U.S. Research Published by Raymond James & Associates

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1 Published by Raymond James & Associates Real Estate William A. Crow, (727) , Paul D. Puryear, (727) , Alexander Sierra, Sr. Res. Assoc., (727) , Andrew Banish, Sr. Res. Assoc., (727) , November 2, 2016 Industry Brief Lodging: Lodging Weekly Lodging Weekly: Halloween Shift "Treats" Results this Week but Next Week Could be "Tricky" Smith Travel Research reported today that U.S. industrywide hotel RevPAR increased 12.7% in the latest week (ended October 29) from year-ago levels; results came against a 6.4% year-ago weekly comp. This week s results were helped by the shift of Halloween, which fell on Saturday of the comparable week last year but this year fell on the following Monday. Accordingly, we expect next week s results will be negatively impacted by Halloween. The prior three weeks saw RevPAR changes of +5.8%, -1.6%, and +0.8%, respectively; over the last 28 days U.S. RevPAR is up 4.1%. Occupancy increased 8.1% industrywide last week from year-ago levels (+500 bp to 67.2%). Occupancy increased in all seven chain scales, all six location segments, and in 21 of the top 25 markets. Industrywide average daily rate (ADR) increased 4.3% last week from year-ago levels, increasing in all chain scales, all location segments, and in 21 of the top 25 markets. We continue to remind investors that urban and luxury results, as calculated by Smith Travel Research, are materially impacted by results at New York City hotels, which last week reported a 0.1% RevPAR increase, reflecting a 2.3% occupancy improvement (+210 bp to 92.3%) was more than offset by a 2.1% ADR decline; results came against a moderate year-ago comp of +5.5%. Over the past four weeks, RevPAR in New York City is down 5.5%. Hersha, Hyatt, Host, Marriott, Hilton and DiamondRock are among the companies we cover with the largest relative exposure to the New York City market. Among luxury and upper upscale classes, transient RevPAR was up 10.7% while group RevPAR increased 15.0% and contract RevPAR grew 9.0%. Over the past 28 days, transient RevPAR is up 3.3%, group RevPAR is down 1.5%, and contract RevPAR is up 7.8%. Thirteen of the top 25 markets reported RevPAR growth better than the 12.7% increase tallied by the overall industry. The better-performing large markets last week were: Chicago (+36.3%, helped by the World Series), New Orleans (+30.6%), Norfolk (+27.5%), Denver (+20.6%), and Philadelphia (+20.1%). The lagging markets last week were: San Francisco (-12.6%), Houston (-11.4%), Miami (-10.3%), Oahu (flat), and New York (+0.1%). Results at other relatively more important markets include: Washington, D.C. (+19.0%), Los Angeles (+17.4%), Orlando (+13.2%), Seattle (+8.4%), and Boston (+8.0% ). The Zika virus continues to make headlines and does pose a risk to the tourism/travel industry in South Florida and, prospectively, other markets in the Southeast. The lodging REITs exposure to South Florida is as follows: Hersha 13%, DiamondRock 11%, RLJ 9%, Chesapeake 9%, Ashford 8%, FelCor 7%, LaSalle 6%, Host 5%, Apple Hospitality 4%, Ashford Prime 3%, Chatham 3%, Summit 2%, Pebblebrook 1%, Xenia 1%, Sunstone 0%, and Ryman 0% (obviously, if the Zika markets were expanded to include Orlando, Naples and Tampa a number of REITs exposure would increase and in some cases materially). Valuation/Recommendations: We view lodging stock valuations as reasonably attractive, especially when looking at other real estate alternatives, with a more vibrant economic outlook being perhaps the most obvious (but heretofore elusive) near-term catalyst. EV/EBITDA multiples of x on our 2017 estimates at the larger C-corporations are attractive, in our view. Lodging REITs trade at significant discounts to NAV and private market valuations. We maintain a Market Weight suggestion for lodging and lodging REITs but note that at this juncture the race between the pace of hotel new supply growth and broader economic growth is not particularly inspiring or encouraging. Our top picks are Outperformrated Hilton Worldwide (HLT) among the brand companies and Summit (INN), Ryman (RHP), Sunstone (SHO), and Pebblebrook (PEB) in the REIT space. Please see our Hilton, Pebblebrook, Summit, Ryman, and Sunstone reports for additional insight. Please read domestic and foreign disclosure/risk information beginning on page 16 and Analyst Certification on page 16. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

2 2017 FFO Multiple by REIT Sector 11.8x 13.3x 14.1x 15.2x 16.5x 16.6x 16.9x 17.0x 17.5x 18.4x 18.6x 18.8x 18.8x 19.0x 19.4x 8.6x Source: SNL, Raymond James research. As of 11/2/ AFFO Multiple by REIT Sector 16.9x 16.9x 17.3x 17.7x 18.2x 19.0x 19.3x 20.1x 20.1x 20.5x 21.6x 24.1x 22.8x 14.7x 10.7x 11.8x Source: SNL, Raymond James research. As of 11/2/2016 International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

