HVSFeasibilityStudy0308Report - Source.prod Affiliate.56

Feasibility Study Proposed Hilton Convention Hotel Fort Lauderdale, Florida
Property Location: Attached to the Greater Fort Lauderdale/ Broward County Convention Center Southeast quadrant of Eisenhower Boulevard and S.E. 17th Street Fort Lauderdale, Florida 33316 Prepared by: H&R Valuation Services, Inc. DBA HVS 2229 Broadway Boulder, Colorado 80302 (303) 443-3933 (303) 443-4186 FAX Submitted to: Mr. Mark Tobin HREC Development Resources 6400 South Fiddler's Green Circle, Suite 1730 Greenwood Village, Colorado 80111-4961 (303) 267-0057 (800) 830-6885 FAX mtobin@hrec.com
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February 22, 2008
2229 Broadway Boulder, Colorado 80302 303 443-3933 303 443-4186 FAX
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Mr. Mark Tobin HREC Development Resources 6400 South Fiddler's Green Circle, Suite 1730 Greenwood Village, Colorado 80111-4961 (303) 267-0057 (800) 830-6885 FAX mtobin@hrec.com Re: Proposed Hilton Convention Hotel Attached to the Greater Fort Lauderdale/ Broward County Convention Center Southeast quadrant of Eisenhower Boulevard and S.E. 17th Street, Fort Lauderdale, Florida HVS Reference: 2007091589 Dear Mr. Tobin: Pursuant to your request, we herewith submit our feasibility study for the abovecaptioned hotel. We have inspected the site and analyzed the market conditions in the Fort Lauderdale area. This feasibility study report is being prepared for use by HREC Development Resources. The information presented in this report may be disseminated to and relied upon by the public or third parties.
Specialists in Hotel Consulting and Appraisal Worldwide
We hereby certify that we have no undisclosed interest in the property, and our employment and compensation are not contingent upon our findings. This study is subject to the comments made throughout this report and to all assumptions and limiting conditions set forth herein. Sincerely, H&R Valuation Services, Inc. DBA HVS
DRAFT DOCUMENT
Bethany Cronk, MBA Vice President bcronk@hvs.com
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Hans Detlefsen Director hdetlefsen@hvs.com
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Gregory Hartmann, MAI Managing Director ghartmann@hvs.com BC:HD:GH:mc
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Table of Contents
Table of Contents
Section
1 2 3 4 5 6 7 8 9 10 11 12 13 Addenda
Title
Summary of Salient Data and Conclusions Nature of the Assignment Description of the Real Estate Market Area Analysis Facility Overview and National Survey Hotel Induced Demand Analysis Overview of the U.S. Meetings Market Supply and Demand Analysis Projection of Occupancy and Average Rate Development Cost Review Return on Investment Analysis Statement of Assumptions and Limiting Conditions Certification
Explanation of Penetration Analysis Qualifications Bethany Cronk, MBA Hans Detlefsen Gregory Hartmann, MAI
Proposed Hilton Convention Hotel - Fort Lauderdale, Florida
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Summary of Salient Data and Conclusions 1-1
1. Summary of Salient Data and Conclusions
Property: Location:
Date of Inspection: Date of Report: Land Description Area: Zoning: Flood Zone: Improvements Description Opening Date: Property Type: Building Area: Guestrooms: Number of Stories: Food and Beverage Facilities: Meeting Space: Additional Facilities: Parking:
Proposed Hilton Convention Hotel Attached to the Greater Fort Lauderdale/ Broward County Convention Center Southeast quadrant of Eisenhower Boulevard and S.E. 17th Street Fort Lauderdale, Florida 33316 December 18, 2007 February 22, 2008
4.36 acres, or 189,922 square feet PEDD - Port Everglades Development District AE, A1-A30
March 1, 2011 Full-service lodging facility 810,753 square feet 1,000 27 A three-meal restaurant, a specialty restaurant, a coffee shop, a lobby bar, a sports bar, a pool bar 72,800 square feet, including a 27,000-squarefoot Main Ballroom and a 16,500-square-foot Junior Ballroom A 12,000-square-foot full-service spa, an outdoor swimming pool, an exercise room, a business center, and a gift shop 680 parking spaces to be shared by the Convention Center and Port Everglades
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Competition 2007 Weighted Competitive Rooms: 2007 Weighted Competitive Occupancy: 2007 Weighted Competitive Average Rate: Proposed Hotel Projections Year 2011/12 2012/13 2013/14 2014/15 Salient Conclusions The purpose of this report is to assess the financial feasibility of a Hilton Convention Headquarters Hotel attached to the Greater Fort Lauderdale/Broward County Convention Center (Convention Center). The scope of this study assessed the markets supply and demand factors in order to derive a projection of occupancy and average rate (ADR) for a proposed 1,000-room Hilton hotel. New demand expected to be induced to this market, as a result of the opening of the subject hotel, was also factoring into this analysis. We further analyzed the US Meetings Market Survey to note recent trends in both convention and in-house group demand for hotels. Once, supply and demand were assessed in order to project occupancy and ADR for the subject and subject market, this study then applied industry and comparable Hilton operating statistics for revenue and expenses to derive ten-year financial projections for the proposed subject hotel. The subject hotel is proposed to be located adjacent to and attached to the Convention Center and is anticipated to open March 1, 2011. The forthcoming projections utilize a four-year stabilization period for this hotel, with the property projected to reach a stabilized level of operation in year 2014/15. This stabilized level of operation is intended to reflect the anticipated results of the property over its remaining economic life, given any and all changes in the life cycle of the hotel. Thus, the stabilized occupancy excludes from consideration any abnormal relationship between supply and demand, as well as any nonrecurring conditions that may result in unusually high or low occupancies. Although the subject property may operate at levels above this stabilized level, we believe it equally possible for new competition and temporary economic downturns to force the occupancy below this selected point of stability. Lodging demand in the competitive market consists of a mix of properties, most with major brand affiliations, with locations ranging from beachfront, to waterfront marina, to urban inland, and accommodating a mix of lodging demand. The selected competitive set is weighted slightly more toward transient demand - derived from commercial and leisure travelers, at approximately 54% of Occupancy 62% 66% 69% 71% Average Rate $216.78 $227.23 $236.80 $244.94 4,193 70.0% $192.60
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total market demand. Group room nights - derived from in-house or convention groups - support the balance of demand for lodging in this market, with in-house groups accounting for the bulk of this market segmentation. According to data compiled by Smith Travel Research, upscale, full-service hotels in downtown Fort Lauderdale, combined with select competitive group-oriented properties located in the greater Fort Lauderdale area, achieved an overall occupancy and average rate of roundly 71% and $150, respectively, in 2004. This performance calculates to a 2004 RevPAR (revenue per available room) of $107. (We note that STR data is not weighted by competitive level as discussed later in this report.) RevPAR trends during 2004 represent a rebound from the impact of a soft US economy experienced earlier in the decade and finally surpassed the market's historical high posted in 2000. In 2005 and 2006, these competitive hotels posted continued RevPAR gains of $3.50 and $9.50, respectively. The Fort Lauderdale markets performance over these three years represent a notable recovery from the declines in 2001 and 2002 that were attributable to several factors: the slowing U.S. economy, the events of September 11, 2001, and a reduction in overall travel throughout the U.S. Through November 2007, year-to-date RevPAR continues strong improvement, with growth of approximately twelve percentage points or a sizeable $14.00, over the same period in 2006. Until the opening of the Hilton Beach Resort in 2007, the hotel supply directly supportive of the Convention Center remained stable since the 2001 addition of the Renaissance and the 2002 opening of the Westin Diplomat. More recently, the former Marriott Marina closed in mid-2007 and reopened in January 2008 as the Fort Lauderdale Grande Hotel & Yacht Club. The remaining competitive supply dates to the 1950's, 1960's, and 1980's. Due to the attractiveness of development of new lodging in this market, further additions to hotel supply are anticipated over the near-term and during the ramp-up of the subject hotel; these proposed rooms are factored into our analysis quantitatively. Our study also discusses other hotels which have been recently constructed or are proposed for the market which have not been deemed competitive with the subject hotel and are only discussed qualitatively. A mutually beneficial relationship exists between a convention center and a headquarters hotel - a convention center serves as a major demand source for a headquarters hotel property, while the headquarters hotel creates a strong convention package by which a CVB sells its city and convention center. As such, the Convention Center is expected to provide a source of demand for the proposed subject property. The facility's 600,000 gross square feet includes net usable meeting, exhibit, and gathering spaces include 199,500 square feet of exhibit space, a 31,600-square-foot Grand Floridian Ballroom, a 20,300-square-foot Floridian Ballroom, 46,300 square feet of meeting and break-out rooms, and 101,300 square feet of prefunction/lobby/concourse areas. The Convention Center completed a series of improvements and expansion projects totaling $34-million in 2001. We note that future expansion plans for the Convention Center are in the discussion phase with the size of the facility to be effectively doubled upon completion. We assume any expansion to take place after the opening of the subject hotel and that such an expansion was not factored quantitatively into our analysis in terms of new demand induced into this market.
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A hotel attached to or adjacent to a convention center is in a unique situation to attract demand. A market's offering of a headquarters hotel is a major consideration for meeting planners assessing a market as a potential convention venue. Due to its proximity to a convention center, the headquarters hotel is typically the first choice among meeting planners for housing guestroom blocks for conventions or meetings. It is also oftentimes the first choice among convention delegates who are planning to attend events in a particular market. The common attribute that is of paramount importance to meeting planners and delegates is the proximity of the headquarters hotel to the convention center. For example, a hotel attached to, adjacent to, or opposite the street from a convention center does not require additional travel by shuttle bus, taxi, or rental car. The introduction of the subject property in this market is expected to induce new demand for lodging. We have estimated the potential induced demand attributable to the subject property and its sizeable amount of meeting space. Our analysis factors in a build-up period for attracting this new demand, with greater amounts of induced demand to be progressively absorbed as the subject hotel stabilizes. We further anticipate this new national and regional convention demand to be generally accustomed to paying higher room rates. Due to its location attached to the Convention Center, the subject property is expected to be an anchor for citywide conventions, accommodating sizeable room blocks for major groups. Although a notable portion of the subject propertys demand is anticipated to be derived from in-house groups due to its sizeable meeting space and large ballroom facility, our projections assume that the subject property will be highly focused on capturing group business generated by the CVB and Convention Center. The proposed subject property is forecast to perform well in this market by stabilization, in 2014/15. This performance is supported by a major national hotel brand (Hilton) and management, sizeable meeting space attractive to meeting clientele, its upscale full-service product, a unique health spa component, varied food and beverage offerings, and a location attached to the Convention Center and along the waterfront. Our analysis relies on certain key assumptions including the following. We note that an expansion to the Convention Center was not factored quantitatively into our analysis in terms of new demand induced into this market. Appropriate marketing efforts by the Greater Fort Lauderdale Convention & Visitors Bureau are considered necessary to sell effectively the city, the Convention Center, and the subject hotel to potential meeting planners. Construction of the hotel and facilities in a manner consistent with current industry standards for similarly positioned hotels. Operation of the hotel by a management company with a high-end, nationally recognized brand name; this report assumes Hilton Hotels & Resorts.
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We have assumed ground lease terms, as provided by the client, to consist of an annual payment of $500,000 commencing in Projection Year 4 and increasing by inflation annually thereafter. No new terrorist activity on US soil comparable to September 11, 2001.
