Exceed Strategic Plan Sample

Strategic Plan 2007 HOTEL A

Property Summary

GRADE

HOTEL A (50) City, St

Market:

Hold Recommendation:

A-

Location:

A

Property:

B+

Long Term Hold

Updated:

Asset Manager: ___________ 2006F Occ / ADR / RevPAR: 2006F NCF $ (%): 2006F EBITDA $ (%): Opened:

2005

Rooms (suites):

----

Floors / Bays:

7 Floors

Meeting Space (per room):

190,000 sf total; Indoor: 69,447 sf, incl. 3 ballrooms (Ballroom 1: 24,644 sf, Ballroom 2: 14,168 sf, Ballroom 3: 3,402 sf); Outdoor: over 100K sf in seven themed function areas.

Acquisition Date:

----

Acquisition Price (per room):

----

Property Rights:

Fee Simple

Acreage (% Improved):

10 acres

Location:

Resort

Debt:

$200 million / 5.08% / Maturity Date: -----Term Five years

Exhibit ‘E’ Provision:

n/a

Manager (Franchisor):

HOTEL Brand Name

Alternate Uses:

N/A

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Strategic Plan 2007 HOTEL A

Executive Summary •

Asset Positioning. Opened in January 2005, the HOTEL A Resort and Spa (the “Resort”) enjoys an ideal setting on 250 picturesque acres in City, ST. The ---- unit, four-star Resort is part of the ---- acre master planned Luxury community, which features upscale residences, shopping and restaurants. The Resort offers premium guestroom accommodations and resort facilities including a ----- hole golf course, a ---- square foot spa, ---- square feet of indoor and outdoor meeting space and ---- swimming pools. As part of a "Sense of Place" theme, the resort pays tribute to the people, landscape, and events that shaped the State's cultural heritage.

•

Market Outlook. The City, St (“City, ST”) economy is booming. Jobs, income, and population are all expanding at a rapid clip. Even the battered manufacturing base is showing signs of a revival, providing an additional source of growth. Other positive developments include a turnaround in information employment and a stronger pace of hiring in office-intensive industries.

•

Capital Project Plan. The property is new and in very good condition. There will be a need to redo the rooms in 2009. The property needs a significant upgrade to the landscaping package and there is an opportunity for us to add time share product to this development. We will also need to address the pool, spa and possibly meeting space over the next few years.

•

Risks. There are several risks associated with this property. The first is that the hotel is somewhat dependent on the PCVO business provided by the Parent Company. With the timeshare units at the property currently sold out, it is likely that the Parent Company will shift this business to another property. The property also has limited outdoor function space and a weaker meeting space to rooms ratio than its primary competition, which limits the property’s upside as there is little room for growth on the group side of the demand equation. The property has risks associated with the potential closure of the pool to fix the leaks in 2009 and has capacity issues with the pool and spa areas that limit the properties growth and guest satisfaction. Recently, the Competition Hotel in downtown City agreed to card check neutrality in order to gain the development rights for the convention hotel, introducing the union potentially to this market.

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•

Ground Lease. None.

•

Recommendation. This is an extraordinary asset in a strong market and should be considered a long term hold. The property has potential to improve the leisure transient segments of its business to drive profit. There are development opportunities that we will explore with time share and spa in 2008 and 2009. We will also take a long term view on analyzing the need for meeting space to make the property less vulnerable to supply additions and downturns in the market.

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Strategic Plan 2007 HOTEL A THREATS

SWOT Analysis STRENGTHS • ---- acres of fee simple real estate in the heart of City, St, a premier resort destination for group and leisure travelers • Age (2 years) of resort – no functional obsolescence issues • Excellent meeting space platform • Hotel Brand & Parent Company management • Strong national and international airlift • Despite seasonal climate, year-round recreational opportunities in market, including over ---- golf courses Excellent support amenities (entertainment, restaurant, retail) • PCVO (timeshare) and residential community provides incremental demand for resort (rooms, F&B, golf, spa) • Strong and diverse local economy

• • • • •

Construction of new ---- sf ballroom at Competition Hotel A Opening of ---- room Competition Hotel B Downtown in late---Nearby City with Large Tourist Attraction Potential phasing out of PCVO-related room night demand City, St viewed as a significant opportunity by labor unions.

