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1

H2-Hotel

Development

Situation Overview

by Market Segments

Draft Presentation - Mar 23, 10

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Situation Overview by Market Segments

1. HRIs Segmentation Performance

2. Contract Segment Mix

3. Average Daily Rate + Incremental Spend by Market Segment

4. Market Segment Opportunity Summary

5. Facility Requirements by Market Segment

6. Hyatt Regency Incheon Assumptions

Future Vision with Addition of H2

8. Future Vision

9. Rooms Configuration

10. F & B Configuration

11. HRI New Business Model

Appendix

12. HRI Function Rooms Utilization 2006 January ~ 2010 February

13. Lost Business Main Reasons 2006 January ~ 2010 February

14. Total Catering Lost Business - 2006 January ~ 2010 February

15. Total MICE Lost Business 2006 January ~ 2010 February

16. Catering Lost Business Due to Space Constrains 2006 January ~ 2010 February

17. MICE Lost Business due to space constrains 2006 January ~ 2010 February

18. Target Market ing Rooms

19. Total Passenger Growth by Region

20. Target Market ing F & B

21. KAL & Hanj in Production

22. IFEZ Large Function Space Competitors Stats

23. Large Function Space Projections

24. Domestic MICE Group Demand Trend (by actual number)

25. Domestic MICE Group Demand Trend (by portion)

26. YoungJong Island Distribution of Potential Large Convention Space Competition and Campus Concept Market Demand

27. Songdo-Distribution of Potential Large Convention Space Competition and Campus + Residence Concept Market Demand

28. Cheongra-Distribution of Potential Large Convention Space Competition and Campus Concept Market Demand

Index

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* Total No. of Room Nights by Market Segment

IT

Gro

Contract

Total

4

6

8

1

1

14

16

18

4 5 6 7 8 9 1 YT

IT Gro Contract Total

%%

7 %68%

8%1 %

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Main Contracted Accounts

-

20,000

40,000

60,000

80,000

100,000

120,000

2004 2005 2006 2007 2008 2009

RoomN

ights

Polar / Atlas

Northwest

Cathay Pacific

Hanjin

KAL

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3. Average Daily Rate + Incremental Spend by Market Segment

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Airline Casino Business

Group

Leisure Group Business FIT Leisure FIT

Won

ADR Rev. per Night

ontract roup FIT

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4. Market Segment Opportunity Summary

After reviewing the statistics we believe that there will be a strong demand

in the next 3 10 years in the following segments:

Market Segment Potential rowth ieldPotential Incremental

Spend

ontract

Casino High High High

Hanjin Layover High Low Low

KAL High Low Low

roup

Market Segment

MICE 50-300pax High Medium Medium - High

MICE 300+ Medium Low - Medium Medium

Wedding 300+ Medium Medium - High Medium - High

FIT

FIT Leisure High Medium - High Medium - High

FIT Business High High Medium

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asino Businessroup (MI E)

FIT Business FIT Leisure Wedding Airline/Hanjin

Leisure options

(Spa)

(Spa)

Seasonal options(Spa/Swimming Pool /

Ice Rink)

(Spa)

Shopping/Duty Free/Retail

(Low Price)

F&B alternatives

(Private room

facilities)

(low medium

spend)

Transportation

Kids facilities

Additional guest rooms

Additional floor space for the casino

Corporate Team Building Alternatives

Destination Venue

Entertainment options

Executive Recreational options

Group Check in

High Tech A.V./Quality

Medium Size Meeting rooms (Regency Size )

Networking Area dedicated to AirlinePersonnel (e.g. Table Tennis, Tennis, Pool

Table),

Residential

Storage space

Bridal room, Photography, Dress rental etc.

1 Stop Shopping

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There will no doubt be new emerging markets, but we should continue to focus on those that are continually

building and how we can yield them better.

Based on the historical data where we have seen Group business decline and FIT business plateau. We see a

opportunity for potential growth in the market segments of FIT, Group and Contract especially as we emerge

from a global economic recession.