3 Lodging Stock Valuations at a Glance (as of 11/2/2016) Implied Value per Key 493, , , , , , , , , , , ,000 67,000 RHP PEB LHO H HT HST DRH SHO XHR HLT RLJ INN LQ Source: Company reports, Raymond James research. 2016E EV/EBITDA Multiple 16.1x 11.8x 11.8x 11.5x 11.5x 10.8x 10.6x 10.4x 10.3x 10.1x 9.6x 9.6x 8.8x 7.7x MAR HT RHP PEB INN SHO HLT H HST LHO RLJ DRH XHR LQ Source: Company reports, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

4 10.8x 10.8x 10.6x 10.4x 10.3x 10.2x Raymond James 2017E EV/EBITDA Multiple 12.3x 11.7x 11.4x 9.9x 9.8x 9.5x 8.8x 7.6x PEB HT RHP MAR INN LHO SHO HST HLT H DRH RLJ XHR LQ Source: Company reports, Raymond James research. 2016E Net Debt/EBITDA 5.9x 1.8x 2.0x 2.4x 2.5x 2.5x 2.9x 3.1x 3.1x 3.4x 3.7x 4.1x 4.1x 4.4x SHO H HST LHO DRH INN HLT XHR RLJ MAR PEB RHP LQ HT Source: Company reports, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

5 Raymond James U.S. Lodging Coverage Universe Valuation 11/2/16 11:26 AM EPS (FFO Per Share) P/E (P/FFO) Price 2016E 2017E 2018E 2016E 2017E 2018E Marriott International $69.13 $3.60 $3.92 $ x 17.7x 15.3x Hyatt Hotels Corporation x 31.6x 28.2x Hilton Worldwide Holdings x 22.7x 20.8x La Quinta Holdings x 17.9x 17.1x Ryman Hospitality (REIT) x 9.3x 8.9x Host Hotels & Resorts (REIT) x 9.3x 9.3x LaSalle Hotel Properties (REIT) x 8.8x 9.2x Hersha Hospitality Trust (REIT) x 7.1x 6.9x Sunstone Hotel Investors (REIT) x 10.1x 10.0x DiamondRock Hospitality (REIT) x 9.1x 9.3x Pebblebrook Hotel Trust (REIT) x 9.5x 10.0x RLJ Lodging Trust (REIT) x 7.1x 7.2x Summit Hotel Properties (REIT) x 9.3x 8.9x Xenia Hotels & Resorts (REIT) x 6.8x 6.9x EBITDA TEV/EBITDA TEV 2016E 2017E 2018E 2016E 2017E 2018E Marriott International $35,207 $2,186 $3,168 $3, x 10.8x 9.8x Hyatt Hotels Corporation 8, x 9.9x 9.5x Hilton Worldwide Holdings 31,557 2,970 3,091 3, x 10.2x 9.9x La Quinta Holdings 2, x 7.6x 7.5x Ryman Hospitality (REIT) 4, x 11.4x 10.8x Host Hotels & Resorts (REIT) 14,992 1,448 1,448 1, x 10.3x 10.5x LaSalle Hotel Properties (REIT) 3, x 10.6x 11.0x Hersha Hospitality Trust (REIT) 2, x 11.7x 11.6x Sunstone Hotel Investors (REIT) 3, x 10.4x 10.3x DiamondRock Hospitality (REIT) 2, x 9.8x 9.9x Pebblebrook Hotel Trust (REIT) 3, x 12.3x 12.8x RLJ Lodging Trust (REIT) 3, x 9.5x 9.5x Summit Hotel Properties (REIT) 1, x 10.8x 10.5x Xenia Hotels & Resorts (REIT) 2, x 8.8x 8.8x Note: FFO/share is recurring FFO/share. Pricing is from FactSet; estimates are from Raymond James. Source: FactSet, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

