Overview Overview Based Based on on historical historical cycles, cycles, now now is is the the time time to to be be investing investing in in • lodging lodging – – it’s it’s still still early early in in the the cycle cycle Ashford is Ashford Ashford is Ashford is best is best best positioned best positioned positioned to positioned to to take to take take advantage take advantage advantage of advantage of of the of the the up the up up-cycle up-cycle cycle: cycle: • • – Attractive Attractive capital capital structure structure – Materially Materially reduced reduced share share count count – Best Best Best in Best-in in class in-class class asset class asset asset management asset management management management – Reinstated Reinstated common common dividend dividend with with 3 3.3% yield yield and and strong strong coverage coverage – Proven Proven management management team team that that has has led led to to consistent consistent outsized outsized returns returns – Highly Highly- Highl Highl -aligned aligned management aligned aligned management management team management team team team – Potential Potential EBITDA EBITDA multiple multiple expansion expansion 7
Historical Occupancy Historical Occupancy Seasonally-Adjusted % Occupancy 66 Cycle Peak RevPAR R PAR 64 Cycle Peak Cycle Peak RevPAR RevPAR 62 65.3% 65.2% Cycle Peak 60 60 C Cycle Peak l P k O Occupancy 65.5% Occupancy Cycle Peak 58 Occupancy 56 54 52 Source: Smith Travel Research (non Source: Smith Travel Research (non- -seasonally adjusted seasonally adjusted monthly figures) monthly figures) monthly figures) monthly figures) 8
Historical Real Room Rates Historical Real Room Rates Seasonally-Adjusted Real ADR (2011 $'s) $115.00 Cycle Peak ADR / RevPAR Cycle Peak ADR / RevPAR $110.00 Cycle Peak ADR $105 00 $105.00 $100.00 $95.00 $90.00 Source: Smith Travel Research (non Source: Smith Travel Research (non- -seasonally adjusted nominal monthly figures) seasonally adjusted nominal monthly figures) 9
Real RevPAR is Cyclical Real RevPAR is Cyclical Seasonally-Adjusted Real RevPAR (2011 $'s) $72 $70 $68 $66 $64 $62 $60 $58 $58 $56 $54 $52 $52 Source: Smith Travel Research (non- Source: Smith Travel Research (non - seasonally adjusted nominal monthly figures) seasonally adjusted nominal monthly figures) 10
Real RevPAR is Cyclical Real RevPAR is Cyclical Peak SA Real RevPAR of Past Cycles (2011 $'s) $73.00 $71.68 $71.33 $70.98 $71.00 $69.00 23% Real Growth $67.00 40% $65.00 Nominal Growth $63.00 (6.3% Nominal Nominal $61.00 $61 00 CAGR) $59.00 $57.86 $57.00 $ (Current) $55.00 1992 - 2000 2003 - 2007 2010 - 2016E * Assumes 2.4% CPI growth * Assumes 2.4% CPI growth (8.6 Years) (4.8 Years) (6.7 Years) Source: Smith Travel Research Source: Smith Travel Research (non (non-seasonally adjusted nominal (non (non-seasonally adjusted nominal seasonally adjusted nominal seasonally adjusted nominal 11 monthly figures) monthly figures)
PKF’s Nominal US RevPAR Forecast PKF’s Nominal US RevPAR Forecast 15.0% 9.3% 8.9% 10.0% 7.9% 7.1% % 5.9% 5.5% 5.4% 4.6% 5.0% 0.0% -2.1% -5.0% 5-Year RevPAR Growth CAGR: 7.0% -10.0% -15.0% -16.6% 16 6% -20.0% 2006 2007 2008 2009 2010 2011F 2012F 2013F 2014F 2015F Source: Smith Travel Research / Source: Smith Travel Research / Historical RevPAR Growth Forecasted RevPAR Growth PKF Research (forecast) PKF Research (forecast) PKF Research (forecast) PKF Research (forecast) 12
Attractive Supply/Demand Imbalance Attractive Supply/Demand Imbalance Demand Demand increase increase is is currently currently expected expected to to outpace outpace supply supply increase increase • through through 2014 2014 10.0 8.0 Growth 6.0 4.0 over-Year % G 2.0 0.0 -2 0 -2.0 Year-o -4.0 -6.0 -8.0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F 2013F 2014F 2015F Supply Growth Supply Growth Demand Growth Demand Growth Source: Smith Travel / PKF Research (forecast) Source: Smith Travel / PKF Research (forecast) 13
Potential EBITDA Growth Rates Potential EBITDA Growth Rates Given Given the the strong strong potential potential RevPAR RevPAR gains gains in in the the • industry, industry, those those companies companies with with high high flow flow- -throughs throughs could could experience experience significant experience experience significant significant EBITDA significant EBITDA EBITDA growth EBITDA growth growth growth CUMULATIVE 5-YEAR EBITDA GROWTH COMPOUNDED 5-YEAR REVPAR GROWTH RATE 55.3% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% DA FLOW % 20.0% 22.1% 24.6% 27.1% 29.6% 32.2% 34.9% 37.5% 25.0% 27.6% 30.7% 33.8% 37.0% 40.3% 43.6% 46.9% 30.0% 33.2% 36.8% 40.6% 44.4% 48.3% 52.3% 56.3% 5-YEAR EBITD 35 0% 35.0% 38 7% 38.7% 43 0% 43.0% 47 4% 47.4% 51.8% 51 8% 56 4% 56.4% 61 0% 61.0% 65 7% 65.7% 40.0% 44.2% 49.1% 54.1% 59.2% 64.4% 69.7% 75.1% 45.0% 49.7% 55.3% 60.9% 66.6% 72.5% 78.4% 84.5% 50.0% 55.3% 61.4% 67.6% 74.0% 80.5% 87.1% 93.9% 60.8% 60 8% 67.5% 67 5% 74.4% 74 4% 81 4% 81.4% 88 6% 88.6% 95 8% 95.8% 103 3% 103.3% 55.0% 55 0% 60.0% 66.3% 73.7% 81.2% 88.8% 96.6% 104.6% 112.6% 65.0% 71.8% 79.8% 87.9% 96.2% 104.7% 113.3% 122.0% 70.0% 77.4% 85.9% 94.7% 103.6% 112.7% 122.0% 131.4% Note: Highlighted box represents PKF’s 5-year projection, based on PKF’s 5 Note: Highlighted box represents PKF’s 5 N t Hi hli ht d b N t Hi hli ht d b t PKF’ 5 t PKF’ 5 year projection, based on PKF’s 5-year RevPAR CAGR and approximate 5 j ti j ti b b d d PKF’ 5 PKF’ 5 year RevPAR CAGR and approximate 5- R R PAR CAGR PAR CAGR d d i i t 5 t 5 -year EBITDA flow year EBITDA flow resulting from PKF’s EBITDA change regression equation EBITDA fl EBITDA fl resulting from PKF’s EBITDA change regression equation lti lti f f PKF’ EBITDA h PKF’ EBITDA h i i ti ti 14
RevPAR Cycle & Stock Returns RevPAR Cycle & Stock Returns Lodging Stock Total Return CAGRs From Current Real RevPAR Level to Cycle Peak Stock Price 35% 32% 32% 30% 30% 28% 25% 20% 15% 10% 5% 0% May '92 - May '01 Apr '03 - May '07 Average Source: Bloomberg; equally Source: Bloomberg; equally-weighted total return index includes: AHT, BEE, DRH, FCH, HST, HT, LHO, SHO, MAR, HOT & HLT Source: Bloomberg; equally Source: Bloomberg; equally weighted total return index includes: AHT, BEE, DRH, FCH, HST, HT, LHO, SHO, MAR, HOT & HLT weighted total return index includes: AHT, BEE, DRH, FCH, HST, HT, LHO, SHO, MAR, HOT & HLT weighted total return index includes: AHT, BEE, DRH, FCH, HST, HT, LHO, SHO, MAR, HOT & HLT 15
Industry Summary Industry Summary Now Now is is the the time time to to be be investing investing in in lodging lodging • Occupancy still Occupancy still has has to to grow grow by by about about 600 600 bps bps to to get get to to • previous previous peaks previous previous peaks peaks peaks Real Real ADR ADR is is still still well well below below its its long long- -term term average, average, much much less less • its its previous previous peaks peaks Current forecasts Current forecasts are are for for nominal nominal RevPAR RevPAR to to grow grow by by 5 5% % to to • 7% % over over the the next next 5 5 years+ years+ The The hotel hotel demand demand / supply / supply imbalance pp y pp y imbalance looks looks good good at g at least least • through through 2014 2014 Strong, Strong, multi multi- -year year EBITDA EBITDA growth growth is is a a real real possibility possibility with with • good good flows good good flows flows flows Stock returns Stock returns have have been been attractive attractive when when buying buying at at this this point point • in in the the RevPAR RevPAR cycle cycle 16
