Beach Area 2 - Town of Wasaga Beach

Transcription

MARKET STUDY WITH OPERATING PROJECTIONS
PROPOSED MIXED-USE RESORT DEVELOPMENT, BEACH AREA 2
WASAGA BEACH, ONTARIO
Prepared for:
Mr. George Vadeboncoeur
Chief Administrative Office, Town of Wasaga Beach
30 Lewis Street
Wasaga Beach, Ontario
L9Z 1A1
April 2014
PKF Consulting
Canada
April 15, 2014
Mr. George Vadeboncoeur
Chief Administrative Office, Town of Wasaga Beach
30 Lewis Street
Wasaga Beach, Ontario
L9Z 1A1
Via email: [email protected]
RE:
MARKET STUDY WITH OPERATING PROJECTIONS, PROPOSED MIXED-USE RESORT
DEVELOPMENT – BEACH 2, WASAGA BEACH, ONTARIO
Dear Mr. Vadeboncoeur:
In accordance with the terms of our engagement, PKF Consulting has completed the research and analysis
relating to the Market Study with Operating Projections for the proposed mixed-use resort development to be
located on the Beach Area 2 site in Wasaga Beach, Ontario. The analysis herein assumes an opening date
for the hotel within the development of January 1, 2016.
The entire study, including all findings and conclusions, pertain to the Wasaga Beach competitive market area
and is based on our knowledge and information with respect to current and projected economic data,
expected growth in the supply of and demand for hotel accommodation, proposed construction of facilities,
which could be deemed to be competitive, and the status of the competitive market as of March 4, 2014.
Projected operating results herein are based on an evaluation of the present economy of the area, but do not
take into account or make provision for the effect of any sharp rise or decline in local, provincial, or national
economic conditions. To the extent that wages and other operating expenses may increase over the
economic life of the hotel, it is expected that room rates would be adjusted to compensate for the increases.
As in all studies of this type, the projected operating results are based on competent and efficient
management and presume no significant change in the competitive position of the accommodation industry in
the immediate area except as set forth in this report. The estimates are subject to uncertainty and variation
Tel 416 360 5000 • Fax 416 777 1567 • Email [email protected] • www.pkfcanada.com
PKF Consulting Inc. • 8th floor • 30 St. Patrick Street • Toronto • Ontario • M5T 3A3
Tel 604 689 3833 • Fax 604 689 2568 • Email [email protected] • www.pkfcanada.com
PKF Consulting Inc. • Suite 1120 • 800 West Pender Street • Vancouver • British Columbia • V6C 2V6
PKF Consulting Inc. is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or
inactions on the part of any other individual member firm or firms.
and we do not represent them as results that will be achieved. They have, however, been conscientiously
prepared on the basis of available information and our experience in the industry.
As is customary in assignments of this nature, neither our name nor the material submitted may be included
in any prospectus, press release, offering, or representation in connection with the sale of securities or
participation interests to the public, without our prior written consent. It is a requirement of professional
practice that we review the final draft of any prospectus or offering memorandum containing references to this
study. In connection with the permitted uses and as an advice to third parties, this report may not be
disassembled or rearranged in any manner that would allow for presentation of only a portion of the report.
This report has been prepared solely for the use of the Town of Wasaga Beach. We understand that this
report will be used to support internal discussions surrounding the potential development of the Beach Area 2
lands. It is also understood that this report will be used in discussions with potential developers for the
project. It may not be used for any other purpose.
Key findings and conclusions from our analysis are as follows:

There is market support for development of an 80-unit branded, select service hotel with an
estimated capital cost of $11.3 million before land costs.

There will be a funding or investment gap of approximately $3.0 million on the hotel project; a
shortfall based on its investment value versus its potential capital cost.
Given that there would be additional land available, after the proposed hotel is developed, it is our opinion that
the development of mid-tier, medium-density, residential units on the balance of the site would complement
the proposed hotel project and could generate acceptable development profits to attract a developer to the
project.
The objectives of a residential development component as part of the project would be:

For the Town to realize fair market value on the sale of the 9.7-acre Beach Area 2 parcel(s);

To absorb the hotel development shortfall estimated to be approximately $3.0 million; and;

To generate significant development profits in order to attract a developer to the project.
Market Study with Operating Projections
Prepared for: Town of Wasaga Beach
Resort Development – Beach 2, Wasaga Beach, Ontario
Consulting Inc. April 2014
Proposed
PKF
If the Town of Wasaga Beach chooses to take this direction, it would be our recommendation that a third
party, residential consultant be engaged to provide an in-depth analysis of the market potential and feasibility
of the residential component.
Based on past experience with similar mixed-used development projects, it is our recommendation that it
would be critical that any agreement with a potential developer includes stipulations that the hotel be
developed within Phase 1 of the overall project to ensure this component comes to fruition. In the past, when
municipalities have not stipulated this, other more profitable areas of development, such as the residential
component discussed above, have been prioritized by the developer with the hotel development eventually be
shelved.
The following pages outline the findings and projections derived from our analysis.
Yours truly,
PKF CONSULTING INC.
Resort Development – Beach 2, Wasaga Beach, Ontario
Consulting Inc. April 2014
Proposed
PKF
PKF Consulting
Canada
TABLE OF CONTENTS
1.0
INTRODUCTION .................................................................................................................................. 1
2.0
SITE EVALUATION AND DEVELOPMENT PROGRAM .................................................................... 3
2.1
2.2
2.3
2.4
2.5
2.6
3.0
3.1
3.2
3.3
3.4
3.5
3.6
4.0
4.1
4.2
4.3
4.4
4.5
4.6
5.0
5.1
5.2
5.3
5.4
5.5
5.6
5.7
6.0
6.1
6.2
6.3
6.4
6.5
7.0
7.1
7.2
Introduction ........................................................................................................................................ 3
Site Description ................................................................................................................................. 3
Access and Visibility .......................................................................................................................... 4
Surrounding Uses / Proximity to Demand Generators ...................................................................... 4
Development Program ...................................................................................................................... 5
Conclusion ......................................................................................................................................... 8
ECONOMIC OVERVIEW .................................................................................................................... 11
Introduction ...................................................................................................................................... 11
National & Provincial Economic Indicators...................................................................................... 11
National & Provincial Travel Forecasts ........................................................................................... 12
Town of Wasaga Beach .................................................................................................................. 13
Town of Collingwood ....................................................................................................................... 17
Conclusion ....................................................................................................................................... 18
COMPETITIVE ACCOMMODATION MARKET ANALYSIS ............................................................. 19
Introduction ...................................................................................................................................... 19
Local Competitive Accommodation Market ..................................................................................... 19
Regional Competitive Accommodation Market ............................................................................... 20
Ontario Resort Competitive Market ................................................................................................. 22
Proposed New Supply – Regional Competitive Market .................................................................. 24
Competitive Market Demand Projections ........................................................................................ 25
SUBJECT PROPERTY OCCUPANCY & AVERAGE DAILY RATE PROJECTIONS ...................... 33
Introduction ...................................................................................................................................... 33
Corporate/Commercial Segment..................................................................................................... 33
Meeting/Conference Segment ........................................................................................................ 34
Leisure/Tourist Segment ................................................................................................................. 36
Government/Other Segment ........................................................................................................... 37
Subject Hotel Average Daily Rate Projections ................................................................................ 39
Summary of Property Projections ................................................................................................... 39
SUBJECT PROPERTY FINANCIAL OPERATING PROJECTIONS ................................................ 43
Introduction ...................................................................................................................................... 43
Departmental Revenue and Expenses ........................................................................................... 44
Undistributed Operating Expenses ................................................................................................. 46
Fixed Operating Charges ................................................................................................................ 47
Summary of Operating Projections ................................................................................................. 48
THE CANADIAN HOTEL INVESTMENT MARKET .......................................................................... 54
Introduction ...................................................................................................................................... 54
Investment Cycles in the Canadian Accommodation Sector .......................................................... 54
Proposed Resort Development – Beach Area 2, Wasaga Beach, Ontario
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7.3
7.4
7.5
7.6
8.0
8.1
8.2
8.3
National Transaction Activity ........................................................................................................... 57
Yields on Transactions .................................................................................................................... 58
Historic Canadian Hotel Investment Trends ................................................................................... 59
Implications for Hotel Investment in 2014 ....................................................................................... 60
INVESTMENT IMPLICATIONS – PROPOSED MIXED-USE RESORT DEVELOPMENT ............... 61
Introduction ...................................................................................................................................... 61
Indication of Supportable Value – Proposed Hotel Development ................................................... 61
Implications & Recommendations ................................................................................................... 63
Proposed Resort Development – Beach Area 2, Wasaga Beach, Ontario
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1.0
INTRODUCTION
In February 2014, PKF Consulting Inc. was retained by the Town of Wasaga Beach to make
recommendations for and to prepare a Market Study with Operating Projections for a potential resort/hotel
development to be located at Beach Area 2 in Wasaga Beach, Ontario.
It is our understanding that the Town of Wasaga Beach is interested in assessing the market and economic
potential for the development of Beach Area 2 with the objective of ensuring that a hotel is part of the final
development program. The development program presented in the following report contemplates an 80-room,
upper mid-scale to upscale hotel, as well as a medium density residential development for the site. This study
focuses on the hotel component of the development.
This report presents the research and analysis with respect to the development of the proposed hotel. The
analysis herein has assumed an opening date for the subject hotel of January 1, 2016. The report also
identifies and presents broad recommendations for the development of complementary uses, specifically
medium density residential.
The objectives of this assignment have been to:

Evaluate the market potential for a proposed hotel development;

Recommend a facility program for the proposed hotel;

Project the future occupancy, average daily room rate, and operating performance of the
proposed hotel over the period of January 1, 2016 to December 31, 2020, allowing for economic
conditions as well as supply and demand growth prospects;

Prepare an “Indication of Supportable Value” for the proposed hotel utilizing the Discounted Cash
Flow Approach with the application of market driven capitalization rates;

Recommend, as necessary, potential complementary developments for the subject site; and;

Provide an overview, as required, of the of investment implications for the overall mixed-use
development of the subject site.
In order to complete our analysis, we have undertaken the following steps:

A review of the proposed hotel site to evaluate its suitability for the hotel development;

A review of economic conditions affecting the demand for accommodation in the Wasaga Beach,
Collingwood and the Ontario Resort market area;

A review of tourism demand trends in the market area;
Proposed Resort Development – Beach 2, Wasaga Beach, Ontario
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
A review of the existing accommodation market in Wasaga Beach, Collingwood and the Ontario
Resort market, including an assessment of the existing facilities and the market demand
segmentation;

An estimate of future growth in supply of, and demand for, hotel accommodation in the
competitive market area;

Preparation of market penetration rates by market segment and average rate that may be
achieved by the proposed hotel over the projection period of January 1, 2016 to December 31,
2020, based on the facilities, and market orientation;

A projection of the share of demand which can reasonably be captured by the subject proposed
hotel, over the projection period January 1, 2016 to December 31, 2020;

Average Daily Rate projections for the subject proposed hotel, over the projection period from
January 1, 2016 to December 31, 2020;

Preparation of a five year pro forma operating statement for the subject proposed hotel for the
period from January 1, 2016 to December 31, 2020;

Preparation of an “Indication of Supportable Value” off cash flow utilizing market driven
capitalization and discount rates;

Review of potential complementary residential development options, in addition to the proposed
hotel, for the development site;

Recommendation of complementary development facilities;

Review of the investment implications for the overall mixed-use development of the subject site;
and; and;