WEAKNESSES • •

Spa & pool potentially undersized Lodging market seasonality

OPPORTUNITIES • • • • • • • •

Capitalize on what is anticipated to be a strong 2-3 year growth period for the City, St resort market No new major resort supply planned for development in the foreseeable future Market exhibited strong occupancy growth in 2006; ADR growth will be the focus for 2007-2009 Resort still in ramp-up mode, particularly in ADR relative to comp set Timeshare/residential development on-site, with associated room night, F&B and golf demand (pending zoning, feasibility) Management Agreement terminable upon sale starting in 2013 Management Agreement provides for Owner to charge an asset management fee of 0.5% of Total Revenues Large Sporting Event hosted by City in ---

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Strategic Plan 2007 HOTEL A Lodging Market – Competitive Landscape

 

Competitive Supply

Property

Rank

Year Open

HOTEL A

5

---

HOTEL B

3

HOTEL C

1

HOTEL D

Rooms

Meeting Space Total Per (Indoor) Room

---

---

---

---

---

---

---

---

---

---

4

---

---

---

---

HOTEL E

6

---

---

---

---

HOTEL F

2

---

---

---

HOTEL G

7

---

---

---

---

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Better / Worse than Host Hotel Meeting Rooms Space Location Amenities

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





 

 

 

 

---

 

 

 

 

---

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Comments

Great meeting space and strong name recognition Premium luxury product in the market Best meeting space platform and superior pool and spa experience Good reputation, getting old despite new spa Wins on leisure transient and excellent relationship with incentive travel groups Great history, planning major reinvention that would improve its competitiveness significantly

Changes in Supply Meeting Space Per Total Room

Property

Opening Date

HOTEL H

---

---

---

---

Formerly the Hotel H1 Resort, this property has been closed since May of 2005 and is going through major reconstruction and renovation.

HOTEL I

---

---

---

---

$200M development will include 25 luxury condos, a restaurant, 2 bars and a spa, located near HOTEL D.

HOTEL J

---

---

---

---

$70M repositioning will be created around it's historic past of the '50's with an updated modern and minimalist styling. This hotel is located in Downtown City, St and will compete with the Hotel L and the new Hotel M opening in 2009.

HOTEL K

---

---

---

---

We do not believe this hotel would represent a direct competitive threat to the Property due to its location, lack of resort amenities, market orientation, and pricing structure.

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Rooms

Comments

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Strategic Plan 2007 HOTEL A

Guestroom

Lobby

Suite A

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Suite B

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Strategic Plan 2007 HOTEL A

Ballroom1

Ballroom 2

Pavilion

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Boardroom

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Strategic Plan 2007 HOTEL A

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Dining Room

Lounge

Café

Bar

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Strategic Plan 2007 HOTEL A

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Adult Pool

Spa

Golf Club

Pools

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Strategic Plan 2007 HOTEL A Capital Investment Strategy Capital Investment Rooms

Plumbing:

Excellent condition

Life Safety:

Excellent condition

Generator:

Excellent condition

Very good condition 4-fixture baths; thresholds/door sweeps needed under entry and connecting doors to solve noise transmission issue; digital thermostats recently installed; guestroom lighting retrofit an opportunity; suites have a bar that is constructed with a laminate top and low grade cabinet – upgrade during redo

Meeting Space

Very good condition Carpet in pre-function areas and Ballroom 2 showing some wear; Temporary pavilion atop Ballroom 2 is used approx 6 months/yr ($300K in rent); This was NOT constructed to support additional levels - designed only to support the current tent load with occupants

Public Space

Very good condition Potential opportunity to activate and increase outdoor seating/gathering places (fire pits, etc.)

F&B

Very good condition

Mechanical & Structural Systems Roof:

Upper roof has a few blisters that have been repaired. The repairs appear to be in good condition and the roof has a warranty that the property has on record. Signs of roof leaks in Ballroom 2.