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Nature of the Assignment 2-1
2. Nature of the Assignment
Subject of the Feasibility Study
The subject of the feasibility study is a 189,922-square-foot (4.36-acre) parcel to be improved with a full-service lodging facility to be known as the proposed Hilton Convention Hotel. The property is expected to open on or about March 1, 2011 and will feature 1,000 rooms, a three-meal restaurant, a specialty restaurant, a coffee shop, a lobby bar, a sports bar, a pool bar, 72,800 square feet of meeting space, a 12,000-square-foot full-service spa, an outdoor swimming pool, an exercise room, a business center, and a gift shop. The hotel is also to have a typical complement of back-of-the-house facilities. The property's location is in the southeast quadrant of Eisenhower Boulevard and S.E. 17th Street, Fort Lauderdale, Florida, 33316. The hotel site is located on land owned by Broward County. The hotel property is expected to operate subject to a ground lease with Broward County (lessor) with an initial term of 50 years and subject to renewal. Lease terms provided to this consultant include a ground lease payment commencing in the hotel's fourth year of operation of $500,000, which is expected to increase by 3.0% annually thereafter. These terms have been included in our proforma. The proposed subject property is expected to be managed by Hilton Hotels Corporation and operate under a Hilton flag. At the time of our analysis, a January 2008 draft Letter of Intent (LOI) for the Broward County Convention Center Hotel Development Project is being finalized between Broward County, FaulknerUSA - the developer, and Hilton - the management company. According to the LOI, management fee terms call for a senior unsubordinated base management fee of 3.0% of total revenues annually, ramping up from 2.0% in projection year one and 2.5% in projection year two. Furthermore, a senior FF&E reserve for replacement is stipulated at 4.0% of total revenues annually, increasing from 1.0% in projection year one, 2.0% in year two, and 3.0% in year three. These terms have been included in our proforma.
Ownership and Ground Lease
Management Assumptions
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Hilton Hotels Corporation is recognized internationally as a preeminent hospitality company. The company develops, owns, manages or franchises approximately 2,300 hotels, resorts and vacation ownership properties. Its portfolio includes many of the world's best known and most highly regarded hotel brands, including Hilton, Conrad, Doubletree, Embassy Suites Hotels, Hampton Inn, Hampton Inn & Suites, Hilton Garden Inn, Hilton Grand Vacations Company and Homewood Suites by Hilton, as well as many of the most famous hotels to be found anywhere, such as New Yorks Waldorf-Astoria, Waikikis Hilton Hawaiian Village, and Chicagos Palmer House. The companys family of brands and hotels offers guests and customers the finest accommodations, services, amenities, and value for business or leisure. Guests can benefit from Hilton's worldwide reservations system and its highly acclaimed guest loyalty program, Hilton Hhonors. There are approximately 498 Hilton Hotels comprising 172,605 rooms in the entire system. For 2006, system-wide Hilton hotels averaged a 72.8% occupancy level (vs. 71.8% for 2005); a $149.86 average rate (vs. $138.55 for 2005); and a $109.11 RevPAR (vs. $99.50 for 2005). Objective of the Feasibility Study The objective of the feasibility study is to evaluate the supply and demand factors affecting the market for transient accommodations in the Fort Lauderdale area for the purpose of developing a forecast of income and expense for the proposed subject property. This feasibility study is being prepared for HREC Development Resources for use in development decisions concerning the subject hotel. The information presented in this report may be disseminated to the public or third parties. The methodology used to develop this feasibility study is based on the market research and valuation techniques set forth in the textbooks authored by Hospitality Valuation Services for the American Institute of Real Estate Appraisers and the Appraisal Institute, entitled The Valuation of Hotels and Motels,1 Hotels, Motels and Restaurants: Valuations and Market Studies,2 The Computerized Income Approach to Hotel/Motel Market Studies and Valuations,3 and
Intended Use of the Feasibility Study Method of Study
Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). 2 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago: American Institute of Real Estate Appraisers, 1983). 3 Stephen Rushmore, The Computerized Income Approach to Hotel/Motel Market Studies and Valuations. (Chicago: American Institute of Real Estate Appraisers, 1990).
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Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations.4 1. The subject site was evaluated from the viewpoint of its physical utility for the operation of a hotel, as well as access, visibility, and other relevant locational factors. 2. The subject's proposed improvement plans were inspected for their quality of construction, design, layout efficiency, and items of physical deterioration and functional obsolescence. 3. The surrounding economic environment, on both an area and neighborhood level, was reviewed to identify specific hostelry-related economic and demographic trends that may have an impact on future demand for hotels. 4. Dividing the market for transient accommodations into individual segments defined specific market characteristics for the types of travelers expected to utilize the area's hotels. The factors investigated included purpose of visit, average length of stay, facilities and amenities required, seasonality, daily demand fluctuations, and price sensitivity. 5. An analysis of existing and proposed competition provided an indication of the current accommodated demand, along with market penetration and the degree of competitiveness. 6. Documentation for an occupancy and average rate projection was derived utilizing the build-up approach based on an analysis of lodging activity. 7. A detailed projection of income and expense made in accordance with the Uniform System of Accounts for Hotels set forth the anticipated economic benefits of the subject property and provided the basis for determining feasibility. Pertinent Dates The subject site was inspected by Bethany Cronk, MBA on December 18, 2007. Hans Detlefsen and Gregory Hartmann, MAI participated in the analysis and reviewed the findings, but did not personally inspect the subject site.
Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations. (Chicago: Appraisal Institute, 1992).
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Description of the Real Estate
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3. Description of the Real Estate
LAND
The subject site is located in the southeast quadrant of Eisenhower Boulevard and S.E. 17th Street in downtown Fort Lauderdale. This location is immediately adjacent to the Greater Fort Lauderdale/Broward County Convention Center and the 17th Street Causeway. Municipal jurisdictions governing the property include the city of Fort Lauderdale, Broward County, and the state of Florida. The street address of the proposed Hilton Convention Hotel has not yet been determined.
Aerial Photograph
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Physical Characteristics
According to a site plan provided by the developer, the subject parcel measures 4.36 acres, or 189,922 square feet. The parcel's adjacent uses are set forth in the following table.
Subject Parcel's Adjacent Uses
Direction North South East West Adjacent Use 17th Street Causeway Convention Center Parking; Terminal 1 Building Intracoastal Waterway Convention Center
Proposed Subject Property and Adjacent Uses
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View from Site to the Northwest
View from Site to the South
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View from Site to the East
View from Site to the West
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View from Site to the Southeast
View from Site to the East and 17th Street Causeway/Bridge
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View from Site to the Southwest
Currently, primary vehicular access to the proposed subject property is provided via Eisenhower Boulevard and the Port Everglades security gate entrance. The existing Port Everglades security gate entrance controls access to the Port Everglades and shipping ports as well as the Convention Center. It is understood by this consultant that this entrance to the Convention Center Complex will be relocated and reconfigured so as to no longer be part of the Port Everglades secured control area. This plan is expected to allow significantly improved access to the subject hotel and adjacent Convention Center. For security purposes, access to the Port will remain under secured control. Due to its location along the Intracoastal Waterway, the subject site maintains excellent water views and access. Nonetheless, we understand no marina access will be available to the site for security reasons. The topography of the parcel is generally flat, and the sites shape is an irregular rectangular. The site is at grade with surrounding uses; however, the 17th Street Causeway is above the grade of the subject site along its northern border.
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Site Plan
Site Utility
Upon completion of construction, the subject site is not expected to contain any significant portion of undeveloped land that could be sold, entitled, and developed for alternate use. The site is expected to be fully developed with site or building improvements, which will contribute to the overall profitability of the hotel. We note that a portion of the waterfront located to the south of the subject site is under consideration to be reclaimed and converted to a non-developable park. This plan is reportedly in order to
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protect the subject improvements and provide additional attractive water frontage. Regional Access It is important to analyze the site in regards to ease of access with respect to regional and local transportation routes and demand generators. The subject site is readily accessible to a variety of local, county, state, and interstate highways.
Map of Regional Access Routes
Primary regional access through the area is provided by north/south Interstate 95, which provides access to such cities as Jacksonville to the north and Miami to the south. East/west Interstate 595 is another major highway that allows for convenient east/west travel through Fort Lauderdale and merges to the west into Interstate 75. Interstate 75 provides access to Gainesville to the north and terminates in Palm Springs North to the south. Additional highways serving the area include State Highways A1A and 84, as well as US Route 1. The proposed subject property's market is further served by a variety of additional local routes, which are illustrated on the map.
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Local Access and Visibility
The subject site is most proximate to Interstate 595 and is located approximately two miles northeast of this highway in the southeast quadrant of Eisenhower Boulevard and S.E. 17th Street. The northern boundary of the subject site runs along the south side of the 17th Street Causeway and 17th Street Service Road, with right of entry to these routes currently restricted due to a secure boundary fence. The Service Road runs parallel to the elevated portion of the 17th Street Causeway at the point that 17th Street becomes a bridge to span the Intracoastal Waterway. 17th Street is also known as State Highway A1A. The elevated 17th Street Causeway commences due north of the Convention Center complex and subject site. Access from the Service Road to the 17th Street Causeway is available at the traffic intersection of 17th Street and Eisenhower Boulevard.
Aerial View of Site, the 17th Street Causeway, and Service Road
We note the approved Port Everglades Master Plan includes the relocation of the secure boundary and checkpoints for the Convention Center and subject site and separates their entrances from that of Port Everglades. Upon completion, motorists will enter the Convention Center complex and subject site from the Service Road off 17th Street and circle the existing water fountain with sequential drop-offs at the Convention Center, the convention center parking garage, and the proposed hotel garage. Alternatively, visitors
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will be able to bypass this traffic circle and enter directly to the subject property's porte-cochere. This new entry point to the subject site off the 17th Street Service Road is expected to afford excellent access to the 17th Street Bridge and State Highway A1A, as well as the nearby supportive commercial and leisure uses. Furthermore, reorienting the property to face toward downtown and the waterway is anticipated to connect this lodging facility to the downtown area and beach locations. The hotel's anticipated 27-story height should provide excellent city and water views, as well as make the hotel clearly visible within the local neighborhood.
View of Site and Convention Complex from S.E. 17th Street Bridge
Additional local access is provided by the area's Water Taxi, which makes stops at area points of interest. The closest Water Taxi stop to the subject site is the Convention Center Campus (#7), located at the Fort Lauderdale Grande Hotel & Yacht Club.
