Hotel Industry Update for DuPage County

The building will continue until morale improves.

Compiled By Ric Mandigo – Senior Consultant Presented by Ted Mandigo – Director of TR Mandigo & Company TR Mandigo & Co. www.trmandigo.com 630 279 8144

Thursday, August 23,

2012

Since April 2011, we’re down 9 hotels. Since December 2010, we’ve lost 1300 rooms.

That’s arguably good news.

Jan 02 Jul 02 Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11 Jul 11 Jan 120

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12500

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Census Room Count vs. OccupancyOccupancy Moving average (Occupancy) Census Rooms

Perc

ent O

ccup

ancy

DuPage has had a modest growth in demand of about 2.1%, but supply exploded throughout the 80’s and 90’s.

The large new hotels came online just before the recession, which hurt overall occupancy more than lower demand.

33

43

53

63

73

83

93

0

100000

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Supply, Demand, Occupancy 12-Month Moving Avg., 2002 - 2012Occupancy Supply Demand

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Recession hits

Compared to the Downtown and airport markets, DuPage’s success is more closely tied to mid-range business.

It dropped lower and has taken longer to recover.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201140%

45%

50%

55%

60%

65%

70%

75%

80%Occupancy Tracks

Chicago O'Hare Suburbs Luxury UpscaleMid-Range Economy Budget

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $-

$50

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Chicago O'Hare Suburbs Luxury UpscaleMid-Range Economy Budget

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

50

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Number of HotelsChicago O'Hare Suburbs LuxuryUpscale Mid-Range Economy Budget

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

5000

10000

15000

20000

25000

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35000Demand Tracks

Chicago O'Hare Suburbs Luxury UpscaleMid-Range Economy Budget

We’re coming out of the recession slowly. Each month, on average is better than the year before.

Jan 10

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$0

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$120

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DuPage Market Monthly 2010 - 2012ADR RevPAR Occ

Notes on Projections

• We lost a lot of ground on ADR during the recession, so it will take some time for rate to recover.

• Our projections are essentially unchanged from February.

• We anticipate that economic activity and commercial demand increases should make up for additional supply.

• Historically, we have overestimated ADR and underestimated occupancy. We have been fairly accurate with RevPAR, within .5%.

Our Projections going forward are fairly conservative.

OccupancyADR RevPAR2000 68.4% $88 $602001 61.8% $86 $532002 58.2% $81 $472003 57.1% $78 $442004 58.4% $78 $462005 60.1% $82 $492006 62.7% $91 $572007 61.9% $99 $612008 57.5% $98 $562009 50.80% $85.13 $432010 57.1% $81 $472011 60.19% $84.51 $50.862012 62.00% $86.62 $53.702013 63.55% $89.22 $56.702014 64.50% $91.90 $59.272015 65.47% $94.66 $61.972016 66.45% $97.97 $65.102017 67.78% $101.40 $68.72

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20170%

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100%

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DuPage PerformanceADR RevPAR Occupancy

Full service and Extended Stay are anticipated to perform somewhat differently from the overall market

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017$0

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0%10%20%30%40%50%60%70%80%90%100%

Suburban Full Service ProjectionsADR RevPAR OCC

Full ServiceOCC ADR RevPAR

2012 57.10% $110.04 $62.842013 60.25% $113.34 $68.282014 62.05% $116.74 $72.442015 63.29% $120.24 $76.102016 64.56% $124.45 $80.342017 65.85% $128.80 $84.82

Extended StayOCC ADR RevPAR

2012 76.01% $90.26 $68.612013 76.00% $92.97 $70.662014 76.00% $95.76 $72.782015 76.00% $98.63 $74.962016 75.00% $102.09 $76.562017 75.00% $105.66 $79.24

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017$0

$20

$40

$60

$80

$100

0%10%20%30%40%50%60%70%80%90%100%

Suburban Extended Stay ProjectionsADR RevPAR OCC

Trends moving forward:

Slow growth in occupancy: Around 2% compound annual rate.

Growth in Rate at 3% annually, will take until 2014 to get back to 2007 levels

RevPAR growth at about 4.5% annually, with fairly steady growth rate.

