Hotel market on course for growth. Frankfurt hotel market in figures. Hotels Beds 40 thousand 39 thousand. Arrivals 4.4 million 4.

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1 Photos from top to bottom: The Squaire, Jumeirah Frankfurt, Meininger Rhein/Main Flughafen, Welcome Hotel Frankfurt [PKF city ticker] [ ] Hotel market on course for growth New peak in overnights: Approximately 7.3 million overnights and around 4.4 million arrivals in 213 confirm the steady growth in demand on Frankfurt s hotel market. The city continued to show growth in the first months of 214 (January to April: +6.8%). Growth markets: Arab Gulf states and China: Demand from Arab and Chinese visitors has shown particularly high growth in recent years (+48% in each case from 21 to 213). Supply is also increasing: With 248 hotels and bed-and-breakfast hotels and a total of approximately 4, beds, supply also increased again in 213. Further increases in capacity are anticipated in the coming years. Over 3,2 rooms in the pipeline: Numerous new hotel projects are at the construction or planning stages in the city centre and the vicinity of the exhibition centre and the airport. Rise in RevPAR: Growth in room occupancy from January to May 214 generated a rise of around 6.5% in RevPAR to around 78 EUR, despite a slight fall in net room rates (samples primarily from branded three- to fivestar hotels). Frankfurt hotel market in figures Hotels thousand 39 thousand Arrivals 4.4 million 4.2 million 7.3 million 6.9 million Ø length of stay 1.7 nights 1.6 nights International overnights total 3.4 million 3.2 million Share of total overnights 44.7% 45.4% Information about international overnights refers to all acommodation facilities, all further information refers only to hotels and bed-and-breakfast hotels Issue

2 Arab Gulf st. China France Italy Japan Spain UK USA [PKF city ticker] Continued steady growth in hotel demand Demand on Frankfurt s hotel market has grown continuously since 29, the year of the financial crisis. Record figures for arrivals and overnights were again noted for 213, at 4.4 million arrivals and 7.3 million overnights - equivalent to total growth of approximately 4% and 41% respectively. Although the average length of stay rose slightly to around 1.7 nights in 213, this is still relatively low in comparison to other German cities because of the high proportion of business travellers. Arrivals/ 's Nights 8, 2. 7, 6, 1.6 5, 4, 3, , 1,.4. Arrivals Length of stay 3,146 5,176 3,67 3,794 4,23 4,45 5,875 6, , , Information refers to hotels and bed-and-breafkfast hotels Arab and Chinese visitors on the increase International visitors accounted for a total of around 3.4 million overnights in Frankfurt in 213. This high percentage (44.7%) clearly shows the city s international significance, which also benefits the hotel market. 5, Increased numbers of visitors from the Arab Gulf states and China in particular are in evidence; these two source markets have each shown growth rates of 48% since 21. 4, 3, Although the main countries of origin of international visitors continue to be the USA and UK, increased demand from the Arab Gulf states and China is also impacting on hotel supply. The Frankfurt region is an increasing focus for Arab and Chinese hotel operators and investors, often serving as their entry to the German market - e.g. Jumeirah Frankfurt, QGREEN Hotel by Meliá (Chinese investment group Greenland), New Century Hotel Frankfurt (previously Golden Tulip Frankfurt Offenbach). 2, 1, Information refers to all accommodation facilities Issue

3 Growing supply Hotel supply has likewise grown steadily in Frankfurt in recent years. The number of hotel operations (including bed-and-breakfast hotels) rose from 29 to 213 by around 13% to 248 operations, while the number of beds rose by 19% to around 4,. Hotels /H , , , , 28, Hotels ,461 35, 36,485 38,554 39,753 p. H Information refers to hotels and bed-and-breakfast hotels Rise in bed occupancy Despite increasing capacities, average bed occupancy rates have also grown steadily thanks to high growth in demand. Bed occupancy rose by a total of 7.8 %-points between 29 and 213 to a record of 5.2%. Overn. ' 16, 14, 12, 1, 8, 6, 4, 2, Bed Occ. 213 % Bed Occ. 12,213 12,775 13,317 14,111 14,51 5,176 5,875 6,185 6,861 7, Information refers to hotels and bed-and-breakfast hotels Issue

