La Quinta — Investor Presentation (September 2004)
40 slides from La Quinta's investor presentation, Sep 16, 2004
Slide 1: La Quinta Investor Presentation September 2004
LaQuinta Investor Presentation September 2004
Slide 2: Safe Harbor Statement
‘SAFE HARBOR STATEMENT Certain matirs discussed In is presentation may eonattute “onuatd ooking alert’ wii the meaning of he PhvateSeautter Lagan Retorm Act of $006. Wotds such as beleves”antigpates "expects" "ntends”“estimats” “projec” and oe! similar expressions, which ate paditons of of ndcate fu
Slide 3: Creating Shareholder Value
Creating Shareholder Value > Proven management team Strong brands High quality assets with recent capital investments > Strong balance sheet with access to capital >» Enhanced sales and marketing programs > Successful franchising program (1) Revenue per available room gines of Growth > Enhance RevPA
Slide 4: Company Overview
COMPANY OVERVIEW
Slide 5: Attractive Product Offering
Attractive Product Offering Hotels Average Rate Customer Location Major Competitors La Quinta Inn & Suites La Quinta Inn 120+ $67 Primarily business Primarily airports & office parks Courtyard, Hampton, Holiday Inn Express 250+ $55 Primarily leisure Primarily suburban areas & highway interchanges Da
Slide 6: Attractive Product Offering
Attractive Product Offering Hotels Average Rate Customer Location Major Competitors Baymont Inns & Suites Woodfield Suites 170+ $51 Primarily leisure Primarily suburban areas & highway interchanges Days Inn, Comfort, Fairfield, Super 8 7 $77 Primarity business Primarily office parks Courtyard, Resid
Slide 7: Attractive Product Offering: La Quinta Inns
Attractive Product Offering La Quinta Inns and La Quinta Inn & Suites La Quinta
Slide 8: Attractive Product Offering: Baymont Inns & Suites
Attractive Product Offering Baymont Inns & Suites a LaQuinta
Slide 9: Attractive Product Offering: Woodfield Suites
Attractive Product Offering Woodfield Suites LaQuinta
Slide 10: Experienced Management Team
Experienced Management Team Proven track records leading successful lodging companies including Marriott, Cendant, Disney, Red Roof and La Quinta Related Name Position Experience Francis “Butch” Cash _ President & Chief Executive Officer 32 David Rea EVP & Chief Financial Officer 18 Rufus Schriber E
Slide 11: Value Created for Shareholders
Value Created for Shareholders Stock performance through 8/31/2004 in bain Eo 269% Since Management Joined ex (4/17/2000) ral 11% 2004 YTD 1s Lodging consists of Marriott intemational, Starwood Hotels & Resorts and Hiton Hotels, weighted by mart eaptaation 7 LaQuinta
Slide 12: Baymont Acquisition Summary
Baymont Acquisition Summary > Acquired 177 Baymont Inns & Suites * 89 owned Baymont hotels * 87 franchised Baymont hotels * 1 managed Baymont hotel > Acquired 7 owned Woodfield Suites > Acquired 1 owned Budgetel hotel > Purchase Price: Approximately $415 million* > Structure: Asset purchase for cash
Slide 13: Baymont Acquisition Benefits
Baymont Acquisition Benefits > Excellent strategic / operational fit * Integrate a comparable type of asset and a business that runs similarly to La Quinta * Diversify real estate concentration » Expect to increase Baymont’s LTM 05/04 segment EBITDA of $33 million * Enhance revenue performance * Red
Slide 14: National Brands with Increased Geographic Distribution
National Brands with Increased Geographic Distribution 550 hotels (62,000 rooms) in 39 states @ La duinta Baymont A Woodfield “ LaQuinta
Slide 15: Diversified Asset Base of Hotels
Diversified Asset Base of Hotels 65% company owned and 35% franchised Number of Hotels Woodfield LaQuinta 381 Geographic Distribution 1X 29 other 2s states 34% s LaQuinta
