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31
<br /> SECTION VII
<br />HOSPITALITY
<br />
<br />
<br />
<br />Related Bristol at 3600 South Bristol Street September 2023
<br />Draft Market Study Report
<br />
<br />www.FinanceDTA.com
<br />Vacancy (30.00%) ($15,750) ($5,748,750) (31.40%)
<br />Rev Par $147.00 $36,750 $13,413,750 73.26%
<br />Food Sales 16.00% $23.52 $5,880 $2,146,200 11.72%
<br />Beverage Sales 7.50% $11.03 $2,756 $1,006,031 5.49%
<br />Technology 3.00% $4.41 $1,103 $402,413 2.20%
<br />Minor Departments 10.00% $14.70 $3,675 $1,341,375 7.33%
<br />Total Non-RevPAR Income $53.66 $13,414 $4,896,019 26.74%
<br />Gross Hotel Revenue $200.66 $50,164 $18,309,769 100.00%
<br />Hotel Expenses
<br />Department Expenses ($63.43) ($15,858) ($5,788,033) (31.61%)
<br />Undistributed Operating Expenses ($60.27) ($15,068) ($5,499,638) (30.04%)
<br />Fixed Charges ($6.62) ($1,653.75) ($603,618.75) ($0.03)
<br />Capital Reserves for FF& E ($2.94) ($735.00) ($268,275.00) ($0.01)
<br />Total Expenses and Reserves ($133.26) ($33,314) ($12,159,564) (66.41%)
<br />Net Operating Income $67.40 $16,850 $6,150,204 33.59%
<br />Net Asset Value @ 6.5% 6.50% $94,619,000
<br />We reduced the hotel income by hotel expenses to determine NOI.
<br />As described above, one of the significant variables to evaluate an IPP is the assumed cap rate. Figure 16
<br />depicts a summary of existing cap rates by hotel class. We believe the proposed hotel will be similar to
<br />the Westin South Coast Plaza, which qualifies as an Upper Upscale property. This led us to determine that
<br />a cap rate of 6.5% is appropriate. Therefore,
<br />we concluded that with a NOI of $6,150,000,
<br />the value of the proposed hotel would be
<br />about $95,000,000.
<br />After we established the value of the proposed
<br />hotel, the next step to determine the viability
<br />of a hotel is to identify the costs required to
<br />construct the hotel. Table 14 provides a
<br />summary of costs incurred in constructing a
<br />hotel of that quality. We estimated that
<br />vertical construction costs would be $350 per
<br />square foot for income-generating room space
<br />and $291 for all other space. We also include
<br />a 5% contingency and an allocation for a
<br />building permit in this category.
<br />Indirect costs include engineering and consulting costs, as well as Development Impact Fees (“DIFs”).
<br />Direct development costs include all physical site costs, plus a percentage share of backbone costs and
<br />parking to accommodate 121 spaces. Indirect costs include field and office operations, as well as
<br />corporate general and administrative expenses. Marketing and sales costs are a portion of a project-wide
<br />brand development program for the site. Financing costs include interest, loan fees, and property taxes.
<br />Figure 16: Market Cap Rate by Class
<br />Exhibit 10
<br />
<br />
<br />City Council 22 – 554 9/17/2024
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