MARKET STUDY Proposed Hampton Inn & Suites

227 MAIN STREET HUNTINGTON, NEW YORK

SUBMITTED TO:PR OPOSED PREPARED BY: Huntington Village Hotel Partners LLC HVS Consulting & Valuation c/o Division of TS Worldwide, LLC Mr. Robert Coleman CPA 1400 Old Country Road, Suite 105N Cassata Organization FLP Westbury, New York 11590 800 Cassata Drive Copiague, New York 11726 +1 (516) 248-8828 ext. 269

+1 (631) 218-6420

February-2020

February 10, 2020

Huntington Village Hotel Partners LLC c/o Mr. Robert Coleman CPA Cassata Organization FLP 800 Cassata Drive Copiague, New York 11726

HVS NEW YORK 1400 Old Country Road, Suite 105N Re: Proposed Hampton Inn & Suites Westbury, New York 11590 Huntington, New York +1 (516) 248-8828 ext. 269 HVS Reference: 2020020105 +1 (516) 248-8828 FAX www.hvs.com

Dear Mr. Coleman:

Pursuant to your request, we herewith submit our market study pertaining to the above-captioned property. We have inspected the real estate and analyzed the hotel market conditions in the Huntington, New York, area. We have studied the proposed project, and the results of our fieldwork and analysis are presented in this report. We have also reviewed the proposed improvements for this site.

We hereby certify that we have no undisclosed interest in the property, and our employment and compensation are not contingent upon our findings. This study is

subject to the comments made throughout this report and to all assumptions and limiting conditions set forth herein.

Sincerely, TS Worldwide, LLC

DRAFT DOCUMENT

Patricia Shih, Vice President [email protected], +1 (404) 791-5509

DRAFT DOCUMENT

Roland deMilleret, MAI, Senior Managing Director Superior results through unrivaled [email protected], +1 (516) 248-8828 ext. 269 hospitality intelligence. Everywhere.

Table of Contents

SECTION TITLE PAGE 1. Executive Summary 1 Subject of the Market Study 1 Ownership, Franchise, and Management Assumptions 2 Summary of Hotel Market Trends 2 Summary of Forecast Occupancy and Average Rate 6 Summary of Forecast Income and Expense Statement 6 Scope of Work 9 2. Description of the Site and Neighborhood 11 Physical Characteristics 11 Access and Visibility 14 Airport Access 15 Neighborhood 16 Flood Zone 18 Zoning 19 3. Market Area Analysis 21 Workforce Characteristics 25 Radial Demographic Snapshot 29 Unemployment Statistics 31 Major Business and Industry 32 Office Space Statistics 34 Convention Activity 36 Airport Traffic 37 Tourist Attractions 42 4. Supply and Demand Analysis 48 Definition of Subject Hotel Market 48 National Trends Overview 48 Historical Supply and Demand Data 52

Seasonality 55 Patterns of Demand 59 Primary Competitors 63 Secondary Competitors 70 Supply Changes 72 Demand Analysis Using Market Segmentation 73 Base Demand Growth Rates 76 Latent Demand 76 Unaccommodated Demand 76 Induced Demand 77 Accommodated Demand and Market-wide Occupancy 77 5. Description of the Proposed Improvements 79 Project Overview 79 Summary of the Facilities 81 Site Improvements and Hotel Structure 82 Public Areas 83 Guestrooms 86 Back-of-the-House 88 ADA and Environmental 88 Capital Expenditures 89 Construction Budget 89 6. Projection of Occupancy and Average Rate 91 Historical Penetration Rates by Market Segment 91 Forecast of Subject Property’s Occupancy 92 Average Rate Analysis 95 Competitive Position 95 7. Projection of Income and Expense 101 Comparable Operating Statements 101 Forecast of Revenue and Expense 105 Rooms Revenue 108 Other Operated Departments Revenue 108

Miscellaneous Income 108 Rooms Expense 109 Other Operated Departments Expense 109 Administrative and General Expense 110 Information and Telecommunications Systems Expense 110 Marketing Expense 110 Franchise Fee 111 Property Operations and Maintenance 111 Utilities Expense 112 Management Fee 113 Property Taxes 113 Insurance Expense 116 Reserve for Replacement 116 Forecast of Revenue and Expense Conclusion 117 8. Statement of Assumptions and Limiting Conditions 118

Addenda

Qualifications

1. Executive Summary

Subject of the The subject of the market study is a 18,731-square-foot (0.43-acre) site to be Market Study improved with a boutique, limited-service lodging facility. The hotel will be associated with the Hampton Inn & Suites by Hilton brand, but will boast an upscale design that complements the character of Downtown Huntington Village as well as the surrounding affluent neighborhoods. Given its planned upscale, historic design and convenient location to a plethora of attractions and establishments, the proposed subject hotel is anticipated to become a popular destination, thereby attracting more leisure and tourism demand into the Huntington area. The property, which is expected to open on July 1, 2021, will feature 80 rooms, a breakfast dining area, a fitness room, a lobby workstation, a market pantry, and a guest laundry room. The hotel will also contain the appropriate parking capacity (40 parking garage + 20 offsite surface lot spaces) and all necessary back-of-the-house space.

RENDERING OF PROPOSED HAMPTON INN & SUITES PROJECT

The subject site’s location is 227 Main Street, Huntington, New York 11743.

Pertinent Dates The effective date of the report is February 3, 2020. The subject site was inspected by Patricia Shih on January 30, 2020. In addition to the inspection, Patricia Shih participated in the research for this assignment and assisted in the report’s

February-2020 Executive Summary Proposed Hampton Inn & Suites – Huntington, New York 1

preparation. Roland deMilleret, MAI, participated in the analysis and reviewed the findings but did not personally inspect the property.

Ownership, Franchise, The developer of the proposed subject hotel is Huntington Village Hotel Partners and Management LLC, which is based in Holtsville, New York. The subject site, which includes the Assumptions existing improvement on the site, was last sold in 2019. Huntington Village Hotel Partners LLC has owned the site since that time, having purchased it from 227 Main Street LLC for a reported price of $4,632,650 (inclusive of closing costs) for the purpose of developing a new hotel that will incorporate a significant portion of the existing improvement. The site is neither listed nor under contract for sale, and we have no knowledge of any recent listings.

We assume that the proposed hotel will be managed by a professional management company that is experienced in the operation of upscale, extended-stay hotels in this region. The management team had not been selected as of the date of this study; therefore, details pertaining to management terms had yet to be determined. Our projections reflect a total management fee of 3.0% of total revenues.

The proposed subject hotel will reportedly operate under a franchise agreement with Hampton Inns Franchise LLC, a subsidiary of Hilton Inc., as a Hampton by Hilton; however, the terms of this agreement had yet to be determined at the time of this appraisal. Based on our review of the agreement’s terms or expected terms, the Hampton Inn & Suites by Hilton franchise is reflected in our forecasts with a royalty fee of 6% of rooms revenue, and a marketing assessment of 4% of rooms revenue.

Summary of Hotel During the illustrated historical period, occupancy increased from 2011 through Market Trends 2016 (with the exception of a dip in 2014) and then remained relatively stable in 2017 and 2018. Meanwhile, average rate gains were achieved in 2011 and then ADR continued to grow each year through 2019, with RevPAR increasing by roughly 29.0% between 2011 and 2019. RevPAR reached its high point in the summer of 2018. It is important to note that the robust average rate gains in 2019 were due in part to the PGA Championship Tournament that took place at Bethpage Black in May 2019 with the presence of Tiger Woods. As such, we have adjusted the ADR in 2020 to a more normalized level given that that PGA Championship Tournament appearance may not recur this year. Hotels in this Long Island submarket benefit from corporate weekday base business, with supplemental leisure demand on weekends and during seasonal periods. As such, this improvement in market conditions was driven largely by the lack of new supply combined with the continued strong corporate-transient demand from the area companies and strong leisure demand from New York City residents as well as tourists.

February-2020 Executive Summary Proposed Hampton Inn & Suites – Huntington, New York 2

The following table provides a historical perspective on the supply and demand trends for a selected set of hotels, as provided by STR.

FIGURE 1-1 HISTORICAL SUPPLY AND DEMAND TRENDS (STR)

Four Points by Sheraton Plainview Long Island Upscale Class Secondary 103 Sep 2005 Aug 1961 Holiday Inn Plainview Long Island Upper Midscale Class Secondary 125 Apr 1963 Apr 1963 Hampton by Hilton Inn Long Island/Commack Upper Midscale Class Primary 143 Feb 1988 Feb 1988 Hilton Long Island Huntington Upper Upscale Class Secondary 305 Mar 1990 Jun 1988 Hampton by Hilton Inn Long Island/Islandia Upper Midscale Class Primary 120 Jul 1988 Jul 1988 Holiday Inn Express Stony Brook Long Island Upper Midscale Class Primary 143 Feb 1991 Feb 1991 Holiday Inn Express Hauppauge Long Island Upper Midscale Class Secondary 133 Mar 2001 Mar 2001 Hampton by Hilton Inn Long Island - Brookhaven Upper Midscale Class Secondary 161 Feb 2002 Feb 2002 Courtyard Long Island MacArthur Airport Upscale Class Secondary 154 May 2002 May 2002 Hilton Garden Inn Islip/MacArthur Airport Upscale Class Secondary 165 Aug 2003 Aug 2003 Homewood Suites by Hilton Long Island Melville Upscale Class Secondary 147 Dec 2004 Dec 2004 La Quinta Inns & Suites Islip MacArthur Airport Upper Midscale Class Secondary 132 Jun 2006 Jun 2006 Courtyard Republic Airport Long Island Farmingdale Upscale Class Secondary 131 May 2007 May 2007 TownePlace Suites Republic Airport Long Island Farmingdale Upper Midscale Class Secondary 118 Jan 2008 Jan 2008 Hilton Garden Inn Melville Upscale Class Secondary 178 Aug 2008 Aug 2008 Hilton Garden Inn Stony Brook Upscale Class Secondary 135 Feb 2013 Feb 2013 Residence Inn Long Island Islip Courthouse Complex Upscale Class Secondary 125 Dec 2013 Dec 2013 Courtyard Long Island Islip Courthouse Complex Upscale Class Secondary 125 Jan 2018 Jan 2018

Total 2,643 Source: STR

The following tables reflect our estimates of operating data for hotels on an individual basis. These trends are presented in detail in the Supply and Demand Analysis chapter of this report.

February-2020 Executive Summary Proposed Hampton Inn & Suites – Huntington, New York 3

FIGURE 1-2 PRIMARY COMPETITORS – OPERATING PERFORMANCE

Est. Segmentation Estimated 2018 Estimated 2019

Weighted Weighted Annual Annual Number of Room Room Occupancy Yield

Property Rooms Commercial Leisure Group Count Occ. Average Rate RevPAR Count Occ. Average Rate RevPAR Penetration Penetration

Hampton Inn Long Island/Commack 143 60 % 30 % 10 % 143 80 - 85 % $150 - $160 $120 - $125 143 55 - 60 % $150 - $160 $90 - $95 70 - 75 % 70 - 75 %

Hampton Inn Long Island/Islandia 120 60 30 10 120 80 - 85 140 - 150 115 - 120 120 75 - 80 140 - 150 115 - 120 95 - 100 90 - 95

Holiday Inn Express Hauppauge-Long Island 133 60 30 10 133 75 - 80 140 - 150 110 - 115 133 75 - 80 140 - 150 115 - 120 95 - 100 90 - 95

Sub-Totals/Averages 396 60 % 30 % 10 % 396 81.6 % $143.61 $117.16 396 72.4 % $148.63 $108 $90 % 85.2 %

Secondary Competitors 2,247 58 % 30 % 12 % 1,757 80.0 % $154.22 $123.36 1,757 81.7 % $159.61 $130 $102 % 103.3 %

Totals/Averages 2,643 59 % 30 % 12 % 2,153 80.3 % $152.24 $122.22 2,153 80.0 % $157.78 $126 $100 % 100.0 % * Specific occupancy and average rate data were utilized in our analysis, but are presented in ranges in the above table for the purposes of confidentiality.

February-2020 Executive Summary Proposed Hampton Inn & Suites – Huntington, New York 4

FIGURE 1-3 SECONDARY COMPETITORS – OPERATING PERFORMANCE

Est. Segmentation Estimated 2018 Estimated 2019

Weighted Weighted Total Annual Annual Number Competitive Room Room

Property of Rooms Commercial Leisure Group Level Count Occ. Average Rate RevPAR Count Occ. Average Rate RevPAR

Homewood Suites by Hilton Long Island Melville 147 65 % 25 % 10 % 80 % 118 85 - 90 % $180 - $190 $160 - $170 118 90 - 95 % $190 - $200 $170 - $180

Hilton Garden Inn Melville 178 65 25 10 80 142 80 - 85 160 - 170 130 - 140 142 85 - 90 160 - 170 140 - 150

Four Points by Sheraton Melville Long Island 103 60 30 10 80 82 75 - 80 140 - 150 105 - 110 82 75 - 80 150 - 160 110 - 115

Hilton Long Island/Huntington 305 50 25 25 80 244 70 - 75 160 - 170 115 - 120 244 75 - 80 170 - 180 130 - 140

Holiday Inn Plainview-Long Island 125 50 40 10 80 100 85 - 90 130 - 140 115 - 120 100 85 - 90 140 - 150 120 - 125

Hampton Inn Long Island-Brookhaven 161 55 35 10 80 129 75 - 80 130 - 140 100 - 105 129 75 - 80 140 - 150 105 - 110

TownePlace Suites by Marriott Republic Airport Long 118 60 30 10 80 94 80 - 85 150 - 160 125 - 130 94 80 - 85 160 - 170 130 - 140 Island/Farmingdale

Courtyard by Marriott Republic Airport Long Island/Farmingdale 131 60 30 10 80 105 80 - 85 170 - 180 140 - 150 105 80 - 85 170 - 180 140 - 150

Hilton Garden Inn Islip/MacArthur Airport 165 60 30 10 80 132 80 - 85 150 - 160 125 - 130 132 80 - 85 150 - 160 125 - 130

Holiday Inn Express Stony Brook-Long Island 143 60 30 10 80 114 85 - 90 140 - 150 125 - 130 114 85 - 90 140 - 150 125 - 130

Hilton Garden Inn Stony Brook 135 60 30 10 80 108 85 - 90 160 - 170 140 - 150 108 85 - 90 160 - 170 140 - 150

La Quinta Inn & Suites by Wyndham Islip-MacArthur Airport 132 50 40 10 80 106 70 - 75 120 - 125 90 - 95 106 65 - 70 125 - 130 85 - 90

Residence Inn by Marriott Long Island Islip/Courthouse Complex 125 65 25 10 70 88 75 - 80 160 - 170 120 - 125 88 75 - 80 150 - 160 120 - 125

Courtyard by Marriott Long Island MacArthur Airport 154 60 30 10 70 108 75 - 80 150 - 160 120 - 125 108 75 - 80 150 - 160 115 - 120

Courtyard by Marriott Long Island Islip/Courthouse Complex 125 60 30 10 70 88 55 - 60 140 - 150 85 - 90 88 70 - 75 150 - 160 110 - 115

Totals/Averages 2,247 58 % 30 % 12 % 78 % 1,757 80.0 % $154.22 $123.36 1,757 81.7 % $159.61 $130.48 * Specific occupancy and average rate data was utilized in our analysis, but is presented in ranges in the above table for the purposes of confidentiality.

February-2020 Executive Summary Proposed Hampton Inn & Suites – Huntington, New York 5

Summary of Forecast Based on our analysis presented in the Projection of Occupancy and Average Rate Occupancy and chapter, we have chosen to use a stabilized occupancy level of 85% and a base-year Average Rate rate position of $170.00 for the proposed subject hotel. The following table reflects a summary of our market-wide and proposed subject hotel occupancy and average rate (ADR) projections.

