Proposed Hotel - City of Eden Prairie

Transcription

MARKET STUDY
Proposed Hotel
EDEN PRAIRIE, MINNESOTA
SUBMITTED TO:
PREPARED BY:
Mr. David Lindahl
City of Eden Prairie
8080 Mitchell Road
Eden Prairie, Minnesota, 55344
HVS Consulting and Valuation Services
Division of TS Worldwide, LLC
33972 North Oak Drive
Pequot Lakes, Minnesota, 59472
+1 (952) 949-8484
+1 (303) 588-6558
PR OPOSED
March-2014
March 11, 2014
Mr. David Lindahl
City of Eden Prairie
8080 Mitchell Road
Eden Prairie, Minnesota, 55344
HVS MINNEAPOLIS
Re:
33972 North Oak Drive
Pequot Lakes, Minnesota, 59472
+1 (303) 588-6558
Proposed Hotel
Eden Prairie, Minnesota
HVS Reference: 2013020900
+1 (970) 493-2919 FAX
www.hvs.com
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Dear Mr. Lindahl:
Pursuant to your request, we herewith submit our market study pertaining to the
above-captioned property. We have inspected the potential site locations and
analyzed the hotel market conditions in the Eden Prairie, Minnesota area, and the
results of our fieldwork and analysis are presented in this report. We have also
made recommendations for the best-suited hotel product for the market area. Our
report was prepared in accordance with the Uniform Standards of Professional
Appraisal Practice (USPAP), as provided by the Appraisal Foundation.
We hereby certify that we have no undisclosed interest in the property, and our
employment and compensation are not contingent upon our findings. This study is
subject to the comments made throughout this report and to all assumptions and
limiting conditions set forth herein.
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TS Worldwide, LLC
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Superior results through unrivaled
hospitality intelligence. Everywhere.
Tanya J. Pierson, MAI, Managing Director
[email protected], +1 (303) 588-6558
State Appraiser License (MN) 40268741
Table of Contents
SECTION
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
TITLE
Executive Summary
Description of the Site and Neighborhood
Market Area Analysis
Supply and Demand Analysis
Description of the Proposed Project
Projection of Occupancy and Average Rate
Projection of Income and Expense
Project Conclusions
Statement of Assumptions and Limiting Conditions
Certification
PAGE
1
11
17
38
68
87
95
114
120
123
Addenda
Penetration Explanation
i
Glossary
v
Qualifications
1. Executive Summary
Objective of the
Market Study
The objective of the market study is to examine current and potential demand for
lodging accommodations, as well as the existing and proposed supply in Eden
Prairie and surrounding suburbs near the city.
Intended Use and
Audience of the
Appraisal
This market study report is being prepared for the City of Eden Prairie. The
findings of this market study are anticipated to be used to determine if the City of
Eden Prairie’s hotel market has sufficient depth and need to accommodate a new
select- or full-service hotel.
Definitions:
Select-Service Hotels: Select-service hotels, as the name suggests, offer the
fundamentals of limited-service properties together with a selection of the
services and amenities characteristic of full-service properties. Generally, this
means select food and beverage and banquet facilities but on a less elaborate scale
than one would find at full-service hotels. Overall, it is fair to say that select-service
properties have more in common with their limited-service properties, but specific
offerings of select-service properties vary.
Select-service hotels keep operating costs down by offering services and amenities
in moderation. Hence, such properties generally do not feature multiple
restaurants, expansive catering services, or an abundance of meeting space. For
example, a select-service hotel’s restaurant is likely to offer a limited menu and
may not be open for all three meals, seven days a week.
In-room amenities, however, can approach or meet the levels found at full-service
hotels. In fact, commercial demand has grown among select-service hotels since
2007, as budgets for business travel tightened. The select-service segment has
continued to increase its competitive advantage by offering the in-room amenities
of full-service hotels while keeping prices low in the absence of a full-spectrum
product offering.
While the term “select-service” may be relatively new to the lodging scene, the
concept has been around for many years. For most people, a Hilton Garden Inn, a
Courtyard by Marriott, or a Hyatt Place evokes an image of the quintessential
select-service hotel. However, the term also describes individual properties that
vary from largely limited-service brands. Examples of such properties include
Aloft, Wyndham Garden Inn, Clarion, Four Points by Sheraton, Hotel Indigo,
Ramada, and Cambria Suites, which feature on-site restaurants or a more
elaborate array of in-room amenities.
March-2014
Executive Summary
Proposed Hotel – Eden Prairie, Minnesota
1
Similarly, the line between full-service and the select-service hotels has become
increasingly blurred with the release of several new prototypes by companies such
as Starwood Hotels & Resorts and Wyndham. The new prototypes, which include
less expansive food and beverage services and feature a smaller overall building
footprint, provide for greater operating efficiency for a hotel that is less expensive
to build and maintain.
Full-Service Hotels: The most distinguishing feature of a full-service hotel is the
abundant provision of food and beverage services suitable for both guests and
groups. Full-service hotels, unlike hotels in other segments, typically play a
significant role in servicing the meeting and special events needs in their market
area. Therefore, on-site restaurants, lounges, and group meeting spaces with
banquet facilities are the cornerstones of the full-service offering. Furthermore,
selective amenities such as spas, elaborate banquet rooms, door attendants, valet
parking, extended room service, concierge services, and high-end restaurants and
boutiques distinguish many full-service properties.
These multiple services and amenities come at a higher operational cost for the
full-service hotel, but they also help the hotel to capture demand that may be more
selective, further allowing the hotel to command a higher average rate. Groups
requiring meeting space are a significant source of business for full-service
properties, as are business travelers willing to pay the higher room rates generally
charged at these hotels. Leisure and vacation travelers, especially at the upscale
and luxury levels, are also a significant market for many full-service hotels. In all
cases, full-service hotel guests seek the extra amenities and service levels found
only at these properties.
Subject of the
Market Study
March-2014
The City of Eden Prairie is looking into the development of a full-service or selectservice hotel and has four potential site locations for such development; however,
a specific site had not been chosen at the time of our report. We have analyzed the
locations of the sites in regard to their proximity to demand generators, retail
establishments, and entertainment venues. We recommend that the proposed
subject hotel operate as an upscale, select-service property, such as an Aloft or a
comparable brand.
Executive Summary
2
SITE MAP
2
4
3
1
Site #
Location
Strengths
Weaknesses
1
Eden Prairie Center Mall Area
Near several recreational, retail, and
entertainment venues, as well as I-494
High-density hotel area
2
Near Optum Campus
Near largest employer, easy access to
regional highways, LRT Station
Most likely high constructon cost due to
area redevelopment
3
Near SuperValu Campus
Inside Golden Triangle, many demand
generators nearby, near future LRT Station
SuperValu has been downsizing; visibility
may be an issue
4
Near Shop NBC
Near LRT Station, easy accessibility to site
Limited ancillary services nearby
March-2014
Executive Summary
3
The subject of the market study is a proposed lodging facility within the city of
Eden Prairie. For the purpose of this analysis, we have assumed that the property
would open on June 1, 2015 and feature 120 rooms, a grab-n-go snack bar and a
lobby bar, 5,000 to 7,500 square feet of meeting space, an indoor pool, an indoor
whirlpool, an exercise room, lobby workstations, an outdoor patio, and a guest
laundry room. The hotel will also feature all necessary back-of-the-house space.
The number of people that can be accommodated in a typical meeting facility that
measures between 5,000 and 7,500 square feet may vary depending on the
configuration of such space, as well as the available number meeting rooms that
are able to break out into smaller rooms. The following table illustrates the
approximate capacity that can be accommodated.
March-2014
Executive Summary
4
FIGURE 1-1
MEETING ROOM CAPACITY
Cocktail Party
Meeting Room Size/
Capacity # of people
Square Feet
500
850
1000
1500
2000
2500
3000
3500
4000
4500
5000
62-83
106-141
125-166
187-250
250-333
312-416
375-500
437-583
500-666
562-750
625-833
Banquet Style
41-55
70-94
83-111
125-166
166-222
280-277
250-333
291-388
333-444
375-500
416-555
Theater Style
62-83
106-141
125-166
187-250
250-333
312-416
375-500
437-583
500-666
562-750
625-833
Classroom Style
27-35
47-60
55-71
83-107
111-142
138-178
166-214
194-250
222-285
250-321
277-357
Conference Style
Hollow Square Style
16
28
33
50
66
83
100
116
133
150
166
14
24
28
42
57
71
85
100
114
128
142
U-Shaped Style
14
24
28
42
57
71
85
100
114
128
142
Trade Show
2-3
4-5
4-6
7-9
9-12
12-16
14-19
16-22
19-25
21-28
24-32
Reception Style
55
94
111
166
222
277
333
388
444
500
555
Source: Meeting Planner and Banquet Calculator
March-2014
Executive Summary
5
Pertinent Dates
The effective date of the report is February 20, 2014. The subject site was
inspected by Lizzette Casarin and Tanya J. Pierson, MAI on November 4, 2013.
Ownership, Franchise,
and Management
Assumptions
There are four potential site locations for the subject property's development;
however, the City had not chosen a specific parcel at the time of our research.
Details pertaining to management terms were not yet determined at the time of
this report; therefore, our forecast fees represent a blended average of what would
be expected on a base-fee and incentive-fee basis. We have assumed a marketappropriate total management fee of 3.0% of total revenues in our study.
We recommend that the proposed subject property operate as an upscale, selectservice hotel. For the purpose of this report, we have assumed that the property
would be branded with a nationally recognized hotel brand, such as an Aloft, a
select-service brand affiliated with Starwood Hotels & Resorts, or another
comparable select-service brand. However, a specific franchise affiliation and/or
brand had yet to be finalized at the time of this study. Based on our review of the
expected terms, the Aloft franchise is reflected in our forecasts with a royalty fee of
5.5% of rooms revenue, and a marketing assessment of 4% of rooms revenue.
Reservations fees will also be due, and are included in the rooms expense line item
of our forecast.
After reaching out to numerous hotel companies to verify the availability of brands
for the proposed subject hotel, and based on our conversations with hotel brand
representatives, the following brands are available for development in Eden
Prairie:
·
Aloft
·
Wyndham Garden Inn
·
Radisson Red
·
Four Points by Sheraton
·
Hotel Indigo
·
Ramada
·
Cambria Suites
While these brands represent multiple parent hotel companies, based on our
review of the national performance of each of these brands, our first
March-2014
Executive Summary
1
recommendation would be Aloft because of its overall 2013 performance across
the United States.
Summary of Hotel
Market Trends
Local employers and headquarter offices in the area, the Minneapolis-St. Paul
International Airport, and the Mall of America represent the primary sources of
demand for the selected competitive set of hotels in this market. Market-wide
occupancy declined between 2001 and 2003, primarily due to the opening of the
SpringHill Suites Minneapolis Eden Prairie and the Hilton Garden Inn Minneapolis
Bloomington. After the quick absorption of the new supply, the market realized
year-over-year occupancy increases in 2004 and 2005, largely due to stronger
corporate travel and overall economic growth in the Eden Prairie area; occupancy
fluctuated between 2006 and 2007. However, occupancy fell in 2008 with the
onset of the financial crisis and the opening of the Hilton Bloomington; the decline
continued into 2009, concurrent with the Great Recession. Demand then returned
to this resilient market in 2010, with market occupancy posting a 12.6% increase.
In 2011, occupancy rose only slightly, but declined once again in 2012. The latest
year-to-date data for 2013 show a slight decrease, attributed to an increasing level
of supply in the adjacent markets, as well as the changes and layoffs experienced at
SuperValu.
The following table provides a historical perspective on the supply and demand
trends for a selected set of hotels that would be considered primarily and
secondarily competitive once the proposed subject hotel is open in Eden Prairie, as
provided by Smith Travel Research.
Available room nights equates to the average daily room count times 365 days.
Occupancy is calculated by dividing the occupied room nights by the available
room nights. Average rate is calculated by dividing the total rooms revenue by the
total occupied room nights. RevPAR, which stands for Revenue Per Available
Room, is calculated by taking occupancy times average rate.
March-2014
Executive Summary
2
FIGURE 1-2
Year
HISTORICAL SUPPLY AND DEMAND TRENDS (STR)
Average Daily Available Room
Room Count
Nights
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2,147
2,226
2,204
2,140
2,224
2,224
2,224
2,575
2,706
2,706
2,707
2,708
Change
783,573
812,490
804,492
781,040
811,760
811,760
811,760
939,990
987,690
987,690
988,058
988,420
—
3.7 %
(1.0)
(2.9)
3.9
0.0
0.0
15.8
5.1
0.0
0.0
0.0
Average Annual Compounded Change:
2001-2012
2.1 %
Occupied Room
Nights
477,810
462,520
448,178
466,833
533,416
525,380
539,302
567,370
579,579
652,797
662,708
650,896
Change
—
(3.2) %
(3.1)
4.2
14.3
(1.5)
2.6
5.2
2.2
12.6
1.5
(1.8)
Occupancy
Average
Rate
Change
RevPAR
Change
61.0 %
56.9
55.7
59.8
65.7
64.7
66.4
60.4
58.7
66.1
67.1
65.9
$104.72
101.06
94.09
97.88
104.44
112.10
117.73
122.32
108.41
105.46
110.27
114.55
—
(3.5) %
(6.9)
4.0
6.7
7.3
5.0
3.9
(11.4)
(2.7)
4.6
3.9
$63.86
57.53
52.42
58.51
68.63
72.55
78.21
73.83
63.62
69.70
73.96
75.44
—
(9.9) %
(8.9)
11.6
17.3
5.7
7.8
(5.6)
(13.8)
9.6
6.1
2.0
2.9 %
0.8 %
1.5 %
Year-to-Date Through September
2012
2013
2,708
2,708
739,284
739,223
—
(0.0) %
497,980
495,320
—
(0.5) %
Number
Hotels Included in Sample
of Rooms
Marriott Minneapolis Southwest
Hilton Garden Inn Minneapolis Eden Prairie
Fairfield Inn & Suites Minneapolis Eden Prairie
Hyatt Place Minneapolis Eden Prairie
Courtyard Minneapolis Eden Prairie
Springhill Suites Minneapolis Eden Prairie
Embassy Suites Bloomington
Westin Edina Galleria
Hilton Minneapolis Bloomington
Crowne Plaza Bloomington Airport
Doubletree Bloomington Minneapolis South
Sofitel Minneapolis
321
97
90
126
149
119
218
225
256
256
568
282
Total
67.4 %
67.0
Year
$115.56
119.29
—
3.2 %
$77.84
79.93
—
2.7 %
Year
Affiliated
Nov 1988
May 2000
Jan 1997
Oct 2007
Feb 1989
Sep 2001
Feb 1999
Aug 2008
Jan 2008
May 2004
Jul 2011
Apr 1975
Opened
Nov 1988
May 2000
Jan 1997
Jan 1997
Feb 1989
Sep 2001
Sep 1980
Aug 2008
Jan 2008
Jul 1970
Sep 1970
Apr 1975
2,707
Source: STR Global
The following tables reflect our estimates of operating data for hotels on an
individual basis. These trends are presented in detail in the Supply and Demand
Analysis chapter of this report.
March-2014
Executive Summary
3
FIGURE 1-3
PRIMARY COMPETITORS – OPERATING PERFORMANCE
Estimated 2010
Estimated 2011
Estimated 2012
Courtyard by Marriott Minneapolis Eden Prairie
Fairfield Inn by Marriott Eden Prairie
SpringHill Suites by Marriott Minneapolis Eden Prairie
149
93
97
126
119
75 % 5 %
70
15
80
5
65
10
75
10
20 %
15
15
25
15
149
93
97
126
119
65-70 %
60-65
65-70
70-75
65-70
$100-105
80-85
115-120
90-95
95-100
149
93
97
126
119
60-65 %
65-70
75-80
70-75
65-70
$110-115
85-90
115-120
95-100
100-105
149
93
97
126
119
Sub-Totals/Averages
584
73 %
9%
18 %
584
67.7 %
$98.39
584
69.1 %
$103.82
584
71.8 %
$98.26
Number
of Rooms
Property
Meet
ing a
n
Grou d
p
Weighted
Annual
Room
Count
Comm
ercia
l
Leisu
re
Est. Segmentation
Occ.
Average
Rate
Weighted
Annual
Room
Count
Occ.
Average
Rate
Weighted
Annual
Room
Count
Occ.
Average
Rate
65-70 % $110-115
65-70
90-95
75-80
115-120
70-75
95-100
75-80
70-75
Secondary Competitors
2,127
53 % 28 %
19 %
1,047
65.6 %
$108.08
1,049
67.1 %
$111.80
1,048
65.7 %
$120.96
Totals/Averages
2,711
60 % 21 %
19 %
1,631
66.4 %
$104.54
1,633
67.8 %
$108.89
1,632
67.9 %
$112.36
FIGURE 1-4
SECONDARY COMPETITORS – OPERATING PERFORMANCE
DoubleTree by Hilton Bloomington Minneapolis South
Sheraton Bloomington
Totals/Averages
March-2014
Estimated 2010
Weighted
Total
Annual
Competitive Room
Average
Level
Rate
Occ.
Count
Estimated 2011
Weighted
Annual
Average
Room
Rate
Occ.
Count
Estimated 2012
Weighted
Annual
Average
Room
Rate
Occ.
Count
45 %
35
31
60
70
60
65
30 % 25 %
45
20
21
48
20
20
25
5
25
15
20
15
50 %
40
50
50
70
50
40
128
226
109
129
225
141
90
50-55 % $90-95
60-65
90-95
70-75
120-125
75-80
110-115
60-65
110-115
65-70
105-110
70-75
125-130
128
228
109
129
225
141
90
50-55 % $95-100
65-70
85-90
70-75
120-125
75-80
120-125
60-65
115-120
65-70
105-110
70-75
145-150
128
227
109
129
225
141
90
50-55 % $95-100
60-65
105-110
65-70
130-135
70-75
125-130
60-65
120-125
65-70
105-110
65-70
160-170
2,127
53 %
28 % 19 %
49 %
1,047
65.6 % $108.08
1,049
67.1 % $111.80
1,048
65.7 % $120.96
Leisu
re
256
568
218
257
321
282
225
Meet
Number
of Rooms
Comm
ercia
l
Property
ing a
n
Grou d
p
Est. Segmentation
Executive Summary
4
It is important to note that the full-service hotels located outside of Eden Prairie
achieve higher average rates than many of the limited-and select-service hotels in
Eden Prairie; however, because of their size and higher concentration of group
business, their RevPAR is comparable, or only slightly higher than the selectservice hotels. Select-service hotels are less expensive to build and typically
generate higher net-operating-income (NOI) ratios than full-service hotels.
Therefore, given the limited difference in RevPAR levels, it is our recommendation
that a select-service hotel be considered for development in Eden Prairie.
Summary of Forecast
Occupancy and
Average Rate
FIGURE 1-5
Based on our analysis presented in the Projection of Occupancy and Average Rate
chapter, we have chosen to use a stabilized occupancy level of 71% and a baseyear rate position of $110.00 for the proposed subject hotel. The following table
reflects a summary of our market-wide and proposed subject hotel occupancy and
average rate projections.
MARKET AND SUBJECT PROPERTY AVERAGE RATE FORECAST
Area-wide Market (Calendar Year)
Year
Base Year
2013
2014
2015
2016
2017
2018
Occupancy
67.9 %
66.6
67.4
67.3
67.5
68.0
68.3
Average Rate
Growth
—
3.0 %
3.5
3.0
3.5
3.0
3.0
Subject Property (Calendar Year)
Average
Rate
Occupancy
$112.36
115.73
119.78
123.38
127.70
131.53
135.47
—
—
—
63.0 %
67.0
71.0
71.0
Average Rate
Growth
Average
Rate
—
3.0 %
3.5
3.0
4.0
3.0
3.0
$110.00
113.30
117.27
120.78
125.61
129.38
133.26
Average Rate
Penetration
97.9 %
97.9
97.9
97.9
98.4
98.4
98.4
The following table summarizes the proposed subject hotel’s forecast, reflecting
fiscal years and opening-year rate discounts as applicable.
FIGURE 1-6
FORECAST OF AVERAGE RATE
Year
2015/16
2016/17
2017/18
March-2014
Average Rate
Occupancy Before Discount
65 %
69
71
$122.78
127.17
130.99
Discount
3.0 %
0.0
0.0
Average Rate
After Discount
$119.10
127.17
130.99
Executive Summary
5
Summary of Forecast
Income and Expense
Statement
March-2014
Our positioning of each revenue and expense level is supported by comparable
operations or trends specific to this market. Our forecast of income and expense is
presented in the following table.
Executive Summary
6
FIGURE 1-7
DETAILED FORECAST OF INCOME AND EXPENSE
2016/17
Stabilized
2018/19
Number of Rooms:
2015/16 Begins June
120
120
120
120
120
Occupancy:
65%
69%
71%
71%
71%
$119.10
$127.17
$130.99
$134.92
$138.97
$77.41
$87.75
$93.00
$95.79
$98.67
365
365
365
365
Average Rate:
RevPAR:
Days Open:
Occupied Rooms:
28,470 %Gross
PAR
POR
30,222 %Gross
PAR
POR
31,098 %Gross
PAR
POR
2019/20
365
31,098 %Gross
PAR
POR
31,098 %Gross
PAR
POR
REVENUE
Rooms
$119.11
$3,843
$127.16
$4,073
$130.97
$4,196
$134.93
$4,322
437
11.2
3,638
15.33
496
11.2
4,134
16.41
542
11.5
4,518
17.43
558
11.5
4,654
17.96
575
11.5
4,793
18.50
Other Operated Departments
50
1.3
415
1.75
52
1.2
435
1.73
54
1.2
452
1.74
56
1.2
465
1.80
58
1.2
479
1.85
Rentals & Other Income
25
0.6
208
0.87
26
0.6
217
0.86
27
0.6
226
0.87
28
0.6
233
0.90
29
0.6
240
0.92
3,902 100.0
32,519
137.07
4,417 100.0
36,811
146.16
4,696 100.0
39,137
151.02
4,838 100.0
40,318
155.58
4,983 100.0
41,529
160.25
Food & Beverage
Total Revenues
$3,391
86.9 % $28,258
87.0 % $32,025
86.7 % $33,942
86.7 % $34,967
86.7 % $36,017
$138.98
DEPARTMENTAL EXPENSES *
Rooms
686
20.2
5,719
24.11
723
18.8
6,028
23.94
754
18.5
6,280
24.23
776
18.5
6,468
24.96
799
18.5
6,662
25.71
Food & Beverage
374
85.8
3,120
13.15
410
82.7
3,418
13.57
434
80.0
3,614
13.95
447
80.0
3,723
14.37
460
80.0
3,835
14.80
Total
DEPARTMENTAL INCOME
634
2.67
656
2.61
678
2.62
698
2.69
719
2.77
1,137
76 152.7
29.1
9,473
39.93
1,212
79 150.9
27.4
10,103
40.11
1,269
81 150.0
27.0
10,572
40.80
1,307
84 150.0
27.0
10,889
42.02
1,346
86 150.0
27.0
11,216
43.28
2,765
70.9
23,046
97.14
3,205
72.6
26,708
106.05
3,428
73.0
28,565
110.23
3,531
73.0
29,429
113.56
3,638
73.0
30,313
116.97
13.80
UNDISTRIBUTED OPERATING EXPENSES
Administrative & General
370
9.5
3,083
12.99
390
8.8
3,247
12.89
404
8.6
3,371
13.01
417
8.6
3,472
13.40
429
8.6
3,576
Marketing
220
5.6
1,834
7.73
222
5.0
1,847
7.33
209
4.5
1,743
6.73
215
4.5
1,796
6.93
222
4.5
1,850
7.14
Franchise Fee
322
8.3
2,685
11.32
365
8.3
3,042
12.08
387
8.2
3,224
12.44
399
8.2
3,322
12.82
411
8.2
3,422
13.20
Prop. Operations & Maint.
126
3.2
1,052
4.44
140
3.2
1,170
4.65
153
3.3
1,278
4.93
158
3.3
1,317
5.08
163
3.3
1,356
5.23
Utilities
153
3.9
1,276
5.38
161
3.6
1,344
5.33
167
3.6
1,395
5.38
172
3.6
1,437
5.54
178
3.6
1,480
5.71
1,192
30.5
9,929
41.85
1,278
28.9
10,650
42.29
1,321
28.2
11,011
42.49
1,361
28.2
11,343
43.77
1,402
28.2
11,683
45.08
1,574
40.4
13,116
55.28
1,927
43.7
16,058
63.76
2,106
44.8
17,554
67.74
2,170
44.8
18,086
69.79
2,236
44.8
18,630
71.89
117
3.0
976
4.11
133
3.0
1,104
4.38
141
3.0
1,174
4.53
145
3.0
1,210
4.67
150
3.0
1,246
4.81
1,457
37.4
12,141
51.17
1,794
40.7
14,954
59.38
1,966
41.8
16,380
63.21
2,025
41.8
16,877
65.12
2,086
41.8
17,384
67.08
Total
HOUSE PROFIT
Management Fee
INCOME BEFORE FIXED CHARGES
FIXED EXPENSES
272
7.0
2,270
9.57
349
7.9
2,909
11.55
360
7.7
2,997
11.56
370
7.7
3,087
11.91
381
7.7
3,179
12.27
Insurance
Property Taxes
53
1.3
438
1.85
54
1.2
451
1.79
56
1.2
465
1.79
57
1.2
479
1.85
59
1.2
493
1.90
Reserve for Replacement
78
2.0
650
2.74
133
3.0
1,104
4.38
188
4.0
1,565
6.04
194
4.0
1,613
6.22
199
4.0
1,661
6.41
403
10.3
3,358
14.16
536
12.1
4,465
17.73
603
12.9
5,027
19.40
621
12.9
5,178
19.98
640
12.9
5,334
20.58
$8,782
$37.02
$1,259
28.6 % $10,489
$41.65
$1,362
28.9 % $11,353
$43.81
$1,404
28.9 % $11,699
$45.14
$1,446
28.9 % $12,050
$46.50
Total
NET INCOME
$1,054
27.1 %
*Departmental expenses are expressed as a percentage of departmental revenues.
March-2014
Executive Summary
7
FIGURE 1-8
TEN-YEAR FORECAST OF INCOME AND EXPENSE
2015/16
Number of Rooms:
Occupied Rooms:
Occupancy:
Average Rate:
RevPAR:
2016/17
120
28,470
2017/18
120
30,222
65%
2018/19
120
31,098
69%
2019/20
120
31,098
71%
2020/21
120
31,098
71%
2021/22
120
31,098
71%
2022/23
120
31,098
71%
2023/24
120
31,098
71%
2024/25
120
31,098
71%
120
31,098
71%
71%
$119.10 % of
$127.17
% of
$130.99
% of
$134.92
% of
$138.97
% of
$143.14
% of
$147.43
% of
$151.85
% of
$156.41
% of
$161.10
% of
$77.41 Gross
$87.75
Gross
$93.00
Gross
$95.79
Gross
$98.67
Gross
$101.63
Gross
$104.67
Gross
$107.82
Gross
$111.05
Gross
$114.38
Gross
$3,391
$3,843
87.0 %
$4,073
86.7 %
$4,196
86.7 %
$4,322
86.7 %
$4,451
86.7 %
$4,585
86.7 %
$4,722
86.7 %
$4,864
86.7 %
$5,010
86.7 %
REVENUE
Rooms
Food & Beverage
Total
86.9 %
437
11.2
496
11.2
542
11.5
558
11.5
575
11.5
592
11.5
610
11.5
629
11.5
647
11.5
667
11.5
50
25
1.3
0.6
52
26
1.2
0.6
54
27
1.2
0.6
56
28
1.2
0.6
58
29
1.2
0.6
59
30
1.2
0.6
61
31
1.2
0.6
63
31
1.2
0.6
65
32
1.2
0.6
67
33
1.2
0.6
3,902 100.0
4,417 100.0
4,696 100.0
4,838 100.0
4,983 100.0
5,132 100.0
5,287 100.0
5,445 100.0
5,608 100.0
5,777 100.0
DEPARTMENTAL EXPENSES*
Rooms
686
20.2
723
18.8
754
18.5
776
18.5
799
18.5
823
18.5
848
18.5
874
18.5
900
18.5
927
18.5
Food & Beverage
374
85.8
410
82.7
434
80.0
447
80.0
460
80.0
474
80.0
488
80.0
503
80.0
518
80.0
533
80.0
Total
DEPARTMENTAL INCOME
76 152.7
79 150.9
81 150.0
84 150.0
86 150.0
89 150.0
92 150.0
94 150.0
97 150.0
100 150.0
1,137
2,765
29.1
70.9
1,212
3,205
27.4
72.6
1,269
3,428
27.0
73.0
1,307
3,531
27.0
73.0
1,346
3,638
27.0
73.0
1,386
3,746
27.0
73.0
1,428
3,859
27.0
73.0
1,471
3,974
27.0
73.0
1,515
4,094
27.0
73.0
1,560
4,217
27.0
73.0
370
9.5
390
8.8
404
8.6
417
8.6
429
8.6
442
8.6
455
8.6
469
8.6
483
8.6
497
8.6
Marketing
220
5.6
222
5.0
209
4.5
215
4.5
222
4.5
229
4.5
235
4.5
243
4.5
250
4.5
257
4.5
Franchise Fee
322
8.3
365
8.3
387
8.2
399
8.2
411
8.2
423
8.2
436
8.2
449
8.2
462
8.2
476
8.2
126
3.2
140
3.2
153
3.3
158
3.3
163
3.3
168
3.3
173
3.3
178
3.3
183
3.3
189
3.3
Utilities
153
3.9
161
3.6
167
3.6
172
3.6
178
3.6
183
3.6
188
3.6
194
3.6
200
3.6
206
3.6
1,192
1,574
30.5
40.4
1,278
1,927
28.9
43.7
1,321
2,106
28.2
44.8
1,361
2,170
28.2
44.8
1,402
2,236
28.2
44.8
1,444
2,302
28.2
44.8
1,487
2,372
28.2
44.8
1,532
2,442
28.2
44.8
1,578
2,516
28.2
44.8
1,625
2,591
28.2
44.8
Total
HOUSE PROFIT
Management Fee
117
3.0
133
3.0
141
3.0
145
3.0
150
3.0
154
3.0
159
3.0
163
3.0
168
3.0
173
3.0
1,457
37.4
1,794
40.7
1,966
41.8
2,025
41.8
2,086
41.8
2,148
41.8
2,213
41.8
2,279
41.8
2,348
41.8
2,418
41.8
272
7.0
349
7.9
360
7.7
370
7.7
381
7.7
393
7.7
405
7.7
417
7.7
429
7.7
442
7.7
53
1.3
54
1.2
56
1.2
57
1.2
59
1.2
61
1.2
63
1.2
65
1.2
67
1.2
69
1.2
78
403
2.0
10.3
133
536
3.0
12.1
188
603
4.0
12.9
194
621
4.0
12.9
199
640
4.0
12.9
205
659
4.0
12.9
211
679
4.0
12.9
218
699
4.0
12.9
224
720
4.0
12.9
231
742
4.0
12.9
FIXED EXPENSES
Property Taxes
Insurance
Total
NET INCOME
$1,054 27.1 %
$1,259 28.6 %
1
1
March-2014
$1,362
1
28.9 %
$1,404
1
28.9 %
$1,446
1
28.9 %
$1,489
1
28.9 %
$1,534
1
28.9 %
$1,580
1
28.9 %
$1,627
1
28.9 %
$1,676
1
Executive Summary
28.9 %
8
As illustrated, the hotel is expected to stabilize at a profitable level. Please refer to
the Forecast of Income and Expense chapter of our report for a detailed
explanation of the methodology used in deriving this forecast.
Scope of Work
The methodology used to develop this study is based on the market research and
valuation techniques set forth in the textbooks authored by Hospitality Valuation
Services for the American Institute of Real Estate Appraisers and the Appraisal
Institute, entitled The Valuation of Hotels and Motels,1 Hotels, Motels and
Restaurants: Valuations and Market Studies,2 The Computerized Income Approach
to Hotel/Motel Market Studies and Valuations,3 Hotels and Motels: A Guide to
Market Analysis, Investment Analysis, and Valuations,4 and Hotels and Motels –
Valuations and Market Studies.5
1.
All information was collected and analyzed by the staff of TS Worldwide,
LLC. Information was supplied by the client and/or the property’s
development team.
2.
The subject site locations were evaluated from the viewpoint of the future
operation of a hotel, as well as access, visibility, and other relevant factors.
3.
The recommended improvements have been reviewed for their expected
quality of construction, design, and layout efficiency.
4.
The surrounding economic environment, on both an area and
neighborhood level, has been reviewed to identify specific hostelry-related
economic and demographic trends that may have an impact on future
demand for hotels.
5.
Dividing the market for hotel accommodations into individual segments
defines specific market characteristics for the types of travelers expected
to utilize the area's hotels. The factors investigated include purpose of visit,
average length of stay, facilities and amenities required, seasonality, daily
demand fluctuations, and price sensitivity.
Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of
Real Estate Appraisers, 1978).
2 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies.
(Chicago: American Institute of Real Estate Appraisers, 1983).
3 Stephen Rushmore, The Computerized Income Approach to Hotel/Motel Market Studies and
Valuations. (Chicago: American Institute of Real Estate Appraisers, 1990).
4 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment
Analysis, and Valuations (Chicago: Appraisal Institute, 1992).
5 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies.
(Chicago: Appraisal Institute, 2001).
1
March-2014
Executive Summary
9
March-2014
6.
An analysis of existing and proposed competition provides an indication of
the current accommodated demand, along with market penetration and
the degree of competitiveness. Unless noted otherwise, we have inspected
the competitive lodging facilities summarized in this report.
7.
Documentation for an occupancy and average rate projection is derived
utilizing the build-up approach based on an analysis of lodging activity.
8.
A detailed projection of income and expense made in accordance with the
Uniform System of Accounts for the Lodging Industry sets forth the
anticipated economic benefits of the subject property.
Executive Summary
10
2. Description of the Site and Neighborhood
The suitability of the land for the operation of a lodging facility is an important
consideration affecting the economic viability of a property and its ultimate
marketability. Factors such as size, topography, access, visibility, and the
availability of utilities have a direct impact on the desirability of a particular site.
The first site location is adjacent to the Eden Prairie Center Mall, which is in the
southeast quadrant of the intersection formed by Interstate 494 and Flying Cloud
Drive. The second location is in the southeast quadrant of the intersection formed
by Crosstown Highway and Shady Oak Road, near the UHG Campus. The third
location is directly east of U.S. Highway 212, near the SuperValu corporate offices,
and inside the Golden Triangle area. The fourth site location is directly west of U.S.
Highway 212, near Shop NBC. The sites are in the city of Eden Prairie, Minnesota.
Physical Characteristics
March-2014
There are four potential site locations for the development of the proposed subject
property; however, the City had not chosen a specific parcel at the time of our
research. The following table identifies the four sites and their strengths and
weaknesses.
11
FIGURE 2-1
SITE IDENTIFICATION AND EVALUATION
2
4
3
1
Site #
Location
Strengths
Weaknesses
1
Eden Prairie Center Mall Area
Near several recreational, retail, and
entertainment venues, as well as I-494
High-density hotel area
2
Near Optum Campus
Near largest employer, easy access to
regional highways, LRT Station
Most likely high constructon cost due to
area redevelopment
3
Near SuperValu Campus
Inside Golden Triangle, many demand
generators nearby, near future LRT Station
SuperValu has been downsizing; visibility
may be an issue
4
Near Shop NBC
Near LRT Station, easy accessibility to site
Limited ancillary services nearby
Given the fairly close proximity of many of these sites, it is difficult to choose rank
one site higher than another, as one site may be more favorable for a particular
demand generator, but more distance from major interstate traffic for leisure
demand, and vice versa. Many demand generators interviewed stated that a hotel
location within a few miles of their office location was preferable.