6 3Q16 Lodging Earnings Calendar Earnings Before/After 3Q16 3Q15 3Q16 3Q15 C-Corps Ticker Release Date Mkt Close Consensus RJ Est. Actual Actual Consensus RJ Est. Actual Actual Belmont Ltd. BEL 11/03/2016 After Market $0.20 NA NA $0.14 $60 NA NA $52 Choice Hotels International CHH 10/27/2016 Before Market $0.84 NA $0.84 $0.72 $81 NA $81 $77 Extended Stay America STAY 10/25/2016 Before Market $0.36 NA $0.36 $0.33 $186 NA $186 $181 Hilton Worldwide Holdings HLT 10/26/2016 Before Market $0.23 $0.23 $0.23 $0.23 $765 $767 $765 $758 Hyatt Hotels Corporation H 11/03/2016 Before Market $0.29 $0.30 NA $0.30 $189 $190 NA $172 InterContinental Hotels Gr. IHG NA NA $0.53 NA $0.53 $1.19 NA NA NA NA La Quinta Holdings LQ 11/02/2016 After Market $0.19 $0.19 NA $0.19 $99 $100 NA $114 Marriott International MAR 11/07/2016 After Market $0.89 $0.90 NA $0.78 $489 $499 NA $431 Red Lion Hotels Corp RLH 11/08/2016 After Market $0.29 NA NA $0.17 $11 NA NA $9 Wyndham Worldwide Corp WYN 10/26/2016 Before Market $1.89 NA $1.89 $1.78 $423 NA $423 $412 Earnings Before/After 3Q16 3Q15 3Q16 3Q15 REITs Ticker Release Date Mkt Close Consensus RJ Est. Actual Actual Consensus RJ Est. Actual Actual Apple Hospitality REIT APLE 11/07/2016 After Market $0.35 NA NA $0.41 $109 NA NA $91 Ashford Hospitality Prime AHP 11/02/2016 After Market $0.41 NA NA $0.39 $24 NA NA $24 Ashford Hospitality Trust AHT 11/03/2016 After Market $0.34 NA NA $0.35 $105 NA NA $104 Chatham Lodging Trust CLDT 11/03/2016 Before Market $0.72 NA NA $0.76 $38 NA NA $39 Chesapeake Lodging Trust CHSP 11/01/2016 After Market $0.71 NA $0.71 $0.73 $53 NA $53 $54 DiamondRock Hospitality DRH 11/09/2016 Before Market $0.25 $0.26 NA $0.26 $64 $64 NA $69 FelCor Lodging Trust FCH 11/01/2016 Before Market $0.28 NA $0.28 $0.25 $67 NA $67 $65 Hersha Hospitality HT 10/25/2016 After Market $0.72 $0.67 $0.72 $0.67 $47 $47 $47 $49 Hospitality Properties Trust HPT 11/09/2016 Before Market $1.05 NA NA $0.99 $210 NA NA $193 Host Hotels & Resorts HST 11/02/2016 Before Market $0.35 $0.37 $0.37 $0.34 $342 $332 $342 $323 LaSalle Hotel Properties LHO 10/19/2016 After Market $0.85 $0.87 $0.85 $0.87 $115 $115 $115 $115 Pebblebrook Hotel Trust PEB 10/27/2016 After Market $0.84 $0.75 $0.84 $0.83 $80 $77 $80 $80 RLJ Lodging Trust RLJ 11/02/2016 After Market $0.70 $0.70 NA $0.66 $102 $102 NA $99 Ryman Hospitality Properties RHP 11/01/2016 Before Market $1.18 $1.24 $1.28 $1.15 $83 $81 $83 $71 Summit Hotel Properties INN 11/02/2016 After Market $0.33 $0.33 NA $0.37 $41 $41 NA $44 Sunstone Hotel Investors SHO 11/01/2016 After Market $0.33 $0.31 $0.31 $0.36 $88 $85 $88 $94 Xenia Hotels & Resorts XHR 11/07/2016 Before Market $0.57 $0.56 NA $0.57 $71 $71 NA $75 Source: FactSet, Raymond James research. Earnings per Share FFO per Share EBITDA (millions) EBITDA (millions) International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

7 Coverage Universe EV/EBITDA (as of 11/2/2016) Note: Based on consensus estimates per FactSet. Source: Company reports, FactSet, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

8 Coverage Universe EV/EBITDA (continued) Note: Based on consensus estimates per FactSet. Source: Company reports, FactSet, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

