On a year-to-date June basis, the transaction market saw ten hotels trade at a total value of approximately $l21.9 million compared to the first half of
1999 with 24 trades totaling approximately $258 million, a decline of 52.8%. During the first six months this year, we witnessed the lowest transaction volume since 1994 (compared to the same period).

Western Canada witnessed only four of the ten hotel transactions during the first half of  2000, however, represented over 37% of the total transaction volume. This is a dramatic increase from the same period last year, when Western Canada only represented less than 10% of the transaction volume. As a result, Eastern Canada saw a decrease in in market share to 63% from 91% during the first six months of 1999.  On a provincial basis, almost half of the transactions were completed in Ontario, followed by two in Manitoba and one hotel each trading in Alberta, Saskatchewan, Quebec and Newfoundland.

The presence of public companies in the investment market continues to be quiet with four of the five transactions in Q2 2000 completed by private investors. The only hotel purchased by a REIT during the first half of 2000 was the 402-room Crowne Plaza Winnipeg (which has been reflagged as the Delta Winnipeg) acquired by Legacy Hotels REIT for $29.5 million in June.

With strong occupancy and average room rate performance, hotels continue to achieve operating profit gains. However, given the stringent underwriting requirements for debt and increasing yield requirements investors have on their equity, the average cap rate, during the first six months of 2000 was 12.1%, showing no major sign of decline.