FIGURE 1-4 ADR FORECAST – MARKET AND PROPOSED SUBJECT HOTEL

Calendar Year 2019 2020 2021 2022 2023 2024 2025 2026 2027

Market ADR $157.78 $159.36 $163.35 $168.25 $173.29 $178.49 $183.85 $189.36 $195.04 Projected Market ADR Growth Rate — 1.0% 2.5% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Proposed Subject Property ADR (As-If Stabilized) $170.00 $171.70 $175.99 $181.27 $186.71 $192.31 $198.08 $204.02 $210.14 ADR Growth Rate — 1.0% 2.5% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Proposed Subject Stabilized ADR Penetration 108% 108% 108% 108% 108% 108% 108% 108% 107.7%

Fiscal Year 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28

Proposed Subject Property Average Rate $178.61 $183.97 $189.49 $195.17 $201.03 $207.06 $213.27 Opening Discount 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Average Rate After Discount $178.61 $183.97 $189.49 $195.17 $201.03 $207.06 $213.27 Real Average Rate Growth — 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Market ADR $161.34 $165.78 $170.75 $175.87 $181.15 $186.58 $192.18 $197.94 Proposed Subject ADR Penetration (After Discount) 108% 108% 108% 108% 108% 108% 108% ADR Expressed in Base-Year Dollars Deflated @ Inflation Rate $170.00 $170.00 $170.00 $170.00 $170.00 $170.00 $170.00

The following table summarizes the proposed subject hotel’s forecast, reflecting fiscal years and opening-year rate discounts as applicable.

FIGURE 1-5 FORECAST OF AVERAGE RATE

Year Occupancy Average Rate RevPAR

2021/22 75 % $178.61 $133.96 2022/23 82 183.97 150.86 2023/24 85 189.49 161.07

Summary of Forecast Our positioning of each revenue and expense level is supported by comparable Income and Expense operations or trends specific to this market. Our forecast of income and expense is Statement presented in the following table.

February-2020 Executive Summary Proposed Hampton Inn & Suites – Huntington, New York 6

FIGURE 1-6 DETAILED FORECAST OF INCOME AND EXPENSE

2021/22 Begins July 2022/23 2023/24 Stabilized Number of Rooms: 80 80 80 80 Occupancy: 75% 82% 85% 85% Average Rate: $178.61 $183.97 $189.49 $195.17 RevPAR: $133.96 $150.85 $161.06 $165.90 Days Open: 365 365 365 365 Occupied Rooms: 21,900 %Gross PAR POR 23,944 %Gross PAR POR 24,820 %Gross PAR POR 24,820 %Gross PAR POR OPERATING REVENUE Rooms $3,912 98.7 % $48,900 $178.63 $4,405 98.8 % $55,063 $183.97 $4,703 98.8 % $58,788 $189.48 $4,844 98.8 % $60,550 $195.17 Other Operated Departments 31 0.8 383 1.40 32 0.7 405 1.35 34 0.7 421 1.36 35 0.7 434 1.40 Miscellaneous Income 20 0.5 255 0.93 22 0.5 270 0.90 22 0.5 281 0.90 23 0.5 289 0.93 Total Operating Revenues 3,963 100.0 49,538 180.96 4,459 100.0 55,737 186.22 4,759 100.0 59,489 191.75 4,902 100.0 61,273 197.50 DEPARTMENTAL EXPENSES * Rooms 993 25.4 12,409 45.33 1,058 24.0 13,224 44.18 1,105 23.5 13,815 44.53 1,138 23.5 14,230 45.87 Other Operated Departments 16 51.3 196 0.72 16 50.4 204 0.68 17 50.0 211 0.68 17 50.0 217 0.70 Total Expenses 1,008 25.4 12,606 46.05 1,074 24.1 13,427 44.86 1,122 23.6 14,026 45.21 1,156 23.6 14,447 46.56 DEPARTMENTAL INCOME 2,955 74.6 36,932 134.91 3,385 75.9 42,309 141.36 3,637 76.4 45,463 146.54 3,746 76.4 46,826 150.93 UNDISTRIBUTED OPERATING EXPENSES Administrative & General 282 7.1 3,520 12.86 296 6.6 3,701 12.37 308 6.5 3,846 12.40 317 6.5 3,961 12.77 Info & Telecom Systems 41 1.0 507 1.85 43 1.0 533 1.78 44 0.9 554 1.79 46 0.9 571 1.84 Marketing 190 4.8 2,381 8.70 200 4.5 2,504 8.37 208 4.4 2,602 8.39 214 4.4 2,680 8.64 Franchise Fee 391 9.9 4,890 17.86 441 9.9 5,506 18.40 470 9.9 5,879 18.95 484 9.9 6,055 19.52 Prop. Operations & Maint. 106 2.7 1,320 4.82 118 2.7 1,481 4.95 131 2.7 1,635 5.27 143 2.9 1,783 5.75 Utilities 133 3.3 1,656 6.05 139 3.1 1,742 5.82 145 3.0 1,810 5.83 149 3.0 1,864 6.01 Total Expenses 1,142 28.8 14,274 52.14 1,237 27.8 15,467 51.68 1,306 27.4 16,325 52.62 1,353 27.6 16,914 54.52 GROSS OPERATING PROFIT 1,813 45.8 22,658 82.77 2,147 48.1 26,842 89.68 2,331 49.0 29,138 93.92 2,393 48.8 29,912 96.41 Management Fee 119 3.0 1,486 5.43 134 3.0 1,672 5.59 143 3.0 1,785 5.75 147 3.0 1,838 5.92 INCOME BEFORE NON-OPR. INC. & EXP. 1,694 42.8 21,172 77.34 2,014 45.1 25,170 84.10 2,188 46.0 27,353 88.17 2,246 45.8 28,074 90.49 NON-OPERATING INCOME & EXPENSE Property Taxes 366 9.2 4,576 16.72 375 8.4 4,691 15.67 387 8.1 4,832 15.57 398 8.1 4,977 16.04 Insurance 37 0.9 458 1.67 38 0.8 472 1.58 39 0.8 486 1.57 40 0.8 501 1.61 Reserve for Replacement 79 2.0 991 3.62 134 3.0 1,672 5.59 190 4.0 2,380 7.67 196 4.0 2,451 7.90 Total Expenses 482 12.1 6,026 22.01 547 12.2 6,835 22.84 616 12.9 7,698 24.81 634 12.9 7,928 25.56 EBITDA LESS RESERVE $1,212 30.7 % $15,147 $55.33 $1,467 32.9 % $18,335 $61.26 $1,572 33.1 % $19,656 $63.35 $1,612 32.9 % $20,146 $64.93 *Departmental expenses are expressed as a percentage of departmental revenues.

February-2020 Executive Summary Proposed Hampton Inn & Suites – Huntington, New York 7

FIGURE 1-7 TEN-YEAR FORECAST OF INCOME AND EXPENSE

2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31

Number of Rooms: 80 80 80 80 80 80 80 80 80 80 Occupied Rooms: 21,900 23,944 24,820 24,820 24,820 24,820 24,820 24,820 24,820 24,820 Occupancy: 75% 82% 85% 85% 85% 85% 85% 85% 85% 85% Average Rate: $178.61 % of $183.97 % of $189.49 % of $195.17 % of $201.03 % of $207.06 % of $213.27 % of $219.67 % of $226.26 % of $233.05 % of RevPAR: $133.96 Gross $150.85 Gross $161.06 Gross $165.90 Gross $170.87 Gross $176.00 Gross $181.28 Gross $186.72 Gross $192.32 Gross $198.09 Gross OPERATING REVENUE Rooms $3,912 98.7 % $4,405 98.8 % $4,703 98.8 % $4,844 98.8 % $4,990 98.8 % $5,139 98.8 % $5,293 98.8 % $5,452 98.8 % $5,616 98.8 % $5,784 98.8 % Other Operated Departments 31 0.8 32 0.7 34 0.7 35 0.7 36 0.7 37 0.7 38 0.7 39 0.7 40 0.7 41 0.7 Miscellaneous Income 20 0.5 22 0.5 22 0.5 23 0.5 24 0.5 25 0.5 25 0.5 26 0.5 27 0.5 28 0.5 Total Operating Revenues 3,963 100.0 4,459 100.0 4,759 100.0 4,902 100.0 5,050 100.0 5,200 100.0 5,356 100.0 5,517 100.0 5,683 100.0 5,853 100.0 DEPARTMENTAL EXPENSES * Rooms 993 25.4 1,058 24.0 1,105 23.5 1,138 23.5 1,173 23.5 1,208 23.5 1,244 23.5 1,281 23.5 1,320 23.5 1,359 23.5 Other Operated Departments 16 51.3 16 50.4 17 50.0 17 50.0 18 50.0 18 50.0 19 50.0 20 50.0 20 50.0 21 50.0 Total Expenses 1,008 25.4 1,074 24.1 1,122 23.6 1,156 23.6 1,190 23.6 1,226 23.6 1,263 23.6 1,301 23.6 1,340 23.6 1,380 23.6 DEPARTMENTAL INCOME 2,955 74.6 3,385 75.9 3,637 76.4 3,746 76.4 3,859 76.4 3,974 76.4 4,093 76.4 4,216 76.4 4,343 76.4 4,473 76.4 UNDISTRIBUTED OPERATING EXPENSES Administrative & General 282 7.1 296 6.6 308 6.5 317 6.5 326 6.5 336 6.5 346 6.5 357 6.5 367 6.5 378 6.5 Info & Telecom Systems 41 1.0 43 1.0 44 0.9 46 0.9 47 0.9 48 0.9 50 0.9 51 0.9 53 0.9 55 0.9 Marketing 190 4.8 200 4.5 208 4.4 214 4.4 221 4.4 227 4.4 234 4.4 241 4.4 249 4.4 256 4.4 Franchise Fee 391 9.9 441 9.9 470 9.9 484 9.9 499 9.9 514 9.9 529 9.9 545 9.9 562 9.9 578 9.9 Prop. Operations & Maint. 106 2.7 118 2.7 131 2.7 143 2.9 163 3.2 168 3.2 173 3.2 178 3.2 184 3.2 189 3.2 Utilities 133 3.3 139 3.1 145 3.0 149 3.0 154 3.0 158 3.0 163 3.0 168 3.0 173 3.0 178 3.0 Total Expenses 1,142 28.8 1,237 27.8 1,306 27.4 1,353 27.6 1,410 27.9 1,452 27.9 1,496 27.9 1,541 27.9 1,587 27.9 1,635 27.9 GROSS OPERATING PROFIT 1,813 45.8 2,147 48.1 2,331 49.0 2,393 48.8 2,449 48.5 2,522 48.5 2,597 48.5 2,676 48.5 2,756 48.5 2,838 48.5 Management Fee 119 3.0 134 3.0 143 3.0 147 3.0 151 3.0 156 3.0 161 3.0 166 3.0 170 3.0 176 3.0 INCOME BEFORE NON-OPR. INC. & EXP. 1,694 42.8 2,014 45.1 2,188 46.0 2,246 45.8 2,298 45.5 2,366 45.5 2,437 45.5 2,510 45.5 2,586 45.5 2,663 45.5 NON-OPERATING INCOME & EXPENSE Property Taxes 366 9.2 375 8.4 387 8.1 398 8.1 410 8.1 422 8.1 435 8.1 448 8.1 462 8.1 475 8.1 Insurance 37 0.9 38 0.8 39 0.8 40 0.8 41 0.8 43 0.8 44 0.8 45 0.8 46 0.8 48 0.8 Reserve for Replacement 79 2.0 134 3.0 190 4.0 196 4.0 202 4.0 208 4.0 214 4.0 221 4.0 227 4.0 234 4.0 Total Expenses 482 12.1 547 12.2 616 12.9 634 12.9 653 12.9 673 12.9 693 12.9 714 12.9 735 12.9 757 12.9 EBITDA LESS RESERVE $1,212 30.7 % $1,467 32.9 % $1,572 33.1 % $1,612 32.9 % $1,644 32.6 % $1,693 32.6 % $1,744 32.6 % $1,796 32.6 % $1,850 32.6 % $1,905 32.6 % 1 1 1 1 1 1 1 1 1 1

February-2020 Executive Summary Proposed Hampton Inn & Suites – Huntington, New York 8

As illustrated, the hotel is expected to stabilize at a profitable level. Please refer to the Forecast of Income and Expense chapter of our report for a detailed explanation of the methodology used in deriving this forecast.

Scope of Work The methodology used to develop this study is based on the market research and valuation techniques set forth in the textbooks authored by Hospitality Valuation Services for the American Institute of Real Estate Appraisers and the Appraisal Institute, entitled The Valuation of Hotels and Motels,1 Hotels, Motels and Restaurants: Valuations and Market Studies,2 The Computerized Income Approach to Hotel/Motel Market Studies and Valuations,3 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,4 and Hotels and Motels – Valuations and Market Studies.5

1. All information was collected and analyzed by the staff of TS Worldwide, LLC. Information was supplied by the client. 2. The subject site has been evaluated from the viewpoint of its physical utility for the future operation of a hotel, as well as access, visibility, and other relevant factors. 3. The subject property's proposed improvements have been reviewed for their expected quality of construction, design, and layout efficiency. 4. The surrounding economic environment, on both an area and neighborhood level, has been reviewed to identify specific hostelry-related economic and demographic trends that may have an impact on future demand for hotels. 5. Dividing the market for hotel accommodations into individual segments defines specific market characteristics for the types of travelers expected to utilize the area's hotels. The factors investigated include purpose of visit, average length of stay, facilities and amenities required, seasonality, daily demand fluctuations, and price sensitivity.

1 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 2 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 3 Stephen Rushmore, The Computerized Income Approach to Hotel/Motel Market Studies and Valuations. (Chicago: American Institute of Real Estate Appraisers, 1990). 4 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 5 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies. (Chicago: Appraisal Institute, 2001).

February-2020 Executive Summary Proposed Hampton Inn & Suites – Huntington, New York 9

6. An analysis of existing and proposed competition provides an indication of the current accommodated demand, along with market penetration and the degree of competitiveness. Unless noted otherwise, we have inspected the competitive lodging facilities summarized in this report. 7. Documentation for an occupancy and average rate projection is derived utilizing the build-up approach based on an analysis of lodging activity. 8. A detailed projection of income and expense made in accordance with the Uniform System of Accounts for the Lodging Industry sets forth the anticipated economic benefits of the subject property.

February-2020 Executive Summary Proposed Hampton Inn & Suites – Huntington, New York 10

2. Description of the Site and Neighborhood

The suitability of the land for the operation of a lodging facility is an important consideration affecting the economic viability of a property and its ultimate marketability. Factors such as size, topography, access, visibility, and the availability of utilities have a direct impact on the desirability of a particular site.

The subject site is located prominently within Downtown Huntington Village, directly north of the intersection formed by Main Street/State Route 25A and Stewart Avenue. This site is in the town of Huntington, New York.

Physical Characteristics The subject site measures approximately 0.43 acres, or 18,731 square feet. The parcel's adjacent uses are set forth in the following table.

FIGURE 2-1 SUBJECT PARCEL'S ADJACENT USES

Direction Adjacent Use North Gerard Street South Main Street/State Route 25A East Main Street/State Route 25A West Stewart Avenue

Topography and The topography of the site is gently slopes downward from north to south, and its Site Utility shape should permit efficient use of the site for the building and other improvements, as well as ingress and egress. Upon completion of construction, the subject site will not contain any significant portion of undeveloped land that could be sold, entitled, and developed for alternate use. It is expected that the site will be developed fully with building and site improvements, thus contributing to the overall profitability of the hotel.

February-2020 Description of the Site and Neighborhood Proposed Hampton Inn & Suites – Huntington, New York 11

VIEW OF THE SUBJECT SITE – FROM MAIN STREET/STATE ROUTE 25A

February-2020 Description of the Site and Neighborhood Proposed Hampton Inn & Suites – Huntington, New York 12

SUFFOLK COUNTY GIS MAP

AERIAL PHOTOGRAPH

February-2020 Description of the Site and Neighborhood Proposed Hampton Inn & Suites – Huntington, New York 13

VIEW FROM SITE TO THE NORTH VIEW FROM SITE TO THE SOUTH

VIEW FROM SITE TO THE EAST VIEW FROM SITE TO THE WEST

Access and Visibility It is important to analyze the site with respect to regional and local transportation routes and demand generators, including ease of access. The subject site is readily accessible to a variety of local and county roads, as well as state and interstate highways. It is important to note the relative ease of transit to/from New York City as well as the immediate surrounding areas such as New Jersey, the Lower Hudson Valley Region, Connecticut, and Boston.