Ashford Snapshot Ashford Snapshot Portfolio Statistics Portfolio Statistics Financial Statistics Financial Statistics Total Enterprise Value Total Enterprise Value p $4.4 B $4.4 B Recent Share Price Recent Share Price $11.95 (5/6/11) $11.95 (5/6/11) ( / / ( / / ) ) Total Gross Assets Total Gross Assets $5.0 B $5.0 B # Fully Diluted Shares # Fully Diluted Shares 76.0 M 76.0 M nd Largest Peer Comparison Peer Comparison 2 nd 2 Largest Leverage Ratio Leverage Ratio 60.9% 60.9% # of Hotels # of Hotels # of Hotels # of Hotels 125 125 125 125 Debt Wtd. Debt Wtd. Avg. Maturity Debt Wtd Avg Maturity Debt Wtd Avg. Maturity Avg Maturity 4.6 Years 4.6 Years 4 6 Years 4 6 Years # of Owned Rooms # of Owned Rooms 26,257 26,257 Debt Wtd. Avg. Cost Debt Wtd. Avg. Cost 3.19% 3.19% # of Property Managers # of Property Managers 6 6 Quarterly Quarterly Dividend Dividend $0.10 $0.10 $ ADR $ ADR $131.94 $131.94 Dividend Yield Dividend Yield 3.3% 3.3% $ RevPAR $ RevPAR $92.20 $92.20 TTM AFFO per Share TTM AFFO per Share $1.60 $1.60 RevPAR Growth % RevPAR Growth % 7.6% 7.6% Dividend Dividend Coverage Coverage 4.0x 4.0x 17
Significant Industry Dilution Significant Industry Dilution Peer Common Stock Issuances / (Repurchases) - Q2 '07 to Q1 '11 Peers Include: BEE, DRH, FCH, HST, HT, LHO & SHO 120.0% 160.0 # of 140 0 140.0 f Common Sh '07 = 100%) 100.0% 120.0 80.0% 100.0 80.0 hares Issued ce Index (Q2 (Millions) 60.0% 60.0 40.0% 40.0 d / (Repurcha er Stock Pric 20.0 20.0% - 0.0% (20.0) ased) Pe Peer Stock Price Index # of Common Shares Issued / (Repurchased) # of Common Shares Issued / (Repurchased) Peer Stock Price Index Source: Bloomberg Source: Bloomberg S S Bl Bl b b 18
Significant Shareholder Accretion Significant Shareholder Accretion Ashford Common Stock Issuances / (Repurchases) - Q2 '07 to Q1 '11 120% 60.0 # of C 50.0 %) Q2 '07 = 100% Common Sh 100% 40.0 80% 30.0 ce Indexed (Q 20.0 20 0 ares Issued / (Millions) 60% 10.0 40% - / (Repurchas HT Stock Pric (10.0) 20% (20.0) 0% (30.0) AH ed) AHT Stock Price # of Common Shares Issued / (Repurchased) / ( p ) # of Common Shares Issued / (Repurchased) / ( p ) AHT Stock Price Source: Bloomberg Source: Bloomberg 19
Significantly Reduced Share Count Significantly Reduced Share Count % Change in Fully Diluted Share Count : Q2 ‘07 vs. Current 350.0% 286% 286% 300 0% 300.0% 250.0% 200.0% 132% 150.0% 116% 109% 96% 88% 100.0% 75% 50.0% 24% 0.0% -50 0% 50.0% -47% -100.0% AHT BEE DRH FCH HST HT LHO SHO PEER AVG Source: Company Filings & Street Research. Source: Company Filings & Street Research. 20
Common Stock Buybacks Common Stock Buybacks If If we we were were to to reissue reissue the the 73 73. .6 6 million million shares shares repurchased, repurchased, it it • would would be be a a gain gain of of nearly nearly $ $640 640 million million Impact of Common Repurchases (73.6M Shares) Repurchased @ $3 26 Per Repurchased @ $3.26 Per $239.9 Share $640M Gain Current Value @ $11.95 $879.5 Per Share $- $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 ($Millions) 21
Preferred Stock Buybacks Preferred Stock Buybacks When When we we reissued reissued the the 3 3. .1 1 million million preferred preferred shares shares we we • repurchased, repurchased, we we realized realized a a gain gain of of $ $53 53 million million Impact of Preferred Repurchases (3.1M Shares) Repurchased @ $6.47 Per $20.3 Share $53M Gain Reissued @ $23.178 Per Share $72.9 $- $10 $20 $30 $40 $50 $60 $70 $80 ($Millions) 22
Share Repurchase Philosophy Share Repurchase Philosophy Estimate multiple Estimate multiple Estimate potential Estimate potential Compare returns Compare returns economic recovery economic recovery returns from returns from to holding cash & to holding cash & scenarios scenarios buybacks buybacks buying assets buying assets Methodically Methodically Healthy debate & Healthy debate & Analyze industry Analyze industry execute buyback execute buyback discussion with discussion with trends& company trends& company strategy strategy strategy strategy Board Committee Board Committee Board Committee Board Committee cash flows cash flows cash flows cash flows 23
Best- Best -in in- -Class Asset Management Class Asset Management Revenues in line with Revenues in line with peers despite larger peers despite larger 50% 50% select select- service exposure l l t t service exposure i i Flows Flows Fl Fl Better EBITDA flows Better EBITDA flows th than peers than peers th Best Best- -in in- -Class Class Remington Remington RevPAR RevPAR + Constant + Constant Asset Asset Penetration Penetration Brand Brand Growth Growth Management Management Better EBITDA margin Better EBITDA margin Pressure Pressure growth than peers growth than peers growth than peers growth than peers EBITDA in line with EBITDA in line with Consistent Consistent peers despite slightly peers despite slightly peers, despite slightly peers, despite slightly Capex Capex Capex Capex Spending Spending lower revenue growth lower revenue growth 24
Recently Reinstated Dividend Recently Reinstated Dividend Ashford Ashford reinstated reinstated its its quarterly quarterly common common dividend dividend in in the the 1 1Q Q • ‘10 10 at at $0 0. .10 10 per per share, share, giving giving it it a a dividend dividend yield yield a a full full 100 100 bps bps above above the above above the the peer the peer peer average peer average average average Ashford Ashford has has nearly nearly the the highest highest dividend dividend yield yield of of the the legacy legacy • lodging lodging REITs REITs Di id Dividend Yield (as of 5/6/11) d Yi ld ( f 5/6/11) 4.7% % 5.0% 4.1% 4.0% 4.0% 3.4% 3.3% 2.9% 2.9% 3.0% 2.3% 2.1% 2.0% 1.6% 1.0% 1 0% 0.5% 0.0% 0.0% 0.0% 0.0% CHSP CLDT INN HT AHT DRH PEB AVG LHO HST FCH BEE SHO Source: Company filings & Bloomberg. Source: Company filings & Bloomberg. 25
Consistent Earnings Growth Consistent Earnings Growth Ashford's Historical AFFO per Share $1.80 $1.60 $1.60 $1.60 $1 50 $1.50 $1.40 $1.31 $1.28 $1.20 $1.13 $1.12 $0.96 $1.00 $0.80 $0.60 $0.41 $0.40 $0 20 $0.20 $- $- 2003 2004 2005 2006 2007 2008 2009 2010 1Q 2011 TTM TTM 26
AFFO per Share Outperformance AFFO per Share Outperformance TTM AFFO Per Share (2007Q2 = 100%) Peers Include: BEE, DRH, FCH, HST, HT, LHO, SHO 140% +27% 120% 100% 80% 60% 40% 20% -73% 0% 0% Ashford Peer Average Source: SNL 27
Total Shareholder Return Total Shareholder Return - - AHT Outperforms Peers AHT Outperforms Peers Trailing Total Shareholder Returns (as of 5/6/11) Peers Include: BEE, CHSP, CLDT, DRH, FCH, HST, HT, LHO, PEB, & SHO 250% 202% 202% 200% 150% 125% 108% 108% 99% 100% 63% 56% 44% 29% 50% 21% 5.0% 0% 0% -16% -27% -50% -34% -45% -100% 1-Yr 2-Yr 3-Yr 4-Yr 5-Yr 6-Yr 7-Yr AHT Peer Avg g Source Source: : Bloomberg, assumes dividend reinvestment Bloomberg, assumes dividend reinvestment g, g, 28
Total Shareholder Return – Total Shareholder Return – AHT Outperforms S&P 500 AHT Outperforms S&P 500 Trailing Total Shareholder Returns (as of 5/6/11) 250% 202% 202% 200% 150% 125% 125% 99% 100% 63% 56% 52% 44% 39% 39% 50% 50% 30% 30% 21% 21% 12% 1% 0% -3% -50% 1-Yr 2-Yr 3-Yr 4-Yr 5-Yr 6-Yr 7-Yr AHT S&P 500 Source Source: : Bloomberg, assumes dividend reinvestment Bloomberg, assumes dividend reinvestment g, g, 29
Total Shareholder Return - Total Shareholder Return - AHT Outperforms RMZ AHT Outperforms RMZ Trailing Total Shareholder Returns (as of 5/6/11) 250% 202% 200% 150% 125% 125% 99% 99% 97% 100% 63% 56% 47% 47% 44% 44% 50% % 27% 21% 15% 2% 0% -8% -50% 1-Yr 2-Yr 3-Yr 4-Yr 5-Yr 6-Yr 7-Yr AHT RMZ Source Source: : Bloomberg, assumes dividend reinvestment Bloomberg, assumes dividend reinvestment g, g, 30