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Map of Fort Lauderdale Water Taxi Stops
Airport Access
The subject property is well served by the Fort Lauderdale Hollywood International Airport, which is located approximately three miles to the southwest of the subject site. From the airport, motorists would follow signs to US Route 1 North and continue northbound for approximately two and one-half miles before turning right (eastbound) onto S.E. 17th Street. To reach the subject's current location, motorists travel east on S.E. 17th Street for approximately one-half mile, before making a right (southbound) turn onto Eisenhower Boulevard. This route provides access to the subject site's current entrance and the Port Everglades and Convention Center complex. Demand generators within downtown Fort Lauderdale include a variety of firms, office complexes, and leisure attractions. To access local demand generators, the closest Water Taxi stop to the subject property is the Convention Center Campus (#7), located at the Fort Lauderdale Grande Hotel & Yacht Club. The downtown core is located along Broward Boulevard
Access to Local Demand Generators
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approximately three miles northwest of the subject site. Major area firms include ANC Corporation/Republic Industries, AT&T, Bank of America, Broward General Hospital District, Deloitte and Touche, Embraer, Federal Express, Florida Power & Light, Fort Lauderdale Jet Center, American Express, Tenet Healthcare, Motorola, Continental Group, Citrix, Wachovia (SouthTrust), Bank of Florida Center, the Federal Courthouse, GMP, Guardian Industries, Signature Flights, and SunSentinal. In terms of key nearby meeting and leisure attractions, the subject site is located adjacent to the Convention Center, the Port Everglades Cruise Terminal, and the Intracoastal Waterway. Furthermore, the subject is situated approximately two miles east of area beaches, three miles southwest of the Broward Center for Performing Arts, and two miles south of the Las Olas Riverfront Entertainment Complex and Riverwalk Arts & Entertainment District in downtown Fort Lauderdale. Other area attractions include the International Swimming Hall of Fame, Museum of Art - Fort Lauderdale, Museum of Discovery/Science, the Art Institute of Fort Lauderdale, Jungle Queen Cruise, Fashion Mall-Plantation, Davie Rodeo Track (professional rodeo association), Dania Jai-Alai, Jacaranda Golf Course, and the Bank Atlantic Center (entertainment center and home of Florida Panthers NHL team). Outside of the greater Fort Lauderdale area are Gulfstream Park Racing & Casino, Calder Race Track (horseracing), Dolphins Stadium, and Sawgrass Mills (Florida's largest outlet store and entertainment venue). Local leisure events include such draws as the International Film Festival. The presence of such a variety of demand generators and the diversity of local companies will make the local economy less susceptible to sudden economic downturns in any one sector and bodes well for the strength of the local lodging market in the future. Neighborhood The neighborhood surrounding a lodging facility often has an impact on a hotels status, image, class, style of operation, and sometimes its ability to attract and properly serve a particular market segment. This section of the report investigates the subject propertys neighborhood and evaluates any pertinent locational factors that could affect the hotels occupancy, average rate, and overall profitability.
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Map of Neighborhood
The proposed subject property's neighborhood is defined as the area encompassing Port Everglades to the south and Las Olas/Broward Boulevard to the north, US Route 1 to the west, and the beaches and Atlantic Ocean to the east. In general, this neighborhood is in the redevelopment stage of its lifecycle, with several redevelopment projects occurring in the hotel, retail, and residential sectors. Proximate to the site, land use is primarily commercial, retail, and tourism-related with some residential pockets of development. Specific uses in the immediate vicinity of the subject site include retail plazas, hotels, Port Everglades (cruise terminals, cargo shipping, and petroleum storage, and distribution hub), an art/culinary school, restaurants, boating/fishing facilities, and upscale residential.
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Map of Neighborhood Attractions
Overall, the supportive nature of the development in the immediate area is considered appropriate for, and conducive to, the operation of a hotel. We note the majority of leisure attracts off Las Olas Boulevard are two miles from the site, which is considered to be a disadvantage. Site Characteristics The following table details other salient highlights of the subject sites characteristics.
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Site Characteristics
Easements and Encroachments There are no known easements or encroachments encumbering the property that would significantly affect its utility or marketability. Soil and Subsoil Conditions Geological and soil reports were not provided to us or made available for review during the preparation of this report. We are not qualified to evaluate soil conditions other than by a visual inspection of the surface. No extraordinary conditions were apparent. We have not been informed of any site-specific nuisances or hazards, and there were no visible signs of toxic ground contaminants at the time of our inspection. Because we are not experts in this field, we do not warrant the absence of hazardous waste, and we urge the reader to obtain an independent analysis of these factors.
Nuisances and Hazards
Flood Zone Panel Number: 12011C0219F Date: August 18, 1992 Zone and Definition: AE, A1-A30: areas with a 1% annual chance of flooding and a 26% chance of flooding over the life of a 30-year mortgage.
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Copy of Flood Map and Cover
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Flood Plain Definition
Zoning
According to the local planning office, the subject site is zoned as follows: PEDD - Port Everglades Development District. This zoning designation allows for select uses to support Port Everglades and the Convention Center. However, we do not warrant the subject's conformance with local zoning regulations and recommend an independent verification. We assume that all necessary permits and approvals have been secured (including an appropriate liquor license), and that the subject property will be constructed in accordance with local zoning ordinances, building codes, and all other applicable regulations. Our zoning analysis should be verified before any physical changes are made to the site.
Land Conclusion
We have analyzed the issues of size, topography, access, visibility, and the availability of utilities. In general, the site is well suited for hotel use, with acceptable access, visibility, and topography for an effective operation.
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Market Area Analysis 4-1
4. Market Area Analysis
The economic vitality of the market area surrounding the subject property is an important consideration in forecasting lodging demand and income potential. Economic and demographic trends that reflect the amount of visitation provide a basis from which to project hostelry demand. The purpose of the market area analysis is to review available economic and demographic data to determine whether the local market will undergo economic growth, stabilization, or decline. In addition to predicting the direction of the economy, the rate of change must be quantified. These trends are then correlated based on their propensity to reflect variations in lodging demand, with the objective of forecasting the amount of growth or decline in transient visitation by individual market segment (e.g., commercial, meeting and group, and leisure). Market Area Definition The market area for a lodging facility is the geographical region where the sources of transient visitation (demand) and the competitive supply are located. A lodging facilitys market area is generally defined as the geographical area of influence surrounding the property. In most instances, this area also encompasses the hotels demand generators and competitive lodging facilities. The economic and demographic profile of the defined market area is typically relevant in gauging the strength of the markets lodging demand. However, sometimes, particularly for resort properties, the feeder markets that generate demand to the resort location are more pertinent for analysis. The subject property is located in the city of Fort Lauderdale, the county of Broward, and the state of Florida. Broward County comprises 1,197 square miles; however, development is restricted to an area of 410 square miles, as the western part of the county lies within the Everglades conservation area. The county is located in the heart of the south Florida region and is easily accessible by road, rail, air, and sea. Four interstate highways and Floridas Turnpike are integrated with the countys local street network, providing excellent access throughout the county and the state. Interstate 95 provides the primary north-south connection in Florida. Broward County is the
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second-largest county in Florida, registering a population of over 1.8 million in 2006. The Greater Fort Lauderdale area is located on Floridas east coast and is known as the Venice of America. With 3,000 hours of sunshine, 30,000 boats, 165 miles of waterways, and seven miles of beach, the area is known primarily as a tourist destination; however, this perception is beginning to change. Greater Fort Lauderdale enjoys a thriving local economy with a variety of businesses, from Fortune 500 companies to various smaller, entrepreneurial operations. Once labeled as strictly a tourism-based economy, the area now supports such industries as manufacturing, finance, insurance, real estate, high-technology, and film and television production. Marine commerce is the leading industry in Greater Fort Lauderdale and Broward County, accounting for more than 134,000 jobs and $10.78 billion in total economic impact. Furthermore, Greater Fort Lauderdale is one of the fastest-growing communities in the nation for small business, high-tech, and foreign trade. Greater Fort Lauderdale is also home to Port Everglades (The Port); with more than 6,300 ship calls, it is the second-largest cruise port in the world and acclaimed as The Worlds Premier Cruise Port, serving more five-star cruise ships than any other port in the nation. In addition, Port Everglades is a major petroleum storage and distribution hub. The Port is located on the southeastern coast of the Florida peninsula within the three cities of Fort Lauderdale, Hollywood, and Dania Beach, as well as unincorporated Broward County. The Port encompasses a total of 2,190 acres, of which 232 acres, or 13.3%, are located within the city of Fort Lauderdale. Opened in September 1991, The Greater Fort Lauderdale/Broward County Convention Center is located at the intersection of the 17th Street Causeway and Eisenhower Boulevard roughly three and one-half miles north of the Ft. Lauderdale International Airport. In 2001, the city finished a $30 million expansion on the center, constructing additional meeting rooms and administrative offices. The center's size increased to 600,000 square feet, 250,486 square feet of which is meeting space. Fort Lauderdale is part of the greater Broward County economic base, which is currently experiencing a significant amount of growth and economic improvement. Companies based in the Fort Lauderdale area include AutoNation, Citrix Systems, DHL Express, Spirit Airlines, and National Beverage Corporation. The largest employers in the county are Tenet
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Healthcare, which employs 5,000 people; American Express, which employs 4,200; The Continental Group, which employs 3,900; Motorola, which employs 3,000, and Citrix, which employs 1,885. The area boasts a diverse economy, which helps buffer the city from the economic instability that can plague other cities that rely heavily on tourism. The area's key industries include manufacturing, marine, aviation, technology, life sciences, and tourism.
Fort Lauderdale FL
The subject propertys market area can be defined by its Metropolitan Statistical Area (MSA): the Miami-Fort Lauderdale-Miami Beach, FL MSA. The MSA is the most standard definition used in comparative studies of metropolitan areas. The federal government defines an MSA as a large population nucleus, which together with adjacent counties, has a higher degree of social integration. The following exhibit illustrates the market area.
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Map of Market Area
Florida Overview
Located in the southeastern U.S., Florida spans approximately 58,560 square miles. The state is bordered by the Atlantic Ocean to the east, Georgia and Alabama to the north, and the Gulf of Mexico to the west. Sunshine is one of the state's most important resources, as Florida's comfortable climate has lured vacationers for more than a century. An interstate highway system exists throughout the state, providing easy access along both the inter-coastal areas and the coastline cities. Tallahassee is the capital of Florida. It is located in the northern part of the state along the Atlantic coast. Floridas many metro cities include Orlando (central), Miami (south), and Daytona Beach (central). Historically, agriculture and tourism have provided much of the economic influence throughout Florida. Since World War II, Floridas economy has become more diverse. Tourism, cattle, citrus, and phosphate have been joined by several new industries that have greatly expanded the number of jobs in the state. The citrus industry continues to prosper, despite occasional winter freezes, and tourism also remains important, bolstered by large capital investments.
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Florida attractions, such as the large theme parks in the Orlando area, bring millions of visitors to the state from across the U.S. and around the world. Economic and Demographic Review Based on fieldwork conducted in the area and our in-house sources, we have evaluated various economic and demographic statistics to determine trends in lodging demand. A primary source of economic and demographic statistics used in this analysis is the Complete Economic and Demographic Data Source published by Woods & Poole Economics, Inc. a well-regarded forecasting service based in Washington, DC. Using a data base containing more than 300 variables for each county in the nation, Woods & Poole employs a sophisticated regional model to forecast economic and demographic trends. Historical statistics are based on census data and information published by the Bureau of Economic Analysis. Projections are formulated by Woods & Poole, and all dollar amounts have been adjusted for inflation, thus reflecting real change. This data is summarized in the following table.
