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Alberta Accommodation Outlook

VIEWS: 2 PAGES: 25

									                                Alberta Accommodation
                                        Outlook

                                                  April 2008




Beth Walters, Director, Western Canada
David Ferguson Senior Consultant, Western Canada

PKF Consulting provides:
 Advisory Services exclusively to the Hospitality and tourism Industry,
including hotels, resorts, spas, conference centres, casinos, golf courses and
other tourism businesses.


•Strategic Advisory services such as Asset Evaluation and Asset Strategy,
Appraisals and Valuations, Market Feasibility Studies and Economic Impact
Analysis and increasingly we review and provide input to the
budget/business planning for hotels.


•Trends in the Hotel Industry Market Report and Financial Reports, the only
Proprietary Database of such information in Canada, maintained 30 years.




                   Presentation Outline
       1. Canadian Travel Outlooks
       2 National Industry Outlook
       2.
       3. Alberta Industry Outlooks
       4. Industry Investment Issues




                                                                                 1
                                      Canadian Travel Outlooks




                National Economic/Travel Outlook
                                                                  2006                2007           2008
                                                                  Actual             Forecast    Projection

     GDP Growth National                                          3.1%                2.4%           2.6%

     Business Travel Overnight Domestic                           5.9%                3.0%           3.2%


     Pleasure Travel Overnight Domestic                           4.2%                3.2%           3.9%


     U.S. Overnight Travel                                       -3.4%                -3.6%          -5.3%

     Overseas Overnight Travel                                    0.1%                4.7%           4.5%


Source: Canadian Tourism Research Institute, Conference Board of Canada, Fall 2007




                2008 Real GDP Growth by Province
                                                                           1.5                       NL

                                                                   1.9                               PEI

                                                                  2.1                                ON

                                                              2.2                                    NB

                                                             2.4                                     QC

                                                           2.6                                       NS

                                                 3.1                                                 BC

                                               3.3                                                   AB

                                             3.6                                                     SK

                                            3.7                                                      MB

         6.5     6     5.5     5     4.5     4     3.5     3     2.5     2     1.5     1   0.5   0
  Gross Domestic Product at Basic Prices (2002 $)
  Source: Conference Board of Canada, Statistics Canada, Winter 2008                       2.6% Canada




                                                                                                              2
                                                          Travel Outlook – Canada

                                                            Total Overnight Person Visits
                                                                   (2007f - 2011f)
                                                                                              3.8%     3.6%
                                              000's)




                                                       140,000
                                                                           2.8%      3.4%
                     Overnight Person Visits (0




                                                       120,000
                                                       120 000
                                                       100,000
                                                        80,000
                                                        60,000
                                                        40,000
                                                        20,000
                                                             0
                                                                 2007(f) 2008(f) 2009(f) 2010(f) 2011 (f)


 Source: Canadian Tourism Research Institute, Conference Board of Canada, Fall 2007




                                                             Business Travel Outlook
                                                                   3.0% Growth in 2007
                                                                   3.2% Growth in 2008
                                                                   2.9% Growth in 2009

                                                           Pros                                Cons
             Continued economic growth                                              Loss in manufacturing jobs
             Number of business trips are                                           Weak export market due to
           still increasing                                                       strong Canadian dollar
             Led by the Domestic market –                                           Sensitive to slowdown in the US
           Particularly in Western Canada                                         economy




Source: Conference Board of Canada, Canadian Travel Research Institute, Fall 2007




                                                             Business Travel Outlook
              Main Concerns
              1. Will Western Canada continue to achieve strong
                 growth?
              2. What is the spillover from the U.S. slowdown?