Total Shareholder Return Total Shareholder Return – – AHT Outperforms NAREIT AHT Outperforms NAREIT Trailing Total Shareholder Returns (as of 4/29/11) 350% 327% 300% 250% 200% 200% 150% 132% 113% 103% 87% 100% 71% 71% 40% 41% 34% 50% 27% 22% 14% 8% 0% -8% 8% -50% 1-Yr 2-Yr 3-Yr 4-Yr 5-Yr 6-Yr 7-Yr AHT NAREIT Source Source: : Bloomberg, assumes dividend reinvestment Bloomberg, assumes dividend reinvestment g, g, 31
Most Highly- Most Highly -Aligned Management Team Aligned Management Team Insider Ownership % 25% 21% 21% 20% 16% 15% 10% 10% 6% 5% 4% 3% 3% 3% 3% 2% 2% 1% 1% 1% 1% 0% AHT HT CLDT INN FCH HST PEB CHSP DRH SHO BEE LHO Source: Company Filings Source: Company Filings 32
Accretive Highland Transaction Accretive Highland Transaction 28 28 hotel hotel portfolio portfolio ( (19 19 full- full -service, service, 9 9 select select- - • service) service) with ) with 8 8,084 , 084 rooms rooms Total Total consideration consideration of of $ $1 1. .3 3 billion billion ( ($ $158 158, ,000 000 per per • key) key) key) key) 2010 2010 EBITDA EBITDA multiple multiple 13 13. .4 4x x • Operational Operational upside upside • – 2010 2010 EBITDA EBITDA flows flows of of 18 18% % vs vs. . AHT’s AHT’s of of 104 104% % – Remington Remington took took over over management management of of 17 17 assets assets – NOI NOI 36 36% % below below peak peak 33
Hotel REIT EBITDA Multiples Hotel REIT EBITDA Multiples Ashford Ashford currently currently trades trades at at 13 13. .8 8x x 2012 2012 EBITDA, EBITDA, slightly slightly above above • the the industry industry average average 2012E TEV/EBITDA MULTIPLES 2012E TEV/EBITDA MULTIPLES (As of 5/6/11) 18.0x 17.6x 17.0x 16.0x 15.0x 13.8x 14.0x 13.3x 13 3x 13.3x 13 3x 13 1 13.1x 13.0x 12.6x 12.2x 11.8x 11.8x 11.7x 12.0x 11.3x 11.1x 10.8x 11.0x 11 0x 10.0x BEE HST DRH LHO AHT PEER SHO PEB CHSP HT INN CLDT FCH AVG Source: Company filings, Bloomberg and street research & First Call estimates Source: Company filings, Bloomberg and street research & First Call estimates 34
Hotel REIT FFO Multiples Hotel REIT FFO Multiples However, However, Ashford Ashford has has materially materially the the lowest lowest FFO/share FFO/share • multiple multiple of of the the peers peers 2012E FFO/SHARE MULTIPLES 2012E FFO/SHARE MULTIPLES (As of 5/6/11) 35.0x 32.1x 30.0x 25.0x 20.0x 15.8x 14 0x 14.0x 14.0x 14 0x 13.7x 13 7 13.3x 15.0x 12.9x 11.6x 11.2x 10.8x 9.8x 8.9x 10.0x 5.3x 5.0x 5.0x 0.0x AHT SHO INN HT CHSP FCH CLDT LHO DRH PEER HST PEB BEE AVG Source: Company filings, Bloomberg and street research & First Call estimates Source: Company filings, Bloomberg and street research & First Call estimates 35
Company Summary Company Summary Ashford Ashford is is best best- -positioned positioned into into the the recovery recovery • More More levered levered capital capital structure p structure • Significantly reduced Significantly reduced share share count count magnifies magnifies EBITDA EBITDA growth growth impact impact • to to earnings earnings & g & stock stock price price Very Very competitive competitive reinstated reinstated dividend dividend with with growth growth potential potential • Proven Proven asset asset management management expertise g expertise p • Proven & Proven & most most- -aligned aligned management management team team • Significant Significant Significant potential Significant potential potential accretion potential accretion accretion from accretion from from recent from recent recent Highland recent Highland Highland acquisition Highland acquisition acquisition acquisition • Potential Potential for for multiple multiple expansion expansion relative relative to to peers peers • 36
Analyst / Investor Day Analyst / Investor Day y y / / y y New York City New York City May May 11 11, , 2011 2011
CAPITAL STRUCTURE CAPITAL STRUCTURE & BALANCE SHEET & BALANCE SHEET David J. Kimichik David J. Kimichik Chief Financial Officer Chief Financial Officer Chief Financial Officer Chief Financial Officer 38
Overview Overview Ashford Ashford has has a a capital capital structure structure built built for for this this part part of of the the cycle cycle: • – Well Well- -laddered laddered maturities maturities – Effectively Effectively no no recourse recourse debt debt – Higher Higher Higher leverage Higher leverage leverage than leverage than than peers than peers peers to peers to to maximize to maximize maximize shareholder maximize shareholder shareholder returns shareholder returns returns returns – Continued Continued benefit benefit from from interest interest rate rate hedges hedges through through March March 2013 2013 – A A management A A management management team management team team that team that that appreciates that appreciates appreciates the appreciates the the expensive the expensive expensive nature expensive nature nature of nature of of of issuing issuing equity equity – A A recently A A recently recently reinstated recently reinstated reinstated dividend reinstated dividend dividend that dividend that that is that is is well is well well-covered well covered covered with covered with with potential with potential potential potential to to grow grow 39
Current Capital Structure Current Capital Structure Current ($ Millions) Current ($ Millions) Cash & Cash Equivalents Cash & Cash Equivalents $92.4 $92.4 Total Debt (AHT Share) Total Debt (AHT Share) $3,186.6 $3,186.6 Assets Assets Hotel Gross Assets Hotel Gross Assets $4,595.8 $4,595.8 Interest Rate Hedges Interest Rate Hedges Interest Rate Hedges Interest Rate Hedges $90 1 $90 1 $90.1 $90.1 Mezz Book Value Mezz Book Value $3.0 $3.0 Other Other $319.6 $319.6 Total Gross Assets Total Gross Assets Total Gross Assets Total Gross Assets $5 008 5 $5 008 5 $5,008.5 $5,008.5 Equity (# of shares) Equity (# of shares) Common Common 61.0 61.0 OP Units OP Units 15.0 15.0 Total Diluted Shares Total Diluted Shares 76.0 76.0 Preferred Series A D & E (par value) Preferred Series A D & E (par value) Preferred Series A,D & E (par value) Preferred Series A,D & E (par value) $345 1 $345 1 $345.1 $345.1 40
Debt Maturity Schedule Debt Maturity Schedule AHT Debt Maturity Schedule $1,200,000 $1,000,000 $800,000 ) Debt (000's) $600,000 $ $400,000 $200,000 $0 2011 2012 2013 2014 2015 2016 2017 Beyond Fixed-Rate Floating-Rate 41
Impact of Interest Rate Hedges in 2011 Impact of Interest Rate Hedges in 2011 Principal Principal Interest Expense Interest Expense Interest Rate Interest Rate (est.) (est.) (est.) (est.) (est.) (est.) (est.) (est.) Total Debt Total Debt $3.3 billion $3.3 billion $176 million $176 million 5.3% 5.3% Swap Swap Impact p Impact p ($31.5 million) ($31.5 million) Flooridor Flooridor Impact Impact ($40.5 million) ($40.5 million) (if Libor stays (if Libor stays f f y y below 50 bps in below 50 bps in 2011) 2011) TOTAL TOTAL $3.3 $3.3 billion billion $104 million $104 million 3.2% 3.2% Note: Assumes 30 Note: Assumes 30-Day Libor of 25 bps Note: Assumes 30 Note: Assumes 30 Day Libor of 25 bps Day Libor of 25 bps Day Libor of 25 bps 42
Interest Rate Hedging Strategy Interest Rate Hedging Strategy In In the the summer summer of of 2007 2007 we we began began to to explore explore various various ways ways to to hedge hedge • against against a a potential potential recession recession After After months months of of thorough thorough analysis, g analysis, we y y , , we determined determined that that one one of of the the • most most highly highly correlated correlated economic economic data data points points to to hotel hotel revenues revenues was was 30 30- -day day LIBOR LIBOR As As a a result, result, we , we made made the the decision decision in in March March 2008 2008 to to swap swap $1. p $ .8 8 billion billion • of of our our fixed fixed- -rate rate debt debt from from 5 5. .84 84% % to to L+ L+264 264 Though Though some some thought thought that that this this was was increasing increasing our our risk risk profile, profile, we we • believed believed that that it it actually actually was y was more more conservative conservative since since it it was was a a better better pairing pairing of of the the cash cash flows flows of of our our assets assets and and liabilities liabilities One One of of two two things things would would have have to to happen happen for for interest interest rates rates to to • dramatically dramatically increase, y increase, both , both of of which which are are positives positives for p for the the hotel hotel business business: : 1 1) ) economic economic growth growth or or 2 2) ) inflation inflation 43
