Clarion Sandusky Ohio

Sandusky, Ohio
Hotel Feasibility Study
Team Members:
John Bozick
Meghan Carlson
Alex Girasole
Brooke Solomon

Clarion - Sandusky, Ohio 2
Table of Contents
Section 1: Introduction....................................................................................................3
Section 2: Executive Summary ........................................................................................5
Section 3: Market Analysis ..............................................................................................7
Geographic Analysis ........................................................................................................ 7
Economic & Demographic Review................................................................................... 8
Workforce Characteristics............................................................................................... 9
The Market....................................................................................................................10
SegmentBreakdown......................................................................................................11
Attractions.....................................................................................................................13
Transportation...............................................................................................................16
Construction Trends......................................................................................................17
Estimated Demand.........................................................................................................18
Estimated Area Occupancy............................................................................................19
Current Lodging Supply in Sandusky............................................................................20
SWOT Analysis .............................................................................................................21
Section 4: Operational Strategies................................................................................... 23
Vision.............................................................................................................................23
Mission...........................................................................................................................23
Values............................................................................................................................23
Goals..............................................................................................................................24
Introduction...................................................................................................................25
Background of Franchise Options..................................................................................26
Selected Franchise .........................................................................................................27
Competitive Set Identification & Analysis .....................................................................28
Room Types & Respective Rates (Year 1: 2018)..............................................................29
Projected Average Yearly Room Rates by Market Segment..........................................30
Projected Occupancy.....................................................................................................30
Projected Number of Rooms Sold per Year by Market Segment ...................................31
Projected Rooms Revenue .............................................................................................32
Section 6: Product and Service Analysis........................................................................ 33
Introduction...................................................................................................................33
Comparative Analysis of Current Lodging Supply Situation.............................................33
Competitive Set Identification and Analysis...................................................................34
Competitive Set..............................................................................................................35
Comparative Analysis of Projected Services to Targeted Market Segments ..................40
Section 7: Operational Plans......................................................................................... 41
Guest Room Layout.........................................................................................................41
Lobby Design and Hotel Services/Amenities...................................................................42
Activity and Fitness Centers............................................................................................43
Dining ............................................................................................................................43
Meeting and Event Facilities...........................................................................................44
Off-Site Services..............................................................................................................44
Section 8: Market Strategies and Sales Plans.............................................................. 45
Packages.........................................................................................................................45

Sales Support.................................................................................................................46
Competitive Nature of The Clarion Hotel......................................................................47
Year 1 Projections .........................................................................................................48
Forecast of Average Rate...............................................................................................49
Forecast of Average Revenue.........................................................................................50
Estimating Occupancy and ADR Penetration................................................................50
Section 9: Management Organization............................................................................ 51
Section 10: Project Construction Costs.......................................................................... 53
Section 11: Project Management Action Plan............................................................. 56
Section 12: Project Management Action Plan Matrix.................................................... 60
Section 13: Sustainability Approaches......................................................................... 61
Section 14: Financial Statements................................................................................... 65
Introduction...................................................................................................................65
Total Revenue.................................................................................................................65
Total Revenue Per Available Room..................................................................................66
Total Departmental Income...........................................................................................67
Net Operating Income.....................................................................................................68
Gross Operating Profit....................................................................................................69
Total Rooms Revenue ....................................................................................................70
Section 15: Conclusion.................................................................................................... 71
Section 16: Appendices.................................................................................................. 72
Section1: Introduction

This document serves to propose the construction of a 125 room, upper midscale,
Clarion Hotel in the city of Sandusky, Ohio. The city of Sandusky, though small, has a
lot to offer and attracts tourists for its’ abundance of outdoor activities including
Cedar Point Amusement Park, Norwalk Raceway Park and Kalahari Water Park.
After much research and consideration if has been decided that building a Clarion
Hotel in Sandusky, Ohio would not only be feasible but also be a fantastic addition to
the Clarion and Choice Hotels brand. The following sections of this document will
include Clarion Hotel’s opertational strategies such as the vision, mission statement,
goals and objectives, franchise comparisons, analysis and comparisons to other
hotels in the area, financial feasability information, operational plans and the
organization of management.
The information presented in this document is based on research and analysis by
Brooke Solomon, Meghan Carlson, Alexander Girasole and Connor Bozick after being
prompted by UD-SHG Hospitality Company, LLC to develop a business proposal for a
new hotel. The information reflects the ideas and views of all group members. For
any further information please contact:
ConfidentialityAgreement
This document is confidential and has been made available to the individual to
whom it is addressed strictly on the understanding that its contents will not be
disclosed or discussed with any third parties except for the individual's own
professional advisers.
Investment in new and small businesses carries high risks as well as the possibility
of high rewards. It is highly speculative and potential investors should be aware that
no established market exists for the trading of shares in private companies.
Prospective investors are advised to verify all material facts and to take advice from
a professional adviser before entering into any commitments. This plan is strictly
for information only and does not constitute a prospectus nor an invitation to
subscribe for shares. Projections in the plan have been compiled by the
promoters for illustrative purposes and do not constitute profit forecasts. The
eventual outcome may be more or less favorable than that portrayed.
Brooke Solomon
108 East Main St.
Newark, DE 19711
516-554-7099
bsolomon@udel.edu
John Bozick
408 Hamlet Way
Newark, DE 19711
301-875-9040
johnb@udel.edu
Meghan Carlson
123 East Main St.
Newark, DE 19711
203-980-4669
mcarlson@udel.edu
Alexander Girasole
19 Amstel Ave.
Newark, DE 19711
516-509-0343
bluehen@udel.edu

Section 2: ExecutiveSummary
After thoroughly analyzing and researching the Sandusky, Ohio market as well as
surrounding area markets, the research shows that the construction of a new, 125 key
Clarion Hotel is not feasible at this time. Due to the high construction cost of a 125 room
Clarion Hotel, the newly constructed property would only begin to generate a positive
NOI after six years of operation. Because of this, it is advisable to purchase and renovate
an existing property, as opposed to constructing an entirely new hotel. The construction
cost for a new Clarion property would be $144,496 per key, for a total of $18,062,062. In
order to renovate and give an existing property a Clarion “makeover,” total cost of the
project cannot exceed $4,000,000 or about $32,000 per key.
Sandusky, Ohio and its surrounding area are home to a wide variety of tourist attractions
such as amusement parks, historic sites and of course, Lake Erie. The activities
associated with these attractions are highly marketable and have the ability to entice
consumers to visit the Sandusky area. Cedar Point Amusement Park and waterpark has
been ranked “Best Amusement Park and best roller coasters in the world” for 16
consecutive years. The Clarion Hotel will be conveniently located less than 5 miles to the
park entrance, an extreme convenience for families and thrill seekers visiting Cedar
Point. In addition, Lake Erie has an abundance of outdoor activities to take part in such as
dinner cruises aboard the Good Time Cruise and a number of watersports easily
accessible from many local shore points. Lake Erie attracts many families as well as
couples looking for a romantic getaway. Summer is the most popular season to visit, but
the spring and autumn months offer beautiful scenery and nature to experience. The
renovated hotel will mainly target leisure travelers, but there will also be a focus on
attracting business travelers in order to increase occupancy. During the peak summer
months, occupancy percentages reaches a high point of 86.6% in 2014, composed mostly
of leisure travelers. However, the occupancy during the off months reaches a low of
22.4%, comprised of mostly business travelers. The average annual occupancy is was
48% in 2014, and we hope to increase this percentage by increasing business travelers
during the off months.
There are a large number of hotels located in the Sandusky area. Most of these locations,
however, are in the economy class, and there are no locations operating under the Clarion
flag. The majority of the economy hotels are independent facilities without a name brand
flag, deterring many customers from visiting due to lack of knowledge of the property
and its offerings. In addition, a lot of the properties are outdated and far behind on the
growing technology race. Clarion Hotel is going to be the newest, most technologically
advanced hotel in the region, giving the new property a huge competitive advantage. Not
only will this location be the only Clarion Hotel, but also it will be one of the few upper-
midscale properties in the area, bringing more upper-midscale amenities with it. A newer

hotel will be able to offer amenities that can satisfy the needs of a new era of travelers,
such as transportation, technology, and systems. This location will also include business
amenities such as meeting spaces, a component that the majority of the properties in the
area do not posses. Furthermore, the area does not contain many restaurants, and offers
even fewer chains. The only chain restaurant located in the area is an Applebee’s, and
many travelers are left with little options and knowledge as to where to consume their
meals. This Clarion Hotel will also contain an on-site restaurant, which is another
component unique to this hotel as well as a large revenue generator.
The Clarion Hotel in Sandusky hopes to gain an optimal competitive advantage amongst
its competitive set, as well as the surrounding area markets. Clarion will strive to be the
upper mid-scale hotel in the region in terms of customer service, amenities, revenue
management, profits, and drawing in the highest occupancy percentages within its first 6
years of opening. The hotel is going to be constructed in an excellent location, being a
short drive away from one of the world’s greatest amusement parks and one of the
beautiful Great Lakes in the United States. The Clarion Hotel hopes to provide the
ultimate guest experience and draw in a multitude of customers from around the country
and world.

Section 3: Market Analysis
Geographic Analysis
Sandusky, Ohio is a part of Erie County located in the far north part of the state between
the major cities of Cleveland and Toledo. Cleveland is 62 miles east of Sandusky and
Toledo is 62 miles west. Columbus is farther away (115 miles) and even farther is
Cincinnati, which is 231 miles from Sandusky. Other surrounding areas include: Essex
County, Ontario; Lorain County; Huron County; and Ottawa County. The city of
Sandusky is only 21.91 square miles, and borders one of the Great Lakes, Lake Erie.
Cedar Point, home of one of the world’s best ranked amusement parks, is located only 3.4
miles off of the mainland in Sandusky. I-90 and I-80 are two of the major interstates that
run through the city and allow for easy access to surrounding areas.
Sandusky is an area that thrives seasonally, as much of the tourism is driven by outdoor
activities such as the amusement and water parks as well as activities on Lake Erie. The
winter months are much quieter and business slows down significantly, but there are
historical buildings in the city that still attract guests such as the historical county jails
that can be toured year round.

