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European Hotel Transactions Article
      2002 Country Analysis

                                      Presented by
                Philippa Bock and Bernard Forster
HVS International                                                                                         European Hotel Transactions 2002 1

European Hotel Transactions 2002

Single Asset                               The UK continues to dominate the European single asset investment
Transactions by                            market, recording a total of 30 qualifying transactions in 2001, some 37%
Country                                    of total transactional activity. Other European countries with significant
                                           publicly available sales activity included Spain (13), Germany (9), France
                                           (6), Sweden (4), Belgium (4), Austria (4) and Ireland (2). In 2002 the UK
                                           continues to be the most liquid hotel market, with, up to September
                                           year-to-date, ten qualifying transactions representing 28% of all activity
                                           and 35% in terms of total investment volume.

Figure 1             Sales Activity by Country 2001-02 (Based on Number of Transactions)
                           2002 year-to-date                                                      2001
                 Hungary                                                      Belgium                           Austria
                   3%                                                           5%          Ireland              5%
    Germany                        Other            UK                                        3%
      3%                           12%             28%                Sweden                                                  UK
                                                                        5%                                                   37%
      9%                                          Spain                             Spain
                                                   18%                              16%                        Germany
           Ireland     France       Sweden                                                   Other               11%
             6%          6%           9%                                                     10%

                                           The total number of rooms sold in 2001 increased over 2000 levels by
                                           approximately 9%, equating to over 17,000 rooms. The UK has
                                           historically been the most liquid investment market due to its
                                           transparency, its legal system, the positive economic outlook and a well-
                                           developed and distinct hotel market. Furthermore, the UK historically
                                           has received the highest inflow of US capital of all the European
                                           countries. Nevertheless, the increase in single asset investment since
                                           1998 has been largely driven by increased investment in both the
                                           German and the Spanish hotel markets, and, to a lesser extent, in France,
                                           Belgium and Italy, principally as a result of benefits of EMU
                                           convergence, resulting in the simplification of cross-border tax and legal

                                           Of the main European countries, France, the UK and Belgium all
                                           recorded a sizeable increase in transaction activity by rooms sold in 2001.
                                           In contrast, Spain suffered a 34% decrease. Meanwhile, the eastern
                                           European investment market was particularly buoyant in 2001 compared
                                           with the previous year, achieving an astounding 338% rise in investment
                                           activity by rooms sold, albeit from a small base. This positive trend has

                                                                                                         By Philippa Bock and Bernard Forster
HVS International                                                                        European Hotel Transactions 2002 2

                                    continued into 2002, although not at the same level of growth as
                                    achieved in the previous year. Nevertheless, this illustrates an increase in
                                    investor confidence and a reduction in the perceived risk involved in the
                                    region as countries such as the Czech Republic and Hungary come closer
                                    to meeting the criteria necessary for their joining the EU.

                                    In today’s market factors such as the desire to gain increasing
                                    international presence, the limited availability of quality products, a
                                    common currency such as the euro and new sources of investment
                                    capital have all influenced the European hotel investment market.

Figure 2            Transactions by Country/Region 2000-02 YTD (By Sales Volume € 000,000s)






 Eastern Europe




                     0      100      200     300      400       500      600     700    800        900        1,000

                                                     2002 YTD     2001    2000

                                    The average price per room paid in 2001 was approximately €191,000,
                                    compared with €144,000 in the previous year. While this clearly indicates
                                    a higher price per room, this contradicts the trend recorded in the HVS
                                    European Hotel Valuation Index 2002, which recorded a 1.8% decrease in
                                    2001 in the value per room compared with a 10.4% increase the previous
                                    year. The reason for this variance can be explained by the fact that the
                                    majority of sales which took place in 2001 occurred prior to 11
                                    September. The sale price achieved in 2001 was strong due to the
                                    positive trading conditions in 2000, and, although 2001 experienced a
                                    slowdown in the global economy, expectations were set for a strong
                                    year-end and a positive momentum leading into 2002. The HVS European
                                    Hotel Valuation Index 2002, however, was based upon full year trading for
                                    2001, thus depicting the difficult trading environment and uncertainty
                                    that suddenly came about during the last quarter of 2001, and one which
                                    also painted a much bleaker picture for 2002.

                                                                                        By Philippa Bock and Bernard Forster
HVS International                                                               European Hotel Transactions 2002 3

                        In 2001, single asset transactions had a record year in terms of
                        investment activity, with the slowdown only becoming apparent in the
                        current year. In 2002, total single asset investment activity has fallen by
                        approximately 45% for the year to-date (September) to approximately
                        €1.1 billion, although the average price per room has fallen only 4%,
                        distorted by the sale of two quality hotel assets, the ANA Grand Hotel in
                        Vienna and the Hilton London Park Lane. These two assets alone
                        account for a third of the total value of transactions in 2002 to date.
                        Excluding the sale of these two hotels, the average price per room sold
                        would have fallen by some 26%.

                        Figure 3   Average Price per Room by Country/Region 1999-02 (€ 000s)
























                                                 2002 YTD   2001     2000    1999

Cross-Border Activity   In support of the growing trend towards internationalisation,
                        approximately 64% of acquisitions in 2002 year-to-date took place within
                        the buyer’s country of origin, compared with 80% in 1999. Despite the
                        European investment market continuing to be predominantly domestic,
                        pan-European investment has been spurred on by EMU convergence
                        and a greater number of cross-border investors.

                                                                               By Philippa Bock and Bernard Forster
HVS International                                                                                       European Hotel Transactions 2002 4

                    Figure 4                         Cross-Border Activity 1999-02

                         Foreign                                             29%


                                                 0%        10%       20%          30%       40%      50%       60%           70%              80%

                                                                         2002      2001      2000    1999

Market Review –     Historically, Austria’s hotel investment market has remained relatively
Austria             illiquid, with some investment in the capital Vienna. In recent times
                    investor interest has increased, largely as a result of improved operating
                    performances and changes in German tax laws, which have motivated
                    German funds to invest in Austria where the tax system is more

                    Figure 5                         Single Asset Transactions in Austria 1999-02

                                                 5                                                                       200
                           No. of Transactions

                                                 4                                                                       150
                                                                                                                               € Millions

                                                 1                                                                       50

                                                 0                                                                       0
                                                          1999             2000             2001            2002

                                                                 Transactions           Approx Transaction Value

                    Vienna has recorded the second most significant European single asset
                    transaction so far in 2002, following the recent sale of the 205-room ANA
                    Grand Hotel Wien to JJW Hotels for approximately €88 million (€428,000
                    per room). This transaction followed two important transactions in 2001.
                    First, the sale of a development with an operating lease for a 295-room
                    Le Méridien hotel to the German open-ended fund DEKA for €100
                    million (€339,000 per room). Second, the sale of the 600-room Hilton for
                    approximately €69 million (€115,000 per room) to the Austrian
                    construction company Soravia Bauträger, as part of SAirGroup‘s
                    rationalisation programme.

                                                                                                       By Philippa Bock and Bernard Forster
HVS International                                                                                     European Hotel Transactions 2002 5

                    Figure 6                     Single Asset Hotel Transactions in Austria – Average Price per Room
                                                 Sold 1999-02

                                                         1200                                                      500
                                                         1000                                                      400

                                        Rooms Sold

                                                                                                                            € 000s
                                                          200                                                      100
                                                            0                                                      0
                                                                 1999         2000        2001        2002

                                                                 Rooms Sold          Average Price per Room Sold

                    Austria has benefited from improved operating performance in recent
                    times, which is likely to attract greater investment to the region.
                    Furthermore, cross-border activity with Germany is likely, as German
                    investors take advantage of tax benefits and the opportunity to acquire
                    quality hotels in prime locations. Further acquisitions within the
                    Viennese hotel market can be expected, with both the Imperial and the
                    Bristol hotels forming part of Starwood’s Ciga portfolio, which is
                    currently on the market.

Belgium             Historically the Belgian hotel investment market has been relatively
                    illiquid, due to an oversupply of hotels and relatively weak trading
                    performance. Nevertheless, in recent times its capital Brussels, has
                    experienced a change of fortune with improved operating performances,
                    thus resulting in a number of significant single asset sales over the past
                    two years.

                    Figure 7                     Single Asset Transactions in Belgium 1999-01

                                                     5                                                                 200

                               No. of Transactions

                                                                                                                              € Millions


                                                     0                                                                 0
                                                                1999             2000               2001

                                                                  Transactions        Total Transaction Value

                    In 2000 Rocco Forte Hotels purchased the 183-room Hotel Amigo for
                    approximately €26 million (€141,000). Meanwhile, in 2001 a further four
                    hotels changed hands, including the Radisson SAS to Germany’s open-

                                                                                                     By Philippa Bock and Bernard Forster
HVS International                                                                        European Hotel Transactions 2002 6

                      ended fund DIFA, its first non-domestic acquisition. The freehold
                      property transacted for approximately €85 million (€302,000 per room).
                      Meanwhile, the 262-room Swissôtel was sold by Bannimo Real Estate to
                      the Belgian group City Hotels. The hotel, which included a block of
                      residential apartments, was sold with vacant possession for
                      approximately €40 million (€142,000 per room), and has since been
                      rebranded to Renaissance Hotels.

