This document summarizes the key findings of the Jones Lang LaSalle Hotels December 2008 Hotel Investor Sentiment Survey. Some key points: - Investor sentiment declined sharply globally due to deteriorating economic conditions and financial market volatility. Most investors now favor a "hold" strategy. - Expectations for short and medium-term trading performance are negative for the first time across all regions. Yields are expected to continue rising over the next six months. - The Americas saw the steepest decline in sentiment. Upscale branded hotels remain the preferred asset type, especially in major US cities. - Restricted credit is slowing new development. Build sentiment declined significantly from prior surveys. Many projects are

1. Hotel Investor
Sentiment Survey
Buy, build, hold, sell?
Issue 17, December 2008

2. Contributors
Arthur de Haast
Global CEO
Arthur Adler
CEO, Americas
Mark Wynne-Smith
CEO, EMEA
David Gibson
CEO, Asia Pacific
Katleen van den Brande
Vice President Research, EMEA
katleen.vandenbrande@eu.jll.com
Karen Wales
Vice President Research, Asia Pacific
karen.wales@ap.jll.com
Lauro Ferroni
Research Analyst, Americas
lauro.ferroni@am.jll.com
Jones Lang LaSalle Hotels, the first and leading global hotel investment services firm, is uniquely positioned to provide both the depth and
breadth of advice required by hotel investors and hotel companies, through a robust and integrated local network. In 2007, Jones Lang
LaSalle Hotels provided sale and purchase advice on 259 hotel transactions globally; representing a combined value of US$13.9 billion, a
total of 54,763 hotel rooms in 84 cities. In addition advisory and valuation services were provided on 660 assignments globally for 182,048
rooms across more than 300 cities. The global team comprises more than 270 hotel specialists, operating from 31 offices in 18 countries.
The firm’s advice is supported by a dedicated global research team, which produced over 45 publications in 2007 in addition to client
research. Jones Lang LaSalle Hotels’ services span the hospitality spectrum; from luxury single assets and large portfolios to select service
and budget hotels, resorts and pubs. Their services include investment sales, mergers and acquisitions, capital raising, valuation and
appraisal, asset management, strategic planning, operator selection, management contract negotiation, consulting, industry research and
project development services. Jones Lang LaSalle Hotels’ clients have access to the resources of its parent company, Jones Lang LaSalle
(NYSE: JLL). www.joneslanglasallehotels.com

3. Hotel Investor Sentiment Survey · Buy, build, hold, sell? · December 2008 1
Global overview
Trading sentiment recorded the sharpest decline in Asia Pacific as
Deteriorating economic fundamentals and liquidity restrictions have
investors re-evaluated expectations in light of recent events and
caused investor sentiment to plummet as the softening, which
softening regional economic growth forecasts. In our June 2008
became apparent in our last two surveys, was compounded by
survey investors expected the region to remain relatively protected
significant volatility in the financial markets and banking collapses
with short term sentiment still positive, however trading is now
occurring throughout September and October. Current sentiment
expected to decline in line with the other two regions albeit to a
may therefore have overshot, though few commentators are calling
lesser extent.
the bottom of the market yet. Notwithstanding, our latest survey
reaffirms that the alignment of operating and transaction cycles
witnessed over the last few years, as well as the globalisation of Global trading performance expectations^
debt and equity capital flows, has magnified the impact of the current
Global
crisis and diminished the importance of geographic diversification
Major Gateways
with current sentiment for all three regions now largely aligned.
Americas
EMEA
Against a backdrop of uncertainty, the majority of investors signalled Asia Pacific
their intention to hold assets. The effective shutdown of securitisation
-50% -40% -30% -20% -10% 0% 10% 20% 30%
markets has lowered the leverage available to fund transactions and
Net balance
called into question asset pricing, disconnecting buyers and sellers. Short term Medium term
With only a limited number of transactions occurring in most markets
^Weighted by number of responses
throughout 2008, it has also become increasingly difficult to call Major gateways include Barcelona, Chicago, Hong Kong, London, Los Angeles, Milan,
Mumbai, Munich, Moscow, New York, Paris, Rio de Janeiro, Rome, San Francisco, Shanghai,
exactly what level pricing has reached. Investor sentiment points to
Singapore, Sydney, Tokyo, Washington, D.C. and Vancouver
a continuation of the softening trend, which has become apparent for Source: Jones Lang LaSalle Hotels
initial yields over the last 18 months, indicating that capital values
will come under pressure throughout 2009.