9 4Q16 Quarter-to-Date Statistics RevPAR ADR Occupancy RevPAR ADR Occupancy United States Average 4.4% 2.3% 2.1% Major Markets Los Angeles/Long Beach, CA 9.0% 6.3% 2.5% SEGMENT Washington, DC-MD-VA 6.7% 4.0% 2.4% Chain Scale Chicago, IL 6.4% 4.5% 1.2% Luxury 1.0% 1.6% -0.6% Boston, MA 0.6% 1.8% -1.4% Upper Upscale 0.7% 1.0% -0.4% Oahu Island, HI 0.2% 2.3% -2.0% Upscale 2.9% 2.2% 0.6% San Francisco/San Mateo, CA 0.2% 0.4% -0.1% Upper Midscale 5.1% 2.6% 2.4% New York, NY -5.4% -6.0% 0.5% Midscale 6.8% 3.2% 3.5% Miami/Hialeah, FL -13.4% -5.2% -8.8% Economy 7.0% 3.7% 3.1% Houston, TX -19.0% -7.6% -12.6% Independents 6.0% 3.3% 2.5% Other Markets Class Norfolk/Virginia Beach, VA 17.9% 2.3% 14.6% Luxury 2.1% 2.3% -0.3% Minneapolis/St. Paul, MN-WI 11.1% 8.6% 2.3% Upper Upscale 1.5% 1.5% 0.0% Atlanta, GA 8.6% 4.7% 3.7% Upscale 3.7% 2.2% 1.4% St. Louis, MO-IL 8.4% 4.6% 3.5% Upper Midscale 5.2% 2.7% 2.3% Orlando, FL 7.4% 5.5% 1.6% Midscale 6.5% 3.2% 3.2% Tampa/St. Petersburg, FL 6.4% 5.8% 0.4% Economy 6.7% 3.5% 3.1% Denver, CO 6.3% 5.1% 0.8% Nashville, TN 6.2% 6.2% -0.2% Location Anaheim/Santa Ana, CA 5.9% 4.4% 1.3% Urban 0.3% 0.2% 0.0% Phoenix, AZ 5.8% 3.3% 2.4% Suburban 5.6% 3.4% 2.1% Seattle, WA 4.4% 3.2% 1.1% Airport 3.5% 2.7% 0.8% Detroit, MI 3.7% 2.6% 0.9% Interstate 5.8% 2.8% 2.9% San Diego, CA 1.6% 0.0% 1.5% Resort 5.5% 3.3% 2.1% New Orleans, LA 1.5% -1.2% 1.8% Small Metro/Town 7.6% 3.4% 4.1% Philadelphia, PA-NJ 0.8% -0.5% 1.0% Dallas, TX 0.4% 1.9% -1.8% Source: Smith Travel Research, Raymond James research Year-to-Date Statistics RevPAR ADR Occupancy RevPAR ADR Occupancy United States Average 3.3% 3.1% 0.2% Major Markets Los Angeles/Long Beach, CA 11.8% 9.0% 2.6% SEGMENT San Francisco/San Mateo, CA 4.6% 4.6% 0.1% Chain Scale Washington, DC-MD-VA 4.3% 2.4% 1.8% Luxury 1.2% 1.6% -0.3% Oahu Island, HI 3.3% 3.6% -0.3% Upper Upscale 2.2% 2.3% -0.1% Boston, MA -0.2% 2.5% -2.7% Upscale 2.5% 2.8% -0.3% Chicago, IL -0.3% 1.0% -1.3% Upper Midscale 2.6% 2.6% 0.0% New York, NY -3.2% -3.4% 0.2% Midscale 2.5% 2.7% -0.2% Miami/Hialeah, FL -4.3% -2.2% -2.1% Economy 3.1% 3.5% -0.4% Houston, TX -11.7% -3.1% -8.9% Independents 4.6% 3.7% 0.8% Other Markets Class Nashville, TN 8.8% 6.3% 2.3% Luxury 2.0% 1.4% 0.5% Norfolk/Virginia Beach, VA 8.4% 3.4% 4.8% Upper Upscale 2.5% 2.4% 0.1% Dallas, TX 7.0% 4.9% 2.0% Upscale 3.1% 2.9% 0.2% Tampa/St. Petersburg, FL 6.7% 6.0% 0.7% Upper Midscale 2.8% 2.7% 0.1% Philadelphia, PA-NJ 6.3% 4.2% 2.0% Midscale 2.8% 2.9% -0.1% Minneapolis/St. Paul, MN-WI 6.1% 5.7% 0.4% Economy 3.9% 3.9% 0.0% Atlanta, GA 6.1% 6.1% 0.0% Anaheim/Santa Ana, CA 4.5% 4.7% -0.2% Location Detroit, MI 3.9% 3.4% 0.4% Urban 2.0% 1.8% 0.2% Phoenix, AZ 3.9% 1.1% 2.7% Suburban 4.2% 3.9% 0.3% Denver, CO 3.6% 6.0% -2.3% Airport 3.5% 3.7% -0.2% St. Louis, MO-IL 3.5% 1.9% 1.5% Interstate 0.9% 2.2% -1.2% Seattle, WA 3.1% 3.5% -0.4% Resort 4.0% 2.8% 1.2% San Diego, CA 3.0% 2.4% 0.5% Small Metro/Town 3.2% 3.0% 0.1% Orlando, FL 2.8% 4.3% -1.5% New Orleans, LA -0.6% 0.2% -0.9% Source: Smith Travel Research, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

10 Weekly Best-Performing Markets Chicago, IL 36.3% New Orleans, LA 30.6% Norfolk/Virginia Beach, VA 27.5% Denver, CO 20.6% Philadelphia, PA-NJ 20.1% 0% 5% 10% 15% 20% 25% 30% 35% 40% RevPAR Growth Source: Smith Travel Research, Raymond James research. Weekly Worst-Performing Markets San Francisco/San Mateo, CA -12.6% Houston, TX -11.4% Miami/Hialeah, FL -10.3% Oahu Island, HI 0.0% New York, NY 0.1% -14% -12% -10% -8% -6% -4% -2% 0% 2% RevPAR Growth Source: Smith Travel Research, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

11 Segmentation: Weekly Y/Y % Change in RevPAR (Luxury and Upper Upscale Classes Only) 15.0% 10.7% 12.2% 9.0% Transient Group Contract Total Source: Smith Travel Research, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

12 Weekly Lodging Data Tables Top 25 Markets: Weekly Average Y/Y % Change in RevPAR Chicago, IL 36.3% New Orleans, LA 30.6% Norfolk/Virginia Beach, VA 27.5% Denver, CO 20.6% Philadelphia, PA-NJ 20.1% Nashville, TN 19.0% Washington, DC-MD-VA 19.0% Atlanta, GA 17.8% Los Angeles/Long Beach, CA 17.4% Anaheim/Santa Ana, CA 15.2% Orlando, FL 13.2% San Diego, CA 13.1% Detroit, MI 12.8% Dallas, TX 12.2% St. Louis, MO-IL 9.1% Minneapolis/St. Paul, MN-WI 8.6% Seattle, WA 8.4% Boston, MA 8.0% Phoenix, AZ 6.7% Tampa/St. Petersburg, FL 0.3% New York, NY 0.1% Oahu Island, HI 0.0% Miami/Hialeah, FL -10.3% Houston, TX -11.4% San Francisco/San Mateo, CA -12.6% Source: Smith Travel Research, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