Economic & Demographic Review
Population Population Trends
2010: 60,944 Sandusky: -1.4% April 1, 2010- July 1, 2013
2013: 60, 098 Ohio: .3% April 1, 2010- July 1, 2013
Per Capita PersonalIncome
Sandusky (2011): $22,045
Sandusky (2012): $22,449
Sandusky (2013): $22,975
Ohio (2011): $24,750
Ohio (2012): $25,395
Ohio (2013): $25,020
Median Household Income
Sandusky 2009-2013 (in 2013 dollars): $46,140
Ohio 2009-2013 (in 2013 dollars): $48,308
Total Retail Sales
Retail Sales Statistics for 2007
Accommodation & Food $70,868,000
Retail $282,362,000
Retail Sales per Capita $10,943
In 2011, Sandusky was rated as the best city in
America to “live cheaply” by Forbes. Income
per capita from 2011-2013 saw a slight incline
each year, while income per capita for the
state of Ohio raised almost $1,000 from 2011-
2012 and dropped from 2012-2013 by a small
margin. Median household income in Sandusky
was close to the median household income for
the state of Ohio at $2,168 less than the state
average.
It was extremely difficult to find
statistics relating to retail sales in
Ohio for later than 2007. However,
data was found for the United States
total retail sales per capita and in
2007 the national average was
$12,990. This is about $2,000 higher
than the average for the state of Ohio.
It’s important to make note that the
numbers included in the chart were
taken just before the stock market
crashed. The economy is much
stronger in today’s market, which is a
positive consideration.
Figure 1

Workforce Characteristics
In 2013, the total workforce for ages 16 and older was 64.2% of Sandusky’s total
population. Of this total percentage, 59.4% were females aged 16 and older. The state of
Ohio’s total workforce ages 16 and older in 2013 fell slightly behind Sandusky at 63.8%
and of the 63.8%, 59.5% of the workforce ages 16 and older was female.
Unemployment
(As of December 2014)
Sandusky: 5.4%
Cincinnati: 4.4%
Ohio: 4.8%
Workforce Sample for Major Employers in Sandusky
Major manufacturing operations in Erie County: Automotive Component Holdings;
Kyklos Bearing International; International Automotive Components; Freudenberg-NOK
(packaging facility); J H Routh Packing; PPG Industries (chemical coatings); JBT Corp.
Figure 2

(conveyors); CertainTeed Corp. (roofing materials); Bettcher Industries, Inc. (meat
processing equipment); US Tsubaki Inc. (chains); Sandusky Newspapers; Sandusky
International (Centrifugal Castings); Industrial Nut Corp.
Major NON manufacturing operations in Erie County: Cedar Point Amusement Park;
Firelands Regional Medical Center; County of Erie; Ohio Veterans Home; Sandusky City
Schools; Meijer Department Store; Walmart; Great Wolf Lodge; Perkins School System;
Providence care centers
The Market
The economy hotel class dominates Sandusky, and more specifically, makes up 43% of
the hotel market in the city. Since the hotels were built in the 60’ s-90s, not much new
construction in the area has surfaced. This is important because technology has evolved
so drastically that consumers are looking for the “latest and greatest” when traveling, and
much of the Sandusky market does not offer that. The construction of a new brand name
upper midscale hotel can potentially attract a whole new market to the Sandusky area and
expand tourism around Cedar Point and Lake Erie.
What makes Sandusky an attractive location?
In 2011, Forbes ranked Sandusky as the best city in America to live cheaply. Cheap
living in the area can potentially bring locals to the hotel as they are saving money on
housing. This gives travelers the idea that the cheaper it is to live, the more money there
is to spend on leisure activities. In addition, Sandusky has plenty to offer during the
spring, summer, and autumn seasons. Located just on the border of one of America’s
great lakes, Lake Erie, families and people of all ages have the opportunity to enjoy
recreational use of the lake, water sports, and excursions such as Erie Lake boat cruises.
If you’re more of a thrill seeker, hop over to Cedar Point Island, home of Cedar Point
amusement park that’s been ranked “best amusement park in the world” for 16
consecutive years.
Why Sandusky?
The city of Sandusky’s geographical location is in perfect, close proximity to one of
America’s 5 great lakes, historic buildings with interactive tours for all ages, and some of
America’s (and the world’s) greatest amusement parks to date. When travelers visit a
destination for leisure purposes, they expect to stay in a quality hotel with reasonable
prices and plenty of amenities to make their experience a memorable one. Our hotel will
attract a new market because of the brand name, reasonable prices, exceptional quality,
and extra amenities that guests love such as a pool and fitness center and even continental
breakfast. The lack of competition for upper midscale hotels in the area, and even more

so, the lack of renovations and innovations to existing hotels is going to give our hotel a
competitive advantage.
Segment Breakdown
Upon analyzing the Sandusky, Ohio CVB, it’s been concluded that marketing efforts in
the area focus mainly on the leisure transient, rather than business. The bureau
predominantly markets visits to the amusement and water parks, historical and ghost
tours, and outdoor activities on or near Lake Erie. Dining options in the area are limited,
with the choice of Applebee’s and some other local “hole-in-the-wall eateries.”
TargetedSegments
The proposed hotel will first and foremost target families. The majority, if not all of the
activities and attractions in the area are family oriented and offer fun for everyone on the
trip. There are options to seek a high level of thrill on some of the world’s fastest and
tallest roller coasters or to relax and enjoy the natural beauty of Lake Erie. Second to
families, the hotel will target the younger demographic from approximately ages 20-30
years. The younger demographic has the tendency to be more price-conscious and
Sandusky offers plenty of options to enjoy the area while keeping spending to a
reasonable amount.
Distribution Channel
To be able to grab the attention of the target market, e-commerce and intermediaries such
as third party booking websites (i.e. Expedia, Travelocity, Priceline, etc.) are going to be
of key importance. In today’s market, 148.3 million travel bookings are made online.
Since 2007, annual online travel sales have nearly doubled from $93.8 billion to $162.4
billion in 2012. The steady increase in sales over the past 5 years indicates that use of
online travel bookings will continue to rise and our hotel needs to take full advantage of
these distribution channels to show up on travelers’ radar and book reservations.

Lodging Trends
It’s no secret that technology has been rapidly evolving and becoming more efficient over
the years. Nationally and worldwide, the travel and tourism industry is adapting to the
technological advancements and utilizing its benefits to expand throughout markets and
maximize profit. In Sandusky’s market, technology and e-commerce are extremely
important, as technology offers the most effective and efficient way to put Sandusky on
the consumer radar map as a desirable travel destination. In general, Ohio is not a top
ranked state for tourism, but the Internet and new technologies allow for opportunities to
expand and reach out to leisure travels to come stay in Ohio, and more importantly,
Sandusky.
Evolution
According to statistical data from the STR report, the majorities of the hotels in Sandusky
were built over 25 years ago and have become more outdated each year. Any renovations
and affiliations to these hotels happened mostly in the early 2000’s, causing a competitive
disadvantage for Sandusky lodging options. Of all the hotel classes in the area, the upper
midscale and upper upscale have been given the most attention in renovations and being
able to keep up with the evolving consumer desires. Construction trends show that the
number of new hotels built in the past 15 years in Sandusky is almost non- existent. The
city underutilizes its tourism and if marketing is done correctly, building a new upper
midscale class hotel near the tourist attractions has the ability to bring in brand new
markets and larger numbers visitors each year.

Attractions
Not many travelers are familiar with everything that Sandusky has to offer. Attractions
range anywhere from amusement and water parks, to haunted house tours and wine
dinners aboard a Lake Erie dinner cruise. Some of the most popular attractions in the area
include visitation to Cedar Point amusement park, Goodtime Lake Erie Cruise, and the
Ghostly Manor Thrill Center. Other tourist hot spots include Cedar Point Soak City water
park, Kalahari water park, Great Wolf Lodge, Skateworld amusements, Sandusky county
Jail Dungeon tours, and plenty of options to rent boats on Lake Erie.
*All ratings below are courtesy of TripAdvisor*
Goodtime Lake Erie Cruise (4.5 stars)
The Goodtime Lake Erie cruise has a number of options to choose from to explore the
Great Lake. During the day, guests can board the cruise for a fun filled day of island
hopping and exploration across the beautiful waters. They even offer plenty of specialty
cruising options, to accommodate guests of all kinds. On Tuesday nights, customers can
tour the Sandusky Bay and enjoy the peaceful atmosphere of the lake during nighttime.
For all the couples looking for a romantic evening, come aboard for delicious food and
wine on the wine tasting dinner cruise. Not your cup of tea? Goodtime Cruise will let
groups rent the boat out for private events! Lastly, Goodtime loves hosting the “famous
Friday night party cruise” where guests have the opportunity to party their hearts out
aboard a beautiful boat.

CedarPoint Amusement Park (4.5 stars/3,628 reviews)
Cedar Point, just outside of Sandusky is home to some of the tallest, fastest roller coasters
in the entire world. As a matter of fact, readers of Amusement Today, have ranked Cedar
Point as the “Best Amusement Park in the World” for 16 consecutive years. In addition,
Cedar Point is historically the 2nd oldest amusement park in the United States. Guests can
seek out optimal thrill on roller coasters like Top Thrill Dragster and Raptor, or take it
easy on the family friendly rides. Regardless of personal taste in rides, there are options
to ensure happiness of all guests.

Ghostly Manor Thrill Center (4.5 stars/173reviews)
What better place to take your family than a haunted house tour that’s been featured on
the Travel Channel. Ghostly Manor Thrill Center and Haunted House has been rated one
of “the best haunts” in the United States and offers a thrilling, interactive experience
through spooky dungeons and creepy tunnels. Tickets for families are extremely
affordable, which is all the more reason to spend the extra cash you tucked away for the
trip on arcade games for kids of all ages.

