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- 1 - Presentation to the Convention Partnership Boston Massachusetts July 14, 2010 Headquarters Hotel Market Study DRAFT FOR POLICY DISCUSSION ONLY.

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Presentation on theme: "- 1 - Presentation to the Convention Partnership Boston Massachusetts July 14, 2010 Headquarters Hotel Market Study DRAFT FOR POLICY DISCUSSION ONLY."— Presentation transcript:

1 - 1 - Presentation to the Convention Partnership Boston Massachusetts July 14, 2010 Headquarters Hotel Market Study DRAFT FOR POLICY DISCUSSION ONLY

2 - 2 - HVS role and purpose of study  HVS is the leading global hospitality consulting firm  Conduct thousands of studies each year  Established methods of hotel analysis  Use Uniform Standards of Professional Appraisal Practice  HVS provides an independent forecast of hotel operations  No ongoing interest in project  No advocacy role  The HVS “Market Study” provides  Starting point for financing analysis  Partial basis for policy decision on project  No opinion of feasibility DRAFT FOR POLICY DISCUSSION ONLY

3 - 3 - Methodology and Market Study Process Site Inspection Market Area Analysis Forecast “Market” Performance ADR and Occupancy Penetration* Hotel Supply/Demand Forecast Financial Operations * By market segment: 1) commercial, 2) group, 3) leisure CC Demand Analysis DRAFT FOR POLICY DISCUSSION ONLY

4 - 4 - I. Overview of Results DRAFT FOR POLICY DISCUSSION ONLY

5 - 5 - Options Studied # of Rooms Hotel Function Space SF BCEC Ballroom Expansion Stabilized Occupancy Stabilized ADR Stabilized NOI 11,00083,000No71%$245$30.8 M 21,00083,000Yes74%$245$33.1 M 31,200100,000No69%$245$35.2 M 41,200100,000Yes73%$245$38.8 M DRAFT FOR POLICY DISCUSSION ONLY

6 - 6 - Ten-year net operating income forecasts for each of 4 development scenarios DRAFT FOR POLICY DISCUSSION ONLY

7 - 7 - Has HVS properly identified and weighted the importance of the competition for the proposed hotel? DRAFT FOR POLICY DISCUSSION ONLY

8 - 8 - Competitive Set Property # of Rooms Year Affiliated Year Opened Renaissance Boston Waterfront Hotel*471Feb 2008 InterContinental Boston*424Nov 2006 Westin Boston Waterfront*793Jun 2006 The Seaport Hotel*426May 1998 Hyatt Regency Boston498Jun 2003Jun 1985 Westin Copley Place Boston803Jun 1984 Marriott Boston Copley Place1,139May 1984 Hilton Boston Back Bay390Nov 1982 Sheraton Hotel Boston1,216Jun 1965 Boston Park Plaza Hotel941Jun 1998Jun 1927 Omni Parker House551Jun 1985Jan 1900 Primary Competitors* 2,114 rooms Secondary Competitor 5,538 Total Comp Set 7,652 rooms DRAFT FOR POLICY DISCUSSION ONLY

9 - 9 - Location of Competitive Hotels DRAFT FOR POLICY DISCUSSION ONLY

10 Historical Trends in Supply and Demand Source: Smith Travel Research DRAFT FOR POLICY DISCUSSION ONLY

11 Competitors Historical Performance Occupancy, ADR and RevPAR Source: Smith Travel Research DRAFT FOR POLICY DISCUSSION ONLY

12 Are the HVS forecasts of future growth in the hotel market consistent with historical patterns of growth during periods of economic recovery? DRAFT FOR POLICY DISCUSSION ONLY

13 National Perspective Source: Smith Travel Research DRAFT FOR POLICY DISCUSSION ONLY

14 Comparison of historical room night demand to forecasted recovery (annual % change) DRAFT FOR POLICY DISCUSSION ONLY

15 Forecast change in demand growth (annual % change) DRAFT FOR POLICY DISCUSSION ONLY

16 Are the HVS assumptions of rate and occupancy penetration of the proposed hotel reasonable? Baseline Scenario 1000 Rooms No Ballroom Expansion DRAFT FOR POLICY DISCUSSION ONLY

17 HVS estimated market penetration for each of three demand segments DRAFT FOR POLICY DISCUSSION ONLY

18 Forecast of occupancy penetration rates by market segment in stabilized year Market Occupancy = 75% Subject Occupancy = 71% DRAFT FOR POLICY DISCUSSION ONLY

19 Subject Property’s Average Daily Rate Penetration in $ 2008 ADR Competitors Primary Competitors$ Secondary Competitors$ Total$ Subject Property Average Rate Penetration98.7% Subject Property ADR$ DRAFT FOR POLICY DISCUSSION ONLY

20 Occupancy Rate Comparison: Subject Property vs. Market DRAFT FOR POLICY DISCUSSION ONLY

21 Average Daily Rate Comparison: Subject vs. Competitive Market DRAFT FOR POLICY DISCUSSION ONLY

22 Projected Stabilized Occupancies (2017) ScenarioMarketSubject 1) 1000 rooms no expansion 75%71% 2) 1000 rooms with expansion 77%74% 3) 1200 rooms no expansion 74%69% 4) 1200 rooms with expansion 76%73% DRAFT FOR POLICY DISCUSSION ONLY

23 Are the forecasts of operating revenue and expense consistent with the performance of similar hotel properties? Baseline Scenario 1000 Rooms No Ballroom Expansion DRAFT FOR POLICY DISCUSSION ONLY

24 House profit - revenue per available room in 2009 dollars DRAFT FOR POLICY DISCUSSION ONLY

25 House profit - revenue per occupied room night in 2009 dollars DRAFT FOR POLICY DISCUSSION ONLY

26 House profit - % of total revenue DRAFT FOR POLICY DISCUSSION ONLY

27 Stabilized Year Income and Expenses (2017) Total (in thousands) Total Revenues$104,699 Total Departmental Expenses(44,346) Total Undistributed Operating Expenses(21,268) House Profit39,085 Insurance(913) Management Fees(3,141) Amount Available for Debt Service35,031 Other Fixed Charges(4,188) NET INCOME$30,843 DRAFT FOR POLICY DISCUSSION ONLY

28 What are the key risk factors in future hotel performance? DRAFT FOR POLICY DISCUSSION ONLY

29 Key Risk Factors*  Risks that can be managed  Project completion (BCEC and hotel on budget - on time)  Adequate marketing effort  Competent management and labor agreements  Neighborhood development  Uncontrollable Risks  Market performance – slower than forecast economic growth  Geopolitical  New supply *Risks are not limited to these items. Reader is advised to read the HVS report in its entirety for a more complete discussion of risk factors, assumptions and limiting conditions. DRAFT FOR POLICY DISCUSSION ONLY


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