OWNER’S BRIEFING

Welcome to our new hotel leadership. We hope the following information will provide a clear picture of
our current situation and future expectations for the property.

CURRENT SITUATION

Our property, along with the other hotels in our competitive set, has experienced a steady performance
decline over the last two years. A soft economy, along with increased competition from other cities, has
combined to erode occupancy, average daily rate, and gross operating profit. Finance and credit have
been nearly impossible to obtain. It is clearly a ‘buyer’s market’, where both Individual and group clients
expect exceptional value at discounted prices.

The erosion over the last three years has been:

Previous Year Last Year This Year

Occupancy 78% 62% 54%
ADR 180 170 160
GOP 31% 24% 17%

In the absence of available financing, and with dramatic decreases in profits from operations, area
hotels have been unable to fund refurbishment or capital investment projects, which would add the
value required to compete with neighboring market areas.

As is the case with other hotels these days, our lending bank closely observes our operations, requesting
both monthly reports and financial statements. While they recognize the area-wide revenue challenges,
they nonetheless remain critical of our operating cost structure.

FUTURE OUTLOOK

Fortunately, developments in key three areas - the economy, our market area, and our hotel - are all
indicating opportunities for better business performance this year.

The Economy:

Four of the key economic indicators are on the rise.

Retail Sales Job Growth Energy Equities

VENTAS AL POR MENOR CRECIMIENTO DEL TRABAJO ENERGIA ACCIONES
Positive Market Area Developments:

 Last year’s government tax incentives have successfully attracted twelve companies to move
into the area this year.
 The airport authority has announced increased regional jet services through contracts with one
new legacy carrier and one new discount airline.
 The regional hospital will double in size and services this year.
 Following last year’s successful funding vote, the new Civic and Conference Center will open in
June.
 The Tourism Authority and Hotel Association have joined resources to triple the regional
promotional budget for leisure travelers.

Positive Property Developments:

 In light of the positive economic developments ownership will do its part to improve the hotels
competitive position by making Replacement Reserve funds available in three ways:

1. There is a carry-over balance in the Replacement Reserve fund which you may use
immediately to begin improving the value of the hotel.
2. Each month the Finance office will deposit 5% of the previous month’s revenue into
the Replacement Reserve fund for you to use as you see fit.
3. If the hotel has improved it profitability picture by midyear, we will consider adding
additional development funds either through the Replacement Reserve or from a Bank
Loan.

 The bank has also agreed to provide a line of credit to smooth out periods where an additional
short term cash loan is needed to meet payroll and vendor bills.
 Our new property leadership brings needed experience in revenue management, cost control,
capital budgeting, marketing and advertising, and service delivery.
 Our new hotel accounting software is now installed, which will finally provide us with the useful
monthly reports, financial statements, and trend analysis that have been lacking in the past.

F&B Strategy:

 In the last decade, the hotel restaurants have often been considered the last alternative, losing
residents and community guests to free-standing restaurant. There is a national trend to re-
establish hotels as a viable choice for F&B. We should invest in facilities, concepts, and
marketing that raise our F&B revenues significantly, while delivering an annual departmental
profit of 20% and a 90% positive guest review total.

Annual Plan:

Once you have completed a site visit to the property and read the information available about our
property and our market place, we would ask you to start your leadership year by estimating the
revenue for January. In doing so, please keep our annual ownership priorities in mind:

 Achieve and maintain an above-fair-market room share and an ADR equal to or higher than our
competitors.
  Generate an annual Gross Operating Profit in excess of 25% and a Return on Investment in
excess of 10%.

Please call on us at any time for assistance.