Transportation
Cleveland Hopkins International Airport Toledo Express Airport
Sandusky Amtrak Train Station
Sandusky Transit System (STS)
This airport, located approximately 60
miles east from the heart of Sandusky, is
the largest airport in the state of Ohio.
Driving distance from CHIA to Sandusky
is roughly an hour to an hour and a half.
There is an off-site rental car facility just
off the airport grounds. In 2014, CHIA
accommodated 7.6 million passengers
and every day the airport sees hundreds
of departures and arrivals.
Toledo Express Airport is located
approximately 60 miles west of
Sandusky and significantly smaller
than Cleveland International with
only 2 runways. The airport is
domestic only and uses American
Airlines & American Eagle. If
guests are trying to avoid road
traffic, Toledo is the better choice
but there are far more flight options
at Cleveland International Airport.
The Amtrak Station is located at 1200 North Depot Street, Sandusky and serves
passengers going to Cleveland for just $10-$15 one way. The Cleveland Amtrak
Station is located just 15 miles from the airport, a huge convenience for passengers
traveling from Sandusky back to the airport.
STS is conveniently located right next to the Sandusky Amtrak Station. This form of
transportation is an on demand, curb-to-curb, advance reservation ride transportation
system. The service also extends to most of Perkins Township as well as the City of
Huron. For guests that choose not to rent a car during their stay, STS offers a cheap
alternative to get travelers to and from their desired destinations.

Construction Trends
The majority of hotels in Sandusky were built in the early to mid 1900’s. Even then, the
market wasn’t very diverse. Because only one hotel was built from 2006-2014, all of the
existing hotels are old and in need of renovations and updates to tend to today’s traveler
expectations. It would be a good idea to put our new hotel in the area because it will offer
an updated facility to guests, compared to the older hotels. It will have more amenities
and options to personalize guest stays and attract a lot of marketing attention in the area.
In addition, the majority of the existing hotels fall under the economy class and there are
almost no existing upper mid-scale facilities in the area. The hotels in the upper mid-scale
class are outdated and our hotel will be the new best commodity to touch down in
Sandusky.
Figure 3

Estimated Demand
The estimated demand chart is based off of information from Smith Travel Research
data. From 2009-2014, the average daily room count in Sandusky stayed pretty
constant, ranging from 5433 (2011) rooms- 5,681 (2009) rooms. This number only
varied a small amount due to new construction as well as the closings of a small
number of properties during those 6 years. The occupied room nights generally
increased with each passing year. In 2009, the Sandusky market saw 955,975
occupied room nights and by 2014, there were 979,076 occupied room nights. This
increase is most likely due to a recovering economy from the 2008 stock market
crash. While the occupied nights have increased between 2009 and 2014, the
highest amount was in 2012. Customer demand was highest in 2012 accounting for
the 984,350 rooms and after 2012, the demand leveled out. In addition, the demand
most likely decreased in 2014 due to a higher ADR at about $94 versus $89 in 2012.
Although in 2014, Sandusky didn’t have the highest occupied room nights, it still
saw the highest amount of RevPAR due to a more stable, thriving economy.
Figure 4

Estimated Area Occupancy
The estimated area occupancy was found using data from Smith Travel Research reports.
Sandusky’s main attractions are open and operating during summer months, which is
why the summer season occupancy is drastically higher than winter and spring in figure
1.10. Autumn falls just over 10% behind summer at an occupancy of 59.1% (which is
most likely due to a manageable climate for guests to still enjoy the outdoors and Cedar
Point amusement park). Figure 1.11 breaks the seasonal occupancy down further by
weekday, weekend, and overall. Summer once again has the highest occupancy, and the
highest during the weekend at 89.51% occupancy. Winter weekday and weekend have
consistently low occupancy rates at 30.47% (weekday) and 35.54% (weekend). During
winter seasons, the majority of guests are business travelers because Sandusky is known
for its abundance of manufacturing plants around the area.
Figure 5

Current Lodging Supply in Sandusky
The data for the current lodging supply was gathered from STR reports. The majority of
hotels in Sandusky are economy class, followed by midscale. We want to market the
proposed hotel towards families seeking to stay in a nice lodging facility during vacation.
Upper midscale makes the most sense for this particular market segment, as an upper
midscale hotel would provide plenty of room types to choose from, an abundance of
amenities, and an on-site restaurant for guests to enjoy during their stay. Because there
aren’t many upper midscale-upscale hotels in Sandusky, the new hotel will look much
more attractive to travelers than the older hotels that haven’t been updated in a decade or
longer.
Figure 6

SWOT Analysis
Strengths
The biggest strength of building a new, upper-midscale hotel in Sandusky stems from
customer loyalty to a brand, but also the simple fact that the entire facility and all its
components will be brand new. Today, consumers are seeking the latest and greatest
facility at a decent price, and the lack of new facilities (especially those with a popular
brand name) in Sandusky will attract that many more people to our hotel. Another
strength that will increase visitation to the new hotel is the concentration of tourist
attractions in the area. Cedar Point Amusement Park has been rated the best amusement
park in the world for 16 consecutive years and possesses some of the fastest, tallest roller
coasters in the world. In addition to the amusement park, there are a number of indoor
and outdoor waterparks in the vicinity. One brand name that consumers love, The Great
Wolf Lodge hotel and indoor waterpark, is in Sandusky. Lake Erie is only 3 miles from
the city and people are able to use the lake and explore at any time.
Weaknesses
Although Sandusky and Cedar Point have many strengths, the city is recognized as a
cheap, low-income area. This particular weakness can potentially hurt the hotel’s
business if people cannot overcome the stereotypical perception of what the city has (or
doesn’t have) to offer. Another weakness is that Sandusky is about an hour away from the
nearest international airport (Cleveland). This eliminates part of the convenience factor
for guests to reach their vacation destination after long travels.

Opportunities
The weaknesses also pave a way for opportunity in Sandusky. The hotel market is very
small and lacking new, innovative facilities to stay at. There are enough visitors each year
to be able to reroute them to the new hotel and build a new market segment based off of
attracting them through cleanliness, new technologies, and a more upscale environment
than the competition. The Clarion Hotel will have the ability and opportunity to attract a
larger leisure market and tailor needs to that particular segment. In addition, the hotel will
be affordable. As of now, the affordable hotels are mainly a part of the economy hotel
class, and those hotels offer much less to the guest and have a reputation for not always
being clean or safe. The Clarion sees this as an opportunity to lure guests in with
affordable prices for staying at a quality facility. The affordable price will not just include
basic amenities, but also an abundance and variety of amenities that the competition does
not offer. For example, Clarion Sandusky will have a swimming pool, free shuttle
service, continental breakfast, and an on-site restaurant. Lastly, due to the lack of
renovations and/or new construction of hotel properties in the Sandusky market, Clarion
has the opportunity to jump- start its facility towards a more efficient, sustainable future.
Threats
A major threat to the hotel market in Sandusky is the seasonal aspect of business.
While the summer months offer high occupancy, the spring and winter offer very
low occupancy and business on whole. Partner the seasonal market with a very low
local economy; it can lead to a major issue for businesses all around the area. One
other threat includes the luxury, themed resorts on the Cedar Point properties.
These resorts lure in many families as they offer an abundance of amenities, themes
for family fun, and located just steps away from the park entrances.

Section4: Operational Strategies
Vision
The vision for the Clarion Hotel Sandusky is to be the market leader in the highest
occupancy and revenue per available room out of our competitors, while delivering
exceptional service in the top grade facility. Business in the summer months is sure
to be the most profitable time of year, and with proper revenue management, the
Clarion can withstand the relatively weak winter and spring months. The hotels
main focus will be targeting families traveling to the amusement park Cedar Point.
Choice Hotels has a strong brand that projects quality with affordability.
Mission
Our brand motto “get together” provoked our mission statement; which is to
provide a friendly, comfortable environment for our guests to get away and enjoy
time with their friends, families and loved ones. The Clarion plans to follow our this
mission by keeping the facilities clean at all times, and providing a care-free,
personalized stay for all our guests.
Values
“You are what you repeatedly do. So excellence, by that measure, is a habit, not an
act.” –Aristotle
At Clarion Sandusky we will hold the highest standard of business ethics and
personal respect. Regardless of dealings with a guests or vendors, we will treat
every person that contacts Clarion Sandusky with the dignity and respect they
deserve. We will keep stockholders happy, and take into account any of their goals
and objectives. Our staff will be trained to the standards of Choice Hotels, while
raising the standard for the best experience possible for guests at any Choice Hotel.
Another value the Clarion will pride itself on is the extreme measures of customer
service. Customer loyalty will be extremely high due to the measures the Clarion
will take to ensure that their stay is flawless.

Goals
Goal # 1: Meet and exceedconsumer expectations.
Objectives: Be ranked as the number 1 hotel (out of 34) in Sandusky on TripAdvisor in
the area within the first 2 years of opening.
Strategies:
 Ask guests to write reviews (on multiple occasions such leaving comment cards in
the rooms and reminding them at check out) and give rewards to those who
consistently review the property.
 Wow the guest by providing amenities that other properties in the area lack such
as rentable towels and sundries for a day out in Sandusky.
 Train all employees to have a “whatever it takes” attitude and go to great lengths
to satisfy the guest. This also includes knowing how to properly handle a
dissatisfied guest.
 Send out post-check out surveys to ensure that guests have been satisfied with
their stay at our property, and take any suggestions to make the operation run
more smoothly and sufficiently.
 Reply to all negative, and as many positive Trip Advisor ratings as possible to
ensure the guest that the Clarion is listening to what they have to say.
Goal # 2: Retain employees through a favorable work environment.
Objectives: Maintain a high level of employee satisfaction, eliciting a low employee
turnover rate of no more than 20% per fiscal year (specifically voluntary and
dysfunctional turnovers)
Strategies:
 Interview candidates carefully before employment to ensure they have proper
skills, are interested in long term growth within the company and they will fit in
with the environment.
 Offer flexible work schedules, bonuses and benefits to employees.
 Recognize and reward employees when they have consistently worked hard and
when they do good things.
 Educate employees of harassment policies and ensure that all employees are being
treated well, not only by management but by other employees.
Goal # 3: Make a profit.
Objectives: Generate a full return on investment and start generating additional revenue
within the first three years of opening. This will be achieved by operating at a minimum
of 70% occupancy during the summer months and 40% during the off-season with 1.5%
growth per year.