                                                                                                                      3
                               Meeting/Conference Outlook
                           Pros
         Continued Upgrading and
       Expansion of Supply
         Increased direct air capacity to                           1.0% Growth in 2007
       many International destinations
         Increased MC&IT sales efforts
       through Rooms Taxes and
                                                                    3.0% Growth in 2008
       Convention Development Funds

                           Cons
          WHTI requiring passports
          Decreased price competitiveness
          of Canada



Source: PKF Consulting




                          Domestic Leisure Travel Outlook
                                           3.2% Growth in 2007
                                           3.9% Growth in 2008
                                           2.9% Growth in 2009
                           Pros                                                     Cons
         Continued growth in real                                   Strong Canadian dollar enticing
       disposable income                                            Canadians to travel out of the
         Continued increase in air travel                           country
         Canadian dollar should                                     Consumer confidence waning in
       moderate                                                     some regions of Canada
                                                                    High gas prices are increasing
                                                                    the prices of short trips
                                                                    Lack of Labour Supply

Source: Conference Board of Canada, Canadian Travel Research Institute, Fall 2007




                                       US Leisure Travel Outlook
                                Pros
          Extension of WHTI
                                                                      -3.6% Decline in 2007
                                Cons                                   5.3%
                                                                      -5.3% Decline in 2008
            Continual decline in US Visitors
            Weak US housing market                                       3.2% Growth in 2009
            Weak US dollar
            Increased competitive destinations
            Gasoline prices affect travel decisions
            Border issues (real and perceived)

        1. How long will the US economy continue to lag?

Source: Conference Board of Canada, Canadian Travel Research Institute, Fall 2007




                                                                                                      4
                                       Overseas Leisure Travel Outlook

                                                             4.7% Growth in 2007
                                                             4.5% Growth in 2008
                                                             4.5% Growth in 2009

                                                    Pros                                                Cons
                             Emerging Markets include:                                     Competition for International
                             China, Mexico, South Korea, India                             travel increasing
                             Increased direct air capacity
                             to/from many International
                             destinations

        Open Skies Agreements – Existing
          and Future Potential
Source: Conference Board of Canada, Canadian Travel Research Institute, Fall 2007




                                                 Travel Outlook – National
                                                                                                        Domestic Business
                                                                                                        Domestic Pleasure
                                     10%                                                                U.S. Overall
                                                                                                        Overseas Overall
                                      8%
                                                                                                        Overall Growth Rate
                                      6%
                              ange




                                      4%
           Year over Year % Cha




                                      2%

                                      0%
                                                 2006(f)          2007(f)        2008(f)      2009(f)         2010(f)
                                     -2%

                                     -4%

                                     -6%

                                     -8%

                                     -10%

Source: Canadian Tourism Research Institute, Conference Board of Canada, Fall 2007




                                            Tourism Growth Projections by
                                                   Province - 2008
                           5%                                                                    4.7%


                           4%                                            3.7%


                           3%                                                                                  2.8%
                                                                                                               2 8%
                                                                                2.5% 2.6% 2.5%
                                        2.1%                      2.1%
                                                           1.8%                                         1.9%
                           2%

                                                 0.9%
                           1%


                           0%
                                            NF     PE      NS     NB QU ON MA SK                 AB      BC     CA
Source: Conference Board of Canada




                                                                                                                              5
                                                        Regional Travel Outlooks
                                                    Regional Overnight Person Visits
                                                             (2007f - 2011f)
             Overnight Person Visits (000's)




                                               90,000
                                               80,000
                                               70,000
                                               70 000
                                   s




                                               60,000
                                                                                                     Atlantic
                                               50,000
                                                                                                     Central
                                               40,000
                                               30,000                                                West
                                               20,000
                                               10,000
                                                    0
                                                         2007(f) 2008(f) 2009(f) 2010(f) 2011(f)

Source: Canadian Tourism Research Institute, Conference Board of Canada, Fall 2007




                                Tourism Growth Projections by City
                                             - 2008
             6%                                         5.5%
             5%                                                                        4.8% 4.9%

             4%
                                                               3.0% 2.8%                                  2.8%
             3%
                                                2.0%                       2.2% 2.3%
             2%
                                                                                                   1.3%
             1%

             0%
                            n
                            o

                            g
                          ity

                           al




                             l
              ue ifax




               Ed ary




                            r
                            a




                         na
                         ve
                         to
                         nt