                      Figure 8                Single Asset Hotel Transactions in Belgium – Average Price per Room
                                              Sold 1999-01

                                              900                                                      250
                                              700                                                      200

                                 Rooms Sold


                                                                                                             € 000s
                                              200                                                      50
                                                0                                                      0
                                                        1999            2000            2001

                                                        Rooms Sold      Average Price per Room Sold

                      Total investment activity equated to approximately €180 million in 2001.
                      No transactions have yet taken place in 2002, although investor interest
                      remains strong despite a significant fall in RevPAR in 2002. With
                      investors keen to gain representation in this market, yet with few
                      opportunities available, investors are having to turn to development.
                      Nevertheless, this market remains relatively weak, especially compared
                      to its European counterparts, and a fall in operational profits may result
                      in fewer hotel transactions in the short term.

Central and Eastern   In the main, hotel investment activity is centred on Prague, Warsaw and
Europe                Budapest, although, increasingly, other markets such as Moscow, Sofia
                      and Zagreb are coming into play. Only one publicly reported transaction
                      was recorded in 2000: the 314-room Renaissance Hotel in Prague was
                      sold to Hospitality Europe for €64.8 million (€206,000 per room).
                      However, in 2001 five hotels transacted, equating to approximately €460
                      million. Hotels that exchanged hands included the 162-room Four
                      Seasons Hotel in Prague for approximately €70 million (€431,000 per
                      room) to the Quinlan Partnership and the 406-room InterContinental
                      Warsaw, for approximately €175 million (€430,000 per room) to a group
                      of foreign investors including Six Continents. Meanwhile, Hungary’s
                      national airline, Malev, sold its 50% stake in the Atrium Hotel company,

                                                                                        By Philippa Bock and Bernard Forster
HVS International                                                                                 European Hotel Transactions 2002 7

                    the owner and operator of the 353-room Hyatt Regency in Budapest, to
                    its co-owner and operator Pannonia Hotels for a reported €25 million.
                    Pannonia has since sold the company, in July this year, to HVB Leasing
                    for €50 million but will continue to operate the hotel under a 22-year
                    lease agreement.

                    Figure 9            Single Asset Transactions in Central and Eastern Europe 1998-02

                                                     6                                                       500

                                                     5                                                       400
                               No. of Transactions


                                                                                                                   € Millions

                                                     1                                                       100

                                                     0                                                       0
                                                         1998        1999      2000     2001       2002

                                                                Transactions      Total Transaction Value

                    Prague has enjoyed the strongest trading performances and is arguably
                    the most liquid investment market within the region, followed by
                    Budapest and Warsaw. All three countries are likely to be ready for EU
                    membership from the beginning of 2004. Indeed, the recent increase in
                    investment activity, particularly within Prague and Budapest, is a sign
                    that investors perceive there to be less risk associated with these markets
                    than in the past. To a certain extent both Budapest and Warsaw have
                    suffered from oversupply of hotels; however, there are some signs that
                    the balance between supply and demand is being restored.

                                                                                                 By Philippa Bock and Bernard Forster
HVS International                                                                     European Hotel Transactions 2002 8

                    Figure 10            Single Asset Hotel Transactions in Central and Eastern Europe –
                                         Average Price per Room Sold 1998-02

                                         1,600                                                      400

                                         1,400                                                      350

                                         1,200                                                      300

                                         1,000                                                      250
                            Rooms Sold

                                                                                                          € 000s
                                          800                                                       200

                                          600                                                       150

                                          400                                                       100

                                          200                                                       50

                                            0                                                       0
                                                  1998     1999     2000      2001       2002

                                                   Rooms Sold       Average Price per Room Sold

France              The majority of all hotel investment activity in France centres around its
                    capital, Paris. Following a year dominated by corporate transactions
                    during 1999 (including the €504 million disposal of the Vivendi
                    portfolio), the hotel market witnessed a number of single asset
                    transactions during 2000 and 2001, as investors realised their capital
                    gains following three years of strong trading. Hotels transacted during
                    2000 totalled approximately €160 million and included the leasehold
                    interest in the 111-room Hotel de la Tremoille for €23 million (€207,000
                    per room) and the 388-room Hyatt Regency Charles de Gaulle Airport
                    for €50 million (€130,000 per room). In 2001 the most significant
                    transaction was the purchase of the 764-room Nikko Hotel by Accor and
                    the US private investment fund Colony Capital for €100 million (€131,000
                    per room). In addition, approximately 2,000 rooms exchanged hands in
                    the Parisian market as part of Nomura’s acquisition of Le Méridien,
                    which included Le Méridien Montparnasse and Le Méridien Etoile.
                    Meanwhile, in terms of portfolio sales Accor’s ten-strong Parisian chain
                    of Jardins de Paris Hotels, some 429 rooms, was sold to SITQ for an
                    undisclosed sum.

                                                                                     By Philippa Bock and Bernard Forster
HVS International                                                                             European Hotel Transactions 2002 9

                    Figure 11                     Single Asset Transactions in France 1998-02
                                                      10                                                  200

                                No. of Transactions

                                                                                                                € Millions
                                                       5                                                  100
                                                       0                                                  0
                                                            1998     1999    2000     2001      2002

                                                              Transactions    Total Transaction Value

                    In 2002 the Parisian hotel market is suffering due to its high exposure to
                    the transatlantic market and the general slowdown in the global
                    economy. Nevertheless, with signs of improved trading conditions,
                    investors are more likely to find more suitably priced assets, hence
                    improving the liquidity of the market. Where investment activity is likely
                    to take place, we envisage institutional and private equity investors to
                    continue to show strong interest, as well as those hotel companies, as yet
                    not represented in the market, seeking to gain entry. The limited
                    opportunity for development in the city as a result of strict building
                    regulations is likely to mean that further transactions will occur in 2002,
                    particularly at the top end of the market with the Ritz rumoured to be
                    currently on the market in 2002.
                    In 2002, two hotels have transacted to date, but both are in resort
                    locations. The 692-room Cannes Beach Residence was acquired by Pierre
                    et Vacances for approximately €32 million (€46,000 per room), the hotel is
                    due to undergo renovation that will elevate it to four-star status;
                    meanwhile, the 329-room Radisson SAS in Nice was acquired by the UK
                    property company Capital and Income Trust Group for approximately
                    €24 million (€74,000 per room).

                                                                                             By Philippa Bock and Bernard Forster
HVS International                                                                       European Hotel Transactions 2002 10

                    Figure 12                Single Asset Hotel Transactions in France – Average Price per Room
                                             Sold 1998-02

                                             2,000                                                     400

                                             1,500                                                     300

                                Rooms Sold

                                                                                                             € 000s
                                             1,000                                                     200

                                               500                                                     100

                                                 0                                                     0
                                                      1998     1999     2000     2001       2002

                                                        Rooms Sold     Average Price per Room Sold

Germany             Germany experienced a surge in investment activity in 2000 with total
                    investment volumes exceeding €610 million, which is considered to be
                    exceptional and unlikely to be repeated in the short term. HVS recorded
                    a total of 19 transactions, including the 202-room Four Seasons Berlin for
                    €86 million (€428,000 per room) to the German closed-ended fund HGA
                    Grundbesitz und Anlage, the 510-room InterContinental Hotel Berlin for
                    approximately €141 million (€276,000 per room) to German open-ended
                    fund DIFA, and the Marriott Hotel in Hamburg to US-based Strategic
                    Hotel Capital for €45 million (€164,000).
                    In 2001 reported investment activity continued to be strong but failed to
                    reach the level recorded in the previous year. HVS recorded some nine
                    transactions with a total volume of approximately €350 million. A
                    significant proportion of four-star and five-star hotels are owned by
                    closed-ended and open-ended funds. These properties are typically
                    leased to operators for 20 to 30 years on fixed rental terms. Institutions,
                    due to their long-term investment horizon of 20 to 40 years, have little
                    incentive to dispose of these stable investments. In addition, these
                    investors accept significantly lower yields than UK or US funds, which
                    have much shorter investment horizons, often of less than ten years.
                    Nevertheless, demand for hotel investment remains strong, but is
                    characterised by the limited availability of product, principally due to the
                    strong representation of domestic institutional investors. By far the
                    largest deal was the sale of the 406-room Maritim ProArte Hotel in Berlin
                    to Allgemeine Leasing for approximately €119 million (€293,000 per
                    room). Dr Ebertz & Partner was particularly active; acquisitions included
                    the 195-room Nassauer Hof in Wiesbaden for €39 million (€190,000 per
                    room), the Holiday Inn Bonn for €25.6 million (€102,000 per room) and
                    the Park Hotel Bremen for €22 million (€140,000 per room). Several more
                    transactions occurred in Germany in 2001; however, the transaction
                    prices have not been made public. These include the Ritz-Carlton
                    Schlosshotel Berlin (now rebranded to Regent International) to Dr Ebertz

                                                                                        By Philippa Bock and Bernard Forster
HVS International                                                                                           European Hotel Transactions 2002 11

                    & Partner and the Rema Savoy Hotel (now rebranded to Starwood’s Four
                    Points) by Westmont Hospitality.

