The questions that follow pertain to the economic study and valuation report for the Sample Inn. To answer the questions, open the report and the three Excel programs for the Sample Inn (in photos). Use the document and the Hotel Valuation Software to answer each question. With each answer, include a description of how you performed the necessary calculations and the conclusions you have drawn from the calculation.

Questions: 1. Look at the Additions to Supply sheet of the RNAADR program. Notice that the Assumed Compound Supply Growth in cell D15 is set to 0%. Thus, long-term supply is not expected to grow in the market. What is the effect of this on the Sample Inn's projected occupancy?

Now change the Assumed Compound Supply Growth to 0.42%. What does this change do to the Sample Inn's projected occupancy and to the market projected occupancy? Given these changes, how would you characterize the relationship between the rate of supply growth and occupancy projections?

2. Finally, consider the assumptions that framed the analysis. Reviewing this report, you decide the appraiser has made an error. The Homewood Suites Stratford, a 135-room property, has been characterized as among the secondary competition. You believe that it should instead be considered among the Sample Inn's primary competition. Remove the Homewood Suites from the secondary competition and add it to the primary competition. What effect does this have on the overall analysis? You should pay particular attention to the Demand Base Year sheet, analyzing the changes in overall penetrations, market segment penetrations for the individual hotels, market segment mix for the entire market, and demand.

Appendix photos: Additions to Supply sheet of the RNAADR program:

D15 X V fx 0% A B C D E F G H I K L M IN O P Hotel Valuation Software, Version 5.0 - Additions to Supply 3 Proposed Hotels to Be Added Hotel 2015 2016 2017 2018 2019 2020 202 2022 2023 2024 2025 5 Existing Rooms in Base Year 1075 1075 1075 1075 1075 1075 1075 1075 1075 1075 1075 6 Best Western Shelton N/A 59 59 F 59 F 59 F 59 F 59 P 59 59 Proposed Hotel 2 N/A 0 8 Proposed Hotel 3 N/A OF OF OF OF OF O OUT A W N - 19 Proposed Hotel 4 N/A OF OF OF OF OF OF OF 10 Proposed Hotel 5 N/A OF OF OF OF ooo 11 Proposed Hotel 6 N/A OF OF OF OF OF Proposed Hotel 7 N/A OF OF OF OF OF OF OF OF 13 60 00 - Proposed Hotel 8 N/A OF OF OF OF OF OF OF OF Proposed Hotel 9 N/A OF OF OF OF OF OF OF OF 15 10 Long-Term Supply Growth 0,00% N/A OF OF OF OF OF OF lo 16 Total New Rooms 0 0 69 59 59 59 59 59 69 59 17 Change in HARC O 0 0 0 0 0 0 0 18 Total Supply at Year End 1075 1075 1075 1134 1134 1134 1134 1134 1134 1134 1134 19 20 Total Room Nights Available 392.375 392.375 392.375 413.910 413.910 413.910 413.910 413.910 413.910 413.910 413.910 21 22 Unadjusted Market Occupancy 75, 18% 74,80% 75,74% 72,58% 72,83% 73,07% 73,32% 73,57% 73,82% 74,07% 74,32% 23 24 Adjusted Market Occupancy 74,36% 73,99% 74,91% 72,58% 72,83% 73,07% 73,32% 73,57% 73,82% 74, 07% 74,32% 25 (Adjusted For Unaccommodated Demand) 26 27 28 29MAP OF COMPETITION Cathy Pudding 714 Mulberry Long Hill Ave 10B Blueberry in Greenbrier Rd Capo Or Meadowlark or Commerce in IS uo, bununH dfield Ro Herbert & Wheelers Farms Rd Booth HV Ry 110 Housatonic River Rd m 8 Hell poomaud Warner Hill Rd Oky Dike Roy N Stowe PI Roosevelt James Farm Ad Forest PKWy 15 North S py uo bununH Dronogd Main St TWI Brooks DX Milfordip Shelton Rd 15 Wheelers Farms Rd Booth Hill Rd Unity Rd 8 25 Chapel St Milford PKwy 15 15 Main St 95 127 108 110 Bunnyview Or 