HVS Market Study - DRAFT - Proposed Hotel

Transcription

MARKET STUDY
Proposed Select-Service Hotel
FLOWER MOUND, TEXAS
SUBMITTED TO:
May-2011
PROPOSED
PREPARED BY:
Ms. Melissa Glasgow
Flower Mound Economic Development
2121 Cross Timbers Road
Flower Mound, Texas, 75028
HVS Consulting and Valuation Services
Division of DFW Hospitality Consulting, LLC
2601 Sagebrush Drive, Suite 101
Flower Mound, Texas 75028
+1 972 874-6045
+1 972 899-5400
May 2, 2011
Ms. Melissa Glasgow
Flower Mound Economic Development
2121 Cross Timbers Road
Flower Mound, Texas, 75028
Re:
2601 Sagebrush Drive, Suite 101
Flower Mound, Texas 75028
Flower Mound, Texas
HVS Reference: 2011020467
Dear Ms. Glasgow:
+1 972 899-5400
+1 972 899-1057 FAX
www.hvs.com
Atlanta
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Pursuant to your request, we herewith submit our market study pertaining to the
above-captioned property. We have inspected the real estate and analyzed the
hotel market conditions in the Flower Mound, Texas area. We have studied the
proposed project, and the results of our fieldwork and analysis are presented in
this report. We have also reviewed the proposed improvements for this site. 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.
Sincerely,
DFW Hospitality Consulting, LLC
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Specialists in Hotel Consulting and
Appraisal Worldwide
Kathleen D. Donahue, Senior Project Manager
[email protected], +1 972 890-3548
Table of Contents
SECTION
1.
2.
3.
4.
5.
6.
7.
8.
9.
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
Statement of Assumptions and Limiting Conditions
Certification
PAGE
1
11
22
45
74
79
88
109
112
Addenda
Penetration Explanation
i
The Nielsen Company Demographic Snapshot
ii
Qualifications
1. Executive Summary
Subject of the
Market Study
The subject of the market study is a select-service lodging facility; the hotel is
expected to be affiliated with a nationally-franchised brand. The property is
expected to open on January 1, 2013 and is expected to feature 130 rooms, a
breakfast dining area, lobby café and lounge, 3,500 square feet of meeting space, a
pool, a whirlpool, an exercise room, a guest laundry facility, a business center, a
market pantry, and ice machine areas. The hotel will also feature all necessary
back-of-the-house space.
The proposed subject property is expected to be located within the Lakeside
Business District, Flower Mound's commercial district located at the south end of
Town. At the time of this study, a specific parcel of land had not been determined
for the hotel site. At the request of our client, The Town of Flower Mound, we have
analyzed two primary areas, the River Walk at Central Park development and the
Lakeside Business District. Following analysis of both areas, our study
recommends and assumes the Lakeside Business District is more suited for hotel
development. Primary support for this recommendation include:
•
Proximity to Dallas/Fort Worth International Airport
•
Proximity to Lake Grapevine Shoreline
•
Nearby concentration of corporations
•
Easy access to State Highway 121 and Grapevine Mills outlet mall and
surrounding uses
While we have recommended the Lakeside Business District for this study, it is
important to note that the River Walk at Central Park development area is
expanding with medical and residential development and would also be suited for
hotel use. Overall, it is our opinion a developer would choose to maximize the
corporate focus of the Lakeside Business Distinct and the proximity to airport. As
Flower Mound continues to grow and is recognized as a lodging market choice, it is
our opinion additional hotel development will be dispersed throughout other
areas of the Town.
Furthermore, a specific brand was not identified by our client as the subject of our
study. After a review of the market supply, we have recommended a first-class,
select-service hotel facility. Given the similarly in scope of facilities and amenities
May-2011
Executive Summary
Proposed Select-Service Hotel – Flower Mound, Texas
1
in nationally affiliated select-service brands, it is our opinion that the identification
of one particular brand is not pertinent to our study. The subject site’s location is
in or near the Lakeside Business District in Flower Mound, Texas.
Pertinent Dates
The effective date of the report is May 2, 2011.
Ownership, Franchise,
and Management
Assumptions
At the time of this study, the developer or specific site had yet to be determined.
The purpose of this report is to allow the Town of Flower Mound to review the
potential performance of a lodging property in the Town and assist in the
attraction of developers. The Town will have no interest in the development of the
property other than potential incentives. Given the preliminary stage of the
potential development project, we have devised certain assumptions illustrated in
this report pertaining to the location of the subject site, as well as to the scope of
the potential proposed hotel facility.
We assume that the proposed subject hotel will be managed by a professional
management company that is experienced in the operation of first-class, branded,
select-service hotels. Our findings and this study are based on the potential
development and future operation of a first-class, select-service hotel facility.
Brands within this tier include hotels such as Hyatt Place (Hyatt), Cambria Suites
(Choice Hotels), and Courtyard by Marriott (Marriott International), among others.
We note the potential brand would be subject to location and impact analysis of
the franchisor if the brand is already represented in the greater market. The
management team had not been selected as of the date of this study; therefore,
details pertaining to management terms had yet to be determined. We have
assumed a market-appropriate total management fee of 3.0% of total revenues in
our study.
We recommend that the proposed subject property be developed and operate as a
first-class, select-service hotel. A specific franchise affiliation has yet to be
selected. First-class, select-service products generally encompass similar facility
programs including limited food and beverage operations, meeting space, and
ancillary facilities. Based on expected terms, a nationally-franchised hotel is
reflected in our forecasts with a royalty fee of 5% of rooms revenue, and a
marketing assessment of 3% of rooms revenue. Reservations fees will also be due,
and are included in the rooms expense line item of our forecast.
Summary of Hotel
Market Trends
May-2011
The north-central Dallas/Fort Worth Metroplex area encompasses the
communities of Grapevine, Flower Mound, and Lewisville, among others, offering
recreational opportunities, hotels, restaurants, and retail centers. The collective
market area is ideally located adjacent to the northern entrance of the Dallas/Fort
Worth International Airport. Occupancy in this area increased from 2003 through
2005 as a result of an increase in corporate travel to the area. Furthermore, the
Executive Summary
2
Gaylord Texan opened in the spring of 2004 and began to generate a significant
amount of overflow demand for the Grapevine hotel market during its ramp-up
period. Demand experienced a correction from October 2008 through October
2009, concurrent with the corporate-travel restrictions that were put into place
during this time. Furthermore, overflow demand from the Gaylord minimized
during this period, as group travel to that facility slowed. Demand levels have now
exceeded the historic high as most travel restrictions have been lifted, the Gaylord
is experiencing strong results, and the Dallas/Fort Worth area is seen as a valuedriven, business-focused and appropriate destination for travel in the current
economic climate.
The following table provides a long-term perspective on the supply and demand
trends for a selected set of hotels, as provided by Smith Travel Research.
FIGURE 1-1
Year
2002
2003
2004
2005
2006
2007
2008
2009
HISTORICAL SUPPLY AND DEMAND TRENDS (STR)
Average Daily Available Room
Room Count
Nights
511
511
511
663
718
787
883
883
Change
Occupied Room
Nights
Change
Occupancy
Average
Rate
Change
RevPAR
Change
186,515
186,515
186,515
241,979
262,070
287,315
322,295
322,295
—
0.0 %
0.0
29.7
8.3
9.6
12.2
0.0
100,555
111,330
123,564
162,443
185,610
195,733
205,414
187,582
—
10.7 %
11.0
31.5
14.3
5.5
4.9
(8.7)
53.9 %
59.7
66.2
67.1
70.8
68.1
63.7
58.2
$87.44
81.11
85.11
95.61
106.23
115.77
118.60
104.30
—
(7.2) %
4.9
12.3
11.1
9.0
2.4
(12.1)
$47.14
48.42
56.39
64.18
75.24
78.87
75.59
60.70
—
2.7 %
16.5
13.8
17.2
4.8
(4.2)
(19.7)
322,295
344,765
—
7.0 %
187,582
221,852
—
18.3 %
58.2 %
64.3
$104.30
95.08
—
(8.8) %
$60.70
61.18
—
0.8 %
Average Annual Compounded Change:
2002-2009
8.1 %
Year-to-Date Through June
2009
2010
1,781
1,905
9.3 %
Hotels Included in Sample
Fairfield Inn & Suites DFW Airport N Grapevine
Hyatt Place Dallas Grapevine
Hampton Inn Suites DFW Airport North Grapevine
Courtyard Dallas Lewisville
Holiday Inn Express & Suites Dallas Lewisville
Comfort Suites Dallas Fort Worth Airport N
Springhill Suites DFW Airport North Grapevine
Hilton Garden Inn Dallas Lewisville
Hampton Inn Suites Dallas Lewisville Vista Ridge Mall
Total
2.6 %
Number
of Rooms
Year
Affiliated
Year
Opened
80
125
94
122
90
96
111
165
105
Aug-04
Feb-08
Dec-00
Mar-01
Jun-06
Jan-05
Jul-05
Aug-07
Jun-10
Jul 1998
Jan 2000
Dec 2000
Mar 2001
Oct 2001
Jan 2005
Jul 2005
Aug 2007
Jun 2010
3.7 %
988
Source: Smith Travel Research
May-2011
Executive Summary
3
The following tables reflect our estimates of operating data for hotels on an
individual basis. These trends are presented in greater detail in the Supply and
Demand Analysis chapter of this report.
May-2011
Executive Summary
4
FIGURE 1-2
PRIMARY COMPETITORS – OPERATING PERFORMANCE
re
Leisu
ing a
nd
Grou
p
M eet
Comm
Number
of Rooms
Property
ercia
l
Est. Segmentation
Estimated 2008
Weighted
Annual
Room
Count
Occ.
Estimated 2009
Average
Rate
Estimated 2010
RevPAR
Weighted
Annual
Room
Count
Occ.
Average
Rate
RevPAR
Weighted
Annual
Room
Count
Occ.
Average
Rate
RevPAR
RevPAR
Change
Occupancy
Yield
Penetration Penetration
Hyatt Place Grapevine
Hampton Inn & Suites Dallas DFW Airport North Grapevine
SpringHill Suites Grapevine DFW Airport North
Fairfield Inn & Suites Grapevine DFW Airport North
Comfort Suites Grapevine
125
94
111
80
96
65 % 15 %
65
15
80
5
70
5
70
5
20 %
20
15
25
25
125
94
111
80
96
60 % $121.00
67
154.00
67
133.00
67
133.00
62
112.00
$72.60
103.18
89.11
89.11
69.44
125
94
111
80
96
62 %
60
54
54
50
$105.00
127.00
117.00
117.00
95.00
$65.10
76.20
63.18
63.18
47.50
125
94
111
80
96
80 %
76
64
64
67
$86.00
114.00
107.00
107.00
82.00
$68.80
86.64
68.48
68.48
54.94
5.7 %
13.7
8.4
8.4
15.7
119.9 %
113.9
95.9
95.9
100.4
106.4 %
134.0
105.9
105.9
85.0
Sub-Totals/Averages
506
70 % 10 %
21 %
506
64.3 % $130.46
$83.91
506
56.3 %
$112.01
$63.10
506
70.8 %
$98.04
$69.36
9.9 %
106.0 %
107.3 %
Secondary Competitors
482
57 % 11 %
32 %
238
62.8 % $102.54
$64.37
238
60.7 %
$95.15
$57.77
282
59.5 %
$94.33
$56.15
(2.8) %
89.2 %
86.9 %
Totals/Averages
988
65 % 10 %
24 %
744
63.8 % $121.66
$77.65
744
57.7 %
$106.33
$61.39
788
66.7 %
$96.85
$64.64
5.3 %
100.0 %
100.0 %
FIGURE 1-3
SECONDARY COMPETITORS – OPERATING PERFORMANCE
Holiday Inn Express Dallas Lewisville
Totals/Averages
May-2011
Estimated 2008
Weighted
Total
Annual
Competitive Room
Level
Count
65 %
50
55
60
5 % 30 %
20
30
5
40
5
35
70 %
60
60
70
85
99
54
0
482
57 %
11 % 32 %
65 %
238
Leisu
re
122
165
90
105
Me e t
Number
of Rooms
Comm
ercia
l
Property
ing a
nd
Gr ou
p
Est. Segmentation
Estimated 2009
Weighted
Annual
Room
Count
Average
Rate
RevPAR
$99.00
115.00
85.00
0.00
$62.37
72.45
52.70
0.00
85
99
54
0
62.8 % $102.54
$64.37
238
Occ.
63 %
63
62
0
Estimated 2010
Average
Rate
RevPAR
Weighted
Annual
Room
Count
62 %
60
60
0
$90.00
108.00
80.00
0.00
$55.80
64.80
48.00
0.00
85
99
54
43
60.7 %
$95.15
$57.77
282
Occ.
Average
Rate
RevPAR
60 %
67
60
41
$90.00
105.00
85.00
84.00
$54.00
70.35
51.00
34.44
59.5 %
$94.33
$56.15
Occ.
Executive Summary
5
Summary of Forecast
Occupancy and
Average Rate
FIGURE 1-4
Based on our analysis presented in the Projection of Occupancy and Average Rate
chapter, we have chosen to use a stabilized occupancy level of 70% and a baseyear rate position of $100.00 for the proposed subject property. The following
table reflects a summary of our market-wide and proposed subject property
occupancy and average rate projections.
MARKET AND SUBJECT PROPERTY AVERAGE RATE FORECAST
Area-wide Market (Calendar Year)
Year
Base Year
2011
2012
2013
2014
2015
2016
Occupancy
66.7 %
69.0
71.4
67.8
69.3
70.2
70.9
Average Rate
Growth
—
-1.0 %
2.5
5.0
6.0
4.0
3.0
Subject Property (Calendar Year)
Average
Rate
Occupancy
$96.85
95.89
98.28
103.20
109.39
113.76
117.18
—
—
—
60.0 %
65.0
68.0
70.0
Average Rate
Growth
Average
Rate
Average Rate
Penetration
—
-1.0 %
2.5
5.0
6.0
4.0
3.0
$100.00
99.00
101.48
106.55
112.94
117.46
120.98
103.2 %
103.2
103.2
103.2
103.2
103.2
103.2
The following table summarizes the proposed subject property’s forecast,
reflecting fiscalization and opening-year rate discounts as applicable.
FIGURE 1-5
Year
2013
2014
2015
2016
Summary of Forecast
Income and Expense
Statement
May-2011
FORECAST OF AVERAGE RATE
Occupancy
60 %
65
68
70
Average Rate
Before Discount
$106.55
112.94
117.46
120.98
Discount
3.0 %
1.5
0.0
0.0
Average Rate
After Discount
$103.35
111.25
117.46
120.98
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 1-6
DETAILED FORECAST OF INCOME AND EXPENSE
2014
2015
Stabilized
Number of Rooms:
2013 (Calendar Year)
130
130
130
130
130
Occupancy:
60%
65%
68%
70%
70%
$103.35
$62.01
$111.25
$72.31
$117.46
$79.87
$120.98
$84.69
$124.61
$87.23
Average Rate:
RevPAR:
Days Open:
Occupied Rooms:
365
365
28,470 %Gross
PAR
POR
365
30,843 %Gross
PAR
POR
2017
365
32,266 %Gross
PAR
POR
365
33,215 %Gross
PAR
POR
33,215 %Gross
PAR
POR
REVENUE
Rooms
Food
$2,942
125
93.5 %
4.0
$22,631
962
$103.34
4.39
$3,431
138
93.9 %
3.8
$26,392
1,060
$111.24
4.47
$3,790
147
94.1 % $29,154
3.7
1,134
$117.46
4.57
$4,018
156
94.1 % $30,908
3.6
1,197
$120.97
4.68
$4,139
160
94.1 %
3.6
$31,838
1,233
$124.61
4.82
1.21
Beverage
31
1.0
241
1.10
34
0.9
265
1.12
37
0.9
283
1.14
39
0.9
299
1.17
40
0.9
308
Other Income
47
1.5
358
1.63
51
1.4
396
1.67
55
1.4
425
1.71
58
1.4
449
1.76
60
1.4
462
1.81
3,145
100.0
24,191
110.46
3,655
100.0
28,113
118.49
4,029
100.0
30,995
124.88
4,271
100.0
32,852
128.58
4,399
100.0
33,842
132.45
766
150
26.0
95.8
5,894
1,152
26.92
5.26
813
159
23.7
92.2
6,255
1,221
26.37
5.15
852
166
22.5
90.2
6,557
1,278
26.42
5.15
888
173
22.1
89.0
6,831
1,331
26.74
5.21
915
178
22.1
89.0
7,036
1,371
27.54
5.37
Total Revenues
DEPARTMENTAL EXPENSES *
Rooms
Food & Beverage
Other Expenses
Total
DEPARTMENTAL INCOME
UNDISTRIBUTED OPERATING EXPENSES
Administrative & General
18
38.6
138
0.63
19
36.7
145
0.61
20
35.6
151
0.61
20
35.0
157
0.61
21
35.0
162
0.63
934
29.7
7,184
32.81
991
27.1
7,621
32.12
1,038
25.8
7,986
32.18
1,082
25.3
8,320
32.56
1,114
25.3
8,569
33.54
2,211
70.3
17,007
77.66
2,664
72.9
20,491
86.37
2,991
74.2
23,009
92.70
3,189
74.7
24,533
96.02
3,285
74.7
25,272
98.91
12.27
345
11.0
2,650
12.10
364
10.0
2,804
11.82
382
9.5
2,935
11.82
396
9.3
3,044
11.92
408
9.3
3,136
Marketing
119
3.8
917
4.19
126
3.5
970
4.09
132
3.3
1,016
4.09
137
3.2
1,054
4.12
141
3.2
1,085
4.25
Franchise Fee
235
7.5
1,810
8.27
274
7.5
2,111
8.90
303
7.5
2,332
9.40
321
7.5
2,473
9.68
331
7.5
2,547
9.97
Prop. Operations & Maint.
113
3.6
872
3.98
133
3.7
1,026
4.33
149
3.7
1,147
4.62
158
3.7
1,213
4.75
166
3.8
1,274
4.99
Utilities
Total
159
972
5.1
31.0
1,223
7,473
5.58
34.12
168
1,067
4.6
29.3
1,294
8,206
5.45
34.59
176
1,142
4.4
28.4
1,355
8,785
5.46
35.40
183
1,195
4.3
28.0
1,405
9,189
5.50
35.97
188
1,234
4.3
28.1
1,447
9,490
5.66
37.14
1,239
39.3
9,534
43.53
1,597
43.6
12,286
51.78
1,849
45.8
14,224
57.31
1,995
46.7
15,343
60.05
2,052
46.6
15,782
61.77
94
3.0
726
3.31
110
3.0
843
3.55
121
3.0
930
3.75
128
3.0
986
3.86
132
3.0
1,015
3.97
1,145
36.3
8,808
40.22
1,488
40.6
11,442
48.23
1,728
42.8
13,294
53.56
1,866
43.7
14,358
56.19
1,920
43.6
14,767
57.80
180
42
5.7
1.3
1,384
321
6.32
1.47
183
43
5.0
1.2
1,405
331
5.92
1.40
186
44
4.6
1.1
1,433
341
5.77
1.37
192
46
4.5
1.1
1,476
351
5.78
1.37
198
47
4.5
1.1
1,520
362
5.95
1.42
HOUSE PROFIT
Management Fee
INCOME BEFORE FIXED CHARGES
FIXED EXPENSES
Property Taxes
Insurance
Reserve for Replacement
Total
NET INCOME
63
2.0
484
2.21
110
3.0
843
3.55
161
4.0
1,240
5.00
171
4.0
1,314
5.14
176
4.0
1,354
5.30
285
9.0
2,189
10.00
335
9.2
2,579
10.87
392
9.7
3,014
12.14
408
9.6
3,141
12.29
421
9.6
3,236
12.66
$6,619
$30.22
$1,152
$8,863
$37.36
$1,336
33.1 % $10,280
$41.42
$1,458
34.1 % $11,216
$43.90
$1,499
$11,531
$45.13
$860
27.3 %
31.4 %
34.0 %
*Departmental expenses are expressed as a percentage of departmental revenues.