                    Figure 13                                 Single Asset Transactions in Germany 1998-02

                                                    20                                                                       600
                           No. of Transactions


                                                                                                                                     € Millions
                                                    10                                                                       300
                                                        0                                                                    0
                                                                  1998          1999      2000       2001         2002

                                                                           Transactions      Approx Transaction Value

                    2002 has witnessed only one reported single asset transaction to-date:
                    the 232-room Novotel Düsseldorf turnkey project for €32.5 million,
                    including 12,000 m² of office space, to Deutsche Bank. A much greater
                    level of activity has taken place on the portfolio side; first, Accor’s
                    strategic 30% stake in Dorint, and, second, the acquisition by NH Hoteles
                    of the 53-strong Astron Hotels portfolio for €130 million (€16,000 per
                    room). The outlook for the remainder of 2002 is dependent upon the
                    German economy, due to its heavy reliance on domestic demand.
                    Nevertheless, with recent poor performances on the global stock
                    markets, property is increasingly regarded as a safe haven, due to its
                    long-term investment nature. We therefore envisage that the interest
                    shown by German institutional investors is set to continue in Germany
                    and increasingly abroad.

                    Figure 14                                 Single Asset Hotel Transactions in Germany – Average Price per Room
                                                              Sold 1998-02

                                                              5,000                                                       250
                                                              4,000                                                       200
                                                 Rooms Sold

                                                              3,000                                                       150
                                                                                                                                € 000s

                                                              2,000                                                       100
                                                              1,000                                                       50
                                                                  0                                                       0
                                                                         1998     1999     2000      2001       2002

                                                                          Rooms Sold       Average Price per Room Sold

Italy               The Italian single asset hotel investment market has remained relatively
                    illiquid over the past few years, with only one reported transaction each

                                                                                                            By Philippa Bock and Bernard Forster
HVS International                                                                                     European Hotel Transactions 2002 12

                    year between 1998 and 2001. In 2002 two hotels have exchanged hands
                    to-date: the Central Palace Hotel in Sicily and the Palace Hotel in Naples.
                    The two hotels were purchased by Una Hotels & Resorts for €23.8 million
                    (€119,000 per room). In 2001, the 24-room Caruso Belvedere Hotel in
                    Ravello was sold for an impressive €31 million to Orient-Express Hotels
                    (€1.3 million per room), the hotel is currently under reconstruction and is
                    due to reopen in spring 2003. Meanwhile, in 2000 the Hotel Baglioni in
                    Florence was sold to Star Hotels for €20 million (€122,000 per room). With
                    respect to portfolio activity, the sale of the Le Méridien portfolio
                    involved a number of Italian properties, including the Forte Village in
                    Sardinia and the Hotel Eden in Rome.

                    Figure 15            Single Asset Transactions in Italy 1998-02

                                                      3                                                             70
                                No. of Transactions

                                                      2                                                             50

                                                                                                                          € Millions
                                                      1                                                             20
                                                      0                                                             0
                                                               1998       1999       2000      2001       2002

                                                                      Transactions      Total Transaction Value

                    Italy’s hotel investment market is set to become more liquid in the short
                    term with the intended disposal of Ciga, which has attracted significant
                    interest from both international and domestic investors. The outcome of
                    the entire portfolio remains unclear; however, Ciga’s four Sardinian
                    properties and the Pevero Golf course, some 379 rooms, are reported to
                    have been sold to a group of Italian investors for €351 million. (Neither
                    the Ciga portfolio nor the two Le Méridien hotel transactions is shown in
                    Figure 15 or Figure 16, which depict single asset hotel transactions only.)

                    Figure 16            Single Asset Hotel Transactions in Italy – Average Price per Room Sold

                                                      250                                                         1,400
                                Rooms Sold

                                                                                                                          € 000s

                                                      100                                                         600
                                                           0                                                      0
                                                                1998       1999      2000    2001      2002

                                                                  Rooms Sold          Average Price per Room Sold

                                                                                                      By Philippa Bock and Bernard Forster
HVS International                                                                               European Hotel Transactions 2002 13

The Netherlands     Due to the relatively small size of the Dutch hotel market, the
                    investment market in the Netherlands has largely focused on
                    Amsterdam. In 1999, the Cok City Hotel Amsterdam transacted for
                    approximately €10 million (€91,000 per room). Meanwhile, two
                    transactions were reported in 2000, the most significant being the 279-
                    room Radisson SAS Schiphol Airport to Miller Global for approximately
                    €48 million (€171,000 per room). The second transaction was the 76-room
                    Hotel des Indes, in The Hague, to a private group of investors. No single
                    asset transactions which meet our criteria (hotels transacting at or above
                    €7.5 million) were recorded in 2001 or year to-date 2002, although most
                    recently, the private equity fund Hospitality Europe announced that it is
                    to sell both the 230-room Sheraton Hotel Pulitzer and the 408-room
                    Sheraton Hotel Schiphol Airport, both of which are in Amsterdam.

                    Figure 17            Single Asset Transactions in The Netherlands 1999-00

                                                      3                                                         80
                                No. of Transactions


                                                                                                                     € Millions

                                                      0                                                         0
                                                                 1999                    2000

                                                               Transactions     Total Transaction Value

                    On the portfolio side, Camp Kleyn acquired the eight-strong AMS Group
                    in 1999. This was followed in 2000 by NH Hoteles’ acquisition of the 64-
                    strong Krasnapolsky group for €495 million. In 2001 Le Méridien Apollo
                    Hotel was sold as part of Compass’s disposal of the Le Méridien portfolio
                    to Nomura.

                    Figure 18            Single Asset Hotel Transactions in The Netherlands – Average Price per
                                         Room Sold 1999-00

                                                      400                                                   250
                                No. of Rooms Sold

                                                      300                                                   200
                                                                                                                     € 000s

                                                      100                                                   50
                                                          0                                                 0
                                                                  1999                   2000

                                                              Rooms Sold      Average Price per Room Sold

                                                                                                By Philippa Bock and Bernard Forster
HVS International                                                      European Hotel Transactions 2002 14

                    Despite a weakening in trading performance following a particularly
                    strong year in 2000, investors remain keen to gain representation.
                    However, the market remains relatively illiquid, partly due to the lack of
                    product available and partly due to owners’ lack of motivation or need to

Spain               As the Spanish hotel market has matured over recent years it has become
                    more sophisticated and resulted in a shift towards greater international
                    sources of investment. Local investors remain prominent; however,
                    evidence of international and institutional investors entering the market
                    is apparent. Examples include Palamon Capital buying a 37.5% stake in
                    High Tech Hotels & Resorts, and a consortium led by Deutsche Bank
                    becoming the successful purchaser of the Hotel Arts complex for €285

                    Madrid and Barcelona are considered key investment markets, spurred
                    on by strong trading performances. Limited opportunities exist,
                    however, due principally to a lack of liquidity, fuelled by the dominance
                    of domestic companies and the fragmented ownership structure of the
                    market. As a means of gaining representation Spain has been
                    characterised by aggressive development. Companies such as AC Hotels,
                    Accor, High Tech, Catalonia, Six Continents, and Zenit Hotels are keen
                    to increase their presence in city centre locations, as are traditional resort
                    operators such as Hoteles Playa, H10, and Fiesta Hotels: all aim to
                    diversify their hotel portfolios into major cities.

                    The Spanish hotel market has historically experienced a high level of
                    activity in the resort market, with Germany and the UK important feeder
                    markets. European tour operators have justified the importance of the
                    Spanish resort market with a number of key transactions. Airtours (now
                    MyTravel), for example, acquired the Bellevue Hotel in Majorca as well
                    as both the Globales and the Hotetur hotel chains.

                    In 2001 the total number of room which transacted declined by
                    approximately 34% upon the previous year; however, total investment
                    activity increased by some 42%, totalling approximately €600 million.
                    The reason for the growth in transaction volumes was due to the quality
                    of assets exchanging hands. The 482-room Hotel Arts complex was sold
                    to a consortium of investors led by Deutsche Bank AG’s Real Estate
                    Private Equity group, together with Patron Capital Partners and a
                    number of other investors. This deal, which represented Europe’s largest
                    single asset transaction in 2001, transacted at approximately €285 million
                    and included 27 luxury apartments, approximately 13,000 m² of retail
                    space, 12,000 m2 of office space and a casino. The hotel component of the
                    Hotel Arts complex is understood to have represented between 85% to
                    90% of the transaction price. In 2002, six transactions have completed to
                    date, totalling some €145 million. Hotels transacted include the 63-room
                    La Residencia in Majorca to Orient-Express Hotels for €24 million

                                                                       By Philippa Bock and Bernard Forster
HVS International                                                                             European Hotel Transactions 2002 15

                    (€381,000 per room), the 368-room Hotel Diagonal 1 project in Barcelona,
                    due to open in 2004, to Princess Hotels for €69 million (€188,000 per
                    room) and the 144-room Illa del Cel Hotel Barcelona, which is currently
                    under construction, to Vincci Hotels for €24 million (€167,000 per room).

