+5pps +7.1% Growth of Guest Arrivals in 2014 (y-o-y) (U/C)

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1 BUDAPEST PERFORMED THE LARGEST KPI IMPROVEMENT AMONG MAJOR EUROPEAN CITIES Budapest performed as the best in CEE ahead of Prague, Warsaw and Bucharest in most key performance indicators. AVERAGE OF 214 OCCUPANCY +5pps +7.1% +14.3% +2.4% 75% EUR 88 EUR 67 EUR 34 RANKING OF BUDAPEST* Source: HotStats * Based on annual % change CEE capitals include Bucharest, Budapest, Prague and Warsaw TOURISM DEMAND SHOWS A ROBUST GROWTH Growth of Guest Arrivals in 214 (y-o-y) For the first time since 29, guest arrivals in pan-regional locations showed higher growth rate than Budapest. BUDAPEST +5.6% +7.2% BUDAPEST IS EXPECTED TO SEE SEVERAL NEW HOTEL OPENINGS IN THE COMING YEARS Hotel development is recovering with several historic schemes being under refurbishment in Budapest downtown. Source: CBRE Research, I-build.info No. of rooms (U/C) IN 214, HUNGARY POSTED THE SECOND HIGHEST GDP GROWTH RATE IN EU (U/C) 217 (planned) HUNGARY Existing Under construction Planned Service industries (including tourism) have picked up with a y-o-y growth of 4.6% in Q4 214, whilst manufacturing growth has lost some momentum over 214. Note: Data in the bubbles indicate the Q4 214 y-o-y growth y-o-y growth 12% 1% 8% 6% 4% 2% % -2% -4% -6% -8% -1% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q % 4.6% 3.4% Manufacturing Services TOTAL Manufacturing Services* TOTAL 215 CBRE Kft. 1

2 TOURISM DEMAND IN HUNGARY Domestic Guests Foreign Guests Number of Guest Arrivals and Average Length of Stay in Hungary (domestic / foreigner split) Million Average Length of Stay Domestic guests Foreign guests Average Length of Stay (right) No. of Days Guest arrivals have increased in each year since 29 Domestic guests posted higher growth rate than foreigners in Foreigners share is historically around 5% and does not show any tendency changes since data are available (21) Average length of stay (2.5 days) is similar to other CEE countries and it is gradually declining Key Hungarian Tourist Destinations Based on Guest Arrivals per Type of Accomodation in 214 Hotels Other Accomodation Million Share of Foreigners Budapest Lake Balaton Mátra-Bükk Sopron & Kőszeg Danube-bend Mecsek & Villány Rest of Hungary Hotels Other accomodation Share of foreigners 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Budapest is still the most attractive tourist destination in Hungary, absorbing 37% of total guest arrivals (3.5 million in 214) Average length of stay is the longest in leisure driven spa cities such as Hévíz (5.3 days) and Bük (4.1 days) and the shortest in Budapest (2.3 days) and other regional cities Despite lower than average growth in guest arrivals in recent years, Lake Balaton is still the second largest tourist destination SHARE OF FOREIGNERS IN GUEST ARRIVALS VÖRÖSMARTY TÉR, BUDAPEST 26% REST OF HUNGARY BUDAPEST 86% Domestic tourism plays an important role outside of Budapest only. 215 CBRE Kft. 2

3 TOURISM DEMAND IN HUNGARY 16% Mátra-Bükk 28=1% 15% 14% 13% 12% 11% 1% 9% 1% Budapest Hungarian average Lake Balaton Growth of Guest Arrivals in Selected Hungarian Tourist Destinations 151% 135% 124% 112% Since 28, the Mátra-Bükk region showed the highest growth rate where demand is largely driven by new hotel supply In 214, 35% more guests came to Budapest than in 28, outperforming the national average growth of 24% 8% AVERAGE Hungarian average Budapest Lake Balaton Mátra-Bükk KOR CHI +46% SK +32% GB PL GER +2% Note: All figures are compared to the base year of 28 CHANGE IN GUEST ARRIVALS BY COUNTRY OF ORIGIN +57% RUS +54% +28% +2% +119% Germany and Austria are still the largest source markets; however, the increase of guest arrivals lagged behind compared to other countries UK, US and CEE countries are also important source markets with a more dynamic growth in recent years Relatively smaller source markets such as South Korea, China and Russia posted the highest increase since 211 AUT +% GROWTH DYNAMICS OF GUEST ARRIVALS Note: Figures indicate overall change in guest arrivals between 211 and 214 BUDA CASTLE, BUDAPEST % -6.5% % 24 Annual average growth rate of guest arrivals is already higher than before the crisis. Note: Figures refer to national level and show the annual average growth rates in the subject periods 215 CBRE Kft. 3

