A FEASIBILITY/MARKET STUDY FOR

MR. GRAHAM PERVIER

ROCKINGHAM COUNTY PARTNERSHIP FOR ECONOMIC AND

TOURISM DEVELOPMENT

P.O. BOX 205

WENTWORTH, NORTH CAROLINA

OF

POTENTIAL HOTEL DEVELOPMENT

WESTERN ROCKINGHAM COUNTY, NORTH CAROLINA

EFFECTIVE DATE OF ANALYSIS

JUNE 10, 2013

PREPARED BY

DEBORAH L. WINTERS

COLVIN, SUTTON, WINTERS AND ASSOCIATES

222 SOUTH SWING ROAD, SUITE 5

GREENSBORO, NORTH CAROLINA 27409

COLVIN, SUTTON, WINTERS & ASSOCIATES

222-5 Swing Road

Greensboro, North Carolina 27409

Telephone: (336) 852-2004 / Fax: (336) 852-2020

June 14, 2013 Mr. Graham Pervier Rockingham County Partnership for Economic and Tourism Development P.O. Box 205 Wentworth, NC 27375 RE: Market/Feasibility Hotel Study Western Rockingham County, NC Dear Mr. Pervier:

Colvin, Sutton, Winters and Associates was engaged to conduct a

market/feasibility study to evaluate the potential need of a lodging facility in the Western

Rockingham County area of North Carolina. The scope of this study includes:

- General area, traffic and economic base analysis;

- Interviews with local business participants as well as government officials and

compilation of pertinent market data;

- Inspection of the potential areas of development along the U.S. Highway 220

corridor;

- Survey of existing potential competition

The consultant is not responsible for unauthorized use of this report. This report

has been prepared for the exclusive use of the Rockingham County Partnership for

Economic and Tourism Development and is not for utilization by third parties without the

written consent of the consultant. The consultant utilized data from perceived reliable

sources and has made every attempt to verify said information.

In summary, the market research and analysis, as described in the following

report, indicates there appears to be economic and community support at this time to

support a limited service hotel, with some potential need for meeting space.

IDENTIFICATION OF POTENTIAL DEVELOPMENT AREA

Location

As requested, the area of consideration for a potential hotel facility is the western

portion of Rockingham County in North Carolina. Rockingham County is bordered to

the west by Stokes County, to the east by Caswell County, to the south by Guilford

County, and to the north by the State of Virginia. It is conveniently located within 45

miles of population centers in Piedmont North Carolina, such as Greensboro, High Point,

and Winston-Salem. Rockingham County consists of 566 square miles of land area.

Transportation

The Piedmont area of North Carolina has an above average transportation

network. Interstate 85, a major north south route; Interstate 40, a major east-west

highway; and U.S. Highways 29, 70, 220 and 421 all intersect in nearby Greensboro.

Convenient access to these highways, as well as to the major towns and cities throughout

North Carolina and Virginia, is provided by U.S. 220 and 158. The Piedmont Triad

International Airport is located approximately 16 miles south of the

Guilford/Rockingham County border along N.C. Highway 68, which intersects with U.S.

Highway 220 approximately two miles north of the Guilford/Rockingham County line.

U.S. Highway 220 is a major connector, and has been designated as the future I-73

corridor. Planning for Interstate 73 began in the 1990’s, which is a proposed highway

from Sault Saint Marie, Michigan to Myrtle Beach, South Carolina. The N.C.

Department of Transportation adopted the Strategic Highway Corridors Initiative to

identify, protect and maximize the use of highway corridors that play a critical role in

regional mobility, which includes the development of I-73 through N.C. The first two

sections of this route are now open from Asheboro (in Randolph County) to south of

Ellerbe (in Richmond County). I-73 will enter N.C. from Virginia in Rockingham

County, and eventually extend south and connect with Bryan Boulevard and follow the

Urban Loop to U.S. Highway 220 South. The next stage of I-73 construction in N.C. is

currently underway, which includes section of southern Rockingham and northern

Guilford counties, designated as “the N.C. 68/US 200 connector”. This 12.4-mile, $223

million connector will be built in several phases. The first phase was started in 2012,

which includes a $96.2 million project that upgrades U.S. Highway 220 from a two-lane

to a four lane limited access highway. This portion of the project is expected to be

completed in December, 2015. The remaining portions of the connector are scheduled to

begin in 2014.

