Warm bed rationale

Hafjell daily traffic vs warm bed capacity* Ski pass revenue per bed type daily traffic NOK 9 000 International guests on ~12500 8 000 weekdays. Capacity 7 000 constrained on warm beds 6 000 5 000 4 000 3 000 2 000 ~2500 1 000 0 Warm bed Cold bed

Daily traffic 100% warm bed utilization

Rationale 1: Fill the resort during weekdays Rationale 2: Higher revenue per warm bed Rationale 3: Visibility • During weekdays in the period from ▪ International guests primarily visit with the ▪ Warm beds are booked a long time in January until winter holiday, guests are intention to go (high alpine advance (typically during fall) almost exclusively international and need factor) to rent beds ▪ This gives improved visibility of the activity ▪ Higher utilization of a warm bed compared in the resorts the upcoming season • AlpinCo is constrained on warm bed to a cold bed through the season, resulting capacity during this period in higher revenue per bed • Despite share of warm beds on less attractive locations (see next page) ▪ Shorter duration ski passes with high prices

(*) Total warm beds at Hafjell x alpine factor x cabin factor Overview of AlpinCo portfolio of warm beds

AlpinCo warm bed units per October-17 (excluding GGH) • # of units are split ~60/40 between Hafjell Warm bed attractiveness and Kvitfjell, while the number of beds are more evenly split Own units HIGH LOW HIGH HIGH • Most of AlpinCos owned units are are attractive located around Kvitfjell Mellomstasjon, mainly consisting of GudbrandsGard 114 Hyttegrend • ~40% of AlpinCo’s controlled units are 60 located around Hafjell Dalstasjon and 40 112 ~25% are located around Kvitfjell 26 26 Mellomstasjon 49 39 26 26 • Remaining units are spread between 11 1 2 Kvitfjell Vest, Hafjell Midtområde and Kvitfjell Midtstasjon Kvitfjell Vest Hafjell Dalstasjon Hafjell Midtområde Hafjelltoppen Hafjelltoppen

Owned units Other units • The most attractive warm beds are those located “in the ” and the units that AlpinCo warm beds per October-17 (excluding GGH) AlpinCo controls 100% • The units located at Hafjell Dalstasjon Warm bed attractiveness are not very attractive as they are located at the bottom of the , Own units where there is little snow. They have a HIGH LOW HIGH HIGH lower utilization through the season are attractive • AlpinCo have too few warm beds “in the 835 snow” . These typically have closer to 100% utilization through the high-season 483 435 • As an example, the cottage owned by 825 227 AlpinCo on Kvtifjell West has an approx. 224 100% utilization through the season 403 425 227 224 80 10 10 • The units that AlpinCo controls at the Kvitfjell Midtstasjon Kvitfjell Vest Hafjell Dalstasjon Hafjell Midtområde Hafjelltoppen Kvitfjell Middle station are also quite attractive and generally high utilization. It Owned warm beds Other warm beds is easier for Alpinco to have a high utilization when controlling the units

Note: Also excludes Ruby Hotel Units development

AlpinCo unit development Units 400

350 349

300 297 300 295 264 266 250 239 244 244 217 229 223 200 195 195 179 150 157 155 155 147 166 100 110 105 100 100 85 89 97 80 72 68 50 0 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18

Kvitfjell Hafjell Alpinco

▪ AlpinCo currently has 265 warm bed units and ~2200 warm beds in its booking system  ~2500 warm beds including GGH and Ruby Hotel ▪ The decline in units from 2008-2014 is related to increased competition from other booking companies in Hafjell  Additionally, some units were lost in the merger between Hafjell Booking and Kvitfjell Booking ▪ Increase of warm bed units since 2015  No other booking-companies in Kvitfjell, permitting higher growth Note: 17/18 season is as of October 2017 Warm bed utilization development

Warm bed utilization Hafjell 100% • Warm bed utilization of 70-80% at Hafjell on average during peak period (December-March), while Kvitfjell is ~60% on average 80% • Low utilization in the beginning- and end points of the season • Utilization improved in 2016/17 compared to 2015/16 with ~5% 60% on average at Hafjell (somewhat less at Kvitfjell) • Generally lower and more holiday sensitive utilization at Kvitfjell 40% compared to Hafjell • The reason for AlpinCo not having 100% utilization on all its warm 20% beds in peak season is mixed. But there are two main factors: 1. There is a lower utilization on the less attractive warm beds not 0% located “in the snow”, such as Hafjell Dalstasjon Oct Nov Dec Jan Feb Mar Apr 2. There is a lower utilization for beds not controlled by AlpinCo. 15/16 16/17 Warm bed owners typically use the units in the peak weeks (e.g. week 6-8). In addition, they often use the units from Thursday to Warm bed utilization Kvitfjell Sunday. In effect, this limits AlpinCo’s ability to sell the warm 100% beds for two weeks (and not just that weekend). But the warm beds are still registered with zero utilization 80%

60%

40%

20% Conclusion 0% AlpinCo needs more controlled units and warm Oct Nov Dec Jan Feb Mar Apr beds «in the snow» 15/16 16/17 Early booking provides cushion during unfavourableBooking patterns 2016/17 winter conditions NOKm 18 ▪ For Hafjell ~77% of revenue was booked 16 before the start of December in 2016/17 14 ▪ For Kvitfjell ~65% of revenue was booked 12 before the start of December in 2016/17 10 ▪ Early booking makes warm bed associated 8 revenue less vulnerable to unfavourable

6 winter season climate

4

2

0 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17

Hafjell 16-17 Kvitfjell 16-17

Note: The figures do not match perfectly with total booking revenue because: (1) There is a mandatory final cleaning agreement included in total booking revenue; and (2) The graph only shows booking revenue for the winter season Development of booking revenue per warmBooking revenue perbed warm bed during winter season NOK 25 000

20 000

5 468 5 674 15 000 5 144

10 000 20 264 18 371 19 529 13 227 14 061 14 590 5 000

0 14/15 15/16 16/17 Owner income Alpinco booking fee Price paid by customer

▪ 72% of gross sales is the amount disposable to the owner, the remaining 28% of gross sales represents booking provisions to AlpinCo ▪ Booking revenue per warm bed has steadily increased during the period. This is partly driven by price increases and partly driven by increased utilization ▪ In addition to the booking revenue, AlpinCo generates approximately NOK 12,500 in ski card revenues and approximately NOK 2,000 related to sales of food/beverage/ski rental/other ▪ Revenue per warm bed is calculated as the average rental income from the cabin in Kvitfjell west (included in 15/16) and the cabins in GudbrandsGard Hyttegrand – in total 88 warm beds Warm bed development considerations

• Revenue from the sale of cold areas may be used for the development of warm beds

• Increased ski pass revenue per bed is estimated at approximately 12,500, - per season. A portion of increased lift ticket income may for a period of time subsidize the construction of warm beds. The marginal effect of increased ski pass revenues is over 90%

• New beds are established with a horizon for rent of 10 years - allowing for full deduction of VAT

• In Hafjell, the plan for Mosetertoppen will release areas for holiday homes which will give increased revenues in the form of grants from Mosetertoppen Hafjell AS, estimated to NOK 12-18m Rental incentives for cabin/appartment owners

Rental • HafjellKvitfjell Booking provides a rental guarantee of up to NOK 15,000, - per bed in direct owner guarantee income

Large client • HafjellKvitfjell Booking has a large client database. This gives high comfort for renting out the warm beds network • Better to use HKB than trying to rent out by yourself

• The owners who rent out their warm beds through HafjellKvitfjell Booking, receive benefits Reduced ski- such as discounted ski-pass (Platina Card) and ski-rental pass prices • The other booking companies cannot offer this benefit to cabin owners

• HafjellKvitfjell Booking handles all the practicalities. The warm bed owner does not need to Simple and do anything, apart from collecting money convenient • Client contract, claim deposit, give and collect keys, provide information, arrange cleaning services, handles any problems during the stay, etc Necassary factors to realize warm bed potential

Access to regulated land in the mountain. Varden is regulated and being ✓ developed. Area at Hafjell recently secured

✓ Financing models proven at other ski resports

✓ Development expertise

? Financing expertise

Owners fully aligned on warm bed strategy (limited willingness/capacity to  use own balance sheet) Warm bed financing structures • AlpinCo partners with property developers. AlpinCo provides a project concept, plots and infrastructure 1. Partnership projects • This is similar to the Branäs model • Possible model for Varden N 1-4. AlpinCo discussing with potential partners

• AlpinCo gives away the property for free, subject to the external party developing 2. External development warm bed units that are included in HafjellKvitfjell Booking of warm beds for rent • AlpinCo guarantees a minimum yield/rental income

• AlpinCo sells the property for a reduced price. The external party develops both cold and 3. External development warm beds. Cold beds used as a «sweetener» or enabler of warm bed development of warm and cold beds • Similar to the Tinde agreement

4. Financing using own • Build warm bed units using own balance sheet. Proceeeds from sale of cold plots balance sheet/ proceeds can also be “earmarked” development of warm beds from sale of cold plots • Skistar has done this for several ski resorts including Hemsedal

• AlpinCo established project vehicle. Capital raised from private investors 5. Syndication • AlpinCo to guarantee a minimum yield • Such a structure has for example been used for Hemsedal

• AlpinCo gives away the property for free, subject to external party developing 6. External development apartments or similar that are sold with a rental obligation of warm beds for sale • Financing structure not very popular among Norwegians, but could be an attractive model for international guests