4 BUDAPEST HOTEL MARKET Key Hotel Performance Indicators in Budapest EUR Occupancy rate % 7% 6% 5% 4% 3% 2% 1% % Number of guest arrivals increased with an average annual growth rate of 6% since 29 which has helped to push up occupancy rate Increasing demand was backed by leisure tourism as business tourism stagnated in recent years Despite growing figures, Budapest still offers a good price-to-value ratio compared to other CEE capitals; in recent years this was clearly backed by the appreciation of HUF Note: Data indicates annual average figures. T Key Hotel Performance Indicators in Budapest growth in 214 was higher than TrevPAR EUR increase as hotels have improved on the cost savings side Since 21, TrevPAR growth was continuosly lower than growth as more hotels tend to incorporate additional services in room rates in order to attract more guests Note: Data indicates annual average figures. HOTEL MARKET SHOWED CLEAR SIGNS OF A RECOVERY IN 214. ALL KEY PERFORMANCE INDICATORS IMPROVED ON THE BACK OF GROWING NUMBER OF TOURIST ARRIVALS AND GUEST NIGHTS. DEMAND FOR HOTEL ACCOMMODATION IN BUDAPEST IS MOSTLY FUELED BY LEISURE TRAVELERS AND TO A LESS EXTENT BY BUSINESS. THE HUNGARIAN CAPITAL HAS MATURED AS A KEY DESTINATION FOR CITY BREAKS AND SPA TOURISM IN THE CEE REGION. THE CITY ATTRACTS MORE ARRIVALS FROM NEW SOURCE MARKETS WHILE KEEPS THE CLIENTELE FROM TRADITIONALLY IMPORTANT COUNTRIES. 215 CBRE Kft. 4

5 y-o-y change y-o-y change Budapest Madrid Prague Bucharest Milan Vienna Berlin Frankfurt London Paris Warsaw Budapest Madrid Prague Bucharest Milan Vienna Berlin Frankfurt London Paris Warsaw -5% % 5% 1% 15% T BUDAPEST HOTEL MARKET Key Hotel Performance Indicators in Benchmark Cities Note: Data refer to the period Feb 214 Jan 215 Key Hotel Performance Indicators in Benchmark Cities Note: Data refer to the period Feb 214 Jan 215-1% -5% % 5% 1% 15% 2% 25% HOTEL PIPELINE IN BUDAPEST ( ) HOTEL INVESTMENT MARKET In 214 EUR 8 million investment turnover was registered in Hungary, representing 17% share in the total investment turnover. Intercontinental, a large five-star hotel in Budapest CBD was traded for the third time since the financial crisis, reflecting the continuing interest of investors of Middle-East origin in the best-in-class hotel assets in the Hungarian capital. As a new phenomenon on the market, we see increased investors interest for three- and four-star hotels in the countryside. Banks have increased their disposal activity in this market niche and managed to sell part of their repossessed portfolio. Three such transactions were confirmed in 214; however, we believe several other assets could be sold in the deal size range of EUR 3-5 million, therefore our investment turnover estimation for 214 can be understated. On the other hand, there is still limited appetite for larger assets (above EUR 15 million) in the countryside. Besides the income-generating hotel deal flow, we registered transactions worth of cca. EUR 45-5 million in total of vacant properties purchased for hotel development. This activity solely concentrated to downtown of Budapest. Same source of money is driving this market segment; investors from the Middle East have been the most active also in such purchases. HOTEL NAME OPENING CATEGORY NO OF ROOMS Bo33 Hotel 215 Upscale 62 Prestige Hotel Budapest 215 Upscale 85 Rácz Hotel & Thermal Spa Upper upscale 62 Hotel Ária 215 Upper upscale 49 Helvetic Clinics Hotel 215 Upscale 8 2 Hotel di Verdi 216 Upscale 19 A8 Palace Hotel 216 Upscale 11 Dorottya 8 Hotel 216 Midscale 12 Source: I-build project database, CBRE Research Note: 1 project put on hold 2 estimated room number 215 CBRE Kft. 5

6 CEE/EMEA HOTEL CONTACTS Jos Tromp MRICS Senior Director Head of Research Martin Thom MRICS Director Valuation Joe Stather Information & Intelligence Manager CBRE Hotels CONTACTS CBRE HUNGARY CONTACTS Lóránt Kibédi Varga Managing Director Hungary Gábor Borbély MRICS Director Head of Research & Consultancy Attila Kapitány Research Analyst Research CBRE HUNGARY OFFICE CBRE Kft. Hungary Eiffel Palace Bajcsy-Zsilinszky út. 78. Budapest 155 Hungary T Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE. SET OF DEFINITIONS (Average Daily Rate) A measure of the average rate paid for rooms sold, calculated by dividing room revenue by rooms sold. COLLECTIVE ESTABLISHMENTS (Gross Operating Profitper Available Room) All establishments entitled by operation license, built and used for tourist accommodation purpose (including hotels, hostels, boarding houses and campsites). Gross operating profit (GOP) divided by total available rooms, where GOP is equal to total revenue less the total departmental and operating expenses. GUEST ARRIVALS Number of people spent at least one night in a collective establishment. KPI (Key Performance Indicator) Group of variables that measures hotel performance. OCCUPANCY Occupancy is the percentage of available rooms that were sold during a specified period of time. (Revenue per Available Room) Total guest room revenue divided by the total number of available rooms. TrevPAR (Total Revenue per Available Room) A measure of total revenue per available room, calculated by sum of room, food and beverage (F&B), and other revenue divided by total available rooms. 215 CBRE Kft. 6