Kokua Hospitality Company Overview
KokuaHospitality Expertise Owner-Centric As an employee-owned subsidiary of Chartres Lodging, Kokua sdna remains that of an owner-centric, adaptive, and transparent property management company. We are focused on delivering ownership s long and short term goals with our experienced and innovative team, while remaining committed to our employees and guests. Proven Track Record Based in Chicago, with additional offices in Jacksonville, Los Angeles, San Francisco, and St. Louis; Kokua has a highly experienced operations team, with industry-veterans throughout our organization. With 7 hotels (2,300+ rooms) currently under management, Kokua soperations team has a proven track-record of operating both independent and branded hotels. As an approved manager of virtually every major brand, we pride ourselves as turnaround and transition specialists having renovated, repositioned, re-branded and de-flagged hotels. Full Service Organization Kokua has all the bells-and-whistles as the larger 3 rd party managers, including Corporate Purchasing pricing, Sales & Marketing, Revenue Management, IT, Accounting, Social Media, state-of-the-art reporting systems (Portfolio 1), etc. We believe our smaller size allows for more focused oversight of every hotel by senior staff. Differentiator We have the unique ability to couple our services with Chartres Lodging Group, including asset management, renovation/development management, investment advisory and brand analysis, disposition and/or recapitalization. 2
Chartres Lodging Group Expertise Extensive Asset Experience Chartres has owned and asset managed a $5.0+ billion portfolio of approximately 15,000 rooms in the upper-upscale and luxury segments (between 2008-2015), across the U.S. and Japan, making them the 15 th largest domestic hotel owner. They have asset managed over 250 upscale and luxury hotels, resorts, and conference centers across the U.S. and Japan. Strong Investment History Located in San Francisco (additional offices in Los Angeles, Chicago, St. Louis, and Tokyo) with approximately 30 corporate employees, Chartres has invested $2 billion between 2003 and 2015 in the U.S. (similar level of investments in Japan), responsible for over $9 billion in lodging investments. Core Competencies With its highly experienced team, Chartres has been part of hotel, resort, and conference center acquisitions, dispositions, asset management, food & beverage conception, repositioning, renovation, rebranding, redevelopment, development, and advisory. Development/Renovation Team Chartres experienced in-house development team has completed over $700 million of renovation initiatives since their inception in 2002, and is the recipient of numerous renovation awards from Starwood, Hilton, and Hyatt. 3
Kokuaand Chartres Together We have the unique ability to couple our third-party management expertise with the asset and development management oversight 0f Chartres, making our company truly a one-stop-shop for turnaround hotel investing. Acquisition Disposition Asset Management Property Management Receivership Food & Beverage Concepting Repositioning Renovation Rebranding Redevelopment Pre-opening Brand Analysis Brand Advisory Asset Management Property Management Development Management 4
Geographical Distribution Map Seattle Portland San Francisco Denver Minneapolis Chicago Omaha St. Louis Indianapolis Buffalo Philadelphia Boston Greenwich New York Washington D.C. Bethesda National Harbor Baltimore Las Vegas Charlotte Los Angeles San Diego Palm Springs Phoenix Dallas Atlanta Jacksonville Oahu & Maui San Antonio New Orleans Houston Orlando Miami 5 Kokua Office Property Mgmt. Experience Chartres Lodging Office Asset Mgmt. Experience US Market Experience Includes But Not Limited To Atlanta Austin Baltimore Bethesda Buffalo Caribbean Charlotte Chicago Dallas Denver Greenwich Houston Indianapolis Jacksonville Los Angeles New York Maui / Waikiki Miami Omaha Orlando Palm springs Philadelphia Phoenix Portland San Diego San Antonio San Francisco Seattle St Louis Washington DC
Kokua smission Statements Corporate Vision To become the operator of choice for strategic institutional and select private lodging investors by leveraging our highly experienced, owner-centric, and adaptive team; a team that has strong brand relations and produces superior results as turnaround specialists. Operations Vision We are a diverse hospitality family, committed to our associates, home to our guests, and transparent to our owners. 6