711 Poque Rd Haw Google Milfor Map data @2016 Google Terms of Use Report a map error Marriott Trumbull Merritt Parkway (Primary) m Courtyard by Marriott Shelton (Primary) Extended Stay America Shelton Fairfield County (Secondary) Hilton Garden Inn Shelton (Primary) Homewood Suites by Hilton Stratford (Secondary) Hyatt House Shelton (Primary) Residence Inn by Marriott Shelton Fairfield County (Secondary) Our survey of the primarily competitive hotels in the local market shows a range of lodging types and facilities. Each primary competitor was inspected and evaluated. Descriptions of our findings are presented below.HVS PRIMARY COMPETITOR #2 - HILTON GARDEN INN SHELTON CLAMLANCE WE' IT Hilton Garden Inn FIGURE 5-9 ESTIMATED HISTORICAL OPERATING STATISTICS Shelton Wtd. Annual Occupancy Yield Year Room Count Occupancy Average Rate RevPAR Penetration Penetration Est. 2011 142 70 - 75 % $115 - $120 $80 - $85 100 - 110 % 100 - 110 % Est. 2012 142 60 - 65 115 - 120 70 - 75 90 - 95 95 - 100 Est. 2013 142 65 - 70 105 - 110 70 - 75 95 - 100 95 - 100 Est. 2014 142 65 - 70 105 - 110 75 - 80 95 - 100 95 - 100 Est. 2015 142 70 - 75 110 - 115 80 - 85 95 - 100 95 - 100HVS PRIMARY COMPETITOR #1 - COURTYARD BY MARRIOTT SHELTON COURT arance 11'-0" Courtyard by Marriott FIGURE 5-8 ESTIMATED HISTORICAL OPERATING STATISTICS Shelton Wtd. Annual Occupancy Yield Year Room Count Occupancy Average Rate RevPAR Penetration Penetration Est. 2011 161 55 -60 % $110 - $115 $65 - $70 85 - 90 % 85 - 90 % Est. 2012 161 60 - 65 110 - 115 65 - 70 95 - 100 90 - 95 Est. 2013 161 60 - 65 105 - 110 65 - 70 90 - 95 85 - 90 Est. 2014 161 65 - 70 100 - 105 65 - 70 90 - 95 85 - 90 Est. 2015 161 70 - 75 105 - 110 75 - 80 90 - 95 85 - 90HVS PRIMARY COMPETITOR #3 - HYATT HOUSE SHELTON HYATT house 830 Hyatt House Shelton FIGURE 5-10 ESTIMATED HISTORICAL OPERATING STATISTICS Wed. Annual Occupancy Yield Year Room Count Occupancy Average Rate RevPAR Penetration Penetration Est. 2011 127 70 - 75 % $110 - $115 $80 - $85 100 - 110 % 100 - 110 % Est. 2012 127 70 - 75 110 - 115 80 - 85 110 - 120 110 - 120 Est. 2013 127 70 - 75 110 - 115 80 - 85 110 - 120 100 - 110 Est. 2014 127 75 - 80 105 - 110 85 - 90 110 - 120 110 - 120 Est. 2015 127 80 - 85 110 - 115 90 - 95 110 - 120 100 - 110HVS PRIMARY COMPETITOR #4 - MARRIOTT TRUMBULL MERRITT PARKWAY Marriott Marriott Trumbull FIGURE 5-11 ESTIMATED HISTORICAL OPERATING STATISTICS Merritt Parkway Wtd. Annual Occupancy Yield Year Room Count Occupancy Average Rate RevPAR Penetration Penetration Est. 2011 325 60 - 65 % $125 - $130 $80 - $85 95 - 100 % 100 - 110 % Est. 2012 325 55 - 60 125 - 130 75 - 80 90 - 95 100 - 110 Est. 2013 325 55 - 60 125 - 130 75 - 80 85 - 90 100 - 110 Est. 2014 325 60 - 65 125 - 130 75 - 80 85 - 90 100 - 110 Est. 2015 325 65 - 70 125 - 130 85 - 90 85 - 90 100 - 110FIGURE 5-12 SECONDARY COMPETITOR(S) - OPERATING PERFORMANCE Est. Segmentation Estimated 2014 Estimated 2015 Weighted Weighted Total Annual Annual Commercial Number Leisure Competitive Room Average Room Average Group Property of Rooms Level Count Occ. Rate RevPAR Count Occ. Rate RevPAR Extended Stay America Shelton 140 75 % 5 % 20 % 40 % 56 65 - 70 % $70 - $75 $45 - $50 56 70 - 75 % $75 - $80 $55 - $60 Fairfield County Homewood Suites by Hilton 135 80 5 15 60 81 75 - 80 120 - 125 90 - 95 81 80 - 85 125 - 130 100 - 105 Stratford Residence Inn by Marriott 96 80 5 15 60 58 75 - 80 105 - 110 85 - 90 58 80 - 85 110 - 115 95 - 100 Shelton Fairfield County Totals/Averages 371 79 % 5 % 16 % 52 % 195 74.7 % $105.43 $78.78 195 80.9 % $108.41 $87.68 * Specific occupancy and average rate data was utilized in our analysis, but is presented in ranges in the above table for the purposes of confidentiality.S B F G H J K M N OP Q R A C D E Hotel Valuation Software, Version 5.0 - Base Year Demand and Competitive Indices Room Nights Sold by Market Segment Fair Overall Market Segment Competitive Indices Total Accommodated Demand Output Competitors Seg 1 Seg 2 Seg 3 Seg 4 Seg 5 Share Comp. Index Seg 1 Seg 2 Seg 3 Seg 4 Seg 5 Base Year Segment Rm Nights Percent Secondary 44.879 2.852 9.301 18, 1% 107,8% 27% 320 07% 0% Segment 102,7% 100% 62% 156% 0% 0% 1 Commercial 195. 159 66,89% Sample Inn 22.657 3.486 8.714 11,6% 8.580 6.435 15,0% 98,2% 95% 118% 90% 0% 0% 27.884 2 Group 48.607 16,66% Courtyard by Marr 90% 0% 0% 3 Leisure 47.996 16,45% 8 Hilton Garden Inn 24.593 7.567 5.675 O 13,2% 98,2% 95% 118% Hyatt House Shelt 30.780 1.924 5.771 11,8% 111,6% 133% 34% 102% 0% 0% 4 N/A 0,00% 9 ooooooo 10 Marriott Trumbull 44.366 24.200 12. 100 30,2% 91,4% 75% 165% 83% 0% 0% 5 N/A 0,00% Oo 11 Primary Hotel 6 0,0% 0,0% 0% 0% 0% 0% 0% TOTAL 291.763 100,00% 0,0% 0,0% 0% 0% 0% 0% 0% 12 Primary Hotel 7 0% 0% 0% 0% Market Occupancy 74,36% 13 Primary Hotel 8 0,0% 0,0% 0% oooo oooo 14 Primary Hotel 9 0,0% 0,0% 0% 0% 0% 0% 0% 0,0% 0,0% 0% 0% 0% 0% 15 Primary Hotel 10 O 0% 0% 0% 16 Primary Hotel 11 0,0% 0,0% 0% 0% 0% 0% 0% 0% 17 Primary Hotel 12 0,0% 0,0% 0% o ooo ooooooooo 0,0% 0,0% 0% 0% 0% 0% 0% 18 Primary Hotel 13 o o o o o oooooo 19 Primary Hotel 14 0,0% 0,0% 0% 0% 0% 0% 0% 20 Primary Hotel 15 0,0% 0,0% 0% 0% 0% 0% 0% ooooooo ooooo 0% 0% 21 Primary Hotel 16 0,0% 0,0% 0% 0% 0% ooo ooo 0% 0% 0% 22 Primary Hotel 17 0,0% 0,0% 0% 0% 0,0% 0,0% 0% 0% 0% 0% 0% 23 Primary Hotel 18 0% 0% 24 0,0% 0,0% 0% 0% 0% Primary Hotel 19 25 26 27 28Supply Changes It is important to consider any new hotels that may have an impact on the subject property's operating performance. The following chart sets forth the hotels that have recently opened, are under construction, or are in the stages of early development in the Your Town market. The list is categorized by the principal submarkets within the city. FIGURE 5-13 AREA DEVELOPMENT ACTIVITY Estimated Expected Number of Qtr. & Year Prod Hotel Name Rooms Hotel Product Tier Development Stage of Opening Add ress Best Western Shemr 99 Midscale Rumored 0.1 '18 Rumored Of the hotels listed in the preceding chart, we have identied the following new supply that is expected to have some degree of competitive interaction with the subject hotel, based on their location, anticipated market orientation and price point, and/or operating profile. FIGURE 5-14 NEW SUPPLY Total We'ghted Number of Competitive Room Estinated Dpening Proposed Property Rooms Level CDUM Date Development Stage Best Western Shelton 99 60 9E 59 J3 nu an:r 1, 2018 Rumored DEMAND We note that a 99-room Best Western is proposed for Shelton in the near to mid term. Given its limited service product offering and location, we have weighted this hotel secondarily competitive in our analysis. While we have taken reasonable steps to investigate proposed hotel projects and their status, due to the nature of real estate development, it is impossible to determine with certainty every hotel that will be opened in the future, or what their marketing strategies and effect in the market will be. Depending on the outcome of current and future projects, the future operating potential of the subject property may be affected. Future improvement in market conditions will raise the risk of increased