                    The disposal of development sites with hotel projects under
                    construction, has been the driving force behind much of the investment
                    activity in the single asset hotel transaction market. This trend sets Spain
                    apart from other European hotel investment markets and looks set to
                    continue into 2003.

                    Figure 19         Single Asset Transactions in Spain 1998-02

                                                      14                                                  700
                                                      12                                                  600
                                No. of Transactions

                                                      10                                                  500

                                                                                                                € Millions
                                                       8                                                  400
                                                       6                                                  300
                                                       4                                                  200
                                                       2                                                  100
                                                       0                                                  0
                                                           1998    1999      2000     2001      2002

                                                              Transactions      Total Transaction Value

                    The last major portfolio sale to have taken place within the Spanish
                    market was Sol Meliá’s acquisition in 2000 of the 60-strong Tryp Hoteles
                    for €360 million at a reported 10% yield. Consolidation within the
                    Spanish market is set to continue in the short to medium term following
                    the diffusion of several domestic, privately run hotels resulting in several
                    new hotel chains such as Grupo Bali, Monarque Hoteles and Gestión
                    Hotelera La Marina.

                    Of considerable interest, at least in terms of strategic change, is the sale
                    and leaseback transaction in 2002 involving NH Hoteles and the Spanish
                    investment company Pontegadea Immobiliaria. The deal involved four
                    20-year leasehold properties, some 643 rooms, for a price of €91.4 million,
                    with a fixed rent payment indexed annually with inflation. NH Hoteles
                    then used the capital to finance its purchase of 80% of Astron Hotels of

                                                                                              By Philippa Bock and Bernard Forster
HVS International                                                                                           European Hotel Transactions 2002 16

                    Figure 20            Spanish Single Asset Hotel Transactions – Average Price per Room Sold

                                         5,000                                                                                 250
                                         4,000                                                                                 200

                            Rooms Sold
                                         3,000                                                                                 150

                                                                                                                                     € 000s
                                         2,000                                                                                 100
                                         1,000                                                                                 50
                                            0                                                                                  0
                                                                       1998       1999     2000      2001         2002

                                                                           Rooms Sold      Average Price per Room Sold

                    The outlook for the future remains positive despite a softening in trading
                    performance, an increase in hotel supply and the potential damage to
                    the tourism industry from the Basque separatist group ETA.
                    Nevertheless, we envisage that the Spanish market will become more
                    liquid, with international investors likely to become increasingly

Scandinavia         In the main, hotel investment activity has historically been characterised
                    by domestic investors and is centred on the capital cities, with Stockholm
                    the most liquid investment market within the region, followed by

                    Figure 21            Single Asset Transactions in Scandinavia 1998-02
                                                                       8                                    175
                                                                       7                                    150
                                                 No. of Transactions

                                                                       6                                    125
                                                                                                                  € Millions

                                                                       5                                    100
                                                                       1                                    25
                                                                       0                                    0
                                                                            1998 1999 2000 2001 2002

                                                                            Transactions     Total Transaction Value

                    In 1999 all transactions recorded within our survey took place in
                    Sweden, representing some €160 million of investment. The most
                    notable transactions included the 198-room Scandic Park in Stockholm
                    for €34.1 million (€172,000 per room) and the 111-room Scandic
                    Hasselbacken in Stockholm for €43 million (€387,000 per room).

                                                                                                            By Philippa Bock and Bernard Forster
HVS International                                                                    European Hotel Transactions 2002 17

                    The number of single asset transactions in 2000 was less than it was in
                    the previous year, as investors chose instead to reap the benefits of a
                    strong trading year. Nevertheless, investment activity in 2000 was shared
                    between the Scandinavian countries. Transactions included the 495-
                    room Ramada Hotel President in Helsinki for €36.3 million (€73,000 per
                    room), the Radisson SAS Plaza in Oslo for €30.8 million (€45,000 per
                    room) and the 287-room Quality Globe Hotel in Stockholm for €35
                    million (€122,000 per room).

                    In 2001, with a softening in market conditions, a number of investors
                    decided to exit the market, but with activity limited only to Sweden, this
                    resulted in a decline in the number of transactions compared with the
                    previous year. HVS recorded four single asset deals, with a total
                    investment value of €79 million. The transactions included the sale of the
                    328-room Scandic Hotel Malmen in Stockholm for approximately €30
                    million (€90,000 per room) to Capona, the 151-room Stockholm Plaza to
                    SSRS Holding for €20 million (€135,000 per room) and the 150-room Mr
                    Chip Hotel to Pandox for €13.5 million (€89,000 per room).

                    Single asset activity in 2002 has been considerably stronger than it was in
                    2001, aided by the sale of three Radisson SAS hotels in Norway to
                    Wenaas Hotels for €156 million (€155,000 per room). Three further
                    transactions have taken place in Sweden, the most notable of which was
                    the sale of the 212-room Scandic Hotel Anglais in Stockholm to the
                    Swedish company AFA Sjukförsäkrings for €63.1 million (€298,000 per

                    Figure 22            Single Asset Hotel Transactions in Scandinavia – Average Price per
                                         Room Sold 1998-02

                                         2,000                                                       200

                                         1,500                                                       150
                            Rooms Sold

                                                                                                           € 000s

                                         1,000                                                       100

                                          500                                                        50

                                            0                                                        0
                                                 1998      1999     2000      2001        2002

                                                   Rooms Sold       Average Price per Room Sold

                    In 2000 the Scandinavian portfolio hotel market started to consolidate
                    with Scandic’s acquisition of the Swedish company Provobis. The
                    transaction, which involved 17 properties and some 3,000 rooms,
                    completed for a purchase price of approximately €71 million. As a result
                    of this corporate sale, Scandic later disposed of five properties that did
                    not fit within the company’s structure or brand image.

                                                                                     By Philippa Bock and Bernard Forster
HVS International                                                                                       European Hotel Transactions 2002 18

                    In 2001, portfolio activity in Scandinavia was exceptional, as Scandic
                    itself became a victim of the consolidation game, snapped up by Hilton
                    for approximately €1 billion. The acquisition provided Hilton with
                    control of the Scandinavian market, some 154 hotels and 26,500 rooms.

                    In 2002 and beyond, international investors are expected to show
                    continued interest in the Scandinavian market. But relatively few
                    opportunities exist, making Hilton’s acquisition of Scandic all the more

The UK              Historically, the UK has dominated the European hotel investment
                    market, and this generally continues to be the case today. In 2001 the UK
                    represented 37% of all single asset transactions recorded by HVS
                    International (based on rooms sold) compared with 46% in 1999. HVS
                    recorded some 30 deals in 2001, of which only seven transactions
                    involved central London hotels. The most significant single asset sale
                    resulted from the disposal of one of Compass’s Signature Hotels, the
                    Cumberland. Nomura’s Principal Finance Group acquired the hotel for
                    approximately €238 million (€267,000 per room), achieving an initial yield
                    of around 7.3%. The second-largest single asset transaction was the 216-
                    room Berners Hotel for €81 million to JJW Hotels & Resorts (€377,000 per

                    London’s single asset sales in 2001 improved marginally on the previous
                    year in terms of sales volume, by 8%, totalling some €494 million
                    (including two hotels at Heathrow). The UK provincial market proved
                    more liquid, with total investment increasing by 84% over the previous
                    year, totalling some €395 million. For the first time investment within the
                    UK provincial market is shown in 2001 to be on a par with the level of
                    investment generated by London.

                    Figure 23                    London and UK Provinces Single Asset Transactions 1998-02

                                            25                                                                                       1,200

                      No. of Transactions

                                                                                                                                             € Millions



                                             0                                                                                       0
                                                 1998             1999               2000          2001              2002

                                                  No. of London Transactions                No. of UK Provinces Transactions
                                                  Total Transaction Value – London          Total Transaction Value – UK Provinces

                                                                                                        By Philippa Bock and Bernard Forster
HVS International                                                                         European Hotel Transactions 2002 19

                    The effect of the softening in the economy, and a considerable
                    weakening in trading, has resulted in a relatively illiquid market in 2002.
                    This is largely as a result of a significant difference between the asking
                    price of the seller and that which the buyer is prepared to pay.