                        pe
                         w
                       tre
                        C



                     tta




                      io
                    on
                       g
                     ro




                    ou
                     al




                     ni
                   on
                    c




                    al




                   at
                 To
                   H




                   O




                  in
                 be




                  m

                 nc
                 C




                 N
                M




                W




              Va
             Q




Source: Canadian Tourism Research Institute, Conference Board of Canada, Fall 2007




                                                               National Industry Outlooks




                                                                                                                 6
                                                     National Room Supply


                                   400
             000's)




                                                                                                1.7%         1.4%
                                                                          1.2%       2.1%
                                   350                      1.0%
Room Supply (0




                                                                                     350        356         361
                                            335                          342
                                                            338
                                   300

                                   250


                                   200
                                            2003           2004         2005        2006     2007(f)      2008(p)

       Source: PKF Consulting




                                           National Accommodation Demand
                ghts (Millions)




                                  100
                                                                                               3.2%         3.0%
                                   90                                               4.2%
                                                            4.9%        4.5%
                                   80
                                                                                   82.5       85.1         87.7
                                   70                                   79.1
                                                           75 7
                                                           75.7
Occupied Room Nig




                                   60      72 2
                                           72.2
                                   50
                                   40
                                   30
                                   20
                                   10
                                    0
                                           2003           2004          2005       2006      2007(f)     2008(p)



       Source: PKF Consulting




                                                    National Market Outlook
                                                  2003        2004       2005     2006      2007         2008
                                                  Actual      Actual     Actual   Actual    Actual     Projection


                                  Occupancy        59%        61%        63%      65%       65%          66%


                                  ADR              $114       $116       $119     $123      $127         $131


                                  RevPAR           $67            $71     $75      $79       $83          $86




                    Source: PKF Consulting




                                                                                                                    7
          National Financial Outlook (All Hotels)
          14                                                                              4.3%
                                                                         5.5%
          12                                               17%
                                    23.6%       5.6%                   $11.6         $12.1
          10                                              $11 0
                                                          $11.0
           8                        $8.9        $9.4
           6        $7.2
           4
           2
           0
                    2003            2004        2005       2006        2007(f)      2008(p)




Source: PKF Consulting




               Western Financial Outlook (All Hotels)


          20
                                                                     14.2%         5.6%
                                                         33.0%
          15                                                                      $17.0
                                               12.8%                 $16.1
                                    20.5%                $14.1
          10
                                               $10.6
                                    $9.4
            5        $7.8

            0
                    2003            2004       2005      2006       2007(f)      2008(p)


Source: PKF Consulting




          National Full Service Segment Outlook
                           2003       2004      2005       2006         2007          2008
                           Actual     Actual    Actual     Actual       Actual      Projection

Occupancy-
Full Service                60%       64%        65%        67%          68%              68%


ADR-
Full Service                $117      $122       $125       $129         $133             $137


RevPAR-
Full Service                $70        $78        $81       $86           $90             $94


Source: PKF Consulting




                                                                                                 8
  National Financial Outlook Full Service Hotels

      14.0

      12.0                                                                                      4.5%
                                                                                5.8%
                                                               18.2%
                                                                                               $11.5
      10.0                                       6%                            $11.0
                                 30%                           $10.4
                                                               $10 4
       8.0                                       $8.8
                                 $8.3
       6.0
                  $6.4
       4.0

       2.0

       0.0
                  2003           2004            2005          2006          2007(f)       2008(p)


Source: PKF Consulting




               National Limited Service Segment
                            Outlook
                          2003          2004          2005            2006             2007          2008
                          Actual        Actual        Actual          Actual           Actual      Projection

Occupancy-
Limited Service           56%           59%             60%            60%             60%              61%


ADR-
 Limited                   $80           $82            $85            $89              $93              $96
Service

RevPAR-
 Limited                   $45           $48            $51            $54              $56              $58
Service

Source: PKF Consulting




           Financial Outlook Limited Service Hotels

      12.0
                                                                                                         3.9%
                                                                                       5.1%
                                                                  12.6%
      10.0                                                                                              $10.7
                                   13.7%              4.8%                             $10.3
                                                                   $9.8
       8.0                                            $8.7
                                   $8.3
                   $7.3
       6.0

