Financial Feasibility Study

2/5/2018

FINANCIAL FEASIBILITY STUDY

Limited Service Hotel U. S. Highway 377, Pilot Point, Texas 76258

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ SourceStrategies.org

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February 5, 2018 FINANCIAL FEASIBILITY STUDY: Limited Service Hotel U.S. Highway 377, Pilot Point, Texas 76258

This study has been prepared to determine the financial feasibility of building and operating an 55 unit limited service hotel along U.S. Highway 377, in Pilot Point, Texas. For the purposes of this study, we have selected the currently available brand of Best Western as the brand for the subject. A site along U.S. 377, in Pilot Point, is expected to be used for this project, and will provide good access to area highways and amenities, and good visibility.

Project quality is assumed to match the physical and operating standards of the Best Western brand. This is a product of Best Western International. All projections herein are based on operating this hotel as a Best Western, or like brand, and retaining the brand in good standing at the time of an assumed sale after 10 years. Assumed market acceptance for a Best Western has been quantified versus market averages, and has been used in developing this study. Operating costs are set at the level of similar hotels in the region.

KEY FINDING: Building and operating a Best Western hotel at this site should generate an unleveraged, pre-tax return on total invested capital of 14%, with a return on equity of 36% (DCF). This return on invested capital also assumes that improvements are completed at the estimated cost of $85,000 per unit, plus $425,000 for land. This is a good hotel investment. Project details follow:

PO Box 120055  134 Laurel Heights, San Antonio, TX 78212  210-734-3434  Fax 210-735-7970  www.SourceStrategies.Org Page 2 of 101

Total Investment

Land Value $ 425,000 Improvements Budget $ 4,675,000 @ $85,000 per key1 Total Investment $ 5,100,000

Pre-Tax Project Return 14.00%2 Pre-Tax Return on Equity 36.17%3

This study incorporates the current downturn in the Texas hotel market, the rebound from the recent national recession which began in late 2008, and the continued impact of the Permian Basin and the Eagle Ford Shale Oil and Gas developments and the hotel market’s response to lower oil prices. In our Market section, we highlight the historical hotel performance in Texas, noting the effect of past recessions. Consequently, our market projections consider how the lodging industry reacts in times of economic downturn and in normal times. See the Market section for details.

With projections beginning in July 2019, cash flow market projections for the Best Western Pilot Point, before taxes and after renovation reserves, should be available for debt service, income tax and dividends as follows:

PROJECT SUMMARY

Occupancy Average $ Total Percent $ Rate REVPAR Revenue CashFlow** Year I 61.1% $84.65 $51.72 $1,072,441 $443,915 Year II 70.2% $88.02 $61.83 $1,282,177 $540,883 Year III 72.6% $91.55 $66.44 $1,377,805 $587,781 Year IV 71.7% $95.92 $68.77 $1,426,029 $615,978 Year V 72.0% $98.80 $71.17 $1,475,939 $637,826 Year VI 71.7% $100.77 $72.26 $1,498,473 $642,278 Year VII 71.6% $102.28 $73.18 $1,517,652 $642,649 Year VIII 71.4% $103.81 $74.12 $1,537,076 $642,807 Year IX 71.6% $104.85 $75.07 $1,556,750 $640,303 Year X 71.7% $105.91 $75.90 $1,573,872 $8,270,776***

*Year I ADR equates to approximately $82 in current market dollars.** Before Income Tax & Financing expense, but reflecting $751,706 in reserves for capital expenditures/property renovation ($13,667 per unit). ***Assumes valuing property at Year 10 cash flow at an 8% return-to-buyer, less 4% expense of sale, plus year 10 cash flow.

1. Developer estimates of purchase price and of development costs. 2. After reserve for on-going renovations. 3. Assuming 30% equity and 70% debt at a 4.5% pre-tax debt cost; calculated weighted average. Page 3 of 101

The above cash flow, assuming a Year 10 sale, has been discounted at the rate of 14% to a present value of $5,100,972, essentially equaling the total budgeted investment of $5,100,000. This 14% is the project's unleveraged return, provided capital costs are kept at this level.

An estimated capital budget for purchase of the hotel, excluding land, of $85,000 per unit 'turn-key' costs for a hotel of this size and quality is average for a new Best Western hotel, in our experience, and reasonable. If capital outlays vary from the current budget for this project, returns will vary accordingly. The following table illustrates the linear nature of financial returns as capital requirements escalate or decline and revenue streams remain stable.

Effect on Returns if Capital Investment Changes4 Improvements Budget Land Total Discounted Cash Flow Variance Per Unit Total Cost Investment Total Proj On Equity (85%) $72.3 $3,974 $425 $4,399 16.54% 44.63% (90%) $76.5 $4,208 $425 $4,633 15.64% 41.63% (95%) $80.8 $4,441 $425 $4,866 14.79% 38.80% BUDGET $85.0 $4,675 $425 $5,100 14.00% 36.17% (105%) $89.3 $4,909 $425 $5,334 13.26% 33.70% (110%) $93.5 $5,143 $425 $5,568 12.57% 31.40% (115%) $97.7 $5,376 $425 $5,801 11.91% 29.20%

4. Discounted Cash Flow / Internal Rate of Return. Page 4 of 101

The first stabilized year of operation (Year III) returns the following results:

Year III 2021/2022

Room Revenues $1,333,790 Total Revenues $1,377,805 Income Before Fixed Costs $ 717,003 (52.0%) Net Income Before Tax & Fin. $ 540,244 (39.2%) Cash Flow Before Financing $ 587,781 (42.7%)5 Occupancy % 72.6% Average Daily Rate $ 91.55 $ REVPAR $ 66.44 Per Occupied Room Cost $ 42.42

The critical statistic used in this study is REVPAR. REVPAR means revenue per available room per day, and reflects the average daily room revenue yield of every room in a property or market (not just occupied rooms). REVPAR is generated by multiplying occupancy times rate (i.e. REVPAR = % occupancy times average daily

rate), and is the most effective and important tool in the evaluation of the success of

any lodging concern.

SUMMARY OF CRITICAL ASSUMPTIONS: Assumptions are summarized as follows (see page 11 for full Market History and Projection study, and page 7 for Methodology):

1. An analysis of the local Pilot Point area market6 reflect a mixture of a number of older and oversized hotels, as well as a significant amount new and competitive lodging products. The average hotel room in the local market is over 17 years old, past the typical peak performance of the first ten years of operation. The typical hotel building becomes stylistically and structurally obsolete after 30+ years, though this life cycle is significantly longer for high-rise/concrete structures. Out of 2,000 total rooms currently in the selected local market, only 94 rooms have opened since 2010, with 620 rooms built before 1989, making this a very old and vulnerable group of hotels.

We are comfortable with market projections, and expect market demand growth levels in the area to rise slowly over the next nine years from the current growth levels. After reduced results in the past 24 months, demand growth is expected to return to more typical levels, while occupancy is expected to fall before reaching an equilibrium level of 60% by 2022. Local market REVPAR is projected to

5. Before deductions of loan principal and interest, before income tax deductions, and before any equity payout. 6. Zip Codes 76258/272/240/266/207/210/208/240/250/273. Page 5 of 101 rise by 2.5% annually in the next five years (versus a 5.1% average growth rate per year in each of the last nine years). Detailed local market history and projections commence on page 19.

PILOT POINT AREA MARKET7 Year8 Occupancy % $ REVPAR 2008 57.6% $ 33.80 2011 58.1% $ 36.47 2013 61.3% $ 41.72 2015 64.1% $ 49.02 2017 63.5% $ 51.889 Projected 2018 62.7% $ 54.00 2020 60.7% $ 56.15 2025 59.8% $ 65.41 Historical Annual Compound Growth Rates Past 9 Year Average 1.3% 5.1% Past 4 Year Average 1.0% 5.9% Past 1 Year Average -1.6% 1.8% Future Annual Compound Growth Rates Next 9 Years -0.7% 2.9% Next 5 Years -1.2% 2.5%

2. Versus the local market's REVPAR dollar projection the REVPAR index of the Best Western starts at 93% of the local market, rising to a plateau in Years III-V of 114% of the market. Thereafter, the REVPAR Index declines due to the normal aging cycle. Detailed REVPAR derivation and subsequent projections commence on page 29.

Best Western, Product Derivation

Data in 2017 $'s Year I Year II Year III Base: Name & Quality 1.08 1.08 1.08 x Brand Age Adjustment 1.12 1.12 1.12 x Site Value Adjustment 0.81 0.81 0.81 x Size Adjustment 1.04 1.04 1.04 x Other Adjustments 1.00 1.00 1.00 x Newness Adjustment 0.92 1.07 1.12 = Performance Factor 93% 109% 114%

x Market REVPAR $51.88 $51.88 $51.88 = Projected Performance $48.46 $56.37 $59.00

7. Zip Codes 76258/272/240/266/207/210/208/240/250/273. 8. Calendar Year basis. 9. 12 months ending September 30, 2017. Page 6 of 101

REVPAR growth for both the local market and the subject reflects the fact that this hotel is expected to perform at a level above the current market average. The hotel's REVPAR index starts in Year I at 93%, rises to 114% of the market in its peak years, then slowly loses ground versus the local market's typical inflationary growth:

3. Expenses are set at the level of similar limited service hotel products from Smith Travel Research Host Reports operating statistics, inflated at 3% per annum. See page 42 for details.

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METHODOLOGY

To develop Pro Forma financial results for the project, two major sets of assumptions have been developed. First, the future market's average REVPAR is forecast on a reasonable and economically-sound basis; the performance of the project is dependent on this market forecast and varies from it only due to specific variables of the project. Second, the specific variables of the project are combined and expressed as an index for each quarter of the forecast, an index that is used to adjust the overall market performance to the specific project.

MARKET REVPAR FORECAST The large Dallas / Fort Worth / Arlington combined metro area is examined historically and projected. The key in the market projection is to stabilize the wider area market in the future at a sustainable, average equilibrium for occupancy, a level which we have determined to be approximately 60% in large rural markets of this type. This occupancy level is highly relevant as a long-term, equilibrium occupancy, a level where investors are neutral about adding new hotel rooms to the market and an average that will reoccur over long periods of time (e.g. 20 years).

After the wider market area is forecast, the performance of the local Pilot Point Area market is examined historically and projected. The key in the market projection is to stabilize this wide market in the future at a sustainable, average equilibrium for occupancy, a level which we have determined to be approximately 58% in successful small town / highway markets of this type. Over the 20 years from 1987 through 2007, according to the Source Strategies, Inc. database, hotel occupancy in Texas has averaged 60%, and 62% in larger Texas metros. The REVPAR projection of the local market is then the pro forma market environment of the project. This project will vary from the norm for only project-specific differences, and then only relatively. PROJECT VARIABLES: DEVELOPMENT OF PROJECT REVPAR INDICES The first variable from the averages to be developed has to do with the fact that each product type and brand have a typical and identifiable influence on REVPAR performance. This variable is based on its consumer acceptance, its product definition, its level of quality, the price it can command from the consumer, its marketing efforts, and other factors. The value of the brand and product type is termed the Base Value. Page 8 of 101

The second adjustment used on the dollar value of the local market's REVPAR is the Brand Age Adjustment. This is made to reflect the average age of similarly branded hotels on the subject property's performance versus the market average. Typically, the opening dates of the same branded hotels as the subject are examined in order to quantify this factor.

The third step to developing a project REVPAR index is to determine an adjustment based on any deviation from a normal project. If the number of rooms in the project is significantly above or below the average for that brand, its performance will also vary from the norm. A lower than average number of rooms should increase per room performance and vice versa. This is due to the fact that consumer demand for a single brand is demand at the project's site, regardless of the number of rooms offered by the hotel.

An empirical proof of this evaluation of Size is the major increase in volume enjoyed by numerous hotels throughout Texas that have split into two branded operations, using two different names. For example, the Hilton Hotel Towers Austin added $1,000,000 annually to revenues by splitting off its adjacent, ground-based rooms as a Super 8 Motel. By creating another brand, the Super 8 began to fill demand for budget properties in the immediate area, while the Hilton Towers kept its current upscale customer base. Hence, smaller room counts than average generate higher occupancy than average. Further proof is the correlation between project size and occupancy: the smaller the property, the higher the occupancy.10

Lastly, an 'Other' segment adjustment may be made if the product type is under- or over- supplied in the local market, or for other factors. For example, a product type commanding 10% of the Texas market - but zero locally - would command a higher daily rate or occupancy locally because it is a relatively scarce commodity. Further, a subject product far exceeds the product quality of the brand average, then a positive adjustment should be made. While there is usually a reasonably consistent pattern of site factors for the brand properties selected, these factors often vary because of unique situations: 1) visibility and access differences between nearby sites; 2) any large variation from the norm in the usual number of rooms for a chain; 3) a nearby property's quality, the quality of

10. Study detailed in size factor derivation in analysis section.

Page 9 of 101 management, last renovation; 4) any major new commercial development nearby. Adjustments will be made for these differences based on industry experience.

Then the REVPAR potential of the subject Site is developed in two ways. First, all other property factors except site are calculated for the competitors, the site factor then being used to bring the calculated REVPAR into a match with actual REVPAR performance. In other words, combining all factors including a 'plugged' site factor results in Theoretical REVPAR projection equaling actual REVPAR for each property studied, revealing the mathematical value of individual hotel sites.

With the development of the adjustments for Brand/product type, overall Brand Age, Segment, project Size, and Site, a revenue projection for the hotel operation begins to take form by combining these factors into a combined index that is applied to the overall market-wide REVPAR projection, resulting in the forecast of the project's dollar REVPAR. However, this combined index changes as the project ages.

Consequently, the physical Age of the individual project impacts this REVPAR index. A +12% increase factor is applied to the combined REVPAR index in the peak performing Year III through Year V. A first-year start-up adjustment of -8% and a second year adjustment of +7%, is followed by this +12% adjustment for years III-V. This factor reflects the major revenue-generating power of new versus old properties.

In the sixth year and thereafter, the REVPAR index is then diminished at a rate of 1.67% per annum in order to reflect aging and the normal life-cycle of a hotel. For a completely renovated property, this factor is slightly different.

This pattern of declining performance with property aging is based on major studies of economic life- cycle patterns. The first study was conducted on a census of all 25,000 Texas rooms built between 1980 and 1982 (study published in September 1994 issues of MarketShare11 and the October 1994 issue of Hotel & Motel Management); the second investigation was conducted on all 17,231 rooms built in Texas from 1990 through 1995. These Source Strategies, Inc. studies confirm a similar, major study conducted in 1982 at the Holiday corporation on 160 company-owned Holiday hotels.

11 Now Hotel Brand Report. Page 10 of 101

Combining all of these factors - Product Type, Brand Age, Site, Size, Segment (other), and Newness (Age) - results in the REVPAR stream for the project. A REVPAR stream from which room revenues, estimated rate, occupancy and room-nights sold are derived. At this point, the investment and operational costs can be laid against the revenue line to generate pro forma financial performance and discounted cash flow analysis.

The calculation of the statistic of Operating Costs Per Occupied Room (before fixed/capital costs are deducted) is typically the important cost to examine carefully because it is highly stable and predictable, regardless of occupancy and rate. The Smith Travel Research’s ‘2017 Almanac’ (2016 data) with dollar costs inflated, and Source Strategies, Inc. financial models are the source of operating cost statistics.

From national average occupancies, costs are categorized as fixed, semi-variable or variable, resulting in the highly-leveraged profit performance characteristic of lodging products, depending on occupancy and REVPAR performance (i.e. variable costs increase proportionately with higher occupancy levels while fixed costs do not). Furthermore, with a capital expenditures profile provided by the International Society of Hospitality Consultants' CapEx, A Study of Capital Expenditures in the U.S. Hotel Industry, a method has been applied to determine an appropriate amount of renovation reserves to ensure that the property is maintained at the franchisor's required level.

All study-area individual hotel/motel five year histories are included in the study, using the Source Strategies, Inc. database of all Texas hotels and motels (includes each hotel’s brand, room count, room revenue, occupancy, rate and REVPAR). The methodology of this database is attached as an exhibit. Page 11 of 101

MARKET REVPAR HISTORY: TEXAS TEXAS MARKET REVPAR 1. Since 1980, the State of Texas has experienced generally strong growth, with occasional periods of economic downturn, one of the worst being the recession that began in 2009. In 1982-1983 the Texas market suffered through six consecutive quarters of major demand declines, with a sharp plummet of 24% in the first quarter of 1983. Two years later, every quarter in 1986 posted significant demand decreases of 19% or more.

Before the recession starting in 2009, the most recent period of decline was in 2001, during which the onset of a recession was coupled, and accelerated by, the terrorist attacks of 9/11. Beginning in the Third quarter of 2001, seven of the next eight quarters showed declining room demand, and it was not until the first quarter of 2004 that healthy levels of growth resumed.

We have considered these historical market patterns in formulating our projections for all markets. Though there are differences in each economic downturn, and areas across the state are impacted differently depending on factors driving demand – particularly Oil & Gas development and production - there is much that can be discerned from historical positive and negative trending performances.

Historical quarterly periods of economic decline and recession are highlighted in the Texas market data that follows overleaf, while more recent history shows the positive results of an improving economy in Texas and the impacts of shale oil extraction:

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HOTEL MARKET: STATE OF TEXAS 1990-1999

1 # Room- Total Yr Htls nites Rooms 2 3 4 % Growth Vs. Prior Yr & and # sold Revenues % $ $ Qtr Mtls Rooms 000's $ 000's Occ. Rate RPAR Suppl Real ADR $ Rev.

901 2,128 214,051 11,805 553,320 61.3 46.87 28.72 0.0 6.8 2.7 9.7 902 2,309 218,422 12,929 621,759 65.0 48.09 31.28 1.1 5.6 4.0 9.8 903 2,486 222,992 12,865 633,123 62.7 49.21 30.86 1.8 -2.3 7.4 4.9 904 2,194 215,429 10,640 516,473 53.7 48.54 26.06 0.3 -2.9 6.1 3.0 911 2,284 216,154 11,566 565,085 59.5 48.86 29.05 1.0 -2.0 4.2 2.1 912 2,448 219,862 12,773 649,194 63.8 50.82 32.45 0.7 -1.2 5.7 4.4 913 2,488 220,995 13,246 664,304 65.1 50.15 32.67 -0.9 3.0 1.9 4.9 914 2,286 217,641 11,080 548,844 55.3 49.53 27.41 1.0 4.1 2.0 6.3 921 2,307 218,028 11,594 590,250 59.1 50.91 30.08 0.9 0.2 4.2 4.5 922 2,484 221,953 12,745 669,602 63.1 52.54 33.15 1.0 -0.2 3.4 3.1 923 2,544 223,066 13,701 715,176 66.8 52.20 34.85 0.9 3.4 4.1 7.7 924 2,355 219,610 11,523 591,250 57.0 51.31 29.26 0.9 4.0 3.6 7.7 931 2,358 219,849 11,895 625,741 60.1 52.60 31.62 0.8 2.6 3.3 6.0 932 2,520 223,200 12,949 706,243 63.8 54.54 34.77 0.6 1.6 3.8 5.5 933 2,582 225,251 14,012 753,292 67.6 53.76 36.35 1.0 2.3 3.0 5.3 934 2,378 221,198 11,677 616,985 57.4 52.84 30.32 0.7 1.3 3.0 4.4 941 2,410 222,093 12,409 673,515 62.1 54.27 33.70 1.0 4.3 3.2 7.6 942 2,589 227,029 13,608 767,336 65.9 56.39 37.14 1.7 5.1 3.4 8.7 943 2,660 229,750 13,943 787,263 66.0 56.46 37.25 2.0 -0.5 5.0 4.5 944 2,470 225,865 12,265 674,587 59.0 55.00 32.46 2.1 5.0 4.1 9.3 951 2,452 224,390 12,637 740,927 62.6 58.63 36.69 1.0 1.8 8.0 10.0 952 2,599 228,476 13,653 813,137 65.7 59.56 39.11 0.6 0.3 5.6 6.0 953 2,694 233,983 13,977 828,759 64.9 59.30 38.50 1.8 0.2 5.0 5.3 954 2,597 231,786 12,357 719,922 57.9 58.26 33.76 2.6 0.7 5.9 6.7 961 2,589 232,887 13,336 827,453 63.6 62.04 39.48 3.8 5.5 5.8 11.7 962 2,730 238,395 14,015 872,560 64.6 62.26 40.22 4.3 2.7 4.5 7.3 963 2,727 242,137 14,060 874,796 63.1 62.22 39.27 3.5 0.6 4.9 5.6 964 2,660 241,218 12,583 774,445 56.7 61.55 34.90 4.1 1.8 5.6 7.6 971 2,687 244,628 13,271 854,727 60.3 64.41 38.82 5.0 -0.5 3.8 3.3 972 2,767 249,653 14,598 956,235 64.3 65.51 42.09 4.7 4.2 5.2 9.6 973 2,831 253,789 14,778 960,539 63.3 65.00 41.14 4.8 5.1 4.5 9.8 974 2,794 256,641 13,525 874,113 57.3 64.63 37.02 6.4 7.5 5.0 12.9 981 2,839 257,550 14,425 967,289 62.2 67.06 41.73 5.3 8.7 4.1 13.2 982 2,922 262,741 15,514 1,059,745 64.9 68.31 44.32 5.2 6.3 4.3 10.8 983 3,011 270,046 16,048 1,058,541 64.6 65.96 42.61 6.4 8.6 1.5 10.2 984 2,970 270,745 14,463 944,329 58.1 65.29 37.91 5.5 6.9 1.0 8.0 991 3,037 276,858 15,264 1,034,222 61.3 67.76 41.51 7.5 5.8 1.0 6.9 992 3,118 282,091 16,226 1,134,795 63.2 69.94 44.21 7.4 4.6 2.4 7.1 993 3,209 289,244 16,682 1,114,859 62.7 66.83 41.90 7.1 4.0 1.3 5.3 994 3,196 288,416 14,650 974,591 55.2 66.53 36.73 6.5 1.3 1.9 3.2

1. Room-nights sold (derived from est. rate and actual revenues) 2. Occupancy nights sold divided by nights available for sale. 3. Avg. price for room-nights sold; Directories, Surveys, & experience. 4. $ Revenue per available room per day (room sales per day)

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HOTEL MARKET: STATE OF TEXAS 2000-2009

1 # Room- Total Yr Htls nites Rooms 2 3 4 % Growth Vs. Prior Yr & and # sold Revenues % $ $ Qtr Mtls Rooms 000's $ 000's Occ. Rate RPAR Suppl Real ADR $ Rev.

001 3,211 288,840 15,995 1,121,091 61.5 70.09 43.13 4.3 4.8 3.4 8.4 002 3,337 294,411 17,078 1,236,477 63.7 72.40 46.15 4.4 5.3 3.5 9.0 003 3,369 299,065 17,169 1,217,493 62.4 70.91 44.25 3.4 2.9 6.1 9.2 004 3,342 297,980 15,285 1,068,043 55.8 69.87 38.96 3.3 4.3 5.0 9.6 011 3,384 300,781 16,560 1,190,233 61.2 71.87 43.97 4.1 3.5 2.5 6.2 012 3,507 304,382 17,296 1,241,862 62.4 71.80 44.83 3.4 1.3 -0.8 0.4 013 3,559 309,066 16,812 1,164,068 59.1 69.24 40.94 3.3 -2.1 -2.4 -4.4 014 3,502 306,150 14,493 960,198 51.5 66.25 34.09 2.7 -5.2 -5.2 -10.1 021 3,544 307,947 15,879 1,110,468 57.3 69.94 40.07 2.4 -4.1 -2.7 -6.7 022 3,652 312,349 17,053 1,226,509 60.0 71.92 43.15 2.6 -1.4 0.2 -1.2 023 3,674 316,462 16,544 1,158,085 56.8 70.00 39.78 2.4 -1.6 1.1 -0.5 024 3,609 312,346 14,679 985,295 51.1 67.13 34.29 2.0 1.3 1.3 2.6 031 3,636 314,854 15,307 1,055,883 54.0 68.98 37.26 2.2 -3.6 -1.4 -4.9 032 3,744 316,970 16,706 1,169,279 57.9 69.99 40.54 1.5 -2.0 -2.7 -4.7 033 3,768 321,781 16,723 1,160,730 56.5 69.41 39.21 1.7 1.1 -0.8 0.2 034 3,694 318,369 14,869 986,916 50.8 66.37 33.69 1.9 1.3 -1.1 0.2 041 3,706 321,083 16,178 1,145,227 56.0 70.79 39.63 2.0 5.7 2.6 8.5 042 3,837 325,898 17,461 1,235,685 58.9 70.77 41.67 2.8 4.5 1.1 5.7 043 3,871 330,490 17,646 1,263,169 58.0 71.58 41.54 2.7 5.5 3.1 8.8 044 3,783 327,182 15,881 1,079,679 52.8 67.98 35.87 2.8 6.8 2.4 9.4 051 3,804 327,276 16,978 1,213,285 57.6 71.46 41.19 1.9 4.9 0.9 5.9 052 3,934 330,064 18,582 1,391,341 61.9 74.87 46.32 1.3 6.4 5.8 12.6 053 4,001 336,006 19,064 1,444,489 61.7 75.77 46.73 1.7 8.0 5.9 14.4 054 3,914 332,055 18,523 1,382,624 60.6 74.64 45.26 1.5 16.6 9.8 28.1 061 3,927 332,581 18,894 1,479,407 63.1 78.30 49.43 1.6 11.3 9.6 21.9 062 4,070 335,437 19,319 1,610,518 63.3 83.36 52.76 1.6 4.0 11.3 15.8 063 4,130 341,794 19,727 1,606,990 62.7 81.46 51.10 1.7 3.5 7.5 11.2 064 4,036 339,252 18,000 1,440,662 57.7 80.04 46.16 2.2 -2.8 7.2 4.2 071 4,047 340,683 19,329 1,614,425 63.0 83.52 52.65 2.4 2.3 6.7 9.1 072 4,209 344,229 19,881 1,756,158 63.5 88.33 56.06 2.6 2.9 6.0 9.0 073 4,257 350,625 20,256 1,738,845 62.8 85.84 53.91 2.6 2.7 5.4 8.2 074 4,160 347,986 18,580 1,565,299 58.0 84.25 48.89 2.6 3.2 5.3 8.7 081 4,176 350,247 19,600 1,735,629 62.2 88.55 55.06 2.8 1.4 6.0 7.5 082 4,358 355,814 20,550 1,915,910 63.5 93.23 59.17 3.4 3.4 5.5 9.1 083 4,416 362,801 21,116 1,903,181 63.3 90.13 57.02 3.5 4.2 5.0 9.5 084 4,213 355,845 19,176 1,691,786 58.6 88.23 51.68 2.3 3.2 4.7 8.1 091 4,187 359,311 18,555 1,587,078 57.4 85.54 49.08 2.6 -5.3 -3.4 -8.6 092 4,396 366,615 18,490 1,606,301 55.4 86.87 48.15 3.0 -10.0 -6.8 -16.2 093 4,465 376,420 18,951 1,585,946 54.7 83.69 45.80 3.8 -10.2 -7.1 -16.7 094 4,315 374,410 17,116 1,366,465 49.7 79.83 39.67 5.2 -10.7 -9.5 -19.2

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HOTEL MARKET: STATE OF TEXAS 2010-2017

1 # Room- Total Yr Htls nites Rooms 2 3 4 % Growth Vs. Prior Yr & and # sold Revenues % $ $ Qtr Mtls Rooms 000's $ 000's Occ. Rate RPAR Suppl Real ADR $ Rev.

