spent on tourism promotion or tourism development, with no greater than 30 percent entering the municipality's general fund.

5

With the foregoing in mind, the following table provides 10 years of estimated lodging tax revenue that could be generated from the lodging (rooms) revenue of the existing lodging supply in the City of Mequon at two levels - 5.0 percent and 8.0 percent - based on the range of lodging taxes being assessed in the surrounding municipalities (as presented in our earlier table.) We then estimated the allocation of the lodging tax revenue for tourism development and the city's general fund.

Estimated Lodging Tax Revenue City of Mequon, WI

Year Rooms Revenue Scenario 1: 5.0% Lodging Tax Scenario 2: 8.0% Lodging Tax

Total $ Amount (at 5.0%) 70% to Tourism Development 30% to General Fund Total $ Amount (at 8.0%) 70% to Tourism Development 30% to General Fund

Hypothetical Lodging Tax Revenues Using Historical Lodging (Rooms) Revenue Performance

2023 $2,869,776 $143,489 $100,442 $43,047 $229,582 $160,707 $68,875

2024 $2,667,420 $133,371 $93,360 $40,011 $213,394 $149,376 $64,018

2025 $2,742,230 $137,112 $95,978 $41,133 $219,378 $153,565 $65,814

Hypothetical Lodging Tax Revenues Using Estimated Future Lodging (Rooms) Revenue Performance

2026 $2,824,497 $141,225 $98,857 $42,367 $225,960 $158,172 $67,788

2027 $2,909,232 $145,462 $101,823 $43,638 $232,739 $162,917 $69,822

2028 $2,996,509 $149,825 $104,878 $44,948 $239,721 $167,805 $71,916

2029 $3,086,404 $154,320 $108,024 $46,296 $246,912 $172,839 $74,074

2030 $3,178,997 $158,950 $111,265 $47,685 $254,320 $178,024 $76,296

2031 $3,274,367 $163,718 $114,603 $49,115 $261,949 $183,365 $78,585

2032 $3,372,598 $168,630 $118,041 $50,589 $269,808 $188,865 $80,942

2033 $3,473,775 $173,689 $121,582 $52,107 $277,902 $194,531 $83,371

2034 $3,577,989 $178,899 $125,230 $53,670 $286,239 $200,367 $85,872

2035 $3,685,328 $184,266 $128,986 $55,280 $294,826 $206,378 $88,448

Four of the seven municipalities have a 7.0 percent lodging tax, and the average lodging tax rate of the municipalities is 6.7 percent. A 5.0 percent lodging tax rate would yield the same combined lodging and sales tax rate as Cedarburg and would be the lowest in the area. An 8.0 percent lodging tax rate would position the combined lodging and sales tax just below the Milwaukee County hotels, which are the highest in the area.

Please note that there are other significant assumptions underlying these estimates. As such, this letter is subject to change pending receipt of new or additional information and should be primarily for internal use only.

We would be pleased to hear from you should you need further interpretation or amplification of the following findings.

Sincerely,

REVPAR International, Inc.

REVPAR International, Inc