From Hogg Robinson Group

5 August 2010

HRG unveils 2010 six month hotel survey

Part 1: Overview

The international hotel industry has shown signs of recovery in the first half of 2010 according to the
bi-annual hotel survey conducted by Hogg Robinson Group (HRG), the world class corporate travel
services company. Although the survey reveals a fragmented global picture, the hotel market in
Europe and the US appears to be stabilising, as rates are either flat or only marginally down. In
addition 12 of the 50 cities surveyed achieved a year on year rate increase when measured in pound
sterling. In contrast though, the Middle East region recorded the highest rate decrease, with double
digit falls in the UAE, Bahrain, Qatar and Oman.

Key trends noted by HRG include:

 Many European cities saw average rate growth, such as Stockholm (13%), Zurich (7%) and Geneva (5%),
and five of the top ten most expensive cities worldwide were in Europe: Geneva, Paris, Zurich, Stockholm
and Oslo

 London has seen a 1% increase in average rate in the first six months of 2010, after a 4% decline in 2009,
and maintains its position at 23rd in the rankings. The increase was driven by a significant increase in
corporate occupancy levels and buoyant demand from the leisure sector. The snow and bad weather
adversely affected the market in the early part of the year but it rebounded in the second quarter

 Moscow yet again retains its place as the city with the highest average room rate for the sixth year,
despite a fall of 12% when measured in local currency. Geneva and Hong Kong were the second and
third most expensive cities respectively

 Abu Dhabi rates fell by 26% in sharp contrast to the 38% growth in average rate recorded in the first half
of 2009

 Rates in the US were flat or marginally back compared to 2009 figures, with the exception of San
Francisco where average rates fell by 11%

 The top end of the market continues to hold up well, with an average rate increase of 1% in 5 star hotels.

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From Hogg Robinson Group

Of the results, Margaret Bowler, Director of Global Hotel Relations at HRG, says: “Globally, the hotel industry
has shown signs of recovery in the first half of 2010 when compared to the same period in 2009. A majority of
the cities surveyed, although not yet in positive growth, certainly recorded an improvement in performance. It
is good to see the positive effect of certain sectors travelling more regularly, however it is clear that the rate of
recovery is mixed and varies according to region, country and specific markets. The challenge now facing
hoteliers is to increase rates in line with demand to pre-recession levels, something which many forecasters
believe will not happen until 2012 at the earliest.

“Expectation is high for further recovery in rates and the big hotel groups are understandably working to return
their rates to pre-recession levels. HRG has witnessed companies reviewing and consolidating their travel
programmes to secure lower hotel rates through increasing their market share with a preferred hotel supplier.
We continue to help corporates navigate a complicated market and ensure business travellers have the best
hotel deal.”

Douglas McWilliams, Chief Executive of cebr (Centre for Economics and Business Research Ltd.), a
leading economic think tank which analysed the HRG survey, commented:

“We are in the middle of a global economic recovery which remains in a fragile state. Whilst the possibility of a
double-dip recession is relatively small, the pace of the recovery varies significantly across the world. The
latest HRG Hotel Survey illustrates the effects of a multi-speed economic recovery in the hotel market. Many
western economies are coming to terms with the budget cuts necessary to reduce sovereign debt levels which
will inevitably soften room rate growth.

“Dynamic emerging economies have less need to take fiscal austerity measures in the current climate and we
expect growth to be higher as a result. However, the survey shows that emerging economies have not, as of
yet, fully recovered from the effects of the global economic downturn. In the UK, growth prospects are buoyed
by a weak sterling which continues to support tourism and leisure travel. In addition, the ongoing recovery of
the banking and finance sector will contribute to corporate demand for rooms. There are, however, significant
downside risks to growth in the market emerging from future cuts in public spending”.

HRG’s interim survey is based on a combination of industry intelligence, actual room nights booked and rates
paid by its UK clients during January to June 2010 compared to the same period in 2009.