13 Segmentation in Top 25 Markets: Weekly Average Y/Y % Change in RevPAR (Luxury and Upper Upscale Classes Only) Transient Group Contract Total Chicago, IL 42.5% 37.3% 27.4% 40.1% Norfolk/Virginia Beach, VA 40.1% 20.7% 6.7% 31.3% New Orleans, LA 10.6% 62.6% -40.6% 30.5% Philadelphia, PA-NJ 12.3% 44.2% 50.2% 23.7% Atlanta, GA 19.7% 29.0% -17.6% 22.8% Denver, CO 14.8% 23.1% 25.4% 18.3% Nashville, TN 15.2% 20.9% 9.0% 18.2% Orlando, FL 5.1% 29.6% -24.6% 17.8% Los Angeles/Long Beach, CA 15.5% 23.4% 17.9% 17.5% Washington, DC-MD-VA 13.2% 20.6% 12.3% 16.3% St Louis, MO-IL 11.8% 25.0% 0.8% 16.3% Anaheim/Santa Ana, CA 4.3% 29.5% 131.4% 15.6% San Diego, CA 0.7% 25.8% 7.6% 13.0% Dallas, TX 10.6% 16.7% -7.1% 12.5% Detroit, MI 14.6% 0.3% 46.9% 11.2% Boston, MA 6.5% 16.7% 45.1% 10.6% Phoenix, AZ -1.5% 17.5% 5.5% 9.0% Seattle, WA 11.6% -3.5% 20.2% 7.0% Minneapolis/St Paul, MN-WI -1.6% 17.7% 6.2% 5.7% Oahu Island, HI 3.5% -33.1% -12.2% -0.3% Tampa/St Petersburg, FL -8.8% 17.3% 11.7% -0.6% New York, NY 1.3% -13.1% 15.8% -1.2% Houston, TX -5.7% -11.9% -4.9% -7.7% Miami/Hialeah, FL -9.1% -14.2% 1.2% -10.3% San Francisco/San Mateo, CA 1.7% -31.4% -1.3% -11.9% Source: Smith Travel Research, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

14 Lodging Industry Data Week of 10/23/ /29/2016 ADR % Occup. % RevPAR SEGMENT CHG CHG % CHG RevPAR United States Average 4.3% 8.1% 12.7% $84.62 CHAIN SCALE Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independents CLASS Luxury Upper Upscale Upscale Upper Midscale Midscale Economy LOCATION Urban Suburban Airport Interstate Resort Small Metro/Town Source: Smith Travel Research, Raymond James research. Y/Y% Weekly Average RevPAR Change Trailing-Six Weeks 9/18-9/25-10/2-10/9-10/16-10/23- SEGMENT 9/24 10/1 10/8 10/15 10/22 10/29 United States Average 9.0% 3.2% 0.8% -1.6% 5.8% 12.7% CHAIN SCALE Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independents CLASS Luxury Upper Upscale Upscale Upper Midscale Midscale Economy LOCATION Urban Suburban Airport Interstate Resort Small Metro/Town Source: Smith Travel Research, Raymond James research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

15 Sequential Weekly Average RevPAR Change Trailing-Six Weeks 9/18-9/25-10/2-10/9-10/16-10/23- SEGMENT 9/24 10/1 10/8 10/15 10/22 10/29 United States Average 0.9% -5.5% 2.1% -3.4% 6.5% -9.3% CHAIN SCALE Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Independents CLASS Luxury Upper Upscale Upscale Upper Midscale Midscale Economy Urban Suburban Airport Interstate Resort Small Metro/Town Source: Smith Travel Research, Raymond James research. Company Citations Company Name Ticker Exchange Currency Closing Price RJ Rating RJ Entity Hilton Worldwide Holdings Inc. HLT NYSE $ RJ & Associates Pebblebrook Hotel Trust PEB NYSE $ RJ & Associates Ryman Hospitality Properties Inc. RHP NYSE $ RJ & Associates Summit Hotel Properties, Inc. INN NYSE $ RJ & Associates Sunstone Hotel Investors, Inc. SHO NYSE $ RJ & Associates Notes: Prices are as of the most recent close on the indicated exchange and may not be in US$. See Disclosure section for rating definitions. Stocks that do not trade on a U.S. national exchange may not be registered for sale in all U.S. states. NC=not covered. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

