Hospitality Business Summit

Hotel Investment – The next moveJune 2014

2013

92 STUDIESHBU’sFEASIBILITIESSTRATEGIES

HOTEL VALUATIONS

$6.3 BILLIONS

38,043 KEYS

COMBINED

PEOPLE

11 HOTELSPROFESSIONALSOVER 100 YEARS COMBINED EXPERIENCE

16 YEARS LOCALLY100’s HOTEL P&Ls1000s AGREEMENTSGLOBAL BENCHMARKS

2013 OPERATOR SEARCH

153

7 12 PROCESSES153 LOI – MOU’s 7 AGREEMENTS $2.1m SAVINGS

HOTEL ASSET MANAGEMENT

OVER4000KEYS2013 10.3% AVERAGEEBITDA INCREASEADDED VALUE

ASSET VALUE

Offices:Dubai, Abu Dhabi, Doha, Riyadh, Jeddah, Cairo

Colliers International Hotels

3

Range of Services

Identification of Market

Opportunities

Asset / Facilities

Management

Investment Teasers / Information Memoranda

Highest & Best Use Assessments

Financial Feasibility Study

Valuation & Brokerage

Business Plans

Portfolio Assessments

Operator Search and Selection

Land Lord / Tenant Representations

Project Lifecycle

Dubai

4

CAGR +14.3%

CAGR +10.1%

26,155 29,834 31,645 32,61740,981 43,419

51,115 53,828 57,343 62,2857,2788,395 9,217 10,190

15,61818,068

19,84021,015

23,06924,171

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Hotel Supply (No. of Keys) Serviced Apartment Supply (No. of Keys)

Current Supply

CAGR +4.2%

CAGR +5.4%

62,285 68,584 71,167 79,861 80,868 81,068

24,17125,443 26,636

29,460 29,681 29,681

0

20,000

40,000

60,000

80,000

100,000

120,000

2013 2014(f) 2015(f) 2016(f) 2017(f) 2018(f)

Hotel Supply (No. of Keys) Serviced Apartment Supply (No. of Keys)

Future Supply

Source: Colliers International, 2014

Current Demand

Future Demand

51% - 5 Star and 4 Star

10% Growth for Hotel Guest nights 18% Growth for Hotel Apartment Guest nights

Tourism Infrastructure

Destination Dubai – Corporate Leisure

Mega events Expo 2020

Double Digit Growth We expect the trend to continue

110,000 Keys by 2018

CAGR + 17.7%

CAGR + 10.0%

2.9

2.9 3.6 4.7 5.8 6.1 7.

6 9.6 11

.4 12.5

12.3 13.4

14.0 15

.9

16.7

16.7 19

.0

23.3 26

.0 29.0

0

5

10

15

20

25

30

35

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Mill

ions

Serviced Apartments Hotels

Abu Dhabi

5

CAGR +12.5%

CAGR +16.6%

6,238 6,787 7,5039,398

12,00013,929

15,56818,261

2,288 2,662 2,828

3,428

4,231

4,5504,709

5,225

0

5,000

10,000

15,000

20,000

25,000

2006 2007 2008 2009 2010 2011 2012 2013

Hotel Supply (No. of Keys) Serviced Apartment Supply (No. of Keys)

CAGR +6.3%

CAGR +7.3%

18,26120,907 21,809 23,020 25,264 26,007

5,2256,051 6,687 6,751

6,751 7,107

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2013 2014(f) 2015(f) 2016(f) 2017(f) 2018(f)

Hotel Supply (No. of Keys) Serviced Apartment Supply (No. of Keys)

Source: Colliers International, 2014

Current Demand

Future Demand

19% Growth for Hotel Guest nights 12% Growth for Hotel Apartment Guest nights

Continued investment

Leisure destination – Saadiyat/ Yas

MICE and Business positioning

Introducing new segments into the market Consolidating the existing demand

61% - 5 Star and 4 Star

33,000 Keys by 2018

Current Supply

Future Supply

CAGR + 11.5%

CAGR + 19.4%

1.6 1.9

1.9 2.

3

3.5

4.4 5.