May-2011
Executive Summary
7
FIGURE 1-7
TEN-YEAR FORECAST OF INCOME AND EXPENSE
2013
Number of Rooms:
Occupied Rooms:
Occupancy:
Average Rate:
RevPAR:
REVENUE
Rooms
Food
Beverage
Other Income
Total
DEPARTMENTAL EXPENSES*
Rooms
Food & Beverage
Other Expenses
2014
130
2015
2016
2017
2018
2019
2020
2021
2022
130
130
130
130
130
130
130
130
130
28,470
60%
$103.35 % of
30,843
65%
$111.25
% of
32,266
68%
$117.46
% of
33,215
70%
$120.98
% of
33,215
70%
$124.61
% of
33,215
70%
$128.35
% of
33,215
70%
$132.20
% of
33,215
70%
$136.17
% of
33,215
70%
$140.25
% of
33,215
70%
$144.46
% of
$62.01 Gross
$72.31
Gross
$79.87
Gross
$84.69
Gross
$87.23
Gross
$89.85
Gross
$92.54
Gross
$95.32
Gross
$98.18
Gross
$101.12
Gross
$2,942
$3,431
93.9 %
$3,790
94.1 %
$4,018
94.1 %
$4,139
94.1 %
$4,263
94.1 %
$4,391
94.1 %
$4,523
94.1 %
$4,658
94.1 %
$4,798
94.1 %
125
31
93.5 %
4.0
1.0
138
34
3.8
0.9
147
37
3.7
0.9
156
39
3.6
0.9
160
40
3.6
0.9
165
41
3.6
0.9
170
43
3.6
0.9
175
44
3.6
0.9
180
45
3.6
0.9
186
46
3.6
0.9
47
1.5
3,145 100.0
51
3,655
1.4
100.0
55
4,029
1.4
100.0
58
4,271
1.4
100.0
60
4,399
1.4
100.0
62
4,531
1.4
100.0
64
4,667
1.4
100.0
66
4,808
1.4
100.0
68
4,951
1.4
100.0
70
5,100
1.4
100.0
766
150
18
26.0
95.8
38.6
813
159
19
23.7
92.2
36.7
852
166
20
22.5
90.2
35.6
888
173
20
22.1
89.0
35.0
915
178
21
22.1
89.0
35.0
942
184
22
22.1
89.0
35.0
970
189
22
22.1
89.0
35.0
1,000
195
23
22.1
89.0
35.0
1,030
201
24
22.1
89.0
35.0
1,060
207
24
22.1
89.0
35.0
934
2,211
29.7
70.3
991
2,664
27.1
72.9
1,038
2,991
25.8
74.2
1,082
3,189
25.3
74.7
1,114
3,285
25.3
74.7
1,147
3,384
25.3
74.7
1,182
3,485
25.3
74.7
1,217
3,590
25.3
74.7
1,254
3,697
25.3
74.7
1,291
3,808
25.3
74.7
345
119
11.0
3.8
364
126
10.0
3.5
382
132
9.5
3.3
396
137
9.3
3.2
408
141
9.3
3.2
420
145
9.3
3.2
432
150
9.3
3.2
445
154
9.3
3.2
459
159
9.3
3.2
473
164
9.3
3.2
235
113
159
7.5
3.6
5.1
274
133
168
7.5
3.7
4.6
303
149
176
7.5
3.7
4.4
321
158
183
7.5
3.7
4.3
331
166
188
7.5
3.8
4.3
341
174
194
7.5
3.8
4.3
351
183
200
7.5
3.9
4.3
362
188
206
7.5
3.9
4.3
373
194
212
7.5
3.9
4.3
384
200
218
7.5
3.9
4.3
Total
HOUSE PROFIT
972
1,239
31.0
39.3
1,067
1,597
29.3
43.6
1,142
1,849
28.4
45.8
1,195
1,995
28.0
46.7
1,234
2,052
28.1
46.6
1,274
2,110
28.1
46.6
1,316
2,170
28.2
46.5
1,355
2,235
28.2
46.5
1,396
2,301
28.2
46.5
1,438
2,371
28.2
46.5
Management Fee
FIXED EXPENSES
94
1,145
3.0
36.3
110
1,488
3.0
40.6
121
1,728
3.0
42.8
128
1,866
3.0
43.7
132
1,920
3.0
43.6
136
1,974
3.0
43.6
140
2,030
3.0
43.5
144
2,091
3.0
43.5
149
2,153
3.0
43.5
153
2,218
3.0
43.5
180
42
63
5.7
1.3
2.0
183
43
110
5.0
1.2
3.0
186
44
161
4.6
1.1
4.0
192
46
171
4.5
1.1
4.0
198
47
176
4.5
1.1
4.0
204
48
181
4.5
1.1
4.0
210
50
187
4.5
1.1
4.0
216
51
192
4.5
1.1
4.0
222
53
198
4.5
1.1
4.0
229
55
204
4.5
1.1
4.0
285
9.0
335
9.2
Total
DEPARTMENTAL INCOME
Marketing
Franchise Fee
Utilities
Property Taxes
Insurance
Total
NET INCOME
$860 27.3 %
$1,152
31.4 %
1
1
May-2011
392
$1,336
1
9.7
33.1 %
408
$1,458
1
9.6
34.1 %
421
$1,499
1
9.6
34.0 %
433
$1,541
1
9.6
34.0 %
446
$1,583
1
9.6
33.9 %
460
$1,631
1
9.6
33.9 %
473
$1,680
1
9.6
33.9 %
488
$1,730
1
Executive Summary
9.6
33.9 %
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 DFW Hospitality
Consulting, LLC. Information was also supplied by the client.
2.
The general location of the subject site has been evaluated from the
viewpoint of its access, visibility, and other relevant factors.
3.
The subject property's proposed improvements represent a recommended
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
May-2011
Executive Summary
9
May-2011
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.
While the specific site of the proposed subject property had not been selected at
the time of this study, the subject site is expected to be located in or near Flower
Mound's Lakeside Business District, in the southern portion of Town. This site is in
the Town of Flower Mound, Texas.
AREAS OF STUDY FOR
SITE SELECTION
May-2011
At the request of our client, we have analyzed two areas of study for the potential
development of the proposed hotel. The River Walk at Central Park is located in
the northeast quadrant of the intersection formed by FM 2499 and Cross Timbers
Road. The Lakeside Business District is located in the general vicinity of Lakeside
Parkway and FM 2499. A summary of each area’s characteristics are presented on
the following pages.
11
MAP OF AREAS OF STUDY FOR SITE RECOMMENDATION
River Walk at Central
Park
May-2011
The River Walk at Central Park was planned as Flower Mound’s 21st century
downtown, integrating commercial and residential uses within a 158-acre
development. However, the turbulence of the economic climate in 2008 and 2009
affected development plans and pace. In 2010, about 149 acres of the 158-acre
property were listed in foreclosure. However, The Texas Health Presbyterian
Hospital opened in 2010, and ground has been broken on the three-phase River
Walk Medical Park and River Walk at Central Park Apartments. The following
illustration shows the concept phasing plan for the mixed-use development. A
major retail grocer is rumored for development in the southwest portion of the
development.
12
RIVER WALK AT CENTRAL PARK – CONCEPT PLAN PHASING
May-2011
13
In our review of the area, we identified advantages and disadvantages for future
hotel development in or near the River Walk at Central Park development. The
primary advantage of this location would be the proximity to Texas Health
Presbyterian Hospital, River Walk Medical Park, and other medical facilities. The
site’s central location in the heart of Flower Mound is ideal for users visiting
friends or relatives, local meetings and functions, and social events such as
weddings. The completion of FM 2499 Section 4 (a four-lane, 4.7-mile stretch of
road that includes two bridges over the far western portions of Lake Lewisville
between FM 407 in Highland Village and FM 2181 in Corinth) connects the
Highland Village/Flower Mound communities and the Corinth area, and the nearby
cities and towns of Denton, Lake Dallas, Hickory Creek and Shady Shores. As such,
the River Walk at Central Park area would be easily accessible to many
communities. The proximity of a heavy retail concentration near FM 299 and FM
407 is a positive attribute of this location as well. Accessibility from the airport
and major interstates and highways was also reviewed. This location is roughly
seven miles north of State Highway 121 and Dallas/Fort Worth International
Airport. Interstate 35E is approximately four miles to the east, while Interstate
35W is located roughly ten miles to the west.
While the general location of River Walk at Central Park would be conducive to
hospital demand and leisure travelers associated with local social functions and
area attractions, the location is considered somewhat distanced from the area’s
regional access routes. The location seven miles north of the airport could be
considered a disadvantage in regard to demand related to the airport. This type of
demand is a significant source for hotels in the North Dallas/Fort Worth
International Airport area given their proximity to the facility and ease of
accessibility.
Lakeside Business
District
May-2011
Eight business centers comprise the 1,500-acre Lakeside Business District. This
commercial district is located within three miles of the Dallas/Fort Worth
International Airport and experienced an investment by the Town of Flower
Mound of $25 million in public improvements that include new road construction
and water and sewer extensions.
14
LAKESIDE BUSINESS DISTRICT
Similar to our analysis of the River Walk at Central Park area, we identified
advantages and disadvantages for future hotel development in or near the
Lakeside Business District. The primary advantage of this location would be the
proximity to area corporations within the Lakeside Business District and the
Dallas/Fort Worth International Airport. The site’s location in the southern
portion of Flower Mound also allows for easy access to State Highway 121, which
connects to several of the Metroplex’s major roadways. The presence of the
Grapevine Mills outlet mall and additional retail and dining uses within two miles
is considered another advantage of this location. The lack of a wide range of retail
and dining choices within the immediate vicinity of the Lakeside Business District
has been considered a disadvantage, but the inclusion of a café and lounge in the
hotel’s planned concept helps mitigate this attribute.
May-2011
15
A hotel within the Lakeside Business District area would have a corporate focus
stemming from nearby corporations and the airport. The stability of airportrelated demand would be a positive attribute of development in this area.
Conclusion of Site Area
Recommendation
Following a review of the two areas, we have identified the Lakeside Business
District area as the area more suited for hotel development at the time of this
study due to the anticipated corporate/commercial focus associated with this
location versus a medical and leisure orientation of the River Walk at Central Park
location.
Physical Characteristics
A specific subject site has not been determined for the project. While site size can
vary with varying types of construction configuration, we would expect the hotel
site to span roughly two acres.
Primary vehicular access to the proposed subject property is expected to be
provided by FM 2499 or a cross street of this roadway. The topography and shape
of the selected site is unknown at this time due to identification of location by a
general area only.
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 site
is readily accessible to a variety of local, county, state, and interstate highways.
May-2011
16
MAP OF REGIONAL ACCESS ROUTES
Primary regional access routes serving the Dallas/Fort Worth Metroplex include
Interstates 20, 30, 35, and 45, as well as U.S. Highways 67, 75, and 287. Interstate
20 traverses the southern sector of the metro area and extends to such cities as
Abilene and Midland to the west and Shreveport, Louisiana to the east. Interstate
30 commences in west Fort Worth and, after serving as a major east/west route
through the metro area, extends in a northeasterly direction to Greenville and
Texarkana. Interstate 35, which divides into eastern and western sections when
passing through the respective Dallas and Fort Worth metro areas, provides access
to Oklahoma City to the north and Austin and San Antonio to the south. Interstate
45 commences near Downtown Dallas and extends in a southeasterly direction,
providing access to the Houston metropolitan area. The subject market is served
by a variety of additional local highways, which are illustrated on the map.
The area enjoys a well-developed network of local roadways, highways, and
interstates. State Highways 114 and 121 and Interstates 635, 35W, and 35E
facilitate travel between Flower Mound and the principal concentrations of
May-2011
17
business activity and population in the region. From State Highway 121, motorists
take the FM 2499 Exit and proceed north on this thoroughfare for approximately
three miles before reaching the Lakeside Business District area. The proposed
subject property is expected to be located near a major interchange of FM 2499
and have adequate signage at the street; thus, the proposed hotel should benefit
from very good visibility from within its local neighborhood. Overall, the subject
site is expected to benefit from very good accessibility, and the proposed hotel is
anticipated to enjoy very good visibility attributes.
Airport Access
The proposed subject property will be well served by the Dallas/Fort Worth
International Airport, which is located approximately three miles to the south of
Flower Mound. From the airport, motorists will follow signs to State Highway 121
and travel north on this thoroughfare to FM 2499. Motorists will then proceed
northbound on FM 2499, continuing to the subject site. As noted previously, the
location of the subject property has only been indentified within a general area,
the Lakeside Business District. The proposed subject property will also be served
by Dallas Love Field, which is located approximately 15 miles to the southeast of
Flower Mound.
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.
The subject neighborhood is generally defined by Flower Mound Road to the
north, Grapevine Lake to the west, Sandy Lake Road to the south, and Valley
Parkway to the east. In general, this neighborhood is in the stable stage of its life
cycle, with pockets of growth having occurred in the residential, special-use, and
retail sectors in the past two years. Within the proximity of the proposed site area,
land use is primarily commercial in nature. Anchored by the Lakeside Business
District, businesses in the area include Stryker Communications, Best Buy
Distribution, Ivie & Associates, and ThermoTek.
There are few restaurants within immediate proximity of the Lakeside Business
District. However, there is a Starbucks, Sonic, and Jack in the Box near FM 2499
and Sandy Lake Road. Additionally, The Pines of Flower shopping center, located
at Flower Mound Road and Gerault Road, offers various dining choices such as
Agave Azul, Lazy Dogz Grill, Straw Hat Pizza, and Subway. Newer developments in
this neighborhood include the Flower Mound Community Activity Center, Verde
Walk Apartments, and small strip retail centers. To the south of the neighborhood,
a major change in the area is the construction of the DFW Connector, which began
in February of 2010 and is intended to increase mobility along State Highways 114
May-2011
18
and 121. When complete in 2014, this 14.4-mile, $1.02-billion project will have
rebuilt the corridor through Southlake, Grapevine, and the north side of the
Dallas/Fort Worth International Airport. In general, we would characterize the
neighborhood as 40% office/retail use, 25% residential use, 25% vacant, and 10%
other. The proposed subject property's opening should be a positive influence on
the area; the hotel will be in character with and will complement surrounding land
uses.
MAP OF NEIGHBORHOOD
Overall, the supportive nature of the development in the immediate area is
considered appropriate for and conducive to the operation of a hotel.
Utilities
May-2011
The subject site is expected to be served by all necessary utilities. We assume that
these will be acquired from the most cost-effective providers within the local
market.
19
Soil and
Subsoil Conditions
As the specific site has not been identified, geological and soil reports were not
available to us or made available for our review during the preparation of this
report. We assume that no extraordinary conditions will be apparent prior to
construction.
Nuisances
and Hazards
We assume that there will be no site-specific nuisances or hazards or toxic ground
contaminants. An independent analysis of these factors should be completed prior
to construction.
Flood Zone
A specific subject site has not been determined; therefore, the flood zone cannot be
determined. The Federal Emergency Management Agency map numbers for the
area are illustrated below. A flood certification should be obtained when a specific
site is identified.
FEDERAL EMERGENCY MANAGEMENT AGENCY MAP PANELS
May-2011
20
Zoning
We assume the zoning designation of the site will allow for most commercial uses,
including small office complexes, retail centers, service industries, and hotels and
motels. We assume that all necessary permits and approvals will be secured
(including an 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. The zoning designations for the
Lakeside Business District, as published by the Town of Flower Mound Planning
Department, are illustrated below.
LAKESIDE BUSINESS DISTRICT ZONING MAP
A zoning analysis should be completed before any physical changes are made to
the site.
Easements and
Encroachments
We have assumed that there will be no easements attached to the property that
would significantly affect the utility of the site or marketability of this project.
Conclusion
We have not analyzed the issues of size, topography, access, visibility, and the
availability of utilities for a specific site. The subject site is expected to be located
in the general location of the Lakeside Business District and within easy access of
FM 2499, a major north/south roadway in Flower Mound. In general, the site
should be well suited for future hotel use, with acceptable access, visibility, and
topography for an effective operation.
May-2011
21
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
May-2011
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 is located
in the Town of Flower Mound, the county of Denton, and the state of Texas. We
note that a small portion of the Town is located in Tarrant County. As part of the
greater Dallas/Fort Worth Metropolitan area, Flower Mound derived its name
from a prominent 12.5-acre mound, "The Mound," that was once covered with
bluestem grasses and a variety of indigenous flowers. Flower Mound is located
primarily within Denton County, with a small portion occupying and bordering
Tarrant County to the south. Encompassing 46 square miles, the Town is situated
26 miles northwest of Dallas, 25 miles northeast of Fort Worth, and three miles
north of the Dallas/Fort Worth International Airport. Denton County offers two
major universities, Texas Women's University and University of North Texas, as
well as campuses of North Texas College in Corinth and Flower Mound. Today, the
Town is home to more than 1,000 businesses and continues to experience
economic and neighborhood growth.
22
FLOWER MOUND
The proposed subject property’s market area can be defined by its Combined
Statistical Area (CSA): Dallas-Fort Worth, TX. 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.
May-2011
23
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.
May-2011
24
FIGURE 3-1
ECONOMIC AND DEMOGRAPHIC DATA SUMMARY
Average Annual
Compounded Change
1990-00 2000-10 2010-15
1990
2000
2010
2015
Resident Population (Thousands)
Denton County
Dallas-Fort Worth-Arlington, TX MSA
State of Texas
United States
276.4
4,014.3
17,056.8
249,622.8
439.0
5,196.2
20,946.0
282,172.0
679.5
6,561.1
25,205.7
310,009.2
783.9
7,134.1
27,346.7
325,343.4
Per-Capita Personal Income*
Denton County
State of Texas
United States
$25,920
28,578
23,924
26,826
$37,070
38,041
31,750
33,770
$32,235
35,280
32,559
35,336
$34,613
37,667
34,611
37,559
3.6
2.9
2.9
2.3
(1.4)
(0.8)
0.3
0.5
1.4
1.3
1.2
1.2
W&P Wealth Index
Denton County
State of Texas
United States
106.0
110.3
92.0
100.0
118.6
115.0
95.1
100.0
98.8
102.2
92.4
100.0
99.4
102.5
92.4
100.0
1.1
0.4
0.3
0.0
(1.8)
(1.2)
(0.3)
0.0
0.1
0.1
(0.0)
0.0
Food and Beverage Sales (Millions)*
Denton County
State of Texas
United States
$211
5,073
17,379
257,805
$449
7,496
25,694
341,525
$775
10,231
33,765
409,983
$900
11,152
36,899
434,221
7.9
4.0
4.0
2.9
5.6
3.2
2.8
1.8
3.0
1.7
1.8
1.2
Total Retail Sales (Millions)*
Denton County
State of Texas
United States
$2,435
49,759
179,748
2,620,710
$5,062
74,167
269,662
3,613,909
$7,346
87,895
313,269
3,880,980
$8,956
101,091
360,785
4,325,045
7.6
4.1
4.1
3.3
3.8
1.7
1.5
0.7
4.0
2.8
2.9
2.2
4.7 %
2.6
2.1
1.2
4.5 %
2.4
1.9
0.9
2.9 %
1.7
1.6
1.0
* Inflation Adjusted
Source: Woods & Poole Economics, Inc.
May-2011
25
The U.S. population has grown at an average annual compounded rate of 0.9%
from 2000 through 2010. The county’s population has grown at a quicker pace
than the nation’s population; the average annual growth rate of 4.5% between
2000 and 2010 reflects a rapidly expanding area. Following this population trend,
per-capita personal income decreased slowly, at -1.4% on average annually for the
county between 2000 and 2010. Local wealth indexes have remained stable in
recent years, registering a relatively near average 98.8 level for the county in 2010.
Food and beverage sales totaled $775 million in the county in 2010, versus $449
million in 2000. This reflects a 5.6% average annual change, which compares to
the average annual change of 3.0%, which is forecast through 2015. Retail sales
totaled $7,346.4 million in the county in 2010, versus $5,061.9 million in 2000.
This represents an average annual change of 3.8%. A modestly slower 4.0%
average annual change is expected in county retail sales through 2015.
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 1990, 2000, and 2010, as well as a forecast for 2015.
May-2011
26
FIGURE 3-2
HISTORICAL AND PROJECTED EMPLOYMENT (000S)
Average Annual
Compounded Change
Percent
of Total
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
2.0
0.2
0.6
0.4
5.1
12.4
17.2
3.3
13.9
1.2
2.5
3.1
3.0
32.9
4.7
0.2
4.8
1.0
6.7
2.0
6.3
7.3
18.2
0.7
1.0
16.4
2.1 %
0.2
0.6
0.4
5.1
12.6
17.4
3.3
14.1
1.2
2.5
3.1
3.1
33.3
4.7
0.2
4.8
1.0
6.8
2.0
6.4
7.4
18.4
0.8
1.0
16.6
2.8
0.5
0.7
0.7
12.9
14.8
30.6
7.2
23.5
3.1
4.3
6.0
5.6
56.1
7.8
0.2
10.3
1.8
11.2
3.5
11.3
10.1
25.8
1.2
1.1
23.4
1.7 %
0.3
0.4
0.4
7.9
9.0
18.7
4.4
14.3
1.9
2.6
3.7
3.4
34.3
4.8
0.1
6.3
1.1
6.8
2.1
6.9
6.2
15.7
0.7
0.7
14.3
2.8
0.5
2.2
0.7
13.0
12.1
38.4
9.5
28.9
5.6
4.3
11.3
10.3
102.6
16.3
1.2
16.4
3.6
22.2
6.1
21.4
15.5
35.2
1.6
1.5
32.1
1.2 %
0.2
0.9
0.3
5.4
5.1
16.1
4.0
12.1
2.3
1.8
4.7
4.3
42.9
6.8
0.5
6.8
1.5
9.3
2.6
9.0
6.5
14.7
0.7
0.6
13.4
TOTAL
98.7
100.0 %
163.7
100.0 %
239.1
100.0 %
2,509.5
138,331.0
—
—
3,423.8
165,371.0
—
—
2010
Percent
of Total
1990
MSA
U.S.
2000
Percent
of Total
Industry
3,956.0
174,062.6
—
—
Percent
2015 of Total
2.8
0.6
2.4
0.8
14.3
12.5
42.4
11.3
31.1
6.6
4.7
13.8
11.1
120.5
20.2
1.4
19.1
4.1
26.4
6.8
24.8
17.7
37.0
1.8
1.5
33.7
1990-2000 2000-2010 2010-2015
1.0 %
0.2
0.9
0.3
5.3
4.6
15.7
4.2
11.5
2.5
1.7
5.1
4.1
44.7
7.5
0.5
7.1
1.5
9.8
2.5
9.2
6.6
13.7
0.7
0.6
12.5
3.2 %
8.9
1.4
6.1
9.8
1.8
5.9
8.0
5.4
10.5
5.5
6.8
6.2
5.5
5.3
2.9
8.0
5.6
5.3
5.6
6.0
3.3
3.6
5.1
1.0
3.6
0.1 %
1.7
12.2
0.6
0.0
(2.0)
2.3
2.9
2.1
5.9
0.2
6.6
6.4
6.2
7.6
18.0
4.7
7.3
7.1
5.8
6.6
4.4
3.2
3.0
2.9
3.2
0.2 %
1.5
1.5
0.9
2.0
0.6
2.0
3.6
1.4
3.5
1.4
4.1
1.6
3.3
4.5
2.9
3.1
3.0
3.5
2.2
3.0
2.7
1.0
1.4
0.2
1.0
269.4 100.0 %
5.2 %
3.9 %
2.4 %
3.2 %
1.2
1.5 %
0.5
1.8 %
1.4
4,324.4
186,999.8
—
—
Source: Woods & Poole Economics, Inc.
May-2011
27
Woods & Poole Economics, Inc. reports that during the period from 1990 to 2000,
total employment in the county grew at an average annual rate of 5.2%. This trend
was above the growth rate recorded by the MSA, and outpaced the national
average, reflecting the expanding nature of the local economy during that decade.
Most recently, the pace of total employment growth in the county slowed to 3.9%
on an annual average from 2000 to 2010.
Of the primary employment sectors, Total Services recorded the highest increase
in number of employees during the period from 2000 to 2010, increasing by
46,454 people, or 82.8%, and rising from 34.3% to 42.9% of total employment. Of
the various service sub-sectors, Health Care And Social Assistance and
Accommodation And Food Services were the largest employers. Strong growth
was also recorded in the Total Government sector, as well as the Total Trade
sector, which expanded by 85.3% and 25.4%, respectively, in the period 2000 to
2010. Forecasts developed by Woods & Poole Economics, Inc. anticipate that total
employment in the county will change by 2.4% on average annually through 2015.
The trend is above the forecast rate of change for the U.S. as a whole during the
same period.
Radial Demographic
Snapshot
May-2011
The following table reflects radial demographic trends for our market area
measured by three points of distance from a point along FM 2499 in the Lakeside
Business District.