Slide 16: Portfolio of High Quality Assets
Portfolio of High Quality Assets Well maintained hotels that undergo regularly scheduled maintenance and periodic refurbishment > Strong asset ownership * 371 company owned hotels * Net book value of over $2 billion >» Estimated replacement cost over $3 billion * $55-65K per key for Baymont Inns & S
Slide 17: Financial Review
FINANCIAL REVIEW
Slide 18: Gaining EBITDA Momentum
Gaining EBITDA Momentum $ RevPAR % Change $ Revenue % Change $ Adj. EBITDA % Change % Adj, EBITDA Margin Ppt Change Period ended June 30, 2004 3:mo, &-mo. $41.33 $39.48 49% —— +10% $145M =—-$277M +8% 49% $46M $83M 410% = #12% 31.8% 30.0% +07ppts +0.9 ppts 18 * Lodging industry recovering * La Quinta
Slide 19: Opportunity for Improvement at La Quinta
Opportunity for Improvement at La Quinta Number of Company Adjusted EBITDA Adj. EBITDA Owned Hotels {in millions) Margin = 450% $275 am 276 155 1909 2003 180900) 2003 1909 2003 (7) Adjusted EBITDA for 1999 is jodging contribution as calculated in our Joint Annual Report on Form 40-K for the year end
Slide 20: Opportunity for Improvement at Baymont
Opportunity for Improvement at Baymont Number of Company EBITDA as Reported Owned Hotels by Marcus EBITDA Margin {in millions) ans 02 101 $100 2% sna Fv2000 Fvan0s Fv2000(1) Fvan04 Fv2000 vane (1) EBITDA Is catoueted by eden cosretng home ane deerevetion end emodtiation a: slated h the segment inerm
Slide 21: Strong Balance Sheet
Strong Balance Sheet Leverage (Net Debt / Adjusted EBITDA) 80 - 70 L L a Meristar —-FelCor Host Starwood La Quinta(t) Hilton Marriott (1) 6/80/04 resuits pro forma for Baymont acquisition, $200 milion senior note offering, receipt of $26 milion from notes reoewable and retirement of the 7.114% notes
Slide 22: Strong Balance Sheet: Debt Maturity Schedule
Strong Balance Sheet Pro Forma(!) Debt Maturity Schedule ($ millions) $530 $210 $116 $20 baad ai — == 2008 2005 2006 2007 2008 2009 and thereafter (1) Debt maturities as of 60/0¢ pro forma for the impact of early repayment of $150 milion 7.174% notes {and the $200 milion senior note offering n LaQui
Slide 23: Engines of Growth
ENGINES OF GROWTH
Slide 24: Levers to Enhance Shareholder Value
Levers to Enhance Shareholder Value integrate Baymont Acquisition improve Hotel Economics Growing Shareholder Value Development/ Redevelopment Opportunities Increasing Fee Based income “ LaQuinta
Slide 25: Engine of Growth: Improve Hotel Economics
Engine of Growth Improve Hotel Economics Internet channels have led to significant RevPAR gains Increase in La Quinta internet Bookings First Half 2004 vs. First Hatf 2003, 7% 1% Internet Revenues 2003 19% F aor i: Opportunity: leverage existing relationships and programs % Third Party La.com Baymon
Slide 26: Engine of Growth: Improve Hotel Economics
Engine of Growth Improve Hotel Economics Increase in membership and stay frequency have contributed to revenue growth 2003 Revenues from Frequent * Points-based system Stover Members * Free nights, airline miles, vacation packages, gift BS. 2 bas + Opportunity: cards increase — = program « Synergies
Slide 27: Engine of Growth: Improve Hotel Economics
Engine of Growth Improve Hotel Economics La Quinta’s company operated call center produces significant volume 2003 Call Center Revenues + Hotel direct 36% 16% + Walk-in 28% Opportunity: improve call + Call Center 16% center * Internet 13% 6% production + GDS 7% Baymont La Quinta n LaQuinta
Slide 28: Engine of Growth: Improve Hotel Economics