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17 Ratings and Definitions Raymond James & Associates (U.S.) definitions Strong Buy (SB1) Expected to appreciate, produce a total return of at least 15%, and outperform the S&P 500 over the next six to 12 months. For higher yielding and more conservative equities, such as REITs and certain MLPs, a total return of at least 15% is expected to be realized over the next 12 months. Outperform (MO2) Expected to appreciate and outperform the S&P 500 over the next months. For higher yielding and more conservative equities, such as REITs and certain MLPs, an Outperform rating is used for securities where we are comfortable with the relative safety of the dividend and expect a total return modestly exceeding the dividend yield over the next months. Market Perform (MP3) Expected to perform generally in line with the S&P 500 over the next 12 months. Underperform (MU4) Expected to underperform the S&P 500 or its sector over the next six to 12 months and should be sold. Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and price target are no longer in effect for this security and should not be relied upon. Raymond James Ltd. (Canada) definitions Strong Buy (SB1) The stock is expected to appreciate and produce a total return of at least 15% and outperform the S&P/TSX Composite Index over the next six months. Outperform (MO2) The stock is expected to appreciate and outperform the S&P/TSX Composite Index over the next twelve months. Market Perform (MP3) The stock is expected to perform generally in line with the S&P/TSX Composite Index over the next twelve months and is potentially a source of funds for more highly rated securities. Underperform (MU4) The stock is expected to underperform the S&P/TSX Composite Index or its sector over the next six to twelve months and should be sold. Raymond James Argentina S.A. rating definitions Strong Buy (SB1) Expected to appreciate and produce a total return of at least 25.0% over the next twelve months. Outperform (MO2) Expected to appreciate and produce a total return of between 15.0% and 25.0% over the next twelve months. Market Perform (MP3) Expected to perform in line with the underlying country index. Underperform (MU4) Expected to underperform the underlying country index. Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and price target are no longer in effect for this security and should not be relied upon. Raymond James Europe (Raymond James Euro Equities SAS & Raymond James Financial International Limited) rating definitions Strong Buy (1) Expected to appreciate, produce a total return of at least 15%, and outperform the Stoxx 600 over the next 6 to 12 months. Outperform (2) Expected to appreciate and outperform the Stoxx 600 over the next 12 months. Market Perform (3) Expected to perform generally in line with the Stoxx 600 over the next 12 months. Underperform (4) Expected to underperform the Stoxx 600 or its sector over the next 6 to 12 months. Suspended (S) The rating and target price have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and target price are no longer in effect for this security and should not be relied upon. In transacting in any security, investors should be aware that other securities in the Raymond James research coverage universe might carry a higher or lower rating. Investors should feel free to contact their Financial Advisor to discuss the merits of other available investments. Rating Distributions Coverage Universe Rating Distribution* Investment Banking Distribution RJA RJL RJ Arg RJEE/RJFI RJA RJL RJ Arg RJEE/RJFI Strong Buy and Outperform (Buy) 53% 69% 59% 53% 17% 41% 10% 0% Market Perform (Hold) 42% 31% 41% 34% 7% 20% 0% 0% Underperform (Sell) 4% 1% 0% 13% 5% 0% 0% 0% * Columns may not add to 100% due to rounding. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

18 Suitability Ratings (SR) Medium Risk/Income (M/INC) Lower to average risk equities of companies with sound financials, consistent earnings, and dividend yields above that of the S&P 500. Many securities in this category are structured with a focus on providing a consistent dividend or return of capital. Medium Risk/Growth (M/GRW) Lower to average risk equities of companies with sound financials, consistent earnings growth, the potential for long-term price appreciation, a potential dividend yield, and/or share repurchase program. High Risk/Income (H/INC) Medium to higher risk equities of companies that are structured with a focus on providing a meaningful dividend but may face less predictable earnings (or losses), more leveraged balance sheets, rapidly changing market dynamics, financial and competitive issues, higher price volatility (beta), and potential risk of principal. Securities of companies in this category may have a less predictable income stream from dividends or distributions of capital. High Risk/Growth (H/GRW) Medium to higher risk equities of companies in fast growing and competitive industries, with less predictable earnings (or losses), more leveraged balance sheets, rapidly changing market dynamics, financial or legal issues, higher price volatility (beta), and potential risk of principal. High Risk/Speculation (H/SPEC) High risk equities of companies with a short or unprofitable operating history, limited or less predictable revenues, very high risk associated with success, significant financial or legal issues, or a substantial risk/loss of principal. Raymond James Relationship Disclosures Raymond James expects to receive or intends to seek compensation for investment banking services from the subject companies in the next three months. Company Name Hilton Worldwide Holdings Inc. Pebblebrook Hotel Trust Ryman Hospitality Properties Inc. Summit Hotel Properties, Inc. Sunstone Hotel Investors, Inc. Disclosure Raymond James & Associates makes a market in shares of HLT. Raymond James & Associates received non-securities-related compensation from HLT within the past 12 months. Raymond James & Associates has acted within the past 12 months or may be acting as an agent in an at-the-market offering of PEB shares. Raymond James & Associates lead-managed an offering of preferred equity for Pebblebrook Hotel Trust within the past 12 months. Raymond James & Associates makes a market in shares of PEB. Raymond James & Associates received non-investment banking securities-related compensation from PEB within the past 12 months. Raymond James & Associates received non-securities-related compensation from PEB within the past 12 months. Raymond James & Associates makes a market in shares of RHP. Raymond James & Associates received non-investment banking securities-related compensation from RHP within the past 12 months. Raymond James & Associates received non-securities-related compensation from RHP within the past 12 months. Raymond James & Associates lead-managed an offering of preferred equity for Summit Hotel Properties, Inc. within the past 12 months. Raymond James & Associates makes a market in shares of INN. Raymond James & Associates received non-investment banking securities-related compensation from INN within the past 12 months. Raymond James & Associates received non-securities-related compensation from INN within the past 12 months. Raymond James & Associates makes a market in shares of SHO. Stock Charts, Target Prices, and Valuation Methodologies Valuation Methodology: The Raymond James methodology for assigning ratings and target prices includes a number of qualitative and quantitative factors including an assessment of industry size, structure, business trends and overall attractiveness; management effectiveness; competition; visibility; financial condition, and expected total return, among other factors. These factors are subject to change depending on overall economic conditions or industry- or company-specific occurrences. Only stocks rated Strong Buy (SB1) or Outperform (MO2) have target prices and thus valuation methodologies. Target Prices: The information below indicates target price and rating changes for the subject companies included in this research. International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

