JeanClaude Baumgarten President

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Jean-Claude BaumgartenPresident CEO The
Americas Lodging Investment Summit 27 January 2009
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MACROECONOMIC TRENDS
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2009 is set to be a tough year...
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with growth dipping to 2
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Commodity prices surged, and have now sunk
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so inflation has fallen globally
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providing scope for much needed rate cuts
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Despite monetary efforts, housing market activity
continues to fall
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Major US macroeconomic indicators

• 760,000 jobs shed in first nine months of 2008
• Consumer spending continues to fall, pushing GDP
  into negative growth levels
• Consumer and producer confidence at all time low
• Dollar has appreciated after weak start in early
  2008
• Housing markets continues to be volatile

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Tremendous loss of wealth
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OVERVIEW OF GLOBAL TRAVEL TOURISM TRENDS
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Year-to-date arrivals growth slowed through 2008,
except in the Middle East
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Trend shows third month of annual contraction in
visitor arrivals
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Preliminary estimates for arrivals in 2008

• Global 2
• North America 4
• Middle East best performing region Europe the
  worst
• Source UNWTO

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Sharp contraction in airline passenger traffic
worldwide from August
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Provisional outlook for Travel Tourism Economy
GDP
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WHY LONG TERM TRENDS HAVE REMAINED RESILIENT
RIGHT THROUGH?
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The surge in the Middle East
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The rise of China as a key source of outbound
flows
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as well as a main tourist destination
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and growth is now mainly restricted to emerging
destinations
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buoyed by rising per capita incomes
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Summary of Global Trends

• The deterioration in the macroeconomic
  environment and the marked slowdown in monthly
  indicators of tourism activity in the last months
  of 2008 point towards a much more pronounced
  cycle in TT GDP than envisaged in January 2008
• The relatively resilient first-half 2008
  performance plus the lead time between holiday
  bookings and actual vacations suggest the impact
  on growth in 2008 will have been limited
  nonetheless, TT Economy GDP is now expected to
  have increased by just 2 last year, a percentage
  point below our January 2008 forecast
• However, the impact on Travel Tourism in future
  years is much greater. TT Economy GDP is now
  expected to contract in 2009 and merely to grow
  by 1 in 2010, significantly below its long term
  trend
• Furthermore, even this forecast like
  macroeconomic prospects generally carries
  downside risks if the intensified credit crunch
  extends through the whole of this year
• Long-term prospects in the Travel Tourism
  industry are supported thanks to the continued
  rapid expansion of emerging destinations along
  with the global increase in per capita income.

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USAsTRAVEL TOURISM
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Strong first half 2008, with performance
weakening through the year

• Good inbound performance through September, 8,
  but zero growth in September and decline expected
  for quarter four. So year-end results?
• Exchange rates less favourable to USA inbound as
  the year progressed
• But total tourism expenditure (domestic and
  inbound) increased by an estimated 6 in 2008
• And international tourism receipts up estimated
  17 in nominal terms partially due to overall
  2008 weak dollar performance

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The Lodging Industry
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Construction pipeline by global regions...
Source Lodging Econometrics 2009
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The USA continues to dominate 43 of forecast
rooms in the world to be constructed in the USA
Source Lodging Econometrics 2009
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Construction pipeline the Americas in further
detail...
Source Lodging Econometrics 2009
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What about the longer term? 2008 - 2018
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