ALBERTA ACCOMMODATION OUTLOOK 2018 ALBERTA HOTEL & LODGING ASSOCIATION APRIL 17, 2018 PRESENTATION OUTLINE Western Calgary & Investment Key National Alberta Questions Canada Edmonton Trends Takeaways AHLA | CBRE HOTELS’ OUTLOOK NATIONAL ECONOMIC & TRAVEL OUTLOOKS NATIONAL REAL GDP OUTLOOK 2018/19 $1.95 4.0% $1.90 $1.91 3.0% $1.88 $1.85 $1.84 $1.80 2.0% $1.79 $1.75 $1.76 1.0% Change % $1.74 $1.70 $1.70 0.0% $1.65 $1.66 Real GDP ($ Trillions) $1.63 $1.60 -1.0% $1.55 -2.0% $1.50 $1.45 -3.0% 2011 2012 2013 2014 2015 2016 2017 2018p 2019p % Change Source: Statistics Canada; Conference Board of Canada, Canadian Outlook Fall 2017; Scotiabank Group – Global Forecast Update January 2018; CIBC World Markets – Monthly FX Outlook, February 2018; RBC – Economic and Financial Market Outlook – 2017 Source: CBRE Hotels AHLA | CBRE HOTELS’ OUTLOOK NATIONAL TRAVEL OUTLOOK Overnight Travel 2016E 2017F 2018P 2019P KEEP YOUR TABLE WITHIN THE GUIDES Business travel domestic 1.3% 2.2% 1.4% 1.4% Pleasure travel domestic 2.1% 3.1% 2.2% 2.0% Total domestic travel 1.9% 2.7% 1.8% 1.7% U.S. Travel 9.4% 4.0% 2.8% 2.3% Overseas travel 13.6% 10.4% 6.4% 5.7% Total Overnight Travel 3.7% 3.3% 2.2% 2.0% National accommodation demand growth 1.3%* 4.1%* 2.4% — Source: Canadian Tourism Research Institute, Conference Board of Canada, Fall 2017 *Actual results, Source: CBRE Hotels AHLA | CBRE HOTELS’ OUTLOOK NATIONAL SUPPLY & DEMAND OUTLOOKS 2018 NATIONAL SUPPLY & DEMAND OUTLOOK National Occupancy 4.1% 2016 Actual 64% 2017 Actual 66% 2.4% 1.7% 1.3% 2018 Projection 66% 1.2% 1.1% 2016 2017 2018p 2016 2017 2018p Supply Demand Source: CBRE Hotels AHLA | CBRE HOTELS’ OUTLOOK NATIONAL ADR, REVPAR & BOTTOM LINE OUTLOOK 2015 ∆ 2016 ∆ 2017 ∆ 2018P ∆ ADR Growth RevPAR Growth Occupancy — 0 pts 2 pts 0 pts 2016 Actual 64% 2.9%64% 2016 Actual66% 3.0%66% ADR 2017 Actual$144 — 4.8%$148 2.9%2017 Actual$155 4.8% 8.0%$161 4.0% 2018 Forecast 4.0% 2018 Forecast 4.7% RevPAR $91 — $94 3.0% $102 8.0% $107 4.7% Adjusted Net 8.2% Operating 15.9% Income/ 3.9% Available Room ($000’s) $12.3 $14.3 $15.4 2016 2017 2018p Source: CBRE Hotels AHLA | CBRE HOTELS’ OUTLOOK WESTERN CANADA OUTLOOKS WESTERN CANADA SUPPLY & DEMAND OUTLOOK Supply & Demand Growth Western Canada Occupancy 2016 Actual 60% 4.6% 2017 Actual 62% 2.4% 2.0% 2018 Projection 63% 1.7% 1.0% 2016 2017 2018p 2016 2017 2018p -1.5% Supply Demand Source: CBRE Hotels AHLA | CBRE HOTELS’ OUTLOOK CANADIAN NATIONAL AND REGIONAL MARKET OUTLOOKS 2018 Region 2014 Actual 2015 Actual 2016 Actual 2017 Actual Forecast Western Canada Occ 65% 62% 60% 62% 63% ADR $143 $148 $150 $155 $160 RevPAR $93 $92 $90 $96 $100 Central Canada Occ 64% 66% 68% 70% 70% ADR $134 $142 $149 $158 $165 RevPAR $87 $93 $101 $110 $115 Atlantic Canada Occ 58% 59% 61% 63% 63% ADR $123 $127 $129 $135 $140 RevPAR $72 $75 $79 $86 $88 National Occ 64% 64% 64% 66% 66% ADR $138 $144 $148 $155 $161 RevPAR $88 $91 $94 $102 $107 Source: CBRE Hotels AHLA | CBRE HOTELS’ OUTLOOK WESTERN CANADA ADR, REVPAR & BOTTOM LINE OUTLOOK 2015 ∆ 2016 ∆ 2017 ∆ 2018P ∆ ADR Growth RevPAR Growth Occupancy 62% — 60% -2 pts 62% 2 pts 63% 1 pt 2016 Actual 1.3% 2016 Actual (2.1%) ADR 2017 Actual$148 — 3.2%$150 1.3%2017 Actual$155 3.2% 6.1%$160 3.3% 2018 Forecast 3.3% 2018 Forecast 4.7% RevPAR $92 — $90 (2.1%) $96 6.1% $100 4.7% Adjusted Net 7.1% Operating Income/ 9.8% Available Room -7.2% ($000’s) $13.7 $15.0 $16.1 2016 2017 2018p Source: CBRE Hotels AHLA | CBRE HOTELS’ OUTLOOK ALBERTA ECONOMIC & TOURISM OUTLOOKS ALBERTA TOURISM INDICATORS 2017 AIRPORT PASSENGER VOLUMES NATIONAL PARKS ATTENDANCE* • Calgary (YYC) 3.8% • Banff 3.0% • Edmonton (YEG) 5.0% • Jasper -1.6% • Waterton Lakes 7.3%** FOOD SERVICES & DRINKING HISTORIC SITES & MUSEUM PLACES RECEIPTS VISITS • 2.4% • 3.8% *Excludes Group Tours as per Parks Canada definition ** Waterton Lakes National Park was closed to the public from September 8-20, 2017 due to a wildfire. Source: Alberta Tourism Market Monitor, Alberta Culture and Tourism AHLA | CBRE HOTELS’ OUTLOOK ALBERTA 2017-19 GDP GROWTH PROJECTIONS 2017 2018 2019 Estimate Forecast Forecast ATB Financial 3.9% 2.8% 2.2% Scotiabank Group 3.0% 2.8% 1.9% RBC Economics 4.2% 2.2% 2.0% Conference Board of 6.7% 2.1% 1.6% Canada Source: ATB Financial – Alberta Economic Outlook – February 2018 Scotiabank Group, Global Economics Forecast Tables, March 6, 2018 RBC Economic and Financial Provincial Outlook – Alberta – March 2018 Conference Board of Canada, Provincial Outlook Winter (February) 2018 AHLA | CBRE HOTELS’ OUTLOOK 2018 Source: Scotiabank Group, Global Forecast Update, March 6, 6, 2018 March Update, Forecast Global Group, Scotiabank Source: Real GDP NL 2018f 0.5% - 19F 19F REAL GDP GROWTH BY PROVINCE 2019f 1.0% 2018f 1.6% PE 2019f 1.2% NS 2018f 1.2% 2019f 0.9% NB 2018f 1.0% 2019f 0.7% QC 2018f 2.1% 2019f 1.6% ON 2018f 2.3% 2019f 1.9% 2018f 2.2% MB 2019f 1.8% SK 2018f 2.2% 2019f 1.9% AB 2019f 1.9% 2019f 2.4% 2018f AHLA 2018f 2.8% National | CBRE 2019f 2.1% HOTELS’ OUTLOOK BC 2018f 2.6% 2019f 2.0% ALBERTA TRAVEL OUTLOOK 2017 2018 2019 Overnight Travel Estimate Forecast Forecast Business Travel Overnight 2.6% 1.3% 1.3% Domestic Pleasure Travel Overnight 3.9% 2.3% 1.9% Domestic U.S. Overnight Travel 4.9% 3.3% 2.8% Overseas Overnight Travel 9.1% 5.9% 5.3% Total Overnight Travel 3.6% 2.3% 2.1% Source: Canadian Tourism Research Institute, Conference Board of Canada, Fall 2017 AHLA | CBRE HOTELS’ OUTLOOK KEY ECONOMIC/TOURISM FACTORS Oil and Gas Capital Investment – Pipeline/Rail Capacity Issues Oil Sands Conventional Low Natural Gas Business & Consumer Overnight Travel Growth Prices Confidence Inconsistencies Increases Source: CBRE Hotels AHLA | CBRE HOTELS’ OUTLOOK WEST TEXAS INTERMEDIATE CRUDE OIL PRICES & HOTEL OCCUPANCY 1998-2018F $120 