       4.0

       2.0

       0.0
                  2003             2004               2005        2006             2007(f)             2008(p)


Source: PKF Consulting




                                                                                                                 9
               All Suite & Extended Stay Outlook
                            2003       2004       2005           2006       2007        2008
                            Actual     Actual     Actual         Actual     Actual    Projection

    Occupancy-
    Suites/ES               62%        69%        71%             70%        69%        74%


    ADR-
    Suites/ES               $115       $115       $118            $133       $133       $133


    RevPAR-
    Suites/ES                $71        $79        $84             $93         $97       $98



Source: PKF Consulting




          Financial Outlook All Suite/Extended Stay

     14.0                                                                               16%

     12.0                                              13%                0%            $13.1
                                      -2.9%
     10.0                                                $11.3            $11.3
                   $10.3               $10.0
      8.0

      6.0

      4.0

      2.0

      0.0
                   2003                2004              2005             2006        2007 (p)


   Source: PKF Consulting




                            Resort Segment Outlook
                         2003        2004       2005             2006        2007        2008
                         Actual      Actual     Actual           Actual      Actual    Projection

 Occupancy
 Resort                  54%         55%        56%              56%           57%       57%


 ADR
 Resort                  $188        $186       $184             $188          $195      $201


 RevPAR
 Resort                  $105        $102       $103             $105          $111      $115



Source: PKF Consulting




                                                                                                    10
                          Financial Outlook Resorts

      20                                                                                                      3.4%
                                                                                        7.8%
      18                                                              11.4%
                               20.7%                 5.1%                                                 $18.5
      16                                                                               $17.9
                                                                     $16.6
      14                       $15.7
                               $15 7
                                                     $14.9
      12        $13.0
      10
       8
       6
       4
       2
       0
                2003            2004                 2005             2006            2007(f)             2008(p)


Source: PKF Consulting




             Property Type Financial Outlook
      $25
                                                                    $22.1

      $20                                                               $17.9
                                                         $16.1

      $15                                                                     $13.0
                                      $12.1                                           $11.7
            $11.1 $11.6                              $10.5
                                                     $10 5                                    $10 5
                                                                                              $10.5
                                                                                                      $11.0
                                                                                                                 $10.3
                                                                                                                 $10 3
      $10                                     $9.1
                          $7.5 $8.1                                                                           $8.0


       $5


       $0
              National    Atlantic     Central          West         Resort        All           Full         Limited
                                                                                Suite/Ext       Service       Service
                                                                                  Stay



Source: PKF Consulting                                       2000     2007




                           Beyond 2007 - National


                                                       Occupancy                   ADR                  RevPAR

      2000 Actual                                               65%              $111                          $72
      2007 Actual                                               65%              $127                          $83
      2010 Outlook                                              66%              $139                          $92




Source: PKF Consulting




                                                                                                                         11
                                     National Financial Outlook                                                             Beyond 2007
                  Net Income per Avaliab Room (000's)




                                                        14
                                                                                                                                                $14.0
                                                        12                                                                          $12.8
                                                                                                                         $11.6
                                                        10                          $11.1                      $11.0
                                       ble




                                                                           $9.3
                                                                           $9 3
                                                        8
                                                                                                    $7.2
                                                        6

                                                        4

                                                        2
                                                             $1.8
                                                        0
                                                             1992      1998         2000        2003           2006      2007(f) 2010(p) 2010(i)