Short term expectations are most bearish for the Americas with
sentiment trending downwards over the last four surveys and being
Trading performance expectations
negative for the last two. While declining sharply compared to June
Expectations for short and medium term trading have declined 2008, medium term sentiment is still positive overall, suggesting that
significantly to both be at the lowest level since we began the survey investors believe that the U.S. economy is already some way along
in 2000. Sentiment for short term trading is negative for all of the 87 any protracted downturn. However it is also possible that in the
markets we track. This is more pronounced than in 2001 when absence of any clear medium term signals, this sentiment reflects
investors expected 85% of the 60 markets tracked to decline. While more hope than expectation.
to some extent reflecting the current uncertainty, the deterioration
also reflects a world that is slowing from record economic growth
with softer trading coming off an extended high in many markets.
Global trading performance expectations 2000 - 2008^
60%
40%
Net balance
20%
0%
-20%
-40%
-60%
Sep-00
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Oct-03
Apr-04
Oct-04
Apr-05
Oct-05
Jun-06
Nov-06
Jun-07
Oct-07
Jun-08
Oct-08
Short term Medium term
^Weighted by number of responses
Source: Jones Lang LaSalle Hotels

4. 2 Hotel Investor Sentiment Survey · Buy, build, hold, sell? · December 2008
In December 2001, medium term sentiment signalled a return to Investment yield requirements
growth across all three regions with weighted averages ranging from
Leveraged Cap rate Short term cap
46.2% in the Americas to 35.8% in Asia Pacific. In our most recent
IRR for new (initial yield) for rate trend (over
survey, medium term sentiment is less than 10% for all three regions acquisition^ new acquisition^ next six months)*
and most positive in Asia Pacific and to a lesser extent in the Americas. 20.1%
Americas 9.2% Higher
17.3% Higher
EMEA 8.0%
Analysis of the individual markets indicates significant variability with 19.1% Higher
Asia Pacific 9.1%
short term expectations ranging from -53.6% in Beijing to -5.1% in 19.0%
Global 8.7% Higher
Dubai. Other markets which are expected to remain relatively
^Weighted by number of responses
protected include Moscow, Washington, D.C., New Delhi and Mumbai *Net balance
IRR = Internal rate of return
although we note that the survey predates the recent terrorist attacks
Source: Jones Lang LaSalle Hotels
in Mumbai.
Conversely, global initial yields recorded the most significant
Sentiment across the major international gateways is also less
retraction since the survey’s inception in 2000, ranging from 90 basis
bearish for the short term and markedly more positive for the
points in Asia Pacific to 60 basis points in Americas and EMEA.
medium term indicating that these global cities are expected to be
Having declined by 40 basis points in June 2008, continuation of the
the primary drivers of economic recovery. Sentiment is strongest for
downward trend indicates further negative pressure on capital values
Moscow (44.9%), Washington, D.C. (42.5%), Mumbai (37.5%), New
throughout 2009. Return expectations are highest for the Americas
York (35.4%), San Francisco (34.3%) and Shanghai (34.0%).
and Asia Pacific at 9.2% and 9.1% respectively, significantly higher
than 8.0% in EMEA. However a lack of transactions across
Investment yield requirements
sufficient locations and/or properties means that it is extremely
Continuing the softening trend from earlier in 2008, investor
difficult to quantify current pricing levels.
expectations for leveraged IRRs and initial yields both retracted by
60 basis points in October 2008 reflective of the weaker short term
Global investment yield requirements 2000 - 2008^
trading outlook and global economic uncertainty.
Expectations for initial yields have increased to their highest level
25%
since October 2005 whereas leveraged IRRs have fallen to a greater
extent, with current expectations similar to those in 2002. However 20%
at that time investors were gauging the impact of September 11
15%
which had a dramatic and immediate impact on global travel
markets. The current slowdown has built over many months with the 10%
progressive and unprecedented failure of the credit system, making
5%
comparisons to 2002 difficult as the trading impact is developing
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Oct-03
Apr-04
Oct-04
Apr-05
Oct-08
Oct-05
Jun-06
Nov-06
Jun-07
Oct-07
Jun-08
more slowly. Though activity statistics do not yet fully reflect the
prevailing downturn in consumer sentiment, coordinated government
IRR Yield (cap rate)
initiatives to moderate the impact of recession clearly signal the
^Weighted by number of responses
anticipated economic climate.