80% 70% $100 60% $80 50% $60 40% 30% $40 Occupancy Hotel 20% USD$ per Barrel $20 10% $0 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F Crude Oil Prices Alberta Hotel Occupancy Source: U.S. Energy Information Administration & CBRE Hotels’ Trends in the Hotel Industry AHLA | CBRE HOTELS’ OUTLOOK HENRY HUB NATURAL GAS PRICES & HOTEL OCCUPANCY 1998-2018F $10 80% $9 70% $8 60% $7 $6 50% $5 40% $4 30% $3 Occupancy Hotel 20% USD Btu $ per million $2 $1 10% $0 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F Natural Gas Prices Alberta Hotel Occupancy Source: U.S. Energy Information Administration & CBRE Hotels’ Trends in the Hotel Industry AHLA | CBRE HOTELS’ OUTLOOK ALBERTA SUPPLY & DEMAND OUTLOOKS 2018 ALBERTA TOP LINE 2017 PERFORMANCE 49% Occ $124 ADR $61 RevPAR Edmonton 57% Occ $130 ADR Red Deer $74 RevPAR Calgary Lethbridge 42% Occ $106 ADR $45 RevPAR Alberta Resorts 67% Occ $273 ADR Other Alberta North* $182 RevPAR Other Alberta South** 59% Occ $143 ADR $85 RevPAR Note: *Properties in Communities located On or North of Highway 16 **Properties in Communities located 51% Occ South of Highway 16 $110 ADR 43% Occ $57 RevPAR $115 ADR $50 RevPAR AHLA | CBRE HOTELS’ OUTLOOK ALBERTA HISTORIC “TOP LINE” RESULTS COMPARISON (YTD FEBRUARY) 2016 Jan-Feb 2017 Jan-Feb 2018 Jan-Feb Overall Occ 45% 45% 47% Alberta ADR $131 $127 $126 (excl.resorts) RevPAR $59 $57 $59 Red Deer Occ 36% 36% 36% ADR $111 $105 $108 RevPAR $40 $38 $40 Lethbridge Occ 42% 40% 42% ADR $109 $109 $111 RevPAR $46 $43 $47 Alberta Occ 48% 48% 49% Resorts ADR $189 $199 $210 RevPAR $91 $96 $103 Other Occ 36% 40% 44% Alberta ADR $127 $119 $121 RevPAR $46 $48 $54 Source: CBRE Hotels AHLA | CBRE HOTELS’ OUTLOOK ACCOMMODATION SUPPLY 2,000 new rooms in 2018 Majority in Calgary/ Edmonton Modular Construction Developers still looking Project Financing? Source: CBRE Hotels AHLA | CBRE HOTELS’ OUTLOOK ALBERTA SUPPLY & DEMAND OUTLOOK Room Nights 18,000,000 2% 2% 1% 16,000,000 14,000,000 5% 3% 12,000,000 5% 10,000,000 -12% 8% 2% 8,000,000 -3% 4% 3% 6,000,000 4,000,000 2,000,000 0 -2,000,000 2016 2017 2018P 2016 2017 2018P Calgary/Edmonton Combined Other Alberta SupplySupply/Available Room Nights Dem…Demand Source: CBRE Hotels 25 CBRE HOTELS | 2017/2018 OUTLOOK “OTHER ALBERTA” MARKET – DUAL IMPACTS OF ECONOMIC DOWNTURN AND NEW SUPPLY (2014 TO 2018) “Other AB” Market “Other AB” Market Occupancy Supply vs. Demand Growth Supply Growth Demand Growth 10% 6% 7% 5% 70% 67% 5% 65% 0% 60% -5% 56% -10% 55% 51% 52% -15% 50% 48% -20% -17% -19% 45% -25% 40% -25% -30% 2014 2015 2016 2017 2018F 2014-2016 2014-2017 2014-2018 Market Occupancy Supply in Other Alberta (outside Calgary and Edmonton) increasing by 7% for 2014-2018 Demand dropping 17% over the same period (2014-2018) The impact on market occupancy is a 15 point decline, from 67% in 2014 to 52% for 2018 for the “Other Alberta” market.