Façade:

windows and caulk joints appear to be in good condition

Elevators:

Excellent

HVAC:

Overall the central plant is in great condition and all computer systems are working normally. Property has an opportunity to capture free cooling if they add a plate and frame heat exchanger.

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Strategic Plan 2007 HOTEL A

ROI / Alternate Use Opportunities • The Property has not been fully developed according to current zoning guidelines. It is estimated that an additional --- hotel units could be developed on the site. It is likely that the highest & best use scenario would be to develop residential/timeshare units, which would require re-zoning or special permits. Parent Company Vacation Ownership (PCVO) has valued the empty parcel and a portion of the parking lot on which additional development of PCVO timeshares would be built at about $4M. PCVO would also build a parking garage to replace the lost parking. Any incremental timeshare/residential development would require a separate pool and the relocation of the two existing tennis courts. Timing would be of the essence, as they will be completing the final phase of the construction of the current development later this year. Keeping PCVO focused on this development is important – there is potential that they might be looking. Incremental resort revenue has not been projected in our analysis. • Spa expansion – Based on the anticipated level of demand from the Hotel and the existing PCVO timeshare units, a spa expansion should be considered. Need to ensure that the property is adequately tracking operating data in SpaSoft. • F&B outlet leasing is not currently an opportunity, but may be in the future, particularly with the golf clubhouse restaurant. The Fine Dining Restaurant (specialty restaurant) operating results will need to be monitored. • Potential energy conservation initiatives include: • Lighting retrofit – incandescent lighting throughout the Hotel, particularly in guestrooms (90W bulbs) – opportunity to convert to 22W compact fluorescent bulbs. • Installation of a plate and frame heat exchanger • Laundry facility – potential to install an ozone or water recycling system • Golf teaching facility – currently no competitive clubs have a top-notch teaching school. Would need a top name (e.g. Famous Person), but financial arrangement would be key in determining opportunity, and particularly would need sponsorship for funding. • Resort management believes there is a need for a new ballroom and a new feature outdoor function space. They also believe that the existing outdoor function areas need to be expanded and enhanced to compete in the market.

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We will evaluate these needs depending on our success with attracting our fair share of leisure transient. The need to replace the PCVO customer may ultimately require us to group up more at this hotel, which would require more meeting space.

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Strategic Plan 2007 HOTEL A in the comp set, and having weaker meeting facilities than the other large group houses in the market.

Operations Strategy •

Guest Satisfaction. Trend the property’s GSI score is ---% which is well above brand and convention hotels. They are aiming for a --- goal by focusing on their 5 key drivers. They are primarily concerned with the price value relationship and the guest arrival experience and are putting measures in place, including capital investment, to address these issues.

•

Meeting Planner Satisfaction. The property has improved its meeting planner scores and is well above other convention resort hotels and the brand. The property exceeds every area of measure but is still focused on improving their scores while driving the group rate and catering contribution.

•

Associate Satisfaction. The property’s ASI results were ---% in 2006 versus a brand standard of ---%. The score is up from ---% in 2005 versus a brand standard of ---%.

•

Priority Focus Areas (Profit Impact)

•



Item 1: Improve sales and marketing other cost to $--- PAR.



Item 2: Improve productivity in the restaurants to $---/Hour worked by increasing menu pricing, closing slow restaurants and monitoring hours more aggressively. We should also look for ways to improve volume for the dinner period.

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Item 3: Increase leisure transient room night production to replace PCVO customer and drive rates as the group rate has less upside in 2007 based on the business on the books YTD.

•

Optimal Mix / Group Crossover Targets. The property currently has a business mix of ---% group, ---% transient and ---% PCVO. The optimal goal is to shift the mix to ---% transient and increase group to a ---% mix by eliminating PCVO rooms as they are eliminated by Parent Company. This mix is not likely to occur without additional meeting space but is the optimal mix for this property. Therefore, we will look to slowly replace the PCVO with leisure transient. If that strategy is not achievable because of new supply or other factors, we would look for an expanded meeting space platform. Our current targeted optimal group room nights is ---- for 2008 with a crossover at year end target of ---- room nights for 2007 and ---- for 2009.