The GBP exchange rate is based on the average for the period 1 January to 30 June 2010 versus the average
during the same period in 2009 (data source www.oanda.com)

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From Hogg Robinson Group

Part 2: In depth analysis

Even taking into account the effect of currency fluctuations, average room rates vary significantly by city when
compared to the same period in 2009, revealing a very mixed performance across markets. Six of the top ten
cities managed to achieve average rate growth when measured in local currency.

Moscow has maintained its place at the highest average room rate for the sixth year despite a 12% fall in local
currency.

Meanwhile, Abu Dhabi, which in HRG’s January to June 2009 survey was in second place and the only top ten
city at the time to record any growth (5%), has seen a dramatic reversal, experiencing the highest average rate
reduction of 25%. Like Dubai, Abu Dubai has faced a substantial fall in occupancy combined with ongoing new
hotel developments, set to continue for some time to come.

Hong Kong achieved the highest growth performance in local currency terms, recovering from an 18% decline
in 2009 to growth of 13% in 2010, assisted by a substantial increase in travel into the city from the Banking and
Finance sector.

Rome, Copenhagen and Dubai (-7%, -10% and -12% in GBP terms) drop out of the top ten, falling to 14th,
16th and 19th positions respectively.

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With the exception of Dublin, where the average rate was static, when broken down on a quarterly basis, all
the key cities saw average rates increase in the second quarter. Taken as an average across all 12 cities
surveyed, average rates fell by 2.5% in the first quarter but grew by almost 5% in the second suggesting signs
of a recovery in the global hotel market.

The country showing the highest increase in rates over both quarters was Hong Kong with growth of 11% and
17%, whilst Zurich, Amsterdam and Stockholm were the only other cities to record consecutive rate increases.

London’s performance in the first quarter was adversely affected by the heavy snow at the start of the year.
However, average rates grew in the second quarter due to a particularly strong April as a result of the effects of
the ash cloud from the Eyjafjallajökull volcano and buoyant leisure demand. [see UK regional focus below].

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While GBP rate increases in Sydney and Johannesburg seem prominent at 24% and 20% this result is due
entirely to fluctuating Australian dollar and Rand exchange rates; when measured in local currency, average
rates were either flat or showing a marginal 1% increase.

Stockholm managed to achieve rate growth due to a recovery in occupancy levels and a lack of any significant
new hotel openings during the period.

Belfast and Beijing both suffer from an oversupply of hotels, the latter having experienced massive investment
in recent years from major players keen to build a presence in this emerging market.

Bangalore, a city reliant on business travel associated with the IT industry and call centres, is a classic
example of a market ‘popping’ as it has seen rates fall as a result of a drop in demand due to the global
recession coupled with significant new hotel openings which have led to a current oversupply of rooms.
Services apartments have grown in popularity and some of the IT industry has relocated to other areas in
India.

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From Hogg Robinson Group

With the exception of the MEWA region, the global hotel market has shown signs of stabilising when measured
in GBP.

The region showing the highest increase was Africa where average rates grew by 16%, in part reflecting
continued investment from global and multinational organisations engaged in the Oil & Gas, Banking &
Finance and Telecoms industries in the region. Mostly, however, this was down to exchange rate variances,
particularly in South Africa. The effect of the country playing host to the 2010 FIFA World Cup did not start to
impact the rates until June.

Following a 17% fall in the first six months of 2009, average rates in Eastern Europe have held relatively firm,
largely due to better performance in Moscow and strong results in Poland where average rates increased by
9% (Warsaw +10%).

The highest regional rate decrease was recorded in the MEWA region (-15%) with double digit rate falls being
recorded in the UAE (primarily Abu Dhabi -26% and Dubai -12%), Bahrain (-14%), Qatar (-22%) and Oman
(-24%). As explained previously, the region has faced a supply and demand issue and a substantial fall in
occupancy combined with ongoing new openings.