March-2014
12
Site Utility
Upon completion of construction, the subject site will not contain any significant
portion of undeveloped land that could be sold, entitled, and developed for
alternate use. The site is expected to be fully developed with site or building
improvements, which will contribute to the overall profitability of the hotel.
Access and Visibility
It is important to analyze the site in regard to ease of access with respect to
regional and local transportation routes and demand generators. The subject
market is readily accessible to a variety of local and county roads, as well as state
and interstate highways.
MAP OF REGIONAL ACCESS ROUTES
March-2014
13
Primary regional access through the area is provided by north/south Interstate 35,
which extends to such cities as Des Moines, Iowa to the south and Duluth to the
north. Interstate 35 divides into two thoroughfares (I-35 West and I-35 East) that
segment the flow of traffic to Minneapolis and St. Paul, respectively. East/west
Interstate 94 is another major highway, which provides access to such cities as
Fargo, North Dakota to the west and Eau Claire to the east. Local and regional
routes include branches of Interstate 94, such as Interstates 394, 494, and 694.
The subject market is served by a variety of additional local highways, which are
illustrated on the map.
Airport Access
The proposed subject hotel will be located in Eden Prairie and will be served by
the Minneapolis-St. Paul International Airport, which is located approximately
eleven miles to the east of Eden Prairie. From the airport, motorists will follow
signs to State Highway 5 and travel for approximately two miles on this
thoroughfare to Interstate 494. Motorists will then proceed west on Interstate 494
until its intersection with one of Eden Prairie's four exits (11A, 11B, 11C, and 12),
depending on the selection of the subject site.
Neighborhood
The neighborhood surrounding a lodging facility often has an impact on a hotel's
status, image, class, style of operation, and sometimes its ability to attract and
properly serve a particular market segment. This section of the report investigates
the subject neighborhood and evaluates any pertinent location factors that could
affect its future occupancy, average rate, and overall profitability.
Eden Prairie is the convergence point of Minnesota’s busiest thoroughfares,
including Interstate 494, U.S. Highways 169 and 212, and State Highways 5 and 62.
The city is home to the Flying Cloud Airport, which provides convenient access for
personal and corporate aircraft. The airport includes three runways and is one of
six reliever airports in the Twin Cities metropolitan area. The Metropolitan
Airports Commission (MAC) completed an expansion of the airport in 2010, which
included the extension of the north and south runways, the construction of a new
south building, and the replacement of airport lighting and various visual and
navigational aids.
The city is part of the proposed Southwest Light Rail Transit (LRT) development.
The proposed Southwest LRT is a high-frequency train that is expected to connect
Downtown Minneapolis to Eden Prairie through St. Louis Park, Hopkins, and
Minnetonka; this area, known as the Southwest Corridor, contains a concentration
of businesses including several of the state’s largest employers. This Southwest
LRT route would also connect directly to the Central Corridor LRT, becoming part
of the Green Line, with direct service to the University of Minnesota and St. Paul.
The proposed Southwest LRT would also allow transfers near Target Field in order
to access the Blue Line, with service to Minneapolis-St. Paul International Airport,
March-2014
14
as well as the Northstar commuter rail line. According to the Metro Council, more
than 210,000 jobs and 60,000 people in 31,000 households are presently located
within one-half mile of the proposed Southwest LRT stations. The Southwest
Corridor is projected to add 30,000 households and 60,000 new jobs by 2030. As
currently proposed, the line would be 15.8 miles long, with 17 stations (five of
them in Eden Prairie) expected to open in 2018; the total project is anticipated to
cost $1.25 billion.
MAP OF NEIGHBORHOOD
Utilities
The subject site will reportedly be served by all necessary utilities.
Soil and
Subsoil Conditions
Geological and soil reports were not provided to us or made available for our
review during the preparation of this report. We are not qualified to evaluate soil
conditions other than by a visual inspection of the surface; no extraordinary
conditions were apparent.
March-2014
15
Nuisances
and Hazards
We were not informed of any site-specific nuisances or hazards, and there were no
visible signs of toxic ground contaminants at the time of our inspection. Because
we are not experts in this field, we do not warrant the absence of hazardous waste
and urge the reader to obtain an independent analysis of these factors.
Zoning
Because a specific site has not been finalized, the zoning could not be confirmed.
However, the general area of all of the sites allows for most commercial uses,
including professional offices, retail and entertainment venues, and hotels and
motels. Our projections assume that the specific site would be approved for hotel
use. We assume that all necessary permits and approvals will be secured
(including the appropriate liquor license if applicable) and that the subject
property will be constructed in accordance with local zoning ordinances, building
codes, and all other applicable regulations. Our zoning analysis should be verified
before any physical changes are made to the site.
Easements and
Encroachments
We are not aware of any easements attached to the property that would
significantly affect the utility of the site or marketability of this project.
March-2014
16
3. Market Area Analysis
The economic vitality of the market area and neighborhood surrounding the
subject site is an important consideration in forecasting lodging demand and
future income potential. Economic and demographic trends that reflect the
amount of visitation provide a basis from which to project lodging demand. The
purpose of the market area analysis is to review available economic and
demographic data to determine whether the local market will undergo economic
growth, stabilize, or decline. In addition to predicting the direction of the economy,
the rate of change must be quantified. These trends are then correlated based on
their propensity to reflect variations in lodging demand, with the objective of
forecasting the amount of growth or decline in visitation by individual market
segment (e.g., commercial, meeting and group, and leisure).
Market Area Definition
The market area for a lodging facility is the geographical region where the sources
of demand and the competitive supply are located. The subject property will be
located in the city of Eden Prairie, the county of Hennepin, and the state of
Minnesota. Eden Prairie is a southwestern suburb of the Minneapolis – St. Paul
metro area, which is well known for its robust economy, a highly educated
workforce, and an outstanding quality of life. The development of the Flying Cloud
Airport and Interstate 494 in the mid-1900s put the city on the map, bringing
thousands of homes and businesses to the area. Since then, the population of Eden
Prairie has grown to more than 60,000 and the number of businesses has
multiplied to more than 2,800. In addition to attractive residential neighborhoods
and affordable housing options, the city also comprises nearly 10,000 acres of land
designated for parks and open spaces, miles of scenic views, and a multitude of
lakes and beaches. Eden Prairie was ranked as the third best place to live in the
United States in 2012 by Money Magazine.
The proposed subject property’s market area can be defined by its Combined
Statistical Area (CSA): Minneapolis-St. Paul-St. Cloud, MN-WI. The CSA represents
adjacent metropolitan and micropolitan statistical areas that have a moderate
degree of employment interchange. Micropolitan statistical areas represent urban
areas in the United States based around a core city or town with a population of
10,000 to 49,999; the MSA requires the presence of a core city of at least 50,000
people and a total population of at least 100,000 (75,000 in New England). The
following exhibit illustrates the market area.
March-2014
17
MAP OF MARKET AREA
Economic and
Demographic Review
A primary source of economic and demographic statistics used in this analysis is
the Complete Economic and Demographic Data Source published by Woods & Poole
Economics, Inc. – a well-regarded forecasting service based in Washington, D.C.
Using a database containing more than 900 variables for each county in the nation,
Woods & Poole employs a sophisticated regional model to forecast economic and
demographic trends. Historical statistics are based on census data and information
published by the Bureau of Economic Analysis. Projections are formulated by
Woods & Poole, and all dollar amounts have been adjusted for inflation, thus
reflecting real change.
These data are summarized in the following table.
March-2014
18
FIGURE 3-2
ECONOMIC AND DEMOGRAPHIC DATA SUMMARY
2000
2010
2013
2020
Resident Population (Thousands)
Hennepin County
Minneapolis-St. Paul-Bloomington, MN-WI MSA
Minneapolis-St. Paul-St. Cloud, MN-WI CSA
State of Minnesota
United States
1,117.8
2,981.2
3,285.1
4,933.7
282,162.4
1,154.6
3,286.2
3,622.6
5,310.6
309,349.7
1,166.6
3,416.3
3,763.2
5,469.4
318,515.7
1,198.9
3,732.2
4,104.8
5,860.2
341,069.5
Per-Capita Personal Income*
Hennepin County
State of Minnesota
United States
$48,793
41,646
40,458
36,311
33,771
$50,694
42,635
41,635
39,015
36,700
$53,711
44,075
43,088
40,580
37,779
$60,543
47,878
46,883
44,553
41,366
W&P Wealth Index
Hennepin County
State of Minnesota
United States
141.9
124.1
121.0
108.8
100.0
135.4
116.1
113.6
106.1
100.0
138.6
116.5
114.1
107.1
100.0
142.0
115.6
113.4
107.3
100.0
Food and Beverage Sales (Millions)*
Hennepin County
State of Minnesota
United States
$2,074
4,199
4,542
6,098
341,525
$2,309
4,927
5,348
7,114
406,373
$2,422
5,292
5,746
7,609
435,874
$2,635
6,084
6,612
8,705
498,869
Total Retail Sales (Millions)*
Hennepin County
State of Minnesota
United States
$20,890
45,817
50,150
70,356
3,613,909
$20,516
47,871
52,658
73,125
3,818,137
$22,131
52,914
58,189
80,345
4,194,877
$24,384
61,452
67,538
92,148
4,810,490
Average Annual
Compounded Change
2000-10 2010-13 2013-20
0.3 %
1.0
1.0
0.7
0.9
0.3 %
1.3
1.3
1.0
1.0
0.4 %
1.3
1.2
1.0
1.0
0.4
0.2
0.3
0.7
0.8
1.9
1.1
1.2
1.3
1.0
1.7
1.2
1.2
1.3
1.3
(0.5)
(0.7)
(0.6)
(0.3)
0.0
0.8
0.1
0.1
0.3
0.0
0.3
(0.1)
(0.1)
0.0
0.0
1.1
1.6
1.6
1.6
1.8
1.6
2.4
2.4
2.3
2.4
1.2
2.0
2.0
1.9
1.9
(0.2)
0.4
0.5
0.4
0.6
2.6
3.4
3.4
3.2
3.2
1.4
2.2
2.2
2.0
2.0
* Inflation Adjusted
Source: Woods & Poole Economics, Inc.
March-2014
19
The U.S. population has grown at an average annual compounded rate of 1.0%
from 2010 through 2013. The county’s population has grown more slowly than the
nation’s population; the average annual growth rate of 0.3% between 2010 and
2013 reflects a gradually expanding area. Following this population trend, percapita personal income increased slowly, at 1.9% on average annually for the
county between 2010 and 2013. Local wealth indexes have remained stable in
recent years, registering a relatively high 138.6 level for the county in 2013.
Food and beverage sales totaled $2,422 million in the county in 2013, versus
$2,309 million in 2010. This reflects a 1.6% average annual change, which is
stronger than the 1.1% pace recorded in the prior decade, the latter years of which
were adversely affected by the recession. Over the long term, the pace of growth is
forecast to moderate to a more sustainable level of 1.2%, which is forecast through
2020. The retail sales sector demonstrated an annual decline of -0.2% registered
in the decade 2000 to 2010, followed by an increase of 2.6% in the period 2010 to
2013. An increase of 1.4% average annual change is expected in county retail sales
through 2020.
Workforce
Characteristics
The characteristics of an area's workforce provide an indication of the type and
amount of transient visitation likely to be generated by local businesses. Sectors
such as finance, insurance, and real estate (FIRE); wholesale trade; and services
produce a considerable number of visitors who are not particularly rate-sensitive.
The government sector often generates transient room nights, but per-diem
reimbursement allowances often limit the accommodations selection to budget
and mid-priced lodging facilities. Contributions from manufacturing, construction,
transportation, communications, and public utilities (TCPU) employers can also be
important, depending on the company type.
The following table sets forth the county workforce distribution by business sector
in 2000, 2010, and 2013, as well as a forecast for 2020.
March-2014
20
FIGURE 3-3
COUNTY HISTORICAL AND PROJECTED EMPLOYMENT (000S)
Average Annual
Compounded Change
Industry
Farm
Forestry, Fishing, Related Activities And Other
Mining
Utilities
Construction
Manufacturing
Total Trade
Wholesale Trade
Retail Trade
Transportation And Warehousing
Information
Finance And Insurance
Real Estate And Rental And Lease
Total Services
Professional And Technical Services
Management Of Companies And Enterprises
Administrative And Waste Services
Educational Services
Health Care And Social Assistance
Arts, Entertainment, And Recreation
Accommodation And Food Services
Other Services, Except Public Administration
Total Government
Federal Civilian Government
Federal Military
State And Local Government
TOTAL
MSA
U.S.
2000
Percent
of Total
2010
Percent
of Total
2013
Percent
of Total
1.0
0.4
0.7
4.5
41.2
106.7
158.5
59.9
98.6
45.6
31.6
83.9
35.5
438.6
94.4
37.1
68.8
15.7
94.1
22.4
58.4
47.6
100.0
13.8
4.8
81.4
0.1 %
0.0
0.1
0.4
3.9
10.2
15.1
5.7
9.4
4.4
3.0
8.0
3.4
41.8
9.0
3.5
6.6
1.5
9.0
2.1
5.6
4.5
9.5
1.3
0.5
7.8
0.8
0.5
1.6
3.5
29.0
76.6
140.5
55.1
85.3
31.4
23.7
90.6
47.4
492.9
99.8
47.3
64.2
25.1
115.5
29.0
66.0
45.9
98.8
13.9
5.0
80.0
0.1 %
0.0
0.2
0.3
2.8
7.4
13.5
5.3
8.2
3.0
2.3
8.7
4.6
47.5
9.6
4.6
6.2
2.4
11.1
2.8
6.4
4.4
9.5
1.3
0.5
7.7
0.9
0.5
1.6
3.6
29.9
77.7
145.3
57.4
87.9
32.1
24.4
97.1
52.5
515.3
104.5
51.9
68.6
27.3
118.2
27.7
69.5
47.6
98.9
13.9
4.9
80.1
0.1 %
0.0
0.1
0.3
2.8
7.2
13.5
5.3
8.1
3.0
2.3
9.0
4.9
47.7
9.7
4.8
6.4
2.5
10.9
2.6
6.4
4.4
9.2
1.3
0.5
7.4
1,048.3
100.0 %
1,037.4
100.0 %
1,079.7
100.0 %
2,109.9
165,370.9
—
—
2,208.5
172,936.0
—
—
2,295.4
178,104.4
—
—
Percent
2020 of Total
0.9
0.5
1.5
3.3
34.4
76.2
166.3
61.6
104.8
34.1
24.4
107.7
57.7
595.6
121.3
59.5
80.7
34.8
135.6
31.2
77.5
54.9
102.2
14.2
5.0
83.0
2000-2010 2010-2013 2013-2020
0.1 %
0.0
0.1
0.3
2.9
6.3
13.8
5.1
8.7
2.8
2.0
8.9
4.8
49.4
10.1
4.9
6.7
2.9
11.3
2.6
6.4
4.6
8.5
1.2
0.4
6.9
(1.8) %
1.6
8.9
(2.4)
(3.4)
(3.3)
(1.2)
(0.8)
(1.4)
(3.7)
(2.8)
0.8
2.9
1.2
0.6
2.4
(0.7)
4.8
2.1
2.6
1.2
(0.4)
(0.1)
0.0
0.4
(0.2)
0.7 %
(0.3)
(0.5)
1.0
1.0
0.5
1.1
1.4
1.0
0.7
0.9
2.3
3.5
1.5
1.5
3.2
2.3
2.8
0.8
(1.5)
1.7
1.2
0.0
0.1
(0.5)
0.1
1.3 %
0.6
(0.5)
(1.4)
2.0
(0.3)
2.0
1.0
2.5
0.9
0.0
1.5
1.4
2.1
2.2
2.0
2.3
3.5
2.0
1.7
1.6
2.1
0.5
0.3
0.1
0.5
1,204.8 100.0 %
(0.1) %
1.3 %
1.6 %
0.5 %
0.6
1.3 %
1.0
1.6 %
1.3
2,563.4
195,598.1
—
—
Source: Woods & Poole Economics, Inc.
March-2014
21
Woods & Poole Economics, Inc. reports that during the period from 2000 to 2010,
total employment in the county contracted at an average annual rate of -0.1%. This
trend was below the growth rate recorded by the MSA and also lagged the national
average. More recently, the pace of total employment growth in the county
accelerated to 1.3% on an annual average from 2010 to 2013, reflecting the initial
years of the recovery.
Of the primary employment sectors, Total Services recorded the highest increase
in number of employees during the period from 2010 to 2013, increasing by
22,433 people, or 4.6%, and rising from 47.5% to 47.7% of total employment. Of
the various service sub-sectors, Health Care And Social Assistance and
Professional And Technical Services were the largest employers. Strong growth
was also recorded in the Finance And Insurance sector, as well as the Real Estate
And Rental And Lease sector, which expanded by 7.1% and 2.8%, respectively, in
the period 2010 to 2013. Forecasts developed by Woods & Poole Economics, Inc.
anticipate that total employment in the county will change by 1.6% on average
annually through 2020. The trend is above the forecast rate of change for the U.S.
as a whole during the same period.
Radial Demographic
Snapshot
March-2014
The following table reflects radial demographic trends for our market area
measured by three points of distance from Downtown Eden Prairie.
22
FIGURE 3-4
DEMOGRAPHICS BY RADIUS
0.00 - 1.00 miles
Population
2018 Projection
2013 Estimate
2010 Census
2000 Census
Growth 2013-2018
Growth 2010-2013
Growth 2000-2010
Households
2018 Projection
2013 Estimate
2010 Census
2000 Census
Growth 2013-2018
Growth 2013-2018
Growth 2013-2018
Income
2013 Est. Average Household Income
2013 Est. Median Household Income
2013 Est. Civ Employed Pop 16+ by Occupation
Architect/Engineer
Arts/Entertain/Sports
Building Grounds Maint
Business/Financial Ops
Community/Soc Svcs
Computer/Mathematical
Construction/Extraction
Edu/Training/Library
Farm/Fish/Forestry
Food Prep/Serving
Health Practitioner/Tec
Healthcare Support
Maintenance Repair
Legal
Life/Phys/Soc Science
Management
Office/Admin Support
Production
Protective Svcs
Sales/Related
Personal Care/Svc
Transportation/Moving
0.00 - 3.00 miles
0.00 - 5.00 miles
9,169
8,524
8,076
6,874
137,427
131,648
127,822
123,762
605,058
579,267
562,318
521,003
7.6%
5.6%
17.5%
4.4%
3.0%
3.3%
4.5%
3.0%
7.9%
4,090
3,779
3,582
2,896
56,845
54,165
52,373
48,219
253,645
241,910
234,033
216,109
8.2%
5.5%
23.7%
5.0%
3.4%
8.6%
4.9%
3.4%
8.3%
$99,539
71,263
$112,227
80,148
$98,043
70,317
5,242
169
124
107
454
19
639
53
279
0
496
347
39
145
56
17
562
675
195
42
583
179
60
73,049
2,082
1,820
1,219
7,336
1,004
4,485
1,397
3,862
92
3,255
4,032
1,058
1,438
1,284
531
11,477
9,038
2,177
598
10,590
2,530
1,742
318,405
7,820
9,654
8,082
28,019
5,716
16,453
7,770
17,496
412
14,102
17,328
5,776
6,422
6,457
3,110
43,586
39,783
12,627
2,764
42,695
12,056
10,280
Source: The Nielsen Company
March-2014
23
This source reports a population of 579,267 within a five-mile radius of Downtown
Eden Prairie, and 241,910 households within this same radius. Average household
income within a five-mile radius of Downtown Eden Prairie is currently reported
at$98,043, while the median is $70,317.
The following table illustrates historical and projected employment, households,
population and average household income data as provided by REIS for the overall
Minneapolis market.
March-2014
24
FIGURE 3-5
HISTORICAL & PROJECTED EMPLOYMENT, HOUSEHOLDS, POPULATION, AND HOUSEHOLD INCOME STATISTICS
Year
Total
Employment
% Chg
Office
Employment
Industrial
% Chg Employment
% Chg
Households
% Chg
Population
% Chg
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1,734,370
1,720,130
1,725,200
1,748,000
1,778,600
1,788,170
1,792,770
1,768,200
1,687,230
1,706,870
1,748,070
1,779,500
1,821,240
—
(0.8) %
0.3
1.3
1.8
0.5
0.3
(1.4)
(4.6)
1.2
2.4
1.8
2.3
1,863,220
1,906,150
1,939,540
1,964,040
1,973,530
2.3 %
2.3
1.8
1.3
0.5
Household
Avg. Income
% Chg
537,656
537,185
540,971
544,673
556,988
562,692
563,248
559,745
541,031
550,083
562,000
571,939
584,903
—
(0.1) %
0.7
0.7
2.3
1.0
0.1
(0.6)
(3.3)
1.7
2.2
1.8
2.3
327,000
314,845
309,747
312,757
314,087
314,231
311,251
303,009
275,009
278,099
284,878
289,922
287,550
—
(3.7) %
(1.6)
1.0
0.4
0.0
(0.9)
(2.6)
(9.2)
1.1
2.4
1.8
(0.8)
1,166,070
1,177,700
1,189,520
1,200,980
1,213,840
1,229,500
1,245,140
1,259,570
1,272,880
1,288,450
1,304,630
1,323,150
1,339,720
—
1.0 %
1.0
1.0
1.1
1.3
1.3
1.2
1.1
1.2
1.3
1.4
1.3
3,038,160
3,064,220
3,091,510
3,118,180
3,148,070
3,183,140
3,216,500
3,247,370
3,273,800
3,302,470
3,337,880
3,370,210
3,400,810
—
0.9 %
0.9
0.9
1.0
1.1
1.0
1.0
0.8
0.9
1.1
1.0
0.9
$98,673
100,559
104,535
111,106
111,963
117,108
122,212
121,767
116,719
122,516
126,177
131,022
132,429
—
1.9 %
4.0
6.3
0.8
4.6
4.4
(0.4)
(4.1)
5.0
3.0
3.8
1.1
594,716
605,903
615,686
626,088
631,344
1.7 %
1.9
1.6
1.7
0.8
291,435
296,426
300,293
300,798
299,173
1.4 % 1,355,600
1.7
1,378,110
1.3
1,397,600
0.2
1,416,910
(0.5)
1,435,130
1.2 % 3,430,990
1.7
3,459,260
1.4
3,486,820
1.4
3,516,210
1.3
3,546,200
0.9 %
0.8
0.8
0.8
0.9
$139,022
145,148
151,299
155,298
159,053
5.0 %
4.4
4.2
2.6
2.4
Forecasts
2014
2015
2016
2017
2018
Average Annual Compound Change
2001 - 2013
2001 - 2007
2007 - 2010
2010 - 2013
0.4 %
0.6
(1.6)
2.2
0.7 %
0.8
(0.8)
2.1
(1.1) %
(0.8)
(3.7)
1.1
1.2 %
1.1
1.1
1.3
0.9 %
1.0
0.9
1.0
2.5 %
3.6
0.1
2.6
Forecast 2013 - 2018
1.6 %
1.5 %
0.8 %
1.4 %
0.8 %
3.7 %
Source: REIS Report, 4th Quarter, 2014
March-2014
25
For the Minneapolis market, of the roughly 1,800,000 persons employed, 32%
work in offices and are categorized as office employees, while 16% are categorized
as industrial employees. Total employment decreased by an average annual
compound rate of -1.6% during the recession of 2007 to 2010, followed by an
improvement of 2.2% from 2010 to 2013. By comparison, office employment
reflected compound change rates of -0.8% and 2.1%, during same respective
periods. Total employment is expected to expand by 2.3% in 2014, while office
employment is forecast to expand by 1.7% in 2014. Forecasts for the period 2013
through 2018 anticipate total employment will improve at an average annual
compound rate of 1.6%, and office employment is forecast to improve by 1.5% on
average annually during the same time frame.
The number of households are forecast to improve by 1.4% on average annually
between 2013 and 2018. Population is forecast to expand during this same time
frame, at an average annual compounded rate of 0.8%. Household average income
is forecast to grow by 3.7% on average annually between 2013 through 2018.
Unemployment
Statistics
The following table presents historical unemployment rates for the proposed
subject hotel’s market area.
FIGURE 3-6
Year
UNEMPLOYMENT STATISTICS
City
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Recent Month - Nov
2012
2013
County
MSA
State
U.S.
4.0 %
3.5
3.1
2.9
3.4
4.0
6.4
6.1
5.2
4.6
4.6 %
4.4
3.8
3.6
4.2
4.9
7.5
7.0
6.1
5.3
4.7 %
4.4
3.9
3.8
4.4
5.1
7.9
7.3
6.3
5.5
4.9 %
4.6
4.2
4.1
4.7
5.4(c)
8.0(c)
7.4(c)
6.5(c)
5.6(c)
6.0 %
5.5
5.1
4.6
4.6
5.8
9.3
9.6
8.9
8.1
4.2 %
3.4
4.8 %
4.0
4.8 %
4.0
4.9 %
4.1
7.8 %
7.0
* Letters shown next to data points (if any) reflect revised population controls and/or
model re-estimation implemented by the BLS.
Source: U.S. Bureau of Labor Statistics
March-2014
26
The unemployment rate for the U.S. fluctuated within the narrow range of 4.6% to
6.0% in the period spanning from 2003 to 2007. The recession and financial crisis
in 2007 and 2008 resulted in heightened unemployment rates, which peaked at
10.0% in October of 2009. Job growth resumed in late 2009; the national
unemployment rate has steadily declined since 2010. Total nonfarm payroll
employment increased by 74,000 jobs in December of 2013, which brought the
unemployment rate down to 6.7%, falling to the lowest level in over four years. In
2013, nonfarm payroll employment increased by 182,000 jobs on average each
month, similar to the 183,000 average of 2012. In December of 2013, job growth
was strongest in retail and wholesale trade. This positive trend reflects steady
progress by the U.S. economy.
Locally, the unemployment rate was 5.3% in 2012; for this same area in 2013, the
most recent month’s unemployment rate was registered at 4.0%, versus 4.8% for
the same month in 2012. Unemployment rates in this area declined mid-decade,
concurrent with the general recovery trend after a difficult period earlier in the
decade. Unemployment began to rise in 2008 as the region entered an economic
slowdown, and this trend continued in 2009 as the height of the national recession
took hold. The unemployment rate began to decline in 2010, a trend that
continued through 2012; an improvement is also illustrated in the most recent
comparative period. Our interviews with economic development officials reflect a
positive outlook, primarily attributed to the development of UnitedHealth
Group/Optum's campus and the light-rail station. In addition, Minneapolis-St.
Paul-Bloomington, MN-WI MSA employers expect to hire at an active pace during
the first quarter of 2014, according to the Manpower Employment Outlook Survey.
Major Business and
Industry
March-2014
Providing additional context for understanding the nature of the regional
economy, the following table presents a list of the major employers in the subject
property’s market.
27
FIGURE 3-7
MAJOR EMPLOYERS
Rank
1
2
3
4
5
6
7
8
9
10
Number of
Employees
Firm
Optum
SuperValu Stores Inc.
EP Schools
CH Robinson
Starkey Labs
Cigna
Dell Compellent
Rosemount-Emerson
GE Capital
Kroll Ontrack
1,800
1,519
1,500
1,465
1,440
1,200
1,000
1,000
900
808
Source: City of Eden Prairie, 2012
The following bullet points highlight major demand generators for this market:
March-2014
·
The healthcare sector in the Minneapolis area is regularly recognized for
advancements made in the medical field. Several high-tech and pharmaceutical
companies support the region's medical industry by offering the latest, stateof-the-art equipment and medicine. HealthPartners is major employer in the
metro area, and Optum, a business unit of Minnetonka-based UnitedHealth
Group Inc., is the largest employer in Eden Prairie. In the spring of 2012,
approximately 1.5 million square feet of additional office space to the
UnitedHealth Group/Optum campus was approved for development on 71
acres located along State Highway 62 and Shady Oak Road. The campus
expansion includes four buildings, which will be built in phases and completed
in 2016. The development is anticipated to positively influence the local
economy and provide new professional employment opportunities; when
completed, UHG expects approximately 6,700 workers to occupy the campus.
An LRT station with a park-and-ride facility (one of five stations planned in
Eden Prairie) is planned to be incorporated, as well, with completion by 2018.
·
The retail industry plays an important role in the greater Eden Prairie market
area. SuperValu is a leader in the grocery retailing industry and one of the
largest employers in the area. In 2006, SuperValu, CVS Corp., and an
investment group (led by Cerberus) agreed to buy Albertsons Inc. for $17.4
billion. However, in March of 2013, the parent company of Albertson’s LLC
acquired back Albertsons, Acme, Jewel-Osco, Shaw’s, and Star Market stores, as
well as related Osco and Sav-on in-store pharmacies owned by Minneapolis-
28
based SuperValu, for $100 million in cash plus the assumption of
approximately $3.2 billion in debt. Following this sale, SuperValu laid off 600
employees. SuperValu retained its ownership of Cub Foods, Save-A-Lot, Farm
Fresh, Shoppers, Shop ‘n Save, and Hornbacher's; it continues to distribute
groceries to 3,420 stores nationally. The area is also home to Shop NBC and the
Eden Prairie Center Mall, among other retail centers. Eden Prairie Center is the
Twin Cities' fourth-largest shopping center. General Growth Properties Inc.
sold the 1.1 million-square-foot regional mall to a fund managed by Dallasbased Cypress Equities. Eden Prairie Center is almost fully leased at 99%
occupancy, and its anchors include Target, Von Maur, JCPenney, Sears, and an
AMC Cineplex.
·
The telecommunications industry within the Eden Prairie area continues to
experience growth associated with increasing demand for globalized network
infrastructure and telecommunications solutions. TDS Telecommunications
Corp, AI Tech, and Kroll Ontrack, among others, are some of the most
prominent companies in the area, providing telecommunications services on a
global scale. In January of 2014, TDS's OneNeck IT Solutions broke ground on a
$12-million expansion of its Certified Tier III data center in Eden Prairie.
The economic base is diverse in this market, with strong employers in the fields of
healthcare, finance, technology, and consumer goods. Major corporations include
UnitedHealth Group/Optum, Cargill, Starkey Labs, GE Capital, and Cigna. In
addition, the number of businesses continues to grow in Eden Prairie. It'sFresh!
Inc., which is headquartered in the United Kingdom, plans to open a U.S.
headquarters office in Eden Prairie in 2014. The company manufactures thin filter
sheets to keep fruits and vegetables fresh. Furthermore, MAC hopes to boost nonaeronautical revenue at the Flying Cloud Airport in Eden Prairie by offering about
70 acres of unused land to office and retail developers. The largest site, 39 acres
along Eden Prairie Road, could fit a 120,000-square-foot office building; other sites
could hold a combination of retail and office space. The 2014 economic outlook
from the Federal Reserve Bank of Minneapolis calls for moderate growth. The
Minneapolis-St. Paul region remains one of the most cost-efficient places to live
and do business in the United States. Its combination of big-city business amenities
and small-market ease of living has historically made the metro area a magnet for
investment. Moody’s Economy.com employment forecast for Minneapolis-St. Paul
remains optimistic, with an expectation of well over 40,000 jobs added each year
from 2013 to 2015, with over 25,000 annually thereafter. The abovementioned
factors should bode well for the Eden Prairie market.
Office Space Statistics
March-2014
Trends in occupied office space are typically among the most reliable indicators of
lodging demand, as firms that occupy office space often exhibit a strong propensity
to attract commercial visitors. Thus, trends that cause changes in vacancy rates or
in the amount of occupied office space may have a proportional impact on
29
commercial lodging demand and a less direct effect on meeting demand. The
following table details office space statistics for the pertinent market area.
FIGURE 3-8
OFFICE SPACE STATISTICS – MARKET OVERVIEW
Inventory
Buildings Square Feet
Submarket
1
2
3
4
5
6
7
8
9
Midway
St. Paul CBD
Dakota County
Washington County
SW/NE Scott County
Minneapolis CBD
West/Northwest
Northeast
Anoka County
52
28
102
40
203
136
159
64
21
3,854,000
5,094,000
4,414,000
1,512,000
20,740,000
27,225,000
11,881,000
3,620,000
611,000
Totals and Averages
805
78,951,000
Occupied Office Vacancy Average Asking
Space
Rate
Lease Rate
3,102,500
3,784,800
3,522,400
1,129,500
17,214,200
23,304,600
9,837,500
2,932,200
460,100
65,287,800
19.5 %
25.7
20.2
25.3
17.0
14.4
17.2
19.0
24.7
$19.35
19.42
18.64
18.24
23.95
23.18
23.16
18.53
18.02
17.3 %
$22.35
The greater Minneapolis market comprises a total of 79.0 million square feet of
office space. For the 4th Quarter of 2014, the market reported a vacancy rate of
17.3% and an average asking rent of $22.35. The subject property is located in the
SW/NE Scott County submarket, which houses 20,740,000 square feet of office
space. The submarket's vacancy rate of 17.0% is on par with the overall market
average. The average asking lease rate of $23.95 is above the average for the
broader market.
The following table illustrates a trend of office space statistics for the overall
Minneapolis market and the SW/NE Scott County submarket.
March-2014
30
FIGURE 3-9
HISTORICAL AND PROJECTED OFFICE SPACE STATISTICS – GREATER MARKET VS. SUBMARKET
Minneapolis Market
Year
Available
Office Space
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Vacancy
Rate
SW/NE Scott County Submarket
% Chg
Occupied
Office Space
% Chg
Asking
Lease Rate
74,931,000
75,645,000
75,809,000
75,508,000
75,996,000
76,127,000
77,079,000
78,014,000
78,297,000
78,324,000
78,292,000
78,411,000
78,951,000
—
1.0 %
0.2
(0.4)
0.6
0.2
1.3
1.2
0.4
0.0
(0.0)
0.2
0.7
64,603,000
61,961,000
61,029,000
61,099,000
61,734,000
63,155,000
65,436,000
64,950,000
63,006,000
62,819,000
63,574,000
64,183,000
65,284,000
—
(4.1) %
(1.5)
0.1
1.0
2.3
3.6
(0.7)
(3.0)
(0.3)
1.2
1.0
1.7
13.8 %
18.1
19.5
19.1
18.8
17.0
15.1
16.7
19.5
19.8
18.8
18.1
17.3
$22.50
21.70
21.01
20.92
20.62
21.03
21.72
21.89
21.81
21.61
21.79
22.11
22.35
79,098,000
79,853,000
80,714,000
81,926,000
83,176,000
0.2 % 66,027,000
1.0
67,071,000
1.1
68,255,000
1.5
70,121,000
1.5
71,847,000
1.1 %
1.6
1.8
2.7
2.5
16.5 % $22.87
16.0
23.64
15.4
24.71
14.4
25.67
13.6
26.86
Occupied
Office Space
Available
Office Space
% Chg
—
(3.6) %
(3.2)
(0.4)
(1.4)
2.0
3.3
0.8
(0.4)
(0.9)
0.8
1.5
1.1
18,843,000
18,881,000
18,830,000
18,575,000
18,458,000
18,533,000
19,023,000
19,805,000
20,348,000
20,386,000
20,354,000
20,309,000
20,740,000
—
0.2 %
(0.3)
(1.4)
(0.6)
0.4
2.6
4.1
2.7
0.2
(0.2)
(0.2)
2.1
15,903,000
15,482,000
15,855,000
15,584,000
15,431,000
15,716,000
16,493,000
16,735,000
16,055,000
16,390,000
16,487,000
16,613,000
17,214,000
—
(2.6) %
2.4
(1.7)
(1.0)
1.8
4.9
1.5
(4.1)
2.1
0.6
0.8
3.6
15.6 %
18.0
15.8
16.1
16.4
15.2
13.3
15.5
21.1
19.6
19.0
18.2
17.0
$23.09
22.59
22.29
22.13
22.05
22.80
23.39
23.45
22.85
23.04
23.37
23.70
23.95
—
(2.2) %
(1.3)
(0.7)
(0.4)
3.4
2.6
0.3
(2.6)
0.8
1.4
1.4
1.1
2.3 %
3.4
4.5
3.9
4.6
20,775,000
20,875,000
21,052,000
21,288,000
21,511,000
0.2 %
0.5
0.8
1.1
1.0
17,285,000
17,289,000
17,296,000
17,311,000
17,252,000
0.4 %
0.0
0.0
0.1
(0.3)
16.8 %
17.2
17.8
18.7
19.8
$24.38
25.06
25.68
26.25
26.99
1.8 %
2.8
2.5
2.2
2.8
% Chg
% Chg
Vacancy
Asking
Rate
Lease Rate
% Chg
Forecasts
2014
2015
2016
2017
2018
Average Annual Compound Change
2001 - 2013
2001 - 2007
2007 - 2010
2010 - 2013
0.4 %
0.5
0.5
0.3
0.1 %
0.2
(1.4)
1.3
(0.1) %
(0.6)
(0.2)
1.1
0.8 %
0.2
2.3
0.6
0.7 %
0.6
(0.2)
1.6
0.3 %
0.2
(0.5)
1.3
Forecast 2013 - 2018
1.0 %
1.9 %
3.7 %
0.7 %
0.0 %
2.4 %
March-2014
31
The inventory of office space in the Minneapolis market increased at an average
annual compound rate of 0.4% from 2001 through 2013, while occupied office
space remained relatively stable at an average annual rate of 0.1% over the same
period. During the period of 2001 through 2007, occupied office space expanded at
an average annual compound rate of 0.2%. From 2007 through 2010, occupied
office space contracted at an average annual compound rate of -1.4%, reflecting
the impact of the recession. The onset of the recovery is evident in the 1.3%
average annual change in occupied office space from 2010 to 2013. From 2013
through 2018, the inventory of occupied office space is forecast to increase at an
average annual compound rate of 1.9%, with available office space expected to
increase 1.0%, thus resulting in an anticipated vacancy rate of 13.6% as of 2018.
