5,504,418 0.1% 3,345,368 5.5%

Source: CBRE Hotels Research, STR, March 2020.

OCCUPANCY- 4QTR. MOVING AVG. – BY SCENARIO

50.0%

52.0%

54.0%

56.0%

58.0%

60.0%

62.0%

64.0%

66.0%

68.0%19

88

19

88

19

89

19

90

19

91

19

91

19

92

19

93

19

94

19

94

19

95

19

96

19

97

19

97

19

98

19

99

20

00

20

00

20

01

20

02

20

03

20

03

20

04

20

05

20

06

20

06

20

07

20

08

20

09

20

09

20

10

20

11

20

12

20

12

20

13

20

14

20

15

20

15

20

16

20

17

20

18

20

18

20

19

20

20

20

21

20

21

20

22

20

23

20

24

Baseline - Current Forecasts Downside - COVID-19 Severe Downside- COVID-19


REVPAR – 4 QTR. MOVING AVG. – BY SCENARIO

$0.50

$20.50

$40.50

$60.50

$80.50

$100.50

$120.50

Baseline - Current Forecasts Downside - COVID-19 Severe Downside- COVID-19


WEEKLY US HOTEL PERFORMANCE

(16)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

4

6YoY Change (%) Occ^ ADR^ RevPAR^Major Travel

Restrictions Start


IMPACT WORSE IN URBAN AND AIRPORT LOCATIONS


(25)

(20)

(15)

(10)

(5)

0

5

10

15YoY Change (%) US Airport Urban

MUCH LESS IMPACT IN INTERSTATE & SMALL METROS…. SO FAR


(16)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

0

2

4YoY Change (%) US Interstate Small Metro/Town

HIGHER THE ADR, LARGER THE Y-O-Y PERCENT DECLINE

(20)

(15)

(10)

(5)

0

5

10

YoY Change (%) Luxury & Upper Upscale Upscale & Upper Midscale Midscale & Economy


DEMAND REVPAR IMPACT OF 9/11, BY MARKET – UPPER PRICED HOTELS


-45.0%

-40.0%

-35.0%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

Loui

svill

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entr

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Long

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harl

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chm

ond

Om

aha

Cha

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teRa

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Min

neap

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Cle

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orfo

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akla

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San

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New

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Sacr

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apol

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Har

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orth

Seat

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ore

Hou

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Mem

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Day

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St L

ouis

San

Die

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s A

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etro

itPh

ilade

lphi

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anci

sco

Chi

cago

Jack

sonv

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Oah

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ew Y

ork

Dal

las

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mpa

Bost

onA

tlant

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rt L

aude

rdal

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n A

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ioA

lbuq

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ilwau

kee

Phoe

nix

Wes

t Pal

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each

Orl

ando

Was

hing

ton,

DC

Mia

mi

Tucs

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Average: -20%

OPERATING METRICS DURING 2001NON TOP & TOP 25 MARKETS 2001 RECESSION CHANGE IN DOLLARS PER AVAILABLE ROOM

(25.0)%

(20.0)%

(15.0)%

(10.0)%

(5.0)%

0%

2000 to 2001 Change in Dollars per Available Room

Top 25 Non Top 25

Note: * Before deduction for Management Fees and Non-Operating Income and Expenses Source: 2019 Trends® in the Hotel Industry.

TOTAL AMOUNT OF INTERNATIONAL ARRIVALS INTO THE U.S.

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

Monthly Arrivals

Source: CBRE Hotels Research, NTTO, 2020 Q1

Increase of 81% from 2001

INTERNATIONAL HOTEL STAYS / HOTEL DEMAND

8.20%

0% 10% 20% 30% 40% 50% 60% 70%

MiamiNew York

OahuSan Francisco

OrlandoLos Angeles

BostonFort LauderdaleWashington DC

San DiegoSeattle

PhiladelphiaChicago

TampaSan Jose-Santa Cruz

New OrleansHoustonAnaheim

AtlantaDallas

National

Sources: U.S. Department of Commerce International Trade Administration; STR, and City Visitor Reports.

8% of U.S. Hotel demand is generated from international visitations

MARKETS WITH A HIGH PERCENT OF REVENUES GENERATED DURING MARCH/APRILAverage March/April revenue as compared to the rest of the year

Source: CBRE Hotels Research, STR, March 2020.-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Phoen

ixW

est Pa

lm B

each

Tam

paN

ew O

rlea

ns

Mia

mi

Fort

Lau

derd

ale

Tucs

on

Sava

nna

hJa

ckso

nvill

eA

ustin

Cha

rles

ton

Orl

ando

San

Anto

nio

Col

um

bia

Was

hing

ton, D

CH

oust

onN

ashv

ille

Rich

mon

dD

alla

sA

tlant

aM

emph

isC

harl

otte

Indi

anap

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Salt

Lake

City

Alb

uque

rque

Loui

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eRa

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rt W

ort

hD

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Lou

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cram

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Balti

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Cin

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San

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Port

land

Cle

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Den

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Alb

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Milw

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Long

Isla

nd

Translation:Phoenix hotels earn 65% more revenue in March/April than they do the rest of the year

ADDITIONAL EFFECTS TO BE CONSIDERED: LOWER OIL PRICES DUE TO ANTICIPATED LOWER CHINESE DEMAND COULD AFFECT TRAVEL TO OIL MARKETS

40

45

50

55

60

65

70

Mar 01,2019

Apr 01,2019

May 01,2019

Jun 01,2019

Jul 01,2019

Aug 01,2019

Sep 01,2019

Oct 01,2019

Nov 01,2019

Dec 01,2019

Jan 01,2020

Feb 01,2020

Dollars per Barrel

Cushing Spot Price, Crude Oil, Previous Year

Source: eia.gov Q1 2020.