Documentation of study research, findings and conclusions.
The following pages present a summary of our research and analysis as it relates to the proposed mixed-use
development.
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2.0
SITE EVALUATION AND DEVELOPMENT PROGRAM
2.1
Introduction
The following discussion provides an overview of the subject site, located at Beach Area 2 in Wasaga Beach,
Ontario, including a description of the site, surrounding land uses and proximity to demand generators, the
recommended facility program for the proposed subject hotel, and an overview of a potential residential
component of the mixed-use development.
2.2
Site Description
The development site is located at Beach Area 2, which is
th
located on the north side of Mosley Street between 6 Street
rd
and 3 Street in Wasaga Beach, Ontario. The subject site is
an irregular shaped parcel of land that is approximately 9.7acres in size and is currently owned by the Town of Wasaga
Beach. Beach Area 2 is not currently improved, save and
except a small public washroom and change facility in the
north-west corner of the property. The parcel has varying
topography with small knolls and hills dispersed throughout
the property. The site, currently used as a public park area, is lightly forested with open grass areas.
th
th
Approximately one acre of the property, located between 4 Street and 5 Street, is currently an asphalt
public parking lot. The site benefits from beachfront access on Beach 2 of Wasaga Beach, the world’s longest
(14km) freshwater beach. Exhibit 2-1 presents and aerial view of the development site.
The zoning of the site is Tourist Commercial (CT-8), which
permits the operation of hotel as well as high-density residential
development. It should be noted that, at the time of this report,
the Town of Wasaga Beach is reviewing the zoning by-laws for
the Beach Area 2 site, pending the results of an environmental
study. It is anticipated that new zoning will be approved for the
site and that both a hotel and residential development will
continue to be permitted uses.
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2.3
Access and Visibility
rd
The subject site has excellent visibility from Mosley Street and 3 Street as well as from the intersection of 3
rd
Street and Beach Drive.
The Town of Wasaga Beach is accessible from most major 400 series Highways including Highways 400,
401 and 404 and the subject site is easily accessible from the primary roadways in Wasaga Beach. Highway
26 is the primary route for traffic travelling both to and from the Collingwood/Blue Mountain Resort area.
Visitors traveling north on Highway 26 would turn right onto Mosley Street, and continue to the site, turning left
into the site from Mosley Street. Guests traveling north on Highway 400 would take Exit 96B Dunlop Street
West and travel west on Dunlop Street to Ferndale Drive. Guests would turn right and travel north on
Ferndale Drive, merging with Wilson Drive guest would continue traveling north before turning left onto
Highway 26 West. Traveling west on Highway 26, guests would exit onto Country Road 22 and immediately
turn left on Country Road 29. Traveling north on Country Road 29, guests would turn left onto Country Road
92 / River Road before turning right onto Main Street in Wasaga Beach. Traveling north on Main Street,
guests would turn left onto Mosley Street and drive to the subject site, accessing the property by turning right
rd
from Mosley Street, or right onto 3 Street then left into the subject site.
The site is approximately a 2-hour drive from the City of Toronto to the south and a one-hour drive from the
City of Barrie to the east.
2.4
Surrounding Uses / Proximity to Demand Generators
The site benefits most from being a beachfront property on Wasaga Beach, a major leisure demand
generator. Wasaga Beach is Ontario’s longest freshwater beach, and is the main driver of leisure/tourist
demand. On weekends and all week throughout the summer months, the Town benefits from a large influx of
tourists, especially for its special events and summer recreational activities. Beach Area 1 is adjacent the
subject site with a number of seasonal restaurants, bars, and retail stores that support the summer tourist
activity in the area.
The Blue Mountain/Collingwood area, located approximately 25 kilometers west of Wasaga Beach, has
evolved into one of Ontario’s few, truly multi-season tourist and vacation areas. Throughout the summer and
winter months, the area benefits from a large influx of tourists, especially for its special events, summer and
winter recreational activities such as golf, mountain biking, downhill and cross-country skiing.
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As a predominantly seasonal leisure destination, Wasaga Beach has very little industry and
corporate/commercial activity. The Zancor Group has serviced and prepared industrial/ commercial land for
development in the Zancor Business Park, located along Hwy 26. The group is marketing the Business Park
to light commercial and manufacturing companies. Based on discussions with Economic Development there
are currently no companies/employers planned or proposed for the Business Park.
2.5
Development Program
Based on current market dynamics as well as our research and analysis, the development program
envisioned for the Beach Area 2 site would be a mix-use development, comprised of an 80-room hotel and a
medium-density residential component, such as town-home units. The following discussion presents the
development program for the hotel, with some preliminary considerations for a potential residential
component of the development.
2.5.1
Hotel Development Program
The following report contemplates an 80-room, upper mid-scale or upscale, branded, select service hotel
development program for the Beach Area 2 site in Wasaga Beach. Examples of upper mid-scale or upscale
brands that could be considered for such a development include, but are not limited to, Best Western Plus,
Holiday Inn Express or Hotel Indigo by Intercontinental Hotel Group, Fairfield Inn by Marriot, Hampton Inn or
Hilton Garden Inn by Hilton. Branding is recommended in that it will not only enhance the marketability of the
project, but will also enhance the potential for project financing.
Table 2-1 presents a preliminary facility program for the proposed subject hotel based on the typical prototype
programs for hotels of this size and nature.
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TABLE 2-1
BEACH AREA 2 - PROPOSED HOTEL DEVELOPMENT
HOTEL FACILITY PROGRAM - PKF ESTIMATES
Guestrooms
Rooms
Sq.Ft./Rm
Standard King
23
275
Standard Queen / Queen
35
325
King Suite
15
380
Queen / Queen Suite
7
475
TOTAL GUESTROOMS
80
334
Food & Beverage
Rooms
Sq.Ft./Rm
70 Seat Restaurant
1
18
30 Seat Outdoor Patio (Seasonal)
1
8
Total Food & Beverage
2
25
Meeting/Event Faciities
Rooms
Sq.Ft./Rm
Main Meeting Room (150 Seats - Flexible Design)
1
28
Breakout Rooms (2 rooms + Boardroom)
3
16
Total Meeting/Event Facilities
4
44
Recreational/Other Activities
Rooms
Sq.Ft./Rm
Fitness Room
1
13
Indoor Pool
1
20
Lobby/Public Areas/Back of House
Lobby/Public Areas/Back of House/Mechanical/Kitchen
150
TOTAL BUILDING SIZE
80
585
Sq.Ft.
6,325
11,375
5,700
3,325
26,725
Sq.Ft.
1,400
600
2,000
Sq.Ft.
2,250
1,250
3,500
Sq.Ft.
1,000
1,600
11,975
46,800
Source: PKF Consulting Inc.
PKF Consulting Inc. has provided these estimates as a discussion point for the proposed hotel
development used in our projections. We are not Planners or Architects and as such these estimates
should be used as a guideline for discussion only.
The proposed hotel development would include a comprehensive offering of amenities for both business and
leisure travelers. Hotels of this nature typically feature a variety of guestrooms, including standard one or two
bedded rooms, and a mixture of suite configurations. Guestrooms within this tier of hotels typically include
amenities such as a desk or work space, high-speed internet and/or wireless internet access, and in-room
coffee making facilities. The proposed hotel would have a total of 80 rooms comprised of 58 standard rooms
with either a single king bed or queen/queen bed configuration, 15 one-bedroom suites with one king bed,
and 7 one-bedroom suites with a queen/queen bed configuration, covering 26,725 sq.ft.
Other services incorporated into the development program for the proposed hotel development include an onsite 24-hour grab-and-go kiosk for sundry items, as well as guest laundry services, and a 24-hour business
center. In addition to an indoor pool, the hotel’s recreation facilities would also include a 1,000 sq. ft. fitness
room, large enough to accommodate both hotel guests and a small number of members from the surrounding
community.
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Capitalizing on the world class beach location, the hotel facility program includes a 2,000 sq. ft., 70 seat all
day restaurant with a 30 seat beach-side patio that would also be open seasonally. With full kitchen facilities
on-site, the hotel would be able to offer a limited amount of in-room dining to its guests as well.
The proposed facility program would also include approximately 3,500 sq. ft. of flexible meeting space. The
meeting space would be comprised of a main ballroom/banquet room with seating capacity for 150 guests,
two breakout rooms with seating capacity for 30 to 50 guests and an executive boardroom. Food and
beverage for the meeting and conference space would be serviced in-house with full kitchen facilities on-site.
Inclusive of the hotel lobby, public areas, mechanical rooms and back of house support areas, the proposed
the hotel facilities would require a total GFA of approximately 46,800 sq.ft., an average of 585 sq.ft./room.
While a formal capital budget has not been prepared for the subject development, our experience in the
industry and knowledge of comparable new build hotel construction projects would indicate that the capital
cost for the proposed upper mid-scale, or upscale, select service, branded, hotel would be in the range of
$135,000 to $145,000 per room (excluding land cost) or between of $10.8 and $11.6 million. For the purpose
of our analysis we have utilized the approximate cost of $141,000 per room or $11.3 million total.
Based on our experience in the industry and knowledge of comparable new build hotel construction projects,
the proposed hotel development would require approximately 2.5 acres of the total 9.7-acre subject site. It is
recommended that the hotel be developed in the north-eastern quadrant of the property, as identified in
Exhibit 2-2, bordering the commercial area of Beach Area 1 and acting as a transition into the proposed
residential development on the site.
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2.5.2
Proposed Residential Development Program
The following report contemplates the development of mid-tier, medium-density residential units, such as
town-homes, on the balance, approximately 7.2 acres, of the subject site. Assuming a density of 20 to 30
residential units per acre as identified by municipal planning representatives, there is potential for 150-225
units to be developed on the west-side of the proposed hotel development.
PKF Consulting Inc. has provided these estimates as a discussion point for the proposed mixed-use
development used in our projections. We are not Planners or Architects and as such these estimates
should be used as a guideline for discussion only, and assumes that all 9.7 acres are fully
developable.
2.6
Conclusion
In terms of its location, visibility and access, the Beach Area 2 site in Wasaga Beach is considered to be very
suitable for a mixed used development, incorporating both residential and hotel accommodation components.
The site is considered to be well located within the market for both a hotel development and a residential
development and is in reasonable proximity to Collingwood, Barrie and the Greater Toronto Area. The site
benefits from its frontage on Wasaga Beach, as well as its proximity to supporting amenities such as
restaurants and retail stores, that are open seasonally, within the Beach Area 1 zone.
Furthermore, the proximity to surrounding recreational amenities and tourism attractions, such as the Blue
Mountain Ski Resort, snowmobile trails, golf courses and the Rec-Plex, also bode well for the prospect of a
hotel development on the subject site. However, the absence of local corporate or industrial demand
generators may present a challenge in realizing weeknight and shoulder season demand levels.
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EXHIBIT 2-1
SITE PLAN – BEACH AREA 2
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EXHIBIT 2-2
RECOMMENDED DEVELOPMENT LAYOUT
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3.0
ECONOMIC OVERVIEW
3.1
Introduction
The market potential of hotel properties are influenced by National, Provincial and local economic conditions.
Accordingly, the analysis has included a review of recent economic performance in Canada, the Province of
Ontario and for the Town of Wasaga Beach and the Town of Collingwood specifically, in order to assess
potential implications for the accommodation market and the subject hotel.
3.2
National & Provincial Economic Indicators
After posting Real GDP growth of approximately 2.0% in 2013, Canada is expected to continue to experience
modest positive economic growth in 2014 and 2015. The challenging global economic performance, and the
uncertainty of US economic performance, are some of the factors that continue to moderate growth in
Canada and, consequently, in Ontario in the near term.
TABLE 3-1
REAL GDP (% CHANGE)
CANADA & ONTARIO
2000-2012
2013 (f)
2014(f)
Real GDP – Canada
2.2
2.0
2.2
Real GDP – Ontario
1.9
1.5
2.0
Source: Scotiabank Group, Global Forecast Update, March 26, 2014
2015(f)
2.5
2.2
The Scotiabank Global Forecast Update released March 26, 2014, projects that the annual gross domestic
product (GDP) growth outlook for the Canadian economy for 2014 to be 2.2%. This level of growth is the
result of strengthening exports and business investment tempered by more moderate consumer and housing
activity. Similarly, Scotiabank has forecasted a 1.5% GDP growth for Ontario in 2013 and a 2.0% increase in
2014. Ontario’s economic growth has slowed since 2010, when its GDP grew by 3.4%. Both the Province and
Country are anticipated to realize growth above 2.0% in 2015.
TABLE 3-2
EMPLOYMENT GROWTH (% CHANGE)
CANADA & ONTARIO
2000-2012
2013 (f)
2014 (f)
Employment Growth – Canada
1.5
1.3
1.0
Employment Growth – Ontario
1.4
1.4
0.9
Source: Scotiabank Group, Global Forecast Update, March 26, 2014
2015(f)
1.2
1.1
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The modest gains in private sector employment, especially in the education and health care sectors, are
expected to offset the public sector cuts in the province of Ontario, which has the largest number of public