Kokua: 8 Years and Growing $6.5M renovation Best Western flag removed Operated as Independent Doubled GOP within first two years Refinanced in 2007; locked in 110% IRR Ascend Collection Affiliation Feb 2006: Inn of Chicago Nov 2006: The Allerton Hotel CrownePlaza flag removed $10M renovation Achieved 4-star luxury rank Awarded HotelWorld s Best Guestroom Design Relocated Lobby to add Junior Ballroom Holiday Inn flag removed Operated as Independent $21.6M renovation Reflagged as Doubletree Awarded Doubletree Developer of the Year Restructured loan in 2010 with discounted pay down and extension Jan 2007: Doubletree Magnificent Mile 7
Kokua: 8 Years and Growing Stabilized operations and upgraded Executive Team Operated as Independent Branding & Hold/Sale Analysis Marketing as of Jun 08, under contract Dec 08, sold Apr 09 Avoided significant deferred capex Feb. 2008: Adams Mark Indianapolis Feb. 2008: Adams Mark Buffalo Upgraded Executive Team Operated as Independent Branding & Hold/Sale Analysis Marketing as of Jun 08, under contract Oct 08, sold Mar 09 Avoided loan-required 18-mth mold remediation ($5M+) $700k + RE Tax Appeal savings Led positioning and branding strategy development process Developed all pre-opening budgets, marketing plans, and operating procedures Coordinated entire opening process Achieved 165% RevPARindex to all other aloft Hotels Jan. 2009: Aloft National Harbor 8
Kokua: 8 Years and Growing Retained by owner to provide advisory assignments include tech services and pre-opening Comprehensive Brand/ Franchise analysis & negotiations Selected over Kimpton and Joie de Vivre as operator upon opening in March 2012 Aug 2010: J House, Greenwich Oct: Hyatt Bethesda Appointed receiver by court for LNR Stabilized cash management procedures Worked with property team to increase RevPAR and maximize profitability Prepared for sale during foreclosure process Developed takeover Action Plan and preacquisition budgets Managed a $45M renovation and rebranding to Hyatt Place Grew NOI from $2.5 million at acquisition to over $9 million at end of 2014 Dec 2010: Hyatt Place Waikiki 9
Kokua: 8 Years and Growing Conversion to Embassy Suites in Spring 2013 Leased two restaurant outlets and completed $12.5M renovation Improved NOI in 2 years by $4 million. Grew Occby 40% and ADR by 27% Jun 2012: Embassy Suites Baltimore Retained by Host Hotels to provide tech services and property management In first year grew RevPAR 25% with an index growth of 12%. GOP up over $500k Undergoing $25million renovation & repositioning Jan 2014: Powell Hotel Retained by KKR to oversee takeover and property management Oversight of extensive renovation in 2015 to include converting 100 suites to 200 guestrooms Nov 2014: Doubletree Suites Houston 10
Kokua: 8 Years and Growing Waikiki Trade Center Retained by Morgan Stanley & PHG to take over management from Aqua on May 1,2015 and run as an independent Hotel Extensive renovation and re-launch planed for 2016 May 2015: Queen KapiolaniHotel Waikiki Following the closure of Hotel Powell and a comprehensive 10 month renovation we will launch this jointly created, high tech independent Hotel Oct 2015 for Host Hotels & Resorts OCT 2015: Axiom Hotel San Francisco Office building conversion to a Lifestyle brand Hotel Retained by Chartres Lodging and KKR to provide renovation support, preopening tech services and property management Fall 2016: Waikiki Trade Center Hotel 11
12 Kokua sdiverse Experience
Revenue Management Advantage - Develop interface and data interpreter for property incorporating revenue management best practices - Analyze customer booking preferences and behavior patterns - Establish customer review tracking - Destination demand tracking based on flight capacities and pricing - Full revenue performance tracking down to the room type level - Group evaluation and block controls functionality - Market Intelligence gathering including competitor rate deployment, convention pace and multiple market compression factors - Daily 365 day rolling forecasting model - Automated price recommendations - Leverage and enhance the existing systems through data collection, analytics and pricing algorithms that improve pricing and forecasting accuracy Destination Demand Product Perception Alternatives Forecasting Optimal Price 13