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From Hogg Robinson Group

In the US market, where exchange rates were relatively stable in comparison to the previous year, rates were
flat or marginally lower. The primary exception was San Francisco, where average rates fell by 11%. UK
average rates fell by 1.2% or £1.25 per night, compared to the 5% decline seen in the first half of 2009 [see UK
focus below].

Reflecting the need for cost reduction, average rates have decreased in the 3 and 4 star markets as suppliers
strive to maintain their share of the corporate market and clients downgrade between the star ratings as well as
review their programmes and renegotiate rates where possible.

The budget sector achieved a rate increase of 3.75%, with the bulk of this growth being achieved in the second
quarter. As in 2008 the budget, 3 and 4 star markets are all targeting the same clients but the 3 and 4 star
markets have the ability to respond at short notice both in the packaging of rates and availability through
flexible pricing. This has resulted in instances where the budget sector hotels aren’t always the cheapest
option when breakfast and other value adds are factored in.

The 5 star market achieved a marginal increase of 1%. Whilst there has undoubtedly been a trend for
corporates to turn to the 4 and even 3 star sectors in the current climate, hoteliers in this sector have held out
for rates at the expense of lower occupancy levels, conscious that any significant rate reduction has an
adverse effect on service levels as costs are brought in line, resulting in damage to a hotel’s reputation for
quality and standards.

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From Hogg Robinson Group

Regional focus: UK

London is the only UK city to have experienced positive growth in rates in the first six months of 2010, with the
UK regional markets, despite improved performances, yet to turn the corner. Overall there was an
improvement on 2009 in average room rates across nearly all major UK cities, but it must be factored that this
is compared to a very poor first half of 2009. Cities such as Bristol suffered from a general drop in demand
combined with an oversupply of hotels and new openings, allowing corporates the ability to aggressively
renegotiate their agreed rates.

Heathrow Airport, with the second most expensive average rate after London, was the only other place to see
an upturn, in part due to the ash cloud leaving travellers stranded at the airport. Like Bristol, many of the UK’s
key regional centres, such as Liverpool, Leeds, Manchester and Edinburgh, suffered from the combination of
lower occupancy levels and a level of new hotel openings that hindered rate growth.

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From Hogg Robinson Group

Overall the capital saw a 1% growth in average rate. This was driven by a significant increase in corporate
occupancy levels and buoyant demand from the leisure sector. Visitors also continued to enjoy the weakness
of the Pound against the US Dollar and Euro.

When broken down monthly, as in the graph above, the fluctuations in average rates were difficult to predict
due to the rapidly changing market. London’s performance in the first quarter was in part adversely affected by
the heavy snow at the start of the year and the fact that Easter fell early – towards the end of March this year
rather than in April (as in 2009) – which significantly affects business travel levels. However, average rates
grew by 8.5% in the second quarter due to a particularly strong April as a result of the effects of the ash cloud
from the Eyjafjallajökull volcano and to buoyant leisure demand .

While it is standard for average rates to be higher in Q2 than in Q1 due to seasonal events and business
activity, a 8% rise over the six months - from £148.62 to £160.08 - is particularly strong. Although this was not
consistent, and it is a little early to predict, it seems to point towards recovery for London, the upcoming host of
the Olympic Games.

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From Hogg Robinson Group

Regional focus: North America

The major North American cities had a mixed first six months of 2010, with the likes of LA and Boston
achieving positive room rate growth but many, in particular San Francisco and Houston, declining. New York
and Washington were again the most expensive rooms, averaging $296.78 and $295.36 respectively.

Canada showed a more consistent performance with all the cities seeing an increase in room rates, except for
the capital Ottawa, where rates were flat. Montreal saw a marked increase of 9%.

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From Hogg Robinson Group

When broken down monthly over the first half of 2010, America’s leading business destination, New York City,
saw buoyant corporate demand lead rates to increase on average by 5% per month. Average rate for the
month of June ($317.08) was up 23% from the rate at the beginning of the year.