101 4,347 378,818 18,986 1,541,596 55.7 81.20 45.22 5.4 2.3 -5.1 -2.9 102 4,588 386,695 20,125 1,725,238 57.2 85.72 49.03 5.5 8.8 -1.3 7.4 103 4,614 392,397 20,768 1,734,977 57.5 83.54 48.06 4.2 9.6 -0.2 9.4 104 4,386 386,086 18,586 1,534,439 52.3 82.56 43.20 3.1 8.6 3.4 12.3 111 4,373 387,566 20,892 1,775,855 59.9 85.00 50.91 2.3 10.0 4.7 15.2 112 4,625 393,399 21,864 1,940,404 61.1 88.75 54.20 1.7 8.6 3.5 12.5 113 4,606 398,406 22,536 1,941,707 61.5 86.16 52.97 1.5 8.5 3.1 11.9 114 4,383 389,041 19,957 1,702,649 55.8 85.32 47.57 0.8 7.4 3.3 11.0 121 4,386 390,377 22,147 1,928,109 63.0 87.06 54.88 0.7 6.0 2.4 8.6 122 4,628 397,054 23,442 2,159,968 64.9 92.14 59.78 0.9 7.2 3.8 11.3 123 4,637 401,978 23,360 2,108,497 63.2 90.26 57.01 0.9 3.7 4.8 8.6 124 4,424 392,720 21,219 1,900,186 58.7 89.55 52.59 0.9 6.3 5.0 11.6 131 4,472 395,820 23,043 2,119,262 64.7 91.97 59.49 1.4 4.0 5.6 9.9 132 4,681 401,808 24,135 2,344,779 66.0 97.15 64.13 1.2 3.0 5.4 8.6 133 4,712 405,102 23,761 2,249,755 63.8 94.68 60.36 0.8 1.7 4.9 6.7 134 4,475 397,488 22,117 2,078,667 60.5 93.98 56.84 1.2 4.2 4.9 9.4 141 4,542 401,945 23,882 2,297,848 66.0 96.22 63.52 1.5 3.6 4.6 8.4 142 4,720 407,265 25,175 2,556,211 67.9 101.54 68.97 1.4 4.3 4.5 9.0 143 4,796 410,576 25,050 2,492,955 66.3 99.52 66.00 1.4 5.4 5.1 10.8 144 4,564 403,917 23,425 2,292,399 63.0 97.86 61.69 1.6 5.9 4.1 10.3 151 4,621 408,908 24,723 2,485,252 67.2 100.52 67.53 1.7 3.5 4.5 8.2 152 4,832 415,658 25,051 2,614,642 66.2 104.37 69.12 2.1 -0.5 2.8 2.3 153 4,855 418,722 25,083 2,558,574 65.1 102.00 66.42 2.0 0.1 2.5 2.6 154 4,597 412,799 23,194 2,290,479 61.1 98.75 60.31 2.2 -1.0 0.9 -0.1 161 4,684 419,299 24,607 2,466,487 65.2 100.24 65.36 2.5 -0.5 -0.3 -0.8 162 4,893 426,450 25,609 2,715,567 66.1 106.04 70.14 2.6 2.2 1.6 3.9 163 4,985 431,288 24,928 2,528,410 62.8 101.43 63.72 3.0 -0.6 -0.6 -1.2 164 4,808 428,684 23,308 2,292,845 59.1 98.37 58.14 3.8 0.5 -0.4 0.1 171 4,839 433,091 25,009 2,607,897 64.1 104.29 66.92 3.3 1.6 4.0 5.7 172 4,870 440,941 26,053 2,741,314 64.9 105.22 68.32 3.4 1.7 -0.8 0.9

CGR%9yrs 2.4% 2.6% 4.3% 0.2% 1.7% 1.9% "4yrs 2.2% 2.0% 4.7% -0.2% 2.6% 2.5% "2yrs 2.9% 0.5% 1.4% -2.3% 0.9% -1.4% "1yr 3.4% 0.8% 1.4% -2.6% 0.6% -2.0%

The Texas lodging REVPAR declined 2% over the past year, a combination of a 2.8% gain in non- Oil & Gas counties (59% of the state) with substantial 8.8% declines in Oil & Gas areas (41% or the state). From 1989 through “9/11,” revenue growth typically was above 8% annually.

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Market REVPAR History & Forecast:

2. Over the past nine years, the Dallas/Fort Worth/Arlington Metro Area market had an average annual real growth of 3% (room-nights sold), annual gain of 4.6% in total room revenues, and a 2.8% annual increase in REVPAR; please note that the severe recession of 2009 depressed long-term performance numbers in many markets, including this one. Occupancy rose 1.2% per year over the nine years. Supply rose by 3% per year, with room rates rising 1.6% annually.

Over the past four years, a gain of 4% per year in demand was coupled with supply growth of 1.8% annually. Revenues over this period rose an average of 7.7% per year, while REVPAR rose 5.8% annually. Room rates were up 3.6% on average. Occupancy increased over the last four years, by 2.1% per year.

Over the last two years, demand rose by 2.7% annually, which was coupled with a 2.4% annual increase in supply. These results caused occupancy to increase by 0.3% annually, and REVPAR to rise 0.3% per year. Rates increased 3.1% per year, and yearly revenues rose 5.9%.

Most recent history, the 12 months ending September 30, 2017, shows a slowing of demand and a rise in supply. Real demand rose by only 0.7%, while supply rose 3.2%. Rates rose by 1.6%, revenues rose by 2.3%; occupancy was down 2.5%, and REVPAR fell 0.8% for the average hotel room.

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LODGING MARKET HISTORY: Dallas/Fort Worth/Arlington Metro Area

# Room1 Total Htls nites Rooms Year & and # sold Revenue %2 $3 $4 % Growth Vs Yr Ago Quarter Mtls Rooms 000’s 000’s Occ. Rate RevPar Sply Real ADR $Rev 074 801 94,154 5,199 454,946 60.0 87.50 52.52 081 798 94,423 5,287 499,772 62.2 94.54 58.81 082 795 94,129 5,450 519,514 63.6 95.32 60.65 083 810 96,379 5,623 501,105 63.4 89.11 56.51 084 808 95,457 4,998 438,311 56.9 87.69 49.91 1.4 -3.9 0.2 -3.7 091 811 96,877 4,726 425,905 54.2 90.13 48.85 2.6 -10.6 -4.7 -14.8 092 824 97,612 4,690 421,183 52.8 89.81 47.42 3.7 -14.0 -5.8 -18.9 093 832 100,364 4,924 418,040 53.3 84.91 45.27 4.1 -12.4 -4.7 -16.6 094 844 100,287 4,737 383,267 51.3 80.90 41.54 5.1 -5.2 -7.7 -12.6 101 842 100,968 5,083 435,363 55.9 85.66 47.91 4.2 7.6 -5.0 2.2 102 850 101,687 5,165 451,489 55.8 87.42 48.79 4.2 10.1 -2.7 7.2 103 850 103,066 5,333 446,581 56.2 83.74 47.10 2.7 8.3 -1.4 6.8 104 847 102,025 5,140 430,658 54.8 83.79 45.88 1.7 8.5 3.6 12.4 111 839 101,888 5,670 519,749 61.8 91.66 56.68 0.9 11.6 7.0 19.4 112 843 102,055 5,601 501,577 60.3 89.56 54.01 0.4 8.4 2.4 11.1 113 842 103,495 5,779 496,581 60.7 85.94 52.15 0.4 8.3 2.6 11.2 114 843 102,995 5,418 466,610 57.2 86.13 49.24 1.0 5.4 2.8 8.3 121 839 103,036 5,800 509,385 62.5 87.82 54.93 1.1 2.3 -4.2 -2.0 122 841 103,405 5,905 544,257 62.8 92.16 57.84 1.3 5.4 2.9 8.5 123 844 104,447 6,012 528,607 62.6 87.93 55.01 0.9 4.0 2.3 6.4 124 846 103,515 5,737 504,191 60.2 87.89 52.94 0.5 5.9 2.0 8.1 131 845 103,713 6,092 556,873 65.3 91.41 59.66 0.7 5.0 4.1 9.3 132 850 103,797 6,194 591,566 65.6 95.51 62.63 0.4 4.9 3.6 8.7 133 852 104,146 6,066 554,629 63.3 91.44 57.89 -0.3 0.9 4.0 4.9 134 846 104,099 6,084 565,211 63.5 92.90 59.02 0.6 6.1 5.7 12.1 141 851 104,712 6,445 609,787 68.4 94.61 64.71 1.0 5.8 3.5 9.5 142 856 104,925 6,557 652,724 68.7 99.55 68.36 1.1 5.9 4.2 10.3 143 859 105,020 6,418 611,093 66.4 95.22 63.25 0.8 5.8 4.1 10.2 144 859 105,138 6,330 594,912 65.4 93.99 61.50 1.0 4.0 1.2 5.3 151 865 105,984 6,836 682,362 71.7 99.83 71.54 1.2 6.1 5.5 11.9 152 873 106,926 6,797 700,850 69.9 103.12 72.03 1.9 3.7 3.6 7.4 153 866 106,474 6,696 671,555 68.4 100.30 68.56 1.4 4.3 5.3 9.9 154 865 106,558 6,635 665,622 67.7 100.32 67.90 1.4 4.8 6.7 11.9 161 873 107,294 7,084 723,693 73.4 102.15 74.94 1.2 3.6 2.3 6.1 162 892 108,684 7,270 788,034 73.5 108.39 79.68 1.6 7.0 5.1 12.4 163 894 109,075 6,944 726,067 69.2 104.57 72.35 2.4 3.7 4.3 8.1 164 890 109,118 6,708 685,581 66.8 102.20 68.29 2.4 1.1 1.9 3.0 171 910 110,683 7,114 750,068 71.4 105.44 75.30 3.2 0.4 3.2 3.6 172 932 111,848 7,120 776,011 69.9 109.00 76.24 2.9 -2.1 0.6 -1.5 173 962 113,733 7,189 759,283 68.7 105.61 72.57 4.3 3.5 1.0 4.6 CGR%Past9yr 1.8% 3.0% 4.6% 1.2% 1.6% 2.8% 4yrs 1.8% 4.0% 7.7% 2.1% 3.6% 5.8% 2yrs 2.4% 2.7% 5.9% 0.3% 3.1% 3.4% 1yr 3.2% 0.7% 2.3% -2.5% 1.6% -0.8%

1.Roomnights sold (derived from est. rate and actual revenues) 2. Occupancy nights sold divided by nights available for sale. 3. Avg. price for roomnights sold; Directories, Surveys, & experience. 4. $ Revenue per available room per day (room sales per day)

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3. In the future, the Dallas/Fort Worth/Arlington Metro Area market occupancy is projected to return to the estimated long-term equilibrium occupancy level of 62% by the later years of our projection (2022). For the next nine years, real demand (room nights sold) is projected at an average 2% growth rate, below the projected net supply growth of 3.1%. With 2.8% average daily rate inflation, market gross revenues should gain 4.8%, and REVPAR should increase 1.7% annually during the nine year forecast.

'Equilibrium Occupancy' is further explained by the fact that new investment money will eventually be attracted to an under-supplied market until market occupancy falls and lower returns on capital are the result. The equilibrium occupancy point is where net, new supply is being added at about the same rate as growth in demand, and where return on investment is in balance with the cost of capital.

Fueled by moderate, steady demand growth, the combined metro market has room for appropriately- positioned new development, added at similar rates to demand. Higher quality new lodging products at or above mid-priced levels are performing very well in the market despite overall performance numbers being moderated by the large number of older, obsolete, budget and independent hotels. These older, existing competitors are highly vulnerable to the superior attractiveness of newly-built lodging. This pattern can be seen in the success of chain operations at or above the mid-priced levels.

Note that REVPAR growth for every individual hotel unit is well below the total revenue growth of the market, with average REVPAR in our projection rising 1.5% per annum over the next five years (compared to a 5.8% REVPAR average loss of the past four years). Revenues are forecast to grow by 5.2% per year on the strength of 2.1% growth in real demand and 3.1% growth in price (room- rates). Occupancy over the next five years is expected to fall by 1.5% per year, as supply rises 3.6% per year.

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Dallas/Fort Worth/Arlington Metro Area PROJECTION # Room1 Total Htls nites Rooms Year & and # sold Revenue %2 $3 $4 % Growth Vs Yr Ago Quarter Mtls Rooms 000’s $000’s Occ. Rate RevPar Sply Real ADR $Rev 174 939 114,028 6,876 723,788 65.5 105.27 68.99 4.5 2.5 3.0 5.6 181 961 115,664 7,291 791,874 70.0 108.60 76.07 4.5 2.5 3.0 5.6 182 984 116,881 7,297 819,289 68.6 112.27 77.03 4.5 2.5 3.0 5.6 183 1,015 118,851 7,369 801,591 67.4 108.78 73.31 4.5 2.5 3.0 5.6 184 982 118,019 7,013 761,888 64.6 108.63 70.17 3.5 2.0 3.2 5.3 191 1,004 119,712 7,437 833,558 69.0 112.08 77.37 3.5 2.0 3.2 5.3 192 1,028 120,972 7,443 862,416 67.6 115.86 78.34 3.5 2.0 3.2 5.3 193 1,062 123,011 7,516 843,787 66.4 112.26 74.56 3.5 2.0 3.2 5.3 194 1,027 122,150 7,154 801,994 63.7 112.11 71.37 3.5 2.0 3.2 5.3 201 1,050 123,902 7,586 877,436 68.0 115.67 78.69 3.5 2.0 3.2 5.3 202 1,075 125,206 7,592 907,814 66.6 119.57 79.68 3.5 2.0 3.2 5.3 203 1,110 127,316 7,667 888,203 65.5 115.85 75.83 3.5 2.0 3.2 5.3 204 1,073 126,425 7,297 844,211 62.7 115.70 72.58 3.5 2.0 3.2 5.3 211 1,098 128,238 7,738 923,625 67.0 119.37 80.03 3.5 2.0 3.2 5.3 212 1,124 129,588 7,744 955,601 65.7 123.40 81.03 3.5 2.0 3.2 5.3 213 1,160 131,772 7,820 934,959 64.5 119.56 77.12 3.5 2.0 3.2 5.3 214 1,122 130,850 7,443 888,651 61.8 119.40 73.82 3.5 2.0 3.2 5.3 221 1,142 132,086 7,892 965,650 66.4 122.35 81.23 3.0 2.0 2.5 4.5 222 1,170 133,476 7,899 999,081 65.0 126.48 82.25 3.0 2.0 2.5 4.5 223 1,207 135,725 7,976 977,499 63.9 122.55 78.28 3.0 2.0 2.5 4.5 224 1,168 134,776 7,591 929,084 61.2 122.39 74.93 3.0 2.0 2.5 4.5 231 1,188 136,048 8,050 1,009,587 65.7 125.41 82.45 3.0 2.0 2.5 4.5 232 1,217 137,480 8,057 1,044,539 64.4 129.64 83.49 3.0 2.0 2.5 4.6 233 1,256 139,797 8,136 1,021,975 63.3 125.61 79.46 3.0 2.0 2.5 4.5 234 1,215 138,819 7,743 971,357 60.6 125.45 76.06 3.0 2.0 2.5 4.5 241 1,236 140,130 8,211 1,055,523 65.1 128.54 83.69 3.0 2.0 2.5 4.5 242 1,266 141,605 8,218 1,092,066 63.8 132.88 84.75 3.0 2.0 2.5 4.5 243 1,307 143,991 8,299 1,068,475 62.6 128.75 80.66 3.0 2.0 2.5 4.5 244 1,264 142,983 7,898 1,015,554 60.0 128.58 77.20 3.0 2.0 2.5 4.5 251 1,267 142,232 8,335 1,098,140 65.1 131.76 85.79 1.5 1.5 2.5 4.0 252 1,298 143,729 8,341 1,136,158 63.8 136.21 86.87 1.5 1.5 2.5 4.0 253 1,340 146,151 8,423 1,111,615 62.6 131.97 82.67 1.5 1.5 2.5 4.0 254 1,296 145,128 8,017 1,056,557 60.0 131.80 79.13 1.5 1.5 2.5 4.0 261 1,299 144,365 8,460 1,142,477 65.1 135.05 87.93 1.5 1.5 2.5 4.0 262 1,331 145,885 8,467 1,182,030 63.8 139.61 89.04 1.5 1.5 2.5 4.0 263 1,374 148,343 8,550 1,156,496 62.6 135.27 84.74 1.5 1.5 2.5 4.0 264 1,328 147,305 8,137 1,099,216 60.0 135.09 81.11 1.5 1.5 2.5 4.0 271 1,332 146,531 8,586 1,188,604 65.1 138.43 90.13 1.5 1.5 2.5 4.0 272 1,364 148,073 8,594 1,229,755 63.8 143.10 91.26 1.5 1.5 2.5 4.0 273 1,408 150,568 8,678 1,203,190 62.6 138.65 86.86 1.5 1.5 2.5 4.0 274 1,362 149,515 8,259 1,143,597 60.0 138.47 83.14 1.5 1.5 2.5 4.0 281 1,366 148,728 8,715 1,236,594 65.1 141.89 92.38 1.5 1.5 2.5 4.0 282 1,399 150,294 8,722 1,279,406 63.8 146.68 93.55 1.5 1.5 2.5 4.0 283 1,444 152,827 8,808 1,251,769 62.6 142.12 89.03 1.5 1.5 2.5 4.0 9yr CGR % 3.1% 2.0% 4.8% -1.1% 2.8% 1.7% '5yrs 3.6% 2.1% 5.2% -1.5% 3.1% 1.5% HISTORY CGR%Past9yr 1.8% 3.0% 4.6% 1.2% 1.6% 2.8% 4yrs 1.8% 4.0% 7.7% 2.1% 3.6% 5.8% 1yr 3.2% 0.7% 2.3% -2.5% 1.6% -0.8%

1.Roomnights sold (derived from est. rate and actual revenues) 2. Occupancy nights sold divided by nights available for sale. 3. Avg. price for room-nights sold; Directories, Surveys, & experience. 4. $ Revenue per available room per day (room sales per day.

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LOCAL MARKET PERFORMANCE

4. The subject hotel’s market in the wide Pilot Point area currently generates a REVPAR of $52 compared to the overall state of Texas average of $65:

Twelve Months Ending September 30, 2017 HOTEL MARKET: PILOT POINT AREA # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000’S RNS 000’S AMT %OCC RATE RPAR BEST WEST DENTON .1 3.7 19 4.2 2,476 6.6 71.4 128.35 91.68 HOL EXP DENTON .1 4.6 23 5.0 2,667 7.1 69.0 115.19 79.43 TOT NEARBY 2 .2 8.4 42 9.2 5,143 13.7 70.1 121.18 84.89

HOMEWOOD 1 .1 5.4 27 6.0 2,815 7.5 70.1 102.83 72.07 RESIDENCE 1 .1 4.7 25 5.5 2,934 7.8 73.7 116.03 85.51 TOT SUITES 2 .2 10.1 53 11.5 5,749 15.3 71.8 109.17 78.36

COURTYARD 1 .1 4.6 24 5.2 2,506 6.7 71.4 104.59 74.64 HILT GARD 1 .1 6.9 35 7.7 3,471 9.3 71.0 98.55 69.92 TOT MID/UPS 2 .2 11.5 59 12.9 5,977 15.9 71.1 101.00 71.82

COMFO STE 1 .1 3.6 14 3.2 1,189 3.2 55.2 82.06 45.26

COMFO INN 2 .1 6.1 30 6.6 2,476 6.6 68.7 82.23 56.52 HAMPTON 1 .1 3.8 17 3.6 2,099 5.6 61.2 125.32 76.67 HOLID EXP 1 .1 3.3 14 3.1 1,591 4.2 59.6 110.86 66.05 LA QUINTA 2 .2 8.0 38 8.3 3,936 10.5 65.4 103.78 67.83 TOT LTD SVE 6 .4 21.2 99 21.6 10,102 26.9 64.7 101.90 65.90

WOODSPRNG 1 .1 6.1 30 6.5 1,417 3.8 68.1 47.11 32.08

BST VALUE 1 .0 2.4 8 1.7 301 .8 44.5 38.60 17.17 DAYS INN 2 .2 8.6 39 8.5 1,842 4.9 62.7 47.32 29.69 HO JO 1 .1 3.5 15 3.2 353 .9 56.8 24.30 13.80 MOTEL 6 1 .1 4.3 23 5.0 1,281 3.4 73.5 56.18 41.28 QUALITY 1 .1 4.6 19 4.1 1,242 3.3 56.0 66.71 37.39 SUPER 8 1 .1 3.0 13 2.8 774 2.1 58.0 60.90 35.33 OTHER BUD 1 .0 1.6 6 1.3 174 .5 50.6 29.43 14.88 TOT BUDGET 8 .6 28.1 121 26.4 5,966 15.9 59.8 49.20 29.40

TOT CHAINS 22 1.8 89.1 419 91.3 35,543 94.8 65.1 84.78 55.20

INDEPENDENTS $60-99ADR 0 .0 .2 1 .1 55 .1 46.5 98.45 45.77 LT $60ADR 4 .1 6.1 20 4.5 987 2.6 46.6 48.26 22.50 LONE STAR LODGE 1 .0 1.5 6 1.3 311 .8 52.9 53.65 28.36 SANGER INN 1 .0 1.5 6 1.4 348 .9 57.7 55.15 31.82 VICTORIAN 1 .0 1.7 7 1.5 258 .7 57.6 37.23 21.46 TOTAL INDEP 7 .2 10.9 40 8.7 1,959 5.2 50.7 48.91 24.80

TOT MARKET 29 2.0 100.0 459 100.0 37,502 100 63.5 81.65 51.88

* All figures annualized. Includes taxed and est non-tax room revenues. Independents are categorized by price: $100+, $60-99.99, and under $60

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Local Market REVPAR History & Forecast:

5. Over the past nine years, the Pilot Point Area market12 has shown real growth (room-nights sold) of 6.9%, annual gains of 10.9% in total room revenues, and a 5.1% annual loss in REVPAR. Occupancy was up 1.3% annually over each of the nine years. Supply rose by 5.6% per year, with room rates rising 3.8% annually.

Over the past four years, 2.1% annual demand gains were coupled with growth of only 1% annually on the supply side. Revenues over this period rose by 7% per year, while REVPAR rose 5.9%, occupancy rose 1%, and room rates rose 4.8%.

Over the last two years, real demand rose by 2.2% annually, and supply rose by 3.2%. Rates rose 3.8%, and yearly revenues rose 6.2%. These results caused occupancy to fall 0.9% annually, and REVPAR to rise by 2.9% per year.

In the latest year, the market was ‘moving’ in many areas: real demand rose 5.4%, rates rose 3.4%, revenues rose by 9% and occupancy fell 1.6% for the year. With supply rising 7.1%, REVPAR rose only 1.8%. Market occupancy averaged 64%, below the 65% average for the overall state of Texas.

12. Zip Codes 76258/272/240/266/207/210/208/240/250/273. Page 21 of 101

LOCAL LODGING MARKET HISTORY: PILOT POINT MARKET

# Room1 Total Htls nites Rooms Year & and # sold Revenue %2 $3 $4 % Growth Vs Yr Ago Quarter Mtls Rooms 000’s $000’s Occ. Rate RevPar Sply Real ADR $Rev 074 19 1,101 51 2,833 49.8 56.14 27.97 081 20 1,222 57 3,234 52.2 56.30 29.40 082 20 1,222 70 4,259 63.2 60.60 38.30 083 22 1,297 73 4,402 61.4 60.10 36.89 084 22 1,331 66 3,753 53.6 57.15 30.65 20.9 30.1 1.8 32.5 091 23 1,342 61 3,342 50.2 55.12 27.67 9.8 5.6 -2.1 3.3 092 25 1,501 71 4,118 51.8 58.17 30.15 22.8 0.7 -4.0 -3.3 093 25 1,501 75 4,261 54.0 57.12 30.86 15.7 1.8 -5.0 -3.2 094 28 1,636 71 3,814 46.9 54.08 25.34 22.9 7.3 -5.4 1.6 101 28 1,774 74 4,162 46.1 56.58 26.07 32.2 21.5 2.6 24.5 102 29 1,814 86 5,127 52.3 59.35 31.06 20.9 22.0 2.0 24.5 103 29 1,897 91 5,452 52.2 59.87 31.24 26.4 22.1 4.8 28.0 104 29 1,933 85 4,970 48.0 58.25 27.95 18.2 21.0 7.7 30.3 111 29 1,931 93 5,419 53.5 58.29 31.18 8.9 26.4 3.0 30.2 112 29 1,931 109 6,944 62.1 63.65 39.52 6.4 26.3 7.2 35.4 113 29 1,931 108 6,945 60.8 64.35 39.10 1.8 18.4 7.5 27.4 114 29 1,931 100 6,399 56.1 64.17 36.02 -0.1 16.9 10.2 28.8 121 29 1,931 108 6,657 62.0 61.81 38.31 0.0 15.8 6.0 22.8 122 29 1,931 122 8,208 69.6 67.08 46.71 0.0 12.2 5.4 18.2 123 29 1,931 113 7,680 63.5 68.08 43.23 0.0 4.5 5.8 10.6 124 29 1,904 101 6,739 57.5 66.96 38.47 -1.4 0.9 4.3 5.3 131 29 1,904 105 6,854 61.1 65.51 40.00 -1.4 -2.9 6.0 3.0 132 29 1,904 111 7,520 63.8 68.02 43.40 -1.4 -9.6 1.4 -8.4 133 29 1,904 108 7,531 61.4 70.03 42.99 -1.4 -4.7 2.9 -1.9 134 29 1,904 103 7,088 58.9 68.66 40.46 0.0 2.6 2.5 5.2 141 28 1,874 106 7,296 63.1 68.55 43.26 -1.6 1.7 4.6 6.4 142 29 1,904 119 8,571 68.4 72.31 49.47 0.0 7.1 6.3 14.0 143 29 1,904 113 8,435 64.3 74.89 48.15 0.0 4.7 6.9 12.0 144 29 1,904 108 7,839 61.5 72.73 44.75 0.0 4.5 5.9 10.6 151 27 1,847 111 7,884 66.6 71.25 47.43 -1.4 4.0 3.9 8.1 152 27 1,847 113 8,723 67.3 77.15 51.90 -3.0 -4.6 6.7 1.8 153 27 1,847 108 8,778 63.6 81.24 51.66 -3.0 -4.0 8.5 4.1 154 27 1,847 100 7,661 58.9 76.53 45.08 -3.0 -7.1 5.2 -2.3 161 26 1,834 109 8,026 65.9 73.81 48.63 -0.7 -1.8 3.6 1.8 162 28 1,841 117 9,536 70.1 81.20 56.92 -0.3 3.8 5.2 9.3 163 28 1,876 110 9,170 63.5 83.67 53.13 1.6 1.4 3.0 4.5 164 29 1,970 111 8,829 61.1 79.74 48.72 6.7 10.6 4.2 15.2 171 29 1,984 111 8,305 62.2 74.77 46.51 8.2 2.2 1.3 3.5 172 29 1,984 121 10,162 67.1 83.86 56.28 7.8 3.2 3.3 6.6 173 29 1,984 116 10,207 63.8 87.70 55.92 5.8 6.2 4.8 11.3 CGR%9yrs 5.6% 6.9% 10.9% 1.3% 3.8% 5.1% 4yrs 1.0% 2.1% 7.0% 1.0% 4.8% 5.9% 2yrs 3.2% 2.2% 6.2% -0.9% 3.8% 2.9% 1yr 7.1% 5.4% 9.0% -1.6% 3.4% 1.8% Wider Market History CGR%Past9yrs 1.8% 3.0% 4.6% 1.2% 1.6% 2.8% 4yrs 1.8% 4.0% 7.7% 2.1% 3.6% 5.8%

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6. Overall market occupancy is projected to fall slowly, with 2.2% demand gains and supply rising 2.9% annually for the next nine years. This translates to occupancies falling back to the 60% long- term equilibrium level (this is near the past ten year average for the market). REVPAR is expected to rise 2.5% annually in the period, based on rates rising 3.8% per year. This compares to an average level of REVPAR gain of 5.1% for each of the past nine years.

These assumptions relative to demand, supply, and occupancy reflect the fact that over the past 20 years overall occupancy in Texas has averaged about 60%, a level considered to be 'Equilibrium Occupancy' state-wide. This fact considers that larger and more successful metro area markets generate higher overall occupancy and REVPAR numbers than state averages, while rural and Interstate highways areas lag these averages (Source Strategies, Inc. database). 'Equilibrium Occupancy' is further explained by the fact that new investment money will eventually be attracted to an under-supplied market until market occupancy falls and lower returns on capital are the result. The equilibrium occupancy point is where net, new supply is being added at about the same rate as growth in demand, and where return on investment is in balance with the cost of capital. The Pilot Point area market has room for selectively-positioned new development. Higher quality new lodging products at or above mid-priced levels are performing very well in the market despite overall performance numbers being moderated by the large number of older, obsolete, budgets. These older, existing competitors are highly vulnerable to the superior attractiveness of newly-built, major- branded lodging. This pattern can be seen in the reasonable level of success of new chain operations at or above the mid-priced levels. Given our growth assumptions, room supply consequently grows from 1,981 rooms currently to 2,544 in 2025, 28% higher and representing 563 net new rooms (gross new openings, less closings).