According to Patty Eason with the N.C. Department of Transportation, the

upgrades to U.S. Highway 220 to Interstate standards for I-73 are not currently funded.

Reprioritization recommendations have been made to include these upgrades, however at

this time the work is not funded and therefore would not begin before 2023. The

Piedmont Triad Rural Planning Organization and Piedmont Triad Council of

Governments completed an Interstate 73/74 Economic Impact Study in 2011. Excerpts

from this report are shown below about the entire route within North Carolina, as well as

a map of the Rockingham County impact.

According to the N.C. Deparment of Transportation traffic count maps, the traffic

counts along U.S. Highway 220 near Highway 135 has increased to 18,000 vehicles in

2011 from 17,000 the prior year, with traffic counts on Highway 135 also increasing to

16,000 vehicles daily in 2011 from 14,000 vehicles in 2010. Based on this information,

along or near the U.S. Highway 220 corridor is the most likely location for hotel/lodging

facilities in the western portion of the county due to the excellent access and visibility.

Worforce

According to the city and county information, major employers in Rockingham

County include Unifi, Wal-Mart Associates, Morehead Hospital, Miller Coors Breweries,

Moses Cone Memorial Hospital, Frontier Spinning Mills, and the Rockingham County

School and County employees. Recent job announcements in the area include the

expansion of Southern Finishing Company, location of Kalo Foods in Stokesdale,

expansion of Global Textile Alliance, and the expansion of Henniges Automotive in

Reidsville.

According to the North Carolina Employment Security Commission, the available

labor force for Rockingham County as of April 2013 was 43,322, with the unemployment

rate being 10.0% compared to the North Carolina state average of 8.5%. Neighboring

Guilford County had a reported labor force of 253,028 with an 8.6% unemployment rate

for this same period. Annual unemployment averages for the past five years are shown

below:

Year Labor Force Unemployment % State Unemployment Avg.

2012 44,038 11.30% 9.50%

2011 44,327 12.20% 10.20%

2010 44,539 13.30% 10.80%2009 43,807 12.50% 10.40%

According to the N.C. Commerce Department, there were 122 jobs announced in

Rockingham County in 2012 with total announced investments of $24.2 million.

According to the Rockingham County Partnership website, additional announcements of

job creation include KDH Defense Systems in Eden announcement of a $48.6 million

U.S. Homeland Security contract.

Growth in Rockingham County has been slow in the past. The Triad area of the

Piedmont has exhibited steady growth in the past, with the recent nationwide economic

slowdown affecting all areas of the Triad. Some growth has been experienced in the recent

past in the western portion of Rockingham County, with recent new development taking

place along N.C. Highway 135 at the U.S. Highway 220 intersection. This has included a

158,000 square foot Super Wal-Mart, a multi-tenant shopping center with a mix of national

and local tenants, as well as outparcels including a gas station, Burger King, McDonald’s,

and Verizon Wireless. Along the west side of U.S. Highway 220 is a Lowes Home

Improvement store with pad sites for retail development. With the upgrades to the future

I-73/Highway 68 corridor and recent opening of the Fed Ex and Honda facilities, stable to

moderate growth is expected in Rockingham County.

Utilities

There are abundant water resources in Rockingham County. The current

reservoirs should provide water needs of the people and industry well into the next

century. Natural Gas in Rockingham County is provided by N.C. Gas Service and

electricity is provided by Duke Power. Public water service has been recently expanded

along the U.S. Highway 220 corridor.