Strategies:
 Upon opening run daily advertisements on Television, the Internet and social
media to spread awareness of the opening.
 Offer deals such as free breakfast and market item to those who book early,
creating urgency in the guest to make reservations.
 Offer incentives such as points to guests who are returning to the property to
increase customer loyalty.
 Offer special discounts and rates to attract a different market such as the AARP
discount and Government and Military rates to attract a larger market.
Section5: Franchise Comparison
Introduction
Sandusky is a small city in Northern Ohio with a great deal of charm and character that
has the potential to draw in a higher amount of tourist activity with the construction of a
new hotel. From natural attractions such as the picturesque Lake Erie, to man-made
marvels such as Kalahari resort, home of America's largest indoor water park, Sandusky
has a large variety of features to draw in tourists from all over the country. After
conducting extensive research on the area, it is clear that the construction of an upper
midscale hotel will prove to be the most profitable. Sandusky receives the majority of its
tourism during the summer months, during which the occupancy percentage of the hotels
in the area reaches around 83%. The majority of these travelers are leisure travelers who
are visiting Sandusky with their families. These guests have a strong desire to get out of
the hotel and see what the city of Sandusky has to offer. Throughout the remainder of the
year, occupancy percentages for Sandusky hotels fall into the mid 20s. The majorities of
travelers are visiting Sandusky on business and are interested in the corporate and factory
plants located in the area. These two critical pieces of traveler data are what we used to
begin our research on what franchise tag would best suit a new hotel. It was important to
select a franchise that can accommodate the summertime leisure travelers, while also
attracting a business crowd during the slow periods throughout the rest of the year.
Based on amenities, cost of construction, and benefits of flying the selected flag, the best
two franchise options were determined to be Wyndham Garden and Clarion.
The major benefit for choosing to operate an upper midscale hotel under a
franchise flag is the characteristics of the typical person who travels to Sandusky. Those
who travel to Sandusky tend to be more psychocentric, meaning they enjoy things they

are familiar with, such as chains. Travelers to Sandusky want to stay in hotels they have
previously stayed in and they want to partake in activities that they have some experience
with, such as relaxing by a lake or visiting a water park. The two franchises selected,
Wyndham Garden and Clarion, have proven to be able to accommodate both leisure and
business travelers.
Background of Franchise Options
WYNDHAM GARDEN HOTEL
Wyndham Garden is a franchise that is owned by the Wyndham Hotel Group, the
largest hotel company in the world. With approximately 7,650 hotels and over 661,000
rooms, Wyndham hotels are recognizable throughout the country, so much so that is has
been called the McDonald’s of the hospitality industry. With the desire to reach the
upper-midscale market, the Wyndham hotel group developed Wyndham garden in 2008.
Wyndham Worldwide hotels were typically known for their business accommodations,
such as conference rooms and meeting centers. The Wyndham Garden brand was
designed to contain more leisurely accommodations, such as pool areas, restaurants, and
more scenic views, while still containing amenities to accommodate the typical business
traveler. These added leisure amenities makes the Wyndham Garden brand an ideal
franchise for a new hotel in Sandusky, OH.
CLARION HOTEL
Clarion hotel is a hotel franchise owned by Choice Hotels. In 1982, when Choice
Hotels was known as Quality Inns, the Quality Royale was created in order to compete in
the upper-midscale market. In 1987, Quality Royale became Clarion Hotel, and that
name has stuck to present day. Clarion Hotel is known for it wide range of amenities.
From pools, restaurants, and entertainment centers, to lounges, banquet rooms, and
conference centers, Clarion Hotel can provide for a wide variety of guest needs. Clarion
hotel has also proven to be successful in multiple tracts such as city centers, airports, and
resorts. Clarion Hotel has been an established franchise dating back to 1987, making it
one of the more recognizable franchises un Choice Hotels. All of these reasons make the
Clarion Hotel franchise an ideal candidate for the chain used for this new hotel.

Selected Franchise
After careful, diligent research, it is clear that Clarion Hotel is the ideal choice for
Sandusky, OH. Both hotels have strong brand recognition and offer amenities to provide
for family leisure travel as well as the occasion business travel. The key factors that set
these two franchises apart are the initial investment cost and the cost per room. Although
both hotels are associated with similar costs, the initial investment for a Clarion Hotel is
slightly cheaper than Wyndham Garden Hotel. Clarion Hotel's operation cost and cost
per room is also cheaper. Although Wyndham Garden Hotel does provide more business
amenities, as well as a slightly more recognizable brand, the costs associated with both
franchises makes Clarion the more viable option. Any existing hotel or hotel under
construction in the Sandusky area is forced to generate the majority of its revenue during
the summer months of May-August. During this time, all upper-midscale hotels in the
Sandusky area are able to charge the very high rate of around $300 per night. The
average daily rate for a Wyndham Garden and a Clarion Hotel during this time would be
very similar, so each hotel would generate a similar revenue based on sale of rooms. The
key factor for a hotel in this area is the ability survive during the slow, eight-month
period following the summer months, in which the occupancy percentage drops to
approximately 30%. In a time period in which every dollar counts, a Wyndham Garden
Hotel requires slightly more revenue to stay afloat, and our research shows that it would
be more difficult for a hotel like this to survive a lengthy low period. However, our
research shows that Clarion will be able to generate sufficient revenue during the summer
months to stay afloat during the lengthy down period, while still generating a significant
annual net-profit. It terms of off moth business travel, Wyndham Garden offers a higher
amount of business related amenities compared to Clarion Hotel. However, those
amenities are geared for business travelers that prefer to conduct a large portion of their
business within the hotel, while Clarion Hotel's business amenities accommodate those
who prefer to conduct their business outside of their hotel, a characteristic that most
business travelers to the Sandusky area share. Based on initial investment costs, cost per
room, operation costs, and travel reports, Clarion hotel seems to be the best fit for a hotel
project in Sandusky, OH.

Franchise Options
Figure7
Costs/ Service Wyndham
Garden
Annualized Clarion Annualized
Application/
Initial Fee
$37,000 $37,000 $40,000 $40,000
Royalties
System Fees
$112,976
$56,488
$112,976
$56,488
$96,030
$73,435
$96,030
$73,435
Training NO YES
Training Fees N/A $1,299 (HOST) $1,299
Cost per room $95,000 $95,000 $90,000 $90,000
Total Initial
Investment
Cost
$11,078,970-
$17,384,170
$11,078,970-
$17,384,170
$10,515,549-
$14,573,099
$10,515,549-
$14,573,099
*Application fee is based off a 125 room hotel
Wyndham: 5% royalties
Clarion: 4.25% royalties
Competitive Set Identification & Analysis
 Application/Initial Fees, Training & Training Fees, and Total Initial
Investment Cost (estimated) are found directly in the Franchise Disclosure
Document.
 Royalties for the Wyndham Garden Hotel are calculated by multiplying the
hotel’s preceding month’s Gross Room Revenue by 5%.
 Royalties for the Clarion are calculated by multiplying the hotel’s preceding
month’s Gross Room Revenue by 4.25%.
 System Fees for Wyndham are calculated by multiplying the preceding
month’s gross room revenue by 2.5%.
 System Fees for Clarion, which include ongoing development & maintenance,
upgrading of management and reservations systems, etc. are calculated by
multiplying the preceding month’s gross room revenue by 3.25%.
Conclusionfrom Figure #

Upon analyzing and comparing the 2 franchise options, Clarion Hotel and the Wyndham
Garden, our group carefully decided to choose Clarion over Wyndham. Although
Clarion’s application fee is $3,000 greater than Wyndham’s, the total estimated initial
investment is about 1 million dollars less for Clarion than for Wyndham. All of this
information is based off of a 125 room hotel. The Clarion in Sandusky will have 125
rooms. In addition, the cost per room is $5,000 less for Clarion. Looking at the greater
picture, the hotel will save another $625,000 based off of a $5,000 savings for 125 rooms.
Room Types & Respective Rates (Year 1: 2018)
Type of Room Number of Rooms Rate
Standard Double Queen +
Pullout Sofa
60 $120
Standard King 40 $115
Standard 2 Double Beds 25 $110.50
*The projected ADR above is based off of the penetration rate from the Competitive
Set projected ADR*
Because the majority of the guests visiting Clarion will be families and leisure travelers,
it’s important that a standard double queen room with a pullout sofa is given priority for
most amount of that specific room type. Most of the time, it’s estimated that families with
children will be staying at Clarion Sandusky and therefore a room that can hold up to 6
guests should be made most available. A standard king room will have the second most
amount of rooms due to anticipation that couples will be staying at Clarion for a romantic
getaway. Lastly, 2 standard double beds will be an option for families that do not want to
spend too much money but still want to travel and stay close to the amusement parks and
Lake Erie. The rates were determined from STR data and projections made through the
financial statements. The lowest rack rate projected was $110.50, given to the standard 2
double bed room type. The price was then raised for a king room to compete with the
competitive set hotel rack rates. Estimating the demand for families choosing the
standard double queen room type, we’ve consciously decided to raise the rate to $120
(which is still comporable to our competitive set rack rates). We will see an increase in
ADR for each room type as the hotel remains open.
Figure 8

Projected Average Yearly Room Rates by Market Segment
*Data used forall charts and graphs in section5 were
foundusing 3 yearweighted averages in the STR Reports*
Segment 2018 2019 2020 2021 2022 2023
Leisure $110.50 $110.50 $110.50 $110.50 $110.50 $110.50
Business $100 $100 $100 $100 $100 $100
Meetings/Events $95.50 $95.50 $95.50 $95.50 $95.50 $95.50
Average $102 $102 $102 $102 $102 $102
This chart reflexes the average room rate for the first six years of operation, without
accounting for inflation. Because of Sandusky, Ohio’s static occupancy percentage, it
is likely that the room rates will remain fairly constant if inflation is not accounted
for. Sandusky has a large volume of leisure travelers, so a hotel in this location is
forced to charge leisure travelers a higher rate in order to make an overall profit. In
order to attract more business travelers, a hotel in this area should charge a lower
rate business travels in order to generate a higher occupancy. There are very few
meeting and events located in the Sandusky area throughout the year, so these
travelers receive the lowest rate.
Projected Occupancy
48.40%
48.41%
48.41%
48.42%
48.42%
48.43%
48.43%
2018 2019 2020 2021 2022 2023
Projected Occupancy Percentage
Figure 9
Figure 10