According to REIS, the greater Minneapolis market offers over 78,000,000 square
feet of Class A and B office space, with the second-largest office space located in
the Southwest/Northeast Scott County submarket. The Southwest/Northeast Scott
County office submarket has noted a slight decrease in supply in the last two years;
however, owner-occupied and medical office construction is occurring in Eden
Prairie by UnitedHealth Group/Optum (to be completed in the near future). The
Southwest/Northeast Scott County submarket boasts the second-lowest vacancy
rate and commands the highest asking rent within the Minneapolis market. In
2013, several high-profile office buildings sold for historically high prices, which
resulted in increased rental rates. As a result of the lack of new office development
in the recent past, developers are reportedly purchasing space and renovating
and/or repurposing the space for office use.
Convention Activity
A convention center serves as a gauge of visitation trends to a particular market.
Convention centers also generate significant levels of demand for area hotels and
serve as a focal point for community activity. Typically, hotels within the closest
proximity to a convention center—up to three miles away—will benefit the most.
Hotels serving as headquarters for an event benefit the most by way of premium
rates and hosting related banquet events. During the largest of conventions,
peripheral hotels may benefit from compression within the city as a whole.
The Minneapolis Convention Center, located in the heart of Downtown, hosts
events and conventions for international to local clientele. In total, the Minneapolis
Convention Center contains more than one million square feet of space and covers
four city blocks. With nearly 500,000 square feet of exhibit space, 87 column-free
meeting rooms, and 2 large ballrooms, it can comfortably accommodate 50,000
attendees. The convention center features a 100,000-square-foot exhibit hall that
can be converted into a ballroom.
According to the Meet Minneapolis Convention & Visitors Association, the
provided statistics represent the events at Minneapolis Convention Center and in-
March-2014
32
house events. Consistent with national trends, the number of event declined in
2008 and 2009; however, the number of delegates attending conventions and
other events increased during those years. In 2010, both number of conventions
and attendees increased; the city’s convention activity modestly decreased in
2011. This downward trend was reversed in 2012, as the number of events and
attendees increased once again given the stronger economy. Convention demand
in 2013 and beyond is expected to benefit from the facility's mid-market price
point.
Airport Traffic
Airport passenger counts are important indicators of lodging demand. Depending
on the type of service provided by a particular airfield, a sizable percentage of
arriving passengers may require hotel accommodations. Trends showing changes
in passenger counts also reflect local business activity and the overall economic
health of the area.
The Minneapolis-St. Paul International Airport is located seven miles southeast of
Downtown Minneapolis and about seven miles southwest of Downtown St. Paul.
The airport is serviced by major commercial airlines, as well as numerous charter
and cargo carriers. Virtually every aspect of the Minneapolis-St. Paul International
Airport was improved through a $3.1-billion expansion effort over the last decade.
In 2002, the Metropolitan Airports Commission (MAC) opened two new Lindbergh
Terminal concourses, A and B, and a second-phase expansion of Concourse C. MAC
also opened the Humphrey Terminal and an eight-story parking ramp at the
Humphrey Terminal, developed new cargo facilities, and finished work on
numerous airfield projects. A fourth runway opened in 2005, and a 4,300-space
parking structure was completed in 2008. Twenty-two charging stations, equipped
with four electrical outlets each, are now available at no charge to travelers at both
the Lindbergh and Humphrey terminals. In September of 2012, MAC presented its
environmental assessment for the airport's proposed $1.5-billion expansion to
support continued passenger growth through 2020. Federal approval of the
assessment is required before the MAC can proceed with any expansion. The
airport's long-term comprehensive plan calls for major expansion of the facilities
at Terminal 2. The plan is designed to increase gate capacity as passenger demand
warrants it; however, expansion plans are currently undergoing hearings. At the
time of this report, no timeline or design had been established.
The following table illustrates recent operating statistics for the Minneapolis St.
Paul International Airport, which is the primary airport facility serving the
proposed subject hotel’s submarket.
March-2014
33
FIGURE 3-10 AIRPORT STATISTICS - MINNEAPOLIS ST. PAUL INTERNATIONAL
AIRPORT
Passenger
Traffic
Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
36,713,173
37,663,664
35,633,019
35,157,322
34,056,443
32,378,599
32,839,441
33,118,499
33,170,960
33,892,074
Percent
Change*
Percent
Change**
—
2.6 %
(5.4)
(1.3)
(3.1)
(4.9)
1.4
0.8
0.2
2.2
—
2.6 %
(1.5)
(1.4)
(1.9)
(2.5)
(1.8)
(1.5)
(1.3)
(0.9)
*Annual average compounded percentage change from the previous year
**Annual average compounded percentage change from first year of data
Source: Minneapolis St. Paul International Airport
FIGURE 3-11 LOCAL PASSENGER TRAFFIC VS. NATIONAL TREND
Change in Passenger Activity
6%
4%
2%
0%
-2%
-4%
-6%
2005 2006 2007 2008 2009 2010 2011 2012 2013
Local Passenger Volume
Na tional Passenger Volume
Source: HVS, Local Airport Authority
This facility recorded 33,892,074 passengers in 2013. The change in passenger
traffic between 2012 and 2013 was 2.2%. The average annual change during the
period shown was 0.9%.
March-2014
34
Tourist Attractions
March-2014
Although Eden Prairie does not have major tourism attractions, its location within
the Twin Cities is favorable. Minneapolis is well known for its extensive theater
and live-performance art offerings, world-class shopping, and eclectic dining
venues. The market benefits from a wide variety of attractions popular with
families visiting from out of town, locals, or international visitors. The peak season
for tourism in this area is from May to September, when the area enjoys warmer
summer weather. During other times of the year, weekend demand comprises
travelers passing through en route to other destinations, people visiting friends or
relatives, and other similar weekend demand generators. Primary attractions in
the area include the following:
·
The 4.2-million-square-foot Mall of America complex attracts more than 40
million visitors a year; between 35 and 40% of these visitors are individuals
who live farther than 150 miles from the nation’s largest retail and
entertainment complex. A $2.1-billion expansion of the mall is proposed that
could potentially add 5.6 million square feet of space, an ice-skating rink, and
new upscale retail stores and would draw an additional 20 million visitors
annually to the Mall of America. In addition to this expansion, in the fourth
quarter of 2012, Mortenson reached an agreement with the City of
Bloomington and the Mall of America concerning public improvements for the
Phase IC expansion of the mall. This more modest expansion, which begins
construction in the fall of 2013, is planned to include a 350-room luxury hotel
and 135,000 square feet of retail space, with completion anticipated by yearend 2015. Additionally, a 500-room Radisson Blu hotel opened on March 15,
2013 at the south end of the mall.
·
Sporting events are a big attraction in the Twin Cities area. The Hubert H.
Humphrey Metrodome, usually simply called The Metrodome, is a domed
sports stadium in Downtown Minneapolis, which is the current home of the
Minnesota Vikings. Construction of a new $975-million Vikings Stadium began
in January of 2014, with the facility expected to be open for the 2016 football
season. In the interim years, the Vikings will play at TCF Bank Stadium on the
University of Minnesota campus. The Target Center, an arena sponsored by the
Target Corporation, is located in Downtown Minneapolis. The center is home
to the NBA's Minnesota Timberwolves and WNBA's Minnesota Lynx. The Xcel
Energy Center in St. Paul is home to the NHL's Minnesota Wild and the NLL's
Minnesota Swarm, and is a premier location for concerts, shows, and athletic
tournaments. In 2010, the Minnesota Twins Major League Baseball team began
the season in its new home, Target Field, an open-air ballpark featuring 39,500
seats. This venue will host the 2014 All Star Game.
·
The Twin Cities area is considered by Minnesotans as the capital for the arts of
the Upper Midwest. The $125-million, 285,000-square-foot Guthrie Theater, a
Tony Award-winning center for theater performance, production, education,
35
and professional training, is located in the historic Mills District on the banks
of the Mississippi River in Downtown Minneapolis. The facility includes three
theaters, public lobbies, rehearsal rooms, classrooms, administrative offices,
production and support facilities, restaurants, bars, and parking.
·
Conclusion
The Minneapolis Institute of Arts is a comprehensive art museum located on a
campus in Minneapolis that covers nearly eight acres. The Minneapolis
Institute of Arts features an encyclopedic collection of more than 100,000
objects, spanning 5,000 years of world history. The building is located within
the Washburn/Fair Oaks Mansion District, a neighborhood of mansions built
by wealthy Minneapolis business leaders between 1880 and 1920; the district
is listed in the National Register of Historic Places. Entry to the museum is free,
except for special exhibitions.
This section discussed a wide variety of economic indicators for the pertinent
market area. The Eden Prairie market is relatively healthy, despite the effects of
the recent economic recession. Real estate was adversely affected by the
downturn, but a recovery is evidently underway. A preponderance of corporate
headquarters has served the Minneapolis MSA well, insulating the metro area from
the adverse effects of one industry's decline. The continued improvement of the
unemployment rate and ongoing expansions in the area should continue to fuel
gains in housing and consumer-driven industries. Furthermore, a highly educated
workforce should continue to attract and retain business investment in the future.
In relation to national conditions, the Minneapolis MSA and the city of Eden Prairie
rank well, featuring a comparatively lower unemployment rate and greater
stability among its key employment sectors.
Our analysis of the outlook for this specific market also considers the broader
context of the national economy. The U.S. economy entered a recession in
December of 2007, which worsened in the fall of 2008 when the financial crisis
shocked the world economy. The U.S. fell into economic decline for most of 2009,
but the nation’s gross domestic product (GDP) and corporate profits began to
grow again in the third quarter of 2009. In 2010, the economy experienced four
consecutive quarters of economic growth, reflecting a rebound from the recession.
Following a slight contraction in the first quarter of 2011, the economy has grown
at positive, albeit fluctuating rates, as evidenced in the following table.
March-2014
36
FIGURE 3-12 UNITED STATES GDP GROWTH RATE
6.0
4.0
2.0
3.9
2.0
1.5
1.3
3.9
1.6
4.9
3.2
2.8 2.8
1.4
3.7
1.2
0.0
-0.4
-2.0
-4.0
-2.7
2.5
0.1
1.1
-1.3
-2.0
-6.0
4.1
2.8
-5.4
-8.0
-8.3
-10.0
2008
2009
2010
2011
2012
2013
Source: tra dingeconomics.com, Bureau of Economic Analysis
Gross domestic product (GDP) increased at an annual rate of 4.1% in the third
quarter of 2013, beating preliminary projections and substantially exceeding the
2.5% annual growth rate in the second quarter. The U.S. GDP has averaged 3.2%
since it was first recorded in 1947. The strong growth was driven by increases of
7.9% in durable goods, 13.4% in non-residential structures, and 10.3% in real
residential investment. This growth occurred despite the 1.5% contraction in
government spending and investment. The economic outlook continues to be
positive; GDP is projected to grow at an annual rate of 3.0% in 2014, according to
the Federal Open Market Committee.
March-2014
37
4. Supply and Demand Analysis
In the lodging industry, price varies directly, but not proportionately, with demand
and inversely, but not proportionately, with supply. Supply is measured by the
number of guestrooms available, and demand is measured by the number of
rooms occupied; the net effect of supply and demand toward equilibrium results in
a prevailing price, or average rate. The purpose of this section is to investigate
current supply and demand trends, as indicated by the current competitive
market, and to set forth a basis for the projection of future supply and demand
growth.
Definition of Subject
Hotel Market
The 120-room Proposed Hotel will be located in Eden Prairie, Minnesota. The
greater market surrounding the subject site offers 87 hotels and motels, spanning
18,184 rooms. The two largest hotels are the 821-room Hilton Minneapolis and the
645-room Hyatt Regency Minneapolis.
Of this larger supply set, the proposed subject hotel is expected to compete with a
smaller set of hotels based on various factors. These factors may include location,
price point, product quality, length of stay (such as an extended-stay focus vs. nonextended-stay focus), room type (all-suite vs. standard), hotel age, or brand,
among other factors. We have reviewed these pertinent attributes and established
an expected competitive set based upon this review. Our review of the proposed
subject hotel’s specific competitive set within the Eden Prairie area begins after
our review of national occupancy, average rate, and RevPAR trends.
National Trends
Overview
The proposed subject hotel’s local lodging market is most directly affected by the
supply and demand trends within the immediate area. However, individual
markets are also influenced by conditions in the national lodging market. We have
reviewed national lodging trends to provide a context for the forecast of the supply
and demand for the proposed subject hotel’s competitive set.
Smith Travel Research (STR) is an independent research firm that compiles and
publishes data on the lodging industry, routinely used by typical hotel buyers.
Figure 4-1 presents annual hotel occupancy and average rate data since 1987.
Figures 4-2 and 4-3 illustrate the more recent trends, categorized by geography,
price point, type of location, and chain scale. The statistics include occupancy,
average rate, and rooms revenue per available room (RevPAR). RevPAR is
calculated by multiplying occupancy by average rate and provides an indication of
how well rooms revenue is being maximized.
March-2014
38
FIGURE 4-1
NATIONAL OCCUPANCY AND AVERAGE RATE TRENDS
70.0%
$120
65.0%
$100
$80
60.0%
$60
55.0%
$40
50.0%
$20
45.0%
RevPAR
Average Rate
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
$0
Occupancy
Source: STR
March-2014
39
FIGURE 4-2
NATIONAL OCCUPANCY AND AVERAGE RATE TRENDS – YEAR-TO-DATE DATA
Occupancy - Thru December
2012
2013
United States
61.3 %
62.3 %
Region
New England
Middle Atlantic
South Atlantic
East North Central
East South Central
West North Central
West South Central
Mountain
Pacific
61.4 %
66.5
60.8
58.4
56.2
57.3
60.5
59.1
67.8
Price
Luxury
Upscale
Midprice
Economy
Budget
% Change
Average Rate - Thru December
2012
2013
1.5 %
$106.25
$110.35
62.5 %
66.0
62.0
59.1
56.9
57.9
61.4
60.3
69.5
1.8 %
(0.7)
1.9
1.2
1.2
1.0
1.5
1.9
2.5
$127.18
150.64
103.49
92.47
79.48
84.20
88.87
96.20
126.30
69.5 %
65.5
62.3
56.2
55.5
70.6 %
66.1
63.1
57.3
56.3
1.6 %
0.9
1.4
2.1
1.5
Location
Urban
Suburban
Airport
Interstate
Resort
Small Metro/Town
69.4 %
61.6
68.0
54.5
63.2
54.3
70.5 %
62.8
69.8
54.8
64.1
54.9
Chain Scale
Luxury
Upper Upscale
Upscale
Upper Midscale
Midscale
Economy
Independents
73.3 %
70.9
70.9
63.0
54.8
54.2
58.0
74.6 %
71.9
71.7
63.8
55.8
55.0
58.9
% Change
RevPAR - Thru December
2012
2013
% Change
3.9 %
$65.15
$68.69
5.4 %
$131.46
155.74
106.64
95.70
82.24
86.54
93.19
99.02
133.73
3.4 %
3.4
3.0
3.5
3.5
2.8
4.9
2.9
5.9
$78.11
100.12
62.89
53.97
44.69
48.23
53.75
56.86
85.65
$82.19
102.83
66.06
56.53
46.78
50.07
57.20
59.67
92.94
5.2 %
2.7
5.0
4.7
4.7
3.8
6.4
4.9
8.5
$175.21
129.00
101.65
75.40
59.24
$181.98
133.43
104.91
78.44
61.68
3.9 %
3.4
3.2
4.0
4.1
$121.73
84.48
63.29
42.36
32.86
$128.52
88.16
66.24
44.99
34.73
5.6 %
4.4
4.7
6.2
5.7
1.6 %
1.9
2.6
0.6
1.4
1.0
$154.02
89.74
94.75
74.29
142.28
86.79
$160.80
92.80
97.53
76.18
150.22
89.14
4.4 %
3.4
2.9
2.5
5.6
2.7
$106.85
55.30
64.46
40.49
89.99
47.16
$113.31
58.26
68.08
41.77
96.36
48.91
6.0 %
5.3
5.6
3.1
7.1
3.7
1.8 %
1.5
1.2
1.2
1.8
1.5
1.6
$274.81
154.36
116.89
97.42
74.62
52.54
105.15
$290.31
161.04
121.72
100.29
76.33
54.27
108.90
5.6 %
4.3
4.1
2.9
2.3
3.3
3.6
$201.36
109.40
82.85
61.42
40.89
28.46
60.94
$216.47
115.84
87.28
63.99
42.57
29.85
64.11
7.5 %
5.9
5.3
4.2
4.1
4.9
5.2
Source: STR - December 2013 Lodging Review
March-2014
40
FIGURE 4-3
NATIONAL OCCUPANCY AND AVERAGE RATE TRENDS – CALENDAR YEAR DATA
Occupancy
2011
2012
United States
59.9 %
61.4 %
Region
New England
Middle Atlantic
South Atlantic
East North Central
East South Central
West North Central
West South Central
Mountain
Pacific
61.2 %
65.4
59.4
56.5
55.5
56.2
58.1
59.1
65.6
Price
Luxury
Upscale
Midprice
Economy
Budget
Average Rate
% Change
2011
2012
2.5 %
$101.85
$106.10
61.6 %
66.5
60.9
58.5
56.4
57.4
60.6
59.2
67.9
0.7 %
1.8
2.5
3.6
1.5
2.2
4.4
0.2
3.5
$120.66
145.05
100.20
88.20
77.22
80.92
84.80
93.39
119.05
68.3 %
63.9
60.5
53.9
54.9
69.7 %
65.5
62.1
55.6
56.1
2.0 %
2.4
2.6
3.1
2.1
Location
Urban
Suburban
Airport
Interstate
Resort
Small Metro/Town
67.5 %
60.1
66.3
53.3
61.8
53.5
69.5 %
61.8
68.1
54.6
63.3
54.5
Chain Scale
Luxury
Upper Upscale
Upscale
Mid-scale w/ F&B
Mid-scale w/o F&B
Economy
Independents
71.0 %
69.3
69.5
61.3
53.2
53.4
56.8
73.2 %
70.9
70.9
63.0
54.8
54.3
58.3
RevPAR
% Change
2011
2012
% Change
4.2 %
$61.02
$65.17
8.2 %
$126.80
150.55
103.28
92.28
79.47
83.82
88.78
96.57
125.98
5.1 %
3.8
3.1
4.6
2.9
3.6
4.7
3.4
5.8
$73.84
94.80
59.50
49.82
42.89
45.48
49.23
55.20
78.06
$78.13
100.15
62.86
53.98
44.78
48.13
53.81
57.20
85.49
8.6 %
8.1
7.0
8.4
5.7
6.5
8.5
8.4
10.3
$167.35
124.88
96.51
72.78
54.54
$173.50
129.09
100.30
76.12
57.49
3.7 %
3.4
3.9
4.6
5.4
$114.26
79.80
58.37
39.24
29.97
$120.86
84.51
62.27
42.30
32.26
8.2 %
7.4
8.0
7.2
7.2
2.9 %
2.7
2.7
2.4
2.3
1.9
$147.44
86.18
91.01
71.66
135.45
84.06
$153.94
89.86
94.70
74.18
141.60
86.72
4.4 %
4.3
4.1
3.5
4.5
3.2
$99.53
51.81
60.37
38.22
83.75
44.95
$106.91
55.49
64.49
40.53
89.60
47.26
8.2 %
8.4
7.1
6.7
9.8
6.3
3.1 %
2.3
2.0
2.8
3.0
1.8
2.6
$262.64
147.99
111.70
93.93
72.34
50.47
101.24
$274.51
154.36
116.88
97.41
74.45
52.50
105.12
4.5 %
4.3
4.6
3.7
2.9
4.0
3.8
$186.43
102.60
77.64
57.58
38.50
26.94
57.49
$200.98
109.43
82.87
61.36
40.79
28.52
61.27
11.2 %
6.6
8.0
8.6
3.0
6.0
6.5
Source: STR - December 2012 Lodging Review
March-2014
41
Following the significant occupancy and RevPAR decline experienced during the
last recession, demand growth resumed in 2010, led by select markets that had
recorded growth trends in the fourth quarter of 2009. The pace of demand growth
accelerated through the year; in 2010, lodging demand in the U.S. increased by
7.7% over that registered in 2009. A return of business travel and some group
activity contributed to these positive trends. The resurgence in demand was partly
fueled by the significant price discounts that were widely available in the first half
of 2010. These discounting policies were largely phased out in the latter half of the
year, balancing much of the early rate loss. Average rate decreased by only 0.1% in
2010 when compared to 2009.
Strong demand growth continued in 2011 and 2012, at 5.0% and 3.0%,
respectively. Demand increased 2.1% in the year-to-date through November 2013
period. Average rate rebounded by respective rates of 3.7% and 4.2%, in 2011 and
2012, followed by a 3.9% increase in 2013. In 2012, occupancy reached 61.3%
(exceeding the ten-year average); moreover, occupancy gained another point in
2013, ending the year at 62.3%. Average rate finished the year just over $106 in
2012, with just over a $4 gain in rate registered in 2013. Demand and average
rates should continue to strengthen in the near term. These trends, combined with
the low levels of supply growth anticipated through 2014, should boost occupancy
to just over 63% by year-end 2014. On a national average, strengthening
occupancy levels should also permit hotels to increase room rates beyond the
3.9% achieved in 2013. HVS forecasts U.S. average rate growth of 5.0% for 2014.
Historical Supply
and Demand Data
Smith Travel Research (STR) is an independent research firm that compiles and
publishes data on the lodging industry, routinely used by typical hotel buyers. HVS
has ordered and analyzed an STR Trend Report of historical supply and demand
data for a group of hotels considered applicable to this analysis for the proposed
subject hotel. This information is presented in the following table, along with the
market-wide occupancy, average rate, and rooms revenue per available room
(RevPAR). RevPAR is calculated by multiplying occupancy by average rate and
provides an indication of how well rooms revenue is being maximized.
It is important to note that the market and competitive research is as of our date of
site inspection, in November of 2013.
March-2014
42
FIGURE 4-4
HISTORICAL SUPPLY AND DEMAND TRENDS
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Average Daily Available Room
Room Count
Nights
2,147
2,226
2,204
2,140
2,224
2,224
2,224
2,575
2,706
2,706
2,707
2,708
Change
783,573
812,490
804,492
781,040
811,760
811,760
811,760
939,990
987,690
987,690
988,058
988,420
—
3.7 %
(1.0)
(2.9)
3.9
0.0
0.0
15.8
5.1
0.0
0.0
0.0
Average Annual Compounded Change:
2001-2012
2.1 %
Occupied Room
Nights
477,810
462,520
448,178
466,833
533,416
525,380
539,302
567,370
579,579
652,797
662,708
650,896
Change
—
(3.2) %
(3.1)
4.2
14.3
(1.5)
2.6
5.2
2.2
12.6
1.5
(1.8)
Occupancy
Average
Rate
Change
RevPAR
Change
61.0 %
56.9
55.7
59.8
65.7
64.7
66.4
60.4
58.7
66.1
67.1
65.9
$104.72
101.06
94.09
97.88
104.44
112.10
117.73
122.32
108.41
105.46
110.27
114.55
—
(3.5) %
(6.9)
4.0
6.7
7.3
5.0
3.9
(11.4)
(2.7)
4.6
3.9
$63.86
57.53
52.42
58.51
68.63
72.55
78.21
73.83
63.62
69.70
73.96
75.44
—
(9.9) %
(8.9)
11.6
17.3
5.7
7.8
(5.6)
(13.8)
9.6
6.1
2.0
2.9 %
0.8 %
1.5 %
Year-to-Date Through September
2012
2013
2,708
2,708
739,284
739,223
—
(0.0) %
497,980
495,320
—
(0.5) %
Number
of Rooms
Hotels Included in Sample
Fairfield Inn & Suites Minneapolis Eden Prairie
Courtyard Minneapolis Eden Prairie
Springhill Suites Minneapolis Eden Prairie
Doubletree Bloomington Minneapolis South
Sofitel Minneapolis
321
97
90
126
149
119
218
225
256
256
568
282
Total
67.4 %
67.0
Year
Affiliated
Nov 1988
May 2000
Jan 1997
Oct 2007
Feb 1989
Sep 2001
Feb 1999
Aug 2008
Jan 2008
May 2004
Jul 2011
Apr 1975
$115.56
119.29
—
3.2 %
$77.84
79.93
—
2.7 %
Year
Opened
Nov 1988
May 2000
Jan 1997
Jan 1997
Feb 1989
Sep 2001
Sep 1980
Aug 2008
Jan 2008
Jul 1970
Sep 1970
Apr 1975
2,707
Source: STR Global
March-2014
43
It is important to note some limitations of the STR data. Hotels are occasionally
added to or removed from the sample, and not every property reports data in a
consistent and timely manner; these factors can influence the overall quality of the
information by skewing the results. These inconsistencies may also cause the STR
data to differ from the results of our competitive survey. Nonetheless, STR data
provide the best indication of aggregate growth or decline in existing supply and
demand; thus, these trends have been considered in our analysis. Opening dates,
as available, are presented for each reporting hotel in the previous table.
The STR data for the competitive set reflect a market-wide occupancy level of
65.9% in 2012, which compares to 67.1% for 2011. The overall average occupancy
level for the calendar years presented equates to 64.0%. Local employers and
headquarter offices in the area, the Minneapolis-St. Paul International Airport, and
the Mall of America represent the primary sources of demand for the selected
competitive set of hotels in this market. Market-wide occupancy declined between
2001 and 2003, primarily due to the opening of the SpringHill Suites Minneapolis
Eden Prairie and the Hilton Garden Inn Minneapolis Bloomington. After the quick
absorption of the new supply, the market realized year-over-year occupancy
increases in 2004 and 2005, largely due to stronger corporate travel and overall
economic growth in the Eden Prairie area; occupancy fluctuated between 2006
and 2007. However, occupancy fell in 2008 with the onset of the financial crisis
and the opening of the Hilton Bloomington; the decline continued into 2009,
concurrent with the Great Recession. Demand then returned to this resilient
market in 2010, with market occupancy posting a 12.6% increase. In 2011,
occupancy rose only slightly, but declined once again in 2012. The latest year-todate data for 2013 show a slight decrease, attributed to an increasing level of
supply in the adjacent markets, as well as the changes and layoffs experienced at
SuperValu.
The STR data for the competitive set reflect a market-wide average rate level of
$114.55 in 2012, which compares to $110.27 for 2011. The average across all
calendar years presented for average rate equates to $112.85. Average rates in this
primarily corporate market fell in 2002 and 2003, followed by positive growth
from 2004 through 2008 during stronger economic times. However, average rate
growth began to slow in late 2008, concurrent with the onset of the recession, and
rates declined in 2009 and 2010. Rate recovery then set in, with the market noting
month-over-month increases from January of 2011 through September 2013, with
the exception of one month. This trend indicates rate recovery is underway as
economic conditions strengthen and demand levels continue to rise. These
occupancy and average rate trends resulted in a RevPAR level of $75.44 in 2012.
March-2014
44
Seasonality
March-2014
Monthly occupancy and average rate trends are presented in the following tables.
45
FIGURE 4-5
MONTHLY OCCUPANCY TRENDS
Month
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
January
February
March
April
May
June
July
August
September
October
November
December
54.4 %
63.8
68.0
61.9
60.6
76.6
66.8
76.3
55.6
60.0
48.8
41.3
47.1 %
55.0
53.8
59.5
56.0
59.2
62.1
72.6
66.4
63.2
50.2
38.0
45.8 %
56.0
53.8
53.7
49.3
60.5
66.5
70.2
57.8
59.4
46.8
48.0
48.1 %
58.2
54.8
60.1
53.8
63.5
69.2
74.1
64.2
66.4
57.3
45.6
51.5 %
60.5
62.9
68.5
59.8
73.4
78.5
83.1
70.7
71.3
60.7
47.4
52.5 %
62.8
62.9
64.0
63.4
73.6
70.7
75.5
71.4
72.5
60.5
47.2
55.4 %
65.5
64.8
64.0
65.4
75.6
74.8
78.3
70.6
75.5
59.5
47.7
50.0 %
56.0
61.0
70.6
63.0
70.9
67.6
68.6
69.3
59.1
49.5
40.4
45.4 %
54.8
52.9
57.4
57.7
64.7
68.7
72.3
66.4
67.5
53.5
42.9
51.7 %
57.9
63.6
65.9
66.3
78.3
76.6
77.8
73.0
73.7
60.5
47.5
54.8 %
60.7
65.2
66.5
66.4
79.4
77.1
80.5
74.5
70.8
58.0
50.7
52.8 %
60.4
63.2
63.0
63.2
78.8
75.5
79.2
69.6
71.2
59.4
53.6
53.3 %
59.9
61.3
67.1
64.1
75.9
74.0
77.5
69.7
—
—
—
Annual Occupancy
61.0 %
56.9 %
55.7 %
59.8 %
65.7 %
64.7 %
66.4 %
60.4 %
58.7 %
66.1 %
67.1 %
65.9 %
Year-to-Date
64.9
59.1
57.0
61.0
67.7
66.3
68.3 %
64.2 %
60.0 %
68.0 %
69.5 %
67.4 %
—
67.0 %
Source: STR Global
March-2014
46
FIGURE 4-6
MONTHLY AVERAGE RATE TRENDS
Month
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
January
February
March
April
May
June
July
August
September
October
November
December
$102.62
102.34
108.48
111.51
106.64
106.15
106.75
105.00
104.09
106.78
97.40
92.73
$96.84
98.52
97.73
99.01
101.34
99.98
101.17
112.89
105.25
106.62
92.98
89.84
$94.90
94.47
94.11
95.05
94.00
91.91
93.13
90.81
97.09
101.19
94.02
87.73
$93.64
96.89
97.17
97.61
98.28
96.75
98.71
99.10
101.42
103.40
96.90
90.11
$97.07
100.77
100.92
102.94
105.32
106.75
106.06
105.67
107.45
110.43
105.30
99.69
$107.92
109.82
109.13
111.38
112.80
115.10
113.10
114.49
111.78
118.89
111.11
104.84
$115.03
114.22
113.01
118.56
118.09
118.78
118.01
119.89
120.26
126.40
115.19
110.11
$119.68
121.60
115.87
120.82
118.62
124.91
118.51
127.17
144.06
124.00
113.42
108.22
$113.75
114.81
109.87
109.43
105.12
106.18
104.15
115.33
107.90
111.06
102.19
99.26
$104.08
103.51
105.57
103.24
104.02
109.03
103.79
106.20
107.58
111.96
104.23
97.94
$108.63
108.12
108.01
110.72
108.65
110.96
109.77
112.75
114.96
117.56
108.65
99.58
$113.22
113.69
111.70
116.76
117.12
116.00
116.34
115.98
118.12
121.83
107.76
101.03
$114.15
116.36
109.48
120.89
117.41
124.15
122.89
119.56
125.31
—
—
—
Annual Average Rate
$104.72
$101.06
$94.09
$97.88
$104.44
$112.10
$117.73
$122.32
$108.41
$105.46
$110.27
$114.55
—
Year-to-Date
$106.03
$101.96
$93.79
$97.97
$104.02
$111.94
$117.48
$124.01
$109.43
$105.37
$110.46
$115.56
$119.29
Source: STR Global
March-2014
47
The illustrated monthly occupancy and average rates patterns reflect important
seasonal characteristics. We have reviewed these trends in developing our
forthcoming forecast of market-wide demand and average rate.
Patterns of Demand
March-2014
A review of the trends in occupancy, average rate, and RevPAR per day of the week
over the past three fiscal years provides some insight into the impact that the
current economic conditions have had on the competitive lodging market. The
data, as provided by Smith Travel Research, are illustrated in the following table.
48
FIGURE 4-7
OCCUPANCY, AVERAGE RATE AND REVPAR BY DAY OF WEEK
Occupancy (%)
Oct 10 - Sep 11
Oct 11 - Sep 12
Oct 12 - Sep 13
Sunday
39.9 %
37.9
39.1
Change (Occupancy Points)
FY 11 - FY 12
-2.0
FY 12 - FY 13
1.2
ADR ($)
Oct 10 - Sep 11
Oct 11 - Sep 12
Oct 12 - Sep 13
Change (Dollars)
FY 11 - FY 12
FY 12 - FY 13
Change (Percent)
FY 11 - FY 12
FY 12 - FY 13
Sunday
Monday
Tuesday
Thursday
Friday
72.2 %
69.0
67.1
82.8 %
79.6
77.1
81.8 %
77.9
76.3
62.5 %
60.2
60.9
63.7 %
63.2
66.3
-3.1
-2.0
-3.2
-2.5
-3.9
-1.6
-2.3
0.7
-0.5
3.0
Monday
Tuesday
Wednesday
Saturday
68.0 %
70.8
72.4
2.8
1.6
Total Year
67.3 %
65.5
65.6
-1.8
0.1
Thursday
Friday
Saturday
Total Year
$101.20
106.37
108.41
$120.41
128.35
132.58
$124.45
132.40
137.39
$123.41
130.76
135.88
$112.29
116.18
118.34
$88.32
89.02
91.79
$84.76
87.26
89.81
$109.39
114.19
117.40
$5.17
2.04
$7.94
4.23
$7.96
4.98
$7.35
5.11
$3.89
2.16
$0.70
2.77
$2.50
2.55
$4.80
3.21
5.1 %
1.9
6.6 %
3.3
6.4 %
3.8
RevPAR ($)
Sunday
Monday
Oct 10 - Sep 11
Oct 11 - Sep 12
Oct 12 - Sep 13
$40.35
40.33
42.35
$86.90
88.62
88.90
$103.10
105.45
105.92
Change (Dollars)
FY 11 - FY 12
FY 12 - FY 13
-$0.02
2.03
$1.71
0.29
$2.35
0.47
Change (Percent)
FY 11 - FY 12
FY 12 - FY 13
Wednesday
-0.1 %
5.0
2.0 %
0.3
Tuesday
2.3 %
0.4
6.0 %
3.9
3.5 %
1.9
0.8 %
3.1
3.0 %
2.9
4.4 %
2.8
Thursday
Friday
Saturday
Total Year
$100.89
101.83
103.67
$70.22
69.94
72.12
$56.25
56.28
60.82
$57.63
61.78
64.98
$73.57
74.76
77.00
$0.94
1.85
-$0.28
2.18
$0.03
4.55
$4.15
3.20
$1.18
2.24
Wednesday
0.9 %
1.8
-0.4 %
3.1
0.1 %
8.1
7.2 %
5.2
1.6 %
3.0
Source: STR Global
In most markets, business travel, including individual commercial travelers and
corporate groups, is the predominant source of demand on Monday through
Thursday nights. Leisure travelers and non-business-related groups generate a
majority of demand on Friday and Saturday nights.
March-2014
49
SUPPLY
Based on an evaluation of the occupancy, rate structure, market orientation, chain
affiliation, location, facilities, amenities, reputation, and quality of each area hotel,
as well as the comments of management representatives, we have identified
several properties that are expected to be primarily competitive with the proposed
subject hotel. If applicable, additional lodging facilities may be judged only
secondarily competitive; although the facilities, rate structures, or market
orientations of these hotels prevent their inclusion among the primary competitive
supply, they are expected to compete with the proposed subject hotel to some
extent.
The following table summarizes the important operating characteristics of the
future primary competitors and the aggregate secondary competitors (if
applicable). This information was compiled from personal interviews, inspections,
lodging directories, and our in-house library of operating data. The table also sets
forth each property’s penetration factors; penetration is the ratio between a
specific hotel’s operating results and the corresponding data for the market. If the
penetration factor is greater than 100%, the property is performing better than
the market as a whole; conversely, if the penetration is less than 100%, the hotel is
performing at a level below the market-wide average.
March-2014
50
FIGURE 4-8
COMPETITORS – OPERATING PERFORMANCE
Estimated 2010
Estimated 2011
Estimated 2012
149
93
97
126
119
75 % 5 %
70
15
80
5
65
10
75
10
20 %
15
15
25
15
149
93
97
126
119
65-70 %
60-65
65-70
70-75
65-70
$100-105
80-85
115-120
90-95
95-100
149
93
97
126
119
60-65 %
65-70
75-80
70-75
65-70
$110-115
85-90
115-120
95-100
100-105
149
93
97
126
119
Sub-Totals/Averages
584
73 %
9%
18 %
584
67.7 %
$98.39
584
69.1 %
$103.82
584
71.8 %
$98.26
Meet
Number
of Rooms
re
Property
ing a
nd
Grou
p
Weighted
Annual
Room
Count
Comm
ercia
l
Leisu
Est. Segmentation
Occ.
Average
Rate
Weighted
Annual
Room
Count
Occ.
Average
Rate
Weighted
Annual
Room
Count
Occ.
Average
Rate
65-70 % $110-115
65-70
90-95
75-80
115-120
70-75
95-100
75-80
70-75
Secondary Competitors
2,127
53 % 28 %
19 %
1,047
65.6 %
$108.08
1,049
67.1 %
$111.80
1,048
65.7 %
$120.96
Totals/Averages
2,711
60 % 21 %
19 %
1,631
66.4 %
$104.54
1,633
67.8 %
$108.89
1,632
67.9 %
$112.36
March-2014
51
The following map illustrates the locations of the proposed subject hotel and its
future competitors.
MAP OF COMPETITION
Our survey of the primarily competitive hotels in the local market shows a range of
lodging types and facilities. Each primary competitor was inspected and evaluated.
Descriptions of our findings are presented below.
March-2014
52
PRIMARY COMPETITOR #1 - COURTYARD BY MARRIOTT MINNEAPOLIS EDEN
PRAIRIE
Courtyard by Marriott
Minneapolis Eden
Prairie
11391 Viking Drive
Eden Prairie, MN
March-2014
The Courtyard by Marriott Minneapolis Eden Prairie is owned by Hospitality
Property Trust and is operated by Marriott International, Inc. Facilities include
The Bistro, an indoor pool and whirlpool, a fitness room, a business center, a
market pantry, a guest laundry facility, and approximately 1,250 square feet of
meeting space. The hotel, which opened in 1989, was renovated in 2011; upgrades
included the reconfiguration of the lobby and The Bistro, known as Courtyard's
"Refreshing Business Lobby" concept, as well as a full renovation of all
guestrooms. This hotel benefits from its relatively recent renovations and its
strong brand affiliation. Overall, the property appeared to be in very good
condition.
53
PRIMARY COMPETITOR #2 - FAIRFIELD INN BY MARRIOTT EDEN PRAIRIE
Fairfield Inn by
Marriott Eden Prairie
11325 Viking Drive
Eden Prairie, MN
March-2014
The Fairfield Inn by Marriott Eden Prairie is owned by Tharaldson Lodging, Inc.
and is operated by TMI Hospitality. Facilities and amenities include a breakfast
dining area (a complimentary breakfast is served), an indoor pool and whirlpool, a
fitness room, a lobby workstation, a market pantry, a guest laundry facility, and
approximately 480 square feet of meeting space. The hotel, which opened in 1997,
underwent a complete renovation in 2011, inclusive of the guestrooms and public
spaces. This hotel benefits from its strong brand affiliation and its location along
Interstate 494. Overall, the property appeared to be in very good condition.
54
PRIMARY COMPETITOR #3 - HILTON GARDEN INN MINNEAPOLIS EDEN
PRAIRIE
Hilton Garden Inn
Minneapolis Eden
Prairie
6330 Point Chase
Eden Prairie, MN
March-2014
The Hilton Garden Inn Minneapolis Eden Prairie is owned and operated by Summit
Hotel Properties, Inc. Facilities include the Great American Grill, the Pavilion
Lounge, an indoor pool, a fitness room, a business center, a market pantry, a guest
laundry facility, and approximately 1,500 square feet of meeting space. The hotel,
which opened in 2000, is scheduled to undergo a full renovation of its public
spaces and guestrooms in 2014. This hotel has the advantage of being located
directly across the UnitedHealth Group/Optum Campus, just outside the Golden
Triangle, and having a strong brand affiliation. Overall, the property appeared to
be in good condition.
55
PRIMARY COMPETITOR #4 - HYATT PLACE MINNEAPOLIS EDEN PRAIRIE
Hyatt Place
Minneapolis Eden
Prairie
11369 Viking Drive
Eden Prairie, MN
March-2014
The Hyatt Place is owned and operated by Noble Investment Group LLC. Facilities
include the 24/7 Gallery & Market (a complimentary breakfast is served), an
indoor pool, a fitness room, a business center, a market pantry, a guest laundry
facility, and approximately 1,100 square feet of meeting space. The hotel, which
opened in 1997, was renovated in 2013; upgrades included new hallway carpeting
and new guestroom softgoods. In addition, the guest bathrooms in the king
guestrooms were changed to contain shower stalls instead of bathtubs. This hotel
benefits from its proximity to Interstate 494 and its recent renovation. Overall, the
property appeared to be in very good condition.
56
PRIMARY COMPETITOR #5 - SPRINGHILL SUITES BY MARRIOTT MINNEAPOLIS
EDEN PRAIRIE
SpringHill Suites by
Marriott Minneapolis
Eden Prairie
11552 Leona Road
Eden Prairie, MN
March-2014
The SpringHill Suites by Marriott Eden Prairie is owned and operated by CSM
Corporation. Facilities include a breakfast dining area (a complimentary breakfast
is served), an indoor pool and whirlpool, a fitness room, a sports court, a business
center, a market pantry, a guest laundry facility, and approximately 1,150 square
feet of meeting space. The hotel, which opened in 2001, underwent renovation in
2013, inclusive of the guestroom suites and public spaces. This hotel benefits from
its proximity to Eden Prairie Center Mall, its recent renovation, and its strong
brand affiliation. Overall, the property appeared to be in very good condition.
57
Secondary
Competitors
March-2014
We have also reviewed other area lodging facilities to determine whether any may
compete with the proposed subject hotel on a secondary basis. The room count of
each secondary competitor has been weighted based on its assumed degree of
competitiveness the future with the proposed subject hotel. By assigning degrees
of competitiveness, we can assess how the proposed subject hotel and its future
competitors may react to various changes in the market, including new supply,
changes to demand generators, and renovations or franchise changes of existing
supply. The following table sets forth the pertinent operating characteristics of the
secondary competitors.
58
FIGURE 4-9
SECONDARY COMPETITORS – OPERATING PERFORMANCE
DoubleTree by Hilton Bloomington Minneapolis South
Sheraton Bloomington
Totals/Averages
March-2014
Leisu
re
ing a
nd
Grou
p
Number
of Rooms
Meet
Property
Comm
ercia
l
Est. Segmentation
Estimated 2010
Weighted
Total
Annual
Competitive Room
Average
Level
Rate
Count
Occ.
Estimated 2011
Weighted
Annual
Average
Room
Rate
Count
Occ.
Estimated 2012
Weighted
Annual
Average
Room
Rate
Count
Occ.
256
568
218
257
321
282
225
45 %
35
31
60
70
60
65
30 % 25 %
45
20
21
48
20
20
25
5
25
15
20
15
50 %
40
50
50
70
50
40
128
226
109
129
225
141
90
50-55 % $90-95
60-65
90-95
70-75
120-125
75-80
110-115
60-65
110-115
65-70
105-110
70-75
125-130
128
228
109
129
225
141
90
50-55 % $95-100
65-70
85-90
70-75
120-125
75-80
120-125
60-65
115-120
65-70
105-110
70-75
145-150
128
227
109
129
225
141
90
50-55 % $95-100
60-65
105-110
65-70
130-135
70-75
125-130
60-65
120-125
65-70
105-110
65-70
160-170
2,127
53 %
28 % 19 %
49 %
1,047
65.6 % $108.08
1,049
67.1 % $111.80
1,048
65.7 % $120.96
59
We have identified seven hotels that are expected to compete with the proposed
subject hotel on a secondary level. The Crowne Plaza, DoubleTree by Hilton,
Embassy Suites, Hilton, Marriott, Sheraton (former Sofitel), and Westin are located
in adjacent suburbs to Eden Prairie. All secondary competitors are full-service
properties that compete with select-service hotels in Eden Prairie for meeting and
group business, as well as a small percentage of corporate demand.
Supply Changes
It is important to consider any new hotels that may have an impact on the
proposed subject hotel’s operating performance. Based upon our research and
inspection (as applicable), new supply considered in our analysis is presented in
the following table.
FIGURE 4-10 NEW SUPPLY
Total
Proposed Property
Proposed Hotel (Subject)
Hampton Inn & Suites
Totals/Averages
Number
of Rooms
120
80
200
Competitive
Level
100 %
0
Weighted
Room
Count
Estimated
Opening Date
120
0
June 1, 2015
May 1, 2015
Developer
City/TBD Developer
Torgerson Properties
Development Stage
Early Development
Early Development
120
Due to its location in the city of Bloomington, which is approximately six miles
from Eden Prairie, and its limited-service product type, the Hampton Inn & Suites
has only been considered qualitatively in our positioning of the proposed subject
property's stabilized occupancy level. In addition, several other hotel projects are
proposed near the Mall of America, in Bloomington.
While we have taken reasonable steps to investigate proposed hotel projects and
their status, due to the nature of real estate development, it is impossible to
determine with certainty every hotel that will be opened in the future, or what
their marketing strategies and effect in the market will be. Depending on the
outcome of current and future projects, the future operating potential of the
proposed subject hotel may be positively or negatively affected. Future
improvement in market conditions will raise the risk of increased competition. Our
forthcoming forecast of stabilized occupancy and average rate is intended to
reflect such risk.
Supply Conclusion
March-2014
We have identified various properties that are expected to be competitive to some
degree with the proposed subject hotel. We have also investigated potential
increases in competitive supply in this Eden Prairie submarket. The Proposed
Hotel should enter a dynamic market of varying product types and price points.
60
Next, we will present our forecast for demand change, using the historical supply
data presented as a starting point.
The following table presents the most recent trends for the subject hotel market as
tracked by HVS. These data pertain to the competitors discussed previously in this
section; performance results are estimated, rounded for the competition, and in
some cases weighted if there are secondary competitors present. In this respect,
the information in the table differs from the previously presented STR data and is
consistent with the supply and demand analysis developed for this report.
DEMAND
FIGURE 4-11 HISTORICAL MARKET TRENDS
Year
Accommodated
Room Nights
Est. 2010
Est. 2011
Est. 2012
395,080
404,062
404,291
% Change
—
2.3 %
0.1
Room Nights
Available
595,242
595,972
595,826
% Change
—
0.1 %
(0.0)
Market
Occupancy
66.4 %
67.8
67.9
Market ADR
$104.54
108.89
112.36
% Change
Market
RevPAR
% Change
—
4.2 %
3.2
$69.39
73.83
76.24
—
6.4 %
3.3
Avg. Annual Compounded
Demand Analysis
Using Market
Segmentation
For the purpose of demand analysis, the overall market is divided into individual
segments based on the nature of travel. Based on our fieldwork, area analysis, and
knowledge of the local lodging market, we estimate the 2012 distribution of
accommodated-room-night demand as follows.
FIGURE 4-12 ACCOMMODATED ROOM NIGHT DEMAND
Market Segment
Marketwide
Accommodated Percentage
Demand
of Total
Commercial
Meeting and Group
Leisure
243,850
84,083
76,358
60 %
21
19
Total
404,291
100 %
The market’s demand mix comprises commercial demand, with this segment
representing roughly 60% of the accommodated room nights in this Eden Prairie
submarket. The remaining portion comprises meeting and group at 21%, with the
final portion leisure in nature, reflecting 19%.
March-2014
61
Using the distribution of accommodated hotel demand as a starting point, we will
analyze the characteristics of each market segment in an effort to determine future
trends in room-night demand.
Commercial Segment
Commercial demand consists mainly of individual businesspeople passing through
the subject market or visiting area businesses, in addition to high-volume
corporate accounts generated by local firms. Brand loyalty (particularly frequenttraveler programs), as well as location and convenience with respect to businesses
and amenities, influence lodging choices in this segment. Companies typically
designate hotels as “preferred” accommodations in return for more favorable
rates, which are discounted in proportion to the number of room nights produced
by a commercial client. Commercial demand is strongest Monday through
Thursday nights, declines significantly on Friday and Saturday, and increases
somewhat on Sunday night. It is relatively constant throughout the year, with
marginal declines in late December and during other holiday periods.
Major factors considered in the development of our growth rates for the
commercial demand segment include the presence of several major corporate
headquarters offices and potential new office developments in the area. Fortune
500 companies, such as SuperValu, UnitedHealth Group/Optum, and C.H. Robinson
Worldwide, are expected to continue to support demand within this segment.
Other companies, such as TDS's OneNeck IT Solutions, have recently expanded
operations in the area, which should bode well for lodging demand. Moreover, the
potential development of additional office space at the Flying Cloud Airport and
the construction of the proposed Southwest LRT should increase economic activity
in the area, lending to demand growth in the future. Considering both current and
historical trends, we project demand change rates of -2.0% in 2013, 1.0% in 2014,
and 1.5% in 2015. After these first three projection years, we have forecast
demand change rates of 1.5% in 2016 and 1.0% in 2017.
Meeting and Group
Segment
March-2014
The meeting and group market includes meetings, seminars, conventions, trade
association shows, and similar gatherings of ten or more people. Peak convention
demand typically occurs in the spring and fall. Although there are numerous
classifications within the meeting and group segment, the primary categories
considered in this analysis are corporate groups, associations, and SMERFE (social,
military, ethnic, religious, fraternal, and educational) groups. Corporate groups
typically meet during the business week, most commonly in the spring and fall
months. These groups tend to be the most profitable for hotels, as they typically
pay higher rates and usually generate ancillary revenues including food and
beverage and/or banquet revenue. SMERFE groups are typically price-sensitive
and tend to meet on weekends and during the summer months or holiday season,
when greater discounts are usually available; these groups generate limited
ancillary revenues. Association demand is generally divided on a geographical
62
basis, with national, regional, and state associations representing the most
common sources. Professional associations and/or those supported by members'
employers often meet on weekdays, while other associations prefer to hold events
on weekends. The profile and revenue potential of associations varies depending
on the group and the purpose of the meeting or event.
Meeting and group demand in this market is highly driven by the market’s
dependence on local corporate sources for group business. As such, the growth of
existing companies and development of additional office space in the subject
neighborhood is expected to increase group room-block needs. This increase is
anticipated to be partially offset by the submarket's proximity to Downtown
Minneapolis, which offers a substantial supply of meeting, banquet, and exhibit
space at the convention center, as well as meeting space at the full-service hotel
properties located in Downtown Minneapolis, Bloomington, Edina, and
Minnetonka. However, the development of the proposed hotel in Eden Prairie
should help to capture some of the group demand that leaks into other suburbs.
We anticipate modest growth to occur within this demand segment. Considering
both current and historical trends, we project demand change rates of -2.0% in
2013, 1.0% in 2014, and 1.5% in 2015. After these first three projection years, we
have forecast demand change rates of 1.0% in 2016 and 0.5% in 2017.
Leisure Segment
Leisure demand consists of individuals and families spending time in an area or
passing through en route to other destinations. Travel purposes include
sightseeing, recreation, or visiting friends and relatives. Leisure demand also
includes room nights booked through Internet sites such as Expedia, Hotels.com,
and Priceline; however, leisure may not be the purpose of the stay. This demand
may also include business travelers and group and convention attendees who use
these channels to take advantage of any discounts that may be available on these
sites. Leisure demand is strongest Friday and Saturday nights, and all week during
holiday periods and the summer months. These peak periods represent the
inverse of commercial visitation trends, underscoring the stabilizing effect of
capturing weekend and summer tourist travel. Future leisure demand is related to
the overall economic health of the region and the nation. Trends showing changes
in state and regional unemployment and disposable personal income correlate
strongly with leisure travel levels.
Leisure demand is strongest in the summer months and around the year-end
holidays. Leisure demand in the area is primarily generated by regional sports
tournaments and compression from the professional sports facilities located in the
Twin Cities, as well as school and holiday shopping at the Mall of America in
Bloomington and the Eden Prairie Center Mall. These destinations draw primarily
weekend demand from around the state and region. Growth related to these
sources should continue to expand modestly in the near term. Considering both
March-2014
63
current and historical trends, we project demand change rates of -1.5% in 2013,
2.0% in 2014, and 2.5% in 2015. After these first three projection years, we have
forecast demand change rates of 1.5% in 2016 and 1.0% in 2017.
The purpose of segmenting the lodging market is to define each major type of
demand, identify customer characteristics, and estimate future growth trends.
Starting with an analysis of the local area, three segments were defined as
representing the subject property’s lodging market. Various types of economic and
demographic data were then evaluated to determine their propensity to reflect
changes in hotel demand. Based on this procedure, we forecast the following
average annual compounded market-segment growth rates.
Conclusion
FIGURE 4-13 AVERAGE ANNUAL COMPOUNDED MARKET SEGMENT GROWTH RATES
Market Segment
2013
2014
Annual Growth Rate
2015
2016
2017
2018
Commercial
Meeting and Group
Leisure
-2.0 %
-2.0
-1.5
1.0 %
1.0
2.0
1.5 %
1.5
2.5
1.5 %
1.0
1.5
1.0 %
0.5
1.0
0.5 %
0.0
0.5
Base Demand Growth
-1.9 %
1.2 %
1.7 %
1.4 %
0.9 %
0.4 %
Latent Demand
A table presented earlier in this section illustrated the accommodated-room-night
demand in the subject property’s competitive market. Because this estimate is
based on historical occupancy levels, it includes only those hotel rooms that were
used by guests. Latent demand reflects potential room-night demand that has not
been realized by the existing competitive supply; this type of demand can be
divided into unaccommodated demand and induced demand.
Unaccommodated
Demand
Unaccommodated demand refers to individuals who are unable to secure
accommodations in the market because all the local hotels are filled. These
travelers must defer their trips, settle for less desirable accommodations, or stay
in properties located outside the market area. Because this demand did not yield
occupied room nights, it is not included in the estimate of historical
accommodated-room-night demand. If additional lodging facilities are expected to
enter the market, it is reasonable to assume that these guests will be able to secure
hotel rooms in the future, and it is therefore necessary to quantify this demand.
Unaccommodated demand is further indicated if the market is at all seasonal, with
distinct high and low seasons; such seasonality indicates that although year-end
March-2014
64
occupancy may not average in excess of 70%, the market sells out many nights
during the year.
The following table presents our estimate of unaccommodated demand in the
subject market.
FIGURE 4-14 UNACCOMMODATED DEMAND ESTIMATE
Market Segment
Accommodated Room
Night Demand
Unaccommodated
Demand Percentage
Unaccommodated
Room Night Demand
11,460
2,706
3,429
Commercial
Meeting and Group
Leisure
243,850
84,083
76,358
4.7 %
3.2
4.5
Total
404,291
4.4 %
17,595
Our interviews with market participants found that the market generally sells out
on Tuesday and Wednesday nights from February through October, as well as on
Friday and Saturday during the peak summer season. A portion of this demand,
which is currently turned away, should return to the market concurrent with the
supply increase. Accordingly, we have forecast unaccommodated demand
equivalent to 4.4% of the base-year demand, resulting from our analysis of
monthly and weekly peak demand and sell-out trends.
Induced Demand
Induced demand represents the additional room nights that are expected to be
attracted to the market following the introduction of a new demand generator.
Situations that can result in induced demand include the opening of a new
manufacturing plant, the expansion of a convention center, or the addition of a
new hotel with a distinct chain affiliation or unique facilities. Although increases in
demand are expected in the local market, we have accounted for this growth in the
determination of market-segment growth rates rather than induced demand.
Accommodated
Demand and Marketwide Occupancy
Based upon a review of the market dynamics in the subject property’s competitive
environment, we have forecast growth rates for each market segment. Using the
calculated potential demand for the market, we have determined market-wide
accommodated demand based on the inherent limitations of demand fluctuations
and other factors in the market area.
The following table details our projection of lodging demand growth for the
subject market, including the total number of occupied room nights and any
residual unaccommodated demand in the market.
March-2014
65
FIGURE 4-15 FORECAST OF MARKET OCCUPANCY
2015
2017
2018
244,983
11,513
256,496
1.5 %
248,658
11,686
260,344
1.5 %
251,145
11,803
262,947
1.0 %
252,400
11,862
264,262
0.5 %
Meeting and Group
Base Demand
Unaccommodated Demand
Total Demand
Growth Rate
84,474
2,718
87,192
1.5 %
85,319
2,745
88,064
1.0 %
85,745
2,759
88,504
0.5 %
85,745
2,759
88,504
0.0 %
Leisure
Base Demand
Total Demand
Growth Rate
78,634
3,531
82,166
2.5 %
79,814
3,584
83,398
1.5 %
80,612
3,620
84,232
1.0 %
81,015
3,638
84,653
0.5 %
408,091
17,763
425,854
7,348
418,506
4.3 %
413,790
18,016
431,806
126
431,680
3.1 %
417,502
18,182
435,684
513
435,171
0.8 %
419,161
18,259
437,420
686
436,734
0.4 %
60.2 %
20.5
19.3
1,632
60.3 %
20.4
19.3
1,632
60.4 %
20.3
19.3
1,632
60.4 %
20.2
19.4
1,632
70
120
120
120
621,506
639,626
639,626
639,626
365
365
365
365
Totals
Base Demand
Total Demand
less: Residual Demand
Total Accommodated Demand
Overall Demand Growth
Market Mix
Commercial
Meeting and Group
Leisure
Existing Hotel Supply
Proposed Hotels
Available Rooms per Night
Nights per Year
Total Supply
Rooms Supply Growth
Marketwide Occupancy
¹
March-2014
2016
Commercial
Base Demand
Total Demand
Growth Rate
¹
1,703
4.3 %
1,752
2.9 %
1,752
0.0 %
1,752
0.0 %
67.3 %
67.5 %
68.0 %
68.3 %
Opening in June 2015 of the 100% competitive, 120-room Proposed Hotel (Subject)
66
These room-night projections for the market area will be used in forecasting the
proposed subject hotel's occupancy and average rate in Chapter 6.
March-2014
67
5. Description of the Proposed Project
The quality of a lodging facility's physical improvements has a direct influence on
marketability, attainable occupancy, and average room rate. The design and
functionality of the structure can also affect operating efficiency and overall
profitability. This section investigates the subject property's proposed physical
improvements and personal property in an effort to determine how they are
expected to contribute to attainable cash flows.
Project Overview
The City of Eden Prairie is looking into the development of a full-service or selectservice hotel and has four potential site locations for such development; however,
a specific site had not been chosen at the time of our report. We have analyzed the
locations of the sites in regard to their proximity to demand generators, retail
establishments, and entertainment venues. We recommend that the proposed
subject hotel operate as an upscale, select-service property, such as an Aloft or a
comparable brand.
After reaching out to numerous hotel companies to verify the availability of brands
for the proposed subject hotel, and based on our conversations with hotel brand
representatives, the following brands are available for development in Eden
Prairie:
March-2014
·
Aloft
·
Wyndham Garden Inn
·
Radisson Red
·
Four Points by Sheraton
·
Hotel Indigo
68
·
Ramada
·
Cambria Suites
While these brands represent multiple parent hotel companies, based on our
review of the national performance of each of these brand, our first
recommendation would be Aloft because of its overall 2013 performance across
the United States.
TYPICAL ALOFT EXTERIOR
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TYPICAL CAMBRIA SUITES EXTERIOR
TYPICAL WYNDHAM GARDEN EXTERIOR
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70
TYPICAL RADISSON RED EXTERIOR
Summary of the
Facilities
March-2014
Based on our review of Aloft prototype information, as well as considering the
seasonality of the Eden Prairie area, we have positioned the proposed subject
property as a 120-unit Aloft hotel. The following table summarizes the facilities
that we recommend be available at the proposed subject hotel.
71
FIGURE 5-1
PROPOSED FACILITIES SUMMARY
Guestroom Configuration
Number of Units
King
Queen/Queen
77
43
Total
120
Food & Beverage Facilities
Grab-and-Go Gourmet Eatery
Lobby Bar
Indoor Meeting & Banquet Facilities
Square Footage
Meeting Space
5,000 - 7,500
Amenities & Services
Indoor Swimming Pool
Indoor Whirpool
Exercise Room
Lobby Workstations
Guest Laundry Facility
Outdoor Patio
Infrastructure
Parking Spaces
Elevators
Life-Safety Systems
Construction Details
Site Improvements and
Hotel Structure
TBD based on zoning
2 Guest, 1 Service
Sprinklers, Smoke Detectors
Concrete Slab; Reinforced Concrete and Metal; EIFS
Once guests enter the site, ample parking should be available on a surface lot or
subterranean parking lot underneath the hotel, depending on the constraints of
the site. Site improvements are expected to include freestanding signage at the
main entrance point to the development, which should direct motorists to the
hotel's main entrance (additional signage is also anticipated to be placed on the
exterior of the building). We assume that all signage will adequately identify the
property and meet brand standards. Landscaping should allow for a positive guest
impression and competitive exterior appearance. Sidewalks should be present
along the front entrance and around the perimeter of the hotel. The expected site
improvements for the property should be adequate to provide for an upscale
lodging experience.
The hotel structure will likely comprise one single building, to be constructed of
steel and reinforced concrete and finished with EIFS or stucco, featuring stone
accents on the ground level and near the main entrance. Several elevators and
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72
stairways will provide internal vertical transportation within the main structure as
needed. The hotel roof will most likely be constructed of concrete and a rubbermembrane roofing system. Double-paned windows will reduce noise transmission
into the rooms. Heating and cooling will be provided by centralized systems. The
building components are expected to be normal for a hotel of this type and should
meet the standards for this market. We assume that all structural components will
meet local building codes and that no significant defaults will occur during
construction that would impact the future operating potential of the hotel or delay
its assumed opening date.
Lobby
Guests should enter the hotel through a single set of automatic doors, which open
to a vestibule, and then through a second set of automatic doors. The lobby should
be average in size and appropriate for an upscale, select-service hotel, featuring an
open lobby concept with varied seating areas, wireless Internet access, and
complimentary recreational games, such as a billiards table. The lobby walls
should be attractively finished with an upscale material that is in line with brand
standards. The front desk should feature a stone or glass countertop, installed with
appropriate property management and telephone systems. The furnishings and
finishes in this space should offer an appropriate first impression, and the design
of the space should lend itself to adequate efficiency. We assume that all property
management and guestroom technology will be appropriately installed for the
effective management of hotel operations.
TYPICAL ALOFT LOBBY
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TYPICAL CAMBRIA SUITES LOBBY
TYPICAL WYNDHAM GARDEN LOBBY
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TYPICAL RADISSON RED LOBBY
Food and Beverage
Facilities
If developed as a select-service property, the hotel should offer a 24-hour, selfserve, grab-and-go gourmet eatery. The hotel would also be expected to feature a
lobby lounge/bar.
TYPICAL ALOFT DINING AREA
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TYPICAL CAMBRIA SUITES DINING AREA
TYPICAL WYNDHAM GARDEN DINING AREA
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76
TYPICAL RADISSON RED DINING AREA
Overall, the hotel is anticipated to provide a competitive offering of food and
beverage facilities for an upscale property of this type.
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FIRST FLOOR PLAN
Meeting and Banquet
Space
Based on market demand, and in consideration of brand standards, it is our
recommendation that the proposed hotel offer at least 5,000 to 7,500 square feet
of meeting space. We would anticipate the integration of fully divisible primary
meeting space along with additional smaller secondary meeting rooms, including a
boardroom-type space. This amount of meeting space should be appropriate for a
hotel of this type and would be assumed to meet brand standards. Public
restrooms near the entrance to the meeting space should enhance the overall
functionality of the area.
The number of people that can be accommodated in a typical meeting facility that
measures between 5,000 and 7,500 square feet may vary depending on the
configuration of such space, as well as the available number meeting rooms that
are able to break out into smaller rooms. The following table illustrates the
approximate capacity that can be accommodated.
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78
FIGURE 5-9
MEETING ROOM CAPACITY
Cocktail Party
Meeting Room Size/
Square Feet
500
850
1000
1500
2000
2500
3000
3500
4000
4500
5000
62-83
106-141
125-166
187-250
250-333
312-416
375-500
437-583
500-666
562-750
625-833
Banquet Style
41-55
70-94
83-111
125-166
166-222
280-277
250-333
291-388
333-444
375-500
416-555
Theater Style
62-83
106-141
125-166
187-250
250-333
312-416
375-500
437-583
500-666
562-750
625-833
Classroom Style
27-35
47-60
55-71
83-107
111-142
138-178
166-214
194-250
222-285
250-321
277-357
Conference Style
Hollow Square Style
16
28
33
50
66
83
100
116
133
150
166
14
24
28
42
57
71
85
100
114
128
142
U-Shaped Style
14
24
28
42
57
71
85
100
114
128
142
Trade Show
2-3
4-5
4-6
7-9
9-12
12-16
14-19
16-22
19-25
21-28
24-32
Reception Style
55
94
111
166
222
277
333
388
444
500
555
Source: Meeting Planner and Banquet Calculator
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TYPICAL ALOFT MEETING ROOM
TYPICAL CAMBRIA SUITES MEETING ROOM
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80
TYPICAL WYNDHAM GARDEN MEETING ROOM
TYPICAL RADISSON RED MEETING ROOM
Recreational Amenities
March-2014
The hotel should feature an indoor pool and whirlpool, as well as an outdoor
sundeck or patio, ideally with cabanas or seating areas. The hotel should offer a
state-of-the-art exercise room that can be accessed 24 hours a day with a guest
81
room key. The exercise room is expected to be located on the main floor.
Restrooms should be present off of the pool area and adjacent to the exercise
room.
Additional Amenities
Other amenities are expected to include lobby workstations and a guest laundry
facility, as well as ice machines on each guestroom floor. Overall, the supporting
facilities should be appropriate for a hotel of this type, and we assume that they
will meet the brand standards of the selected affiliation.
Guestrooms
As an upscale, select-service property, the hotel should feature standard
guestroom configurations, with guestrooms present on the aboveground levels of
the structure. The guestrooms are expected to be of a standard size, offering
typical amenities for this product type. In addition to the standard furnishings,
rooms should also feature an in-room safe, a mini-refrigerator, and a modern plugand-play connectivity center (for laptop, MP3 player, camcorder, video game
console, etc.). Other amenities should include wired and wireless high speed
Internet, coffee and tea service, and various lifestyle magazines. Overall, the
guestrooms should offer a competitive product for this neighborhood.
Guestroom bathrooms will be of a standard size, with an oversized shower
featuring a window that separates it from the sleeping and living area, a commode,
and a single bowl sink with vanity area, featuring a granite countertop. The floors
will be finished with tile, and the walls will be finished with wallcovering.
Bathrooms will feature a hairdryer and complimentary toiletries. Overall, the
bathroom design should appeal to the upscale traveler and conform to the selected
brand's standards.
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TYPICAL ALOFT GUESTROOM
TYPICAL CAMBRIA SUITES GUESTROOM
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83
TYPICAL WYNDHAM GARDEN GUESTROOM
TYPICAL RADISSON RED GUESTROOM
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GUESTROOM FLOOR PLAN
The interior guestroom corridors will be wide and functional, permitting the easy
passage of housekeeping carts. Corridor carpet, wallcovering, signage, and lighting
will be in keeping with the overall look and design of the rest of the property.
Back-of-the-House,
ADA, and
Environmental
The hotel will be served by the necessary back-of-the-house space, including an inhouse laundry facility, administrative offices, and a kitchen to service the needs of
food and beverage operation. These spaces should be adequate for a hotel of this
type and should allow for the efficient operation of the property under competent
management.
We assume that the property will be built according to all pertinent codes and
brand standards. Moreover, we assume its construction will not create any
environmental hazards (such as mold) and that the property will fully comply with
the Americans with Disabilities Act.
Capital Expenditures
March-2014
Our analysis assumes that, after its opening, the hotel will require ongoing
upgrades and periodic renovations in order to maintain its competitive level in
this market and to remain compliant with brand standards. These costs should be
adequately funded by the forecasted reserve for replacement, as long as a
successful, ongoing preventive-maintenance program is employed by hotel staff.
85
Conclusion
March-2014
Overall, the proposed subject property should offer a well-designed, functional
layout of support areas and guestrooms. All typical and market-appropriate
features and amenities are expected to be included in the hotel's design. We
assume that the building will be fully open and operational on the stipulated
opening date and will meet all local building codes and applicable brand standards.
Furthermore, we assume that the hotel staff will be adequately trained to allow for
a successful opening and that pre-marketing efforts will have introduced the
product to major local accounts at least six months in advance of the opening date.
86
6. Projection of Occupancy and Average Rate
Along with average rate results, the occupancy levels achieved by a hotel are the
foundation of the property's financial performance and market value. Most of a
lodging facility's other revenue sources (such as food, beverages, other operated
departments, and rentals and other income) are driven by the number of guests,
and many expense levels vary with occupancy. To a certain degree, occupancy
attainment can be manipulated by management. For example, hotel operators may
choose to lower rates in an effort to maximize occupancy. Our forecasts reflect an
operating strategy that we believe would be implemented by a typical,
professional hotel management team to achieve an optimal mix of occupancy and
average rate.
Penetration Rate
Analysis
The subject property's forecasted market share and occupancy levels are based
upon its anticipated competitive position within the market, as quantified by its
penetration rate. The penetration rate is the ratio of a property's market share to
its fair share. A complete discussion of the concept of penetration is presented in
the addenda.
Historical Penetration
Rates by Market
Segment
In the following table, the penetration rates attained by the primary competitors
and the aggregate secondary competitors are set forth for each segment for the
base year.
Secondary Competition
125 %
116
149
113
141
84
24 %
72
27
50
55
131
106 %
80
89
139
90
98
Ov
era
ll
Co
m
Property
L ei
sur
e
Me
e ti
ng
Gro and
up
HISTORICAL PENETRATION RATES
me
r ci
al
FIGURE 6-1
100 %
100
112
105
113
97
The Hilton Garden Inn Minneapolis Eden Prairie achieved the highest penetration
rate within the commercial segment. The highest penetration rate in the meeting
March-2014
87
and group segment was achieved by the secondary competition, while the Hyatt
Place Minneapolis Eden Prairie led the market with the highest leisure penetration
rate.
Forecast of Subject
Property’s Occupancy
Because the supply and demand balance for the competitive market is dynamic,
there is a circular relationship between the penetration factors of each hotel in the
market. The performance of individual new hotels has a direct effect upon the
aggregate performance of the market, and consequently upon the calculated
penetration factor for each hotel in each market segment. The same is true when
the performance of existing hotels changes, either positively (following a
refurbishment, for example) or negatively (when a poorly maintained or marketed
hotel loses market share).
A hotel’s penetration factor is calculated as its achieved market share of demand
divided by its fair share of demand. Thus, if one hotel’s penetration performance
increases, thereby increasing its achieved market share, this leaves less demand
available in the market for the other hotels to capture and the penetration
performance of one or more of those other hotels consequently declines (other
things remaining equal). This type of market share adjustment takes place every
time there is a change in supply, or a change in the relative penetration
performance of one or more hotels in the competitive market.
Our projections of penetration, demand capture, and occupancy performance for
the subject property account for these types of adjustments to market share within
the defined competitive market. Consequently, the actual penetration factors
applicable to the subject property and its competitors for each market segment in
each projection year may vary somewhat from the penetration factors delineated
in the previous tables.
The following tables set forth, by market segment, the projected adjusted
penetration rates for the proposed subject hotel and each hotel in the competitive
set.
It is important to note that our recommendation of the Aloft flag is based on the
national performance of the brand, its affiliation with a significant parent hotel
company, Starwood Hotels & Resorts, and the flexibility the brand allows for
meeting space, which would serve the needs of the community. Business travelers
and meeting planners alike look to brands with which they are familiar and have
frequent traveler benefits. For corporate and group business alike, Marriott,
Hilton, and Starwood perform at the top of the market in terms of demand
captured.
March-2014
88
FIGURE 6-2
COMMERCIAL SEGMENT ADJUSTED PENETRATION RATES
Hotel
2012
Proposed Select-Service Hotel
125 %
116
149
113
141
84
—
—
2013
135 %
115
147
113
139
83
—
—
2014
134 %
114
151
117
138
83
—
—
2015
134 %
114
150
117
138
82
108
—
2016
133 %
113
149
116
137
82
112
—
2017
132 %
113
149
116
137
82
116
—
2018
132 %
113
149
116
137
82
116
—
Within the commercial segment, the proposed subject hotel’s penetration is
positioned at an above-market-average level by the stabilized period due to its
new select-service product (no new hotels have opened in Eden Prairie since
2001), as well as an overall marketing focus that is expected to cater toward
corporate travel and extended stays. While other full-service hotels in this
competitive market focus on groups and leisure guests, the proposed subject hotel
will be ideally suited for corporate demand.
FIGURE 6-3
MEETING AND GROUP SEGMENT ADJUSTED PENETRATION RATES
Hotel
2012
24 %
72
27
50
55
131
—
—
2013
24 %
72
27
50
55
131
—
—
2014
24 %
72
27
50
55
131
—
—
2015
25 %
74
28
51
56
134
46
—
2016
25 %
75
28
52
56
136
52
—
2017
25 %
75
28
52
56
135
57
—
2018
25 %
75
28
52
56
135
57
—
As noted previously, area hotels benefit from local corporate sources for group
business; however, most of this demand is forced to utilize full-service hotels in
the competitive set in adjacent suburbs because of the lack of large meeting
facilities in Eden Prairie. These full-service hotels are likely to continue to attract
group related demand because of their larger meeting facilities. However, the
proposed hotel is expected to include larger than prototypical meeting facilities for
a select-service hotel. Therefore, the proposed subject hotel's considerable amount
of on-site meeting space for a property of this type should lead to a relatively
strong meeting and group penetration rate. Furthermore, if developed as an Aloft,
the hotel would be the only Starwood-branded hotel in the Eden Prairie market.
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89
FIGURE 6-4
LEISURE SEGMENT ADJUSTED PENETRATION RATES
Hotel
2012
106 %
80
89
139
90
98
—
—
2013
106 %
80
89
139
90
98
—
—
2014
106 %
80
89
139
90
98
—
—
2015
106 %
80
89
139
90
98
100
—
2016
2017
105 %
79
88
137
89
97
114
—
105 %
79
88
137
89
97
118
—
2018
105 %
79
88
137
89
97
118
—
The proposed subject hotel should benefit from a strong amount of leisure demand
during the peak season and weekends given its proximity to Bloomington and
Minneapolis, as well as several local attractions. The adjacent suburbs are replete
with upscale retail outlets, restaurants, and entertainment venues. With the
proposed subject hotel’s location being favorable to weekend uses in a market
typically known for lower rates than those in Downtown Minneapolis, we would
anticipate the hotel to experience high levels of peak weekend demand, with
weekend-transient leisure supplemented by some weekend group business. The
proposed subject hotel is forecast to realize a leisure penetration level above fair
share by the stabilized year.
These positioned segment penetration rates result in the following market
segmentation forecast.
FIGURE 6-5
MARKET SEGMENTATION FORECAST – SUBJECT PROPERTY
2015
Commercial
Meeting and Group
Leisure
Total
2016
2017
2018
69 %
10
21
67 %
11
22
67 %
11
22
67 %
11
22
100 %
100 %
100 %
100 %
The subject property's occupancy forecast is set forth as follows, with the adjusted
projected penetration rates used as a basis for calculating the amount of captured
market demand.
March-2014
90
FIGURE 6-6
FORECAST OF SUBJECT PROPERTY'S OCCUPANCY
Market Segment
2015
2016
2017
2018
251,733
4.4 %
11,188
108 %
260,268
7.7 %
19,932
112 %
262,639
8.0 %
20,919
116 %
263,849
8.0 %
21,015
116 %
Meeting and Group
Demand
Market Share
Capture
Penetration
86,068
1.9 %
1,638
46 %
88,038
3.5 %
3,121
52 %
88,399
3.9 %
3,435
57 %
88,364
3.9 %
3,434
57 %
Leisure
Demand
Market Share
Capture
Penetration
80,705
4.1 %
3,335
100 %
83,374
7.8 %
6,499
114 %
84,133
8.1 %
6,820
118 %
84,521
8.1 %
6,852
118 %
Total Room Nights Captured
16,160
29,552
31,174
31,300
Available Room Nights
25,680
43,800
43,800
43,800
Commercial
Demand
Market Share
Capture
Penetration
Subject Occupancy
Marketwide Available Room Nights
Fair Share
63 %
621,506
4%
Marketwide Occupied Room Nights
Market Share
418,506
67 %
639,626
71 %
639,626
7%
431,680
7%
435,171
71 %
639,626
7%
436,734
4%
7%
7%
7%
67 %
67 %
68 %
68 %
Total Penetration
93 %
100 %
105 %
105 %
Based on our analysis of the proposed subject hotel and market area, we have
selected a stabilized occupancy level of 71%. The stabilized occupancy is intended
to reflect the anticipated results of the property over its remaining economic life,
given all changes in the life cycle of the hotel. Thus, the stabilized occupancy
excludes from consideration any abnormal relationship between supply and
demand, as well as any nonrecurring conditions that may result in unusually high
or low occupancies. Although the subject property may operate at occupancies
above this stabilized level, we believe it equally possible for new competition and
temporary economic downturns to force the occupancy below this selected point
of stability.
March-2014
91
Average Rate Analysis
One of the most important considerations in estimating the value of a lodging
facility is a supportable forecast of its attainable average rate, which is more
formally defined as the average rate per occupied room. Average rate can be
calculated by dividing the total rooms revenue achieved during a specified period
by the number of rooms sold during the same period. The projected average rate
and the anticipated occupancy percentage are used to forecast rooms revenue,
which in turn provides the basis for estimating most other income and expense
categories.
Competitive Position
The following table summarizes the historical range of average rate of the subject
property’s future primary competitors.
FIGURE 6-7
BASE-YEAR AVERAGE RATE OF THE COMPETITORS
Property
Average - Primary Competitors
Average - Secondary Competitors
Overall Average
Estimated 2012
Average Room
Rate
$110-115
90-95
115-120
95-100
70-75
$98.26
120.96
$112.36
The defined primarily competitive market realized an overall average rate of
$98.26 in the 2012 base year, declining from the 2011 level of $103.82. The
Embassy Suites Bloomington, a secondary competitor, achieved the highest
estimated average rate in the local competitive market, by a significant margin,
because of its Hilton brand affiliation, all-suite accommodations, and its proximity
to strong demand generators, including the Minneapolis-St. Paul International
Airport. Among the primary competitors, the Hilton Garden Inn achieved the
highest estimated average rate given the hotel's strong brand affiliation and
proximity to major demand generators, such as UnitedHealth Partners/Optum,
SuperValu, and ShopNBC. Other important rate aspects of this market include a
hotel's proximity to Interstate 494 and convenient access to area attractions, such
as restaurants, retail establishments, and entertainment venues. The selected rate
position for the proposed subject hotel, in base-year dollars, takes into
consideration factors such as its new construction, location in Eden Prairie, and
March-2014
92
expected affiliation with a strong national brand. We have selected the rate
position of $110.00, in base-year dollars, for the proposed subject.
As illustrated previously, the average rate for the primarily competitive market
averaged $103.82 in 2011, before reaching $98.26 in 2012. Market-wide rates
began to trend upward in 2011. We expect average rates to continue to improve
given the stable market dynamics in this Eden Prairie submarket, including a rise
in higher-rated corporate accounts at the hotels in the primary competitive set.
Based on these considerations, the following table illustrates the projected average
rate and the growth rates assumed. As a context for the average rate growth
factors, note that we have applied underlying inflation rates of 2.5%, 2.5%, and
3.0% thereafter for each respective year following the base year of 2012.
FIGURE 6-8
Year
Base Year
2013
2014
2015
2016
2017
2018
Occupancy
67.9 %
66.6
67.4
67.3
67.5
68.0
68.3
Average Rate
Growth
—
3.0 %
3.5
3.0
3.5
3.0
3.0
Average
Rate
Occupancy
$112.36
115.73
119.78
123.38
127.70
131.53
135.47
—
—
—
63.0 %
67.0
71.0
71.0
Average Rate
Growth
Average
Rate
—
3.0 %
3.5
3.0
4.0
3.0
3.0
$110.00
113.30
117.27
120.78
125.61
129.38
133.26
Average Rate
Penetration
97.9 %
97.9
97.9
97.9
98.4
98.4
98.4
As illustrated above, a 3.0% rate of change is expected for the proposed subject
hotel's positioned 2012 room rate in 2013. This is followed by growth rates of
3.5% and 3.0% in 2014 and 2015, respectively. The Eden Prairie market should
enjoy positive rate growth through the near term. The proposed subject hotel's
rate position should reflect growth similar to market trends because of the
proposed hotel's new facility, strong brand affiliation, and potential location near a
number of commercial demand generators. The proposed subject hotel’s
penetration rate is forecast to reach 98.4% by the stabilized period.
The North American lodging market bottomed out in late 2009, at which time
demand rebounded and the supply pipeline diminished. In 2010, occupancy
rebounded strongly, and by 2011, average rates in most U.S. markets showed
increases. By year-end 2013, occupancy approached the levels realized during the
2005–2007 timeframe, and average rate surpassed the prior 2008 peak. In many
March-2014
93
primary markets, strong occupancy levels and a lack of new supply are allowing
hotel operators to make continued, aggressive average rate gains in 2014. While
average rate growth is strong in some secondary and tertiary markets, it may be
limited in the near term by the entrance of new supply. With demand now
recovered from the correction in 2009, and new supply remaining muted in 2014
and 2015, markets should be able to support healthy average rate gains in the near
term.
A new property must establish its reputation and a client base in the market
during its ramp-up period; as such, the proposed subject hotel’s average rate in the
initial operating period has been discounted to reflect this likelihood. We forecast
a 3.0% discount to the proposed subject hotel’s forecast room rate in the first
operating year, which would be typical for a new operation of this type.
The following occupancies and average rates will be used to project the subject
property's rooms revenue. This forecast reflects years beginning on June 1, 2015
and corresponds with our financial projections.
FIGURE 6-9
Year
2015/16
2016/17
2017/18
March-2014
FORECAST OF OCCUPANCY, AVERAGE RATE, AND REVPAR
Average Rate
65 %
69
71
$122.78
127.17
130.99
Discount
3.0 %
0.0
0.0
Average Rate
After Discount
$119.10
127.17
130.99
RevPAR
$77.41
87.75
93.00
94
7. Projection of Income and Expense
In this chapter of our report, we have compiled a forecast of income and expense
for the proposed subject hotel. This forecast is based on the facilities program set
forth previously, as well as the occupancy and average rate forecast discussed
previously.
The forecast of income and expense is expressed in current dollars for each year.
The stabilized year is intended to reflect the anticipated operating results of the
property over its remaining economic life, given any or all applicable stages of
build-up, plateau, and decline in the life cycle of the hotel. Thus, income and
expense estimates from the stabilized year forward exclude from consideration
any abnormal relationship between supply and demand, as well as any
nonrecurring conditions that may result in unusual revenues or expenses. The tenyear period reflects the typical holding period of large real estate assets such as
hotels. In addition, the ten-year period provides for the stabilization of income
streams and comparison of yields with alternate types of real estate. The
forecasted income streams reflect the future benefits of owning specific rights in
income-producing real estate.
Comparable Operating
Statements
March-2014
In order to project future income and expense for the proposed subject hotel, we
have included a sample of individual comparable operating statements from our
database of hotel statistics. All financial data are presented according to the three
most common measures of industry performance: ratio to sales (RTS), amounts
per available room (PAR), and amounts per occupied room night (POR). These
historical income and expense statements will be used as benchmarks in our
forthcoming forecast of income and expense.
95
FIGURE 7-1
COMPARABLE OPERATING STATEMENTS: RATIO TO SALES
Comp 1
Comp 2
Comp 3
Comp 4
Comp 5
Year:
2012/13
Number of Rooms: 130 to 170
Days Open:
365
Occupancy:
72%
Average Rate:
$127
RevPAR:
$91
2012/13
90 to 120
365
70%
$106
$74
2012
140 to 180
365
74%
$112
$82
2011/12
80 to 110
366
68%
$108
$73
2011
110 to 150
365
73%
$100
$73
REVENUE
Rooms
Food & Beverage
Total
Rooms
Food & Beverage
Total
DEPARTMENTAL INCOME
OPERATING EXPENSES
Marketing
Franchise Fee
Property Operations & Maintenance
Utilities
Total
HOUSE PROFIT
Management Fee
84.5 %
13.5
0.8
1.2
100.0
91.4 %
6.0
2.6
0.0
100.0
Subject
Stabilized $
2012
120
365
71%
$113
$80
90.2 %
8.9
0.9
0.0
100.0
88.7 %
9.9
1.2
0.2
100.0
87.2 %
10.6
1.5
0.7
100.0
86.7 %
11.5
1.2
0.6
100.0
18.3
80.2
178.4
27.8
72.2
18.7
99.8
51.9
24.5
75.5
21.3
68.6
177.9
26.9
73.1
22.9
106.8
172.2
33.0
67.0
18.6
79.6
139.3
27.3
72.7
18.5
80.0
150.0
27.0
73.0
8.1
6.4
7.9
4.6
4.4
31.4
40.8
3.0
37.8
8.6
1.5
8.1
2.8
3.9
24.8
50.7
3.0
47.8
8.9
6.7
7.5
6.3
4.6
34.0
39.1
3.0
36.1
10.7
9.1
6.2
6.5
3.7
36.1
30.9
2.7
28.1
10.3
9.1
3.1
4.1
3.6
30.1
42.6
6.5
36.1
8.6
4.5
8.2
3.3
3.6
28.1
44.9
3.0
41.9
* Departmental expense ratios are expressed as a percentage of departmental revenues
March-2014
96
FIGURE 7-2
COMPARABLE OPERATING STATEMENTS: AMOUNTS PER AVAILABLE ROOM
Comp 1
Year:
2012/13
Days Open:
365
Occupancy:
72%
Average Rate:
$127
RevPAR:
$91
REVENUE
Rooms
Food & Beverage
Total
DEPARTMENTAL EXPENSES
Rooms
Food & Beverage
Total
DEPARTMENTAL INCOME
OPERATING EXPENSES
Marketing
Franchise Fee
Utilities
Total
HOUSE PROFIT
Management Fee
March-2014
Comp 2
Comp 3
Comp 4
Comp 5
Subject
Stabilized $
2012
120
365
71%
$113
$80
2012/13
2012
90 to 120 140 to 180
365
365
70%
74%
$106
$112
$74
$82
2011/12
2011
80 to 110 110 to 150
366
365
68%
73%
$108
$100
$73
$73
$33,270
5,316
323
477
39,386
$26,912
1,761
767
0
29,440
$30,082
2,962
292
0
33,337
$26,745
2,980
367
61
30,153
$26,695
3,230
458
222
30,604
$29,282
3,897
390
195
33,764
6,103
4,265
576
10,944
28,442
5,045
1,758
398
7,201
22,239
6,411
2,032
520
8,963
24,373
6,133
3,184
633
9,949
20,204
4,973
2,571
638
8,359
22,246
5,417
3,118
585
9,120
24,644
3,182
2,525
3,120
1,826
1,721
12,374
16,068
1,172
14,896
2,529
447
2,372
818
1,134
7,301
14,938
878
14,060
2,962
2,234
2,506
2,101
1,538
11,342
13,031
1,000
12,032
3,235
2,735
1,878
1,949
1,102
10,898
9,306
827
8,480
3,151
2,782
939
1,243
1,111
9,225
13,021
1,987
11,033
2,907
1,504
2,781
1,103
1,203
9,499
15,146
1,013
14,133
97
FIGURE 7-3
COMPARABLE OPERATING STATEMENTS: AMOUNTS PER OCCUPIED ROOM
Comp 1
Year:
2012/13
Days Open:
365
Occupancy:
72%
Average Rate:
$127
RevPAR:
$91
REVENUE
Rooms
Food & Beverage
Total
DEPARTMENTAL EXPENSES
Rooms
Food & Beverage
Total
DEPARTMENTAL INCOME
OPERATING EXPENSES
Marketing
Franchise Fee
Utilities
Total
HOUSE PROFIT
Management Fee
Comp 2
Comp 3
Comp 4
Comp 5
Subject
Stabilized $
2012
120
365
71%
$113
$80
2012/13
2012
90 to 120 140 to 180
365
365
70%
74%
$106
$112
$74
$82
2011/12
2011
80 to 110 110 to 150
366
365
68%
73%
$108
$100
$73
$73
$126.82
20.26
1.23
1.82
150.14
$106.01
6.94
3.02
0.00
115.97
$111.99
11.03
1.09
0.00
124.11
$107.51
11.98
1.48
0.25
121.22
$100.03
12.10
1.72
0.83
114.68
$112.99
15.04
1.50
0.75
130.29
23.27
16.26
2.19
41.72
108.42
19.88
6.92
1.57
28.37
87.60
23.87
7.56
1.94
33.37
90.74
24.65
12.80
2.54
40.00
81.22
18.63
9.63
2.39
31.32
83.36
20.90
12.03
2.26
35.19
95.10
12.13
9.63
11.89
6.96
6.56
47.17
61.25
4.47
56.78
9.96
1.76
9.35
3.22
4.47
28.76
58.85
3.46
55.39
11.03
8.32
9.33
7.82
5.73
42.22
48.52
3.72
44.79
13.00
10.99
7.55
7.83
4.43
43.81
37.41
3.32
34.09
11.81
10.42
3.52
4.66
4.16
34.57
48.79
7.45
41.34
11.22
5.80
10.73
4.26
4.64
36.65
58.44
3.91
54.54
The comparables’ departmental income ranged from 67.0% to 75.5% of total
revenue. The comparable properties achieved a house profit ranging from 30.9%
to 50.7% of total revenue. We will refer to the comparable operating data in our
discussion of each line item, which follows later in this section of the report.
Fixed and Variable
Component Analysis
March-2014
HVS uses a fixed and variable component model to project a lodging facility's
revenue and expense levels. This model is based on the premise that hotel
revenues and expenses have one component that is fixed and another that varies
directly with occupancy and facility usage. A projection can be made by taking a
98
known level of revenue or expense and calculating its fixed and variable
components. The fixed component is then increased in tandem with the underlying
rate of inflation, while the variable component is adjusted for a specific measure of
volume such as total revenue.
The actual forecast is derived by adjusting each year’s revenue and expense by the
amount fixed (the fixed expense multiplied by the inflated base-year amount) plus
the variable amount (the variable expense multiplied by the inflated base-year
amount) multiplied by the ratio of the projection year’s occupancy to the base-year
occupancy (in the case of departmental revenue and expense) or the ratio of the
projection year’s revenue to the base year’s revenue (in the case of undistributed
operating expenses). Fixed expenses remain fixed, increasing only with inflation.
Our discussion of the revenue and expense forecast in this report is based upon
the output derived from the fixed and variable model. This forecast of revenue and
expense is accomplished through a systematic approach, following the format of
the Uniform System of Accounts for the Lodging Industry. Each category of revenue
and expense is estimated separately and combined at the end in the final
statement of income and expense.
Inflation Assumption
March-2014
A general rate of inflation must be established that will be applied to most revenue
and expense categories. The following table shows inflation estimates made by
economists at some noted institutions and corporations.
99
FIGURE 7-4
INFLATION ESTIMATES
Name
Firm
Projected Increase in Consumer Price Index
(Annualized Rate Versus 12 Months Earlier)
Dec.
June
Dec.
June
Dec.
2013
2014
2014
2015
2015
Lewis Alexander
Paul Ashworth
Beth Ann Bovino
Jay Brinkmann
Michael Carey
Joseph Carson
Julia Coronado
Mike Cosgrove
Lou Crandall
J. Dewey Daane
Douglas Duncan
Robert Dye
Maria Fiorini Ramirez/Joshua Shapiro
Doug Handler
Ethan Harris
Maury Harris
Jan Hatzius
Tracy Herrick
Stuart Hoffman
Joseph LaVorgna
Edward Leamer/David Shulman
Don Leavens/Tim Gill
John Lonski
Dean Maki
Aneta Markowska
Jim Meil/Arun Raha
Robert Mellman
Michael P. Niemira
Jim O'Sullivan
Dr. Joel Prakken/ Chris Varvares
Vincent Reinhart
John Ryding/Conrad DeQuadros
Ian Shepherdson
Allen Sinai
James F. Smith
Sean M. Snaith
Sung Won Sohn
Neal Soss
Stephen Stanley
Susan M. Sterne
Diane Swonk
Carl Tannenbaum
Bart van Ark
Brian S. Wesbury/ Robert Stein
William T. Wilson
Lawrence Yun
Nomura Securities International
Capital Economics
Standard and Poor's
Mortgage Bankers Association
Credit Agricole CIB
AllianceBernstein
BNP Paribas
Econoclast
Wrightson ICAP
Vanderbilt University
Fannie Mae
Comerica Bank
MFR, Inc.
IHS Global Insight
Bank of America Securities- Merrill Lynch
UBS
Goldman, Sachs & Co.
Avidbank
PNC Financial Services Group
Deutsche Bank Securities, Inc.
UCLA Anderson Forecast
NEMA Business Information Services
Moody's Investors Service
Barclays Capital
Societe Generale
Eaton Corp.
JP Morgan Chase & Co.
International Council of Shopping Centers
High Frequency Economics
Macroeconomic Advisers
Morgan Stanley
RDQ Economics
Pantheon Macroeconomics
Decision Economics, Inc.
Parsec Financial Management
University of Central Florida
California State University
CSFB
Pierpont Securities
Economic Analysis Associates Inc.
Mesirow Financial
The Northern Trust
The Conference Board
First Trust Advisors, L.P.
Skolkovo Institute for Emerging Market Studies
National Association of Realtors
1.3 %
1.4
1.1
1.5
1.5
1.8
1.5
1.8
1.4
1.0
1.1
1.2
1.3
1.5
1.5
1.2
1.2
2.6
1.2
1.8
1.4
1.6
1.3
1.7
1.3
1.0
1.2
1.5
1.2
1.1
1.7
1.3
1.7
1.4
1.0
1.0
1.8
1.5
1.6
1.6
1.2
1.5
1.2
1.3
0.9
1.2
1.9 %
1.8
1.5
2.1
1.4
2.0
1.3
2.0
1.5
2.0
1.5
1.7
1.8
1.5
1.4
1.8
1.7
2.7
1.8
2.7
1.6
1.9
1.6
1.7
1.4
1.4
1.6
2.2
1.7
1.7
1.9
1.8
1.9
1.6
1.0
1.9
1.9
1.4
2.0
1.9
1.3
1.6
1.8
1.9
1.1
2.3
1.9 %
1.9
1.7
2.0
1.8
2.0
1.7
2.0
2.2
2.0
1.6
1.8
1.8
1.5
1.4
2.4
1.7
2.9
2.0
2.6
2.0
2.0
1.8
2.2
2.0
1.8
1.6
2.3
2.3
1.7
2.0
2.3
1.9
2.8
1.1
1.6
1.7
1.7
2.4
2.6
1.4
2.0
2.0
2.0
1.2
2.8
1.9 %
2.0
1.7
2.1
1.9
2.2
1.8
2.3
2.4
2.0
1.7
1.8
—
1.6
—
2.5
1.8
3.4
2.2
2.4
2.4
2.1
1.8
—
2.0
2.0
1.8
2.5
2.4
1.7
2.0
—
2.0
2.2
1.2
1.6
1.6
—
2.6
2.1
1.5
2.1
2.1
2.3
1.6
3.3
2.0 %
2.0
1.9
2.3
2.0
2.4
1.8
2.4
2.5
2.0
1.8
1.9
—
1.7
—
2.5
2.0
3.9
2.2
2.2
2.3
2.2
1.6
—
2.4
2.1
1.9
2.5
2.5
1.8
2.1
—
2.0
2.3
1.3
1.7
1.9
—
2.9
2.0
1.6
2.2
2.2
2.5
1.8
3.4
1.4 %
1.7 %
2.0 %
2.1 %
2.2 %
Averages:
Source: wsj.com, January 15, 2014
March-2014
100
As the preceding table indicates, the financial analysts who were surveyed in
December of 2013 anticipated inflation rates ranging from 0.9% to 2.6% (on an
annualized basis) for December 2013; the average of these data points was 1.4%.
The same group expects a slightly higher annualized 1.7% inflation rate for June
2014. These rates are lower than the inflation rate averages for December 2014
and June 2015, shown at 2.0% and 2.1%, respectively.
As a further check on these inflation projections, we have reviewed historical
increases in the Consumer Price Index (CPI-U). Because the value of real estate is
predicated on cash flows over a relatively long period, inflation should be
considered from a long-term perspective.
FIGURE 7-5
NATIONAL CONSUMER PRICE INDEX (ALL URBAN CONSUMERS)
Year
National Consumer
Price Index
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
184.0
188.9
195.3
201.6
207.3
215.3
214.5
218.1
224.9
229.6
233.0
Percent Change
from Previous Year
—
2.7 %
3.4
3.2
2.8
3.8
-0.4
1.6
3.1
2.1
1.5
Average Annual Compounded Change
2003 - 2013:
2008 - 2013:
2.4 %
1.6
Source: Bureau of Labor Statistics
Between 2003 and 2013, the national CPI increased at an average annual
compounded rate of 2.4%; from 2008 to 2013, the CPI rose by a slightly lower
average annual compounded rate of 1.6%. In 2013, the CPI rose by 1.5%, a
decrease from the level of 2.1% recorded in 2012.
In consideration of the most recent trends, the projections set forth previously,
and our assessment of probable property appreciation levels, we have applied
underlying inflation rates of 2.5%, 2.5%, and 3.0% thereafter for each respective
year following the base year of 2012. This stabilized inflation rate takes into
account normal, recurring inflation cycles. Inflation is likely to fluctuate above and
March-2014
101
below this level during the projection period. Any exceptions to the application of
the assumed underlying inflation rate are discussed in our write-up of individual
income and expense items.
Summary of
Projections
March-2014
Based on an analysis that will be detailed throughout this section, we have
formulated a forecast of income and expense. The following table presents a
detailed forecast through the fifth projection year, including amounts per available
room and per occupied room. The second table illustrates our ten-year forecast of
income and expense, presented with a lesser degree of detail. The forecasts pertain
to years that begin on June 1, 2015, expressed in inflated dollars for each year.
102
FIGURE 7-6
DETAILED FORECAST OF INCOME AND EXPENSE
2016/17
Stabilized
2018/19
Number of Rooms:
2015/16 Begins June
120
120
120
120
120
Occupancy:
65%
69%
71%
71%
71%
$119.10
$127.17
$130.99
$134.92
$138.97
$77.41
$87.75
$93.00
$95.79
$98.67
365
365
365
365
Average Rate:
RevPAR:
Days Open:
Occupied Rooms:
28,470 %Gross
PAR
POR
30,222 %Gross
PAR
POR
31,098 %Gross
PAR
POR
2019/20
365
31,098 %Gross
PAR
POR
31,098 %Gross
PAR
POR
REVENUE
Rooms
$119.11
$3,843
$127.16
$4,073
$130.97
$4,196
$134.93
$4,322
437
11.2
3,638
15.33
496
11.2
4,134
16.41
542
11.5
4,518
17.43
558
11.5
4,654
17.96
575
11.5
4,793
18.50
50
1.3
415
1.75
52
1.2
435
1.73
54
1.2
452
1.74
56
1.2
465
1.80
58
1.2
479
1.85
25
0.6
208
0.87
26
0.6
217
0.86
27
0.6
226
0.87
28
0.6
233
0.90
29
0.6
240
0.92
3,902 100.0
32,519
137.07
4,417 100.0
36,811
146.16
4,696 100.0
39,137
151.02
4,838 100.0
40,318
155.58
4,983 100.0
41,529
160.25
Food & Beverage
Total Revenues
$3,391
86.9 % $28,258
87.0 % $32,025
86.7 % $33,942
86.7 % $34,967
86.7 % $36,017
$138.98
DEPARTMENTAL EXPENSES *
Rooms
686
20.2
5,719
24.11
723
18.8
6,028
23.94
754
18.5
6,280
24.23
776
18.5
6,468
24.96
799
18.5
6,662
25.71
Food & Beverage
374
85.8
3,120
13.15
410
82.7
3,418
13.57
434
80.0
3,614
13.95
447
80.0
3,723
14.37
460
80.0
3,835
14.80
Total
DEPARTMENTAL INCOME
634
2.67
656
2.61
678
2.62
698
2.69
719
2.77
1,137
76 152.7
29.1
9,473
39.93
1,212
79 150.9
27.4
10,103
40.11
1,269
81 150.0
27.0
10,572
40.80
1,307
84 150.0
27.0
10,889
42.02
1,346
86 150.0
27.0
11,216
43.28
2,765
70.9
23,046
97.14
3,205
72.6
26,708
106.05
3,428
73.0
28,565
110.23
3,531
73.0
29,429
113.56
3,638
73.0
30,313
116.97
13.80
370
9.5
3,083
12.99
390
8.8
3,247
12.89
404
8.6
3,371
13.01
417
8.6
3,472
13.40
429
8.6
3,576
Marketing
220
5.6
1,834
7.73
222
5.0
1,847
7.33
209
4.5
1,743
6.73
215
4.5
1,796
6.93
222
4.5
1,850
7.14
Franchise Fee
322
8.3
2,685
11.32
365
8.3
3,042
12.08
387
8.2
3,224
12.44
399
8.2
3,322
12.82
411
8.2
3,422
13.20
126
3.2
1,052
4.44
140
3.2
1,170
4.65
153
3.3
1,278
4.93
158
3.3
1,317
5.08
163
3.3
1,356
5.23
Utilities
153
3.9
1,276
5.38
161
3.6
1,344
5.33
167
3.6
1,395
5.38
172
3.6
1,437
5.54
178
3.6
1,480
5.71
1,192
30.5
9,929
41.85
1,278
28.9
10,650
42.29
1,321
28.2
11,011
42.49
1,361
28.2
11,343
43.77
1,402
28.2
11,683
45.08
1,574
40.4
13,116
55.28
1,927
43.7
16,058
63.76
2,106
44.8
17,554
67.74
2,170
44.8
18,086
69.79
2,236
44.8
18,630
71.89
117
3.0
976
4.11
133
3.0
1,104
4.38
141
3.0
1,174
4.53
145
3.0
1,210
4.67
150
3.0
1,246
4.81
1,457
37.4
12,141
51.17
1,794
40.7
14,954
59.38
1,966
41.8
16,380
63.21
2,025
41.8
16,877
65.12
2,086
41.8
17,384
67.08
Total
HOUSE PROFIT
Management Fee
FIXED EXPENSES
272
7.0
2,270
9.57
349
7.9
2,909
11.55
360
7.7
2,997
11.56
370
7.7
3,087
11.91
381
7.7
3,179
12.27
Insurance
Property Taxes
53
1.3
438
1.85
54
1.2
451
1.79
56
1.2
465
1.79
57
1.2
479
1.85
59
1.2
493
1.90
78
2.0
650
2.74
133
3.0
1,104
4.38
188
4.0
1,565
6.04
194
4.0
1,613
6.22
199
4.0
1,661
6.41
403
10.3
3,358
14.16
536
12.1
4,465
17.73
603
12.9
5,027
19.40
621
12.9
5,178
19.98
640
12.9
5,334
20.58
$8,782
$37.02
$1,259
28.6 % $10,489
$41.65
$1,362
28.9 % $11,353
$43.81
$1,404
28.9 % $11,699
$45.14
$1,446
28.9 % $12,050
$46.50
Total
NET INCOME
$1,054
27.1 %
March-2014
103
FIGURE 7-7
TEN-YEAR FORECAST OF INCOME AND EXPENSE
2015/16
Number of Rooms:
Occupied Rooms:
Occupancy:
Average Rate:
RevPAR:
2016/17
120
28,470
2017/18
120
30,222
65%
2018/19
120
31,098
69%
2019/20
120
31,098
71%
2020/21
120
31,098
71%
2021/22
120
31,098
71%
2022/23
120
31,098
71%
2023/24
120
31,098
71%
2024/25
120
31,098
71%
120
31,098
71%
71%
$119.10 % of
$127.17
% of
$130.99
% of
$134.92
% of
$138.97
% of
$143.14
% of
$147.43
% of
$151.85
% of
$156.41
% of
$161.10
% of
$77.41 Gross
$87.75
Gross
$93.00
Gross
$95.79
Gross
$98.67
Gross
$101.63
Gross
$104.67
Gross
$107.82
Gross
$111.05
Gross
$114.38
Gross
$3,391
$3,843
87.0 %
$4,073
86.7 %
$4,196
86.7 %
$4,322
86.7 %
$4,451
86.7 %
$4,585
86.7 %
$4,722
86.7 %
$4,864
86.7 %
$5,010
86.7 %
REVENUE
Rooms
Food & Beverage
Total
86.9 %
437
11.2
496
11.2
542
11.5
558
11.5
575
11.5
592
11.5
610
11.5
629
11.5
647
11.5
667
11.5
50
25
1.3
0.6
52
26
1.2
0.6
54
27
1.2
0.6
56
28
1.2
0.6
58
29
1.2
0.6
59
30
1.2
0.6
61
31
1.2
0.6
63
31
1.2
0.6
65
32
1.2
0.6
67
33
1.2
0.6
3,902 100.0
4,417 100.0
4,696 100.0
4,838 100.0
4,983 100.0
5,132 100.0
5,287 100.0
5,445 100.0
5,608 100.0
5,777 100.0
Rooms
686
20.2
723
18.8
754
18.5
776
18.5
799
18.5
823
18.5
848
18.5
874
18.5
900
18.5
927
18.5
Food & Beverage
374
85.8
410
82.7
434
80.0
447
80.0
460
80.0
474
80.0
488
80.0
503
80.0
518
80.0
533
80.0
Total
DEPARTMENTAL INCOME
76 152.7
79 150.9
81 150.0
84 150.0
86 150.0
89 150.0
92 150.0
94 150.0
97 150.0
100 150.0
1,137
2,765
29.1
70.9
1,212
3,205
27.4
72.6
1,269
3,428
27.0
73.0
1,307
3,531
27.0
73.0
1,346
3,638
27.0
73.0
1,386
3,746
27.0
73.0
1,428
3,859
27.0
73.0
1,471
3,974
27.0
73.0
1,515
4,094
27.0
73.0
1,560
4,217
27.0
73.0
370
9.5
390
8.8
404
8.6
417
8.6
429
8.6
442
8.6
455
8.6
469
8.6
483
8.6
497
8.6
Marketing
220
5.6
222
5.0
209
4.5
215
4.5
222
4.5
229
4.5
235
4.5
243
4.5
250
4.5
257
4.5
Franchise Fee
322
8.3
365
8.3
387
8.2
399
8.2
411
8.2
423
8.2
436
8.2
449
8.2
462
8.2
476
8.2
126
3.2
140
3.2
153
3.3
158
3.3
163
3.3
168
3.3
173
3.3
178
3.3
183
3.3
189
3.3
Utilities
153
3.9
161
3.6
167
3.6
172
3.6
178
3.6
183
3.6
188
3.6
194
3.6
200
3.6
206
3.6
1,192
1,574
30.5
40.4
1,278
1,927
28.9
43.7
1,321
2,106
28.2
44.8
1,361
2,170
28.2
44.8
1,402
2,236
28.2
44.8
1,444
2,302
28.2
44.8
1,487
2,372
28.2
44.8
1,532
2,442
28.2
44.8
1,578
2,516
28.2
44.8
1,625
2,591
28.2
44.8
Total
HOUSE PROFIT
Management Fee
117
3.0
133
3.0
141
3.0
145
3.0
150
3.0
154
3.0
159
3.0
163
3.0
168
3.0
173
3.0
1,457
37.4
1,794
40.7
1,966
41.8
2,025
41.8
2,086
41.8
2,148
41.8
2,213
41.8
2,279
41.8
2,348
41.8
2,418
41.8
272
7.0
349
7.9
360
7.7
370
7.7
381
7.7
393
7.7
405
7.7
417
7.7
429
7.7
442
7.7
53
1.3
54
1.2
56
1.2
57
1.2
59
1.2
61
1.2
63
1.2
65
1.2
67
1.2
69
1.2
78
403
2.0
10.3
133
536
3.0
12.1
188
603
4.0
12.9
194
621
4.0
12.9
199
640
4.0
12.9
205
659
4.0
12.9
211
679
4.0
12.9
218
699
4.0
12.9
224
720
4.0
12.9
231
742
4.0
12.9
FIXED EXPENSES
Property Taxes
Insurance
Total
NET INCOME
$1,054 27.1 %
$1,259 28.6 %
1
1
March-2014
$1,362
1
28.9 %
$1,404
1
28.9 %
$1,446
1
28.9 %
$1,489
1
28.9 %
$1,534
1
28.9 %
$1,580
1
28.9 %
$1,627
1
28.9 %
$1,676
1
28.9 %
104
Forecast of Income and
Expense
The following description sets forth the basis for the forecast of income and
expense. We anticipate that it will take three years for the subject property to
reach a stabilized level of operation. Each revenue and expense item has been
forecast based upon our review of the proposed subject hotel’s operating budget
and comparable income and expense statements. The forecast is based upon fiscal
years beginning June 1, 2015, expressed in inflated dollars for each year.