employees in Canada. Scotia Bank is expecting Ontario’s employment rate to grow by 0.9% in 2014 and then
1.1% in 2015. National employment is expected to grow by 1.0% in 2014 and 1.2% in 2015.
3.3
National & Provincial Travel Forecasts
In the Fall of 2013, The Conference Board of Canada released their Travel Market Outlooks for 2013 - 2017,
which project moderate growth for Canada and Ontario across all travel segments. After posting modest
growth of 1.3% in 2013, National total overnight visitation is projected to grow by stronger levels of 2.1% in
2014, and 2.7% in 2015, while total overnight visitation to Ontario is projected to increase by 2.0% in 2014
and 2.9% 2015.
Canada
Ontario
TABLE 3-3
TOTAL OVERNIGHT VISITATION (% CHANGE)
CANADA & ONTARIO
2013(f)
2014(f)
2015(f)
2016(f)
1.3
2.1
2.7
2.3
0.9
2.0
2.9
2.2
2017(f)
2.5
2.5
Source: Conference Board of Canada Travel Market Outlooks, Fall 2013; Statistics
Canada
National domestic overnight travel is estimated to grow between 2.2% and 2.7% per annum from 2014 to
2017. Domestic overnight visitation is projected to account for 124.4 million visits, or over 86% of total
visitation to Canada by 2017. Similarly, in Ontario, domestic travel will account for approximately 85% of
overnight travel by 2017, generating more than 46.4 million overnight visits. The domestic market is
forecasted to see growth of 2.1% in 2014. In 2015, domestic pleasure travel to Ontario is projected to grow
3.5% as the City of Toronto and surrounding municipalities host the PanAm Games.
TABLE 3-4
OVERNIGHT VISITATION – DOMESTIC ORIGIN (% CHANGE)
CANADA & ONTARIO
2013(f) 2014(f) 2015(f) 2016(f) 2017(f)
Canada
1.4
2.2
2.7
2.3
2.6
Business
1.5
2.3
2.6
2.6
2.3
Pleasure
1.4
2.3
3.0
2.3
2.8
Ontario
1.0
2.1
2.9
2.3
2.5
Business
0.4
2.1
2.5
2.3
2.0
Pleasure
1.1
2.1
3.5
2.1
2.9
Source: Conference Board of Canada Travel Market Outlooks, Fall 2013; Statistics Canada
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The U.S. travel to Canada is expected to grow by 1.6% in 2014 with modest improvement in the U.S.
economy. Continued moderate growth is expected for the U.S. market between 2014 and 2017 at rates
between 1.6% and 2.1%. The U.S. visitation to Ontario is expected to contract slightly in 2013 and then grow
at rates that generally mirror the National levels from 2014 to 2017.
Canada
Ontario
TABLE 3-5
OVERNIGHT VISITATION – U.S. ORIGIN (% CHANGE)
CANADA & ONTARIO
2013(f)
2014(f)
2015(f)
2016(f)
0.7
1.6
2.0
2.1
-0.5
1.6
2.1
1.8
2017(f)
1.6
1.7
Source: Conference Board of Canada Travel Market Outlooks, Fall 2013; Statistics Canada
The overseas market in Canada is projected to see continued growth of 2.5% in 2014. Going forward this
segment is expected to post healthy growth of between 3.1% and 3.7% per annum through to 2017. Similarly,
this market in Ontario is projected to see growth of 2.5% in 2014 and growth of between 3.5% and 3.9% from
2015 to 2017.
TABLE 3-6
OVERNIGHT VISITATION - OVERSEAS ORIGIN (% CHANGE)
CANADA & ONTARIO
2013(f)
2014(f)
2015(f)
2016(f)
2017(f)
Canada
1.5
2.5
3.1
3.3
3.7
Ontario
2.6
2.5
3.5
3.4
3.9
Source: Conference Board of Canada Travel Market Outlooks, Fall 2013; Statistics
Canada
The overseas segment is often touted as a major opportunity market for the tourism and accommodation
sectors, particularly countries like China with huge volumes of potential visitors. However, even with solid
annual growth, the overseas market is projected to generate less than 5% of the total overnight travel to
Canada by 2017, or about 2.2 million overnight visits to Ontario.
3.4
Town of Wasaga Beach
The Town of Wasaga Beach, while only incorporated in 1974, has a rich history as one of Ontario’s premier
summer tourist destinations dating back to the early 1800’s. The area’s original settlement was a logging and
fishing village settled along the shores of the Nottawasaga River, a main waterway that runs through the
Town today. In the early 1900’s the region progressively transformed into a popular tourist destination for the
military families at nearby Base Borden, and Toronto residents visiting the area to enjoy the 14 kilometers of
white-sand, freshwater beach.
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Today the Town is part of Simcoe County and has a population of approximately 17,537 people. The area is
expected to continue to see strong population growth with the overall population projected to be 27,500
people by 2031 according to the Provincial Growth Plan.
The Town of Wasaga Beach is serviced by the main north-south highways of HWY 400 and 27, which direct
travelers to the Town of Wasaga Beach via County Road 92 and Highway 26. During the peak summer
months, the Town of Wasaga Beach has indicated that traffic congestion problems can occur. The congestion
issues are due in part to the increased visitation from cottagers and tourists and the lack of road lanes, as
currently the primary access routes within the town proper are two lane highways.
The nearest local airport to the Town of Wasaga Beach is the Town of Collingwood Municipal Airport. It is
equipped with a 5,000-foot jet runway capable of handling small jets. Additionally, the Town of Wasaga Beach
is approximately 125 km drive from by Lester B. Pearson International Airport, which has daily flights to most
major national and international destinations.
3.4.1
Economic Development
The Town of Wasaga Beach has an estimated labour force of 7,745 persons with an unemployment rate of
7.7%. The Service sector represents the largest industry by labour force in Wasaga Beach accounting for
29.2% of jobs. The Trades/Transport/Equipment Operators sector accounts for 17.3% and the Business
Finance/Administration sector accounts for 13.3% of jobs in the Town of Wasaga Beach. Table 3-7 provides
the summary of labour force occupations for the Town of Wasaga Beach.
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TABLE 3-7
OCCUPATION / LABOUR FORCE STATISTICS
Occupations
Management
Business; finance and administration
Natural and applied sciences
Health occupations
Education; Law and Social; Community; Government
Art; Culture; Recreation and Sport
Sales and Service
Trades; Transport and Equipment Operators
Natural Resources; Agriculture and Related Production
Manufacturing and Utilities
Other
Total Labour Force
People
Employed
775
1,030
295
415
930
170
2,265
1,340
100
320
105
7,745
%
10.0%
13.3%
3.8%
5.4%
12.0%
2.2%
29.2%
17.3%
1.3%
4.1%
1.4%
100.0%
According to Economic Development and Planning officials, the Town of Wasaga Beach continues to see
strong residential building growth. Due to its proximity to Toronto, there is demand for cottage or weekend
properties and retirement residential located near the Beach. There are currently approximately 15 residential
projects under construction representing approximately 2,500 units/lots and an additional 25 projects
representing approximately 2,700 units/lots actively progressing through the planning and approval process.
Table 3-8 provides the historic building permit values for the Town of Wasaga Beach.
TABLE 3-8
PERMITS ISSUED & BUILDING PERMIT VALUES
TOWN OF WASAGA BEACH
2009
2010
2011
2012
Total Permits Issued
658
664
663
578
Estimated Value of Residential
$43,136,000 $60,006,000 $58,104,000 $41,671,000
Construction ($)
Estimated Value of Non$4,954,000
$2,160,000
$5,277,000
$1,078,000
Residential Construction ($)
Total Construction Value
$48,090,000 $62,166,000 $63,381,000 $42,749,000
2013
647
$68,982,000
$1,877,000
$70,859,000
Source: Town of Wasaga Beach
In 2013, total building permit values in the Town of Wasaga Beach reached $71 million compared to $43
million in 2012, and $63 million in 2011. Construction in Wasaga Beach has been primarily residential in
recent years with residential development accounting for 97.4% of total construction, or $69 million, in 2013.
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3.4.2
Tourism
The Town of Wasaga Beach attracts approximately 1.16 million visitors annually according to the Town of
Wasaga Beach Economic Development Department. The primary driver of visitation demand is Wasaga
Beach itself, the world's longest freshwater beach. In the summer months “The Beach” is bustling with tourism
activity as a popular beach volleyball and sunbathing destination. There are six public beach areas numbered
from 1 to 6; the higher the number, the smaller and less crowded the area. Pedestrians along Beach Area 1
and 2 benefit from a boardwalk running along the beach. The boardwalk along Beach Area 1 has been
developed with a number of seasonal restaurants, bars and retail stores.
Also located in the Town of Wasaga Beach are Wasaga Beach Provincial Park and the Blueberry Plains trail
system, which offers 30km of trails through the dunes area. Eco-tourism is a growing market as tourists
continue to explore the non-attraction based activities in the area.
Peak season activities include golf,
biking/hiking, fishing and boating.
The Town’s waterfront location makes it accessible to marine traffic. There are four public launch facilities in
the Town of Wasaga Beach. Two of these facilities, Sturgeon Point Marina and Wasaga Marine provide
docking facilities.
Wasaga Beach also provides a number of winter activities. In the winter, there are miles of fresh groomed
trails for snowmobiling in the region. Cross country skiers enjoy access to local trails, while downhill skiers
have central access to Blue Mountain, Horseshoe Valley and Snow Valley ski resorts all located within 35
kilometers of Wasaga Beach.
The Town of Wasaga Beach is also home to Nancy Island Museum, this museum displays the original hull of
the Schooner HMS Nancy, which was sunk by the British Commander in the Nottawasaga River in 1814.
Open in the summer, the museum offers daily regular tours, special events and evening programs that take
place around a campfire.
The Town of Wasaga Beach hosts a number of well attended annual special events catered to both the local
resident population, and tourists alike. Most notable major events take place in the summer and fall months,
though events like Sledfest, an annual snowmobile festival, have strong support from the community and are
expected to grow in the future. Table 3-9 summarizes the major annual events in Wasaga Beach.
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TABLE 3-9
MAJOR EVENT LISTING
Event
Sledfest
Snowman Mania - Family Day Weekend
Easter Eggstravaganza
Wasaga Beach Fest
Canada Day Celebrations
Not-So-Pro Volleyball Tournament
Underground Series
Wasaga Under Seige “A War of 1812 Experience”
Corvette Weekend
Multi-Sports Triathalon and Marathon
Wasaga Beach Blues
Funderland
TOTAL
Month
Jan
Feb
Mar/Apr
Jun
Jul
Jul
Jul
Aug
Aug
Sep
Sep
Dec
Estimated
Attendance
1,500
10,000
3,000
3,500
3,000
3,500
4,500
2,000
1,500
1,000
6,000
2,500
42,000
Source: Town of Wasaga Beach
Tourist accommodations within the Town of Wasaga Beach include motels, cottages, B&B’s and many
seasonal trailer parks and campgrounds.
3.5
Town of Collingwood
The Town of Collingwood is located approximately 20 kilometers west of the Town of Wasaga Beach and is
approximately 160 kilometers north of the Greater Toronto Area. According to the 2011 Census, Collingwood
has an estimated population of 19,241 residents, representing an 11.3% increase from the 2006 Census. In
the winter, the Town provides the largest concentration of downhill ski facilities (5 areas) with the some of the
highest verticals in the province. There is a growing base of spring/fall shoulder season recreational activities
such as golf, sailing, mountain biking, hiking and fishing. Collingwood’s proximity to southern Ontario’s large
and affluent year round markets (as well as winter markets in southern Michigan, Ohio and as far away as
Chicago), have helped the Collingwood area evolve into one of Ontario’s few, truly multi-season tourist and
vacation areas.
The largest single tourist draw to the Collingwood area is Blue Mountain, which sells over 750,000 lift tickets
each year. At 720 vertical feet and 2.5 miles long, Blue Mountain is Ontario’s largest mountain resort. With 36
runs, 4 terrain parks, 3 half-pipes, a snow-tubing park and 15 ski lifts the facility attracts a significant volume of
visitors to the area. The resort is also a regional meeting/conference destination and is increasingly becoming
a summer leisure destination for mountain biking, golf and hiking. With further development planned for the
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resort and increased promotion by Intrawest, Blue Mountain is expected to continue to see an increase in
visitation in the coming years.
There are also a number of golf courses in Collingwood, including the nationally ranked Monterra Golf Course
at Blue Mountain Resorts, Georgian Bay Golf Club and Batteaux Creek Golf Club, located 6 kms south of
Collingwood. These courses help to position Collingwood as a golf course destination within Southern Ontario
and increase overall visitor volumes in the summer months.
In addition to the leisure market, a number of resorts in the Collingwood area also cater to the
meetings/convention market. Blue Mountain offers over 37,500 sq.ft of meeting space at the resort.
One of the other significant attractions in the Town is the Scenic Caves, which underwent a major
redevelopment and now includes a Nordic Ski Centre, treetop trails, Ontario’s longest suspension footbridge,
eco-adventure tours and 20 kilometres of trails.
Major festivals include the Collingwood Jazz and Blues Festival, Collingwood Music Festival, Collingwood
Elvis Festival and Dragon Boat Festival.
3.6
Conclusion
Overall, Town of Wasaga Beach and the Town of Collingwood have strong tourism presence with attractions
including, Wasaga Beach, Blue Mountain Resorts, the Scenic Caves and Nancy Island. The Town of
Collingwood draws meeting/conference business to the area year round which helps to support the
community. Both Wasaga Beach and Collingwood struggle with a lack of local corporate or industrial
business. Residential developments have been the most obvious signs of growth in recent years as visitors
increase the demand for summer cottages and retirement residential facilities. The Town of Wasaga Beach
expects the community to continue with moderate positive growth in the short to medium term.
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4.0
COMPETITIVE ACCOMMODATION MARKET ANALYSIS
4.1
Introduction
The proposed hotel is to be located on Beach Area 2 in Wasaga Beach would compete within three
competitive accommodation markets; the local Wasaga Beach accommodation market; the regional
accommodation market, which includes supply in both Wasaga Beach and Collingwood; and on a broader
scale within the Ontario Resort accommodation market, which includes a mix of resorts in various locations
across the province.
4.2
Local Competitive Accommodation Market
The local Wasaga Beach accommodation market is comprised of approximately 22 motels, 42 cottage courts
and a number of independent bed and breakfasts. In total there are currently 126 licensed Tourist
