First Busey Corporation Ramada Inn – Bloomington, IL

1. First Busey CorporationRamada Inn – Bloomington, IL

2. Contents • Project Objectives • Project Process • Current Hotel Status • Alternative Uses • Alternative Use Description • Projected Financials • Circumstances Required for 20% ROR • Recommended Alternative Use • Appendix 2

3. Project Objectives • What alternative uses are available for Ramada Inn – Bloomington, IL • What do each of these alternative uses entail • How viable is each alternative use, financially • Which alternative use is recommended 3

4. Project Process Research Research Ramada Inn – Bloomington, IL competitors Research nationwide and Bloomington specific hospitality industry conditions and trends Determine viable alternative uses Research Recommendations Research independent living market in Bloomington Research independent living facilities in Bloomington and elsewhere Develop recommendations if Ramada Inn - Bloomington, IL were to remain a hotel Recommendations Develop plan for Ramada Inn – Bloomington, IL to become an independent living facility Financials Project financials for each alternative use based on research findings Evaluate alternative uses based on projected financials and research findings Outputs 4

5. Current Situation of the Hotel • 209 individual rooms total • 160 in use • 49 unused due to poor room condition • Furniture and decoration are outdated • 35% occupancy rate • Associated facilities include lounge, cafe, indoor pool, conference room, kitchen space, gaming room, exercise room and business center (under construction) • Bloomington City is going to construct an Arena and a conference center, which are expected to be beneficial to the local hospitality industry 5

6. Alternative Uses

7. Alternative Uses • OSBI Consulting Changes (if remaining as hotel) • Renovation of south wing into suites to attract corporate travelers • Convert atrium into coffeehouse/dining area • Make finger food available to guests for purchase • No Change • No significant changes to physical structure of hotel • Increase marketing efforts to attract untargeted potential customers • Complete Renovation (as recommended by Broeren Russo Builders, Inc.) • Turn south wing into 13,000 feet of conference space • Renovate 100 existing rooms on north and east side of the pool • Independent Living • Complete renovation of hotel into independent living facility • Significant decrease in number of rooms • Addition of elevators and services 7

8. Financial Summary 8

9. Opportunity description Use atrium as dining area/coffeehouse, which would include purchasing new tables and chairs Move big screen TV from the bar to the new dining area Move arcade games to room 106 and consolidate vending machines in room 108 to provide a single area customers can go to Convert existing dining area into reading lounge, including magazines and couches Provide finger food for guests late at night, possibly including pizza, chicken fingers, and fries Convert south wing lower level rooms into suites Slightly renovate current conference area, possibly including new carpet and a wall between the conference area and the pool instead of a curtain Add a barrier between the new dining area/coffeehouse and the pool to lessen noise interference, with the barrier possibly consisting of greenery Possibly pursue deals with neighboring restaurants to increase convenience for hotel guests Key Benefits Apart from room renovations, most of which are necessary, the changes do not require extensive capital Creates comfortable areas for corporate and family guests to spend time within the hotel Creates suites, which are attractive to both corporate and family guests Provides food for guests, increasing convenience for guests Scenario 1: OSBI Consulting Changes (if remaining as hotel) • Potential Business Risks • Providing finger food to guests may be a tricky endeavor, with hiring serving staff and starting something completely new • It is difficult to forecast whether potential guests will be attracted to the efficiencies • Key Investments (one-time and major ongoing) • Convert lower level south wing into business suites • Make finger food available to guests for purchase • Purchase additional/new furniture for suites, new dining area, and reading lounge • Convert Lobby to WiFi and install business center 9

10. Bloomington-Normal Status • Downtown Bloomington Arena • August 10, 2004: A 7-1 city council vote Monday on the price of the Bloomington arena clears the way for construction on the $37 million project • The council accepted the guaranteed maximum price of the arena and public skating rink at its meeting • Normal Conference Center • July 6, 2004: Unanimous vote by the Normal Town Council endorsing the hotel-conference center • Proposal represented the culmination of three-plus years of study, rejection, revision, negotiation, analysis, selection and consensus • Wayne Aldrich, Normal Downtown Development Director, during a phone interview said town council used an HVS International study (dated pre 9/11) for conference center demand analysis 10