Source: Jones Lang LaSalle Hotels
With each region having recorded a marked retraction in leveraged
IRR expectations in June 2008, shifts in sentiment were less
pronounced in this survey. Expectations are lowest for EMEA at
17.3% compared to 19.1% in Asia Pacific and 20.1% in the Americas.

5. Hotel Investor Sentiment Survey · Buy, build, hold, sell? · December 2008 3
Our survey indicates that initial yields peaked slightly earlier in the Having spiked upwards in June 2008, buy sentiment declined from
Americas than in the other two regions and the retraction is therefore 40.5% to 33.2% - well below the long term average of 38.4%. With
more pronounced. Cap rates in the Americas are now 150 basis sell sentiment increasing to 12.0%, the ratio of buyers to sellers
points higher than their peak compared to 100 basis points in Asia decreased to just below 3:1. Sentiment is strongest for the Americas
Pacific and EMEA. Investors expect cap rates to continue to trend at almost 4:1 with buyers outweighing sellers in key gateways such
upwards over the next six months as generally softer yields are as San Francisco by 37:1, Washington, D.C. by 17:1, Boston by 15:1
compounded by a subdued trading environment. Further retractions and New York by 14:1. Sentiment in EMEA and Asia Pacific is softer
are expected in 85 out of the 87 markets tracked, the exceptions by comparison with the most competitive markets including Rome
being Fiji and Auckland. and Singapore with nine buyers to every seller, and seven in
Amsterdam, Milan and Shanghai.
Investment intentions
While all regions recorded a notable change in sentiment, the Hot global hotel markets
majority of investors favour a hold strategy in Asia Pacific and the
Americas and a buy strategy in EMEA. Hold sentiment has Hold
Buy Build Sell
skyrocketed to the highest level since December 2002 and marks Philadelphia
1 Rome New Delhi Spanish Resorts
the dominant global investment strategy, having jumped 11.0 Tampa
2 Amsterdam Mumbai Dubai
Montreal
3 Munich Hangzhou Orlando
percentage points to 42.9% since June 2008. Current sentiment
Chicago
4 Bali Los Cabos Jakarta
reflects the widely held belief that the market will not support pricing
Atlanta
5 London Bangalore Budapest
expectations as well as the difficulty in closing large transactions in
Hawaii
6 Madrid Rio de Janeiro Chendgu
the current economic environment compounded by significantly
Denver
7 San Francisco Ho Chi Minh City Hangzhou
contracted credit markets. Until pricing expectations moderate or
Macao
8 Boston Guangzhou Lisbon
hotel values decline, transaction markets will remain subdued even if
Auckland
9 Paris Moscow Guangzhou
liquidity is restored to the credit markets.
Santiago Dublin
10 Milan Phuket
Source: Jones Lang LaSalle Hotels
Global short term investment intentions 2000 - 2008^
60%
% of respondents
40%
20%
0%
Sep-00
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Oct-03
Apr-04
Oct-04
Apr-05
Oct-05
Jun-06
Nov-06
Jun-07
Oct-07
Jun-08
Oct-08
Buy Build Hold Sell
^Weighted by number of responses
Source: Jones Lang LaSalle Hotels

6. 4 Hotel Investor Sentiment Survey · Buy, build, hold, sell? · December 2008
Short term investment intentions^ In terms of short term asset class preferences, investors continue to
hold upscale assets in the highest regard. Sentiment is strongest in
Global the Americas with 47.9% of investors favouring this class. This
compares to 32.4% in EMEA and 22.9% in Asia Pacific. Upscale
Americas
branded assets with established cash flows are more likely to attract
acquisition financing in the current debt environment. Across the
EMEA
regions, preference for this type of hotel was strongest in Denver
Asia Pacific (57.1%), the Pacific Northwest (56.5%), Boston (51.2%),
Copenhagen (40.6%) and Perth (32.7%).
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% of respondents
Budget hotels are growing in popularity in EMEA and Asia Pacific
Buy Build Hold Sell whereas serviced apartments have attracted additional interest in
Asia Pacific, reflective of the high proportion of expatriates in many
^Weighted by number of responses
markets. Serviced apartments have a higher average length of stay
Source: Jones Lang LaSalle Hotels
and lower risk profile compared to hotels which tend to be more
likely to be sold on a nightly basis.