REVPAR growth for every individual hotel unit is below the total revenue growth of the market, with average REVPAR in our projection rising 2.5% per annum over the next five years. Revenues during this upcoming period are forecast to rise by 6.8% per year on demand gains of 2.8% per year and a 3.8% annual increase in prices (room-rates). Occupancy over the next five years is expected to fall 1.2% per year as supply rises by an expected 4.1% per year. If supply should grow 250 rooms over forecast (+10%), without demand also growing faster than forecast, average individual hotel REVPAR would decline by 9% versus forecast, dropping from the forecast REVPAR of $67 to $61 by the end of 2025. Page 23 of 101

LODGING MARKET PROJECTION: PILOT POINT MARKET

# Room1 Total Htls nites Rooms Year & and # sold Revenue %2 $3 $4 % Growth Vs Yr Ago Quarter Mtls Rooms 000’s $000’s Occ. Rate RevPar Sply Real ADR $Rev 174 40 2,069 115 9,593 60.5 83.33 50.41 5.0 4.0 4.5 8.7 181 31 2,083 116 9,028 61.6 78.13 48.15 5.0 4.0 4.5 8.7 182 31 2,083 126 11,046 66.5 87.63 58.27 5.0 4.0 4.5 8.7 183 31 2,083 121 11,094 63.2 91.65 57.89 5.0 4.0 4.5 8.7 184 42 2,172 119 10,326 59.6 86.66 51.68 5.0 3.5 4.0 7.6 191 33 2,187 120 9,718 60.7 81.26 49.36 5.0 3.5 4.0 7.6 192 33 2,187 130 11,890 65.5 91.14 59.73 5.0 3.5 4.0 7.6 193 33 2,187 125 11,942 62.3 95.31 59.34 5.0 3.5 4.0 7.6 194 45 2,281 122 10,955 58.2 89.69 52.21 5.0 2.5 3.5 6.1 201 35 2,297 123 10,309 59.3 84.10 49.87 5.0 2.5 3.5 6.1 202 34 2,275 134 12,614 64.6 94.33 60.93 4.0 2.5 3.5 6.1 203 34 2,275 128 12,669 61.4 98.65 60.53 4.0 2.5 3.5 6.1 204 47 2,372 125 11,622 57.4 92.83 53.26 4.0 2.5 3.5 6.1 211 36 2,389 126 10,937 58.4 87.05 50.88 4.0 2.5 3.5 6.1 212 36 2,366 137 13,382 63.7 97.63 62.16 4.0 2.5 3.5 6.1 213 36 2,366 132 13,440 60.5 102.10 61.75 4.0 2.5 3.5 6.1 214 50 2,467 128 12,329 56.5 96.08 54.33 4.0 2.5 3.5 6.1 221 37 2,424 128 11,489 58.4 90.09 52.66 1.5 1.5 3.5 5.1 222 37 2,401 139 14,058 63.7 101.05 64.33 1.5 1.5 3.5 5.1 223 37 2,401 134 14,119 60.5 105.67 63.91 1.5 1.5 3.5 5.1 224 51 2,504 130 12,952 56.5 99.45 56.23 1.5 1.5 3.5 5.1 231 38 2,461 129 12,070 58.4 93.25 54.50 1.5 1.5 3.5 5.1 232 38 2,437 141 14,768 63.7 104.58 66.58 1.5 1.5 3.5 5.1 233 38 2,437 136 14,833 60.5 109.37 66.15 1.5 1.5 3.5 5.1 234 52 2,541 132 13,607 56.5 102.93 58.20 1.5 1.5 3.5 5.1 241 39 2,498 131 12,680 58.4 96.51 56.41 1.5 1.5 3.5 5.1 242 39 2,474 143 15,514 63.7 108.24 68.91 1.5 1.5 3.5 5.1 243 39 2,474 138 15,582 60.5 113.20 68.46 1.5 1.5 3.5 5.1 244 54 2,579 134 14,294 56.5 106.53 60.24 1.5 1.5 3.5 5.1 251 40 2,535 133 13,256 58.4 99.41 58.10 1.5 1.5 3.0 4.5 252 40 2,511 145 16,219 63.7 111.49 70.98 1.5 1.5 3.0 4.5 253 40 2,511 140 16,290 60.5 116.60 70.52 1.5 1.5 3.0 4.5 254 55 2,618 136 14,944 56.5 109.72 62.05 1.5 1.5 3.0 4.5 261 41 2,573 135 13,859 58.4 102.39 59.84 1.5 1.5 3.0 4.5 262 41 2,549 148 16,956 63.7 114.84 73.11 1.5 1.5 3.0 4.5 263 41 2,549 142 17,031 60.5 120.10 72.63 1.5 1.5 3.0 4.5 264 56 2,657 138 15,623 56.5 113.02 63.91 1.5 1.5 3.0 4.5 271 42 2,612 137 14,488 58.4 105.46 61.64 1.5 1.5 3.0 4.5 272 42 2,587 150 17,727 63.7 118.28 75.30 1.5 1.5 3.0 4.5 273 42 2,587 144 17,805 60.5 123.70 74.81 1.5 1.5 3.0 4.5 274 58 2,697 140 16,333 56.5 116.41 65.82 1.5 1.5 3.0 4.5 281 43 2,651 139 15,147 58.4 108.62 63.49 1.5 1.5 3.0 4.5 282 43 2,626 152 18,533 63.7 121.83 77.56 1.5 1.5 3.0 4.5 283 43 2,626 146 18,614 60.5 127.41 77.05 1.5 1.5 3.0 4.5 9yr CGR % 2.9% 2.2% 5.9% -0.7% 3.6% 2.9% '5yrs 4.1% 2.8% 6.8% -1.2% 3.8% 2.5% HISTORY 9yrs 5.6% 6.9% 10.9% 1.3% 3.8% 5.1% 4yrs 1.0% 2.1% 7.0% 1.0% 4.8% 5.9% 1yr 7.1% 5.4% 9.0% -1.6% 3.4% 1.8%

7. A graph of the REVPAR history and projection for the local market compared to the Dallas/Fort Worth/Arlington Metro Area shows the recent strong rise that both markets have experienced, and the expected return to slower, normal growth:

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8. The occupancy projection for the Dallas/Fort Worth/Arlington Metro Area market and for the Pilot Point area shows a return to normal levels, with a drop from the most recent boom; local area occupancy approaches 60% on average, with seasonal highs and lows for both the local and wider market shown below:

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9. The Room Nights Sold history and projection graph shows the reasonable nature of the ‘trend’ expectations for the local market, and with steady levels of growth assuming continued local population growth and a steady national economy:

Page 27 of 101

10. Over the history examined, the local market REVPAR index has fluctuated versus the combined metros, and was at 71% of the metro average REVPAR in the past year:

MARKET REVPAR HISTORY

Local/Total Market Year & Total Local Quartrly Annualized Quarter Mkt Area Index Index 074 52.52 27.97 53 081 58.81 29.40 50 082 60.65 38.30 63 083 56.51 36.89 65 58 084 49.91 30.65 61 091 48.85 27.67 57 092 47.42 30.15 64 093 45.27 30.86 68 62 094 41.54 25.34 61 101 47.91 26.07 54 102 48.79 31.06 64 103 47.10 31.24 66 61 104 45.88 27.95 61 111 56.68 31.18 55 112 54.01 39.52 73 113 52.15 39.10 75 66 114 49.24 36.02 73 121 54.93 38.31 70 122 57.84 46.71 81 123 55.01 43.23 79 76 124 52.94 38.47 73 131 59.66 40.00 67 132 62.63 43.40 69 133 57.89 42.99 74 71 134 59.02 40.46 69 141 64.71 43.26 67 142 68.36 49.47 72 143 63.25 48.15 76 71 144 61.50 44.75 73 151 71.54 47.43 66 152 72.03 51.90 72 153 68.56 51.66 75 72 154 67.90 45.08 66 161 74.94 48.63 65 162 79.68 56.92 71 163 72.35 53.13 73 69 164 68.29 48.72 71 171 75.30 46.51 62 172 76.24 56.28 74 173 72.57 55.92 77 71 CGR%9yrs 2.8% 5.1% 4yrs 5.8% 5.9% 2yrs 3.4% 2.9% 1yr -0.8% 1.8%

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11. The REVPAR forecast calls for the local market REVPAR index to slowly rise when compared to the combined metro growth:

MARKET REVPAR PROJECTION Local/Total Market Year & Total Local Quartrly Annualized Quarter Mkt Area Index Index 174 68.99 50.41 73 181 76.07 48.15 63 182 77.03 58.27 76 183 73.31 57.89 79 73 184 70.17 51.68 74 191 77.37 49.36 64 192 78.34 59.73 76 193 74.56 59.34 80 73 194 71.37 52.21 73 201 78.69 49.87 63 202 79.68 60.93 76 203 75.83 60.53 80 73 204 72.58 53.26 73 211 80.03 50.88 64 212 81.03 62.16 77 213 77.12 61.75 80 73 214 73.82 54.33 74 221 81.23 52.66 65 222 82.25 64.33 78 223 78.28 63.91 82 75 224 74.93 56.23 75 231 82.45 54.50 66 232 83.49 66.58 80 233 79.46 66.15 83 76 234 76.06 58.20 77 241 83.69 56.41 67 242 84.75 68.91 81 243 80.66 68.46 85 78 244 77.20 60.24 78 251 85.79 58.10 68 252 86.87 70.98 82 253 82.67 70.52 85 78 254 79.13 62.05 78 261 87.93 59.84 68 262 89.04 73.11 82 263 84.74 72.63 86 79 264 81.11 63.91 79 271 90.13 61.64 68 272 91.26 75.30 83 273 86.86 74.81 86 79 274 83.14 65.82 79 281 92.38 63.49 69 282 93.55 77.56 83 283 89.03 77.05 87 79 284 85.42 67.63 79 CGR%9Yrs 1.7% 2.9% First5Yrs 1.5% 2.5%

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PROJECT REVPAR - DEVELOPMENT OF INDICES

Within the above market REVPAR forecast, the expected performance of the subject hotel in this market projection is based on six factors. All six factors are independent and modify the market's projected REVPAR average to reflect the subject property's particular characteristics. First, what is the Base Value? It is the effect of the Brand, including specified product quality levels. Second, what is the effect of the brand's overall Age on its average performance? Third, what is the effect of the project's Size, or room-count, on results? Fourth, are there any ‘Other’ adjustments needed to account for various factors, including under- or over-supply in the product's Segment in which the project will compete? Fifth, what is the effect of the normal Life Cycle patterns on the project (e.g. the effect of the project's Newness compared to older competition on its unstoppable way to obsolescence)? And sixth, what is the likely influence of the Site on results?

1. The Base Value factor sets property type/brand/product quality for this Best Western Hotel at 108% of the average for the product in the Exhibit IV market.13 This is based on the current performance of the 176 existing Best Western hotels in the Texas wide Exhibit IV market, which is selected to mimic the conditions in the local market. The calculation is as follows:

Best Western REVPAR $53.07 / Exhibit IV REVPAR $48.94 = 1.08 or 108%

This sample of Best Western hotels in Texas markets firmly establishes the basic REVPAR performance that can be expected when operating such a hotel in a market such as the proposed location.

2. The second adjustment factor, Brand Aging, is set at 1.12 or 112%, as the selected group of Best Western Hotels were built in 2000. Typically, this factor adjusts for the effect of the average age of the existing hotels on the brand's current performance.14 The brand age adjustment, or life- cycle adjustment, for other brands includes:

13. Texas excluding the five largest cities, & the Luxury & Upscale segments. 14. Point #5, below, adjusts for the physical life-cycle of the subject property, a different and additional consideration. Page 30 of 101

BRAND AGING: TEXAS MARKETS Average Brand Aging Brand Opening Adjustment EconoLodge 1988 1.32 La Quinta 1996 1.17 Residence Inn 2004 1.02

3. The property Size factor - reflecting room count - calls for a very small adjustment of 1.04 (104%). At 55 units the hotel is smaller than the average for the brand in similar markets (60 rooms).

The size factor assigns a premium if the property is smaller than average and a penalty to the property if it is larger than average for its brand or product type. The size adjustment is necessary because demand is not affected by the number of rental rooms offered, as the individual consumer only needs one room: customers do not care whether a hotel offers 100, 125 or 150 rooms and their purchasing behavior will be the same regardless of how many rooms the property offers. Keeping a project conservatively sized assures a higher per-unit revenue yield, particularly in very competitive markets like the local market. The highly-positive effect on revenues and return on capital due to building small, and not 'over-sizing' projects is best explained by the following study, a study that can be replicated with any brand, in almost any situation. The net effect of building small is to run higher occupancy and rate, thereby increasing brand REVPAR by building a below-average number of rental units. A STUDY OF THE EFFECT OF HOTEL SIZE ON PERFORMANCE IN THE TEXAS HOTEL INDUSTRY: THE CASE FOR DOWNSIZING NEW HOTELS15

Source Strategies, Inc., has long contended that the number of rooms a developer offers in a new property is one of the key factors in determining a venture's relative success or failure. It is every bit as important to size a hotel project properly as it is to select the appropriate brand, and to have chosen to develop in a suitable market and location. For the purposes of this study, we analyzed two separate samplings of hotels. We first looked at Comfort Inns across Texas as a selected brand sampling; then we examined all branded hotels built during a set period of time for a wider sampling. 1) COMFORT INN - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE In our initial analysis, we selected a group [55 properties] of Texas Comfort Inn branded properties ranging in size from 36 to 75 rooms. The following chart of performance statistics clearly illustrates

15 Analyzed and compiled by Doug Sutton and Bruce Walker.

Page 31 of 101 the fact that on average, the smaller property will perform better, in terms of REVPAR and occupancy, than a larger property of the same brand: SIZING ANALYSIS 12 Months Ending September 30, 1999 Rooms Occupancy Rate REVPAR 36-40 66.9% $55.25 $36.95 41-45 65.3% $57.34 $37.45 46-50 66.5% $57.38 $38.17 51-55 62.8% $56.02 $35.20 56-60 61.8% $54.26 $33.55 61-65 56.6% $55.33 $31.33 66-70 44.6% $45.71 $20.41 71-75 43.8% $44.20 $19.38 Combined: 52 63.2% $55.46 $35.03 Further, properties with lower room counts were clearly able to sustain a higher level of occupancy. Average occupancy ranged from 66.9% for properties of 36-40 rooms, downward to a much lower 43.8% average occupancy for properties in the 71-75 room size bracket.

Comfort Inn Sizing Study Occupany vs Roomcount (1999 Data) 70%

65%

60%

55%

50% Occupancy % 45%

40% 36-40 41-45 46-50 51-55 56-60 61-65 66-70 71-75 Roomcount

The above chart and graph clearly illustrate that developers often miss the mark, building more rooms than 'optimum'. 'Optimum' is defined as generating the highest return on invested capital, and is closely tied to occupancy and REVPAR. Analyzing the above data provides a measure of the effect of over-building. For the typical range of rooms for Comfort Inn projects occupancy dropped 23 points (a full 35%) from 67% to 44% as room counts escalated. The key question is, 'how to apply this principle to a given hotel project.' Naturally, each project would have to be judged on its individual merits, but looking at an 'average' project for a single brand and product is very revealing.

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BRANDED HOTELS - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE In our second analysis, we looked at a sampling [91 properties] of Texas branded hotels of less than 135 rooms which were constructed from 1970-1975. For our analysis we examined performance results from the year 1985 when all subject hotels were 10 to 15 years old, to well into their aging life cycles. The following table of performance statistics from 1985 for branded properties throughout Texas clearly illustrates the downward curve, with a pronounced and methodical erosion of performance as room counts increased: SIZING ANALYSIS 1985 Performance Results # of Hotels Rooms Occupancy Rate REVPAR 2 00-44 70.0% $37.88 $26.50 3 45-59 73.9% $36.13 $26.71 7 60-74 66.8% $31.10 $20.77 14 75-89 62.7% $31.65 $19.86 29 90-104 60.9% $32.42 $19.75 16 105-119 57.8% $26.25 $15.18 20 120-134 55.5% $29.35 $16.28 Combined: 91 98 59.8% $30.34 $18.14 The following graph provides a clear picture of descending performance as room counts increase. Average occupancy ranged from 70% for properties of 44 rooms or less, downward to a much lower 55.5% average occupancy for properties in the 120-134 size bracket, after peaking at 73.9% in the 45-59 size range.

Sizing Impact on Performance Occupany vs Roomcount (1985 Data) 80% 75% 70% 65% 60% 55% 50% Occupancy % 45% 40% 00-44 45-59 60-74 75-89 90-104 105-119 120-134 Roomcount

The data is clear: in almost every case small hotels outperform larger ones. Common sense explains this occurrence: a successful 100 room hotel will inevitably prompt the development of one or more new, small hotels of similar quality in the immediate area. In a competitive market environment, the smaller hotel has a distinct advantage and wins - almost every time. The fact remains that if one Page 33 of 101 builds a smaller than average property for a given brand, results should be improved over the average for that brand, with the converse of this fact also true.

4. Fourth, the Segment or Other adjustment factor is neutral, with no adjustment.

5. Fifth, the Aging Adjustment factor reflects the standard hotel life cycle: 92% (-8%) in Year I; 107% for Year II; 112% for Years III through V; followed by a 1.67% annual decline in the REVPAR index starting in Year VI. The aging factor also mirrors extensive studies of hotel life- cycles conducted by Source Strategies, Inc.'s principal, Bruce Walker, when heading the Holiday Corporation's strategic planning department (1979-83). It also reflects recent research on the life cycles of 25,000 Texas hotel rooms, developed from 1980 through 1982, and then again in 1990 through 1992, with each group's performance versus the market tracked to the present (MarketShare newsletter, "The Hotel Life Cycle - It's Very Real" published September 1994).

6. The last factor, Site, is set at 0.85 (85%), or below average for the local market, and reasonable considering the values of other hotel sites examined. A location along U.S. 377 in Pilot Point will have excellent visibility and access; it is in an area with significant traffic and some industrial interests, as well as the agricultural and leisure industries which have long been a hallmark. New retail and food outlets, and expected construction of a significant number of new housing units are also entering the area.

As we have used the other nearby hotels around the property for our analysis, it is our determination that the value of the subject’s location is comparable to that of several other examined hotel sites in the area. With the evaluation of the current sites around this location, we have an easy analysis of the site potential. The site values for nearby existing competitors have been developed by quantifying the influence site has had on their performance. Applying known adjustment factors to existing properties, except for a site factor, lets us solve for the site value itself. Source Strategies' site methodology 'backs into' the value of the site by matching actual performance against known factors, using the site factor as the 'plugged number.' The differences between the closest key competitors appear to be both explainable and reasonable. The site value is 'plugged' so that projected REVPAR versus market approaches the actual REVPAR over the past 12 months. Overall, the current performance of nearby existing competition would indicate that a 85% site value for a location along Page 34 of 101

U.S. 377 in Pilot Point is a responsible estimate which is reinforced by the actual results of the past year produced by local competition:

DERIVATION OF LOCAL COMPETITION

BestWest HolExp LoneStar Sanger Victorian Data in 2017 $'s Denton Denton Lodge Inn Whitesboro Base: Name & Quality 1.08 1.28 0.43 0.43 0.43 x Brand Age Adjustment 1.12 1.14 1.00 1.00 1.00 x Site Value Adjustment 1.19 1.16 1.04 1.16 0.94 x Size Adjustment 0.94 0.95 1.29 1.29 1.23 x Other Adjustments 1.25 0.90 1.00 1.15 1.00 x Newness Adjustment 1.05 1.05 0.94 0.82 0.82 = Performance Factor 177% 153% 55% 61% 41%

x Market REVPAR $51.88 $51.88 $51.88 $51.88 $51.88 = Projected Performance $91.83 $79.26 $28.42 $31.80 $21.43

REVPAR latest 12 months $91.68 $79.43 $28.36 $31.82 $21.46 Index (Proj. Vs Actual) 100 100 100 100 100

Units in Above Subject 74 92 30 30 33 Average Units 60 79 56 56 56 Size Adjustment (33%) -6 -5 29 29 23 Year Built 2009 2009 2003 1984 1983

Combining all six factors that affect a hotel's REVPAR performance, we calculate that the proposed hotel's REVPAR will achieve 114% of the market average REVPAR in Years III-V, declining slowly thereafter:

Best Western Derivation

x Market REVPAR $51.88 $51.88 $51.88 = Projected Performance $48.46 $56.37 $59.00

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COMBINING THE ABOVE MARKET REVPAR PROJECTION AND THE HOTEL'S REVPAR INDEX TO DEVELOP REVENUES, OCCUPANCY, AND RATE

Using the projected Year III REVPAR index of 114%, the above process generates a theoretical REVPAR of $59.00 in 2017 market dollars. This is the result of the Year III performance index of 114% (1.14) multiplied by the current market average REVPAR of $51.88.

Therefore, if the property were open today and were in its third year of operation, it should theoretically be operating at the following level when measured against 2017 market results: a $59.05 REVPAR computes to gross room revenues of approximately $1,184,425 ($59.00 times 55 units times 365 days). Please note that the actual effect on the market due to the introduction of this project and other new hotels is fully reflected in subsequent pro forma market projections and financials.

In latest year's dollars (2017), this projection for the project's theoretical Year III revenue breaks down seasonally as follows:

Quarter Third Fourth First Second Year III Room Revenues $316,304 $278,309 $263,863 $325,949 $1,184,425 % of Year 26.7% 23.5% 22.3% 27.5% 100 Seasonal Index 108 94 88 109 100 REVPAR$ $63.90 $55.61 $52.15 $64.42 $59.00

Source Strategies, Inc.'s projections of a reasonable rate and occupancy mix, a split of the subject hotel's REVPAR for occupancy and rate, in latest year dollars, would be as follows:

Quarter Third Fourth First Second Year III ADR - $ $86.40 $77.68 $75.17 $85.50 $81.30 Occupancy % 74.0% 71.6% 69.4% 75.3% 72.6% REVPAR$ $63.90 $55.61 $52.15 $64.42 $59.00

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TESTS FOR REASONABILITY

Comparisons made here support the reasonable nature of market and subject projections:

1. Individual property projections depend importantly on the projection of local market REVPAR - forecast to rise at a reasonable rate through 2025, starting at the current level. Over the next nine years market REVPAR is projected to rise 2.9% per year, compared to the recent rising growth rates of the past year. REVPAR encompasses the net effects of room supply, room-night demand and prices. Over the next nine years, we are comfortable with the 2.2% real growth (room nights sold) compound gain projected for the market, the projected net supply growth of 2.9% annually, and prices going up 3.6%. The resulting level of occupancy is 60% (equilibrium).

2. The derived Base Value of 1.08 (108%) for a Best Western hotel is reasonable when compared to the Base Values of other hotels in these same higher priced market areas. The hierarchy of REVPAR indices for various brands is shown below:

REVPAR INDEX COMPARISON16 Hampton Inn 151 Holiday Express 137 Candlewood Suites 114 Best Western 108 La Quinta 107 Comfort Inn 105 Super 8 63

3. Developing actual adjustment factors for the existing properties - so that their projected REVPAR equals actual REVPAR - indicates why the REVPAR index projection has a high probability of being achieved. The REVPAR differences between the closest key competitors appear to be both explainable and reasonable, using the standard, Source Strategies' adjustment factor quantification. For each property, revenues are driven first by chain name affiliation and product type, and are further adjusted for size, segment, hotel age and site location. The REVPAR Index is then multiplied by the actual local market average to generate dollar REVPAR. We also include Theoretical Year III performance of the subject hotel, as if it were open today and in its third year of operation, as follows:

16. Unadjusted for physical aging of each brand. Page 37 of 101

REVPAR DERIVATION

Best West BestWest HolExp LoneStar Sanger Data in 2017 $'s Yr III Denton Denton Lodge Inn Base: Name & Quality 1.08 1.08 1.28 0.43 0.43 x Brand Age Adjustment 1.12 1.12 1.14 1.00 1.00 x Site Value Adjustment 0.81 1.19 1.16 1.04 1.16 x Size Adjustment 1.04 0.94 0.95 1.29 1.29 x Other Adjustments 1.00 1.25 0.90 1.00 1.15 x Newness Adjustment 1.12 1.05 1.05 0.94 0.82 = Performance Factor 114% 177% 153% 55% 61%

x Market REVPAR $51.88 51.88 51.88 51.88 51.88 = Projected Performance $59.00 91.83 79.26 28.42 31.80

Actual Past Year n/a 91.68 79.43 28.36 31.82 Index (Proj./Actual) n/a 100 100 100 100 Year Opened n/a 2009 2009 2003 1984 # Rooms 55 74 92 30 30

4. The projected REVPAR performance of the Best Western Pilot Point versus the local market average reflects the fact that this hotel is newly built, with a very good limited service hotel brand, and a good location:

Page 38 of 101

5. The graphically projected occupancy performance of the Best Western versus the local market average reflects the fact that this hotel will be above the overall market average because of its brand, location, and newness:

6. An analysis of the local Pilot Point area market17 reflect a mixture of a number of older and oversized hotels, as well as a significant amount new and competitive lodging products. The average hotel room in the local market is over 17 years old, past the typical peak performance of the first ten years of operation. The typical hotel building becomes stylistically and structurally obsolete after

17. Zip Codes 76258/272/240/266/207/210/208/240/250/273. Page 39 of 101

30+ years, though this life cycle is significantly longer for high-rise/concrete structures. Out of 2,000 total rooms currently in the selected local market, only 94 rooms have opened since 2010, with 620 rooms built before 1989, making this a very old and vulnerable group of hotels. Consumer research has been clear in showing that ‘new’ is associated with ‘clean,’ while ‘old’ equates to being ‘dirty:’

PILOT POINT AREA MARKET PROPERTIES

Year # Open Rooms Hotel 2016 94 RESIDENCE INN BY MARRIOTT 2010 88 LA QUINTA INN & SUITES 2010 136 HILTON GARDEN INN 2009 92 HOLIDAY EXPRESS 2009 107 HOMEWOOD SUITES 2009 74 BEST WESTERN CROWN CHASE 2009 22 WHITESBORO INN & SUITES 2009 56 COMFORT INN & SUITES 2008 64 COMFORT INN 2008 92 COURTYARD BY MARRIOTT 2008 121 WOODSPRING SUITES 2008 45 VALLEY VIEW INN & SUITES 2007 72 COMFORT SUITES 2007 71 LA QUINTA INN & SUITES 2006 75 HAMPTON INN & SUITES 2006 27 LINDSAY INN 2003 66 HOLIDAY EXPRESS 2003 30 LONE STAR LODGE (FMR LANTANA) 1995 32 BUDGET HOST INN 1989 60 DAYS INN 1985 48 BEST VALUE INN FMR TRAILS INN 1984 30 SANGER INN 1984 110 DAYS INN (FMR TRAVELODGE/EXEL 1984 91 QUALITY INN (FMR RAMA/QUALY/H 1983 33 VICTORIAN INNS 1982 33 ATRIA INN (FMR RODEW/SOUTHWIN 1979 70 HO JO EXPRESS (FMR ECONOLODGE 1972 85 MOTEL 6 1964 60 SUPER 8 (FMR DELUX/RALTD)

Page 40 of 101

PRO FORMA: Applying the project derivation factor (114% Years III-V) to the quarterly local market REVPAR forecast results in the following progression:

PROJECT REVPAR PROJECTION

Subject/ Year & Local Subject Market Index Quarter Market Hotel Qtr Year 193 59.34 55.19 93 194 52.21 48.56 93 201 49.87 46.38 93 202 60.93 56.67 93 93 203 60.53 65.98 109 204 53.26 58.06 109 211 50.88 55.45 109 212 62.16 67.75 109 109 213 61.75 70.39 114 214 54.33 61.94 114 221 52.66 60.03 114 222 64.33 73.34 114 114 223 63.91 72.86 114 224 56.23 64.11 114 231 54.50 62.13 114 232 66.58 75.90 114 114 233 66.15 75.41 114 234 58.20 66.35 114 241 56.41 64.30 114 242 68.91 78.56 114 114 243 68.46 76.74 112 244 60.24 67.52 112 251 58.10 65.13 112 252 70.98 79.57 112 112 253 70.52 77.73 110 254 62.05 68.39 110 261 59.84 65.96 110 262 73.11 80.58 110 110 263 72.63 78.72 108 264 63.91 69.26 108 271 61.64 66.80 108 272 75.30 81.62 108 108 273 74.81 79.73 107 274 65.82 70.15 107 281 63.49 67.66 107 282 77.56 82.66 107 107 283 77.05 80.75 105 284 67.63 70.88 105 291 65.23 68.36 105 292 79.70 83.52 105 105 293 79.17 81.58 103 294 69.49 71.61 103 CGR%9Yrs 3.0% 4.4% First5Yrs 3.0% 6.9%

-CGR% measured from open date- Page 41 of 101

This REVPAR forecast is then extended to room revenues - multiplying REVPAR by the number of days in each quarter and by the number of rooms in the project - and to occupancy, estimated rate and to room-nights sold:

RESULTING PROJECTION: Best Western

Resulting Aver. Room- Year & Room Annual % Daily nghts Annual Basis Quarter Revenues Basis Occ Rate Sold RMNTES Occ. Rate 193 $279,255 62.7 $88.00 3,173 194 $245,710 60.7 $80.00 3,071 201 $229,596 58.0 $80.00 2,870 202 $283,620 $1,038,182 63.0 $90.00 3,151 12,266 61.1% $84.64 203 $333,869 72.1 $91.52 3,648 204 $293,763 69.8 $83.20 3,531 211 $274,498 66.7 $83.20 3,299 212 $339,087 $1,241,217 72.4 $93.60 3,623 14,101 70.2% $88.02 213 $356,193 74.0 $95.18 3,742 214 $313,405 71.6 $86.53 3,622 221 $297,138 69.4 $86.53 3,434 222 $367,054 $1,333,790 75.3 $97.34 3,771 14,569 72.6% $91.55 223 $368,659 72.9 $99.94 3,689 224 $324,375 70.6 $90.85 3,570 231 $307,538 69.4 $89.56 3,434 232 $379,901 $1,380,473 73.9 $102.70 3,699 14,392 71.7% $95.92 233 $381,562 73.3 $102.94 3,707 234 $335,728 70.9 $93.58 3,588 241 $318,302 69.7 $92.24 3,451 242 $393,198 $1,428,789 74.3 $105.78 3,717 14,462 72.0% $98.79 243 $388,322 73.1 $105.00 3,698 244 $341,675 70.7 $95.45 3,580 251 $322,376 69.2 $94.09 3,426 252 $398,230 $1,450,603 73.7 $107.89 3,691 14,395 71.7% $100.77 253 $393,292 72.9 $106.57 3,690 254 $346,048 70.6 $96.88 3,572 261 $326,502 69.1 $95.50 3,419 262 $403,327 $1,469,169 73.6 $109.51 3,683 14,364 71.6% $102.28 263 $398,326 72.8 $108.17 3,682 264 $350,478 70.4 $98.34 3,564 271 $330,681 68.9 $96.93 3,411 272 $408,489 $1,487,973 73.4 $111.16 3,675 14,333 71.4% $103.82 273 $403,424 73.0 $109.25 3,693 274 $354,963 70.6 $99.32 3,574 281 $334,913 69.1 $97.90 3,421 282 $413,718 $1,507,018 73.6 $112.27 3,685 14,373 71.6% $104.85 283 $408,587 73.2 $110.34 3,703 284 $358,634 70.7 $100.31 3,575 291 $338,376 69.1 $98.88 3,422 292 $417,996 $1,523,593 73.7 $113.39 3,686 14,386 71.7% $105.90 293 $412,813 73.2 $111.45 3,704 294 $362,342 70.7 $101.32 3,576 301 $341,875 69.2 $99.87 3,423 302 $422,318 $1,539,348 73.7 $114.52 3,688 14,391 71.7% $106.96 303 $417,081 73.2 $112.56 3,705 304 $366,089 70.7 $102.33 3,578 CGR%9Yrs 4.4% 1.8% 2.5% 1.8% First5Yrs 6.9% 3.3% 3.6% 3.3%

-CGR% measured from open date- Page 42 of 101

OPERATING COSTS18

Profitability and returns reflect the above revenue projections and the following other critical assumptions: operating costs per occupied room approximate Full, Select, & Limited Service hotels of similar size, rate, and occupancy and include appropriate fixed, semi-fixed and variable costs (Smith Travel Research's 2017 Host Almanac for year 2016 annual data, and Source Strategies, Inc. data).