Kokua sbusiness Intelligence Platform In 2010, Kokuarolled out a dynamic, Internet-based business intelligence and Intranet platform called Portfolio One ( P1 ). P1 provides the Kokua corporate office, property teams, and Hotel Owners with access to real-time financial data, reports, and other critical information. P1 Mobile with the ipadand iphoneallows for maximum flexibility on the go. Benefits afforded by P1 include: Real-time, daily performance data Comparisons to budgets, forecasts, history, and comp sets Detail of revenue sources and market segmentation Web-based invoice entry and forward-looking expense management Ability to dynamically reforecast month-end and make necessary adjustments before month-end Ability to manage to planned GOP and Flow Facilitation of company-wide communication and collaboration A centralized document library for standardized SOP s, forms, templates, models, and reports Financial consolidations by Property Manager, Owner, Brand, or Region 14
Kokua s Business Intelligence Platform 15
Development Management Expertise Unique Nature of Development Management Responsible for over $700 Million of completed renovation projects serving in this role since Chartres Lodging s inception. Strategic Capital Planning based on maximizing asset value for the term of the investment period. Understanding hotel ownership, asset management, and operationsin addition to the technical skills needed to implement a capital program. Focused on ROI nature of every dollar invested (or not invested). Speak the languageof Owners, Developers, General and Sub Contractors, Designers, Tradesmen, Operators, Capital Partners, and Lenders. Able to align interest of above mentioned parties. Serves as the asset manager for large-scaled reposition, renovation, and re-development projects. 16
Development Management Scope The Chartres Lodging Development Management team is organized to provide an integrated Development and Project Management solution; focusing on creative problem-solving, effective development and project management, and long-term value creation. The Development Management team is highly experienced in aggressively negotiating brand PIP sto ensure capital projects achieve strong ROIto Ownership and do not only provide brand enhancement. To date, Chartres has achieved a 10% decrease in PIP budgetthrough effective negotiations including the shifting of scope to better ROI-enhancing items. Chartres can provide a full range of comprehensive and professional Development and Project Management serviceswhich include, but are not limited to the following: 17 Project Assessment Strategic Advisory Assignments Reposition and Renovation Programs PIP verification and/or assembly PIP negotiation Professional Consultant Team Selection Project Management and Coordination Entitlements Purchasing Management Value Engineering
18 Development/Renovation Experience (2002 to 2014) Jumeirah Essex House Central Park $92mm (ALIS deal of the Year Award) Sheraton Dallas $87mm (Starwood Developer of the Year) Novotel Times Square, NYC $85mm Sheraton Denver $70mm (Starwood Developer of the Year) Hyatt Regency St. Louis $63mm Waikiki Trade Center (proposed) $61mm Aloft Washington National Harbor $60mm Doubletree Metropolitan, NYC $45mm (Winner of several design awards) Hyatt Place Waikiki $45mm (Hyatt Project of the Year) Radisson Minneapolis (BLU) $27mm Radisson Lexington, NYC $25mm (Winner of several design awards) Sir Francis Drake Hotel, San Francisco $24mm Doubletree Magnificent Mile, Chicago $21mm (Doubletree developer of the year) Hyatt Regency Jacksonville $14mm Embassy Suites, Baltimore $13mm Allerton Michigan Avenue, Chicago $10mm (Winner of several design awards) Inn of Chicago, Chicago $6mm Pan Pacific Hotel, San Francisco $4mm Total $752mm
Why Kokua? Comprehensive and Custom-Tailored Turnaround/Transition Plans Industry-leading turnaround experiencethrough: renovation, repositioning, rebranding, focused profit improvement plans, industry-leading cost saving initiatives, and dynamic revenue management and sales & marketing capabilities. We consider ourselves Transition Specialists, having full-time employees dedicated solely to pre and post transition oversight. Proven and influential brand relationshipswithin Chartres and Kokuaenable team to leverage brand strengths and shape brand involvement. Extensive food & beverage repositioning experience. Transparency/Flexibility Kokua sintranet Portfolio One, providing ownership with financial and sales reports daily. Ownership can accesswith private logon 24/7. Forecasts, OTB, Budgets, Pace Reports, etc. are posted for view. Kokua, as a product of an owner-centric DNA, understands ownership s goals and needs when selling an asset. As a result, the language in our agreements remain flexible, leaving hotels unencumbered in the event of a sale. Access to Chartres Lodging Group Resources Along with all of Kokua sresources, ownership automatically gets support from all of Chartres disciplines, a unique feature relative to other management companies. 19