20

30

40

50

60

70

80

90

100

110

120

Jan 04,2010

Jan 04,2011

Jan 04,2012

Jan 04,2013

Jan 04,2014

Jan 04,2015

Jan 04,2016

Jan 04,2017

Jan 04,2018

Jan 04,2019

Jan 04,2020

Dollars per Barrel

Cushing Spot Price, Crude Oil, Previous Decade

Source: eia.gov Q1 2020.

HOUSTON ALREADY BUFFETED BY OIL PRICES, HURRICANE DISRUPTIONContinued slide in prices could exacerbate future weakness

0

20

40

60

80

100

120

-15%

-10%

-5%

0%

5%

10%

15%

2011 2012 2013 2014 2015 2016

Oil Price ($)Occupancy Change

Houston Occupancy and Oil Price Change During 2014 Oil Price Crash

Occupancy Change Oil Price

Sources: CBRE Hotels, STR Q1 2020.

0

20

40

60

80

100

120

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

2011 2012 2013 2014 2015 2016

Oil Price ($)Occupancy

Change

Houston ADR and Oil Price Change During 2014 Oil Price Crash

ADR Change Oil Price

Sources: CBRE Hotels, STR Q1 2020.

ANNUAL CHANGE IN REVENUES, EXPENSES AND PROFITS*

Note: * Before deduction for Management Fees and Non-Operating Income and Expenses Source: 2019 Trends® in the Hotel Industry.

2001 CHANGE IN OPERATING PERFORMANCEMULTIPLE REVPAR CHANGE SCENARIOS - 2000 - 2001

-5%

-15%

-24%

-34%

-44%

-9%

-22%

-35%

-47%

-62%

-80%

-60%

-40%

-20%

0%

RevPAR Decline:0% to 9.9%




RevPAR Decline:Greater Than 40%

RevPAR Total RevPAR Operating Expenses* GOP* EBITDA**Note: * Profit Before Management Fees and Non-Operating Income and Expenses

** Earnings Before Interest, Taxes, Depreciation and Amortization.Source: CBRE, Trends® in the Hotel Industry

2009 CHANGE IN OPERATING PERFORMANCEMULTIPLE REVPAR CHANGE SCENARIOS 2008 - 2009

-6%-16%

-24%-33%

-44%

-11%

-25%-37% -35%

-79%

-120%

-100%

-80%

-60%

-40%

-20%

0%





RevPAR Decline:Greater Than 40%

RevPAR Total RevPAR Operating Expenses* GOP* EBITDA**Note: * Profit Before Management Fees and Non-Operating Income and Expenses

** Earnings Before Interest, Taxes, Depreciation and Amortization.Source: CBRE, Trends® in the Hotel Industry

SUMMARY THOUGHTS

• THE HOTEL MARKET’S RECOVERY FROM PAST MAJOR SHOCKS, SUCH AS 9/11 NATIONALLY, SARS OUTBREAKIN TORONTO, ZIKA OUTBREAK IN MIAMI, TYPICALLY TOOK 14 TO 24 MONTHS.

• OUR DOWNSIDE SCENARIO INDICATES IT WILL TAKE SIX TO EIGHT MONTHS FOR US HOTEL DEMAND TORECOVER, AND 12 TO 14 MONTHS FOR ADR AND REVPAR TO RECOVER.

• THE IMPACT IN RECENT WEEKS HAS BEEN NEGATIVE FOR NEARLY ALL HOTEL OPERATORS. BUT IT HAS BEENMORE ACUTE FOR URBAN AND AIRPORT LOCATIONS, AND LESS SO FOR SMALL METROS AND INTERSTATEHOTELS. THE HIGHER THE HOTEL SEGMENT’S ADR, THE LARGER THE YEAR-OVER-YEAR DECLINE.

• THE IMPACT SO FAR HAS BEEN GREATEST, IN GENERAL, FOR WEST COAST MARKETS AND NEW YORK CITY.MEANWHILE, IT HAS BEEN LESSER FOR EAST COAST MARKETS SUCH AS BOSTON, WASHINGTON DC, MIAMIAND (IN THE MIDWEST) CHICAGO.

• CAUSE FOR HOPE FOR FAST RECOVERY: CHINESE HOTELS HAD NEARLY FULLY RECOVERED FROM THE MARCH2003 SARS OUTBREAK BY JULY OF THAT YEAR WHEN SARS WAS CONTAINED.

• MARKETS LIKELY TO SEE THE MOST SEVERE IMMEDIATE IMPACT ARE THOSE THAT GAIN A HIGH PERCENTAGEOF THEIR REVENUE FROM MARCH AND APRIL: PHOENIX, WEST PALM BEACH, TAMPA, NEW ORLEANS, MIAMI,

FORT LAUDERDALE, TUCSON.

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HOW WE CAN HELPCBRE HOTELS ADVISORY

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We have identified the following services that can be offered in expedited fashion. They are largely desktop based but incorporate real-time data that can be applied to your specific property or portfolio. Given the scale and experience of our professional team, together with the unparalleled strength of the world’s leading hospitality group, CBRE Hotels Advisory is prepared to offer these services on a weekly, bi-weekly, monthly or one-time basis. Act NOW by contacting our National Director below. CBRE Hotels Advisory is prepared to immediately help you navigate through the current environment with confidence.

Our Select Service Offering:

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Henry FondeAsset Management Sr Director, CBRE Hotels Advisory+1 904 633 [email protected]

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Documents

U.S. Outlook for 2020 - Hospitality NetPAST DEMAND SHOCKS - IMPACT ON MARKET HOTEL ADR % Difference from month prior to event 60.0% 65.0% 70.0% 75.0% 80.0% 85.0% 90.0% 95.0% 100.0%