Education

There are 26 schools in the Rockingham County system, including five high

schools. Rockingham County has one community college, Rockingham Community

College, which is located in Wentworth. It offers six-month and one year vocational

programs, two year technical and college transfer programs, and general education

development. Four major universities are located within a 40 mile radius of Rockingham

County and include the University of North Carolina at Greensboro, North Carolina A&T

State University, Wake Forest University and Winston-Salem State University.

Recreation/Tourism

Rockingham County has many recreational opportunities for local residents

including both private and public swimming pools, tennis courts, and a mix of private and

public golf courses. The Rockingham County Partnership for Economic and Tourism

Development has extensive marketing campaigns ongoing, including website

development and printed materials. Points of interest include golf, extensive bicycling

trails of more than 100 miles, civil war sites, lakes (Belews Lake and Lake Reidsville),

and extensive river activities, including the new Mayo River State Park. This park

opened in April, 2010, with an interim facility accessed off of Highway 220 Business,

north of Mayodan. The park is located in the northwestern portion of Rockingham

County, and includes more than 1,900 acres. Various properties were acquired by the

N.C. Division of Parks and Recreation for development of this park, with proposed

development to include various picnicking, hiking, and visitor’s center programs.

Currently there are picnic shelters, hiking trails, and a maintenance facility with

additional amenities planned in the future.

Additional new tourist activity has been related to vineyards and wine tasting.

Autumn Creek Vineyards has grown since the first planting in 2003 from one acre to

more than 100 acres, which includes 17 acres of vines. The facility includes a tasting

room and two cabins, and an event pavilion, seating more than 300 guests.

Other area events expected to draw tourists and visitors includes Martinsville

Speedway, with grandstand seating for 65,000 visitors, hosts two Nascar Sprint Cup

series races with travelers staying within a 60-mile radius. This facility also offers

various other racing events throughout the year, and is located only 17 miles north of the

intersection of U.S. Highway 220 and N.C. Highway 135. The 311 Speedway is a ½ mile

high banked clay track located in Pine Hall, with weekly events. Local festivals in the

western part of the county also includes the Mayodan Homecoming event each fall, the

annual Madison Festival, local and regional car shows and cruises, the Charlie Poole

music festival. The local homecoming festivals draw a number of out of town visitors

and family members according to long time residents as well as chamber and business

affiliates.

DEMOGRAPHIC ANALYSIS

The consultant utilized a demographic detail report prepared by Experian/Applied

Geographic Solutions by STDB Online to present a comprehensive demographic profile

of the area, as well as Census Data. Information was obtained for a one, five, and ten mile

radius of the general area of U.S. Highway 220 and Highway 135. The consultant is of

the opinion that the Experian/Applied Geographic Solutions offers an unbiased economic

breakdown of the area. This analysis is based on Census Reports with projections for

future anticipations. The following chart shows the 2010 Census data for the 1, 5 and 10

mile radius, as well as the 2012 estimates and 2017 projections.

This data indicates there has been little residential growth in the immediate area,

with some growth in the outlying areas. As anticipated, the household growth is expected

to be similar to meet the population demands.

The following information was obtained in regards to the current and projected

income levels for the area.

The following chart is a Business Summary of the Number of Businesses and

Employees within a one, five and 10 mile radius, including a breakdown by type of

business.

In summary, the demographic information obtained indicates a stable area with

trends for both population and income below the national indicators, with some upward

trends apparent in the number of households.

COMPETITION DISCUSSION

The following motels are considered to be the primary competition for any

proposed development in the western Rockingham County area.

