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Workshop briefing 2310

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  • 1. Downtown Frederick Hotel Frederick Chamberand Conference Center Major Employers GroupPUBLIC BRIEFINGFrederick, Maryland, USA
  • 2. DOWNTOWN HOTEL FEASIBILITY TEAMDeveloping a full-service hotel with meeting, event, and conference space inDowntown Frederick is a key priority of Frederick’s Economic DevelopmentPartners and Major Employers. A feasibility study was jointly funded by this group. Mark Gaver, Community Chairman MAJOR EMPLOYER GROUP President & CEO Gaver Holding, Inc. • SAIC‐Frederick • State Farm • Frederick Community College • Bechtel • Wells Fargo Home Mortgage • US Army Garrison Fort Detrick • Chase Card Services • Frederick County Public Schools • Frederick Memorial Health Care System • Lonza BioScience Feasibility Study Prepared by: • MedImmune • Mount St. Mary’s University • Plamondon Companies • CitiMortgage
  • 3. WHY A HOTEL CONFERENCE CENTER? No full‐service hotel in Frederick and very limited conference,  meetings, event facilities Identified by business community as critical need for attracting,  retaining and expanding employment in Frederick  Opportunity for induced demand for meetings, business and  family events, conferences, and overnight stays  Job creation and tax revenue generator Strengthens Frederick’s tourism by increasing likelihood of   overnight/multi‐day visits Increases in tourism, business use, conference use will in turn  strengthen the entire Frederick Hotel Industry
  • 4. WHY DOWNTOWN FREDERICK?Downtown is centrally located within county and within residential and major employment baseNo Hotel and very limited Bed and Breakfast overnight lodging inDowntown Frederick –– Strong DemandDowntown has a high amenity value for guests – restaurants/retailStrengthens Downtown Frederick TourismHotel Conference Center will be a major Downtown anchor and retail/pedestrian generator – fueling stronger retail salesContributes to the goal for an “18‐hour Downtown” environmentTransit and pedestrian orientedCatalyst for Area Wide Revitalization – builds on public investment in downtown
  • 5. FEASIBILITY STUDY The Feasibility Study by Pinnacle Advisory Group and OPX evaluated the following (assumes 12/31/14 opening):Area Analysis Projected Hotel PerformanceNational Hotel and Meetings  Financial ProjectionsOverview Development CostsLodging Market Analysis Site Analysis and Building LayoutsEvaluation of Potential Demand Economic ImpactHotel Facility Recommendations Financial Feasibility of Market Supply and Demand  DevelopmentProjection Assumptions and Limited  Conditions
  • 6. Key FindingsStrong Market for Full‐Service Hotel/Conference Center Capture of unmet demand with core market demand growth will allow for 72%  occupancy once stabilized.Cash flow projections show a strong positive Net Operating Income once stabilized at 18.9% of revenueMarket is willing to pay more ($30‐$50) for an upscale, full‐service hotelDowntown has excellent location, amenities, and sites with visibility and size to accommodate such a facility.Positive Economic Impact will be substantial. Direct impact – approx. $30 million annually once stabilized Indirect impact (multiplier effect) – approx. $60 million annuallyCost to Construct will be $225,000 to $250,000 per roomPrivate‐Public Partnership is the preferred development strategy
  • 7. Impact of Proposed Hotel on Lodging MarketProposed hotel will introduce a vastly different product (both rooms and meeting space) than what exists today Lodging market will absorb new supply and stabilize at 71% by 2016 (3rd year after the opening of proposed hotel)Market will absorb new supply due to core demand growth and induced demand from proposed hotelProposed hotel will bring new overflow demand to existing hotels
  • 8. Facility Recommendations200 Room Hotel – Branded as Marriott, Hilton, Westin, or Hyatt14,000 square feet of meeting space including 5,000 – 6,000 SF ballroom accommodating 500‐600 people 4,000 – 5,000 SF Breakout Meeting Rooms 4,000 SF Pre‐Function Space (lobbies, hallways, etc.0250 parking spaces minimum – adjacent to hotel for hotel guests.  (Larger events will pull on entire downtown parking system)Restaurant and lounge (with frontage on Carroll Creek Park or Street Side)Guest Amenities ‐ Indoor pool, Exercise room, Business CenterGreen building design/construction – industry is trending that direction and will minimize operating costs by increasing energy, utility efficiency
  • 9. Economic ImpactTotal Economic Impact Construction  Operational  Costs of Goods  Hotel Payroll  Real Estate Year Costs, Labor,   Revenues and  Total Sold and Taxes and Taxes Taxes and Taxes TaxesPre‐Opening $48,008,000 $48,008,0002014 $17,156,140 $3,140,780 $7,354,640 $645,000 $28,296,5602015 $18,699,290 $3,379,280 $8,027,170 $664,000 $30,769,7402016 $20,195,870 $3,613,540 $8,638,000 $684,000 $33,131,4102017 $20,802,400 $3,723,780 $8,895,906 $704,000 $34,126,0862018 $21,426,190 $3,834,020 $9,163,684 $725,000 $35,148,894Source: Pinnacle Advisory Group
  • 10. Downtown SitesPurpose of analyzing downtown sites was to determine if hotel/conf center could be physically be constructed downtown. Facility sizes ranged from 126,000 SF to 141,000 SF depending on site & building configurationSites are sufficient in terms of size, but each has variety of attributes – No priority set yetThere may be other sites not yet considered
  • 11. Downtown Site Analysis
  • 12. Public/Private Partnership StructureFinancial Requirements ‐ $45 million project cost (excluding land)  Step 1 – Determine Financial Sources/Uses $20 (45%) – Bank Financed Mortgage $25 (55%) – Equity $12‐ $13 (25%) Developer $12 ‐ $13 (25%) Local Match (Private Investors, Foundations, Corporations, City, County,  State (MEDCO, Stadium Authority, Earmarks), Federal, Tax Increment Financing) Step 2 –Select Developer Using RFQ/RFP Process Step 4 – Select site Step 5 – Development Process – permits, financing, raise  capital, mgm’t/franchise, legal documents, etc.

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