A HOTEL MARKET REVIEW OF KEY TOURIST DESTINATIONS

A HOTEL MARKET REVIEW OF KEY TOURIST DESTINATIONS IN THAILAND BANGKOK PHUKET Craig Collins, Senior Vice President February, 2002

Presentation Outline n n n Asian Economic Environment Asian Hotel Market SWOT Analysis Thailand Tourism Market – Bangkok and Phuket n Thailand Hotel Investment Market – Bangkok and Phuket

Asian Economic Environment Source: Consensus Economics

Asian Hotel Markets – SWOT Analysis Strengths 1. Limited supply pressures in most markets 2. Geographic isolation of many Asia Pacific hotel markets from the US and Afghanistan 3. Historically low interest environment 4. Strength of Indian, Chinese and Australian economies 5. Regional government support of faltering tourism industries 6. Weakened currencies against the US dollar, encourages international inbound and domestic tourism Opportunities 1. Growth in discount airlines, stimulating intra-regional travel 2. ‘Safe haven’ markets capturing displaced leisure ad conference demand – eg Phuket 3. China’s entrance into the World Trade Organization 4. Narrowing of pricing gap between buyers and sellers 5. Increased domestic and intra-regional travel 6. Hotel stock valuation pressures may encourage consolidation Weaknesses 1. Dependence on few international air carriers, particularly the US and Japan routes 2. Reduction in air services 3. Lower US visitor demand 4. Further contraction of already weakened Asian economies of Japan, Singapore and Taiwan. 5. Political instability of Indonesia and the Threats 1. Further weakening of the US & Japanese economies 2. Conservative hotel lending practices – reduction in available debt 3. Further political tension in key Asian markets 4. Banks inactive in forcing the sale of assets with non-performing loans

Thailand Tourism Market Historic International Visitors Source: Tourism Authority Thailand

Thailand Tourism Market Monthly International Arrivals 2000 - 2001 Source: Tourism Authority Thailand

Thailand Hotel Markets Bangkok – 4 & 5 Star Hotel Performance Source: Jones Lang La. Salle Hotels

Thailand Hotel Markets Phuket – 4 & 5 Star Hotel Performance Source: Jones Lang La. Salle Hotels

Thailand Hotel Market - Outlook n The outlook for Thailand’s hotel markets remains positive, due to strong demand fundamentals and minimal supply increases. BANGKOK n n n Given the global economic downturn, room rate is expected to experience downward pressure in 2002. Occupancy is expected to improve due to strong tourist arrivals, the perception that Thailand is a relatively safe destination and the limited new supply in the market Limited new supply - only one new 5 star hotel is anticipated to enter the market in 2002 (the Conrad) PHUKET n n Similarly, room rate is expected to experience downward pressure in 2002. Occupancy is expected to improve as Bali (Phuket’s primary competitor) continues to suffer from the political and social instability in Indonesia

Thailand Hotel Market Comparative Trading Performance Expectations Source: Jones Lang La. Salle Hotels’ HISS

Thailand Hotel Investment Market Asia Pacific Investment Climate n n n Transaction activity in 2002 likely to be similar if not greater than 2001 Consolidation/privatisation of LPT’s Focus on investment in larger 1 st class and luxury assets Resorts to be sought after J/V opportunities through corporate investment in hotel companies in Asia Japanese owners to continue divestment

Thailand Hotel Investment Market Hotel Investment Cycle – Asia Pacific 6 Singapore 1 Tokyo Bali, Hong Kong, Mumbai, New 2 Delhi, Sydney 1 Early Downturn 2 Late Downturn 3 Trough 4 Early Upturn 5 Late Upturn 6 Peak Beijing, Jakarta, Brisbane, Kuala Seoul Lumpur, Melbourne, Phuket Manila 6 5 Shanghai 4 Bangkok 3 Auckland, Gold Coast Source: Jones Lang La. Salle Hotels’ HISS

Thailand Hotel Investment Market Comparative Short Term Investment Intentions Strong Buy n n n Bali (47. 4%) Bangkok (42. 1%) Shanghai (36. 8%) Phuket (35. 3%) Sydney (32. 7%) Beijing (31. 3%) Source: Jones Lang La. Salle Hotels’ HISS Strong Build n n n Seoul (40. 0%) Phuket (35. 3%) Beijing (31. 3%) Strong Sell n Gold Coast (41. 2%)

Thank You