The pattern also contrasts to the situation this time last year where average rates could be seen steadily falling
through the first six months of 2009, as America hit the height of the recession.

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From Hogg Robinson Group

Part 3: Summary

Margaret Bowler of HRG says: “2010 has so far proved an encouraging year for the global hotel industry. The
average length of stay has increased by 9% suggesting that corporates have begun to relax their travel policies
in light of the perceived improvement in the current economic climate. However, our data shows that it is not
consistent around the world and it is still too early to predict how the rest of 2010 will pan out.

“In addition to lower pricing and in many cases last room availability* (LRA), corporates have been able to
negotiate added value items – or unbundled items as the airline industry puts it – within their rates such as
food and beverage discounts, free wi-fi access and reduced parking charges. However, it is inevitable as the
industry recovers that yield management will come back into play and suppliers will seek to unbundle further
their pricing to gain maximum revenues. Even in the current market, certain cities are achieving high
occupancy levels on peak nights and HRG continues to advise clients to secure sufficient allocation in high
volume locations.”

Margaret Bowler adds: “Reflecting the need for cost reduction, clients are downgrading between the star
ratings as well as continually reviewing their programmes and renegotiating rates where possible. In the 3 and
4 star markets average rates have decreased as suppliers strive to maintain their share of the corporate
market. We continue to believe that budget options are not always the cheapest option when the add-on costs
are taken into account.

"With the uncertainty in the market in 2009 the Request for Proposal (RFP) season was extended with many
corporates delaying issuing their annual RFP in the hope that the market would continue to fall and more
favourable rates become available. With the recovery underway it is likely clients will revert to the traditional
RFP season. It will be interesting to see how rate negotiations progress over the rest of 2010 ahead of any
further growth in the industry."

- Ends-

* Last Room Availability - an agreement between the company and hotel(s), whereby all company negotiated
rates associated with a room category are available at the negotiated rate up to and including the last room to
be sold in that room category.

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From Hogg Robinson Group

For further information, please contact:

Sallyanne Heywood/Katy Carmen Ed Grattan/Tanya Brunet

Hogg Robinson Group Euro RSCG Biss Lancaster
Tel: +44 (0) 1256 312624/+44 (0) 1256 312622 Tel: +44 (0) 207 467 9200 / 07817 413 792
sallyanne.heywood@hrgworldwide.com / Email: blhrg@bisslancaster.com
katy.carmen@hrgworldwide.com

Notes to Editors:

Value added tax (VAT) in the UK was returned from 15% to 17.5% from the start of 2010. Many UK suppliers
were forced to absorb the increase as part of rate negotiations. However with the current pick up in the market
HRG research suggests this is unlikely to be the case when VAT rises to 20% on January 4th 2011.

Hogg Robinson Group plc (HRG) is an award-winning international corporate travel services company which
operates from headquarters in Basingstoke, Hampshire, UK. Established in 1845, HRG’s interests now relate
to owned or controlled corporate travel services operations in 25 key driver/growth markets throughout Europe,
North America and Asia Pacific supported by contracted partners in Africa, Middle East/West Asia and Latin
America. The HRG worldwide network extends to nearly 120 countries.

HRG’s philosophy is to focus on its clients, underpinned by three differentiators – its people, its technology and
its breadth of service. The company has experienced management and skilled operators together with a strong
reputation for technology which it develops and owns in-house. In addition HRG is the only major travel
management company to offer a real breadth and depth of services, all of which combine to serve every client
around the globe delivering value, cost savings, efficiency and innovation, without compromise.

HRG’s portfolio of clients spans a broad range of industry sectors including but not limited to Automotive,
Banking and Finance, Food Manufacturing, Media and Entertainment, Oil & Gas, Pharmaceutical, Retail and
Telecommunications.

Read the latest HRG news and search our archives.

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