PKF Hotel Market Demand and Financial Analysis - DIA Business ...

The Westin Denver International AirportHotel Market Analysisthan 100 percent. We have formulated our assumptions and analysis on aprojected opening date of the hotel of August 1, 2015.Based on the expected attributes of the proposed Subject, we anticipate that it willhave various advantages within the market in location and in product quality. Asummary of the proposed Subject’s competitive advantages are presented in thefollowing statements.The proposed Subject will be a state-of-the-art, newly-built prototypefeaturing the latest in engineering, design, and innovation. Additionally, theproposed Subject will represent the newest upper upscale, full-service hotelin the Denver-Aurora lodging market and the highest quality hotel in theDenver Airport lodging market;The proposed Subject will be affiliated with Starwood Hotels and Resorts andthe Preferred Guest® reward program, which encompasses 850 hotelsworldwide. Furthermore, the Subject will benefit from the strong recognitionof the Westin hotel brand and will represent the only full service Starwoodaffiliated hotel in the Airport/East submarket;The proposed Subject will benefit from its designation as an in-terminal hotelat DIA, a central hub within the U.S. that represents one of the highesttrafficked airports nationwide. This central, strategic location will be asignificant advantage point with regard to attracting nationwide meetings andgroup demand that can easily converge at DIA without the inefficiency andcost of having to commute from the airport to an alternate meeting andlodging venue.With plenty of room for expansion surrounding DIA, the proposed Subject isalso situated to benefit from any future growth that might occur. This is aunique situation when compared to other major airports with in-terminalhotels, which typically do not have room for runway, concourse, or gateexpansions.In review of the aforementioned competitive advantages affecting the proposedSubject and after our analysis of the competitive market, similar airport markets,and, more specifically, in-terminal hotels, we project that the proposed Subject canachieve a stabilized market penetration level of 106 percent, more than its fair shareof demand. This results in a stabilized occupancy of 74 percent. During the firsttwo years of operation, we estimate the proposed Subject’s occupancy level to“ramp up” from 68 percent in 2015 to 72 percent in 2016 before stabilizing at 74percent in 2017. As previously stated, the in-terminal hotels that we analyzedthroughout the U.S. achieved an average occupancy of roundly 77 percent over thepast five years with the aggregate occupancy level ranging from a low of 72.2IV-38