Appendix 5 Fiscal and Marketing Information
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APPENDIX 5 FISCAL AND MARKETING INFORMATION Market Study & Feasibility Analysis Proposed Belleayre Resort at Catskill Park Shandaken-Middletown, New York Property Location: State Route 28 Shandaken, New York 12441 Prepared by: HVS A Division of Hotel Appraisals, LLC 372 Willis Avenue Mineola, New York 11501 (516) 248-8828 (516) 742-3059 FAX Submitted to: Mr. Dean Gitter Crossroads Ventures, LLC 72 Andrew Lane Mt. Tremper, New York 12457 845-688-7740 845-688-2828 FAX October 1, 2008 Mr. Dean Gitter Crossroads Ventures, LLC 72 Andrew Lane Mt. Tremper, New York 12457 Re: Proposed Belleayre Resort at Catskill Park Shandaken-Middletown, New York HVS Reference: 2008010088 Dear Mr. Gitter: 372 Willis Avenue Pursuant to your request, we herewith submit our market study and Mineola, New York 11501 feasibility analysis pertaining to the above-captioned property. We have 516-248-8828 studied the proposed project, and the results of our fieldwork and analysis 516-742-3059 FAX are presented in this report. We have also reviewed the proposed improvements for this site. Our report was prepared in accordance with the www.hvs.com Uniform Standards of Professional Appraisal Practice (USPAP), as provided by the Appraisal Foundation. Atlanta We hereby certify that we have no undisclosed interest in the property, and Boston our employment and compensation are not contingent upon our findings. Boulder Chicago This study is subject to the comments made throughout this report and to all Dallas/Fort Worth assumptions and limiting conditions set forth herein. Denver Mexico City Sincerely, Miami New York Newport San Francisco Toronto Erich Baum, Vice President Vancouver Hotel Appraisals, LLC Washington Athens Buenos Aires Dubai Hong Kong Stephen Rushmore, MAI, FRICS, CHA, Managing Member London Hotel Appraisals, LLC Madrid Mumbai New Delhi Sao Paulo Shanghai Darius Hatami, President Singapore HVS Golf Services Specialists in Hotel Consulting and Appraisal Worldwide HVS Table of Contents Table of Contents Section Title 1 Executive Summary 2 Description of the Real Estate 3 Market Area Analysis 4 Forecast of Hotel Component Net Income 5 Forecast of Golf Component Net Income 6 Forecast of Condominium Rental Pool Net Income 7 Feasibility Conclusion 8 Statement of Assumptions and Limiting Conditions 9 Certification Addenda Press Release: Agreement in Principle Qualifications Proposed Belleayre Resort at Catskill Park HVS Executive Summary 1-1 1. Executive Summary Belleayre Resort at Catskill Park – Wildacres Component The Belleayre Resort at Catskill Park is envisioned as a world-class resort consisting of two hotels, each with its own characteristics and amenities; an 18-hole public championship golf course designed by Davis Love III; two separate full-service spa opterations totaling 45 treatment rooms; a conference center with ±15,000 square feet of usable space; extensive food and beverage outlets offering a wide range of dining experiences; and separate communities of vacation ownership units associated with each of the two hotels. The resort will be constructed on ±620 acres of land directly to the west of the existing Belleayre Mountain Ski Center. The land is located in both the Town of Shandaken (Ulster County) and the Town of Middletown (Delaware County). The resort’s development will be located in two integrated components, detailed in the following table. Proposed Belleayre Resort at Catskill Park HVS Executive Summary 1-2 Proposed Belleayre Resort at Catskill Park Wildacres Highmount 1. Four-Star Hotel - 250 Rooms 1. Five-Star Hotel and Spa - 120 Rooms Ski-in, ski-out to existing Belleayre Ski Center Ski-in, ski-out resort adjacent to new Highmount Ski Center 18-hole championship golf course Guest-only Spa of ±60,000 sf with 30 treatment rooms, (including 40-seat clubhouse snack bar) grotto pool, lounges, sauna, and lockers Meeting Space Food & Beverage Outlets Ballroom/Auditorium 6,000 sf Main Restaurant 150 seats Banquet Hall 2,700 Six-Star Restaurant 30 Break-out Rooms 4,500 Sushi Bar / Oyster House 70 Boardrooms 1,800 Spa Café 30 Total 15,000 sf Total 280 seats Day Spa of ±36,000 sf with 15 treatment rooms, LEED-certified lockers, and grotto pool 2. Lodging Units (vacation ownership) Food & Beverage Outlets 60 fractional ownership lodging units in two buildings Multi-purpose three-meal restaurant 300 seats 60 stand-alone, whole-ownership lodging units Specialty restaurant 150 LEED-certified Lounge/bar 100 Golf course clubhouse snack bar 40 3. Resort Wilderness Activity Marlowe Mansion 150 Café, library, weight room, sauna/steam room, and Totall 740 seats seasonal activities LEED-certified (Leadership in Energy and Environmental Design) 2. Lodging Units (vacation ownership) 139 units in less than 18 buildings LEED-certified 3. Community Clubhouse 40-seat snack bar Health club and game room Outdoor swimming pool Tennis courts (2) The Wildacres Hotel will be developed in the manner consistent with four- star hotel standards. The property is envisioned as an affiliate of a nationally- recognized first-class hotel brand, such