11. OSBI Changes • Local market factors • Bloomington-Normal Area Convention & Visitors Bureau forecasts new downtown Bloomington Arena will annually attract the following from outside the area: • 21,000 business travelers • 42,000 sporting fans • 4,000 entertainment/leisure visitors • Starting in 2006, Ramada will attract the following from new Arena: • 1000 business travelers to stay 2 nights • 2000 sporting fans to stay 1 night • 200 entertainment/leisure visitors to stay 1 night • Total = 4200 Rooms Sold • New luxury hotel/conference will be built in downtown Normal • Starting in 2007, Ramada will attract 500 business travelers to stay 2 nights • Total = 1000 Rooms Sold • Macro-economic factors • In addition, due to improving hospitality market, Rooms Sold will increase 4% annually: • 2006: 1030 Rooms Sold • 2007: 1240 Rooms Sold • 2008: 1330 Rooms Sold • 2009: 1380 Rooms Sold • 2010: 1440 Rooms Sold 11

12. Projected Financials OSBI Recommendation Scenario (if remaining as hotel) 12

13. Projected Financials OSBI Recommendations Scenario 20% ROR (if remain hotel) 13

14. Opportunity description Continue operating Ramada in Bloomington without major physical changes Implement marketing strategies to increase occupancy rates Target currently untargeted groups, such as tourist groups that stay overnight in Bloomington Increase the number of free stay offerings over radio shows and other forms of media to get the word about Ramada out to the community to transform Ramada’s previous negative reputation Offer discounts for referrals to promote word-of-mouth advertisement Key Benefits Reliable figures for accurate prediction Little capital required Stable operations and practiced procedures Scenario 2: No Change • Potential Business Risks • If demand for hotel rooms doesn’t seem to be increasing, it will be difficult to continue stealing market share from other hotels and increase Ramada’s occupancy rates • Without change, it is difficult to raise the value of the hotel to potential buyers • Key Investments (one-time and major ongoing) • Perhaps hire additional marketing staff to increase efforts 14

15. Complete Renovation / Unchanged Scenario Figures • For the Complete Renovation scenario, local market and macro-economic factors remain the same as OSBI Changes • In addition, Rooms Sold will increase 2% annually due to upgrade to luxury hotel: • 2006: 620 Rooms Sold • 2007: 670 Rooms Sold • 2008: 690 Rooms Sold • 2009: 720 Rooms Sold • 2010: 750 Rooms Sold • For the Unchanged scenario, rooms sold will only increase by macro-economic factors • On average, this equates to yearly increase of 500 rooms sold (2% increase) 15

16. Projected Financials Unchanged Scenario 16

17. Projected Financials Unchanged Scenario 20% ROR 17

18. Opportunity description Demolish and dispose of existing south wing of 55 rooms and convert the space into 13,000 square feet of conference space (total capacity of approximately 425 people) Completely renovate the 100 existing hotel rooms on the north and east side of the pool (reconfigure bathrooms, apply new wall, ceiling, and floor finishes, re-use electrical systems and heating/cooling systems, provide sprinkler systems, re-finish aluminum framing at the front of all hotel rooms, dispose of glass corridor enclosure and replace with metal stud framing, EIFS, exterior skin, punch windows, and drywall finish) Re-roof existing areas Replace Kalwall skylights Furnishings such as beds, tables, chairs, TVs, lamps, artwork, and accessories are not included Key Benefits Extensive amount of conference space, which is in high demand (add additional info) Competitive rooms that would attract corporate customers Improve Ramada’s image in the Bloomington community Ability to charge higher prices Scenario 3: Complete Renovation (as recommended by Broeren Russo Builders, Inc.) • Potential Business Risks • Incredibly high initial investment with low likelihood of high rate of return • New conference center in the works in Bloomington, which would increase supply greatly, thus lowering the payoff from Ramada’s new conference rooms • Facilities will only match, and not surpass facilities of other top hotels, so Ramada may not be able to draw price-insensitive corporate customers from other top hotels • Key Investments (one-time and major ongoing) • Converting the south wing into 13,000 square feet of conference space ($2,050,000) • Renovate 100 existing hotel rooms on the north and east side of the pool ($1,934,000) • Re-roof existing areas ($400,000) • Replace Kalwall skylights ($85,000) 18