February-2020 Description of the Site and Neighborhood Proposed Hampton Inn & Suites – Huntington, New York 14

MAP OF REGIONAL ACCESS ROUTES

The subject market is served by a variety of additional local highways, which are illustrated on the map.

Vehicular access to the subject site is provided by Stewart Avenue, which is accessible via either Main Street or Gerard Street that is located to the northwest of the subject site. The subject site is located prominently at the entrance to Downtown Huntington Village, boasting frontage along Main Street/State Route 25A, and is relatively simple to locate from Interstate 495 (Long Island Expressway), which is the closest major thoroughfare. The proposed subject hotel is anticipated to have adequate signage at the site entrance, as well as on its eastern façade. Overall, the subject site benefits from excellent accessibility, and the proposed hotel is expected to enjoy excellent visibility from within its local neighborhood.

Airport Access The proposed subject hotel will be served by the Long Island MacArthur Airport, which is located approximately 16 miles to the southeast of the subject site.

February-2020 Description of the Site and Neighborhood Proposed Hampton Inn & Suites – Huntington, New York 15

Additionally, John F. Kennedy (JFK) International Airport and LaGuardia Airport are both located approximately 21 miles to the southwest of the subject site. Travelers flying into the airports in Queens or visiting from New York City can utilize the Long Island Rail Road (LIRR) in Brooklyn (Atlantic Terminal) or Manhattan (Penn Station) to reach Huntington; the LIRR Huntington Station is located at New York Avenue and Broadway, roughly one and one-half miles from the subject site. Additionally, the Town of Huntington offers the Huntington Area Rapid Transit (HART) for the local residents. HART operates ADA-approved buses that are on fixed route services, as well as paratransit services for people with disabilities or senior citizens who are unable to access the HART public buses.

Neighborhood The neighborhood surrounding a lodging facility often has an impact on a hotel's status, image, class, style of operation, and sometimes its ability to attract and properly serve a particular market segment. This section of the report investigates the subject neighborhood and evaluates any pertinent location factors that could affect its future occupancy, average rate, and overall profitability.

Downtown Huntington Village is vibrant and exudes a local community flair in its shopping and dining options. The neighborhood, however, lacks a centerpiece that the proposed subject property is anticipated to become. The neighborhood that surrounds the subject site is generally defined by Central Street and Union Place to the north, Gibson Avenue to the east, High Street/Fairview Street to the south, and Hillside Avenue to the west. The neighborhood is characterized by independent retail establishments, restaurants, a movie theater, small offices, medical offices, residences, and places of worship, as well as a historic cemetery along the primary thoroughfares, with more residential areas located along the secondary roadways. Some specific businesses and entities in the area include the Church of St. Patrick and St. Patrick's School, Central Presbyterian Church, the Huntington Arts Council, and The Paramount (a two-level concert hall that hosts numerous musical and comedic acts, boxing matches, and other special events throughout the year), as well as Old Burial Hill Cemetery, which is listed on the National Register of Historic Places. There are currently no lodging facilities in Downtown Huntington Village. The proximity of the restaurants and eclectic retail shops are considered supportive of the operation of an upper-midscale, nationally branded, boutique hotel that complements the upscale and individualistic character of the area. It is important to note that although not situated within the neighborhood, Heckscher Park and the Heckscher Museum of Art are conveniently located within walking distance, roughly three blocks to the northeast of the subject site.

In general, this neighborhood is in the stable stage of its life cycle. No particular developments or construction efforts were observed as taking place within this neighborhood at the time of our fieldwork.

February-2020 Description of the Site and Neighborhood Proposed Hampton Inn & Suites – Huntington, New York 16

MAP OF NEIGHBORHOOD

The proposed subject hotel's opening should be a positive influence on the area; the hotel will be in character with and will complement surrounding land uses. Overall, the supportive nature of the development in the immediate area is considered appropriate for and conducive to the operation of a hotel.

Utilities The subject site will reportedly be served by all necessary utilities.

Soil and Geological and soil reports were not provided to us or made available for our review Subsoil Conditions during the preparation of this report. We are not qualified to evaluate soil conditions other than by a visual inspection of the surface; no extraordinary conditions were apparent.

Nuisances We were not informed of any site-specific nuisances or hazards, and there were no and Hazards visible signs of toxic ground contaminants at the time of our inspection. Because we are not experts in this field, we do not warrant the absence of hazardous waste and urge the reader to obtain an independent analysis of these factors.

February-2020 Description of the Site and Neighborhood Proposed Hampton Inn & Suites – Huntington, New York 17

Flood Zone According to the Federal Emergency Management Agency map illustrated below, the subject site is located in Zone X.

COPY OF FLOOD MAP AND COVER

February-2020 Description of the Site and Neighborhood Proposed Hampton Inn & Suites – Huntington, New York 18

The flood zone definition for the designation is as follows: areas outside the 500- year flood plain; areas of the 500-year flood; areas of the 100-year flood with average depths of less than one foot or with drainage areas less than one square mile and areas protected by levees from the 100-year flood.

Zoning According to the local planning office, the subject property is zoned as follows: C-6 - General Business District/Historic Overlay District. Additional details pertaining to the proposed subject property’s zoning regulations are summarized in the following table.

FIGURE 2-2 ZONING

Municipality Governing Zoning Town of Huntington Current Zoning General Business District/Historic Overlay District Current Use Former Municipal Building - now a Historic Landmark Is Current Use Permitted? Yes Is Change in Zoning Likely? No. The zoning was recently changed to the C-6/Historic Overlay District for the purpose of this proposed hotel development project. Permitted Uses C-6 = General Business District: offices, medical offices, financial institutions, municipal or non-profit cultural or recreational buildings, post offices, fire and police stations, places of worship, personal services establishments (e.g. barber, beauty shop, shoe repairs, self- service laundry facility), retail sales establishments (when conducted entirely in the building), dining establishment without a drive-in component (e.g. restaurant, bistro, tavern/bar, bakery, ice cream shop), hospitals, hospices, funeral home, public utility buildings, rail or bus stations. Additionally, mixed-use buildings are permitted where commercial use is on the ground level and residential use is on the upper levels. In mixed-use developments, the upper level cannot exceed the footprint of the ground level space, and must meet the height, area, bulk, and parking requirements of the zoning district; parking cannot be situated on the ground level. Hotel Allowed Yes, a hotel is permitted under the C-6/historic overlay district. On August 8, 2019, the Town of Huntington Zoning Board of Appeals approved the special permit use application submitted by Huntington Village Hotel Partners LLC to convert the existing office building into a boutique hotel, and for height and parking setback relief. Legally Non-Conforming Not applicable

The hotel development entity has received approval from the Town of Huntington Zoning Board of Appeals to construct the four-level, 80-key proposed subject hotel that will include a large portion of the existing historic Town Hall building, on the subject site. The Huntington Historic Preservation Commission noted in the memo dated December 17, 2019 that because more than 75% of the original historic

February-2020 Description of the Site and Neighborhood Proposed Hampton Inn & Suites – Huntington, New York 19

building will remain to be included as part of the proposed hotel development, the work falls within the Town Code 198-41 (C) and does not require a public hearing before the Town Board. We assume that all necessary permits and approvals will be secured (including the appropriate liquor license if applicable) and that the subject property will be constructed in accordance with local zoning ordinances, building codes, and all other applicable regulations. Our zoning analysis should be verified before any physical changes are made to the site.

Easements and We are not aware of any easements attached to the property that would significantly Encroachments affect the utility of the site or marketability of this project.

Conclusion We have analyzed the issues of size, topography, access, visibility, and the availability of utilities. The subject site is favorably located along Main Street/State Route 25A at the entrance to Downtown Huntington Village. In general, the site should be well suited for future hotel use, with acceptable access, visibility, and topography for an effective operation.

February-2020 Description of the Site and Neighborhood Proposed Hampton Inn & Suites – Huntington, New York 20

3. Market Area Analysis

The economic vitality of the market area and neighborhood surrounding the subject site is an important consideration in forecasting lodging demand and future income potential. Economic and demographic trends that reflect the amount of visitation provide a basis from which to project lodging demand. The purpose of the market area analysis is to review available economic and demographic data to determine whether the local market will undergo economic growth, stabilize, or decline. In addition to predicting the direction of the economy, the rate of change must be quantified. These trends are then correlated based on their propensity to reflect variations in lodging demand, with the objective of forecasting the amount of growth or decline in visitation by individual market segment (e.g., commercial, leisure, and group).

Market Area Definition The market area for a lodging facility is the geographical region where the sources of demand and the competitive supply are located. The subject site is located in the town of Huntington, the county of Suffolk, and the state of New York. Historically, Long Island developed from the westernmost areas eastward. The densest residential populations are located in the western and southern parts of Nassau County and in western Suffolk County. The character of Long Island changes markedly from urban to suburban to rural over its length. Commercial developments tend to be centered along major thoroughfares. Twelve regional malls and hundreds of shopping centers, as well as local shopping districts, are situated on Long Island. The five office sub-districts on the island contain office space in excess of 43 million square feet. Industrial production is scattered throughout the region, but is most heavily concentrated in the region’s 30 industrial parks.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 21

HUNTINGTON

The subject property’s market area can be defined by its Combined Statistical Area (CSA): New York-Newark, NY-NJ-CT-PA. The CSA represents adjacent metropolitan and micropolitan statistical areas that have a moderate degree of employment interchange. Micropolitan statistical areas represent urban areas in the United States based around a core city or town with a population of 10,000 to 49,999; the MSA requires the presence of a core city of at least 50,000 people and a total population of at least 100,000 (75,000 in New England). The following exhibit illustrates the market area.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 22

MAP OF MARKET AREA

Economic and A primary source of economic and demographic statistics used in this analysis is the Demographic Review Complete Economic and Demographic Data Source published by Woods & Poole Economics, Inc.—a well-regarded forecasting service based in Washington, D.C. Using a database containing more than 900 variables for each county in the nation, Woods & Poole employs a sophisticated regional model to forecast economic and demographic trends. Historical statistics are based on census data and information published by the Bureau of Economic Analysis. Projections are formulated by Woods & Poole, and all dollar amounts have been adjusted for inflation, thus reflecting real change.

These data are summarized in the following table.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 23

FIGURE 3-1 ECONOMIC AND DEMOGRAPHIC DATA SUMMARY

Average Annual Compounded Change 2000 2010 2019 2025 2000-10 2010-19 2019-25

Resident Population (Thousands) Suffolk County 1,424.1 1,494.7 1,513.9 1,558.9 0.5 % 0.1 % 0.5 % New York-Newark-Jersey City, NY-NJ-PA MSA 18,980.0 19,600.8 20,447.9 21,070.8 0.3 0.5 0.5 New York-Newark, NY-NJ-CT-PA CSA 22,282.7 23,116.2 24,043.8 24,793.6 0.4 0.4 0.5 State of New York 19,001.8 19,402.6 19,971.8 20,454.1 0.2 0.3 0.4 United States 282,162.4 309,348.1 331,969.3 350,937.2 0.9 0.8 0.9 Per-Capita Personal Income* Suffolk County $45,460 $49,465 $57,920 $62,174 0.8 1.8 1.2 New York-Newark-Jersey City, NY-NJ-PA MSA 48,917 52,492 62,795 67,608 0.7 2.0 1.2 New York-Newark, NY-NJ-CT-PA CSA 49,079 53,479 62,836 67,635 0.9 1.8 1.2 State of New York 43,213 47,369 57,002 61,604 0.9 2.1 1.3 United States 36,812 39,622 46,751 50,233 0.7 1.9 1.2 W&P Wealth Index Suffolk County 117.8 119.7 118.8 118.8 0.2 (0.1) (0.0) New York-Newark-Jersey City, NY-NJ-PA MSA 126.0 127.3 129.7 129.9 0.1 0.2 0.0 New York-Newark, NY-NJ-CT-PA CSA 126.7 129.7 130.0 130.2 0.2 0.0 0.0 State of New York 111.7 115.1 118.1 118.6 0.3 0.3 0.1 United States 100.0 100.0 100.0 100.0 0.0 (0.0) 0.0 Food and Beverage Sales (Millions)* Suffolk County $1,700 $2,323 $3,008 $3,214 3.2 2.9 1.1 New York-Newark-Jersey City, NY-NJ-PA MSA 24,862 32,177 42,556 45,073 2.6 3.2 1.0 New York-Newark, NY-NJ-CT-PA CSA 29,055 37,195 48,953 51,930 2.5 3.1 1.0 State of New York 23,876 30,918 41,191 43,566 2.6 3.2 0.9 United States 368,829 447,728 606,351 662,610 2.0 3.4 1.5 Total Retail Sales (Millions)* Suffolk County $22,277 $23,517 $27,527 $29,173 0.5 1.8 1.0 New York-Newark-Jersey City, NY-NJ-PA MSA 242,962 266,705 326,760 345,355 0.9 2.3 0.9 New York-Newark, NY-NJ-CT-PA CSA 294,530 316,800 385,450 407,748 0.7 2.2 0.9 State of New York 227,613 249,096 302,020 317,609 0.9 2.2 0.8 United States 3,902,830 4,130,414 5,156,220 5,598,240 0.6 2.5 1.4

* Inflation Adjusted Source: Woods & Poole Economics, Inc.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 24

The U.S. population grew at an average annual compounded rate of 0.8% from 2010 through 2019. The county’s population has grown more slowly than the nation’s population; the average annual growth rate of 0.1% between 2010 and 2019 reflects a gradually expanding area. Following this population trend, per-capita personal income increased slowly, at 1.8% on average annually for the county between 2010 and 2019. Local wealth indexes have remained stable in recent years, registering a high 118.8 level for the county in 2019.

Food and beverage sales totaled $3,008 million in the county in 2019, versus $2,323 million in 2010. This reflects a 2.9% average annual change, weaker than the 3.2% pace recorded in the prior decade. Over the long term, the pace of growth is forecast to moderate to a more sustainable level of 1.1%, which is projected through 2025. The retail sales sector demonstrated an annual increase of 0.5% in the decade spanning from 2000 to 2010, followed by an increase of 1.8% in the period from 2010 to 2019. An increase of 1.0% average annual change is expected in county retail sales through 2025.

Workforce The characteristics of an area's workforce provide an indication of the type and Characteristics amount of transient visitation likely to be generated by local businesses. Sectors such as finance, insurance, and real estate (FIRE); wholesale trade; and services produce a considerable number of visitors who are not particularly rate-sensitive. The government sector often generates transient room nights, but per-diem reimbursement allowances often limit the accommodations selection to budget and mid-priced lodging facilities. Contributions from manufacturing, construction, transportation, communications, and public utilities (TCPU) employers can also be important, depending on the company type.