LIBOR / RevPAR Correlation (March 2008) LIBOR / RevPAR Correlation (March 2008) Change in 30-Day LIBOR vs. TTM RevPAR Growth (5 Month Lag) 400 15.0% As of March 2008 300 10.0% 10 0% LIBOR (bps) TTM RevPA 200 5.0% 100 0 AR Growth (5 0 0% 0.0% e in 30-Day L -100 -5.0% -200 -300 300 Y-o-Y Change -10.0% 5 Month Lag -400 1989 - Present R-Squared: .67 -15.0% -500 2000 - Present R-Squared: .91 g) Y -600 -20.0% 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 Y-o-Y Change in 30-Day LIBOR (bps) TTM RevPAR Growth (5 Month Lag) Source: Smith Travel Research, British Bankers Association website, Morgan Stanley. Source: Smith Travel Research, British Bankers Association website, Morgan Stanley. 44
LIBOR / RevPAR Correlation (Current) LIBOR / RevPAR Correlation (Current) Change in 30-Day LIBOR vs. TTM RevPAR Growth (5 Month Lag) 400 15.0% As of April 2011 300 TT 10 0% 10.0% TM RevPAR s) LIBOR (bps 200 5.0% 100 0 0 0.0% % ge in 30-Day Growth (5 M -100 -5.0% -200 Month Lag) Y-o-Y Chang -300 -10.0% -400 1989 - Present R-Squared: .55 -15.0% -500 2000 - Present R-Squared: .70 Y -600 -20.0% 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Y-o-Y Change in 30-Day Libor (bps) TTM RevPAR Growth (5 Month Lag) Source: Smith Travel Research, British Bankers Association website, Morgan Stanley. Source: Smith Travel Research, British Bankers Association website, Morgan Stanley. 45
Expanding to Flooridors Expanding to Flooridors Source: San Francisco Federal Reserve 46
Understanding Flooridor Strategy Understanding Flooridor Strategy Flooridor Purchase History Flooridor Purchase History Flooridor Flooridor Date Date Year Year Notional Notional LIBOR LIBOR Price Paid Price Paid Theoretical Theoretical Total Value Total Value IRR IRR # # P Purchased P Purchased h h d d Eff Eff Effective Effective ti ti Amount A Amount A t t Range Range R Maximum Maximum M M i i Received* Received* R R i i d* d* Benefit Benefit 1 Dec Dec ’08 ’08 2009 2009 $1.8B $1.8B 0.75% 0.75% - - 1.25% 1.25% $3.0M $3.0M $9.0M $9.0M $8.5M $8.5M 582% 582% 2 Mar ’09 Mar ’09 2010 2010 $ $3.6B $3.6B 0.75% - 0.75% - 1.25% 1.25% $8.5M $8.5M $ $ $18.0M $18.0M $18.0M $18.0M $ 81% 81% 3 Jul ’09 Jul ’09 2010 2010 $1.8B $1.8B 1.25% 1.25% - - 1.75% 1.75% $7.1M $7.1M $9.0M $9.0M $9.0M $9.0M 29% 29% 4 Jul ’09 Jul ’09 2011 2011 $1.8B $1.8B 0.50% 0.50% - - 2.75% 2.75% $15.2M $15.2M $40.5M $40.5M $40.5M $40.5M 92% 92% 5 Oct ’09 Oct ’09 2009 2009 $2.7B $2.7B 1.00% 1.00% - - 2.00% 2.00% $6.8M $6.8M $6.9M $6.9M $6.9M $6.9M 3% 3% TOTAL TOTAL $ $40 40.6M $83.4M $83.4M $82.9M $82.9M 99% 99% * Value is equal to income received + current market value * Value is equal to income received + current market value Value is equal to income received + current market value Value is equal to income received + current market value 47
Interest Rate Hedge Update Interest Rate Hedge Update Swapped back to Swapped back to $32 32 million of million of Able to lock in Able to lock in fixed fixed- -rate at rate at annual savings annual savings nearly all nearly all 4.09% in October 4.09% in October through March through March g potential swap potential swap p p p p 2010 2010 2013 2013 benefit benefit Current market Current market Current market Current market Eliminated risk Eliminated risk value of all value of all of LIBOR of LIBOR hedges is $ hedges is $90 90 increases increases million million million million 48
Understanding Swap/Flooridor Strategy Understanding Swap/Flooridor Strategy Ashford Corporate EBITDA & Hedge Income ($ Thousands) $400,000 $ $350,000 , $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $- TTM Hedge Income TTM EBITDA 49
How We Manage Leverage / Risk How We Manage Leverage / Risk Ashford Ashford is is comfortable comfortable having having leverage leverage of of 50 50% % to to 60 60% % net net • debt debt to to cost cost We We We believe We believe believe the believe the the relatively the relatively relatively higher relatively higher higher leverage higher leverage leverage produces leverage produces produces better produces better better better • • long long- -term term shareholder shareholder returns returns without without adding adding material material risk risk to to the the platform platform We W We focus f focus on on the the following th th following items f ll f ll i i it it items in i in order order to d to manage t manage our our • leverage: leverage : Maximize non recourse Maximize non Maximize non Maximize non-recourse recourse recourse Preference for longer duration Preference for longer duration Proper mix of fixed vs floating Proper mix of fixed vs floating Proper mix of fixed vs. floating Proper mix of fixed vs. floating Proactively Proactively ladder ladder the maturities the maturities 50
Ashford’s Unique View on Equity Ashford’s Unique View on Equity Ashford Ashford does does not not subscribe subscribe to to a a static, static, long long- -term term CAPM CAPM • version of version of our our cost cost of of equity equity We We believe We believe, We believe rather believe, rather, rather that rather, that that the that the the cost the cost cost of cost of of equity of equity equity can equity can can ebb can ebb ebb and ebb and and flow and flow flow flow • • throughout throughout hotel hotel & & economic economic cycles cycles We prefer We prefer to to look look at at expected expected equity equity returns returns over over the the next next 3 3 to to • 5 years 5 years in in order i order to d t to determine determine our d t d t i i our hurdle h h hurdle rates dl dl rates t Cost of Equity Comparison - AHT vs. Peers 30% Higher Cost 25% 20% 15% 10% 5% Lower Cost 0% Trough Peak Trough Peak AHT AHT Peers Peers 51
Reinstated Dividend w/ Attractive Yield Reinstated Dividend w/ Attractive Yield Ashford Ashford reinstated reinstated its its quarterly quarterly common common dividend dividend for for the the 1 1 st st • quarter 2011 quarter 2011 at at $0 0. .10 10 per per share share This This This equates This equates equates to equates to to an to an an annual an annual annual dividend annual dividend dividend yield dividend yield yield of yield of of 3.3% at of 3 3% at at the at the the current the current current current • • stock stock price price of of $ $11 11. .95 95 d per $0.25 25.0% Annualized D A on Dividend $0.20 20.0% $0.15 15.0% are terly Commo $0.10 $0 10 10 0% 10.0% Dividend Yie Sha $0.05 5.0% $0.00 $ 0.0% Quart eld 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 - - 1Q 11 Current Di id Dividend d Di id Dividend Yield d Yi ld 52
Reinstated Dividend w/ Growth Potential Reinstated Dividend w/ Growth Potential Given Given the the material material reduction reduction in in our our common common share share • count, count, Ashford Ashford is is the the best best positioned positioned lodging lodging REIT REIT to to cover cover and and and potentially and potentially potentially grow potentially grow grow its grow its its dividend its dividend dividend dividend AFFO per Share / Dividend Coverage 4.5x 4.0x Though Ashford didn’t pay g f p y 4 0 4.0x a dividend in 2009 & 2010, it could have covered 3.5x its peak dividend at 1.3x in 2009 & 1.8x in 2010 3.0x 2.5x 2 5 2.0x 1.6x 1.5x 1.4x 1.4x 1.5x 0.9x 1 0 1.0x 0.5x 0.0x 0.0x N/A N/A 0.0x 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 1Q TTM 1Q TTM 53