competition. Our forthcoming forecast of stabilized occupancy and average rate is intended to reect such risk. The following table presents the most recent trends for the subject hotel market as tracked by HVS. These data pertain to the subject and competitors discussed previously in this section; performance results are estimated, rounded for the competition, and in some cases weighted if there are secondary competitors present. In this respect, the information in the table differs from the previously presented STR data and is consistent with the supply and demand analysis developed for this appraisal. FIGURE 5-15 HISTORICAL MARKET TRENDS Accommodated Room Nights Market Market Year Room Nights % Change Available % Change Occupancy Market ADR % Change RevPAR % Change Est. 2011 239,966 360,979 66.5 % $115.24 $76.61 Est. 2012 251,687 % 392,229 8.7 % 64.2 114.37 (0.8) % 73.39 (4.2) % Est. 2013 258,046 2.5 392,229 O.C 65.8 113.17 (1.0) 74.46 1.5 Est. 2014 274,373 6.3 392,229 O.C 70.0 112.18 (0.9) 78.47 5.4 Est. 2015 291,793 6.3 392,229 0.0 74.4 114.79 2.3 85.40 8.8 Avg. Annual Compounded Chg., Est. 2011-Est. 2015: 5.0 % 2.1 % (0.1) % 2.8 % Demand Analysis For the purpose of demand analysis, the overall market is divided into individual Using Market segments based on the nature of travel. Based on our fieldwork, area analysis, and Segmentation knowledge of the local lodging market, we estimate the 2015 distribution of accommodated-room-night demand as follows. FIGURE 5-16 ACCOMMODATED ROOM-NIGHT DEMAND Marketwide Subject Property Accommodated Percentage Accommodated Percentage of Market Segment Demand of Total Demand Total Commercial 195,478 67 % 22,667 65 % Group 48,29 17 3,48 10 Leisure 48,023 16 8,718 25 Total 291,793 100 % 34,873 100 % The market's demand mix comprises commercial demand, with this segment representing roughly 67% of the accommodated room nights in this Your Town submarket. The remaining portion comprises group at 17%, with the final portion leisure in nature, reflecting 16%.Commercial Segment Group Segment Leisure Segment Base Demand Growth Rates Using the distribution of accommodated hotel demand as a starting point, we will analyze the characteristics of each market segment in an effort to determine future trends in room-night demand. Commercial demand consists mainly of individual businesspeople passing through the subject market or visiting area businesses, in addition to high-volume corporate accounts generated by local firms. Brand loyalty [particularly frequent- traveler programs), as well as location and convenience with respect to businesses and amenities, inuence lodging choices in this segment. Companies typically designate hotels as "preferred" accommodations in return for more favorable rates, which are discounted in proportion to the number of room nights produced by a commercial client. Commercial demand is strongest Monday through Thursday nights, declines significantly on Friday and Saturday, and increases somewhat on Sunday night. It is relatively constant throughout the year, with marginal declines in late December and during other holiday periods. In the limited-service sector, group demand is most commonly generated by groups that require ten or more room nights, but need little to no meeting space within the hotel. Examples of these groups include family reunions, sports teams, and bus tours. In some markets, limited-service hotels may also accommodate demand from groups or individuals attending events at the local convention center or at one of the larger