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DRAFT FOR POLICY DISCUSSION ONLY. Headquarters Hotel Market Study. Presentation to the Convention Partnership Boston Massachusetts July 14, 2010. HVS role and purpose of study. DRAFT FOR POLICY DISCUSSION ONLY. HVS is the leading global hospitality consulting firm

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headquarters hotel market study

DRAFT FOR POLICY DISCUSSION ONLY

Headquarters Hotel Market Study

Presentation to the

Convention Partnership

Boston Massachusetts

July 14, 2010

hvs role and purpose of study
HVS role and purpose of study

DRAFT FOR POLICY DISCUSSION ONLY

  • HVS is the leading global hospitality consulting firm
    • Conduct thousands of studies each year
    • Established methods of hotel analysis
    • Use Uniform Standards of Professional Appraisal Practice
  • HVS provides an independent forecast of hotel operations
    • No ongoing interest in project
    • No advocacy role
  • The HVS “Market Study” provides
    • Starting point for financing analysis
    • Partial basis for policy decision on project
    • No opinion of feasibility
methodology and market study process
Methodology and Market Study Process

DRAFT FOR POLICY DISCUSSION ONLY

Site Inspection

Market Area Analysis

Forecast “Market” Performance

Hotel Supply/Demand

CC Demand Analysis

ADR and Occupancy Penetration*

Forecast Financial Operations

* By market segment: 1) commercial, 2) group, 3) leisure

options studied
Options Studied

DRAFT FOR POLICY DISCUSSION ONLY

ten year net operating income forecasts for each of 4 development scenarios
Ten-year net operating income forecasts for each of 4 development scenarios

DRAFT FOR POLICY DISCUSSION ONLY

competitive set
Competitive Set

DRAFT FOR POLICY DISCUSSION ONLY

Primary Competitors* 2,114 roomsSecondary Competitor 5,538Total Comp Set 7,652 rooms

location of competitive hotels
Location of Competitive Hotels

DRAFT FOR POLICY DISCUSSION ONLY

historical trends in supply and demand
Historical Trends in Supply and Demand

DRAFT FOR POLICY DISCUSSION ONLY

Source: Smith Travel Research

competitors historical performance occupancy adr and revpar
Competitors Historical PerformanceOccupancy, ADR and RevPAR

DRAFT FOR POLICY DISCUSSION ONLY

Source: Smith Travel Research

slide12

DRAFT FOR POLICY DISCUSSION ONLY

Are the HVS forecasts of future growth in the hotel market consistent with historical patterns of growth during periods of economic recovery?

national perspective
National Perspective

DRAFT FOR POLICY DISCUSSION ONLY

Source: Smith Travel Research

comparison of historical room night demand to forecasted recovery annual change
Comparison of historical room night demand to forecasted recovery (annual % change)

DRAFT FOR POLICY DISCUSSION ONLY

slide16

DRAFT FOR POLICY DISCUSSION ONLY

Are the HVS assumptions of rate and occupancy penetration of the proposed hotel reasonable?Baseline Scenario1000 Rooms No Ballroom Expansion

hvs estimated market penetration for each of three demand segments
HVS estimated market penetration for each of three demand segments

DRAFT FOR POLICY DISCUSSION ONLY

forecast of occupancy penetration rates by market segment in stabilized year
Forecast of occupancy penetration rates by market segment in stabilized year

DRAFT FOR POLICY DISCUSSION ONLY

Market Occupancy = 75%

Subject Occupancy = 71%

subject property s average daily rate penetration in 2008
Subject Property’s Average Daily Rate Penetration in $ 2008

DRAFT FOR POLICY DISCUSSION ONLY

projected stabilized occupancies 2017
Projected Stabilized Occupancies (2017)

DRAFT FOR POLICY DISCUSSION ONLY

slide23

DRAFT FOR POLICY DISCUSSION ONLY

Are the forecasts of operating revenue and expense consistent with the performance of similar hotel properties?Baseline Scenario1000 Rooms No Ballroom Expansion

house profit revenue per occupied room night in 2009 dollars
House profit - revenue per occupied room night in 2009 dollars

DRAFT FOR POLICY DISCUSSION ONLY

house profit of total revenue
House profit - % of total revenue

DRAFT FOR POLICY DISCUSSION ONLY

stabilized year income and expenses 2017
Stabilized Year Income and Expenses (2017)

DRAFT FOR POLICY DISCUSSION ONLY

key risk factors
Key Risk Factors*

DRAFT FOR POLICY DISCUSSION ONLY

  • Risks that can be managed
    • Project completion (BCEC and hotel on budget - on time)
    • Adequate marketing effort
    • Competent management and labor agreements
    • Neighborhood development
  • Uncontrollable Risks
    • Market performance – slower than forecast economic growth
    • Geopolitical
    • New supply

*Risks are not limited to these items. Reader is advised to read the HVS report in its entirety for a more complete discussion of risk factors, assumptions and limiting conditions.

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