Summary Summary Ashford Ashford thinks thinks about about its its capital capital structure structure differently differently than than its its • peers peers − We We We are We are are comfortable are comfortable comfortable with comfortable with with relatively with relatively relatively higher relatively higher higher leverage higher leverage leverage because leverage because because we because we we we actively actively managed managed our our balance balance sheet sheet by by: : � Minimizing Minimizing recourse recourse debt debt � Continually � Continually Continually pushing Continually pushing pushing out pushing out out maturities out maturities maturities maturities � Laddering Laddering our our maturities maturities � Have Have a a proper proper mix mix of of fixed fixed & & floating floating rate rate debt debt − We We also also don’t don’t subscribe subscribe to to a a static static view view of of our our cost cost of of equity, equity, which which has has caused caused us us to to make make capital capital allocation allocation decisions decisions differently differently than than our our peers peers Ashford has Ashford has an an attractive, attractive, well well- -covered covered common common dividend dividend • with with growth growth potential potential 54
Analyst / Investor Day Analyst / Investor Day y y / / y y New York City New York City May 11, 2011 May 11, 2011
ASSET OVERVIEW ASSET OVERVIEW ASSET OVERVIEW ASSET OVERVIEW Monty J. Bennett Monty J. Bennett Chief Executive Officer Chief Executive Officer Chief Executive Officer Chief Executive Officer 56
Overview Overview Broadly Broadly diversified diversified portfolio portfolio with with a a focus focus on on: • – Top Top 25 25 markets markets – Coastal Coastal locations Coastal Coastal locations locations locations – Hilton Hilton & & Marriott Marriott brand brand families families – Franchised Franchised properties properties Current Current valuation Current valuation Current valuation is valuation is is materially is materially materially lower materially lower lower than lower than than replacement than replacement replacement cost replacement cost cost cost • • Best- Best -in in- -class class asset asset management management • Remington Remington property property management management affiliation affiliation is is a a strategic strategic • advantage advantage Analytically Analytically rigorous rigorous capex capex management management • We We continually We We continually continually reinvest continually reinvest reinvest significant reinvest significant significant capital significant capital capital into capital into into our into our our hotels our hotels hotels to hotels to to to • • maximize maximize their their returns returns 57
Significant Growth Since IPO Significant Growth Since IPO # of Owned Rooms 30,000 26,257 25,481 , 25,000 22,913 22,141 20,458 20,000 15,492 15,000 13,184 10,000 5,095 5,000 , 2,381 1,094 0 IPO 2003 2004 2005 2006 2007 2008 2009 2010 Current 58
Broad Geography Broad Geography Ashford’s Ashford’s geographic geographic footprint footprint encompasses encompasses 30 30 states states and and • Washington DC Washington DC West Coast includes Alaska WEST WEST COAST COAST COAST COAST MIDDLE MIDDLE AMERICA AMERICA EAST EAST EAST EAST COAST COAST EBITDA by Region EBITDA b R i TEXAS TEXAS TEXAS TEXAS EAST COAST: 50% WEST COAST: 26% TEXAS: 9% MIDDLE AMERICA: MIDDLE AMERICA: 15% 15% 59
MSA MSA The The vast vast majority majority of of Ashford’s Ashford’s EBITDA EBITDA comes comes from from top top 25 25 • markets, markets, with with 90 90% % coming coming from from top top 50 50 markets markets As % of 2010 EBITDA 10 10% 16% 16 16% 16 74% 74 74 74% Top 25 Top 50 Other 60
Chain Scale Chain Scale Approximately Approximately 60 60% % of of Ashford’s Ashford’s EBITDA EBITDA comes comes from from luxury luxury • & upper upper upscale upscale assets assets As % of 2010 EBITDA f 1% 1% 3% 3% 37% 37% 37% 37% 59 59% Luxury Luxury Upper Upscale Upper Upscale Upscale Upscale Upper Midscale Upper Midscale 61
Brand Family Brand Family Nearly Nearly 85 85% % of of Ashford’s Ashford’s EBITDA EBITDA comes comes from from Marriott Marriott and and • Hilton Hilton branded branded assets assets As % of 2010 EBITDA f 4% 4% 4% 3%4% 52% 52% 32 32% Marriott Hilton Hyatt Starwood Intercontinental Independent p 62
Transient vs. Group vs. Contract Transient vs. Group vs. Contract Our Our customers customers are are predominantly predominantly transient, transient, with with a a strong strong • emphasis emphasis on on corporate corporate business business 4% 4% 25% 25% 55 55% 16 16% Transient - Corporate Transient - Leisure Group Contract 63
Replacement Cost per Key Replacement Cost per Key Replacement Cost Per Key Estimate At current price of $350,000 $11.95, AHT trades for approximately $167,000 per $295,000 , $300,000 $300 000 key – a 28% discount to replacement cost $250,000 $233,000 $200,000 $145,000 $150,000 $100,000 $50,000 $- Full-Service (15,475 Keys) Select-Service (10,782 Keys) Total (26,257 Keys) Source: Estimated based on JP Morgan Research Report Source: Estimated based on JP Morgan Research Report Note: Total excludes recently purchased WorldQuest asset Note: Total excludes recently purchased WorldQuest asset 64
Best- Best -in in- -Class Asset Management Class Asset Management What makes What makes Ashford’s Ashford’s asset asset management management team team different? different? • Analytical rigor Analytical rigor Strategic Strategic relationship relationship Brand influence Brand influence with Remington with Remington Best Best- -in in- -class class asset asset asset asset management management 65
Best Best- -in in- -Class Asset Management Class Asset Management - - RevPAR RevPAR Despite Ashford Despite Ashford having having 1 1/ /3 3 of of its its portfolio portfolio select select- -service, service, its its • average annual average annual RevPAR RevPAR growth growth is is just just 38 38 bps bps lower lower than than its its peers, peers, which peers, peers, which which focus which focus focus primarily focus primarily primarily in primarily in in full in full full-service full service service assets service assets assets assets Annual RevPAR Growth Spread – AHT vs. Peers Peers Include: BEE, CHSP, DRH, FCH, HST, HT, LHO, PEB, SHO 400 bps 300 bps 200 bps 100 60 100 bps 0 bps -38 -100 bps -50 -80 -200 bps -220 -300 bps -400 bps 2007 2008 2009 2010 2011 YTD AVG Source: Company filings Source: Company filings 66
Best Best- -in in- -Class Asset Management Class Asset Management – – RevPAR Yield RevPAR Yield Despite Despite a a weak weak year year in in 2010 2010, , Ashford Ashford has has still still been been able able to to • grow grow its its market market share share over over the the past past several several years years Better Better branded Better branded Better branded assets branded assets assets have assets have have a more have a more more difficult more difficult difficult time difficult time time maintaining time maintaining maintaining maintaining • • share share in in the the early early stages stages of of a a recovery recovery Annual Change in RevPAR Yield Index 80 bps 80 bps 60 bps 50 50 40 40 bps 12 12 20 bps 20 bps 0 bps -20 bps -10 -40 bps 40 bps -60 bps -80 bps -70 2007 2008 2009 2010 2011 YTD AVG Source: Company filings Source: Company filings 67