20 Why Kokua? Significant Seasoned Staffing Horsepower with National Distribution Senior Level Focus Existing small portfolio size enables undiluted, hands-on asset level focus by seasoned senior executiveswho understand hotels as profitable investment vehicles, as well as an operating business. Hands-on focus enable property-specific issues to be addressed promptly, with considerable senior level guidance. With offices in Chicago, San Francisco, Los Angeles, and Jacksonville and support of Chartres Lodging s industry leading Research and Asset Management teams, Kokua has access to extensive research, analysis, and widespread market data to customtailor action plans. An Owner-Centric Platform Adaptable management facility has been highly successful in achieving return requirements and executing operating strategies for many institutional ownersby focusing on owner-centric prioritieswithout sacrificing customer service or operational integrity that could jeopardize long-term value. Built for ultimate operational flexibilityand unencumbered by restrictive brand agendas and mandates, Kokualed operations are able to cater to unique and changing property needsand tailor strategies specific to the improvement of the individual property. Sharing of best practices and cost saving opportunities put focus on bottom-line growth.
KokuaExecutive Team Rob Kline, Co-chair of Kokua Hospitality, CEO and Co-founder of The Chartres Lodging Group, is a 20+ year veteran of the lodging industry and a graduate of Cornell University s School of Hotel Administration. He has led over $5.0 billion in transactions and is a pioneer in the development of asset management practices. Prior to forming KokuaHospitality and Chartres Lodging (formerly known as Oxford Lodging ) and serving with Chartres Capital Partners, Rob founded the Lodging Business for Lend Lease Real Estate Investments and was the founding Head of Acquisitions for Strategic Hotel Capital. Rob is also a Founding Director of the Hotel Asset Management Association and a frequent lecturer at universities and industry conferences. Maki Bara, Co-chair of Kokua Hospitality, President and Co-founder of The Chartres Lodging Group, is a leading expert in redeveloping and repositioning luxury resorts, urban hotels, convention hotels and conference centers. Her expertise has involved nearly $800 million with The Chartres Lodging Group. Recently, in recognition of her extensive experience in the lodging sector, particularly in acquisitions, asset management, development management, and her role in the growth of the companies, Maki was recognized as the top 40 Under 40 by M&A Advisor. She also received the Best Executive Stevie Award for Women in business and was named a Woman of Influence in commercial real estate by Real Estate Southern California magazine. Maki s previous experience includes participating in the formation and growth of the lodging activities of Lend Lease Real Estate and Strategic Hotel Capital. She has also worked at Oxford Capital Partners, Inc. and PricewaterhouseCoopers, the hospitality industry s leading consulting firm. Ms. Bara is a graduate of UCLA, fluent in Japanese and has extensive hospitality industry experience throughout the United States and Japan. Phil Tufano, Partner & Chief Operating Officer, is a 30 year hospitality veteran who has been heading up Kokuasince 2007. Tufano is responsible for all areas of hotel operations, sales & marketing, human resources, finance and development. Prior to Kokua, Tufano spent 21 years working for Global Hyatt Corporation at 12 locations in the United States and Caribbean. He has been General Manager of several Hyatt Hotels with experience working at luxury resorts, suburban, urban and convention hotels and all suite properties. Mr. Tufano sexperience includes: renovating, reengineering, repositioning and re-flagging Hyatt, Hilton, Starwood, Choice and independent properties. Prior to Hyatt, he worked three years for ITT Sheraton in New York City. Tufano is a graduate of Farleigh Dickinson Universities School of Hotel & Restaurant Management and has taught hospitality management college courses. Mr. Tufano has served as President of the Jacksonville Hotel/Motel Association and the Montgomery County, MD Convention and Visitors Bureau. He also served on the Board of Advisors for Virginia Tech s Pamplin College of Hospitality and Tourism Management and on numerous CVB and Chamber Boards. 21