28
FIGURE 3-3
DEMOGRAPHICS BY RADIUS
0.00 - 1.00
miles
0.00 - 3.00
miles
0.00 - 5.00
miles
2015 Projection
3,869
60,846
219,941
2010 Estimate
3,242
51,578
189,735
2000 Census
2,245
36,957
141,975
1990 Census
441
10,659
73,120
Growth 2010-2015
19.34%
17.97%
15.92%
Growth 2000-2010
44.41%
39.56%
33.64%
Growth 1990-2000
409.07%
246.72%
94.17%
2015 Projection
1,258
19,868
77,855
2010 Estimate
1,065
17,003
67,415
2000 Census
757
12,406
50,813
1990 Census
160
3,834
26,941
Growth 2010-2015
18.12%
16.85%
15.49%
Growth 2000-2010
40.69%
37.05%
32.67%
Growth 1990-2000
373.13%
223.58%
88.61%
$155,496
$134,376
$108,078
131,250
113,861
87,261
51,161
44,382
38,475
1,646
27,647
105,930
Architect/Engineer
32
680
2,293
Arts/Entertain/Sports
46
726
2,148
Building Grounds Maint
17
225
1,616
Business/Financial Ops
147
2,509
8,462
4
166
934
100
1,928
5,973
Population
Households
Income
2010 Est. Average Household Income
2010 Est. Median Household Income
2010 Est. Per Capita Income
2010 Est. Civ Employed Pop 16+ by Occupation
Community/Soc Svcs
Computer/Mathematical
Construction/Extraction
40
510
3,349
Edu/Training/Library
85
1,645
6,379
Farm/Fish/Forestry
0
1
10
Food Prep/Serving
42
833
4,312
Health Practitioner/Tec
76
1,178
3,551
Healthcare Support
6
185
1,009
Maintenance Repair
46
580
3,348
Legal
21
252
749
Life/Phys/Soc Science
24
244
877
Management
318
5,123
16,252
Office/Admin Support
229
3,394
14,767
Production
31
695
3,463
Protective Svcs
26
402
1,758
261
4,485
16,456
Personal Care/Svc
42
941
3,873
Transportation/Moving
52
947
4,352
Sales/Related
Source: Claritas, Inc.
May-2011
29
This source reports a population of 189,735 within a five-mile radius of the subject
property, and 67,415 households within this same radius. Average household
income within a five-mile radius of the subject property is currently reported at
$108,078, while the median is $87,261.
Within the addenda of this report, a demographic report for the entire Town of
Flower Mound has been included.
Roadway Projects
Major Business and
Industry
May-2011
The population growth of Flower Mound has spurred increased roadway
improvements to improve traffic flow through the Town and facilitates ingress and
egress from and to other parts of the Metroplex. Most recently, the completion of
Section 4 of FM 2499 in Highland Village included the bridge that connects FM
2499 with FM 2181 in Corinth, traversing a portion of Lewisville Lake. This
roadway improvement has improved north/south travel in the area, allowing for
between exposure of businesses along FM 2499. The following bullet points
highlight major roadway projects within the Town of Flower Mound:
•
FM 1171 - Phase 1 (under construction) of this Texas Department of
Transportation project will consist of the widening of the existing two-lane
roadway to a six-lane divided thoroughfare from FM 2499 to Shiloh Road.
Future Phase 2 extends the improvements from Shiloh to U.S. Highway 377,
and Future Phase 3 extends the improvements from U.S. Highway 377 to
Interstate 35W.
•
Morriss Road/Gerault Road – Under construction, this project consists of the
addition of two inside lanes (one northbound and one southbound) to Gerault
Road between FM 2499 and FM 3040 and improving the intersections at FM
407, FM 1171, and FM 3040. Additionally, traffic signals will be added to the
intersections with Spinks Road, Garden Road, Sagebrush Drive, and Buckeye
Drive. This project will also add landscaping to the medians, provide for new
sidewalk in locations where there previously was no existing sidewalk, widen
most existing sidewalks to six feet, and replace existing wooden fences along
the Morriss/Gerault corridor from FM 2499 to FM 407.
•
FM 2499/Gerault Road Fly-Over Bridge – Near the intersection of FM 2499
and Gerault Road, piers are under construction for a new fly-over bridge.
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.
30
FIGURE 3-4
MAJOR EMPLOYERS
Rank
1
2
3
4
5
6
7
8
9
10
Firm
Lewisville Independent School District
Town of Flower Mound
Stryker Communications
Texas Health Presbyterian Hospital Flower Mound
Communication Test Design, Inc (CTDI)
Best Buy Distribution & Service Center
Ivie & Associates
Premier Manufacturing
HD Supply
Kroger
Number of
Employees
1,647
466
315
288
205
185
180
140
132
115
Source: Town of Flower Mound Economic Development, 2011
The following bullet points highlight major demand generators for this market:
•
May-2011
Medical-related development has flourished in Flower Mound. The Texas
Health Presbyterian Hospital opened on April 30, 2010 and offers 103 beds in
an approximately 182,000-square-foot facility. The campus occupies a twelveacre site and is the first development in The River Walk at Central Park, a
planned development on FM 2499/Long Prairie Road near the intersection
with Windsor Drive. The facility received a LEED NC 2.2 certification, which
designated it as the first official “green” hospital in Texas. Located across FM
2499, the 24-hour Flower Mound Emergency Center opened in December of
2009. The center is affiliated with Medical Center of Lewisville and offers
twelve beds, a trauma/code room, two negative-pressure rooms, and a
laboratory with blood bank. In February of 2011, Continuum Rehabilitation
Hospital opened a new 55,000-square-foot rehabilitation facility in the
southwest quadrant of FM 2499 and Cross Timbers Road, along Peters Colony
Road. Orthopedic Associates is developing a 45,000-square-foot office
building north of the hospital at FM 2499 and College Parkway. Rainier
Medical Investments purchased 21 acres adjacent to the hospital and broke
ground in December of 2010 on the River Walk Medical Park I building, an
84,000-square-foot structure that will be attached to the hospital. The project
is scheduled to be completed by the fall of 2011. In addition to the new
hospital and other larger facilities, the area is replete with smaller medical
offices that offer specialty practices and services that complement health care.
31
TEXAS HEALTH PRESBYTERIAN HOSPITAL
FLOWER MOUND EMERGENCY CENTER
CONTINUUM REHABILITATION HOSPITAL
ORTHOPEDIC ASSOCIATES
•
May-2011
The southern border of Flower Mound serves as the community's campus
commercial district. Located within three miles of Dallas/Fort Worth
International Airport, the 1,500-acre Lakeside Business District includes
several business centers such as Lakeside DFW, Corporate Ridge, Lakeside
Trade Center, Cornerstone, Lakeside Ranch, Lakeside International, and
Lakeside Commerce Center. With an investment of $25 million in public
improvements to encourage development in the district, the Town has
successfully attracted high-quality development. Companies within the
32
complex include Stryker Communications, Best Buy Distribution, and Stacy
Furniture, among others. In April of 2010, Mohawk Industries opened a new
distribution, sales, and operations center in Lakeside Trade Center Building
Four. In addition to housing the national distribution center, the 258,372square-foot facility will house Mohawk's south-central regional operations
offices and regional sales offices. In addition to the south end of Town, Flower
Mound has designated the west end of Town for mixed-use residential and
commercial development.
The Denton Creek District encompasses
approximately 1,500 acres; future land uses are expected to include retail,
office, campus commercial/industrial, and some residential. High-quality
office space is also available in numerous office parks and developments in the
Town, including Fountain Park, Sagebrush Office Park, and Parker Square.
•
The presence of Dallas/Fort Worth International Airport just south of Flower
Mound/Grapevine/Lewisville generates significant levels of demand for area
hotels. In addition, global and national corporations, associations, and
organizations find the airport’s central location convenient for hosting
planning, training, and strategy meetings in the Dallas/Fort Worth Metroplex.
Recessionary influences negatively impacted several industries in the North
Dallas/Fort Worth International Airport area in 2008 and 2009, similar to trends
throughout the U.S. However, the Dallas/Fort Worth Metroplex economy benefits
from diverse economic drivers; furthermore, indications of a recovery are
manifesting as the national economic climate improves. Increased passenger
traffic at Dallas/Fort Worth International Airport, new development of
entertainment attractions planned for the Gaylord Texan Resort & Convention
Center and Grapevine Mills Mall, and the resurgence of leisure demand to the area
should contribute to this market's continued strength and expansion. Overall, the
area is benefiting from an emerging recovery.
Unemployment
Statistics
May-2011
The following table presents historical unemployment rates for the proposed
subject property’s market area.
33
FIGURE 3-5
UNEMPLOYMENT STATISTICS
Year
County
MSA
State
U.S.
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
3.5 %
5.0
5.3
4.6
4.6
4.2
3.9
4.5
7.2
7.5(E)
4.7 %
6.5
6.6
5.8
5.2
4.8
4.3
5.0
7.8
8.3(E)
5.0 %
6.4
6.7
6.0
5.4
4.9
4.4
4.9
7.6
8.2(D)
4.7 %
5.8
6.0
5.5
5.1
4.6
4.6
5.8
9.3
9.6
Recent Month - February
2010
7.7 %
2011
7.4
8.5 %
8.1
8.4 %
8.2
9.7 %
8.9
* 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
The unemployment rate for the U.S. fluctuated within the narrow range of 4% to
6% in the period spanning 1997 to 2007. The recession that began in late 2007,
and the subsequent financial crisis in 2008, forced many businesses to downsize
or cease operations. Over seven million jobs were lost between 2008 and 2009; as
a result, the national unemployment rate reached 10.0% in the fourth quarter of
2009. However, beginning in the fourth quarter of 2009, the pace of job losses
slowed dramatically and the national economy began to exhibit positive trends.
Job growth resumed in January of 2010, and excluding the fluctuations related to
the loss of temporary jobs associated with the 2010 Census collection of data, the
pace of job growth improved during the remainder of 2010, with the
unemployment rate declining to 9.6 for 2010. Non-farm employment payrolls
showed job growth for eight of the twelve months of 2010. Forecasts for 2011
anticipate an accelerating pace of job growth throughout the year, barring any
unforeseen international economic crisis. Nevertheless, it is expected to take
several years to regenerate the jobs that were lost during the recession, and most
economists expect unemployment to remain heightened over the near term.
Locally, the unemployment rate was 7.5(E)% in 2010; for this same area in 2011,
the most recent month’s unemployment rate was registered at 7.4%, versus 7.7%
for the same month in 2010.
May-2011
34
Unemployment rates in this area fluctuated mid-decade and then increased
slightly in 2008, followed by a more notable increase in 2009, primarily due to the
weakening national economy. The most recent comparative period illustrates that
unemployment has decreased slightly and still falls below the national level.
Within Denton County, local employment has been strong at public employers
such as University of North Texas and the Lewisville Independent School District.
Within the greater area, employment in the Dallas/Fort Worth International
Airport area has remained strong. Our interviews with economic development
officials and our research reflect an optimistic outlook as the economy is
anticipated
to
emerge
from
recessionary
conditions
this
year.
Office Space Statistics
May-2011
Trends in occupied office space are typically among the most reliable indicators of
lodging demand, because 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 commercial lodging demand, and a less direct effect on meeting
demand. The following table details office space statistics for the pertinent market
area.
35
FIGURE 3-6
OFFICE SPACE STATISTICS
Submarket
Dallas CBD
Fort Worth CBD
Central Expressway
Denton
East Dallas
Far North Dallas
Far Northeast Dallas
Grapevine/Southlake
Hurst/Euless/Bedford
Las Colinas/Irving
LBJ Freeway
Lewisville/Flower Mound
N. Arlington/Grand Prairie
North Fort Worth
Northeast Fort Worth
Preston Center
Richardson/Plano/Allen
S. Arlington/Grand Prairie
South Dallas
Southeast Fort Worth
Stemmons
Uptown/Turtle Creek
West Fort Worth
West Plano/Frisco
Totals
Net Rentable
Area (SF)
Under
Construction (SF)
26,638,741
8,741,655
10,411,162
399,047
2,392,796
18,391,344
505,455
2,606,740
3,359,130
25,045,887
22,647,068
2,970,251
3,824,455
895,003
986,913
3,284,885
14,474,912
2,316,375
1,233,905
154,636
7,158,962
12,125,840
4,367,680
13,255,179
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
352,876
26.3 %
7.5
19.4
10.4
16.7
24.9
35.9
33.8
23.8
22.4
26.2
26.4
20.6
8.5
13.1
13.5
26.5
13.2
19.5
22.8
39.8
20.6
12.1
19.2
$21.71
27.42
22.63
19.79
17.51
23.71
22.77
27.32
18.72
21.76
21.90
24.50
20.24
17.96
20.25
31.60
22.02
18.99
16.66
13.58
17.78
31.08
25.92
24.44
(877,662)
168,474
86,776
5,824
98,610
821
(15,823)
(81,296)
97,575
511,948
(81,153)
212,772
(153,395)
8,625
(20,237)
(93,064)
(408,561)
(40,779)
7,625
(5,174)
72,767
(55,696)
90,072
896,917
188,188,021
352,876
22.9 %
$23.21
425,966
Vacancy
Rate
Average Asking
Net
Lease Rate
Absorption (SF)
Source: Grubb & Ellis, Fourth Quarter 2010 Trends Report
Office vacancy represented 22.9% in the greater market area, and the area’s lease
rate was $23.21. The subject site is located in the Lewisville/Flower Mound
submarket. This submarket reported a vacancy rate of 26.4% and a lease rate of
$24.50.
Airport Traffic
May-2011
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.
36
Dallas/Fort Worth International Airport is one of the nation's largest airports and
serves as headquarters for American Airlines, which generates over 80% of the
airport’s activity. A new international terminal and a Grand Hyatt hotel opened at
the airport in the summer of 2005. A high-speed tram system, Skylink, was also
completed in 2005 to transport passengers among the airport's five terminals. In
2007, the airport received the prestigious “Highest in Customer Satisfaction for
Large Airports” award from J.D. Power and Associates. In September of 2009, the
Board of Directors approved the first major expenditure of $20.75 million for the
DFW Terminal Development Program, which is an eight-year plan to improve
Terminals A, B, C, and E. Updates are planned to include restroom renovations,
new flight information display screens, lighting improvements, and jet bridge and
ramp equipment upgrades. The renovation of Terminal A began in February of
2011 and is expected to be completed by 2014; the entire project is scheduled for
completion by the end of 2017.
The following table illustrates recent operating statistics for the primary airport
facility serving the subject property’s submarket.
FIGURE 3-7
AIRPORT STATISTICS
Percent
Change*
Percent
Change**
55,150,693
52,814,185
53,253,607
59,412,217
59,176,265
60,226,138
59,802,556
57,093,187
56,030,457
56,886,843
—
(4.2) %
0.8
11.6
(0.4)
1.8
(0.7)
(4.5)
(1.9)
1.5
—
(4.2) %
(1.7)
2.5
1.8
1.8
1.4
0.5
0.2
0.3
Year-to-date, January
2010
4,278,669
2011
4,347,023
—
1.6 %
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Passenger
Traffic
—
—
*Annual average compounded percentage change from the previous year
**Annual average compounded percentage change from first year of data
Source: Dallas Fort Worth International Airport
May-2011
37
LOCAL PASSENGER TRAFFIC VS. NATIONAL TREND
Change in Passenger Activity
FIGURE 3-8
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
2002 2003 2004 2005 2006 2007 2008 2009 2010
Local Passenger Volume
National Passenger Volume
Source: HVS, Local Airport Authority
This facility recorded 56,886,843 passengers in 2010. The change in passenger
traffic between 2009 and 2010 was 1.5%. The average annual change during the
period shown was 0.3%.
The following table illustrates recent operating statistics for the secondary airport
facility serving the proposed subject property’s sub-market.
May-2011
38
FIGURE 3-9
AIRPORT STATISTICS – SECONDARY AIRPORT
Percent
Change*
Percent
Change**
6,685,618
5,622,754
5,588,930
5,889,756
5,909,599
6,874,717
7,953,385
8,060,792
7,744,522
7,960,809
—
(15.9) %
(0.6)
5.4
0.3
16.3
15.7
1.4
(3.9)
2.8
—
(15.9) %
(8.6)
(4.1)
(3.0)
0.6
2.9
2.7
1.9
2.0
Year-to-date, February
2010
1,113,353
2011
1,190,376
—
6.9 %
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Passenger
Traffic
—
—
*Annual average compounded percentage change from the previous year
**Annual average compounded percentage change from first year of data
Source: Dallas Love Field
Dallas Love Field is a public airport located northwest of Dallas, Texas. Love Field
was the primary airport for Dallas until Dallas/Fort Worth International Airport
opened in 1974. Love Field was designated as a Texas State Historical Site in 2003
and celebrated 90 years in the aviation industry in 2007. Love Field is now Dallas’
secondary airport and is primarily serviced by Southwest Airlines. Other airlines
serving the facility include Continental Express, American Airlines, and American
Eagle. Love Field launched a $519-million capital improvement project in June of
2009. The timing of the capital project's completion will coincide with the end of
federal restrictions on how far planes can fly from the airport in 2014; the project
will double the airport's capacity from a current four million passengers per year
to eight million. Additional improvements include replacing existing terminals
with a 20-gate concourse and an expanded baggage-claim area. Air traffic
registered 7,960,809 passengers in 2010. The change in passenger traffic between
2009 and 2010 was 2.8%. The increase in passenger traffic can be attributed in
large part to improving economic conditions, on both micro and macro scales;
consumers have increased spending related to travel, while airlines have
recovered from the significant decline in demand noted in 2009.
May-2011
39
Flower Mound
Community Activities
and Organizations
Located off Gerault Road and north of Spinks Road, Flower Mound’s Community
Activity Center (CAC ) offers a variety of recreational and social facilities for Town
residents. Centrally located in Flower Mound, the $14 million, 70,000 plus squarefoot CAC features a two-court gymnasium; an eight-lane indoor natatorium with a
two-story slide; a outdoor pool area with lap lanes, slides, and children’s activities;
an outdoor whirlpool; a full-service fitness area with a variety of cardiovascular
equipment, resistance machines, and other equipment; an indoor track with three
lanes; locker rooms with showers and amenities; a teen room with foosball,
billiards table, air hockey, shuffle board, and electronic gaming systems; a
concession stand; multi-purpose and party rooms; a child care facility; and a
designated area for seniors. The facility hosts numerous art, dance, and fitness
classes and programs and is home to the Youth Action Council and Seniors in
Motion programs.
FLOWER MOUND COMMUNITY ACTIVITY CENTER
Flower Mound Youth Sports Association (FMYSA) serves as The Town’s youth
baseball/softball facilitator. Flower Mound’s Bakersfield Park Phase One opened
in 2004 and features eight baseball fields and six soccer fields. Phase Two,
completed in 2006, includes a girls’ softball complex.
FMYSA provides
programming to thousands of local youth through recreational and select
(competitive) teams. In addition, select tournaments create a regional draw from
surrounding areas.
Meeting and Banquet
Facilities
May-2011
Meeting and banquet facilities for private functions in the Flower Mound area are
somewhat limited. The CAC offers features three multi-purpose rooms, one wet
multi-purpose room in the pool area, the Chill Zone teen room, and a catering
kitchen for party, meeting, and activity rentals. The gymnasium and pools are also
available for rent after hours. Chapelle des Fleurs is located north of FM 1171 off
FM 2499 and is known as a wedding venue for ceremonies and receptions, but also
40
hosts breakfasts, luncheons, seminars, corporate events, parties, and other
functions. Located to the southwest of FM 2499 and FM 1171, Circle R Ranch is a
theme-oriented ranch with three separate event facilities spread across 100 acres.
In addition to these Flower Mound facilities, Highland Village offers Celebrations, a
banquet and event facility that offers two 4,000 square-foot-ballrooms.
Tourist Attractions
The Dallas/Fort Worth market benefits from a variety of tourist and leisure
attractions in the area. The peak season for tourism in this area is from May to
September. 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. Within Flower Mound, visitation
is primarily related to golf, youth sporting events, and annual festivals, including
Wild About Flower Mound Festival and Fiesta Flower Mound. Tour 18 and
Bridlewood Golf Club are both nationally recognized golf courses. While Flower
Mound has frontage on Lake Grapevine, public access is limited and, therefore, is
not a significant tourism draw. Nonetheless, both Lake Grapevine and Lake
Lewisville offer area visitors a variety of recreational activities. Primary
attractions in the Dallas/Fort Worth Metroplex include the following:
•
May-2011
Nearby Grapevine offers the Grapevine Mills outlet mall, which features
hundreds of retail-outlet stores, family-oriented entertainment venues, and
dining options in several themed restaurants. The LEGOLAND Discovery
Centre, a $12-million children's attraction, opened at the mall in March of
2011, and the $15-million Sea Life aquarium is expected to open in the
summer of 2011. Grapevine's historic Downtown District is also a popular
destination, replete with shops, restaurants, and entertainment venues. Bass
Pro Shops Outdoor World, Great Wolf Lodge (indoor water park resort), and
the Gaylord Texan Resort & Convention Center are also popular attractions. In
the spring of 2011, the Gaylord will unveil a ten-acre water park. To the east of
Flower Mound, Old Town Lewisville offers unique store fronts, some dating
from the turn of the century, providing the setting for many antique shops and
malls, boutiques, craft stores, and art galleries.
41
GAYLORD TEXAN RESORT & CONVENTION CENTER
May-2011
•
Connected to Interstate 35W via FM 1171, Flower Mound is within an easy
drive of Fort Worth. Major attractions on the north side of Fort Worth include
the Texas Motor Speedway and Cabela's. Texas Motor Speedway is a major
North Texas attraction, hosting multiple events including truck auctions, car
shows, and multiple major races per year. In addition, the Speedway offers
driving schools along with driving and riding experiences. Cabela’s is a major
retailer of hunting and camping products. Its 230,000-square-foot Forth
Worth showroom features museum-quality animal displays, aquariums, and
trophy animals. Other attractions in Fort Worth include the Fort Worth
Stockyards (anchored by the legendary Billy Bob’s Texas honky-tonk);
Downtown Fort Worth, offering many attractions including its convention
center and the Bass Performance Hall, as well as Sundance Square and the Fort
Worth Water Gardens; the Fort Worth Botanic Garden; Will Rogers Memorial
Center, home to the annual Fort Worth Stock Show and Rodeo; and the Kimbell
Art Museum.