Establishment properties in Wasaga Beach, comprising a total of 1,109 units. The majority of these
establishments are open only seasonally, during peak summer months. Additionally, the greater part of the
existing accommodation supply in Wasaga Beach is considered to be tired and does not satisfy the needs of
transient guests, especially for corporate demand and meeting/conference groups or sports teams. As such,
only 6 year-round establishments have been included within the local competitive market. These properties
have been included due to proximity of location, number of annual operating days, the commonality of room
night demand generators, and similar services, facilities and amenities. Table 4-1 summarizes the properties
that comprise the local competitive accommodation market.
Hotel
Saga Resort
Luau Resort
J&J Motel
TOTAL
TABLE 4-1
LOCAL COMPETITIVE ACCOMMODATION MARKET
Rooms Hotel
21
Mermaid Motel & Cottage Court
25
WuWu's Cabins
12
Knightsbridge Inn
109
Rooms
15
22
14
Discussions with local stakeholders indicated that local accommodation establishments generally experience
strong demand in the peak summer months of June through September, particularly on weekends, with
occupancies in the 65 – 90% range. Peak season demand is primarily driven by tourists visiting the beach or
attending the many festivals and events in the area. In contrast, the general consensus is that off-season
demand is extremely limited, particularly on weekdays, due to the lack of tourism and corporate demand
generators during the winter months, with occupancies in the 10 – 25% range. Average daily rates within the
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local market are generally in the $75 - $195 range during the peak season, and in the $40 - $85 range in the
off season.
The existing local accommodation product is, for the most part, small owner operated cottage courts, bed and
breakfasts, and exterior access motels. As previously noted, the majority of the product is tired and does not
satisfy the needs of transient guests, especially for corporate demand, meeting/conference groups and sports
teams. A new build, select service, branded property with a beachfront location would be superior to the
existing product in the Wasaga Beach market.
4.3
Regional Competitive Accommodation Market
The proposed subject hotel development would compete regionally with the Wasaga Beach properties
discussed in Section 4.2, as well as with properties also located in Collingwood. This combined regional
market is considered to be the primary competitive market for the proposed hotel. The regional Wasaga
Beach/Collingwood competitive accommodation market is comprised of 7 traditional hotels and approximately
16 motels and independent accommodations which provide a total of 1,647 guest rooms as of December
2013. These properties have been included due to proximity of location, the commonality of room night
demand generators, and similar services, facilities and amenities. Table 4-2 summarizes the properties that
comprise the regional competitive accommodation market.
TABLE 4-2
REGIONAL COMPETITIVE ACCOMMODATION MARKET
WASAGA BEACH/COLLINGWOOD
Hotel
Rooms Hotel
Days Inn & Suites Collingwood
76
Holiday Inn Express Collingwood
Mountain Springs Resort
144
Westin Trillium House
Blue Mountain Resorts*
612
Cranberry Resort
Blue Mountain Inn
103
Collingwood Motel Supply
Saga Resort
21
Luau Resort
25
WuWu's Cabins
J&J Motel
12
Knightsbridge Inn
TOTAL
1,647
Rooms
74
222
78
229
15
22
14
* Includes Mosaic at Blue, Seasons at Blue, Weider Lodge and the Grand Georgian
The competitive market historic occupancy and average daily rate information for the 2009-2013 period is
summarized in Table 4-3. The detailed information has been provided in Exhibit 4-1.
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TABLE 4-3
HISTORIC MARKET PERFORMANCE
2009
2010
2011
Rooms
1,647
1,647
1,647
Available Room Nights
601,155 601,155 601,155
Occupied Room Nights
258,287 262,552 254,384
Occupancy
43.0%
43.7%
42.3%
Average Daily Rate
$150.53 $154.11 $157.33
RevPar
$64.68
$67.31
$66.57
2012
1,647
601,155
261,684
43.5%
$160.97
$70.07
2013
1,647
601,155
266,368
44.3%
$163.43
$72.45
As summarized, over the 2009 – 2013 historic period occupancy in the regional Wasaga Beach/Collingwood
accommodation market has been in the mid 40% range. The market occupancy declined in 2011 to 42.3%,
following a similar trend to the other regions in Ontario that year, and due in part to a less than ideal start to
the winter ski season for the regional market. Since then, the market has experienced year over year demand
growth improving occupancy to 44.3% in 2013.
The market Average Daily Rate has seen relatively consistent growth over the historic period from $150.53 in
2009 to $163.43 in 2013 for a total of 8.6% over the 5 year period or an annual compounded rate of 2.1%.
4.3.1
Regional Market Mix by Segment
Demand
for
hotel
accommodation
within
the
competitive
regional
Wasaga
Beach/Collingwood
accommodation market consists of four broad demand segments: the Corporate/Commercial segment; the
Leisure/Tourist segment; the Meeting/Conference segment; and Government/Other segment. On the
basis of PKF market research, estimated market segmentation for the regional competitive market in 2013 is
presented in Table 4-4.
TABLE 4-4
MARKET SEGMENTATION - 2013
WASAGA BEACH/COLLINGWOOD COMPETITIVE MARKET
Occupied Room
Percentage of
Segment
Nights
Demand
Corporate/Commercial
12,992
4.9%
Meeting/Conference
85,190
32.0%
Leisure/Tourist
154,874
58.1%
Government/Other
13,311
5.0%
TOTAL
266,368
100.0%
Source: PKF Consulting
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The Corporate/Commercial market segment consists of rooms’ demand, which is generated by, and
specifically related to, business and corporate activity. Within this market, both individual and volume (or
preferred) corporate accounts are included.
The Meeting/Conference market segment consists of rooms’ demand generated for the purpose of attending
meetings and/or conferences internally within area hotels, which offer public assembly facilities. Conference
delegates who may be attending a meeting or conference elsewhere in the vicinity may also generate
demand.
The Leisure/Tourist market segment consists of rooms’ demand generated by independent tourists, group
tours, and a variety of sports teams/events throughout the year. It includes individuals and families visiting as
tourists, the “VFR” market (visiting friends or relatives). This market also consists of demand generated by
groups whose primary purpose is of a leisure or transient nature and not related to corporate business.
The Government/Other market segment consists of demand generated by crew contracts, government
officials, travel agents, hotel employees, and to a lesser extent, smaller specialty markets. Demand in this
segment is typically represented by sources, which are highly rate sensitive and are normally provided with
significantly discounted room rates.
The regional Wasaga Beach/Collingwood market is largely a year-round Leisure destination, with a strong
Meeting/ Conference base generated by the Collingwood hotels. There is little in the way of demand
generated by Corporate segment which is a result of the absence of industry and major corporate/commercial
employers in the area.
4.4
Ontario Resort Competitive Market
The proposed hotel would also compete on a broader scale with the overall Ontario Resort Market, in
particular within the Leisure and Meeting/Conference segments. The Ontario Resort competitive
accommodation market includes Resort and Inn properties located across Ontario and is comprised of 33
traditional resorts and independent inns which provide a total of 3,623 guest rooms as of December 2013.
These properties have been included due to the nature of their locations as destination resorts, the
commonality of room night demand generators, and similar services, facilities and amenities. Table 4-5
summarizes the properties that comprise the Ontario Resort competitive accommodation market.
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TABLE 4-5
REGIONAL COMPETITIVE ACCOMMODATION MARKET
Hotel
Rooms Hotel
Deerhurst Resort
403
Millcroft Inn
The Briars
88
Old Mill Inn
Westin Trillium
222
Pillar & Post
Taboo
61
Benmiller Inn
Blue Mountain
784
Idlewyld Inn***
Horseshoe Valley Resort
102
Ste. Anne's Country Inn & Spa
Talisman
87
Inn at Christie's Mill
White Oaks
220
Queen's Landing
Sherwood Resort
49
Moffat Inn
Rocky Crest Resort
65
Langdon Hall
Pinestone Resort
103
Touchstone Resort
Nottawasaga
269
Balance of Inns
Hockley Valley
104
Elora Mill Inn*
J W Marriott, The Rosseau
220
Delta Grandview**
Prince of Wales
110
TOTAL
Rooms
52
60
123
60
23
27
42
142
24
52
33
103
32
129
3,623
*Closed in 2011
** Closed in 2012
***Closed in 2013 and is anticipated to re-open in 2014
The Ontario Resort competitive market historic occupancy and average daily rate information for the 20092013 period is summarized in Table 4-6. The detailed information has been provided in Exhibit 4-2.
TABLE 4-6
ONTARIO RESORTS
2009
2010
2011
2012
Rooms
3,789
3,785
3,759
3,629
1,382,916 1,381,456 1,371,966 1,324,585
626,661
667,814
670,164
673,606
Occupancy
45.3%
48.3%
48.8%
50.9%
Average Daily Rate
$181.09
$188.07
$191.55
$195.53
RevPar
$82.06
$90.91
$93.57
$99.44
2013
3,623
1,322,395
665,276
50.3%
$197.83
$99.52
As summarized, over the 2009 – 2013 historic period occupancy in the Ontario Resort accommodation
market has been in the mid 40% to 50% range. The market occupancy increased steadily from 45.3% in 2009
to 50.9% in 2012, before declining to 50.3% in 2013. It should be noted that over the historic period there has
been a reduction in supply with the closure of four rooms at The Briars in 2010, the closure of the Elora Inn in
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2011, and the transition of the Delta Grandview to an independent, fractional ownership resort in 2012. The
Idlewyld Inn also closed in late 2013 under new ownership, but is expected to re-open in the spring of 2014
after undergoing an extensive renovation. The changes in supply accounted for a decrease in available guest
rooms of 0.7% in 2011, 3.5% in 2012 and 0.2% in 2013. Without the closure of these collective 166 rooms
market occupancy would have been 48.5% in 2011, 48.7% in 2012 and 48.1% in 2013.
The market Average Daily Rate has seen relatively consistent growth over the historic period from $181.09 in
2009 to $197.83 in 2013 for a total of 9.2% over the 5 year period or an annual compounded rate of 2.2%.
4.4.1
Ontario Resort Market Mix by Segment
Demand for hotel accommodation within the competitive Ontario Resort accommodation market consists of
four broad demand segments: the Corporate/Commercial segment; the Leisure/Tourist segment; the
Meeting/Conference segment; and Government/Other segment. On the basis of PKF market research,
estimated market segmentation for the regional competitive market in 2013 is presented in Table 4-7.
TABLE 4-7
MARKET SEGMENTATION - 2013
ONTARIO RESORT COMPETITIVE MARKET
Occupied Room
Percentage of
Segment
Nights
Demand
Corporate/Commercial
16,661
2.5%
Meeting/Conference
290,123
43.6%
Leisure/Tourist
349,689
52.6%
Government/Other
8,803
1.3%
TOTAL
665,276
100.0%
Source: PKF Consulting
Similar to the regional Wasaga Beach/Collingwood market, the Ontario Resort market is largely driven by the
Leisure segment, with a strong Meeting/ Conference base. There is little in the way of demand generated by
Corporate or Government/Other segments segment which is a result of primarily the locational characteristics
of these properties.
4.5
Proposed New Supply – Regional Competitive Market
Over the historic period the competitive market supply has remained relatively constant with no new
properties entering the local or regional markets over this time period.
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Based on discussions with representatives of the Town of Wasaga Beach, it is understood that the Wasaga
th
River Docks Suites, a mixed-use development, located on Mosley Street at 11
Street, is currently
progressing through the planning approval process. The majority of the building that will become the hotel
within the proposed Wasaga River Docks Suites development was constructed as part of previous
development project that failed to reach completion over the past few years. As the construction of the
property is for the most part complete, our projections anticipate this new hotel to come on line by the summer
of 2014. Based on discussions with representatives from the Town, it is understood that the Wasaga River
Docks Suites would be an independent mid-scale limited service hotel. The opening of the proposed 25-room
Wasaga River Docks Suites, estimated to be mid-2014 represents a 0.7% increase in supply in the regional
market in 2014, and a 0.8% increase in 2015.
With the exception of the Wasaga River Docks Suites development, no additional new supply has been
projected to enter the competitive market over the projection period.
The subject hotel, with 80 rooms, has been projected to open on January 1, 2016, representing a 4.8%
increase in supply in the competitive market in that year.
Exhibit 4-3 reflects the projected supply changes in the competitive accommodation market over the 20142020 projection period.
4.6
Competitive Market Demand Projections
4.6.1
Regional Wasaga Beach/Collingwood Market
The demand projections prepared for the primary regional Wasaga Beach/Collingwood competitive market
are based on the current market dynamics and anticipated changes in demand throughout the projection
period. Exhibit 4-4 provides the projected demand and average daily rate levels for the competitive
accommodation market over the 2016 to 2020 period. The following table summarizes these projections.
TABLE 4-8
MARKET OCCUPANCY & AVERAGE DAILY RATE PROJECTIONS
WASAGA BEACH/COLLINGWOOD COMPETITIVE MARKET
2014
2015
2016
2017
2018
2019
610,280
610,280
639,480
639,480
639,480
639,480
267,844
272,773
283,145
286,397
288,671
290,965
Occupancy
43.9%
44.7%
44.3%
44.8%
45.1%
45.5%
Average Daily Rate (ADR)
$167.60
$171.79
$176.09
$180.49
$185.00
$189.63
2020
639,480
293,279
45.9%
$194.37
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The demand in the competitive market is projected to grow at a rate of 0.6% in 2014 and 1.8% in 2015. The
increased demand growth projected for 2015 is primarily induced demand as a result of the Wasaga River
Docks Suites entering the local market. In 2016, when the proposed subject hotel enters the market, it is
projected to grow by 3.8%, with an additional 1.1% demand growth projected in 2017. This demand growth
will be largely supply induced demand as a result of the proposed hotel entering the market. In 2019 and
2020 the market is projected to experience stabilized demand growth of 0.8% per annum.
The projections for supply induced demand growth over the 2016 to 2017 period are based on the following
assumptions;

