Water Park Market Feasibility Study Report

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Water Park Market Feasibility Study Report MARKET FEASIBILITY STUDY REPORT FOR THE PROPOSED INDOOR WATERPARK RESORT-COOPERSTOWN 4850 STATE HIGHWAY 28 HARTWICK, OTSEGO COUNTY, NEW YORK Date of Report: November 24, 2015 FOR Mr. Jeff Hyman and Mr. Sandy Mathes Hyman Hemispheric, LLC and Mr. Sandy Mathes Otsego County IDA December 14, 2015 Mr. Jeff Hyman and Mr. Sandy Mathes President Hyman Hemispheric, LLC 37 Forest Drive Voorheesville, NY 12186 and Mr. Sandy Mathes CEO Otsego County IDA 189 Main Street, 5th Floor Oneonta, NY 13820 RE: Proposed Indoor Waterpark Resort-Cooperstown Hartwick, Otsego County, New York Dear Mr. Hyman and Mr. Sandy Mathes: In fulfillment of our engagement letter, we completed our study of the market demand and economic feasibility for the proposal to develop an indoor waterpark resort in Hartwick, Otsego County, New York. The study is based upon market conditions observed as of the date of our market inspection on August 12, 2015, and research conducted in August and September 2015. The subject site is at 4850 State Highway 28, adjacent to Cooperstown Fun Park. Assumptions The conclusions contained in this report are based upon a review of information provided by you and on-site field work in the market area, which is described in the Scope of Assignment section. As in all studies of this type, the conclusions do not take into account or make provisions for the effect of any sharp rise or decline in local or general economic conditions not presently foreseeable. The estimated results are based on competent and efficient management of the proposed hotel, as well as an aggressive marketing program. We assume the subject will hire appropriate management personnel to operate and market the indoor waterpark resort. We assume that the subject will operate as an independent resort not affiliated with a national franchise. We assume the proposed resort will open January 1, 2018. We presume no significant change in the competitive position of the hotel industry in the area from that as set forth in this report. We do not warrant that the estimates will be attained, but they have been conscientiously prepared on the basis of information obtained and our experience in the hotel industry. It is expressly understood that the scope of this study and the report thereon do not include the possible impact of zoning regulations, licensing requirements, or other Cleveland, Ohio ● 216-228-7000 www.hladvisors.com San Antonio, Texas ● 210-319-5440 Corporate Headquarters: 14805 Detroit Avenue, Suite 420, Cleveland, Ohio 44107-3921 Mr. Jeff Hyman and Mr. Sandy Mathes December 14, 2015 Page 2 restrictions concerning the project, except where such matters have been brought to our attention and are set forth in this report. This report and its contents are intended solely for the information of our client for internal use relative to determining the project’s feasibility. The report should not be relied upon for any other purpose. Neither our report nor any of its contents nor any reference to Hotel & Leisure Advisors, LLC (H&LA) may be included or quoted in any document, offering circular, registration statement, prospectus, sales brochure, other appraisal, or other agreement without our prior written approval. Such permission will not be unreasonably withheld. We have also prepared an economic impact study on the proposed development, which is a separate document from this study. We are available to prepare additional consulting services on this proposed property as the scope of the development is finalized. In addition, we are available to perform a full narrative appraisal report or management company analysis for the proposed development upon your request. We appreciate the opportunity to be of service to your organization and look forward to working with you again. Respectfully submitted, Hotel & Leisure Advisors, LLC David J. Sangree, MAI, ISHC President Eric B. Hansen, AIA, ISHC Director of Development Services MARKET FEASIBILITY STUDY REPORT FOR THE PROPOSED INDOOR WATERPARK RESORT-COOPERSTOWN 4850 STATE HIGHWAY 28 HARTWICK, OTSEGO COUNTY, NEW YORK TABLE OF CONTENTS A. INTRODUCTION Scope of the Assignment ......................................................................... A-1 Executive Summary ................................................................................ A-2 Standard Conditions ............................................................................... A-12 Extraordinary Assumptions and Hypothetical Conditions .............................. A-14 Competency of the Consultants ................................................................ A-15 B. AREA ANALYSIS AND DESCRIPTIVE DATA Area Review .......................................................................................... B-1 Neighborhood Analysis ............................................................................ B-17 Demographic Comparison of Cooperstown vs. Wisconsin Dells and Sandusky . B-22 Site Analysis .......................................................................................... B-29 Description of Projected/Recommended Improvements ............................... B-34 Franchise Affiliation Analysis .................................................................... B-44 C. MARKET ANALYSIS National Lodging Overview ...................................................................... C-1 Analysis of Indoor Waterpark Resorts ........................................................ C-9 New York State and Regional Lodging Overview ......................................... C-25 Competitive Lodging Market Overview ....................................................... C-26 Projected Market Occupancy .................................................................... C-45 Group Demand Research ......................................................................... C-46 D. SUBJECT OCCUPANCY AND AVERAGE DAILY RATE ANALYSIS Competitive Advantages and Disadvantages of Subject Property ................... D-1 Projected Subject Occupancy ................................................................... D-2 Estimated Average Daily Rate .................................................................. D-7 Indoor Waterpark Analysis ....................................................................... D-10 E. FINANCIAL ANALYSIS Introduction .......................................................................................... E-1 Income and Expense Analysis .................................................................. E-3 Prospective Financial Analysis in Inflated Dollars ......................................... E-18 Feasibility Analysis ................................................................................. E-22 F. CERTIFICATION ......................................................................................... F-1 ADDENDA Qualifications ............................................................................ Addendum I Smith Travel Research Report ..................................................... Addendum II ERSI Demographic Report .......................................................... Addendum III Brochures of Comparable Indoor Waterpark Resorts ..................... Addendum IV Proposed Indoor Waterpark Resort – Cooperstown, NY Introduction A-1 SCOPE OF THE ASSIGNMENT Mr. Jeff Hyman and Mr. Sandy Mathes with Otsego County IDA retained Hotel & Leisure Advisors, LLC to estimate the potential market feasibility of the development of a destination indoor waterpark resort in Hartwick. We made a number of independent investigations and analyses while preparing this study, including: Evaluating the subject site and its relationship to potential demand generators as well as its attributes relative to the lodging and waterpark competitors. Interviewing representatives of the local convention and visitors bureau, chamber of commerce, and city, county, and economic development officials, to collect information concerning the proposed site and region. Interviewing managers or owners of existing and proposed competitive hotel or resort properties. Interviewing representatives of various hotel chains to determine performance of area hotels and proposed new supply additions. Interviewing managers of indoor waterpark resorts across the country and representatives of area attractions to determine usage and new supply additions. Consulting various agencies and databases for demographic data, land use policies and trends, growth estimates, and employment data. We also relied on data retained in our office, which is updated regularly for use in all assignments. Completing a physical inspection of the subject property and the area. Mr. Jeff Hyman and Mr. Sandy Mathes provided the subject property data. In addition to the subject’s specific information, we considered relevant market data in determining the projections used in our cash flow analysis. We based the financial analysis primarily upon the probable operating experience of the property relative to gross operating revenues, typical expense levels, and resultant net cash flow. We estimated operating revenues utilizing market data relative to industry standards and comparable properties in the subject area. We estimated expense levels based upon industry standards and operating histories of similar properties. We estimated the financial projections for the subject facility for 11 years, beginning January 1, 2018. Proposed Indoor Waterpark Resort – Cooperstown, NY Introduction A-2 EXECUTIVE SUMMARY The client is considering development of a destination indoor
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