•
The Metroplex's network of interstates and highways allows Dallas to be easily
accessible from Flower Mound. The Dallas Arts District is a unique, 68-acre,
19-block complex that is anchored by the Dallas Museum of Art. The district
also includes the Nasher Sculpture Center, the Crow Collection of Asian Art,
and the Meyerson Symphony Center. The AT&T Performing Arts Center is the
newest addition to the district, with the opening of the Dee and Charles Wyly
Theater, the Margot and Bill Winspear Opera House, and Sammons Park in
October of 2009. Ever since Neiman Marcus opened its flagship store on Main
Street in 1914, Dallas has been a shopping mecca. Highland Park Village
followed in 1931 and is recognized as the first shopping center in America and
the prototype for centers across the country. NorthPark Center, which opened
in 1965, was then the largest climate-controlled retail establishment in the
42
world; now, the mall attracts more than 21 million visitors per year. The
Galleria Dallas features more than 200 shops and restaurants, a hotel, and an
indoor ice rink. The American Airlines Center in Downtown Dallas hosts the
Dallas Mavericks basketball team and the Dallas Stars hockey team, as well as
many high-profile concerts, special events, and shows.
•
Conclusion
South of Dallas/Fort Worth International Airport, Arlington boasts numerous
entertainment and sporting event attractions. Located on 212 acres, Six Flags
Over Texas opened in 1961 and is the oldest park of the Six Flags chain.
During the peak season, the amusement park attracts thousands of visitors
daily. Six Flags Hurricane Harbor spans 47 acres and includes body slides,
speed slides, tube slides, wave pools, lazy rivers, and shopping areas. Cowboys
Stadium in Arlington is the largest NFL stadium to date and incorporates the
Dallas Cowboys' tradition through the stadium's iconic and modern
architecture. The stadium, designed to be open or closed, measures
approximately 660,800 square feet and can house up to 100,000 spectators
and avid fans; when closed, the stadium becomes the largest of its kind in the
world. The Rangers Ballpark in Arlington is home to the Texas Rangers major
league baseball team. This 1,400,000-square-foot venue also features iconic
Texas architecture and entertainment options to baseball spectators and fans.
This section discussed a wide variety of economic indicators for the pertinent
market area. After a period of economic expansion, the market area entered into a
period of contraction as the local economy began to experience the challenges felt
across the nation associated with the recession. Our market interviews and
research revealed that although the area was impacted by slowing business levels,
a depressed housing market, and reduced levels of discretionary spending during
the most recent recession, the Dallas/Fort Worth market benefits from a wellestablished, diversified economy. Primarily a bedroom community, Flower Mound
is diversifying its economic base through aggressive growth within the health care,
manufacturing, and distribution sectors. Aside from health care, many of the
corporations that support this area are world-renowned companies working with
a multitude of clients. Thus, as the national economy rebounds and strengthens,
the market is anticipated to bounce back relatively quickly.
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, initially triggered by the subprime mortgage crisis that led to
the collapse of the housing bubble. The recession 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 some positive trends began to emerge mid-year. The
nation’s gross domestic product and corporate profits began to grow again in the
May-2011
43
third quarter of 2009. Momentum continued to build during 2010. Stock prices
and retail sales increased across the country, and real GDP in the U.S. expanded by
an annual rate of 3.2% in the fourth quarter of 2010, accelerating from the 2.6%
rate noted in the third quarter. The prospects for continued economic growth are
tied to the expansion of the labor market. While many employment sectors,
including manufacturing, are reporting improving trends, unemployment remains
heightened. The construction and housing sectors continue to be challenged.
Nevertheless, in January of 2011, the Federal Reserve reported that businesses
were positive, although still generally cautious, about the outlook for 2011. Both
political parties have made the reduction of unemployment a top priority and, at
this point, expectations are for slow to moderate growth in the near term, with the
potential for a period of stronger growth as the economic recovery accelerates.
May-2011
44
4. Supply and Demand Analysis
In the economic principle of supply and demand, price varies directly, but not
proportionately, with demand and inversely, but not proportionately, with supply.
In the lodging industry, supply is measured by the number of guestrooms
available, and demand is measured by the number of room occupied; the net effect
of supply and demand towards 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 set forth a basis for the
projection of future supply and demand growth.
Definition of Subject
Hotel Market
The 130-room proposed select-service hotel will be located in Flower Mound,
Texas. The Dallas-Fort Worth-Arlington, Texas MSA offers 950 hotels and motels,
spanning 109,917 rooms. The two largest hotels are the 1,840-room Sheraton
Hotel Dallas and the 1,608-room Hilton Anatole.
Of this larger supply set, the proposed subject property 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. non-extended-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 property’s specific competitive set within the Flower Mound
area begins after our review of national occupancy, average rate, and RevPAR
trends. There are no lodging facilities that currently operate in the jurisdiction of
Flower Mound. In a review of area hotels, we established a competitive set from
the Grapevine and Lewisville markets. The Grapevine hotels selected represent
hotels that offer a similar product to that expected of proposed subject hotel and
benefit from locational attributes similar to those anticipated to be associated with
the site chosen for the proposed subject property. We have also established a
secondary competitive set based on the presence of quality hotels in Lewisville.
While the Grapevine properties are considered to be primary competitors because
of their product orientations and access to area demand generators, it is our
opinion the subject property would compete with the Lewisville hotels to some
degree due to the presence of demand-generating corporations along State
Highway 121 between FM 2499 and Interstate 35.
National Trends
Overview
May-2011
The proposed subject property’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
45
reviewed national lodging trends to provide a context for the forecast of the supply
and demand for the proposed subject property’s competitive set.
Smith Travel Research (STR) is an independent research firm that compiles data
on the lodging industry; its published data is routinely used by typical hotel
buyers. Figure 5-1 presents annual hotel occupancy and average rate data since
1987. More recent information is presented in Figures 5-2 and 5-3; this data is
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.
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
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
May-2011
46
FIGURE 4-2
NATIONAL OCCUPANCY AND AVERAGE RATE TRENDS – YEAR-TO-DATE DATA
Occupancy - Thru March
2010
2011
% Change
United States
52.0 %
54.9 %
Region
New England
Middle Atlantic
South Atlantic
East North Central
East South Central
West North Central
West South Central
Mountain
Pacific
46.5 %
53.1
55.0
44.0
48.2
45.1
53.2
52.7
57.1
Price
Luxury
Upscale
Midprice
Economy
Budget
Average Rate - Thru March
2010
2011
5.7 %
$96.35
$99.37
48.7 %
54.3
58.0
47.2
49.8
46.6
56.5
57.2
60.8
4.7 %
2.1
5.4
7.1
3.3
3.5
6.3
8.5
6.4
$101.38
123.30
101.63
78.47
72.77
74.82
83.57
97.01
109.13
61.1 %
52.5
47.9
45.7
48.8
64.8 %
55.3
50.6
48.3
51.4
6.0 %
5.4
5.6
5.6
5.3
Location
Urban
Suburban
Airport
Interstate
Resort
Small Metro/Town
59.3 %
52.2
61.4
43.8
57.4
43.1
61.8 %
55.6
64.3
46.0
61.1
45.5
Chain Scale
Luxury
Upper Upscale
Upscale
Mid-scale w/ F&B
Mid-scale w/o F&B
Economy
Independents
62.9 %
63.3
62.1
52.0
45.4
46.0
48.5
67.0 %
65.4
65.4
55.1
47.9
48.5
51.5
% Change
RevPAR - Thru March
2010
2011
% Change
3.1 %
$50.07
$54.56
9.0 %
$104.46
127.42
102.96
80.88
74.36
77.02
86.60
99.93
115.51
3.0 %
3.3
1.3
3.1
2.2
2.9
3.6
3.0
5.8
$47.16
65.52
55.90
34.56
35.04
33.72
44.46
51.11
62.36
$50.89
69.14
59.67
38.15
36.99
35.92
48.95
57.12
70.22
7.9 %
5.5
6.8
10.4
5.6
6.5
10.1
11.8
12.6
$145.52
103.47
76.01
55.61
44.66
$150.75
106.07
77.75
56.12
45.41
3.6 %
2.5
2.3
0.9
1.7
$88.96
54.34
36.39
25.42
21.81
$97.64
58.71
39.31
27.08
23.35
9.8 %
8.0
8.0
6.5
7.0
4.1 %
6.4
4.6
5.0
6.4
5.8
$127.83
82.38
89.52
66.88
139.27
75.17
$133.84
84.47
91.55
68.08
144.75
76.51
4.7 %
2.5
2.3
1.8
3.9
1.8
$75.84
43.04
54.97
29.28
80.00
32.36
$82.69
46.97
58.83
31.30
88.49
34.84
9.0 %
9.1
7.0
6.9
10.6
7.6
6.5 %
3.3
5.3
6.1
5.6
5.4
6.2
$241.52
140.83
107.00
88.28
70.55
46.51
92.92
$256.14
146.51
110.34
90.39
70.35
46.89
95.33
6.1 %
4.0
3.1
2.4
(0.3)
0.8
2.6
$151.96
89.09
66.42
45.88
32.00
21.39
45.06
$171.56
95.76
72.13
49.84
33.69
22.72
49.11
12.9 %
7.5
8.6
8.6
5.3
6.2
9.0
Source: STR - March 2011 Lodging Review
May-2011
47
FIGURE 4-3
NATIONAL OCCUPANCY AND AVERAGE RATE TRENDS – CALENDAR YEAR DATA
Occupancy
2009
2010
United States
54.5 %
57.6 %
Region
New England
Middle Atlantic
South Atlantic
East North Central
East South Central
West North Central
West South Central
Mountain
Pacific
54.1 %
59.6
53.9
50.2
51.2
52.8
53.4
54.0
59.3
Price
Luxury
Upscale
Midprice
Economy
Budget
Average Rate
% Change
2009
2010
5.7 %
$98.17
58.5 %
63.3
57.1
53.9
54.0
55.1
55.1
56.7
63.0
8.1 %
6.2
5.9
7.4
5.3
4.3
3.2
4.9
6.3
61.5 %
55.9
51.2
49.0
51.3
65.4 %
58.9
53.8
51.5
54.0
Location
Urban
Suburban
Airport
Interstate
Resort
Small Metro/Town
61.8 %
53.7
59.8
49.5
56.8
49.6
Chain Scale
Luxury
Upper Upscale
Upscale
Mid-scale w/ F&B
Mid-scale w/o F&B
Economy
Independents
61.4 %
63.6
60.9
49.0
55.5
48.9
52.4
RevPAR
% Change
2009
2010
% Change
$98.08
(0.1) %
$53.50
$56.47
5.5 %
$114.65
134.32
98.65
85.50
75.23
77.15
83.74
91.95
112.77
$115.93
138.57
97.46
85.13
75.08
77.95
82.71
90.28
112.54
1.1 %
3.2
(1.2)
(0.4)
(0.2)
1.0
(1.2)
(1.8)
(0.2)
$62.00
80.10
53.18
42.92
38.56
40.72
44.71
49.69
66.86
$67.77
87.78
55.64
45.90
40.51
42.91
45.58
51.16
70.89
9.3 %
9.6
4.6
6.9
5.1
5.4
2.0
3.0
6.0
6.3 %
5.4
5.2
5.1
5.3
$147.61
107.21
78.66
59.04
48.26
$146.54
106.44
78.33
58.28
47.30
(0.7) %
(0.7)
(0.4)
(1.3)
(2.0)
$90.81
59.94
40.25
28.95
24.74
$95.84
62.71
42.16
30.04
25.54
5.5 %
4.6
4.7
3.8
3.2
65.7 %
57.3
63.7
51.4
59.4
51.6
6.3 %
6.8
6.5
3.8
4.6
4.1
$136.45
85.02
90.67
69.43
129.86
81.14
$139.60
83.62
88.54
69.93
129.30
81.45
2.3 %
(1.6)
(2.3)
0.7
(0.4)
0.4
$84.32
45.64
54.19
34.38
73.73
40.26
$91.73
47.94
56.38
35.95
76.81
42.06
8.8 %
5.0
4.0
4.6
4.2
4.5
66.2 %
67.7
65.4
51.1
58.3
51.3
55.0
7.8 %
6.4
7.3
4.4
5.2
5.1
4.9
$244.52
143.09
108.63
83.33
85.43
50.95
95.12
$249.65
142.16
106.97
82.48
84.75
49.38
95.42
2.1 %
(0.6)
(1.5)
(1.0)
(0.8)
(3.1)
0.3
$150.18
90.97
66.20
40.82
47.39
24.89
49.88
$165.29
96.19
69.97
42.16
49.44
25.35
52.46
10.1 %
5.7
5.7
3.3
4.3
1.8
5.2
Source: STR - December 2010 Lodging Review
May-2011
48
The onset of the recession in December of 2007 first became evident in lodging
trends in the spring of 2008 as demand levels decreased from the peak recorded in
the previous year. The pace of decline sped up in the fall of 2008, as both
corporate and consumer spending fell dramatically in the wake of the financial
crisis and in response to intensifying recessionary pressures. Continued increases
in lodging supply, which grew by 2.7% in 2008 and 3.2% in 2009, combined with
demand decreases, resulted in a national average occupancy of 55.1% in 2009, an
historic low. Aggressive price cuts and discounting that were implemented in the
face of falling occupancy levels caused average rate to decrease by 8.8% in that
same year. The resulting $53.71 RevPAR recorded in 2009 was on par with the
level recorded in 2004.
Demand growth resumed in 2010, led by select markets that had recorded positive
growth trends in the fourth quarter of 2009. The pace of demand growth
accelerated through the year, and lodging demand in the U.S. increased by 7.7% in
2010 when compared with 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 with 2009. Moderate demand growth is
forecast for 2011 and thereafter, and the commercial and meeting/group demand
segments are expected to continue to strengthen. These trends, combined with
the low levels of supply growth anticipated through 2012, should boost occupancy
to above the 60% mark by 2012. Strengthening occupancy levels should permit
hotels to further reduce and eventually eliminate the deep discounts implemented
in response to the recession. The net result will be accelerated rate growth as
occupancy nears stabilization.
Historical Supply
and Demand Data
May-2011
Smith Travel Research (STR) is an independent research firm that compiles and
publishes data on the lodging industry, routinely used by typical hotel buyers. STR
has compiled historical supply and demand data for a group of hotels considered
applicable to this analysis for the proposed subject property. 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.
49
FIGURE 4-4
HISTORICAL SUPPLY AND DEMAND TRENDS
Year
2002
2003
2004
2005
2006
2007
2008
2009
Average Daily Available Room
Room Count
Nights
511
511
511
663
718
787
883
883
Change
Occupied Room
Nights
Change
Occupancy
Average
Rate
Change
RevPAR
Change
186,515
186,515
186,515
241,979
262,070
287,315
322,295
322,295
—
0.0 %
0.0
29.7
8.3
9.6
12.2
0.0
100,555
111,330
123,564
162,443
185,610
195,733
205,414
187,582
—
10.7 %
11.0
31.5
14.3
5.5
4.9
(8.7)
53.9 %
59.7
66.2
67.1
70.8
68.1
63.7
58.2
$87.44
81.11
85.11
95.61
106.23
115.77
118.60
104.30
—
(7.2) %
4.9
12.3
11.1
9.0
2.4
(12.1)
$47.14
48.42
56.39
64.18
75.24
78.87
75.59
60.70
—
2.7 %
16.5
13.8
17.2
4.8
(4.2)
(19.7)
322,295
344,765
—
7.0 %
187,582
221,852
—
18.3 %
58.2 %
64.3
$104.30
95.08
—
(8.8) %
$60.70
61.18
—
0.8 %
Average Annual Compounded Change:
2002-2009
8.1 %
Year-to-Date Through June
2009
2010
1,781
1,905
9.3 %
Hotels Included in Sample
Fairfield Inn & Suites DFW Airport N Grapevine
Hyatt Place Dallas Grapevine
Hampton Inn Suites DFW Airport North Grapevine
Holiday Inn Express & Suites Dallas Lewisville
Comfort Suites Dallas Fort Worth Airport N
Springhill Suites DFW Airport North Grapevine
Total
2.6 %
Number
of Rooms
Year
Affiliated
Year
Opened
80
125
94
122
90
96
111
165
105
Aug-04
Feb-08
Dec-00
Mar-01
Jun-06
Jan-05
Jul-05
Aug-07
Jun-10
Jul 1998
Jan 2000
Dec 2000
Mar 2001
Oct 2001
Jan 2005
Jul 2005
Aug 2007
Jun 2010
3.7 %
988
May-2011
50
100,000
50
50,000
40
0
30
Room Supply
Room Demand
2009
60
2008
70
150,000
2007
200,000
2006
80
2005
90
250,000
2004
300,000
2003
100
2002
350,000
Occupancy %
HISTORICAL SUPPLY AND DEMAND GRAPH
2001
Room Nights
FIGURE 4-5
Occupancy
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.
These data reflect an overall market occupancy level of 58.2% in 2009, which
compares to 63.7% for 2008. The overall average occupancy level for the calendar
years presented equates to 65.4%. The north-central Dallas/Fort Worth Metroplex
area encompasses the communities of Grapevine, Flower Mound, and Lewisville,
among others, offering recreational opportunities, hotels, restaurants, and retail
centers. The collective market area is ideally located adjacent to the northern
entrance of the Dallas/Fort Worth International Airport. Occupancy in this area
increased from 2003 through 2005 as a result of an increase in corporate travel to
the area. Furthermore, the Gaylord Texan opened in the spring of 2004 and began
to generate a significant amount of overflow demand for the Grapevine hotel
market during its ramp-up period. Demand experienced a correction from
October 2008 through October 2009, concurrent with the corporate-travel
restrictions that were put into place during this time. Furthermore, overflow
demand from the Gaylord minimized during this period, as group travel to that
facility slowed. Demand levels have now exceeded the historic high as most travel
May-2011
51
restrictions have been lifted, the Gaylord is experiencing strong results, and the
Dallas/Fort Worth area is seen as a value-driven, business-focused and
appropriate destination for travel in the current economic climate.
These data reflect an overall market average rate level of $104.30 in 2009, which
compares to $118.60 for 2008. The average across all calendar years presented for
average rate equates to $105.96. After a slight dip in 2003, average rate in the local
market registered steady growth from 2004 through the third quarter of 2008. As
the market reached its capacity in 2005, hotels were able to set rates higher.
Moreover, during group events at the Gaylord, which commanded very high rates
at the headquarters hotel, nearby hotels could set their rates just under the high
Gaylord rate, which fueled rate growth further. Average rate growth began to slow
in early 2008 as managers attempted to maintain negotiated rates set in better
times but also benefitted from some already-set, Gaylord-driven rates. However,
average rate trended downward, posting negative growth in 2009, along with the
contraction of the national economy and reduced Gaylord overflow demand.
Major corporate accounts also became aggressive in demanding price concessions.
Rate decline continued throughout most of 2010, but average rates began to show
improvement in the third quarter. The latest year-to-date data indicate that this
market's average daily rate is continuing to gain ground, evidence that a recovery
is underway, and hotels should regain pricing power with the forecasted increases
in occupancy. These occupancy and average rate trends resulted in a RevPAR level
of $60.70 in 2009.
Seasonality
May-2011
Monthly occupancy and average rate trends are presented in the following tables.
52
FIGURE 4-6
MONTHLY OCCUPANCY TRENDS
Month
2002
2003
2004
2005
2006
2007
2008
2009
2010
January
February
March
April
May
June
July
August
September
October
November
December
49.0 %
47.9
54.2
60.2
56.4
57.3
63.7
53.7
48.7
60.0
52.5
42.8
51.4 %
56.3
65.2
59.1
62.3
70.9
63.7
58.0
55.1
63.2
59.7
51.3
54.5 %
59.6
71.6
66.4
64.3
76.7
68.3
62.8
70.2
74.5
67.2
58.7
59.7 %
68.4
67.4
74.0
67.6
72.5
62.9
57.7
69.5
75.6
76.3
55.9
71.8 %
77.9
78.9
73.6
71.2
74.7
66.3
64.5
67.8
76.6
71.1
56.3
71.1 %
75.0
81.6
77.3
73.4
75.3
69.8
58.0
60.5
72.0
65.1
47.9
55.7 %
62.9
69.0
73.8
66.1
67.8
64.4
61.2
69.6
69.0
59.1
46.6
53.7 %
61.9
57.0
63.6
53.5
62.3
61.3
52.3
55.7
62.9
61.3
53.7
56.2 %
70.0
69.1
71.8
70.4
67.6
70.2
57.8
61.9
65.4
62.6
51.5
Annual Occupancy
53.9 %
59.7 %
66.2 %
67.1 %
70.8 %
68.1 %
63.7 %
58.2 %
Year-to-Date
54.2
60.9
65.6 %
68.2 %
74.7 %
75.6 %
65.9 %
58.6 %
—
64.3 %
May-2011
53
FIGURE 4-7
MONTHLY AVERAGE RATE TRENDS
Month
2002
2003
2004
2005
2006
2007
2008
2009
2010
January
February
March
April
May
June
July
August
September
October
November
December
$90.94
92.99
89.02
92.36
88.35
86.35
83.19
85.39
85.83
87.59
85.29
82.34
$84.89
84.47
87.39
82.28
79.30
79.93
79.12
78.59
81.85
79.52
79.41
77.00
$85.07
84.29
83.70
87.43
83.35
81.14
84.25
87.71
88.38
87.33
84.98
83.84
$95.31
96.05
97.48
100.97
94.37
93.41
90.93
92.56
95.99
97.98
100.45
89.73
$104.18
104.97
107.86
109.30
102.38
109.69
101.69
107.13
105.98
110.41
110.59
98.26
$115.66
116.80
113.07
122.11
115.80
115.11
110.80
113.24
118.15
119.86
118.16
107.87
$121.90
124.28
124.13
125.41
116.44
117.26
114.12
116.89
118.86
118.43
113.37
108.78
$113.03
112.25
111.38
113.78
104.17
105.73
101.57
101.76
103.19
101.65
94.07
88.49
$95.27
96.03
94.88
96.51
94.05
92.06
89.13
97.20
99.64
99.55
96.48
90.53
Annual Average Rate
$87.44
$81.11
$85.11
$95.61
$106.23
$115.77
$118.60
$104.30
—
Year-to-Date
$89.89
$82.93
$84.05
$96.32
$106.43
$116.38
$121.57
$110.09
$95.08
May-2011
54
The illustrated monthly occupancy and average rates patterns reflect important
seasonal characteristics. We have reviewed these trends in developing our
forthcoming forecast of market-wide demand and average rate.