Corporate/Commercial demand growth and Government/Other demand growth will be the result
of new demand entering or re-entering the market because of the availability of branded
overnight accommodation in Wasaga Beach.

Meeting/ Conference occupied room night demand will enter the market because of the
availability of professional meeting space for small to mid-sized groups and the availability of
branded overnight accommodation in Wasaga Beach. Additionally, based on the location and
proposed facilities for the hotel, Meeting/Conference occupied room night demand in the form of
wedding groups will also enter the market because of the availability of quality banquet facilities
and overnight accommodation;

Leisure demand growth will be the result of new demand entering or re-entering the market
because of the availability of branded overnight accommodation in Wasaga Beach. The new
product will relieve some of the capacity constraints in the area, especially during tournaments,
large festivals and events and during the busy summer period.
Although the proposed hotel will generate some additional demand for the competitive market, the market is
projected to see relatively stable growth and will continue to perform in the mid 40% occupancy range over
the projection period.
While the competitive market experienced 1.6% growth in average daily rate in 2013, the 2010 to 2012 period
saw growth rates in the 2.1% to 2.4% range. From 2014 to 2020 the average daily rate is projected to
increase by 2.5% per annum. A 2.5% growth rate is indicative of a market that is growing in a moderate, but
positive manner, and generally reflects the current and anticipated rate of inflation.
4.6.2
Ontario Resort Market
The demand projections prepared for the Ontario Resort competitive market are based on the current market
dynamics and anticipated changes in demand throughout the projection period. Exhibit 4-5 provides the
projected demand and average daily rate levels for the competitive Ontario Resort accommodation market
over the 2016 to 2020 period. The following table summarizes these projections.
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TABLE 4-9
MARKET OCCUPANCY & AVERAGE DAILY RATE PROJECTIONS
ONTARIO RESORT COMPETITIVE MARKET
2014
2015
2016
2017
2018
2019
1,322,395 1,324,585 1,353,785 1,353,785 1,353,785 1,353,785
671,801
678,392
685,047
691,768
698,556
705,411
Occupancy
50.8%
51.2%
50.6%
51.1%
51.6%
52.1%
Average Daily Rate
$202.77
$207.84
$213.04
$218.36
$223.82
$229.42
2020
1,353,785
712,334
52.6%
$235.15
The Ontario Resort market is projected to see relatively stable growth of 1.0% throughout the projection
period and will continue to perform in the low 50% occupancy range over the projection period.
Average daily rate for the Ontario Resort market is projected to increase by 2.5% per annum from 2014 to
2020. A 2.5% growth rate is indicative of a market that is growing in a moderate, but positive manner, and
generally reflects the current and anticipated rate of inflation, and is in line with the Ontario Resort market’s
compounded growth rate of 2.2% from 2009 to 2013.
4.6.3
Seasonality of Demand
Occupied room night demand for both the regional Wasaga Beach/Collingwood market and the Ontario
Resort market is highly seasonal in nature. The regional Wasaga Beach/Collingwood market achieves higher
occupancies in Q1 due to demand generated by the Blue Mountain ski area. Table 4-10 summarizes the
seasonality of demand for each market.
TABLE 4-10
SEASONALITY OF DEMAND
ONTARIO RESORT & WASAGA BEACH/COLLINGWOOD MARKETS
Occupancy %
Q1
Q2
Q3
Regional Wasaga Beach/Collingwood Market
54%
42%
72%
Ontario Resort Market
40%
46%
70%
Q4
41%
45%
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$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
$200.00
Total Competitive Market
Available Rooms
Average Daily Rate
RevPar
MARKET GROWTH
2009
Average Daily Rate
2010
RevPar
YEARS
2011
Annual Occupancy
2012
HISTORIC MARKET PERFORMANCE (ANNUAL)
2013
0.0%
30.0%
60.0%
90.0%
Corporate
Meeting/Conference
Leisure
Gov't/Other
Total Market
2011
0.0%
-3.1%
2.1%
Market Segmentation
2013
%
12,992
4.9%
85,190
32.0%
154,874
58.1%
13,311
5.0%
266,368
100.0%
COMPETITIVE MARKET
Days Inn & Suites Collingwood
Holiday Inn Express Collingwood
Mountain Springs Resort & Conference Centre
Westin Trillium House
Blue Mountain Resort
Cranberry Resort
Blue Mountain Inn
Collingwood Motel Supply
Saga Resort
Luau Resort
J&J Motel
WuWu's Cabins
Knightsbridge Inn
2013
0.0%
1.8%
1.6%
2010
0.0%
1.7%
2.4%
2012
0.0%
2.9%
2.3%
2009
na
na
na
Compounded Annual
Growth Rate (CAGR) Total Growth
2009 - 2013
2009 - 2013
0.0%
0.0%
0.8%
3.1%
2.1%
8.6%
2.9%
12.0%
Available Rooms
Average Daily Rate
2013
1,647
44.3%
$163.51
$72.45
601,155
266,368
$43,554,765
2009
2010
2011
2012
1,647
1,647
1,647
1,647
43.0%
43.7%
42.3%
43.5%
$150.53
$154.11
$157.33
$160.97
$64.68
$67.31
$66.57
$70.07
601,155
601,155
601,155
601,155
258,287
262,552
254,384
261,684
$38,880,217 $40,461,029 $40,021,730 $42,123,791
OCCUPANCY (%)
TOTAL COMPETITIVE MARKET
Rooms
Annual Occupancy
Average Daily Rate
RevPar
Room Revenue
AVERAGE DAILY RATE ($)
EXHIBIT 4-1
WASAGA BEACH / COLLINGWOOD MARKET
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$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
$200.00
Total Competitive Market
Available Rooms
Average Daily Rate
RevPar
MARKET GROWTH
Total Growth
2009 - 2013
-4.4%
6.2%
9.2%
21.3%
2009
na
na
na
2009
3,789
45.3%
$181.09
$82.06
1,382,916
626,661
$113,479,867
2009
Average Daily Rate
2010
RevPar
YEARS
2011
Annual Occupancy
2012
2011
-0.7%
0.4%
1.9%
2011
3,759
48.8%
$191.55
$93.57
1,371,966
670,164
$128,369,055
2013
0.0%
30.0%
60.0%
90.0%
Corporate
Meeting/Conference
Leisure
Gov't/Other
Total Market
2010
-0.1%
6.6%
3.9%
2010
3,785
48.3%
$188.07
$90.91
1,381,456
667,814
$125,593,410
HISTORIC MARKET PERFORMANCE (ANNUAL)
Compounded Annual
Growth Rate (CAGR)
2008 - 2012
-1.1%
1.5%
2.2%
4.9%
Available Rooms
Average Daily Rate
TOTAL COMPETITIVE MARKET
Rooms
Annual Occupancy
Average Daily Rate
RevPar
Room Revenue
OCCUPANCY (%)
EXHIBIT 4-2
ONTARIO RESORTS MARKET
2013
-0.2%
-1.2%
1.2%
2012
-3.5%
0.5%
2.1%
2013
na
na
na
Year to Date
2013
0
0.0%
$0.00
$0.00
0
0
$0
0
2014
0.0%
0.0%
0.0%
2014
0
0.0%
$0.00
$0.00
0
0
$0
Market Segmentation
2013
%
16,661
2.5%
290,123
43.6%
349,689
52.6%
8,803
1.3%
665,276
100.0%
COMPETITIVE MARKET
Deerhurst Resort
Millcroft Inn
The Briars
Old Mill Inn
Westin Trillium
Pillar & Post
Taboo
Benmiller Inn
Blue Mountain
Idlewyld Inn
Horseshoe Valley Resort
Ste. Anne's Country Inn & Spa
Talisman
Inn at Christie's Mill
Delta Grandview
Queen's Landing
Sherwood Resort
Moffat Inn
Rocky Crest Resort
Langdon Hall
Pinestone Resort
Elora Mill Inn
Nottawasaga
Balance of Inns
Hockley Valley
J W Marriott, The Rosseau
White Oaks
Touchstone Resort
Prince of Wales
2013
3,623
50.3%
$197.83
$99.52
1,322,395
665,276
$131,610,029
2012
3,629
50.9%
$195.53
$99.44
1,324,585
673,606
$131,711,768
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SUPPLY PROJECTIONS
Existing Supply
New Projects
BEACH AREA 2 PROPOSED HOTEL DEVELOPMENT
1 WASAGA RIVER DOCKS SUITES - estimated opening July 1, 2014
2 BALANCE OF WASAGA RIVER DOCKS SUITES
Subtotal
Total Supply
Change
% Change
Total Supply
1 WASAGA RIVER DOCKS SUITES - estimated opening July 1, 2014
2 BALANCE OF WASAGA RIVER DOCKS SUITES
Subtotal
New Projects
SUPPLY ADDITIONS
Existing Supply
2014
1,647
0
12
0
12
1,659
12
0.7%
2013
1,647
0
0
0
0
1,647
na
na
Rooms Probability
80
100.0%
12
100.0%
13
100.0%
105
1,647
0
12
13
25
1,672
13
0.8%
2015
1,647
Impact
80
12
13
105
1,752
EXHIBIT 4-3
SUPPLY PROJECTIONS
80
12
13
105
1,752
80
4.8%
2016
1,647
Timing
2016
2014
2015
80
12
13
105
1,752
0
0.0%
2017
1,647
80
12
13
105
1,752
0
0.0%
2018
1,647
80
12
13
105
1,752
0
0.0%
2019
1,647
80
12
13
105
1,752
0
0.0%
2020
1,647
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Market Projections
Total Demand
occupied room nights
demand growth
Total Supply
available room nights
supply growth
Market Occupancy
Market Average Daily Rate
Market RevPar
rate growth
Demand Projections
Corporate
demand growth
Meeting/Conference
demand growth
Leisure
demand growth
Gov't/Other
demand growth
610,280
0.0%
44.7%
$171.79
$76.78
2.5%
610,280
1.5%
43.9%
$167.60
$73.56
2.5%
13,646
2.0%
13,378
0.5%
272,773
1.8%
158,905
2.0%
155,789
0.6%
267,844
0.6%
86,900
1.5%
85,616
0.5%
2015
13,322
2.0%
13,061
0.5%
2014
2015
2014
639,480
4.8%
44.3%
$176.09
$77.97
2.5%
283,145
3.8%
2016
13,919
2.0%
165,261
4.0%
90,376
4.0%
13,588
2.0%
2016
639,480
0.0%
44.8%
$180.49
$80.83
2.5%
286,397
1.1%
2017
14,053
1.0%
167,791
1.5%
90,828
0.5%
13,724
1.0%
2017
EXHIBIT 4-4
ACCOMMODATION MARKET PROJECTIONS
639,480
0.0%
45.1%
$185.00
$83.51
2.5%
288,671
0.8%
2018
14,123
0.5%
169,469
1.0%
91,282
0.5%
13,796
0.5%
2018
639,480
0.0%
45.5%
$189.63
$86.28
2.5%
290,965
0.8%
2019
14,194
0.5%
171,164
1.0%
91,739
0.5%
13,869
0.5%
2019
639,480
0.0%
45.9%
$194.37
$89.14
2.5%
293,279
0.8%
2020
14,265
0.5%
172,875
1.0%
92,197
0.5%
13,942
0.5%
2020
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Market Projections
Total Demand
demand growth
Total Supply
available room nights
supply growth
Market Occupancy
Market RevPar
rate growth
Demand Projections
Corporate
demand growth
Meeting/Conference
demand growth
Leisure
demand growth
Gov't/Other
demand growth
2020
17,253
0.5%
311,051
1.0%
374,914
1.0%
9,116
0.5%
2020
712,334
1.0%
1,353,785
0.0%
52.6%
$235.15
$123.73
2.5%
2019
17,167
0.5%
307,971
1.0%
371,202
1.0%
9,071
0.5%
2019
705,411
1.0%
1,353,785
0.0%
52.1%
$229.42
$119.54
2.5%
2018
17,081
0.5%
304,922
1.0%
367,527
1.0%
9,025
0.5%
2018
698,556
1.0%
1,353,785
0.0%
51.6%
$223.82
$115.49
2.5%
2017
16,996
0.5%
301,903
1.0%
363,888
1.0%
8,980
0.5%
2017
691,768
1.0%
1,353,785
0.0%
51.1%
$218.36
$111.58
2.5%
2016
16,912
0.5%
298,914
1.0%
360,285
1.0%
8,936
0.5%
2016
685,047
1.0%
1,353,785
2.2%
50.6%
$213.04
$107.80
2.5%
2015
16,828
0.5%
295,954
1.0%
356,718
1.0%
8,891
0.5%
2015
678,392
1.0%
1,324,585
0.2%
51.2%
$207.84
$106.45
2.5%
2014
16,744
0.5%
293,024
1.0%
353,186
1.0%
8,847
0.5%
2014
671,801
1.0%
1,322,395
0.0%
50.8%
$202.77
$103.01
2.5%
EXHIBIT 4-5
ACCOMMODATION MARKET PROJECTIONS
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5.0
SUBJECT PROPERTY OCCUPANCY & AVERAGE DAILY RATE PROJECTIONS
5.1
Introduction
Our analysis of the subject property projections examines future occupancy and market penetration levels for
the proposed hotel based on numerous factors including, economic influences and the actual and projected
supply/demand relationship in the competitive markets.
In projecting occupancy performance of the proposed hotel over the projection period, the concept of “fair
market share” has been utilized. This concept states that a property will attract rooms demand in the same
proportion as its share of rooms supply. The basic assumption is that all things are equal however; different
properties achieve different levels of market penetration based on various competitive factors including
location, product and facilities, customer preferences, pricing and marketing strategies. Market penetrations in
excess of 100.0% indicate that a hotel possesses competitive advantages relative to the market as whole,
competitive weaknesses are reflected in penetrations of less than 100.0%.
In the following paragraphs, the projected competitive position of the subject hotel is assessed for each major
market segment, relative to both the regional Wasaga Beach/Collingwood market and the broader Ontario
Resort market, to arrive at overall market penetration and occupancy estimates. Exhibit 5-1A summarizes the
projected market position of the property over the projection period within the regional Wasaga
Beach/Collingwood market. Exhibit 5-1B summarizes the projected market position of the property over the
projection period within the broader Ontario Resort market.
5.2
Corporate/Commercial Segment
The Corporate/Commercial market segment consists of rooms’ demand, which is generated by, and
specifically related to, business and corporate activity. Within this market, both individual and volume (or
preferred) corporate accounts are included.
The proposed subject hotel is projected to capture approximately 693 occupied room nights within the
Corporate/Commercial segment in its stabilized year, 2018, representing 4.0% of the hotel’s total demand.
The majority of these occupied room nights within the Corporate/Commercial segment will be captured over
the Sunday through Thursday period throughout the year. As the proposed hotel would be the only branded
hotel in Wasaga Beach, it could reasonably attract a substantial share of the existing corporate business.
Additionally, a portion of occupied room nights within this segment would be induced demand, or demand that
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has historically chosen to stay in markets such as Barrie due to a lack of adequate, branded product in
Wasaga Beach and is as such could be re-captured by the subject hotel.
5.2.1
Regional Wasaga Beach/Collingwood Market Performance – Corporate/Commercial
Segment
Relative to the regional Wasaga Beach/Collingwood market, the subject hotel is projected to penetrate the
Corporate/Commercial segment at 110.0% of its fair market share of demand in its stabilized year, 2018.
TABLE 5-1
SUBJECT PROPERTY MARKET PENETRATION
CORPORATE/COMMERCIAL SEGMENT
REGIONAL WASAGA BEACH/COLLINGWOOD MARKET
2016
2017
2018
2019
2020
651
674
693
693
693
Ratio to Total Demand
4.1%
4.0%
4.0%
4.0%
4.0%
Penetration Rate
105.0% 107.5% 110.0% 109.4% 108.9%
5.2.2
Ontario Resort Market Performance – Corporate / Commercial Segment
Relative to the Ontario Resort market, the subject hotel is projected to penetrate the Corporate/Commercial
segment at 188.1% of its fair market share of demand in its stabilized year, 2018.
TABLE 5-2
CORPORATE/COMMERCIAL SEGMENT
ONTARIO RESORT MARKET
2016
2017
2018
2019
651
674
693
693
4.1%
4.0%
4.0%
4.0%
Penetration Rate
178.6% 183.8% 188.1% 187.1%
2020
693
4.0%
186.2%
5.3
Meeting/Conference Segment
The Meeting/Conference market segment consists of rooms’ demand generated for the purpose of attending
meetings and/or conferences internally within area hotels, which offer public assembly facilities. Conference
delegates who may be attending a meeting or conference elsewhere in the vicinity may also generate
demand.
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The proposed hotel is projected to capture approximately 5,189 occupied room nights within the
Meeting/Conference segment in its stabilized year, 2018, representing 29.8% of the hotel’s total demand.
Based on the facility program discussed in Section 2, the projections for the subject hotel have assumed that
the hotel will have one large banquet room (approximately 150 seats) and two smaller breakout rooms
(approximately 30-50 seats per room) and an executive boardroom, for meetings and events.
The proposed hotel will compete with the full service properties in Collingwood, as well as within the broader
Ontario Resort market, for small to mid-sized meetings/events. The subject hotel will have a world class,
beach location within a 2-hour drive of the GTA and Pearson International Airport and as such will attract
demand from the regional, provincial and national markets. The overall positioning of the hotel within this
segment is that of a “unique destination meeting/event experience” with the majority of delegates being from
out of town and requiring overnight accommodation. Additionally, based on the beachfront location of the
subject hotel, it is anticipated to be a popular wedding venue in the spring, summer and fall seasons.
Projections in this segment make the following assumptions:
5.3.1