Increased leisure and group leisureContinued pressure on ADR for corporate rate

business

Projected Occupancy DuPage

Month 2009 2010 2011 2012 2013 2014 2015 2016 2017January 36.89% 39.10% 40.79% 45.84% 44.14% 44.81% 45.48% 46.16% 47.08%February 43.48% 46.40% 49.08% 52.73% 52.53% 53.32% 54.12% 54.93% 56.03%March 46.18% 52.20% 55.11% 57.47% 58.02% 58.89% 59.78% 60.67% 61.89%April 48.54% 57.10% 58.95% 59.46% 62.22% 63.15% 64.10% 65.06% 66.36%May 51.99% 60.40% 64.55% 69.34% 66.89% 67.89% 68.91% 69.94% 71.34%June 60.38% 69.30% 73.98% 74.38% 76.99% 78.14% 79.31% 80.50% 82.11%July 60.29% 68.55% 73.50% 74.62% 76.49% 77.64% 78.80% 79.98% 81.58%August 58.47% 65.16% 69.56% 71.25% 73.03% 74.13% 75.24% 76.37% 77.89%September 57.96% 66.67% 67.42% 70.83% 72.60% 73.69% 74.80% 75.92% 77.44%October 56.14% 63.12% 65.54% 68.16% 69.86% 70.91% 71.97% 73.05% 74.51%November 49.26% 56.81% 60.46% 61.42% 62.95% 63.90% 64.86% 65.83% 67.14%December 39.60% 39.96% 44.33% 45.69% 46.83% 47.53% 48.25% 48.97% 49.95%

Annual 50.80% 57.14% 60.19% 62.00% 63.55% 64.50% 65.47% 66.45% 67.78%

Projected ADR DuPageMonth 2009 2010 2011 2012 2013 2014 2015 2016 2017January $88.69 $76.71 $79.32 $83.59 $88.17 $90.81 $93.54 $96.81 $100.20February $89.39 $78.58 $80.40 $85.83 $89.48 $92.17 $94.93 $98.25 $101.69March $88.90 $79.41 $55.10 $85.86 $80.49 $82.90 $85.39 $88.38 $91.47April $87.68 $79.31 $81.83 $87.79 $89.64 $92.33 $95.10 $98.43 $101.88May $86.01 $79.98 $84.27 $89.72 $90.16 $92.87 $95.65 $99.00 $102.47June $86.10 $82.60 $86.40 $91.17 $91.91 $94.66 $97.50 $100.92 $104.45July $83.24 $80.72 $83.80 $86.66 $89.26 $91.94 $94.70 $98.01 $101.44August $85.30 $82.39 $85.66 $88.62 $91.27 $94.01 $96.83 $100.22 $103.73September $86.72 $85.40 $88.07 $91.01 $93.74 $96.55 $99.45 $102.93 $106.53October $84.75 $84.71 $88.45 $90.21 $92.92 $95.71 $98.58 $102.03 $105.60November $81.62 $83.12 $86.58 $87.91 $90.54 $93.26 $96.06 $99.42 $102.90December $75.43 $76.24 $78.91 $80.65 $83.07 $85.56 $88.13 $91.22 $94.41

Annual $85.13 $81.18 $84.51 $86.62 $89.22 $91.90 $94.66 $97.97 $101.40

Projected RevPAR DuPageMonth 2009 2010 2011 2012 2013 2014 2015 2016 2017January $32.72 $29.99 $32.35 $38.32 $38.92 $40.69 $42.54 $44.69 $47.18February $38.87 $36.46 $39.46 $45.26 $47.01 $49.14 $51.38 $53.97 $56.98March $41.05 $41.45 $30.37 $49.34 $46.70 $48.83 $51.04 $53.62 $56.61April $42.56 $45.29 $48.24 $52.20 $55.77 $58.31 $60.96 $64.04 $67.60May $44.71 $48.31 $54.40 $62.21 $60.31 $63.05 $65.91 $69.24 $73.10June $51.98 $57.24 $63.92 $67.81 $70.75 $73.97 $77.33 $81.24 $85.76July $50.18 $55.33 $61.59 $64.67 $68.27 $71.38 $74.62 $78.39 $82.76August $49.88 $53.68 $59.58 $63.14 $66.66 $69.69 $72.86 $76.54 $80.80September $50.27 $56.93 $59.38 $64.46 $68.06 $71.15 $74.38 $78.14 $82.49October $47.58 $53.47 $57.97 $61.48 $64.91 $67.86 $70.95 $74.53 $78.68November $40.21 $47.22 $52.35 $53.99 $57.00 $59.59 $62.30 $65.45 $69.09December $29.87 $30.46 $34.98 $36.85 $38.90 $40.67 $42.52 $44.67 $47.16

Annual $43.25 $46.38 $50.87 $53.70 $56.70 $59.27 $61.97 $65.10 $68.72