Patterns of Demand
May-2011
A review of the trends in occupancy, average rate, and RevPAR by the night of the
week over the past three fiscal years provides some insight into the impact that
the current economic conditions have had on the competitive lodging market. The
data, as provided by Smith Travel Research, is set forth in the following table.
55
FIGURE 4-8
OCCUPANCY, AVERAGE RATE AND REVPAR BY DAY OF WEEK
Occupancy (%)
Apr 08 - Mar 09
Apr 09 - Mar 10
Apr 10 - Mar 11
Sunday
39.7 %
38.4
42.2
Change (Occupancy Points)
FY 08 - FY 09
-1.3
FY 09 - FY 10
3.8
ADR ($)
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
64.5 %
61.4
66.8
76.4 %
72.1
78.7
75.8 %
70.9
78.3
63.3 %
61.0
66.1
58.3 %
57.2
58.9
-3.1
5.4
-4.3
6.6
-4.9
7.4
-2.4
5.2
-1.0
1.7
Monday
Tuesday
Wednesday
Saturday
59.1 %
59.3
61.3
0.2
2.0
Total Year
62.5 %
60.1
64.6
-2.4
4.6
Thursday
Friday
Saturday
Total Year
Apr 08 - Mar 09
Apr 09 - Mar 10
Apr 10 - Mar 11
$110.37
94.10
95.22
$124.89
108.79
104.24
$129.33
111.16
106.15
$127.99
110.65
105.48
$120.04
103.74
99.94
$94.68
82.26
81.78
$93.39
81.85
82.03
$115.94
100.06
97.39
Change (Dollars)
FY 08 - FY 09
FY 09 - FY 10
-$16.27
1.12
-$16.10
-4.55
-$18.17
-5.01
-$17.34
-5.17
-$16.30
-3.80
-$12.42
-0.48
-$11.54
0.18
-$15.89
-2.66
Change (Percent)
FY 08 - FY 09
FY 09 - FY 10
-14.7 %
1.2
-12.9 %
-4.2
-14.0 %
-4.5
-13.6 %
-4.7
-13.6 %
-3.7
-13.1 %
-0.6
-12.4 %
0.2
-13.7 %
-2.7
RevPAR ($)
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Total Year
Apr 08 - Mar 09
Apr 09 - Mar 10
Apr 10 - Mar 11
$43.83
36.16
40.18
$80.49
66.77
69.58
$98.80
80.18
83.57
$97.01
78.40
82.56
$76.01
63.23
66.07
$55.16
47.08
48.20
$55.18
48.54
50.25
$72.43
60.10
62.94
Change (Dollars)
FY 08 - FY 09
FY 09 - FY 10
-$7.67
4.02
-$13.72
2.81
-$18.62
3.40
-$18.61
4.16
-$12.77
2.84
-$8.08
1.12
-$6.64
1.71
-$12.32
2.84
Change (Percent)
FY 08 - FY 09
FY 09 - FY 10
-17.5 %
11.1
-17.0 %
4.2
-18.8 %
4.2
-19.2 %
5.3
-16.8 %
4.5
-14.6 %
2.4
-12.0 %
3.5
-17.0 %
4.7
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.
May-2011
56
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 property. If applicable, additional lodging facilities may be judged to be
only secondarily competitive; although the facilities, rate structures, or market
orientations of these hotels prevent their inclusion among the primarily
competitive supply, they are expected to compete with the proposed subject
property 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.
May-2011
57
FIGURE 4-9
COMPETITORS – OPERATING PERFORMANCE
re
L e is u
M ee t
l
er c ia
Number
of Rooms
Co m m
Property
ing a
n
G ro u d
p
Est. Segmentation
Estimated 2008
Weighted
Annual
Room
Count
Occ.
Estimated 2009
Average
Rate
RevPAR
Weighted
Annual
Room
Count
Estimated 2010
Occ.
Average
Rate
RevPAR
Weighted
Annual
Room
Count
Occ.
Average
Rate
RevPAR
RevPAR
Change
Occupancy
Yield
Penetration Penetration
125
94
111
80
96
65 % 15 %
65
15
80
5
70
5
70
5
20 %
20
15
25
25
125
94
111
80
96
60 % $121.00
67
154.00
67
133.00
67
133.00
62
112.00
$72.60
103.18
89.11
89.11
69.44
125
94
111
80
96
62 %
60
54
54
50
$105.00
127.00
117.00
117.00
95.00
$65.10
76.20
63.18
63.18
47.50
125
94
111
80
96
80 %
76
64
64
67
$86.00
114.00
107.00
107.00
82.00
$68.80
86.64
68.48
68.48
54.94
5.7 %
13.7
8.4
8.4
15.7
119.9 %
113.9
95.9
95.9
100.4
106.4 %
134.0
105.9
105.9
85.0
Sub-Totals/Averages
506
70 % 10 %
21 %
506
64.3 % $130.46
$83.91
506
56.3 %
$112.01
$63.10
506
70.8 %
$98.04
$69.36
9.9 %
106.0 %
107.3 %
Secondary Competitors
482
57 % 11 %
32 %
238
62.8 % $102.54
$64.37
238
60.7 %
$95.15
$57.77
282
59.5 %
$94.33
$56.15
(2.8) %
89.2 %
86.9 %
Totals/Averages
988
65 % 10 %
24 %
744
63.8 % $121.66
$77.65
744
57.7 %
$106.33
$61.39
788
66.7 %
$96.85
$64.64
5.3 %
100.0 %
100.0 %
May-2011
58
The following map illustrates the locations of the proposed subject property’s
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.
May-2011
59
PRIMARY COMPETITOR #1 - HYATT PLACE GRAPEVINE
2220 Grapevine Mills
Circle West
Grapevine, TX
FIGURE 4-10 ESTIMATED HISTORICAL OPERATING STATISTICS
Year
Estimated 2008
Estimated 2009
Estimated 2010
Wtd. Annual
Room Count Occupancy
125
125
125
60 %
62
80
Average
Rate
$121
105
86
RevPAR
$73
65
69
Occupancy
Penetration
Yield
Penetration
94.0 %
107.4
119.9
93.5 %
106.0
106.4
The Hyatt Place is owned and operated by the Moody National Group LLC.
Facilities include a breakfast dining area (a complimentary breakfast is served), an
outdoor pool, a 24/7 Guest Kitchen, a lobby host stand with Bakery Café and a
grab-and-go case, a guest laundry facility, a business center, an exercise room, and
1,584 square feet of meeting space. The hotel, which was built in 2002, was
completely renovated in 2008 when it was converted from an AmeriSuites
property. This hotel benefits from its Hyatt brand affiliation and easy access to
and from the airport. Overall, the property appeared to be in good condition.
May-2011
60
PRIMARY COMPETITOR #2 - HAMPTON INN & SUITES DALLAS DFW AIRPORT
NORTH GRAPEVINE
Hampton Inn & Suites
Dallas DFW Airport
North Grapevine
1750 North Highway
121
Grapevine, TX
Year
Estimated 2008
Estimated 2009
Estimated 2010
Wtd. Annual
94
94
94
67 %
60
76
Average
Rate
RevPAR
Occupancy
Penetration
Yield
Penetration
$154
127
114
$103
76
87
105.0 %
103.9
113.9
132.9 %
124.1
134.0
The Hampton Inn & Suites is owned and operated by the Moody National Group
LLC. Facilities include a breakfast dining area (a complimentary breakfast is
served), an indoor pool and whirlpool, an exercise room, and approximately 600
square feet of meeting space. The renovation history of the hotel, which was built
in 2000, was not disclosed. This hotel benefits from its strong corporate client
base and proximity to Dallas/Fort Worth International Airport. Overall, the
property appeared to be in good condition.
May-2011
61
PRIMARY COMPETITOR #3 - SPRINGHILL SUITES GRAPEVINE DFW AIRPORT
NORTH
SpringHill Suites
Grapevine DFW Airport
North
2240 West Grapevine
Mills Circle
Grapevine, TX
Year
Estimated 2008
Estimated 2009
Estimated 2010
Wtd. Annual
111
111
111
67 %
54
64
Average
Rate
$133
117
107
RevPAR
$89
63
68
Occupancy
Penetration
Yield
Penetration
105.0 %
93.5
95.9
114.8 %
102.9
105.9
The SpringHill Suites is owned and operated by Grapevine Lodging Partners, LP.
Facilities include a breakfast dining area (a complimentary continental breakfast is
served), an indoor pool and whirlpool, an exercise room, a business center, and
950 square feet of meeting space. The renovation history of the hotel, which was
built in 2005, was not disclosed. This hotel benefits from its popular Marriott
affiliation and location adjacent to the Grapevine Mills outlet mall. Overall, the
property appeared to be in good condition.
May-2011
62
PRIMARY COMPETITOR #4 - FAIRFIELD INN & SUITES GRAPEVINE DFW
AIRPORT NORTH
Fairfield Inn & Suites
Grapevine DFW Airport
North
2050 Highway 121
North
Grapevine, TX
Year
Estimated 2008
Estimated 2009
Estimated 2010
Wtd. Annual
80
80
80
67 %
54
64
Average
Rate
$133
117
107
RevPAR
$89
63
68
Occupancy
Penetration
Yield
Penetration
105.0 %
93.5
95.9
114.8 %
102.9
105.9
The Fairfield Inn & Suites is owned and operated by Pineapple Management.
Facilities include a breakfast dining area (a complimentary continental breakfast is
served), an outdoor pool and whirlpool, an exercise room, a business library, and
600 square feet of meeting space. The hotel, which was built in 1998, was
renovated in 2005/06; upgrades included new guestroom softgoods. This hotel
benefits from its popular Marriott affiliation and location near the Grapevine Mills
outlet mall. Overall, the property appeared to be in good condition.
May-2011
63
Secondary
Competitors
May-2011
We have also reviewed other area lodging facilities to determine whether any may
compete with the proposed subject property on a secondary basis. The room count
of each secondary competitor has been weighted based on its assumed degree of
competitiveness in the future with the proposed subject property. By assigning
degrees of competitiveness, we can assess how the subject property and its
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 competitor(s).
64
FIGURE 4-14 SECONDARY COMPETITOR(S) – OPERATING PERFORMANCE
Holiday Inn Express Dallas Lewisville
Totals/Averages
May-2011
re
L e is u
ing a
n
Gro u d
p
M ee t
Number
of Rooms
Co m m
Property
e rc ia
l
Est. Segmentation
Estimated 2008
Weighted
Total
Annual
Competitive Room
Level
Count
122
165
90
105
65 %
50
55
60
5 % 30 %
20 30
5 40
5 35
70 %
60
60
70
85
99
54
0
482
57 %
11 % 32 %
65 %
238
Estimated 2009
Weighted
Annual
Room
Count
Average
Rate
RevPAR
$99.00
115.00
85.00
0.00
$62.37
72.45
52.70
0.00
85
99
54
0
62.8 % $102.54
$64.37
238
Occ.
63 %
63
62
0
Estimated 2010
Average
Rate
RevPAR
Weighted
Annual
Room
Count
62 %
60
60
0
$90.00
108.00
80.00
0.00
$55.80
64.80
48.00
0.00
85
99
54
43
60.7 %
$95.15
$57.77
282
Occ.
Average
Rate
RevPAR
60 %
67
60
41
$90.00
105.00
85.00
84.00
$54.00
70.35
51.00
34.44
59.5 %
$94.33
$56.15
Occ.
65
We have identified four hotels that are expected to compete with the proposed
subject property on a secondary level. The Courtyard by Marriott Dallas
Lewisville, the Hilton Garden Inn Dallas Lewisville, the Hampton Inn Suites Dallas
Lewisville Vista Ridge Mall, and the Holiday Inn Express Dallas Lewisville are
anticipated to be competitive on the basis of their select- and limited-service
products; however, these hotels are located proximate to Vista Ridge Mall and near
the Interstate 35 corridor and are not expected to compete directly.
Supply Changes
It is important to consider any new hotels that may have an impact on the
proposed subject property’s operating performance. No new hotels are expected
within the proposed subject property's neighborhood at this time (aside from the
proposed subject property).
We note that in 2008, Flower Mound Town Council approved an $8 million
incentive package for a luxury resort hotel and condominium development to be
located in the Lakeside Business District on nine acres overlooking Lake
Grapevine. The 18-story tower Lakeside Resort & Residences project was to be
developed by The Hines Co. and was expected to have 289 guestrooms; 64
residences; an array of complementary hotel and residential facilities, amenities,
and services; and significant ballroom and meeting space to attract regional and
national conferences. The project was put on hold following as a result of the poor
economic climate.
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 property 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
We have identified various properties that are expected to be competitive to some
degree with the proposed subject property. We have also investigated potential
increases in competitive supply in this north-central Dallas/Fort Worth Metroplex
submarket. The proposed select-service 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.
DEMAND
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
May-2011
66
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.
FIGURE 4-15 HISTORICAL MARKET TRENDS
Year
Accommodated
Room Nights
Est. 2008
Est. 2009
Est. 2010
173,420
156,873
191,918
% Change
—
(9.5) %
22.3
Room Nights
Available
271,706
271,706
287,582
% Change
—
0.0 %
5.8
Market
Occupancy
63.8 %
57.7
66.7
Market ADR
% Change
Market
RevPAR
% Change
$121.66
106.33
96.85
—
(12.6) %
(8.9)
$77.65
61.39
64.64
—
(20.9) %
5.3
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 2010 distribution of
accommodated room night demand as follows.
FIGURE 4-16 ACCOMMODATED ROOM NIGHT DEMAND
Market Segment
Marketwide
Accommodated Percentage
Demand
of Total
Commercial
Meeting and Group
Leisure
125,605
19,485
46,828
65 %
10
24
Total
191,918
100 %
The market’s demand mix comprises commercial demand, with this segment
representing roughly 65% of the accommodated room nights in this Flower
Mound submarket. The remaining portion comprises meeting and group at 10%,
with the final portion leisure in nature, reflecting 24%.
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.
May-2011
67
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.
While the primary source of commercial demand in the North Dallas/Fort Worth
International Airport area is related to flight safety schools at or near Dallas/Fort
Worth International Airport, the area's commercial segment is diversified due to a
variety of factors. Grapevine, Flower Mound, and Lewisville are easily connected
to all areas of the Metroplex. The North Dallas/Fort Worth International Airport
area is often a preferred lodging choice due to its offering of a multitude of
restaurants and the presence of the Grapevine Mills shopping mall. Market hotels
also house significant levels of demand associated with traffic utilizing the
Dallas/Fort Worth International Airport, which borders Grapevine to the south.
Travelers visiting Dallas/Fort Worth for a corporate purpose often choose
Grapevine and Lewisville hotels for their overnight stay because of its proximity
and ease of access to the airport, sometimes regardless of where their business
location may be within the greater Dallas/Fort Worth Metroplex. As the economic
climate improves and corporate travel picks up pace, the diversity and depth of
companies in the area should provide stability over the longer term. Considering
these historical trends, we project demand change rates of 7.0% in 2011, 4.0% in
2012, and 4.0% in 2013. After these first three projection years, we have forecast
demand change rates of 2.5% in 2014 and 1.5% in 2015.
Meeting and Group
Segment
May-2011
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, beverage
and banquet revenue. SMERFE groups are typically price-sensitive and tend to
meet on weekends and/or during the summer months or holiday season, when
greater discounts are usually available. These groups generate limited ancillary
68
revenues. The profile and revenue potential of associations varies depending on
the group and the purpose of their meeting or event.
The group market is driven primarily by the Gaylord Texan Resort. This property
draws conventions that typically require room blocks well beyond what its 1,511room facility can hold. As a result, overflow demand is plentiful on most
convention nights; however, per contractual guidelines with the City of Grapevine,
group organizers utilizing the Gaylord property must negotiate room block
agreements with nearby Grapevine hotels only and cannot utilize other hotels.
Beyond negotiated agreements, many convention attendees will book outside of
the block, making reservations on an individual basis (due to factors such as the
expiration or sell-out of the room block, or the ability to obtain a better price
outside of the block). Some additional group demand is housed by area hotels; the
Embassy Suites DFW @ Outdoor World and Great Wolf Lodge offer sizable meeting
facilities, as does the Hilton DFW Lakes, which is a certified conference center.
Due to their proximity to the airport, group business at the Embassy Suites and
Hilton is often nationally based, with participants easily able to access the central
meeting facility from points across the nation. Meeting and group demand is now
reflecting growth as the local economy improves. Considering these historical
trends, we project demand change rates of 4.0% in 2011, 3.0% in 2012, and 3.0%
in 2013. After these first three projection years, we have forecast demand change
rates of 2.0% in 2014 and 1.0% in 2015.
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.
Grapevine and the North Dallas/Fort Worth International Airport area enjoy
strong weekend demand levels. In addition to Great Wolf Lodge's water park
serving as a primary leisure demand generator, the Grapevine Mills shopping
complex is a popular retail destination for the greater northern Texas/Oklahoma
region, attracting individuals, families, and leisure groups throughout the year.
May-2011
69
Grapevine Lake, nearby golf courses, area wineries, and the Old Town District and
trains are also popular with tourists. Finally, weekend stays in the area are a
function of Dallas/Fort Worth International Airport, as travelers utilizing the
airport for weekend travel will often stay in the convenient North Dallas/Fort
Worth International Airport area submarket if overnight accommodations are
required. Demand in this segment has started to improve, and this strengthening
should continue through the near term. Considering these historical trends, we
project demand change rates of 3.0% in 2011, 2.0% in 2012, and 2.0% in 2013.
After these first three projection years, we have forecast demand change rates of
1.0% in 2014 and 1.0% in 2015.
Conclusion
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.
FIGURE 4-17 AVERAGE ANNUAL COMPOUNDED MARKET SEGMENT GROWTH RATES
Market Segment
2011
2012
Annual Growth Rate
2013
2014
2015
2016
2017
Commercial
Meeting and Group
Leisure
7.0 %
4.0
3.0
4.0 %
3.0
2.0
4.0 %
3.0
2.0
2.5 %
2.0
1.0
1.5 %
1.0
1.0
1.0 %
0.5
1.0
1.0 %
0.5
1.0
Base Demand Growth
5.7 %
3.4 %
3.4 %
2.1 %
1.3 %
1.0 %
1.0 %
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
May-2011
70
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
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 4-18 UNACCOMMODATED DEMAND ESTIMATE
Market Segment
Accommodated Room
Night Demand
Unaccommodated
Demand Percentage
Unaccommodated
Room Night Demand
14,388
155
776
Commercial
Meeting and Group
Leisure
125,605
19,485
46,828
11.5 %
0.8
1.7
Total
191,918
8.0 %
15,320
Our interviews with market participants found that the market generally sells out
on Tuesday through Thursday nights during the peak travel season, as well as
sporadically within other periods throughout the year. A portion of this demand,
which is currently turned away, should return to the market concurrent with the
supply increase. Accordingly, we have forecast 8.0% of the base-year demand to be
classified as unaccommodated based upon an 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
May-2011
71
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.
FIGURE 4-19 FORECAST OF MARKET OCCUPANCY
2013
2015
2016
2017
Commercial
Base Demand
Unaccommodated Demand
Total Demand
Growth Rate
145,364
16,652
162,016
4.0 %
148,998
17,068
166,066
2.5 %
151,233
17,324
168,557
1.5 %
152,745
17,497
170,243
1.0 %
154,273
17,672
171,945
1.0 %
Meeting and Group
Base Demand
Total Demand
Growth Rate
21,499
172
21,670
3.0 %
21,929
175
22,103
2.0 %
22,148
177
22,324
1.0 %
22,259
178
22,436
0.5 %
22,370
178
22,548
0.5 %
Leisure
Base Demand
Total Demand
Growth Rate
50,182
832
51,014
2.0 %
50,684
840
51,524
1.0 %
51,190
849
52,039
1.0 %
51,702
857
52,559
1.0 %
52,219
866
53,085
1.0 %
217,044
17,655
234,699
0
234,699
10.2 %
221,610
18,083
239,693
0
239,693
2.1 %
224,571
18,349
242,921
0
242,921
1.3 %
226,706
18,532
245,238
0
245,238
1.0 %
228,862
18,716
247,578
0
247,578
1.0 %
69.0 %
9.2
21.7
818
69.3 %
9.2
21.5
818
69.4 %
9.2
21.4
818
69.4 %
9.1
21.4
818
69.5 %
9.1
21.4
818
130
130
130
130
130
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
¹
345,984
345,984
345,984
345,984
345,984
Nights per Year
365
365
365
365
365
Total Supply
Rooms Supply Growth
948
15.9 %
948
0.0 %
948
0.0 %
948
0.0 %
948
0.0 %
Marketwide Occupancy
67.8 %
69.3 %
70.2 %
70.9 %
71.6 %
¹
May-2011
2014
Opening in January 2013 of the 100% competitive, 130-room Proposed Select-Service Hotel
72
These room night projections for the market area will be used in forecasting the
proposed subject property's occupancy and average rate in Chapter 6.
May-2011
73
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 proposed subject property is expected to be a select-service lodging facility
containing 130 rentable units. For the purposed of this analysis. the property is
expected to open on January 1, 2013. The proposed subject property is expected to
be located within the Lakeside Business District, Flower Mound's commercial
district located at the south end of Town. At the time of this study, a specific parcel
of land had not been determined for the hotel site. At the request of our client, The
Town of Flower Mound, we have analyzed two primary areas, the River Walk at
Central Park development and the Lakeside Business District. Following analysis
of both areas, our study recommends and assumes the Lakeside Business District
is more suited for hotel development given its proximity to Dallas/Fort Worth
International Airport and the nearby concentration of corporations. Furthermore,
a specific brand was not identified by our client as the subject of our study. After a
review of the market supply, we have recommended a first-class, select-service
hotel facility. Given the similarly in scope of facilities and amenities in nationally
affiliated select-service brands, it is our opinion that the identification of one
particular brand is not pertinent to our study.
Summary of the
Facilities
The following table summarizes the facilities that are expected to be available at
the proposed subject property.