19. Projected Financials Complete Renovation Scenario 19

20. Projected Financials Complete Renovation Scenario 20% ROR 20

21. Opportunity description Complete renovation of property to meet independent living standards, including larger room sizes Ability to provide proper meals for residents Security provided for residents Increased transportation to key locations in Bloomington for residents Organized activities for residents to participate in Several other services made available to residents by contract Possible increase in number of staff required Key Benefits Incredibly high revenue per square foot Increasing aging population likely to increase demand for independent living High occupancy rates in other independent living facilities Significant services need to be made available but most can be done without extensive ongoing capital investments Residents stay for long-term With the positive outlook for independent living market, it may be attractive to potential buyers of the property Scenario 4: Alternative Use – Independent Living • Potential Business Risks • If we build it, will they come? • Medical attention required for some residents, and emergency situations may arise • Standards expected by residents may be very high • Key Investments (one-time and major ongoing) • Initial renovation of property to meet independent living standards will be immensely costly • Providing meals for residents • Ongoing investment of running activities and providing services and security for residents 21

22. Independent Living Customer Analysis 22

23. Independent Living Market Analysis 23

24. Cost Estimate • Room recap: 73 apartments, 1 hospitality rooms and 3 guest rooms • Total area of the rooms: North Wing 13,728 sq. ft. • East Wing (Exe) 18,408 sq. ft. • East Wing (Pool) 12,672 sq. ft • South Wing (Bus) 15,276 sq. ft. • Subtotal 60,084 sq. ft. • Estimated cost per sq. ft.: $ 80 • Cost for room restructuring: $ 4.8 million • Total area from porches (North and East Wing): 3,000 sq. ft. • Estimated cost per sq. ft.: $ 110 • Cost for re-doing porches: $ 330,000 • Cost for 2 elevators: $ 200,000 • Cost for roofing: $ 300,000 • The estimated total cost for conversion: $ 5.63 million • (Cost for building associated facilities is not included) 24

25. Projected Financials Independent Living Scenario 1 BR: $1800/month 2 BR: $2500/month 25

26. Projected Financials Independent Living Scenario 20% ROR 26

27. Independent Living Details • Market Insight: Based on the result of the national population census in 2000, the market size of independent living in Bloomington Area is estimated over 4,500 people. The total number of rooms available in major independent living houses are 659. For most of these houses, the occupancy rate is above 95%. • Financial Takeaways: The initial estimated cost of conversion is $5.63 million. By selling the facility in 2010, the project would obtain a 2% rate of return on the total investment of $9.63 million ($5.63 million + $4 million). The analysis of the student team is on the conservative side based on the reference and estimated data. 27

28. Recommendation

29. Financial Summary 29

30. Advantages Business know-how Only one major change required Established clientele Already operating at near breakeven, if Bloomington hospitality industry predictions pan out, property can easily become profitable Limited risk Disadvantages Potential payoff limited (difficult to increase occupancy by huge amount, and also difficult to raise ADR significantly without losing customers) Arena and conference center predictions may be overly optimistic Most increase in occupancy would have to come from continued stealing of market share from other hotels Advantages Possibility of increasing the value of the property drastically if everything is successful From the research, it appears that there the need for independent living facilities is present and will grow in the future Don’t have to worry about attracting customers on a daily basis Disadvantages Very high initial capital expenditure, and thus high risk Lack of experience in running an independent living facility Additional services will need to be offered Though the need is present, if not designed and run well, potential customers, many of whom may be picky, may not wish to live here OSBI Hotel Recommendations Scenario Vs. Independent Living Scenario OSBI Hotel Recommendations Independent Living 30

31. OSBI Recommendation • As can be seen from financials and alternatives comparison, the unchanged and complete renovation scenarios are not viable options • OSBI recommends that Busey follow the OSBI recommended changes for remaining as a hotel if Busey plans on continuing to operate the property • However, in an effort to sell the Ramada Inn – Bloomington, IL property, OSBI recommends selling the independent living idea 31

32. First Busey CorporationRamada Inn – Bloomington, IL Questions?

33. Appendix

34. Independent Living Floor Plan

35. 1 BR Units/Hospitality Suite Corridors Elevator Corridor 1 BR/2 BR Units Barber Pool 1 BR/2 BR Units Activity Area 1 BR Units Library & Video Room Lobby & Back Office Fun Room Dining Room Kitchen Entire Property Floor Plan Elevator Nursing Room and Exercise Room 35