Facility Date Opened # of Rooms Room Rate Occupancy

Eden, NC

Baymont Inn 4/96 41 $69.00 65%

Shayona Inn 6/94 57 $69.99 WND

Hampton Inn 11/96 72 $99.99-$109.99 *

Econolodge 6/97 60 $58.99-$79.99 53%

Reidsville, NC

Days Inn 9/97 35 $62.90-$74.00 40%

Quality Inn 2/93 51 $65.00-$119.00 *

Holiday Inn Express 8/00 73 $95.00-$124.00 55%

Martinsville, VA

Hampton Inn 4/97 68 $119.00-$154.00 *

Econo Lodge 6/63 90 $64.95 40%

Comfort Inn 6/90 70 $90.99-$129.99 45%

Super 8 5/88 54 $60.95-$109.95 WND

Days Inn 1/65 51 $59.95-70.00 45%

Greensboro, NC

Marriott Airport 6/83 299 $94.99-$184.99 WND

Hampton Inn 6/96 125 $139.00-$199.00 WND

Embassy Suites 2/89 209 $159.00-$224.00 *

Residence Inn 10/07 116 $164.00-209.00 55%

Best Western Plus 4/11 61 $84.00-$149.00 45%

Courtyard 7/08 124 $84.00-$169.00 *

WND - Would Not Disclose

* - "Better than 50%"

Eden is located approximately 14 miles east of the intersection of U.S. Highway

220 and Highway 135, but is an approximately 25 minute drive-time. As noted above,

the reported occupancy rates are above 50%, with the facilities being constructed in the

late 1990’s. Reidsville is approximately 22 miles east with an estimated 35 minute drive-

time. The primary competition is located along the US Highway 29 and Barnes Street

interchange. The center of Martinsville, Virginia is located approximately 21 miles and a

30 minute drive-time north, with competition being located along Business Highway 220.

Of note, there are no hotels located directly along an interchange with U.S. Highway 220

to the north until the Smith Mountain Comfort Inn facility in Rocky Mount

(approximately 50 miles and one hour’s drive-time). The competition located in nearby

Greensboro is near the Highway 68 and Interstate 40 interchange, approximately 25 miles

south and a 30 minute drive-time. There are a number of hotels located south of the

Interstate 40 interchange with Highway 68, with the above hotels being noted by a

number of individual businesses in the surveys discussed later as current alternatives to a

local facility.

The appraiser also utilized data from Smith Travel Research (STR) Travel Report.

The potential competition noted above was included in this report, which compiled all the

data into one report. The combined data is included on the following page for 2010-

2012, and the first four months of 2013. As noted in the report, the occupancy has

remained relatively steady since 2010, in the 59-62% range overall, with the Average

Daily Rate (ADR) increased approximately 11.5% in the same period. Demand has also

increased slightly during this period.

In addition to the surveys, the consultant also analyzed the change over the last

five years of occupancy based on tax history for Rockingham County, as shown below:

Occupancy Tax History

Year Total Revenue $ Change % Change2007-2008 $170,877

2008-2009 $163,309 -$7,568 -4.43%

2009-2010 $170,372 $7,063 4.32%

2010-2011 $175,236 $4,864 2.85%2011-2012 $210,638 $35,402 20.20%

As noted above, there were positive increases each of the past three years. The

only existing facilities in the western portion of the county include an older facility, the

Budget Inn/Old Dolly Madison on US Highway 220, a bed and breakfast facility in

Madison, and the formerly mentioned cabins at the local winery. The Budget Inn was

built in the 1960’s and is an older style, drive-up hotel. Typical room rates are in the

$30-$50 per night range, with weekly rates applying. This facility is not considered to

present competition for a limited or full service facility in the area.

SUMMARY OF LOCAL BUSINESS LEADERS SURVEY

In addition to the above statistical data, the consultant completed a survey of

various local business owners/managers. Survey responses indicated a definite need for a

local facility, with all the responders indicating they were currently utilizing Greensboro

hotels due to the location and amenities available in Rockingham County. Estimates of

usage is noted below based on the returned surveys.

Business # of Days # of Visitors Frequency

Southern Steel 2 1 Monthly

Remington Arms 3 15-20 Monthly - Employees

1-2 15 Monthly - Clients

Bi-annual conferences

Bridgestone 10-12 Varies 10-12 Nights per month total

Pine Hall Brick 1 1-2 Monthly - Employees

2 1-3 Monthly - Clients

The individuals that responded all indicated existing hotels utilized for their

business needs in Greensboro, with very positive response for local facility for both

business and personal visitors. Range of room rates were $90-$120 per night. The

Western Rockingham Chamber of Commerce, in addition to the Towns of Madison,

Mayodan and Stoneville all passed resolutions in support of recruitment of new lodging

facilities for the western portion of the county. This support is to encourage both

business and leisure travel in the area.