Engine of Growth Improve Hotel Economics Utilize La Quinta’s yield management skills to increase RevPAR for both brands RevPAR $40.64 Opportunity: T $36.15 close RevPAR gaps LaQuinta La Quinta Baymont 1999 2003 2003 2” LaQuinta
Slide 29: Engine of Growth: Improve Hotel Economics
Engine of Growth Improve Hotel Economics La Quinta’s strong cost management skills can be implemented at Baymont + Labor management skills * Training programs 2003 Cost Per Rented Room * Technology platform $30.28 Opportunity: + Purchasing power reduce Baymont operating costs La Quinta Baymont » LaQ
Slide 30: Engine of Growth: Improve Hotel Economics
Engine of Growth Improve Hotel Economics > Focus on guest satisfaction * La Quinta and Baymont guest satisfaction higher than midscale segment overall * Employee bonuses tied to guest satisfaction * Introduced new training programs to improve guest satisfaction Complaints per 1,000 Guests 1.50 13 ee
Slide 31: Engine of Growth: Improve Hotel Economics
Engine of Growth Improve Hotel Economics > Positive RevPAR momentum > Strong company-specific RevPAR performance > Rebounding local markets RevPAR Performance Year-Over-Year Percent Change 10% 11% 9, 7% 6% 4% 2% T T : 7% 1 Q3-03 Q4-03 Q1-04 Q2-04 9% mLa Quinta = Smith Travel Research Competitive Set
Slide 32: Engine of Growth: Development/Redevelopment Opportunities
Engine of Growth Development/Redevelopment Opportunities >» Redevelop existing La Quinta locations * High-demand markets with barriers to entry * Improve property economics >» Rebrand selected Baymont and La Quinta hotels * Improve network value of both brands * ROI driven decision to convert >» Dev
Slide 33: Engine of Growth: Increasing Fee Based Income
Engine of Growth Increasing Fee Based Income >» Increase market share through minimal capital investment >» Generate high margin, recurring fee income > Maintain strict control over product and service quality * Strict enforceable terms * Poor operators are expelled, marginal operators will not be a
Slide 34: Engine of Growth: Increasing Fee Based Income
Engine of Growth Increasing Fee Based Income + Utilize La Quinta’s successful franchising system * Strong brand equity Respected as an operator; aligned interest as owner Significant opportunity for geographic expansion Revenue producing distribution channels Frequent stayer program LONG-TERM Number
Slide 35: Creating Shareholder Value
Creating Shareholder Value > Proven management team Strong brands High quality assets with recent capital investments > Strong balance sheet with access to capital >» Enhanced sales and marketing programs > Successful franchising program 35 Engines of Growth > Enhance RevPAR, margin and Adjusted EBI
Slide 36: La Quinta
La Quinta BAYMONT JAA INNS & SUITES Woodfield. SUITES
Slide 37: Appendix
APPENDIX
Slide 38: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Three Mos. Ended Six Mos. Ended June 30, June 30 (in miltions) 2004 2003. 2004-2003 Net loss (per GAAP) $68) $(13.6) $(19.1) $63.9) Depreciation & amortization 302 324 595 638 Impairment of PP&E 7 46 27 688 47 48 92 oA Income tax (benefit) expense G9) (6.6) 9.0) (69.6)
Slide 39: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation earned fn ition) ee 91,1600 Lodging Reverne ses expences ozag Cortribution Ts Heathoae 6 other Revere aoe2 Experees Es Contribution 228 Combined cortibution 68 Interest expanse 2450 Depreciation & amortization 1058 Amortization of goodwill a5 Gain onsales of assets (12
Slide 40: Searchable text section of graphics shown above
Searchable text section of graphics shown above [ LOG O] Investor Presentation September 2004 SAF E HARBOR STATEMENT Certain matters discussed in this presentation may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “b