HVS Global Hospitality Services has compiled data provided by Smith Travel Research to illustrate the effects of the current state of the economy on different classes of hotels in Manhattan. The following tables compare the performance of all reporting hotels in Manhattan using year-end figures from 2000 through 2007. These results are classified by market segment: luxury, full service, limited service, and boutique. The following graph presents the annual percentage change in RevPAR for all four segments since 2001.

Luxury

Year	Average Daily Room Count	% Change	Occupied Room Nights	% Change	Occupancy	Average Rate	% Change	RevPAR	% Change
2000	8,451	—	2,496,170	—	80.9%	$370.45	—	$299.79	—
2001	8,350	(1.2)	2,141,877	(14.2)	70.3	329.31	(11.1)	231.43	(22.8)
2002	8,868	6.2	2,339,537	9.2	72.3	315.93	(4.1)	228.36	(1.3)
2003	8,979	1.3	2,415,317	3.2	73.7	308.60	(2.3)	227.43	(0.4)
2004	8,937	(0.5)	2,598,590	7.6	79.7	341.66	10.7	272.18	19.7
2005	8,039	(10.0)	2,421,855	(6.8)	82.5	401.09	17.4	331.04	21.6
2006	7,690	(4.3)	2,196,593	(9.3)	78.3	460.94	14.9	360.71	9.0
2007	7,522	(2.2)	2,167,975	(1.3)	79.0	530.39	15.1	418.82	16.1
Average Annual Compounded Change		(1.6)		(2.0)			5.3		4.9

Source: Smith Travel Research

As a result of the closing of several luxury hotels for conversion to condominiums, supply within the luxury segment decreased by nearly 16% between 2004 and 2007. As a result, a large portion of demand previously accommodated at luxury hotels was forced to seek accommodation outside this segment, which caused occupancy to decline by 5.2% in 2006. Still, throughout 2007, the luxury segment continued to perform strongly, with annual occupancy reaching 79%. The compression within the luxury segment, together with healthy national and regional economies, has allowed hotel operators to grow rates aggressively each year since 2004. Thus, average rate within the luxury segment has increased by roundly 55% since 2004, peaking at a stellar $530.39 in 2007. RevPAR recorded double-digit gains of around 20% in 2004 and 2005, and lower but still significant increases of 9.0% in 2006 and 16.1% in 2007, highlighting the underlying strength of the Manhattan market’s luxury segment.

Full Service

Year	Average Daily Room Count	% Change	Occupied Room Nights	% Change	Occupancy	Average Rate	% Change	RevPAR	% Change
2000	27,891	—	8,554,710	—	84.0%	$210.42	—	$176.82	—
2001	27,920	0.1	7,719,105	(9.8)	75.7	186.74	(11.3)	141.45	(20.0)
2002	27,580	(1.2)	7,708,617	(0.1)	76.6	174.92	(6.3)	133.95	(5.3)
2003	28,671	4.0	8,048,635	4.4	76.9	169.32	(3.2)	130.22	(2.8)
2004	28,399	(0.9)	8,711,129	8.2	84.0	187.95	11.0	157.95	21.3
2005	28,520	0.4	9,010,774	3.4	86.6	222.11	18.2	192.26	21.7
2006	27,944	(2.0)	8,869,742	(1.6)	87.0	251.01	13.0	218.28	13.5
2007	27,882	(0.2)	8,992,918	1.4	88.4	280.50	11.7	247.87	13.6
Average Annual Compounded Change		(0.0)		0.7			4.2		4.9

Source: Smith Travel Research

Supply of full-service accommodations remained relatively stable in 2007, while demand for this hotel category rose by 1.4%. As a result, occupancy improved by 1.6% in 2007, to a high for the period reviewed of 88.4%. However, because occupancy levels are in the high 80s, increases in occupancy are hampered by capacity constraints, as most hotels currently operate at near-maximum-capacity levels. This continued compression in the full-service segment enabled hotel operators to drive average rate to a new level of around $280.00, which incorporates four consecutive years of double-digit increases. Average rate within the full-service segment has increased by more than $111.00 since its previous low-point in 2003, a gain of over 65%. As a result, RevPAR recorded another double-digit increase in 2007, of 13.6%, continuing the positive trend registered in the last four years.

Limited Service

Year	Average Daily Room Count	% Change	Occupied Room Nights	% Change	Occupancy	Average Rate	% Change	RevPAR	% Change
2000	4,636	—	1,503,042	—	79.5%	$156.63	—	$124.56	—
2001	4,758	2.6	1,381,079	(8.1)	78.4	136.40	(12.9)	106.92	(14.2)
2002	4,918	3.4	1,407,277	1.9	78.4	124.83	(8.5)	97.86	(8.5)
2003	4,996	1.6	1,419,295	0.9	77.8	123.02	(1.4)	95.75	(2.1)
2004	5,094	2.0	1,630,161	14.9	87.7	142.19	15.6	124.66	30.2
2005	5,278	3.6	1,693,775	3.9	87.9	177.06	24.5	155.66	24.9
2006	5,626	6.6	1,800,858	6.3	87.7	199.48	12.7	174.93	12.4
2007	6,088	8.2	1,964,458	9.1	88.4	226.00	13.3	199.80	14.2
Average Annual Compounded Change (2000-2007):		4.0		3.9			5.4		7.0

Source: Smith Travel Research

The limited-service segment was the fastest-growing category in Manhattan in 2007, with unparalleled demand growth of roundly 9.0%. This increase in demand was nearly matched by supply growth of limited-service products. As a result, occupancy within the limited-service segment remained very strong in 2007, at 88.4%. This high occupancy level suggests the presence of a notable amount of unaccommodated demand for limited-service lodging, which is expected to be accommodated by the large number of limited-service hotels proposed for the city in the future. Continuing the positive trend observed since 2004, average rate registered another healthy increase in 2007, of 13.3%, rising to $226.00, contributing to a double-digit RevPAR increase in this segment as well.

Boutique

Year	Average Daily Room Count	% Change	Occupied Room Nights	% Change	Occupancy	Average Rate	% Change	RevPAR	% Change
2000	5,626	—	1,644,801	—	80.1%	$252.68	—	$202.40	—
2001	7,159	27.3	1,796,009	9.2	68.7	214.61	(15.1)	147.50	(27.1)
2002	8,012	11.9	2,110,317	17.5	72.2	203.87	(5.0)	147.12	(0.3)
2003	7,998	(0.2)	2,160,949	2.4	74.0	203.61	(0.1)	150.73	2.5
2004	7,825	(2.2)	2,247,909	4.0	78.7	234.84	15.3	184.84	22.6
2005	7,980	2.0	2,398,848	6.7	82.4	272.59	16.1	224.50	21.5
2006	7,846	(1.7)	2,408,724	0.4	84.1	304.49	11.7	256.10	14.1
2007	8,010	2.1	2,521,981	4.7	86.3	333.78	9.6	287.92	12.4
Average Annual Compounded Change (2000-2007):		5.2		6.3			4.1		5.2

Source: Smith Travel Research

In 2007, eight new boutique hotels entered the Manhattan market, as reflected in the 2.1% increase in supply. This trend was offset by a greater increase in demand within the boutique segment in that year, causing occupancy to reach its highest level during the observed period. Average rate continued to grow at a strong rate in 2007, posting an increase of 9.6%, to over $333.00. As a result of the strong average rate increase and the continued growth in occupancy, RevPAR improved by 12.4% in 2007.

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