Outlook For The Hotel Industry - HVS

Outlook for the Hotel Industry The impact of current events on hotel performance and values January 2021

Outlook for the U.S. Lodging Industry The following forecasts for the U.S. lodging industry reflect the current outlook of market participants. Approximately 35% of the RevPAR decline is expected to be recovered by the end of 2021 (and 32% in 2022), with full RevPAR recovery by 2024. Historical 2018 2019 Occupancy Percent Change Average Rate Percent Change RevPAR Percent Change 66.1% 129.97 85.96 66.1% 0.0% 131.17 0.9% 86.76 0.9% 2020 2021 42.0% -36% 103.00 -21% 43.26 -50% 53.5% 27% 109.25 6% 58.45 35% Forecast 2022 61.0% 14% 119.00 9% 72.59 24% 2023 2024 65.0% 7% 127.25 7% 82.71 14% 65.5% 1% 133.75 5% 87.61 6% This represents the current expectation for the timing and pattern of recovery, with occupancy anticipated to recover first, followed by ADR. All forecasts are in current dollars. 2 Source: STR (Historical Years) and HVS (Forecast)

If 60% Want The Vaccine, and States Can Administer 2.9 Million Doses Per Day at Peak Total Possible Vaccinations 60% of Population Vaccinations Scenario of Vaccinations Administered 700,000,000 600,000,000 500,000,000 400,000,000 300,000,000 200,000,000 100,000,000 3 Source: HVS 15-Jun 8-Jun 1-Jun 25-May 18-May 11-May 4-May 27-Apr 20-Apr 13-Apr 6-Apr 30-Mar 23-Mar 16-Mar 9-Mar 2-Mar 23-Feb 16-Feb 9-Feb 2-Feb 26-Jan 19-Jan 12-Jan 5-Jan 29-Dec 22-Dec 0

Hotel Occupancy 2020 & 2021 80% 2019 60% 40% 20% -17.1% 0% J F M A M J J A S O N D J F M A M J J A S O N D Month of the Year Hotel ADR 2020 & 2021 150 2019 130 110 Source: STR (Historical Years) and HVS (Forecast) 90 70 -21.5% 50 J 4 Our 2021 outlook reflects an average occupancy level of 53.5% (vs. 42% in 2020) and 6% ADR growth, averaging roughly 109 (vs. 103 in 2020). F M A M J J A S O N D J F M A M Month of the Year J J A S O N D

Occupancy Economy -8.2% Midscale -15.1% Upper Midscale -23.5% Upscale -31.2% Upper Upscale -52.2% Luxury -52.4% RevPAR ADR -18.9% Economy -11.7% -25.8% Midscale -12.6% -36.2% Upper Midscale -16.6% -45.7% Upscale Upper Upscale 5 Luxury -21.0% -61.3% -19.1% -56.6% -8.9% Impact differs significantly among the hotel classes Data Source: STR *Running 28 Days Ending January 9, 2021

What About the Transaction Market? Historical Hotel Transactions Dollar Volume (M) 35,000 700 30,000 600 25,000 500 20,000 400 15,000 300 10,000 200 5,000 100 0 2007 Q1 2007 Q3 2008 Q1 2008 Q3 2009 Q1 2009 Q3 2010 Q1 2010 Q3 2011 Q1 2011 Q3 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2015 Q3 2016 Q1 2016 Q3 2017 Q1 2017 Q3 2018 Q1 2018 Q3 2019 Q1 2019 Q3 2020 Q1 2020 Q3 0 Source: Real Capital Analytics 6 Number of Transactions Dollar Volume (Millions) Transactions PPP funding and relaxed forbearance rules – keeping wave of foreclosures from materializing For Transactions to Occur: Sellers ability to accept significant discount from Pre-COVID values (often 20–35%) Buyers ability to obtain financing Hotel performance showing that the worst is behind them

The Worst is Behind Us Select markets realized an uptick in 2020 RevPAR, leading to a positive value story. 25 Number of Hotels 20 Declines predominantly in the -10% to -35% range last half of 2020; these declines will diminish as the year progresses and recovery sets in. 15 10 5 0 -60% -55% -50% -45% -40% -35% -30% -25% -20% -15% -10% -5% 0% to - to - to - to - to - to - to - to - to - to - to - to - to 65% 59% 54% 49% 44% 39% 34% 29% 24% 19% 14% 9% 4% Source: HVS 7 5% 10% 15% 20% 25% 30% to to to to to to 9% 14% 19% 24% 29% 34% Smaller deals can take advantage of the SBA 7a loan, with limited mortgage payments for 6 months and a government guarantee.

Final Thoughts Robust occupancy recovery should set in during the summer and fall of 2021, concurrent with the majority roll-out of the vaccines behind us. ADR recovery will lag the occupancy recovery, with full RevPAR recovery expected by 2024. Transaction volume is anticipated to pick up when lending opens up more widely, a recovery in NOI is documented, and price declines diminish. Meetings business is expected to return with strength. Zoom fatigue has set in, and people are ready and excited to meet again in person. High and continually increasing construction costs will keep new supply in check through the near term. Numerous potential investors will create competition for deals, which is anticipated to fuel transaction activity and mitigate value declines. 8

Superior Results Through Unrivaled Hospitality Intelligence. Everywhere. HVS has been supporting the hospitality industry in the U.S. and around the world for over 40 years. Our senior staff represents a collective 300 years of experience advising our industry, including through multiple prior cycles and events. Our expertise covers the full range of hospitality assets and spans the full lifecycle of a hotel, including services that support developers, owners, operators, lenders, and investors. With 40 offices in markets across the U.S., we offer local insights on a real-time basis. This knowledge and experience is available to support you as you navigate these challenging times. Our platform is fully functional on a remote basis, so even though we are not currently traveling, our staff can access the full resources of HVS on your behalf. Let us know how we can assist you. Rod Clough, MAI rclough@hvs.com 1 (214) 629-1136 9 DISPOSITION PLANNING Site Selection Market Study Investment Search Product Recommendation Financial Projections Financial Feasibility Analysis Economic Impact Analysis Architectural Concept Design Construction Costs Estimates Exit Strategy Brokerage & Advisory Adaptive Reuse Analysis Shared Ownership Analysis Pricing Analysis OWNERSHIP & OPERATION Asset Management Management Agreement Analysis & Negotiation Hotel Management Appraisal for Refinancing Operation Performance Analysis Repositioning Study & Valuation Repositioning Design & Budgeting Timeshare Conversion Review Capital Improvement Financing FR ACQUISITION & DEVELOPMENT Valuation & Pricing Guidance Appraisal for Financing Debt & Equity Financing Due Diligence Coordination Brand Selection & Contract Negotiations Operator Selection & Contract Negotiations Interior Design & Project Management Executive Search Pre-Opening Oversight

Hotel ADR 2020 & 2021 2019-17.1% 0% 20% 40% 60% 80% J F M A M J J A S O N D J F M A M J J A S O N D Month of the Year Hotel Occupancy 2020 & 2021 2019 4 Our 2021 outlook reflects an average occupancy level of 53.5% (vs. 42% in 2020) and 6% ADR growth, averaging roughly 109 (vs. 103 in 2020). Source: STR (Historical Years) and HVS (Forecast)