                    HVS has recorded four notable London sales to date in 2002, with the
                    most significant transaction (on an average price per room basis) being
                    the sale of the exclusive 53-room, 47 Park Street property (previously
                    flagged under Accor’s Sofitel Demeure brand) for €43 million in a joint
                    venture agreement between Marriott and Orion European Real Estate
                    Fund. This is now being marketed as Marriott’s first Executive Residence
                    in Europe, an up-market, urban fractional ownership product. One
                    further significant transaction involved the sale of a majority stake in the
                    450-room London Hilton on Park Lane for approximately €248. The sale
                    involves a joint venture agreement between Land Securities, the existing
                    owner, and London & Regional, with the latter taking a controlling

                    With few other London transactions, the average price per room in 2002
                    is somewhat distorted, as indicated in Figure 24.

                    Figure 24             UK Single Asset Hotel Transactions – Average Price per Room Sold

                                     4,500                                                                         600
                                     3,000                                                                         400
                       Rooms Sold


                                                                                                                         € 000s
                                     1,500                                                                         200
                                         0                                                                         0
                                                 1998          1999        2000          2001          2002

                                    Rooms Sold – London                           Rooms Sold – UK Provinces
                                    Average Price per Room Sold – London          Average Price per Room Sold – UK Provinces

                    Portfolio activity in 2001 was exceptional, totalling approximately €4.5
                    billion. The tremendous level of activity can be attributed to the decision
                    by Compass plc (formerly Granada Compass plc) to sell off its hotel
                    investment portfolio, which was made up of the old Forte empire. Six
                    Continents acquired the 79-strong Posthouse Hotels portfolio for
                    approximately €1.3 billion (approximately €108,000 per room). All
                    Posthouse Hotels have since been rebranded as Holiday Inn, with the
                    exception of around 15 hotels not deemed as suitable for conversion,
                    many of which have since been sold on. Meanwhile, Macdonald Hotels

                                                                                          By Philippa Bock and Bernard Forster
HVS International                                                     European Hotel Transactions 2002 20

                    acquired the 48-strong Heritage Hotels in a joint venture agreement with
                    the Bank of Scotland for approximately €385.4 million (€124,000 per

                    Prior to the sale of Compass’s various hotel portfolios, the investment
                    vehicle of the Japanese bank Nomura, Principal Finance Group (PFG),
                    entered the UK hotel investment market with the acquisition of the 17-
                    strong Principal Hotel Group for approximately €418.2 million (€167,000
                    per room). Nomura, under the company name of Grand Hotels (M)
                    Acquisitions, proceeded to successfully acquire the 128-strong worldwide
                    Le Méridien portfolio for €1.9 billion, of which 17 are operated in the UK.

                    In addition to the disposal of the Compass hotel inventory, much of the
                    investment activity that arose during 2001 was in the form of sale and
                    leaseback structured deals. Nomura financed its acquisition of the Le
                    Méridien portfolio following the sale and leaseback of 12 UK properties.
                    The deal, which was entered into with the Royal Bank of Scotland (RBS),
                    provided funds worth €1.6 billion. Hilton also undertook its first wave of
                    sale and leaseback activity, with RBS once again the investor. The deal
                    involved some 11 properties, and provided funds of €512 million. A third
                    major sale and leaseback deal that completed in 2001 was between Accor
                    and London & Regional: this deal involved some 13 UK properties and
                    raised €98.5 million of capital.

                    Despite the difficult trading environment of recent times, the
                    momentum of innovative financing deals has continued into 2002.
                    Thistle entered into a uniquely structured ‘sale and managementback‘
                    deal with the property company Orb Estates. The deal, which involved
                    37 properties, some 5,500 rooms, completed for €950.5 million. This deal
                    was followed later in the year by Hilton’s entering into its second sale
                    and leaseback, with a further ten hotels, some 2,043 rooms. The deal, in
                    which Hilton itself has taken a 40% equity stake, involved the formation
                    of a limited partnership between Hilton, the property company Rotch,
                    the hotel investment company Farnsworth Group and the Bank of
                    Scotland, and realised a further €488 million of capital after consideration
                    for Hilton’s investment. Most recently Jarvis Hotels has secured a sale
                    and leaseback deal with a private equity consortium led by Lioncourt
                    Capital for €237 million in exchange for a 34-year lease. The deal involves
                    nine UK properties, some 1,341 rooms.

                    Following the wealth of portfolio deals in the past two years we can
                    expect investors to rationalise their portfolios further than that already
                    witnessed. A cautious outlook seems set to remain for the remainder of
                    2002, although the hotel investment market is likely to pick up
                    somewhat and improve substantially in 2003. Corporate deals are likely
                    to continue, with further sale and leaseback and other innovative
                    financing deals expected, with the anticipated sale of Travelodge, the
                    UK’s second-largest budget hotel operator, providing considerable

                                                                      By Philippa Bock and Bernard Forster
HVS International                                                      European Hotel Transactions 2002 21

                    interest. Nomura is also rumoured to be disposing of a number of
                    Principal Hotels that have failed to meet Le Méridien’s brand standards.
                    Economic factors such as the continued low interest rates are also likely
                    to boost investment activity.

Conclusion          Despite the challenging times experienced in the first six months of 2002,
                    the outlook for European hotel operating markets is positive, although
                    the possibility of war with Iraq and the risk of further terrorist attacks are
                    likely to have an impact upon the future trading environment. Hotel
                    investment activity in 2002 was particularly slow at the start of the year,
                    nevertheless a number of impressive and interesting deals have
                    completed, particularly on the corporate side. In the UK, sale and lease
                    back deals have been at the forefront of this activity, with three publicly
                    quoted companies namely Hilton International, Jarvis and Thistle Hotels
                    all participating in this innovative form of financing and in doing so
                    divesting themselves from the burden of hotel real estate ownership.

                    In the second half of 2002 a greater number of single asset deals have
                    completed and this positive momentum in the hotel investment market
                    is expected to continue to strengthen and resume the traits and trends
                    set in the previous years. With respect to specific hotel markets, we
                    consider that investment activity in Spain will continue to be strong,
                    Central European markets are expected to become increasingly more
                    active, investor interest will remain strong in Germany and liquidity
                    within the UK hotel investment market will continue, although its
                    dominance within the European hotel investment market is likely to

                    As the European hotel industry continues to consolidate, further
                    corporate and portfolio activity is assured. The remainder of the Ciga
                    portfolio and the sale of Travelodge are two portfolios currently on the
                    market. Other smaller and medium sized national and international
                    portfolios are likely to disappear as the hotel investment market
                    continues to intensify. While hotel operators remain keen to extend their
                    global representation, pension funds and institutional investors are likely
                    to feature more prominently in the European hotel investment market.