KokuaSenior Management Team Clay Spencer, SVP, Operations, joined the Kokua Corporate team in January 2014 with over 25 years in the hospitality industry. Clay began his career with Hyatt Hotel Corporation and worked a variety of positions in both the Rooms and Food&BeveragedivisionsintenhotelsthroughouttheUnitedStates. ClayhasbeenDirectorofFood&Beverageatsix different Hyatt Hotels, including the Hyatt Regency Chicago, which achieved nearly $70 million in F&B sales under his leadership. Clay has worked as General Manager in three hotels, the most recent being the Allerton Hotel Chicago. During his tenure, the Allerton was voted one of the Best Places to Work by its associates and the Chicago Tribune. Clay was also nominated for GM of the Year Downtown Chicago by the Illinois Hotel and Lodging Association in 2011. Clay is a graduate of the School of Hotel Administration at Cornell University. James Lobosco, Vice President Acquisitions & Operations, joined the Kokua Corporate team in January 2014 with over 25 years of professional experience in the hospitality industry. Having served as Hotel General Manager at hotels in Annapolis, Philadelphia, Baltimore and Washington DC, James has experienced a variety of businesses and has a track record for developing strong teams, repositioning and transforming hotels. Both his management and life philosophy is based on fostering a positive environment and maintaining balance. James graduated from Johnson and Wales University with a Bachelor of Science degree in Hospitality Management and Restaurant/Institutional Management. 22 Brian Bolf, Vice President Revenue & Profit Optimization, joined the Kokua team in 2007 and has more than 20 years of hotel management experience across a multitude of independent and branded hotels. He evaluates the revenue strategies and ecommerce marketing efforts in place at each hotel to ensure optimal profitability. Leading the charge of Kokua s recently developed Revenue Management platform, Brian is focused on maintaining a true advantage above the competition that is both progressive and insightful with its approach to understanding market trends, as well as customer behavior. Brian graduated from Loyola University Chicago with a Bachelor of Science degree in Psychology and Finance and also holds an A.A.S. Degree in Marketing.
KokuaSenior Management Team Jim Melvin, Vice President, Finance, joined Kokua with over 40 years of experience in the hotel industry, with 32 years at Hyatt Corporation where he held positions of Vice President Hyatt Shared Services, Assistant Vice President of Hotel Accounting, Divisional Controller, Regional Controller and Controller. Jim graduated from the University of Maryland, College Park with a Bachelor of Science Degree in Business Management. Katie Prats, Vice President, Human Resources, oversees the Human Resources of Kokua Hospitality's hotels with 15+ years of Human Resources experience in various positions in the retail and hospitality management fields with such companies as Target, Montclair Hotel Investors, Camberley Hotels, and most recently Chicago City Centre Hotel. Katie graduated with a Bachelor of Science degree in Human Resources from Northern Illinois University in DeKalb, Illinois and holds Senior Professional Human Resources Certification. Karen Wiley, Consultant, Sales & Marketing, joined the Kokuateam in July 2008 after more than 25 years of hospitality experience with many different hotel brands coast to coast, such as Westin, Fairmont, Sheraton, and Adam s Mark. Karen s experience ranges from single property to multi property management, from Director of Sales to Vice President or Sales. Karen had spent more than 2 years as owner and CEO of a hospitality consulting company prior to joining Kokua, specializing in Sales, Marketing, Revenue Management and Training. 23