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Headquarters Hotel Market Study

DRAFT FOR POLICY DISCUSSION ONLY. Headquarters Hotel Market Study. Presentation to the Convention Partnership Boston Massachusetts July 14, 2010. HVS role and purpose of study. DRAFT FOR POLICY DISCUSSION ONLY. HVS is the leading global hospitality consulting firm

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Headquarters Hotel Market Study

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

  2. HVS role and purpose of study DRAFT FOR POLICY DISCUSSION ONLY • 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

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

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

  5. Options Studied DRAFT FOR POLICY DISCUSSION ONLY

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

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

  8. Competitive Set DRAFT FOR POLICY DISCUSSION ONLY Primary Competitors* 2,114 roomsSecondary Competitor 5,538Total Comp Set 7,652 rooms

  9. Location of Competitive Hotels DRAFT FOR POLICY DISCUSSION ONLY

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

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

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

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

  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. DRAFT FOR POLICY DISCUSSION ONLY Are the HVS assumptions of rate and occupancy penetration of the proposed hotel reasonable?Baseline Scenario1000 Rooms No Ballroom Expansion

  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 DRAFT FOR POLICY DISCUSSION ONLY Market Occupancy = 75% Subject Occupancy = 71%

  19. Subject Property’s Average Daily Rate Penetration in $ 2008 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) DRAFT FOR POLICY DISCUSSION ONLY

  23. DRAFT FOR POLICY DISCUSSION ONLY Are the forecasts of operating revenue and expense consistent with the performance of similar hotel properties?Baseline Scenario1000 Rooms No Ballroom Expansion

  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) DRAFT FOR POLICY DISCUSSION ONLY

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

  29. Key Risk Factors* DRAFT FOR POLICY DISCUSSION ONLY • 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.

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