The potential for high yield growth will come from market segments 1. Group , 2. FIT and 3. Casino , and this

is likely to be sustained if the planned visionary developments for the greater Songdo and Yong Jeong -doareas develop as planned.

The following recommendations are based on the statistics and information that has been made available to us

from the various government agencies. Although there is no guarantee as to the timeframe. A cautious approach

should be made when considering the timeframe of the development of these projects and potentially the

financial commitment in lieu of the recent global recession.

The opportunity to position the hotel at this early stage of development and concept , means that we must

understand the environment around us and the developments that are planned for the future before any detailedcommitment is confirmed.

We must also assume that surrounding developments may be delayed as we have already seen since the

opening of Hyatt Regency Incheon in 2003.

In order to be attractive to both the Incheon market and greater Seoul Market we must be able to offer a superior

product that is attractive to the MICE, FIT, and Leisure markets year round.


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7. Hyatt Regency Incheon Assumptions continued

Most importantly , we need to be self sufficient in all aspects of our facilities in order to attract the target markets

which compare us to city locations. i.e. A Destination venue

The facilities are already world class , but with the potential developments and long term vision for the island , we

should proactively look at other markets that can support the hotel to be a market leader in the next 10-20 years.

After a detailed review of the environment developing around us and the renewed access to the island, we

suggested the following options that could be considered for further development.

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10

H2-Hotel

Development

Hyatt Regency Incheon

Future Vision with Addition ofH2

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8. Future Vision

Hyatt Regency Incheon is the leading deluxe 5 star hotel in the airport area and Incheon.

With authentic hospitality, we serve International and Korean travelers the most dynamic

pragmatic lifestyle experience.

We want to be the market leader and compete with no one else. Concepts will cater to the

international and local market but will be original in the thought process, pragmatic and

catering for the local market. Our designed concepts will focus on the best utilization of

our space to generate the best return on investment for the areas and efficiency.

It is generally thought that demand for a 1000 pax Ballroom may only be when the

Songdo and Yong Jeong do areas have reached the full maturity of their development

stages which is likely to be in 10 15 years. In the immediate future 5 10 years, the

demand would be for medium to large size function rooms.

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It is understood that the new H2 project will need to target new markets and future

potential business opportunities in order to expand the current business in the area.

In conclusion to the review of the future developments in the area, we see the area to

potentially become self sufficient and a sought after leisure destination. We should

anticipate that there is potentially a bigger picture in the long term, but not to over

invest for a lower return on investment in the short term ( 5 10 years).

If the design scope permits , venues should be specifically designed and segregated ,

taking into consideration noise and pre-function area space allocation.

8. Future Vision

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9. Rooms onfiguration

Sqm Total Sqm

(215) King Rooms 36 7,740

(105) Twin Rooms 36 3,780

(5) Disabled Rooms 36 180

(66) Regency Club King Rooms 36 2,376

(34) Regency Club Twin Rooms 36 1,224 (20) 1bedroom Service Apartments 72 1,440

(15) 2 bedroom Service Apartments 90 1,350

(25) Suites 72 1,800

(13) Executive Suites 108 1,404

(1) Presidential Suites 144 144

(1) Chairman Suites 180 180

Club Lounge, Boardroom, & Pantry 288 288

Guest Floor Service Areas (estimate of 25) 15 375

500 Total uest Rooms & Suites 22,281

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10. F & B onfiguration

Option 1 F & B ADD

1 - Restaurant 200 seats (with Bar facility)

1 - Ballroom 800sqm ( divisible into 3 sections )

8 - Smaller function rooms

1 Lounge

Target the small/medium sized MICE ie. 500 persons and less as the number of these types of event are greater in

volume and trends show event sizes are generally getting smaller.

Taking this option would also be conducive to the wedding business which also is seeing a trend of size reduction and

catering only.

Also given that within the vicinity we have Song-do - CONVENSIA, KINTEX and potentially MILANO (Local

Convention & exhibition centers) this would compliment these facilities rather than directly compete.