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Economic and Demographic Data Summary

Average Annual Compounded Change 1990-00 2000-07 2007-10
1990 Resident Population (Thousands) Broward County Miami-Fort Lauderdale-Miami Beach, FL MSA State of Florida United States Per-Capita Personal Income* Broward County Miami-Fort Lauderdale-Miami Beach, FL MSA State of Florida United States W&P Wealth Index Broward County Miami-Fort Lauderdale-Miami Beach, FL MSA State of Florida United States Food & Beverage Sales (Millions)* Broward County Miami-Fort Lauderdale-Miami Beach, FL MSA State of Florida United States
2000
2007
2010
1,263.3 4,078.6 13,033.3 249,622.8 $26,964.0 25,858.0 22,735.0 22,634.0 121.9 117.9 104.3 100.0 $1,523.0 4,478.6 13,439.8 215,240.0
1,632.7 5,028.8 16,048.9 282,193.5 $28,727.0 29,209.0 26,669.0 27,919.0 105.7 107.9 99.2 100.0 $1,951.3 5,668.9 17,165.3 278,161.2 $21,900.0 60,929.3 182,411.6 2,867,300.2
1,851.6 5,643.6 18,478.2 303,041.1 $30,453.0 30,759.0 27,859.0 29,130.0 108.1 109.6 99.9 100.0 $2,575.8 7,376.6 22,722.7 341,296.4 $26,962.5 74,399.2 227,454.3 3,339,578.1
1,954.3 5,951.0 19,424.2 311,844.0 $31,307.0 31,744.0 28,881.0 30,133.0 107.6 109.5 100.1 100.0 $2,825.6 8,091.5 24,885.8 366,302.0 $29,267.2 80,738.0 246,096.1 3,538,596.1
2.6 % 2.1 2.1 1.2 0.6 1.2 1.6 2.1 (1.4) (0.9) (0.5) 0.0 2.5 2.4 2.5 2.6 3.7 3.3 3.6 3.3
1.8 % 1.7 2.0 1.0 0.8 0.7 0.6 0.6 0.3 0.2 0.1 0.0 4.0 3.8 4.1 3.0 3.0 2.9 3.2 2.2
1.8 % 1.8 1.7 1.0 0.9 1.1 1.2 1.1 (0.2) (0.0) 0.1 0.0 3.1 3.1 3.1 2.4 2.8 2.8 2.7 1.9
Total Retail Sales (Millions)* Broward County $15,267.9 Miami-Fort Lauderdale-Miami Beach, FL MSA 44,072.9 State of Florida 128,637.7 United States 2,079,504.0
* Inflation Adjusted
Source: Woods & Poole Economics, Inc.
The U.S. population has grown at an average annual compounded rate of 1.0% during the last half decade. The countys population has grown at a quicker pace than the nations population; the average annual growth rate of 1.8% between 2000 and 2007 reflects a gradually expanding area. Per-capita personal income changed slowly, at 0.8% on average annually for the county between 2000 and 2007. Local wealth indexes have remained stable in recent years, registering a relatively high 108.1 level for the county in 2007.
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Food and beverage sales and retail sales continue to show positive change within the county, the state, and the nation; a continued 3.1% average annual growth rate is anticipated for the countys food and beverage sales in 2007 through 2010. A modestly slower 2.8% positive average annual change is expected in county retail sales through 2010. Work Force Characteristics The characteristics of an area's workforce provide an indication of the type and amount of transient visitation likely to be generated by local businesses. Sectors such as finance, insurance, and real estate (FIRE); wholesale trade; and services produce a considerable number of visitors who are not particularly rate sensitive. The government sector often generates transient room nights, but per-diem reimbursement allowances often limit the accommodations selection to budget and mid-priced lodging facilities. Contributions from manufacturing, construction, transportation, communications, and public utilities (TCPU) employers can also be important, depending on the company type. The following table sets forth the local county workforce distribution by business sector in 1990, 2000, and 2007, as well as a forecast for 2010.
Historical and Projected Employment - Local County (000s)
Average Annual Compounded Change Industry Farm Agriculture Services, Other Mining Construction Manufacturing Trans., Comm. & Public Utils. Total Trade Wholesale Trade Retail Trade Finance, Insurance, & Real Estate Services Total Government Federal Civilian Govt. Federal Military Govt. State & Local Govt. TOTAL 1990 1.0 6.4 0.9 43.5 44.6 27.0 165.3 34.8 130.5 63.6 208.7 71.6 6.1 3.8 61.8 632.5 Percent of Total 0.2 % 1.0 0.1 6.9 7.0 4.3 26.1 5.5 20.6 10.0 33.0 11.3 1.0 0.6 9.8 100.0 % 2000 0.9 8.5 0.6 52.9 40.7 38.5 208.8 49.2 159.6 88.2 316.3 92.7 7.7 3.8 81.2 848.1 Percent of Total 0.1 % 1.0 0.1 6.2 4.8 4.5 24.6 5.8 18.8 10.4 37.3 10.9 0.9 0.5 9.6 100.0 % 2007 0.9 10.5 0.5 57.2 36.7 41.7 236.7 58.3 178.5 106.2 389.2 109.3 8.1 4.0 97.2 988.9 Percent of Total 0.1 % 1.1 0.0 5.8 3.7 4.2 23.9 5.9 18.0 10.7 39.4 11.1 0.8 0.4 9.8 100.0 % 2010 0.9 10.9 0.5 60.1 37.5 44.2 248.0 62.9 185.2 109.7 414.0 116.0 8.4 4.0 103.5 Percent of Total 0.1 % 1.0 0.0 5.8 3.6 4.2 23.8 6.0 17.8 10.5 39.7 11.1 0.8 0.4 9.9 1990-2000 2000-2007 2007-2010 (0.8) % 3.0 (3.1) 2.0 (0.9) 3.6 2.4 3.5 2.0 3.3 4.2 2.6 2.5 0.2 2.8 3.0 % (0.5) % 3.0 (3.8) 1.1 (1.5) 1.1 1.8 2.4 1.6 2.7 3.0 2.4 0.6 0.6 2.6 2.2 % (0.3) % 1.3 0.6 1.7 0.7 2.0 1.6 2.6 1.2 1.1 2.1 2.0 1.4 (0.1) 2.1 1.7 %
1,041.6 100.0 %
Source: Woods & Poole Economics, Inc.
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This source reports that between 1990 and 2007, one of the most significant employment growth rates occurred in the services sector. During this time frame, services employment increased from 208,700 persons (rounded) to 389,200 persons (rounded), reflecting an increase of 86%. Woods & Poole forecasts indicate expected employment growth at a rate of 1.7% annually through 2010. Major Business and Industry Providing additional context for understanding the nature of the regional economy, the following table presents a list of the major employers in the subject propertys market.
Major Employers
Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Firm Tenet Healthcare Corporation American Express The Continental Group Motorola Citrix Systems JM Family Enterprises Interbond Corp. of America dba BrandsMart USA City Furniture Brown Jordan International Sun-Sentinel Co. Spherion Corporation Republic Services Pylon Manufacturing Corp. Muvico Theaters Ed Morse Automotive Group Gold Coast Beverage Distributors American Changer Corp. Source: Broward Alliance
Municipality Fort Lauderdale Plantation Hollywood Plantation Fort Lauderdale Deerfield Beach Hollywood Tamarac Pompano Beach Fort Lauderdale Fort Lauderdale Fort Lauderdale Deerfield Beach Fort Lauderdale Fort Lauderdale Pompano Fort Lauderdale
Number of Employees 5,000 4,200 3,900 3,000 1,885 1,732 1,700 1,559 1,460 1,056 900 862 836 773 690 590
Broward County houses a number of large firms, some of which are Fortune 500 companies. The preceding table lists the top 17 companies ranked according to the number of employees employed within Broward County and their municipal location. These companies represent a variety of sectors, including retail, financial, transportation, and education. Additionally, the
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top five companies with their headquarters in Broward County ranked by revenue are AutoNation, JM Family Enterprises, Republic Services, Technical Olympic USA and Spherion Corporation. The presence of these employers and other firms indicates a steady source of lodging demand in the Fort Lauderdale market. The following bullet points highlight major demand generators for this market: Tenet Healthcare is the largest employer for the area. Tenet Healthcare Corporation, through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet owns and operates 54 acute care hospitals in 12 states, which offer a wide array of medical services. Tenet has an annual economic impact of between $70 and $90 million to the Broward County region. One of the largest employers for the market is American Express. The company's customer service call center is located just west of Fort Lauderdale. American Express was named South Florida Business Journal's Corporate Diversity Award Winner for 2005 and was number seventeen on Fortune Magazine's Top 20 Most Admired Companies for 2007 for the second straight year. This company recently noted that in the third quarter of 2006, net revenues increased by 12.0% as a result of a 15.0% increase in cardholder spending. Motorola, which is known around the world for innovation and leadership in wireless and broadband communications, is the fourthlargest employer in the county. The Broward County facility has undergone four expansions since opening and is currently almost one million square feet in size. The company gives back to the South Florida community by offering over $1,000,000 annually in community service programs and charitable donations.
The market is in the midst of strengthening, and the general outlook for the area is optimistic with an expectation of continued growth in the foreseeable future. According to The Broward Alliance, several companies in this area have recently expanded their facilities or relocated into this area, and this trend is expected to continue as the market becomes stronger.
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Unemployment Statistics
The following table presents historical average unemployment rates for the city of Fort Lauderdale and the local MSA, versus those of the state and the nation, from 2002 to the most recent month in 2007.
Unemployment Statistics
City of Fort Lauderdale 6.6 % 6.1 5.2 3.5 3.0 Broward County 6.4 % 5.9 5.0 3.8 3.0 State of Florida 5.5 % 5.1 4.7 3.8 3.3
Year 2002 2003 2004 2005 2006
U.S. 5.8 % 6.0 5.5 5.1 4.6
Recent Month - December 2006 2.6 % 2007 4.0
2.7 % 4.0
3.0 % 4.4
4.4 % 5.0
Source: Bureau of Labor Statistics
The national unemployment rate was 4.6% in 2007, reflecting no overall change from 2006. During the first half of 2007, the national unemployment rate was below that of the corresponding period in 2006; however, 2007 unemployment rates rose for the months of September through December to levels higher than those of the corresponding months in 2006. We expect unemployment rates to follow a similar upward trend through the first half to three-quarters of 2008 in-line with a mild economic recession, followed by a return to slow employment growth in the latter part of the year. Locally, the city of Fort Lauderdale unemployment rate was 3.0% for year-end 2006; for this same area in 2007, the most recent months unemployment rate was registered at 4.0%, versus 2.6% for the same month in 2006. Unemployment rates in Fort Lauderdale have declined as area industries have continued their recovery trend following a period of economic softening earlier this decade. Local employment has been strong at entities such as Motorola and American Express. Our interviews with economic development officials reflect a promising outlook for the area. Office Space Statistics Trends in occupied office space are typically among the most reliable indicators of lodging demand, because firms that occupy office space often exhibit a strong propensity to attract commercial visitors. Thus, trends that
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cause changes in vacancy rates or in the amount of occupied office space may have a proportional impact on commercial lodging demand, and a less direct effect on meeting demand. The following tables detail office space statistics for the pertinent market area.
Table Office Space Statistics 4th Quarter 2006
Submarket Commercial Corridor Cypress Creek Deerfield Beach Downtown (CBD) Fort Lauderdale Hollywood NW Broward Plantation Pompano Beach Sawgrass SW Broward Totals / Averages Net Rentable Area (SF) 1,932,277 3,549,450 949,351 4,734,769 1,809,000 2,098,647 1,215,974 2,952,319 832,257 1,800,456 2,160,844 24,035,344 Under Construction (SF) 100,000 268,000 210,000 220,000 798,000 Vacancy Rate 6.3 % 7.3 6.4 10.6 6.0 3.6 10.9 3.6 9.5 9.7 5.4 7.2 % Net Absorption 111,990 212,672 16,055 224,311 (2,170) 113,176 30,665 129,411 (18,478) 71,498 221,044 1,110,174 Average Asking Lease Rate $14.02 15.46 14.26 19.26 15.47 16.26 17.86 14.69 11.81 18.85 19.88 $16.84
Source: CB Richard Ellis, Marketview Fourth Quarter 2006
Table Office Space Statistics 4th Quarter 2007

Submarket Cypress Creek Deerfield Beach Downtown (CBD) Fort Lauderdale Hollywood NW Broward Plantation Pompano Beach Sawgrass SW Broward Commercial Corridor Totals/Averages Net Rentable Area (SF) 3,649,450 949,351 5,128,372 1,809,000 2,098,647 1,264,474 2,811,319 832,257 1,800,456 2,160,844 1,981,157 24,485,327 Under Construction (SF) 0 0 0 66,517 0 0 0 0 221,122 0 0 287,639 Vacancy Rate 11.7 % 12.8 16.2 6.4 6.2 14.3 9.5 10.5 7.8 12.8 7.4 11.1 % Net Absorption (64,332) (33,078) (29,438) (19,843) (45,912) 19,712 70,484 (8,037) 37,737 (155,671) (21,871) (250,249) Average Asking Lease Rate $15.85 14.48 20.95 15.69 18.00 17.26 18.81 12.79 18.44 21.39 14.10 $18.21
Source: CB Richard Ellis, Marketview Fourth Quarter 2007
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Overall, office vacancy represented 11.1% in the greater market area, and the areas lease rate was $18.21. This was an increase of 8.1% over the same period in 2006. The subject propertys location is contained in the category named Downtown (CBD). This category shows a vacancy rate of 16.2% and a net lease rate of $20.95. The downtown submarket had a substantial increase in the vacancy rate due to the completion of 268,000 square feet of additional space while at the same time the lease rate increased $1.69 indicating a strong market. With the continued redevelopment of downtown Fort Lauderdale, local companies have exhibited greater interest in moving to the downtown area, as evidenced by the additional office space recently delivered within the CBD. Such a move by companies to offices in downtown Fort Lauderdale will result in declines in the vacancy rate and will create additional demand for hotels in the immediate area. The increase in vacancy rate not withstanding, development in the area continues with over 500,000 square feet to come into the downtown submarket by 2010. This will be anchored by the Atlantic Center, an iconic tower that will be located on S.E. Second Street, just south of Broward Boulevard, and will encompass 437,000 square feet of Class A office space. Convention Activity A convention center serves as a gauge of visitation trends to a particular market. Convention centers also generate significant levels of demand for area hotels and serve as a focal point for community activity. Typically, hotels within the closest proximity to a convention center up to three miles away will benefit the most. Hotels serving as headquarters for an event benefit the most, by way of premium rates and the hosting related banquet events. During the largest of conventions, peripheral hotels benefit from compression within the city as a whole. The $49-million, three-story Greater Fort Lauderdale/Broward County Convention Center opened in September 1991 at the intersection of the 17th Street Causeway and Eisenhower Boulevard and bordered by the Intracoastal Waterway. This 600,000-square-foot (gross) waterfront facility is owned by Broward County and contains three levels of flexible meeting facilities. Net usable meeting, exhibit, and gathering spaces include 199,500 square feet of exhibit space, a 31,600-square-foot Grand Floridian Ballroom, a 20,300-square-foot Floridian Ballroom, 46,300 square feet of meeting and break-out rooms, and 101,300 square feet of prefunction/lobby/concourse areas. In addition to the street-level entrance, the center can be accessed by a climate-controlled skywalk connected to the second level of the adjacent parking garage.
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Convention Center
The Center completed a series of improvements and expansion projects totaling $34-million in 2001. Meeting space was expanded to 251,000 square feet with other improvements including upgrades to ballroom lighting, replacement of pre-function area carpeting, and a renovation of exhibit hall concession stands, including the addition of backlit awnings to increase visibility. The area immediately surrounding the convention center has also experienced development, including a three-level retail complex, North Port Marketplace, which offers 77,000 square feet of retail space and restaurants. In May 2007, LMN Architects completed a space allocation summary for a possible future expansion of the Convention Center. This summary includes adding 180,000 square feet of exhibit space, 70,000 square feet of ballroom/meeting space, and a 25,000-square-foot auditorium, as well as other lobby, back-of-the-house, and administrative areas. Overall, this expansion would essentially double the overall gross size of the Convention Center from its current 600,000 to 1,200,000. No official timing was provided regarding this possible expansion; however, we assume it would take place after the opening of the subject hotel.
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Convention Center Floor Plans: Level I
Convention Center Floor Plans: Level 2
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Convention Center Floor Plans: Level 3
The following table illustrates recent use statistics for this facility.
Convention Center Statistics
Year 2003 2004 2005 2006 2007 2008* 2009* 2010* 2011* 2012* Conventions 29 33 44 47 37 36 26 28 16 15 Number of Meetings Meetings Total 397 403 451 549 544 296 90 39 16 5 426 436 495 596 581 332 116 67 32 20 % Change 2.3 % 13.5 20.4 (2.5) Attendance Conventions Meetings Total 57,960 183,095 163,881 209,957 197,695 200,630 195,740 195,700 173,190 163,037 465,410 259,096 363,067 429,773 356,832 112,606 40,210 86,083 7,713 12,765 523,370 442,191 526,948 639,730 554,527 313,236 235,950 281,783 180,903 175,802 % Change (15.5) % 19.2 21.4 (13.3)
* Definites and Tentaives on the books as of December 18, 2007 Source: Greater Fort Lauderdale Convention & Visitors Bureau
According to the local Convention and Visitors Bureau, this facility posted increased utilization (number of events and delegates) through 2006, with a modest decline illustrated in 2007. Despite the impact of major hurricanes in 2005, 2005 and 2006 posted the Center's best performance to date. The number of conventions reached a peak of 47 in 2006 with a moderate decline
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illustrated in 2007. The number of meetings generated by the CVB remained relatively flat in 2007 compared to 2006. This total number of meetings in 2007 equated to 581, reflecting a modest 2.5% decrease from 2006. Similarly, the number of total delegates posted strong growth in 2005 and 2006, followed by a moderate decline in 2007. 2008 conventions and convention delegates on-the-books are currently on pace with 2007 levels. General meetings on-the-books for 2008 are well behind historical levels; however, we note that general meetings for 2008 have a greater likelihood to fill-in within the current year, unlike conventions which book further in advance. As illustrated in the following table, total room nights from both conventions and general meetings posted very strong growth in 2005 and remained relatively flat in 2006. Nonetheless, room nights tapered moderately in 2007, as a result of meetings room nights. We note convention room nights in 2007 posted strong growth nearly reaching the high level posted in 2005. Room nights on-the-books for 2008 indicate a very strong rebound in convention room nights, while room nights related to general meetings show a notable lag compared to prior years. General meeting room nights for 2008 are expected to fill-in within the current year due to their more short-term booking window.
Convention Center Statistics
Year 2003 2004 2005 2006 2007 2008* 2009* 2010* 2011* 2012* Number of Room Nights Conventions Meetings Total 73,572 132,746 148,459 127,084 142,524 193,174 175,873 176,582 121,673 128,239 610,995 578,287 772,596 789,604 693,783 220,506 103,103 80,509 23,667 22,131 684,567 711,033 921,055 916,688 836,307 413,680 278,976 257,091 145,340 150,370 % Change 3.9 % 29.5 (0.5) (8.8)
* Definites and Tentaives on the books as of December 18, 2007 Source: Greater Fort Lauderdale Convention & Visitors Bureau
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Airport Traffic
Airport passenger counts are important indicators of lodging demand. Depending on the type of service provided by a particular airfield, a sizable percentage of arriving passengers may require hotel accommodations. Trends showing changes in passenger counts also reflect local business activity and the overall economic health of the area. Fort Lauderdale Hollywood International Airport (FLL) consists of four passenger terminals that house approximately 57 gates, restaurants, gift shops, and business centers. The airport serves 39 air carriers that provide non-stop service to more than 40 U.S. cities, as well as international service to Canada, the Bahamas, the Caribbean, Mexico, Latin America, and South America. Some of the major commercial airlines that serve Fort Lauderdale/Hollywood International Airport include AirTran, America West, American Airlines, Continental, Delta, JetBlue, Northwest, Southwest, Spirit, United, and US Airways. The airports current focus is to relieve traffic congestion and shorten delay times. The following table illustrates recent operating statistics for the Fort Lauderdale Hollywood International Airport.
Airport Statistics - Fort Lauderdale Hollywood International Airport
Fort Lauderdale Hollywood International Airport Passenger Percent Percent Traffic Change* Change** 17,037,261 17,937,708 20,819,292 22,390,285 21,367,598 22,681,903 5.3 % 16.1 7.5 (4.6) 6.2 5.3 % 10.5 9.5 5.8 5.9
Year 2002 2003 2004 2005 2006 2007
*Average annual compounded change from the previous year **Average annual compounded change from 2002 Source: Fort Lauderdale Hollywood International Airport
Fort Lauderdale/Hollywood International Airport was recognized as the fastest-growing airport in the country between 1995 and 2002. In 2004, the airport recorded its largest increase in passenger traffic count, a 16.1%
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increase over the previous year. Airport statistics for 2005 show a continuation of the strong growth trend. However, 2006 had a significant decline in traffic. This was primarily due to a reduction in service by major carriers such as Delta, United and US Air as they struggled to escape bankruptcy by cutting low producing flights during that year. By 2015, passenger traffic at the airport is expected to increase to 25 million. To accommodate such demand, the airport is currently undergoing a 20-year expansion, which was approved by both the city and the county in 1997. The expansion plans include doubling the size of the current terminal complex to accommodate 70 gates, increasing parking spaces from 9,000 to 19,000 spaces, airfield improvements to accommodate increased air-carrier demand, improving roadways, creating new entrances, and building new air cargo and maintenance centers, among others. Port Everglades Broward County is served by Port Everglades, which is partially located within the city of Fort Lauderdale. Since its construction in 1927, Port Everglades has grown to become one of south Floridas strongest economic engines, with annual operating revenues of more than $112 million and total waterborne commerce close to 25 million tons of liquid, bulk, automotive, and containerized cargo. More than 6,300 ships call at Port Everglades in a year, forming the basis of a diverse maritime operation. This operation includes a thriving cruise industry and a reputation as the worlds best cruise port; a growing containerized cargo business that establishes Port Everglades among the nations top seaports; a major petroleum storage and distribution hub; a primary bulk cargo depot for South Florida; and a U.S. Navy liberty port. In an Economic Impact Study performed by the Maritime Administration in 1989, it was determined that Port Everglades multi-faceted business generates in excess of $4 billion in annual economic impact to the surrounding community, and up to 100,000 jobs are directly or indirectly associated with seaport activities. The seaport is renowned for its commitment to ongoing capital improvements, environmental protection, and convenient maritime operations with connections through the adjacent Fort Lauderdale/Hollywood International Airport and direct links with Floridas highway system via I-595. To accommodate and better serve the cruise business, Port Everglades utilizes two parking facilities. The Northport Garage comprises 2,500 parking spaces and is easily accessed through the 17th Street Causeway. The
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recently expanded Midport Garage contains 2,000 spaces, and is easily accessed from I-595. Port Everglades is divided into three areas of operation: Southport, Midport, and Northport. The Southport area is used for cargo operations, with a focus on lift-on/lift-off containerized operations and roll-on/roll-off services. The Midport area provides cruise berthing, cargo facilities, military vessel berthing, and smaller lay-in spaces. The Northport area primarily handles cruise operations, liquid bulk unloading, and other miscellaneous cargo operations. Petroleum fuels make up 28.8% of the ports revenue with roundly 124 million barrels in 2004. Port Everglades handles more than 4.1 million passengers annually and is home to 49 ships belonging to 17 different cruise lines. Regarded as the worlds finest cruise port, Port Everglades has won the prestigious Grand Prix Mondial du Voyage award an unprecedented eight times, most recently in 2001, and has been named by Dreamworld Cruise Destinations magazine as the worlds best cruise port as well as the best and most efficient port in the Caribbean region. On December 21, 2003, Port Everglades set a world record by hosting 44,100 passengers traveling on 15 cruise ships. Cruise companies utilizing Port Everglades as a home port include Bahamas Florida Express, Carnival Cruise Lines, Celebrity Cruises, Costa Cruises, Crystal Cruises, Cunard Line, Discovery Cruise Lines, Holland America Line, Imperial Majesty Cruise Line, MSC Italian Cruises, Princess Cruises, Radisson Seven Seas Cruises, Royal Caribbean International, Sea Escape Cruises Ltd., Seabourn Cruise Line, and Silversea Cruises. Port Everglades is constantly undergoing renovations and expansions to improve the ever-popular facility, with investments totaling approximately $40.1 million in fiscal year 2004 and roundly $50.9 million in 2005. By 2020, the port is expected to nearly double its annual cargo tonnage and cruise passengers, compared to 2004 levels. With the ongoing expansion of the cruise facilities and significant fleet additions, Port Everglades will continue to build upon its distinction as Americas Best Cruise Port. The port offers a diversified fleet of luxury cruise ships and itineraries and the convenience of an international airport next door. In addition, the ports Foreign Trade Zone (FTZ), Floridas first free zone facility, offers businesses duty-related advantages for importing and exporting goods.