  Source: PKF Consulting




                                                                                Western Canada Outlook




Source: Canadian Tourism Commission




                Western Canada - Report of Room Operations
                                                                                  Occupancy Percentage             Average Daily Rate
                                                                                                     **Point
                                                                                  2007      2006                 2007      2006     Variance
                                                                                                     Change
                                                              Property Size
                                                              Under 50 rooms      57.0%     57.2%      -0.3    $95.79     $89.66        6.8%
                                                              50-75 rooms         64.1%     63.1%       1.0    $99.41     $92.14        7.9%
                                                              76-125 rooms        65.9%     65.1%       0.7    $114.64    $106.86       7.3%
                                                              126-200 rooms       70.4%
                                                                                  70 4%     68 8%
                                                                                            68.8%       1.6
                                                                                                        16     $118.89
                                                                                                               $118 89    $108 67
                                                                                                                          $108.67       9 4%
                                                                                                                                        9.4%
                                                              201-500 rooms       71.5%     69.6%       2.0    $137.23    $128.61       6.7%
                                                              Over 500 rooms      71.4%     70.5%       0.9    $214.60    $206.19       4.1%
                                                              Total               68.3%     67.0%      1.3     $127.53    $119.07       7.1%
                                                              Property Type
                                                              Limited Service     65.2%     64.7%      0.5     $96.39     $89.43        7.8%
                                                              Full Service        70.6%     69.1%      1.5     $129.47    $120.91       7.1%
                                                              Suite Hotel         72.0%     70.8%      1.2     $145.16    $130.83       10.9%
                                                              Resort              62.1%     59.9%      2.2     $203.63    $195.28       4.3%
                                                              Total               68.3%     67.0%      1.3     $127.53    $119.07       7.1%
                                                             Price Level
                                                               Budget             62.7%     62.1%      0.6     $88.25     $82.54        6.9%
                                                               Mid-Price          69.1%     67.7%      1.4     $111.49    $102.51       8.8%
                                                               Upscale            70.6%     69.0%      1.5     $173.58    $163.42       6.2%
                                                              Total               68.3%     67.0%      1.3     $127.53    $119.07       7.1%
Source: PKF Trends in The Hotel Industry December 2006




                                                                                                                                                        12
                         WESTERN CANADA OUTLOOK
                                  2003 2004 2005 2006           2007       2008
                                  Actual Actual Actual Actual   Actual   Projection

         Vancouver                62%    67%    69%     72%     74%        75%
                                  $115
                                  $      $118
                                         $      $
                                                $121    $126
                                                        $       $133
                                                                $          $
                                                                           $139
                                   $71    $79    $83     $91     $98       $104
         Winnipeg                 60%    63%    63%     65%     68%        71%
                                  $92    $92    $94     $99     $103       $108
                                  $55    $58    $59     $64     $70        $77
         Western Canada           59%    62%    65%     67%     68%        69%
                                  $109   $113   $114    $119    $128       $133
                         RevPAR   $64    $70    $74     $80     $87        $92


Source: PKF Consulting




                                   Alberta Industry Outlooks




                         2007 Alberta Tourism Highlights
               Direct Entries from U.S. residents increased 1.9%
               Direct Entries from Other Countries up 21.2%
               Air Passenger Volumes up in Edmonton & Calgary
               Total Employment –Accommodation & Foodservice
                  Sector up 1.7%
               YTD (Nov) Attendance Up in Banff (3.3%) and Jasper
               (5.0%)National Parks
               YTD (Sept) Visitor Attendance at Historic Sites and
               Museums up 2.5%
               YTD (Oct) Restaurant Receipts up 7.0%



  Source: Alberta Tourism, Parks and Recreation




                                                                                      13
                                   Supply
   Hotels
   Franchise
        Full service vs. Limited Service
   Development
        Growth in Supply
        Development Costs
   Product
        Condo
        Full Service, Limited Service, Suite/Extended Stay
        Work Camps




           Branded Hotel/ Guest Rooms
                  Canada       # of      Alberta      # of
                Guest Rooms Properties Guest Rooms Properties

Total              445,524          8,341         65,359     1,121

% Branded            49%             22%           47%       26%




                                                                     14
      Accommodation Supply Estimates by
      Alberta TDR (# of Guest Rooms)

     Alberta North                              10.5%
     Alberta Central                       16.1%
     Alberta South                         10.5%
     Canadian Rockies                      20.2%
     Edmonton & Area                       21.8%
     Calgary & Area                        20.9%