Estimates of operating costs take into account the lower costs of the West South Central region of the United States, which had an average Per Occupied Room Cost of $52.61 (including royalties) in 2016 in Limited Service hotels - versus a national average of $61.93 - or 85% of the U.S. average. The following cost comparisons have all been adjusted to reflect this 15% lower-cost environment that may be expected in operating a hotel in the West South Central (WSC) region.

Rooms only Operating Costs per Occupied Room (before Fixed Charges) are estimated at $39.58 for Year I ($485,411 divided by 12,265 room nights sold); $41.06 for Year II ($579,043 divided by 14,101), and $42.42 for Year III ($618,051 divided by 14,569). These numbers compare to industry- wide data as follows: a) $44.14 in the Host Almanac for Suburban hotels in 2016, adjusted to Southwest the WSC region of the USA. This POR cost translates to $46.83 when inflated 3% annually to Year 2018 dollars. b) $59.24 in the Host Almanac for Upper-Midscale hotels in 2016, adjusted to WSC USA. This POR cost translates to $62.85 when inflated to Year 2018 dollars. c) $43.67 in the Host Almanac for Interstate hotels in 2016, adjusted to WSC USA. This POR cost translates to $46.33 when inflated to Year 2018 dollars. d) $66.13 in the Host Almanac for Upscale hotels in 2016, adjusted to WSC USA. This translates to $70.16, when inflated to Year 2018 dollars. e) $30.07 in the Host Report for Midscale/Economy hotels, 2016 data, adjusted to WSC USA. This POR cost translates to $31.90 when inflated to Year 2018 dollars.

18. The calculation of the statistic of Operating Costs Per Occupied Room (before fixed/capital costs are deducted) is typically the important cost to examine carefully because it is highly stable and predictable, regardless of occupancy and rate. Page 43 of 101

- Versus room revenues: a necessary marketing expense of 7% in Year I and thereafter. Marketing includes reservation and advertising fees, sales expense, local advertising and the always important outdoor billboards. A small annual association fee is charged, as is a management fee.

A reserve for renovations is taken and subtracted from projected cash flows annually; such renovation reserves amount to $751,706 in the first ten years ($13,667 per unit). Reserves insure that future revenue streams continue by maintaining product quality at high, excellent levels as required by the franchisor. Reserves are based on an extensive 2001 study, CapEx, by the International Society of Hospitality Consultants, and subsequent studies by the same group through 2013. The studies show that required reserves typically average 5.5% over a 20 year period. We have applied a 5.5% annual reserve annually for the first ten years.

- Total capital of $5,100,000 is allocated for the land and turn-key construction. The estimated total turn-key cost (excluding land) of $85,000 per unit is average for a new Best Western hotel, in our experience, and reasonable. Land has been estimated at a value of $425,000. Should capital needs vary, then returns would change proportionately. The estimates of necessary capital include:

Total Investment

Land Value $ 425,000 Improvements Budget $ 4,675,000 @ $85,000 per key19 Total Investment $ 5,100,000

19. Developer estimates of purchase price and of development costs. Page 44 of 101

Best Western Year I Land Value: $425,000 Open 7/1/2019 # Rooms: 55 PerRoomCost: $85,000 QUARTER: Third Fourth First Second Year Rmnites Sold 3,173 3,071 2,870 3,151 12,265 Rmnites Avail 5,060 5,060 4,950 5,005 20,075 Occupancy % 62.7% 60.7% 58.0% 63.0% 61.1% Avg Rate $88.01 $80.01 $80.00 $90.01 $84.65 REVPAR $55.19 $48.56 $46.38 $56.67 $51.72 % Revenues Room Revenues $279,255 $245,710 $229,596 $283,620 $1,038,181 96.8% Misc Revenues 9,215 8,108 7,577 9,359 34,260 3.2% Total Sales $288,470 $253,818 $237,173 $292,979 $1,072,441 100.0%

Operating Expe-Payroll Administration 17,308 15,229 14,230 17,579 64,346 6.0% Housekeeping 12,692 12,284 11,480 12,604 49,060 4.6% Laundry 5,394 5,221 4,879 5,357 20,851 1.9% Front Desk 13,485 13,052 12,198 13,392 52,126 4.9% Misc. 2,885 2,538 2,372 2,930 10,724 1.0% Taxes/Benefits 7,247 6,765 6,322 7,261 27,595 2.6% Total Payroll 59,011 55,089 51,481 59,122 224,703 21.0%

-Room Expense S:Linen & Laun 4,760 4,607 4,305 4,727 18,398 1.7% CompFood&Bev. 6,346 6,142 5,740 6,302 24,530 2.3% Total Room 11,106 10,749 10,045 11,029 42,928 4.0%

-Other Expense Phone/Telecom. 8,739 8,739 8,739 8,739 34,955 3.3% Elec/Utility 9,519 9,213 8,610 9,453 36,795 3.4% Maint. & Repai 5,769 5,076 4,743 5,860 21,449 2.0% Total Other 24,027 23,028 22,092 24,051 93,199 8.7%

-Gen & Admin Adver. & Sales 19,548 17,200 16,072 19,853 72,673 6.8% Memb.Fee 8,378 7,371 6,888 8,509 31,145 2.9% Credit Card 5,585 4,914 4,592 5,672 20,764 1.9% Tot Admin & Ge 33,511 29,485 27,552 34,034 124,582 11.6% -Total Operati 127,655 118,351 111,170 128,236 485,411 45.3% Expenses

Gross Oper. 160,816 135,467 126,003 164,744 587,030 54.7% Profit Management Fee 8,986 7,786 7,264 9,154 33,189 3.1% Income Bef Fix 151,830 127,682 118,740 155,589 553,841 51.6% Charges -Fixed Charges Insurance 5,362 5,362 5,362 5,362 21,449 2.0% Property Tax 8,043 8,043 8,043 8,043 32,173 3.0% DeprecSL 39Yrs 29,968 29,968 29,968 29,968 119,872 11.2% Tot Capital Ex 43,373 43,373 43,373 43,373 173,494 16.2%

Net Income Bef 108,457 84,308 75,366 112,216 380,347 35.5% Tax & Financing Depreciat. Add 29,968 29,968 29,968 29,968 119,872 11.2% Renovation Res (15,145) (13,325) (12,452) (15,381) (56,303) -5.3%

Cash Flow Befo 123,280 100,951 92,883 126,802 443,915 41.4% Tax & Financing

Page 45 of 101

Best Western Years II-X Compound #Rooms: 55 Growth Year 2 3 4 5 6 7 8 9 10 Yr 2-1 Rmnites Sold 14,101 14,569 14,392 14,462 14,395 14,364 14,333 14,373 14,386 1.8% Rmnites Avail 20,075 20,075 20,075 20,075 20,075 20,075 20,075 20,075 20,075 0.0% Occupancy % 70.2% 72.6% 71.7% 72.0% 71.7% 71.6% 71.4% 71.6% 71.7% 1.8% Avg Rate* $88.02 $91.55 $95.92 $98.80 $100.77 $102.28 $103.81 $104.85 $105.91 2.5% REVPAR $61.83 $66.44 $68.77 $71.17 $72.26 $73.18 $74.12 $75.07 $75.90 4.4%

RoomRevenues 1,241,217 1,333,790 1,380,473 1,428,789 1,450,603 1,469,169 1,487,973 1,507,018 1,523,593 4.4% Misc Revenues 40,960 44,015 45,556 47,150 47,870 48,483 49,103 49,732 50,279 4.4% Total Sales 1,282,177 1,377,805 1,426,029 1,475,939 1,498,473 1,517,652 1,537,076 1,556,750 1,573,872 4.4%

Operating Expense - Payroll Administration 76,198 81,089 82,507 85,395 87,550 89,982 92,481 95,522 98,476 4.8% Housekeeping 58,096 61,825 62,906 65,108 66,751 68,605 70,511 72,829 75,082 4.8% Laundry 24,691 26,276 26,735 27,671 28,369 29,157 29,967 30,952 31,910 4.8% Front Desk 61,727 65,689 66,838 69,178 70,923 72,893 74,918 77,381 79,774 4.8% Miscellaneous 12,700 13,515 13,751 14,233 14,592 14,997 15,414 15,920 16,413 4.8% Taxes/Benefits 32,678 34,775 35,383 36,622 37,546 38,589 39,661 40,965 42,232 4.8% Total Payroll 266,090 283,168 288,120 298,207 305,730 314,224 322,952 333,569 343,887 4.8%

-Room Expense Linen & Laundry 21,786 23,184 23,590 24,416 25,032 25,727 26,442 27,311 28,156 4.8% CompFood&Bev. 29,048 30,913 31,453 32,554 33,376 34,303 35,256 36,415 37,541 4.8% Total Room 50,834 54,097 55,043 56,970 58,407 60,030 61,697 63,726 65,697 4.8%

-Other Expense Phone Lines 41,393 44,050 44,821 46,390 47,560 48,881 50,239 51,891 53,496 4.8% Electric/Util. 43,572 46,369 47,180 48,831 50,063 51,454 52,883 54,622 56,311 4.8% Repairs & Maint 28,208 30,312 31,373 32,471 32,966 33,388 33,816 34,248 34,625 5.5% Total Other 113,173 120,731 123,373 127,692 130,590 133,724 136,938 140,761 144,432 5.0%

-Gen & Admin Adver. & Sales 86,885 93,365 96,633 100,015 101,542 102,842 104,158 105,491 106,652 4.4% Memb.Fee 37,237 40,014 41,414 42,864 43,518 44,075 44,639 45,211 45,708 4.4% Credit Card 24,824 26,676 27,609 28,576 29,012 29,383 29,759 30,140 30,472 4.4% Total G & A 148,946 160,055 165,657 171,455 174,072 176,300 178,557 180,842 182,831 4.4%

-TotOperExp. 579,043 618,051 632,193 654,323 668,800 684,278 700,144 718,898 736,847 4.7%

GrossOpProfit 703,134 759,754 793,836 821,616 829,673 833,374 836,932 837,852 837,024 4.0%

Mngmt Fee 39,706 42,751 44,397 45,951 46,563 47,021 47,480 47,892 48,218 4.2%

Page 46 of 101

IncomeBefore 663,428 717,003 749,439 775,665 783,110 786,353 789,451 789,960 788,806 3.3% Fixed Charges -Fixed Charges Insurance 22,092 22,755 23,438 24,141 24,865 25,611 26,379 27,171 27,986 3.0% Property Tax 33,138 34,133 35,157 36,211 37,298 38,417 39,569 40,756 41,979 3.0% Depr. SL 39 Yrs 119,872 119,872 119,872 119,872 119,872 119,872 119,872 119,872 119,872 0.0% Total Fixed Ch. 175,103 176,759 178,466 180,224 182,034 183,899 185,820 187,799 189,836 1.0%

Income Before 488,325 540,244 570,973 595,441 601,076 602,454 603,631 602,161 598,970 5.2% Tax & Financing Depr. AddBack 119,872 119,872 119,872 119,872 119,872 119,872 119,872 119,872 119,872 0.0% RenovReserve (67,314) (72,335) (74,867) (77,487) (78,670) (79,677) (80,696) (81,729) (82,628) 4.4%

Cash Before 540,883 587,781 615,978 637,826 642,278 642,649 642,807 640,303 636,214 4.1% Tax & Financing

February 5, 2018 OPINION

This report is based on independent opinion, surveys and research from sources considered reliable. No representation is made as to accuracy or completeness and no contingent liability of any kind can be accepted. The study projections are dependent on the developer building and operating the subject hotel as a ‘Best Western’ for the next ten years, including certain amenities, and spending the appropriate operating funds necessary to generate projected revenues, most especially budgeted funds for aforementioned amenities and for marketing, including a listing in the American Automobile Association Texas Tourbook.

It is our opinion that this report fairly and conservatively represents the room revenues, profitability and return on investment performance that can be achieved by building and operating an 55 unit Best Western hotel at a site in this area of Pilot Point, Texas.

Please contact us with any questions at (210) 734-3434.

Respectfully submitted,

Todd Walker, Bruce H. Walker, President Chairman

PO Box 120055  134 Laurel Heights, San Antonio, TX 78212  210-734-3434  Fax 210-735-7970  www.SourceStrategies.Org

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 48

EXHIBITS:

I DFW Metro, and Pilot Point Area, Aggregated Basis

II Local Market History: By Segment and Brand, Past Five Years, Annual Basis

III Individual Hotel/Motel Histories Local Market

IV Texas Excluding Luxury, Upscale Segments, & Top 5 Cities

V The Case For Downsizing Hotels

VI Start-up Performance of New Hotels

VII CAPEX Study of Capital Expenditures

VIII Preparer Qualifications and Client List

IX Source Strategies Database Methodology

X Hotel Brand Report Newsletter (separate file)

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 49

EXHIBIT I

LODGING MARKET: DFW METRO # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR4 ------074 801 94,154 5,199.2 454,946 60.0 87.50 52.52 *TOTAL 2007 5,199.2 454,946 60.0 87.50 52.52

081 798 94,423 5,286.6 499,772 62.2 94.54 58.81 082 795 94,129 5,450.4 519,514 63.6 95.32 60.65 083 810 96,379 5,623.2 501,105 63.4 89.11 56.51 084 808 95,457 4,998.1 438,311 56.9 87.69 49.91 *TOTAL 2008 21,358.3 1,958,702 61.5 91.71 56.43

091 811 96,877 4,725.6 425,905 54.2 90.13 48.85 092 824 97,612 4,689.8 421,183 52.8 89.81 47.42 093 832 100,364 4,923.5 418,040 53.3 84.91 45.27 094 844 100,287 4,737.3 383,267 51.3 80.90 41.54 *TOTAL 2009 19,076.2 1,648,395 52.9 86.41 45.71

101 842 100,968 5,082.6 435,363 55.9 85.66 47.91 102 850 101,687 5,164.5 451,489 55.8 87.42 48.79 103 850 103,066 5,333.2 446,581 56.2 83.74 47.10 104 847 102,025 5,139.6 430,658 54.8 83.79 45.88 *TOTAL 2010 20,720.0 1,764,091 55.7 85.14 47.41

111 839 101,888 5,670.4 519,749 61.8 91.66 56.68 112 843 102,055 5,600.5 501,577 60.3 89.56 54.01 113 842 103,495 5,778.5 496,581 60.7 85.94 52.15 114 843 102,995 5,417.7 466,610 57.2 86.13 49.24 *TOTAL 2011 22,467.2 1,984,516 60.0 88.33 52.99

121 839 103,036 5,800.1 509,385 62.5 87.82 54.93 122 841 103,405 5,905.4 544,257 62.8 92.16 57.84 123 844 104,447 6,011.8 528,607 62.6 87.93 55.01 124 846 103,515 5,736.8 504,191 60.2 87.89 52.94 *TOTAL 2012 23,454.1 2,086,439 62.0 88.96 55.17

131 845 103,713 6,092.0 556,873 65.3 91.41 59.66 132 850 103,797 6,193.6 591,566 65.6 95.51 62.63 133 852 104,146 6,065.5 554,629 63.3 91.44 57.89 134 846 104,099 6,083.9 565,211 63.5 92.90 59.02 *TOTAL 2013 24,434.9 2,268,279 64.4 92.83 59.79

141 851 104,712 6,445.3 609,787 68.4 94.61 64.71 142 856 104,925 6,556.6 652,724 68.7 99.55 68.36 143 859 105,020 6,418.0 611,093 66.4 95.22 63.25 144 859 105,138 6,329.8 594,912 65.4 93.99 61.50 *TOTAL 2014 25,749.8 2,468,516 67.2 95.87 64.44

151 865 105,984 6,835.5 682,362 71.7 99.83 71.54 152 873 106,926 6,796.7 700,850 69.9 103.12 72.03 153 866 106,474 6,695.6 671,555 68.4 100.30 68.56 154 865 106,558 6,635.1 665,622 67.7 100.32 67.90 *TOTAL 2015 26,962.8 2,720,389 69.4 100.89 69.99

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 50

LODGING MARKET: DFW METRO # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR4 ------161 873 107,294 7,084.4 723,693 73.4 102.15 74.94 162 892 108,684 7,270.4 788,034 73.5 108.39 79.68 163 894 109,075 6,943.5 726,067 69.2 104.57 72.35 164 890 109,118 6,708.1 685,581 66.8 102.20 68.29 *TOTAL 2016 28,006.5 2,923,374 70.7 104.38 73.78

171 910 110,683 7,113.6 750,068 71.4 105.44 75.30 172 932 111,848 7,119.5 776,011 69.9 109.00 76.24 173 962 113,733 7,189.3 759,283 68.7 105.61 72.57 *TOTAL 2017 21,422.4 2,285,362 70.0 106.68 74.68

*TOTAL 238,851.4 ********* 63.3 94.46 59.81

1. Roomnights sold (derived from est. rate and actual room revenues) 2. Occupancy: nights sold divided by nights available for sale(x 100) 3. Average price for each roomnight sold;from Directories and surveys 4. $ Revenue per available room per day (room sales per day)

SOURCE STRATEGIES, INC 02/01/18 (210) 734-3434. METR020Y.FEX

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 51

LODGING MARKET: PILOT POINT AREA # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR4 ------074 19 1,101 50.5 2,833 49.8 56.14 27.97 *TOTAL 2007 50.5 2,833 49.8 56.14 27.97

081 20 1,222 57.4 3,234 52.2 56.30 29.40 082 20 1,222 70.3 4,259 63.2 60.60 38.30 083 22 1,297 73.3 4,402 61.4 60.10 36.89 084 22 1,331 65.7 3,753 53.6 57.15 30.65 *TOTAL 2008 266.6 15,647 57.6 58.69 33.80

091 23 1,342 60.6 3,342 50.2 55.12 27.67 092 25 1,501 70.8 4,118 51.8 58.17 30.15 093 25 1,501 74.6 4,261 54.0 57.12 30.86 094 28 1,636 70.5 3,814 46.9 54.08 25.34 *TOTAL 2009 276.5 15,535 50.7 56.18 28.45

101 28 1,774 73.6 4,162 46.1 56.58 26.07 102 29 1,814 86.4 5,127 52.3 59.35 31.06 103 29 1,897 91.1 5,452 52.2 59.87 31.24 104 29 1,933 85.3 4,970 48.0 58.25 27.95 *TOTAL 2010 336.3 19,711 49.7 58.61 29.11

111 29 1,931 93.0 5,419 53.5 58.29 31.18 112 29 1,931 109.1 6,944 62.1 63.65 39.52 113 29 1,931 107.9 6,945 60.8 64.35 39.10 114 29 1,931 99.7 6,399 56.1 64.17 36.02 *TOTAL 2011 409.7 25,707 58.1 62.74 36.47

121 29 1,931 107.7 6,657 62.0 61.81 38.31 122 29 1,931 122.4 8,208 69.6 67.08 46.71 123 29 1,931 112.8 7,680 63.5 68.08 43.23 124 29 1,904 100.6 6,739 57.5 66.96 38.47 *TOTAL 2012 443.5 29,284 63.1 66.03 41.70

131 29 1,904 104.6 6,854 61.1 65.51 40.00 132 29 1,904 110.6 7,520 63.8 68.02 43.40 133 29 1,904 107.5 7,531 61.4 70.03 42.99 134 29 1,904 103.2 7,088 58.9 68.66 40.46 *TOTAL 2013 425.9 28,993 61.3 68.07 41.72

141 28 1,874 106.4 7,296 63.1 68.55 43.26 142 29 1,904 118.5 8,571 68.4 72.31 49.47 143 29 1,904 112.6 8,435 64.3 74.89 48.15 144 29 1,904 107.8 7,839 61.5 72.73 44.75 *TOTAL 2014 445.4 32,141 64.3 72.17 46.43

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 52

LODGING MARKET: PILOT POINT AREA # Rnights $ Rooms Hotels # sold 1 Revenues % $ $ YRQ Motels Rooms (000s) (000 s) OCC2 Rate3 RPAR4 ------151 27 1,847 110.7 7,884 66.6 71.25 47.43 152 27 1,847 113.1 8,723 67.3 77.15 51.90 153 27 1,847 108.1 8,778 63.6 81.24 51.66 154 27 1,847 100.1 7,661 58.9 76.53 45.08 *TOTAL 2015 431.9 33,045 64.1 76.52 49.02

161 26 1,834 108.7 8,026 65.9 73.81 48.63 162 28 1,841 117.4 9,536 70.1 81.20 56.92 163 28 1,876 109.6 9,170 63.5 83.67 53.13 164 29 1,970 110.7 8,829 61.1 79.74 48.72 *TOTAL 2016 446.5 35,561 65.0 79.64 51.81

171 29 1,984 111.1 8,305 62.2 74.77 46.51 172 29 1,984 121.2 10,162 67.1 83.86 56.28 173 29 1,984 116.4 10,207 63.8 87.70 55.92 *TOTAL 2017 348.6 28,673 64.4 82.24 52.94

*TOTAL 3,881.5 267,131 59.9 68.82 41.20

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 53

PERIOD: TWELVE MONTHS ENDING SEPT. 30, 2017 LODGING MARKET: PILOT POINT AREA # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR ------CHAINS BEST WEST DENTON .1 3.7 19 4.2 2,476 6.6 71.4 128.35 91.68 HOL EXP DENTON .1 4.6 23 5.0 2,667 7.1 69.0 115.19 79.43 TOT NEARBY 2 .2 8.4 42 9.2 5,143 13.7 70.1 121.18 84.89

HOMEWOOD 1 .1 5.4 27 6.0 2,815 7.5 70.1 102.83 72.07 RESIDENCE 1 .1 4.7 25 5.5 2,934 7.8 73.7 116.03 85.51 TOT SUITES 2 .2 10.1 53 11.5 5,749 15.3 71.8 109.17 78.36

COURTYARD 1 .1 4.6 24 5.2 2,506 6.7 71.4 104.59 74.64 HILT GARD 1 .1 6.9 35 7.7 3,471 9.3 71.0 98.55 69.92 TOT MID/UPS 2 .2 11.5 59 12.9 5,977 15.9 71.1 101.00 71.82

COMFO STE 1 .1 3.6 14 3.2 1,189 3.2 55.2 82.06 45.26

WOODSPRNG 1 .1 6.1 30 6.5 1,417 3.8 68.1 47.11 32.08

TOT CHAINS 22 1.8 89.1 419 91.3 35,543 94.8 65.1 84.78 55.20

TOT MARKET 29 2.0 100.0 459 100.0 37,502 100 63.5 81.65 51.88

* All figures annualized. Includes taxed and est non-tax room revenues. Independents are categorized by price: $100+, $60-99.99, and under $60)

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 54

PERIOD: TWELVE MONTHS ENDING SEPT. 30, 2016 LODGING MARKET: PILOT POINT AREA # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR ------BEST WEST 1 .1 4.0 19 4.4 2,351 6.8 71.3 122.04 87.05 HOLID EXP 1 .1 5.0 24 5.5 2,711 7.9 71.0 113.75 80.74 TOT NEARBY 2 .2 9.0 43 9.9 5,063 14.7 71.1 117.45 83.55

HOMEWOOD 1 .1 5.8 26 5.9 2,751 8.0 65.9 106.95 70.45

COURTYARD 1 .1 5.0 25 5.7 2,824 8.2 74.4 113.09 84.09 HILT GARD 1 .1 7.4 35 7.9 3,400 9.9 69.7 98.27 68.49 TOT MID/UPS 2 .2 12.3 60 13.7 6,224 18.1 71.6 104.48 74.79

COMFO STE 1 .1 3.9 14 3.3 1,272 3.7 55.1 87.84 48.40

COMFO INN 2 .1 6.5 32 7.3 2,383 6.9 72.4 75.13 54.40 HAMPTON 1 .1 4.1 18 4.0 2,198 6.4 64.2 125.03 80.29 HOLID EXP 1 .1 3.6 15 3.5 1,688 4.9 63.8 109.78 70.07 LA QUINTA 2 .2 8.6 38 8.8 3,863 11.2 65.8 101.14 66.57 TOT LTD SVE 6 .4 22.7 103 23.6 10,132 29.5 67.1 98.49 66.09

WOODSPRNG 1 .1 6.5 31 7.1 1,434 4.2 70.0 46.37 32.47

BST VALUE 1 .0 2.6 9 2.1 347 1.0 51.9 38.24 19.83 DAYS INN 2 .2 8.7 40 9.1 1,580 4.6 67.2 39.95 26.84 HO JO 1 .1 3.8 16 3.7 429 1.2 62.8 26.76 16.79 MOTEL 6 1 .1 4.6 23 5.3 1,241 3.6 74.2 53.92 39.99 QUALITY 1 .1 4.9 17 4.0 1,213 3.5 52.1 70.05 36.51 SUPER 8 1 .1 3.3 12 2.8 770 2.2 55.8 62.51 34.86 OTHER BUD 1 .0 1.7 6 1.3 162 .5 50.2 27.59 13.86 TOT BUDGET 8 .5 29.6 123 28.3 5,741 16.7 61.6 46.61 28.71

TOT CHAINS 21 1.7 89.8 400 91.7 32,617 94.8 65.9 81.57 53.77

INDEPENDENTS $100+ ADR 1 .0 .5 2 .4 177 .5 48.8 101.26 49.40 $60-99ADR 1 .0 1.2 4 .9 248 .7 47.3 65.11 30.83 LT $60ADR 2 .1 4.2 14 3.3 570 1.7 49.8 40.21 20.02 1 .0 .8 2 .5 114 .3 36.1 57.43 20.71 1 .0 1.6 7 1.7 419 1.2 68.1 56.28 38.31 1 .0 1.8 7 1.6 248 .7 56.6 36.44 20.62 TOTAL INDEP 6 .2 10.2 36 8.3 1,776 5.2 52.5 49.36 25.90

TOT MARKET 27 1.8 100.0 436 100.0 34,392 100 64.6 78.92 50.94

* All figures annualized. Includes taxed and est non-tax room revenues. Independents are categorized by price: $100+, $60-99.99, and under $60)

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 55

PERIOD: TWELVE MONTHS ENDING SEPT. 30, 2015 LODGING MARKET: PILOT POINT AREA # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR ------BEST WEST 1 .1 4.0 20 4.6 2,200 6.6 74.4 109.50 81.45 HOLID EXP 1 .1 4.9 24 5.4 2,410 7.3 70.9 101.29 71.77 TOT NEARBY 2 .2 8.9 44 10.0 4,610 13.9 72.4 105.05 76.09