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Cruise passenger activity typically generates lodging demand consisting of passengers arriving a day prior to departure and/or extending their stay in the area. The following table shows historical cruise passenger counts for Port Everglades. (2007 data was not available at the time of our research).
Port Everglades Statistics
Port Everglades Cruise Percent Passengers Change 2,873,968 3,154,399 3,449,644 3,605,152 4,045,567 3,599,905 3,303,343 9.8 % 9.4 4.5 12.2 (11.0) (8.2)
Year 2000 2001 2002 2003 2004 2005 2006
Source: Greater Fort Lauderdale Convention & Visitors Bureau
The total cruise passenger count exhibited consistent healthy growth rates from 2001 to 2004. The slower rate of growth recorded in 2003 can primarily be attributed to the reassignment of some multi-day ships to growth markets in the Pacific. The decline in the total cruise passenger count in 2005 can be attributed to the combined effects of the bankruptcy of St. Tropez Casino Cruises and the occurrence of three major hurricanes: Rita, Wilma, and Katrina. However, the cruise ports loss of business operations from the bankruptcy of St. Tropez Casino Cruises was somewhat replaced by the entrance of three new cruise ships: the Jewel of the Seas by Royal Caribbean International, the Westerdam by Holland America Line, and MSC Opera by MSC Cruises. The decrease in cruise passengers in 2006 is partly the continued result of the three hurricanes that affected the market in late 2005, and the occurrence of Hurricane Ernesto in the third quarter of 2006. Tourist Attractions and Events Domestic and international tourism has traditionally been a mainstay of the Florida economy. In particular, the Miami-Fort Lauderdale-Miami Beach, FL MSA has benefited from substantial growth in tourism over the past several years. Broward Countys favorable weather has proven very attractive for visitors coming from northeastern and nearby states of the country, as well as from Canada, Latin America, and Europe. The market features a variety of
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tourist and leisure attractions owing to its coastal location. As such, this area benefits from a high amount of leisure demand throughout the year, as visitors from the north travel south during the winter, and cruise-related demand peaks during the summer. Throughout the year, weekend demand also comprises travelers passing through en route to other destinations, people visiting friends or relatives, and other similar weekend demand generators. Fort Lauderdale boasts more than seven miles of beaches that offer residents and visitors premier opportunities for recreation, relaxation, and enjoyment. The citys award-winning wave-wall and signature beachfront promenade highlight Fort Lauderdales world famous coastline, which is punctuated by an array of shops, restaurants, sidewalk cafs, and entertainment venues. Beachgoers can participate in a wide range of activities from boating, wind surfing, jet skiing, and volleyball to snorkeling, scuba diving, deep-sea fishing, and rollerblading. Additional Fort Lauderdale tourist activities are listed below. African American Research Library & Cultural Center Ah-Tah-Thi-Ki Museum Anne Kolb Nature Center Billie Swamp Safari Bonnet House Museum & Gardens Boomers Amusement Park Broward Center for the Performing Arts Buehler Planetarium Butterfly World Everglades Day Safari Flamingo Gardens & Wray Botanical Collection Fort Lauderdale Antique Car Museum International Swimming Hall of Fame Jungle Queen Riverboat Museum of Art
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Museum of Discovery & Science and Blockbuster 3D Imax Theater Office Depot Sports and Concerts Center Old Fort Lauderdale Village & Museum Riverwalk Beach Mile Sawgrass Mills Shopping Mall Young at Art Childrens Museum
To further attract domestic and international visitors to the area, the Greater Fort Lauderdale Convention and Visitors Bureau has developed several marketing and tourism programs geared to attract different market segments through public relations efforts. These programs include attending major tourism trade shows and events to strengthen relationships with key stakeholders, target market blitzes in main market feeders such as New York City and Chicago, and brand awareness campaigns in select media. Market Area Conclusion This section discussed a wide variety of economic indicators for the pertinent market area. It is evident that the area was subject to an economic correction earlier this decade, concurrent with the rest of the nation. Recent indicators and our market interviews and research show improvement. The outlook for the area is generally favorable, and real growth is expected to continue through the near term.
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Facility Overview and National Survey 5-1
5. Facility Overview and National Survey
DESCRIPTION OF THE PROPOSED PROJECT
The quality of a lodging facility's physical improvements has a direct influence on marketability, attainable occupancy, and average room rate. The design and functionality of the structure can also affect operating efficiency and overall profitability. This section investigates the subject's proposed physical improvements and personal property in an effort to determine how they are expected to contribute to attainable cash flows. Furthermore, we compare the subject's planned program to that of comparable hotels nationwide in order to determine the facilities and amenities required of headquarters hotels to compete for international, national, regional, and local group business. The proposed Hilton Convention Hotel is planned to be a full-service lodging facility containing 1,000 rentable units. The 27-story property is projected to open on or about March 1, 2011 and feature a three-meal restaurant, a specialty restaurant, a coffee shop, a lobby bar, a sports bar, a pool bar, 72,800 square feet of meeting space, a 12,000-square-foot fullservice spa, an outdoor swimming pool, an exercise room, a business center, and a gift shop.
Project Overview
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Rendering of Subject Property
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Design and Configuration
The proposed subject property is planned to be a high-rise tower structure of architectural significance constructed along S.E. 17th Street, with the IntraCoastal Waterway to its east and a pedestrian bridge attached to the Convention Center to its west. Access to the site is planned to be reconfigured as part of the overall Port Everglades Master Plan, which should lead motorists conveniently to the porte cochere planned for the west end of the structure. Overall, the planned site improvements for the property appear appropriate for an upscale convention hotel of this caliber and market focus. In general, the Ground Level is expected to house the property's lobby, front office, and food and beverage spaces, with a two-story design. The Level 1 Mezzanine is planned to overlook part of the Ground Level and contain recreation spaces and back-of-the-house housekeeping areas. Meeting spaces are planned for Level 2, as well as banquet storage. Level 2 Mezzanine is to accommodate the full-service spa, additional meeting rooms, and administrative areas. The main ballroom is planned for Level 3, along with some smaller meeting rooms and some guestrooms. Guestrooms continue on Levels 4 through 23. The attached parking structure will feature seven levels of above-ground parking. The following diagrams depict the layout and configuration of the subject property.
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Building Cross Section
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Floor Plan - Ground Level
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Floor Plan - Level 1 Mezzanine
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Floor Plan - Level 2
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Floor Plan - Level 2 Mezzanine
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Floor Plan - Level 3
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Floor Plan - Levels 7 through 23
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Typical Guestroom
Summary of the Facilities
In the planning and design considerations for hotels, guest comfort and satisfaction are paramount but must be developed within the boundaries defined by economic feasibility. Guest satisfaction is generated not only by the aesthetic and structural design parameters that directly affect the hotel's guestrooms and public areas but also by the functional layout and configuration of the building as a whole.
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The design, functional layout, and configuration of the proposed subject property must be straightforward and incorporate sound design principles for hotel construction and in accordance with generally accepted standards for a first-class hotel. The design of guest, public, and back-of-the-house traffic circulation patterns, the separation of back-of-the-house facilities from the public facilities, and the ease of access from public to non-public areas are also among the major design factors that promote guest comfort and efficiency of operation. The optimal design for the proposed subject property should not only encompass the recommended facilities, but is also expected to appropriately balance the considerations of guest satisfaction, operational efficiency, and cost benefit. Based on information provided by development representatives of the subject property, the following table summarizes the facilities that will be available.
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Proposed Facilities Summary
Guestroom Configuration King Queen/Queen Standard Suite Hospitality Suite Executive Suite Presidential Suite Total Food & Beverage Facilities Three-Meal Restaurant Specialty Restaurant (120 Seats) Coffee Shop Lobby bar Sports Bar Pool Bar/Grille Meeting & Banquet Facilities Main Ballroom Junior Ballroom 21 Meeting Rooms 2 Boardrooms Outdoor Function Space Total Amenities Gift Shop Outdoor Swimming Pool Business Center Full-Service Health Spa (12,000 SF) Services Assumed Self and Valet Parking in Adjacent Parking Garage Assumed Concierge
Number of Units 380 570 24 20 4 2 1,000 Square Footage 6,200 3,800 1,600 2,600 2,600 -Square Footage 27,000 16,500 28,300 1,000 Excluded from total 72,800 Location/Floor Ground Level Level One Mezzanine Ground Level Level Two Mezzanine Location/Floor Ground Level Ground Level Ground Level Ground Level Ground Level Poolside Location Floor Level Three Level Two Level Two, Two Mezzanine Level Two, Level Three Level One Mezzanine Meals Served/ Hours of Operation B-L-D D All Day Afternoon-Evening Afternoon-Evening Afternoon-Evening
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Project Timing
Our forecast must begin on a given date. For the purpose of this analysis, we have assumed an opening date of March 1, 2011 for the subject property. This date takes into consideration necessary time for funding, predevelopment (plan approval, permits), and construction. Moreover, our occupancy build-up takes into consideration the formidable task of opening a hotel on a specific date. Most often, hotels are open almost finished. These properties are in functional condition, but staff is still being trained and construction odds and ends are being attended to. Technology glitches are being handled, and back-ordered items are still being installed. Our projections assume that throughout the ten-year projection period the subject hotel will be managed by Hilton Hotels as a Hilton-branded property, or a major first-tier, hotel management company which provides a nationally recognized brand name appropriate for the operation of a first-class, fullservice hotel. The quality of a lodging facility's physical improvements has a direct influence on marketability, attainable occupancy, and average room rate. The design and functionality of the structure can also affect operating efficiency and overall profitability. The hotel's facilities are expected to be of a high quality level for the Fort Lauderdale area, conforming at a minimum to the brand-specific guidelines set forth by the operator of the hotel. Hence, the proposed subject property's guestrooms are expected to be upscale and comfortable. The product should conform to the guidelines to achieve a minimum three-star Mobil hotel rating and four-diamond AAA hotel rating. In addition to meeting the major brands general guidelines, we recommend that the hotels design incorporate local architectural influences as much as possible. The hotel will likely be the first stop of many conventioneers and guests and should therefore reflect a unique design that highlights what the market has to offer. This potential for an unparalleled experience would certainly give the hotel a competitive edge when compared to standard products featured by many existing hotels.