Build sentiment recorded a marked decline down from 17.8% in
June 2008 to 11.8% and is now ranked the least favoured strategy
by global hotel investors with many projects being put on hold in light Preferred asset type^
of the highly restricted credit environment. The most significant fall in
build sentiment was noted in some of the world’s development hot Global
spots including Dubai, Bangalore and Cancun/Riviera Maya. While
Americas
boding well for the future stability of the investment market, stalled
projects coupled with subdued profits will significantly impact EMEA
operators’ ambitious growth plans.
Asia Pacific
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% of respondents
All Grades Luxury Upscale
Mid-scale Budget Serviced Apts.
^Weighted by number of responses
Source: Jones Lang LaSalle Hotels

7. Hotel Investor Sentiment Survey · Buy, build, hold, sell? · December 2008 5
Americas
Americas trading performance expectations 2000 - 2008^
Worsening economic fundamentals and massively restricted liquidity
have caused investor sentiment to plummet. Hotel investors’ short
term trading performance sentiment for the Americas declined to a 80%
level just above the low point recorded in our survey conducted in 60%
December 2001. While still slightly positive, the medium term trading
40%
Net balance
sentiment has softened considerably since our last survey. Across
20%
the major markets surveyed in the U.S., Canada, Mexico, the
0%
Caribbean and South America, investors have increased their IRR
and cap rate requirements. -20%
-40%
The shutdown of the securitization market and the general
-60%
retrenchment of more traditional lenders have lowered the leverage
Sep-00
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Oct-03
Apr-04
Oct-04
Apr-05
Oct-05
Jun-06
Nov-06
Jun-07
Oct-07
Jun-08
Oct-08
available to fund transactions, making the pricing of assets
increasingly difficult and disconnecting buyers and sellers. The asset
Short term Medium term
hold strategy is at a seven-year high, with the sentiment to buy
^Weighted by number of responses
having declined over the last three surveys. The disconnect between Source: Jones Lang LaSalle Hotels
buyers and sellers is further evidenced by the lowest number of
investors in three years indicating a dominant sell strategy.
Of the markets surveyed in Canada, investors have the most
pessimistic short and medium term outlook for Montreal (-50.0% and
Economic strain has weighed down on worldwide property markets
-10.9%, respectively) and the most positive medium range trading
and volatility in the financial markets persists. To stabilize the financial
outlook for Vancouver (15.4%). While economic growth has slowed in
system, governments are initiating plans to bolster greater credit
Canada, domestic demand from sectors such as mining has held up.
market liquidity to make capital available from the banking industry.
This may provide the credit needed to refinance existing debt and to
Mexico’s outlook for the medium term exceeds the Americas
fuel transactions. It will not, however, replace the massive amounts
average, bolstered by Mexico’s emerging middle class, which is
of capital that was provided by the securitization market.
leading to increased intra-Mexico travel. Albeit marking a large
decline from six months ago, investors are most upbeat on the
Trading performance expectations
medium term outlook for Los Cabos (18.8%).
Across the Americas, the net balance of investors’ short term (six
months) trading performance expectations dropped further negative
The trading performance sentiment for the Caribbean marked one of
to -47.8%. While signifying a considerable fall, the Americas short
the region’s largest declines for both the short term and medium
term sentiment is less negative than it was in the months following
term with airline capacity reductions and discretionary travel coming
9/11. The medium term (two years) positive performance sentiment
under pressure. Investors’ returns in the Caribbean have been
decreased to 1.8%, further amplifying the downward trend recorded
impacted by high energy costs that, once elevated, are slow to
six months ago. While the short term performance outlook dipped
decrease again. The Dominican Republic benefits from relatively
negative for all Americas markets surveyed, the net balance of
higher operating efficiencies and is expected to fare better. Markets
investor sentiment for the medium term is positive for 48% of the
with more diversified economies, such as Trinidad and Tobago with
markets surveyed, including most international gateway markets.
an oil and natural gas-based economy, Grand Cayman, due to its
banking centre, and Puerto Rico are also in a stronger position to
In the United States, Washington, D.C., San Francisco, and Houston
weather the downturn.
exhibit the least negative short term sentiment. The medium term
trading performance outlook is most positive for markets with high
barriers to entry such as Washington, D.C. (42.5%), New York
(35.4%) and San Francisco (34.3%). Respondents indicated the
most pessimistic short term trading sentiment for Hawaii, Orlando
and Phoenix, all of which are leisure and group destination resort
markets. Hawaii marked the greatest performance outlook decline of
any U.S. market due to threat of flight consolidation and decreased
discretionary travel.