May-2011
74
FIGURE 5-1
PROPOSED FACILITIES SUMMARY
Guestroom Configuration
Estimated Number of Units
King
Queen/Queen
95
35
Total
130
Food & Beverage Facilities
Estimated Seating Capacity
Breakfast Dining Area
Lobby Café and Lounge
36
20
Indoor Meeting & Banquet Facilities
Estimated Square Footage
Meeting and Banquet Room (Divisible)
Boardroom
2,750
750
Total
3,500
Amenities & Services
Swimming Pool
Whirlpool
Exercise Room
Guest Laundry Facility
Business Center
Market Pantry
Ice Machine Areas
Infrastructure
Parking Spaces
Elevators
Life-Safety Systems
Construction Details
Site Improvements and
Hotel Structure
May-2011
137
2 Guest
Sprinklers, Smoke Detectors
Steel Framing on Poured Concrete
Once guests enter the site, ample parking should be available on the surface lot
around the perimeter of the hotel. Site improvements should include freestanding signage, which should be located on the sides of the site with roadway
frontage (additional signage should be placed on the exterior of the building). We
assume that all signage will adequately identify the property and meet the to-bedetermined brand standards. Planned 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. Overall,
the site improvements for the property should reflect an appropriate look and feel
for a hotel in a suburban location.
75
The hotel structure should comprise one single building, which is likely to be
constructed of steel and reinforced concrete. The exterior of the hotel should be
finished with an attractive building material, such as stucco, brick, or stone.
Stairways and elevators will provide internal vertical transportation within the
main structure as needed. The hotel's roof should be constructed consistent with
the concept of the building construction. The installation of double-paned
windows will reduce noise transmission into the rooms. Heating and cooling
should be provided by individual in-room systems and several large units for the
public areas.
Overall, the building components should meet prototype
development specifications set forth by the chosen brand. We assume that this
type of first-class, select-service hotel will meet the standards for this market and
should complement existing, nearby improvements. We assume that all structural
components will meet local building codes and that no significant defaults will
occur during construction that may impact the future operating potential of the
hotel or delay its assumed opening date.
Lobby
We have assumed the future development of a first-class, select-service hotel
facility. Although facility programs and development specifications may differ
among other brands and facilities being considered, the select-service
programming development specifications are generally consistent. Guests should
enter the hotel through a single set of automatic doors, which will open to a
vestibule, and then through a second set of automatic doors. The lobby area
should be appropriately sized for a select-service hotel. The lobby décor should be
attractively finished with an upscale material that is in line with brand standards.
The front desk should feature a granite countertop and be installed with
appropriate property management and telephone systems. In many select-service
hotel designs, the front desk staff provides additional customer services, such as
service of the small café and lounge area. We would expect the café and lounge
area to be situated adjacent to the front desk and to be operated by the same staff
or be proximate to the front desk and feature limited personnel to service the
modest food and beverage operations. 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.
Food and Beverage
Facilities
The hotel is expected to offer food and beverage operations at a level appropriate
for a select-service hotel; these facilities should include a breakfast dining area and
a small lobby café and lounge, as well as limited room service and banquet
operations. The furnishings of the space are expected to be of a similar style and
finish as lobby and guestroom furnishings.
May-2011
76
Overall, the hotel is expected to provide a competitive offering of food and
beverage facilities for a first-class, select-service property.
Meeting and Banquet
Space
The hotel should offer one large meeting room, divisible into multiple sections
with removable walls, as well as a boardroom, located on the first floor of the hotel
building. The meeting space should be appropriate for a hotel of this type and is
expected to meet brand standards. Public restrooms near the entrance to the
meeting space should enhance the overall functionality of the area.
Recreational Amenities
The hotel is expected to offer a pool, a whirlpool, and an exercise room as
recreational facilities.
Additional Amenities
Other amenities should include a business center, a market pantry, a guest laundry
facility, and 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 brand standards.
Guestrooms
Typical of select-service prototypes, the hotel is expected to feature an all suitestyle guestroom configuration or both standard and suite-style configurations.
Guestrooms should be present on all levels of the property's proposed single
building. The guestrooms should offer typical amenities for this product tier. In
addition to first-class, high-quality furnishings, guestrooms are anticipated to
feature an iron and ironing board, a coffeemaker, and wireless, high-speed
Internet access. Guestrooms should be equipped with the newest media
technology available, including flat-panel televisions, a media desk for Internet
connections, an MP3 or iPod docking station, and personalized voicemail options.
Overall, the guestrooms should offer a competitive product for this neighborhood.
Guestroom bathrooms should be of a standard size, with a shower-in-tub,
commode, and single sink with vanity area, featuring a stone countertop. The
floors are anticipated to be finished with tile, and the walls should be finished with
knockdown texture or vinyl wall-covering. Bathrooms should feature a hairdryer
and complimentary toiletries. Overall, the bathroom design is expected to be
appropriate for a product of this type.
The interior guestroom corridors should be wide and functional, permitting the
easy passage of housekeeping carts. Corridor carpet, wall covering, signage, and
lighting are expected to be in keeping with the overall look and design of the rest
of the property.
Back-of-the-House,
ADA, and
Environmental
May-2011
The hotel is expected to be served by the necessary back-of-the-house space,
including an in-house laundry facility, administrative offices, and a modified fullservice kitchen to serve the needs of the proposed property's select-service food
77
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
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. 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.
Conclusion
Overall, the subject property should offer a well-designed, functional layout of
support areas and guestrooms. All typical and market-appropriate features and
amenities should be included in the hotel's design. We assume that the building
will be fully open and operational on the assumed opening date and will meet all
local building codes and brand standards. Furthermore, we assume that the hotel
staff will be adequately trained to allow for a successful opening and that premarketing efforts will have introduced the product to major local accounts at least
six months in advance of the opening date.
May-2011
78
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, and telephone
income) are driven by the number of guests, and many expense levels also 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
119 %
113
117
103
107
77
177 %
168
47
47
49
96
98 %
93
59
98
103
119
Ov
era
ll
Lei
su r
e
Co
mm
Property
Me
eti
ng
Gr and
ou
p
HISTORICAL PENETRATION RATES
erc
ial
FIGURE 6-1
120 %
114
96
96
100
89
The Hyatt Place Grapevine achieved the highest penetration rate within the
commercial segment. The highest penetration rate in the meeting and group
May-2011
79
segment was achieved by the Hyatt Place Grapevine, while the secondary
competition 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 subject property and each hotel in the competitive set.
FIGURE 6-2
COMMERCIAL SEGMENT ADJUSTED PENETRATION RATES
Hotel
2010
119 %
113
117
103
107
77
—
2011
118 %
112
116
101
106
81
—
2012
116 %
110
114
100
104
85
—
2013
116 %
110
114
100
105
89
89
2014
114 %
108
112
98
103
89
95
2015
113 %
108
112
98
102
89
98
2016
113 %
107
111
97
102
89
100
2017
113 %
107
111
97
102
89
100
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
May-2011
80
location within or near the Lakeside Business District, as well as its proximity to
the Dallas/Fort Worth International Airport. Given its likely select-service nature,
the hotel is expected to offer limited on-site dining options, which should appeal to
the corporate traveler. Furthermore, Flower Mound's expanding healthcare
climate should create lodging demand for the proposed subject property. FM 2499
connects the Lakeside Business District to the River Walk at Central Park, and
users can easily travel to the hospital or related medical facilities.
FIGURE 6-3
MEETING AND GROUP SEGMENT ADJUSTED PENETRATION RATES
Hotel
2010
177 %
168
47
47
49
96
—
2011
175 %
167
47
47
49
98
—
2012
173 %
164
46
46
48
100
—
2013
174 %
166
46
46
49
106
83
2014
170 %
162
45
45
48
109
86
2015
169 %
161
45
45
47
108
89
2016
169 %
160
45
45
47
108
91
2017
169 %
160
45
45
47
108
91
While select-service hotels are not known for group accommodations, this
property will be proximate to both the Gaylord Texan and the Dallas/Fort Worth
International Airport. Grapevine hotels will primarily benefit from overflow
demand; however, we expect a modest amount of overflow would be
accommodated at the proposed subject property during large events. Additionally,
the lack of meeting and event facilities in Flower Mound will allow the hotel to
capture demand tied to meetings for local groups and associations, weddings, and
training events for area corporations. Flower Mound's Gerault Field Complex also
hosts several sporting tournaments annually, and the proposed hotel is expected
to benefit from groups associated with team travel. These factors should lead to a
relatively strong meeting and group penetration level for a property of this type.
FIGURE 6-4
LEISURE SEGMENT ADJUSTED PENETRATION RATES
Hotel
2010
98 %
93
59
98
103
119
—
2011
96 %
91
58
96
101
120
—
2012
95 %
90
57
95
99
122
—
2013
95 %
90
57
95
99
127
87
2014
94 %
90
57
94
99
126
91
2015
94 %
89
56
94
98
126
95
2016
93 %
88
56
93
97
125
99
2017
93 %
88
56
93
97
125
99
The proposed subject property’s leisure penetration rate is positioned
appropriately within the range of existing competitors, supported by the hotel’s
May-2011
81
convenient location and array of amenities. In addition to nearby Grapevine,
Flower Mound is replete with upscale retail outlets, restaurants, and
entertainment venues. The hotel's location along FM 2499 is also a positive
attribute in capturing demand associated with friends or relatives visiting nearby
residents. The expansion of FM 2499 connects Grapevine to Corinth and Denton,
with Flower Mound in between. The proposed subject property is expected 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
2013
Commercial
Meeting and Group
Leisure
Total
2014
2015
2016
2017
70 %
9
22
70 %
8
21
70 %
8
21
70 %
8
22
70 %
8
22
100 %
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.
May-2011
82
FIGURE 6-6
FORECAST OF SUBJECT PROPERTY'S OCCUPANCY
Market Segment
2013
2014
2015
2016
2017
162,016
12.2 %
19,698
89 %
166,066
13.0 %
21,596
95 %
168,557
13.5 %
22,687
98 %
170,243
13.7 %
23,298
100 %
171,945
13.7 %
23,531
100 %
Meeting and Group
Demand
Market Share
Capture
Penetration
21,670
11.3 %
2,456
83 %
22,103
11.7 %
2,595
86 %
22,324
12.2 %
2,725
89 %
22,436
12.5 %
2,815
91 %
22,548
12.5 %
2,830
91 %
Leisure
Demand
Market Share
Capture
Penetration
51,014
11.9 %
6,084
87 %
51,524
12.5 %
6,443
91 %
52,039
13.1 %
6,806
95 %
52,559
13.6 %
7,170
99 %
53,085
13.6 %
7,242
99 %
Total Room Nights Captured
28,238
30,635
32,217
33,283
33,602
Available Room Nights
47,450
47,450
47,450
47,450
47,450
Commercial
Demand
Market Share
Capture
Penetration
Subject Occupancy
60 %
Marketwide Available Room Nights
Fair Share
345,984
14 %
Marketwide Occupied Room Nights
234,699
65 %
345,984
14 %
239,693
68 %
345,984
14 %
242,921
70 %
345,984
14 %
245,238
71 %
345,984
14 %
247,578
Market Share
12 %
13 %
13 %
14 %
14 %
Marketwide Occupancy
68 %
69 %
70 %
71 %
72 %
Total Penetration
88 %
93 %
97 %
99 %
99 %
Based on our analysis of the proposed subject property and market area, we have
selected a stabilized occupancy level of 70%. The stabilized occupancy is intended
to reflect the anticipated results of the property over its remaining economic life,
given any and 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.
May-2011
83
These projections reflect years beginning January 1, 2013, corresponding to the
first projection year for the subject property’s forecast of income and expense.
FIGURE 6-7
FORECAST OF OCCUPANCY
Year
2013
2014
2015
2016
Subject
Property's
Occupancy
60 %
65
68
70
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
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.
May-2011
84
FIGURE 6-8
BASE YEAR AVERAGE RATE AND REVPAR OF THE COMPETITORS
Estimated 2010
Average Room
Rate
Average
Room Rate
Penetration
Rooms Revenue
Per Available
Room (RevPAR)
$86.00
114.00
107.00
Fairfield Inn & Suites Grapevine DFW Airport North 107.00
82.00
88.8 %
117.7
110.5
110.5
84.7
$68.80
86.64
68.48
68.48
54.94
106.4 %
134.0
105.9
105.9
85.0
Average - Primary Competitors
Average - Secondary Competitors
$98.04
94.33
101.2 %
97.4
$69.36
56.15
107.3 %
86.9
Overall Average
$96.85
Property
RevPAR
Penetration
$64.64
The defined primarily competitive market realized an overall average rate of
$98.04 in the 2010 base year, declining from the 2009 level of $112.01. The
Hampton Inn & Suites achieved the highest estimated average rate in the local
competitive market because of its strong corporate clientele, as well as its popular
franchise affiliation and rewards program. When compared with the secondary
competitors, the primary competitive set achieved a higher rate by a measurable
margin. The presence of Grapevine Mills outlet mall, surrounding retail and
restaurants, and more convenient access to the airport allow the primary
competitive set to command a rate premium. The selected rate position for the
proposed subject property, in base-year dollars, takes into consideration factors
such as its new construction, anticipated affiliation with a strong brand, and its
favorable location near the North Dallas/Fort Worth International Airport area's
primary generators of demand, as well as Flower Mound's growing industry and
budding healthcare facilities. We have selected the rate position of $100.00, in
base-year dollars, for the proposed subject.
As illustrated previously, the average rate for the primarily competitive market
averaged $112.01 in 2009, before reaching $98.04 in 2010. As corporate budgets
tightened and consumer spending declined, average rates for hotels in this North
Dallas/Fort Worth International Airport area market weakened. Based upon our
research and analysis, rates appear to have already bottomed out near the low
$90s from late 2009 to early 2010. Rate growth gained momentum in the latter
half of 2010; thus, we expect rate to continue to increase as the economy continues
to recover.
May-2011
85
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 a base underlying inflation rate of 3.0% annually
throughout our projection period.
FIGURE 6-9
MARKET AND SUBJECT PROPERTY AVERAGE RATE FORECAST
Area-wide Market (Calendar Year)
Year
Base Year
2011
2012
2013
2014
2015
2016
Occupancy
66.7 %
69.0
71.4
67.8
69.3
70.2
70.9
Average Rate
Growth
—
-1.0 %
2.5
5.0
6.0
4.0
3.0
Subject Property (Calendar Year)
Average
Rate
Occupancy
$96.85
95.89
98.28
103.20
109.39
113.76
117.18
—
—
—
60.0 %
65.0
68.0
70.0
Average Rate
Growth
Average
Rate
Average Rate
Penetration
—
-1.0 %
2.5
5.0
6.0
4.0
3.0
$100.00
99.00
101.48
106.55
112.94
117.46
120.98
103.2 %
103.2
103.2
103.2
103.2
103.2
103.2
As illustrated above, a -1.0% rate of change is expected for the subject property's
positioned 2010 room rate in 2011. This is followed by growth rates of 2.5% and
5.0% in 2012 and 2013, respectively. The North Dallas/Fort Worth International
Airport market should experience a slight decrease in average rate in the first
projected year, followed by an increase in the second projected year and
thereafter. The proposed subject property's rate position should reflect growth
similar to market trends because of the proposed subject property's new facility,
strong brand affiliation, and proximity to both Flower Mound and Grapevine
demand generators. The proposed subject property’s penetration rate is forecast
to reach 103.2% by the stabilized period.
The North American lodging market bottomed out in late 2009 when demand
started to grow once again and the supply pipeline diminished. In 2010,
occupancy rebounded strongly, although average rate stabilization was not
uniform throughout the U.S. In many urban markets, average rates began to show
strength during the summer of 2010, while rates have yet to stabilize in select
markets that are heavily dependent on group demand. Overall, HVS forecasts
RevPAR to increase by 7.1% in 2011. Thereafter, HVS projects that RevPAR levels
will continue to recover as a result of steady demand growth, modest increases in
supply, and accelerating average rate gains.
A new property must establish its reputation and a client base in the market
during its ramp-up period; as such, the proposed subject property’s average rates
May-2011
86
in the initial operating period have been discounted to reflect this likelihood. We
forecast 3.0% and 1.5% discounts to the proposed subject property’s forecast
room rates in the first two operating years, which would be typical for a new
operation of this type.
The following average rates will be used to project the subject property's rooms
revenue; this forecast reflects years which begin January 1, 2013 and correspond
with our financial projections.
FIGURE 6-10 FORECAST OF AVERAGE RATE
Year
2013
2014
2015
2016
May-2011
Occupancy
60 %
65
68
70
Average Rate
Before Discount
$106.55
112.94
117.46
120.98
Discount
3.0 %
1.5
0.0
0.0
Average Rate
After Discount
$103.35
111.25
117.46
120.98
87
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 property. 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 time frame 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
May-2011
In order to project future income and expense for the proposed subject property,
we have included a sample of individual comparable operating statements from
our database of hotel statistics. All financial data is 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.
88
FIGURE 7-1
COMPARABLE OPERATING STATEMENTS: RATIO TO SALES
Year:
Number of Rooms:
Days Open:
Occupancy:
Average Rate:
RevPAR:
REVENUE
Rooms
Food & Beverage
Other Operated Departments
Other Income
Total
Rooms
Food & Beverage
Other Expenses
Total
DEPARTMENTAL INCOME
OPERATING EXPENSES
Marketing
Franchise Fee
Property Operations & Maintenance
Utilities
Total
HOUSE PROFIT
Management Fee
Comp 1
Comp 2
Comp 3
Comp 4
Comp 5
2008/09
70 to 90
365
69%
$110
$76
2007/08
80 to 100
366
63%
$118
$75
2007
120 to 160
365
63%
$109
$68
2009/10
120 to 160
365
68%
$120
$81
2008/09
100 to 130
365
70%
$107
$74
85.7 %
4.8
0.1
9.4
100.0
95.5 %
3.0
0.3
1.2
100.0
Subject
Stabilized $
2010
130
365
70%
$101
$71
94.9 %
3.3
0.1
1.7
100.0
93.8 %
3.8
0.2
2.2
100.0
90.2 %
5.8
0.2
3.8
100.0
94.1 %
4.6
0.0
1.4
100.0
22.4
101.3
81.6
27.1
72.9
21.6
100.0
84.5
27.0
73.0
21.4
113.5
43.2
27.7
72.3
20.2
79.1
48.6
26.0
74.0
19.2
99.0
52.6
23.2
76.8
22.1
89.0
35.0
25.3
74.7
11.3
4.4
6.6
4.7
3.1
30.1
42.8
3.5
39.3
10.9
7.0
4.7
4.9
4.2
31.8
41.2
3.5
37.7
7.4
6.3
2.6
5.5
6.3
28.1
44.2
3.1
41.1
8.0
3.7
6.6
4.8
3.7
26.8
47.2
2.5
44.7
9.2
4.3
6.7
5.6
3.8
29.6
47.2
3.5
43.7
9.3
3.2
7.5
3.7
4.3
28.0
46.7
3.0
43.7
* Departmental expense ratios are expressed as a percentage of departmental revenues
May-2011
89
FIGURE 7-2
COMPARABLE OPERATING STATEMENTS: AMOUNTS PER AVAILABLE ROOM
Comp 1
Year:
Number of Rooms:
Days Open:
Occupancy:
Average Rate:
RevPAR:
REVENUE
Rooms
Food & Beverage
Other Income
Total
DEPARTMENTAL EXPENSES
Rooms
Food & Beverage
Other Expenses
Total
DEPARTMENTAL INCOME
OPERATING EXPENSES
Marketing
Franchise Fee
Utilities
Total
HOUSE PROFIT
Management Fee
May-2011
2008/09
70 to 90
365
69%
$110
$76
Comp 2
Comp 3
Comp 4
Comp 5
2007/08
2007
2009/10
2008/09
80 to 100 120 to 160 120 to 160 100 to 130
366
365
365
365
63%
63%
68%
70%
$118
$109
$120
$107
$75
$68
$81
$74
Subject
Stabilized $
2010
130
365
70%
$101
$71
$27,641
962
38
487
29,128
$27,311
1,100
56
644
29,111
$24,821
1,586
57
1,057
27,521
$29,629
1,643
36
3,250
34,557
$27,188
857
80
339
28,464
$25,888
1,253
0
376
27,516
6,205
974
397
7,897
21,231
5,900
1,100
544
7,856
21,256
5,300
1,800
457
7,629
19,893
5,993
1,300
1,579
8,979
25,579
5,223
848
179
6,598
21,866
5,721
1,115
132
6,968
20,549
3,282
1,269
1,936
1,372
910
8,769
12,462
1,026
11,436
3,178
2,033
1,367
1,433
1,233
9,244
12,012
1,022
10,989
2,036
1,721
729
1,507
1,743
7,736
12,157
843
11,314
2,779
1,293
2,279
1,650
1,264
9,264
16,315
871
15,443
2,607
1,232
1,902
1,607
1,089
8,438
13,428
1,000
12,429
2,550
883
2,071
1,016
1,177
7,696
12,853
825
12,027
90
FIGURE 7-3
COMPARABLE OPERATING STATEMENTS: AMOUNTS PER OCCUPIED ROOM
Comp 1
Year:
Number of Rooms:
Days Open:
Occupancy:
Average Rate:
RevPAR:
REVENUE
Rooms
Food & Beverage
Other Income
Total
DEPARTMENTAL EXPENSES
Rooms
Food & Beverage
Other Expenses
Total
DEPARTMENTAL INCOME
OPERATING EXPENSES
Marketing
Franchise Fee
Utilities
Total
HOUSE PROFIT
Management Fee
Comp 2
Comp 3
Comp 4
Comp 5
Subject
Stabilized $
2010
130
365
70%
$101
$71
2008/09
70 to 90
365
69%
$110
$76
2007/08
2007
2009/10
2008/09
80 to 100 120 to 160 120 to 160 100 to 130
366
365
365
365
63%
63%
68%
70%
$118
$109
$120
$107
$75
$68
$81
$74
$109.53
3.81
0.15
1.93
115.42
$118.24
4.76
0.24
2.79
126.03
$108.63
6.94
0.25
4.63
120.45
$119.55
6.63
0.14
13.11
139.44
$107.01
3.37
0.32
1.34
112.03
$101.32
4.90
0.00
1.47
107.70
24.59
3.86
1.57
31.29
84.13
25.54
4.76
2.36
34.01
92.02
23.20
7.88
2.00
33.39
87.06
24.18
5.25
6.37
36.23
103.21
20.56
3.34
0.70
25.97
86.06
22.39
4.36
0.51
27.27
80.42
13.01
5.03
7.67
5.44
3.61
34.75
49.38
4.06
45.32
13.76
8.80
5.92
6.21
5.34
40.02
52.00
4.43
47.57
8.91
7.53
3.19
6.60
7.63
33.86
53.21
3.69
49.52
11.21
5.22
9.19
6.66
5.10
37.38
65.83
3.52
62.31
10.26
4.85
7.49
6.33
4.29
33.21
52.85
3.94
48.92
9.98
3.45
8.10
3.98
4.61
30.12
50.30
3.23
47.07
The comparables’ departmental income ranged from 72.3% to 76.8% of total
revenue. The comparable properties achieved a house profit ranging from 41.2%
to 47.2% 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.