The following table sets forth the county workforce distribution by business sector in 2000, 2010, and 2019, as well as a forecast for 2025.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 25

FIGURE 3-2 HISTORICAL AND PROJECTED EMPLOYMENT (000S)

Average Annual Compounded Change Percent Percent Percent Percent Industry 2000 of Total 2010 of Total 2019 of Total 2025 of Total 2000-2010 2010-2019 2019-2025

Farm 2.8 0.4 % 2.4 0.3 % 3.1 0.3 % 3.1 0.3 % (1.6) % 2.8 % 0.1 % Forestry, Fishing, Related Activities And Other 1.3 0.2 1.4 0.2 1.8 0.2 1.9 0.2 0.3 3.0 1.1 Mining 0.3 0.0 0.7 0.1 0.7 0.1 0.7 0.1 7.3 0.2 1.0 Utilities 1.7 0.2 1.6 0.2 0.9 0.1 0.9 0.1 (0.7) (6.1) 0.2 Construction 48.0 6.5 49.7 6.1 67.3 7.3 71.5 7.3 0.3 3.4 1.0 Manufacturing 66.6 9.0 55.2 6.8 59.6 6.4 59.6 6.0 (1.9) 0.9 (0.0) Total Trade 126.2 17.1 127.4 15.7 144.9 15.7 151.2 15.3 0.1 1.4 0.7 Wholesale Trade 41.0 5.6 40.6 5.0 47.0 5.1 48.6 4.9 (0.1) 1.6 0.5 Retail Trade 85.2 11.6 86.8 10.7 97.9 10.6 102.7 10.4 0.2 1.3 0.8 Transportation And Warehousing 21.4 2.9 20.0 2.5 24.7 2.7 25.2 2.6 (0.7) 2.4 0.4 Information 18.1 2.5 12.6 1.6 10.8 1.2 11.2 1.1 (3.6) (1.7) 0.6 Finance And Insurance 37.5 5.1 52.6 6.5 57.6 6.2 63.8 6.5 3.5 1.0 1.7 Real Estate And Rental And Lease 24.1 3.3 37.5 4.6 46.5 5.0 50.3 5.1 4.5 2.4 1.3 Total Services 285.7 38.7 333.6 41.2 398.9 43.1 431.8 43.8 1.6 2.0 1.3 Professional And Technical Services 55.5 7.5 60.2 7.4 69.1 7.5 72.8 7.4 0.8 1.6 0.9 Management Of Companies And Enterprises 8.2 1.1 10.1 1.3 9.9 1.1 10.3 1.0 2.1 (0.2) 0.7 Administrative And Waste Services 44.7 6.1 46.7 5.8 57.1 6.2 61.1 6.2 0.4 2.2 1.2 Educational Services 13.8 1.9 18.4 2.3 20.7 2.2 22.2 2.3 2.9 1.3 1.2 Health Care And Social Assistance 76.5 10.4 95.8 11.8 112.2 12.1 125.9 12.8 2.3 1.8 1.9 Arts, Entertainment, And Recreation 15.0 2.0 18.3 2.3 21.2 2.3 21.9 2.2 2.0 1.7 0.5 Accommodation And Food Services 34.4 4.7 41.9 5.2 55.8 6.0 58.8 6.0 2.0 3.2 0.9 Other Services, Except Public Administration 37.5 5.1 42.1 5.2 52.8 5.7 58.7 6.0 1.2 2.6 1.8 Total Government 103.6 14.0 114.3 14.1 109.0 11.8 114.4 11.6 1.0 (0.5) 0.8 Federal Civilian Government 13.8 1.9 12.5 1.5 11.5 1.2 11.6 1.2 (0.9) (1.0) 0.1 Federal Military 2.9 0.4 2.7 0.3 2.6 0.3 2.6 0.3 (0.9) (0.5) 0.1 State And Local Government 86.9 11.8 99.1 12.3 95.0 10.3 100.3 10.2 1.3 (0.5) 0.9

TOTAL 737.3 100.0 % 808.9 100.0 % 925.8 100.0 % 985.6 100.0 % 0.9 % 1.5 % 1.0 %

MSA 10,477.6 — 11,255.6 — 13,378.1 — 14,320.6 — 0.7 % 1.9 % 1.1 % U.S. 165,372.0 — 173,034.7 — 205,736.3 — 223,254.5 — 1.2 1.9 1.4

Source: Woods & Poole Economics, Inc.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 26

Woods & Poole Economics, Inc. reports that during the period from 2000 to 2010, total employment in the county grew at an average annual rate of 0.9%. More recently, the pace of total employment growth in the county accelerated to 1.5% on an annual average from 2010 to 2019, reflecting the initial years of the recovery.

Of the primary employment sectors, Total Services recorded the highest increase in number of employees during the period from 2010 to 2019, increasing by 65,313 people, or 19.6%, and rising from 41.2% to 43.1% of total employment. Of the various service sub-sectors, Health Care And Social Assistance and Professional And Technical Services were the largest employers. Strong growth was also recorded in the Construction sector, as well as the Total Trade sector, which expanded by 35.5% and -43.1%, respectively, in the period from 2010 to 2019. Forecasts developed by Woods & Poole Economics, Inc. anticipate that total employment in the county will change by 1.0% on average annually through 2025. The trend is below the forecast rate of change for the U.S. as a whole during the same period.

The following table illustrates historical and projected employment, households, population, and average household income data, as provided by REIS for the overall Long Island market.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 27

FIGURE 3-3 HISTORICAL & PROJECTED EMPLOYMENT, HOUSEHOLDS, POPULATION, AND HOUSEHOLD INCOME STATISTICS

Total Office Industrial Household Year Employment % Chg Employment % Chg Employment % Chg Households % Chg Population % Chg Avg. Income % Chg

2006 1,259,600 — 380,083 — 174,962 — 935,440 — 2,797,300 — $162,739 — 2007 1,270,730 0.9 % 383,471 0.9 % 173,979 (0.6) % 941,150 0.6 % 2,800,290 0.1 % 169,677 4.3 % 2008 1,254,970 (1.2) 375,895 (2.0) 168,354 (3.2) 944,380 0.3 2,811,700 0.4 169,752 0.0 2009 1,222,470 (2.6) 368,158 (2.1) 158,189 (6.0) 949,010 0.5 2,827,990 0.6 167,666 (1.2) 2010 1,238,230 1.3 373,897 1.6 159,090 0.6 952,800 0.4 2,841,810 0.5 173,912 3.7 2011 1,251,330 1.1 375,607 0.5 160,714 1.0 958,760 0.6 2,846,140 0.2 181,066 4.1 2012 1,263,770 1.0 378,919 0.9 161,817 0.7 962,380 0.4 2,848,210 0.1 194,048 7.2 2013 1,291,530 2.2 384,056 1.4 162,918 0.7 966,490 0.4 2,850,860 0.1 191,127 (1.5) 2014 1,301,170 0.7 385,191 0.3 161,894 (0.6) 969,160 0.3 2,849,590 (0.0) 199,328 4.3 2015 1,317,530 1.3 388,826 0.9 162,782 0.5 971,200 0.2 2,845,290 (0.2) 205,093 2.9 2016 1,336,230 1.4 393,350 1.2 162,642 (0.1) 973,080 0.2 2,842,000 (0.1) 211,206 3.0 2017 1,347,470 0.8 392,035 (0.3) 163,277 0.4 976,700 0.4 2,840,530 (0.1) 224,520 6.3 2018 1,343,930 (0.3) 388,499 (0.9) 162,120 (0.7) 979,560 0.3 2,838,560 (0.1) 225,082 0.3

Forecasts 2019 1,360,280 1.2 % 386,245 (0.6) % 162,738 0.4 % 985,350 0.6 % 2,837,480 (0.0) % $228,214 1.4 % 2020 1,363,060 0.2 387,255 0.3 161,990 (0.5) 989,100 0.4 2,836,140 (0.0) 230,745 1.1 2021 1,364,360 0.1 387,629 0.1 160,748 (0.8) 993,680 0.5 2,835,840 (0.0) 236,646 2.6 2022 1,373,580 0.7 390,871 0.8 160,527 (0.1) 998,620 0.5 2,836,760 0.0 244,206 3.2 2023 1,378,780 0.4 393,036 0.6 159,950 (0.4) 1,003,130 0.5 2,837,640 0.0 250,894 2.7

Average Annual Compound Change 2006 - 2018 0.5 % 0.2 % (0.6) % 0.4 % 0.1 % 2.7 % 2007 - 2010 (0.9) (0.8) (2.9) 0.4 0.5 0.8 2010 - 2018 1.0 0.5 0.2 0.3 (0.0) 6.7 Forecast 2019 - 2023 0.3 % 0.4 % (0.4) % 0.4 % 0.0 % 2.4 % Source: REIS Report, 3rd Quarter, 2019

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 28

For the Long Island market, of the roughly 1,300,000 persons employed, 29% are categorized as office employees, while 12% are categorized as industrial employees. Total employment decreased by an average annual compound rate of -0.9% during the recession of to 2010, followed by an increase of 1.0% from 2010 to 2018. By comparison, office employment reflected compound change rates of -0.8% and 0.5%, during the same respective periods. Total employment is expected to expand by 1.2% in 2019, while office employment is forecast to contract by -0.6% in 2019. From 2019 through 2023, REIS anticipates that total employment will expand at an average annual compound rate of 0.3%, while office employment will expand by 0.4% on average annually during the same period.

The number of households is forecast to expand by 0.4% on average annually between 2019 and 2023. Population is forecast to expand during this same period, at an average annual compounded rate of 0.0%. Household average income is forecast to grow by 2.4% on average annually from 2019 through 2023.

Radial Demographic The following table reflects radial demographic trends for our market area Snapshot measured by three points of distance from the subject site.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 29

FIGURE 3-4 DEMOGRAPHICS BY RADIUS

0.00 - 1.00 miles 0.00 - 3.00 miles 0.00 - 5.00 miles Population 2025 Projection 8,517 44,011 85,901 2020 Estimate 7,823 40,804 79,736 2010 Census 6,208 33,845 66,552 2000 Census 4,930 19,833 36,394 Percent Change: 2020 to 2025 8.9% 7.9% 7.7% Percent Change: 2010 to 2020 26.0% 20.6% 19.8% Percent Change: 2000 to 2010 25.9% 70.7% 82.9% Households 2025 Projection 3,400 15,483 29,961 2020 Estimate 3,093 14,315 27,800 2010 Census 2,328 11,724 23,137 2000 Census 1,843 6,877 12,649 Percent Change: 2020 to 2025 9.9% 8.2% 7.8% Percent Change: 2010 to 2020 32.9% 22.1% 20.2% Percent Change: 2000 to 2010 26.3% 70.5% 82.9% Income 2020 Est. Average Household Income $66,003 $85,035 $93,383 2020 Est. Median Household Income 49,629 68,347 76,520

2020 Est. Civ. Employed Pop 16+ by Occupation Architecture/Engineering 16 149 369 Arts/Design/Entertainment/Sports/Media 104 395 705 Building/Grounds Cleaning/Maintenance 37 358 936 Business/Financial Operations 164 1,002 2,125 Community/Social Services 35 267 608 Computer/Mathematical 37 292 670 Construction/Extraction 200 976 1,696 Education/Training/Library 219 1,014 2,357 Farming/Fishing/Forestry 13 17 24 Food Preparation/Serving Related 249 1,040 1,907 Healthcare Practitioner/Technician 140 895 2,096 Healthcare Support 113 292 453 Installation/Maintenance/Repair 151 705 1,307 Legal 14 65 174 Life/Physical/Social Science 34 86 105 Management 259 1,706 3,878 Office/Administrative Support 687 3,197 5,773 Production 225 813 1,530 Protective Services 90 672 1,540 Sales/Related 428 1,826 3,527 Personal Care/Service 120 545 996 Transportation/Material Moving 816 2,892 4,944 0 Source: Environics Analytics

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 30

This source reports a population of 79,736 and 27,800 households within a five- mile radius of the subject site. The average household income within this radius is reported at $93,383, while the median is $76,520.

Unemployment The following table presents historical unemployment rates for the proposed Statistics subject hotel’s market area.

FIGURE 3-5 UNEMPLOYMENT STATISTICS

Year County MSA State U.S. 2009 7.3 % 8.6 % 8.3 % 9.3 % 2010 7.7 8.9 8.6 9.6 2011 7.6 8.6 8.3 8.9 2012 7.8 8.7 8.5 8.1 2013 6.6 7.9 7.7 7.4 2014 5.4 6.5 6.3 6.2 2015 4.7 5.3 5.3 5.3 2016 4.4 4.8 4.9 4.9 2017 4.5 4.5 4.7 4.4 2018 3.9 4.0 4.1 3.9 Recent Month - Nov 2018 3.2 % 3.4 % 3.5 % 3.7 % 2019 3.3 3.4 3.6 3.5

Source: U.S. Bureau of Labor Statistics

After the U.S. unemployment rate declined to an annual average of 4.6% in 2006 and 2007, the Great Recession, which spanned December 2007 through June 2009, resulted in heightened unemployment rates. The unemployment rate peaked at 10.0% in October 2009, after which job growth resumed; the national unemployment rate has steadily declined since 2010. Total nonfarm payroll employment increased by 155,000, 238,000, and 235,000 jobs in December, January, and February, respectively. The strongest gains in February were recorded in the construction, private educational services, manufacturing, health care, and mining sectors. The national unemployment rate remains low, at 4.7% in December, 4.8% in January, and 4.7% in February; it has remained near the 5.0% mark since August 2015, reflecting a trend of relative stability and the overall strength of the U.S. economy.

Locally, the unemployment rate was 3.9% in 2018; for this same area in 2019, the most recent month’s unemployment rate was registered at 3.3%, versus 3.2% for

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 31

the same month in 2018. Unemployment rose in 2010 as the nation entered an economic slowdown. Local unemployment then remained generally stable in 2011 and 2012, before decreasing from 2013 through 2016 as the area recovered from the Great Recession. After remaining stable in 2017, a decrease in the unemployment rate resumed in 2018. Reportedly, local employment has remained strong within the healthcare and biotechnology sectors, thereby contributing to the relatively stable unemployment rate in the latest available data.

Major Business and Providing additional context for understanding the nature of the regional economy, Industry the following table presents a list of the major employers in the proposed subject property's market of Long Island.

FIGURE 3-6 MAJOR EMPLOYERS

Number of Rank Firm Employees

1 Northwell Health 31,153 2 New York State 20,304 3 Catholic Health Services 17,000 4 Nassau County 16,784 5 Federal Government 16,391 6 Suffolk County 11,075 7 Stop & Shop Supermarkets 8,100 8 Winthrop-University Hospital 7,700 9 Long Island Rail Road 6,960 10 Walmart 5,056

Source: U. S. Department of Labor, 2017

The following bullet points highlight major demand generators for this market:

• Long Island is home to numerous institutions of research and education. The Brookhaven National Laboratory (BNL) is one of ten national laboratories that is overseen and primarily funded by the Office of Science of the U.S. Department of Energy (DOE). The Brookhaven National Lab, which is based in the hamlet of Upton, conducts research in physical, biomedical, and environmental sciences, as well as energy technologies and national security. BNL also safely constructs and operates major scientific facilities available to university, industry, and government researchers. BNL’s 5,300-acre campus, which comprises more than 350 buildings with roughly 3,000 employees, attracts more than 4,000 global scientists annually. In September 2014, the $912-million, 590,000-square-foot

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 32

National Synchrotron Light Source II facility was completed; operations are expected to ramp up through 2020. Additionally, higher education is a key economic contributor for central Long Island, featuring institutions such as Stony Brook University, Saint Joseph’s College, Five Towns College, St. John’s University's Graduate Center, and Suffolk County Community College. • The Brookhaven Technology Center and Long Island Innovation Park at Hauppauge are key industrial office parks in the area. The 190-acre Brookhaven Technology Center is home to companies such as American Regent, Atlantic Industrial Technologies, Biodex Medical Systems, Luitpold Pharmaceutical, Modular Devices, Rockwell Automation, and United Sleep Diagnostic. As one of the East Coast's largest industrial parks, the 1,400-acre Long Island Innovation Park at Hauppauge (formerly the Hauppauge Industrial Park) houses roughly 1,300 companies employing in excess of 55,000 people. In April 2019, the Suffolk County Industrial Development Agency commissioned a report to help identify ways in which the industrial park, which was subsequently renamed The Long Island Innovation Park at Hauppauge, can perform as a hub to help position the region for economic growth. Meanwhile, advanced manufacturing remains a major industry in the local economy. In 2016, Novartis announced the plant consolidation of its subsidiary Fougera Pharmaceuticals, currently located in Hicksville and Melville, to a new facility in Melville. The plant expansion, which is slated for completion in 2020, will house the technical operations, quality operations, and research and development departments, as well as all of the local administrative staff. Meanwhile in October 2018, Estée Lauder leased a Melville facility near its existing research and development center, to establish its new $14.5-million, 51,580-square-foot engineering center; 25 new jobs are anticipated to be created at this new facility. • The healthcare sector plays a significant role in the Long Island economic environment. Healthcare entities such as Nassau Health Care Corporation, Northwell Health (formerly the North Shore-Long Island Jewish Health Systems), NYU Winthrop Hospital, and the Nassau University Medical Center are key components for the Long Island community. The NYU Winthrop Hospital unveiled its new $80-million, 95,000-square-foot Research and Academic Center in February 2015 in Mineola. The state-of-the-art building boasts the Adult and Pediatric Endocrinology Suite, an expanded Simulation Center, and a new Clinical Trials Center. Additionally, the center features classrooms for the medical students who live and study on the NYU Winthrop campus. The NYU Winthrop Hospital faculty continues to maintain a strong partnership with the clinicians and investigators at Stony Brook University Medical Center, as the hospital serves as the university's Nassau County Clinical Campus. Moreover, Huntington Hospital (a member of Northwell Health) completed a $53-million, 28,000-square-foot expansion to its emergency department that opened in January 2017. In April 2019, Northwell Health entered into a management

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 33

services agreement with Nassau University Medical Center (NUMC) in an effort to create a five-year strategic plan for the medical facility. Long Island’s economy has shifted from a manufacturing-based economy to one that is also research and service oriented over the last few decades. Additionally, the region has become New York State's leader in the bioscience and healthcare sectors. The area industry is undergoing a transition toward sophisticated technical and medical innovations emerging from its premier research institutions, which include Brookhaven National Labs (BNL). Given the area's array of public and private industries and its proximity to New York City, steady growth is expected over the long term.