HOMEWOOD 1 .1 5.7 26 6.0 2,870 8.6 67.1 109.49 73.49

COURTYARD 1 .1 4.9 24 5.5 2,725 8.2 72.4 112.15 81.16 HILT GARD 1 .1 7.3 33 7.6 3,211 9.7 67.3 96.16 64.68 TOT MID/UPS 2 .2 12.2 58 13.1 5,936 17.9 69.3 102.90 71.33

COMFO STE 1 .1 3.9 14 3.3 1,219 3.7 54.9 84.46 46.40

COMFO INN 2 .1 6.4 31 6.9 2,037 6.1 69.7 66.72 46.50 HAMPTON 1 .1 4.0 18 4.2 2,521 7.6 67.2 137.09 92.08 HOLID EXP 1 .1 3.5 15 3.5 1,439 4.3 64.2 93.02 59.73 LA QUINTA 2 .2 8.5 40 9.1 3,739 11.3 68.9 93.46 64.43 TOT LTD SVE 6 .4 22.6 104 23.8 9,735 29.3 68.1 93.26 63.51

WOODSPRNG 1 .1 6.5 32 7.4 1,298 3.9 73.5 39.99 29.40

BST VALUE 1 .0 2.6 8 1.9 325 1.0 48.2 38.43 18.52 DAYS INN 2 .2 9.1 39 8.8 1,372 4.1 62.3 35.49 22.10 HO JO 1 .1 3.8 15 3.3 407 1.2 57.4 27.79 15.94 MOTEL 6 1 .1 4.6 22 5.0 1,182 3.6 71.3 53.48 38.11 QUALITY 1 .1 4.9 21 4.8 1,529 4.6 63.5 72.49 46.05 SUPER 8 1 .1 3.3 12 2.8 704 2.1 55.3 57.14 31.62 OTHER BUD 1 .0 1.7 6 1.3 152 .5 47.2 27.48 12.98 TOT BUDGET 8 .6 29.9 123 27.9 5,671 17.1 60.4 46.18 27.89

TOT CHAINS 21 1.7 89.8 402 91.4 31,340 94.3 65.9 77.99 51.38

INDEPENDENTS $100+ ADR 1 .0 .7 1 .3 183 .6 31.6 122.08 38.57 $60-99ADR 1 .0 1.2 4 .9 295 .9 49.8 73.81 36.72 LT $60ADR 2 .1 4.6 17 3.9 733 2.2 54.7 43.30 23.69 0 .0 .4 1 .2 47 .1 26.4 64.84 17.13 1 .0 1.6 8 1.8 353 1.1 71.1 45.33 32.24 1 .0 1.8 7 1.5 272 .8 55.5 40.69 22.57 TOTAL INDEP 7 .2 10.2 38 8.6 1,883 5.7 54.1 50.05 27.10

TOT MARKET 28 1.9 100.0 439 100.0 33,223 100 64.7 75.59 48.90

* All figures annualized. Includes taxed and est non-tax rooms revenues. Independents are categorized by price: $100+, $60-99.99, and under $60)

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 56

PERIOD: TWELVE MONTHS ENDING SEPT. 30, 2014 LODGING MARKET: PILOT POINT AREA # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR ------CHAINS BEST WEST 1 .1 3.9 20 4.5 1,946 6.2 73.5 98.06 72.05 HOLID EXP 1 .1 4.9 25 5.8 2,228 7.1 75.8 87.56 66.35 TOT NEARBY 2 .2 8.8 45 10.3 4,174 13.3 74.7 92.16 68.89

HOMEWOOD 1 .1 5.6 29 6.6 3,059 9.7 74.6 104.97 78.33

COURTYARD 1 .1 4.9 25 5.7 2,552 8.1 75.4 100.73 76.00 HILT GARD 1 .1 7.2 34 7.6 2,972 9.5 67.8 88.34 59.86 TOT MID/UPS 2 .2 12.0 59 13.4 5,524 17.6 70.9 93.66 66.37

COMFO STE 1 .1 3.8 15 3.4 1,290 4.1 57.6 85.16 49.08

COMFO INN 2 .1 6.3 28 6.4 1,660 5.3 64.4 58.87 37.90 HAMPTON 1 .1 4.0 19 4.3 2,371 7.6 68.5 126.50 86.61 HOLID EXP 1 .1 3.5 13 2.9 1,359 4.3 53.3 105.85 56.42 LA QUINTA 2 .2 8.4 39 8.9 3,427 10.9 68.0 86.88 59.05 TOT LTD SVE 6 .4 22.1 99 22.5 8,817 28.1 64.7 88.86 57.51

WOODSPRNG 1 .1 6.4 32 7.2 966 3.1 71.9 30.44 21.88

BST VALUE 1 .0 2.5 8 1.9 320 1.0 48.1 38.02 18.28 DAYS INN 2 .2 9.0 35 8.0 1,243 4.0 57.0 35.13 20.04 HO JO 1 .1 3.7 13 2.9 346 1.1 50.0 27.10 13.54 MOTEL 6 1 .1 4.5 22 5.0 1,082 3.4 71.1 49.10 34.89 QUALITY 1 .1 4.8 21 4.8 1,455 4.6 63.3 69.20 43.81 SUPER 8 1 .1 3.2 12 2.7 635 2.0 53.6 53.18 28.51 OTHER BUD 1 .0 1.7 5 1.2 160 .5 46.1 29.76 13.73 TOT BUDGET 8 .6 29.4 117 26.5 5,242 16.7 57.5 44.82 25.79

TOT CHAINS 21 1.7 88.1 396 90.0 29,072 92.6 65.0 73.32 47.67

INDEPENDENTS $100+ ADR 1 .0 .7 2 .5 326 1.0 51.1 134.46 68.66 $60-99ADR 1 .0 1.2 4 .9 303 1.0 48.7 77.53 37.74 LT $60ADR 3 .1 5.5 23 5.2 995 3.2 59.7 43.45 25.96 1 .0 1.2 3 .6 171 .5 31.5 66.03 20.78 1 .0 1.6 6 1.4 226 .7 57.3 36.10 20.68 1 .0 1.7 6 1.4 296 .9 51.2 47.95 24.54 TOTAL INDEP 8 .2 11.9 44 10.0 2,317 7.4 53.8 52.35 28.14

TOT MARKET 29 1.9 100.0 441 100.0 31,390 100 63.7 71.22 45.34

* All figures annualized. Included taxed and est non-tax rooms revenues. Independents are categorized by price: $100+, $60-99.99, and under $60)

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 57

PERIOD: TWELVE MONTHS ENDING SEPT. 30, 2013 LODGING MARKET: PILOT POINT AREA # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR ------BEST WEST 1 .1 3.9 19 4.6 1,610 5.6 71.4 83.47 59.61 HOLID EXP 1 .1 4.8 23 5.4 1,776 6.2 67.5 78.32 52.88 TOT NEARBY 2 .2 8.7 42 9.9 3,386 11.8 69.3 80.69 55.88

HOMEWOOD 1 .1 5.6 27 6.5 2,570 9.0 70.2 93.69 65.81

COURTYARD 1 .1 4.8 24 5.7 2,405 8.4 72.1 99.38 71.61 HILT GARD 1 .1 7.1 32 7.6 2,418 8.4 64.7 75.25 48.72 TOT MID/UPS 2 .2 12.0 56 13.3 4,823 16.8 67.7 85.61 57.96

COMFO STE 1 .1 3.8 14 3.2 1,170 4.1 51.8 85.95 44.51

COMFO INN 2 .1 6.3 26 6.2 1,486 5.2 59.5 57.03 33.93 HAMPTON 1 .1 3.9 18 4.4 2,162 7.5 67.3 117.36 78.97 HOLID EXP 1 .1 3.5 15 3.6 1,630 5.7 64.1 105.58 67.67 LA QUINTA 2 .2 8.4 39 9.3 3,400 11.9 67.5 86.72 58.58 TOT LTD SVE 6 .4 22.1 99 23.4 8,678 30.3 64.7 87.55 56.61

WOODSPRNG 1 .1 6.4 28 6.7 814 2.8 63.7 28.91 18.43

BST VALUE 1 .0 2.5 10 2.3 365 1.3 56.0 37.16 20.82 DAYS INN 2 .2 8.9 33 7.7 1,166 4.1 52.6 35.70 18.79 HO JO 1 .1 3.7 10 2.4 293 1.0 40.0 28.70 11.49 MOTEL 6 1 .1 4.5 21 4.9 934 3.3 66.7 45.14 30.10 QUALITY 1 .1 4.8 21 5.1 1,382 4.8 64.6 64.39 41.62 SUPER 8 1 .1 3.2 12 2.9 622 2.2 54.6 51.16 27.93 OTHER BUD 1 .0 1.7 5 1.2 147 .5 43.7 28.75 12.57 TOT BUDGET 8 .6 29.3 112 26.5 4,909 17.1 55.1 43.78 24.15

TOT CHAINS 21 1.7 87.8 379 89.5 26,350 92.0 62.1 69.57 43.20

INDEPENDENTS $100+ ADR 1 .0 .7 2 .5 297 1.0 44.8 139.49 62.56 $60-99ADR 1 .0 1.2 4 1.0 332 1.2 55.0 75.14 41.35 LT $60ADR 3 .1 5.5 22 5.3 933 3.3 58.2 41.80 24.34 1 .0 1.6 4 .9 233 .8 34.2 62.13 21.27 1 .0 1.6 6 1.5 224 .8 57.6 35.56 20.49 1 .0 1.7 6 1.3 276 1.0 46.9 48.83 22.92 TOTAL INDEP 8 .2 12.2 45 10.5 2,295 8.0 52.4 51.49 26.99

TOT MARKET 29 1.9 100.0 423 100.0 28,645 100 60.9 67.67 41.22

* All figures annualized. Included taxed and est non-tax rooms revenues. Independents are categorized by price: $100+, $60-99.99, and under $60) Source Strategies Inc. (210) 734-3434 02/02/18 BRDR1000.FEX

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 58

EXHIBIT III LODGING MARKET: PILOT POINT AREA E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------CORINTH 8111 S INTERSTA 76210 COMFORT INN & SUITES 09 1.025 20121 56 COMFO 106,101 112,812 1.063 52.61 43 22.38 20122 56 COMFO 199,085 200,435 1.007 59.22 66 39.33 20123 56 COMFO 162,218 166,273 .000 54.94 59 32.27 20124 56 COMFO 128,972 137,142 1.063 52.59 51 26.62 20131 56 COMFO 140,835 143,263 1.017 52.06 55 28.43 20132 56 COMFO 194,836 196,333 1.008 57.56 67 38.53 20133 56 COMFO 170,152 172,912 1.016 56.67 59 33.56 20134 56 COMFO 151,434 157,444 1.040 53.99 57 30.56 20141 56 COMFO 152,454 155,288 1.019 52.15 59 30.81 20142 56 COMFO 204,806 209,926 .000 60.45 68 41.19 20143 56 COMFO 206,035 214,858 1.043 62.89 66 41.70 20144 56 COMFO 198,803 203,773 .000 60.71 65 39.55 20151 56 COMFO 225,871 231,518 .000 63.94 72 45.94 20152 56 COMFO 262,126 269,462 1.028 70.06 75 52.88 20153 56 COMFO 264,081 268,915 1.018 77.00 68 52.20 20154 56 COMFO 244,438 247,572 1.013 72.47 66 48.05 20161 56 COMFO 249,483 255,720 .000 69.17 73 50.74 20162 56 COMFO 314,518 328,181 1.043 83.08 78 64.40 20163 56 COMFO 306,121 321,684 1.051 89.26 70 62.44 20164 56 COMFO 265,635 281,304 1.059 83.23 66 54.60 20171 56 COMFO 237,966 247,782 1.041 71.50 69 49.16 20172 56 COMFO 318,280 322,230 1.012 90.26 70 63.23 20173 56 COMFO 272,819 282,589 1.036 88.70 62 54.85

DENTON 4050 MESA DR 76207 COMFORT INN 08 1.033 20121 64 COMFO 160,866 166,257 1.034 56.03 52 28.86 20122 64 COMFO 215,883 219,118 1.013 57.60 65 37.62 20123 64 COMFO 176,441 187,516 1.063 57.21 56 31.85 20124 64 COMFO 170,220 186,597 1.096 56.57 56 31.69 20131 64 COMFO 176,448 187,362 1.062 55.44 59 32.53 20132 64 COMFO 222,000 250,595 1.129 61.54 70 43.03 20133 64 COMFO 190,413 211,829 1.112 60.73 59 35.98 20134 64 COMFO 204,366 212,741 1.041 60.69 60 36.13 20141 64 COMFO 191,034 197,139 1.032 55.66 61 34.23 20142 64 COMFO 230,302 235,135 1.021 58.35 69 40.37 20143 64 COMFO 266,046 277,593 1.043 63.89 74 47.15 20144 64 COMFO 229,884 241,789 1.052 59.91 69 41.06 20151 64 COMFO 224,997 244,386 1.086 60.98 70 42.43 20152 64 COMFO 291,003 309,178 1.062 71.08 75 53.09 20153 64 COMFO 252,680 267,604 1.059 70.07 65 45.45 20154 64 COMFO 263,380 279,632 1.062 69.09 69 47.49 20161 64 COMFO 263,409 272,101 .000 64.51 73 47.24 20162 64 COMFO 347,631 362,283 1.042 76.52 81 62.21 20163 64 COMFO 303,976 315,535 1.038 77.86 69 53.59 20164 64 COMFO 291,248 306,402 1.052 77.82 67 52.04 20171 64 COMFO 279,154 288,237 1.033 72.34 69 50.04

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 59

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------DENTON 4050 MESA DR 76207 COMFORT INN 08 1.033 20172 64 COMFO 368,496 380,320 1.032 84.54 77 65.30 20173 64 COMFO 349,594 366,759 1.049 89.72 69 62.29

3116 BANDERA ST 76207 HO JO EXPRESS (FMR ECONOLO 79 1.125 20121 70 HO JO 49,986 58,397 1.168 28.46 33 9.27 20122 70 HO JO 54,533 73,958 1.356 30.33 38 11.61 20123 70 HO JO 66,989 74,676 1.115 30.18 38 11.60 20124 70 HO JO 65,317 68,824 1.054 30.21 35 10.69 20131 70 HO JO 61,764 71,507 1.158 29.16 39 11.35 20132 70 HO JO 74,042 82,169 1.110 28.56 45 12.90 20133 70 HO JO 69,560 70,952 1.020 27.09 41 11.02 20134 70 HO JO 66,337 66,802 1.007 26.75 39 10.37 20141 70 HO JO 76,776 80,145 1.044 25.11 51 12.72 20142 70 HO JO 110,010 112,336 1.021 28.65 62 17.64 20143 70 HO JO 84,086 86,674 1.012 27.44 49 13.46 20144 70 HO JO 78,261 85,157 1.088 27.36 48 13.22 20151 70 HO JO 74,406 84,927 1.141 26.46 51 13.48 20152 70 HO JO 96,627 110,251 1.141 27.27 63 17.31 20153 70 HO JO 114,096 126,912 1.112 29.55 67 19.71 20154 70 HO JO 69,667 89,881 1.290 27.16 51 13.96 20161 70 HO JO 82,803 83,568 1.009 25.92 51 13.26 20162 70 HO JO 131,878 134,813 1.022 27.18 78 21.16 20163 70 HO JO 107,391 120,815 .000 26.59 71 18.76 20164 70 HO JO 97,101 102,010 1.051 24.51 65 15.84 20171 70 HO JO 62,516 72,840 1.165 21.79 53 11.56 20172 70 HO JO 72,083 85,914 1.192 23.25 58 13.49 20173 70 HO JO 86,132 91,893 1.067 27.72 51 14.27

4485 N INTERSTA 76207 HOLIDAY EXPRESS 09 1.065 20121 92 HIEXP 338,340 352,331 1.041 72.54 59 42.55 20122 92 HIEXP 450,605 468,053 1.039 79.71 70 55.91 20123 92 HIEXP 426,095 456,410 1.071 79.31 68 53.92 20124 92 HIEXP 357,705 416,211 1.164 78.52 63 49.17 20131 92 HIEXP 391,654 400,545 1.023 73.75 66 48.38 20132 92 HIEXP 457,180 471,660 1.032 79.50 71 56.34 20133 92 HIEXP 457,678 487,427 .000 81.09 71 57.59 20134 92 HIEXP 469,993 500,543 .000 84.09 70 59.14 20141 92 HIEXP 476,512 507,485 .000 80.53 76 61.29 20142 92 HIEXP 585,491 623,548 .000 88.97 84 74.48 20143 92 HIEXP 589,610 596,369 1.011 96.44 73 70.46 20144 92 HIEXP 489,534 560,965 1.146 96.15 69 66.28 20151 92 HIEXP 494,755 511,408 1.034 90.50 68 61.76 20152 92 HIEXP 641,919 659,506 1.027 101.78 77 78.78 20153 92 HIEXP 630,526 678,211 1.076 116.33 69 80.13 20154 92 HIEXP 529,986 570,625 1.077 104.84 64 67.42 20161 92 HIEXP 597,498 636,335 .000 104.83 73 76.85 20162 92 HIEXP 718,605 763,671 1.063 117.88 77 91.22

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 60

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------DENTON 4485 N INTERSTA 76207 HOLIDAY EXPRESS 09 1.065 20163 92 HIEXP 665,021 740,740 1.114 126.69 69 87.52 20164 92 HIEXP 526,028 631,769 1.201 113.69 66 74.64 20171 92 HIEXP 554,211 582,004 1.050 106.53 66 70.29 20172 92 HIEXP 697,456 727,989 1.044 118.81 73 86.96 20173 92 HIEXP 662,971 725,422 1.094 120.73 71 85.71

4465 N INTERSTA 76207 LA QUINTA INN & SUITES 10 1.060 20121 88 LAQUN 268,129 293,826 1.096 61.87 60 37.10 20122 88 LAQUN 392,944 410,285 1.044 74.60 69 51.23 20123 88 LAQUN 313,859 352,691 1.124 68.16 64 43.56 20124 88 LAQUN 288,618 338,751 1.174 66.63 63 41.84 20131 88 LAQUN 279,614 314,217 1.124 63.85 62 39.67 20132 88 LAQUN 346,329 359,956 1.039 67.85 66 44.95 20133 88 LAQUN 400,212 424,225 .000 73.29 71 52.40 20134 88 LAQUN 397,924 400,105 1.005 73.73 67 49.42 20141 88 LAQUN 360,650 371,889 1.031 67.99 69 46.96 20142 88 LAQUN 489,497 509,442 1.041 78.98 81 63.62 20143 88 LAQUN 519,878 522,896 1.006 85.14 76 64.59 20144 88 LAQUN 370,166 549,988 1.486 89.17 76 67.93 20151 88 LAQUN 411,341 430,645 1.047 77.00 71 54.37 20152 88 LAQUN 516,647 521,436 1.009 83.91 78 65.11 20153 88 LAQUN 554,218 579,177 1.045 99.20 72 71.54 20154 88 LAQUN 508,271 543,923 1.070 97.81 69 67.18 20161 88 LAQUN 524,993 556,493 .000 93.35 75 70.26 20162 88 LAQUN 600,026 631,500 1.052 104.13 76 78.86 20163 88 LAQUN 564,516 589,061 1.043 107.36 68 72.76 20164 88 LAQUN 515,059 543,702 1.056 99.29 68 67.16 20171 88 LAQUN 444,818 477,208 1.073 89.59 67 60.25 20172 88 LAQUN 576,856 607,703 1.053 104.59 73 75.89 20173 88 LAQUN 553,446 590,718 1.067 104.70 70 72.96

4125 N IH 35 76207 MOTEL 6 72 1.255 20121 85 MTL 6 172,721 189,976 1.100 35.10 71 24.83 20122 85 MTL 6 213,901 236,732 1.107 41.63 74 30.61 20123 85 MTL 6 224,078 244,753 1.092 44.31 71 31.30 20124 85 MTL 6 199,220 220,261 1.106 43.55 65 28.17 20131 85 MTL 6 194,534 207,469 1.066 42.12 64 27.12 20132 85 MTL 6 228,443 245,844 1.076 45.12 70 31.78 20133 85 MTL 6 230,095 260,353 1.132 49.49 67 33.29 20134 85 MTL 6 201,900 237,322 1.175 47.77 64 30.35 20141 85 MTL 6 208,625 245,251 1.176 46.58 69 32.06 20142 85 MTL 6 265,917 304,547 1.145 49.83 79 39.37 20143 85 MTL 6 249,699 295,261 1.182 51.80 73 37.76 20144 85 MTL 6 215,083 272,025 1.265 51.64 67 34.79 20151 85 MTL 6 218,978 268,741 1.227 50.37 70 35.13 20152 85 MTL 6 243,216 305,236 .000 52.20 76 39.46 20153 85 MTL 6 267,930 336,252 .000 59.41 72 43.00

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 61

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------DENTON 4125 N IH 35 76207 MOTEL 6 72 1.255 20154 85 MTL 6 228,542 301,448 1.319 54.73 70 38.55 20161 85 MTL 6 245,099 301,652 1.231 52.23 75 39.43 20162 85 MTL 6 269,017 320,117 1.190 54.54 76 41.39 20163 85 MTL 6 269,117 317,350 1.179 54.17 75 40.58 20164 85 MTL 6 241,744 279,413 1.156 52.10 69 35.73 20171 85 MTL 6 234,793 283,758 1.209 50.65 73 37.09 20172 85 MTL 6 284,246 361,376 1.271 58.43 80 46.72 20173 85 MTL 6 285,613 356,044 1.247 63.07 72 45.53

4505 N INTERSTA 76207 WOODSPRING SUITES 08 1.868 20121 121 VALUP 44,525 231,276 5.194 29.75 71 21.24 20122 121 VALUP 68,439 291,427 4.258 35.52 75 26.47 20123 121 VALUP 71,028 267,708 3.769 34.35 70 24.05 20124 121 VALUP 45,570 182,914 4.014 30.28 54 16.43 20131 121 VALUP 61,101 173,047 2.832 27.30 58 15.89 20132 121 VALUP 65,687 230,156 3.504 28.50 73 20.90 20133 121 VALUP 90,354 227,708 2.520 29.58 69 20.46 20134 121 VALUP 97,364 207,707 2.133 27.75 67 18.66 20141 121 VALUP 98,728 213,722 2.165 27.06 73 19.63 20142 121 VALUP 134,864 269,474 1.998 32.30 76 24.47 20143 121 VALUP 101,160 275,309 2.722 34.34 72 24.73 20144 121 VALUP 92,209 286,134 3.103 35.55 72 25.70 20151 121 VALUP 104,512 310,865 2.974 37.78 76 28.55 20152 121 VALUP 122,335 334,154 2.731 40.89 74 30.35 20153 121 VALUP 137,244 367,149 2.675 45.81 72 32.98 20154 121 VALUP 120,195 306,415 2.549 41.82 66 27.53 20161 121 VALUP 160,209 299,270 .000 41.34 66 27.48 20162 121 VALUP 194,648 395,559 2.032 46.32 78 35.92 20163 121 VALUP 181,104 432,919 2.390 55.31 70 38.89 20164 121 VALUP 124,146 288,321 2.322 46.61 56 25.90 20171 121 VALUP 117,493 261,823 2.228 38.14 63 24.04 20172 121 WOODS 217,587 407,205 1.871 47.04 79 36.98 20173 121 WOODS 246,150 459,368 1.866 54.91 75 41.27

2450 BRINKER RD 76208 BEST WESTERN CROWN CHASE 09 1.095 20121 74 BWEST 266,165 310,933 1.168 71.65 65 46.69 20122 74 BWEST 392,971 416,274 1.059 81.21 76 61.82 20123 74 BWEST 381,297 397,350 1.042 80.80 72 58.37 20124 74 BWEST 340,945 368,905 1.082 77.58 70 54.19 20131 74 BWEST 320,786 368,983 1.150 78.09 71 55.40 20132 74 BWEST 417,981 440,259 1.053 86.59 75 65.38 20133 74 BWEST 408,050 431,946 1.059 91.38 69 63.45 20134 74 BWEST 412,163 434,700 1.055 95.15 67 63.85 20141 74 BWEST 435,243 475,571 1.093 92.77 77 71.41 20142 74 BWEST 473,916 510,687 1.078 100.17 76 75.84 20143 74 BWEST 505,001 525,219 1.040 103.89 74 77.15 20144 74 BWEST 446,343 461,110 1.033 98.29 69 67.73

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 62

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------DENTON 2450 BRINKER RD 76208 BEST WESTERN CROWN CHASE 09 1.095 20151 74 BWEST 471,893 513,941 1.089 100.24 77 77.17 20152 74 BWEST 587,925 616,518 1.049 113.44 81 91.55 20153 74 BWEST 580,727 608,448 1.048 125.71 71 89.37 20154 74 BWEST 538,628 556,016 1.032 119.02 69 81.67 20161 74 BWEST 482,223 528,034 .000 113.59 70 79.28 20162 74 BWEST 545,391 640,422 1.174 122.71 77 95.10 20163 74 BWEST 553,525 626,672 1.132 132.49 69 92.05 20164 74 BWEST 559,063 598,421 1.070 125.39 70 87.90 20171 74 BWEST 542,773 592,945 1.092 124.24 72 89.03 20172 74 BWEST 594,862 643,516 1.082 131.66 73 95.56 20173 74 BWEST 579,036 641,337 1.108 131.92 71 94.20

2800 COLORADO B 76210 COURTYARD BY MARRIOTT 08 1.080 20121 92 COURT 489,984 521,418 1.064 87.94 72 62.97 20122 92 COURT 587,260 634,241 .000 97.66 78 75.76 20123 92 COURT 519,165 560,698 .000 94.09 70 66.25 20124 92 COURT 547,471 591,269 .000 97.69 72 69.86 20131 92 COURT 546,813 590,558 .000 94.05 76 71.32 20132 92 COURT 606,005 654,485 .000 105.05 74 78.18 20133 92 COURT 526,305 568,409 .000 100.83 67 67.16 20134 92 COURT 537,290 580,273 .000 97.58 70 68.56 20141 92 COURT 593,086 640,533 .000 98.47 79 77.36 20142 92 COURT 643,009 694,450 .000 102.01 81 82.95 20143 92 COURT 589,598 636,766 .000 104.74 72 75.23 20144 92 COURT 592,093 639,460 .000 104.68 72 75.55 20151 92 COURT 586,435 633,350 .000 104.45 73 76.49 20152 92 COURT 630,697 681,153 .000 111.76 73 81.36 20153 92 COURT 714,100 771,228 .000 127.79 71 91.12 20154 92 COURT 655,421 707,855 .000 116.93 72 83.63 20161 92 COURT 623,013 672,854 .000 109.79 74 81.26 20162 92 COURT 723,685 781,580 .000 114.06 82 93.36 20163 92 COURT 612,607 661,616 .000 111.41 70 78.17 20164 92 COURT 591,544 638,868 .000 109.40 69 75.48 20171 92 COURT 507,087 547,654 .000 97.27 68 66.14 20172 92 COURT 676,322 730,428 .000 107.82 81 87.25 20173 92 COURT 545,702 589,358 .000 103.02 68 69.63

4211 N INTERSTA 76210 DAYS INN (FMR TRAVELODGE/E 84 1.140 20121 110 DAYS 132,365 166,620 1.259 28.73 59 16.83 20122 110 DAYS 159,044 208,476 1.311 33.65 62 20.83 20123 110 DAYS 154,646 214,077 1.384 33.48 63 21.15 20124 110 DAYS 115,670 157,761 1.364 31.51 49 15.59 20131 110 DAYS 127,865 155,563 1.217 30.69 51 15.71 20132 110 DAYS 148,965 177,627 1.192 30.69 58 17.74 20133 110 DAYS 145,458 173,742 1.194 31.30 55 17.17 20134 110 DAYS 128,702 155,745 1.210 30.78 50 15.39 20141 110 DAYS 104,966 124,577 1.187 28.27 45 12.58

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 63

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------DENTON 4211 N INTERSTA 76210 DAYS INN (FMR TRAVELODGE/E 84 1.140 20142 110 DAYS 190,567 211,667 1.111 29.92 71 21.15 20143 110 DAYS 168,665 191,464 1.135 29.22 65 18.92 20144 110 DAYS 160,748 183,253 .000 29.13 62 18.11 20151 110 DAYS 153,852 175,391 .000 28.55 62 17.72 20152 110 DAYS 200,982 220,022 1.095 31.03 71 21.98 20153 110 DAYS 209,705 231,464 1.104 33.64 68 22.87 20154 110 DAYS 181,475 204,200 1.125 33.17 61 20.18 20161 110 DAYS 182,603 209,326 1.146 31.66 67 21.14 20162 110 DAYS 199,965 217,202 1.086 30.71 71 21.70 20163 110 DAYS 248,185 281,785 1.135 38.67 72 27.84 20164 110 DAYS 216,589 248,671 1.148 35.62 69 24.57 20171 110 DAYS 185,783 214,006 1.152 32.53 66 21.62 20172 110 DAYS 310,079 341,141 1.100 49.27 69 34.08 20173 110 DAYS 331,735 378,427 1.141 56.05 67 37.39