Premise of Forecast
May-2011
In 2010, occupancy gains have been considerable on a nationwide basis and, in
many markets, average rates began to show signs of recovery beginning in the
second half of the year. With demand recovery established in 2010, hotel
operators are expected to continue to pursue price increases for 2011. Operators
91
and investors in the market anticipate an acceleration of revenue growth
thereafter as the economy and lodging market gain traction in the recovery; this
outlook is reflected in our forecasts. Strong RevPAR growth and continued
monitoring of expenses are anticipated to positively affect the overall net
operating income.
Fixed and Variable
Component Analysis
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
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 following table illustrates the revenue and expense categories that can be
projected using this fixed and variable component model. These percentages show
the portion of each category that is typically fixed and variable; the middle column
describes the basis for calculating the percentage of variability, while the last
column sets forth the fixed percentage that has been utilized in this valuation.
May-2011
92
FIGURE 7-4
RANGE OF FIXED AND VARIABLE RATIOS
Category
Percent Fixed
Percent Variable
Revenues
Food
Beverage
Telephone
Other Income
25 - 50 %
0 - 30
10 - 40
30 - 70
50 - 75 %
70 - 100
60 - 90
30 - 70
Departmental Expenses
Rooms
Food & Beverage
Telephone
Other Expenses
50 - 70
35 - 60
40 - 60
30 - 70
30
40
40
30
Undistributed Operating Expenses
Marketing
Utilities
65 - 85
65 - 85
55 - 75
75 - 95
Management Fee
Fixed Expenses
Property Taxes
Insurance
- 50
- 65
- 60
- 70
Index of Variability
Occupancy
Food Revenue
Occupancy
Occupancy
Selected
Fixed Ratio
15 %
0
10
10
Occupancy
Food & Beverage Revenue
Telephone Revenue
Other Income
60
55
60
70
15 - 35
15 - 35
25 - 45
5 - 25
Total Revenue
Total Revenue
Total Revenue
Total Revenue
75
75
75
75
0
100
Total Revenue
0
100
100
0
0
0
100
Total Revenue
Total Revenue
Total Revenue
100
100
0
Our fixed and variable projection model is based upon variables that we input for
each revenue and expense item for a “base year,” which in this case is the year
2010. The base-year forecast sets forth the ratios to revenue, amounts per
available room, or amounts per occupied room that we believe can be achieved at
the stated base-year average rate and occupancy. Our input variables are derived
from the comparable hotel statements. The model then calculates a base-year
forecast of income and expense in these base-year dollars.
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
May-2011
93
the output derived from the fixed and variable model. This forecast of revenue and
expense is accomplished through a step-by-step 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
May-2011
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.
94
FIGURE 7-5
INFLATION ESTIMATES
Previous
Projections
for Dec. '10 in
July '10 Survey
Name
Firm
Paul Ashworth
Paul Ballew
Nariman Behravesh
Richard Berner/David Greenlaw
Ram Bhagavatula
Jay Brinkmann
Michael Carey
Joseph Carson
Julia Coronado
Mike Cosgrove
Lou Crandall
J. Dewey Daane
Richard DeKaser*
Douglas Duncan
Brian Fabbri*
Maria Fiorini Ramirez/Joshua Shapiro
Stephen Gallagher*
Ethan Harris
Maury Harris
Jan Hatzius
Tracy Herrick
Stuart Hoffman
Gene Huang
William B. Hummer
Dana Johnson
Kurt Karl
Bruce Kasman
Paul Kasriel
Joseph A. LaVorgna
Edward Leamer/David Shulman
Don Leavens/Tim Gill
John Lonski
Dean Maki
David Malpass
Aneta Markowska
Jim Meil
Mark Nielson, Ph. D.
Michael P. Niemira
Jim O'Sullivan
Nicholas S. Perna
Joel Prakken/ Chris Varvares
Arun Raha
David Resler
John Ryding/Conrad DeQuadros
Ian Shepherdson
John Silvia
Allen Sinai
James F. Smith
Sean M. Snaith
Sung Won Sohn
Neal Soss
Stephen Stanley
Susan M. Sterne
Diane Swonk
Bart van Ark
Brian S. Wesbury/ Robert Stein
William T. Wilson
David Wyss
Lawrence Yun
Capital Economics
Nationwide
IHS Global Insight
Morgan Stanley
Combinatorics Capital
Mortgage Bankers Association
Credit Agricole CIB
AllianceBernstein
BNP Paribas
Econoclast
Wrightson ICAP
Vanderbilt University
Woodley Park Research
Fannie Mae
BNP Paribas
MFR, Inc.
Societe Generale
Bank of America Securities-Merrill Lynch
UBS
Goldman Sachs & Co.
The Private Bank
PNC Financial Services Group
FedEx Corp.
Wayne Hummer Investments LLC
Comerica Bank
Swiss Re
JP Morgan Chase & Co.
The Northern Trust
Deutsche Bank Securities Inc.
UCLA Anderson Forecast
NEMA Business Information Services
Moody's Investors Service
Barclays Capital
Encima Global LLC
Societe Generale
Eaton Corp.
MacroEcon Global Advisors
International Council of Shopping Centers
MF Global
Perna Associates
Macroeconomic Advisers
Economic and Revenue Forecast Council
Nomura Securities International Inc.
RDQ Economics
High Frequency Economics
Wells Fargo & Co.
Decision Economics Inc.
Parsec Financial Management
University of Central Florida
California State University
Credit Suisse
Pierpont Securities
Economic Analysis
Mesirow Financial
The Conference Board
First Trust Advisors, L.P.
Skolkovo Inst. for Emerging Market Studies
Standard and Poor's
National Association of Realtors
Actual Inflation for 2010
Projected Increase in Consumer Price
Index (Annualized Rate
Versus 12 Months Earlier)
June
December
2011
2011
0.0 %
2.2
0.7
1.5
2.0
0.8
1.1
1.5
—
1.0
1.1
2.0
0.4
0.8
1.2
0.9
1.1
0.8
—
0.6
2.0
1.0
1.8
1.3
0.7
1.3
0.9
0.7
1.2
1.1
0.7
0.9
1.3
2.2
—
2.1
3.2
2.4
0.9
1.2
0.7
2.5
—
2.1
0.7
0.5
1.0
0.2
1.2
1.8
0.8
1.0
2.6
0.8
0.8
1.9
1.7
1.0
1.2
1.5 %
1.7
2.0
2.5
2.0
1.1
1.8
1.6
1.6
1.6
3.1
1.5
—
1.7
—
2.0
—
1.9
1.8
1.2
1.5
2.2
1.9
1.7
2.5
2.1
1.7
1.9
1.7
1.9
2.2
2.5
1.9
2.4
1.2
1.4
2.5
2.4
1.6
1.8
1.7
2.0
1.5
2.2
2.0
2.4
2.4
0.7
1.8
1.2
1.5
2.8
1.9
1.7
1.7
2.4
1.4
1.7
2.5
1.0 %
2.2
1.3
2.5
2.6
1.0
1.4
2.0
1.0
1.8
3.0
2.0
—
1.3
—
2.1
—
0.8
1.9
1.0
3.0
1.7
2.6
1.8
1.9
1.5
1.2
1.9
2.0
1.8
2.4
2.2
1.6
2.5
1.8
1.9
3.2
2.9
1.3
1.7
1.1
2.4
0.9
2.6
0.5
2.0
2.6
1.0
1.7
2.2
0.4
2.7
2.2
1.2
2.0
3.0
1.8
1.6
2.7
1.3 %
1.9 %
1.9 %
1.6 %
*No forecasts submitted for January 2011 survey
Source: wsj.com, January 17, 2011
May-2011
95
As the preceding table indicates, the financial analysts who were surveyed in early
2011 anticipated inflation rates ranging from 0.7% to 3.1% (on an annualized
basis) for the six-month period ending June 2011; the average estimate was 1.9%.
The same group forecast 1.3% inflation for the six-month period ending December
2011, and the actual inflation rate during this period was 1.6%.
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 7-6
NATIONAL CONSUMER PRICE INDEX (ALL URBAN CONSUMERS)
Year
National Consumer
Price Index
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
172.2
177.1
179.9
184.0
188.9
195.3
201.6
207.3
215.3
214.5
218.1
Percent Change
from Previous Year
Average Annual Compounded Change
2000 - 2010:
2005 - 2010:
—
2.8 %
1.6
2.3
2.7
3.4
3.2
2.8
3.8
-0.4
1.6
2.4 %
2.2
Source: Bureau of Labor Statistics
Between 2000 and 2010, the national CPI increased at an average annual
compounded rate of 2.4%; from 2005 to 2010, the CPI rose by a slightly below
average annual compounded rate of 2.2%. In 2010, the CPI noted a change of
1.6%, an increase from the level of -0.4% recorded in 2009.
In consideration of the most recent trends, the projections set forth previously,
and our assessment of probable property appreciation levels, we have applied an
underlying inflation rate of 2.0% in 2013, 2.0% in 2014, and 3.0% in 2015 and
thereafter. This stabilized inflation rate takes into account normal, recurring
inflation cycles. Inflation is likely to fluctuate above and below this level during the
projection period. Any exceptions to the application of the assumed underlying
May-2011
96
inflation rate are discussed in our write-up of individual income and expense
items.
Summary of
Projections
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 beginning January 1, 2013 and are expressed in inflated dollars for each
year.
We note that the following forecast does not consider any possible incentives a
developer could potentially receive from the Town of Flower Mound.
May-2011
97
FIGURE 7-7
DETAILED FORECAST OF INCOME AND EXPENSE
2014
2015
Stabilized
Number of Rooms:
2013 (Calendar Year)
130
130
130
130
130
Occupancy:
60%
65%
68%
70%
70%
$103.35
$62.01
$111.25
$72.31
$117.46
$79.87
$120.98
$84.69
$124.61
$87.23
Average Rate:
RevPAR:
Days Open:
Occupied Rooms:
365
365
28,470 %Gross
PAR
POR
365
30,843 %Gross
PAR
POR
2017
365
32,266 %Gross
PAR
POR
365
33,215 %Gross
PAR
POR
33,215 %Gross
PAR
POR
REVENUE
Rooms
Food
$2,942
125
93.5 %
4.0
$22,631
962
$103.34
4.39
$3,431
138
93.9 %
3.8
$26,392
1,060
$111.24
4.47
$3,790
147
94.1 % $29,154
3.7
1,134
$117.46
4.57
$4,018
156
94.1 % $30,908
3.6
1,197
$120.97
4.68
$4,139
160
94.1 %
3.6
$31,838
1,233
$124.61
4.82
1.21
Beverage
31
1.0
241
1.10
34
0.9
265
1.12
37
0.9
283
1.14
39
0.9
299
1.17
40
0.9
308
Other Income
47
1.5
358
1.63
51
1.4
396
1.67
55
1.4
425
1.71
58
1.4
449
1.76
60
1.4
462
1.81
3,145
100.0
24,191
110.46
3,655
100.0
28,113
118.49
4,029
100.0
30,995
124.88
4,271
100.0
32,852
128.58
4,399
100.0
33,842
132.45
766
150
26.0
95.8
5,894
1,152
26.92
5.26
813
159
23.7
92.2
6,255
1,221
26.37
5.15
852
166
22.5
90.2
6,557
1,278
26.42
5.15
888
173
22.1
89.0
6,831
1,331
26.74
5.21
915
178
22.1
89.0
7,036
1,371
27.54
5.37
Total Revenues
DEPARTMENTAL EXPENSES *
Rooms
Food & Beverage
Other Expenses
Total
DEPARTMENTAL INCOME
18
38.6
138
0.63
19
36.7
145
0.61
20
35.6
151
0.61
20
35.0
157
0.61
21
35.0
162
0.63
934
29.7
7,184
32.81
991
27.1
7,621
32.12
1,038
25.8
7,986
32.18
1,082
25.3
8,320
32.56
1,114
25.3
8,569
33.54
2,211
70.3
17,007
77.66
2,664
72.9
20,491
86.37
2,991
74.2
23,009
92.70
3,189
74.7
24,533
96.02
3,285
74.7
25,272
98.91
12.27
345
11.0
2,650
12.10
364
10.0
2,804
11.82
382
9.5
2,935
11.82
396
9.3
3,044
11.92
408
9.3
3,136
Marketing
119
3.8
917
4.19
126
3.5
970
4.09
132
3.3
1,016
4.09
137
3.2
1,054
4.12
141
3.2
1,085
4.25
Franchise Fee
235
7.5
1,810
8.27
274
7.5
2,111
8.90
303
7.5
2,332
9.40
321
7.5
2,473
9.68
331
7.5
2,547
9.97
113
3.6
872
3.98
133
3.7
1,026
4.33
149
3.7
1,147
4.62
158
3.7
1,213
4.75
166
3.8
1,274
4.99
Utilities
Total
159
972
5.1
31.0
1,223
7,473
5.58
34.12
168
1,067
4.6
29.3
1,294
8,206
5.45
34.59
176
1,142
4.4
28.4
1,355
8,785
5.46
35.40
183
1,195
4.3
28.0
1,405
9,189
5.50
35.97
188
1,234
4.3
28.1
1,447
9,490
5.66
37.14
1,239
39.3
9,534
43.53
1,597
43.6
12,286
51.78
1,849
45.8
14,224
57.31
1,995
46.7
15,343
60.05
2,052
46.6
15,782
61.77
94
3.0
726
3.31
110
3.0
843
3.55
121
3.0
930
3.75
128
3.0
986
3.86
132
3.0
1,015
3.97
1,145
36.3
8,808
40.22
1,488
40.6
11,442
48.23
1,728
42.8
13,294
53.56
1,866
43.7
14,358
56.19
1,920
43.6
14,767
57.80
180
42
5.7
1.3
1,384
321
6.32
1.47
183
43
5.0
1.2
1,405
331
5.92
1.40
186
44
4.6
1.1
1,433
341
5.77
1.37
192
46
4.5
1.1
1,476
351
5.78
1.37
198
47
4.5
1.1
1,520
362
5.95
1.42
HOUSE PROFIT
Management Fee
FIXED EXPENSES
Property Taxes
Insurance
Total
NET INCOME
63
2.0
484
2.21
110
3.0
843
3.55
161
4.0
1,240
5.00
171
4.0
1,314
5.14
176
4.0
1,354
5.30
285
9.0
2,189
10.00
335
9.2
2,579
10.87
392
9.7
3,014
12.14
408
9.6
3,141
12.29
421
9.6
3,236
12.66
$6,619
$30.22
$1,152
$8,863
$37.36
$1,336
33.1 % $10,280
$41.42
$1,458
34.1 % $11,216
$43.90
$1,499
$11,531
$45.13
$860
27.3 %
31.4 %
34.0 %
May-2011
98
FIGURE 7-8
TEN-YEAR FORECAST OF INCOME AND EXPENSE
2013
Number of Rooms:
Occupied Rooms:
Occupancy:
2015
2017
2018
2019
2020
2021
2022
130
130
130
130
130
130
130
130
28,470
60%
30,843
65%
32,266
68%
33,215
70%
33,215
70%
33,215
70%
33,215
70%
33,215
70%
33,215
70%
33,215
70%
$111.25
$72.31
$3,431
138
34
51
3,655
% of
Gross
93.9 %
3.8
0.9
1.4
100.0
$117.46
$79.87
$3,790
147
37
55
4,029
% of
Gross
94.1 %
3.7
0.9
1.4
100.0
$120.98
$84.69
$4,018
156
39
58
4,271
% of
Gross
94.1 %
3.6
0.9
1.4
100.0
$124.61
$87.23
$4,139
160
40
60
4,399
% of
Gross
94.1 %
3.6
0.9
1.4
100.0
$128.35
$89.85
Gross
% of
$132.20
$92.54
$4,263
165
41
62
4,531
94.1 %
3.6
0.9
1.4
100.0
$4,391
170
43
64
4,667
% of
Gross
94.1 %
3.6
0.9
1.4
100.0
$136.17
$95.32
$4,523
175
44
66
4,808
% of
Gross
94.1 %
3.6
0.9
1.4
100.0
$140.25
$98.18
$4,658
180
45
68
4,951
% of
Gross
94.1 %
3.6
0.9
1.4
100.0
$144.46
$101.12
$4,798
186
46
70
5,100
% of
Gross
94.1 %
3.6
0.9
1.4
100.0
813
159
19
991
2,664
23.7
92.2
36.7
27.1
72.9
852
166
20
1,038
2,991
22.5
90.2
35.6
25.8
74.2
888
173
20
1,082
3,189
22.1
89.0
35.0
25.3
74.7
915
178
21
1,114
3,285
22.1
89.0
35.0
25.3
74.7
942
184
22
1,147
3,384
22.1
89.0
35.0
25.3
74.7
970
189
22
1,182
3,485
22.1
89.0
35.0
25.3
74.7
1,000
195
23
1,217
3,590
22.1
89.0
35.0
25.3
74.7
1,030
201
24
1,254
3,697
22.1
89.0
35.0
25.3
74.7
1,060
207
24
1,291
3,808
22.1
89.0
35.0
25.3
74.7
364
126
274
133
168
1,067
1,597
110
1,488
10.0
3.5
7.5
3.7
4.6
29.3
43.6
3.0
40.6
382
132
303
149
176
1,142
1,849
121
1,728
9.5
3.3
7.5
3.7
4.4
28.4
45.8
3.0
42.8
396
137
321
158
183
1,195
1,995
128
1,866
9.3
3.2
7.5
3.7
4.3
28.0
46.7
3.0
43.7
408
141
331
166
188
1,234
2,052
132
1,920
9.3
3.2
7.5
3.8
4.3
28.1
46.6
3.0
43.6
420
145
341
174
194
1,274
2,110
136
1,974
9.3
3.2
7.5
3.8
4.3
28.1
46.6
3.0
43.6
432
150
351
183
200
1,316
2,170
140
2,030
9.3
3.2
7.5
3.9
4.3
28.2
46.5
3.0
43.5
445
154
362
188
206
1,355
2,235
144
2,091
9.3
3.2
7.5
3.9
4.3
28.2
46.5
3.0
43.5
459
159
373
194
212
1,396
2,301
149
2,153
9.3
3.2
7.5
3.9
4.3
28.2
46.5
3.0
43.5
473
164
384
200
218
1,438
2,371
153
2,218
9.3
3.2
7.5
3.9
4.3
28.2
46.5
3.0
43.5
183
43
110
335
5.0
1.2
3.0
9.2
186
44
161
392
4.6
1.1
4.0
9.7
192
46
171
408
4.5
1.1
4.0
9.6
198
47
176
421
4.5
1.1
4.0
9.6
204
48
181
433
4.5
1.1
4.0
9.6
210
50
187
446
4.5
1.1
4.0
9.6
216
51
192
460
4.5
1.1
4.0
9.6
222
53
198
473
4.5
1.1
4.0
9.6
229
55
204
488
4.5
1.1
4.0
9.6
$860
27.3 %
$1,152
31.4 %
1
1
May-2011
2016
130
Average Rate:
$103.35 % of
RevPAR:
$62.01 Gross
REVENUE
Rooms
$2,942
93.5 %
Food
125
4.0
Beverage
31
1.0
Other Income
47
1.5
Total
3,145 100.0
Rooms
766
26.0
Food & Beverage
150
95.8
Other Expenses
18
38.6
Total
934
29.7
DEPARTMENTAL INCOME
2,211
70.3
345
11.0
Marketing
119
3.8
Franchise Fee
235
7.5
113
3.6
Utilities
159
5.1
Total
972
31.0
HOUSE PROFIT
1,239
39.3
Management Fee
94
3.0
1,145
36.3
FIXED EXPENSES
Property Taxes
180
5.7
Insurance
42
1.3
63
2.0
Total
285
9.0
NET INCOME
2014
130
$1,336
1
33.1 %
$1,458
1
34.1 %
$1,499
1
34.0 %
$1,541
1
34.0 %
$1,583
1
33.9 %
$1,631
1
33.9 %
$1,680
1
33.9 %
$1,730
1
33.9 %
99
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 four 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 comparable income and expense statements. Our
forecast is based upon calendar years beginning January 1, 2013 and is 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
subject property is expected to stabilize at an occupancy level of 70% with an
average rate of $120.98 in 2016. 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, food and beverage department will include a
breakfast dining area, lobby café and lounge; moreover, banquet space is expected
to span 3,500 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
3.2% to 6.4% of rooms revenue, or $3.37 and $6.94 per occupied room.
The proposed subject property's food and beverage operation is expected to be
modest, serving as a convenient alternative to a full-service hotel dining
experience. Based upon our review of comparable operating statements, we have
positioned this revenue at an appropriate level given its 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 $4.39 and
$1.10 per occupied room, respectively, in the first projection year, or respectively
4.3% and 1.1% of rooms revenue. These per-occupied-room amounts increase to
$4.68 and $1.17 for respective food and beverage revenue categories by the
stabilized year, or respectively 3.9% and 1.0% of rooms revenue. On a percentage
of food revenue, beverage revenue is forecast at 25.0% in the first projection year,
stabilizing at 25.0%.
May-2011
100
Other Income
Other income is derived from sources other than guestrooms, food and beverage,
and telephone services. Other income revenue for the comparables ranged 1.2% to
11.0% of rooms revenue or $1.34 to $13.11 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 property’s other income to stabilize at $1.76 per
occupied room by the stabilized year, 2016. The proposed subject property's other
income sources are expected to be generated primarily from the hotel's meeting
space rental, sundries counter, 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 property.
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 19.2% and 22.4% of
rooms revenue; on a per-occupied-room basis, the range was between $20.56 and
$25.54. We have projected rooms expense for the subject at 26.0% in the first year
(or $26.92 per occupied room), stabilizing at 22.1% in 2016 (or $26.74 per
occupied room). The proposed subject property'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.
Food and Beverage
Expense
May-2011
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.
101
The comparables illustrate food and beverage expense ranging between 79.1%
and 113.5% of food and beverage revenue. We have projected a stabilized expense
ratio of 89.0% in 2016. The proposed subject property'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.
Other
Income Expense
Other income expense consists of costs associated with other income and is
dependent on the nature of the revenue. For example, if a hotel leases its gift shop
to an outside operator, the gift shop expenses are limited to items such as rental
fees and commissions. If the property operates its own gift shop, both revenues
and expenses will be higher, and the hotel is responsible for the cost of goods sold,
payroll, and so forth.