Brand Affiliation
Design and Condition
Capital Expenditures
After its opening, our analysis assumes that the hotel will require ongoing upgrades and periodic renovations in order to maintain its competitive level in this market. These costs should be adequately funded by the forecasted reserve for replacement, as long as a successful, ongoing preventive maintenance program is employed by hotel staff.
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NATIONAL HOTEL SURVEY
A headquarters hotel is simply defined as a large hotel with a location proximate to a convention center which accommodates a large portion of its business from convention attendees with additional demand generated from in-house groups, commercial, and leisure travelers. The following section of this chapter reviews the facilities of comparable group-oriented hotels nationwide in order to determine the facilities and amenities required of headquarters hotels to compete for international, national, regional, and local business at convention centers. In each area, we compare the productoffering of the subject hotel to the national hotels. The following three tables display the current room counts, opening year, AAA and Mobil ratings, suite counts, and food and beverage offerings for a selection of major group hotels in the markets considered competitive with Fort Lauderdale.
Review of Room Count, Suite Mix, and F&B Offering
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Guestroom Count, Suite Mix, Food and Beverage Outlets Competitive Review 1
Current Ratings Number Hotel Name Region Address of Rooms Year Opened
Mobil Stars AAA Diamonds
Food and Beverage Facilities Suites Total % Suites of Total Concept/ Fine Casual Lounge
THE EAST Baltimore, MD Marriott Waterfront Sheraton City-Center Renaissance Harbor Place Marriott Inner-Harbor Hyatt Radisson Lord Baltimore Sheraton Inner-Harbor Courtyard by Marriott Hilton Baltimore Convention Center Charlotte, NC The Blake Hotel Marriott City Center Hilton City Center Westin Omni Myrtle Beach, SC Sheraton Springmaid Beach Hotel Hilton Myrtle Beach Resort Embassy Suites Oceanfront Landmark Resort Sea Mist Oceanfront Resort Marriott Resort & Spa Nashville, TN Renaissance Gaylord Opryland Resort and Conference Center Sheraton Hilton Downtow n DoubleTree New Orleans, LA New Orleans Hyatt New Orleans Hilton Riverside New Orleans Sheraton New Orleans Marriott Crowne Plaza Astor Marriott at the Convention Center Embassy Suites Convention Center South South South South South South South Poydras Plaza at Loyola Avenue Two Poydras Street 500 Canal Street 555 Canal Street 739 Canal Street 859 Convention Center Boulevard 315 Julia Street 1,184 1,616 1,110 1,329 707 331 370 1976 1977 1982 1972 2002 2005 1985 NR 3 NR NR NR NR 2 4 3 3 4 NA NA NA 100 74 53 54 28 11 370 8.4 % 4.6 4.8 4.1 4.0 3.3 100.0 1 0 1 1 0 0 0 2 3 0 1 1 1 1 1 2 1 2 1 1 1 Southeast Southeast Southeast Southeast Southeast 611 Commerce Street 2800 Opryland Drive 623 Union Street 121 4th Avenue South 315 4th Avenue North 673 2,881 474 330 337 1987 1977/96 1975 2000 1979 3 3 3 NR 2 NA NA NA 4 NA 13 165 10 330 6 1.9 5.7 % 2.1 100.0 1.8 0 3 0 1 0 3 6 1 2 1 1 5 1 1 Southeast Southeast Southeast Southeast Southeast Southeast Southeast 2101 Oak Street 3200 South Ocean Boulevard 10,000 Beach Club Drive 9800 Queensway Boulevard 1501 S Ocean Boulevard 1200 South Ocean Boulevard 8400 Costa Verde Drive 402 492 385 255 570 825 405 2003 1986 1974 1987 1973 1954 2003 NR NR 3 3 NR NR NR 4 NA NA NA 3 NA NA 16 35 8 255 243 29 8 4.0 7.1 % 2.1 100.0 42.6 3.5 2.0 0 0 0 0 0 0 0 1 2 4 2 2 2 2 1 1 1 1 1 1 2 Southeast Southeast Southeast Southeast Southeast 555 South McDow ell 100 West Trade Street 222 East Third Street 601 South College Street 132 East Trade Street 308 434 400 700 374 1972/84/06 1984 1990 2003 1982 NR 3 3 3 3 4 3 4 NA 4 23 4 15 2 33 7.5 % 0.9 3.8 0.3 8.8 0 1 0 0 0 1 2 1 1 1 1 1 1 1 1 East East East East East East East East East 700 Aliceanna Street 101 Fayette Street 202 East Pratt Street 110 South Eutaw Street 300 Light Street 20 West Baltimore Street 300 South Charles Street 1000 Aliceanna Street 401 West Pratt Street 754 707 622 524 488 439 337 205 757 2001 1968 1988 1986 1981 1928 1985 2000 Fall 2008 3 NR 3 3 3 NR NR NR NR NR 4 4 3 4 3 3 3 NR 21 21 36 34 26 24 20 10 20 2.8 % 3.0 5.8 6.5 5.3 5.5 5.9 4.9 2.6 0 1 0 1 1 0 1 0 0 2 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
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Guestroom Count, Suite Mix, Food and Beverage Outlets Competitive Review 2
Current Ratings Hotel Name Region Address Number of Rooms Year Opened
Mobil Stars AAA Diamonds
Suites Total
% Suites of Total
Food and Beverage Facilities Concept/ Fine Casual Lounge
Tampa, FL Embassy Suites Tampa Marriott Waterside Hyatt Regency Westin Harbour Island Orlando, FL Disney's Swan and Dolphin Orlando World Center Marriott Peabody International Plaza Resort & Spa Wyndham Loews Royal Pacific Renaissance Orlando Resort at SeaWorld Miami, FL Hyatt Regency Miami Miami Beach, FL Ritz-Carlton South Beach Fontainbleau Hotel & Resort Loews Miami Beach Shore Club West Palm Beach, FL Marriott West Palm Beach Crowne Plaza West Palm Beach Airport Radisson West Palm Beach Airport The Breakers Palm Beach Hilton Palm Beach Airport Four Seasons Fort Lauderdale, FL Westin Diplomat Resort & Spa Harbor Beach Marriott Resort & Spa Fort Lauderdale Grande Sheraton Yankee Clipper Hyatt Regency Pier 66 San Antonio, TX Grand Hyatt Marriott Rivercenter Westin Riverwalk Hilton Palacio Hyatt Marriott Riverwalk Austin, TX Hilton Austin Proposed Marriott Complex by White Lodging Hyatt Radisson Sheraton (former Marriott) Omni
Southeast Southeast Southeast Southeast
513 South Florida Avenue 700 South Florida Avenue 211 North Tampa Street 725 South Harbour Island Boulevard
360 717 521 299
2006 2000 1982/2007 1985
2 NR 3 3
NA NA NA NA
360 36 18 10
100.0 % 5.0 3.5 3.3
0 1 0 1
1 2 1
1 1 1
Southeast Southeast Southeast Southeast Southeast Southeast Southeast
1500 Epcot Resort Boulevard 8701 World Center Drive 9801 International Drive 10100 International Drive 8001 International Drive 6300 Hollywood Way 6677 Sea Harbor Drive
2,267 2,000 981 1,088 1,052 1,000 778
1990 1986 1986 1981 1978 2002 1985
NR 3 4 NR 3 NR 3
4 4 4 NA 3 NA NA
195 101
223 51 65
8.6 % 5.1 0.0 0.0 21.2 5.1 8.4
3 0 1 0 0 1 0
7 4 1 2 2 4 4
6 2 1 2 1 1 1
Southeast
400 South East Second Avenue
612
1982
NR
51
8.3 %
Southeast Southeast Southeast Southeast
One Lincoln Road 4441 Collins Avenue 1601 Collins Avenue 1901 Collins Avenue
375 402 790 307
2004 1954 1998 1947
5 3 4 NR
NA NA 4 NA
33 2 50 70
8.8 0.5 6.3 22.8
1 2 1 1
1 2
1 1 1 1
Southeast Southeast Southeast Southeast Southeast Southeast
1001 Okeechobee Boulevard 1601 Belvedere Road 1808 S. Australian Avenue One South County Road 150 Australian Avenue 2800 South Ocean Boulevard
352 219 179 550 245 210
1981 1983 1987 1926 1984 1989
3 NR NR 4 3 5
NA NA NA NA NA NA
7 104 90 58 2 13
2.0 % 47.5 50.3 10.5 0.8 6.2
0 0 0 1 0 1
1 1 1 7 2 2
1 1 1 1 1
Southeast Southeast Southeast Southeast Southeast
3555 South Ocean Drive 3030 Holiday Drive 1881 Southeast 17th Street 1140 Seabreeze Blvd. 2301 Southeast 17th Street
998 650 589 500 384
2002 1984 1980 1968 1957
3 3 3 3 3
NA NA NA NA NA
100 32 16 8 8
10.0 % 4.9 2.7 1.6 2.1
1 1 1 1 0
4 2 1 1 2
1 1 3 1
South South South South South South
600 East Market Street 101 Bowie Street 420 West Market Street South Alamo Street 123 Losoya 711 East Riverwalk
1,003 1,001 473 483 631 500
Feb-08 1968 1999 1968 1981 1979
NR 3 3 3 3 2
NR 4 NA NA 4 4
63 86 66 28 4
6.3 % 8.6 14.0 0.0 4.4 0.8
0 1 0 0 0 0
1 1 2 1 1 1
2 2 1 2 1 1
South South South South South South
500 East 4th Street Congress Ave. between 2nd & 3rd 208 Barton Springs 111 East Cesar Chavez Street 701 East 11th Street 700 San Jacinto Street @ 8th Street
800 1,000 448 413 362 375
2003 2009 1982 1966 1986 1986
NR NR 3 2 3 4
4 NA 4 3 4 4
25 NA 18 99 4 37
3.1 % 4.0 24.0 1.1 9.9
1 NA 0 0 0 0
1 NA 1 1 1 1
1 NA 1 0 1 1
Meeting planners prefer to have a majority of their constituents within the larger, headquarters room block. If a convention is able to house the majority
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of constituents at a singular property, less coordination efforts are needed between hotels. Moreover, the meeting planner has a greater chance at capturing the attendee for more convention-related events if the attendee is housed within the property. Smaller room blocks are booked at surrounding hotels as necessary, typically within close proximity to the convention center and headquarters hotel. Convention travelers themselves also prefer to be within the headquarters hotel. A headquarters hotel is considered the hotel a particular convention group is using as their base of operations. Typically any large hotel proximate to the convention center can be considered a headquarters hotel for any particular convention. Often, meeting attendees want to retreat to their guestrooms between meetings for breaks, to drop-off or pick-up materials, or handle other necessities. It is also the most easy and preferred access to the meetings at the beginning and end of the days sessions. If staying at a nearby hotel, guests often have to reserve more time for transportation to and from the meeting facility and cannot escape to guestrooms between sessions. Several years ago, the presence of the substantial headquarters hotel was more of an exception to the norm. As such, large conventions were willing to split up their attendees among many different hotels, as well as settling for a smaller headquarters hotel block. However, in recent years, a shift has occurred toward cities adding headquarters properties. Substantial room blocks are available in large hotels located adjacent to the regions most significant convention centers. Meeting planners now have their pick of facilities, which offer substantial room blocks within the headquarters hotel. As noted, the subject property should ideally attain a minimum three-star and four-diamond ratings. A mix of standard guestrooms and suites is necessary to compete. The design program is recommended to include conference suites, hospitality suites, junior suites, executive suites, deluxe suites, VIP suites, and even presidential suites. Suites with specialized purposes, such as conference and hospitality suites are generally not sold as sleeping rooms. We note that the latest in hotel design shows that a smaller suite count is now demanded in todays market; this trend should be taken into consideration in the suite count of the proposed hotel when compared to older hotel facilities. Some suites are still an important inclusion and are typically included as upgrades for meeting planners, association officials, or corporate officers visiting the hotel.