3110 COLORADO B 76210 HILTON GARDEN INN 10 1.050 20121 136 HILTG 471,349 494,916 .000 70.68 57 40.43 20122 136 HILTG 583,112 612,268 .000 72.66 68 49.47 20123 136 HILTG 527,826 554,217 .000 71.20 62 44.29 20124 136 HILTG 524,021 550,222 .000 71.27 62 43.98 20131 136 HILTG 552,883 580,527 .000 70.56 67 47.43 20132 136 HILTG 613,173 643,832 .000 77.56 67 52.02 20133 136 HILTG 613,096 643,751 .000 81.60 63 51.45 20134 136 HILTG 622,298 653,413 .000 78.97 66 52.22 20141 136 HILTG 656,130 688,937 .000 82.94 68 56.29 20142 136 HILTG 806,003 846,303 .000 94.01 73 68.38 20143 136 HILTG 745,699 782,984 .000 97.19 64 62.58 20144 136 HILTG 701,544 736,621 .000 94.90 62 58.87 20151 136 HILTG 733,612 770,293 .000 89.67 70 62.93 20152 136 HILTG 820,672 861,706 .000 98.36 71 69.63 20153 136 HILTG 801,905 842,000 .000 101.73 66 67.30 20154 136 HILTG 747,928 785,324 .000 94.39 66 62.77 20161 136 HILTG 775,851 814,644 .000 91.37 73 66.56 20162 136 HILTG 952,264 964,701 1.013 102.21 76 77.95 20163 136 HILTG 830,749 835,134 1.005 105.38 63 66.75 20164 136 HILTG 829,058 870,511 .000 100.18 69 69.57 20171 136 HILTG 752,125 789,731 .000 90.16 72 64.52 20172 136 HILTG 895,272 940,036 .000 102.50 74 75.96 20173 136 HILTG 829,164 870,622 .000 101.22 69 69.58

2907 SHORELINE 76210 HOMEWOOD SUITES 09 1.080 20121 107 HOMEW 458,683 495,378 .000 86.89 59 51.44 20122 107 HOMEW 620,635 670,286 .000 95.18 72 68.84 20123 107 HOMEW 551,822 595,968 .000 90.13 67 60.54 20124 107 HOMEW 540,566 583,811 .000 90.22 66 59.31 20131 107 HOMEW 631,177 681,671 .000 93.57 76 70.79 20132 107 HOMEW 622,860 672,689 .000 99.00 70 69.09

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 64

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------DENTON 2907 SHORELINE 76210 HOMEWOOD SUITES 09 1.080 20133 107 HOMEW 585,286 632,109 .000 91.80 70 64.21 20134 107 HOMEW 684,518 739,279 .000 98.08 77 75.10 20141 107 HOMEW 668,483 721,962 .000 99.04 76 74.97 20142 107 HOMEW 758,229 818,887 .000 109.08 77 84.10 20143 107 HOMEW 721,367 779,076 .000 114.38 69 79.14 20144 107 HOMEW 658,470 711,148 .000 110.05 66 72.24 20151 107 HOMEW 660,163 712,976 .000 105.35 70 74.04 20152 107 HOMEW 726,822 784,968 .000 110.57 73 80.62 20153 107 HOMEW 612,238 661,217 .000 112.30 60 67.17 20154 107 HOMEW 502,575 542,781 .000 101.07 55 55.14 20161 107 HOMEW 584,645 631,417 .000 100.76 65 65.57 20162 107 HOMEW 746,800 806,544 .000 108.41 76 82.83 20163 107 HOMEW 713,485 770,564 .000 115.89 68 78.28 20164 107 HOMEW 602,629 650,839 .000 104.57 63 66.12 20171 107 HOMEW 552,316 596,501 .000 94.41 66 61.94 20172 107 HOMEW 755,784 816,247 .000 105.97 79 83.83 20173 107 HOMEW 695,548 751,192 .000 105.35 72 76.31

3761 S INTERSTA 76210 RESIDENCE INN BY MARRIOTT 16 1.400 20164 94 RESID 385,741 676,654 1.469 105.00 75 78.24 20171 94 RESID 414,428 608,652 1.469 105.00 69 71.94 20172 94 RESID 615,356 811,645 .000 125.00 76 94.88 20173 94 RESID 570,846 836,855 1.466 127.72 76 96.77

2602 LILLIAN MI 76210 THE WILDWOOD INN 02 1.050 20121 13 72,262 81,413 1.127 141.99 49 69.58 20122 13 70,848 83,446 1.178 145.97 48 70.54 20123 13 57,343 62,658 1.093 137.54 38 52.39 20124 13 74,155 83,161 1.121 140.68 49 69.53 20131 13 65,358 71,759 1.098 139.27 44 61.33 20132 13 74,682 82,899 1.110 139.27 50 70.08 20133 13 57,292 59,020 1.030 137.98 36 49.35 20134 13 78,042 81,869 1.049 138.81 49 68.45 20141 13 72,562 78,525 1.082 133.39 50 67.12 20142 13 75,487 82,016 1.086 132.25 52 69.33 20143 13 79,592 83,393 1.048 133.18 52 69.73 20144 13 45,821 48,613 1.061 124.80 33 40.65 20151 13 41,334 43,401 .000 119.07 31 37.09 20152 13 46,840 49,182 .000 124.19 33 41.57 20153 13 39,815 41,806 .000 119.14 29 34.95 20154 13 56,573 58,951 1.042 103.67 47 49.29 20162 13 70,830 74,372 .000 103.00 61 62.87 20163 13 41,219 43,280 .000 95.22 38 36.19 20164 13 52,133 54,740 .000 98.42 46 45.77

GAINESVILLE 2103 N INTERSTA 76240 ATRIA INN (FMR RODEW/SOUTH 82 1.275 20121 33 50,462 53,821 1.067 41.92 43 18.12

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 65

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------GAINESVILLE 2103 N INTERSTA 76240 ATRIA INN (FMR RODEW/SOUTH 82 1.275 20122 33 78,827 84,646 1.074 42.26 67 28.19 20123 33 89,092 91,996 1.033 50.40 60 30.30 20124 33 81,305 103,664 .000 49.90 68 34.14 20131 33 72,084 91,907 .000 45.50 68 30.95 20132 33 82,071 104,641 .000 46.87 74 34.85 20133 33 81,343 82,754 1.017 50.51 54 27.26 20134 33 53,507 54,554 1.020 45.49 39 17.97 20141 33 60,920 77,673 .000 47.31 55 26.15 20142 33 62,640 79,866 .000 46.12 58 26.60 20143 33 80,507 102,646 .000 49.23 69 33.81 20144 33 68,108 72,406 1.063 46.00 52 23.85 20151 33 92,732 95,683 1.032 54.36 59 32.22 20152 33 52,733 58,354 1.107 47.51 41 19.43 20153 33 69,427 75,384 1.086 51.42 48 24.83 20154 33 54,609 60,732 1.112 44.33 45 20.00 20161 33 58,623 66,874 1.141 45.26 50 22.52 20162 33 75,088 90,136 1.200 50.65 59 30.02 20163 33 72,529 98,131 1.353 58.04 56 32.32 20164 33 60,156 73,512 1.222 52.75 46 24.21 20171 33 53,725 65,131 1.212 49.48 44 21.93 20172 33 62,256 72,520 1.165 52.56 46 24.15 20173 33 71,147 92,140 1.295 58.42 52 30.35

3019 E HIGHWAY 76240 BEST VALUE INN FMR TRAILS 85 1.220 20121 48 BVALU 61,892 96,501 1.559 35.95 62 22.34 20122 48 BVALU 68,288 112,218 1.643 38.26 67 25.69 20123 48 BVALU 58,318 110,241 1.890 40.55 62 24.96 20124 48 BVALU 59,046 81,146 1.374 35.19 52 18.38 20131 48 BVALU 66,559 80,201 1.205 35.19 53 18.57 20132 48 BVALU 78,348 96,908 1.237 38.72 57 22.19 20133 48 BVALU 57,031 106,547 1.868 39.02 62 24.13 20134 48 BVALU 56,173 69,592 1.239 36.01 44 15.76 20141 48 BVALU 77,824 91,870 1.180 37.45 57 21.27 20142 48 BVALU 58,251 87,602 1.504 38.74 52 20.06 20143 48 BVALU 50,751 71,211 1.403 40.07 40 16.13 20144 48 BVALU 58,163 73,153 1.258 37.07 45 16.57 20151 48 BVALU 68,601 92,789 1.353 38.17 56 21.48 20152 48 BVALU 59,882 84,170 1.406 38.74 50 19.27 20153 48 BVALU 59,446 74,396 1.251 39.79 42 16.85 20154 48 BVALU 55,852 70,502 1.262 36.54 44 15.97 20161 48 BVALU 66,436 85,767 1.291 37.31 53 19.85 20162 48 BVALU 85,176 87,406 1.026 37.82 53 20.01 20163 48 BVALU 73,839 103,813 1.406 40.70 58 23.51 20164 48 BVALU 50,205 89,115 1.775 38.86 52 20.18 20171 48 BVALU 61,626 74,166 1.203 38.32 45 17.17 20172 48 BVALU 59,323 70,914 1.195 38.23 42 16.23 20173 48 BVALU 53,483 66,643 1.246 38.93 39 15.09

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 66

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------

GAINESVILLE INT 35N-SERVICE 76240 BUDGET HOST INN 95 1.150 20121 32 X.BUD 39,215 45,097 .000 30.86 51 15.66 20122 32 X.BUD 40,516 46,593 .000 28.79 56 16.00 20123 32 X.BUD 41,718 47,976 .000 31.26 52 16.30 20124 32 X.BUD 29,027 33,381 .000 28.27 40 11.34 20131 32 X.BUD 32,384 37,242 .000 27.57 47 12.93 20132 32 X.BUD 32,234 37,069 .000 29.43 43 12.73 20133 32 X.BUD 33,973 39,069 .000 29.69 45 13.27 20134 32 X.BUD 27,280 31,372 .000 26.58 40 10.66 20141 32 X.BUD 36,837 42,363 .000 28.68 51 14.71 20142 32 X.BUD 35,627 40,971 .000 30.82 46 14.07 20143 32 X.BUD 39,701 45,656 .000 32.56 48 15.51 20144 32 X.BUD 30,572 35,158 .000 27.56 43 11.94 20151 32 X.BUD 30,337 34,888 .000 26.98 45 12.11 20152 32 X.BUD 34,923 40,161 .000 26.86 51 13.79 20153 32 X.BUD 35,953 41,346 .000 28.47 49 14.04 20154 32 X.BUD 28,946 33,288 .000 27.03 42 11.31 20161 32 X.BUD 39,507 45,433 .000 27.09 58 15.78 20162 32 X.BUD 36,487 41,960 .000 27.25 53 14.41 20163 32 X.BUD 35,837 41,213 .000 29.02 48 14.00 20164 32 X.BUD 36,519 41,997 .000 29.02 49 14.27 20171 32 X.BUD 31,336 36,036 .000 27.56 45 12.51 20172 32 X.BUD 38,479 44,251 .000 28.29 54 15.20 20173 32 X.BUD 44,831 51,556 .000 32.44 54 17.51

1715 N INTERSTA 76240 COMFORT SUITES 07 1.082 20121 72 COMFS 366,985 378,708 1.032 85.17 69 58.44 20122 72 COMFS 419,131 440,875 1.052 92.30 73 67.29 20123 72 COMFS 430,218 452,731 1.052 97.81 70 68.35 20124 72 COMFS 293,373 307,421 1.048 86.93 53 46.41 20131 72 COMFS 225,179 242,236 1.076 82.53 45 37.38 20132 72 COMFS 261,181 279,223 1.069 85.01 50 42.62 20133 72 COMFS 309,777 340,766 1.100 88.41 58 51.44 20134 72 COMFS 282,441 301,670 1.068 83.48 55 45.54 20141 72 COMFS 242,230 255,100 1.053 81.62 48 39.37 20142 72 COMFS 296,295 313,432 1.058 78.99 61 47.84 20143 72 COMFS 396,773 419,629 1.058 94.47 67 63.35 20144 72 COMFS 266,810 286,359 1.073 85.47 51 43.23 20151 72 COMFS 282,745 301,415 1.066 79.76 58 46.51 20152 72 COMFS 309,865 329,275 1.063 85.43 59 50.26 20153 72 COMFS 284,281 302,413 1.064 87.48 52 45.65 20154 72 COMFS 224,246 241,584 1.077 82.17 44 36.47 20161 72 COMFS 249,048 272,227 1.093 80.22 52 42.01 20162 72 COMFS 340,786 371,274 1.089 90.76 62 56.67 20163 72 COMFS 353,366 386,949 1.095 95.31 61 58.42 20164 72 COMFS 285,635 314,354 1.101 84.49 56 47.46 20171 72 COMFS 266,799 286,320 1.073 77.00 57 44.19

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 67

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------GAINESVILLE 1715 N INTERSTA 76240 COMFORT SUITES 07 1.082 20172 72 COMFS 268,210 288,249 1.075 79.81 55 43.99 20173 72 COMFS 276,153 300,471 1.088 87.19 52 45.36

1701 N INTERSTA 76240 DAYS INN 89 1.044 20121 60 DAYS 103,164 173,167 1.679 55.12 58 32.07 20122 60 DAYS 124,520 158,690 1.274 57.58 50 29.06 20123 60 DAYS 119,433 162,015 1.357 57.84 51 29.35 20124 60 DAYS 57,304 61,678 1.076 35.48 31 11.17 20131 60 DAYS 77,520 128,021 1.651 42.58 56 23.71 20132 60 DAYS 89,460 154,822 1.731 46.95 60 28.36 20133 60 DAYS 82,435 156,721 1.901 48.83 58 28.39 20134 60 DAYS 65,725 132,378 2.014 45.81 52 23.98 20141 60 DAYS 73,401 150,902 2.056 46.80 60 27.94 20142 60 DAYS 74,980 137,661 1.836 45.05 56 25.21 20143 60 DAYS 59,160 138,945 2.349 44.35 57 25.17 20144 60 DAYS 50,210 126,113 2.512 44.35 52 22.85 20151 60 DAYS 86,987 167,372 1.924 45.06 69 30.99 20152 60 DAYS 88,063 110,048 1.250 45.56 44 20.16 20153 60 DAYS 76,757 157,881 2.057 48.29 59 28.60 20154 60 DAYS 63,200 148,017 2.342 49.30 54 26.81 20161 60 DAYS 83,611 167,240 2.000 50.03 62 30.97 20162 25 DAYS 130,000 135,720 .000 1 53.28 ** 59.66 20163 60 DAYS 200,395 216,296 1.079 61.31 64 39.18 20164 60 DAYS 130,068 130,928 1.007 53.14 45 23.72 20171 60 DAYS 151,327 155,687 1.029 53.20 54 28.83 20172 60 DAYS 172,352 180,276 1.046 56.35 59 33.02 20173 60 DAYS 185,554 193,261 1.042 62.08 56 35.01

4325 N INTERSTA 76240 HAMPTON INN & SUITES 06 1.050 20121 75 HAMPT 560,865 588,908 .000 113.71 77 87.25 20122 75 HAMPT 589,261 618,724 .000 119.95 76 90.66 20123 75 HAMPT 593,916 623,612 .000 129.29 70 90.38 20124 75 HAMPT 492,401 517,021 .000 118.39 63 74.93 20131 75 HAMPT 505,009 530,259 .000 111.39 71 78.56 20132 75 HAMPT 529,084 555,538 .000 114.73 71 81.40 20133 75 HAMPT 532,458 559,081 .000 125.56 65 81.03 20134 75 HAMPT 474,892 498,637 .000 120.51 60 72.27 20141 75 HAMPT 534,066 560,769 .000 120.13 69 83.08 20142 75 HAMPT 619,673 650,657 .000 127.76 75 95.33 20143 75 HAMPT 629,437 660,909 .000 136.38 70 95.78 20144 75 HAMPT 653,803 686,493 .000 136.38 73 99.49 20151 75 HAMPT 606,166 636,474 .000 132.47 71 94.29 20152 75 HAMPT 574,944 603,691 .000 137.59 64 88.45 20153 75 HAMPT 565,646 593,928 .000 142.67 60 86.08 20154 75 HAMPT 496,048 520,850 .000 122.08 62 75.49 20161 75 HAMPT 516,600 542,430 .000 114.94 70 80.36 20162 75 HAMPT 526,621 552,952 .000 134.13 60 81.02

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 68

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------GAINESVILLE 4325 N INTERSTA 76240 HAMPTON INN & SUITES 06 1.050 20163 75 HAMPT 554,120 581,826 .000 130.05 65 84.32 20164 75 HAMPT 450,989 473,538 .000 118.20 58 68.63 20171 75 HAMPT 487,015 511,366 .000 120.57 63 75.76 20172 75 HAMPT 496,759 521,597 .000 126.18 61 76.42 20173 75 HAMPT 564,187 592,396 .000 135.61 63 85.85

320 IH 35 NORTH 76240 HOLIDAY EXPRESS 03 1.062 20121 66 HIEXP 389,699 412,721 1.059 95.32 73 69.48 20122 66 HIEXP 461,501 481,341 1.043 96.09 83 80.14 20123 66 HIEXP 458,284 477,777 1.043 111.37 71 78.69 20124 66 HIEXP 368,282 392,245 1.065 102.53 63 64.60 20131 66 HIEXP 412,045 436,371 1.059 105.53 70 73.46 20132 66 HIEXP 394,166 417,601 1.059 108.70 64 69.53 20133 66 HIEXP 364,328 384,007 1.054 105.50 60 63.24 20134 66 HIEXP 313,185 334,095 1.067 101.46 54 55.02 20141 66 HIEXP 370,404 391,728 1.058 108.64 61 65.95 20142 66 HIEXP 317,889 337,906 1.063 111.98 50 56.26 20143 66 HIEXP 276,274 295,332 1.069 100.95 48 48.64 20144 66 HIEXP 280,323 298,872 1.066 85.95 57 49.22 20151 66 HIEXP 324,660 344,648 1.062 83.97 69 58.02 20152 66 HIEXP 383,796 407,563 1.062 98.05 69 67.86 20153 66 HIEXP 363,746 387,904 1.066 103.93 61 63.88 20154 66 HIEXP 338,191 363,651 1.075 102.61 58 59.89 20161 66 HIEXP 361,677 385,845 1.067 99.56 65 64.96 20162 66 HIEXP 412,045 445,731 1.082 112.65 66 74.21 20163 66 HIEXP 453,076 492,727 1.088 123.15 66 81.15 20164 66 HIEXP 360,245 387,373 1.075 110.83 58 63.80 20171 66 HIEXP 375,349 396,880 1.057 105.62 63 66.81 20172 66 HIEXP 356,884 379,942 1.065 104.60 60 63.26 20173 66 HIEXP 401,829 427,021 1.063 123.06 57 70.33

4201 N INTERSTA 76240 LA QUINTA INN & SUITES 07 1.165 20121 71 LAQUN 409,203 510,192 1.247 98.54 81 79.84 20122 71 LAQUN 395,208 515,669 1.305 100.34 80 79.81 20123 71 LAQUN 400,884 519,365 1.296 112.91 70 79.51 20124 71 LAQUN 418,425 536,265 1.282 111.38 74 82.10 20131 71 LAQUN 412,112 525,089 1.274 110.38 74 82.17 20132 71 LAQUN 334,550 415,503 1.242 104.42 62 64.31 20133 71 LAQUN 396,699 485,528 1.224 106.62 70 74.33 20134 71 LAQUN 304,778 383,461 1.258 97.48 60 58.70 20141 71 LAQUN 327,954 389,504 1.188 97.32 63 60.96 20142 71 LAQUN 365,156 440,882 1.207 108.67 63 68.24 20143 71 LAQUN 352,901 408,630 1.158 103.08 61 62.56 20144 71 LAQUN 404,209 424,765 1.051 101.08 64 65.03 20151 71 LAQUN 353,107 397,896 1.127 96.60 64 62.27 20152 71 LAQUN 341,767 409,223 1.197 103.46 61 63.34 20153 71 LAQUN 385,680 426,160 1.105 108.61 60 65.24

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 69

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------GAINESVILLE 4201 N INTERSTA 76240 LA QUINTA INN & SUITES 07 1.165 20154 71 LAQUN 280,477 317,292 1.131 90.47 54 48.58 20161 71 LAQUN 298,244 338,923 1.136 92.37 57 53.04 20162 71 LAQUN 379,960 429,705 1.131 107.11 62 66.51 20163 71 LAQUN 386,822 456,209 1.179 115.83 60 69.84 20164 71 LAQUN 305,421 396,990 1.300 105.64 58 60.78 20171 71 LAQUN 322,576 388,355 1.204 99.61 61 60.78 20172 71 LAQUN 387,915 449,635 1.159 111.45 62 69.59 20173 71 LAQUN 407,355 481,980 1.183 120.86 61 73.79

600 MEDAL OF HO 76240 QUALITY INN (FMR RAMA/QUAL 84 1.020 20121 118 QUALY 362,350 370,385 1.022 45.90 76 34.88 20122 118 QUALY 410,668 422,933 1.030 51.30 77 39.39 20123 118 QUALY 371,233 380,897 1.026 54.36 65 35.09 20124 91 QUALY 266,763 274,792 1.030 56.98 58 32.82 20131 91 QUALY 313,352 320,144 1.022 56.98 69 39.09 20132 91 QUALY 357,764 363,079 1.015 65.40 67 43.84 20133 91 QUALY 420,318 424,448 1.010 77.48 65 50.70 20134 91 QUALY 318,474 320,886 1.008 62.55 61 38.33 20141 91 QUALY 355,992 358,610 1.007 68.17 64 43.79 20142 91 QUALY 395,294 398,148 1.007 71.62 67 48.08 20143 91 QUALY 372,069 377,558 1.015 74.32 61 45.10 20144 91 QUALY 304,069 307,056 1.010 62.32 59 36.68 20151 91 QUALY 403,928 409,539 1.014 69.76 72 50.00 20152 91 QUALY 420,051 428,470 1.020 78.78 66 51.74 20153 91 QUALY 380,666 384,425 1.010 79.05 58 45.92 20154 91 QUALY 280,351 283,257 1.010 66.42 51 33.83 20161 91 QUALY 320,302 322,989 1.008 67.81 58 39.44 20162 91 QUALY 366,180 368,660 1.007 74.03 60 44.52 20163 91 QUALY 233,903 237,682 1.016 71.91 39 28.39 20164 91 QUALY 283,655 287,380 1.013 66.50 52 34.33 20171 91 QUALY 284,735 286,356 1.006 61.71 57 34.96 20172 91 QUALY 304,480 308,232 1.012 64.42 58 37.22 20173 91 QUALY 353,857 359,924 1.017 73.88 58 42.99

1936 N INTERSTA 76240 SUPER 8 (FMR DELUX/RALTD) 64 1.125 20121 61 SUPR8 133,279 179,389 1.346 46.42 70 32.68 20122 61 SUPR8 167,122 203,007 1.215 49.81 73 36.57 20123 61 SUPR8 166,896 204,600 1.226 56.71 64 36.46 20124 61 SUPR8 141,561 159,456 1.126 49.50 57 28.41 20131 61 SUPR8 133,385 161,044 1.207 49.50 59 29.33 20132 61 SUPR8 117,152 151,017 1.289 52.01 52 27.21 20133 61 SUPR8 131,053 150,276 1.147 54.09 50 26.78 20134 61 SUPR8 116,997 129,444 1.106 50.07 46 23.07 20141 61 SUPR8 139,395 152,584 1.095 52.07 53 27.79 20142 61 SUPR8 145,143 163,286 .000 53.07 55 29.42 20143 61 SUPR8 168,492 189,554 .000 56.64 60 33.78 20144 61 SUPR8 132,739 149,331 .000 52.64 51 26.61

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 70

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------GAINESVILLE 1936 N INTERSTA 76240 SUPER 8 (FMR DELUX/RALTD) 64 1.125 20151 61 SUPR8 156,885 176,496 .000 55.37 58 32.15 20152 61 SUPR8 168,963 176,748 1.046 58.23 55 31.84 20153 61 SUPR8 179,021 201,399 .000 61.72 58 35.89 20154 61 SUPR8 145,229 163,383 .000 63.02 46 29.11 20161 61 SUPR8 209,741 235,959 .000 63.83 67 42.98 20162 60 SUPR8 178,934 212,914 1.190 67.98 57 39.00 20163 60 SUPR8 140,000 157,500 .000 1 54.39 52 28.53 20164 60 SUPR8 143,695 170,988 1.190 51.65 60 30.98 20171 60 SUPR8 159,713 187,458 1.174 58.81 59 34.71 20172 60 SUPR8 171,148 199,068 1.163 63.37 58 36.46 20173 60 SUPR8 199,294 216,126 1.084 70.48 56 39.15

LINDSAY 312 JM LINDSAY 76250 LINDSAY INN 06 1.750 20121 27 47,417 63,439 1.338 46.14 57 26.11 20122 27 50,962 89,124 1.749 48.93 74 36.27 20123 27 40,896 64,715 1.582 48.22 54 26.05 20124 27 32,141 35,941 1.118 44.07 33 14.47 20131 27 26,946 40,296 1.495 41.57 40 16.58 20132 27 33,935 57,874 1.705 42.82 55 23.55 20133 27 39,054 77,362 1.981 47.34 66 31.14 20134 27 41,813 74,814 1.789 47.32 64 30.12 20141 27 33,367 70,770 2.121 46.80 62 29.12 20142 27 40,093 83,637 2.086 49.61 69 34.04 20143 27 39,037 82,806 2.121 52.96 63 33.34 20144 27 39,555 69,658 1.761 49.50 57 28.04 20171 27 47,462 69,189 1.458 47.69 60 28.47 20172 27 53,931 104,669 1.941 59.75 71 42.60 20173 27 83,854 121,137 1.445 70.47 69 48.77

PILOT POINT 2200 FM 1192 76258 LONE STAR LODGE (FMR LANTA 03 1.080 20121 30 30,414 32,048 1.054 49.08 24 11.87 20122 30 82,800 85,250 1.030 72.04 43 31.23 20123 30 59,601 64,369 .000 69.69 33 23.32 20124 30 50,537 56,537 1.119 59.75 34 20.48 20131 30 40,291 47,271 1.173 49.50 35 17.51 20132 30 68,983 70,453 1.021 72.50 36 25.81 20133 30 56,338 58,678 1.042 66.81 32 21.26 20134 30 37,684 40,854 1.084 66.20 22 14.80 20142 30 63,918 67,954 1.063 67.90 37 24.89 20143 30 60,821 62,609 1.029 63.94 35 22.68 20144 30 45,268 47,270 1.044 64.81 26 17.13 20162 30 60,746 65,075 1.071 62.87 38 23.84 20163 30 47,966 48,629 1.014 51.44 34 17.62 20164 30 56,879 58,109 1.022 51.59 41 21.05 20171 30 69,270 70,399 1.016 51.36 51 26.07 20172 30 94,743 98,534 1.040 56.26 64 36.09 20173 30 76,256 83,539 1.096 54.15 56 30.27

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 71

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------

SANGER 1400 N STEMMONS 76266 SANGER INN 84 1.050 20121 30 57,833 58,753 1.016 36.28 60 21.76 20122 30 87,523 95,013 1.086 44.80 78 34.80 20123 30 55,552 68,152 1.227 36.62 67 24.69 20124 30 48,207 53,167 1.103 35.66 54 19.26 20131 30 53,023 55,674 .000 35.30 58 20.62 20132 30 61,666 64,528 1.046 35.30 67 23.64 20133 30 50,482 50,987 1.010 36.01 51 18.47 20134 30 42,985 45,134 .000 35.22 46 16.35 20141 30 43,604 45,784 .000 34.34 49 16.96 20142 30 58,659 61,592 .000 35.83 63 22.56 20143 30 70,435 73,957 .000 38.09 70 26.80 20144 30 68,917 72,363 .000 37.98 69 26.22 20151 30 76,483 80,307 .000 41.73 71 29.74 20152 30 94,975 99,724 .000 48.09 76 36.53 20153 30 95,851 100,644 .000 53.32 68 36.47 20154 30 102,399 107,519 .000 55.53 70 38.96 20161 30 97,089 101,943 .000 53.00 71 37.76 20162 30 110,639 116,171 .000 57.72 74 42.55 20163 30 89,373 93,842 .000 59.28 57 34.00 20164 30 74,132 77,839 .000 53.32 53 28.20 20171 30 63,042 66,194 .000 49.35 50 24.52 20172 30 90,670 95,204 .000 54.64 64 34.87 20173 30 103,948 109,145 .000 61.46 64 39.55