Office Space Statistics Trends in occupied office space are typically among the most reliable indicators of lodging demand, as firms that occupy office space often exhibit a strong propensity to attract commercial visitors. Thus, trends that cause changes in vacancy rates or occupied office space may have a proportional impact on commercial lodging demand and a less direct effect on meeting demand. The following table details office space statistics for the pertinent market area.

FIGURE 3-7 OFFICE SPACE STATISTICS – MARKET OVERVIEW

Inventory Occupied Office Vacancy Average Asking Submarket Buildings Square Feet Space Rate Lease Rate

1 East Nassau 133 10,446,000 9,025,300 13.6 % $28.16 2 Southwest Nassau 91 7,125,000 6,177,400 13.3 28.88 3 Western Suffolk 127 10,251,000 8,856,900 13.6 26.30 4 NW Nassau 114 8,042,000 7,125,200 11.4 32.53 5 Eastern Suffolk 144 7,367,000 6,335,600 14.0 22.42 Totals and Averages 609 43,231,000 37,520,400 13.2 % $27.67 Source: REIS Report, 3rd Quarter, 2019

The greater Long Island market comprises a total of 43.2 million square feet of office space. For the 3rd Quarter of 2019, the market reported a vacancy rate of 13.2% and an average asking rent of $27.67. The subject property is located in the Western Suffolk submarket, which houses 10,251,000 square feet of office space. The submarket's vacancy rate of 13.6% is on par with the overall market average. The average asking lease rate of $26.30 is below the average for the broader market.

The following table illustrates a trend of office space statistics for the overall Long Island market and the Western Suffolk submarket.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 34

FIGURE 3-8 HISTORICAL AND PROJECTED OFFICE SPACE STATISTICS – GREATER MARKET VS. SUBMARKET

Long Island Market Western Suffolk Submarket Available Occupied Vacancy Asking Available Occupied Vacancy Asking Year Office Space % Chg Office Space % Chg Rate Lease Rate % Chg Office Space % Chg Office Space % Chg Rate Lease Rate % Chg

2006 44,063,000 — 39,318,000 — 10.8 % $25.90 — 10,544,000 — 9,289,000 — 11.9 % $24.81 — 2007 43,937,000 (0.3) % 39,546,000 0.6 % 10.0 27.25 5.2 % 10,503,000 (0.4) % 9,411,000 1.3 % 10.4 26.30 6.0 % 2008 43,645,000 (0.7) 38,679,000 (2.2) 11.4 27.67 1.5 10,351,000 (1.4) 9,212,000 (2.1) 11.0 26.32 0.1 2009 43,494,000 (0.3) 38,281,000 (1.0) 12.0 26.92 (2.7) 10,415,000 0.6 9,061,000 (1.6) 13.0 26.54 0.8 2010 43,516,000 0.1 37,965,000 (0.8) 12.8 26.72 (0.7) 10,415,000 0.0 8,978,000 (0.9) 13.8 26.06 (1.8) 2011 43,256,000 (0.6) 37,393,000 (1.5) 13.6 26.74 0.1 10,415,000 0.0 8,936,000 (0.5) 14.2 26.44 1.5 2012 43,256,000 0.0 37,361,000 (0.1) 13.6 26.88 0.5 10,415,000 0.0 8,874,000 (0.7) 14.8 26.35 (0.3) 2013 43,256,000 0.0 37,163,000 (0.5) 14.1 26.75 (0.5) 10,415,000 0.0 8,749,000 (1.4) 16.0 26.23 (0.5) 2014 43,183,000 (0.2) 37,309,000 0.4 13.6 26.97 0.8 10,415,000 0.0 8,832,000 0.9 15.2 26.22 (0.0) 2015 43,162,000 (0.0) 37,099,000 (0.6) 14.0 27.29 1.2 10,415,000 0.0 8,863,000 0.4 14.9 26.40 0.7 2016 42,998,000 (0.4) 37,368,000 0.7 13.1 27.38 0.3 10,251,000 (1.6) 8,836,000 (0.3) 13.8 26.42 0.1 2017 43,231,000 0.5 37,402,000 0.1 13.5 27.34 (0.1) 10,251,000 0.0 8,816,000 (0.2) 14.0 26.33 (0.3) 2018 43,231,000 0.0 37,476,000 0.2 13.3 27.53 0.7 10,251,000 0.0 8,703,000 (1.3) 15.1 26.25 (0.3)

Forecasts 2019 43,231,000 0.0 % 37,484,000 0.0 % 13.3 % $27.83 1.1 % 10,251,000 0.0 % 8,850,000 1.7 % 13.7 % $26.40 0.6 % 2020 43,231,000 0.0 37,523,000 0.1 13.2 28.06 0.8 10,251,000 0.0 8,876,000 0.3 13.4 26.62 0.8 2021 43,297,000 0.2 37,554,000 0.1 13.3 28.34 1.0 10,267,000 0.2 8,894,000 0.2 13.4 27.00 1.4 2022 43,443,000 0.3 37,679,000 0.3 13.3 28.65 1.1 10,301,000 0.3 8,943,000 0.6 13.2 27.47 1.7 2023 43,610,000 0.4 37,851,000 0.5 13.2 28.99 1.2 10,340,000 0.4 8,999,000 0.6 13.0 28.02 2.0

Average Annual Compound Change 2006 - 2018 (0.2) % (0.4) % 0.5 % (0.2) % (0.5) % 0.5 % 2007 - 2010 (0.3) (1.4) (0.7) (0.3) (1.6) (0.3) 2010 - 2018 (0.1) (0.2) 0.4 (0.2) (0.4) 0.1 Forecast 2019 - 2023 0.2 % 0.2 % 1.0 % 0.2 % 0.4 % 1.5 % Source: REIS Report, 3rd Quarter, 2019

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 35

The inventory of office space in the Long Island market contracted at an average annual compound rate of -0.2% from 2006 through 2018, while occupied office space contracted at an average annual rate of -0.4% over the same period. During the period of 2006 through 2007, occupied office space expanded at an average annual compound rate of 0.6%. From 2007 through 2010, occupied office space contracted at an average annual compound rate of -1.4%, reflecting the impact of the recession. The onset of the recovery is evident in the -0.2% average annual change in occupied office space from 2010 to 2018. From 2019 through 2023, the inventory of occupied office space is forecast to increase at an average annual compound rate of 0.2%, with available office space expected to increase 0.2%, thus resulting in an anticipated vacancy rate of 13.2% as of 2023.

Convention Activity A convention center serves as a gauge of visitation trends to a particular market. Convention centers also generate significant levels of demand for area hotels and serve as a focal point for community activity. Typically, hotels within the closest proximity to a convention center—up to three miles away—will benefit the most. Hotels serving as headquarters for an event benefit the most by way of premium rates and hosting related banquet events. During the largest conventions, peripheral hotels may benefit from compression within the city as a whole.

The Nassau Veterans Memorial Coliseum is an 18,000-seat, multi-purpose arena located in Uniondale, Long Island. This facility is home to the New York Islanders hockey team, the New York Saints lacrosse team, and the New York Dragons football team. The center also hosts a variety of concerts, shows, and exhibitions. The Coliseum opened in 1972 and features 32 luxury suites, a press box, 14 concession stands, and a 60,000-square-foot exhibition hall.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 36

NASSAU COLISEUM

Usage statistics were not available for this facility upon our request. However, reports from the market reflect that the facility is well utilized.

Airport Traffic Airport passenger counts are important indicators of lodging demand. Depending on the type of service provided by a particular airfield, a sizable percentage of arriving passengers may require hotel accommodations. Trends showing changes in passenger counts also reflect local business activity and the overall economic health of the area.

The Long Island MacArthur Airport is a public airport located seven miles northeast of the town of Islip on Long Island, New York. The airport is served by American, Frontier, and Southwest Airlines, providing nonstop, daily service to destinations across the United States. In July 2018, a new 21,000-square-foot Aircraft Rescue and Fire-Fighting Building was completed. Most of the passengers who use MacArthur Airport are local residents or commercial travelers visiting firms in Suffolk County.

The following table illustrates recent operating statistics for the Long Island MacArthur Airport, which is the primary airport facility serving the proposed subject hotel’s submarket.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 37

FIGURE 3-9 AIRPORT STATISTICS - LONG ISLAND MACARTHUR AIRPORT

Passenger Percent Percent Year Traffic Change* Change**

2010 1,746,411 — — 2011 1,581,545 (9.4) % (9.4) % 2012 1,356,162 (14.3) (11.9) 2013 1,340,447 (1.2) (8.4) 2014 1,309,709 (2.3) (6.9) 2015 1,222,823 (6.6) (6.9) 2016 1,211,951 (0.9) (5.9) 2017 1,311,434 8.2 (4.0) 2018 1,657,515 26.4 (0.7) 2019 1,566,605 (5.5) (1.2)

*Annual average compounded percentage change from the previous year **Annual average compounded percentage change from first year of data Source: Long Island MacArthur Airport

FIGURE 3-10 LOCAL PASSENGER TRAFFIC VS. NATIONAL TREND

30% 25% 20% 15% 10% 5% 0% -5% -10%

ChangeinActivityPassenger -15% -20% 2011 2012 2013 2014 2015 2016 2017 2018 2019

Local Passenger Volume National Passenger Volume

Source: HVS, Local Airport Authority

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 38

This facility recorded 1,566,605 passengers in 2019. The change in passenger traffic between 2018 and 2019 was -5.5%. The average annual change during the period shown was -1.2%. The decrease in passenger traffic shown by the most recent data can be attributed in large part to the unfavorable weather conditions in this region during early 2019.

John F. Kennedy International Airport (JFK) is located in the southeastern section of Queens County, New York City, approximately 15 miles by highway from Midtown Manhattan. JFK is serviced by numerous airlines and is the base of operations for JetBlue Airways and a major international gateway for American and Delta Air Lines. AirTrain JFK is a light-rail system that connects the airport terminals and parking areas with the Long Island Rail Road (LIRR) and New York City Subway lines at stations in Queens. In October 2018, New York Governor Andrew Cuomo unveiled current details of the $13-billion modernization plan for JFK airport, for which private investments will contribute 90% of total funding. The expansion and modernization plans will add roughly four million square feet to the north and south ends of the airport to ease passenger traffic flow. Spacious waiting areas will be created with high ceilings, natural lighting, and modern designs featuring interior green space, exhibits, local art, complimentary Wi-Fi service, and new dining establishments. Plans also include updates to key access routes and mass-transit systems, as well as renovations to the existing terminals. The Van Wyck Expressway, the airport’s main access route, will be expanded, and additional cars will be added to each AirTrain vehicle. The existing terminals will be linked together, allowing for easier travel between gates. The first new gates are anticipated to open in 2023, while the entire project is slated for completion in 2025. The City forecasts that passenger traffic at JFK will reach 75 million by 2030 and 100 million by 2050. Moreover, in February 2019, airport officials announced that American Airlines and British Airways will invest $344 million for renovations and enhancements to Terminal 8, which will enable both airlines to co-locate their operations to offer enhanced service between New York and London; completion is slated for 2022.

The following table illustrates recent operating statistics for the John F. Kennedy International Airport, which is the secondary airport facility serving the proposed subject property’s submarket.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 39

FIGURE 3-11 AIRPORT STATISTICS – JOHN F. KENNEDY INTERNATIONAL AIRPORT

Passenger Percent Percent Year Traffic Change* Change**

2010 45,915,069 — — 2011 46,514,154 1.3 % 1.3 % 2012 47,683,529 2.5 1.9 2013 49,292,733 3.4 2.4 2014 50,423,765 2.3 2.4 2015 53,254,362 5.6 3.0 2016 56,827,154 6.7 3.6 2017 58,956,288 3.7 3.6 2018 59,345,421 0.7 3.3 2019 61,909,148 4.3 3.4 Year-to-date, Oct 2019 51,787,180 — — 2020 52,877,896 2.1 % —

*Annual average compounded percentage change from the previous year **Annual average compounded percentage change from first year of data Source: John F. Kennedy International Airport

Air traffic registered 61,909,148 passengers in 2019. The change in passenger traffic between 2018 and 2019 was 4.3%. The recent increase in passenger traffic can be attributed in large part to increased service by major air carriers in response to relatively strong economic conditions and continued strong demand. Delta Air Lines began direct service to/from San Jose, California, in June 2018. The airline added a second, daily nonstop flight to/from Nassau, the Bahamas, in October 2018 and then began its new nonstop service to Kingston, Jamaica; Antigua, Antigua and Barbuda; and Port-Au-Prince, Haiti, in December 2018. Meanwhile, Qatar Airways, TAP Air Portugal, Norwegian Air, and China Eastern are strong international contributors.

LaGuardia Airport is a leading domestic and business travel gateway for the region; many major commercial airlines service the airport, which is located in the borough of Queens, just eight miles from Midtown Manhattan. The existing central terminal at LaGuardia Airport, which was originally constructed to accommodate eight million passengers annually, now handles passenger traffic of roughly 12.5 million. The ongoing LaGuardia Airport expansion project is expected to increase that capacity to many as 17.5 million passengers by 2030. The project is planned to link all four terminals through one facility that will be constructed 600 feet closer to

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 40

Grand Central Parkway. The $8-billion total project cost will be funded by private and public investments, with a 75% contribution from private funding. Phase I of the project, which began in 2016, comprises the development of the new, 1.3- million-square-foot, 35-gate Terminal B. Eleven of the eighteen new gates in Terminal B opened in December 2018, featuring 55-foot ceilings, floor-to-ceiling windows, modern designs and an indoor park, spacious waiting areas with Internet connectivity, and new dining and retail establishments. The remaining seven gates are slated to open in 2020. Public access to the remainder of the new terminal is anticipated for 2020, with full completion of Phase I planned for 2021. Phase II will entail the redevelopment and connection of Terminals C and D that are operated by Delta Air Lines, which will ultimately feature four concourses with 37 gates. Completion of the entire project is slated for 2026.

The following table illustrates recent operating statistics for the LaGuardia Airport, which is the third airport facility serving the proposed subject property’s submarket.

FIGURE 3-12 AIRPORT STATISTICS – LAGUARDIA AIRPORT

Passenger Percent Percent Year Traffic Change* Change**

2010 22,142,336 — — 2011 23,983,082 8.3 % 8.3 % 2012 24,122,478 0.6 4.4 2013 25,707,784 6.6 5.1 2014 26,722,183 3.9 4.8 2015 26,954,588 0.9 4.0 2016 28,437,668 5.5 4.3 2017 29,786,769 4.7 4.3 2018 29,502,219 (1.0) 3.7 2019 30,094,074 2.0 3.5

Year-to-date, Oct 2019 25,007,419 — — 2020 25,919,718 3.6 % —

*Annual average compounded percentage change from the previous year **Annual average compounded percentage change from first year of data Source: LaGuardia Airport

Air traffic registered 30,094,074 passengers in 2019. The change in passenger traffic between 2018 and 2019 was 2.0%. The recent uptick in passenger traffic can be attributed in large part to increased service by major air carriers in response to

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 41

relatively strong economic conditions and continued strong demand. Additionally, the December 2018 opening of eleven new gates in the newly modernized Terminal B has created room for additional flights and enhances the travel experience, thereby contributing to the year-over-year passenger traffic increase. Air Canada opened its Maple Leaf Lounge in the new Terminal B in December 2018. Delta Air Lines added seasonal nonstop service to/from Key West, which operates from March 9, 2019, through August 31, 2019. Moreover, American Airlines added daily service to/from Columbia, South Carolina, and weekend service to/from Asheville, North Carolina, in early May 2019.

