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“The 2011 LIIC Top Ten” 2 7

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WWW.HREC.COM
CEO and Founder 5 10
HREC – Hospitality Real Estate Counselors

2011 BRIDGING THE GAP AND FACILITATING THE

2011 THE LIIC TOP TEN
10 Occupancy & ADR Fundamentals
Continue to Improve:
 94% of LIIC think tank believe that average room
rate levels will grow in the next year (39% forecast
over 5%).
 89% of responders anticipate occupancy increases
for the lodging industry.

2011 BRIDGING THE GAP AND FACILITATING THE

2011 THE LIIC TOP TEN
9 Equity Return Rates Are Stabilizing:
 More than half of respondents believe equity rates
will be stable (remain the same).
 The remaining 50% of respondents are equally split
between increases and decreases.

2011 BRIDGING THE GAP AND FACILITATING THE

10 Occupancy & ADR Fundamentals Continue to Improve
2011 THE LIIC TOP TEN
8 Interest Rates to Rise:
 58% believe hotel interest rates (senior debt) will
increase over the next 12 months; with many
concerned about interest rate increases impacting
short-term/exit strategies.
 Flip side, 68% of respondents believe loan/value
ratios are also increasing.

2 091 1 B Equity
R I D G IReturn
N G T Rates
H E G Are
A P Stabilizing
AND FACILITATING THE
10 Occupancy & ADR Fundamentals Continue to Improve
2011 THE LIIC TOP TEN
7 Acquisition Debt Returning?
 Ability to acquire debt financing appears to be
improving.
 48% of respondents believe that they will be able to
use acquisition debt financing to leverage deals
over the next twelve months.

8 Interest Rates to Rise

2 091 1 B Equity
R I D G IReturn
N G T Rates
H E G Are
A P Stabilizing
AND FACILITATING THE
10 Occupancy & ADR Fundamentals Continue to Improve
2011 THE LIIC TOP TEN
6 REIT Envy & Bitterness
 For the first time in ten years of surveys, investors
are split: REIT’s (public equity) vs. Private Equity.

7 Acquisition Debt Returning?

8 Interest Rates to Rise
2 091 1 B Equity
R I D G IReturn
N G T Rates
H E G Are
A P Stabilizing
AND FACILITATING THE
10 Occupancy & ADR Fundamentals Continue to Improve
2011 THE LIIC TOP TEN
5 It’s a New Ballgame!:
 LIIC members solidly believe we are in the beginning
of a new cycle.
 51% of respondents say we are playing in innings 1 or 2.
 46% of respondents say in innings 3 or 4.
 Concerns: inflation, real job growth, escalating operating
costs and oil prices.

6 REIT Envy & Bitterness

7 Acquisition Debt Returning?
8 Interest Rates to Rise
2 091 1 B Equity
R I D G IReturn
N G T Rates
H E G Are
A P Stabilizing
AND FACILITATING THE
10 Occupancy & ADR Fundamentals Continue to Improve
2011 THE LIIC TOP TEN
4 Lodging Transaction Volume to Increase
Dramatically:
In regards to hotel asset sales volume for Budget 2011 vs.
Forecast 2012:
 39% believe volume will grow over 20%.
 29% believe volume will grow 10% to 20%.
 26% believe volume will grow 5% to 10%.

5 It’s a New Ballgame!

6 REIT Envy & Bitterness
7 Acquisition Debt Returning?
8 Interest Rates to Rise
2 091 1 B Equity
R I D G IReturn
N G T Rates
H E G Are
A P Stabilizing
AND FACILITATING THE
10 Occupancy & ADR Fundamentals Continue to Improve
2011 THE LIIC TOP TEN
3 Better Quality Hotel Product Available, If
You Can Get It:
 Sharp contrast to 2010:
 46% believe quality of hotel product on the market is
“excellent/above average”.
 81% believe hotel real property on market is “average or
excellent/above average” quality.
 46% believe quantity of product is “below average or low”.

4 Lodging Transaction Volume to Increase Dramatically

5 It’s a New Ballgame!
6 REIT Envy & Bitterness
7 Acquisition Debt Returning?
8 Interest Rates to Rise
2 091 1 B Equity
R I D G IReturn
N G T Rates
H E G Are
A P Stabilizing
AND FACILITATING THE
10 Occupancy & ADR Fundamentals Continue to Improve
2011 THE LIIC TOP TEN
2 Lodging Real Property Values Are Only Going Up:
 98% of respondents believe that hotel real estate values
will increase over the next 12 months, with 61% of total
responders predicting a significant increase of over 5%.
 Luxury hotel category appears to be poised for the
greatest value growth in the coming year.

3 Better Quality Hotel Product Available, If You Can Get It

4 Lodging Transaction Volume to Increase Dramatically
5 It’s a New Ballgame!
6 REIT Envy & Bitterness
7 Acquisition Debt Returning?
8 Interest Rates to Rise
2 091 1 B Equity
R I D G IReturn
N G T Rates
H E G Are
A P Stabilizing
AND FACILITATING THE
10 Occupancy & ADR Fundamentals Continue to Improve
2011 THE LIIC TOP TEN
1 Hotel Investment Market to Peak in 2015:
 Investment market continues to trend upwards due to improving revenue
fundamentals, increasing availability of debt financing, and continued
strong interest from equity investors.
 39% of respondents believe values will peak in 2015.
 29% of respondents believe values will peak in 2014.
 24% of respondents believe values will not peak until 2016 or beyond.

2 Lodging Real Property Values Are Only Going Up

3 Better Quality Hotel Product Available, If You Can Get It
4 Lodging Transaction Volume to Increase Dramatically
5 It’s a New Ballgame!
6 REIT Envy & Bitterness
7 Acquisition Debt Returning?
8 Interest Rates to Rise
2 091 1 B Equity
R I D G IReturn
N G T Rates
H E G Are
A P Stabilizing
AND FACILITATING THE
10 Occupancy & ADR Fundamentals Continue to Improve
2011 THE LIIC TOP TEN

1 Hotel Investment Market to Peak in 2015

2 Lodging Real Property Values Are Only Going Up
3 Better Quality Hotel Product Available, If You Can Get It
4 Lodging Transaction Volume to Increase Dramatically
5 It’s a New Ballgame!
6 REIT Envy & Bitterness
7 Acquisition Debt Returning?
8 Interest Rates to Rise
9 Equity Return Rates Are Stabilizing
10 Occupancy & ADR Fundamentals Continue to Improve
2011 BRIDGING THE GAP AND FACILITATING THE
 The 2011 LIIC Top Ten
For a copy of this survey presentation, please send an email to:
Mike Cahill
mcahill@hrec.com

For more information on LIIC, please see our website:

www.liic.ws

2011 BRIDGING THE GAP AND FACILITATING THE