VALLEY VIEW 1000 S FRONTAGE 76272 VALLEY VIEW INN & SUITES 08 1.222 20121 45 73,491 89,806 .000 34.15 65 22.17 20122 45 123,146 150,484 .000 38.44 96 36.75 20123 45 87,948 107,472 .000 37.56 69 25.96 20124 45 75,744 92,559 .000 35.20 64 22.36 20131 45 62,036 75,808 .000 34.20 55 18.72 20132 45 71,952 87,925 .000 35.23 61 21.47 20133 45 67,119 82,019 .000 36.64 54 19.81 20134 45 78,409 95,816 .000 36.62 63 23.14 20141 45 58,351 71,305 .000 36.00 49 17.61 20142 45 95,293 116,448 .000 38.16 75 28.44 20143 45 69,106 84,448 .000 37.53 54 20.40 20144 45 74,161 90,625 .000 37.53 58 21.89 20151 45 67,559 82,557 .000 36.10 56 20.38 20152 45 78,929 96,451 .000 38.66 61 23.55 20153 45 75,320 92,041 .000 39.92 56 22.23 20154 45 32,191 39,337 .000 30.76 31 9.50 20161 45 65,998 80,650 .000 31.41 63 19.91 20162 45 55,438 68,235 1.231 32.39 51 16.66 20163 45 55,104 65,864 1.195 34.50 46 15.91 20164 45 37,970 47,148 1.242 30.50 37 11.39 20171 45 32,458 41,667 1.284 28.81 36 10.29

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 72

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------VALLEY VIEW 1000 S FRONTAGE 76272 VALLEY VIEW INN & SUITES 08 1.222 20172 45 43,064 52,461 1.218 30.54 42 12.81 20173 45 43,446 53,467 1.231 33.19 39 12.91

WHITESBORO 1013 HWY 82 WES 76273 VICTORIAN INNS 83 1.050 20121 33 55,670 58,454 .000 41.59 47 19.68 20122 33 83,034 87,186 .000 53.30 54 29.03 20123 33 73,448 73,848 1.005 48.79 50 24.32 20124 33 69,432 72,904 .000 49.60 48 24.01 20131 33 67,046 68,096 1.016 46.38 49 22.93 20132 33 61,141 62,366 1.020 51.85 40 20.77 20133 33 70,482 72,722 1.032 47.97 50 23.95 20134 33 70,491 73,181 1.038 47.97 50 24.10 20141 33 57,701 66,821 1.158 46.71 48 22.50 20142 33 80,777 85,732 1.061 54.96 52 28.55 20143 33 66,551 69,879 .000 42.31 54 23.02 20144 33 55,739 56,489 1.013 38.51 48 18.61 20151 33 56,326 56,836 1.009 38.51 50 19.14 20152 33 68,305 69,768 1.021 43.52 53 23.23 20153 33 85,700 88,708 1.035 41.53 70 29.22 20154 33 51,354 59,414 1.157 37.63 52 19.57 20161 33 50,083 52,447 1.047 33.88 52 17.66 20162 33 60,520 60,945 1.007 39.10 52 20.29 20163 33 73,207 75,607 1.033 35.43 70 24.90 20164 33 61,573 62,861 1.021 33.12 62 20.71 20171 33 49,211 53,671 1.091 32.48 56 18.07 20172 33 61,227 66,934 1.093 43.31 51 22.29 20173 33 72,449 74,968 1.035 40.58 61 24.69

31434 HIGHWAY 8 76273 WHITESBORO INN & SUITES 09 1.060 20121 22 66,256 70,231 .000 65.17 54 35.47 20122 22 86,003 91,163 .000 74.56 61 45.54 20123 22 90,000 95,400 .000 1 72.32 65 47.13 20124 22 70,679 74,920 .000 66.06 56 37.02 20131 22 64,414 68,279 .000 66.62 52 34.48 20132 22 87,989 93,268 .000 85.68 54 46.59 20133 22 90,153 95,562 .000 81.40 58 47.21 20134 22 69,585 73,760 .000 75.40 48 36.44 20141 22 65,681 69,622 .000 75.63 46 35.16 20142 22 72,321 76,660 .000 83.95 46 38.29 20143 22 78,328 83,028 .000 75.56 54 41.02 20144 22 59,204 62,756 .000 75.56 41 31.01 20151 22 70,691 74,932 .000 62.56 60 37.84 20152 22 81,216 86,089 .000 93.29 46 43.00 20153 22 67,069 71,093 .000 67.95 52 35.13 20154 22 53,918 57,153 .000 62.78 45 28.24 20161 22 62,283 66,020 .000 64.04 52 33.34 20162 22 64,176 68,027 .000 74.45 46 33.98

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 73

E 3 YR AVG CITY ADDR ZIP S EST 4 OP ADJ 1 ------T AVG. % ------# TAXABLE GROSS ADJ 1 DAILY OCC $ 5 YRQ RMS BRAND REVENUE REVENUE FACTOR 2 RATE EST REVPAR ------WHITESBORO 31434 HIGHWAY 8 76273 WHITESBORO INN & SUITES 09 1.060 20163 22 53,163 56,353 .000 59.32 47 27.84 20164 22 43,000 45,580 .000 1 49.32 46 22.52 20171 22 49,543 52,516 .000 53.76 49 26.52 20172 22 50,500 53,530 .000 63.79 42 26.74 20173 22 40,000 42,400 .000 1 52.10 40 20.95

ENDNOTES: 1. FACTOR USED TO ADJUST TAXABLE TO GROSS REVENUES. AREA FACTOR USED IF PROPERTY DOES NOT PROVIDE GROSS. TAXABLE IS 89% OF GROSS STATEWIDE. 2. A NUMBER OR A 'Y' INDICATES QUARTERS REVENUES ARE ESTIMATED. 3. ESTIMATED AVERAGE DAILY RATE (IE 60-85% OF RACK SINGLE) 4. Occupancy derived from calculated roomnights sold (gross room revenues divided by Average Daily Rate), divided by roomnights available. 5. Total REVenues Per Available Room per day, or 'REVPAR'; Prepared from State Comptroller, chain directories and private records. INCLUDES ALL QUARTERLY REPORTS EXCEEDING $35,000 (OTHERWISE OMITTED).

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 74

EXHIBIT IV

PERIOD: TWELVE MONTHS ENDING SEPT. 30, 2017 LODGING MARKET: TEXAS, EXCLUDING MAJOR CITIES, LUXURY, UPSCALE SEGMENTS # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR ------CHAINS AIRBB 18 .3 .1 57 .1 12,923 .3 56.3 225.20 126.77 EMBASSY 10 2.2 1.0 599 1.2 96,016 2.3 73.0 160.20 116.97 HOMEWOOD 38 3.8 1.6 937 1.8 123,970 3.0 67.9 132.37 89.86 HYATT HSE 4 .5 .2 142 .3 18,422 .4 71.9 129.57 93.12 RESIDENCE 39 4.2 1.8 1,057 2.1 135,172 3.3 69.4 127.92 88.77 STAYBRIDG 21 2.0 .9 495 1.0 57,910 1.4 67.2 116.98 78.56 OTH SUITE 5 .5 .2 135 .3 13,374 .3 67.5 99.20 66.97 TOT SUITES 136 13.6 5.9 3,422 6.7 457,786 11.1 69.0 133.78 92.30

CAMBRIA 2 .3 .1 66 .1 7,559 .2 65.6 114.12 74.91 CANDLWOOD 50 4.2 1.8 1,043 2.0 91,482 2.2 67.2 87.73 58.97 COMFO STE 82 5.7 2.5 1,336 2.6 118,219 2.9 64.4 88.49 56.97 HAWTHORN 17 1.6 .7 364 .7 30,154 .7 63.8 82.81 52.82 HOME2STES 16 1.6 .7 389 .8 47,793 1.2 67.9 122.80 83.40 QUAL STES 3 .2 .1 45 .1 2,436 .1 60.8 53.85 32.71 SPRNGHILL 27 2.9 1.3 737 1.4 81,302 2.0 69.4 110.34 76.58 TOWNPLACE 28 2.8 1.2 699 1.4 76,185 1.9 68.0 108.93 74.04 OTHER MIN 7 .8 .4 177 .3 12,684 .3 59.6 71.79 42.80 TOT MIN STE 232 20.1 8.7 4,856 9.5 467,814 11.4 66.2 96.33 63.80

BEST WEST 176 11.6 5.0 2,634 5.2 224,948 5.5 62.1 85.42 53.07 CNTRY INN 19 1.5 .7 356 .7 28,636 .7 64.9 80.41 52.18 COMFO INN 58 3.9 1.7 890 1.7 73,296 1.8 62.2 82.32 51.20 DRURY INN 4 .5 .2 135 .3 12,748 .3 69.0 94.58 65.28 FAIRFIELD 57 4.7 2.0 1,111 2.2 111,531 2.7 64.9 100.39 65.10 HAMPTON 148 12.1 5.3 2,874 5.6 327,604 8.0 64.9 113.98 73.95 HOLID EXP 197 15.4 6.7 3,561 7.0 375,977 9.1 63.3 105.58 66.83 LA QUINTA 185 15.6 6.8 3,581 7.0 298,790 7.3 62.8 83.43 52.36 SLEEP INN 27 1.8 .8 395 .8 31,010 .8 61.2 78.54 48.09 WINGATE 14 1.3 .6 288 .6 23,080 .6 61.8 80.10 49.49 TOT LTD SVE 903 68.5 29.7 15,825 30.9 1,507,619 36.6 63.3 95.27 60.30

BUDG STES 6 2.2 1.0 628 1.2 28,146 .7 77.1 44.78 34.55 EXT AMERI 27 3.0 1.3 773 1.5 42,337 1.0 71.2 54.75 38.96 INTOWN ST 18 2.3 1.0 599 1.2 27,787 .7 70.2 46.37 32.56 STUDIO 6 27 2.5 1.1 574 1.1 28,167 .7 63.9 49.09 31.37 WOODSPRNG 30 3.5 1.5 842 1.6 39,686 1.0 65.8 47.13 31.00 OTHER EXT 19 1.7 .7 391 .8 21,196 .5 62.6 54.23 33.94 TOT EXT STA 127 15.2 6.6 3,808 7.4 187,319 4.6 68.5 49.19 33.71

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PERIOD: TWELVE MONTHS ENDING SEPT. 30, 2017 LODGING MARKET: TEXAS, EXCLUDING MAJOR CITIES, LUXURY, UPSCALE SEGMENTS # * EST. $ EST. #* RMS % RNS % AMT. % EST. $ $ BRAND HTL 000S RMS 000S RNS 000S AMT %OCC RATE RPAR ------BAYMONT 33 2.4 1.0 515 1.0 34,250 .8 59.9 66.57 39.86 BST VALUE 87 5.4 2.3 1,109 2.2 46,933 1.1 56.2 42.32 23.78 DAYS INN 112 7.0 3.0 1,495 2.9 81,122 2.0 58.7 54.25 31.85 ECONOLODG 39 2.2 1.0 451 .9 20,708 .5 55.2 45.93 25.36 HO JO 10 .7 .3 145 .3 7,685 .2 60.2 53.11 31.95 MICROTEL 23 1.5 .7 355 .7 23,837 .6 63.1 67.19 42.39 MOTEL 6 132 10.7 4.6 2,440 4.8 119,237 2.9 62.7 48.87 30.63 QUALITY 75 5.6 2.4 1,199 2.3 76,942 1.9 59.1 64.15 37.94 RAMADA 14 1.5 .6 313 .6 20,375 .5 57.6 65.15 37.52 RED ROOF 23 2.2 1.0 510 1.0 29,389 .7 63.0 57.62 36.30 RODEWAY 17 1.1 .5 203 .4 9,105 .2 51.4 44.93 23.08 SUPER 8 123 7.3 3.2 1,555 3.0 82,991 2.0 58.1 53.38 30.99 TRAVELODG 10 .7 .3 146 .3 5,570 .1 55.6 38.09 21.16 OTHER BUD 77 4.8 2.1 985 1.9 43,999 1.1 56.2 44.68 25.10 TOT BUDGET 775 53.0 23.0 11,420 22.3 602,144 14.6 59.0 52.73 31.10

TOT CHAINS 2,173 170.4 74.0 39,331 76.9 3,222,683 78.3 63.2 81.94 51.80

INDEPENDENTS $100+ ADR 367 14.0 6.1 2,683 5.2 435,157 10.6 52.3 162.18 84.87 $60-99ADR 211 10.5 4.6 2,124 4.2 183,371 4.5 55.3 86.34 47.78 LT $60ADR 634 35.5 15.4 6,997 13.7 275,367 6.7 54.1 39.36 21.28 TOT INDEP 1,212 60.0 26.0 11,804 23.1 893,895 21.7 53.9 75.73 40.80

TOT MARKET 3,385230.5 100.0 51,135 100.0 4,116,577 100 60.8 80.50 48.94

* All figures annualized. Includes taxed and est non-tax room revenues. Independents are categorized by price: $100+, $60-99.99, and under $60)

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EXHIBIT V A Study of the Effect of Hotel Size on Performance in the Texas Hotel Industry

The Case for Downsizing New Hotels

11/30/99 By Douglas W. Sutton and Bruce H. Walker

Source Strategies has long contended that the number of rooms a developer offers in a new property is one of the key factors in determining a venture's relative success or failure. It is every bit as important to size a hotel project properly as it is to select the appropriate brand, and to develop in a suitable market and location. We have previously conducted extensive studies of the lodging market that support our hotel sizing contention, and we have taken this opportunity to re- examine the issue using our extensive database of hotel and motel performance for the State of Texas.

Before delving into the numbers that define the role of room count in a hotel's performance, we should first highlight the basic industry theory of 'right-sizing' a property. The premise offered by many inexperienced developers is "If I can make a profit constructing a 50 room hotel in a given market, it would be twice as profitable to develop 100 rooms." In virtually all cases nothing could be farther from the truth. At some point adding rooms to a project reaches a point of diminishing returns, and the investment in the additional rooms cannot be economically justified.

To illustrate this point, mentally divide our hypothetical 100 room project into two 50 room hotels. The initial 50 rooms may perform very well, with occupancies over 70% and a very strong rate structure. However, the second 50 rooms are only utilized when there is overflow from the first hotel because its rooms are 100% occupied. Effectively, the second 50 rooms may only attain an occupancy of 30% or less. This low level of occupancy may prompt the general manager to lower rates to bolster occupancy, but this is a losing battle. Ultimately, overbuilding causes REVPAR erosion in the property, and in the market as a whole.

Today's developers and lenders would not seriously consider involvement in a 50 room project operating at this low level, but often times they accomplish the same end by pushing for more rooms in a project than the market can effectively support. If we now mentally put these two 50 room properties back together (one operating at 70%, the other at 30% occupancy), what we end up with is an oversized 100 room hotel that is running a mediocre 50% occupancy.

Over-sizing a hotel makes it difficult, if not impossible, to be competitive in a marketplace. There are a finite number of room-nights sold to be divided among existing hotels in the market, and developing a more conservatively sized property helps insure that a profitable level of those room-nights can be captured. Building a hotel is not the 'Field of Dreams'.... If you build it - they won't come.... With the exception of destination resorts and some unique convention hotels, people do not go someplace because there is a hotel. Rather, they stay in a hotel because they want to be near someplace.

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Builders who construct too many rooms usually put themselves in unenviable financial situations. Many hotels which we see put up for sale were developed with far too many rooms. The owners, having had difficulty getting a return on their investment, are often trying to get out from under a bad investment. There are even drastic cases of properties bulldozing entire wings to provide additional parking, because those extra rooms are a financial burden, remaining unsold the vast majority of the time.

Now that we've outlined the basic economic benefits of 'building small', let's look into hotel performance numbers and see if they support this development principle. We analyzed two separate hotel samplings: First we will look at Comfort Inns across Texas as a selected brand sampling. Then we will look at all branded hotels built during a given period of time for a more diverse sampling.

COMFORT INN - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE

In our initial analysis, we selected a sampling of Texas Comfort Inn branded properties ranging in size from 36 to 75 rooms; they are all 'Limited Service' hotels. We excluded those properties located in exclusive, higher priced markets, since they would naturally support larger room counts while maintaining strong performance levels and would distort the findings. The resulting sample included 55 Comfort Inn hotels located across Texas.

The following chart of performance statistics from the latest year on file (12 months ending September 30, 1999) clearly illustrates the consistent curve, showing marked declines in performance as room count increases. This decline was exhibited in all three measures shown, Occupancy, Average Daily Rate, and REVPAR:

SIZING ANALYSIS 12 Months Ending September 30, 1999 Rooms Occupancy Rate REVPAR 36-40 66.9% $55.25 $36.95 41-45 65.3% $57.34 $37.45 46-50 66.5% $57.38 $38.17 51-55 62.8% $56.02 $35.20 56-60 61.8% $54.26 $33.55 61-65 56.6% $55.33 $31.33 66-70 44.6% $45.71 $20.41 71-75 43.8% $44.20 $19.38 Combined: 52 63.2% $55.46 $35.03

Looking only at occupancy, the following graph gives a clear depiction of the notable negative impact of larger room counts on a hotel's ability to maintain an acceptable level of room-nights sold. Properties with lower room counts were clearly able to sustain a higher level of occupancy. Average occupancy ranged from 66.9% for properties of 36-40 rooms, downward to a much lower 43.8% average occupancy for properties in the 71-75 room size bracket.

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Comfort Inn Sizing Study Occupany vs Roomcount (1999 Data) 70%

65%

60%

55%

50%

Occupancy % 45%

40% 36-40 41-45 46-50 51-55 56-60 61-65 66-70 71-75

Roomcount

When looking at REVPAR, the following graph follows a very similar performance curve, ranging from an average REVPAR of $36.95 for properties of 36-55 units, downward to a mediocre $19.38 average REVPAR for properties in the 71-35 unit size bracket. Note that the downward slide in both graphs did not begin until room counts exceeded 35 units. Prior to that, a mild upward trend is experienced. This appears to indicate that, on average, 50 rooms is the 'optimum' size for a Comfort Inn in Texas markets (excluding high priced areas). Of course, this is an average number for this type of market. Each project must be examined on an individual basis to determine the proper size to develop within its given market.

Comfort Inn Sizing Study REVPAR vs Roomcount (1999 Data) $40

$35

$30

$25 REVPAR $

$20

$15 36-40 41-45 46-50 51-55 56-60 61-65 66-70 71-75

Roomcount

The above chart and graphs clearly illustrates that Developers often missed the mark, building more rooms than 'optimum.' 'Optimum' is defined as generating the highest return on invested capital, and is closely tied to occupancy and REVPAR generation.

Analyzing the above data provides a measure of the effect of over building. For the typical range of rooms for Comfort Inn projects (40-75 rooms) outside of higher priced areas, the occupancy dropped 23.1 points (a full 35%) from 66.9% to 43.8% as room counts escalated. With a 35 room increase in rooms from the 36-40 room size bracket to the 71-75 room size bracket, a resulting 35% drop in occupancy is experienced.

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The key question, is how to apply this principle to a given hotel project. Naturally, each project would have to be judged on its individual merits, but looking at an 'average' project for a single brand and product is very revealing. All are Comfort Inns. All are very similar products in similar market environments, leaving size as the major variable in performance.

In our sampling, the average project is 65 rooms in size. At this size, the average occupancy is 62.8%. If we built 36% fewer rooms (42 rooms) our average occupancy would rise a moderate 6.5% to 66.9%. Conversely, if we built 36% more than average, (71 rooms) our average occupancy plummets by 42.5% to 43.8%.

Clearly there are some basic economic principles at work. Comfort Inns are conservatively-sized. Building smaller than the average of 65 rooms yields slightly higher occupancies, but the ability to charge ever higher rates as size decreases is marginal. As rates rise, some consumers perceive lost value and will stay at another property. On the other side of the coin, properties built larger than the average 65 rooms suffer serious occupancy declines. At some point the need for additional rooms that was envisioned by the optimistic developer is simply not there, and the extra rooms only serve to depress the overall performance of the property.

BRANDED HOTELS - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE In our second analysis, we selected a sampling of all Texas branded hotels constructed from 1970-1975; 91 properties across Texas, predominantly 'Full Service'. Our sampling was limited to hotels of less than 135 rooms. We once again excluded those properties located in exclusive, higher priced markets. For our analysis we examined performance results from the year 1985 when all subject hotels were 10 to 15 years old, well into their aging life cycles.

The following chart of performance statistics from 1985 for branded properties throughout Texas clearly illustrates the downward curve, with definite erosion in performance measures as room count increases:

1985 Performance Results # of Hotels Rooms Occupancy Rate REVPAR 2 00-44 70.0% $37.88 $26.50 3 45-59 73.9% $36.13 $26.71 7 60-74 66.8% $31.10 $20.77 14 75-89 62.7% $31.65 $19.86 29 90-104 60.9% $32.42 $19.75 16 105-119 57.8% $26.25 $15.18 20 120-134 55.5% $29.35 $16.28 Combined: 91 98 59.8% $30.34 $18.14

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SIZING ANALYSIS 1985 Performance Results # of Hotels Rooms Occupancy Rate REVPAR 2 00-44 70.0% $37.88 $26.50 3 45-59 73.9% $36.13 $26.71 7 60-74 66.8% $31.10 $20.77 14 75-89 62.7% $31.65 $19.86 29 90-104 60.9% $32.42 $19.75 16 105-119 57.8% $26.25 $15.18 20 120-134 55.5% $29.35 $16.28 Combined: 91 98 59.8% $30.34 $18.14

With occupancy declines being the strongest indicator of the negative impact of building too large, the following graph provides a clear picture of the descending performance slide as room counts increase. Once again, properties with lower room counts were more insulated from market competition and were therefore able to be more competitive in both favorable and depressed market environments. Average occupancy ranged from 70% for properties of 58 rooms or less, downward to a much lower 55.5% average occupancy for properties in the 120-134 room size bracket, after peaking at 73.9% in the 45-59 size range.

Sizing Impact on Performance Occupany vs Roomcount (1985 Data) 80% 75% 70% 65% 60% 55% 50% Occupancy % 45% 40% 00-44 45-59 60-74 75-89 90-104 105-119 120-134

Roomcount

As with the Comfort Inn analysis, the above data provides a measure of the effect of over building. However, since a number of varying brands are considered in this sample, the typical size of these projects ranges from about 40 to 135. This is a wider range than the Comfort sampling, since many of the brands in this sample typically have larger room counts than a Comfort Inn. This is partially due to some brands' ability to support higher room counts, and partially due to the tendency to overbuild in the early 1970s, when all hotels in this sample were constructed.

While the 65 room average for our Comfort Inn sample is reasonably close to optimum sizing for that brand, the 98 room average for this analysis appears to be oversized. In our assessment, the optimum average number of rooms for this sampling would have been 60 to 41 rooms, depending upon brand. In 1985, this roomcount supported occupancies near

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70%, with an average REVPAR of almost $27. Compare this to the average capacity of 98 rooms attaining a much lower average occupancy of 60.9% and REVPAR below $20. Clearly this lower level of performance can be attributed to over- sizing projects in the early 1970s.

Looking at our average (oversized) roomcount of 98 rooms, increasing the size by 30% (135 rooms) would cause occupancy to slide 10% from 60.9% to 55.5%. On the other hand, making the average project smaller (58 rooms, or 75% smaller) would improve occupancy to 73.9%, or a healthy 21% increase.

For the sake of comparison, let us assume that the average property was more appropriately sized at about 58 rooms. If the project size were increased to 135 rooms, the largest range in our sample, occupancy would suffer a significant 33% decline from optimum levels.

Of course this assumes that locational differences are not significant. We believe this is true; the large sample and clear correlation between size and performance support this conclusion.

SUMMARY The data is clear. In most cases, small hotels outperform large hotels, with the exception of higher-priced markets where competitive barriers to entry exist (e.g. lack of land, excessive land cost, building restrictions, etc.).

Common sense explains this occurrence: a successful 100 room hotel will inevitably prompt the development of one or more new, small hotels of similar quality in the immediate area. In a competitive market environment, the smaller hotel has a distinct advantage and wins - almost every time.

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EXHIBIT VI

START-UP PERFORMANCE OF NEW HOTELS AND MOTELS A new study by Source Strategies, Inc., utilizing all new chain hotels opened in Texas between 1990 and 1994, shows that new hotels and motels provide their peak performance in Years III through V, when they typically reach 112% of their 20-year average REVPAR performance level.

In other words, the newness of a property is an advantage on the order of a 12% premium in Years III through V - versus the average REVPAR that would otherwise be expected for that property over a twenty-year period. That's because the consumer almost always picks new over old because, to them, 'new' means 'clean' and 'new' means 'value.' Perhaps this is not news to many, but it is highly important to those who forecast the performance of new properties.

Here's what the graph looks like for the first twelve years for new properties opened in the moderately-good and improving markets of the 1990's. The years after peak are projected based on two major previous studies: one by Limited Service in the early 1980's and the second last year by Source Strategies, Inc.

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Year I at 92% of the 20 Year Average, Year II at 107%

The study found that a property could expect a REVPAR at Year I of 92% of the twenty-year average for a project. In Year II, this would move to 107% and to 112% in Years' III through V.

For example, if over the twenty-year span of the project, we expect a hypothetical new hotel to generate 105% of the market average REVPAR, this means that in Year I it would generate 97% of market (105% times 92%), and in Year II 112% (105% times Year II's 107%), and then peak at 118% for Years III-V.

Study Method The underlying design for this study was to determine what effect a property's age had on its REVPAR during the first five years of operation.

From two other studies, we know that properties will decline at 1.67% per year, versus the market average, over long periods of time. The second study sample consisted of all new Texas development in the early 1980's, a time of major under-supply. Consequently, the first few years performance of this group of hotels and motels was probably be overstated - versus the current, more-normal times. The current study confirmed that belief.

The current study's design was to develop the REVPAR index for every new chain property (each new property's REVPAR, divided by the REVPAR of all nearby hotels and motels). Then all the resulting indices were averaged.

This process was done for each year of development, 1990, 1991, 1992, 1993 and 1994, in order to obtain data for "Year I," "Year II" and so on. These were averaged as well to obtain an over-all, average Year I result.

This process produced the graph curve shown above, and is reflective of the particular mix of chain properties, a mix which produced REVPAR slightly above the market average. To eliminate the effect of a specific mix of chains, the scale was moved down slightly, so that the application of the year-by-year REVPAR indices to any project would result in averaging 100 of the first twenty years of the project.

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REVPAR of all New Chain Hotels Opened 1990-1994 With Local Market Averages (Same Zip-Codes)

Opened 1990 Year I Year II Year III Year IV Year V Year VI 9 Chain Hotels $41.97 $49.45 $54.76 $54.17 $59.45 $66.16 Local Market Average $35.38 $37.40 $39.72 $39.71 $43.31 $48.87 Index New Chain/Market 119 132 138 136 137 135

(Peak)

Opened 1991 Year I Year II Year III Year IV Year V Year VI 8 Chain Hotels $32.06 $37.95 $41.49 $44.18 $46.26 Local Market Average $29.96 $31.26 $32.36 $33.04 $33.70 est Index New Chain/Market 107 121 128 134 137 135

(Peak) Above assumes Year VI index decline of 1.67%

Opened 1992 Year I Year II Year III Year IV Year V Year VI 7 Chain Hotels $25.07 $36.53 $39.76 $41.74 Local Market Average $30.60 $33.62 $34.36 $37.49 est est Index New Chain/Market 82 109 116 111 111 109

(Peak) Above assumes Year V is "flat" and Year VI index declines by 1.67%

Opened 1993 Year I Year II Year III Year IV Year V Year VI 16 Chain Hotels $24.51 $29.15 $33.19 Local Market Average $30.70 $31.88 $35.27 est est est Index New Chain/Market 80 91 94 94 93 91

(Peak) (Peak) Above assumes Year III and IV are Peak, and Year V and Year VI index declines by 1.67% annually

Opened 1994 Year I Year II Year III Year IV Year V Year VI 29 Chain Hotels $30.40 $35.97 Local Market Average $38.68 $41.29 est est est est Index New Chain/Market 79 87 90 89 87 86

Above assumes Year III and Year IV Peak equals Year II plus 4%, as above, and Year V and Year VI index declines by 1.67% annually

COMBINED INDICES Year I Year II Year III Year IV Year V Year VI Average of Raw Data 93 108 113 113 113 111 Adjusted 100 over 20 years 92 107 112 112 112 110 (Peak)

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After Year V, Declines Average 1.67% Per Annum

In the sixth year and thereafter, the twenty-year average REVPAR index is diminished at a rate of 1.67% per annum in order to reflect aging and the normal life-cycle of a hotel.

This pattern of declining performance with property aging is based on major studies of economic life-cycle patterns, studies which were conducted on a census of all 25,000 Texas rooms built between 1980 and 1982 (study published in September 1994 issues of MarketShare and the October 1994 issue of Hotel & Motel Management). These Source Strategies studies confirm a similar, major study conducted in 1982 at the Holiday corporation on 160 company-owned and company-operated hotels.