4 New projects - new brands Frankfurt has numerous new hotel projects, some in the planning stage and some already under construction. Focal areas are the city centre, the exhibition centre and Frankfurt Airport. Projects range from onestar to five-star categories but focus on the international economy to mid-class sector. Given the domination of business travel in the demand structure, several boarding-house / apartment projects are also planned. The hotel supply in Frankfurt is expected to grow significantly in the coming years as new brands enter Frankfurt and Germany as a whole (e.g. Element, Capri by Fraser, Moxy). The following chart shows selected projects in Frankfurt with a reasonable likelihood of realization: Hotel projects Project Location Category (stars) Rooms Opening B&B Hotel Mainzer Landstr Element Frankfurt Airport Gateway Gardens Fleming s Deluxe Hotel (extension) Eschenheimer Tor Smart Stay Hotel Niddastr Easy Hotel Düsseldorfer Str Boardinghouse Oskar Residence An der Flößerbrücke Capri by Fraser Europaallee Hampton by Hilton Europaallee Holiday Inn Mainzer Landstr Innside by Meliá Hanauer Landstr. / Sonnemannstr Moxy Gateway Gardens Smartments Business Europaallee Sofitel Opernplatz Hotelprojekt Galopprennbahn Rennbahnstr Derag Livinghotel Milano Mailänderstr Adina Apartment Hotel Osloer Str Ibis Budget Hanauer Landstr Moxy New Wave Areal, Eschborn Motel One Berliner Str Category according to international classification Research PKF hotelexperts Issue

5 Performance indicators Room occupancy on the rise Room occupancy YTD 1) % Jan. Feb. March April May May In the first five months of 214, room occupancy in our hotel sample in Frankfurt (primarily comprising branded three- to fivestar hotels) rose by 4.3 %-points to around 68.2%. Year-on-year growth was recorded for all months except April; the decline in April was due to factors including Easter holidays, which had been in March in the previous year and which have a significant impact on Frankfurt s hotel market because of its high proportion of business travel Change (%-Points) Stable prices At around 114 EUR, the average net room rate of the hotels analysed stayed virtually unchanged between January and May 214. The month showing the highest year-on-year increase was February, for reasons including the carnival season, which this year partly extended into March, and the upturn in trade show business (e.g. Ambiente trade show). Net room rates YTD 1) EUR Jan. Feb. March April May May Change (%) RevPAR YTD 1) EUR Jan. Feb. March April May May Higher RevPAR In line with the increase in room occupancy, RevPAR at the hotels sampled also rose in the first five months of 214 by a total of 6.5% to around 78 EUR. Almost all months showed positive development; only April recorded a fall of around 2% year-on-year owing to lower room occupancy rates over the Easter holidays Change (%) Issue ) YTD figures refer to the sample of May BDO/PKF Monthly German Trends 5

6 Future prospects Developments on Frankfurt s hotel market will continue to be a source of interest in the coming years. Numerous new projects will expand the available hotel capacity and bring new products and new brands to Germany. In recent years Frankfurt s hotel industry has shown steady growth thanks to increased demand. New international growth markets have been a particular driver of overnight statistics. However, given that capacity will grow in the future, competition and thus increasing price pressure is likely to step up. The expansion in hotel capacity will prove a particular challenge in periods of lower demand, such as vacations and weekends. It therefore remains to be seen whether room occupancy can continue to increase in the future and the currently relatively high level of room rates in Frankfurt can be maintained. Potential for further positive development is offered by the leisure sector, which has developed extremely positively to date. Frankfurt is increasingly rated as an attractive destination for city-hoppers, while the exhibition centre and airport continue to be major demand generators; for example, the Kap Europa congress centre, which opened in May 214, still offers potential for growth. In addition, when the airport Germany s largest adds a third terminal, passenger capacity will increase to around 88 million by 22. However, given Frankfurt s heavy dependence on the banking and financial sector, development of the city s hotel market will continue to be closely linked to developments in the global economy in the future. PKF hotelexperts GmbH Maximilianstrasse Munich tel: +49 () fax: +49 () info@pkfhotelexperts.com web: Contact for queries and suggestions: Caroline Schade tel: +49 () caroline.schade@m.pkf.de Worldwide hotel consulting Partner for your success. PKF hotelexperts city tickers provide a fast, compact overview of major German cities and their hotel markets. The information publications appear several times per year. The next issue will examine the Hamburg hotel market. Order your personal copy at: info@pkfhotelexperts.com. Disclaimer: This report and the figures, trends and details of possible reasons for change are based on careful market research. Although PKF hotelexperts assembles this information with the utmost care, no guarantee can be given for the completeness and up-to-dateness of the information. As of July 214 Issue