1

6.0

0

1

2

3

4

5

6

7

2010 2011 2012 2013(e)

Mill

ions

Serviced Apartments Hotels

Market Performance

6

30%

40%

50%

60%

70%

80%

90%

70 90 110 130 150 170 190 210 230 250 270

Occ

upan

cy (%

)

ADR (USD)

2011 2012 2013

Al AinCairo

Abu Dhabi Muscat

JeddahDubai

Al Khobar

Riyadh

Ras Al KhaimahFujairah

Sharjah

Average occupancy in Dubai reached 81% in 2013 with an ADR of USD 247; Abu Dhabi, on the other hand, experienced a rate compression with an ADR of USD 132 in 2013 while the occupancy recovered to reach

69%, we expect further recovery as the market consolidates

Evolution of Key Performance Indicators: 20011 – 2013

Source: STR Global, Colliers International, 2014

DubaiTourism Hub

Abu Dhabi Emerging MICE and Leisure

Ras al KhaimaAffordable Luxury

FujeirahThe Getaway

Opportunity: Mid market hotels

7

We expect the mid market hotel segment to experience considerable growth in the next 3 to 5 years

Market GapSupply Gap/ Rate Gap Wider audience/ Target Market Projected Occupancy of 80% to 85% by 2018

Lower Investment/ IncentivesIncentives by authorities (Land) Budget hotel investment range: USD 90,000 to USD 110,000Upscale hotel investment range: USD 160,000 to USD 180,000 Efficient Optimum utilization of BUAShort construction/ fit out period Efficient operations: GOP in the range of 40% to 55%

Gap

Cost

Efficiency

Mid Market Hotels

Opportunity: Serviced Apartments

8

Annual contracts

Annual or quarterly payments

Lower operating costs

Limited staff to unit ratio

No cleaning

Rooms sold on monthly basis

Monthly payments

Limited food and beverage options

Cleaning 2 to 3 times per week

Rooms sold on daily basis

Payment post-stay

Kitchenette

Mini bar

Restaurants

Leisure facilities

Limited services

Daily cleaning

Rooms sold on annual basis

Extensive street-level retail

Full kitchen

High staff to unit ratio

Higher operating costs

Full range of hotel services

Residential HotelServiced Apartments

Possible common features between Residential

apartments and Serviced Apartments

Possible common features between Hotels and

Serviced Apartments

Features unique to

Residential apartments

Features unique to

Hotel apartments

Features unique to

Hotels

0.51 Staffper unit

Standard (All)

0.78 Staffper unit

Deluxe (All)

0.60 Staffper unit

Deluxe (Branded)

0.84 Staffper unit

Deluxe (Unbranded)

Serviced Apartments: Operating Model

With average occupancies over 85% in many parts of the city, many serviced apartments in Dubai are confident that they will be able to fill with transient demand paying strong rates and see long stay guests as an erosion of

potential revenue streams

Opportunity: Branded Residences

9

Prime Residential

Product

Premium Branded Hotel

Branded Residences

Strength of hotel brand ensuring high occupancy and stability in returns; In a rising residential market, benefits capital value appreciation; In a rising hotel market income growth from increases in Average Room Rates; Minimum hassle – maintained and

managed by hotel operator; Low security and damage risk; Ability to use the residence for personal use on a set number of days each year (0-14 days)

•New construction building•Unique features (e.g. Rooftop pool)•Very good accessibility

•High-end finishing•Branded quality white goods and electronics•Easy accessibility

•Conversion building•Communal facilities (e.g. garden)

•Five-star hotel services•High-end restaurants•Extensive luxury leisure facilities•Luxury spa

•Hotel amenities•Health club•Spa•Valet parking

•Private parking•24 h security•Limited leisure facilities

•Luxury brand•Iconic building design•Star Architect•Famous building name•High floor•Prime global city•Prime neighborhood

•Boutique/lower tier brand•Unique building design•Recognized architect•Desirable views•Renowned location/neighborhood

•Professional architect•Good location/neighborhood•Low floor

PHYSICAL ATTRIBUTES SERVICES & AMENITIES IMAGE & ASSOCIATION

HIGH PREMIUM30-40% AND HIGHER

MEDIUM PREMIUM15-30%

LOW PREMIUM15% AND LOWER

The Concept The Premium

Source: Colliers International, 2014