Interim Hotel Report. January June A Hogg Robinson Group Company

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1 Interim Hotel Report January June 2016 A Hogg Robinson Group Company

2 HRG Interim Hotel Report January June Contents 3 Key Findings 4 Top 50 Cities 6 Top Five Increases In Local Currency 7 Top Five Decreases In Local Currency 8 Global Regions ARR GBP 9 North America Focus 10 Europe Focus 11 Asia Pacific Focus 12 MEWA Focus 13 UK Focus

3 HRG Interim Hotel Report January June Key Findings SAN FRANSISCO LONDON PARIS MOSCOW Moscow REMAINS THE WORLD S MOST EXPENSIVE CITY FOR THE 12 TH CONSECUTIVE YEAR The world s top 50 most expensive cities remain the same with small place changes in rankings $ $ $ AVERAGE ROOM RATES by region saw little change with the exception of Europe and MEWA, both regions show growth in ARR $ $ IN NORTH AMERICA, SAN FRANCISCO WAS THE REGION S MOST EXPENSIVE CITY (2015 s interim report saw New York ranked first) 1 PARIS M is the most expensive city in the Eurozone FOLLOWED CLOSELY BY FRANKFURT & BRUSSELS h LONDON IS THE UK S MOST EXPENSIVE CITY and has enjoyed a 1.77% INCREASE IN ARR

4 HRG Interim Hotel Report January June Top 50 Cities Moscow continues to dominate as the world s most expensive city for the 12 th consecutive year. A slight fall in average rate in GBP was effected massively by the large movement in the exchange rate, which saw a modest 3.14% fall in GBP translated into a large 10.64% rise in local currency. 21 of the top 50 cities have seen an average room rate increase (23 cities saw room rates increase in the 2015 report), showing uncertainty continuing to impact global markets. 23 cities saw a decrease in average room rates and six cities remained the same. Ranking 2016 Ranking 2015 City Currency 2016 Exchange Rate 2015 Exchange Rate Jan-Jun 2016 ARR GBP Jan-Jun 2015 ARR GBP GBP ARR % Var Jan-Jun 2016 ARR Local Jan-Jun 2015 ARR Local Local ARR % Var 1 1 MOSCOW RUR % RUR 25, RUR 23, % 14.23% 2 3 SAN FRANCISCO USD % USD USD % -5.93% 3 11 WASHINGTON USD % USD USD % -5.93% 4 2 NEW YORK CITY USD % USD USD % -5.93% 5 12 TOKYO JPY % JPY 32, JPY 31, % % 6 4 GENEVA CHF % CHF CHF % -2.47% 7 7 LAGOS NGN % NGN 56, NGN 55, % -2.99% 8 6 HONG KONG HKD % HKD 2, HKD 2, % -5.77% 9 5 ZURICH CHF % CHF CHF % -2.47% RIO DE JANEIRO BRL % BRL BRL % 17.36% 11 8 SYDNEY AUD % AUD AUD % 0.38% STOCKHOLM SEK % SEK 2, SEK 1, % -6.35% 13 9 PARIS EUR % EUR EUR % -5.93% MIAMI USD % USD USD % -5.93% SINGAPORE SGD % SGD SGD % -3.77% LONDON GBP % GBP GBP % 0.00% BASEL CHF % CHF CHF % -2.47% SEOUL KRW 1, , % KRW 280, KRW 273, % 0.92% DUBAI AED % AED AED % -8.85% FRANKFURT EUR % EUR EUR % -5.93% NAIROBI KES % KES 22, KES 20, % 1.80% COPENHAGEN DKK % DKK 1, DKK 1, % -5.99% Exchange Rate % Var

