workshop briefing 2310
TRANSCRIPT
Downtown Frederick Hoteland Conference Center
PUBLIC BRIEFINGFrederick, Maryland, USA
Frederick Chamber Major Employers Group
MAJOR EMPLOYER GROUP• SAIC‐Frederick• State Farm• Frederick Community College• Bechtel• Wells Fargo Home Mortgage• US Army Garrison Fort Detrick• Chase Card Services• Frederick County Public Schools• Frederick Memorial Health Care System• Lonza BioScience• MedImmune• Mount St. Mary’s University• Plamondon Companies• CitiMortgage
DOWNTOWN HOTEL FEASIBILITY TEAM
Feasibility Study Prepared by:
Developing a full-service hotel with meeting, event, and conference space in Downtown Frederick is a key priority of Frederick’s Economic Development Partners and Major Employers. A feasibility study was jointly funded by this group.
Mark Gaver, Community ChairmanPresident & CEO Gaver Holding, Inc.
No full‐service hotel in Frederick and very limited conference, meetings, event facilities
Identified by business community as critical need for attracting, retaining and expanding employment in Frederick
Opportunity for induced demand for meetings, business and family events, conferences, and overnight stays
Job creation and tax revenue generator
Strengthens Frederick’s tourism by increasing likelihood of overnight/multi‐day visits
Increases in tourism, business use, conference use will in turn strengthen the entire Frederick Hotel Industry
WHY A HOTEL CONFERENCE CENTER?
Downtown is centrally located within county and within residential and major employment base
No Hotel and very limited Bed and Breakfast overnight lodging inDowntown Frederick –– Strong Demand
Downtown has a high amenity value for guests – restaurants/retail
Strengthens Downtown Frederick Tourism
Hotel Conference Center will be a major Downtown anchor and retail/pedestrian generator – fueling stronger retail sales
Contributes to the goal for an “18‐hour Downtown” environment
Transit and pedestrian oriented
Catalyst for Area Wide Revitalization – builds on public investment in downtown
WHY DOWNTOWN FREDERICK?
Area Analysis
National Hotel and Meetings Overview
Lodging Market Analysis
Evaluation of Potential Demand
Hotel Facility Recommendations
Market Supply and Demand Projection
FEASIBILITY STUDYThe Feasibility Study by Pinnacle Advisory Group and OPX evaluated the following (assumes 12/31/14 opening):
Projected Hotel Performance
Financial Projections
Development Costs
Site Analysis and Building Layouts
Economic Impact
Financial Feasibility of Development
Assumptions and Limited Conditions
Key FindingsStrong Market for Full‐Service Hotel/Conference Center
Capture of unmet demand with core market demand growth will allow for 72% occupancy once stabilized.
Cash flow projections show a strong positive Net Operating Income once stabilized at 18.9% of revenue
Market is willing to pay more ($30‐$50) for an upscale, full‐service hotel
Downtown has excellent location, amenities, and sites with visibility and size to accommodate such a facility.
Positive Economic Impact will be substantial.Direct impact – approx. $30 million annually once stabilizedIndirect impact (multiplier effect) – approx. $60 million annually
Cost to Construct will be $225,000 to $250,000 per room
Private‐Public Partnership is the preferred development strategy
Impact of Proposed Hotel on Lodging Market
Proposed hotel will introduce a vastly different product (both rooms and meeting space) than what exists today
Lodging market will absorb new supply and stabilize at 71% by 2016 (3rd year after the opening of proposed hotel)
Market will absorb new supply due to core demand growth and induced demand from proposed hotel
Proposed hotel will bring new overflow demand to existing hotels
Facility Recommendations200 Room Hotel – Branded as Marriott, Hilton, Westin, or Hyatt
14,000 square feet of meeting space including
5,000 – 6,000 SF ballroom accommodating 500‐600 people
4,000 – 5,000 SF Breakout Meeting Rooms
4,000 SF Pre‐Function Space (lobbies, hallways, etc.0
250 parking spaces minimum – adjacent to hotel for hotel guests. (Larger events will pull on entire downtown parking system)
Restaurant and lounge (with frontage on Carroll Creek Park or Street Side)
Guest Amenities ‐ Indoor pool, Exercise room, Business Center
Green building design/construction – industry is trending that direction and will minimize operating costs by increasing energy, utility efficiency
Economic Impact
Total Economic Impact
YearConstruction Costs, Labor, and Taxes
Operational Revenues and
Taxes
Costs of Goods Sold and Taxes
Hotel Payroll and Taxes
Real Estate Taxes
Total
Pre‐Opening $48,008,000 $48,008,0002014 $17,156,140 $3,140,780 $7,354,640 $645,000 $28,296,5602015 $18,699,290 $3,379,280 $8,027,170 $664,000 $30,769,7402016 $20,195,870 $3,613,540 $8,638,000 $684,000 $33,131,4102017 $20,802,400 $3,723,780 $8,895,906 $704,000 $34,126,0862018 $21,426,190 $3,834,020 $9,163,684 $725,000 $35,148,894Source: Pinnacle Advisory Group
Downtown SitesPurpose of analyzing downtown sites was to determine if hotel/conf center could be physically be constructed downtown.
Facility sizes ranged from 126,000 SF to 141,000 SF depending on site & building configuration
Sites are sufficient in terms of size, but each has variety of attributes – No priority set yet
There may be other sites not yet considered
Downtown Site Analysis
Public/Private Partnership Structure
Financial Requirements ‐ $45 million project cost (excluding land)
Step 1 – Determine Financial Sources/Uses$20 (45%) – Bank Financed Mortgage
$25 (55%) – Equity$12‐ $13 (25%) Developer
$12 ‐ $13 (25%) Local Match (Private Investors, Foundations, Corporations, City, County, State (MEDCO, Stadium Authority, Earmarks), Federal, Tax Increment Financing)
Step 2 –Select Developer Using RFQ/RFP Process
Step 4 – Select site
Step 5 – Development Process – permits, financing, raise capital, mgm’t/franchise, legal documents, etc.