PROS

- Flexibility to handle many small to medium MICE/Events Groups

- High restaurant utilization expected with MICE for lunch and Hanjin for dinner

ONS

- Can not handle lunch and dinner demand with full Hotel and Banquet occupancy

- Can not accommodate 500+ MICE meals in one venue only

- Limited room for restaurant growth on week end (Currently reach full capacity)

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Option 2 F & B ADD

1 Restaurant 200 seats (with bar facility)

1 Ballroom 1,600sqm ( divisible into 4 sections )

1 Meeting Room (Type A) 300sqm (divisible into 2 sections)

2 Meeting Room (Type B) 100sqm

3 Meeting Room (Type C) 75sqm

2 Meeting Room (Type D) 50sqm

1 Board Room 45sqm

1 Lounge

A large ballroom potentially long term is what would be required to support large MICE groups of over 500+ persons.

The volume of these types of events using hotel facilities are limited and guest accommodation util ization tends to be

lower.

On the contrary this configuration would allow flexibility for the up to 500pax MICE as meeting + meals can be

confined to one area.

Utilization of the whole Ballroom would be low and the tendency would be that these events would be weddings or

social event therefore a meal venue would not be required.

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Option 2 F & B ADD

PROS

- Open opportunities to compliment Song-do CONVENSIA

- Increase restaurant variety offerings.

- Flexibility to handle multiple events at one time e.g. 2 weddings, 2 or more smaller MICE groups

ONS

- Challenge to sell the whole Ballroom on a regular basis in the short term

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17

11. Hyatt Regency Incheon New Business Model

H1

523 Rooms 500 Pax Ballroom

1 x Breakout Rooms 100 pax

4 x Breakout Rooms

Restaurant 8 401 Seats

Spa

1 Restaurant 200 seats + Bar Facility

H1

523 Rooms 500 Pax Ballroom

1 x Breakout Rooms 100 pax

4 x Breakout Rooms

Restaurant 8 401 Seats

Spa

1 Restaurant 200 seats + Bar Facility

H2 Option 1

Rooms

500 Rooms

F & B

1 Ballroom 800sqm ( divisible into 3 sections )

2 Meeting Room (Type A) 120sqm



1 Board Room 45sqm 1 Lounge with R/S pantry + Casino offerings

Other Facilities

Gymnasium Room

Business Centre

Administrative Offices

In flight Catering Production Kitchen

Casino

H2 Option 2

Rooms

500 Rooms

F & B

1 Ballroom 1,600sqm ( divisible into 4 sections )

1 Meeting Room (Type A-divisible into 2 section) 300sqm



2 Meeting Room (Type D) 50sqm

1 Board Room 45sqm

1 Lounge with R/S pantry + Casino offerings

Other Facilities

Gymnasium Room

Business Centre

Administrative Offices

In flight Catering Production Kitchen

Casino

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18

H2-Hotel

Discussion

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Situation Overview by Market Segments



3. Average Daily Rate + Incremental Spend by Market Segment 4. Market Segment Opportunity Summary



Future Vision with Addition of H2

8. Future Vision

9. Rooms Configuration

10. F & B Configuration

11. HRI New Business Model

Appendix


13. Lost Business Main Reasons 2006 January ~ 2010 February

14. Total Catering Lost Business - 2006 January ~ 2010 February

15. Total MICE Lost Business 2006 January ~ 2010 February

16. Catering Lost Business Due to Space Constrains 2006 January ~ 2010 February

17. MICE Lost Business due to space constrains 2006 January ~ 2010 February

18. Target Market ing Rooms

19. Total Passenger Growth by Region 20. Target Market ing F & B

21. KAL & Hanjin Production

22. IFEZ Large Function Space Competitors Stats


24. Domestic MICE Group Demand Trend (by actual number)

25. Domestic MICE Group Demand Trend (by portion)

26. YoungJong Island Distribution of Potential Large Convention Space Competition and Campus Concept Market Demand

27. Songdo-Distribution of Potential Large Convention Space Competition and Campus + Residence Concept Market Demand

28. Cheongra-Distribution of Potential Large Convention Space Competition and Campus Concept Market Demand

Index

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20

H2-Hotel

Development

Appendix Materials

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21


0%

10%

20%

0%

40%

50%

60%

70%

80%

2004 2005 2006 2007 2008 2009

Se re ate allroom 280~550) Ballr ( 8 55 ) Regency

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13. Lost Business Main Reasons2006 January ~ 2010 February