5 HRG Interim Hotel Report January June Ranking 2016 Ranking 2015 City Currency 2016 Exchange Rate 2015 Exchange Rate Jan-Jun 2016 ARR GBP Jan-Jun 2015 ARR GBP GBP ARR % Var Jan-Jun 2016 ARR Local Jan-Jun 2015 ARR Local Local ARR % Var PHILADELPHIA USD % USD USD % -5.93% AMSTERDAM EUR % EUR EUR % -5.93% MILAN EUR % EUR EUR % -5.93% OSLO NOK % NOK 1, NOK 1, % 2.44% SHANGHAI CNY % CNY 1, CNY 1, % 0.57% BEIJING CNY % CNY 1, CNY 1, % 0.57% SAO PAULO BRL % BRL BRL % 17.36% NEW DELHI INR % INR 13, INR 12, % 0.59% BRUSSELS EUR % EUR EUR % -5.93% HOUSTON USD % USD USD % -5.93% BARCELONA EUR % EUR EUR % -5.93% DUSSELDORF EUR % EUR EUR % -5.93% CAPE TOWN SAR % SAR 2, SAR 2, % 21.67% ATHENS EUR % EUR EUR % -5.93% PITTSBURGH USD % USD USD % -5.93% MUNICH EUR % EUR EUR % -5.93% BERLIN EUR % EUR EUR % -5.93% ABU DHABI AED % AED AED % -8.85% TORONTO CAD % CAD CAD % 1.43% HAMBURG EUR % EUR EUR % -5.93% MUMBAI INR % INR 11, INR 11, % 0.59% MADRID EUR % EUR EUR % -5.93% ROME EUR % EUR EUR % -5.93% ISTANBUL TRL % TRL TRL % 7.20% JOHANNESBURG SAR % SAR 2, SAR 2, % 21.67% BANGALORE INR % INR 9, INR 9, % 0.59% HEATHROW GBP % GBP GBP % 0.00% MANCHESTER GBP % GBP GBP % 0.00% Exchange Rate % Var

6 HRG Interim Hotel Report January June Top Five Increases In Local Currency SAO PAULO RIO DE JANEIRO CAPE TOWN NAIROBI JOHANNESBURG NAIROBI KES 22, KES 20, % 1.80% All the big positive movers in average room rates in this period with the exception of one have seen large swings in the exchange rate influence what was a modest move in GBP to large increases in local currency. The exception is Nairobi, where continued reliance on upper scale hotels for added security means average room rates continue to rise despite only a modest move in exchange rate. CAPE TOWN RIO DE JANEIRO SAO PAULO JOHANNESBURG SAR 2, BRL BRL SAR 2, SAR 2, BRL BRL SAR 2, % 22.85% 11.36% 11.12% 21.67% 17.36% 17.36% 21.67%

7 HRG Interim Hotel Report January June Top Five Decreases In Local Currency ABERDEEN HOUSTON HOUSTON ABERDEEN PARIS ROME DUBAI GBP GBP % USD USD % 0.00% -5.93% Aberdeen and Houston continue to see the effects of falling demand driven by the oil and gas sector, along with the impact of a few new openings. ROME DUBAI PARIS Regional Performance EUR EUR % -5.93% Rome saw a modest fall in average room rate in GBP which was nearly doubled as a result of movement in the exchange rate; the city saw a larger average room rate fall in local currency. AED AED % -8.85% Dubai saw a more or less flat average room rate movement in terms of GBP as more and more rooms are added to the city in preparation for Expo The movement in exchange rate saw this translate into a fall in average room rate in local currency. EUR EUR % -5.93% Paris also saw a fairly flat movement in GBP in average room rate which was again turned negative in local currency by the exchange rate movement so far has seen a slowdown in average room rate growth in general with only two global regions Europe and MEWA recording overall growth. Cities within each region continue to show a large disparity in terms of average room rate movement. Once again this supports the findings that regional performance is becoming less dominant when compared to mega city performance within regions.