as Fairmont, Hilton, Marriot, Westin, Proposed Belleayre Resort at Catskill Park HVS Executive Summary 1-3 or Hyatt. The Wildacres portion of the project will be developed in conjunction with a ±36,000-square-foot day spa with 15 treatment rooms, the conference center, the 18-hole championship golf course, and 740 seats of food and beverage outlets (including the restaurant located within the to-be- renovated Marlowe Mansion). The Highmount Hotel & Spa will be developed in the manner consistent with five-star hotel standards. The property is envisioned as an affiliate of a nationally-recognized luxury hotel brand, such as Ritz-Carlton or St. Regis. The spa will offer a variety of distinctive dining options and a ±60,000- square-foot spa (for hotel guests only) with 30 treatment rooms. The spa will function as a major amenity and demand generator on the level of a golf course. The developers of the Belleayre Resort project will work to set a new standard for environmental sensitivity. Its development will proceed in cooperation with the National Resource Defense Council as well as the departments of environmental protection of the State of New York and City of New York. The project will set new Leadership in Energy and Environmental Design (LEED) standards for such a resort and develop new organic regimens for the operation and maintenance of its golf course. All parties are pledged to achieve these new standards. The resort’s construction will reportedly employ an architecturally ambitious design and the broader purpose, according to the developer, is “to provide residential and recreational facilities that will benefit the community, and enhance the tourism attraction of the area as a four-season recreation destination.” Hart/Howerton serve as master planners for the project and they and noted environmental architect Emilio Ambasz have provided conceptual designs for the two hotel buildings. The physical and curricular programming will comprise “a beautifully orchestrated resort where education and entertainment opportunities blend seamlessly into the wonderful fabric of the Catskill Mountains; where both young and old leave worries behind and let their imaginations flourish.” The Resort is intended “to marry the physical assets of the Belleayre Mountain Ski Center and the Catskill Forest Preserve with new facilities and programs that will enhance these assets for the benefit of both visitors to the Resort and the general public.” Proposed Belleayre Resort at Catskill Park HVS Executive Summary 1-4 Rendering of Proposed Development, looking South over State Route 28 In September 2007, New York State Governor Eliot Spitzer publicly announced the public/private agreement between the State of New York, the City of New York, seven national environmental groups and the developer (Crossroads Ventures, LLC) which outlines plans for the Belleayre Resort, as well as expansion of the State-owned Belleayre Ski Center and the protection of more than 1,400 acres of land in the Catskill Forest Preserve. (The press release announcing the agreement is included as an addendum to this narrative report.) Scope of the Work The scope of our market study is limited to the proposed hotel, conference center, and golf course facilities. The timeshare and fractional interest Proposed Belleayre Resort at Catskill Park HVS Executive Summary 1-5 components will be studied separately by Ragatz Associates of Eugene, Oregon. Our work product, attached herewith, is communicated in a summary format addressing the feasibility of the proposed hotel, conference center, and golf course facilities, including the following components: · evaluation of the site; · evaluation of recommended physical improvements and amenities; · commentary on the outlook for the national economy, capital markets, and resort hotel visitation in general; · a review of the resort hotels that can be expected to compete with the proposed subject property, providing context for the proposed properties’ occupancy and average rate results; · a ten-year projection of income and expense for both of the proposed hotels, including the conference space; · a separate examination of the proposed golf course component, including a membership planning study, and culminating in a ten-year forecast of income and expense; and · a feasibility conclusion documented with respect to the projected return on investment. In addition, we have quantified a third income stream in this analysis, attributable to the periodic conversion of the timeshare and fractional interest vacation ownership units (defined elsewhere in this narrative as “lodging units”) for rental as part of the hotel operation. This income stream is unique in this analysis because it is derived from the value of the lodging units rather than the hotel or the golf course. However, it is our understanding that this figure will not be addressed in the Ragatz Associates’ study. The sum of the three income streams is then calculated and used to calculate the rate of return, as compared to the construction cost. The projected return is then compared to current market standards as a gauge of the project’s likely market acceptance.