19 Raymond James Valuation Methodology: Our valuation methodology for Hilton Worldwide includes a P/E multiple analysis applied to core lodging earnings, an EV/EBITDA analysis, and a sum-of-the-parts analysis. Valuation Methodology: Our valuation methodology for Summit includes an EV/EBITDA analysis and a peer group multiple comparison. We also compare the company's share price to our estimate of NAV (net asset value). International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

20 Raymond James Valuation Methodology: Our valuation methodology for Pebblebrook includes an EV/EBITDA analysis and a peer group multiple comparison. We also compare the company's share price to our estimate of NAV (net asset value). Valuation Methodology: Our valuation methodology for Ryman Hospitality Properties includes an EV/EBITDA analysis and a peer group multiple comparison. We also compare the company's share price to our estimate of NAV (net asset value). International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

21 Valuation Methodology: Our valuation methodology for Sunstone includes an EV/EBITDA analysis and a peer group multiple comparison. We also compare the company's share price to our estimate of NAV (net asset value) and replacement cost. Risk Factors General Risk Factors: Following are some general risk factors that pertain to the businesses of the subject companies and the projected target prices and recommendations included on Raymond James research: (1) Industry fundamentals with respect to customer demand or product / service pricing could change and adversely impact expected revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes toward the sector or this stock; (3) Unforeseen developments with respect to the management, financial condition or accounting policies or practices could alter the prospective valuation; or (4) External factors that affect the U.S. economy, interest rates, the U.S. dollar or major segments of the economy could alter investor confidence and investment prospects. International investments involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. Specific Investment Risks Related to the Industry or Issuer Lodging Industry Risks Investors in lodging stocks should consider several risks that could negatively impact share performance. A recovery in lodging demand to more normalized levels will be largely dependent upon an improving U.S. economy, an improved profit outlook for corporate America, increased employment growth, and improved levels of consumer confidence. Geopolitical turmoil in the Middle East, the threat of domestic terrorism, and health scares such as H1N1 could negatively impact lodging results. Company-Specific Risks for Hilton Worldwide Holdings Inc. Hilton's portfolio consists of world-class owned, managed, franchised, and timeshare assets in North America, Latin America, Europe, the Middle East, Africa, and Asia. More broadly, the lodging industry faces risks related to the economy, terrorism and its potential impact on travel, new supply of competing hotels, substitution impact from online meetings and from alternative, non-traditional lodging options, rising interest rates, the health of the airline industry, etc. Blackstone Overhang Blackstone s ongoing ownership stake totaling 455 million shares (46% of the company) and the high likelihood that it will be paring back that position over time puts an overhang on HLT shares. Lower Exposure to Luxury and Upper Upscale Hotels Relative to Peers Relative to peers, Hilton has a lower mix of luxury and upper upscale rooms (combined ~40% of rooms). Upscale and upper midscale make up the bulk of the portfolio s rooms (~60%). We expect luxury and upper upscale segments to outperform throughout much of the cycle and to be less impacted from emerging new supply pressures as the cycle extends. By contrast, today the most new supply being added in the States is in the mid-tier segments, driven by brands such as those controlled by Marriott, Hilton, and InterContinental. Foreign Exchange Risk International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