8%

5%

3%

16%

9%

18%

41%

Alternate Destination Function Space Issue Customer Budget

Speaker Cancelled Location Competitors

Others

50% of our lost business losses

are somehow related to our function

space competitiveness

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14. Total atering Lost Business - 2006 January ~ 2010 February

The total number of lost cateringfunctions since 2006 is 649

55% (354) were small scale

functions under 100pax

25% (162) were small-medium scale

functions between 100 and 300pax.

7% (46) were medium scale

functions between 300 and 500pax

8% (54) were large scale functions

between 500 and 1000pax

5% (33) were very large scale

functions with more than 1000pax

atering Lost Business

100 ~ 300

25%

300 ~ 500

7%

500 ~ 1000

8%

More than

1000

5%

Less than

100

55%

Unit : Pax

o. of Function Average o. of Pax

Less than 100 354 41

100 ~ 300 162 202

300 ~ 500 46 400

500 ~ 1000 54 6 0

More than 1000 33 2,401

Total 649 747

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15. Total MI E Lost Business 2006 January ~ 2010 February

MI E Lost Business

100 ~ 500

41%

500 ~ 1000

8%

Less t an100

4 %

More t an

1000

8%

nit a

MI E Lost Business

100 ~ 00

2%

More t an

1000

9%

00 ~ 500

9%

Less t an

10042%

500 ~ 1000

8%

nit a

No. of Function Average No. of a

Less t an 100 239 49

100 ~ 00 176 186

00 ~ 500 49 392

500 ~ 1000 42 692

More t an 1000 48 2,053

Total 554 674

T e total number of lost MI EBusiness since 2006 is 554

42% (239) were small scale

functions under 100pax



9% (49) were medium scale

functions between 300 and 500pax





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16. atering Lost Business Due to Space onstrains 2006 January ~ 2010 February

No. of Function Average No. of Pax

Less than 100 16 35

100 ~ 300 9 211

300 ~ 500 2 430

500 ~ 1000 5 666

More than 1000 3 1,980

Total 35 664

The total number of catering

functions lost due to space

constrains since 2006 is 35

45% (16) were small scale functions

under 100pax



6% (2) were medium scale functions






atering Lost Business

100 ~ 300

26%

300 ~ 500

6%

500 ~ 1000

14%

More than

1000

9%

Less than

100

45%

nit Pax

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17. MI E Lost Business due to space constrains2006 January ~ 2010 February

No. of Funct ion Average No. of Pax

Less than 100 4 83

100 ~ 300 8 198

300 ~ 500 2 328

500 ~ 1000 3 708

More than 1000 7 2,825

Total 24 331

The total number of lost MI E

Business due to space constrains

since 2006 is 24

17% (4) were small scale functions

under 100pax



8% (2) were medium scale functions




29% (7) were very large scale with

more than 1000pax

MI E Lost Business

100 ~ 300

33%

More than

1000

29%

500 ~ 1000

13%

Less than

100

17%

300 ~ 500

8%

Unit : Pax

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215 King Rooms / 110 Twin Rooms Transient travelers from growing segments (regional tourist, Chinese tourist, long-haul layovers)

Honeymoon market

Family Leisure in summer & winter school breaks

Hyatt Intl Limiter Time Offers

MICE

66 Regency lub King Rooms / 34 Regency lub Twin Rooms FIT Corporate

MICE VIPs full charge upgrades

Casino regular guests

High OCC upselling

Suites

MICE overseas VIPs

Casino top rollers

Foreign Governments delegates

Residential Suites 2 Bed - Residential Suites 1 Bed

Incheon-Development overseas long-term guests (I.e. Songdo-related)