Tourist Attractions Tourism is a significant economic contributor to the communities of Long Island. Roughly 30.0% of the area hotels' market segment mix belongs to the leisure and tourism segment, given this Long Island submarket's convenience to New York City and also communities within Long Island, such as the waterfront/beachfront destinations in the Hamptons. The tourist season is strongest from May through September, as well as during the winter holiday period. During other times of the year, weekend demand comprises travelers passing through en route to other destinations, people visiting friends or relatives, people attending events (e.g. concerts, festivals, and sports tournaments), and other similar weekend demand generators. Discover Long Island is the entity responsible for promoting tourism, in the form of individual travel and group events such as meetings and incentive group retreats, for the Long Island communities. The Discover Long Island staff has been strengthening its partnership with I LOVE NEW YORK and NYC & Company to increase awareness of the locational convenience, diverse activities, family-friendly environments, and waterfront/beachfront locations that Long Island features, which residents of New York City, the Lower Hudson Valley Region, New Jersey, Connecticut, and Boston should consider when seeking getaways throughout the year. Many Long Island communities offer the convenience of public transportation via the Long Island Rail Road (LIRR), which is a cost-effective transportation option for New York City residents and tourists. Some of the major tourist attractions on Long Island are described as follows:

• The Huntington area is central to New York City and the North and South Forks of Long Island. Showcasing an eclectic array of dining and shopping options, Downtown Huntington Village is a draw for many visitors. As previously noted, Downtown Huntington Village currently not only lacks a lodging facility but also a centerpiece that draws the neighborhood together. The proposed boutique subject property is anticipated to fill an underserved niche in the Huntington area, and become a destination for New York City residents, and visitors from nearby regional areas such as Pennsylvania, New Jersey, Connecticut, and Boston, as well as tourists. Travelers visiting the Huntington area seek the local, eclectic, and upbeat ambience, which the existing hotels lack. The exception is the luxury Oheka Castle, which features only 32 guestrooms and exorbitant

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 42

room rates, targeting a specific customer base. Numerous attractions and establishments make the Huntington area welcoming for people of ages. Concert goers and people who enjoy live comedic acts and boxing matches go to The Paramount, a popular two-level intimate yet spacious concert hall in Downtown Huntington Village, which operates in a partnership with TD Bank. The Huntington Arts Center is adjacent to the subject site, while the Huntington Center for Performing Arts is within walking distance downtown, while Heckscher Park and the Heckscher Museum of Art are conveniently located within walking distance to the northeast of the subject site. The village of Huntington Bay boasts a waterfront backdrop and the Huntington Yacht Club as well as the West Shore Marina, which contribute to the area's visitation. The numerous beaches within the town of Huntington such as Crescent Beach, Bay Hills Beach, and Knollwood Beach are enticing to travelers, particularly people who choose to avoid the traffic and exorbitant room rates at lodging facilities in the Hamptons during peak season. Annual festivals within the North Shore such as the Huntington Tulip Festival, the Long Island Fall Festival (LIFF) at Heckscher Park, and the Huntington Folk Festival, draw thousands of regional visitors to the area, some of whom seek overnight accommodations. Meanwhile, the nearby village of Northport also boasts attractions and entertainment venues that attract New York City residents, regional visitors, and tourists. The Haven Gallery, Northport Historical Society and Museum, Northport Village Dock, and the John W Engeman Theater At Northport attract people from outside of Long Island. While the owners of the John W Engeman Theater at Northport are constructing the Northport Inn, that hotel will feature only 24 guestrooms. The proposed subject property would be anticipated to capture any additional room nights that are generated by events or tourism that occurs in Northport. The adjacent hamlet of Centerport also showcases several attractions that generate tourism demand, such as Centerport Beach, Northport Beach, and Centerport Yacht Club. The Vanderbilt Museum, Mansion, & Planetarium, which is named after William Vanderbilt II, is situated on his 43- acre estate known as Eagle's Nest. Visitors can enjoy tours of Willian Vanderbilt II's Eagle's Nest mansion, as well as museum tours, and events at the planetarium. The hamlet of Cold Spring Harbor is to the adjacent west of Huntington, boasting attractions such as the Cold Spring Harbor State Park, Cold Spring Harbor Beach Club, Cold Spring Harbor Fish Hatchery & Aquarium, Uplands Farm Sanctuary by The Nature Conservancy, The Whaling Museum & Education Center of Cold Spring Harbor, and Whaler's Cove Yacht Club. The Cold Spring Harbor Laboratory is a not-for-profit biomedical research center that is home to eight Nobel Prize winners. The Laboratory offers summer camp and school programs, as well as numerous public exhibits throughout the year, such as the "Our Human Inheritance" exhibition that details the human evolution. The focal point

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 43

of that exhibit is Ötzi the Iceman; mummified remains of the 5,300-year-old man were discovered by two hikers in the Ötztal Alps. The only nearby lodging facility is the previously mentioned The Harbor Rose, a bed & breakfast with four guestrooms. As such, the proposed subject property would be able to attract more visitors to the area requiring overnight stays who have not considered staying in the area given the lack of unique lodging facilities. • The North and South Forks, located in the easternmost part of Suffolk County, attract New York City residents and tourists alike. The North Fork is popular for its award-winning wineries, which are open for tours and tastings throughout the year. The Clark Botanical Garden in Albertson, Nassau County, features twelve beautifully manicured acres of labeled gardens, trees, ponds, and streams. Wineries, including Roanoke Vineyards, Martha Clara Vineyards, and Palmer Vineyards, are predominantly situated in eastern Long Island. Beaches in the area include Sailors Haven Beach and Watch Hill Beach. Meanwhile, the South Fork comprises most of the Hamptons. Renowned beaches in the towns of Southampton and East Hampton are located on the far east end of Long Island. Professional and amateur anglers have the option of participating in open boat fishing trips and private fishing charters in Montauk. Sunset cruises are available for nature, fishing, or birding enthusiasts. Additionally, the 862-acre Montauk Point State Park and the Montauk Lighthouse Museum, a national historic landmark that is separate from the state park, are located at the easternmost tip of Long Island. Moreover, numerous annual festivals draw a vast amount of visitors into the Hamptons. People of all ages can enjoy the Hampton Classic Horse Show, Montauk Music Festival, San Gennaro Feast of the Hamptons, and the Hamptons International Film Festival, SouthamptonFest, and the Fall Festival in East Hampton and Montauk. • Numerous state and county parks, many of which offer swimming and ice- skating, are located across the island. Caumsett Historic State Park Preserve is a roughly 1,500-acre state park situated in Lloyd Neck, a village situated on a peninsula that reaches out to the Long Island Sound. Caumsett Historic State Park Preserve offers numerous walking and jogging trails and bird watching areas for outdoor enthusiasts. The State Park Reserve is currently undergoing renovations of the new park entrance and the main parking lot; completion is slated for spring 2020. Equestrian services and lessons are offered as part of the Lloyd Harbor Equestrian Center, and fishing and scuba diving permits are also issued for the general public. Heckscher Park, which was listed in the National Register of Historic Places in 1985, is situated immediately northeast of Downtown Huntington. The roughly 18-acre park offers a pond, play areas, and lush gardens, and also showcases the Heckscher Museum of Art and the Chapin Rainbow outdoor amphitheater that plays host to a variety of annual festivals. Meanwhile, the Fire Island National Seashore on Fire Island is a 21-mile barrier island that offers seashore attractions, tent camping, swimming, surf fishing,

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 44

hiking, boating, and tours of the Sunken Forest and the Otis Pike National Wilderness Area. In addition, golf is available at 113 private and public courses, bicycle trails abound in numerous locations, and camping, boating, and fishing are popular recreational activities. Long Island hosted the U.S. Open Golf Championship in 2002, 2004, and 2009, as well as the first FedEx Cup in 2012, in Bethpage State Park, located in Farmingdale, New York. • The Tanger Outlets Riverhead, located off Interstate 495, is home to over 165 brand-name retailers. Roosevelt Field Mall is anchored by four department stores and features over 245 specialty retailers, an expansive food court, and a multiplex cinema. Patrons of independently owned retail shops can also meander through the myriad of shops in the villages and townships within Long Island. Quaint inland locations such as Downtown Huntington Village, as well as the Hamptons destinations such as The Shopping Cove in Sag Harbor and Amagansett Square offer distinctive shopping and dining experiences. Educational facilities also attract visitors of all ages. The Long Island Aquarium and Exhibition Center in Riverhead, which is situated along the Picnic River, boasts many fascinating marine life exhibits. The Atlantis Explorer Tour Boat operates seasonally from May until September, providing interactive lessons about the Long Island waterways such as the Peconic Estuary, and promoting environmental and ecological awareness. The seasonally-operated Montauk Lighthouse, a national historic landmark, is situated at the easternmost tip of Long Island. The lighthouse showcases the Montauk Lighthouse Museum and also serves as a breathtaking wedding venue. Weekend shows such as the Kings of the Coast Pirates, also take place at the lighthouse site.

HUNTINGTON BAY

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 45

THE HAMPTONS

This section discussed a wide variety of economic indicators for the pertinent Conclusion market area. Long Island is experiencing a period of economic strength and gradual expansion. The area economy is transitioning toward sophisticated technical and medical industries emerging from its premier research institutions, such as Brookhaven National Labs (BNL). Our market interviews and research revealed that Suffolk County’s extensive agritourism options also bode well for future economic stability. The outlook for the market area is positive.

Our analysis of the outlook for this specific market also considers the broader context of the national economy. The U.S. economy expanded at an overall rate of 2.9% in 2018, compared to 2.2% in 2017, the highest growth registered since 2015. After a slow end to 2018, with 1.1% growth in the fourth quarter, growth rebounded to 3.1% in the first quarter of 2019. Moderate growth rates of 2.0% and 2.1% were registered in the second and third quarters of 2019, respectively. GDP growth in 2018 was stimulated by the Tax Cut and Jobs Act, which was passed in December 2017, driven primarily by fixed investments and strong consumer spending, particularly personal consumption expenditures (PCE) and spending related to both non-durable and durable goods. Investment in equipment and intellectual property rose, while investment in structures and residential real estate declined. In the year- to-date 2019 period, economic expansion has been driven by increases in consumer

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 46

spending and a rebound in the housing sector; these gains have been balanced by declines in business investment.

FIGURE 3-13 UNITED STATES GDP GROWTH RATE

6.0 5.0 5.0 4.0 3.5 3.5 4.0 3.2 3.2 3.1 2.7 2.9 3.0 2.5 2.0 2.3 2.2 2.0 2.3 2.2 2.0 2.1 2.0 1.5 1.0 1.1 1.0 0.4 0.0 -1.0 -1.2 -2.0 2014 2015 2016 2017 2018 2019 Source: tradingeconomics.com, Bureau of Economic Analysis

U.S. economic growth continues to support expansion of lodging demand. In 2018, demand growth registered 2.5%, just under the 2.7% level recorded in 2017. The economic growth, low unemployment, higher levels of personal income, and stability in the U.S. economy as of the third quarter of 2019 is helping to maintain strong interest in hotel investments by a diverse array of market participants.

February-2020 Market Area Analysis Proposed Hampton Inn & Suites – Huntington, New York 47

4. Supply and Demand Analysis

In the lodging industry, price varies directly, but not proportionately, with demand and inversely, but not proportionately, with supply. Supply is measured by the number of guestrooms available, and demand is measured by the number of rooms occupied; the net effect of supply and demand toward equilibrium results in a prevailing price, or average daily rate (ADR). The purpose of this section is to investigate current supply and demand trends, as indicated by the current competitive market, and to set forth a basis for the projection of future supply and demand growth.

Definition of Subject The subject site is located in the greater Suffolk County lodging market, which Hotel Market encompasses nearly 69 open and operating lodging facilities totaling roughly 9,812 guestrooms. Within this greater market, the direct submarket that will include the proposed subject hotel is known as the greater Huntington area. Given that there are currently no directly competitive lodging facilities in the town of Huntington, the proposed subject hotel is expected to compete with three hotels (located in nearby areas) on a primary level based on the similar, nationally branded, limited- service products, as well as some similar corporate-transient, leisure, and group demand. We have considered an additional 15 hotels as future secondary competitors given differences in location, service level, price point, and customer bases.

National Trends A hotel’s local lodging market is most directly affected by the supply and demand Overview trends within the immediate area. However, individual markets are also influenced by conditions in the national lodging market. We have reviewed national lodging trends to provide a context for the forecast of the supply and demand for the proposed subject hotel’s competitive set.

STR is an independent research firm that compiles and publishes data on the lodging industry, and this information is routinely used by typical hotel buyers. The following STR diagram presents annual hotel occupancy and average rate data since 1988. The next two tables contain information that is more recent; the data are categorized by geographical region, price point, type of location, and chain scale, and the statistics include occupancy, average rate, and rooms revenue per available room (RevPAR). RevPAR is calculated by multiplying occupancy by average rate and provides an indication of how well rooms revenue is being maximized.

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 48

FIGURE 4-1 NATIONAL OCCUPANCY, AVERAGE RATE, AND REVPAR TRENDS

70.0% $120

65.0% $100

$80 60.0%

$60 55.0% $40

50.0% $20

$0 45.0%

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 2018

RevPAR Average Rate Occupancy

Source: STR

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 49

FIGURE 4-2 NATIONAL OCCUPANCY AND ADR TRENDS – YEAR-TO-DATE DATA

Occupancy Average Rate RevPAR Percent Change % % % Rms. Rms. 2018 2019 Change 2018 2019 Change 2018 2019 Change Avail. Sold United States 66.1 % 66.1 % 0.0 % $129.97 $131.21 1.0 % $87.71 $89.50 0.8 % 2.0 % 2.0 % Region New England 65.8 % 65.0 % (1.1) % $158.93 $159.91 0.6 % $104.56 $104.00 (5.0) % 1.6 % 0.5 % Middle Atlantic 69.7 69.1 (0.9) 166.57 166.33 (0.1) 116.10 114.91 (1.0) 2.5 1.6 South Atlantic 67.9 67.6 (0.4) 126.38 128.40 1.6 85.76 86.81 1.2 2.0 1.7 E. North Central 61.5 61.2 (0.6) 112.57 112.69 0.1 69.28 68.96 (0.5) 2.0 1.5 E. South Central 61.9 62.6 1.1 100.91 103.45 2.5 62.44 64.71 3.6 2.8 3.9 W. North Central 57.7 58.5 1.2 99.03 99.26 0.2 57.18 58.02 1.5 2.0 3.3 W. South Central 62.7 62.7 0.1 102.56 101.88 (0.7) 64.26 63.92 (0.5) 2.6 2.7 Mountain 66.2 66.9 1.0 119.09 122.23 2.6 78.86 81.76 3.7 1.2 2.2 Pacific 73.8 73.7 (0.1) 168.77 171.42 1.6 124.52 126.36 1.5 1.6 1.5 Class Luxury 71.1 % 71.2 % 0.1 % $298.12 $301.60 1.2 % $211.97 $214.60 1.2 % 2.7 % 2.8 % Upper-Upscale 72.9 72.6 (0.4) 186.47 188.71 1.2 135.96 137.40 0.8 2.2 1.8 Upscale 71.8 71.5 (0.4) 143.22 143.92 0.5 102.86 102.93 0.1 3.7 3.3 Upper-Midscale 67.8 67.6 (0.3) 115.40 115.93 0.5 78.21 78.34 0.2 3.6 3.3 Midscale 59.9 59.6 (0.4) 95.68 95.94 0.3 57.31 57.22 (0.2) 1.2 0.7 Economy 59.2 59.4 0.5 73.96 74.24 0.4 43.75 44.13 0.9 (0.3) 0.2 Location Urban 73.4 % 73.1 % (0.4) % $183.22 $183.71 0.3 % $134.52 $134.36 (0.1) % 3.2 % 2.8 % Suburban 66.9 66.8 (0.2) 110.56 111.23 0.5 74.07 74.32 0.3 2.3 2.1 Airport 73.7 73.8 0.1 118.33 119.19 0.7 87.21 87.91 0.8 2.2 2.2 Interstate 57.9 58.0 0.1 87.01 87.79 0.9 50.41 50.90 1.0 1.7 1.8 Resort 70.2 70.1 (0.1) 178.81 182.96 2.3 125.51 128.29 2.2 1.2 1.1 Small Town 57.7 58.0 0.4 105.16 106.72 1.5 60.73 61.90 1.9 1.2 1.6 Chain Scale Luxury 74.5 % 73.9 % (0.9) % $336.12 $343.44 2.2 % $250.47 $253.02 1.3 % 0.5 % (0.3) % Upper-Upscale 74.2 73.9 (0.5) 187.10 189.74 1.4 138.91 142.84 0.9 1.9 1.4 Upscale 73.2 72.6 (0.8) 142.14 142.58 0.3 103.98 105.75 (0.5) 4.9 4.0 Upper-Midscale 67.9 67.6 (0.5) 112.72 113.03 0.3 76.52 78.34 (0.2) 3.4 2.9 Midscale 58.6 58.2 (0.7) 86.94 86.56 (0.4) 50.95 51.84 (1.1) 2.8 2.1 Economy 58.5 58.8 0.5 63.85 63.68 (0.3) 37.36 38.33 0.2 (1.2) (0.7) Independents 63.2 63.6 0.7 130.21 130.24 1.6 82.27 85.44 2.2 1.2 1.9

Source: STR - December 2019 Lodging Review

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 50

FIGURE 4-3 NATIONAL OCCUPANCY AND ADR TRENDS – CALENDAR-YEAR DATA

Occupancy Average Rate RevPAR Percent Change % % % Rms. Rms. 2017 2018 Change 2017 2018 Change 2017 2018 Change Avail. Sold United States 65.9 % 66.2 % 0.5 % $126.77 $129.83 2.4 % $83.53 $85.96 2.9 % 2.0 % 2.5 % Region New England 64.6 % 65.9 % 2.1 % $154.39 $157.96 2.3 % $99.72 $104.16 4.5 % 2.0 % 4.1 % Middle Atlantic 68.4 69.8 2.1 162.05 166.18 2.5 110.77 116.00 4.7 2.4 4.5 South Atlantic 67.9 67.9 0.1 123.57 126.45 2.3 83.88 85.88 2.4 1.8 1.8 E. North Central 61.3 61.6 0.5 109.90 112.44 2.3 67.37 69.30 2.9 2.0 2.6 E. South Central 61.5 62.0 0.7 98.23 100.79 2.6 60.46 62.45 3.3 2.2 2.9 W. North Central 58.0 58.0 (0.1) 97.70 99.00 1.3 56.65 57.38 1.3 2.1 2.0 W. South Central 62.5 62.7 0.4 100.36 102.53 2.2 62.69 64.29 2.5 2.6 3.0 Mountain 65.9 66.2 0.5 118.02 119.06 0.9 77.81 78.88 1.4 1.4 1.9 Pacific 73.8 73.8 0.0 162.89 168.55 3.5 120.25 124.45 3.5 1.8 1.8 Class Luxury 70.7 % 71.3 % 0.9 % $286.91 $294.86 2.8 % $202.87 $210.29 3.7 % 2.4 % 3.3 % Upper-Upscale 72.8 72.7 (0.1) 181.74 185.59 2.1 132.26 134.88 2.0 2.4 2.2 Upscale 72.3 72.2 (0.2) 141.05 143.86 2.0 101.99 103.81 1.8 4.4 4.2 Upper-Midscale 67.7 67.8 0.2 115.32 117.22 1.6 78.08 79.52 1.8 3.9 4.1 Midscale 60.6 60.8 0.4 93.42 95.44 2.2 56.58 58.01 2.5 0.6 0.9 Economy 58.7 59.3 1.1 72.23 73.94 2.4 42.38 43.84 3.5 (0.5) 0.6 Location Urban 75.1 % 74.6 % (0.6) % $184.00 $184.40 0.2 % $138.12 $137.56 (0.4) % 3.2 % 2.5 % Suburban 68.6 68.4 (0.3) 111.91 112.55 0.6 76.82 77.03 0.3 2.2 1.9 Airport 75.4 75.4 0.0 119.74 120.50 0.6 90.23 90.82 0.7 2.2 2.2 Interstate 59.6 59.8 0.3 87.77 88.63 1.0 52.30 53.00 1.3 1.7 2.1 Resort 71.6 71.3 (0.4) 179.37 182.91 2.0 128.46 130.43 1.5 1.3 0.8 Small Town 59.7 60.1 0.7 106.72 108.31 1.5 63.67 65.07 2.2 1.1 1.8 Chain Scale Luxury 75.8 % 74.7 % (1.4) % $333.57 $340.10 2.0 % $252.75 $254.02 0.5 % 0.7 % (0.7) % Upper-Upscale 76.1 75.4 (0.9) 188.56 191.09 1.3 143.45 144.09 0.4 1.9 1.0 Upscale 75.0 74.3 (1.0) 143.51 143.99 0.3 107.62 106.92 (0.7) 4.8 3.7 Upper-Midscale 69.7 69.4 (0.5) 114.12 114.46 0.3 79.59 79.46 (0.2) 3.4 2.9 Midscale 60.5 60.2 (0.6) 88.00 87.74 (0.3) 53.25 52.80 (0.9) 2.7 2.1 Economy 59.9 60.3 0.7 64.59 64.49 (0.2) 38.68 38.88 0.5 (1.4) (0.8) Independents 64.8 65.2 0.7 131.17 132.98 1.4 84.97 86.71 2.1 1.3 2.0 Source: STR - December 2018 Lodging Review

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 51

Following the significant RevPAR decline experienced during the last recession, demand growth resumed in 2010, led by select markets that had recorded growth trends in the fourth quarter of 2009. A return of business travel and some group activity contributed to these positive trends. The resurgence in demand was partly fueled by the significant price discounts that were widely available in the first half of 2010. These discounting policies were largely phased out in the latter half of the year, balancing much of the early rate loss. Demand growth remained strong, but decelerated from 2011 through 2013, increasing at rates of 4.7%, 2.8%, and 2.0%, respectively. Demand growth then surged to 4.0% in 2014, driven by a strong economy, a robust oil and gas sector, and limited new supply, among other factors. By 2014, occupancy had surpassed the 64% mark. Average rate rebounded similarly during this time, bracketing 4.0% annual gains from 2011 through 2014.

In 2015, demand growth continued to outpace supply growth, a relationship that has been in place since 2010. With a 2.9% increase in room nights, the nation's occupancy level reached a record high of 65.4% in 2015. Supply growth intensified modestly in 2015 (at 1.1%), following annual supply growth levels of 0.7% and 0.9% in 2013 and 2014, respectively. Average rate posted another strong year of growth, at 4.7% in 2015, in pace with the annual growth of the last four years. Robust job growth, heightened group and leisure travel, and waning price sensitivity all contributed to the gains. In 2016, occupancy showed virtually no change, as demand growth kept pace with supply additions. Occupancy then moved even higher in 2017 and 2018, to new highs of 65.9% and 66.1%, respectively. Average rate increased 2.1% and 2.4% in 2017 and 2018, respectively. By year-end 2019, occupancy remained unchanged at 66.1%, as a 2.0% demand growth rate matched a 2.0% increase in available supply. Average rate increased by 1.0% in 2019, well below the gains achieved in prior years.

Historical Supply As noted previously, STR is an independent research firm that compiles and and Demand Data publishes data on the lodging industry, routinely used by typical hotel buyers. HVS has ordered and analyzed an STR Trend Report of historical supply and demand data for a group of hotels considered applicable to this analysis for the proposed subject hotel. This information is presented in the following table, along with the market-wide occupancy, average rate, and rooms revenue per available room (RevPAR). RevPAR is calculated by multiplying occupancy by average rate and provides an indication of how well rooms revenue is being maximized.

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 52

FIGURE 4-4 HISTORICAL SUPPLY AND DEMAND TRENDS

Average Daily Available Occupied Average Year Room Count Room Nights Change Room Nights Change Occupancy Rate Change RevPAR Change 2010 2,256 823,440 — 574,871 — 69.8 123.77 — 86.41 — 2011 2,256 823,440 0.0 % 590,191 2.7 % 71.7 126.73 2.4 90.83 5.1 % 2012 2,257 823,685 0.0 623,062 5.6 75.6 132.81 4.8 100.46 10.6 2013 2,391 872,770 6.0 683,236 9.7 78.3 136.30 2.6 106.70 6.2 2014 2,517 918,705 5.3 699,351 2.4 76.1 140.18 2.8 106.71 0.0 2015 2,517 918,705 0.0 718,475 2.7 78.2 142.66 1.8 111.57 4.6 2016 2,517 918,858 0.0 737,761 2.7 80.3 146.79 2.9 117.86 5.6 2017 2,518 919,070 0.0 738,448 0.1 80.3 150.69 2.7 121.08 2.7 2018 2,643 964,695 5.0 772,884 4.7 80.1 152.54 1.2 122.21 0.9 2019 2,643 964,695 0.0 % 774,120 0.2 % 80.2 158.16 3.7 % 126.92 3.9 % Four Points by Sheraton Plainview Long Island Upscale Class Secondary 103 Sep 2005 Aug 1961 Holiday Inn Plainview Long Island Upper Midscale Class Secondary 125 Apr 1963 Apr 1963 Hampton by Hilton Inn Long Island/Commack Upper Midscale Class Primary 143 Feb 1988 Feb 1988 Hilton Long Island Huntington Upper Upscale Class Secondary 305 Mar 1990 Jun 1988 Hampton by Hilton Inn Long Island/Islandia Upper Midscale Class Primary 120 Jul 1988 Jul 1988 Holiday Inn Express Stony Brook Long Island Upper Midscale Class Primary 143 Feb 1991 Feb 1991 Holiday Inn Express Hauppauge Long Island Upper Midscale Class Secondary 133 Mar 2001 Mar 2001 Hampton by Hilton Inn Long Island - Brookhaven Upper Midscale Class Secondary 161 Feb 2002 Feb 2002 Courtyard Long Island MacArthur Airport Upscale Class Secondary 154 May 2002 May 2002 Hilton Garden Inn Islip/MacArthur Airport Upscale Class Secondary 165 Aug 2003 Aug 2003 Homewood Suites by Hilton Long Island Melville Upscale Class Secondary 147 Dec 2004 Dec 2004 La Quinta Inns & Suites Islip MacArthur Airport Upper Midscale Class Secondary 132 Jun 2006 Jun 2006 Courtyard Republic Airport Long Island Farmingdale Upscale Class Secondary 131 May 2007 May 2007 TownePlace Suites Republic Airport Long Island Farmingdale Upper Midscale Class Secondary 118 Jan 2008 Jan 2008 Hilton Garden Inn Melville Upscale Class Secondary 178 Aug 2008 Aug 2008 Hilton Garden Inn Stony Brook Upscale Class Secondary 135 Feb 2013 Feb 2013 Residence Inn Long Island Islip Courthouse Complex Upscale Class Secondary 125 Dec 2013 Dec 2013 Courtyard Long Island Islip Courthouse Complex Upscale Class Secondary 125 Jan 2018 Jan 2018

Total 2,643

Source: STR

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 53

FIGURE 4-5 HISTORICAL SUPPLY AND DEMAND TRENDS (STR)

1,500,000 85.0 80.0 1,000,000 75.0 500,000 70.0

65.0 Room Nights

0 60.0 Occupancy(%) 2010 2011 2012 2013 2014 2015 2016 2017 2018

Available Room Nights Occupied Room Nights Occupancy

It is important to note some limitations of the STR data. Hotels are occasionally added to or removed from the sample; furthermore, not every property reports data in a consistent and timely manner. These factors can influence the overall quality of the information by skewing the results, and these inconsistencies may also cause the STR data to differ from the results of our competitive survey. Nonetheless, STR data provide the best indication of aggregate growth or decline in existing supply and demand; thus, these trends have been considered in our analysis. Opening dates, as available, are presented for each reporting hotel in the previous table.

The STR data for the competitive set reflect a market-wide occupancy level of 2018 in 80.1%, which compares to 80.3% for 2017. The STR data for the competitive set reflect a market-wide ADR level of $152.54 in 2018, which compares to $150.69 for 2017. These occupancy and ADR trends resulted in a RevPAR level of $122.21 in 2018.

During the illustrated historical period, occupancy increased from 2011 through 2016 (with the exception of a dip in 2014) and then remained relatively stable in 2017 and 2018. Meanwhile, average rate gains were achieved in 2011 and then average daily rate (ADR) continued to grow each year through 2019, with RevPAR increasing by roughly 29.0% between 2011 and 2019. RevPAR reached its high point in the summer of 2018. It is important to note that the robust average rate gains were achieved in 2019 due in part to the Tiger Woods' appearance at the PGA Championship Tournament at Bethpage Black in May 2019. As such, we have adjusted the ADR in 2020 to reflect a more normalized level in the event that Tiger Woods does not return to the PGA Championship Tournament this year. Hotels in this Long Island submarket benefit from corporate weekday base business, with supplemental leisure demand on weekends and during seasonal periods. As such, this improvement in market conditions was driven largely by the lack of new supply combined with the continued strong corporate-transient demand from the area

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 54

companies and strong leisure demand from New York City residents as well as tourists.

Seasonality Monthly occupancy and ADR trends are presented in the following tables.

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 55

FIGURE 4-6 MONTHLY OCCUPANCY TRENDS

Month 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

January 53.7 % 53.0 % 55.0 % 74.4 % 58.9 % 58.8 % 63.0 % 64.4 % 67.1 % 64.7 % February 56.2 58.1 60.1 73.8 63.2 67.2 71.7 64.6 69.9 72.1 March 69.6 64.9 66.1 75.7 71.4 73.1 75.7 76.0 77.1 78.7 April 69.8 65.4 69.9 78.4 77.0 77.4 83.1 80.5 80.1 82.5 May 75.3 74.8 76.1 78.2 80.9 81.3 82.9 83.1 83.8 86.6 June 79.2 81.7 82.1 85.4 85.6 87.0 87.0 89.2 90.3 86.2 July 83.2 80.9 80.3 86.1 86.8 87.8 88.4 88.9 86.2 88.4 August 79.4 86.4 82.0 86.8 88.9 89.2 91.3 91.4 89.7 87.5 September 74.1 86.1 76.4 81.5 82.3 84.7 85.5 85.4 83.3 82.9 October 75.8 78.4 80.4 81.0 81.2 84.7 82.9 83.6 82.4 83.1 November 64.5 70.4 95.4 72.8 70.3 76.9 80.7 81.3 78.5 78.5 December 55.9 59.3 83.0 65.4 66.1 69.8 71.0 74.7 72.3 71.3 Annual Occupancy 69.8 % 71.7 % 75.6 % 78.3 % 76.1 % 78.2 % 80.3 % 80.3 % 80.1 % 80.2 %

FIGURE 4-7 MONTHLY ADR TRENDS

Month 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

January $118.95 $119.66 $124.53 $134.63 $130.42 $129.68 $128.76 $132.42 $131.84 $131.28 February 119.59 121.74 123.94 132.87 132.13 130.03 129.64 131.33 129.64 $131.21 March 119.95 120.85 124.36 131.59 132.38 133.48 132.56 138.48 136.89 $140.91 April 118.73 119.06 125.92 134.57 136.55 135.91 139.14 144.22 145.19 $150.08 May 122.88 126.41 131.97 137.58 142.04 144.91 152.29 156.34 159.32 $181.87 June 127.65 132.06 135.28 141.15 147.28 152.34 162.66 165.20 184.45 $176.07 July 128.00 131.13 134.36 140.98 148.93 155.09 162.49 166.87 167.34 $173.66 August 129.09 133.67 137.17 141.00 148.48 153.77 161.68 165.15 164.32 $171.56 September 128.70 133.20 132.50 138.70 146.27 150.00 154.59 158.35 159.64 $167.62 October 127.35 129.79 135.46 139.48 144.23 147.74 150.37 156.44 156.72 $162.46 November 121.69 124.65 141.89 131.81 133.72 136.83 141.53 145.00 145.43 $151.77 December 116.18 118.51 136.67 127.49 128.83 128.80 130.86 131.83 132.37 $141.04

