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

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The Westin Denver International AirportHotel Market AnalysisThe ADR for the competitive downtown lodging market increased at a CAGR of 1.4percent between 2007 and 2011 with ADRs ranging from a low of$149.80 in 2009 toa high of $163.37 in 2011. Rate growth of 5.8 percent was achieved in 2008 beforeADR declined 8.2 percent in 2009. This decline in ADR is less than half of thedecline experienced by the competitive airport lodging market during this time. In2010 and 2011, market ADR increased 5.2 and 3.6 percent to $163.37. ThroughYTD June 2012, ADR remained relatively flat at approximately $160.As a result of fluctuations in occupancy and ADR, RevPAR increased at a CAGR of1.6 percent between 2007 and 2011. In 2009, the competitive market experienceda decline in RevPAR of 18.7 percent, as a result of an 11.5 percent decrease indemand and 8.2 percent decrease in ADR. In 2010, the performance of thecompetitive downtown lodging market rebounded, experiencing an increase inRevPAR of 16.4 percent. Through YTD June 2012, RevPAR increased 3.4 percentover prior year levels, resulting in RevPAR of $113.52, in line with 2008 levels.A majority of demand at the hotels comprising the competitive downtown lodgingmarket is from the transient and group market segments (approximately 45 and 50percent, respectively). Only approximately five percent of demand represents thecontract/crew market segment. Guests who choose to stay in the downtownDenver area primarily do so to be proximate to the convention center, downtowntourist attractions, and/or within the Denver CBD where most commercial businessis conducted.3. Combined Historical Performance of the Primary and SecondaryCompetitive Lodging MarketsPresented in the following table is the historical performance of the aforementionedcombined competitive airport and downtown lodging markets from 2007 through2011, as well as YTD June 2011 and 2012.The Westin Denver International AirportHistorical Performance of the Competitive MarketAnnual Percent Occupied Percent Market Percent PercentYear Supply Change Rooms Change Occupancy ADR Change RevPAR Change2007 1,794,340 - 1,263,201 - 70.4% $148.42 - $104.49 -2008 1,868,070 4.1% 1,313,504 4.0% 70.3% $156.63 5.5% $110.13 5.4%2009 1,892,525 1.3% 1,210,102 -7.9% 63.9% $139.66 -10.8% $89.30 -18.9%2010 1,948,735 3.0% 1,351,501 11.7% 69.4% $145.46 4.2% $100.88 13.0%2011 2,161,165 10.9% 1,535,193 13.6% 71.0% $151.56 4.2% $107.66 6.7%CAGR 4.8% - 5.0% - - 0.5% - 0.8% -YTD Jun '11 1,080,583 - 752,767 - 69.7% $149.43 - $104.10 -YTD Jun '12 1,080,583 0.0% 778,637 3.4% 72.1% $149.10 -0.2% $107.44 3.2%Source: PKF Consulting USAIV-27
The Westin Denver International AirportHotel Market AnalysisSupply for the overall competitive market increased at a CAGR of 4.8 percent overthe past five years as a result of the aforementioned additions to supply. Marketoccupancy ranged from a low of 63.9 percent in 2009, the height of the GreatRecession, to a high of 71.0 percent in 2011, which was attainable due to an 11.7percent increase in demand in 2010 and 13.6 percent increase in demand in 2011.Through YTD June 2012, occupancy increased from 69.7 to 72.1 percent or 3.4percent over prior year levels. ADR for the overall competitive market remainedrelatively unchanged between 2007 and 2011 due to an offset in ADR declines andincreases. The year-end 2011 ADR is approximately $3 higher than 2007 levels.Through YTD June 2012, the competitive market experienced a modest decline inADR of 0.2 percent, resulting in an ADR of $149.10. Due to the aforementionedfluctuations in occupancy and ADR RevPAR increased at a CAGR of 0.8 percent.In 2009, RevPAR decreased 18.9 percent before increasing 13.0 percent in 2010and 6.7 percent in 2011, resulting in a RevPAR of $107.66. RevPAR increased 3.2percent over prior year levels through YTD June 2012 to $107.44.Presented in the following table is a summary of the estimated year-end 2012 ADRsfor the primary and secondary competitive markets. Due to the confidential natureof this information, we have not disclosed the identity of the hotels.Estimated Year-End 2012 ADRPrimary Competitive Market Secondary Competitive MarketProperty ADR Property ADRHotel A $90 Hotel A $165Hotel B $85 Hotel B $240Hotel C $100 Hotel C $140Hotel D $115 Hotel D $225Hotel E $145 Hotel E $170Hotel F $130 Hotel F $155Hotel G $150Hotel H $165We estimate the primary competitive market to achieve ADRs ranging betweenapproximately $85 and $145 through year-end 2012. We estimate the secondarycompetitive market to achieve ADRs ranging between approximately $155 and$240 through year-end 2012. As noted, the low-end of the range in estimated 2012ADRs for the secondary competitive market is approximately $10 above the highendof the range of the primary competitive market. The hotels comprising thecompetitive downtown lodging market, in general, represent upper upscale andluxury properties with superior guestroom products and are located in primedowntown locations, thus warranting a premium in ADR.IV-28
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September 18, 2012Mr. Patrick HeckD
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The Westin Denver International Air
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SECTION IEXECUTIVE SUMMARY
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SECTION IIIPROPERTY DESCRIPTION
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The Westin Denver International Hot
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PKF Consulting appreciates the oppo
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STATEMENT OF ASSUMPTIONS AND LIMITI
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ADDENDUM CQUALIFICATIONS OF THE CON
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QUALIFICATIONS OFCHRISTOPHER A. KRA
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QUALIFICATIONS OFCATHERINE E. BOLST
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Appraisal for the Yountville Inn lo
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Sent via email to: patrick.heck@fly
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Mr. Patrick HeckJune 14, 2012Housto
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Mr. Patrick HeckJune 14, 2012In ord
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Mr. Patrick HeckJune 14, 20127. Mar
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ADDENDUM ESENSITIVITY ANALYSIS
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