Trend reports for the Sandusky area show that travel to the area is highly seasonal.
STR data shows that occupancy reaches the high 80s to the low 90s in the summer
months, then drops as low as 22% in the remaining months. The reason for this
dramatic shift is the high volume of tourist attractions available during the summer
and the lack there of during the remainder of the year. These trends lead to a static
average annual occupancy percentage of around 48%. An advisable goal for this
hotel would be to increase the average annual occupancy by increasing occupancy
during the off months. The best way for this hotel to do so would be by offering
more business amenities than those in its competitive set. A Clarion hotel in this
area would have a competitive advantage in doing so because it contains business
amenities such as technology equipped meeting rooms, an amenity that most hotels
in the Sandusky area do not have.
ProjectedNumber of Rooms Soldper Year by MarketSegment
Other than the deconstruction or unavailability of previously offered rooms, the
projected number of rooms sold directly correlates with projected occupancy
percentage. As previously stated, do the seasonal travel trend of the Sandusky area,
the average annual occupancy of hotels in the area remains static at around 48%.
This renders the projected number of rooms sold at a static amount of about 22,090.
If more hotels are constructed in the area,
the average annual occupancy may drop,
but the number of rooms sold should
remain constant as long as there are no new attractions added to the area. An
advisable strategy for a new Clarion hotel in the area to increase number of rooms
sold is to use their business amenities to increase business travel during the off
months
Total Sold Leisure Business Meetings/Events
2018 22087 17670 3313 1104
2019 22094 17675 3314 1105
2020 22094 17675 3314 1105
2021 22093 17674 3314 1105
2022 22093 17674 3314 1105
2023 22093 17674 3314 1105
Figure 11

Projected Rooms Revenue
$2,258,000.00
$2,258,500.00
$2,259,000.00
$2,259,500.00
$2,260,000.00
$2,260,500.00
$2,261,000.00
$2,261,500.00
$2,262,000.00
2018 2019 2020 2021 2022 2023
Projected Rooms Revenue for the first 6 years after Clarion Hotel opens is
based off of STR data and 3 year weighted averages. These numbers
exhibit a $500 increase each year. The room revenue is relatively high, but
not high enough to offset the $18M construction costs. In order to increase
room revenue even more, Clarion Sandusky will offer enticing in-room
amenities such as water bottles, alcoholic beverages placed in the mini
fridge, and pay-per-view TV options to increase guest folios and in turn,
room revenue.
Figure
12

Section6: Productand Service Analysis
Introduction
Due to its close proximity to Cedar Point Amusement Park, Sandusky hotels see a lot
of business from families and leisure groups. Other nearby attractions include
Kalahari Water Park, Sandusky State Theater, and Norwalk Raceway Park. The
Wyndham Garden Hotel Sandusky would be an energetic, family-friendly, upper
midscale hotel to serve the market. With amenities such as free wifi, a pool and hot
tub, a full kitchen with cookwear, 24 hour business and fitness centers, and an on-
site restaurant, our guests will have as much fun in the hotel, as they will at the
nearby attractions.
Comparative Analysis of Current Lodging Supply Situation
The economy hotel class dominates Sandusky, and more specifically, makes up 43%
of the hotel market in the city. Since the hotels were built in the 60’s-90’s, not much
new construction in the area has surfaced. This is important because technology has
evolved so drastically that consumers are looking for the “latest and greatest” when
traveling, and much of the Sandusky market does not offer that. The construction of
a new brand name upper midscale hotel can potentially attract a whole new market
to the Sandusky area and expand tourism around Cedar Point and Lake Erie.
Construction trends show that the number of new hotels built in the past 15 years in
Sandusky is almost non-existent. The city underutilizes its tourism and if marketing
is done correctly, building a new upper midscale class hotel near the tourist
attractions has the ability to bring in brand new markets and larger numbers
visitors each year.
As technology continues to expand, the attractions in the Sandusky area expand with it.
The older properties that occupy the Sandusky area are struggling to adapt to the increase
in demand for technology. One of our property’s goals is to increase the presence of
technology in the hotel, and benefits of constructing a new property will assist us in doing
so. The average customer’s use of technology has also led them to desire more out of
attractions when they travel. Travelers are no longer “ok” with simply going to Lake
Erie, a beach, or an amusement park. Instead, they want to be taken there in style with

beach gear and a fast pass. The construction of a new hotel with the basis of satisfying a
new age of demands will better accommodate those traveling to the Sandusky area, as
well assist in the achievement of the property’s goals.
Competitive Set Identification and Analysis
After analyzing other hotels in the Sandusky area, we have identified a select set of
competitors. These are the hotels that are the most similar to what we are offering
in price, proximity to attractions, amenities, services and other variables. The four
hotels that will be the Clarion Hotel’s biggest competitors are the Comfort Inn
Sandusky, Best & Suites Sandusky. All of these hotels are in the upper midscale
market and pose thus pose as our top competitors, since we will be attracting the
same market. Taking our target market into consideration, the amenities that will be
provided at Clarion will mostly cater to families and leisure travelers. This includes
a pool, a television, a fitness center, and an on-site restaurant with kid-friendly food.
These amenities and characteristics will set apart the Clarion Hotel from its
competition allowing it to rise to the top in occupancy. Western Plus Sandusky Hotel
& Suites, Hampton Inn Sandusky Central, and Fairfield Inn & Suites Sandusky. All of
these hotels are in the upper midscale market and pose thus pose as our top
competitors, since we will be attracting the same market. Taking our target market
into consideration, the amenities that will be provided at Clarion will mostly cater to
families and leisure travelers. This includes a pool, a television, a fitness center, and
an on-site restaurant with kid-friendly food. These amenities and characteristics
will set apart the Clarion Hotel from its competition allowing it to rise to the top in
occupancy.
Figure 13 - CompetitiveSet Numberof Keys
Hotel Number of Rooms
Comfort Inn Sandusky 207
Best Western Plus Sandusky Hotel & Suites 70
Hampton Inn Sandusky Central 50
Fairfield Inn & Suites Sandusky 88
*Clarion Hotel Sandusky 125

Competitive Set
Comfort Inn Hotel
5909 Milan Rd. US 2 & US 250, Sandusky, OH, US,
44870
The Comfort Inn is a 207 room upper
midscale hotel located off US-250.
Similar to the Clarion, they offer an on-
site restaurant. This is the biggest
competition to the Clarion because off
of the amenities are very similar. They
do not offer an on-site fitness center or
business center. They have pool and hot
tub and a game room for the young
travelers. They pride themselves on
their delicious free breakfast and
family-oriented business.

BestWesternPlus Sandusky Hotel & Suites
6011 Milan Road, Sandusky, OH 44870-5869
Hampton Inn Sandusky Central
6100 Milan Road, Sandusky, Ohio, 44870, USA
The Best Western Plus is an affordable
upper midscale hotel, which also attracts
families. There are 70 rooms in this hotel,
which are all equipped with a television,
microwave, refrigerator and safe. They
also offer a complimentary breakfast,
exercise facility, business center, game
room and laundry services. The hotel
does not provide any sort of restaurant on
site. The Best Western is a smoke-free
property and is not pet friendly.
Hampton Inn Sandusky is located
just minutes from the Comfort Inn,
Best Western Plus and Fairfield
Inn. They are all located right off
US-250 on Milan Road. The
Hampton Inn has only 50 rooms.
Some of their amenities include free
breakfast, and breakfast bags to go,
free Internet access in all guest
rooms, a pool and a fitness room.
The Hampton Inn does not have a
restaurant located on site but
promotes local restaurants in the
area instead.

Figure 14 - Competitive Set Room
Rates
1 Kind Bed Room 07/12/16 09/24/16 02/26/16
Comfort Inn Sandusky $119.00 $89.00 $229.00
Best Western Plus Sandusky Hotel & Suites $169.00 $109.00 $109.00
Hampton Inn Sandusky Central $109.00 $149.00 $169.00
Fairfield Inn & Suites Sandusky $179.00 $179.00 $119.00
Fairfield Inn & Suites Sandusky
6220 Milan Road Sandusky, Ohio 44870 USA
The Fairfield Inn and suites has 88 guest rooms.
This hotel attracts both business and leisure
travelers, unlike many of the other hotels the
Clarion Hotel will compete with. They offer free
high speed Internet, complimentary breakfast, a
fitness center, a heated indoor pool and a flat
screen television. All rooms are equipped with
mini fridges and microwaves and HD TV. This
property is also smoke free and does not allow
pets.

