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

The Westin Denver International AirportStatement of Estimated Annual Operating ResultsUtility CostsPer Available Room Ratio to Total Rev.In-Terminal HotelsHotel A $2,494 3.7%Hotel B 2,414 3.5%Hotel C 3,537 5.1%Hotel D 2,180 3.9%Hotel E 3,656 4.8%Hotel F 1,318 2.0%Westin HotelsHotel G $1,909 2.9%Hotel H 2,545 3.7%Hotel I 2,166 2.2%Hotel J 2,014 2.5%Hotel K 2,360 3.4%Weighted Average 2,321 3.3%Subject Stabilized Year $2,500 3.2%Utility costs are generally particular to the location, climate, and type of hotelstructure. Placing primary reliance on the comparable Westin hotels, we estimateutility costs to be $2,500 PAR, or 3.2 percent of total revenues. Furthermore, ourestimate is in line with the weighted average of the comparable in-terminal hotels ona PAR and ratio basis.3. Management Fees and Fixed Chargesa. Base and Subordinate Management FeesAs previously discussed, we have been provided with a QMA between the City andCounty of Denver, on behalf of the Denver International Airport, and StarwoodHotels and Resorts (“Starwood”). This analysis assumes that the proposed Subjectwill be operated by Starwood under the Westin brand. Based on our currentforecast, base management fees are projected to be $1,220,000, or 3.0 percent oftotal revenues, for a stabilized year of operation.Subordinate management fees are payable below the NOI line. For a stabilizedyear of operation, we estimate subordinate management fees of $407,000. Ourcalculation of both base and subordinate management fees over the first ten yearsof operation for the proposed Subject is presented in the following table.V-18