SUMMARY

In conclusion, there appears to be a healthy mix of lodging facility needs from

local business owners/managers as well as public officials. The elected officials feel a

hotel is imperative for local business recruitment, and would also be supported by local

residents for personal visitors as well. There is a mix of large events in the county as

well as neighboring counties, including race events, furniture market related activities

and local festivals that would benefit from the additional room availability.

The neighborhood most likely to respond favorably to new lodging is in the U.S.

Highway 220 and Highway 135 corridor, which has recently constructed restaurant and

retail users, typically required for a lodging facility. All facets of the local community

interviewed responded favorably to a potential facility, and the competition appears to be

maintaining relatively stable occupancy trends at this time. Taking all of the available

information into consideration, a lodging facility can be supported in the market.

Thank you again for the opportunity to provide this market/feasibility study.

Deborah L. Winters

QUALIFICATIONS

Deborah L. Winters

PROFESSIONAL EXPERIENCE 2006 to Present: Colvin, Sutton, Winters and Associates 1999 to 2006: McNairy & Associates

EDUCATION

The Appraisal Institute

Courses

Course 120 Appraisal Procedures, 1998 Course 210 Appraising Residential Properties, 1998 Course 410 Standards of Professional Appraisal Practice, Part A, 1998 Course 310 Basic Income Capitalization 1999 Course 320 General Applications 2000 Course 420 Standards of Professional Appraisal Practice, Part B, 2000 Course 430 Standards of Professional Appraisal Practice, Part C, 2000 Course 510 Advanced Income Capitalization 2001 Course 520 Highest & Best Use and Market Analysis, 2001 Course 550 Advanced Applications, 2001

Virginia Law Update, 2002 Course 420 Business Practice and Ethics, 2003

Course 400 National USPAP Update Course, 2004 Course 530 Advanced Sales Comparison and Cost Approaches, 2005

Course 540 Report Writing and Valuation Analysis, 2005 National 7-Hour USPAP Update Course, 2006, 2008, 2010, 2012 Business Practices and Ethics, 2010 Curriculum Overview – Residential, 2012 Curriculum Overview – General, 2012 Seminars

Demonstration Appraisal Report Writing, 2003 Evaluating Commercial Construction, 2005 Subdivision Analysis, 2006 Office Building Valuation, 2008 Appraising Convenience Stores, 2008 Analyzing Operating Expenses, 2008 Appraising Distressed Commercial Properties, 2009 Managing and Procuring Commercial Appraisal Reports, 2009 Discounted Cash Flow Model, 2010 Commercial Real Estate Sustainability Forum, USGBC, 2010 Feasibility, Market Value, Investment Timing: Option Value, 2010 Small Hotel/Motel Valuation, 2010 2012 Real Estate Valuation Conference

Guilford Technical Community College R-1 Appraisal Procedures and Policies, 1998 PROFESSIONAL AFFILIATIONS

North Carolina Certified General Real Estate Appraiser – No. A4902 Commonwealth of Virginia Certified General Real Estate Appraiser –

No. 4001 006478 State of South Carolina Certified General Real Estate Appraiser #5221 General Associate Member of Appraisal Institute

Member Greensboro Regional Realtors Alliance (GRRA) Member GRRA Realtors Commercial Alliance Board GRRA Realtors Commercial Alliance 2010-2012 Director Member - TREBIC Member Rockingham County Board of Realtors Member Alamance County Board of Realtors Steering Committee – Hospice of the Piedmont Taste of the Town Alternate Board Member – Guilford County Board of Equalization and Review September 2011-August 2014

APPRAISAL CLIENTELE SERVED Commercial Banks Savings & Loan Associations/Credit Unions Commercial/Investment Property Owners and Developers Government Agencies - Federal, State, and Municipal