                                                                       By Philippa Bock and Bernard Forster
HVS International

                                                                                                                  Sales Price per
Sale Date Property                            City                    Country          Rooms   Sales Price Euro     Room Euro       Buyer                                                Seller
2002      ANA Grand Hotel                     Vienna                  Austria          205       87,800,000              428,000    JJW Hotels                                           All Nippon Airways (ANA)
2002      Sheraton-Sofia Balkan               Sofia                   Bulgaria         188       24,075,000              128,000    EFG Eurobank, Axxon Bulagia, Intl Lodging Bulgaria   Daewoo Engineering & Construction
2002      Hotel Praha                         Prague                  Czech Republic   120       16,934,000              141,000    Falcon Capital                                       Prague 6 Municipality
2002      Radisson SAS Royal                  Copenhagen              Denmark          1004     155,985,000              155,000    Wenaas Hotels                                        Copenhagen Int. Hotels
2002      Radisson SAS Scandinavia            Copenhagen              Denmark                  As Radisson SAS Royal                Wenaas Hotels                                        Copenhagen Int. Hotels
2002      Radisson SAS Globetrotter           Copenhagen              Denmark                  As Radisson SAS Royal                Wenaas Hotels                                        Copenhagen Int. Hotels
2002      Cannes Beach Residence              Cannes                  France           692       32,000,000               46,000    Pierre & Vacance                                     Lucia SA (Colony Capital Group)
2002      Radisson SAS Nice                   Nice                    France           329       24,384,000               74,000    CIT (Capital and Income Trust Group of Companies)    Morun Corporation NV (Abela Corp)
2002      Novotel Dusseldorf                  Dusseldorf              Germany          232       32,499,000              140,000    Deutsche Bank Subsidiary                             NCC Property Development
2002      Lindos Memories Hotel               Rhodes Island           Greece            70        9,000,000              129,000    Mitsis Group                                         n/a
2002      Hyatt Regency (Atrium Hotel)        Budapest                Hungary          353       50,000,000              142,000    HVB-Leasing Hungary                                  Pannonia Hotel Rt.
2002      Jurys Skylon Hotel                  Dublin                  Ireland          186       14,000,000               75,000    McEniff Hotels                                       Jurys Doyle
2002      Jurys Waterford Hotel               Waterford               Ireland                     As Jurys Skylon                   McEniff Hotels                                       Jurys Doyle
2002      Central Palace Hotel                Sicily                  Italy            200       23,800,000              119,000    UNA Hotels & Resorts                                 Private Individual
2002      Palace Hotel                        Naples                  Italy                    As Central Palace Hotel              UNA Hotels & Resorts                                 Private Individual
2002      La Residencia                       Mallorca                Spain             63       24,000,000              381,000    Orient Express Hotels                                Virgin Group
2002      Colombo Hotel                       Mallorca, Portocristo   Spain            140        7,810,000               56,000    Hoteles Catalonia                                    Hotel Colombo SA
2002      Hotel Diagonal 1 (Project)          Barcelona               Spain            368       69,000,000              188,000    Princess Hotels                                      Espais/Landscape
2002      Illa del Cel                        Barcelona               Spain            144       24,000,000              167,000    Vincci Hoteles                                       Iber Espais
2002      Hotel Maya                          Alicante                Spain            195       10,000,000               51,000    Hotel Maya                                           Prom. Alicantinas
2002      Paradiso Garden                     Mallorca                Spain            135       10,000,000               74,000    Mac Hotels                                           Lucy Hotels
2002      Mornington Hotel                    Goteborg                Sweden            92       10,414,000              113,000    Koncept Fastighets                                   Choice Hotels Sweden
2002      Stadshotellet (Best Western)        Eskilstuna              Sweden           220        9,318,000               42,000    Debutanten 1124 AB (Home Invest AS)                  Graflunds Byggnads AB
2002      Scandic Hotel Anglais               Stockholm               Sweden           212       63,127,000              298,000    AFA Sjukförsäkrings AB                               AB Hotelinvest & Co KB
2002      Comfort Inn Hotel                   Birmingham              UK               166        8,941,000               54,000    Private Individual                                   Choice Hotels Europe
2002      Quality Hotel Kensington            London                  UK                72       11,954,000              166,000    International Currency Exchange (ICE)                Kingston Smith & Partners
2002      47 Park Street - Sofitel Demeure    London                  UK                53       43,033,000              812,000    Orion European RE Fund/Marriott Intl                 Colony Capital / Blackstone / Accor
2002      Mornington Hotel                    London                  UK                66       14,000,000              212,000    Losan                                                Hesperia
2002      Posthouse - Croydon                 London, Croydon         UK                83        8,535,000              103,000    Private Individual                                   Six Continents
2002      Hilton Park Lane                    London                  UK               450      247,652,000              550,000    London & Regional/Land Securities                    Land Securities
2002      Princess Hotel                      Manchester              UK                85        8,115,000               95,000    Carlton Hotels UK                                    Private Individual
2002      Posthouse - Manchester              Manchester              UK               191       10,567,000               55,000    Britannia Hotels                                     Six Continents
2002      Wood Norton Hall                    Worcestershire          UK               292       12,172,000               42,000    Private Investor Rick Hvizdak                        BBC Resources
2002      Aldwark Manor Golf & Country Club   York                    UK                60       12,425,000              207,000    Marston Hotels                                       n/a
2001      Hilton Am Stadpark                  Vienna                  Austria          600       68,700,000              115,000 Soravia Bautrager GmbH                                  Sodereal Holdings / SAir Group
2001      Le Meridien (Project)               Vienna                  Austria          295      100,000,000              339,000 Deka Fund                                               n/a
2001      Hotel Mate                          Vienna                  Austria          172        8,357,000               49,000 Diana Hotels                                            Private Individual
2001      Hotel Dependance                    Vienna                  Austria                      As Hotel Mate                 Diana Hotels                                            Private Individual
2001      Radisson SAS Brussels               Brussels                Belgium          281       85,000,000              302,000 DIFA Fund                                               Memphis Group
2001      Swissotel Brussels                  Brussels                Belgium          262       37,228,000              142,000 City Hotels SA                                          Bannimo Real Estate
2001      Barsey Hotel Mayfair                Brussels                Belgium           99       22,300,000              225,000 Private Individual                                      Private Individual
2001      Jolly Hotel Sabon                   Brussels                Belgium          195       34,700,000              178,000 West Invest                                             Private Individual
2001      Excelsior Hotel                     Dubrovnik               Croatia          172       22,348,000              130,000 Private Individual                                      Croatian Government
2001      Four Seasons Hotel Prague           Prague                  Czech Republic   162       69,740,000              430,000 Quinlan Partnership                                     Four Seasons Hotels Inc.
2001      Mont Vallon Hotel                   Meribel, Alps           France            92       13,700,000              149,000 Alp A'zur Hotels                                        Colony Capital
2001      Radisson SAS Etoile Marceau         Paris                   France            46       16,794,000              365,000 Brussels City Hotels                                    n/a
2001      Nikko Hotel de Paris                Paris                   France           764       66,675,000               87,000 Colony Capital/Accor                                    Japan Airlines
2001      Forest Hill Balard                  Paris                   France           130       12,954,000              100,000 Saudi Investor                                          n/a
2001      Hotel Development                   Paris, Roissy           France           300       37,500,000              125,000 GI Fund                                                 n/a
2001      Hotel Golf Plaza                    Sainte-Maxime           France           111       10,668,000               96,000 JJ France Hotels & Resorts                              Consortium de Realisation
2001      Pro Arte Maritim                    Berlin                  Germany          406      119,000,000              293,000 Allgemeine Leasing                                      Deutsche Interhotel Holding
2001      Ritz-Carlton Schlosshotel           Berlin                  Germany           54       23,000,000              426,000 Dr Ebertz & Partner                                     Albeck & Zehden
HVS International