Competition Hotel Locations

Figure 15 Competitive Set Amenities
Amenities
Comfort
Inn
Best
Western
Plus
Hampton
Inn
Fairfield
Inn
*Clarion
Hotel
Access to Wifi ✔ ✔ ✔ ✔ ✔
FreeBreakfast ✔ ✔ ✔ ✔ ✔
Television ✔ ✔ ✔ ✔ ✔
Adjustable
HVAC ✔ ✔ ✔ ✔
Laundry
Services
✔ ✔ ✔ ✔ ✔
Safe ✔ ✔ ✔
Pool ✔ ✔ ✔ ✔
Hot Tub ✔ ✔ ✔
BusinessCenter ✔ ✔ ✔ ✔
Fitness Center ✔ ✔ ✔ ✔
Game Room ✔ ✔
On-site
Restaurant ✔ ✔

Comparative Analysis of Projected Services to Targeted Market Segments
It is clear that all of these hotels will serve as serious competition for the Clarion
Hotel. The product, services, and amenities offered are all rather similar and thus
make it impossible to see one hotel that stands out more than the others. Upon
analyzing Sandusky, Ohio CVB, it’s been concluded that marketing efforts in the area
focus mainly on the leisure transient, rather than business. The bureau
predominantly markets visits to the amusement and water parks, historical and
ghost tours, and outdoor activities on or near Lake Erie. Because of this target
market, the amenities the Clarion Hotel will offer will be fun for the whole family.
Dining options in the area are limited, which will make the proposed on-site
restaurant set apart the Clarion Hotel from it’s competition.
The targeted market segment is families and young leisure travelers. The Clarion
Hotel is sure to beat the competition because of its strategic amenities and services
provided. A safe is one thing that the Clarion has that the other hotels do not offer.
Families often travel with a lot of money and valuables. They will be more inclined
to pick a hotel that will protect their goods. The Clarion also offers a pool and hot
tub for families and young leisure travelers to relax in after a fun day out in
Sandusky. This is an activity that all ages can enjoy. The main differentiation
between the Clarion Hotel and the competition is the on-site restaurant. This is
perfect for the target market because there will be options for the whole family to
enjoy and is a low-key, cheap, easy, alternative to going out to a nearby restaurant.

Section 7: OperationalPlans
Guest Room Layout
The Clarion Hotel will consist of 125 rooms varying between 3 different room types: 1
king size, 2 queen size with the option of a pullout sofa, and 2 double beds. There will
not be any suites in the hotel. Room amenities will include:
 Flat screen television
 Air conditioning
 Free Wi-Fi
 Easily accessible power outlets
 Coffee/tea maker
 Compact refrigerator
 Microwave
 Hair dryer
 Iron/ Iron board
 Safe
 Work desk
 Bath amenities
 Bath towels
 Shower assist bar
Standard Double Queen
Room for Clarion Hotel

Lobby Design and Hotel Services/Amenities
Upon entry to the Clarion Hotel, guests will be greeted by a doorman who will offer
assistance with any additional luggage. A beautiful, contemporary lounge will be in the
center of the lobby where guests can relax and grab a cup of 24- hour complementary
coffee and tea. The front desk will offer mail and laundry services, as well as an
abundance of extra hotel room toiletries that guests can have readily available. There will
also be a separate space for complimentary computer use with printing capabilities, and
an onsite ATM. The entire lobby will be equipped with free Wi-Fi to ensure that the
Clarion has created a unique and positive impression during the first few minutes of the
guests’ stay.
Breakfast area in
Standard Clarion
Hotel

Activity and Fitness Centers
Because the Clarion Hotel wants to attract many markets, including families, an outdoor
heated pool will be available for all guests. The outdoor pool area will include 1 heated
swimming pool for all ages, as well as a children’s swimming pool with a maximum
water depth of 2 feet and a whirlpool Jacuzzi. In addition to swimming facilities, the
hotel will offer a fitness center with weightlifting, treadmills, and elliptical machines. All
equipment will be state of the art to give the guest an ultimate fitness experience during
his/ her stay.
Dining
The hotel will have a full service restaurant that serves breakfast, lunch, dinner for up to
50 guests at a time, and room service. In addition, the hotel will have an onsite bar for
guests to enjoy from late afternoon through the evening. There is also going to be a
complimentary 24-hour coffee and tea bar available in the lobby. Free, limited
continental breakfast will be offered 7 days a week from 7am-10am.
Clarion Hotel
Restaurant

Meeting and Event Facilities
Clarion Hotel will offer meeting spaces for events such as wedding rehearsals &
receptions, business conferences and more. Amenities available will include a removable
dance floor, overhead projector and screen, round tables, and comfortable chairs. Our
business meeting room will be fully equipped with a long rectangular table, leather
swivel chairs, an overhead projector and screen, a white board, free Wi-Fi, and built-in
power outlets disbursed evenly on the meeting table.
Off-Site Services
Due to the hotel’s close proximity to large amusement attractions in the area, we will
offer van services at designated times throughout the day to shuttle guests to and from the
desired attraction sites. We will create strong partnerships with Cedar Point Amusement
Parks as well as some of the popular attractions along Lake Erie so that guests have easy
and worry-free access to their destinations off the hotel property.
Meeting
Space in
Clarion
Hotel

Section 8: Market Strategies and Sales Plans
Packages
Family Fun Package
The Clarion Sandusky is just a short drive away from the 16 consecutive year award
winning amusement park, Cedar Point. Clarion will offer families that are staying in
the hotel for 4 or more nights a discounted ticket bundle valid for 3 full days at the
park for 2 adults and up to 3 children. Vacation is expensive, but by slashing tickets
to Cedar Point, everyone wins!
Couples Retreat
Looking to spend quality time with someone special on a picturesque getaway? Look
no farther! The couples’ retreat package is guaranteed to give you and that special
someone an unforgettable escape from reality. This package will include a romantic
dinner for two plus a bottle of wine at our on-site restaurant. It doesn’t stop there as
this deal also includes 2 discounted tickets for a sunset cruise aboard the Good Time
Cruise on Lake Erie where guests will take in breathtaking views of the sun setting.
Complimentary shuttle service is provided to and from the Good Time Cruise.
Wedding Package
Wedding party and guests booking a block of 15 or more rooms will receive a 10%
discount off the rack rate. In addition, complimentary late night snacks and
beverages will be provided to wedding party guests in our meeting space after the
wedding reception. Finally, a buffet style breakfast will be served the following
morning for a great start to the new day.
Thrill seekers Package
For those who love a good adrenaline rush, this package is perfect for you. Start day
1 off on some of the worlds, yes! Worlds! tallest roller coasters with discounted one-
day passes to Cedar Point. Haven’t had quite enough? Day 2 includes tickets to
“Skydive Upper Sandusky” for the experience of a lifetime! Both excursions include
complimentary hotel shuttle service to and from the venues.

“Racewith Rusty” Package
Sandusky Speedway is just minutes away and while the races are exciting to watch
from the stands, wouldn’t it be better to put yourself in the driver’s seat? This
package offers a day with professional racecar driver, Rusty Wallace, who teaches
you and let’s you drive the racecars around the ½ mile track at high speeds and high
thrills. Nothing works up an appetite more than a day of racing cars on a Speedway,
so this package also includes a picnic style lunch in the stadium!
Sales Support
In order to attract new customers and retain current guests, Clarion Sandusky must
hire an expert sales team. The main goals of this sales team will be to maximize
occupancy by gaining and retaining guest and to increase brand awareness as well
as franchise awareness through various methods such as direct sales, telesales, sales
blitzes and enhanced marketing efforts.
The main message behind all of our advertisements (TV advertisements, online
banners and videos, social media platforms, etc.) will be to book rooms through our
central reservation system, choicehotels.com, in order to increase both occupancy
and RevPAR. They will also focus on the unique benefits of the Clarion Brand
encouraging customers to “Get Together” at our hotel.
A unique way we will maintain customer relationship is through the Choice
Privileges Rewards Program. This program gives access to its members to extra
points, gift cards, free nights and more promotions. Members also receive greater
discounts, are eligible for express reservations, check-ins and free extended check-
out times. The rewards program currently has over 18 million members and its
purpose is to drive incremental reservations. Good-relationship customers see high
value in our offers and thus are more likely to spend more with us overtime, are less
costly to maintain and bring business through word-of-mouth marketing.
Our sales team will keep constant communication with members, guests, and
partners through email and direct mail in order to encourage repeat visits, increase
customer loyalty and general trial.
Lastly, Clarion Sandusky, along with the Clarion Brand and Choice Hotels Franchise,
will maintain a large presence on social media platforms such as Facebook, Twitter,
Instagram and Google Plus. This will increase awareness and alert users of ongoing
promotions, incentives and special offers.

Competitive Nature of The Clarion Hotel
The Sandusky area has seen little development of hotels in years. All of the hotels in
the area are extremely old and have not been renovated. There are many upper
midscale hotels in the nearby area, but none of them offer all the same amenities
and services as the Clarion Hotel that will attract our desired market segment,
families and leisure travelers. Because of these reasons, the Clarion Hotel will take a
demand-based approach in pricing. The expected demand for the newly developed,
upper midscale hotel, will ensure that we are getting the highest RevPAR for our
high occupancy percentages.
In addition to using a customer approach for our expected market segment, the
Clarion Sandusky will also offer special rate programs to attract some other non-
conventional travelers to stay at the Clarion, in order to maximize occupancy. Some
of these rates include AAA and AARP Rate Discounts, Senior Rates, discounting rates
and amenities to make travel more cost-effective for seniors, and Government and
Militarty Hotel Rates.
The Clarion expects to have a high occupancy percentage not only due to the novelty
of the hotel, but also due to the fantastic amenities and services offered. Some of
these include an in-room safe to protect any money and valuables families may
bring with them during their vacation adventures, a pool and hot tub for families
and young leisure travelers to relax in after a fun day out in Sandusky, and an on-
site restaurant for a low-key, cheap, easy, alternative to going out to a nearby
restaurant. These amenities are sure to attract the target market to stay at the
Clarion instead of the other competing hotels.
The marketing of the hotel will be sure to include pictures of all the great amenities
that the hotel will thrive from, such as the hotel pool, and dining facilities. The
advertisements will feature families laughing and having fun while on vacation, or a
young leisure traveler taking a spontaneous trip to Sandusky for a great adventure.
The marketing department will be sure to target the correct audience in their
development of the television and Internet ads. They will also use social media to
offer sales and promotions as well as increase brand awareness, because young
travelers are mostly using social media platforms and will best be reached in this
method.