The proposed hotel will capture approximately 60 Corporate/Social meetings and events to be
held during the 52 week calendar year, about one event per week over this period. These events
will attract an average of 60 - 70 attendees. Approximately 85% of the attendees will stay at least
one night. These events will generate approximately 3,400 occupied room nights annually.

The proposed hotel will capture approximately 45 weddings to be held over the course of a year,
primarily on weekends. These events will attract approximately 75 - 100 attendees.
Approximately 25-50% of attendees will require overnight accommodation for at least one night,
with peak season events having a greater out of town attendee mix. These events will generate
about 1750 occupied room nights annually.
Regional Wasaga Beach/Collingwood Market Performance – Meeting/Conference Segment
Meeting/Conference segment at 124.5% of its fair market share of demand in its stabilized year, 2018.
TABLE 5-3
MEETING/CONFERENCE SEGMENT
2016
2017
2018
2019
2020
4,766
4,977
5,189
5,189
5,189
29.7%
29.9%
29.8%
29.8%
29.8%
Penetration Rate
115.5% 120.0% 124.5% 123.8% 123.2%
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5.3.2
Ontario Resort Market Performance – Meeting/Conference Segment
Relative to the Ontario Resort market, the subject hotel is projected to penetrate the Meeting/Conference
segment at 78.9% of its fair market share of demand in its stabilized year, 2018. The proposed hotel will
penetrate below its fair share of demand throughout the projection period as the hotel, and the community of
Wasaga Beach, work towards becoming an established “meeting and conference destination.”
TABLE 5-4
2016
2017
2018
2019
4,766
4,977
5,189
5,189
29.7% 29.9% 29.8% 29.8%
Penetration Rate
73.9% 76.4% 78.9% 78.1%
2020
5,189
29.8%
77.3%
5.4
Leisure/Tourist Segment
The Leisure/Tourist market segment consists of rooms’ demand generated by independent tourists, group
tours, and a variety of sports teams/events throughout the year. It includes individuals and families visiting as
tourists, the “VFR” market (visiting friends or relatives). This market also consists of demand generated by
groups whose primary purpose is of a leisure or transient nature and not related to corporate business.
The proposed subject hotel is projected to capture approximately 10,938 occupied room nights within the
Leisure/Tourist segment in its stabilized year, 2018, representing 62.9% of the hotel’s total demand. The
majority of these occupied room nights will be captured over the Friday and Saturday period in the off peak
season and all week the summer period. As the proposed hotel would be the only branded hotel in Wasaga
Beach, it could reasonably attract a substantial share of the existing leisure business. Additionally, a portion of
occupied room nights within this segment would be induced demand, or demand that has historically chosen
to stay in markets such as Collingwood due to a lack of adequate, branded product in Wasaga Beach and
could be re-captured by the subject hotel.
Occupied room night demand within the Leisure/Tourist segment will be generated from a variety of sources
including, sports tournaments, cultural events and festivals, and pleasure travel to Wasaga Beach and
Collingwood. The subject hotel will benefit from the superior, world class beachfront location, particularly in
the peak summer months.
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5.4.1
Regional Wasaga Beach/Collingwood Market Performance – Leisure/Tourist Segment
Leisure/Tourist segment at 139.0% of its fair market share of demand in its stabilized year, 2018.
TABLE 5-5
LEISURE/TOURIST SEGMENT
2016
2017
2018
2019
2020
Occupied Room Nights 10,112 10,458 10,938 10,938
10,938
62.9%
62.7%
62.9%
62.9%
62.9%
Penetration Rate
134.0% 136.5% 139.0% 139.9% 138.6%
5.4.2
Ontario Resort Market Performance – Leisure/Tourist Segment
Relative to the Ontario Resort market, the subject hotel is projected to penetrate the Leisure/Tourist segment
at 138.0% of its fair market share of demand in its stabilized year, 2018.
TABLE 5-6
2016
2017
2018
2019
Occupied Room Nights 10,112 10,458 10,938 10,938
62.9%
62.7%
62.9%
62.9%
Penetration Rate
130.1% 133.2% 138.0% 136.6%
2020
10,938
62.9%
135.3%
5.5
Government/Other Segment
The Government/Other market segment consists of demand generated by crew contracts, government
officials, travel agents, hotel employees, and to a lesser extent, smaller specialty markets. Demand in this
segment is typically represented by sources, which are highly rate sensitive and are normally provided with
significantly discounted room rates.
The proposed subject hotel is projected to capture approximately 580 occupied room nights within the
Government/Other segment in its stabilized year, 2018, representing 3.3% of the hotel’s total demand.
The majority of these occupied room nights within the Government/Other segment will be captured over the
Sunday through Thursday period throughout the year. Demand within this segment is primarily driven by crew
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business within the local competitive market, with a substantial amount of residential development and ongoing infrastructure improvement projects in the region. Additionally, a portion of occupied room nights within
this segment would be induced demand, or demand that has historically chosen to stay in markets such as
Barrie due to a lack of adequate, branded product in Wasaga Beach and is as such could be re-captured by
the subject hotel. The subject will also induce some Other demand into the market from sources such as third
party providers (i.e. Expedia).
5.5.1
Regional Wasaga Beach/Collingwood Market Performance – Government/Other Segment
Government/Other segment at 90.0% of its fair market share of demand in its stabilized year, 2018. The
proposed hotel will penetrate this segment below its fair share of demand due to the location specific nature of
this demand, with the majority of demand generators for this segment focused on the Collingwood market.
TABLE 5-7
GOVERNMENT/OTHER SEGMENT
2016
2017
2018
2019
2020
540
561
580
580
580
3.4%
3.4%
3.3%
3.3%
3.3%
Penetration Rate
85.0% 87.5% 90.0% 89.6%
89.1%
5.5.2
Ontario Resort Market Performance – Government/Other Segment
Relative to the Ontario Resort market, the subject hotel is projected to penetrate the Government/Other
segment at 298.2% of its fair market share of demand in its stabilized year, 2018.
TABLE 5-8
GOVERNMENT/OTHER SEGMENT
2016
2017
2018
2019
540
561
580
580
3.4%
3.4%
3.3%
3.3%
Penetration Rate
280.3% 289.9% 298.2% 296.7%
2020
580
3.3%
295.2%
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5.6
Subject Hotel Average Daily Rate Projections
In terms of Average Daily Rate (ADR), the ADR for the proposed subject hotel is projected to be $140.87, a
penetration of 80.0% against the regional Wasaga Beach/Collingwood market in its opening year, 2016. The
subject hotel is projected to have an ADR below the market ADR, but at a slight premium to the select service
hotels in Collingwood (i.e. Days Inn and Holiday Inn Express) based on the proposed hotel’s superior,
beachfront location.
TABLE 5-9
SUBJECT PROPERTY PENETRATION
AVERAGE DAILY RATE
2016
2017
2018
$176.09 $180.49 $185.00
Subject Average Daily Rate $140.87 $144.39 $148.00
Subject Rate Penetration
80.0%
80.0%
80.0%
2019
$189.63
$151.70
80.0%
2020
$194.37
$155.49
80.0%
Although the subject hotel will be a new build, branded asset, the hotel will not be able to charge similar rates
to those being achieved by the full service properties in Collingwood (i.e. The Westin or the Blue Mountain
Resorts) since it will not have comparable amenities and services.
5.7
Summary of Property Projections
The following table summarizes the proposed subject hotel projections over 2016-2020 in relation to the
competitive regional Wasaga Beach/Collingwood market.
TABLE 5-10
PROPOSE HOTEL DEVELOPMENT
SUBJECT HOTEL PROJECTIONS
2016
2017
2018
Market Occupancy
44.3%
44.8%
45.1%
Subject Occupancy
55.0%
57.1%
59.6%
$176.09 $180.49 $185.00
Subject Average Daily Rate $140.87 $144.39 $148.00
Market RevPar
$77.97
$80.83
$83.51
Subject RevPar
$77.53
$82.43
$88.20
2019
45.5%
59.6%
$189.63
$151.70
$86.28
$90.38
2020
45.9%
59.6%
$194.37
$155.49
$89.14
$92.65
At a stabilized occupancy of 59.6% in 2018, the proposed hotel is projected to outperform the competitive
market with a penetration of 132.0%,14.5 points above the market in occupancy. The proposed hotel is
projected to achieve a RevPar penetration of 105.6%, a level that is comparable to the Select Service hotels
in the competitive market.
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5.7.1
Seasonality Analysis & Implications
One of the challenges of operating a hotel in the Wasaga Beach/ Collingwood market is the seasonality of the
demand. Based on the projections above, the subject hotel will face similar seasonal occupancy challenges
that the current operators are facing. Table 5-11 provides a summary of the seasonality of demand and the
weekday vs. weekend impact of business on the proposed subject hotel based on the projections presented
in Exhibit 5-1A, for the property’s stabilized year of operation at a 59.6% annual occupancy.
Period Occupancy
Period Occupancy
TABLE 5-11
PROPOSED HOTEL DEVELOPMENT
SEASONAL CAPACITY ANALYSIS
Winter
Spring
Summer
(Jan – Mar)
(Apr-June)
(July-Sept)
46%
60%
87%
SunFri-Sat
SunFri-Sat
SunFri-Sat
Thurs
Thurs
Thurs
36%
69%
51%
81%
87%
90%
Fall
(Oct-Dec)
45%
SunFri-Sat
Thurs
33%
75%
Given the nature and beachfront location of the proposed hotel in Wasaga Beach and its proximity to the Blue
Mountain/Collingwood area, the proposed hotel will likely achieve strong occupancy in the summer season all
week, as a result of strong leisure demand. The hotel will likely face capacity situations in the summer with the
occupancy running in the 85-95% range all week long. Year round, the proposed hotel should achieve solid
occupancy levels on the weekends (Friday and Saturday) as a result of social events, sports tournament and
year round sporting activities in the area. Induced Meeting/Conference demand will support the year round
base business levels for the hotel. However, the absence of industry and major corporate/commercial
employers and limited demand drivers, especially over the Sunday to Thursday period will result in low
occupancy levels during the week lowering the overall occupancy for the period.
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EXHIBIT 5-1A
PROJECT PROJECTIONS
SUPPLY
2016
80
Total Supply
1,752
Fair Share of Supply
4.6%
2017
80
1,752
4.6%
2018
80
1,752
4.6%
2019
80
1,752
4.6%
2020
80
1,752
4.6%
DEMAND PROJECTIONS
Corporate
fair share of demand
penetration rate
total demand captured
ratio to total demand
Meeting/Conference
penetration rate
Leisure
penetration rate
Gov't/Other
penetration rate
2016
2017
2018
2019
2020
13,588
620
105.0%
651
4.1%
13,724
627
107.5%
674
4.0%
13,796
630
110.0%
693
4.0%
13,869
633
109.4%
693
4.0%
13,942
637
108.9%
693
4.0%
90,376
4,127
115.5%
4,766
29.7%
90,828
4,147
120.0%
4,977
29.9%
91,282
4,168
124.5%
5,189
29.8%
91,739
4,189
123.8%
5,186
29.8%
92,197
4,210
123.2%
5,187
29.8%
165,261
7,546
134.0%
10,112
62.9%
167,791
7,662
136.5%
10,458
62.7%
169,469
7,738
139.0%
10,938
62.9%
171,164
7,816
139.9%
10,938
62.9%
172,875
7,894
138.6%
10,938
62.9%
13,919
636
85.0%
540
3.4%
14,053
642
87.5%
561
3.4%
14,123
645
90.0%
580
3.3%
14,194
648
89.6%
580
3.3%
14,265
651
89.1%
580
3.3%
283,145
16,070
44.3%
124.3%
55.0%
286,397
16,670
44.8%
127.5%
57.1%
288,671
17,401
45.1%
132.0%
59.6%
290,965
17,397
45.5%
130.9%
59.6%
293,279
17,398
45.9%
129.9%
59.6%
Total Demand
market occupancy
market penetration
Project Occupancy
RATE PROJECTIONS
% Growth
Rate Penetration Subject
Project Average Daily Rate
Market RevPar
Subject RevPar Penetration
Subject RevPar
$
$
2016
$176.09
2.5%
80.0%
140.87 $
$77.97
99.4%
77.53 $
2017
$180.49
2.5%
80.0%
144.39 $
$80.83
102.0%
82.43 $
2018
$185.00
2.5%
80.0%
148.00 $
$83.51
105.6%
88.20 $
2019
$189.63
2.5%
80.0%
151.70 $
$86.28
104.8%
90.38 $
2020
$194.37
2.5%
80.0%
155.49
$89.14
103.9%
92.65
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EXHIBIT 5-1B
PROJECT PROJECTIONS
SUPPLY
2016
80
Total Supply
3,709
Fair Share of Supply
2.2%
2017
80
3,709
2.2%
2018
80
3,709
2.2%
2019
80
3,709
2.2%
2020
80
3,709
2.2%
DEMAND PROJECTIONS
Corporate
penetration rate
Meeting/Conference
penetration rate
Leisure
penetration rate
Gov't/Other
penetration rate
2016
2017
2018
2019
2020
16,912
365
178.6%
651
4.1%
16,996
367
183.8%
674
4.0%
17,081
368
188.1%
693
4.0%
17,167
370
187.1%
693
4.0%
17,253
372
186.2%
693
4.0%
298,914
6,447
73.9%
4,766
29.7%
301,903
6,512
76.4%
4,977
29.9%
304,922
6,577
78.9%
5,189
29.8%
307,971
6,643
78.1%
5,189
29.8%
311,051
6,709
77.3%
5,189
29.8%
360,285
7,771
130.1%
10,112
62.9%
363,888
7,849
133.2%
10,458
62.7%
367,527
7,927
138.0%
10,938
62.9%
371,202
8,007
136.6%
10,938
62.9%
374,914
8,087
135.3%
10,938
62.9%
8,936
193
280.3%
540
3.4%
8,980
194
289.9%
561
3.4%
9,025
195
298.2%
580
3.3%
9,071
196
296.7%
580
3.3%
9,116
197
295.2%
580
3.3%
685,047
16,070
50.6%
108.8%
55.0%
691,768
16,670
51.1%
111.7%
57.1%
698,556
17,401
51.6%
115.5%
59.6%
705,411
17,401
52.1%
114.4%
59.6%
712,334
17,401
52.6%
113.3%
59.6%
Total Demand
market occupancy
market penetration
Project Occupancy
RATE PROJECTIONS
% Growth
Rate Penetration Subject
Project Average Daily Rate
Market RevPar
Subject RevPar Penetration
Subject RevPar
$
$
2016
$213.04
2.5%
66.1%
140.87 $
$107.80
71.9%
77.53 $
2017
$218.36
2.5%
66.1%
144.39 $
$111.58
73.9%
82.43 $
2018
$223.82
2.5%
66.1%
148.00 $
$115.49
76.4%
88.20 $
2019
$229.42
2.5%
66.1%
151.70 $
$119.54
75.6%
90.40 $
2020
$235.15
2.5%
66.1%
155.49
$123.73
74.9%
92.66
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6.0
SUBJECT PROPERTY FINANCIAL OPERATING PROJECTIONS
6.1
Introduction
Based upon the preceding discussion of projected occupancies and average daily rates, a five-year projection
of annual operating results has been prepared for the proposed 80-room hotel development to be located at
Beach Area 2 in Wasaga Beach, Ontario.
The pro forma assumptions are based primarily on PKF’s in-house database, which provides insight into the
operating performance of other directly competitive and comparably branded hotels. The comparative hotels
have been selected based on their size, facility program and market mix. PKF’s database of financial
statements includes over 650 properties across the country. In projecting the subject hotel’s operating results,
we have reviewed the historical operating information of a sample of select service and resort properties
across Ontario, in order to establish an industry standard for a product that is comparable to the proposed
hotel. In addition, the historical operating information for a sample of properties in southern Ontario and the
surrounding area were contemplated in order to address regional operating concerns.
Fundamental to the projected operating results is the assumption that the hotel would be competently and
efficiently managed.
It is important to note that the projections do not take into account any efficiencies or additional
operating costs which may result from the operations of the residential components of the proposed
mixed-use development. The projections reflect the proposed hotel as a stand-alone operation.
Inflation
The average annual inflation rate in Canada the past several years has been at 2.5% or less, and for the
purpose of this analysis, inflation has been projected at 2.5% as an average throughout the five year forecast
period. However, inflation has not been used in all revenue and expense categories as the sole basis of
annual increases. The impact of increased/decreased occupancies or sales volumes is also reflected in
revenue and expense projections.
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Account Classification
The Uniform System of Accounts for Hotels, recommended by the American Hotel and Lodging Association
and in general use throughout the hotel industry in Canada, has been used to classify income and expenses
in this report. In conformity with this system, only direct operating expenses are charged to operating
departments of the hotel. The general overhead items, which are applicable to operations as a whole, are
classified as undistributed and include administrative and general expenses, marketing, property operations
and maintenance, and energy costs.
The pro forma projected operating results for the proposed hotel are presented in Exhibit 6-1. The following
paragraphs summarize the projected financial operating performance for the proposed subject development
by department, the details of which are provided in Exhibits 6-2A-C.
6.2
Departmental Revenue and Expenses
6.2.1
Rooms Revenue and Expenses (Exhibit 6-2A)