Rooms Revenue
Rooms revenue is determined by two variables: occupancy and average rate. We
projected occupancy and average rate in a previous section of this report. The
proposed subject hotel is expected to stabilize at an occupancy level of 71% with
an average rate of $130.99 in 2017/18. Following the stabilized year, the subject
property’s average rate is projected to increase along with the underlying rate of
inflation.
Food and Beverage
Revenue
Food and beverage revenue is generated by a hotel's restaurants, lounges, coffee
shops, snack bars, banquet rooms, and room service. In addition to providing a
source of revenue, these outlets serve as an amenity that assists in the sale of
guestrooms. With the exception of properties with active lounges or banquet
facilities that draw local residents, in-house guests generally represent a
substantial percentage of a hotel's food and beverage patrons. In the case of the
Proposed Select-Service Hotel, the food and beverage department will include a
grab-n-go snack bar and a lobby bar; moreover, banquet space is expected to span
between 5,000 and 7,500 square feet.
Although food and beverage revenue varies directly with changes in occupancy,
the small portion generated by banquet sales and outside capture is relatively
fixed. The comparable statements illustrated food and beverage revenue between
$6.94 and $20.26 per occupied room.
The proposed subject hotel's food and beverage operation is expected to be an
important component of the hotel. Therefore, based upon our review of
comparable operating statements, we have positioned an appropriate revenue
level given the hotel's planned facility and price point. We would expect future
moderate growth to occur within this category after the hotel's opening. We
project food and beverage revenue to be $15.33 per occupied room in the first
projection year. This per-occupied-room amount increases to $17.43 for food and
beverage revenue by the stabilized year.
Other Operated
Departments Revenue
March-2014
According to the Uniform System of Accounts, other operated departments include
any major or minor operated department other than rooms and food and
beverage. The proposed subject hotel's other operated departments revenue
sources are expected to include the hotel's telephone charges. Based on our review
105
of operations with a similar extent of offerings, we have positioned an appropriate
revenue level for the proposed subject hotel.
The comparable operating statements illustrate other operated departments
revenue ranging from 1.0% to 2.9% of rooms revenue and $1.09 to $3.02 per
occupied room. We forecast the proposed subject hotel’s other operated
departments revenue to stabilize at 1.3% of rooms revenue or $1.74 per occupied
room by the stabilized year, 2017/18.
Rentals & Other
Income
The rentals and other income sources comprise those other than guestrooms, food
and beverage, and the other operated departments. The proposed subject hotel's
rentals and other income revenues are expected to be generated primarily by the
guest laundry fees, business center services, and in-room movie and game charges.
Based on our review of operations with a similar extent of offerings, we have
positioned an appropriate revenue level for the proposed subject hotel. Rentals
and other income revenue for the comparables ranged from $0.25 to $1.82 on a
per-occupied-room basis. Changes in this revenue item through the projection
period result from the application of the underlying inflation rate and projected
changes in occupancy. We forecast the proposed subject hotel’s rentals and other
income to stabilize at $0.87 per occupied room by the stabilized year, 2017/18.
Rooms Expense
Rooms expense consists of items related to the sale and upkeep of guestrooms and
public space. Salaries, wages, and employee benefits account for a substantial
portion of this category. Although payroll varies somewhat with occupancy and
managers can generally scale the level of service staff on hand to meet an expected
occupancy level, much of a hotel's payroll is fixed. A base level of front desk
personnel, housekeepers, and supervisors must be maintained at all times. As a
result, salaries, wages, and employee benefits are only moderately sensitive to
changes in occupancy.
Commissions and reservations are usually based on room sales, and thus are
highly sensitive to changes in occupancy and average rate. While guest supplies
vary 100% with occupancy, linens and other operating expenses are only slightly
affected by volume.
The comparables illustrated rooms expense ranging between 18.3% and 22.9% of
rooms revenue; on a per-occupied-room basis, the range was between $18.63 and
$24.65. We have projected rooms expense for the proposed subject hotel at 20.2%
in the first year (or $24.11 per occupied room), stabilizing at 18.5% in 2017/18
(or $24.23 per occupied room). The proposed subject hotel's rooms department
expense has been positioned based upon our review of the comparable operating
data and our understanding of the hotel's future service level and price point.
March-2014
106
Food and Beverage
Expense
Food expenses consist of items necessary for the primary operation of a hotel's
food and banquet facilities. The costs associated with food sales and payroll are
moderately to highly correlated to food revenues. Items such as china, linen and
uniforms are less dependent on volume. Although the other expense items are
basically fixed, they represent a relatively insignificant factor. Beverage expenses
consist of items necessary for the operation of a hotel’s lounge and bar areas. The
costs associated with beverage sales and payroll are moderately to highly
correlated to beverage revenues.
The comparables illustrate food and beverage expense ranging between 68.6%
and 106.8% of food and beverage revenue. We have projected a stabilized expense
ratio of 80.0% in 2017/18. The proposed subject hotel's food and beverage
operation is expected to be efficiently managed and operate at an expense level
that is in line with other comparable operations offering a similar amount of
meeting space.
Other Operated
Departments Expense
Other operated departments expense includes all expenses reflected in the
summary statements for the divisions associated in these categories. This was
previously discussed in this chapter. The comparables illustrated other operated
departments expense ranging between $1.57 and $2.54 per occupied room. We
have projected a stabilized expense ratio of 150.0% in 2017/18. The proposed
subject hotel's other operated departments revenue sources are expected to
include the hotel's telephone charges. Based on our review of operations with a
similar extent of offerings, we have positioned an appropriate revenue level for the
proposed subject hotel.
Administrative and
General Expense
Administrative and general expense includes the salaries and wages of all
administrative personnel who are not directly associated with a particular
department. Expense items related to the management and operation of the
property are also allocated to this category.
Most administrative and general expenses are relatively fixed. The exceptions are
cash overages and shortages; commissions on credit card charges; provision for
doubtful accounts, which are moderately affected by the number of transactions or
total revenue; and salaries, wages, and benefits, which are very slightly influenced
by volume.
As a percentage of total revenue, the comparable operations indicate an
administrative and general expense range from 8.1% to 10.7%, or $2,529 to
$3,235 per available room. Based upon our review of the comparable operating
data and the expected scope of facility for the proposed subject hotel, we have
positioned the administrative and general expense level at a market- and
property-supported level. In the first projection year, we have projected
March-2014
107
administrative and general expense for the proposed subject hotel to be $3,083
per available room, or 9.5% of total revenue. By the 2017/18 stabilized year, these
amounts change to $3,371 per available room and 8.6% of total revenue.
Marketing Expense
Marketing expense consists of all costs associated with advertising, sales, and
promotion; these activities are intended to attract and retain customers. Marketing
can be used to create an image, develop customer awareness, and stimulate
patronage of a property's various facilities.
The marketing category is unique in that all expense items, with the exception of
fees and commissions, are totally controlled by management. Most hotel operators
establish an annual marketing budget that sets forth all planned expenditures. If
the budget is followed, total marketing expenses can be projected accurately.
Marketing expenditures are unusual because although there is a lag period before
results are realized, the benefits are often extended over a long period. Depending
on the type and scope of the advertising and promotion program implemented, the
lag time can be as short as a few weeks or as long as several years. However, the
favorable results of an effective marketing campaign tend to linger, and a property
often enjoys the benefits of concentrated sales efforts for many months.
As a percentage of total revenue, the comparable operations indicate a marketing
expense range from 1.5% to 9.1%, or $447 to $2,782 per available room. Based
upon our review of the comparable operating data and the expected scope of
facility for the proposed subject hotel, we have positioned the marketing expense
level at a market- and property-supported level. In the first projection year, we
have projected marketing expense for the proposed subject hotel to be $1,834 per
available room, or 5.6% of total revenue. By the 2017/18 stabilized year, these
amounts change to $1,743 per available room and 4.5% of total revenue.
Franchise Fee
As previously discussed, the subject is assumed to be franchised under the Aloft
brand. Costs associated with this franchise are summarized in the introductory
chapter in this report.
Property Operations
and Maintenance
Property operations and maintenance expense is another expense category that is
largely controlled by management. Except for repairs that are necessary to keep
the facility open and prevent damage (e.g., plumbing, heating, and electrical items),
most maintenance can be deferred for varying lengths of time.
Maintenance is an accumulating expense. If management elects to postpone
performing a required repair, they have not eliminated or saved the expenditure;
they have only deferred payment until a later date. A lodging facility that operates
March-2014
108
with a lower-than-normal maintenance budget is likely to accumulate a
considerable amount of deferred maintenance.
The age of a lodging facility has a strong influence on the required level of
maintenance. A new or thoroughly renovated property is protected for several
years by modern equipment and manufacturers' warranties. However, as a
hostelry grows older, maintenance expenses escalate. A well-organized preventive
maintenance system often helps delay deterioration, but most facilities face higher
property operations and maintenance costs each year, regardless of the occupancy
trend. The quality of initial construction can also have a direct impact on future
maintenance requirements. The use of high-quality building materials and
construction methods generally reduces the need for maintenance expenditures
over the long term.
As a percentage of total revenue, the comparable operations indicate a property
operations and maintenance expense range from 2.8% to 6.5%, or $818 to $2,101
per available room. We expect the proposed subject hotel's maintenance operation
to be well managed, and expense levels should stabilize at a typical level for a
property of this type. Changes in this expense item through the projection period
result from the application of the underlying inflation rate and projected changes
in occupancy. In the first projection year, we have projected property operations
and maintenance expense for the proposed subject hotel to be $1,052 per available
room, or 3.2% of total revenue. By the 2017/18 stabilized year, these amounts
change to $1,278 per available room and 3.3% of total revenue.
Utilities Expense
The utilities consumption of a lodging facility takes several forms, including water
and space heating, air conditioning, lighting, cooking fuel, and other miscellaneous
power requirements. The most common sources of hotel utilities are electricity,
natural gas, fuel oil, and steam. This category also includes the cost of water
service.
Total energy cost depends on the source and quantity of fuel used. Electricity tends
to be the most expensive source, followed by oil and gas. Although all hotels
consume a sizable amount of electricity, many properties supplement their utility
requirements with less expensive sources, such as gas and oil, for heating and
cooking.
As a percentage of total revenue, the comparable operations indicate a utilities
expense range from 3.6% to 4.6%, or $1,102 to $1,721 per available room. The
changes in this utilities line item through the projection period are a result of the
application of the underlying inflation rate and projected changes in occupancy. In
the first projection year, we have projected utilities expense for the proposed
subject hotel to be $1,276 per available room, or 3.9% of total revenue. By the
March-2014
109
2017/18 stabilized year, these amounts change to $1,395 per available room and
3.6% of total revenue.
Management Fee
Management expense consists of the fees paid to the managing agent contracted to
operate the property. Some companies provide management services and a brandname affiliation (first-tier management company), while others provide
management services alone (second-tier management company). Some
management contracts specify only a base fee (usually a percentage of total
revenue), while others call for both a base fee and an incentive fee (usually a
percentage of defined profit). Basic hotel management fees are often based on a
percentage of total revenue, which means they have no fixed component. While
base fees typically range from 2% to 4% of total revenue, incentive fees are dealspecific and often are calculated as a percentage of income available after debt
service and, in some cases, after a preferred return on equity. Total management
fees for the proposed subject hotel have been forecast at 3.0% of total revenue.
Property Taxes
Property (or ad valorem) tax is one of the primary revenue sources of
municipalities. Based on the concept that the tax burden should be distributed in
proportion to the value of all properties within a taxing jurisdiction, a system of
assessments is established. Theoretically, the assessed value placed on each parcel
bears a definite relationship to market value, so properties with equal market
values will have similar assessments and properties with higher and lower values
will have proportionately larger and smaller assessments.
Depending on the taxing policy of the municipality, property taxes can be based on
the value of the real property or the value of the personal property and the real
property. We have based our estimate of the proposed subject property's market
value (for tax purposes) on an analysis of assessments of comparable hotel
properties in the local municipality.
March-2014
110
FIGURE 7-8
COUNTY-ASSESSED VALUE OF COMPARABLE HOTELS
Number
of Rooms
Hotel
119
126
149
97
Assessments per Room
Positioned Subject - Per Room
Positioned Subject - Total
120
Total Assessment
Land
Improvements
Total
$979,000
1,336,000
1,923,000
1,997,000
$4,621,000
6,224,000
7,464,000
3,687,000
$5,600,000
7,560,000
9,387,000
5,684,000
$8,227
10,603
12,906
20,588
$38,832
49,397
50,094
38,010
$47,059
60,000
63,000
58,598
$15,000
$55,000
$70,000
$1,800,000
$6,600,000
$8,400,000
Source: Hennepin County Assessor's Office
We have positioned the proposed subject property's future assessment levels
based upon the illustrated comparable data. We have positioned the overall
assessment slightly above the Courtyard by Marriott and the Hilton Garden Inn
because of the similarities in product type, while considering the new construction
of the subject building. The positioned assessment is well supported by the market
data.
Tax rates are based on the city and county budgets, which change annually, and
vary based on location. Because a specific site has not been selected, we have
averaged the various tax rates in Eden Prairie for the purpose of this analysis, at
3.88.
Based on comparable assessments and the tax rate information, the proposed
subject property's projected property tax expense levels are calculated as follows.
March-2014
111
FIGURE 7-9
PROJECTED PROPERTY TAX EXPENSE
Assessed Value
Improvements
Tax
Forecast
Land
Positioned
$1,800,000
$6,600,000
$8,400,000
3.88
$325,920
2015/16
2016/17
2017/18
$1,800,000
1,800,000
1,800,000
$4,950,000
6,600,000
6,600,000
$6,750,000
8,400,000
8,400,000
4.04
4.16
4.28
$272,376
$349,126
$359,599
Insurance Expense
Total
Pers. Prop.
Tax Rate
Year
The insurance expense category consists of the cost of insuring the hotel and its
contents against damage or destruction by fire, weather, sprinkler leakage, boiler
explosion, plate glass breakage, and so forth. General insurance costs also include
premiums relating to liability, fidelity, and theft coverage. Insurance rates are
based on many factors, including building design and construction, fire detection
and extinguishing equipment, fire district, distance from the firehouse, and the
area's fire experience. Insurance expenses do not vary with occupancy.
Based on comparable data and the structural attributes of the proposed project,
we have forecast the proposed subject hotel's insurance expense at $465 per
available room by the stabilized year (positioned at $400 on a per-available-room
basis in base-year dollars). This forecast equates to 1.2% of total revenue on a
stabilized basis. In subsequent years, this amount is assumed to increase in
tandem with inflation.
Reserve for
Replacement
Furniture, fixtures, and equipment are essential to the operation of a lodging
facility, and their quality often influences a property's class. This category includes
all non-real estate items that are capitalized, rather than expensed. The furniture,
fixtures, and equipment of a hotel are exposed to heavy use and must be replaced
at regular intervals. The useful life of these items is determined by their quality,
durability, and the amount of guest traffic and use.
Periodic replacement of furniture, fixtures, and equipment is essential to maintain
the quality, image, and income-producing potential of a lodging facility. Because
capitalized expenditures are not included in the operating statement but affect an
owner's cash flow, a forecast of income and expense should reflect these expenses
in the form of an appropriate reserve for replacement.
The International Society of Hospitality Consultants (ISHC) undertook a major
industry-sponsored study of the capital expenditure requirements for fullservice/luxury, select-service, and extended-stay hotels. The most recent findings
March-2014
112
of the study were published in a report in 2007.6 Historical capital expenditures of
well-maintained hotels were investigated through the compilation of data
provided by most of the major hotel companies in the United States. A prospective
analysis of future capital expenditure requirements was also performed based
upon the cost to replace short- and long-lived building components over a hotel's
economic life. The study showed that the capital expenditure requirements for
hotels vary significantly from year to year and depend upon both the actual and
effective ages of a property. The results of this study showed that hotel lenders and
investors are requiring reserves for replacement ranging from 4% to 5% of total
revenue.
Based on the results of this study, our review of the subject asset and comparable
lodging facilities, and our industry expertise, we estimate that a reserve for
replacement of 4% of total revenues is sufficient to provide for the timely and
periodic replacement of the subject property's furniture, fixtures, and equipment.
This amount is ramped up during the initial projection period.
Conclusion
In conclusion, our analysis reflects a profitable operation, with net income
expected to total 28.9% of total revenue by the stabilized year. The stabilized total
revenue comprises primarily rooms and food and beverage revenue, with a
secondary portion derived from other income sources. On the cost side,
departmental expenses total 27.0% of revenue by the stabilized year, while
undistributed operating expenses total 28.2% of total revenues; this assumes that
the property will be operated competently by a well-known hotel operator. After a
3.0% of total revenues management fee, and 12.9% of total revenues in fixed
expenses, a net income ratio of 28.9% is forecast by the stabilized year.
The International Society of Hotel Consultants, CapEx 2007, A Study of Capital
Expenditure in the U.S. Hotel Industry.
6
March-2014
113
8. Project Conclusions
Ownership, Franchise,
and Management
Assumptions and
Recommendations
There are four potential site locations for the subject property's development;
however, the City had not chosen a specific parcel at the time of our research.
Details pertaining to management terms were not yet determined at the time of
this report; therefore, our forecast fees represent a blended average of what would
be expected on a base-fee and incentive-fee basis. We have assumed a marketappropriate total management fee of 3.0% of total revenues in our study.
We recommend that the proposed subject property operate as an upscale, selectservice hotel. For the purpose of this report, we have assumed that the property
would be branded with a nationally recognized hotel brand, such as an Aloft, a
select-service brand affiliated with Starwood Hotels & Resorts, or another
comparable select-service brand. However, a specific franchise affiliation and/or
brand had yet to be finalized at the time of this study. Based on our review of the
expected terms, the Aloft franchise is reflected in our forecasts with a royalty fee of
5.5% of rooms revenue, and a marketing assessment of 4% of rooms revenue.
Reservations fees will also be due, and are included in the rooms expense line item
of our forecast.
Conclusion
The Eden Prairie market is relatively healthy, despite the effects of the recent
economic recession. Real estate was adversely affected by the downturn, but a
recovery is evidently underway. A preponderance of corporate headquarters has
served the Minneapolis MSA well, insulating the metro area from the adverse
effects of one industry's decline. The continued improvement of the
unemployment rate and ongoing expansions in the area should continue to fuel
gains in housing and consumer-driven industries. Furthermore, a highly educated
workforce should continue to attract and retain business investment in the future.
In relation to national conditions, the Minneapolis MSA and the city of Eden Prairie
rank well, featuring a comparatively lower unemployment rate and greater
stability among its key employment sectors.
Our analysis of the outlook for this specific market also considers the broader
context of the national economy. The U.S. economy entered a recession in
December of 2007, which worsened in the fall of 2008 when the financial crisis
shocked the world economy. The U.S. fell into economic decline for most of 2009,
but the nation’s gross domestic product (GDP) and corporate profits began to
grow again in the third quarter of 2009. In 2010, the economy experienced four
consecutive quarters of economic growth, reflecting a rebound from the recession.
March-2014
Project Conclusions
114
Following a slight contraction in the first quarter of 2011, the economy has grown
at positive, albeit fluctuating rates, as evidenced in the following table.
Supply Conclusion
We have identified various properties that are expected to be competitive to some
degree with the proposed subject hotel. We have also investigated potential
increases in competitive supply in this Eden Prairie submarket. The Proposed
Hotel should enter a dynamic market of varying product types and price points.
Next, we will present our forecast for demand change, using the historical supply
data presented as a starting point.
Accommodated
Demand and Marketwide Occupancy
Conclusion
Based upon a review of the market dynamics in the subject property’s competitive
environment, we have forecast growth rates for each market segment. Using the
calculated potential demand for the market, we have determined market-wide
accommodated demand based on the inherent limitations of demand fluctuations
and other factors in the market area.
The following table details our projection of lodging demand growth for the
subject market, including the total number of occupied room nights and any
residual unaccommodated demand in the market.
March-2014
Project Conclusions
115
FIGURE 8-16 FORECAST OF MARKET OCCUPANCY
2015
2017
2018
Commercial
Base Demand
Total Demand
Growth Rate
244,983
11,513
256,496
1.5 %
248,658
11,686
260,344
1.5 %
251,145
11,803
262,947
1.0 %
252,400
11,862
264,262
0.5 %
Meeting and Group
Base Demand
Total Demand
Growth Rate
84,474
2,718
87,192
1.5 %
85,319
2,745
88,064
1.0 %
85,745
2,759
88,504
0.5 %
85,745
2,759
88,504
0.0 %
Leisure
Base Demand
Total Demand
Growth Rate
78,634
3,531
82,166
2.5 %
79,814
3,584
83,398
1.5 %
80,612
3,620
84,232
1.0 %
81,015
3,638
84,653
0.5 %
408,091
17,763
425,854
7,348
418,506
4.3 %
413,790
18,016
431,806
126
431,680
3.1 %
417,502
18,182
435,684
513
435,171
0.8 %
419,161
18,259
437,420
686
436,734
0.4 %
60.2 %
20.5
19.3
1,632
60.3 %
20.4
19.3
1,632
60.4 %
20.3
19.3
1,632
60.4 %
20.2
19.4
1,632
70
120
120
120
621,506
639,626
639,626
639,626
Totals
Base Demand
Total Demand
less: Residual Demand
Total Accommodated Demand
Overall Demand Growth
Market Mix
Commercial
Meeting and Group
Leisure
Existing Hotel Supply
Proposed Hotels
Available Rooms per Night
Nights per Year
Total Supply
Rooms Supply Growth
¹
March-2014
2016
¹
365
365
365
365
1,703
4.3 %
1,752
2.9 %
1,752
0.0 %
1,752
0.0 %
67.3 %
67.5 %
68.0 %
68.3 %
Opening in June 2015 of the 100% competitive, 120-room Proposed Hotel (Subject)
Project Conclusions
116
Proposed Project
Conclusion
Overall, the proposed subject property should offer a well-designed, functional
layout of support areas and guestrooms. All typical and market-appropriate
features and amenities are expected to be included in the hotel's design. We
assume that the building will be fully open and operational on the stipulated
opening date and will meet all local building codes and applicable brand standards.
Furthermore, we assume that the hotel staff will be adequately trained to allow for
a successful opening and that pre-marketing efforts will have introduced the
product to major local accounts at least six months in advance of the opening date.
Competitive Position
FIGURE 8-2
Although the average rate analysis presented here follows the occupancy
projection, these two statistics are highly correlated; in reality, one cannot project
occupancy without making specific assumptions regarding average rate. This
relationship is best illustrated by revenue per available room (RevPAR), which
reflects a property's ability to maximize rooms revenue. The following table
summarizes the historical average rate and the RevPAR of the subject property’s
future primary competitors.
BASE-YEAR AVERAGE RATE AND REVPAR OF THE COMPETITORS
Property
Average - Primary Competitors
Average - Secondary Competitors
Overall Average
March-2014
Estimated 2012
Average Room
Rate
Average
Room Rate
Penetration
Rooms Revenue
Per Available
Room (RevPAR)
$113.00
91.00
116.00
100.00
71.00
100.6 %
81.0
103.2
89.0
63.2
$76.84
61.88
88.16
71.00
54.67
100.8 %
81.2
115.6
93.1
71.7
$98.26
120.96
87.4 %
107.6
$70.56
79.41
92.5 %
104.2
$112.36
RevPAR
Penetration
$76.24
Project Conclusions
117
We have selected the rate position of $110.00, in base-year dollars, for the
proposed subject.
Based on these considerations, the following table illustrates the projected average
rate and the growth rates assumed. As a context for the average rate growth
factors, note that we have applied underlying inflation rates of 2.5%, 2.5%, and
3.0% thereafter for each respective year following the base year of 2012.
FIGURE 8-3
Year
Base Year
2013
2014
2015
2016
2017
2018
Occupancy
67.9 %
66.6
67.4
67.3
67.5
68.0
68.3
Average Rate
Growth
—
3.0 %
3.5
3.0
3.5
3.0
3.0
Average
Rate
Occupancy
$112.36
115.73
119.78
123.38
127.70
131.53
135.47
—
—
—
63.0 %
67.0
71.0
71.0
Average Rate
Growth
Average
Rate
—
3.0 %
3.5
3.0
4.0
3.0
3.0
$110.00
113.30
117.27
120.78
125.61
129.38
133.26
Average Rate
Penetration
97.9 %
97.9
97.9
97.9
98.4
98.4
98.4
The Eden Prairie market should enjoy positive rate growth through the near term.
The proposed subject hotel's rate position should reflect growth similar to market
trends because of the proposed hotel's new facility, strong brand affiliation, and
potential location near a number of commercial demand generators. The proposed
subject hotel’s penetration rate is forecast to reach 98.4% by the stabilized period.
The following occupancies and average rates will be used to project the subject
property's rooms revenue. This forecast reflects years beginning on June 1, 2015
and corresponds with our financial projections.
FIGURE 8-4
Year
2015/16
2016/17
2017/18
March-2014
FORECAST OF OCCUPANCY, AVERAGE RATE, AND REVPAR
Average Rate
65 %
69
71
$122.78
127.17
130.99
Discount
3.0 %
0.0
0.0
Average Rate
After Discount
$119.10
127.17
130.99
RevPAR
$77.41
87.75
93.00
Project Conclusions
118
Projection of Income
and Expense
Conclusion
March-2014
In conclusion, our analysis reflects a profitable operation, with net income
expected to total 28.9% of total revenue by the stabilized year. The stabilized total
revenue comprises primarily rooms and food and beverage revenue, with a
secondary portion derived from other income sources. On the cost side,
departmental expenses total 27.0% of revenue by the stabilized year, while
undistributed operating expenses total 28.2% of total revenues; this assumes that
the property will be operated competently by a well-known hotel operator. After a
3.0% of total revenues management fee, and 12.9% of total revenues in fixed
expenses, a net income ratio of 28.9% is forecast by the stabilized year.
Project Conclusions
119
9. Statement of Assumptions and Limiting Conditions
March-2014
1.
This report is set forth as a market study of the proposed subject hotel; this
is not an appraisal report.
2.
This report is to be used in whole and not in part.
3.
No responsibility is assumed for matters of a legal nature, nor do we
render any opinion as to title, which is assumed to be marketable and free
of any deed restrictions and easements. The property is evaluated as
though free and clear unless otherwise stated.
4.
We assume that there are no hidden or unapparent conditions of the subsoil or structures, such as underground storage tanks, that would impact
the property’s development potential. No responsibility is assumed for
these conditions or for any engineering that may be required to discover
them.
5.
We have not considered the presence of potentially hazardous materials or
any form of toxic waste on the project site. The consultants are not
qualified to detect hazardous substances, and we urge the client to retain
an expert in this field if desired.
6.
The Americans with Disabilities Act (ADA) became effective on January 26,
1992. We have assumed the proposed hotel would be designed and
constructed to be in full compliance with the ADA.
7.
We have made no survey of the site, and we assume no responsibility in
connection with such matters. Sketches, photographs, maps, and other
exhibits are included to assist the reader in visualizing the property. It is
assumed that the use of the described real estate will be within the
boundaries of the property described, and that no encroachment will exist.
8.
All information, financial operating statements, estimates, and opinions
obtained from parties not employed by TS Worldwide, LLC are assumed to
be true and correct. We can assume no liability resulting from
misinformation.
9.
Unless noted, we assume that there are no encroachments, zoning
violations, or building violations encumbering the subject property.
10.
The property is assumed to be in full compliance with all applicable
federal, state, local, and private codes, laws, consents, licenses, and
regulations (including a liquor license where appropriate), and that all
120
licenses, permits, certificates, franchises, and so forth can be freely
renewed or transferred to a purchaser.
March-2014
11.
All mortgages, liens, encumbrances, leases, and servitudes have been
disregarded unless specified otherwise.
12.
None of this material may be reproduced in any form without our written
permission, and the report cannot be disseminated to the public through
advertising, public relations, news, sales, or other media.
13.
We are not required to give testimony or attendance in court by reason of
this analysis without previous arrangements, and only when our standard
per-diem fees and travel costs are paid prior to the appearance.
14.
If the reader is making a fiduciary or individual investment decision and
has any questions concerning the material presented in this report, it is
recommended that the reader contact us.
15.
We take no responsibility for any events or circumstances that take place
subsequent to the date of our field inspection.
16.
The quality of a lodging facility's on-site management has a direct effect on
a property's economic viability. The financial forecasts presented in this
analysis assume responsible ownership and competent management. Any
departure from this assumption may have a significant impact on the
projected operating results.
17.
The financial analysis presented in this report is based upon assumptions,
estimates, and evaluations of the market conditions in the local and
national economy, which may be subject to sharp rises and declines. Over
the projection period considered in our analysis, wages and other
operating expenses may increase or decrease because of market volatility
and economic forces outside the control of the hotel’s management. We
assume that the price of hotel rooms, food, beverages, and other sources of
revenue to the hotel will be adjusted to offset any increases or decreases in
related costs. We do not warrant that our estimates will be attained, but
they have been developed based upon information obtained during the
course of our market research and are intended to reflect the expectations
of a typical hotel investor as of the stated date of the report.
18.
This analysis assumes continuation of all Internal Revenue Service tax code
provisions as stated or interpreted on either the date of value or the date of
our field inspection, whichever occurs first.
19.
Many of the figures presented in this report were generated using
sophisticated computer models that make calculations based on numbers
carried out to three or more decimal places. In the interest of simplicity,
121
most numbers have been rounded to the nearest tenth of a percent. Thus,
these figures may be subject to small rounding errors.
March-2014
20.
It is agreed that our liability to the client is limited to the amount of the fee
paid as liquidated damages. Our responsibility is limited to the client, and
use of this report by third parties shall be solely at the risk of the client
and/or third parties. The use of this report is also subject to the terms and
conditions set forth in our engagement letter with the client.
21.
Evaluating and comprising financial forecasts for hotels is both a science
and an art. Although this analysis employs various mathematical
calculations to provide value indications, the final forecasts are subjective
and may be influenced by our experience and other factors not specifically
set forth in this report.
22.
This study was prepared by TS Worldwide, LLC. All opinions,
recommendations, and conclusions expressed during the course of this
assignment are rendered by the staff of TS Worldwide, LLC as employees,
rather than as individuals.
122
10. Certification
The undersigned hereby certify that, to the best of our knowledge and belief:
March-2014
1.
the statements of fact presented in this report are true and correct;
2.
the reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are our personal,
impartial, and unbiased professional analyses, opinions, and conclusions;
3.
we have no (or the specified) present or prospective interest in the
property that is the subject of this report and no (or the specified) personal
interest with respect to the parties involved;
4.
we have no bias with respect to the property that is the subject of this
report or to the parties involved with this assignment;
5.
our engagement in this assignment was not contingent upon developing or
reporting predetermined results;
6.
our compensation for completing this assignment is not contingent upon
the development or reporting of a predetermined result or direction in
performance that favors the cause of the client, the attainment of a
stipulated result, or the occurrence of a subsequent event directly related
to the intended use of this study;
7.
our analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice;
8.
Lizzette Casarin and Tanya J. Pierson, MAI personally inspected the
property described in this report;
9.