                                                                                                                Sales Price per
Sale Date Property                           City                     Country       Rooms    Sales Price Euro     Room Euro       Buyer                                                  Seller
2001      Holiday Inn Bonn                   Bonn                     Germany       252         25,600,000          102,000       Dr Ebertz & Partner                                    Drott AB
2001      Park Hotel                         Bremen                   Germany       150         20,967,000          140,000       Dr Ebertz & Partner                                    Sparkasse Bremen
2001      Astron Hotel (Project)             Cologne                  Germany       205         28,000,000          137,000       Wilhelm Sander Stiftung                                Kaphag Holding
2001      Hilton Hotel (Project)             Cologne                  Germany       296         54,000,000          182,000       WestInvest InterSelect                                 n/a
2001      Nassauer Hof                       Wiesbaden                Germany       195         37,000,000          190,000       Dr Ebertz & Partner                                    Stinnes Logistik AG
2001      Aukamm Hotel                       Wiesbaden                Germany       158         19,429,000          123,000       Astron Hotels                                          Private Individual
2001      Hotel Rose                         Wiesbaden                Germany        30         21,475,000          716,000       Subsidiary of Hessische Landesbank                     BBV Immobilien Fonds
2001      Hyatt Regency                      Budapest                 Hungary       353         25,323,000            72,000      Pannonia Hotels                                        Malev Hungarian Airlines
2001      Royal Marine Hotel                 Dublin                   Ireland       103         28,802,000          280,000       William Neville & Sons Ltd                             Ryan Hotels
2001      Limerick Inn                       Limerick                 Ireland       154          9,875,000            64,000      Knox Hotels                                            Ryan Hotels
2001      Caruso Belvedere Hotel             Ravello                  Italy          24         31,200,000        1,300,000       Orient Express Hotels                                  n/a
2001      Inter-Continental                  Warsaw                   Poland        406        174,759,000          430,000       Six Continents / Warimpex Finanz / UBM Vienna          n/a
2001      Neptuno Hotel                      Algarve, Monte Gordo     Portugal      335         12,675,000            38,000      Portuguese Business Group                              Sosul
2001      Nevskyj Palace                     St Petersburg            Russia        282        168,818,000          599,000       Corinthia Hotels International                         St Petersburg City government
2001      La Nina                            Adeje                    Spain         232         36,000,000          155,000       Globalia Hotels                                        Amrey
2001      Playa Hotel                        Barcelona                Spain         215         45,000,000          209,000       Playa Hoteles                                          n/a
2001      Hotel Gravina                      Barcelona                Spain          85          9,015,000          106,000       Group H10                                              n/a
2001      Hotel Arts                         Barcelona                Spain         482        285,000,000          591,000       Deutsche Bank Private Equity/Patron Capital Partners   Sogo Co/HOVISA
2001      Apartotel Dorado Beach             Canaries                 Spain         195         18,030,000            92,000      Bull Hotels                                            n/a
2001      Hotel Costa Lago                   Costa del Sol            Spain         204         18,030,000            88,000      Riu Hotels                                             n/a
2001      Hotel Ses Estaques                 Ibiza                    Spain         159         14,000,000            88,000      Catalonia                                              Ses Estaques
2001      Hotel Mindanao                     Madrid                   Spain         281         45,000,000          160,000       Bancor Pastor                                          Hotel Mindanao
2001      Villa Magna Hotel                  Madrid                   Spain         182         80,000,000          440,000       Queiroz Pereira                                        Shirayama
2001      Hotel Helios                       Salou                    Spain         216         10,000,000            46,000      Sara Hoteles                                           n/a
2001      Hotel Peregrino                    Santiago de Compostela   Spain         179         10,217,000            57,000      Private Individual                                     n/a
2001      Porta Coeli Hotel                  Seville                  Spain         244         18,030,000            74,000      Hesperia Hoteles                                       Occidental Hotels
2001      Hotel Samil                        Vigo                     Spain         137          9,000,000            66,000      Hot Lao Garriga                                        Inm Samil
2001      Scandic Hotel                      Linkoping                Sweden        220         15,477,000            70,000      City Financing A/S                                     NCC Group
2001      Mr Chip Hotel                      Stockholm, Kista         Sweden        150         13,421,000            89,000      Pandox AB                                              Private Individual
2001      Stockholm Plaza                    Stockholm                Sweden        151         20,347,000          135,000       SSRS Holding                                           Skandia Life Insurance
2001      Scandic Hotel Malmen               Stockholm                Sweden        328         29,547,000            90,000      Capona AB                                              Nordisk Renting
2001      Noga Hilton                        Geneva                   Switzerland   410        188,496,000          460,000       UBS/BNP Paribas                                        Ogan Family
2001      Swan Diplomat Hotel                Berkshire                UK             46          9,875,000          215,000       Nike Group                                             Hotell Diplomat AB
2001      Crowne Plaza (Project)             Birmingham               UK            242         39,428,000          163,000       Six Continents                                         David Mclean Developments
2001      Chamberlain Tower Hotel            Birmingham               UK            695         66,171,000            95,000      Jurys Doyle Hotels                                     Chamberlain Hotel Group
2001      Chamberlain Park Hotel             Birmingham               UK                    As Chamberlain Tower Hotel            Jurys Doyle Hotels                                     Chamberlain Hotel Group
2001      Chamberlain Park Hotel             Birmingham               UK            250         13,578,000            54,000      Cockpit Hotels                                         Jurys Doyle Hotels
2001      Cedar Court Hotel                  Bradford                 UK            131         23,609,000          180,000       Tweed Investments                                      Acropolis hotels (Sirdar Estates)
2001      Burstin Hotel                      Folkestone               UK            481         18,894,000            39,000      Grand Hotel Group                                      Leisure Great Britain
2001      Four Seasons Hampshire (Project)   Hampshire                UK            120         12,633,000          105,000       Rochamel Construction Systems/Four Seasons             Union Holdings
2001      Sundridge Park                     Kent, Bromley            UK            151         24,687,000          163,000       Tweed Investments                                      PA Consulting Group
2001      Holiday Inn Express Leeds          Leeds                    UK            112         11,592,000          104,000       Standard Life Investments Ltd                          Premier Hotels
2001      Holiday Inn Express Albert Dock    Liverpool                UK            117          8,978,000            77,000      Centre Island                                          EHI Development
2001      Kensington Hotel                   London                   UK            226         50,385,000          223,000       Lancaster Landmark Hotel Group                         n/a
2001      Cumberland Hotel                   London                   UK            894        238,308,000          267,000       Nomura Principal Finance                               Compass Group
2001      Albany Hotel                       London                   UK             79          8,231,000          104,000       Private Individual                                     Kuwaiti Algerian
2001      Berners Hotel                      London                   UK            216         83,908,000          388,000       JJW Hotels & Resorts                                   SAIF Inc.
2001      Holiday Inn Heathrow               London, Heathrow         UK            230         50,385,000          219,000       Standard Life Investment Funds                         BDL Hotels
2001      Heathrow Park Hotel                London, Heathrow         UK            309         22,063,000            71,000      Private Company                                        Equitable Life Assurance Society
2001      Kensington Edwardian Hotel         London                   UK             69         12,339,000          179,000       Private Individual                                     Kuwaiti Algerian Investment Co
2001      Knightsbridge Hotel                London                   UK             50         14,807,000          296,000       Firmdale Hotels                                        n/a
2001      Hotel Europe                       London                   UK            100         15,630,000          156,000       Private Individual                                     n/a
2001      Radisson SAS Manchester Airport    Manchester               UK            360         61,697,000          171,000       n/a                                                    Radisson SAS - Rezidor
HVS International

                                                                                                                   Sales Price per
Sale Date Property                           City                    Country            Rooms   Sales Price Euro     Room Euro       Buyer                                             Seller
2001      Prince of Wales                    Merseyside              UK                  103        7,578,000              74,000    Britannia Hotels                                  Paramount Hotels
2001      Dunchurch Conference Centre        Rugby                   UK                   79        8,896,000             113,000    First! Venues Ltd                                 Jarvis Hotels/Marconi
2001      Buchanan Arms Hotel                Stirlingshire           UK                   52       28,152,000             541,000    Stonefield Castle Group                           Paramount Hotels
2001      Hilton Stoke on Trent              Stoke                   UK                  136        8,229,000              61,000    Prince Hotel Group                                Hilton International
2001      Park Royal International Hotel     Warrington, Cheshire    UK                  142       35,373,000             249,000    Tweed Investments                                 Mossley
2001      Bishopstrow House Hotel            Warminster, Wiltshire   UK                   33        8,089,000             245,000    Von Essen Hotels                                  Simon Lowe & co investors
2001      Hilton Edinburgh Belford           Edinburgh               UK                  378       44,025,000             116,000    Menzies Hotels                                    Hilton International
2001      Hilton Newcastle                   Newcastle               UK               n Edinburgh Above                              Menzies Hotels                                    Hilton International
2001      Hilton Bath Waterside              Bath                    UK               n Edinburgh Above                              Menzies Hotels                                    Hilton International
2000      Hotel Amigo                        Brussels                Belgium             183        25,856,000            141,000    RF Hotels                                         Blaton Family
2000      Sol Las Olas                       Fuerteventura           Canary Islands      200        11,840,000             59,000    Sara Hoteles                                      Sol Melia
2000      Renaissance Hotel                  Prague                  Czech Republic      314        64,800,000            206,000    Hospitality Europe BV                             Gestin AS
2000      Hotel Rivoli                       Espoo                   Finland             206        15,979,000             78,000    Hotelman Oy                                       Nordisk Renting with Radisson SAS
2000      Ramada Hotel President             Helsinki                Finland             495        36,331,000             73,000    Elanto                                            Finnish Insurers
2000      Abela Hotel                        Monaco                  France              192        32,840,000            171,000    Columbus Hotels                                   Abela Hotels
2000      Holiday Inn                        Nice                    France              131        10,866,000             83,000    City Hotels Belgium                               n/a
2000      Hotel de la Tremoille              Paris                   France              111        22,988,000            207,000    Scotsman Hotels                                   Highgate Holdings
2000      Hyatt Regency Charles de Gaulles   Paris                   France              388        50,292,000            130,000    Hospitality Europe BV                             TOA Invest France SARL
2000      Balzac Hotel                       Paris                   France              107        45,720,000            427,000    Pacific Investments                               Abela family
2000      Hotel de Vigny                     Paris                   France            Balzac Hotel                                  Pacific Investments                               Abela family
2000      Four Seasons                       Berlin                  Germany             202        86,359,000            428,000    HGA Fund                                          n/a
2000      Inter-Continental                  Berlin                  Germany             510      141,000,000             276,000    DIFA Fund                                         n/a
2000      Best Western Stuttgarter Hof       Berlin                  Germany             105        10,731,000            102,000    n/a                                               n/a
2000      Steigenberger Venusberg            Bonn                    Germany              85         9,249,000            109,000    Dr Ebertz & Partner                               n/a
2000      Best Western Hotel Eden            Dusseldorf              Germany             120        12,775,000            106,000    Golden Tulip (Krasnapolski)                       Gainstride
2000      Radisson SAS Düsseldorf            Dusseldorf              Germany             309        35,400,000            115,000    Memphis Group                                     SAS International Hotels
2000      Renaissance Hotel                  Dusseldorf              Germany             245        45,990,000            188,000    BFG Immoinvest                                    n/a
2000      Mercure Seestern (Project)         Dusseldorf              Germany             160        16,352,000            102,000    DESPA Fund                                        NCC Real Estate
2000      Hilton Düsseldorf                  Dusseldorf              Germany             372        47,523,000            128,000    Hilton International                              n/a
2000      Kempinski Gravenbruch              Frankfurt               Germany             285        28,105,000             99,000    Private Consortium                                Kempinski Hotels & Resorts
2000      Marriott Hotel                     Hamburg                 Germany             277        45,479,000            164,000    Strategic Hotel Capital                           Goteborg, Bilia AB
2000      Kempinski Hotel Atlantic           Hamburg                 Germany             254        35,770,000            141,000    Private Consortium                                Kempinski Hotels & Resorts
2000      Euro Garden Köln                   Cologne                 Germany              85         8,176,000             96,000    Westmont Hospitality                              National Investment Company
2000      Euro Plaza Köln                    Cologne                 Germany             116         9,709,000             84,000    Westmont Hospitality                              National Investment Company
2000      Kempinski Hotel Fürstenhof         Leipzig                 Germany              92        14,308,000            156,000    Schoerghuber Group                                Hypo Vereinsbank
2000      Arabella Sheraton                  Offenbach               Germany             221        29,638,000            134,000    Private Individual                                n/a
2000      Hotel Vierjahreszeiten             Regensburg              Germany             225        11,498,000             51,000    NH Hoteles                                        n/a
2000      Binshof Therme & Resort            Speyer                  Germany              88         8,585,000             98,000    Lindner Hotels                                    Mannheimer Sparkase
2000      Kempinski Hotel Elefant            Weimar                  Germany             102        13,286,000            130,000    Schoerghuber Group                                Hypo Vereinsbank
2000      Fitzpatrick Silver Spring Hotel    Cork                    Ireland             110        17,776,000            162,000    Moran Group                                       Fitzpatrick Hotel Group
2000      Blooms Hotel                       Dublin                  Ireland              86        22,140,000            257,000    Martin Keane                                      Private Individuals
2000      Holiday Inn                        Dublin                  Ireland              92         8,507,000             92,000    Consortium (KPMG Partners)                        Receivers
2000      Grand Hotel Baglioni               Florence                Italy               169        20,660,000            122,000    Star Hotels                                       Private Individual
2000      Radisson SAS Hotel Schiphol        Amsterdam               Netherlands         279        47,636,000            171,000    Miller Global                                     Tencourts Leisure Investments
2000      Hotel des Indes                    The Hague               Netherlands          76        20,000,000            263,000    Berange Holding                                   Private Individual
2000      Radisson SAS Plaza                 Oslo                    Norway              693        30,828,000             44,000    Kommunal Landspenjonkasse (Pension institution)   SAS International Hotels
2000      Playa Capricho                     Almeria                 Spain               331        19,232,000             58,000    Bami                                              Playa Hoteles
2000      Costa del Sol                      Estepona                Spain               170        24,942,000            147,000    n/a                                               n/a
2000      Oasis Hotel                        Ibiza                   Spain               178        10,217,000             57,000    Grupotel                                          Oasis Playa
2000      Club Delfin                        Ibiza                   Spain               228        18,030,000             79,000    n/a                                               n/a
2000      Costa Salinas / Lanzarote Garden   La Palma / Lanzarote    Spain               379        66,110,000            174,000    H10 Hotels                                        Grupo Lutz
2000      Playa Blanca                       Lanzarote               Spain               190        24,040,000            127,000    Riu Hotels                                        n/a
HVS International

