Market Feasibility Study Report for the Proposed Convention Center Hotel 11355 Chester Road Sharonville, Hamilton County, Ohio

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Market Feasibility Study Report for the Proposed Convention Center Hotel 11355 Chester Road Sharonville, Hamilton County, Ohio MARKET FEASIBILITY STUDY REPORT FOR THE PROPOSED CONVENTION CENTER HOTEL 11355 CHESTER ROAD SHARONVILLE, HAMILTON COUNTY, OHIO Date of Report: August 27, 2013 FOR Chris Xeil Lyons Economic Development Director City of Sharonville 10900 Reading Road Sharonville, Ohio 45241 August 27, 2013 Chris Xeil Lyons Economic Development Director City of Sharonville 10900 Reading Road Sharonville, Ohio 45241 RE: Proposed Convention Center Hotel - Sharonville Sharonville, Hamilton County, Ohio Dear Ms. Lyons: In fulfillment of our engagement letter, we have completed our study of the market demand and economic feasibility for the proposal to develop a convention center hotel in Sharonville, Hamilton County, Ohio. The study is based upon market conditions observed as of the date of our market inspection on May 15, 2013, and research conducted in May and June, 2013. The property will be located at 11355 Chester Road. The property will be directly connected to the existing Sharonville Convention Center. The property will be located fronting on Chester Road. It is our understanding that this study is being conducted for the city of Sharonville as part of a larger RFP process in order to attract potential developers for the proposed hotel. 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 reached 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 prior to and after the opening of the proposed hotel. We assume the subject will hire appropriate management personnel to operate and market the hotel. We assume that the subject will operate as a national franchise affiliate. We assume the proposed hotel will open January 1, 2015. 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 restrictions concerning the project, except where such matters have been brought to our attention and which 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 feasibility of the project. The report should not be relied upon for any other purpose. Otherwise, neither our report nor any of its contents 14805 Detroit Avenue, Suite 420 • Cleveland, OH 44107 • 216-228-7000 • Fax: 216-228-7320 • www.hladvisors.com Ms. Chris Xeil Lyons August 27, 2013 Page 2 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 are available to perform additional consulting services on this proposed property as the scope of the development is finalized. In addition, we are available to perform a self- contained full narrative appraisal report, economic impact study, 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 Eric B. Hansen, AIA, ISHC Director of Development Services MARKET FEASIBILITY STUDY REPORT FOR THE PROPOSED CONVENTION CENTER HOTEL 11355 CHESTER ROAD SHARONVILLE, HAMILTON COUNTY, OHIO 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-14 B. AREA ANALYSIS AND DESCRIPTIVE DATA Area Review .......................................................................................... B-1 Neighborhood Analysis ............................................................................ B-16 Site Analysis .......................................................................................... B-22 Description of Projected/Recommended Improvements ............................... B-32 Franchise Affiliation Analysis .................................................................... B-35 Municipal Incentives ............................................................................... B-38 C. MARKET ANALYSIS National Lodging Market Overview ............................................................ C-1 Comparable Lodging Analysis ................................................................... C-9 Cincinnati Lodging Overview .................................................................... C-12 Competitive Lodging Market Overview ....................................................... C-13 Projected Market Occupancy .................................................................... C-30 Demand Interviews ................................................................................ C-31 D. SUBJECT OCCUPANCY AND AVERAGE DAILY RATE ANALYSIS Historical Performance of Sharonville Convention Center ............................. D-1 Competitive Advantages and Disadvantages of Subject Property ................... D-2 Projected Subject Occupancy ................................................................... D-4 Estimated Average Daily Rate .................................................................. D-8 E. FINANCIAL ANALYSIS Introduction .......................................................................................... E-1 Income and Expense Analysis .................................................................. E-3 Prospective Financial Analysis in Inflated Dollars ......................................... E-13 Feasibility Analysis ................................................................................. E-17 F. CERTIFICATION ......................................................................................... F-1 ADDENDA Qualifications ............................................................................ Addendum I Smith Travel Research Report ..................................................... Addendum II ERSI Demographic Report .......................................................... Addendum III Demand Interviews Survey Form ................................................. Addendum IV Proposed Convention Center Hotel - Sharonville Introduction A-1 SCOPE OF THE ASSIGNMENT Hotel & Leisure Advisors, LLC has been retained by Ms. Chris Xeil Lyons with the city of Sharonville, Ohio, to estimate the potential market feasibility of the development of a convention center hotel with direct connection to the existing Sharonville Convention Center. We made a number of independent investigations and analyses in performing this study. We evaluated the subject site and its relationship to potential demand generators as well as its attributes relative to the lodging competitors. We interviewed representatives of the convention and visitors bureau, chamber of commerce, city officials, county officials, economic development officials, and assessor's office to collect information concerning the proposed site and region. We interviewed managers or owners of existing competitive hotel properties. We interviewed representatives of various hotel chains to determine performance of area hotels and proposed new supply additions. We interviewed a representative from the Princeton School District to understand the facilities that are currently under construction, and the district’s overall relationship with the community and potential demand generated from the new facilities. We have conducted demand interviews with various potential users of the proposed facility. In conducting our investigation and analysis, we relied on data retained in our office, which is updated regularly for use in all assignments. Various agencies and databases, including the Site to Do Business database, were contacted for demographic data, land use policies and trends, growth estimates, and employment data. Neighborhood data was supplemented by a physical inspection of the subject property and the area. Ms. Chris Xeil Lyons provided the subject property data for our analysis. In addition to the subject's specific information, we have 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
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