The comparables illustrated other income expense ranging between 43.2% and
84.5% of other income. We have projected a stabilized expense ratio of 35.0% in
2016. Expenses related to the proposed subject property's other income sources
should be minimal and associated with the other revenue components discussed
previously.
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.
On a percentage of total revenue basis, the comparable operations indicate an
administrative and general expense range from 7.4% to 11.3%, or $2,036 to
$3,282 per available room. Based upon our review of the comparable operating
data and the expected scope of facility for the proposed subject property, we have
positioned the administrative and general expense level at a market- and
property-supported level. In the first projection year, we have projected
administrative and general expense for the proposed subject property to be
$2,650 per available room, or 11.0% of total revenue. By the 2016 stabilized year,
these amounts change to $3,044 per available room and 9.3% of total revenue.
Marketing Expense
May-2011
Marketing expense consists of all costs associated with advertising, sales, and
promotion; these activities are intended to attract and retain customers. Marketing
102
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.
On a percentage of total revenue basis, the comparable operations indicate a
marketing expense range from 3.7% to 7.0%, or $1,232 to $2,033 per available
room. Based upon our review of the comparable operating data and the expected
scope of facility for the proposed subject property, 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
property to be $917 per available room, or 3.8% of total revenue. By the 2016
stabilized year, these amounts change to $1,054 per available room and 3.2% of
total revenue.
Franchise Fee
As previously discussed, we recommend that the proposed subject property be
developed and operate as a first-class, select-service hotel. A specific franchise
affiliation has yet to be selected. We have included franchise fees that represent
levels in line with this product tier.
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
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
May-2011
103
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.
property operations and maintenance expense range from 4.7% to 5.6%, or $1,372
to $1,650 per available room. We expect the proposed subject property'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 property
to be $872 per available room, or 3.6% of total revenue. By the 2016 stabilized
year, these amounts change to $1,213 per available room and 3.7% 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.
utilities expense range from 3.1% to 6.3%, or $910 to $1,743 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 property to be $1,223 per available room, or 5.1% of total
revenue. By the 2016 stabilized year, these amounts change to $1,405 per
available room and 4.3% of total revenue.
May-2011
104
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 contacts 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 almost always
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 deal specific 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 subject property 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.
We note Flower Mound is both in Denton and Tarrant Counties. A small portion of
the Lakeside Business District is in Tarrant County. It is possible that the future
hotel development could be in Tarrant County. For the purposes of positioning,
we have reviewed comparable information from Denton County. We have shown
the tax rates for both jurisdictions.
May-2011
105
FIGURE 7-9
COUNTY-ASSESSED VALUE OF COMPARABLE HOTELS
Number
of Rooms
Hotel
Comfort Suites Vista Ridge Mall
$1,641,336
165
60
3,160,629
430,376
$2,831,513
3,610,991
1,076,104
$4,472,849
6,771,620
1,506,480
$13,454
19,155
7,173
$23,209
21,885
17,935
$36,663
41,040
25,108
$15,000
$50,000
$65,000
$1,950,000
$6,500,000
$8,450,000
130
Positioned Subject - Total
Total
122
Ass essm ents per Room
Comfort Suites Vista Ridge Mall
Positioned Subject - Per Room
Total Assessment
Land
Improvements
Source: Denton Central Appraisal District
We have positioned the proposed subject property's future assessment levels
based upon the illustrated comparable data. We have positioned the assessment
closest to the Courtyard Dallas Lewisville because of the expected similarities in
product type; however, we have positioned it well above this hotel given the
subject hotel's newer construction. Overall, the positioned assessment is well
supported by the market data.
Tax rates are based on the Town and county budgets, which change annually. The
most recent tax rate in the Denton County jurisdiction was reported at 2.15030.
The most recent tax rate in the Tarrant County jurisdiction was reported at
2.50594. The following table shows changes in the tax rate during the last several
years.
FIGURE 7-10 TOTAL AD VALOREM TAX RATES
Year
2008
2009
2010
Denton County
Tax Rate
2.06547
2.10820
2.15030
Tarrant County
Tax Rate
2.459557
2.487967
2.505937
Source: Denton County Tax Assessor/Collector,
Tarrant County Appraisal District
May-2011
106
Based on comparable assessments and the tax rate information, the proposed
subject property's projected property tax expense levels are calculated as follows.
FIGURE 7-11 PROJECTED PROPERTY TAX EXPENSE
Insurance Expense
Assessed Value
Improvements
Total
Tax Rate
Tax
Forecast
Year
Land
Positioned
$1,950,000
$6,500,000
$8,450,000
2.15
$211,752
2013
2014
2015
$1,950,000
1,950,000
1,950,000
$6,500,000
6,500,000
6,500,000
$8,450,000
8,450,000
8,450,000
2.17
2.20
2.25
$213,869
217,077
221,419
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 project the proposed subject property's insurance expense at $351 per
available room by the stabilized year (positioned at $300 on a per-available-room
basis in base-year dollars). This forecast equates to 1.1% 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
nevertheless 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.
May-2011
107
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
of the study were published in a report in 20076. 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 age 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 34.0% 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 25.3% of revenue by the stabilized year, while
undistributed operating expenses total 28.1% 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 9.6% of total revenues in fixed
expenses, a net income ratio of 34.0% 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
May-2011
108
8. Statement of Assumptions and Limiting Conditions
May-2011
1.
This report is set forth as a market study of the proposed subject property;
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 DFW Hospitality Consulting, 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
109
licenses, permits, certificates, franchises, and so forth can be freely
renewed or transferred to a purchaser.
May-2011
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 due to 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 on the basis of 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,
110
most numbers have been rounded to the nearest tenth of a percent. Thus,
these figures may be subject to small rounding errors.
May-2011
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 DFW Hospitality Consulting, LLC. All opinions,
recommendations, and conclusions expressed during the course of this
assignment are rendered by the staff of DFW Hospitality Consulting, LLC as
employees, rather than as individuals.
111
9. Certification
The undersigned hereby certify that, to the best of our knowledge and belief:
May-2011
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.
Kathleen D. Donahue conducted market research and fieldwork;
9.
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;
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;
11.
the use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives; and
Certification
112
12.
as of the date of this report, Kathleen D. Donahue has completed the
requirements of the continuing education program of the Appraisal
Institute.
Kathleen D. Donahue
Senior Project Manager
DFW Hospitality Consulting, LLC
May-2011
Certification
113
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
Commercial
Meeti ng and Group
Lei sure
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:
May-2011
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
Totals/Average
425
Commercial
Capture
Commercial
Market Share
Commercial
Penetration
23.5 %
29.4
47.1
16,425
20,759
17,520
30.0 %
37.9
32.0
127.6 %
129.0
68.1
100.0 %
54,704
100.0 %
100.0 %
Fair Share
If a new 100-room hotel enters the market, the fair share of each hotel changes
due to 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.
May-2011
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 due to 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.
May-2011
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 %
May-2011
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
Pop-Facts: Demographic Snapshot 2011 Report
Flower Mound, TX
Place, (see appendix for geographies), aggregate
Total
Place
Description
%
Population
2016 Projection
2011 Estimate
2000 Census
1990 Census
86,019
72,882
50,702
15,788
Growth 2011-2016
Growth 2000-2011
Growth 1990-2000
18.03%
43.75%
221.14%
2011 Est. Pop by Single Race Class
72,882
White Alone
Black or African American Alone
Amer. Indian and Alaska Native Alone
Asian Alone
Native Hawaiian and Other Pac. Isl. Alone
Some Other Race Alone
Two or More Races
61,577
3,777
316
3,951
58
1,442
1,761
2011 Est. Pop Hisp or Latino by Origin
72,882
Not Hispanic or Latino
Hispanic or Latino:
Mexican
Puerto Rican
Cuban
All Other Hispanic or Latino
67,204
5,678
3,746
556
90
1,286
2011 Est. Hisp or Latino by Single Race Class
Page
1
3,630
48
58
56
6
1,396
484
Of 12
Prepared By:
Nielsen Solution Center 1 800 866 6511
Prepared For:
92.21
7.79
65.97
9.79
1.59
22.65
5,678
White Alone
American Indian and Alaska Native Alone
Asian Alone
Native Hawaiian and Other Pacific Islander Alone
Two or More Races
Prepared On: Fri Apr 29, 2011
84.49
5.18
0.43
5.42
0.08
1.98
2.42
© 2011 The Nielsen Company. All rights reserved.
63.93
0.85
1.02
0.99
0.11
24.59
8.52
Flower Mound, TX
Total
Place
Description
2011 Est. Pop. Asian Alone Race by Cat
3,951
Chinese, except Taiwanese
Filipino
Japanese
Asian Indian
Korean
Vietnamese
Cambodian
Hmong
Laotian
Thai
All Other Asian Races Including 2+ Category
600
288
67
1,552
628
345
6
0
3
26
436
2011 Est. Population by Ancestry
267
461
281
630
7,972
1,428
327
11,708
238
189
6,803
2,295
107
3,691
1,096
1,472
100
617
1,698
1,084
38
539
935
154
118
601
183
20,203
Page
2
Of 12
Prepared By:
Prepared For:
15.19
7.29
1.70
39.28
15.89
8.73
0.15
0.00
0.08
0.66
11.04
72,882
Pop, Arab
Pop, Czech
Pop, Danish
Pop, Dutch
Pop, English
Pop, French (except Basque)
Pop, French Canadian
Pop, German
Pop, Greek
Pop, Hungarian
Pop, Irish
Pop, Italian
Pop, Lithuanian
Pop, United States or American
Pop, Norwegian
Pop, Polish
Pop, Portuguese
Pop, Russian
Pop, Scottish
Pop, Scotch-Irish
Pop, Slovak
Pop, Subsaharan African
Pop, Swedish
Pop, Swiss
Pop, Ukrainian
Pop, Welsh
Pop, West Indian (exc Hisp groups)
Pop, Other ancestries
%
0.37
0.63
0.39
0.86
10.94
1.96
0.45
16.06
0.33
0.26
9.33
3.15
0.15
5.06
1.50
2.02
0.14
0.85
2.33
1.49
0.05
0.74
1.28
0.21
0.16
0.82
0.25
27.72
Flower Mound, TX
Total
Place
Description
%
2011 Est. Population by Ancestry
Pop, Ancestry Unclassified
7,647 10.49
2011 Est. Pop Age 5+ by Language Spoken At Home
65,831
Speak Only English at Home
Speak Asian/Pac. Isl. Lang. at Home
Speak IndoEuropean Language at Home
Speak Spanish at Home
Speak Other Language at Home
57,258
1,683
2,314
4,281
295
2011 Est. Population by Sex
86.98
2.56
3.52
6.50
0.45
72,882
Male
Female
36,087 49.51
36,795 50.49
2011 Est. Population by Age
72,882
Age 0 - 4
Age 5 - 9
Age 10 - 14
Age 15 - 17
Age 18 - 20
Age 21 - 24
Age 25 - 34
Age 35 - 44
Age 45 - 54
Age 55 - 64
Age 65 - 74
Age 75 - 84
Age 85 and over
7,051
6,546
6,709
3,889
2,569
3,229
7,071
13,031
11,978
7,316
2,523
720
250
9.67
8.98
9.21
5.34
3.52
4.43
9.70
17.88
16.43
10.04
3.46
0.99
0.34
Age 16 and over
Age 18 and over
Age 21 and over
Age 65 and over
51,159
48,687
46,118
3,493
70.19
66.80
63.28
4.79
2011 Est. Median Age
34.12
2011 Est. Average Age
32.30
Page
3
Of 12
Prepared By:
Prepared For:
Flower Mound, TX
Total
Place
Description
2011 Est. Male Population by Age
36,087
Age 0 - 4
Age 5 - 9
Age 10 - 14
Age 15 - 17
Age 18 - 20
Age 21 - 24
Age 25 - 34
Age 35 - 44
Age 45 - 54
Age 55 - 64
Age 65 - 74
Age 75 - 84
Age 85 and over
3,544
3,366
3,410
1,976
1,371
1,673
3,377
6,064
5,965
3,624
1,345
303
69
2011 Est. Median Age, Male
33.00
2011 Est. Average Age, Male
32.00
2011 Est. Female Population by Age
3,507
3,180
3,299
1,913
1,198
1,556
3,694
6,967
6,013
3,692
1,178
417
181
2011 Est. Median Age, Female
35.07
2011 Est. Average Age, Female
32.70
Page
4
Of 12
Prepared By:
Prepared For:
9.82
9.33
9.45
5.48
3.80
4.64
9.36
16.80
16.53
10.04
3.73
0.84
0.19
36,795
Age 0 - 4
Age 5 - 9
Age 10 - 14
Age 15 - 17
Age 18 - 20
Age 21 - 24
Age 25 - 34
Age 35 - 44
Age 45 - 54
Age 55 - 64
Age 65 - 74
Age 75 - 84
Age 85 and over
%
9.53
8.64
8.97
5.20
3.26
4.23
10.04
18.93
16.34
10.03
3.20
1.13
0.49
Flower Mound, TX
Total
Place
Description
2011 Est. Pop Age 15+ by Marital Status
52,576
Total, Never Married
Males, Never Married
Females, Never Married
Married, Spouse present
Married, Spouse absent
Widowed
Males Widowed
Females Widowed
Divorced
Males Divorced
Females Divorced
11,702
5,972
5,730
34,569
1,041
1,283
205
1,078
3,981
1,540
2,441
2011 Est. Pop. Age 25+ by Edu. Attainment
193
798
5,331
9,886
3,499
16,808
5,513
522
339
2011 Est Pop Age 25+ by Edu. Attain, Hisp. or Lat
107
138
630
640
237
766
329
Page
0.45
1.86
12.43
23.05
8.16
39.19
12.85
1.22
0.79
2,847
Less than 9th grade
Some High School, no diploma
High School Graduate (or GED)
Some College, no degree
Associate Degree
Bachelor's Degree
Graduate or Professional Degree
5
Of 12
Prepared By:
Prepared For:
22.26
11.36
10.90
65.75
1.98
2.44
0.39
2.05
7.57
2.93
4.64
42,889
Less than 9th grade
Some High School, no diploma
High School Graduate (or GED)
Some College, no degree
Associate Degree
Bachelor's Degree
Master's Degree
Professional School Degree
Doctorate Degree
%
3.76
4.85
22.13
22.48
8.32
26.91
11.56
Flower Mound, TX
Total
Place
Description
%
Households
2016 Projection
2011 Estimate
2000 Census
1990 Census
27,102
22,758
16,179
5,113
Growth 2011-2016
Growth 2000-2011
Growth 1990-2000
19.09%
40.66%
216.43%
2011 Est. Households by Household Type
22,758
Family Households
Nonfamily Households
19,839 87.17
2,919 12.83
2011 Est. Group Quarters Population
169
2011 HHs by Ethnicity, Hispanic/Latino
1,361 5.98
2011 Est. HHs by HH Income
22,758
Income Less than $15,000
Income $15,000 - $24,999
Income $25,000 - $34,999
Income $35,000 - $49,999
Income $50,000 - $74,999
Income $75,000 - $99,999
Income $100,000 - $124,999
Income $125,000 - $149,999
Income $150,000 - $199,999
Income $200,000 - $499,999
Income $500,000 and more
407
402
468
1,355
3,041
3,843
3,874
3,206
3,136
2,602
424
2011 Est. Average Household Income
$133,648
2011 Est. Median Household Income
$112,023
2011 Est. Per Capita Income
$41,835
Page
6
Of 12
Prepared By:
Prepared For:
1.79
1.77
2.06
5.95
13.36
16.89
17.02
14.09
13.78
11.43
1.86
Flower Mound, TX
Total
Place
Description
%
2011 Median HH Inc by Single Race Class. or Ethn
White Alone
American Indian and Alaska Native Alone
Asian Alone
Native Hawaiian and Other Pacific Islander Alone
Two or More Races
113,810
100,312
83,203
107,184
141,250
86,436
93,519
Hispanic or Latino
Not Hispanic or Latino
101,132
112,822
2011 Est. Family HH Type, Presence Own Children
19,839
Married-Couple Family, own children
Married-Couple Family, no own children
Male Householder, own children
Male Householder, no own children
Female Householder, own children
Female Householder, no own children
11,207
6,460
386
189
1,098
499
2011 Est. Households by Household Size
22,758
1-person household
2-person household
3-person household
4-person household
5-person household
6-person household
7 or more person household
2,066
6,215
4,909
5,842
2,689
767
270
2011 Est. Average Household Size
3.20
Page
7
Of 12
Prepared By:
Prepared For:
56.49
32.56
1.95
0.95
5.53
2.52
9.08
27.31
21.57
25.67
11.82
3.37
1.19
Flower Mound, TX
Total
Place
Description
%
2011 Est. Households by Presence of People
22,758
Households with 1 or more People under Age 18:
Married-Couple Family
Other Family, Male Householder
Other Family, Female Householder
Nonfamily, Male Householder
Nonfamily, Female Householder
13,090
11,464
420
1,176
27
3
57.52
87.58
3.21
8.98
0.21
0.02
9,668
6,196
152
416
1,363
1,541
42.48
64.09
1.57
4.30
14.10
15.94
Households no People under Age 18:
Married-Couple Family
Other Family, Male Householder
Other Family, Female Householder
Nonfamily, Male Householder
Nonfamily, Female Householder
2011 Est. Households by Number of Vehicles
22,758
No Vehicles
1 Vehicle
2 Vehicles
3 Vehicles
4 Vehicles
5 or more Vehicles
139
3,176
13,986
4,166
973
318
2011 Est. Average Number of Vehicles
0.61
13.96
61.46
18.31
4.28
1.40
2.17
Family Households
2016 Projection
2011 Estimate
2000 Census
1990 Census
23,644
19,839
14,262
4,393
Growth 2011-2016
Growth 2000-2011
Growth 1990-2000
19.18%
39.10%
224.65%
2011 Est. Families by Poverty Status
19,839
2011 Families at or Above Poverty
2011 Families at or Above Poverty with Children
19,384 97.71
12,621 63.62
2011 Families Below Poverty
2011 Families Below Poverty with Children
Page
455 2.29
371 1.87
8
Of 12
Prepared By:
Prepared For:
Flower Mound, TX
Total
Place
Description
2011 Est. Pop Age 16+ by Employment Status
51,159
In Armed Forces
Civilian - Employed
Civilian - Unemployed
Not in Labor Force
19
37,604
1,794
11,742
2011 Est. Civ Employed Pop 16+ Class of Worker
31,370
1,881
2,143
825
665
2,926
73
2011 Est. Civ Employed Pop 16+ by Occupation
891
862
281
3,494
328
2,390
546
2,450
5
1,351
1,646
351
934
311
438
7,601
4,692
669
520
6,183
1,504
1,197
9
Of 12
Prepared By:
Prepared For:
81.18
4.87
5.55
2.13
1.72
7.57
0.19
38,644
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
Page
0.04
73.50
3.51
22.95
38,644
For-Profit Private Workers
Non-Profit Private Workers
Local Government Workers
State Government Workers
Federal Government Workers
Self-Emp Workers
Unpaid Family Workers
%
2.31
2.23
0.73
9.04
0.85
6.18
1.41
6.34
0.01
3.50
4.26
0.91
2.42
0.80
1.13
19.67
12.14
1.73
1.35
16.00
3.89
3.10
Flower Mound, TX
Total
Place
Description
2011 Est. Pop 16+ by Occupation Classification
%
38,644
Blue Collar
White Collar
Service and Farm
3,346 8.66
31,286 80.96
4,012 10.38
2011 Est. Workers Age 16+, Transp. To Work
38,178
Drove Alone
Car Pooled
Public Transportation
Walked
Bicycle
Other Means
Worked at Home
31,874
2,537
172
191
62
418
2,924
83.49
6.65
0.45
0.50
0.16
1.09
7.66
2011 Est. Workers Age 16+ by Travel Time to Work *
Less than 15 Minutes
15 - 29 Minutes
30 - 44 Minutes
45 - 59 Minutes
60 or more Minutes
6,322
11,334
11,167
4,784
2,117
2011 Est. Avg Travel Time to Work in Minutes
29.58
2011 Est. Tenure of Occupied Housing Units
22,758
Owner Occupied
Renter Occupied
21,252 93.38
1,506 6.62
2011 Owner Occ. HUs: Avg. Length of Residence
13
2011 Renter Occ. HUs: Avg. Length of Residence
6
Page
10
Of 12
Prepared By:
Prepared For:
Flower Mound, TX
Total
Place
Description
2011 Est. All Owner-Occupied Housing Values
21,252
Value Less than $20,000
Value $20,000 - $39,999
Value $40,000 - $59,999
Value $60,000 - $79,999
Value $80,000 - $99,999
Value $100,000 - $149,999
Value $150,000 - $199,999
Value $200,000 - $299,999
Value $300,000 - $399,999
Value $400,000 - $499,999
Value $500,000 - $749,999
Value $750,000 - $999,999
Value $1,000,000 or more
149
187
146
69
141
2,218
5,297
6,790
3,922
1,087
894
241
111
2011 Est. Median All Owner-Occupied Housing Value
23,152
1 Unit Attached
1 Unit Detached
2 Units
3 or 4 Units
5 to 19 Units
20 to 49 Units
50 or More Units
Mobile Home or Trailer
Boat, RV, Van, etc.
263
21,822
69
70
403
180
53
286
6
2011 Est. Housing Units by Year Structure Built
23,152
Housing Unit Built 2000 or later
Housing Unit Built 1990 to 1999
Housing Unit Built 1939 or Earlier
2011 Est. Median Year Structure Built **
6,857
11,187
3,824
982
150
84
21
47
1995
*This row intentionally left blank. No total category data is available.
**1939 will appear when at least half of the Housing Units in this reports area were built in 1939 or earlier.
Page
11
Of 12
Prepared By:
Prepared For:
0.70
0.88
0.69
0.32
0.66
10.44
24.92
31.95
18.45
5.11
4.21
1.13
0.52
$235,628
2011 Est. Housing Units by Units in Structure
%
1.14
94.26
0.30
0.30
1.74
0.78
0.23
1.24
0.03
29.62
48.32
16.52
4.24
0.65
0.36
0.09
0.20
Flower Mound, TX
Appendix: Area Listing
Area Name:
Type: List - Place
Reporting Detail: Aggregate
Geography Code
Geography Name
4826232
Flower Mound town
Reporting Level: Place
Geography Code
Geography Name
Project Information:
Site:
1
Order Number: 969905342
Page
12
Of 12
Prepared By:
Prepared For:

HVS Market Study - DRAFT - Proposed Hotel

Transcription

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