Lizzette Casarin provided significant assistance to Tanya J. Pierson, MAI,
and that no one other than those listed above and the undersigned
prepared the analyses, conclusions, and opinions concerning the real
estate that are set forth in this report; Tanya J. Pierson, MAI has not
performed appraisal or consulting work on this property within the past
three years;
10.
the reported analyses, opinions, and conclusions were developed, and this
report has been prepared, in conformity with the requirements of the Code
of Professional Ethics and the Standards of Professional Appraisal Practice
of the Appraisal Institute;
Certification
123
11.
the use of this report is subject to the requiremen
requirements of the Appraisal
Institute relating to review by its duly authorized representatives; and
12.
as of the date of this report, Tanya J. Pierson, MAI has completed the
requirements of the continuing education program of the Appraisal
Institute
Institute.
Tanya J. Pierson, MAI
Managing Director
State Appraiser License (MN) 40268741
March-2014
Certification
124
Let us illustrate the penetration adjustment with an example.
A market has three existing hotels with the following operating statistics:
BASE-YEAR OCCUPANCY AND PENETRATION LEVELS
Property
Number
of Rooms
Hotel A
Hotel B
Hotel C
100
125
200
23.5 %
29.4
47.1
60 %
70
30
20 %
10
60
20 %
20
10
75.0 %
65.0
80.0
100.8 %
87.4
107.5
Totals/Average
425
100.0 %
47 %
38 %
15 %
74.4 %
100.0 %
Fair Share
Commercial
Meeting and
Group
Leisure
Occupancy
Penetration
Based upon each hotel’s room count, market segmentation, and annual occupancy,
the annual number of room nights accommodated in the market from each market
segment can be quantified, as set forth below.
MARKET-WIDE ROOM NIGHT DEMAND
Market
Segment
Commerci a l
Meeti ng a nd Group
Lei s ure
Total
Annual Room
Night
Demand
Percentage of
Total
54,704
43,481
17,246
47.4 %
37.7
14.9
115,431
100.0 %
The following discussion will be based upon an analysis of the commercial market
segment. The same methodology is applied for each market segment to derive an
estimate of a hotel’s overall occupancy. The table below sets forth the commercial
demand accommodated by each hotel. Each hotel’s commercial penetration factor
is computed by:
March-2014
i
1) calculating the hotel’s market share % of commercial demand (commercial
room nights accommodated by subject hotel divided by total commercial room
nights accommodated by all hotels) and
2) dividing the hotel’s commercial market share % by the hotel’s fair share %.
The following table sets forth each hotel’s fair share, commercial market share,
and commercial penetration factor.
COMMERCIAL SEGMENT PENETRATION FACTORS
Property
Number
of Rooms
Hotel A
Hotel B
Hotel C
100
125
200
23.5 %
29.4
47.1
16,425
20,759
17,520
30.0 %
37.9
32.0
127.6 %
129.0
68.1
Totals/Average
425
100.0 %
54,704
100.0 %
100.0 %
Fair Share
Commercial
Capture
Commercial
Market Share
Commercial
Penetration
If a new 100-room hotel enters the market, the fair share of each hotel changes
because of the new denominator, which has increased by the 100 rooms that have
been added to the market.
COMMERCIAL SEGMENT FAIR SHARE
Property
Number of
Rooms
Fair Share
Hotel A
Hotel B
Hotel C
New Hotel
100
125
200
100
19.0 %
23.8
38.1
19.0
Total
525
100.0 %
The new hotel’s penetration factor is projected for its first year of operation. It is
estimated that the hotel will capture (penetrate) only 85% of its fair share as it
establishes itself in the market. The new hotel’s market share and room night
capture can be calculated based upon the hotel’s estimated penetration factor.
When the market share of the existing hotels and that of the new hotel are added
up, they no longer equal 100% because of the new hotel’s entry into the market.
The market share of each hotel must be adjusted to reflect the change in the
denominator that comprises the sum of each hotel’s market share.
March-2014
ii
This adjustment can be mathematically calculated by dividing each hotel’s market
share percentages by the new denominator of 97.1%. The resulting calculations
reflect each hotel’s new adjusted market share. The sum of the adjusted market
shares equals 100%, indicating that the adjustment has been successfully
completed. Once the market shares have been calculated, the penetration factors
can be recalculated (adjusted market share divided by fair share) to derive the
adjusted penetration factors based upon the new hotel’s entry into the market.
Note that each existing hotel’s penetration factor actually increases because the
new hotel is capturing (penetrating) less than its fair share of demand.
COMMERCIAL SEGMENT PROJECTIONS (YEAR 1)
Property
Number
of Rooms
Fair Share
Hotel A
Hotel B
Hotel C
New Hotel
100
125
200
100
19.0 %
23.8
38.1
19.0
Totals/Average
525
100.0 %
Hist./Proj.
Penetration
Factor
127.6 %
129.0
68.1
85.0
Hist./Proj.
Market
Share
Adjusted
Market
Share
24.3 %
30.7
25.9
16.2
25.0 %
31.6
26.7
16.7
97.1 %
100.0 %
Adjusted
Penetration
Factor
Projected
Capture
131.4 %
132.8
70.1
87.5
13,688
17,299
14,600
9,117
54,704
In its second year of operation, the new hotel is projected to penetrate above its
fair share of demand. A penetration rate of 130% has been chosen, as the new
hotel is expected to perform at a level commensurate with Hotel A and Hotel B in
this market segment. The same calculations are performed to adjust market share
and penetration factors. Note that now the penetration factors of the existing
hotels decline below their original penetration rates because of the new hotel’s
above-market penetration. Also, note that after the market share adjustment, the
new hotel retains a penetration rate commensurate with Hotel A and Hotel B,
though the penetration rates of all three hotels have declined by approximately
nine percentage points because of the reapportionment of demand.
Once the market shares of each hotel have been adjusted to reflect the entry of the
new hotel into the market, the commercial room nights captured by each hotel
may be projected by multiplying the hotel’s market share percentage by the total
commercial room-night demand. This calculation is shown below.
March-2014
iii
COMMERCIAL SEGMENT PROJECTIONS (YEAR 2)
Property
Number
of Rooms
Fair Share
Hotel A
Hotel B
Hotel C
New Hotel
100
125
200
100
19.0 %
23.8
38.1
19.0
Totals/Average
525
100.0 %
March-2014
Hist./Proj.
Penetration
Factor
131.4 %
132.8
70.1
130.0
Hist./Proj.
Market
Share
Adjusted
Market
Share
25.0 %
31.6
26.7
24.8
23.1 %
29.3
24.7
22.9
108.1 %
100.0 %
Adjusted
Penetration
Factor
Projected
Capture
121.5 %
122.9
64.8
120.3
12,662
16,004
13,507
12,531
54,704
iv
Glossary
Assessed Value: 1.) A value set on real estate and personal property by a
government as a basis for levying taxes. 2.) The monetary amount for a property as
officially entered on the assessment roll for purposes of computing the tax levy.
Assessed values differ from the assessor’s estimate of actual (market) value for
three major reasons: fractional assessment ratios, partial exemptions, and
decisions by assessing officials to override market value. The process of gathering
and interpreting economic data to provide information that can be used by
policymakers to formulate tax policy.
Average Daily Rate (ADR): A statistical unit that represents the total guest room
revenue divided by the total number of occupied rooms.
Base Year: This is the historical year from which future projections are based.
This could be a calendar year or a fiscal year.
Capital Expenditure: Investments of cash or the creation of liability to acquire or
improve an asset (e.g. land, buildings, building additions, site improvements,
machinery, equipment), as distinguished from cash outflows for expense items
that are normally considered part of the current period’s operations.
Capital Deduction: A deduction made from the value opinion in order to account
for future capital expenditures. These expenditures, and hence the deduction, are
assumed to be required in order to achieve the forecast results. The deduction is
also considered in the positioning of the capitalization rate and other investment
parameters.
Chain Scales: According to Smith Travel Research, hotel brands are categorized
under the following chain scale segments: Luxury, Upper-Upscale, Upscale, MidScale with Food and Beverage, Mid-Scale without Food and Beverage, and
Economy. Chain scales are based primarily on the average rate achieved across a
particular hotel brand.
Chronological Age: The number of years elapsed since an original structure was
built; also known as “actual age” or “historical age.”
Departmental Expenses: The costs associated with the following departments:
Rooms – Includes labor costs such as salaries, wages, and benefits for front desk,
housekeeping, reservations, bell staff, and laundry employees. Other operating
expenses in the rooms department include costs associated with the procurement
March-2014
Glossary
v
and maintenance of linens, cleaning supplies, guest supplies, and employee
uniforms; payment of central or franchise reservation fees, equipment leases, and
travel agent commissions; and cost of providing a continental breakfast. Food and
Beverage – A combination of food and beverage departmental expenses, which
include the cost of goods, labor and related benefits, and other operating expenses.
Labor costs include the employment of departmental management; cooks and
kitchen personnel; and service, banquet, and bartending staff. Other food and
beverage operating expenses include the procurement and maintenance of china,
silverware, linens, restaurant and kitchen supplies, menus and printing, and
special promotions. Telecommunications – Consists of all costs associated with the
operation of a hotel's telephone department, including the cost of calls, the labor
cost of the hotel's telephone operators, and other related expenses. It is important
to note that the telecommunications expense excludes capital lease payments.
Other Expenses - Comprises those expenses that offset the revenue generated by
other hotel-operated (as opposed to leased) departments such as garage and
parking, athletic facilities, gift shop, and equipment rental facilities.
Economic Life: The period over which improvements to real property contribute
to property value.
Effective Age: Age attributed to a property on the basis of the amount of observed
deterioration and obsolescence it has sustained; a property’s effective age may be
different from its chronological age.
Excess Land: With regard to an improved site, the land not needed to serve or
support the existing improvement. With regard to a vacant site or a site considered
as though vacant, the land not needed to accommodate the site’s highest and best
use. Such land may be separated from the larger site to have its own highest and
best use, or it may allow for future expansion of the existing or anticipated
improvement. See also: “surplus land.”
Exposure Time: 1.) The period during which a property remains on the market.
2.) The estimated length of time the property interest being appraised would have
been offered on the market prior to the hypothetical consummation of a sale at
market value on the effective date of the appraisal; a retrospective estimate based
on an analysis of past events assuming a competitive and open market. Exposure
time is always presumed to occur prior to the effective date of the appraisal. See
also: “marketing period.”
Extraordinary Assumption: An assumption, directly related to a specific
assignment, which if found to be false could alter the appraiser’s opinions or
conclusions. Extraordinary assumptions presume as fact otherwise uncertain
information about physical, legal, or economic characteristics of the subject
property; or about conditions external to the property such as market conditions
March-2014
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vi
or trends; or about the integrity of data used in an analysis. An extraordinary
assumption may be used in an assignment only if: 1.) It is required to properly
develop credible opinions and conclusions; 2.) The appraiser has a reasonable
basis for the extraordinary assumption; 3.) Use of the extraordinary assumption
results in a credible analysis; and 4.) The appraiser complies with the disclosure
requirements set forth in USPAP for extraordinary assumptions.
Fair Share: That portion of total supply accounted for by the same property.
Fixed Charges/Expenses: Operating expenses that generally do not vary with
occupancy and that prudent management will pay whether the property is
occupied or vacant. Fixed charges include the following: Property Taxes –
Typically include taxes on real estate, business and occupation, personal property,
utilities, and other municipal taxes. Insurance – Cost of insuring the hotel building
and its contents against fire and weather damage, as well as damage associated
with equipment malfunction, such as sprinkler leakage. This expense includes all
insurance except that for workers’ compensation.
Full-Service Operation: A hotel operation that provides a more complete set of
services than those offered at an extended-stay, select-service, or limited-service
property. The services of a full-service operation may include room service, valet,
concierge, transportation and tour services, entertainment facilities, barber shop,
bellhop service, laundry service, free continental breakfast, restaurant and lounge,
turn-down service, morning newspapers, fitness centers, and more extensive
banquet and meeting space.
Hypothetical Condition: Hypothetical conditions assume conditions contrary to
known facts about physical, legal, or economic characteristics of the subject
property, such as market conditions or trends, or about the integrity of data used
in an analysis. A hypothetical condition may be used in an assignment only if: 1.)
Use of the hypothetical condition is required for legal purposes, purposes of
meaning, or purposes of comparison; 2.) Use of the hypothetical condition results
in a credible analysis; and 3.) The appraiser complies with the disclosure
requirements set for in USPAP for hypothetical conditions.
Indirect Construction Costs: Expenditures or allowances for items other than
labor and materials that are necessary for construction, but are not typically part
of the construction contract. Indirect costs may include administrative costs;
professional fees; financing costs and the interest paid on construction loans; taxes
and the builder’s or developer’s all-risk insurance during construction; and
marketing, sales, and lease-up costs incurred to achieve occupancy or sale. Also
called “soft costs.”
March-2014
Glossary
vii
Limited-Service Operation: A hotel operation without a food and beverage
department, which provides basic amenities at a reasonable price to guests.
Market Share: That portion of a market’s total demand accommodated by a given
property.
Marketing Period: The time it takes an interest in real property to sell on the
market subsequent to the effective date of an appraisal. This includes the
anticipated time required to expose the property to a pool of prospective
purchasers and to allow appropriate time for negotiation, the exercise of due
diligence, and the consummation of a sale at a price supportable by concurrent
market conditions. Marketing time differs from exposure time, which is always
assumed to precede the effective date of an appraisal. See also: “exposure time.”
Net Operating Income (NOI) (EBITDA): The actual or anticipated net income
that remains after all operating expenses are deducted from effective gross
income, but before mortgage debt service and book depreciation are deducted;
may be calculated before or after deducting replacement reserves. EBITDA
(Earnings Before Interest, Taxes, Depreciation, and Amortization) is a term
sometimes substituted for net operating income, especially as a measure of the
performance of Real Estate Investment Trusts (REITs).
Penetration Factor (By Segment): A rating factor that shows how well each
property in the market area competes for a particular market segment, calculated
by dividing a given hotel’s market share by its fair share.
Per Available Room (PAR): A basis of comparison that is calculated by dividing a
revenue or expense category’s total dollar amount by the hotel’s room count. This
point of comparison is most useful when reviewing operating and fixed expense
categories.
Per Occupied Room (POR): A basis of comparison that is calculated by dividing a
revenue or expense category’s total dollar amount by the number of occupied
rooms in a given year. This point of comparison is most useful when reviewing
revenue and departmental expense categories.
Property Improvement Plan (PIP): A brand-mandated plan of required
renovations that enable a hotel to meet competitive standards and also contribute
to the owner’s ability to attain a new or renewed franchise agreement.
RevPAR (Revenue Per Available Room): A unit of comparison applied in the
appraisal of lodging facilities, RevPAR is calculated by multiplying a property’s
percentage of occupancy by its average room rate. RevPAR is used throughout the
lodging industry to compare the revenue of competing facilities.
March-2014
Glossary
viii
Select-Service Operation: A hotel operation designed to answer the market
demand for a level of service and amenities beyond the limited-service segment,
but less than the full-service hotel segment; select-service properties offer a
limited degree of food and beverage options and typically fall within middle to
upper-middle tiers within their respective markets.
Site Improvements: Improvements to a site that make it suitable for its intended
use or development. Site improvements include, but are not limited to, sidewalks,
parking lots, freestanding signage, and landscaping.
Stability: A stage in a market area’s life cycle in which the market area
experiences equilibrium without marked gains or losses.
Stabilized Expense: A projected expense that is subject to change, but has been
adjusted to reflect an equivalent, stable annual expense.
Stabilized Income: Income at that point in time when abnormalities in supply
and demand or any additional transitory conditions cease to exist, and the existing
conditions are those expected to continue over the economic life of the property;
projected income that is subject to change, but has been adjusted to reflect an
equivalent, stable annual income.
Stabilized Occupancy: Occupancy at that point in time when abnormalities in
supply and demand or any additional transitory conditions cease to exist, and the
existing conditions are those expected to continue over the economic life of the
property; the optimum range of long-term occupancy that an income-producing
real estate project is expected to achieve under competent management after
exposure for leasing in the open market for a reasonable period of time at terms
and conditions comparable to competitive offerings.
Undistributed Operating Expenses: The costs associated with the following
categories: Administrative and General (A&G) Expense – Includes all managerial
and operational expenses that cannot be attributed to a particular department,
including payroll and related expenses for the general manager, the human
resources and training department, and security, clerical, and accounting
operations. Other A&G expenses include office supplies, computer services,
accounting and legal fees, cash overages and shortages, bad debt expenses, travel
insurance, credit card commissions, transportation (non-guest), and travel and
entertainment. Marketing Expense – Includes payroll and related expenses for the
sales and marketing staff, direct sales expenses, advertising and promotion, travel
expenses for the sales staff, and civic and community projects. Marketing expenses
also include national advertising fees paid to a branded property's franchise
company and the costs associated with frequent-stay programs. This expense
category does not include royalty fees charged by the franchise company. Utility
March-2014
Glossary
ix
Expense – Utility expenses typically include electricity, fuel (oil, gas, and coal),
purchased steam, and water. The utility costs include central plant and energy
management systems. This category does not, however, include waste removal,
which is included in Property Operation and Maintenance Expense. Property
Operations and Maintenance Expense – This category includes payroll and related
expenses for maintenance personnel; maintenance supplies; repairs to and
maintenance of the building and grounds; furniture and equipment; and the
removal of waste. Franchise Fee – Includes only the royalty fees charged by
franchise companies. Other fees or assessments are categorized under Marketing
Expense or Rooms-Other Expenses. Management Fees – Fees charged by
management organizations for management services or supervision. This expense
includes both base and incentive fees.
March-2014
Glossary
x
Tanya Pierson, MAI
EMPLOYMENT
1994 to present
HVS CONSULTING AND VALUATION SERVICES
Denver, Colorado and Minneapolis, Minnesota
1993 - 1994
TABLE MOUNTAIN INN
Golden, Colorado
1993
RICHFIELD HOTEL MANAGEMENT
Denver, Colorado
1992 - 1993
HOTEL BOULDERADO
Boulder, Colorado
1991
CAESARS TAHOE
Stateline, Nevada
1990
LA QUINTA MOTOR INN
Denver, Colorado
EDUCATION AND OTHER
TRAINING
BSBA – Hotel, Restaurant and Tourism Management, University of Denver
HVS, Minneapolis, Minnesota
Certified General Appraiser Classes Completed:
NCRE: 200 - Basic Appraisal Principles and Procedures
NCRE: 201 - Basic Appraisal Applications
NCRE: 208 - Standards and Ethics
NCRE: 203 - Small Residential Income Properties
NCRE: 211 - Certified Residential: Reporting,
Reviewing, and Analyzing Appraisals
NCRE: 215 - Appraisal Principles and Advanced
Applications
NCRE: 216 - Income Capitalization
NCRE: 219 - Commercial Case Studies
Qualifications of Tanya Pierson, MAI
1
EDUCATION AND OTHER
TRAINING (CONTINUED)
Continuing Education Courses:
Real Estate Finance
Course 400: National USPAP Update
Appraisal Loss Prevention Seminar
Market Valuation & Financial Considerations
Developing & Growing an Appraisal Practice
Capitalization Rate Models
Feasibility, Market Value & Investment Timing
Using Your HP12C
Small Hotel/Motel Valuation
Internet Search Strategies for Appraisers
Valuation of Detrimental Conditions in Real Estate
Analyzing Operating Expenses
What Commercial Clients Would Like Appraisers to Know
Course 550: Advanced Applications
Course 530: Advanced Sales Comparison and Cost Approach
Course 510: Advanced Income Capitalization
General Appraiser Market Analysis and HBU
Advanced Applications
Business Practices and Ethics
Report Writing
Risky Business: Ways to Minimize Your Liability
Mortgage Fraud – Protect Yourself
Perspectives from Commercial Review Appraisers
Introduction to Legal Description
Fundamentals of Separating Real, Personal Property, and Intangible Business Assets
Annual USPAP Updates
Appraisal Institute Comprehensive Exam - Passed
STATE CERTIFICATIONS
California, Colorado, Minnesota, Nebraska, Wisconsin, North Dakota
2
ARTICLES AND MENTIONS
HVS Journal
“Market Intelligence Report 2013: Minneapolis,” August 2013
HVS Journal
“HVS Market Intelligence Report: Minneapolis, Minnesota,” co-authored with Tess Federer,
June 2012
Minneapolis-St. Paul
Business Journal
”Grand Hotel for Sale as Wirth Tests the Waters,” October 2, 2009
Denver Business Journal
“Seven Hotels Retain U.S. 36 Plans,” October 3, 2008
Missoulian
“Foreclosure won't shutter Holiday Inn Parkside,” March 25, 2005
The Hotel Valuation Journal
"Major U.S. Transactions-Mid-Year 2004," August 2004
"Telecommunication Evolution and its Impact on the Hotel Industry," January 2003
Colorado Real Estate
Journal
e-hospitality.com
“US 36 Hotel Market Diversifies,” April 18, 2001
“Too Many Rooms: Lessons to Learn from Salt Lake City,” August 8, 2000 – Feature Article
"Why Hotel Markets Crash – Salt Lake City as a Blueprint," September 2000
"From Lodging to Senior Housing – A Natural Trend?" September 1998
"The South Pacific - Paradise Lost or Found?" June 1997
CONFERENCE
ENGAGEMENTS
Panelist at Hunter Hotel Investment Conference – March 2013
Panelist at the Lodging Conference – September 2010
HVS Valuation Summit, Minneapolis – June 2012, May 2013
Minnesota Real Estate Journal, Hotel & Hospitality Conference – September 2012
3
EDITING AND LECTURE
ASSIGNMENTS
Guest Speaker, HRTM 3500: Lodging III - University of Denver – October 1999, February
2000, November 2000
Guest Speaker, TOM 3400: Hotel Management and Opportunities- University of Colorado –
January 2004, September 2004
Guest Speaker, HRTM 4440: Hotel Asset Management – University of Denver – May 2004
Guest Speaker, Lodging Valuation – University of Denver – May 2007, May 2008, May
2009, May 2010
Contributing Editor, Hotel Investments Handbook, 1997
PROFESSIONAL
AFFILIATIONS
Appraisal Institute – Designated Member (MAI)
Boulder, Colorado CVB – Advisory Board, 2008 – 2011
Eastern Carolina University – Hospitality Management Advisory Board, 2008 – 2011
University of Denver Visiting Committee, 1997/98
University of Denver MBA Curriculum Review Committee, 2000
University of Denver HRTM Society
Eta Sigma Delta
4
EXAMPLES OF COROPRATE AND
INSTITUTIONAL CLIENTS SERVED
1st Bank
21c Hotels
9920 Hotels LLC
Access Point Financial
Adams Bank & Trust
Aldrich, Eastman & Waltch, L.P.
Allegro Hotels and Resorts
American Financial Mortgage
Amstar Group Limited
Archon Group, L.P.
Ashford Financial Corporation
Ashford Hospitality Trust
Ballard, Spahr, Andrews & Ingersoll,
LLP
Banc One
Bank of America
Bank of Boston
Bank of the West
Bankers Trust
Barclays Capital
BBG
Best Western International
BHA Stonehouse Association
Boykin Lodging Company
Bremer Bank
Butler Burgher Group
Capmark Finance Inc.
CDC Mortgage Capital
Centier Bank
Chase Manhattan Bank
CIBC World Markets
CNL Real Estate Advisors
CS First Boston
CSM Corporation
Choice Hotels International
Citizens National Bank
City of Boulder
City of Westminster
Colonial Bank
Colony Capital Acquisitions, LLC
Columbia Sussex Corporation
Column Financial
Compass Bank
Concept Restaurants, Inc.
Contritrade Services, LLC
CP Sanibel LLC
Credit Lyonnaise
Crested Butte Mountain Resort
CW Capital
Daiwa Securities International
Debartolo Holdings
Denver Athletic Club
Deutsche Bank Securities
Dollar Bank FSB
Dougherty Funding LLC
Driftwood Ventures
Equity Inns
Finova Capital
FirstBank
First National Bank of Boulder
First National Bank of Omaha
First National Bank of Santa Fe
First National Bank of South Dakota
First Security Commercial Mortgage
Firstar Bank
FirsTier Bank
Focus Enterprises, Inc.
Franchise Concepts Unlimited
GE Capital
Glacier Bank
GMAC Commercial Mortgage
GoldenTree Asset Management
Goldman Sachs
Great Western Bank
Greenwich Capital
Guaranty Bank & Trust
Gustin Property Group
Hamister Group
HEI Hotels
Heller Financial
Henley Holding Company
HilMAC
Hilton Mortgage Acceptance
Corporation
Hinshaw & Culbertson LLC
Hodges Ward Elliott
Hospitality Properties Trust
Host Marriott
HVS Hotel Management
Hypo Real Estate Capital Corp.
Independence Bank One of California
ING/Northmarq
Inland Pacific Colorado, LLC
Interlocken Advanced Technology
Intervest Property Company
Investco
Island Inn & Suites
ITT Sheraton Corporation
Ivory Tusk, LLC
JD Ford and Company
Jefferies LoanCore
JP Morgan Chase
Kettler
Krisch Hotels
Labovitz Enterprises
Larken, Inc.
LaSalle Bank
LeBoeuf Lamb Green & MacRae
Lehman Brothers
Lennar Partners
Larimer Associates
Lexington Mortgage
Lincoln National Life
Lion Hotel Group
LNR
Macy Development
Madison Capital Management Manor
Care
Madison Hospitality Group
Marriott International
Marshall Investments Corporation
McGough Companies
Meridian Group
Merrill Lynch Capital
Mesa West Capital
Meta Bank
Mille Lacs Band of Ojibwe
Miller & Schroeder
MONY Life Insurance Company
Morgan Stanley
Morrissey Hospitality
Mortenson Development
MSP Metropolitan Airports
Commission
National Bank of Indianapolis
National Lodging
Nations Bank
Nevada Gold & Casino, Inc.
5
New Mexico Bank & Trust
Nomura Securities International
North Central Group
North Hill Suites, LLC
OPPUBCO Development Corp.
Paine Webber
Patriot American Hospitality
PNC Bank, National Association
Principal Real Estate
Prudential
RAM Hotels
Raymond James
RBS
Rialto Capital
Richfield Hospitality Services, Inc.
Riskpro
River Valley Development Corp.
Riverwood Bank
RREEF
Ryan Companies
Sage Hospitality
Sagecrest, LLC
Salomon Brothers Realty
Security Bank
Self-Help Bank
Self Help Credit Union
Servico, Inc.
Seva Holdings
Shaner Hotel Group
Signature Hospitality
Skopbank
Sonmar Hospitality
Sonnenblick Goldman
Snow Goose Investments
Starwood Capital
Starwood Property Trust
Steptoe & Johnson, LLP
Stone Mountain Partners
Stonebridge Companies
Stout Street Hospitality
Studio Ventures
Suburban Capital
Summit Hotel Properties
Sunrise Banks
Tebo Development Company
Telemark Owners Association
The Capital Company of America
The Guardian Life Insurance Company
of America
The Weglarz Group
Titan Development
UBS
United Properties
UrbanAmerica
US Bancorp
US Bank
US Bank Piper Jaffary
VVI Corporation
Walker Field Airport Authority
Waterford Development Corp.
Wells Fargo Bank
Westin Hotels and Resorts
WestRock Association, LLC
WestStar Bank
White Lodging Services Corp.
Windmill Inns of America
Wintrust Financial Corporation
Woodbine Development Corp.
WPB Hospitality
The World Company
W.P. Carey & Co. LLC
WRK, LLC
Wyndham International, Inc.
EXAMPLES OF PROPERTIES APPRAISED
OR EVALUATED
PORTFOLIO ANALYSIS
Portfolio of 650 Extended StayAmerica
Hotels, Various Locations
Portfolio of 365 La Quinta-Owned
Hotels, Various Locations
Portfolio of 11 Boykin-Owned Hotels,
Various Locations
Portfolio of 48 Hotels, Various
Locations (Due Diligence)
Portfolio of 57 RFS-Owned Hotels,
Various Locations
Portfolio of 34 Athletic Clubs Facilities,
Various Locations
Portfolio of 13 Suburban Lodges,
Various Locations
Portfolio of 21 Equity Inns Properties,
Various Locations
Portfolio of 10 Marriott Properties,
Various Locations
Portfolio of 6 Summerfield Suites,
Various Locations
Portfolio of 5 Heart of America
Properties, Various Locations
Multiple Portfolios of Summit-Owned
Portfolio of 8 La Quinta Properties,
Various Locations
Portfolio of 11 Real Estate Capital
Partners-Owned Properties,
California
Portfolio of 26 Summit-Owned
Portfolio of 11 Tharaldson-Managed
Portfolio of 5 LNR-Owned Properties,
Various Locations
Multiple Portfolios of Highland-Owned
Portfolio of 8 Hyatt Place Properties,
Various Locations
Portfolio of 5 DoubleTree Hotels,
Tennessee
Portfolio of 160 Tharaldson-Managed
ALABAMA
Proposed Hotel, Auburn
Hilton, Birmingham
Hilton Garden Inn Lakeshore,
Birmingham
Hilton Garden Inn Liberty Park,
Birmingham
Holiday Inn, Birmingham
Hampton Inn, Dothan
Holiday Inn, Dothan
Holiday Inn Express, Gadsden
Proposed 4-Star Hotel, Huntsville
Clarion Hotel, Mobile
Proposed USA Hotel, Mobile
Proposed Hotel, Montgomery
Proposed Hotel, Prattville
6
Holiday Inn, Sheffield
ALASKA
Hampton Inn, Anchorage
Holiday Inn, Anchorage
Marriott, Anchorage
Proposed Embassy Suites, Anchorage
Proposed Hampton Inn, Fairbanks
ARIZONA
Carefree Resort, Carefree
Courtyard by Marriott, Chandler
Hampton Inn, Chandler
Homewood Suites, Chandler
Proposed Home2 Suites, Chandler
Proposed Hotel Site, Chandler
AmeriSuites, Flagstaff
Courtyard by Marriott, Flagstaff
Embassy Suites, Flagstaff
Howard Johnson, Flagstaff
SpringHill Suites, Flagstaff
Proposed Home2 Suites, Glendale
Proposed Hotel, Glendale
Holiday Inn Express, Goodyear
Hampton Inn & Suites, Goodyear
Proposed Hotel Site, Goodyear
Residence Inn by Marriott, Mesa
Proposed Hotel, Oro Valley
Arizona Biltmore Resort & Spa,
Phoenix
Crowne Plaza, Phoenix
Embassy Suites, Phoenix
Fairfield Inn by Marriott, Phoenix
Hampton Inn, Phoenix
Holiday Inn West, Phoenix
Homewood Suites, Phoenix
Hyatt Place Phoenix North, Phoenix
Proposed Hampton Inn, Phoenix
Proposed Hotel Palomar, Phoenix
Proposed Hotel Site, Phoenix
Radisson, Phoenix
Holiday Inn Express, Prescott
Hilton Resort, Scottsdale
Proposed Fairfield Suites by Marriott,
Scottsdale
TownePlace Suites by Marriott,
Scottsdale
L’Auberge de Sedona, Sedona
Hampton Inn, Sedona
Proposed Residence Inn, Tempe
Wyndham Buttes Resort, Tempe
Embassy Suites Airport, Tucson
Sheraton El Conquistador, Tucson
Proposed Comfort Suites, Tucson
Ramada Palo Verde, Tucson
Residence Inn by Marriott, Tucson
ARKANSAS
Four Points by Sheraton, Bakersfield
Courtyard by Marriott, Bentonville
Fairfield Inn, Little Rock
Residence Inn by Marriott, Little Rock
Proposed Marriott, West Little Rock
CALIFORNIA
Sheraton Disneyland, Anaheim
Embassy Suites, Arcadia
Proposed Hilton Garden, Arcadia
Proposed SpringHill Suites by
Marriott, Arcadia
Claremont Resort & Spa, Berkeley
Radisson Hotel, Brisbane
Hampton Inn & Suites, Camarillo
Proposed Residence Inn by Marriott,
Carlsbad
Proposed Courtyard by Marriott,
Carlsbad
Courtyard by Marriott, Century City
Hardage Hotel, Emeryville
Courtyard by Marriott, Fresno
Piccadilly Airport Hotel, Fresno
Hampton Inn, Goleta
Holiday Inn Express, Hesperia
Clarion Roosevelt, Hollywood
La Quinta Resort & Club, La Quinta
Courtyard by Marriott, Livermore
Hotel D’Orsay, Long Beach
Four Points LAX, Los Angeles
Marriott LAX, Los Angeles
The Standard Hotel, Los Angeles
Beverly Heritage Hotel, Milpitas
Sheraton Hotel, Milpitas
DoubleTree Hotel, Mission Valley
Courtyard, Modesto
Silverado Resort, Napa
Courtyard by Marriott, Oyster Point
Residence Inn by Marriott, Oyster
Point
Holiday Inn Express, Palm Desert
Renaissance Hotel, Palm Springs
Four Points by Sheraton, Pleasanton
Sierra Suites, Pleasanton
Summerfield Suites by Wyndham,
Pleasanton
Wyndham Garden, Pleasanton
Hampton Inn & Suites, Poway
Homewood Suites, Rancho Cucamonga
Holiday Inn, Riverside
DoubleTree, Sacramento
Residence Inn by Marriott, Sacramento
Proposed Hotel, San Bernadino
DoubleTree, San Diego
Hardage Hotel, San Diego
Hilton Harbor Island, San Diego
Holiday Inn Mission Valley Stadium,
San Diego
Westin, San Diego
Wyndham Emerald Plaza, San Diego
Hilton Fisherman’s Wharf, San
Francisco
Holiday Inn Express Fisherman’s
Wharf, San Francisco
Hotel Rex, San Francisco
Courtyard by Marriott, San Luis
Obispo
Courtyard, Santa Rosa
Radisson Valley Center Hotel, Sherman
Oaks
Sonoma Valley Inn, Sonoma
Four Points SFO, South San Francisco
Maple Tree Inn, Sunnyvale
Sheraton, Sunnyvale
Holiday Inn Express, Temecula
Courtyard by Marriott, Thousand Oaks
Thousand Oaks
Residence Inn by Marriott, Torrance
7
Courtyard, Vacaville
Holiday Inn, Ventura
Ventura Beach Marriott, Ventura
Wyndham Bel Age, West Hollywood
Marriott Warner Center, Woodland
Hills
COLORADO
Denver Marriott, Aurora
DoubleTree Denver Southeast, Aurora
Hilton Garden Inn DIA, Aurora
Proposed Residence Inn Gateway Park,
Aurora
Proposed Woolley Classic Suites,
Aurora
Sleep Inn, Aurora
Suburban Lodge, Aurora
Hyatt Regency Beaver Creek, Avon
Proposed Hotel, Avon
Proposed Timeshare, Avon
Ritz-Carlton Bachelor Gulch, Avon
Proposed TBD Hotel, Basalt
Alps Boulder Canyon Inn, Boulder
Clarion Harvest House, Boulder
Proposed Hotel
Renovation/Expansion, Boulder
Proposed Marriott, Boulder
Proposed St. Julien Hotel, Boulder
aloft Arista, Broomfield
Interlocken Club & Spa, Broomfield
Omni Interlocken Resort, Broomfield
Proposed Interlocken Resort,
Broomfield
Proposed NYLO, Broomfield
Proposed Summerfield Suites,
Broomfield
Proposed aloft, Broomfield
Proposed Holiday Inn, Clifton
Academy Hotel, Colorado Springs
Best Western Academy, Colorado
Springs
DoubleTree, Colorado Springs
Embassy Suites, Colorado Springs
Hampton Inn, Colorado Springs
Holiday Inn Express, Colorado Springs
Homewood Suites, Colorado Springs
Proposed Brighton Gardens, Colorado
Springs
Proposed Homewood Suites by Hilton,
Colorado Springs
Proposed Hotel, Colorado Springs
Proposed Mining Exchange Hotel,
Colorado Springs
Holiday Inn, Craig
Grande Butte Hotel, Crested Butte
Irwin Mountain Lodge, Crested Butte
MountainLair Hotel, Crested Butte
Sheraton Hotel, Crested Butte
Imperial Hotel & Casino, Cripple Creek
Colorado Athletic Club Downtown,
Denver
Colorado Athletic Club Leetsdale,
Denver
Courtyard by Marriott, Denver
Embassy Suites, Denver
Four Points by Sheraton, Denver
Hampton Inn, Denver
Hampton Inn DIA, Denver
Hampton Inn & Suites, Denver
Hilton DTC, Denver
Hilton Garden Inn Downtown, Denver
Holiday Inn Central, Denver
Holiday Inn Express, Denver
International Airport
JW Marriott, Denver
Proposed Best Western Plus Gateway
Park, Denver
Proposed Boutique Hotel – Sloan Lake,
Denver
Proposed Denver Athletic Club Hotel,
Denver
Proposed Executive Tower Hotel,
Denver
Proposed Full-Service Hotel, Denver
Proposed Hilton Garden Inn, Denver
Proposed Hotel at DU, Denver
Proposed JW Marriott Hotel, Denver
Proposed Limited-Service DTC Hotel,
Denver
Proposed Metro State Hotel, Denver
Denver
Ritz-Carlton Downtown, Denver
Wyndham DTC, Denver
Days Inn, Denver International Airport
Ramada Limited, Denver International
Airport
Proposed Sheraton, Denver
International Airport
Proposed Jackson Creek Ranch,
Douglas County
Holiday Inn & Suites, Durango
Proposed Holiday Inn, Durango
24 Hour Fitness, Englewood
Colorado Athletic Club Inverness,
Englewood
Englewood
Englewood
Sheraton Denver Tech Center,
Englewood
Englewood
The Stanley Hotel, Estes Park
Courtyard by Marriott, Fort Collins
Marriott, Fort Collins,
Residence Inn by Marriott, Fort Collins
Holiday Inn, Frisco
Hampton Inn & Suites, Glendale
Staybridge Suites, Glendale
Courtyard by Marriott, Glenwood
Springs
Residence Inn by Marriott, Glenwood
Springs
Fairfield Inn/AmericInn, Golden
Golden Hotel, Golden
Hampton Inn, Golden
Proposed Holiday Inn Express, Golden
Ramada Inn Denver West, Golden
Golden
Golden
Table Mountain Inn, Golden
Adams Mark, Grand Junction
Comfort Inn, Grand Junction
Hilton Hotel, Grand Junction
Proposed Candlewood Suites, Grand
Junction
8
Grand Junction
Proposed Hampton Inn, Grand
Junction
Proposed Holiday Inn, Grand Junction
Grand Junction
Proposed Hotel, Grand Junction
Colorado Athletic Club DTC,
Greenwood Village
Greenwood Athletic Club, Greenwood
Village
AmericInn, Lakewood
Hampton Inn, Lakewood
Proposed Brighton Gardens,
Lakewood
Sheraton Denver West, Lakewood
Holiday Inn Express, Littleton
Proposed Hotel, Longmont
Raintree Plaza, Longmont
Comfort Inn, Louisville
Courtyard by Marriott, Louisville
Louisville
Hampton Inn, Louisville
Embassy Suites, Loveland
Fairfield Inn by Marriott, Loveland
Rock ‘N River Property, Lyons
Holiday Inn Express, Montrose
Ramada Limited, Northglenn
Hampton Inn, Parker
Marriott Convention Center, Pueblo
Proposed Hilton Garden Inn, Superior
Proposed Hotel, Superior
Proposed Westin, Telluride
Peaks at Telluride, Telluride
The Owners Club, Telluride
Rosewood Resort, Telluride
Radisson Graystone Castle, Thornton
Chateau Vail, Vail
Lodge at Vail, Vail
Vail Village Inn, Vail
Proposed Vail Plaza, Vail
Proposed Four Seasons, Vail
Proposed Bradford Homesuites,
Westminster
Proposed Comfort Suites, Westminster
Proposed SpringHill Suites by
Marriott, Westminster
Proposed Westin, Westminster
Westin Hotel, Westminster
CONNECTICUT
Radisson, Enfield
Holiday Inn, East Hartford
Courtyard by Marriott, Orange
DoubleTree Hotel, Windsor Locks
DELAWARE
Residence Inn by Marriott, Wilmington
DISTRICT OF COLUMBIA
Proposed Embassy Suites
Proposed Residence Inn - Navy Yards
FLORIDA
Boca Athletic Club, Boca Raton
Fairfield Inn by Marriott, Brandon
Courtyard by Marriott, Brandon
Mayfair House, Coconut Grove
Holiday Inn, Coral Gables
Hyatt, Coral Gables
DoubleTree Hotel, Fort Lauderdale
DoubleTree Guest Suites, Fort
Lauderdale
Hampton Inn, Fort Lauderdale
Marriott Sanibel Harbour Resort, Fort
Myers
Sanibel Harbour Resort & Spa, Ft.