Source: Alberta Tourism, Parks and Recreation - Based on 2006 Estimates




      Hotel Development Cost Impact
    Rapid Escalation
    Material Cost Increase
    Non Residential Construction Costs in Calgary up >
    18% (2006 and 2007)
          (             )
    General Rule of Thumb has been 1.5% per Month
    Increase
    Will the Growth Abate?
    Influences Acquisition vs. Development Decisions
    Varies by product type
        Full Service
        Limited Service
    Franchise, Contractors and Quantity Surveyors




                                 Demand
        Alberta Major Urban Communities
        Alberta Regional Communities
        Alberta Resort Communities

        Impact of Supply
        Impact of Energy Issues
            Royalty Review
            $100+ Oil
            Natural Gas Price Fluctuations
            Drilling Activity
            Mergers & Acquisitions




                                                                          15
Alberta Major Urban Communities
 Segmentation

 Corporate
 Meeting & Conventions
   ajo Special ojec s
 Major Spec a Projects
 Sports Tourism
 Tours
 Airline, Movie Crews
 Casino

 Impact of Supply
 Impact of Energy Issues




EDMONTON AND LEDUC /NISKU HOTEL CLUSTERS




            CALGARY HOTEL CLUSTERS




                                           16
Alberta Regional Communities
Segmentation

Oil and Gas & Other Resources
Major Special Projects
Construction
Manufacturing/Production
Forestry Industry Concerns

Impact of Supply
Impact of Energy Issues




      Alberta Major Projects

Upgraders in Sturgeon/Strathcona County/Wood Buffalo
Impact of Prince Rupert Port Expansion
Pipelines Construction
Oilsands Projects
Pine Beetle Harvest
Highways/Road Construction




                 Oil & Gas
 Oilsands Projects
 Gas Projects
 Pipelines
 Coalbed Methane
 Supporting Infrastructure
       Bitumen Upgraders
       Road Construction/Widening
       Schools/Recreation/Medical Facilities
       Other Emergency Response Upgrades
 Oilsands and related construction projects
 workforce projected to peak in 2009 and
 2010




                                                       17
                                     Work Camps
           •   Open vs. Closed
           •   Competition for Fixed Roof Properties
           •   Pricing
           •   Lack of Availability
           •   Labour Challenges
           •   Executives/VIP Housing




               Alberta Resort Communities

                  Segmentation
                  Meeting & Conventions
                  Leisure
                  Recreation

                  Impact of Supply
                  Global Economic concerns and their impact
                  on demand




                                  ALBERTA OUTLOOK
                                  2003 2004 2005 2006           2007       2008
                                  Actual Actual Actual Actual   Actual   Projection

         Calgary                  61%    66%    70%     74%     74%        74%
                                  $106   $112   $116    $127    $142       $152
                                  $65    $74    $81     $95     $105       $112
         Ed   t
         Edmonton                 62%    62%    66%     72%     75%        75%
                                  $96    $97    $99     $103    $113       $121
                                  $60    $60    $65     $75     $83        $90
         Alberta Resorts          55%    57%    61%     62%     64%        63%
                                  $197   $202   $204    $206    $211       $229
                                  $108   $115   $124    $128    $134       $144
         Western Canada           59%    62%    65%     67%     68%        69%
                                  $109   $113   $114    $119    $128       $133
                         RevPAR   $64    $70    $74     $80     $87        $92
Source: PKF Consulting




                                                                                      18
                 ALBERTA OCCUPANCY AND ADR
                          2006       2007     2006     2007      Occupancy        ADR
                          Actual     Actual   Actual   Actual   Point Change   % Change
                                                                 2007/2006     2007/2006


 Alberta Excl.
 Resorts                  72%         71%     $113     $126        -0.5          11%

 Lethbridge               57%         60%      $82      $89         3.3          9%

 Red Deer                 62%         57%      $91      $95        -4.8          5%

 Other
 Alberta                  75%         69%     $115     $132        -6.3          15%
 Edmonton                 72%         75%     $103     $113         2.8          9%

 Calgary                  74%         74%     $127     $142        -0.3          12%