22 Hilton has significantly increased its presence outside the U.S., and at the current time, more than 60% of rooms in Hilton's new room pipeline are outside the U.S. Greater international exposure increases foreign exchange risk and subjects the company s results to the volatility that can accompany excess new supply (some markets in China, for example), political unease (certain markets in the Middle East and Africa), a slowing Chinese economy, etc. Longer term, we view Hilton s vast global footprint quite favorably. Cost Pressures May Limit Margin Expansion While current management was able to take advantage of some relatively low hanging fruit to drive unit growth and margin expansion, we note that the pace of improvement tallied by Hilton during the past few years is going to be increasingly difficult to maintain. Pressure in several cost buckets wages and benefits, property taxes, as examples will limit margin improvement over the next few years. Company-Specific Risks for Pebblebrook Hotel Trust Rising Cost of Capital The cost of capital affects both interest costs and cap rates and has a profound impact on hotel buy/sell decisions. A rising cost of capital could negatively impact Pebblebrook by impairing hotel valuations and reducing cash flows. Dependence on Current Management Senior management, including John Bortz and Raymond Martz, represent valuable, albeit intangible assets to Pebblebrook. The loss of any of these key executives could seriously impair the value of the company, its operations and strategy. Company-Specific Risks for Sunstone Hotel Investors, Inc. Investors in Sunstone Hotel Investors should consider several risks that could negatively impact share performance. A recovery in lodging demand to more normalized levels will be largely dependent upon an improving U.S. economy, an improved profit outlook for corporate America, increased employment growth, and improved levels of consumer confidence. Geopolitical turmoil in the Middle East, the threat of domestic terrorism, and health scares such as H1N1 could negatively impact lodging results. Geographic Concentration A significant portion of Sunstone's hotels are geographically concentrated in California (nearly one-third of the company's revenue is derived from this state), as well as Illinois, Massachusetts and the greater Washington DC area. Accordingly, the company could be disproportionately harmed by economic downturns or natural disasters in these areas of the country. Focus on Upper Upscale Chain Scale Sunstone primarily owns upper upscale hotels. This segment of the lodging market is highly competitive and generally subject to greater volatility than most other market segments, which could negatively affect Sunstone's profitability. The upper upscale segment of the hotel business is highly competitive and many competitors may have substantially greater marketing and financial resources than Sunstone. This competition could reduce occupancy levels and room revenue at Sunstone's hotels, which would harm the company's operations. Overbuilding in the hotel industry may increase the number of rooms available and may decrease occupancy and room rates. In addition, in periods of weak demand, as may occur during a general economic recession, profitability is negatively affected by the relatively high fixed costs of operating upper upscale hotels. Company-Specific Risks for Summit Hotel Properties, Inc. Limited-Service Exposure: RevPAR and Margin Improvement Could Lag Industry The defensive characteristics of limited- service properties, while advantageous in a downturn, act as headwinds during a recovery. Limitedservice ADRs are lower than full-service, and both business and leisure transient travelers will often trade down to these lower price point rooms when the economy gets bad. This trade down tendency has the effect of cushioning (at least relative to full-service) the ADR and occupancy declines. Of course, with the economy on the mend, the opposite trend can be seen, with full-service properties posting outsized rate and occupancy gains. Summit also does not have large exposure to urban markets which tend to outperform in recover scenarios. As such, it is difficult to estimate the performance disparity, particularly against other lodging peers that have full-service properties in urban and resort locations. Augmenting the top-line volatility is the substantially higher fixed cost structure of full-service hotels that creates a greater level of flow through to hotel EBITDA during both upturns and down turns. A lower cost structure translates into higher margins for limited-service hotels. While higher hotel EBITDA margins are generally considered attractive by investors, using simple math we can see that the same absolute basis point improvement at lower margin levels (i.e., full-service) will have a more material impact on profit growth. Supply Growth in the Limited-Service Sector Is Likely to Outpace the Overall Industry While we expect limited new hotel supply growth through 2017, when development accelerates it is typically focused on the limited-service sector relatively earlier in the cycle. This is due to 1) their generally smaller and less sophisticated designs make the average duration of planning and construction shorter, and 2) the lower cost of construction and higher margins makes it easier to achieve minimum IRR hurdles over a quicker period of time. We think this shorter time-to-market promises outsized growth within these two segments targeted by Summit. That said, the current pipeline for new hotel development is limited and the company does not anticipate a significant increase in the supply of new hotel rooms in their markets in the near term but it still may outpace the overall industry. Relatively High Cost of Capital The cost of capital affects both interest expense and cap rates and has a profound impact on hotel buy/sell decisions. The ultimate direction and magnitude that interest rates take, as well as the degree to which borrowing spreads contract or expand, will have a material impact on International Headquarters: The Raymond James Financial Center 880 Carillon Parkway St. Petersburg, Florida

23 releasable resear ch Raymond James real estate valuations and Summit s ability to make accretive acquisitions. In the short term, improved credit markets and lower borrowing costs could actually impede Summit s acquisition strategy as leveraged buyers return to the market to compete for distressed assets. In the long term, however, Summit will make use of leverage to achieve its optimal capital structure and goose equity returns. A higher cost of capital at that point could significantly limit growth or even impair the value of the company s assets. What s more, Summit s balance sheet is not that strong as it might appear and a return to the equity market may come sooner than some investors might otherwise expect. Other Risks Other risks include, but are not limited to: 1) the company s dependence upon current management for success; 2) illiquidity associated with hotel properties; 3) commitment to capital improvements; 4) acts of terrorism; and 5) health of the airline system; among others. Company-Specific Risks for Ryman Hospitality Properties Inc. Investment risks include an uncertain economic and consumer environment and a lack of geographic diversity and global exposure. Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available at rjcapitalmarkets.com/disclosures/index. Copies of research or Raymond James summary policies relating to research analyst independence can be obtained by contacting any Raymond James & Associates or Raymond James Financial Services office (please see raymondjames.com for office locations) or by calling , toll free or sending a written request to the Equity Research Library, Raymond James & Associates, Inc., Tower 3, 6 th Floor, 880 Carillon Parkway, St. Petersburg, FL For clients in the United Kingdom: For clients of Raymond James & Associates (London Branch) and Raymond James Financial International Limited (RJFI): This document and any investment to which this document relates is intended for the sole use of the persons to whom it is addressed, being persons who are Eligible Counterparties or Professional Clients as described in the FCA rules or persons described in Articles 19(5) (Investment professionals) or 49(2) (High net worth companies, unincorporated associations etc) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) or any other person to whom this promotion may lawfully be directed. 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