Rooms revenue for the proposed 80-room hotel is based on the projected occupancy levels and the average
daily room rates as discussed in Section 5.0 of this report.
Labour and benefits expenses are based on average wage rates for similar positions in the Simcoe County
area inflated to 2016 dollars, and take into consideration industry norms for productivity of similar hotels.
Labour and benefits expenses are forecasted to be $24.48 per occupied room night in the first year of
operation.
Other Rooms departmental expenses have been based on industry averages of comparable style hotels
within Ontario. These expenses include Travel Agent Commissions of 2.0% of Rooms revenue, and $10.00
per occupied room for Laundry, Linen, and Other Guest Supplies expenses.
Total rooms departmental expenses are forecasted to be $37.30 (26.5% of Rooms revenue) in the first year
of operations. These expenses are projected to improve to 25.8% or $40.06 per occupied room night by the
fifth year of operations (2020), as a result of increased average room rates and occupancy levels over the
three-year ramp-up period. The expenses have been increased on a 60% variable, 40% fixed basis with
inflation over the projection period.
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6.2.2
Food and Beverage Department Revenue and Expenses (Exhibit 6-2B)
As discussed in Section 2.0, the subject hotel will have approximately 3,500 sq. ft. of meeting space, as well
as a 70-seat restaurant, with a 30-seat seasonal patio, serving breakfast, lunch and dinner daily. The hotel will
also provide a limited amount of in-room dining to its guests. Revenue and expense estimates in this
department are based on industry standards and properties with similar facilities in Ontario generally.
In its first year of operation the hotel’s restaurant is projected to generate revenue of $810,018 or $49.65 per
occupied room night. The main 70-seat, indoor, restaurant is projected to generate revenue of approximately
$735,000 or $45.04 per occupied room night, while the seasonal 30-seat outdoor patio is projected to
generate an additional $75,000 in revenue or $4.61 per occupied room night.
Banqueting revenue, including food & beverage revenue and meeting room rentals, is projected to be $16.25
per occupied room night. Room service revenue is projected to be $1.00 per occupied room night, resulting in
a total food & beverage revenue of $66.90 per occupied room night.
Food and Beverage expenses, including cost of goods sold, payroll and benefits and other operating
expenses, are projected to be 82.1% of revenues, or $54.91 per occupied room night. F&B expenses are
projected to increase by inflation on a 70% fixed and 30% variable basis over the projection period.
6.2.3
Other Operated Departments Revenue and Expenses (Exhibit 6-2C)
This department includes the operation of various ancillary services including: telecommunications, guest
laundry, gift shop/grab-and-go, and internet and in-room movies, it also includes some potential revenue from
Health Club revenue generated through the sale of local memberships. Revenue and expense estimates in
this department are based on industry standards and select service properties in Ontario generally.
In the first year of operation, the hotel is projected to realize total revenue for Other Operated Departments of
$1.33 per occupied room night and $0.79 per occupied room night in expenses. The revenues and expenses
have been increased by 2.5% per annum on an 80% fixed and 20% variable basis over the projection period.
6.2.4
Other Income Net (Exhibit 6-2C)
Other Income Net is comprised of other sources of revenue including; net revenue from foreign exchange,
interest income, commissions and other miscellaneous income. These sources are projected to generate
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$2.00 in net revenue per occupied room night in the first year of operations. Revenues from Other Income are
projected to increase with inflation on an 80% fixed and 20% variable basis over the projection period..
6.3
Undistributed Operating Expenses
6.3.1
Administration and General (Exhibit 6-2D)
This category includes the salaries and wages of administrative staff, credit card commissions, cash overages
and shortages, bad debt expense, data processing, executive office expenses, general insurance,
professional fees, security, IT, and travel.
Expenses in this department have been projected at $3,376 per available room for the first year of operation.
Expenses have been increased on an 80% fixed and 20% variable basis, with inflation, over the projection
period.
6.3.2
Sales and Marketing (Exhibit 6-2D)
In order to achieve the market penetration at the projected room rates, the property must work to develop a
strong presence in the market area and a good relationship with key clients. This category includes a budget
for salaries, and general sales and marketing expenses such as promotions and advertising campaigns.
These expenses are based primarily on industry averages for comparable type and size of hotel operations.
Additionally, a Franchise Fee of 5.0% and Other Brand Fees of 4.0% of Rooms revenue are included in this
category and are based on the industry standards and our knowledge of typical franchise agreements for
branded hotels.
Sales and Marketing expenses (inclusive of Franchise Fees) have been projected at $3,986 per available
room, or 9.3% of gross revenues, in the first year of operations. Expenses have been increased on a 90%
fixed and 10% variable basis, with inflation, over the projection period.
6.3.3
Property Operations and Maintenance (Exhibit 6-2D)
This expense line consists of salaries, wages and employee benefits for maintenance personnel, normal
building maintenance, electrical and mechanical equipment, and grounds maintenance, operating supplies,
maintenance contracts, furniture cleaning and repair, waste removal and uniforms.
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Based on industry norms for hotels of comparable size and type in Ontario, these expenses are projected to
be $1,300 per available room for the first year of operation. Expenses have been increased on a 90% fixed
and 10% variable basis, with inflation, over the projection period.
6.3.4
Energy (Exhibit 6-2D)
Energy expenses, related to the heat, light and power of the hotel, have been projected at $1,500 per
available room in the first year of operation. Energy expenses have been based on results achieved by hotels,
of similar size and style, located in the Barrie and Simcoe County area. Expenses have been increased on a
90% fixed and 10% variable basis, with inflation, over the projection period.
6.4
Fixed Operating Charges
6.4.1
Property Taxes and Insurance (Exhibit 6-2D)
Property Taxes have been estimated at $2,000 per available room in the first year of operation based on the
results of hotels, of similar size and style. Property taxes have been inflated at 2.5% throughout the period.
Insurance expenses have been estimated at $120 per available room in the first year of operation, which has
been based on the results of hotels, of similar size and style. Insurance expense has been increased by
inflation annually over the projection period.
6.4.2
Management Fees (Exhibit 6-2D)
The projections take into account a management fee of 3.0% of gross revenues. This management fee
reflects industry standards and typical underwriting criteria.
6.4.3
Reserve For Asset Replacement (Exhibit 6-2D)
A reserve for asset replacement has been included to account for the replacement of furnishings and fixtures,
as required, to maintain the quality of product offered by the hotel. These expenses represent 4.0% of gross
revenues. They have been projected to be approximately $753,793 or $9,422 per available room over the
entire projection period. This amount is likely insufficient to completely renovate the guestrooms at the end of
the five year period but, will likely be sufficient to cover soft good replacements at that time.
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6.5
Summary of Operating Projections
Table 6-1 summarizes the projected revenues, expenses and net operating results for the proposed 80-room
hotel development to be located at Beach Area 2 in Wasaga Beach, over its first five years of operation.
TABLE 6-1
PROPOSED HOTEL DEVELOPMENT – WASAGA BEACH
SUMMARY OF OPERATING PROJECTIONS
December
December
December
December
2016
2017
2018
2019
Subject Occupancy
55.0%
57.1%
59.6%
59.6%
Subject ADR
$140.87
$144.39
$148.00
$151.70
Total Revenue
$3,444,198
$3,634,647
$3,825,424
$3,921,204
Total Expenses
$2,741,113
$2,849,179
$2,957,830
$3,031,830
Adjusted Net Operating Income
$703,085
$785,468
$867,594
$889,374
Percentage of Revenue
20.4%
21.6%
22.7%
22.7%
December
2020
59.6%
$155.49
$4,019,360
$3,107,672
$911,688
22.7%
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UNDISTRIBUTED OPERATING EXPENSES
Administration and General
Sales and Marketing 1
Property Operation and Maintenance
Utilities
Total Undistributed Expenses
GROSS OPERATING PROFIT
Management Fees
INCOME BEFORE FIXED CHARGES
1
Includes Franchise Fees (where applicable)
$840,853
$137,768
$703,085
$270,105
$318,860
$104,000
$120,000
$812,965
$1,113,779
$103,326
$1,010,453
DEPARTMENTAL EXPENSES
Rooms
Food and Beverage
Other Operated Departments
Total Departmental Expenses
TOTAL DEPARTMENTAL INCOME
NET OPERATING INCOME
Reserve for Asset Replacement
ADJUSTED NET OPERATING INCOME
$608,614
$895,945
$12,895
$1,517,454
$1,926,744
REVENUE
Rooms
Food and Beverage
Other Operated Departments
Rentals and Other Income
Total Revenue
$160,000
$9,600
$169,600
$2,298,446
$1,091,472
$21,648
$32,632
$3,444,198
Rooms
Available Rooms
Occupied Rooms
Occupancy Rate
Average Daily Rate
RevPar
FIXED CHARGES
Property Taxes
Insurance
Total Fixed Charges
December
2016
80
29,200
16,316
55.9%
$140.87
$78.71
24.4%
4.0%
20.4%
4.6%
0.3%
4.9%
9.3%
3.0%
3.5%
23.6%
32.3%
3.0%
29.3%
7.8%
26.5%
82.1%
59.6%
44.1%
55.9%
66.7%
31.7%
0.6%
0.9%
100.0%
$930,854
$145,386
$785,468
$164,000
$9,840
$173,840
$278,910
$331,974
$106,995
$123,456
$841,335
$1,213,733
$109,039
$1,104,694
$637,706
$928,557
$13,315
$1,579,578
$2,055,068
$2,443,248
$1,135,349
$22,353
$33,696
$3,634,647
25.6%
4.0%
21.6%
4.5%
0.3%
4.8%
9.1%
2.9%
3.4%
23.1%
33.4%
3.0%
30.4%
7.7%
26.1%
81.8%
59.6%
43.5%
56.5%
67.2%
31.2%
0.6%
0.9%
100.0%
$1,020,610
$153,017
$867,594
$168,100
$10,086
$178,186
$287,799
$345,190
$110,038
$126,966
$869,993
$1,313,559
$114,763
$1,198,796
$666,792
$961,340
$13,740
$1,641,871
$2,183,553
$2,588,255
$1,179,333
$23,066
$34,770
$3,825,424
EXHIBIT 6-1
PROJECTED OPERATING RESULTS
December
December
2017
2018
80
80
29,200
29,200
16,921
17,488
57.9%
59.9%
$144.39
$148.00
$83.67
$88.64
26.7%
4.0%
22.7%
4.4%
0.3%
4.7%
9.0%
2.9%
3.3%
22.7%
34.3%
3.0%
31.3%
7.5%
25.8%
81.5%
59.6%
42.9%
57.1%
67.7%
30.8%
0.6%
0.9%
100.0%
$1,046,223
$156,848
$889,374
$172,303
$10,338
$182,641
$294,997
$353,827
$112,789
$130,141
$891,754
$1,346,499
$117,636
$1,228,863
$683,480
$985,387
$14,083
$1,682,951
$2,238,253
$2,653,083
$1,208,839
$23,643
$35,640
$3,921,204
December
2019
80
29,200
17,489
59.9%
$151.70
$90.86
26.7%
4.0%
22.7%
4.4%
0.3%
4.7%
9.0%
2.9%
3.3%
22.7%
34.3%
3.0%
31.3%
7.5%
25.8%
81.5%
59.6%
42.9%
57.1%
67.7%
30.8%
0.6%
0.9%
100.0%
$1,072,462
$160,774
$911,688
$176,610
$10,597
$187,207
$302,374
$362,679
$115,609
$133,395
$914,057
$1,380,250
$120,581
$1,259,669
$700,583
$1,010,034
$14,436
$1,725,053
$2,294,307
$2,719,516
$1,239,079
$24,234
$36,531
$4,019,360
December
2020
80
29,200
17,490
59.9%
$155.49
$93.13
26.7%
4.0%
22.7%
4.4%
0.3%
4.7%
9.0%
2.9%
3.3%
22.7%
34.3%
3.0%
31.3%
7.5%
25.8%
81.5%
59.6%
42.9%
57.1%
67.7%
30.8%
0.6%
0.9%
100.0%
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EXHIBIT 6-2A
ROOMS DEPARTMENTAL EXPENSES
YEAR ONE
ROOMS
2016
80
OCCUPANCY (%)
55.9%
$140.87
TOTAL OCCUPIED ROOM NIGHTS
16,316
TOTAL ROOM REVENUES ($)
$2,298,446
MANAGEMENT/SUPERVISORY STAFF
MANAGER (STAFF/SALARY)
1.0
$40,000
HOUSEKEEPING SUPERVISION(STAFF/SALARY)
0.5
$35,000
1.5
$57,500
TOTAL MGT/SUPERVISORY
HOUSEKEEPING
ROOMS PER SHIFT
HOURLY RATE (ENTER IN FIRST YEAR DOLLARS)
14.0
$12.00
COST OF HOUSEKEEPERS - YEAR ONE
$111,883
LAUNDRY / OTHER STAFFING
SHIFTS PER DAY
1.5
$12.00
COST OF HOUSEKEEPERS - YEAR ONE
$52,560
FRONT DESK
SHIFTS PER DAY
2.0
$12.50
COST OF FRONT DESK STAFF
$73,000
NIGHT AUDIT
SHIFTS PER DAY
1.0
$13.00
COST OF FRONT DESK STAFF
$37,960
TOTAL ROOMS DEPT LABOUR COST
ROOMS DEPT LABOUR COST
ADD PAYROLL COSTS & BENEFITS
$332,903
20.0%
TOTAL ROOMS DEPT PAYROLL & BENEFITS
$66,581
$399,483
OTHER ROOMS DEPT EXPENSES
T.A. COMMISSIONS (% OF ROOM REV)
LAUNDRY/LINEN/GUEST SUPPLIES ($ORN)
2.0%
$45,969
$10.00
$163,162
TOTAL ROOMS OTHER EXPENSES
$209,131
TOTAL ROOMS DEPARTMENT EXPENSES
$608,614
TOTAL EXPENSES
LABOUR
% of Revenue
$ORN
17.4%
$24.48
OTHER
9.1%
$12.82
TOTAL
26.5%
$37.30
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28.0%
ROOM SERVICE/OTHER
%
$4.44
20.0%
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82.1%
17.9%
TOTAL OPERATING EXPENSES
NET DEPARTMENTAL PROFIT
12.0%
GENERAL OPERATING EXPENSES
TOTAL PAYROLL & BENEFITS
39.8%
11.0%
KITCHEN
BENEFITS
$7.36
18.0%
$11.98
$54.91
$8.03
$26.66
$0.18
$2.60
16.0%
$9.93
$2.15
$ORN
$20.23
$0.28
$4.06
$15.89
$ORN
$66.90
$1.00
$16.25
$2.25
$14.00
$49.65
$4.61
$45.04
$ORN
ROOM SERVICE/OTHER
$198
$76
$10
$65
$405
$125
$525
$/SQ.FT.
BANQUETING
0.5
$3,274
$1,136
$157
$979
$8,100
$2,505
$10,498
$/SEAT
20.0%
3.2% # of Mgmt Staff
5,500
3,500
2,000
600
1,400
SQ.FT.
HOTEL RESTAURANTS/LOUNGES
MANAGEMENT
PAYROLL & BENEFITS
30.2%
25.0%
BANQUETING
TOTAL COSTS OF GOODS SOLD
32.0%
%
333
233
COSTS OF GOODS SOLD
TOTAL FOOD & BEVERAGE REVENUE
ROOM SERVICE/OTHER
TOTAL BANQUETING REVENUE
MEETING ROOM RENTALS
F&B REVENUE
BANQUETING
100
30
TOTAL HOTEL RESTAURANTS/LOUNGES
70
Outside Patio (Seasonal)
SEATS
FOOD AND BEVERAGE DEPARTMENTAL PROJECTIONS
Main Restaurant
EXHIBIT 6-2B
$195,527
$895,945
$130,977
$434,909
$72,485
$120,062
$2,937
$42,422
$162,004
$35,000
EXPENSES
$330,059
$4,569
$66,285
$259,206
EXPENSES
$1,091,472
$16,316
$265,138
$36,711
$228,427
$810,018
$75,136
$734,882
REVENUES
PKF Consulting
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60.0%
82.6%
59.6%
$2,447
$3,100
$12,895
$4,079
$3,753
$21,648
$0.15
$0.19
$0.79
$0.25
$0.23
$1.33
Retail Store
Movie Rentals
Total Other Operated Departments
0.0%
0.0%
Expense
$0
$0
Revenue
$32,632
$32,632
Expense
$0.00
$0.00
$2.00
$2.00
Other Income Net
Total Rentals and Other Income
RENTALS AND OTHER INCOME (YEAR 1)
Revenue
Departmental
Ratio
80.0%
$1,305
$1,632
$0.08
$0.10
Guest Laundry
TOTAL
18.2%
$1,800
$9,900
$0.11
$0.61
Health Club
$ORN
185.7%
$4,242
$2,284
$0.26
$0.14
Telecommunications
Departmental
Ratio
Expense
Revenue
OTHER OPERATED DEPARTMENTS (YEAR 1)
Expense
TOTAL
Revenue
$ORN
OTHER OPERATED DEPARTMENTS / RENTALS AND OTHER INCOME
EXHIBIT 6-2C
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EXHIBIT 6-2D
UNDISTRIBUTED EXPENSES
ADMINISTRATIVE & GENERAL
Year One
2016
PAYROLL COSTS
TOTAL PER ROOM
BENEFITS
TOTAL PAYROLL COSTS
$1,250
$100,000
20.0%
$20,000
$1,500
$120,000
2.5%
$86,105
OTHER A&G EXPENSES
CREDIT CARD COMMISSIONS (% OF GROSS REV)
$800
$64,000
TOTAL 'OTHER A&G' COSTS
OTHER A&G COSTS ($ PER AVAIL ROOM)
$1,876
$150,105
TOTAL ADMINISTRATIVE & GENERAL
$3,376
$270,105
% OF GROSS REVENUE
SALES & MARKETING
7.8%
Year One
2016
PAYROLL COSTS
TOTAL PER ROOM
BENEFITS
$500
$40,000
20.0%
$8,000
TOTAL PAYROLL COSTS
$48,000
OTHER MARKETING EXPENSES
FRANCHISE ROYALTY FEE(% OF ROOMS REV)
5.0%
$114,922
OTHER BRAND FEES (% OF ROOMS REV)
4.0%
$91,938
GENERAL ($ PER AVAIL. RM.)
$800
TOTAL 'OTHER MARKETING COSTS
TOTAL SALES & MARKETING
% OF GROSS REVENUE
PROPERTY OPERATION & MAINTENANCE
$64,000
$270,860
$3,986
$318,860
9.3%
Year One
2016
PAYROLL COSTS
TOTAL PER ROOM
BENEFITS
$250
20.0%
TOTAL PAYROLL COSTS
$20,000
$4,000
$24,000
TOTAL OTHER MAINTENANCE COSTS
$1,000
$80,000
TOTAL PROPERTY OPERATION & MAINTENANCE
$1,300
$104,000
% OF GROSS REVENUE
UTILITIES
TOTAL UTILITIES
% OF GROSS REVENUE
OTHER EXPENSES
PROPERTY AND OTHER TAXES($ PER AVAIL. RM.)
3.0%
Year One
$1,500
2016
$120,000
3.5%
Year One
2016
$2,000
$160,000
INSURANCE($ PER AVAIL. RM.)
$120
$9,600
MANAGEMENT FEE(% OF GROSS REV)
3.0%
$103,326
RESERVE FOR ASSET REPLACEMENT (% OF GROSS REV)
4.0%
$137,768
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7.0
THE CANADIAN HOTEL INVESTMENT MARKET
7.1
Introduction
In the following section we provide an overview of the historic business activity within the Canadian hotel
investment market to support the subsequent discussion surrounding the investment implications for the
proposed resort/hotel development in Section 8 of this report.
The level of investment interest and the nature of investment activity in the Canadian Hotel industry is
influenced by a number of factors including but not limited to:

The national and global economies

The top line and bottom line performance of the hotel industry itself

The availability and cost of financing

Investment risk and return expectations
As we examine historic and future hotel investment trends each of these factors must be considered.
7.2
Investment Cycles in the Canadian Accommodation Sector
The accommodation industry is cyclical and vulnerable to economic and travel fluctuations. The Canadian
Accommodation Sector has really experienced five distinct investment cycles over the last 20 years.

The Early 1990s

The Latter Part of the 1990s

The 2001-2006 Period


The 2008/2009 Downturn and
the start of Recovery 20102012
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i)
The Early 1990s
This was a period of significant erosion in industry top line and bottom line performance resulting in the most
difficult period in hotel industry ownership and investment in recent history. This was influenced by significant
supply growth during the preceding years which, combined with a pro-longed period of economic downturn,
resulted in reductions in both leisure and business travel. The hotel industry reacted by decreasing rates,
which only further impacted top-line revenues and profits. There were a significant number of bank
foreclosures during this period. The impacts were felt the greatest in Central Canada.
ii)
The Latter Part of the 1990s
After enduring the impacts of the downturn in the early part of the decade, the industry began a slow recovery
in terms of demand levels, price increases and profit levels. There was minimal new supply developed during
this period as hotel investment was focused on acquisitions of existing properties at well below replacement
costs. As industry profits improved, the investment interest in the sector increased, and we saw the
emergence of Public Companies and Real Estate Investment Trusts which targeted this sector. Industry
profits reached their highest levels ever
up to that time in 2000, and the number
of new development projects was on
the increase. Over 10,000 new hotel
rooms entered the market in 2000, the
strongest development year on record.
Financing and investment were more
readily available, and the strongest level
of performance and investment was
evident in Central Canada.
iii)
After industry performance had recovered and reached a new peak in 2000, the industry was then severely
impacted, first by the impacts of 9/11 in 2001 and then by the impacts of SARS in 2003. Performance
tumbled, but development and investment interest remained high, especially in Central Canada, despite a
slowing economy and eroding profit levels. There was also a regional shift in industry performance over this
period. Profits in properties in Central Canada continued to erode, while profits levels for hotels in Western
Canada, driven by the resource driven economy, continued to improve.
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iv)
This was a period where real estate investment as a whole was high. Interest rates were favourable, financing
was readily available and investment return expectations were low. The level of transaction activity was
unprecedented and the level of new development was strong. Many non-hotel investors entered the sector
which despite higher risks, offered the prospect of better returns than other forms of real estate were offering
at the time. Industry profits, specifically in Western Canada surpassed 2000 levels. However, values being
paid for assets reached and in some cases surpassed replacement costs. Despite continued industry
improvement over this period, profit levels in Central Canada still remained below 2000 levels.
v)
The 2008/2009 Downturn and the Start of Recovery 2010 - 2013
While the impacts of the most recent economic downturn on the Canadian hotel sector were significant, they
were not as dramatic as those of the downturn in early 1990s. Further as lenders were more conservative in
their lending and financing structures, the number of bank foreclosures during this period was also much
lower. Initially the lending community literally abandoned the hotel sector, however as the sector began to
show improvement in 2010, they began to come back and continued to do so in 2011, 2012, and 2013.
vi)
The Industry Outlook for 2014 and Beyond
Going forward the expectations are for positive
and
modest
Accommodation
growth
sector.
in
the
After
Canadian
a
13%
improvement in 2010, industry profits in 2011
realized a 7% decline with minimal occupancy
growth and no improvement in ADR. In 2012,
with growth achieved in both occupancy and
ADR, ANOI levels increased by over 6%,
making up for some of 2011’s 7% decrease, but
still remaining below 2010 levels.
PKF is
forecasting a one point increase in occupancy, and only a 2.0% increase in ADR, industry profitability in 2013
increased by just 2.5%, reaching ANOI levels of $9,300 per room. Industry profits are expected to improve by
a further 34% over the 2014-2018 period.
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7.3
National Transaction Activity
The table below summarizes the level of hotel transaction activity across Canada for the 14-year period from
2000 to 2013.
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
HISTORIC NATIONAL
TRANSACTION OVERVIEW
2000 – 2013
Total Volume
Transactions
($ Millions)
47
$485
41
$657
48
$540
50
$488
52
$412
110
$1,660
115
$2,594
150
$4,423
73
$912
74
$392
86
$717
99
$1,107
116
$1,178
117
$2,023
Source: Colliers INNvestment Report; CBRE Hotel
Investment Trends, PKF Consulting Inc.
As noted, in the late 1990s hotel transaction activity in
Canada was, for the most part, driven by the
emergence of Canada’s three initial hotel Real Estate
Investment Trusts (“REITs”). Over the 1997 and 1998
period alone, 293 hotels transacted at a total of $3.2
billion, the highest levels in history to that point. With
375 transactions at $8.7 billion, those levels were well
surpassed over the 2005-2008 period. This peaked at
150 transactions and $4.4 billion in 2007.
In 2008 and 2009, the impacts of the struggling
economy and the limited debt financing market were
reflected in the volume of hotel transaction activity,
with total transaction volume for 2008 down to $912
million. The continued weak economic performance in
Canada and abroad and the continuance of the global credit crunch limited the volume of hotel transaction in
2009.
While the number of transactions for the year was comparable to 2008, these were much smaller deals and
as a result, sales volumes decreased to $392 million. In 2009, the bulk of transaction activity involved limited
service assets, located in secondary and tertiary markets, which traded well below $100,000 per room.
There was some recovery in transaction activity in 2010, with a total of 86 hotel transactions, at $717 million.
While this level of activity was far below the peak periods of 1997-1998 and 2005-2007, it was well above the
1999 through 2004 period which averaged about 50 trades per year at a value of $400 million to $650 million
annually.
In 2011, national hotel transaction activity increased further. There were 99 transactions recorded with a total
dollar volume of $1.1 billion. The dollar volume was up 53% over 2010. Of note however, there were three
significant transactions in 2011 which accounted for much of this growth. This included the portfolio sale of the
Sutton Place Vancouver and Edmonton properties, the sale of the Intercontinental Toronto, and the portfolio
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sale of four Concord assets in the GTA. These three transactions alone represented over one-third of the
sales volumes in 2011.
In 2012, there were 17 more transactions than in 2011, however overall sales volumes were only up $50
million over the previous year. It is
important to note that the four largest
transactions, the Four Seasons Toronto at
$142 million, the Sutton Place Toronto at
$57 million, the 5 Calgary Downtown
Suites at $57 million and the Hotel de la
Montagne at $39 million all sold for
alternative uses. These four transactions
accounted for approximately one quarter
of the total transaction dollar volume
nationally for the year.
To the end of 2013, total transaction volumes were up at approximately $845 million over 2012, despite only
one more transaction taking place. However, this transaction volume is being skewed heavily by the sale of
the 5 property, Westin Canada Hotel Portfolio which sold for $765 million in September. This sale is the
largest portfolio transaction recorded since 2007. Transaction volumes for 2013 have also been influenced by
significant sales which took place throughout the year including the sale of the Hilton Toronto for $140.0
million and the Temple/Centennial Atlantic Canada Portfolio (3 properties) for $87.5 million, as well as the
$70.5 million five-property Courtyard and Residence Inn portfolio acquired by Morguard Corporation and the
sale of the Fairmont Chateau Laurier for $120.0 million.
7.4
Yields on Transactions
When discussing historic transaction activity many industry analysts discuss the capitalization rates at which
these properties sold. We prefer to utilize the term yield, as these “capitalization” rates are derived by relating
the sales price of the asset to historic cash flow, and are not directly related to an investor’s expectation of
return.
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In 2008 the average reported yield for all
transactions was 9.0%, which was at its
lowest level in the last 12 years. In 2009,
average
reported
yields
across
all
transactions increased to 10.2%. In
2010
the
decreased
average
reported
significantly
to
yields
7.8%.
However, of note about 15.0% of the
hotels which transacted in 2010 were
purchased
for
alternative
uses
at
extremely low yields. The average reported yield for transactions exclusive of those assets purchased for
conversion to alternative uses was about 9.0%.
Through the end of 2011, the average yield had increased to 8.8% from 7.8% (unadjusted) in 2010. In 2012,
there continued to be a significant number of transactions completed at lower yields, with purchasers either
acquiring assets for alternative uses or anticipating significant upside through improved performance post
renovation/re-positioning or conversion to an alternate use. The average reported yield for transactions
inclusive of those assets purchased for conversion to alternative uses was about 9.2% in 2012 up from 9.0%
in 2011. In 2013, there were fewer transactions that occurred with the intention of conversion for alternate
uses and the average yield decreased slightly to 8.7%.
7.5
Historic Canadian Hotel Investment Trends
As shown below, the Overall Capitalization Rate (OCR) or yields reported on transactions is measured
against the trailing twelve months earnings. Based on our historic knowledge of investment trends in Canada
and the U.S., we have generally seen a 25 to a 50 basis point spread between the Overall Capitalization Rate
(OCR) based on the trailing twelve months and the Overall Capitalization Rate (OCR) based on the next
twelve months earnings and a further 25 to a 50 basis point spread relative to the Terminal Capitalization
Rate. The spread between the Terminal Capitalization Rate and the Discount Rate in Canada has been in the
range of 200 to 300 basis points. This resulted in the following investment return rates for hotels in Canada
over the 2010-2013 period.
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HISTORIC CAPITALIZATION RATES
CANADA
Hotel Investment Criteria - Canada
2010
1
Overall Capitalization Rate (trailing 12 months)
9.0%
2
Overall Capitalization Rate (next 12 months/going in)
9.5%
3
Terminal Capitalization Rate
10.0%
4
Discount Rate
12.0%
2011
8.8%
9.5%
10.0%
12.0%
2012
9.5%
10.0%
10.5%
12.5%
2013
8.7%
9.0%
9.5%
11.5%
1. 2010-2013 OCR as reported for all transactions. Adjusted to exclude assets acquired for alternative uses.
2. Trailing 12 months OCR plus an implied 50 basis point premium.
3. Next 12 months OCR plus an implied 50 basis point premium.
4. Terminal Cap Rate plus an implied 200-250 basis point premium
7.6
Implications for Hotel Investment in 2014
The industry lost ground in 2011, with industry profitability down 7.0% to $8,400 per available room;
recovering by almost 8.0% in 2012, with a further 3.0% increase forecasted for 2013.
Over the last 10 years, there has been a shift in industry performance from the east to the west, and this is not
expected to shift back over the 2012 and 2016 period. However, our forecasts for the next five years reflect a
growth and recovery stage for the industry, leading to a new peak in industry profitability by 2017. Due to the
relatively lower starting point, growth on a percentage basis will be stronger in Central Canada, however on
an absolute dollars basis growth will be stronger in Western Canada.
These factors combined with greater access to financing, lower cost of capital and increased investor interest
have put some downward pressure on cap rates, but with strong variances based on market and asset
specific factors. The Outlook for 2014 for capitalization rates and return expectations reflect some modest
compression from 2012 and 2013 levels.
2014 OUTLOOK FOR
CAPITALIZATION RATES IN CANADA
Hotel Investment Criteria- Canada
2012
2013
2014P
Overall Capitalization Rate (trailing 12 months)
9.5%
8.7%
8.0%-9.0%
Overall Capitalization Rate (next 12 months)
Terminal Capitalization Rate
Discount Rate
10.0%
10.5%
12.5%
9.0%
9.5%
11.0%
8.5%-9.5%
9.0%-10.0%
11.0%-12.0%
As noted, asset and market specific factors have been considered in the application of these general criteria
in this valuation process.
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8.0
INVESTMENT IMPLICATIONS – PROPOSED MIXED-USE RESORT DEVELOPMENT
8.1
Introduction
The following discussion outlines the investment implications for the proposed mixed-use resort development
to be located at Beach Area 2 in Wasaga Beach, Ontario.
An “Indication of Supportable Value off Cash Flow” has been prepared for the proposed hotel development
utilizing the Discounted Cash Flow Approach.
Additionally, recommendations have been prepared for the development of medium-density residential units
on the 7.2 acres of land remaining after the development of the proposed hotel.
8.2
Indication of Supportable Value – Proposed Hotel Development
The preceding assumptions and projections presented in Section 6.0 provide the basis for the preparation of
an “Indication of Supportable Value” for the proposed hotel utilizing the Discounted Cashflow approach,
applying market driven capitalization and discount rates.
Section 7.0, presented a synopsis of capitalization rates from Canadian hotel sales in recent years, which
identified Overall Capitalization rates against trailing twelve month earnings in the range of 8.0%-9.0%. Based
on our experience in the industry and knowledge of similar new build hotel developments, an Overall
Capitalization Rate within the 8.0% to 10.0% range would be considered reasonable for the proposed hotel
operating as an upscale or upper mid-scale, select service, branded asset. As such, based upon the
discussion of capitalization rates presented in Section 7.0, and on our knowledge and understanding of
current return expectations and the type of asset, we would conclude on an overall capitalization rate
(OCR) of 9.5% for the subject proposed hotel development.
However, with respect to the above hotel Capitalization Rates, it should be noted that these rates were
developed on the basis of historical (trailing earnings) and are not necessarily reflective of return objectives on
anticipated future earnings. Therefore, in selecting a Terminal Capitalization Rate to be applied to a projection
of future earnings, it is necessary to account for risk not included in historically derived rates. Typically a
Terminal Capitalization Rate to be applied to a set of projections would include an additive to account for the
perception of risk as compared to proven historical earnings. We believe that a Terminal Capitalization Rate
of 10.0% is reasonable for the subject hotel, 50 basis points above the rate that we concluded for the Overall
Capitalization Rate.
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The other parameter required for the Discounted Cash Flow Analysis is the discount rate. The discount rate
reflects the overall rate of return expected by the investor, weighing the relative risk of the investment in
relation to other investment vehicles and the perceived risk of each component in the operation of the facility.
At the present time we believe that the spread between the overall or going in capitalization rate would be in
the range of 1.5% to 3.0%. This is based upon our discussions with Canadian purchasers and other
appraisers. We have utilized a discount rate of 12.0%.
As shown in Exhibit 8-1, the “Supportable Value off Cashflow” after applying a 10.0% Terminal Capitalization
Rate and 12.0% Discount Rate is $8,256,480, or $103,206 per room. This “Indication of Value” should not be
construed as “Market Value”.
EXHIBIT 8-1
ESTIMATE OF VALUE CALCULATION - DISCOUNTED CASH FLOW
ROOMS
INFLATION
DISCOUNT RATE
TERMINAL CAPITALIZATION RATE
Year
1
2
3
4
5
Year
2016
2017
2018
2019
2020
Cashflow Value
Residual Value
NET PRESENT VALUE ANALYSIS
Discount
Cash Flow
Rate @ 12%
$703,085
0.893
$785,468
0.797
$867,594
0.712
$889,374
0.636
$911,688
0.567
$4,157,209
Discounted
$9,344,799
Discounted
80
2.5%
12.0%
10.0%
Net Present
Value
$627,755
$626,170
$617,536
$565,213
$517,316
$2,953,990
$5,302,490
Estimate of Value
Per Room
Implied
Yield
8.5%
9.5%
10.5%
10.8%
11.0%
$8,256,480
$103,206
VALUE PER ROOM SENSITIVITY MATRIX
9.0%
9.5%
10.0%
10.5%
11.0%
11.0%
$114,926
$110,872
$107,223
$103,922
$100,922
11.5%
$112,720
$108,757
$105,189
$101,962
$99,027
12.0%
$110,571
$106,694
$103,206
$100,050
$97,180
12.5%
$108,475
$104,684
$101,272
$98,185
$95,379
13.0%
$106,431
$102,723
$99,386
$96,367
$93,623
PKF Consulting Inc.
April 2014
Page 62
PKF Consulting
Canada
8.3
Implications & Recommendations
As discussed in Section 2.5.1, the hotel development cost is estimated to be approximately $11.3 million
(excluding land). The “Supportable Value off Cashflow” of $8.3 million leaves a minimum funding gap of
approximately $3.0 million on the hotel development. However, this funding gap is likely more significant since
Lenders will typically lend up to 60% of the lower of the value or the construction cost.
In this case, assuming a 60% loan to value (LTV), a Lender would be prepared to lend approximately $5.0
million against the hotel development, requiring approximately $6.3 million in equity to be contributed by the
developer. In order for the proposed hotel development to attract a developer, the equity requirement would
need to be mitigated by other sources of revenue to meet return expectations on the project as a whole for
the developer.
Given that there would be approximately 7.2 acres of land available, after the proposed hotel is developed, it
is our opinion that the development of mid-tier, medium-density, residential units on the balance of the site
would complement the proposed hotel project and could generate acceptable development profits to attract a
developer to the project.
The objectives of a residential development component as part of the project would be:

For the Town to realize fair market value on the sale of the 9.7-acre Beach Area 2 parcel(s);

To absorb the hotel development shortfall estimated to be approximately $3.0 million; and;

To generate significant development profits in order to attract a developer to the project.
It is our understanding that, the permitted density for residential development on the Beach Area 2 site could
reasonably be between 20 and 30 units per acre. With this in mind and assuming that all 7.2 acres of land
remaining are fully developable, it is reasonable to assume that approximately 150 – 225 units of mediumdensity residential could be developed.
While PKF Consulting Inc. does not specialize in residential development, nor are we architects or planners, it
is our opinion that the development of mid-tier, medium-density, residential units as part of the Beach Area 2
development would complement the proposed hotel project and could potentially generate acceptable
development profits to attract a developer to the project.
PKF Consulting Inc.
April 2014
Page 63
PKF Consulting
Canada
If the Town of Wasaga Beach chooses to take this direction, it would be our recommendation that a third
party, residential consultant be engaged to provide an in-depth analysis of the market potential and feasibility
of the residential component.
Based on past experience with similar mixed-used development projects, it is our recommendation that it
would be critical that any agreement with a potential developer includes stipulations that the hotel be
developed within Phase 1 of the overall project to ensure this component comes to fruition. In the past, when
municipalities have not stipulated this, other more profitable areas of development, such as the residential
component discussed above, have been prioritized by the developer with the hotel development eventually be
shelved.
PKF Consulting Inc.
April 2014
Page 64

Beach Area 2 - Town of Wasaga Beach

Transcription

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