Best- Best -in in- -Class Asset Management Class Asset Management - - Flows Flows Ashford Ashford consistently consistently beats beats its its peers peers in in hotel hotel EBITDA EBITDA flow flow- - • throughs, throughs, and and on on average average ranks ranks # #1 1 among among peers peers over over the the past past four four years years Ashford’s affiliate Ashford’s affiliate manager, manager, Remington, Remington, gives gives it it a a competitive competitive • advantage advantage in in managing managing costs costs over over its its peers peers Hotel EBITDA Flow-Throughs g Peers Include: BEE, CHSP, DRH, FCH, HST, HT, LHO, PEB, SHO 120% 104% 100% 80% 80% 62% 53% 51% 60% 49% 41% 39% 37% 40% 24% 20% 20% 8% 8% 0% 2007 2008 2009 2010 2011 YTD AHT Peer Average g Source: Company filings Source: Company filings 68
Best- Best -in in- -Class Asset Management Class Asset Management - - Margins Margins Ashford’s EBITDA Ashford’s EBITDA margin margin change change consistently consistently outperforms outperforms its its • peers, peers, and and on on average average ranks ranks # #1 1 among among peers peers over over the the past past four four years years Ashford is Ashford is the the only only hotel y hotel REIT REIT whose whose 2010 2010 margins margins were g were higher higher than g than • they they were were in in 2006 2006 Change in Hotel EBITDA Margins (in bps) Peers Include: BEE, CHSP, DRH, FCH, HST, HT, LHO, PEB, SHO 300 219 147 200 114 86 78 53 100 0 -100 100 -58 -106 -200 -300 -400 -406 406 -500 500 -487 -600 2007 2008 2009 2010 2011 YTD AHT Peer Average g Source: Company filings Source: Company filings 69
Best- Best -in in- -Class Asset Management Class Asset Management - - EBITDA EBITDA Ashford’s Ashford’s asset asset management management expertise expertise allows allows it it to to have have • EBITDA EBITDA growth growth in in line line with with peers peers despite despite lower lower revenue revenue growth growth growth growth Annual EBITDA Growth Spread – AHT vs. Peers Peers Include: BEE, CHSP, DRH, FCH, HST, HT, LHO, PEB, SHO 400 bps 300 bps 260 200 bps 130 100 bps 0 b 0 bps -4 -100 bps -90 -120 -200 bps -200 200 -300 bps -400 bps 2007 2008 2009 2010 2011 YTD AVG Source: Company filings Source: Company filings 70
Advantages of Remington Advantages of Remington Less Less Check against Check against More More Additional Additional disruption disruption other other owner- owner -friendl friendl brand brand during during managers managers y cost y cost advocate advocate renovations renovations structure structure Constant Constant accessibility accessibility Aligned with Aligned with ownership ownership hi hi Reacts rapidly Reacts rapidly to real to real- -time time Immediate Immediate changes changes changes changes attention attention Company Company Operate the Operate the “drivers” are “drivers” are Share best Share best h h b b Keeps project Keeps project hotels as if hotels as if operationally operationally practices practices management management they owned they owned across brands across brands in- in -house house focused focused them them 71
Remington Company “Drivers” Remington Company “Drivers” 50 50% Flows % Flows RevPAR RevPAR Empowered Empowered Empowered Empowered Yield Yield Associates Associates Growth Growth Annual Annual Top Top 25 25% % Product Product GSS GSS Audit Audit 72
Remington Outperformance Remington Outperformance 2007-2010 Cumulative Outperformance: Remington vs. Non- Remington AHT Managers (bps difference) 800 669 700 566 600 506 506 500 400 300 200 100 100 0 Total Revenue Improvement RevPAR Index Improvement GOP Flow 73
Capex Spend History Capex Spend History We We consistently consistently spend spend much much more more than than the the FF&E FF&E reserve reserve to to • keep keep our our properties properties in in good good shape, shape, but but refrain refrain from from spending spending any any optional any any optional optional dollars optional dollars dollars which dollars which which don’t which don t don’t meet don t meet meet return meet return return hurdles return hurdles hurdles hurdles Capex as a % of Total Hotel Revenue 14.0% 12.8% 12.0% 11.1% 11.1% 10.0% 8.3% 8.0% 7.4% 7.1% * 6.0% 4.0% 2 0% 2.0% 0.0% 2007 2008 2009 2010 2011E* * E ti * E ti * Estimate based on * Estimate based on capex t b t b d d capex planned spend and PKF forecasted planned spend and PKF forecasted 2011 l l d d d d d PKF f d PKF f t d 2011 t d 2011 US R 2011 US RevPAR growth of US RevPAR growth of 7.1% US R PAR PAR th f 7 1% th f % % 74
Capital Management Strategy Capital Management Strategy Normal Capex Normal Capex PIPs PIPs ROIs ROIs Lender Requirements Lender Requirements Asset Manager & Asset Manager & Property Manager Input Property Manager Input Guest Service Scores Guest Service Scores 75
Case Study Case Study – – Hilton Fort Worth Hilton Fort Worth Rebranded Rebranded from from Radisson Radisson to to Hilton Hilton • 1Q Q06 06 after after $ $10 10. .5 5 million million renovation renovation ($ $36 36, ,000 000 per per key) key) Reduced Reduced room room count count by by taking taking 220 220- -room room • east east tower tower out out of of hotel hotel inventory inventory and y and sold sold it it as as an an office office building building for for $ $4 4. .1 1 million million Following Following renovation, renovation, guest guest mix mix shifted shifted • from group from group to to higher higher- -rated rated transient transient business business Achieved Achieved higher higher returns returns on on smaller smaller • asset asset basis basis 76
Case Study Case Study – – Hilton Fort Worth Hilton Fort Worth Before Before & & After After Renovation Renovation: : • Before Before After After Current Current T12 12 Apr ‘ Apr ‘05 05 T12 Apr ‘07 T12 Apr ‘07 2010 2010 Total Revenue Total Revenue $15.0M $15.0M $13.7M $13.7M $14.8M $14.8M NOI NOI $2.6M $2.6M $1.9M $1.9M $3.1M $3.1M RevPAR RevPAR Index Index 84% 84% 98% 98% 127% 127% NOI NOI Margin Margin 17.4% 17.4% 13.8% 13.8% 20.7% 20.7% 77
Highland Potential Highland Potential In In 2010 2010, , the the Highland Highland portfolio portfolio achieved achieved EBITDA EBITDA flow flow of of only only • 18 18% %, compared compared to to Ashford’s Ashford’s flow flow of of 104 104% % Had Highland Had Highland achieved g achieved Ashford’s Ashford’s flow, flow, an , an additional additional $8. $ .7 7 • million million of of EBITDA EBITDA would would have have been been realized realized Replacing Replacing Crestline Crestline management management with with Remington Remington provides provides • significant significant upside g upside potential p potential p Repositioning Repositioning opportunities opportunities for for Melrose, Melrose, Churchill, Churchill, and and • Silversmith Silversmith Opportunities Opportunities Opportunities to Opportunities to to convert to convert convert brand convert brand brand managed brand-managed managed assets managed assets assets to assets to to franchise to franchise franchise franchise • Potential Potential to to increase increase RevPAR RevPAR index index with with capex capex • Courtyard Courtyard Tremont Tremont ranked ranked as as one one of of the the worst worst Courtyards Courtyards in in • intent intent to intent to intent to return to return return return Opportunity Opportunity to to increase increase service service scores scores at at HGI HGI Austin Austin and and • other other properties properties 78