Year 1 Projections
In the first year of operation, the hotel is expected to be competitive in the
market, compared to our competitive set. The Clarion can expect to get a
static occupancy of 48%. The market generally demands a low occupancy,
due to the slow off-season months. Since ADR and Occupancy are low,
RevPAR numbers are also generally low. Hotels in this market must
conduct superior revenue management since the profit margins are so
low. Finally, because of traditionally slow Occupancy, the main ways to
raise RevPAR numbers will be to increase ADR.
Figure 16

Forecast of Average Rate
$102.24
$102.26
$102.28
$102.30
$102.32
$102.34
$102.36
2018 2019 2020 2021 2022 2023
Projected Average Yearly Room Rates
Figure 17
These projected average yearly room rates represent the ADR for the upper mid-
scale hotels in the Sandusky market. For an upper mid-scale property, the
numbers are relatively low and because Clarion Sandusky will be a new,
advanced property, ADR can be higher than its market competition. Despite a
steeper price, guests will still be drawn to stay at Clarion versus its competition
because of its exceptional quality and “newness.”

Forecast of Average Revenue
Room’s revenue is fairly static due to the travel patterns of the Sandusky area.
Consumers continue to travel to Sandusky, Ohio in the summer months because of
attractions such as Lake Erie, amusement parks, and historic sites. During the off
months, these attractions are not available and occupancy drops to the low 20 percentage,
comprised of mostly business travelers. This leaves total projected rooms revenue at a
rather steady rate. The reason for the slight increase or decrease in certain years is due to
unique local trends as well as inflation.
Estimating Occupancy and ADR Penetration
Years 2018 2019 2020 2021 2022 2023
Penetration
Rate
95% 100% 105% 105% 105% 105%
Occupancy 41.4% 44.8% 48.1% 48.1% 48.1% 48.1%
ADR 107.65 116.72 126.23 130.01 133.91 137.93
Our penetration rate for 2018 is only 95% because it will be our first year of operation
and we do not anticipate being an immediate market leader. By our second year, 2019,
we want to be equal to our competitive set, and we hope to be the leader of our
competitive set from 2021 onward. Our occupancy is low at first during our first two
$2,258,000.00
$2,258,500.00
$2,259,000.00
$2,259,500.00
$2,260,000.00
$2,260,500.00
$2,261,000.00
$2,261,500.00
$2,262,000.00
2018 2019 2020 2021 2022 2023
Figure 18
Figure 19

years because of our low penetration percent. Once our penetration levels reach a higher
point than those of our competitive, we hope to maintain a static ADR of over 48%.
ADR is affected by the same age variable as our occupancy and penetration rate in the
first two year, but it continues to rise during the following three years because of a 3%
inflation rate.
Section9: Management Organization
General Manager
The GM will be responsible for all of the operations of the hotel on a daily basis. He or
she will present professionalism at all times and assist the financial controller, and
aspects of revenue management at the Clarion Cedar Point Hotel.
Financial and Room Controller
The financial controller will project reports on business metrics and financial standing.
This person needs to be talented with numbers and familiar with USALI. He or she will
also be keeping track of rates and strive to keep room revenue competitive among the
other hotels in the area. . This person must be extremely meticulous in his/her work, and

leadership skills should exceed regular expectations. They must be well organized,
exceptional with excel, and able to manipulate numbers to give the hotel opportunities for
revenue boosts.
Sales Director
This person will be responsible for finding new ways to market the brand and bring in a
variety of new market segments to the hotel. This person will also need to market hotel
rooms, amenities, and hotel features that cause our hotel to stand out above the other
hotels in Sandusky.
Activities/ Event Planner
This person will help guests to plan and manage their events and vacations that extend
beyond the hotel (i.e. Cedar Point Amusement Park visit). Must be knowledgeable on all
aspects of Sandusky as well as all nearby attractions that guests will be interested in
visiting.
Front Desk Manager
This person will oversee the satisfaction of guests before, during, and after their stay.
Must have outstanding communication skills. Must be proficient with computers and the
PMS system used in Clarion hotels. Will be responsible for all reservations, group
bookings, promotions, and room discounts.

Section10: Project ConstructionCosts
Section 1: Investigatory
Travel and Miscellaneous $2,000.00
Appraisals N/A
Environmental Study $3,000.00
Transportation Study $4,000.00
Legal $2,000.00
Market/ Feasibility $30,000.00
Subtotal $41,000.00
Section 2: Land
Land Cost $1,894,936.70
Closing Cost $18,949.36
Brokerage Fees $23,686.70
Legal fees $6,000.00
Survey $7,000.00
Historic Review $1,000.00
Subtotal $1,951,572.76
Section 3: Initial Cost
Travel and Miscellaneous $4,000.00
Soils $12,000.00
Engineering Fees $28,646.63
Architectural Fees $190,977.50
Use Permit $18,000.00
Model/Renderings $2,000.00
Ground Breaking Ceremony $3,000.00
Signage $1,200.00
Subtotal $259,824.13

Section 4: Intangibles
Accounting $10,000.00
Permit Expediter $20,000.00
Franchise Fee $45,000.00
Consulting fee $20,000.00
Liquor License $2,344.00
Title insurance $12,000.00
Construction financing- Points $190,977.50
Permit Loan- Points $267,368.50
Legal $30,000.00
Mobilization $15,000.00
Section 5: Construction Financing Fees
Interest $358,082.81
Taxes $40,000.00
Insurance $50,000.00
Section 6: Project andSupervision Cost
Development Fee $200,000.00
Travel, out of pocket $6,000.00
Payroll $50,000.00
Section 7: Professional Fees- Construction
Architects Fee $334,210.63
Reimbursable $20,000.00
Mechanical & Electrical Eng. Fees $167,105.31
Structural Engineering Fees $95,488.75
Civil Engineering Fees $71,616.56
Landscape Architect Fees $9,000.00

Section 8: Construction Cost
General Contract- Building (x Geo. Adjust of 1.00) $9,548,875.00
Parking $348,000.00
Demolition N/A
Bond $71,616.56
Builder's Risk Insurance $50,000.00
Plan Review $1,000.00
Building Permit $19,097.75
Utility Tap Fees $38,200.00
Fire Marshall Review & Permit $1,500.00
Board of Health R&P $2,000.00
Subtotal $10,080,289.31
Section 9: Land Improvements
Landscaping, Exterior $30,000.00
Landscaping, Interior $45,000.00
Subtotal $75,000.00
Section 10: Professional Fees
Interior Design $71,616.56
Kitchen Consultant $20,000.00
Misc. Out of Pocket $12,000.00
Laundry Design Consultant $2,500.00
Section 11: OtherCosts
Furniture, Fixtures, and Equipment $1,450,000.00
Equipment, Gen. Build. Systems $100,000.00
Equipment, Operating $50,000.00
Supplies $31,250.00
Pre-Opening $75,000.00
Working Capital $300,000.00

Contingency $95,488.75
Interest Reserve $1,432,331.25
Subtotal $3,534,070.00
Project Total: $18,062,066.82
Section 11: Project Management Action Plan
Initial Investigation:
Researching the proposed area, finding the right location, putting together the estimates
for financial investments, figuring out the laws and other legal fees, and ensuring the
projects feasibility (2 Months)
ProjectProposal:
Create and Present the Project Business Plan. The Business Plan will consist of
construction design, property concepts, and projected financial statements. (3 months)
Property Acquisition:
Purchase the desired land that was found in the Initial Investigation. (3 months)
Approval & Permits:
Seek and receive the proper approvals and permits, for construction, from Sandusky and
the State of Ohio. (3 months)
*Necessary for design phase, 1 month during mobilization, and 1 month prior to pre-
opening.

DesignPhase:
Architects and interior designers will be hired to create the blueprints for the property that
fit the business plan concepts and Clarion standards in the FDD. (5 months)
Bidding Phase:
We will seek out offers from local contractors and select the best bid based on price,
timing, resources, and quality of past projects. (1 month)
Mobilization:
The contractor will gather all resources needed for the construction process. (1 month)
Building Construction:
We do not want to rush this portion of the project, in order to preserve long-term quality.
We predict that the construction will be completed in 24 months. (24 months)
FF&E:
Select, purchase, and install all furniture, fixtures, and equipment for the property.
Delivery timing is key to activity completion. (5 months)
Set Up Telecommunications:
Install all phone, Internet, and cable connections for maximum efficiency, and access for
maintenance. (3 months)
Apply for LEED Certification:
Make sure that the building is aligned with requirements for creating a sustainable hotel
(1 month)
Hiring and Training of Employees:
Interview and Hire a General Manager. The General Manager will be responsible for the
hiring of other upper management personnel. Begin extensive training for these positions.
(5 months). Upper management will determine the job description and desirable qualities
of front –line employees. They will interview and conduct background checks on all
possible candidates. (3 months). (8 months total).
Install PMS, POS and Training System:
Purchase a PMS and POS that fits into the Clarion brand. Train the staff members who
may have to operate it, to properly use it (1 month)
Create Bank Accounts:
Set up an account a local, trusted bank near project site (1 month)

Set Up Payroll Systems for Employees:
Decide on Payroll Company, wage system and paycheck dates. W4 forms should be
filled out and all employees should be inputted into the system (1 month)
Purchase Shuttle Vehicles and Obtain CDL:
Purchase vehicles for the guest shuttle service and make sure drivers have a Certified
Driver’s License (CDL). (2 months)
Purchase Supplies for All Departments:
Make sure orders are placed for all necessary supplies for the hotel to operate properly.
Make sure every department is fully stocked (2 months)
Obtain Insurance Policies:
Choose an insurance plan that suits our needs. Make sure we are covered in case anything
should happen to guests, employees, equipment, etc. (1 month)
Selectand Order Uniforms:
Determine the type of uniforms we want and compile the sizes of hired employees so we
can order them the correct size (1 month)
Advertisements/Marketing:
Start creating anticipation of the property in the local area. Promote information about
amenities, service, and other “selling points”. Make sure there is a steady following and
mentioning of the property on Social Media. (6 months).
Create Website:
Design a website specific to our hotel that can be hyperlinked to the Choice Brand
website. Use the website as a destination of information, for consumers. Feature on the
website promotions, discounts, upcoming events, etc. We need to use the website as a
reinforcement of other advertisements we have put out. (2 months)
Write Policies for EmergencyProcedures:
Outline written procedures for various emergencies like fires, guest illness, etc. For other
emergencies that may not fall into one of the other categories, outline a code of conduct
for all employees to follow in a state of emergency. (1 month)
Sales Blitz:
Travel to local businesses to entice them to promote our new hotel. Focus should be on
Cedar Point. People who go to Cedar point will be the largest segment to stay at our
facility. (1 month)
Open Accounts with Vendors ForServices:

Form relationships with third party vendors in order to set up a “tab” (3 months)
Pre-Opening:
Make sure all preparations for the grand opening party are completed and check that the
hotel is completely stocked and the staff is fully trained. (1 month).
Grand Opening:
Plan and conduct the Grand Opening celebration. Use advertising and promotions to
entice potential guests to want to stay here. The “Anticipation” of the property opening
should be climaxing just around the time of opening. Open the Clarion Cedar Point to the
public. (3 months)

Section12: Project Management Action PlanMatrix
Section 12: Project Management Action Plan Matrix
Figure 20

Section 13: SustainabilityApproaches
CREE LEDLighting
LED lights reduce costs not only by longevity but
also efficiency. LED lights use 10-15% less power
and lasts almost 25 times longer than traditional
bulbs. We will take advantage of the financial
benefits by using them all over the hotel. If we
utilize CREE LED lighting, we will see, during
normal operation settings, throughout the year,
almost $54,000 in energy savings. Also with these
savings we will see the bulbs start paying fort
themselves in about 9 months time.
This dimmable LED lamp (800 Lumens, 2700K Soft
White, 120 Volt, 60 Watt Equal) is perfect for the
hotel rooms. The cost is $9.97 and the Clarion
would install 4 in each bedroom and 2 in the bathrooms. This would make the cost
of these lamps $7477.50. This sounds like a lot of money, however compared to the
usual 60 watt lamp, these bulbs would save 330876 kWh per year, $36,396.36 in
energy cost savings per year, 2.5 months for payback investment and $104,156.25
in savings over the life of the lamp. (See appendix for calculations.)
Using Energy Efficient Brands onAppliances and fixtures
All lamps, laundry machines, kitchen appliances, etc. will use the lowest efficiency.
Sink aerators and low flow toilet will be in all restrooms, lowering the water budget.
If these highly sustainable appliances are erected
when the building is first built, they will last longer
and run more efficiently than having to renovate
later on. These efficient appliances and fixtures
could save countless energy, water, and money
every day that they are operated.

These items tend to be costly, however the payoff in
energy savings and heat, water, electricity savings is very
beneficial. Sink aerators cost only $9 per unit. If there is
one sink in each room that makes the cost $1125. The low
flow toilets will be installed in each room as well. Each
toilet reduces and recycles waste into compost and flushes
with as little as one pint of water. The cost of there toilets
is $2,202.45 each, making the total cost $275,625. The
dishwasher for the bistro is the Champion Industries,
Energy Star Quality, high temperature door-type with
built-in booster. This machine costs $9175. In the laundry
room, we will have Whirlpool energy efficient gas washer
and dryer. These machines are CEE Tier II and Energy Star
qualified. They are $2,819 per piece and the Clarion will
have 3 units making the total cost $8,457.
Efficient HVAC Systems
Most high-level LEED certified projects want
at least 35% improved energy efficiency. In
order to achieve this we will have LEED
specialists install a heating system that is both
energy efficient and improves indoor air
quality.
The Clarion Sandusky will install a Goodman
14 SEER Horizontal Air Conditioner Package
Unit. The unit features energy-efficient
cooling and heating reducing the need for two
separate systems. The system costs $2059.64,
has a capacity of 4 tons and a Cooling BTU of
46,000. Compared to a 10 SEER system, the
high efficiency unit will save $97 in annual energy costs and 864 kWH annually.

Electric Shuttles vs. Gas Shuttles (with electric charging station on site)
Almost all hotels offer a shuttle service. Whether it is strictly for taking guests to the
airport or to restaurants, it consumes a lot of gas. The Clarion Shuttle will consume
no gas and instead will run on electricity. The hotel expects to drive most of its
guests to Cedar Point and other nearby attractions. The 12 miles there and back,
driven countless times will undoubtedly be more sustainable when traveled in an
electric shuttle. Electric buses are estimated to cut emissions by as much as 75
percent when compared to conventional diesel buses. The electric buses are
expected to have lower maintenance costs due to reduced stress and maintenance
on mechanical components such as brake linings, which may extend brake life by 50
– 100 percent. The electric buses also
offer on average, a 37 percent
improvement in fuel economy over
standard diesel buses
The Clarion will offer a 15 passenger
ADA wheelchair accessible electric
shuttle. The shuttle can drive up to 25
MPH and 60 miles full capacity. It has
steel framework and aluminum doors, a
feature that many electric shuttles do not
have. A regular 15-passenger gas-run
shuttle bus would cost approximately
$10,600, the electric shuttle will cost
$29,995.
LEED certification 1st year, LEED Silver by 5th year
The Clarion Sandusky will surpass other hotels in the area by being LEED Certified
within the first year and LEED Silver Certified by the 5th year. This will not only be
extremely helpful to the environment but will also drive sales and marketing
techniques for our property. When the hotel is first built, we will install everything
in our power to make the property LEED Certified so that within the first year we
will be certified. This includes water efficiency, materials and resources, and
innovations in operations. We will then, once we begin making profit, run the
property efficiently and do whatever else it takes to move up into the LEED Silver
ranking (40 points to 50 points).

Pella windows and doors
Pella is a company that is one of the world’s leading manufacturers of premium-
quality windows, entry door systems. Pella doors and windows help homes and
buildings use less energy, saving money on monthly heating and cooling bills and
reducing their carbon footprint. These will not only save energy by keeping the
hotel insulated but will also lower the need for HVAC.
Clarion Sandusky will have windows from the
Pella 350 series, the most energy-efficient vinyl
winows and doors. These fixtures are Energy
Star Rated. The triple pane windows are
between 54% and 83% more efficient than
single pane windows and the doors provide
resistance to air and water infiltration, wind
and outside noise, while increasing energy
efficiency, security and ease of operation. A
Pella 350 Single-Hung window costs
approximately $210 per window (including
installation). Assuming the each room will have
1 window this makes the total cost $26,250. The
doors cost approximately $1079 with
installation however the hotel will only have 10 of these doors making the cost
$10,790.

Section14: FinancialStatements
Introduction
The following analyses are a 6 -year projection for the financials of Clarion Sandusky
once it opens in 2017. The projections show that the hotel will make a gross operating
profit beginning in year 3 but will not realize a Net Operating Income in within the 6
years that projections are given. We’ve concluded that the hotel will not be able to make
a net operating income in the time span of the first 6 years in operations due to the high
cost of construction to build the new property. Occupancy percentages are not high
enough during the off seasons for the hotel to sustain a positive income within its first 6
years.
Total Revenue
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Total Revenue
Figure 21

To calculate total revenue, add up the room revenue, revenue from operating
departments, revenue from rentals, and revenue from other incomes. In year one, Clarion
in Sandusky is projected to earn total revenue of $3,169,319. In the years following, the
hotel will continue to see a small increase in earnings. By year 6, the total revenue will be
about $4,503,422. It’s a good sign that total revenue is increasing with each passing year.
Part of this revenue will come from the hotel’s on-site restaurant and other departments
such as telecommunications, premium Internet, and guest services that are not
complimentary. However, looking at the larger picture, this revenue may not be enough
to keep the hotel afloat since the cost of construction is over $18 Million and Clarion is in
a market that generates the majority of its revenue during the 3 summer months.
Total Revenue Per Available Room
To find total revenue per available room, divide total rooms revenue by the total number
of rooms sold. In the first year, one standard room generated just over $25,000 in
revenue. In year 2, we see a $5,000 increase in revenue but years 3-6 see a much smaller
increase. The positive aspect is that by year 6, each room is generating over $10,000
more than the revenue from year 1. If the economy continues to rise, we should continue
to see a steady increase in rooms revenue in years past 2023
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Total Revenue Per Available Room
Figure 22

Total Departmental Income
To find the total departmental income, subtract total departmental expenses from the total
revenue. Fortunately, in year one the total departmental income is greater than expenses,
but only by about $500,000. However, the gap between expenses and income increases
with each passing year and by year 6 the total departmental income is $1,176,724 higher
than the total departmental expenses. To increase departmental income and decrease
expenses, Clarion will turn a large focus over to energy efficient practices and purchases,
which in the long run will serve as a continuous money saver.
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
Total Departmental Income
Figure 23

Net Operating Income
Net operating income can be found by subtracting total fixed charges from income before
fixed charges. During the first six years of operations, the net operating income is
positive. Not only that, but the NOI jumps from just over $100,000 profit in year one
(2018) to over six times that at about $650,000 by year 2023. While this is good to see for
a new hotel, it’s important to remember that construction costs are still over $18 Million.
The Clarion Sandusky will not see a satisfactory Internal Rate of Return until much
farther into the future due to occupancy and ADR restrictions from the Sandusky area
market. The hotel has to have an ADR complimentary to the occupancy in order to
maintain a high enough influx of guests while being able to generate the highest ADR
and not lose business. The maximum rack rate possible (while keeping a higher
occupancy) is not enough to earn a substantial net operating income. Because of this,
there are other options such as finding a hotel to renovate instead of beginning new
construction. Costs to acquire and renovate an existing property would cost the company
potentially 1/3 to ½ the cost of starting new construction for the proposed Clarion.
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
2018 2019 2020 2021 2022 2023
Net Operating Income
Figure 24

Gross Operating Profit
Total gross operating profit can be found by subtracting the total undistributed expenses
from the total departmental income. In year one, the gross operating profit is at -
$265,189. The negative profit is due to the high cost of constructing a new hotel. It isn’t
until year 3 that the hotel will see a positive profit. After year 3 with a gross profit of
$176,900, the hotel will see a steady increase but not large enough for comfort. In order
for the NOI to become positive, gross operating profit needs to see a significant jump
from the small increase we see in the 6- year projections.
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
2018 2019 2020 2021 2022 2023
Gross Operating Profit
Figure 25

Clarion Sandusky Ohio

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