36. 3 x 264’ = 792’ 4 x 264’ = 1,056’ 22’ x 12’ = 264’ 2 x 264’ = 528’ North Wing Room Configuration I (Ground Floor) 1 BR (big) – 792' (6) 2 BR – 1,056' (1) Lounge Back Office Multi-function Rooms (Combined with the fun room) Pool 12′ 122 120 118 116 114 112 110 108 106 104 22′ 123 121 119 117 115 113 111 110 109 107 105 103 101 36

37. Pool 1 BR (big) – 792' (6) 2 BR – 1,056' (2) 12′ Boiler Rooms 228 226 224 222 220 218 216 214 212 210 208 206 204 202 200 225 223 221 219 217 215 213 211 209 207 205 201 203 22′ 3 x 264’ = 792’ 4 x 264’ = 1,056’ 22′ x 12′ = 264’ 2 x 264’ = 528’ North Wing Room Configuration I (Second Floor) 37

38. North Wing Room Configuration II (Ground Floor with porch area included in rooms) 1 BR (big) – 912’ (3) 1 BR (small) – 852’ (3) 2 BR – 1,176' (2) Lounge Back Office Same for the Second floor (Combined with the fun room) Pool 12′ 122 120 118 116 114 112 110 108 106 104 122 22′ 123 121 121 119 117 115 113 111 110 109 107 105 103 101 27’ 38

39. North Wing Room Configuration III (Ground Floor with porch area converted into balconies) 1 BR – 792' (6) 2 BR – 1,056' (2) Lounge Back Office Same for the second floor (Combined with the fun room) Pool 12′ 122 120 118 116 114 112 110 108 106 104 22′ 123 121 119 117 115 113 111 110 109 107 105 103 101 Balconies 39

40. 1 BR (big)- 744'/840' (8) 2 BR – 1056' (6) East Wing Pool Side Rooms Configuration I 12′ (Porch area not included into rooms) 133 135 137 139 141 143 145 147 149 151 153 Ex Rm 18′ 26′ 239 241 243 245 247 249 251 253 255 18′ 26′ Pool 40

41. 12’ 133 135 137 139 141 143 145 147 149 151 153 Ex Rm 18’+5’=23’ 26’ Pool 1 BR (big)- 864'/900' (8) 2 BR – 1176' (6) East Wing Pool Side Rooms Configuration II (Porch area included into rooms) 23’x12’=276’ 26’x12’= 312’ Same for the second floor 41

42. 1 BR (big)- 744'/840' (8) 2 BR – 1056' (6) East Wing Pool Side Rooms Configuration III (Porch area converted into balconies) Balconies 133 135 137 139 141 143 145 147 149 151 153 Ex Rm 18’ 26’ 12’ Pool 42

43. Executive Wing (East) 12’x26’= 312' 312’x2 = 624’ 312’x3 = 936’ 12’ 26’ 26’ Ground Floor: Second Floor: Same layout without the hospitality suite (6 small 1 BR and 6 2 BR) 1 BR (small)- 624' (6) 2 BR – 936' (5) Hospitality Suite – 624’ (1) Entrance and stair 43

44. 1 BR – 612’ (3) 1 BR – 774’ (4) 2 BR – 918’ (2) Guest Rooms (3) Stairs South Wing Room Configuration Ground Floor Atrium & Pool 12' 306' x 2 = 612' 306' x3 = 918' 258' x 3 = 774' Entrance 25.5' 21.5' 44

45. 1 BR – 612’ (3) 1 BR – 774’ (5) 2 BR – 918’ (3) Stairs South Wing Room Configuration Second Floor Atrium & Pool 306' x 2 = 612' 306' x3 = 918' 258' x 3 = 774' 12' 25.5' 21.5' 45

46. 1 Bedroom (Big) Configuration (North and East Wing) Bedroom Bathroom Tub Living Room Kitchen Area 46

47. 1 Bedroom (Big) Configuration (North and East Wing) Kitchen Area Bedroom Bathroom Living Room 47

48. Bedroom Bathroom Kitchen Living Room 1 Bedroom (Small) Configuration (North & East Wing) 44' 12' 48

49. Living Room Bedroom 26' Kitchen Area Bathroom 24' 1 Bedroom (Small) Configuration Executive and South Wing 49

50. Bedroom Bedroom Living Room Kitchen Bathroom Bathroom 2 Bedroom Configuration Executive and South Wing 50