 Source: PKF Consulting




               Alberta Hotels by Department

         Hotel Expense Comparison 2000-2006
               Expense Categories In Line with Inflation
               Expense Rapid Cost Escalation




Source: PKF Trends In The Hotel Industry




                                Historic Expense Ratios –
                                Alberta Full Service Hotels
                                                  2006                 2006
                                              (Per Available        (% of Dept
                                                 Room)               Revenue)

 Rooms                                           $7,517                   24.5%
 F&B                                            $11,942                   67.2%
 Telecom                                             $303                 86.6%

 Other Depts                                      $1,431                  70.5%




 Source: PKF Consulting




                                                                                           19
                          Historic Expense Ratios –
                          Alberta Full Service Hotels
                                      2006            2006
                                  (Per Available   (% of Total
                                     Room)           Gross
                                                    Revenue)
Admin/General                        $3,786            7.3%
Marketing                            $2,343           4.5%
Maintenance                          $1,846           3.6%
Energy                               $2,124            4.1%
Property Tax                          $1,462          2.8%
Insurance                            $230             0.4%

Source: PKF Consulting




                           Historic Expense Ratios –
                         Alberta Limited Service Hotels
                                      2006            2006
                                  (Per Available   (% of Dept
                                     Room)          Revenue)

Rooms                                $4,996           19.2%
F&B                                    $0              0.0%
Telecom                                 $54           62.1%

Other Depts                            $347           59.5%




Source: PKF Consulting




                           Historic Expense Ratios –
                         Alberta Limited Service Hotels
                                      2006            2006
                                  (Per Available   (% of Total
                                     Room)           Gross
                                                    Revenue)
Admin/General                        $2,008            7.2%
Marketing                             $966            3.4%
Maintenance                          $1,050           3.7%
Energy                                $1,157           4.1%
Property Tax                          $962            3.4%
Insurance                             $91             0.3%

Source: PKF Consulting




                                                                 20
                                                         Financial Outlook – Alberta *
                                                         (By Property Type)
                                     $18




                                                                                                                                             4
                                                                                                                                            1
                                                                                                                                          6.
                                                                                                                                         7.
                                                                                                                              8




                                                                                                                                       $1
                                                                                                                           4.



                                                                                                                                      $1
                                     $16




                                                                                                                          $1


                                                                                                                                      2
                                                                                                                                   4.
Net Income Per Avail. Roo ($000's)




                                                                                                                                  $1
                                     $14




                                                                                                              7

                                                                                                                      8
                                                                                                           0.
                                     $12




                                                                                                                   0.
                                                                                                          $1
                        om




                                                                                                                  $1
                                            .6




                                                                                                     .1
                                                                                         .6
                                     $10
                                                         .0




                                                                                               .6
                                                                         .8
                                           $9




                                                                                                    $9
                                                                       .7
                                                               .4




                                                                                        $8
                                                        $9




                                                                                              $8
                                                                      $8
                                                                     $8
                                                              $8




                                                                                   .4
                                                  .1




                                      $8
                                                                                  $7
                                                 $7




                                      $6

                                      $4

                                      $2

                                      $0
                                             2000        2001             2002     2003        2004            2005            2006        2007
                                                                   Full Service                     Limited Service
                                     Note: * BEFORE debt service, rent, income taxes, depreciation, amortization.
                                     Source: PKF Consulting




                                                       Alberta Accommodation Outlook
                                                       Summary – 2008 and Beyond
                                            Fundamentals still strong for solid RevPar and
                                            Net Income performance
                                            Most markets that have stagnant demand growth
                                            are still getting ADR growth
                                            Energy companies have too much invested in
                                            Province to abandon projects
                                            Property tax increases still an issue as
                                            municipalities struggle with growth
                                            New construction/property expansion
                                            opportunities exist, but you must complete due
                                            diligence and control construction costs




                                                       Alberta Accommodation Outlook
                                                       Summary – 2008 and Beyond
                                            Labour issues to remain a major challenge
                                            Renovations – What shape is your property in?
                                            Oversupply – Some markets need additional
                                            demand growth to absorb recent new additions