8. 6 Hotel Investor Sentiment Survey · Buy, build, hold, sell? · December 2008
Americas trading performance expectations^ Investment yield requirements
The record-low leveraged IRR and capitalization rate (yield)
Atlanta
Boston
environment has shown a clear upward trend across the Americas.
Chicago
Dallas All but two cities notched an increase in leveraged IRR expectations,
Denver
retracing on average by 50 basis points to 20.1%, reflecting the
Hawaii
Houston
perception of increased risk. Due to the increased weighted average
Los Angeles
cost of capital, investors’ targeted cap rates rose by 60 basis points
Miami
New York
since the last survey, reaching 9.2%. U.S. markets continue to
Orlando
Pacific Northwest record the lowest cap rates in the Americas, followed by Canada,
Philadelphia
Mexico, the Caribbean and South America.
Phoenix
San Diego
San Francisco
Tampa In the United States, the lowest IRR expectations were reported for
Washington, D.C.
gateway cities with more diversified demand and higher barriers to
Montreal
Toronto
entry, such as New York (18.0%), Boston (18.5%) and San
Vancouver
Francisco (18.8%). Owed to their relatively strong demand
Buenos Aires
Caribbean
fundamentals, the leveraged IRR increase for these three cities was
Rio de Janeiro
Sao Paulo
below the Americas average. U.S. cities with the highest IRR
Santiago
expectations were Tampa (20.9%), Phoenix (20.9%) and Orlando
Cancun/Riv. Maya
Los Cabos
(20.8%), all marking an IRR increase of 130 basis points or more
Mexico City
from the last survey. Hawaii has traditionally exhibited low IRR
-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100%
requirements but marked a 120 basis points increase to 19.4% due
Net balance
to weakened demand outlook.
Short term Medium term
^Weighted by number of responses
Americas investment yield requirements 2000 - 2008^
Source: Jones Lang LaSalle Hotels
The medium range performance outlook for South America exceeds
25%
the Americas average. Faced with slowing or declining RevPAR
growth in the U.S., investors and hotel companies are looking to 20%
South America to invest and to expand their brands. Brazil is
15%
bolstered by strong domestic demand that has maintained positive
growth, although currency pressures are increasing. Having 10%
achieved investment grade, Brazil is currently a hot investment
5%
market with substantial development opportunities for branded
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Oct-03
Apr-04
Oct-04
Apr-05
Oct-08
Oct-05
Jun-06
Nov-06
Jun-07
Oct-07
Jun-08
hotels, particularly in the mid-market. Rio de Janeiro and São Paulo
exhibited South America’s strongest medium term performance
Americas IRR Americas yield (cap rate)
outlook, at 11.1% and 8.8%, respectively. As investments in Brazil
U.S./Canada IRR U.S./Canada yield (cap rate)
have traditionally been structured with much lower leverage levels, Mexico/Caribbean/ Mexico/Caribbean/South
these investments are less impacted by the current illiquidity. South America IRR America yield (cap rate)
^Weighted by number of responses
Source: Jones Lang LaSalle Hotels

9. Hotel Investor Sentiment Survey · Buy, build, hold, sell? · December 2008 7
In U.S. cities, expected cap rates retraced on average by 70 basis Americas investment yield requirements
points, having already increased by 60 basis points in the previous
Average leveraged Average cap rate Short term cap
survey. While cap rates rose in all markets, they remain lowest in
IRR for new rate trend (over
(initial yield) for
New York (8.0%) and San Francisco (8.4%), both cities having acquisition^ new acquisition^ next six months)*
maintained considerable RevPAR growth momentum during the first 20.4% (+)
Atlanta 9.6% (+) Higher
three quarters of 2008. Faced with concerns over declining NOI, 18.5% (+)
Boston 8.5% (+) Higher
investors active in Orlando, Tampa and Phoenix have the highest 19.2% (-)
Chicago 8.7% (+) Higher
cap rate expectations for these markets. The most pronounced cap 20.7% (+)
Dallas 9.4% (+) Higher
rate increase in the U.S. since the last survey was indicated for Denver 9.4% (+) Higher
20.3% (+)
Hawaii. Upward pressure on cap rates is expected to persist until Hawaii 9.1% (+)
19.4% (+) Higher
credit markets become more liquid and industry fundamentals begin Houston 9.4% (+) Higher
20.4% (+)
to stabilize. Los Angeles 8.6% (+) Higher
19.1% (+)
Miami 9.4% (+) Higher
19.7% (+)
New York 8.0% (+) Higher
18.0% (+)
Investors also raised their IRR requirements for Canadian markets.