convention hotels in the area. Leisure demand consists of individuals and families spending time in an area or passing through en route to other destinations. Travel purposes include sightseeing, recreation, or visiting friends and relatives. Leisure demand also includes room nights booked through Internet sites such as Expedia, Hotels.com, and Priceline; however, leisure may not be the purpose of the stay. This demand may also include business travelers and group and convention attendees who use these channels to take advantage of any discounts that may be available on these sites. Leisure demand is strongest Friday and Saturday nights, and all week during holiday periods and the summer months. These peak periods represent the inverse of commercial visitation trends, underscoring the stabilizing effect of capturing weekend and summer tourist travel. Future leisure demand is related to the overall economic health of the region and the nation. Trends showing changes in state and regional unemployment and disposable personal income correlate strongly with leisure travel levels. The purpose of segmenting the lodging market is to define each major type of demand, identify customer characteristics, and estimate future growth trends. Starting with an analysis of the local area, three segments were dened as representing the subject property's lodging market Various types of economic and demographic data were then evaluated to determine their propensity to reect changes in hotel demand. Based on this procedure, we forecast the following annual growth rates for each demand segment. FIGURE 5-17 AVERAGE ANNUAL COMPOUNDED MARKET SEGMENT GROWTH RATES Latent Demand Unaccommodated Demand Annual Growth Rate Market Segment 2016 201? 2018 2019 Commercial (].5 9% 1.5 % 1.5 96 0.5 96 Group 0.0 0.5 0.0 0.0 Lei5ure 1.0 1.0 0.5 0.0 Base Demand Growth 41.5 96 1.3 96 1.1 96 0.3 96 A table presented earlier in this section illustrated the accommodated-room-night demand in the subject property's competitive market Because this estimate is based on historical occupancy levels, it includes only those hotel rooms that were used by guests. Latent demand reects potential room-night demand that has not been realized by the existing competitive supply, further classied as either unaccommodated demand or induced demand. Unaccommodated demand refers to individuals who are unable to secure accommodations in the market because all the local hotels are lled. These travelers must defer their trips, settle for less desirable accommodations, or stay in properties located outside the market area. Because this demand did not yield occupied room nights, it is not included in the estimate of historical accommodated-room-night demand. If additional lodging facilities are expected to enter the market, it is reasonable to assume that these guests will be able to secure hotel rooms in the future, and it is therefore necessary to quantify this demand. Unaccommodated demand is further indicated if the market is at all seasonal, with distinct high and low seasons; such seasonality indicates that although year-end occupancy may not average in excess of 70%, the market may sell out certain nights during the year. To evaluate the incidence of unaccommodated demand in the market, we have reviewed the average occupancy by the night of the week for the past twelve months for the competitive set, as reected in the STR data. This is set forth in the following table. FIGURE 5-18 OCCUPANCY BY NIGHT OF THE WEEK Month Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total