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EXHIBIT VII

CapEx: A STUDY OF CAPITAL EXPENDITURES IN THE US HOTEL INDUSTRY

The following is a summary of the International Society of Hospitality Consultants' 2000 "CapEx Study, A Study of Capital Expenditures in the US Hotel Industry" as it applies to limited service properties:

The objective of our historical analysis in CapEx 2000 was to determine what has been spent in the past to maintain a hotel in good, competitive condition. Hotel owners and management companies were contacted to provide data for the study. Definition of CapEx "Capital Expenditure" is defined as: investments of cash or the creation of liability to acquire or improve an asset, e.g., land, buildings, building additions, site improvements, machinery, equipment; Comparatively, the "reserve for replacement" for a hotel asset has been narrowly defined as the funds set aside for the periodic replacement of furniture, fixtures and equipment (FF&E). The reserve was not contemplated to fund the replacement of major building components, such as roofs, elevators, and chillers.

For this study the term has been defined as: the cost of replacing worn out FF&E, as well as the cost of; - updating design and decor - curing functional and economic obsolescence... - complying with franchisors' brand requirements - technology improvements - product change to meet market demands - adhering to government regulatory requirements - replacing all short- and long-lived building components due to wear and tear

Although many equity investors frequently argue against the necessity of a reserve, particularly if the investor does not plan to hold the property for greater than five years, the requirement for and amount of reserves are typically contractual issues between ownership, lender, manager, and/or franchisor/franchisee.

Significant Findings of CapEx 2000 The average amount spent per year by limited-service hotels in the survey was determined to be 5.5% of total revenue for the time period covered by CapEx 2000 (1988-1998). As these limited-service hotels have matured, CapEx has increased, underscoring one of our principal findings that CapEx requirements increase as a hotel ages. CapEx Spending is highly dependent upon a hotel's point in its life cycle. The following chart shows the range of CapEx spending (as a percentage of total revenues) over a 25-year time period; the table following the chart identifies the specific ranges of CapEx spending as a percentage of total revenues by year.

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Average CapEx Range by Year as a Ratio to Total Sales 18% 16% 14% Maximum 12% 10% 8%

of Revenues 6% % 4% Minimum 2% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Years

Percentage Range of CapEx Spending by Year

Year Minimum 1 1.7% 2 1.7% 3 1.5% 4 1.3% 5 3.2% 6 4.8% 7 4.2% 8 3.6% 9 4.8% 10 8.4% 11 4.7% 12 5.4% 13 4.7% 14 4.7% 15 3.4% 16 5.1% 17 5.1% 18 2.5% 19 2.9% 20 2.4% 21 2.4% 22 3.2% 23 5.1% 24 3.5% 25 5.1% Percentage Range of CapEx Spending by Year

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Year Minimum Maximum 1 1.7% 4.5% 2 1.7% 3.3% 3 1.5% 3.2% 4 1.3% 3.6% 5 3.2% 6.2% 6 4.8% 6.8% 7 4.2% 5.9% 8 3.6% 5.2% 9 4.8% 7.0% 10 8.4% 11.9% 11 4.7% 6.6% 12 5.4% 9.4% 13 4.7% 9.9% 14 4.7% 7.8% 15 3.4% 5.7% 16 5.1% 12.4% 17 5.1% 10.5% 18 2.5% 9.7% 19 2.9% 8.1% 20 2.4% 8.7% 21 2.4% 7.0% 22 3.2% 6.8% 23 5.1% 17.0% 24 3.5% 12.9% 25 5.1% 10.2%

As the data indicates, CapEx spending increases over time for all (U.S.) hotels, with large differences in both the level of CapEx spending and timing across different hotels. The data illustrates that, over time, the minimum and maximum levels of CapEx spending generally widens as a hotel increases in age.

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 89

CapEx to Total Revenue Limited Service Hotels 12%

10%

6% of Revenues

% 4% 4% Reserve 2%

0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Years

For limited-service hotels, the first major increase in spending occurs in the sixth year, which likely represents the replacement of soft goods. The first major spike occurs in year 10, which is likely to be the result of a rooms and corridors renovation. Smaller spikes in CapEx spending occur in the following years, with the next major spending spike occurring in year 17, which is likely building and some mechanical renovation and replacement.

The following series of tables illustrates limited-service CapEx spending levels in various demographic categories:

CapEx 2000- Limited Service Hotels by Location

Average CapEx/ CapEx per Age in Total Room per Location Years Revenue Year All Properties 12 5.5% $1,111 Airport 9.8 5.4% $1,268 Urban 15.2 4.3% $820 Small City/Hwy 9.2 5.1% $773 Suburban 10.5 5.7% $1,172

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 90

CapEx 2000- Limited Service Hotels by Average Daily Rate

Average CapEx/ CapEx per Age in Total Room per Location Years Revenue Year All Properties 12 5.5% $1,111 < $60 12.7 5.0% $687 $60-$80 12.5 6.3% $1,134 > $80 12 5.3% $1,570

CapEx 2000- Limited Service Hotels by Property Size

Average CapEx/ CapEx per Age in Total Room per Location Years Revenue Year All Properties 12 5.5% $1,111 < 100 rooms 8.7 3.3% $475 100-150 rooms 10.3 5.4% $1,107 > 150 rooms 20 6.9% $1,360

-CapEx 2000- Limited Service Hotels by Age of Property

CapEx/ CapEx per Total Room per Property Age Revenue Year All Properties 5.5% $1,111 > 15 yrs old 6.5% $1,372 5-15 yrs old 4.8% $897 < 5 yrs old 3.0% $547

Overall, the study details the varying levels of capital required to keep a hotel competitive in its life cycle. Historically, many operators have held no more than 3-4% of gross revenues in reserve, a level which may be sufficient for FF&E replacement, but is woefully inadequate for other required expenditures.20

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 91

ABOUT SOURCE STRATEGIES Source Strategies, Inc. is the leading hotel consultant in Texas, providing Financial Feasibility Studies, Appraisal Market Packages, Litigation Support and Data Analysis. Source publishes extensive market and individual hotel statistics: the Hotel Performance Factbook, the Hotel Brand Report and the Hotel Markets Report. Source Strategies maintains the most accurate and comprehensive Texas hotel database, covering 98% of all hotels. Source is the only provider of individual, hotel-by-hotel data, trends and financial projections in Texas. Bruce Walker, Todd Walker, Douglas Sutton, Paul Vaughn and Amanda Sykes are the team behind the Source Strategies hotel consultancy, with over 100 years of hospitality industry experience. Source data is based on the Texas State Comptroller audited tax files for the period of 1980 to the present, making it more accurate than voluntary samples. Source researches and writes over 100 Hotel Financial Feasibility Studies annually – a key part in the underwriting of $1 billion in new hotel investment. Beyond lenders and developers, Source’s client list includes TxDOT and the Texas Governor’s Tourism Office (1988 – 2016). Services detailed below and at SourceStrategies.org.

 The Texas Hotel Performance Factbook: Contains every hotel and motel’s Revenue, REVPAR, Occupancy Numbers, etc. compared to last year and summarized by zip, city and metro. Factbooks contain 3-month data or 12-month data.  Financial Feasibility Studies: Over 100 Hotel Feasibility Studies annually. Texas’ lenders insist on a Source study because of the speed, accuracy and high value.  The Hotel Brand Report: Newsletter that is the only industry source tracking each brand’s performance, as well as product and price segments. Includes top 500 hotels every quarter.  Hotel Markets Report: Geographic Breakdowns of Texas Markets – metro, county and city by quarter and by past 12 months.  Appraisal Market Packages: Five- and ten-year market and individual property histories that show market and individual property trends.  Litigation Support and Data Analysis: Almost any question can be analyzed and proved with the powerful Source database. Extensive testimonial experience.

Contacts us at (210) 734-3434 or visit SourceStrategies.org! Bruce H. Walker, Chairman & Founder [email protected] Todd A. Walker, President & COO [email protected] Douglas W. Sutton, Executive Vice President [email protected] Paul J. Vaughn, Senior Vice President [email protected] Amanda B. Sykes, Administration Manager [email protected]

Endorsed by the Texas Hotel & Lodging Association

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 92

BRUCE H. WALKER

Bruce Walker is the founder and chairman of Source Strategies, Texas’ leading hotel consultancy. His experience includes working with some of the world’s most recognizable consumer companies (Holiday Inn, Hampton Inns, Howard Johnson, Procter & Gamble, Crest, Secret, Scope, La Quinta). Bruce Walker leveraged his innovative marketing and branding work to develop Source Strategies into a key resource for the Texas lodging industry.

CAREER HIGHLIGHTS

 1987-Present: Source Strategies, Inc. Founder and Chairman. Practice includes 100+ hotel feasibility studies annually for individual developers. Maintain Database Texas hotels and motels. Litigation support and expert testimony. Publisher and writer of The Hotel Brand Report, the Texas Hotel Performance Factbook and the Texas Hotel Markets Report.  1986-1987: La Quinta Motor Inns, Inc. Senior Vice President, Marketing. Repositioned brand with the ad campaign “Just Right Overnight,” new corporate logo, extensive couponing and premium-quality king rooms.  1984-1985: Portel Videotex Network. President. Home-banking, home-shopping start-up.  1976-1983: Holiday Corporation. Vice President, Marketing (1975-79), President of Subsidiaries (1979-82), Senior Vice President, Central/Strategic Planning (1980-83). Initiated the first hotel frequent traveler’s program, and the classic ad campaign, “The Best Surprise is No Surprise.” Developed and launched the Hi-Net satellite reception network to Holiday Inn hotels (HBO, CNN and ESPN). Created prototypes and strategic plans for new chains Hampton Inns and Embassy Suites, and recommended sale of Holiday Inn chain (sold 1989 to Bass PLC).  1969-1975: Howard Johnson Company. Assistant to the President, Director Disney World Development, Director Restaurant Marketing.  1964-1968: Procter & Gamble Company. International Brand Manager. Introduced Scope, Secret and Crisco Oil into Canada; Crest and Tempo into the United Kingdom.

EDUCATION

 Amherst College, BA, 1961, Economics. Harvard Business School, MBA, 1963.  Boston Consulting Group seminars.  Hotel/Motel Valuation and Investment Seminar, April 1992. Appraisal Institute

PUBLICATIONS AND SEMINARS

 The Appraisal Journal: New Option in Hotel Appraisals: Quantifying the Revenue Enhancement Value of Hotel Brands. 2012. Co-written with Doug Sutton.  The Cornell Quarterly, “What’s Ahead: A Strategic Look at Lodging Trends.” 1993  Hotel & Motel Management, “Hoteliers Should Examine Hotels’ Life Cycles.” 1994  Hotel Brand Report, written and published quarterly since 1987.  Speeches to Urban Land Institute, Appraisal Institute, Real Estate Counseling Group of America, Texas Hotel & Lodging Association, O’Connor & Associates, and metro hotel associations.

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 93

TODD ANDERSON WALKER

Todd Walker is the president of Source Strategies, Inc. and has served over 20 years as the main communicator to Source clients. He has authored over 800 hotel studies for Texas developers and lenders equating to approximately $750 million in capital projects annually since 2005.

CAREER HIGHLIGHTS

 1994 – Present: Source Strategies, Inc. President (2016-present), Senior Vice President, (1997-2016). Major contributor to Source Strategies in its achieving market status as the largest supplier of Hotel Financial Feasibility Studies to Texas’ developers and lending institutions. Completed over 800 Financial Feasibility Studies successfully, encompassing over thirty different brands now operating successfully in Texas, New Mexico, Louisiana, Kansas, Colorado, Oklahoma and other states. Studies include major and local market assessments and projections, proposed hotel’s revenue generation, ten-year cash flow forecasts and the projection of return on capital investment.

Responsible for sales and operation of Source Strategies’ publications, including the Texas Hotel Performance Factbook and the Hotel Brand Report newsletter. Contributes as analyst, writer and editor to Hotel Brand Report newsletter and the Texas Hotel Performance Factbook, including ‘Results from 1995, 2004, & 2005: Limited Service Dominates’ (2005), ‘First Quarter 2004, The Best Increase Since the Year 2000’ (2004), ‘Age Matters, Size Matters’ (2005).

Provides litigation support, analysis and strategy for hotel litigation and testimony.

 1997: Toronto Globe & Mail Newspaper. Assistant Editor of Business Publications. The Globe & Mail is Canada’s national newspaper. Wrote business articles and edited publications. Edited InfoGlobe.

EDUCATION

 University of Toronto. Bachelor of Arts with Honors in English and History, 1994.

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 94

DOUGLAS W. SUTTON

Doug Sutton is Executive Vice President of Source Strategies, Inc. and the lead analyst in the practice.

CAREER HIGHLIGHTS

 1996-Present: Source Strategies, Inc. Executive Vice President developing hotel feasibility studies, proprietary Source Strategies database software development and maintenance, undertaking complicated analytical studies and writing for Source publications.

Completed over 800 Financial Feasibility Studies successfully, encompassing over thirty-two different brands in Texas, New Mexico, Louisiana, Kansas, Nebraska, Iowa and Oklahoma. Studies include market assessments and projections, proposed hotel’s revenue generation and ten-year cash flow forecasts and the projection of return on capital investment.

Responsible for programming and maintaining Source database of Texas hotels and motels.

Contributing analyst and writer to Hotel Brand Report newsletter and the Texas Hotel Performance Factbook, including ‘Hot Brands & Dying Brands’, ‘Development Since 9/11: Winners & Losers’, ‘Higher Priced Brands in Turmoil, Mid-Priced Brands Prosper’.

Provides in-depth and extreme analysis and strategy for hotel litigation and testimony.

 1994-1996: University Health System, San Antonio. Decision Support Analyst. Provided data analysis to all levels of hospital management. Prepared numerous medical studies, grant support documents, cost-analysis studies, staffing studies, and other decision support analysis. Developed vertical software applications to allow departments to track and study their individual patient populations.

 1987-1994: Systems IV Professionals, Inc. President. Consulting firm specializing in data analysis and customized software development utilizing FOCUS database software. Created major applications, including a long distance network analysis system for a major carrier; system allowed the carrier to determine the effect of various network changes before implementation to facilitate selection of the most cost efficient network possible.

 1983-1987: United States Air Force. Captain and Information Services Officer, Directorate of Special Weapons, Kelly AFB, Texas. Duties included writing and maintaining software to manage the Air Force Nuclear weapons arsenal, tracking nuclear component parts and supplies, and acquisition and installation of major secure computer network.

EDUCATION

 Troy State University. Bachelor of Science in Computer and Information Science, 1983.

PUBLICATIONS AND SEMINARS

 The Appraisal Journal: New Option in Hotel Appraisals: Quantifying the Revenue Enhancement Value of Hotel Brands. 2012. Primary analyst and co-author.  Numerous articles for the Hotel Brand Report newsletter.

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 95

PAUL J. VAUGHN

Paul Vaughn is a business technology consultant and writer and has consulted for businesses from manufacturers to retailers, non-profits to law firms, for more than 25 years. He has extensive experience working with data of all types and developing database-driven web sites.

CAREER HIGHLIGHTS

 2016 – Present: Source Strategies, Inc. Senior Vice President with extensive knowledge of database management, industry analysis and methodology. Developed and managed Source Strategies website.  2009 – 2016: Sanford-Brown College. Department Chair for the Technology programs including Visual Communications, Web Design & Development, Internet Marketing and Information Technology. Responsible for hiring and managing instructors, retaining and mentoring students, marketing programs, and teaching courses.  2001 – 2016: Dingus Design. Principal. Major projects with a variety of clients including Source Strategies, LumiQuest (international marketing campaign in print and on the web), Digital Pro Lab (managed transition from Photo Express to Digital Pro Lab branding), Wilshire Homes, Fotoseptiembre USA international photography festival (created database- driven website), City of San Antonio Office of Cultural Affairs (launched city’s Fall Arts Festivals web site), Zeitgraph (launch of Steelhouse Lofts website) and many more. Provided business technology consulting and training.  2008 – 2011: Southwest School of Art. Adjunct Technology Instructor.  2001 – 2009: San Antonio Express-News / MySanAntonio.com. Wrote weekly technology column for the Sunday Business section of the newspaper.  1993 – 2001: River City Silver – Photo & Digital Imaging. Director of Digital Services – Managed transition from traditional photographic workflow to digital workflow. Worked with clients including the San Antonio Convention & Visitors Bureau, The Adkins Agency, Anderson Advertising, Goodman Sign Art and the UT Health Science Center.  1988 – 1993: Quest Productions. Production Manager – Designed and produced corporate presentations for clients including Valero, USAA, Kinetic Concepts and Procermex.

EDUCATION

 Texas State University, Bachelor of Fine Art in Graphic Communications, 1988.  Center for Excellence in Education (CEE), Various courses on management, technology and training, 2010-2015.  Adobe Certified Expert, Dreamweaver and Contribute

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org 96

AMANDA B. SYKES

Amanda Sykes is the Administration Manager of Source Strategies. She brings a business and accounting background to ensure that all account issues and contacts are handled efficiently and professionally.

CAREER HIGHLIGHTS

 2006-Present: Source Strategies, Inc. Responsible for sales and operations of Source Strategies’ publications, duties include Texas Hotel Performance Factbook and Hotel Brand Report newsletter. Manage Accounts Receivables, billing and collections.

Contributes as analyst, writer and editor to Hotel Brand Report newsletter and the Texas Hotel Performance Factbook.

Maintains AP, AR, publication delivery and verification of the Source database.

 2003-2005: Valero Energy Corporation. Associate Accountant.

EDUCATION

 Southern Methodist University, Bachelor of Business Administration, 2001.  Southern Methodist University, Masters of Science in Accounting, 2002.

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FINANCIAL FEASIBILITY STUDIES SAMPLE PROJECTS

AmeriSuites Candlewood Suites Embassy Suites  Austin NW  Beaumont  Laredo  College Station  Irving DFW  Lubbock  Denton  Friendswood  McAllen  Fort Worth Stockyards  Houseon Westheimer  San Antonio  San Antonio Toyota Fairfield Inn by Marriott  Waco  San Marcos  Livingston  Temple  Laredo Baymont Inn  Wichita Falls  San Marcos  Katy Area  New Braunfels Clarion Hotel Hampton Inn & Suites  O’Brien San Antonio  Austin Pecan Park Best Value  Austin Ben White  Houseon Comfort Inn & Suites  Cedar Park  Houseon SW  Fredericksburg  Corpus Christi  San Antonio  Navasota  Del Rio  Waller  Pampa  Galveston  Pharr  Gainesville Best Western Inn & Suites  Bay City  Greenville  Addison  College Station  Hillsboro  Andrews  Copperas Cove  Katy Area  Big Spring  Deer Park  Houseon Beltway 8  Bridgeport  Elmendorf  Greenville  Cameron  Georgetown  Nipomo, CA  Cleveland  Katy Area  Rosenberg  Copperas Cove  Hobbs, NM  Seguin  Dickinson  Longview  Schertz  Franklin  Pasadena  South Austin  Halletsville  Quanah  Texarkana  La Grange  San Antonio  Waxahachie  Lake Dallas  San Antonio North  Laredo  Sugarland Hawthorn Suites Ltd  Levelland  Longview  Marble Falls  Lumberton  Webster  Pearsall Hilton Hotel  Pilot Point Country Inn & Suites  Fort Worth CC  Rosenberg  Arlington  Schulenberg Hilton Garden Inn  Temple Econo Lodge  Amarillo  Tomball  Dallas  Corpus Christi  Wakeeney, KS  Lake Charles  Granbury  Port Arthur  Houseon Beltway 8  Texas City  Killeen  Odessa  New Braunfels  Temple

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org

Sample Projects Continued Independent Hotels Red Roof Inn  St. George, Marfa  Katy Area Holiday Express  Crescent Hotel, New Orleans  Pharr  Odessa  Dacoma Inn Houseon  Stafford  Alvarado  Executive Inn Tyler  Temple  Amarillo  Fairmont Hotel San Antonio  Atlanta  First Choice Inn Grand Prairie Staybridge Suites  Austin  Garden Inn San Antonio  San Antonio  Buda  Killeen Inn  South Padre Island  Cameron  Laredo Inn  Center  Luxury Suites Canton Studio 6  Cleburne  Palms Hotel South Padre  Bay City  Corsicana  Palace Inn Houseon  Tyler  Desoto  Passport Houseon  Winnie  Galveston  San Antonio Inn & Suites  Gatesville Super 8  La Grange Hotel Indigo  Austin East  La Porte  Alamo Plaza San Antonio  Beaumont  Lampasas  Conroe  Manvel La Quinta Inn & Suites  Copperas Cove  Pearland  Boerne  Fort Stockton  Orange  Cedar Hill  Humble  San Antonio I-10 West  Gun Barrel City  Killeen  San Antonio Toyota  Keene  Livingston  San Marcos  Palestine  Pharr  Sherman  Pasadena  Plainview  Texarkana  Pearland  Rosenberg  Wichita Falls  Rockwall  San Antonio South  San Antonio Holiday Inn  San Antonio I-10W Townplace Suites  Austin (Select)  San Antonio Toyota  Killeen  Balch Spring Area  Seguin  Universal City  Frisco  Tomball  San Antonio Travelodge Marriott Hotel  Killeen Homewood Suites  Dallas Convention Center  San Antonio  Houseon Katy Freeway  Colorado Springs CC  Norman, OK  JW Marriott, Houseon Westin  Marble Falls  San Antonio Riverwalk  McAllen Quality Inn & Suites  Odessa  Katy Wingate Inn & Suites  New Braunfels  San Antonio East  Odessa  Waco  Waco  San Antonio  Wichita Falls

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org

SAMPLE STUDIES, DATA AND LITIGATION SUPPORT

1. Contracted by the Texas’ Governors Office of Economic Development, Tourism Division (1988 – 2016) to assess Texas tourism promotion efforts and to aid in marketing Texas.

2. Provided over 1,000 ten-year custom local hotel market histories to MAI appraiser clients (Appraisal Market Packages).

3. Developed numerous competitive REVPAR performance studies versus local area market averages. This unique analysis technique highlights trends and deviations in performance, regardless of market movement; a REVPAR index versus market average shows how well a property has performed. By limiting study to a single variable, truly scientific conclusions can be made as to cause and effect.

Deviations from trend can be related to specific, causal events such as management problems or outside influence (e.g. new highway construction, brand change, new competition); if there is no effect from an event, studies confirm the absence of any impact). If there is an effect, the degree is measurable and apparent. This study approach is among Source's most important work, frequently the basis for expert witness testimony by Source's principal Bruce Walker.

Examples of major studies include: a) the (lack of) induced demand from opening large North hotels in Texas, 1980 through 2003; b) the impact of adding a second luxury hotel of the same brand in a local market, or removing a hotel of the same name, on the performance of the pre-existing property; 3) Studies to separate and quantify hotel Business Value - and the separate Real Estate Value - for tax assessment disputes. The most important study here was to determine the average revenue effect of adding or removing the "Marriott Hotel" name to numerous hotel properties from 1980 through 1995. Source Strategies has produced values for the Marriott Austin hotel and the Marriott Rivercenter hotel San Antonio, both with- and without- the Marriott name for real property tax disputes. Clients included USAA, the Bexar County Appraisal District, and Texas Department of Transportation (TxDOT).

Frequent litigation clients have included the TxDOT through Texas Attorney General's Office for condemnation valuation and damage cases (Days Inn Houseon I-45N, Motel 6 Ft. Worth, Holiday Inn Houseon I-45N, La Quinta Houseon I-45N, Holiday Inn Lubbock, Austin Hawthorn Suites South, Chariot Inn, Malibu Grand Prix, Dallas Sheraton, San Antonio Holiday Select Airport, Coit Towers Hotel Dallas, Erie County PA Hotel Owners vs. Convention Authority, Bandera Motel San Antonio), USAA, Bexar County Appraisal District, Capital Income Properties (Hilton Nassau Bay, Austin Marriott North), American Liberty, Dosani Brenham Inn, Wes-Tex Management El Campo. Hospitality (Homeplace Inn), Ramada Bannister Austin (lock manufacturer), Rodeway Inn I-10 West (bank's non-funding of a committed loan), Homer J. Rader, and Siu Ft Worth and San Antonio Inn (bankruptcies), Holiday/Clarion (loss due to change of brand), United Fire (Wingate McAllen performance due to construction issues), Hyatt Regency San Antonio (arbitration re: introduction of second Hyatt in CVB), Drury Inn Riverwalk.

4. Numerous studies to determine the effect on revenues and cash flow of brand name alternatives, whether in new builds or in changing to or from a brand name. This technique is used extensively in feasibility work to predict revenue performance of new hotel projects under various brand name alternatives.

5. Represented Host Marriott before Real Estate Tax Appeal Board, Virginia.

6. Drafted national lending guidelines for Heller Small Business Finance for lodging projects under $5 million.

7. Presentations to bank lending committees to explain the economics of the lodging industry, particularly the effect of market demand and supply, equilibrium occupancy, cost structures, and the effect of brand name on REVPAR and ROIC.

8. Analysis of alternative markets to determine their potential for new lodging: alternative metro areas, alternative sites, and strategically, for an expanding chain.

9. Consumer intercept and secondary data studies, including the effect of a new hotel or a potential name change.

P.O. Box 120055 ♦ 134 Laurel Heights ♦ San Antonio, Texas 78212 ♦ (210) 734.3434 ♦ www.SourceStrategies.org

METHODOLOGY OF TEXAS HOTEL/MOTEL REPORTS

Texas Hotel/Motel Quarterly Reports are prepared on a custom basis for private and public clients. Reports are prepared by Source Strategies of San Antonio, Texas, based on the SSI proprietary database.

Data sources include the following:

Room Revenues: State of Texas Comptroller records are the source of taxable and gross room revenues for all properties. All properties exceeding $36,000 in the current quarter are included; allowing the Source Strategies database to cover. As a 98% of Texas lodging industry market.

Gross room revenues (including Non-taxable) were reported to the Comptroller starting in the third quarter of 1990. To account for the missing non-taxable revenues prior to the third quarter of 1990, Source Strategies increases each individual property's taxable-only, reported revenues by variable factors averaging 12% to reflect this untaxed volume (e.g. government business, over 30-day stays, charitable and educational purchases).

Starting in the third quarter of 1990, hotels and motels were required by the Texas Comptroller to report both taxable and gross room revenues. Approximately 80% of properties usually comply, allowing the development of adjustment factors for all hotels and motels, even if only taxable revenues are reported. For example, taxable room revenues are adjusted accordingly higher if a hotel reports only taxable revenues (i.e. where taxable equals gross room revenues).

Properties that make no report or only partial reports are estimated based on the taxable and gross revenues of the past five quarter trends and performance of similar hotels. If and when they subsequently report accurately, their actual revenues 'overwrite' our estimates.

Room Counts: these are checked annually in chain directories, the Texas American Automobile Association Tour Book, brand websites and telephoning to hotels; properties checked account for approximately 80% of revenues. For independent properties too small to be listed, the room counts reported to the state are used (unless they appear unreasonable; if so, a telephone contact is made).

As a result, the 'CHAIN' occupancies and room counts appear to be very close to 'actual', while independent room counts could be slightly overstated. Reports are split into CHAIN and INDEPENDENT categories.

Average Daily Rates are estimated with the aid of financial reports, appraisers, private S.S.I. surveys, chain and AAA directories and another reliable industry database.

Room-nights sold are derived from the above revenues, divided by Average Daily Rates. Room-nights available are calculated from Room Counts (times days in the period).

Occupancy is calculated from room-nights sold and room-nights available. All occupancy figures reported represent fully weighted averages, as calculations are always made after sub-totaling or totaling room-nights sold and room-nights available.

"CHAINS" are defined as one of the "Top 70+" brands, and include the following names: Four Seasons, Gaylord, Westin, ZaZa, W, Hilton, Hyatt, Inter-Continental, Marriott, Omni, Renaissance, Wyndham, Embassy, Homewood, Residence, Staybridge, Clarion, Courtyard, Crowne Plaza, Indigo, Doubletree, Hilton Garden Inn, Holiday Inn, Radisson, Sheraton, Candlewood, Comfort Suites, Hawthorn, Quality Suites, SpringHill, TownPlace, Baymont, Best Western, Comfort Inn, Country Inn, Drury, Fairfield, Hampton, Holiday Express, La Quinta, Wingate, Budget Suites, Extended Stay America, Intown, Value Place, Studio Plus, Studio 6, Best Value, Days, Econo Lodge, Howard Johnson, Microtel, Motel 6, Quality Inn, Ramada, Red Roof, Super 8, Home2 Suites and Tru.

Accuracy: Room counts and Room Revenues are within 2%. On an overall basis, the change in average daily rates reported by Source Strategies Inc. have typically been within a few tenths of one-percent of other private research firms operating in the Texas market.