Summary Summary Broadly Broadly diversified diversified portfolio portfolio with with a a focus focus on on: • – Top Top 25 25 markets markets – Coastal Coastal locations Coastal Coastal locations locations locations – Hilton Hilton & & Marriott Marriott brand brand families families – Franchised Franchised properties properties Current valuation Current Current valuation Current valuation is valuation is is materially is materially materially lower materially lower lower than lower than than replacement than replacement replacement cost replacement cost cost cost • • Best Best- -in in- -class class asset asset management management • Remington Remington property property management management affiliation affiliation is is a a strategic strategic • advantage advantage Analytically rigorous Analytically rigorous capex capex management management • We continually We We continually We continually reinvest continually reinvest reinvest significant reinvest significant significant capital significant capital capital into capital into into our into our our hotels our hotels hotels to hotels to to to • • maximize maximize their their returns returns Significant Significant upside upside potential potential for for Highland Highland portfolio portfolio • 79
Analyst / Investor Day Analyst / Investor Day y y / / y y New York City New York City May 11, 2011 May 11, 2011
TRANSACTIONS OVERVIEW TRANSACTIONS OVERVIEW TRANSACTIONS OVERVIEW TRANSACTIONS OVERVIEW Douglas A. Kessler Douglas A. Kessler President President President President 81
Overview Overview Ashford is Ashford is disciplined disciplined and and thorough thorough in in how how it it approaches approaches its its • transactions transactions Proactive Proactive in Proactive Proactive in in thinking in thinking thinking about thinking about about today’s about today s today’s impact today s impact impact and impact and and the and the the range the range range of range of of of • • future future possibilities possibilities Despite Despite its its size, size, Ashford Ashford is is not not just just a a property property aggregator, aggregator, but but • frequently frequently trades f f tl tl t t trades out d d out of t of assets, f assets, selling t selling over lli lli over a a billion billi billi billion dollars d ll d ll dollars of of f assets assets since since inception inception Carefully Carefully monitor y monitor real real- -time time trends trends in in the the capital capital and and lodging lodging g g g g • markets markets Assess Assess qualitative qualitative issues, issues, but but ultimate ultimate decisions decisions are are • determined determined by determined determined by by quantitative by quantitative quantitative analysis quantitative analysis analysis analysis 82
Ashford Underwriting Ashford Underwriting Ashford’s Ashford’s underwriting underwriting process process is is a a highly highly focused focused one one that that • ensures ensures both both the the qualitative qualitative and and quantitative quantitative goals goals of of the the company company are company are company are met are met met met Ashford Underwriting Ashford Underwriting Qualitative Qualitative Quantitative Quantitative Physical asset Physical asset Accretion Accretion Market Market Market Market Cost of capital Cost of capital Cost of capital Cost of capital Strategic consistency Strategic consistency Investment returns Investment returns Non- Non -financial risk financial risk Financial risk Financial risk 83
Qualitative Underwriting Qualitative Underwriting Hilton & Hilton & Top Top 25 25 Capex Capex Marriott Marriott Marriott Marriott markets markets markets markets Market Market AHT AHT Value Value- -add add trends trends exposure exposure Full Full- -service service Franchise Franchise Supply Supply 84
Quantitative Underwriting Quantitative Underwriting RevPAR RevPAR Index Peak Index Peak Leverage Leverage Capex lift Capex lift Creating Creating RevPAR RevPAR the the Sensitivity Sensitivity forecasts forecasts proforma proforma proforma proforma Remington Remington Costs Costs input input input input analysis analysis analysis analysis Supply Supply impact impact 85
Quantitative Underwriting Quantitative Underwriting Meets or Meets or Meets or Meets or exceeds IRR exceeds IRR hurdles hurdles FFO per FFO per Stock Stock share share price price accretion accretion i accretion accretion i i 86
Capital Recycling Capital Recycling Capital Capital recycling recycling is is an an essential essential part part of of our our overall overall strategy strategy • Sold Sold more more than than $ $1 1 billion billion of of assets assets since since its its IPO IPO in in 2003 2003 • Potential Potential reasons reasons for for dispositions dispositions: : • Non-Core Non Non Non-Core Core Core Non-Core Non-Core Non Non Core Core Supply Supply Supply Supply Market Market Brand Brand Growth Growth Debt D bt D bt Debt Better Use of Better Use of B tt B tt U U f f S ll S ll Seller’s Seller’s ’ ’ Maturity Maturity Capital Capital Market Market Market Market Portfolio Sale Portfolio Sale Non Non- -value value Concentration Concentration Trade Trade Add Capex Add Capex 87
Capital Recycling Capital Recycling Dispositions ($ Millions) $1,400 56 Assets $1,181 , $1 200 $1,200 $1,000 $800 10 Assets $600 23 Assets $439 3 $400 10 2 $312 Assets Assets 1 Assets 7 Asset $152 $152 $200 $200 A Assets t $106 $113 $29 $30 $- 2005 2006 2007 2008 2009 2010 2011 Total 88
Highland Transaction Background Highland Transaction Background $2.2 billion privatization in 2007 $2.2 billion privatization in 2007 Ashford $17.5 JV (25/75) with Prudential in Ashford $17.5 JV (25/75) with Prudential in mezz 6 tranche mezz 6 tranche Crowne Plaza Atlanta Crowne Plaza Atlanta- -Ravinia Ravinia $1.5 5 billion debt billion debt senior, $ senior, $172 172 million debt million debt Hyatt Regency Long Island Hyatt Regency Long Island j junior junior Borrower $ Borrower $440 440 million equity million equity Acquired mezz 4 tranche participation at a A Acquired mezz 4 tranche participation at a A i i d d 4 t 4 t h h ti i ti i ti ti t t The Melrose (D.C.) The Melrose (D C ) The Melrose (D C ) The Melrose (D.C.) discount with Pru discount with Pru Commenced consensual discussions with Commenced consensual discussions with all involved parties all involved parties Renaissance Palm Springs Renaissance Palm Springs Acquired portfolio in 72/28 JV with Pru Acquired portfolio in 72/28 JV with Pru - - $150m equity and $1.1b debt restructure $150m equity and $1.1b debt restructure $ $ q q y y $ $ Sugar Land Marriott Sugar Land Marriott 89
Highland Transaction Summary Highland Transaction Summary Transformational Transformational 28 28-hotel, $1.3 billion hotel, $1.3 billion acquisition with 8,084 rooms acquisition with 8,084 rooms Ashford had two competitive advantages Ashford had two competitive advantages Ashford had two competitive advantages Ashford had two competitive advantages in the deal: 1) existing mezz lender & 2) in the deal: 1) existing mezz lender & 2) complex transaction skill set complex transaction skill set Nashville Renaissance Nashville Renaissance Primarily upper Primarily upper- P i P i il il -upscale and luxury full upscale and luxury full- l l d l d l f ll f ll Hilton Boston Back Bay Hilton Boston Back Bay service assets service assets Expands Ashford’s presence in key Expands Ashford’s presence in key markets (Washington D.C and NY/NJ) markets (Washington D.C and NY/NJ) and into new markets (Boston and and into new markets (Boston and Plaza San Antonio Marriott Plaza San Antonio Marriott Nashville) Nashville) Ritz Ritz- -Carlton Atlanta Carlton Atlanta Significant growth potential with affiliate Significant growth potential with affiliate manager Remington taking over manager Remington taking over management of management of 17 17 hotels hotels Hyatt Savannah Hyatt Savannah The Churchill (D.C.) The Churchill (D.C.) 90