Annual Average Rate $123.77 $126.73 $132.81 $136.30 $140.18 $142.66 $146.79 $150.69 $152.54 $158.16

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 56

FIGURE 4-8 SEASONALITY

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 High Season - May, June, July, August, September, October Occupancy 77.9 % 81.3 % 79.6 % 83.2 % 84.3 % 85.8 % 86.3 % 86.9 % 85.9 % 85.8 % Average Rate $127.30 $131.15 $134.51 $139.86 $146.27 $150.73 $157.49 $161.54 $165.49 $172.31 RevPAR 99.10 106.68 107.02 116.34 123.29 129.28 135.97 140.43 142.23 147.83 Shoulder Season - March, April, November Occupancy 68.0 % 66.9 % 77.0 % 75.6 % 72.9 % 75.8 % 79.8 % 79.2 % 78.5 % 79.9 % Average Rate $120.08 $121.59 $131.99 $132.68 $134.26 $135.42 $137.81 $142.61 $142.50 $147.55 RevPAR 81.65 81.32 101.67 100.33 97.87 102.58 109.94 112.99 111.91 117.88

Low Season - January, February, December Occupancy 55.2 % 56.8 % 66.2 % 71.0 % 62.7 % 65.2 % 68.5 % 68.0 % 69.8 % 69.3 % Average Rate $118.19 $119.91 $129.61 $131.67 $130.38 $129.47 $129.80 $131.87 $131.34 $134.72 RevPAR 65.26 68.05 85.84 93.43 81.74 84.44 88.85 89.68 91.67 93.32 Source: Smith Travel Research

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 57

FIGURE 4-9 MONTHLY OCCUPANCY AND ADR TRENDS (TRAILING 12 MONTHS)

100.0 $200.00 90.0 $180.00 80.0 $160.00 70.0 $140.00 60.0 $120.00 50.0 $100.00 40.0 $80.00

Occupancy(%) 30.0 $60.00 20.0 $40.00 10.0 $20.00 0.0 $0.00

Occupancy ADR

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 58

The illustrated monthly occupancy and ADR patterns reflect important seasonal characteristics. We have reviewed these trends in developing our forthcoming forecast of market-wide demand and average rate.

Patterns of Demand A review of the trends in occupancy and ADR by day of the week provides some insight into the impact that the current economic conditions have had on the competitive lodging market. The data, as provided by STR, are illustrated in the following table(s).

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 59

FIGURE 4-10 OCCUPANCY BY DAY OF WEEK (TRAILING 12 MONTHS)

Month Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total Month Jan - 19 47.0 % 71.5 % 73.6 % 75.5 % 61.1 % 55.6 % 64.4 % 64.7 % Feb - 19 51.5 76.7 87.7 83.7 68.5 62.8 73.9 72.1 Mar - 19 57.2 84.9 93.3 90.1 74.3 73.5 83.1 78.7 Apr - 19 61.0 83.2 91.8 89.6 75.7 83.2 90.4 82.5 May - 19 74.1 77.8 91.3 92.0 84.3 89.6 95.7 86.6 Jun - 19 65.2 85.4 93.9 92.3 80.8 92.2 96.4 86.2 Jul - 19 73.4 87.4 89.3 88.9 88.6 94.1 96.6 88.4 Aug - 19 70.1 86.6 90.7 91.1 83.7 91.1 96.6 87.5 Sep - 19 69.8 76.1 88.1 88.1 79.4 88.9 94.8 82.9 Oct - 19 65.2 81.9 89.2 86.4 75.8 87.3 95.5 83.1 Nov - 19 57.5 76.1 82.1 84.1 81.0 80.3 86.2 78.5 Dec - 19 51.0 65.1 81.0 82.5 73.0 74.4 76.5 71.3 Average 61.8 % 79.3 % 87.4 % 86.9 % 77.1 % 81.3 % 87.7 % 80.2 % Source: STR

FIGURE 4-11 AVERAGE RATE BY DAY OF WEEK (TRAILING 12 MONTHS)

Month Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total Month Jan - 19 $121.96 $134.90 $143.07 $140.49 $126.98 $119.85 $118.70 $131.28 Feb - 19 122.37 134.62 143.49 141.21 128.12 121.11 119.39 131.21 Mar - 19 129.63 144.59 156.24 153.98 136.21 129.75 133.79 140.91 Apr - 19 138.34 149.36 162.31 156.20 143.52 143.04 149.21 150.08 May - 19 176.39 176.97 182.28 179.45 175.50 186.37 194.37 181.87 Jun - 19 157.68 167.84 177.62 173.23 163.84 186.66 195.41 176.07 Jul - 19 158.39 165.13 175.07 174.58 164.53 182.94 191.56 173.66 Aug - 19 153.16 164.04 176.78 171.21 161.68 176.99 187.42 171.56 Sep - 19 154.43 162.28 174.14 170.24 158.28 172.80 179.61 167.62 Oct - 19 148.48 157.83 166.97 164.33 150.94 165.69 177.07 162.46 Nov - 19 138.67 150.66 161.11 158.42 148.65 148.98 152.17 151.77 Dec - 19 129.25 143.08 150.85 152.57 137.16 134.14 133.69 141.04

Average $146.05 $154.86 $164.31 $162.15 $151.24 $159.29 $164.55 $158.16 Source: STR

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 60

FIGURE 4-12 OCCUPANCY AND AVERAGE RATE BY DAY OF WEEK (TRAILING 12 MONTHS)

100.0 $170.00 90.0 $165.00 80.0 70.0 $160.00 60.0 $155.00 50.0 $150.00

40.0 Occupancy(%) 30.0 $145.00 20.0 $140.00 10.0 0.0 $135.00 Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Occupancy ADR

FIGURE 4-13 OCCUPANCY, AVERAGE RATE, AND REVPAR BY DAY OF WEEK (MULTIPLE YEARS)

Occupancy (%) Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total Year Jan 17 - Dec 17 62.5 % 80.9 % 87.8 % 87.6 % 76.8 % 79.7 % 87.5 % 80.3 % Jan 18 - Dec 18 61.2 78.8 86.8 86.3 77.0 81.8 88.8 80.1 Jan 19 - Dec 19 61.8 79.3 87.4 86.9 77.1 81.3 87.7 80.2 Change (Occupancy Points) FY 17 - FY 18 (1.2) (2.1) (1.0) (1.3) 0.2 2.2 1.3 (0.2) FY 18 - FY 19 0.6 0.4 0.6 0.6 0.1 (0.5) (1.1) 0.1

ADR ($) Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total Year Jan 17 - Dec 17 $140.03 $148.05 $155.79 $153.65 $143.05 $152.75 $157.66 $150.69 Jan 18 - Dec 18 140.57 148.32 158.30 155.33 145.24 154.98 160.32 152.54 Jan 19 - Dec 19 146.05 154.86 164.31 162.15 151.24 159.29 164.55 158.16 Change (Dollars) FY 17 - FY 18 $0.54 $0.27 $2.51 $1.68 $2.20 $2.23 $2.66 $1.84 FY 18 - FY 19 5.48 6.53 6.01 6.82 6.00 4.31 4.23 5.63 Change (Percent) FY 17 - FY 18 0.4 % 0.2 % 1.6 % 1.1 % 1.5 % 1.5 % 1.7 % 1.2 % FY 18 - FY 19 3.9 4.4 3.8 4.4 4.1 2.8 2.6 3.7

RevPAR ($) Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total Year Jan 17 - Dec 17 $87.48 $119.78 $136.74 $134.64 $109.90 $121.69 $137.96 $121.08 Jan 18 - Dec 18 86.09 116.95 137.43 134.09 111.82 126.80 142.37 122.21 Jan 19 - Dec 19 90.29 122.77 143.62 140.96 116.60 129.46 144.39 126.92 Change (Dollars) FY 17 - FY 18 ($1.40) ($2.84) $0.68 ($0.54) $1.92 $5.11 $4.42 $1.13 FY 18 - FY 19 4.21 5.83 6.20 6.87 4.78 2.67 2.02 4.71 Change (Percent) FY 17 - FY 18 (1.6) % (2.4) % 0.5 % (0.4) % 1.7 % 4.2 % 3.2 % 0.9 % FY 18 - FY 19 4.9 5.0 4.5 5.1 4.3 2.1 1.4 3.9

Source: STR

In most markets, business travel, including individual commercial travelers and corporate groups, is the predominant source of demand on Monday through Thursday nights. Leisure travelers and non-business-related groups generate a majority of demand on Friday and Saturday nights.

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 62

SUPPLY Based on an evaluation of the occupancy, rate structure, market orientation, chain affiliation, location, facilities, amenities, reputation, and quality of each area hotel, as well as the comments of management representatives, we have identified several properties that are expected to be primarily competitive with the proposed subject hotel. If applicable, additional lodging facilities may be judged only secondarily competitive; although the facilities, rate structures, or market orientations of these hotels prevent their inclusion among the primary competitive supply, they are expected to compete with the proposed subject hotel to some extent.

Primary Competitors The following table summarizes the important operating characteristics of the future primary competitors and the aggregate secondary competitors (if applicable). This information was compiled from personal interviews, inspections, online resources, and our in-house database of operating and hotel facility data.

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 63

FIGURE 4-14 PRIMARY COMPETITORS – OPERATING PERFORMANCE

Est. Segmentation Estimated 2018 Estimated 2019

Weighted Weighted Annual Annual Number of Room Room Occupancy Yield

Property Rooms Commercial Leisure Group Count Occ. Average Rate RevPAR Count Occ. Average Rate RevPAR Penetration Penetration

Hampton Inn Long Island/Commack 143 60 % 30 % 10 % 143 80 - 85 % $150 - $160 $120 - $125 143 55 - 60 % $150 - $160 $90 - $95 70 - 75 % 70 - 75 %

Hampton Inn Long Island/Islandia 120 60 30 10 120 80 - 85 140 - 150 115 - 120 120 75 - 80 140 - 150 115 - 120 95 - 100 90 - 95

Holiday Inn Express Hauppauge-Long Island 133 60 30 10 133 75 - 80 140 - 150 110 - 115 133 75 - 80 140 - 150 115 - 120 95 - 100 90 - 95

Sub-Totals/Averages 396 60 % 30 % 10 % 396 81.6 % $143.61 $117.16 396 72.4 % $148.63 $108 $90 % 85.2 %

Secondary Competitors 2,247 58 % 30 % 12 % 1,757 80.0 % $154.22 $123.36 1,757 81.7 % $159.61 $130 $102 % 103.3 %

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 64

FIGURE 4-15 PRIMARY COMPETITORS – FACILITY PROFILES

Approx. Miles Indoor Number of Year Last Major To Subject Food and Beverage Meeting Meeting Space Property Rooms Opened Renovation(s) Property Outlets Space (SF) per Room Facilities & Amenities Hampton Inn Long Island/Commack 143 1988 Guestrooms 8.1 Breakfast Dining Area 504 3.5 Business Center; Fitness Room; Coffee Station; Guest Laundry 680 Commack Road 2019/20 Area

Hampton Inn Long Island/Islandia 120 1988 — 13.3 Breakfast Dining Area 625 5.2 Business Center; Indoor Swimming Pool; Fitness Room; Coffee 1600 Veterans Memorial Highway Station; Guest Laundry Area

Holiday Inn Express Hauppauge-Long Island 133 2001 2015/16 11.5 Breakfast Dining Area 1,400 10.5 Business Center; Airport/Local Shuttle; Guest Laundry Area; 2050 Express Drive South Indoor Swimming Pool; Fitness Room; Lobby Workstation; Market Pantry; Coffee Station

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 65

The following map illustrates the locations of the proposed subject property and its future competitors.

MAP OF COMPETITION

Our survey of the primarily competitive hotels in the local market shows a range of lodging types and facilities. Each primary competitor was inspected and evaluated. Descriptions of our findings are presented below.

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 66

PRIMARY COMPETITOR #1 - HAMPTON INN LONG ISLAND/COMMACK

Hampton Inn Long FIGURE 4-16 ESTIMATED HISTORICAL OPERATING STATISTICS Island/Commack 680 Commack Road Wtd. Annual Occupancy Yield Commack, NY Year Room Count Occupancy Average Rate RevPAR Penetration Penetration Est. 2017 143 80 - 85 % $140 - $150 $120 - $125 100 - 110 % 100 - 110 % Est. 2018 143 80 - 85 150 - 160 120 - 125 100 - 110 100 - 110 Est. 2019 143 55 - 60 150 - 160 90 - 95 70 - 75 70 - 75

This interstate-adjacent hotel benefits from its strong brand affiliation and its newly-completed guestroom renovations. The guestroom corridors are currently being updated with new carpeting. Some of the public space have not undergone recent renovations. According to the hotel staff, the indoor pool has been closed and is planned to be permanently removed. Overall, the property appeared to be in good to very good condition. Its accessibility is similar to that of the subject site, and its visibility is similar to the expected visibility of the Proposed Hampton Inn & Suites.

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 67

PRIMARY COMPETITOR #2 - HAMPTON INN LONG ISLAND/ISLANDIA

Hampton Inn Long FIGURE 4-17 ESTIMATED HISTORICAL OPERATING STATISTICS Island/Islandia 1600 Veterans Wtd. Annual Occupancy Yield Memorial Highway Year Room Count Occupancy Average Rate RevPAR Penetration Penetration Islandia, NY Est. 2017 120 80 - 85 % $130 - $140 $110 - $115 100 - 110 % 90 - 95 % Est. 2018 120 80 - 85 140 - 150 115 - 120 100 - 110 90 - 95 Est. 2019 120 75 - 80 140 - 150 115 - 120 95 - 100 90 - 95

This interstate-adjacent hotel benefits from its strong brand affiliation but is somewhat disadvantaged by its lack of recent renovations. The guestroom bathrooms are currently under renovation; no additional information was provided regarding any potential guestroom upgrades. Guests are charged a $10.00/per night parking fee for the surface lot parking offered at this hotel. Overall, the property appeared to be in good condition. Its accessibility is similar to that of the subject site, and its visibility is similar to the expected visibility of the Proposed Hampton Inn & Suites.

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 68

PRIMARY COMPETITOR #3 - HOLIDAY INN EXPRESS HAUPPAUGE-LONG ISLAND

Holiday Inn Express FIGURE 4-18 ESTIMATED HISTORICAL OPERATING STATISTICS Hauppauge-Long Island 2050 Express Drive Wtd. Annual Occupancy Yield South Year Room Count Occupancy Average Rate RevPAR Penetration Penetration Hauppauge, NY Est. 2017 133 75 - 80 % $130 - $140 $105 - $110 95 - 100 % 85 - 90 % Est. 2018 133 75 - 80 140 - 150 110 - 115 95 - 100 90 - 95 Est. 2019 133 75 - 80 140 - 150 115 - 120 95 - 100 90 - 95

Although this hotel benefits from its strong national brand affiliation, it is somewhat disadvantaged by its lack of recent renovations, given that the last renovations occurred in 2015/16. Overall, the property appeared to be in good condition. Its accessibility is inferior to that of the subject site, and its visibility is similar to the expected visibility of the Proposed Hampton Inn & Suites.

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 69

Secondary We have also reviewed other area lodging facilities to determine whether any may Competitors compete with the proposed subject hotel on a secondary basis. The room count of each anticipated secondary competitor has been weighted based on its assumed degree of competitiveness in the future with the proposed subject hotel. By assigning degrees of competitiveness, we can assess how the proposed subject hotel and its future competitors may react to various changes in the market, including new supply, changes to demand generators, and renovations or franchise changes of existing supply. The following table sets forth the pertinent operating characteristics of the secondary competitors.

February-2020 Supply and Demand Analysis Proposed Hampton Inn & Suites – Huntington, New York 70

FIGURE 4-19 SECONDARY COMPETITORS – OPERATING PERFORMANCE