The Company’s hotel properties are subject to the normal operating risks common to the hotel industry, including seasonal and cyclical business fluctuations.

In prior years approximately 60% of the Company’s annual revenues were generated in the second and third quarters. Management of the individual hotel properties were aware of the seasonal nature of their own markets, and sales initiatives would be planned to offset times of low demand as required. Recently, particularly with the Company’s property in Edmonton, Alberta, this traditional seasonality has been less significant. Taking the last four quarters into account, during which time the Company earned total revenues of $31.7 million, the first quarter of 2007 accounted for 21.2% of the total while the remaining three quarters ranged from 25.7% (2006 – Q3) to 26.6% (2007 – Q2). Management believes this is a result of corporate business looking for less busy times of the year to travel, thereby filling in the traditionally weaker winter months. Seasonal factors should be considered when reviewing the Company’s quarterly operating results.

The hotel industry has, historically, been subject to significant economic cycles. Industry reports indicate that the hotel industry in Canada is operating in a weak economic environment, although performance indicators suggest a recovery is underway. Such recovery may be delayed due to world events. A stronger market should allow for continued improvements in the occupancy levels and average room rates at the Company’s properties.

As discussed above, work has commenced on an access road to allow construction of a high-rise condominium development to start adjacent to one of the Company’s hotels. There is a risk that this disruption will cause some guest relocation, resulting in lower occupancies. Management believe that by keeping guests fully informed of the work being undertaken, and providing services such as valet parking, any loss of business will be minimal.