Foreign delegates on IIAC projects

Airline/IIAC-development, passenger growth projections management staff

18. Target Marketing Rooms

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19. Total Passenger rowth by Region

Europe

Asia

N. America

World Wide

Passenger/ Logistic

Passenger/ Logistic

Passenger/ Logistic

Passenger/ Logistic

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0

10000

20000

30000

40000

50000

60000

70000

2004 2005 2006 2007 2008 2009

KAL & Hanjin Production

KAL rew Hanjin

21. KAL & Hanjin Production

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22. IFEZ Large Function Space

ompetitors StatsAppendix

NA: Non-Announced yet

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31


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24. Domestic MI E roup Demand Trend (by actual number)

2006 2008 International MICE group demand in Korea

Source: Korean Tourism Organization, 2009

MICE group with less than 500 pax accounts for 70%.

Groups between 100 and 500 pax accounts for 51%.

0

50

10 0

15 0

20 0

25 0

L e s s t

10 0

10 0 0 0 30 0 500 5 00 1,000 M ore t

1,00 0P a x

2006

2007

2008

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25. Domestic MI E roup Demand Trend (by portion)

2006 2008 International MICE group demand in Korea

Source: Korean Tourism Organization, 2009

MICE group with less than 500 pax accounts for 70%.

Groups between 100 and 500 pax accounts for 51%.

0%

5%

0%

5%

0%

5%

0%

5%

40%

e ss t an

1 00

100 ~ 300 300 ~ 500 500 ~ 1 ,00 0 M ore t an

1,0 00P a

200 6

200 7

200 8

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26. oungJong Island Distribution of Potential Large onvention Space

ompetition and ampus oncept Market Demand

Yon g yu & Mu i Tour Co m p l e x(2020) MGM the m e pa rk

Un b o ok Le i sure c o m p l e x

(2014)

Logis t ic c o m p l e x (2012~ 2017) Fie ra Miilano Inc he o n Co m p l e x

S ky City (202 0)

- Me d i - c i ty

Wa te r Pa rk

Air City

Fash io nIs la nd (2014)

Fa nt a s y o rld (2020)

M agnetic rain (2013)

Young jo ng Broad way

(2013)

Yon g yu & Mu i Tour Co m p l e x(2020) MGM the m e pa rk

Un b o ok Le i sure c o m p l e x

(2014)

Logis t ic c o m p l e x (2012~ 2017) Fie ra Miilano Inc he o n Co m p l e x

S ky City (202 0)

- Me d i - c i ty

Wa te r Pa rk

Air City

Fash io nIs la nd (2014)

Fa nt a s y wo rld (2020)

M agnetic rain (2013)

Young jo ng Broad way

(2013)

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27. Songdo-Distribution of Potential Large onvention Space ompetition

and ampus + Residence oncept Market Demand

Convens ia

Inche o n Twin To we rs

(151F, 2013)

Bio , IT ce nte r

(2011)

NEAT Trade

Tow er (2010)

Internatio na l Scho olJac k Nicklous Golf Club

Convens ia

Inche o n Twin To we rs

(151F, 2013)

Bio , IT ce nte r

(2011)

NEAT Trade

Tow er (2010)

Internatio na l Scho olJac k Nicklous Golf Club

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28. heongra-Distribution of Potential Large onvention Space ompetition and

ampus oncept Market Demand

Ro b o t Land (2013)GM Dae w o oR&D

Intl. i-tech ar

(2011)

Go lfPark (201 0)

Intl. Hi- te c h Park

(2011)

Inte rnatio na l Buis ne s sC lus te r (201 5)

City To we r (201 1)

SNU KAIST

(2012)

Ro b o t Land (2013)GM Dae w o oR&D

Intl. i-tech ar

(2011)

Go lfPark (201 0)

Intl. Hi- te c h Park

(2011)

Inte rnatio na l Buis ne s sC lus te r (201 5)

City To we r (201 1)

SNU KAIST

(2012)

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Final H2-Mar 24,10

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