Orlando 9.7% (+) Higher
20.8% (+)
The economic development led by the 2010 Winter Olympics has
Pacific Northwest 9.3% (+) Higher
20.0% (+)
investors most buoyant on Vancouver, which exhibited the lowest
Philadelphia 9.3% (+) Higher
20.4% (+)
leveraged IRR and cap rate expectations in Canada. Average
Phoenix 9.6% (+) Higher
20.9% (+)
expected cap rates for Toronto increased by 40 basis points,
San Diego 8.9% (+) Higher
20.0% (+)
reaching 9.4%. Montreal has experienced declining room demand
San Francisco 8.4% (+) Higher
18.8% (+)
thus far in 2008 and exhibits the highest IRRs of the three Canadian
Tampa 9.7% (+) Higher
20.9% (+)
markets surveyed.
Washington, D.C. 8.5% (+) Higher
18.9% (+)
Montreal Higher
21.0% (+) 9.8% (+)
In Mexico, investors continue to have the lowest cap rate
Toronto Higher
21.3% (+) 9.4% (+)
expectations for Los Cabos. Leveraged IRR requirements have risen
Vancouver Higher
20.2% (+) 9.0% (+)
across all Mexican markets surveyed. The weak second home
Buenos Aires Higher
23.3% (+) 11.4% (+)
market will affect the viability of mixed-use resort developments in
Caribbean Higher
22.9% (+) 10.7% (+)
Mexico. The risk of investing in the Caribbean increased
Rio de Janeiro Higher
23.3% (+) 11.1% (+)
substantially over the past year due to soaring energy costs and the
Sao Paulo Higher
24.0% (-) 11.4% (+)
decline in the number of U.S. travellers to the region, reflected by Santiago Higher
23.6% (+) 11.6% (+)
rising IRRs. In the Caribbean, surveyed cap rates rose by 50 basis Cancun/Riviera Maya Higher
23.5% (+) 9.8% (+)
points from six months ago, reaching 10.7%. Los Cabos Higher
25.5% (+) 9.4% (+)
Mexico City Higher
25.5% (+) 10.7% (+)
South American markets saw the most moderate increases in Americas average Higher
20.1% (+) 9.2% (+)
leveraged IRR requirements, up on average 20 basis points, with U.S./Canada Higher
19.8% (+) 9.1% (+)
São Paulo IRRs actually recording a decrease. The negligible IRR Mexico/Caribbean/
Higher
23.3% (+) 10.4% (+)
South America
increase for Rio de Janeiro is reflective of investors’ relative
perception of stable or declining investment risk in Brazil. Among the
^Weighted by number of responses
South American markets, investors indicated the lowest cap rate *Net balance
IRR = Internal rate of return
expectations for Rio de Janeiro (11.1%). Yields in South America
Source: Jones Lang LaSalle Hotels
and in particular in Brazil are expected to stabilize or decrease in the
medium to long term as the real estate market benefits from
increased transparency and more stable interest rates.

10. 8 Hotel Investor Sentiment Survey · Buy, build, hold, sell? · December 2008
Investment intentions Markets attracting the most attention for acquisitions are San
Francisco (46.8%) and Boston (46.2%). While hotel transaction
The hold sentiment jumped 13.0 percentage points to 51.1% since
volumes in these markets are down compared to 2007, investors
the last survey and is at its highest level since December 2001. The
remain interested in top international markets. Investors also rank
dominating hold sentiment is both a reflection that many owners
the Pacific Northwest (44.9%) and Washington, D.C. (43.4%) as
believe the market will not support their pricing expectations, and of
strong buy markets. U.S. markets with low buyer interest include
the difficulty in closing substantial hotel transactions. The buy
Orlando and Tampa. In Canada, Vancouver is by far the strongest
sentiment declined to 32.3%, reaching its second lowest point since
buy market (38.5%), boosted in part by the upcoming Winter
our survey’s inception.