                                                                                                                                                  21
  Industry Investment Issues




Overview of Investments in Hotels
US Perspective vs. Canada
Yield Rates
Capitalization Rates
Discount Rates
Impact on Hotel Values
Loan to Value Ratio




 The Fundamentals of Valuations

Valuation Approaches
The Cost Approach
    ,        g,
Land, Building, FF&E
The Comparable Sales Approach
Price per Room, Return Expectations
The Income Approach
Historic Earnings, Future Earnings, Yield Rates,
Capitalization Rates, Discount Rates




                                                   22
            Top Line Performance in the Canadian
                    & US Hotel Industries
           14.0
           12.0
           10.0
            8.0
            6.0
            4.0
            2.0
            0.0
           -2.0      2000        2001       2002       2003        2004       2005     2006    2007E
           -4.0
           -6.0
           -8.0                                                                                      Canada
          -10.0                                                                                      US
          -12.0
          -14.0



Sources: Smith Travel Research, Torto Wheaton Research, PKF Hospitality Research, PKF Consulting




         Canada US Bottom Line Comparison
                   $18
                                                                                             $15.7
                   $16                                               $14.9
                   $14                  $12.7
                                                         $11.0                       $11.6
                   $12       $11.1
                   $10
                    $8

                    $6

                    $4

                    $2

                    $0

                                   2000                        2006                    2007(f)


                                                            Canada       US
Source: PKF Consulting




 Investment Trends in the US Lodging Industry
                                           1995              2000             2005            2006      2007

 Overall Capitalization                    11.0%             11.3%            9.7%            8.9%      9.1%
 Rate

 Discount Rate                             14.6%             14.5%            13.7%          13.3%     13.0%

 Holding Period                              6.3               8.6             6.9            6.3        8.2
 (Years)

 Debt Coverage Ratio                         1.4               1.4             1.4            1.4        1. 4

 Interest Rate                              9.6%             9.2%             7.2%            7.1%      7.0%


 Loan-to-Value Ratio                       69.1%             66.4%            70.6%          68.5%     69.8%

Source: PKF Hospitality Research, the research affiliate of PKF Consulting




                                                                                                                23
                     National Transaction Overview
                                Canada
                                          2000         2001           2002            2003             2004
 Transactions                               47          41             48               50               52
 Volume ($ Millions)                       $485        $657           $540            $488             $412

 Price/Room ($ 000)                       $83.4        $102.2         $95.6           $68.7            $67.3
 Yield (%)                                12.5%        11.2%          11.2%          11.2%            10.4%

                                          2005         2006             2007
 Transactions                               110         115              149

 Volume ($ Millions)                      $1,660       $2,594          $4,322
 Price/Room ($ 000)                       $104.1        $153           $153.7

 Yield (%)                                 9.7%        10.82%          9.72%

 Source: Colliers Investment Report; PKF Consulting




            National Transaction Overview Central vs. West
                     National                  2000          2006                    2007
              Transactions                       47           115                      149
              Volume ($ Millions)              $484          $2,594                  $4,322
              Price/Room ($ 000)               $83.4         $153                   $153.7
              Yield (%)                       12.5%       10.82%                     9.72%

                      Central                  2000          2006                    2007
              Transactions                       18            48                      31
              Volume ($ Millions)              $140          $696                     $330
              Price/Room ($ 000)               $60.6         $94.8                   $89.9
              Yield (%)                       13.0%          10.4%                   7.8%*

                       West                    2000          2006                    2007
              Transactions                       28             56                     55
              Volume ($ Millions)              $324          $1,833                  $760
              Price/Room ($ 000)              $100.9         $220.9                 $141.6
              Yield (%)                       12.1%          11.1%                  10.7%
Source: Colliers Investment Report; PKF Consulting                          *Limited number of reporting yield rates.




                                     Financing Trends
                “The Players”
                Current Financing Trends




                                                                                                                        24
            2008
Alberta Accommodation Outlook



           April 2008




                                25

								
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