8 HRG Interim Hotel Report January June Global Regions ARR GBP EUROPE average APR AMERICAS average APR APR AFRICA average APR APR APR MEWA average APR APR ASIA average APR APR

9 HRG Interim Hotel Report January June North America Focus Houston once again saw a modest fall in GBP driven by the downturn in the oil and energy sector and magnified by the exchange rate movement to a much larger % drop in average room rate locally. City ARR Local 16 ARR Local 15 Local Var Exc Rate Var SAN FRANCISCO USD USD % -5.93% WASHINGTON DC USD USD % -5.93% NEW YORK CITY USD USD % -5.93% BOSTON USD USD % -5.93% LOS ANGELES USD USD % -5.93% CHICAGO USD USD % -5.93% VANCOUVER CAD CAD % 1.43% TORONTO CAD CAD % 1.43% PHILADELPHIA USD USD % -5.93% OTTAWA CAD CAD % 1.43% HOUSTON USD USD % -5.93% MONTREAL CAD CAD % 1.43% Travel to New York City continues to increase, but with many more options now available including the sharing economy, a lower average room rate growth in GBP turned slightly negative due to the exchange rate movement. Occupancy in many areas is lower than projected. Washington DC is seeing an increase in demand as the presidential election year progresses. Even with the exchange rate pulling the average room rate backwards for international visitors the city delivered a 5.87% increase in average room rate locally. San Francisco and Boston are feeling the effects of strong corporate demand coupled with no new bed stock pushing up average room rates in both cities. Chicago has seen a softer convention season and as such average room rate has fallen modestly which was magnified by the movement in exchange rate. Vancouver has seen a very strong leisure base top up a buoyant corporate demand coupled with no significant new openings. Ottawa has seen very strong leisure demand coupled with corporate demand which has driven up the average room rates. Montreal saw a major hotel close down taking approximately 450 rooms out of the city, with strong corporate demand this resulted in an increase in average room rates along with an exchange rate movement that pushed rates even higher.

10 HRG Interim Hotel Report January June Europe Focus Moscow continues to dominate as the world s most expensive city for the 12 th consecutive year. A slight fall in average rate in GBP was effected massively by the large movement in the exchange rate, which saw a modest 3.14% fall in GBP translated into a large 10.64% rise in local currency. City ARR Local 16 ARR Local 15 Local Var Exc Rate Var MOSCOW RUR 25, RUR 23, % 14.23% GENEVA CHF CHF % -2.47% PARIS EUR EUR % -5.93% FRANKFURT EUR EUR % -5.93% BRUSSELS EUR EUR % -5.93% BARCELONA EUR EUR % -5.93% ATEHNS EUR EUR % -5.93% VIENNA EUR EUR % -5.93% BERLIN EUR EUR % -5.93% HAMBURG EUR EUR % -5.93% MADRID EUR EUR % -5.93% DUBLIN EUR EUR % -5.93% Paris was the most expensive city in the Eurozone despite showing a drop in average room rates in local currency. In GBP the average room rate remained almost flat year on year with the local drop reflecting the movement in exchange rate. Dublin saw rising corporate demand coupled with strong leisure demand and limited new openings. Together this drove a large 8.6% average room rate growth in local currency, even coupled with a backwards movement in exchange rate. Athens saw a flat performance in average room rate in GBP but the movement in exchange rate saw the modest backwards movement of -5.03% locally. Barcelona benefits from strong leisure business which tops up a growing corporate demand and saw a modest 2.75% increase in average room rate. Madrid saw a decline of 2.59% in average room rate. This was driven by the movement in exchange rate turning a 3.55% rise in GBP average room rate negative locally.