Olympic Games. For markets in Mexico and South America, the buy
sentiment is below the Americas average, reflective of the fact that
Spurred by the dearth of construction financing and weakening
these markets have limited product available for acquisition, and
fundamentals, the build sentiment decreased for the third
hence shows a higher build sentiment.
consecutive survey, narrowing to 7.9%. The decreased build
sentiment represents a silver lining in the credit crisis. The fact that
Across the Americas, a mere 8.6% of investors indicated ‘sell’ as
new supply will be choked-off will result in a more robust and
their overlying investment strategy. In the U.S., the sell sentiment is
sustainable recovery once demand growth resumes. The sell
highest in Orlando (27.7%), followed by Tampa (20.0%) and Dallas
sentiment (8.6%) decreased by a third, again evidencing that
(19.6%). Toronto leads the Canadian cities’ sell sentiment at 12.5%.
investors are reluctant to set the benchmark of a sale at a lower
Investors across Mexico, the Caribbean and South America all
transaction price.
exhibit a low sell sentiment. In the Caribbean, very few hotel
transactions are anticipated in the near term unless driven by the
Americas short term investment intentions 2000 - 2008^
pressure to refinance existing debt.
Respondents’ inclination to build recorded the lowest proportion of
60%
% of respondents
responses (7.9%) of the four investment intentions in the survey. The
40%
build sentiment is markedly more elevated in markets outside of the
U.S. Unlike markets in the U.S. where demand projections
20%
overwhelmingly do not justify new supply, South American markets
0% saw an increase in the proportion of investors seeking to build.
Sep-00
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Oct-03
Apr-04
Oct-04
Apr-05
Oct-05
Jun-06
Nov-06
Jun-07
Oct-07
Jun-08
Oct-08
Investors active in Rio de Janeiro, São Paulo, Buenos Aires and
Santiago all indicated equal or higher interest in building new supply
Buy Build Hold Sell than acquiring existing assets. The build sentiment in the Caribbean
trailed off, and the good news for existing supply is that a number of
^Weighted by number of responses
Source: Jones Lang LaSalle Hotels
projects in early planning stages will not come to fruition.
Investors indicated a dominant hold strategy in all but two Americas
markets. In the U.S., Philadelphia and Tampa depict the highest hold
sentiment, each at 62.5%. Markets where the increase in hold
sentiment was most pronounced include Hawaii, New York and
Phoenix. In Canada, Montreal exhibits the highest hold sentiment
(60.9%). Over 40% of investors intend to hold their assets in Mexico,
with the hold sentiment in South America being at a comparable level.

11. Hotel Investor Sentiment Survey · Buy, build, hold, sell? · December 2008 9
Americas short term investment intentions^ Investors’ interest in luxury assets in the Americas remained
unchanged from the last survey, with 27.5% of investors targeting
Atlanta
this asset type. In the U.S., luxury assets are most in demand in
Boston
Chicago
Hawaii (36.7%), Miami (30.3%) and New York (29.7%). Owed to a
Dallas
Denver scarcity of luxury product in Montreal, 37.9% of investors active in
Hawaii
Canada are targeting assets in this segment. Forty per cent of
Houston
Los Angeles
investors active in Brazil are shopping luxury assets in Rio de
Miami
Janeiro and São Paulo.
New York
Orlando
Pacific Northwest
Philadelphia
Across the Americas, the number of investors targeting investment in
Phoenix
mid-scale assets declined marginally to 13.2%. Of the markets
San Diego
San Francisco
surveyed, interest in mid-scale assets is highest in San Diego
Tampa
Washington, D.C. (19.2%), Los Angeles (19.1%) and Atlanta (19.0%). Investors
Montreal
indicated the highest interest for budget assets in São Paulo
Toronto
Vancouver
(10.0%), reflective of the vast opportunities to develop the
Buenos Aires
Caribbean underserved branded budget hotel sector in Brazil.
Rio de Janeiro
Sao Paulo
Santiago
Americas preferred asset type^
Cancun/Riv. Maya
Los Cabos
Mexico City
Atlanta
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Boston
Chicago
% of respondents Dallas
Denver
Buy Build Hold Sell Hawaii
Houston
Los Angeles
^Weighted by number of responses
Miami
Source: Jones Lang LaSalle Hotels
New York
Orlando
Pacific Northwest
Across the Americas, investors indicated upscale properties as their Philadelphia
Phoenix
preferred asset type, with 47.9% intending to invest in upscale San Diego
assets, up 8.4 percentage points from the previous survey. Upscale San Francisco
Tampa
branded assets with healthy in-place cash flows are more likely to Washington, D.C.