                                                                                                 Sales Price per
Sale Date Property                       City               Country   Rooms   Sales Price Euro     Room Euro       Buyer                              Seller
2000      Alameda                        Madrid             Spain     145       13,943,000               96,000    Tryp Hoteles                       Grupo Barajas
2000      Barajas                        Madrid             Spain     230       22,117,000               96,000    Tryp Hoteles                       Grupo Barajas
2000      Tryp Fenix Hotel               Madrid             Spain     444       75,125,000              169,000    Sol Melia                          Tryp Hoteles
2000      Costa Azul                     Malaga             Spain     312       36,060,000              116,000    Playa Hoteles                      Bagels Hunan
2000      Bellevue Hotel                 Mallorca           Spain     1474     102,921,000               70,000    Airtours                           Banesto Corporation
2000      Sol Inn Bardinos               Mallorca           Spain     215        8,414,000               39,000    Arenales de Las Palmas             Sol Melià
2000      Scandic Star Hotel             Stockholm          Sweden    269       11,529,000               43,000    Pandox                             JM AB
2000      Strandbaden Elite Hotel        Falkenberg         Sweden    135        8,260,000               61,000    SSRS Holding                       Wihlborgs Fastighets
2000      Quality Hotel Globe            Stockholm          Sweden    287       35,046,000              122,000    Fastighets AB Stockholm Arenan 1   Balder
2000      Ston Easton Park               Bath               UK         22        8,226,000              374,000    Von Essen Hotels                   Private Individual
2000      Marygreen Manor Hotel          Brentwood          UK         55       12,300,000              224,000    Pantheon Hotels & Leisure          Paul Pearson
2000      Thornbury Castle               Bristol            UK         20        8,200,000              410,000    Von Essen Hotels                   Private Individual
2000      Caledonian Hotel               Edinburgh          UK        249       72,406,000              291,000    Hilton International               Queens Moat Houses
2000      Posthouse Hotel                Erskine            UK        177       12,300,000               69,000    Cosmopolitan Hotels                Granada
2000      Burstin Hotel                  Folkestone         UK        481       19,680,000               41,000    Grand Hotel Group                  Queensborough Holdings
2000      Howard Johnson Hotel           Glasgow            UK        114        9,348,000               82,000    Sydney & London Properties         Premier Hotels
2000      Master Robert                  Hounslow           UK         94       10,988,000              117,000    Hillport Limited                   Fuller Smith & Turner
2000      Beaufort                       London             UK         28       10,824,000              387,000    Private Individual                 Private Individual
2000      Cavendish Hotel                London             UK        251       98,400,000              392,000    De Vere Hotels                     Granada
2000      Conrad London                  London             UK        160       96,760,000              605,000    Consortium of Property Investors   Peninsular & Oriental Steam
2000      De Vere                        London             UK        100       41,000,000              410,000    Private Individual                 Cola Holdings
2000      Dorset Square Hotel            London             UK         38       11,480,000              302,000    Bank Kuwait                        Firmdale Hotels
2000      Grand Plaza Hotel              London             UK        301       41,000,000              136,000    Crown Dilmun plc                   Romahaven Ltd
2000      Hilton St Ermins               London             UK        290       90,200,000              311,000    Jolly Hotels                       Strategic Hotel Capital
2000      Howard Hotel                   London             UK        139       65,600,000              472,000    Marylebone Warwick Balfour         Barclay Brothers
2000      Dominion Serviced Apartments   Manchester         UK        115       14,760,000              128,000    Crown Dilmun plc                   n/a
2000      Hellidon Lakes Hotel           Northamptonshire   UK         71       19,680,000              277,000    Marston Hotels                     Private Individual
2000      Oxford Moat House              Oxford             UK        155       18,450,000              119,000    Paramount Hotel Group              Queens Moat Houses
2000      Reigate Manor                  Reigate            UK         50        7,790,000              156,000    Private Individual                 n/a
HVS International - Offices & Divisions

Europe                           United States of America     Canada                               HVS Divisions

HVS London                       HVS New York                 HVS Vancouver                        •   Consulting Services
14 Hallam Street                 372 Willis Avenue            4235 Prospect Road, N Vancouver      •   Valuation Services
London W1W 6JG                   Mineola, NY 11501            British Columbia, Canada, V7N 3L6    •   Investment Services
UK                               USA                          (1) 604 988 9743                     •   Eco Services
(44) 20 7878 7700                (516) 248-8828               (1) 604 988 4625 (fax)               •   Gaming Services
(44) 20 7436 3386 (fax)          (516) 742-3059 (fax)                                              •   Executive Search Services
                                                              HVS Toronto                          •   Food & Beverage Services
HVS Madrid                       HVS San Francisco            Hammersmith House                    •   Marketing Services
Paseo de la Castellana 93 - 20   Suite 620                    2120 Queen Street East, Suite 202    •   Convention, Sports and Entertainment Facilities
28046 Madrid                     116 New Montgomery Street    Toronto, Ontario, Canada M4E 1E2         Consulting
Spain                            San Francisco, CA 94105      (1) 416 686 2260                     •   Technology Strategies
(34) 91 597 4635                 USA                          (1) 416 686 2264 (fax)               •   Timeshare Consulting Services
(34) 91 597 3054 (fax)           (415) 896-0868 x108                                               •   HVS Capital Corporation
                                 (415) 896-0516 (fax)                                              •   Asset Management & Operational Advisory
Asia                                                          South America                            Services
                                 HVS Miami                                                         •   HVS Compass Interior Design
HVS Singapore                    Treman Center                HVS São Paulo                        •   HVS/The Ference Group: Operational &
100 Beach Road                   8925 SW 148th Street         Av Brig Faria Lima                       Management Strategy Development
#28-10/13 Shaw Towers            Suite 216, Miami, FL 33176   1912 cj 7F                           •   HVS Special Hospitality Assets Group
Singapore 189702                 USA                          01452-001 São Paulo/SP
(65) 6293 4415                   (305) 378 0404               Brazil
(65) 6293 5426 (fax)             (305) 378 4484 (fax)         (55) 11 3034 1091
                                                              (55) 11 3034 6364 (fax)
HVS India                        HVS Boulder
C-67 Anand Niketan               2229 Broadway                HVS Buenos Aires
                                                              Reconquista 1056 – 10° Piso         For an introduction to any of our offices and divisions, please
2nd Floor, New Delhi 110021      Boulder, CO 80302
                                                              1003 Buenos Aires                   contact Russell Kett or Charles Human in London.
India                            USA
(91) 11 410 1005                 (303) 443-3933 x11           Argentina
(91) 11 410 1066 (fax)           (303) 443-4186 fax           (54) 11 4515 1461
                                                              (54) 11 4515 1462 (fax)