RevPar Index Target. The property is 6 of 6 in the RevPar Index for 2006 and 2005 using the trailing 12 months activity in the September report. The hotel is 3 of 6 in occupancy and 6 of 6 in ADR index. However, the property has been number 1 in RevPar growth for each of the last 3 years showing that the property is still ramping up and is gaining on the competition. The hotel is projecting to achieve a ----% RevPAR Index in 2006, up 4 pts from previous year. The hotel is still under its fair share and should be at or above 100% in 2007 by increasing its leisure transient business and filling in need periods with more group business. The property is disadvantaged to several properties with less of their business coming from the higher rated transient business than many

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Strategic Plan 2007 HOTEL A •

PCVO Various Agreements. In 2006, the Resort generated approx. ---K room nights from Parent Company Vacation Ownership (PCVO) activities at an ADR of $----. For 2006, the Hotel budgeted approximately ---K room nights at an ADR of $----. For the purposes of this pro forma, it is assumed that as the relative level of demand for this segment diminishes, it is replaced primarily by leisure transient and group business. The Resort has recently deployed sales resources to focus on future leisure transient opportunities. An employee expense allocation agreement exists between the Resort and the existing PCVO timeshares. PCVO effectively reimburses the Resort monthly for services provided by Resort employees for PCVO. The agreement is renewed annually subject to mutual agreement between the Resort and PCVO. Costs allocated include: 100% of wages & benefits of Direct Employees and 10% of base salary 10% of benefits load for the GM, controller, Chief Engineer and F&B Director. Our analysis assumes that this agreement remains in place.

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Strategic Plan 2007 HOTEL A

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Strategic Plan 2007 HOTEL A

Appendix I Management Team Updated 1/1/07 General Manager:

DOM: F&B Director: DOE:

Effective Date:

November 2003

Amendment Date:

N/A

Initial Term:

----

Renewal Date:

----

Renewal Terms: Renewal Option: Termination Date:

Performance Termination: Escrow % / Type:

Additional IMF:

N/A

Expansion IMF:

N/A

Owner’s Priority:

----% of any Hotel Brand-approved Capital Improvements

Territorial Rights:

-----mile radius for 17 years form the opening date, excluding one full-service Hotel Brand hotel of less than ---- rooms outside of a seven-mile radius of the Hotel.

Notes:

Ground Lease: N/A

Management Agreement Brand Operator Incorporated

----% of annual Gross Operating Revenue ----% of Incentive Income (Operating Income minus Owner’s Minimum Return ($---- million + ----% of any Hotel Brandapproved Capital Improvements)) See Exhibit Q of Second Amendment for IMF Calculation.

Right of First Refusal:

Major Hotel Agreements

Operator:

N/A

Base Fee: Primary IMF:

Manager 1 (555) 555-5555 [email protected] Manager 2 (555) 555-5555 [email protected] Manager3 (555) 555-5555 [email protected] Manager4 (555) 555-5555 [email protected] Manager 5 (555) 555-5555 [email protected]

DOF:

Master Capital:

Mortgage Debt Lender:

Lending Company, L.P.

Closing Date:

----

Loan Amount (Interest Rate):

----

Amortization / Payment Term:

None / 5 years

Balloon Payment (Due Date):

----

Two terms of five years each Owner has option to renew as long as Hotel is compliant with Operating Standards 2013 or beyond (with sale or transfer of the Hotel) – Owner must provide 70-day notice which can be changed or rescinded up to 5 days prior to stated termination date. Owner can terminate (after the first five years) if Owner’s Return exceeds Operating Income for two consecutive years and RevPAR is one of the three highest in the comp set. 4% (increases to 5% in 2011)

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Strategic Plan 2007 HOTEL A

Appendix II – Historical Operating Performance

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Strategic Plan 2007 HOTEL A

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