11 HRG Interim Hotel Report January June Asia Pacific Focus Hong Kong actually saw a small rise in average room rates in GBP. Movement in exchange rate saw that translated locally into a small fall in average room rate. City ARR Local 16 ARR Local 15 Local Var Exc Rate Var HONG KONG HKD 2, HKD 2, % -5.77% SINGAPORE SGD SGD % -3.77% TOKYO JPY 32, JPY 31, % % NEW DELHI INR 13, INR 12, % 0.59% MUMBAI INR 11, INR 11, % 0.59% BANGALORE INR 9, INR 9, % 0.59% HYDERABAD INR 8, INR 8, % 0.59% BEIJING CNY 1, CNY 1, % 0.57% SHANGHAI CNY 1, CNY 1, % 0.57% SYDNEY AUD AUD % 0.38% Tokyo saw a large increase in average room rate in GBP due to increased demand. However when coupled with a large negative movement in the exchange rate this saw only a modest 3.9% increase locally. An increase in demand in New Delhi has filled many of the new mid-market rooms that came on line over the last 12 months resulting in a modest average room rate growth for the city. Mumbai and Hyderabad saw a softening of demand from a group s perspective which meant there was more capacity. This drove a small negative average room rate movement in both cities. Even with the high supply of hotel rooms in both Beijing and Shanghai, domestic travel within China is driving the average room rates higher. Three months of positive and accelerating growth rates confirm a recovery in business activity for China s hoteliers. The increase in average room rate in Sydney was due to large conferences and special events for the first six months of the year. January to March is High Season and so a combination of summer holiday and also pre and post cruise accommodation influenced demand.

12 HRG Interim Hotel Report January June MEWA Focus Dubai continues to add new hotel stock in preparation for Expo 2020 and so any new demand is being swallowed up by these new rooms. This together with the exchange rate movement has resulted in a large decline of 9.51% locally in average room rate. City ARR Local 16 ARR Local 15 Local Var Exc Rate Var DUBAI AED AED % -8.85% ABU DHABI AED AED % -8.85% MANAMA BHD BHD % -6.12% ISTANBUL TRL TRL % 7.20% CAIRO EGP 1, EGP 1, % 5.29% DOHA QAR QAR % -6.04% Abu Dhabi saw a small increase in average room rates in GBP, however the exchange rate movement saw this turn negative in local currency. Istanbul has seen a decline in average room rates in GBP as demand continues to soften with political unrest in Turkey and the war in Syria. Even with the movement in exchange rate the average room rate movement has remained negative locally. Cairo has seen overall demand flat line in the first six months of 2016 with barely any movement in GBP average room rates. This was translated into a modest average room rate growth locally due to the movement in the exchange rate. Doha has seen the effect of the dip in oil prices driving down corporate demand. This coupled with a large movement in exchange rate means the city shows a large 13.07% fall in average room rates in local currency. Manama sees new supply constricting growth in average room rate with a small decline in GBP translated to a larger decline locally due to the movement in the exchange rate.

13 HRG Interim Hotel Report January June UK Focus London growth for the first six months is lower than the 3.09% seen during A weaker start to the year in corporate demand and uncertainty around the EU referendum has seen overall demand increase but not to the extent many hotel groups were predicting. Aberdeen continues to feel the effect of the downturn in the oil industry resulting in less demand. Together with several new openings in 2015 means hotels are fighting to retain a shrinking pool of business. As a result the average room rate saw an even sharper decline in the last six months than in 2015 as a whole. Belfast saw a modest decline in average room rate as new bed stock came in to play. The majority of the rest of the UK was quite flat in terms of average room rates with a few exceptions: Edinburgh Strong corporate demand and a buoyant leisure base combined to see a strong first six months for the city seeing a 5.02% rise in average room rate. Liverpool With six new hotels opening in 2015 alone, bed stock in the city has started to outpace demand, resulting in a small fall in average room rates in the first six months of -2.05%. City ARR GBP 15 ARR GBP 15 GBP Variance LONDON GBP GBP % HEATHROW GBP GBP % MANCHESTER GBP GBP % ABERDEEN GBP GBP % EDINBURGH GBP GBP % BELFAST GBP GBP % GLASGOW GBP GBP % London by Region 2016 Jan-Jun Average Rates by Location Hammersmith & Kensington % Docklands % NEWCASTLE GBP GBP % LIVERPOOL GBP GBP % CARDIFF GBP GBP % West End & Central % City %

14 HRG Interim Hotel Survey June Now in its 23rd year, the HRG Interim Hotel Report looks at hotel room rates for key business destinations across the world. For more information please contact: Margaret Bowler E margaret.bowler@hrgworldwide.com T +44 (0)