Rachel J. Roginsky, Principal Pinnacle Advisory Group

P in n ac leA dvis o r y G r o up

GREATER BOSTON LODGING OUTLOOK 2003

WWW.PINNACLE-ADVISORY.COMWWW.PINNACLE-ADVISORY.COM

Total United StatesKey Performance Indicators Percent Change

May Year to Date

3.1 3.8

0.7

4.8 5.4

2.7

0.3

-2.4

2.9

0.41.7

-2.2-3.8 -4.3

-8

-20

-15

-10

-5

0

5

10

Supply Demand Occupancy ADR RevPAR

2000 2001 2002

Source: Smith Travel Research Note: Preliminary May 2002

New England States YTD May 2002 Change in Occupancy, Average Rate and RevPAR

Source: Smith Travel Research

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

Connec

ticut

Rhode

Islan

d

Mas

sach

uset

ts

Verm

ont

New Ham

pshir

e

Main

eOccupancy

Avg Rate

RevPAR

Suburban Boston Occupancy 1996 - 2001

Source: Smith Travel Research

69.4%71.1%

69.9% 70.0%

73.3%

61.3%

54.0%56.0%

58.0%60.0%62.0%64.0%

66.0%68.0%70.0%72.0%

74.0%76.0%

1996 1997 1998 1999 2000 2001

Suburban Boston Average Daily Rate 1996- 2001

Source: Smith Travel Research

$81.51$90.32

$98.30 $102.08$111.15 $108.43

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

1996 1997 1998 1999 2000 2001

Suburban BostonRevPAR 1996 - 2001

Source: Smith Travel Research

$56.57$64.22

$68.71 $71.46

$81.47

$66.47

$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

1996 1997 1998 1999 2000 2001

Suburban Boston YTD May 2002

2001 2002 % Chg

Occupancy 62.3% 53.8% -13.6%

Average Daily Rate $111.61 $96.66 -13.4%

RevPAR $69.49 $51.98 -25.2%

Source: Smith Travel Research

Suburban Boston Change in Occupancy, Average Rate and RevPAR by Quarter

1Q 2001 - 2Q 2002

Source: Smith Travel Research

-40.0%-35.0%-30.0%-25.0%-20.0%-15.0%-10.0%-5.0%0.0%5.0%

10.0%15.0%

Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02

Occ

Rate

RevPAR

* Limited Boston Related Demand

* Improved Corporate Demand

* Slower Supply Growth

* Limited ADR Growth

Suburban Boston 2002

* 9/11 Effect (Year over Year Growth)

Suburban Boston 2002 Projection

2001 2002 % Chg

Occupancy 61.4% 61.6% 0.3%

Average Daily Rate $108.30 $98.36 -9.2%

RevPAR $66.50 $60.59 -8.9%

* Lack of Boston-Related Demand

* Improved Corporate Demand

* Limited Supply Growth

* Minor ADR Growth

Suburban Boston 2003

Suburban Boston 2003 Projection

2002 2003 % Chg

Occupancy 61.6% 64.8% 5.3%

Average Daily Rate $98.35 $101.13 2.8%

RevPAR $60.58 $65.53 8.17%

Boston/Cambridge Occupancy 1997 - 2001

Source: Pinnacle Perspective

79.0%78.3%

75.1%

78.5%

69.6%

64.0%

66.0%

68.0%

70.0%

72.0%

74.0%

76.0%

78.0%

80.0%

1997 1998 1999 2000 2001

Boston/Cambridge Average Daily Rate1997-2001

Source: Pinnacle Perspective

$162.18$177.81

$190.28$199.74

$182.91

$-

$50.00

$100.00

$150.00

$200.00

$250.00

1997 1998 1999 2000 2001

Boston/Cambridge RevPAR1997 - 2001

Source: Pinnacle Perspective

$128.12$139.23 $142.90

$156.80

$127.31

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

$180.00

1997 1998 1999 2000 2001

Boston/Cambridge 2001 Change in RevPAR by Market Area

Source: Pinnacle Perspective

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

Cambridge Downtown Back Bay Other

Boston/Cambridge YTD June 2002

2001 2002 % Chg

Occupancy 71.4% 68.8% -3.9%

Average Daily Rate $188.63 $163.51 -13.3%

RevPAR $134.70 $112.56 -16.4%

Source: Pinnacle Perspective

Boston/Cambridge YTD June 2002 RevPAR Change By Market Area

Source: Pinnacle Perspective

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

Cambridge Downtown Back Bay Other

Boston/Cambridge Occupancy by Quarter 1Q 2000 – Q4 2002

Source: Pinnacle Perspective

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Q1 Q2 Q3 Q4

2000

2001

2002

Boston/Cambridge Average Daily Rate by Quarter 1Q 2000 – 2Q 2002

Source: Pinnacle Perspective

$-

$50.00

$100.00

$150.00

$200.00

$250.00

Q1 Q2 Q3 Q4

2000

2001

2002

Boston/Cambridge RevPAR by Quarter1Q 2000 – 2Q 2002

Source: Pinnacle Perspective

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

$180.00

$200.00

Q1 Q2 Q3 Q4

2000

2001

2002

Boston/Cambridge Change in Occupancy, Average Rate and RevPAR by Quarter

1Q 2001 - 2Q 2002

Source: Pinnacle Perspective

-40.0%

-35.0%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Occ

Rate

RevPAR

* Corporate Demand• Some signs of improvement• The recovery?

* Leisure Demand• Likely to remain strong • Rate Driven and Regional

* Group Demand• Pace is ahead of ’01 the rest of the year

Boston/Cambridge 2002

* New Supply• Minor – Only 1.9 percent

Boston Cambridge 2002 Projection

2001 2002 % Chg

Occupancy 69.6% 72.0% 3.4%

Average Daily Rate $182.91 $172.10 -5.9%

RevPAR $127.31 $123.91 -2.7%

* Corporate Demand• Continued Improvement• Negotiated Rates are flat to –10%

* Leisure Demand• Return of International • Increased Rates after 1Q

* Group Demand• Weak 1Q, Moderate Remainder

Boston/Cambridge 2003

* New Supply• Major – 5.5%

•Nine Zero – 6/02

•Hampton Inn Cambridge – 6/02

•Ritz Carlton – 11/02

•Commonwealth Hotel – 9/02

•Kimpton Cambridge – 3/03

•Residence Inn C’Town – 3/03

•Embassy Suites – 3/03

New Supply 2002 - 2003

Boston Cambridge 2003 Projection

2002 2003 % Chg

Occupancy 72.0% 71.0% -1.4%

Average Daily Rate $172.10 $176.40 2.5%

RevPAR $123.91 $125.25 1.1%

Rachel J. Roginsky, Principal Matthew R. Arrants, Director

Pinnacle Advisory Group

P in n ac leA dvis o r y G r o up

GREATER BOSTON LODGING OUTLOOK 2003