Highland Transaction Portfolio Highland Transaction Portfolio Name Name Location Location Rooms Rooms Manager Manager Renaissance Palm Springs Renaissance Palm Springs Palm Springs, CA Palm Springs, CA 410 410 Remington Remington The Melrose The Melrose Washington, DC Washington, DC 240 240 Remington Remington The Churchill The Churchill Washington, DC Washington, DC 173 173 Remington Remington Hilton Tampa Westshore Hilton Tampa Westshore Tampa, FL Tampa, FL 238 238 Remington Remington C Crowne Plaza Ravinia Crowne Plaza Ravinia C Pl Pl R R i i i i A l A l Atlanta, GA Atlanta, GA GA GA 495 495 495 495 R R Remington Remington i i The Silversmith The Silversmith Chicago, IL Chicago, IL 143 143 Remington Remington Sheraton Annapolis Sheraton Annapolis Annapolis, MD Annapolis, MD 196 196 Remington Remington HGI BWI Airport HGI BWI Airport Baltimore, MD Baltimore, MD 158 158 Remington Remington Omaha Marriott Omaha Marriott Omaha, NE Omaha, NE 299 299 Remington Remington Westin Princeton Westin Princeton Princeton, NJ Princeton, NJ 296 296 Remington Remington Hilton Parsippany Hilton Parsippany Hilton Parsippany Hilton Parsippany New York NY New York NY New York, NY New York, NY 354 354 354 354 Remington Remington Remington Remington Hampton Inn Parsippany Hampton Inn Parsippany New York, NY New York, NY 152 152 Remington Remington Sugar Land Marriott Sugar Land Marriott Houston, TX Houston, TX 300 300 Remington Remington Plaza San Antonio Marriott Plaza San Antonio Marriott San Antonio, TX San Antonio, TX 252 252 Remington Remington Portsmouth Renaissance Portsmouth Renaissance Portsmouth, VA Portsmouth, VA 249 249 Remington Remington HGI Virginia Beach HGI Virginia Beach Virginia Beach, VA Virginia Beach, VA 176 176 Remington Remington HGI Austin HGI Austin HGI A HGI A ti ti A A Austin, TX Austin, TX ti ti TX TX 254 254 254 254 Remington Remington R R i i t t Hilton Boston Back Bay Hilton Boston Back Bay Boston, MA Boston, MA 390 390 Hilton Hilton Hyatt Regency Savannah Hyatt Regency Savannah Savannah, GA Savannah, GA 351 351 Hyatt Hyatt Hyatt Regency Long Island Hyatt Regency Long Island New York, NY New York, NY 358 358 Hyatt Hyatt Courtyard Denver Airport Courtyard Denver Airport Denver, CO Denver, CO 202 202 Marriott Marriott Ritz Ritz- -Carlton Atlanta Carlton Atlanta Atlanta, GA Atlanta, GA 444 444 Marriott Marriott Courtyard Boston Tremont Courtyard Boston Tremont Courtyard Boston Tremont Courtyard Boston Tremont Boston MA Boston MA Boston, MA Boston, MA 315 315 315 315 Marriott Marriott Marriott Marriott Courtyard Gaithersburg Courtyard Gaithersburg Gaithersburg, MD Gaithersburg, MD 210 210 Marriott Marriott Nashville Renaissance Nashville Renaissance Nashville, TN Nashville, TN 673 673 Marriott Marriott DFW Airport Marriott DFW Airport Marriott Dallas, TX Dallas, TX 491 491 Marriott Marriott 91 Residence Inn Tampa Downtown Residence Inn Tampa Downtown Tampa, FL Tampa, FL 109 109 McKibbon McKibbon Courtyard Savannah Courtyard Savannah Savannah, GA Savannah, GA 156 156 McKibbon McKibbon TOTAL TOTAL 8,084 8,084
Portfolio Upgrade Portfolio Upgrade Legacy Ashford vs. Highland 2010 EBITDA Concentration 100.0% 90 0% 90.0% 76% 80.0% 75% 73% 67% 70.0% 63% 62% 57% 60 0% 60.0% 50.0% 40.0% 30 0% 30.0% 24% % 20.0% 10.0% 0 0% 0.0% Top 25 Markets Luxury / Upper- Full-Service Urban Upscale Legacy Ashford g y Highland g 92
Highland Transaction - Highland Transaction - Price Per Key Comparison Price Per Key Comparison Highland Purchase Price Per Key Comparison ($ Thousands) $300 47% $250 discount to recent peer 35% acquisitions discount to $200 2007 Highland Highland purchase $150 $300 $244 $100 $100 $158 $158 $50 $- Peer Purchase Avg. - AHT Highland 2007 Highland AHT Highland 2009 to Current Purchase Purchase Purchase Source: Real Capital Analytics & company filings. S Source: Real Capital Analytics & company filings. S R R l C l C it l A it l A l ti & l ti & fili fili 93
Replacement Cost per Key Replacement Cost per Key Replacement Cost Per Key Estimate $350,000 Highland was purchased for $158,000 per key - a 44% $300,000 $300 000 discount to replacement cost d l $281,000 $250,000 $233,000 $218,000 $200,000 $150,000 $100,000 $50,000 $50 000 $- Source: Estimated based Source: Estimated based Legacy AHT (20,458 Keys) g y ( , y ) Highland (5,799 Keys) g ( , y ) Total (26,257 Keys) ( , y ) on JP Morgan Research on JP Morgan Research on JP Morgan Research on JP Morgan Research 94 Report Report
Transaction Conclusions Transaction Conclusions Disciplined Disciplined and and thorough thorough in in underwriting underwriting transactions transactions • Proactive Proactive in in thinking thinking about about today’s today’s impact impact and and longer longer range range goals goals • Cap ta Capital Capital recycling Cap ta recycling is ecyc ecyc g s a g is an an essential esse t a esse t a pa t essential part pa t o part of o ou of our ou st ategy our strategy strategy st ategy • Carefully Carefully monitor monitor real real- -time time trends trends in in the the capital capital and and lodging lodging markets markets • Assess qualitative Assess qualitative issues, issues, but but ultimate ultimate decisions decisions are are determined determined by by • quantitative quantitative analysis quantitative quantitative analysis analysis analysis The Highland The Highland transaction transaction is is transformational transformational • – Improves Improves overall overall portfolio portfolio quality quality – Expands Expands Expands our Expands our our presence our presence presence into presence into into new into new new markets new markets markets markets – There There are are significant significant operational operational efficiencies efficiencies to to be be had had – Acquired Acquired at at an an outstanding outstanding price price per per key key 95
Analyst / Investor Day Analyst / Investor Day y y / / y y New York City New York City May 11, 2011 May 11, 2011
CONCLUSION CONCLUSION CONCLUSION CONCLUSION Monty J. Bennett Monty J. Bennett Chief Executive Officer Chief Executive Officer Chief Executive Officer Chief Executive Officer 97
Conclusion Conclusion NOW IS THE RIGHT TIME TO INVEST IN THE CYCLE NOW IS THE RIGHT TIME TO INVEST IN THE CYCLE • Occupancy, Real ADR and Real RevPAR are well below Occupancy, Real ADR and Real RevPAR are well below historical averages historical averages • Historically, investing at this point in the cycles yielded Historically, investing at this point in the cycles yielded 30%+ 30 %+ 5 5-year IRRs year IRRs • Whether GDP growth is rapid or slow, as long as it’s Whether GDP growth is rapid or slow, as long as it’s positive, hotel REITs should perform well positive, hotel REITs should perform well positive, hotel REITs should perform well positive, hotel REITs should perform well 98
Conclusion Conclusion ASHFORD IS THE RIGHT PLATFORM ASHFORD IS THE RIGHT PLATFORM • Potential Highland accretion Potential Highland accretion • Reinstated dividend with room to grow Reinstated dividend with room to grow • Levered capital stock should amplify EBITDA growth Levered capital stock should amplify EBITDA growth • Share count has been cut in half Share count has been cut in half • Proven asset management abilities with Remington Proven asset management abilities with Remington affiliation affiliation • Highly Highly- -aligned management team aligned management team 99
Q&A SESSION Q&A SESSION Q&A SESSION Q&A SESSION 100
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