Montreal
attract acquisition financing in the current debt environment. In the
Toronto
U.S., upscale assets are most sought after in Denver (57.1%) and Vancouver
Buenos Aires
the Pacific Northwest (56.5%). In Canada, the proportion of investors Caribbean
Rio de Janeiro
seeking upscale assets is highest in Toronto (48.5%). Investors
Sao Paulo
active in South America indicated the highest sentiment for upscale Santiago
Cancun/Riv. Maya
investment in Rio de Janeiro (40.0%). Los Cabos
Mexico City
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% of respondents
All grades Luxury Upscale
Mid-scale Budget Serviced Apts.
^Weighted by number of responses
Source: Jones Lang LaSalle Hotels

12. 10 Hotel Investor Sentiment Survey · Buy, build, hold, sell? · December 2008
EMEA
Whereas investors’ expectations remained positive in the first half of The most negative outlook was recorded for the UK, in particular for
this year, the events of Q3 have left no doubt as to the seriousness provincial cities such as Manchester and Birmingham. These cities
of the current financial crisis and its likely impact on the hotel are highly dependent on domestic demand which is forecast to drop
industry. It appears that although not a single event, the combination rapidly in the coming year. The UK is not only suffering from the
of events is now being recognised as a demand shock. Buy global conditions, but in addition has a pool of highly indebted
sentiments decreased substantially, whilst investors reported residents, many of whom are struggling to make ends meet, with
increased preferences to hold or sell assets. Nevertheless, buy higher unemployment and rapidly falling house prices.
intentions prevailed across the region.
The greatest fall in expectations occurred in CEE which in the first half
of the year was still perceived as offering strong income growth
The EMEA hotel market’s trading performance is likely to be heading
potential. Although it could be argued that this is still the case relative
for tough times, at least in the short term, a sentiment which was
to some other markets, investors are clearly expecting a significant
reported consistently across all markets. Investors reported greater
impact on trading performance from the global environment. Various
IRR and yield requirements, which expanded by 80 and 60 basis
countries in the east have high levels of government debt, limiting
points respectively with some very wide ranges of opinion. As
the funds available to support their financial markets.
uncertainty about the current economic market conditions remains,
investors’ confidence seemingly remains weak with yield
Investors have suggested that Dubai will be the least affected
requirements expected to soften further in the coming months as
market in the short term, with short term expectations only
room night demand falls off quickly.
marginally negative. However, in contrast to other EMEA cities,
Trading performance expectations medium term expectations are more pessimistic. A lag seems to
exist between the impact on the Middle Eastern hotel market and to
The increasing recognition that financial turmoil will continue in some
that in Europe. The development boom of recent years in the area is
form, together with worsening global economic conditions have
highly likely to affect the real estate market in the medium to long
started to impose substantial pressure on trading performance
term and the first signs of a downturn in residential property values
expectations. Both short term and medium term expectations turned
have already become apparent which may impact the pace of future
negative across the region, with investors adopting a very dismal
development projects.
outlook for the coming six months. Expectations in the medium term
were only marginally negative but interestingly the fall was the
The survey suggests that Germany will be one of the best positioned
largest that we have experienced over the life of the survey.
countries in Europe to weather the storm. Although short term
trading expectations are negative, the medium term outlook is more
EMEA trading performance expectations 2000 - 2008^
optimistic. In particular Munich, Berlin and Hamburg are expected to
achieve positive trading performance in the medium term. Munich
80% benefits from a wide base of domestic and international visitors as
well as strong conference and corporate demand. Although all are
60%
set to be affected in the short term at least, investors seemingly
40%
Net balance
expect a market such as Munich to recover quickly. This sentiment
20%
might have been enhanced by the fact that the market is still
0%
relatively undersupplied at present whilst future developments are
-20%
likely to be delayed or cancelled.
-40%
-60%
Sep-00
Dec-00
Jun-01
Dec-01
Jun-02
Dec-02
Oct-03
Apr-04
Oct-04
Apr-05
Oct-05
Jun-06
Nov-06
Jun-07
Oct-07
Jun-08
Oct-08
Short term Medium term
^Weighted by number of responses
Source: Jones Lang LaSalle Hotels