Month Jun - 15 58.1 % 88.3 % 93.6 % 95.6 % 75.7 % 75.7 % 84.8 % 32.3 % Jul - 15 57.0 87.0 94.6 88.8 72.4 82.3 90.1 31.7 Aug - 15 61.4 87.3 93.6 91.4 74.8 75.0 89.3 81.6 Sep - 15 58.8 79.8 92.5 93.0 74.4 75.7 87.9 81.1 Oct - 15 60.8 88.8 97.0 95.8 75.4 80.6 88.5 83.6 Nov - 15 48.2 79.3 84.0 85.4 76.4 69.0 71.0 72.7 Dec - 15 12.0 64.8 70.3 69.6 61.3 50.5 57.8 60.2 Jan - 16 40.9 73.5 85.5 86.1 56.5 17.2 47.2 60.7 Feb - 16 51.5 78.1 90.1 84.7 59.3 53.7 63.9 69.1 Mar - 16 45.2 82.3 88.5 85.5 59.3 55.0 59.7 68.9 Apr - 16 52.3 88.4 94.3 90.2 65.7 71.0 79.9 77.3 75.4 May - 16 60.4 73.7 37.9 90.5 61.4 68.8 86.4 Average 53.0 % 81.0 % 89.1 % 87.8 % 67.7 % 67.3 % 75.6 % 74.6 % Source: STR The following table presents our estimate of unaccommodated demand in the subject market. FIGURE 5-19 UNACCOMMODATED DEMAND ESTIMATE Accommodated Room Unaccommodated Unaccommodated Market Segment Night Demand Demand Percentage Room Night Demand Commercial 195,478 1.5 % 2,915 Group 48,292 0.4 178 Leisure 48,023 0.2 89 Total 291,793 1.1 % 3,182 Accordingly, we have forecast unaccommodated demand equivalent to 1.1% of the base-year demand, resulting from our analysis of monthly and weekly peak demand and sell-out trends. Accommodated Based upon a review of the market dynamics in the subject property's competitive Demand and Market- environment, we have forecast growth rates for each market segment. Using the wide Occupancy calculated potential demand for the market, we have determined market-wide accommodated demand based on the inherent limitations of demand fluctuations and other factors in the market area. The following table details our projection oflodging demand growth for the subject market, including the total number of occupied room nights and any residual unaccommodated demand in the market. FIGURE 5-20 ACCOMMODATED DEMAND 2015 016 2017 2018 2019 Commercial Base Demand 195,478 194,500 197,418 200,379 201,381 Unaccommodated Demand 2,90 2,94 2,988 3,00 Total Demand 197,401 200,362 203,367 204,384 Growth Rate 1.0 % 1.5 % 1.5 % 0.5 % Group Base Demand 48,292 48,292 48,534 48,534 48,534 Unaccommodated Demand BLT 179 179 179 Total Demand 48,471 18,713 48,713 48,713 Growth Rate 0.4 % 0.5 % 0.0 % 0.0 % Leisure Base Demand 48,023 47,543 48,018 48,258 48,258 Unaccommodated Demand 88 89 89 89 Total Demand 47,630 48,107 48,347 48,347 Growth Rate (0.8) % 1.0 % 0.5 0.0 % Totals Base Demand 291,793 290,335 293,970 297,171 298,173 Unaccommodated Demand 3,166 3,212 3,256 3,271 Total Demand 293,502 297,181 300,427 301,444 less: Residual Demand 3 ,166 4,494 0 Total Accommodated Demand 290,335 292,688 300,427 301,444 Overall Demand Growth (0.5) % 0.8 % 2.6 % 0.3 % Market Mix Commercial 67.0 % 67.3 % 67.4 % 67.7 % 67.8 % Group 16.6 16.5 16.4 16.2 16.2 Leisure 16.5 16.2 16.2 16.1 16.0 Existing Hotel Supply 1,075 1,075 1,075 1,075 1,075 Proposed Hotels Best Western Shelton 59 59 Available Room Nights per Year 392,229 392,229 392,229 413,910 413,910 Nights per Year 365 365 365 365 365 Total Supply 1,075 1,075 1,075 1,134 1,134 Rooms Supply Growth 0.0 % 0.0 % 5.5 % 0.0 % Marketwide Occupancy 74.4 % 74.0 % 74.6 % 72.6 % 72.8 % Opening in January 2018 of the 60% competitive, 99-room Best Western SheltonBecause of the cyclical nature of the market and historical fluctuations in market occupancy, as well as our expectation of supply additions in the greater market that will siphon off demand from this competitive set, we have forecast market occupancy for the defined competitive market of hotels to stabilize in the low 70s