Myers
Holiday Inn, Fort Pierce
aloft, Jacksonville
Hampton Inn, Jacksonville
Holiday Inn Sunspree, Jacksonville
Beach
Proposed aloft, Jacksonville
Residence Inn by Marriott, Jacksonville
Westin, Key Largo
Courtyard by Marriott, Key West
Holiday Inn, Key West
Super 8, Lantana
Hilton Walt Disney Work, Lake Buena
Vista
Sheraton, Maitland
Holiday Inn, Melbourne
Doral Golf Resort & Spa, Miami
DoubleTree Club Hotel, Miami
Hilton Garden Inn Miami Airport,
Miami
Hilton Miami Downtown, Miami
Homewood Suites Miami Airport,
Miami
Proposed Aloft South Beach, Miami
TownePlace Suites by Marriott, Miami
Miami
Grand Beach Hotel, Miami Beach
TownePlace Suites by Marriott, Miami
Lakes
Proposed Hilton, Naples
Naples
DoubleTree Orlando at SeaWorld,
Orlando
Hyatt Place Convention Center,
Orlando
Hyatt Place Universal, Orlando
Residence Inn by Marriott, Orlando
Radisson Parkway Resort, Orlando
Holiday Inn Express, Pensacola
Holiday Inn University Mall, Pensacola
Hampton Inn, Pensacola
Sheraton Suites, Plantation
Hyatt Regency, Sarasota
SpringHill Suites by Marriott, Sarasota
Hampton Inn Ybor City, Tampa
Harbour Island Athletic Club, Tampa
Crowne Plaza, West Palm Beach
Residence Inn by Marriott, West Palm
Beach
Sheraton, West Palm Beach
Holiday Inn, Winter Haven
GEORGIA
Marriott, Alpharetta
Residence Inn by Marriott, Alpharetta
9
Courtyard by Marriott, Atlanta
Courtyard Vinings, Atlanta
Crowne Plaza Ravinia, Atlanta
Days Inn, Atlanta
DoubleTree Guest Suites, Atlanta
Georgian Terrace, Atlanta
Hyatt Place Airport, Atlanta
Marriott Hotel, Atlanta
Northeast Athletic Club, Atlanta
Residence Inn by Marriott, Atlanta
Ritz-Carlton Downtown, Atlanta
Sheraton Colony Square, Atlanta
Westin Perimeter North, Atlanta
Wyndham Vining Inn, Atlanta
Days Inn Downtown, Augusta
Fairfield Inn by Marriott, Augusta
Holiday Inn Gordon Hwy, Augusta
Holiday Inn West, Augusta
Holiday Inn, Brunswick
Courtyard by Marriott, Buckhead
Residence Inn by Marriott, Buckhead
Sierra Suites, Buckhead
Hampton Inn, Buford
SpringHill Suites, Buford
Hilton Garden Inn, Duluth
Holiday Inn Gwinnett Center, Duluth
Proposed Holiday Inn Express, Duluth
Residence Inn by Marriott, Duluth
Hyatt Place Atlanta Airport, East Point
Residence Inn by Marriott, Gwinnett
Holiday Inn, Jekyll Island
Fairfield Inn, Kennesaw
SpringHill Suites, Kennesaw
Emerald Pointe Resort, Lake Lanier
Islands
SpringHill Suites, Lithia Springs
Comfort Inn, Marietta
Holiday Inn & Suites, Marietta
Hyatt Regency, Marietta
Wyndham Peachtree Center,
Peachtree City
Courtyard by Marriott, Savannah
Hyatt Regency, Savannah
Radisson Hotel, Savannah
Westin, Savannah
Holiday Inn, Valdosta
Fairfield Inn by Marriott, Valdosta
Ramada Inn, Warner Robins
HAWAII
Fairmont Orchid, Big Island
Ritz-Carlton Kapalua, Maui
Royal Hawaiian, Oahu
Sheraton Moana Surfrider, Oahu
Sheraton Princess, Oahu
IDAHO
DoubleTree Hotel, Boise
Holiday Inn, Boise
Red Lion Downtowner, Boise
Proposed Cambria Suites, Boise
Red Lion Riverside, Boise
Shilo Inn, Boise
SpringHill Suites, Boise
The Grove Hotel, Boise
Holiday Inn Express, Coeur d’Alene
Shilo Inn, Idaho Falls
Proposed Resort, McCall
AmericInn, Twin Falls
ILLINOIS
Holiday Inn, Arlington Heights
Sheraton Chicago Northwest,
Arlington Heights
Courtyard by Marriott, Bedford Park
Fairfield Inn by Marriott, Bedford Park
Holiday Inn Express, Bedford Park
Proposed Holiday Inn Select, Bedford
Park
Hampton Inn, Bloomington
Proposed Hyatt Place, Bloomington
Proposed JW Marriott, Bloomington
SpringHill Suites, Burr Ridge
Crowne Plaza Avenue Hotel & Office
Building, Chicago
Hyatt Printers Row, Chicago
Proposed Holiday Inn Express, Chicago
Ritz Carlton, Chicago
Sheraton Hotel & Towers, Chicago
Wyndham NW, Chicago
Holiday Inn, Crystal Lake
DoubleTree Club Hotel, Des Plaines
Holiday Inn, Downers Grove
Proposed Staybridge Suites by Holiday
Inn, Elgin
SpringHill Suites, Elmhurst
Holiday Inn, Glen Ellyn
DoubleTree Hotel, Glenview
Fairfield Inn by Marriott, Glenview
Proposed Hotel, Gurnee
Hyatt Place, Hoffman Estates
Holiday Inn, Itasca
Wyndham NW Chicago, Itasca
Wyndham, Lisle
Wyndham Garden, Naperville
Proposed Hotel, Peoria
Holiday Inn, Rolling Meadows
Proposed Radisson Hotel, Schaumburg
Wyndham Garden, Schaumburg
DoubleTree Hotel, Skokie
Proposed Residence Inn, Wilmette
Wyndham Garden, Wood Dale
INDIANA
Holiday Inn, Bloomington
Bloomington
Proposed Staybridge Suites, Carmel
Residence Inn by Marriott, Fishers
Courtyard by Marriott Downtown,
Fort Wayne
Hilton, Fort Wayne
Holiday Inn, Fort Wayne
Proposed Courtyard, Fort Wayne
Proposed Hotel, Fort Wayne
Staybridge Suites by Holiday Inn, Fort
Wayne
French Lick Resort, French Lick
AmeriSuites, Indianapolis
Fairfield Inn by Marriott, Indianapolis
Hampton Inn, Indianapolis
Residence Inn by Marriott,
Indianapolis
Proposed Hampton Inn, Lawrenceburg
Residence Inn by Marriott, Merrillville
Proposed Casino, Paxton
Knights Inn, Seymour
10
Proposed Fairfield Inn, South Bend
IOWA
Crowne Plaza, Cedar Rapids
Wildwood Lodge, Clive
Best Western Metro, Council Bluffs
Comfort Suites, Des Moines
Country Inn & Suites, Des Moines
Savery Hotel, Des Moines
Sleep Inn, Des Moines
Four Points, West Des Moines
Sheraton, Iowa City
KANSAS
Holiday Inn, Lawrence
Proposed Hotel, Lawrence
Proposed MainStay Suites, Lawrence
Holiday Inn, Manhattan
Comfort Suites, Olathe
AmeriSuites, Overland Park
Hampton Inn, Overland Park
Homewood Suites, Overland Park
AmericInn, Salina
Holiday Inn, Wichita
Proposed Hotel – Bowllagio, Wichita
Proposed Downtown Hotel, Wichita
Proposed Hotel – Greenwich, Wichita
Proposed Hotel – Southfork, Wichita
TownePlace Suites by Marriott, Baton
Rouge
Courtyard by Marriott, Lafayette
Holiday Inn, Lafayette
Courtyard by Marriott, Metairie
Quality Inn, Metairie
Residence Inn by Marriott, Metairie
Astor Crowne Plaza, New Orleans
Bourbon Orleans, New Orleans
Courtyard Convention Center, New
Orleans
Crowne Plaza, New Orleans
Hyatt Regency, New Orleans
Maison DuPuy, New Orleans
Radisson, New Orleans
SpringHill Suites Convention Center,
New Orleans
MARYLAND
Courtyard by Marriott, Florence
Hilton Garden Inn Northeast,
Louisville
Holiday Inn, Louisville
Radisson, Louisville
Courtyard by Marriott, Paducah
Super 8, Prestonburg
Marriott, Annapolis
Radisson, Annapolis
Brookshire Suites, Baltimore
Proposed Extended-Stay Hotel,
Baltimore
Proposed Staybridge Suites, Baltimore
Wyndham Inner Harbor Hotel,
Baltimore
Bel Air Athletic Club, Bel Air
Holiday Inn, Belmont
Residence Inn by Marriott, Bethesda
Hilton, Columbia
Holiday Inn, Cromwell Bridge
Holiday Inn, Frederick
Gaithersburg
Holiday Inn Airport, Linthicum Heights
DoubleTree, Rockville
Days Inn, Silver Spring
Holiday Inn, Silver Spring
LOUISIANA
MASSACHUSETTS
Comfort Inn, Baton Rouge
Fairfield Inn by Marriott, Baton Rouge
SpringHill Suites by Marriott, Baton
Rouge
Wyndham, Billerica
Atlantic Avenue Athletic Club, Boston
Charles Square Athletic Club, Boston
Commonwealth Athletic Club, Boston
KENTUCKY
Courtyard by Marriott, Boston
Proposed Intercontinental Hotel,
Boston
Westin Copley Place, Boston
Wyndham Hotel, Boston
Burlington
Danvers
Residence Inn by Marriott, Dedham
Natick
Newton Athletic Club, Newton
Waltham
Woburn
Crowne Plaza, Worcester
MICHIGAN
Proposed TownePlace Suites, Ann
Arbor
Residence Inn by Marriott, Ann Arbor
Fairfield Inn by Marriott, Auburn Hills
Hilton Suites, Auburn Hills
Proposed TownePlace Suites, Auburn
Hills
Fairfield Inn by Marriott, Canton
Lifetime Fitness Center, Canton
Courtyard by Marriott, Dearborn
Hyatt Regency, Dearborn
Dearborn
DoubleTree Hotel Airport, Detroit
Courtyard by Marriott, Flint
Holiday Inn, Flint
Proposed TownePlace Suites by
Marriott, Grand Rapids
Holiday Inn West, Lansing
Marriott, Livonia
Livonia
Fairfield Inn by Marriott, Madison
Heights
Hampton Inn, Northville
11
Wyndham Garden, Novi
Quality Inn, Plymouth
Proposed Marriott, Pontiac
Lifetime Fitness Center, Rochester
Hills
Fairfield Inn by Marriott, Romulus
Proposed Hilton Garden Inn, Romulus
Courtyard by Marriott, Southfield
Holiday Inn, Southfield
Proposed TownePlace Suites, Sterling
Heights
Comfort Inn, Traverse City
Courtyard by Marriott, Troy
Drury Inn, Troy
Hilton Inn Northfield, Troy
Courtyard by Marriott, Warren
Fairfield Inn by Marriott, Warren
MINNESOTA
Holiday Inn, Arden Hills
Proposed Country Inn, Bemidji
Cambria Suites, Bloomington
Crowne Plaza, Bloomington
Hampton Inn & Suites, Bloomington
Holiday Inn, Bloomington
Holiday Inn Express, Bloomington
Le Bourget Aero Suites (conversion to
Holiday Inn Express), Bloomington
Northwest Athletic Club 98th Street,
Bloomington
Northwest Athletic Club Normandale,
Bloomington
Bloomington
Proposed Full-Service Hotel,
Bloomington
Proposed Hampton Inn & Suites,
Bloomington
Proposed Hyatt, Bloomington
Proposed JW Marriott, Bloomington
Proposed MOA Hotel, Bloomington
Proposed Radisson Blu, Bloomington
Bloomington
Ramada Mall of America, Bloomington
Renaissance Hotel, Bloomington
Wyndham Garden, Bloomington
Northwest Athletic Club Highway 100,
Brooklyn Center
Cragun's Resort, Brainerd
Northland Inn, Brooklyn Park
Northwest Athletic Club Burnsville,
Burnsville
Holiday Inn, Duluth
Proposed Cambria Suites, Duluth
Proposed GrandStay Hotel & Suites,
Duluth
Proposed Mixed-Use Development,
Duluth
Proposed Hotel, Eagan
Residence Inn by Marriott, Eagan
Hilton Garden Inn, Eden Prairie
Northwest Athletic Club Crosstown,
Eden Prairie
Flagship Athletic Club, Eden Prairie
Marriott, Eden Prairie
Hawthorn Suites, Edina
Northwest Athletic Club Midwest,
Edina
Northwest Athletic Club St. Louis Park,
Edina
Westin, Edina
Northwest Athletic Club Moore Lake,
Fridley
Proposed Microtel, Hastings
Northwest Athletic Club Maple Grove,
Maple Grove
Proposed Hilton Garden Inn, Maple
Grove
Proposed Staybridge Suites by
Marriott, Maple Grove
Comfort Suites, Minneapolis
Days Inn University of MN,
Minneapolis
Homewood Suites Mall of America,
Minneapolis
Hotel Ivy, Minneapolis
Hotel Minneapolis, Minneapolis
Hyatt Place, Minneapolis
Northwest Athletic Club Arena,
Minneapolis
Minneapolis
Proposed Extended-Stay Hotel,
Minneapolis
Proposed Full-Service Hotel,
Minneapolis
Proposed Hampton Inn, Minneapolis
Proposed Hotel at MSP, Minneapolis
Proposed Hyatt Place (conversion),
Minneapolis
Proposed Minneapolis Stadium Hotel,
Minneapolis
Proposed TownePlace Suites,
Minneapolis
Proposed Westin, Minneapolis
Radisson Metrodome, Minneapolis
The Grand Hotel, Minneapolis
The Marquette Hotel, Minneapolis
Hampton Inn, Minnetonka
Holiday Inn Express, Minnetonka
Northwest Athletic Club Oakdale,
Minnetonka
Proposed Hilton Garden, Oakdale
Extended StayAmerica North,
Rochester
Extended StayAmerica South,
Rochester
Proposed Cambria Suites, Rochester
Proposed Embassy Suites, Rochester
Proposed Hotel, Rochester
Comfort Inn, Roseville
Roseville
Holiday Inn West, St. Louis Park
Proposed Extended-Stay Hotel, St.
Louis Park
Proposed Hilton Garden Inn, St. Louis
Park
Proposed Hotel, St. Louis Park
Holiday Inn, St. Paul
Proposed Hotel, Wabasha
Proposed Limited-Service Hotel,
Willmar
Sheraton, Woodbury
MISSISSIPPI
12
Hampton Inn, Harrisburg
Comfort Inn, Hattiesburg
Courtyard by Marriott, Jackson
Holiday Inn Express, Jackson
Proposed Conference Resort,
Jackson
Ramada, McComb
Holiday Inn Express, Milford
Homewood Suites, Ridgeland
Staybridge Suites, Ridgeland
MISSOURI
Branson Landing Hilton, Branson
Sheraton, Clayton
Hampton Inn, Kansas City
Kansas City
Residence Inn by Marriott, Kansas City
Country Club Hotel & Spa, Lake Ozark
Big Cedar Lodge, Ridgedale
Comfort Inn, St. Louis
Holiday Inn North, St. Louis
Radisson Hotel, St. Louis
MONTANA
Marriott, Billings
Best Western Butte Plaza Inn, Butte
Proposed Holiday Inn Express,
Glendive
Proposed Holiday Inn Express, Great
Falls
Holiday Inn Express, Helena
Proposed Holiday Inn Express, Helena
Wingate Inn, Helena
Proposed Homewood Suites, Kalispell
Proposed Hotel, Missoula
Proposed TownePlace Suites, Missoula
Proposed Best Western, Shelby
Proposed Best Western, Sidney
Richland Motor Inn, Sidney
Proposed Hotel, Whitefish
NEBRASKA
Proposed Hotel, Ashland
Proposed Hotel, Beatrice
Hampton Inn, Lincoln
Courtyard by Marriott, La Vista
Proposed Hotel, Lincoln
Best Western Central, Omaha
DoubleTree, Omaha
Hampton Inn, Omaha
Marriott Hotel, Omaha
Ramada Inn, Omaha
Sheraton Inn, Omaha
Proposed Hotel, Waverly
NEVADA
Candlewood Suites, Henderson
Hampton Inn & Holiday Inn Express,
Henderson
Proposed Holiday Inn Express,
Henderson
Proposed Timeshare Resort, Lake
Tahoe
Alexis Park Suites, Las Vegas
Courtyard by Marriott, Las Vegas
Embassy Suites, Las Vegas
Marriott Suites, Las Vegas
Proposed Hotel, Las Vegas
SpringHill Suites, Las Vegas
NEW HAMPSHIRE
Fairfield Inn by Marriott, Merrimack
NEW JERSEY
Trump Marina Hotel & Casino, Atlantic
City
Bridgewater
Courtyard by Marriott, Edison
Leisure Park Retirement Community,
Lakewood
Morristown
Hilton Gateway Plaza, Newark
Hilton, Parsippany
Residence Inn by Marriott, Princeton
Courtyard by Marriott, Secaucus
DoubleTree, Somerset
Residence Inn by Marriott, Tinton Falls
Whippany
NEW MEXICO
Andaluz, Albuquerque
Del Norte Athletic Club, Albuquerque
Downtown Athletic Club, Albuquerque
Hilton Garden Inn Uptown,
Albuquerque
Highpoint Athletic Club, Albuquerque
Holiday Inn Express, Albuquerque
Hotel Albuquerque, Albuquerque
La Posada, Albuquerque
Midtown Athletic Club, Albuquerque
Proposed Hilton Garden Inn,
Albuquerque
Proposed Hotel Indigo, Albuquerque
Proposed Residence Inn, Albuquerque
Proposed SpringHill Suites,
Albuquerque
Riverpoint Athletic Club, Albuquerque
Suburban Lodge, Albuquerque
Holiday Inn Express, Farmington
Hilton Garden Inn, Las Cruces
Proposed Resort, Pojoaque
Hilton Garden Inn, Rio Rancho
Courtyard by Marriott, Santa Fe
Eldorado Hotel, Santa Fe
Encantado Resort, Santa Fe
Hilton, Santa Fe
Holiday Inn, Santa Fe
Hotel Chimayo, Santa Fe
Proposed Hotel, Santa Fe
NEW YORK
Crowne Plaza, Albany
Omni Hotel, Albany
Proposed Hilton Garden Inn, Buffalo
Holiday Inn Express, Cooperstown
Residence Inn by Marriott, Fishkill
Hyatt Place, Garden City
Holiday Inn, Grand Island
13
Holiday Inn, Jamestown
Sofitel, New York
Four Points, Niagara Falls
Holiday Inn Select, Niagara Falls
Proposed Hotel, Niagara Falls
Embassy Suites, Syracuse
Fairfield Inn by Marriott, Syracuse
Holiday Inn, Syracuse
Wyndham Hotel, Syracuse
NORTH CAROLINA
Sleep Inn & Suites, Albemarle
DoubleTree Biltmore, Asheville
Renaissance, Asheville
Hilton Garden Inn Ayrsley, Charlotte
Homewood Suites, Charlotte
Residence Inn by Marriott, Charlotte
Westin Hotel, Charlotte
Proposed Select-Service Hotel,
Charlotte
Holiday Inn Express, Clemmons
Hilton Garden Inn, Concord
Proposed 21c Hotel, Durham
Proposed Hotel, Durham
Holiday Inn, Fayetteville
Radisson Inn, Greensboro
Holiday Inn Express, Henderson
Days Inn RPT, Raleigh
Holiday Inn, Raleigh
Proposed Hotel, Raleigh
Renaissance Hotel, Raleigh
Fairfield Inn by Marriott, Rocky Mount
NORTH DAKOTA
Proposed University Hotel, Bismarck
Holiday Inn, Fargo
Proposed Limited-Service Hotel, Fargo
Proposed Wingate Inn, Fargo
Hyatt House, Minot
North Hills Suites Conversion to Hyatt
House, Minot
Proposed Extended-Stay Hotel, Minot
Proposed Limited-Service Hotel, Minot
Proposed Hotel(s), Williston
Supply Update, Williston
OHIO
Fairfield Inn by Marriott, Akron
Proposed Hilton, Chippewa Lake
Radisson, Cincinnati
Courtyard by Marriott, Cleveland
Holiday Inn Beachwood, Cleveland
Holiday Inn Westlake, Cleveland
Marriott East, Cleveland
Marriott North, Cleveland
Radisson, Cleveland
AmeriSuites, Columbus
Courtyard Easton, Columbus
DoubleTree Guest Suites, Columbus
Hilton Easton, Columbus
Hilton Polaris, Columbus
Westin, Columbus
DoubleTree Guest Suites, Dayton
AmeriSuites, Forest Park
Harley Hotel, Independence
Comfort Inn, Marietta
Harley Hotel, Middleburg Heights
Holiday Inn, Richfield
Homewood Suites, Sharonville
Holiday Inn, Strongsville
Ramada Hotel, Willoughby
OKLAHOMA
Hampton Inn, Oklahoma City
Park Inn, Oklahoma City
Proposed Boutique Hotel, Oklahoma
City
Westin, Oklahoma City
Courtyard by Marriott, Tulsa
Hampton Inn, Tulsa
OREGON
Windmill Inn, Ashland
Best Western Pier Point Inn, Florence
Residence Inn by Marriott, Lake
Oswego
Proposed Candlewood Suites, Medford
Windmill Inn, Medford
DoubleTree Downtown, Portland
DoubleTree Lloyd Center, Portland
Marriott, Portland
Residence Inn by Marriott, Portland
Windmill Inn, Roseburg
DoubleTree, Springfield
Holiday Inn, Wilsonville
PENNSYLVANIA
Hilton Garden Inn, Fort Washington
Holiday Inn, Greentree
Crowne Plaza, Harrisburg
Proposed Hotel – King of Prussia Mall,
King of Prussia
Four Points by Sheraton, Mars
Holiday Inn, McKnight
Holiday Inn, Monroeville
DoubleTree, Moon Township
DoubleTree Club, Philadelphia
Proposed Ritz-Carlton, Philadelphia
Proposed Sofitel, Philadelphia
Philadelphia
Sofitel, Philadelphia
Wyndham Franklin Plaza, Philadelphia
Crowne Plaza, Pittsburgh
Holiday Inn, Pittsburgh
Holiday Inn Parkway East, Pittsburgh
Windsor Court Hotel Conversion,
Pittsburgh
Wyndham, Pittsburgh
DoubleTree Guest Suites, Plymouth
Meeting
Nittany Lion, State College
Penn Stater, State College
Holiday Inn Meadowlands,
Washington Park
Holiday Inn, York
RHODE ISLAND
Residence Inn by Marriott, Warwick
Proposed NYLO Hotel, Warwick
SOUTH CAROLINA
Best Western, Charleston
14
Clarion, Charleston
Lodge Alley, Charleston
Holiday Inn, Columbia
Hilton Garden Inn, Greenville
Best Western, Hilton Head
Holiday Inn, Hilton Head
Hampton Inn Oceanside, Myrtle Beach
Holiday Inn Sunspree, Myrtle Beach
Shorecrest II, Myrtle Beach
Holiday Inn, Rock Hill
SOUTH DAKOTA
Proposed GrandStay Suites, Aberdeen
Proposed TownePlace Suites,
Aberdeen
Aberdeen
Courtyard by Marriott, Sioux Falls
SpringHill Suites, Sioux Falls
TENNESSEE
Courtyard by Marriott, Clarksville
Fairfield Inn by Marriott, Chattanooga
Courtyard by Marriott, Germantown
Fairfield Inn by Marriott, Jackson
Hampton Inn & Suites East, Knoxville
Proposed Convention Hotel, Knoxville
Knoxville
Adams Mark, Memphis
AmeriSuites, Memphis
Courtyard by Marriott, Memphis
French Quarter Hotel, Memphis
Hampton Inn, Memphis
Ramada Inn, Memphis
Country Inn, Murfreesboro
Proposed SpringHill/Residence Inn,
Nashville
Renaissance Hotel, Nashville
SpringHill Suites by Marriott, Nashville
Hampton Inn, Pigeon Forge
Hampton Inn, Smyrna
Hilton Garden Inn, Smyrna
TEXAS
Courtyard by Marriott, Abilene
Comfort Inn, Amarillo
Crowne Plaza, Amarillo
Days Inn, Amarillo
Holiday Inn Express, Amarillo
Courtyard by Marriott South Arlington,
Arlington
Residence Inn South Arlington,
Arlington
Courtyard by Marriott, Austin
Fairfield Inn & Suites North, Austin
Hawthorn Suites Central, Austin
Hawthorn Suites South, Austin
Hilton Garden Inn, Austin
Holiday Inn, Austin
Holiday Inn NW, Austin
Holiday Inn South, Austin
Austin
Sheraton, Austin
Proposed Spillman Ranch, Bee Cave
Courtyard by Marriott, Corpus Christi
DoubleTree Campbell Center, Dallas
Holiday Inn Market Center, Dallas
Le Meridien, Dallas
Proposed Boutique Hotel, Dallas
Proposed NYLO, Dallas
Residence Inn by Marriott, Dallas
Holiday Inn Select, D/FW Airport
Hyatt D/FW Airport
Courtyard by Marriott, El Paso
Hilton Garden Inn, Fort Worth
Residence Inn by Marriott, Fort Worth
TownePlace Suites by Marriott, Fort
Worth
Proposed NYLO Hotel, Frisco
Proposed Resort, Horseshoe Bay
Crowne Plaza, Houston
Hampton Inn, Houston
Hawthorn Suites, Houston
Hilton Garden Inn Galleria, Houston
Hotel Icon, Houston
Kingwood Athletic Club, Houston
Magnolia Hotel, Houston
Ramada Plaza, Houston
Westin Galleria, Houston
Westin Oaks, Houston
Hawthorn Suites, Irving
Holiday Inn Express, Irving
Hyatt Place, Irving
Marriott DFW Airport, Irving
Proposed Convention Hotel, Irving
Hawthorn Suites, Killeen
Residence Inn, Killeen
Hampton Inn, Laredo
Proposed NYLO, Las Colinas
Proposed Campus Hotel, Lubbock
Embassy Suites, McAllen
Proposed Hotel, McKinney
Holiday Inn, New Braunfels
Best Western, Odessa
Proposed NYLO, Plano
Courtyard by Marriott, Richardson
Hampton Inn, Richardson
Proposed Hotel, Riviera
DoubleTree, San Antonio
Homewood Suites, San Antonio
JW Marriott Hill Country, San Antonio
Marriott Plaza, San Antonio
Proposed aloft, San Antonio
Residence Inn by Marriott Airport, San
Antonio
Staybridge Suites, Stafford
Marriott Hotel & Conference Center,
Sugar Land
Residence Inn, Temple
Holiday Inn, Tyler
Residence Inn by Marriott, Tyler
Courtyard by Marriott, Waco
UTAH
Crystal Inn, Brigham City
Cottonwood
Suburban Lodge, Midvale
Brookfield Inn, Park City
Chateaux at Silver Lake, Park City
Olympia Park, Park City
Park City Peaks, Park City
The Lodges at Deer Valley, Park City
Comfort Inn Airport, Salt Lake City
Crystal Inn, Salt Lake City
15
Embassy Suites, Salt Lake City
Hilton Airport, Salt Lake City
Hilton Downtown, Salt Lake City
Holiday Inn Express, Salt Lake City
Peery Hotel, Salt Lake City
Proposed Comfort Suites, Salt Lake
City
Proposed Courtyard by Marriott, Salt
Lake City
Proposed Embassy Suites, Salt Lake
City
Proposed Hilton Garden Inn, Salt Lake
City
Salt Lake City
Quality Inn, Salt Lake City
Quality Inn Midvalley, Salt Lake City
Residence Inn by Marriott, Salt Lake
City
Residence Inn City Center, Salt Lake
City
University Park, Salt Lake City
Holiday Inn Express & Suites, Sandy
Proposed Embassy Suites, Sandy
Suburban Lodge, S. Salt Lake City
Proposed Cambria Suites, S. Jordan
Bottle Hollow Resort, Uinitah
VERMONT
Fairfield Inn by Marriott, Colchester
VIRGINIA
Hilton Garden Inn, Chesapeake
Super 8, Christiansburg
Holiday Inn, Covington
AmeriSuites, Glen Allen
Super 8, Harrisonburg
Holiday Inn, Lexington
Super 8, Lexington
Courtyard by Marriott, McLean
Proposed Tysons Corner Hotel,
McClean
Staybridge Suites by Holiday Inn,
McLean
Super 8, Norton
Super 8, Radford
Embassy Suites, Richmond
Westin, Richmond
Proposed MainStay Suites, Roanoke
Sheraton Airport, Roanoke
Super 8, Roanoke
Holiday Inn, Salem
Country Inn, Stafford
Super 8, Waynesboro
WYOMING
Holiday Inn, Casper
Snake River Lodge, Jackson
Proposed Resort, Teton Village
INTERNATIONAL
WASHINGTON
Canada
DoubleTree Bellevue Center, Bellevue
SpringHill Suites by Marriott, Bothell
Proposed Holiday Inn Express, Lacey
Proposed Mt. Rainer Resort, Park
Junction
Seattle
DoubleTree Spokane Valley, Spokane
Residence Inn by Marriott, Vancouver
SpringHill Suites, Wenatchee
DoubleTree, Yakima
Horseshoe Valley Ski Resort, Barrie,
Ontario
Hilton, Windsor, Ontario
Travelodge, Windsor, Ontario
Hampton Inn & Suites, Ontario
WEST VIRGINIA
Aspen Suites (Holiday Inn Express
Conversion), Charleston
Residence Inn by Marriott, Charleston
Hampton Inn, Morgantown
WISCONSIN
Proposed Country Inn, Brookfield
Wyndham Garden, Brookfield
Telemark Resort, Cable
Ramada Hotel and Conference Center,
Eau Claire
Proposed Hilton Garden, Kimberly
Madison
Proposed Marriott, Milwaukee
Milwaukee
Comfort Suites, Pewaukee
Proposed Hotel, Verona
Holiday Inn, Wauwatosa
Caribbean
Aruba Marriott & Casino, Aruba
Americana Resort, Aruba
Westin, Aruba
Holiday Inn Nassau, Bahamas
Paradise Island Fun Club, Bahamas
Little Dix Bay, Virgin Gorda, BVI
Club St. Lucia, Castries, British West
Indies
Marriott Resort, Grand Cayman,
British West Indies
Ritz Carlton San Juan, Puerto Rico
Sands Hotel & Casino, Puerto Rico
Wyndham El San Juan, Puerto Rico
Hyatt Regency St. John, USVI
Proposed Limited-Service Hotel, St.
John USVI
Westin Resort, St. John, USVI
Caneel Bay, St. John, USVI
Marriott Frenchman’s Reef and
Morningstar Resort, St. Thomas,
USVI
Mexico
Royal Sands, Cancun
16

Proposed Hotel - City of Eden Prairie

Transcription

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