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The proposed property's guestrooms should be designed to efficiently use space, and should appear spacious and comfortable. The guestrooms should consist of a mixture of double/doubles or queen/queens and kings, in addition to a combination of several suite arrangements. A portion of the guestrooms should have connecting doors to adjacent rooms. The planned room mix for the subject property includes 38% king rooms, 57% queen/queen units, and 5% suites of all types. This combination appears consistent with the national hotels analyzed. Guestroom furnishings should reflect a first-class level of quality. Because hotel decor periodically undergoes changes in style, an experienced interior designer should be consulted in order to implement the current offerings. Some of the items that should be provided in guestrooms are outlined in the following table.
Guestroom Amenities and Furnishings
Beds with box springs, headboards, mattresses, and pillows Recessed reading light(s) proximate to bed(s) Nightstand(s) Bedside alarm clock radio Bureau Remote-controlled color cable television with movies Over-sized desk or work table with adequate chair and lighting Direct-dial, touch-tone with message light, computer modem-port, clear instructions and extra long phone cord to allow use at desk or bed High-Speed Internet Access Comfortable armchair(s) and couch Coffee and end table(s) Curtains with blackout panels Artwork or wall hangings Portable luggage rack Adequate room lighting Wastebasket(s) Small refrigerator in suites Electronic card-style door lock with deadbolt Door chain or other, similar security device Security peephole
The closet should have a sufficient number and variety of one-piece, noncaptive hangers and a hanger bar of suitable length to accommodate three days worth of clothing for two people.
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Today's trend is that most or all guestroom floors are designated as nonsmoking floors. Guestroom wall covering should be of top-grade vinyl and color-coordinated with plush carpeting, bedspreads, and floor-length drapes. Draperies may be equipped with a valance and extend past the window edge, perhaps covering the entire wall. An efficient heating and airconditioning system that operates quietly, is thermostatically controlled, and permits guests a year-round choice of either heat or air conditioning is necessary. Special effort should be made to limit sound transmission between guestrooms and from plumbing, HVAC units, and outside sources such as passing traffic or water enthusiasts. The bath area should contain one or two sinks with a vanity top, a large mirror, and superior lighting from recessed-type fixtures. The commode and combination tub/shower can be designed to be located in the same room as the sink and vanity or separate. Proper use of mirror and lighting are considered important bathroom elements. Adequate and quiet ventilation is necessary during shower use to prevent mold. Other bath amenities should include easily reached electrical outlets, shower area handrails, a tissue dispenser, towel racks, toilet paper with spare, good quality bath and wash towels, soap and shampoo, and a waste can. Guestroom Corridors Proper corridor design is needed so guests are always within a short walking distance of their rooms. When possible, corridor lengths from the elevators and lobbies should be minimized. A six-foot-wide corridor, along with proper lighting and wall treatment, will reduce the tunnel effect of a long hallway. Bright corridors with overhead lighting or wall sconces increase the attractiveness and safety of the corridor. Provisions should be made to protect walls from rolling room attendants carts and luggage carts that can scratch and tear the wall covering. Vending and ice machines should be readily accessible to guests and be located in an area that will not create noise disturbances for nearby guestrooms. As is indicated by the previous survey, the national group hotels offer a variety of dining options, typically including at least two restaurants and two lounge facilities. The food and beverage facilities appropriate for a headquarters hotel include a casual restaurant, a lounge and/or lobby bar, an optional specialty concept restaurant with bar, and a snack/pantry outlet. This outlet mix is well supported by the current offerings of competitors nationwide, as illustrated on the previous table. The majority of these outlets should be located on the first level of the hotel and should feature a first-class design consistent with the overall feel and style of the hotel. Each outlet
Food and Beverage Outlets
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should be themed to highlight its presence within the hotel and downtown Fort Lauderdale. Its dcor should follow this theme and should provide diners with unique, interesting on-site dining experiences. Overall, the food and beverage outlets for the subject property are expected to include a three-meal restaurant, a specialty restaurant, a coffee shop, a lobby bar, a sports bar, a pool bar, in addition to room service and banquets. The food and beverage outlets are expected to be of a first-class nature and consistent with the overall design of the hotel. This offering appears consistent with its anticipated local, regional, and national competitors. The subjects restaurants and lounges should be adjacent to one another, to allow for synergy and efficiency in staffing and management. The coffee shop should also provide quick snacks to supplement the three-meal and specialty restaurants. As an additional marketing tool, the entryway signage of the hotel should also feature the name of this hotel restaurant. Management should advertise the presence of the restaurants throughout the hotel, as well as in local convention literature and at local venues. The restaurant entrance(s) should be visible from the main entrance of the hotel and ideally from the convention center. Review of Meeting Space Offering Due to the subject hotels location proximate to the convention center, the hotel is expected to market itself primarily to meeting demand. As such, the hotel will have the direct benefit of rooms business from groups utilizing the convention center. While convention center events will be an important component of the hotels captured demand, the hotel must also offer enough in-house meeting space to serve groups during times when the convention center is not housing any significant function or room night producing event. In-house groups requiring meeting space can also be booked concurrently with citywide room blocks that hold meetings at the convention center. The following tables illustrate a competitive review of hotels in competitive markets nationwide. This portion of the review illustrates each hotels proximity to the convention center, as well as grand ballroom space, junior ballroom space, total meeting space, exhibit space, number of breakout rooms, and business center offering.
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Meeting Space Competitive Review 3

Connected to Convention Hotel Name Center? If no, how far to center? Grand Ballroom Meeting Space Square Feet Junior Ballroom Total Meet. Sp. Per Room Exhibit Space Number of Breakouts Business Center
THE EAST Baltimore, MD Marriott Waterfront Sheraton City-Center Renaissance Harbor Place Marriott Inner-Harbor Hyatt Radisson Lord Baltimore Sheraton Inner-Harbor Courtyard by Marriott Hilton Baltimore Convention Center Charlotte, NC The Blake Hotel Marriott City Center Hilton City Center Westin Omni Myrtle Beach, SC Sheraton Springmaid Beach Hotel Hilton Myrtle Beach Resort Embassy Suites Oceanfront Landmark Resort Sea Mist Oceanfront Resort Marriott Resort & Spa Nashville, TN Renaissance Gaylord Opryland Resort and Conference Center Sheraton Hilton Downtown DoubleTree New Orleans, LA New Orleans Hyatt New Orleans Hilton Riverside New Orleans Sheraton New Orleans Marriott Crowne Plaza Astor Marriott at the Convention Center Embassy Suites Convention Center No No No No No No No 1 Mile Adjacent 1/4 Mile 1/4 Mile 1 Mile Across Street 1 Block 25,000 27,009 22,882 27,089 7,920 6,912 3,952 8,100 24,000 24,500 10,368 5,733 2,756 960 115,000 127,888 88,475 59,000 25,523 15,554 8,226 97 79 80 44 36 47 22 25,000 20,582 45,808 29,300 8,468 0 0 53 35 52 37 21 19 8 Yes Yes Yes Yes Yes Yes Yes Yes No No No No Attached 2 blocks 1/3 Mile 1/3 Mile 1/2 Mile 17,877 55,314 10,681 7,452 7,000 10,920 18,644 1,559 0 1,656 31,000 600,000 20,000 13,475 13,516 46 208 42 41 40 118,675 288,972 0 0 0 20 101 19 9 15 Yes Yes Yes Yes Yes Yes No No No No No No Attached 1/2 mile 7 Miles 9 Miles 11 blocks 2.8 Miles 5 Miles 16,890 7,800 6,500 14,520 6,900 6,120 15,121 0 2,600 3,000 8,715 6,600 2,574 5,332 100,000 34,416 15,206 51,446 18,200 17,789 24,180 249 70 39 202 32 22 60 0 7,816 0 9,200 6,936 0 17 23 9 22 11 9 5 Yes Yes Yes Yes Yes Yes No No No No No 3 Blocks 5 Blocks 2 Blocks Adjacent 3 Blocks 16,000 9,100 11,250 16,276 7,320 8,083 0 4,692 6,725 3,024 52,000 12,500 30,000 38,217 16,000 169 29 75 55 43 11,040 0 0 0 0 19 13 18 24 12 Yes Yes Yes Yes Yes No No No No No No No No Yes 10 Blocks 3 Blocks 3 Blocks 1 Block Adjacent 3 Blocks Adjacent 11 Blocks Attached 19,140 12,296 14,560 6,264 14,161 7,347 7,524 0 25,488 14,388 4,590 4,046 4,066 4,200 2,187 3,800 0 14,877 80,000 29,456 31,000 15,600 29,000 18,702 22,809 3,346 60,000 106 42 50 30 59 43 68 16 79 0 0 0 0 0 0 0 0 0 41 17 18 8 11 10 4 5 20 Yes Yes Yes Yes Yes Yes Yes No Yes
HVS
Meeting Space Competitive Review 4

Connected to Convention Hotel Name Center? If no, how far to center? Grand Ballroom Meeting Space Square Feet Junior Total Per Ballroom Meet. Sp. Room Exhibit Space Number of Breakouts Business Center
Tampa, FL Embassy Suites Tampa Marriott Waterside Hyatt Regency Westin Harbour Island Orlando, FL Disney's Swan and Dolphin Orlando World Center Marriott Peabody International Plaza Resort & Spa Wyndham Loews Royal Pacific Renaissance World Resort Miami, FL Hyatt Regency Miami Miami Beach, FL Ritz-Carlton South Beach Fontainbleau Hotel & Resort Loews Miami Beach Shore Club West Palm Beach, FL Marriott Crowne Plaza West Palm Beach Airport Radisson West Palm Beach Airport The Breakers Palm Beach Hilton Palm Beach Airport Four Seasons Fort Lauderdale, FL Westin Diplomat Resort & Spa Harbor Beach Marriott Resort & Spa Fort Lauderdale Grand Sheraton Yankee Clipper Hyatt Regency Pier 66 San Antonio, TX Grand Hyatt Marriott Rivercenter Westin Riverwalk Hilton Palacio Hyatt Marriott Riverwalk Austin, TX Hilton Austin Proposed Marriott Complex by White Lodging Hyatt Radisson Sheraton (former Marriott) Omni
Yes No No No
Attached Adjacent 3/4 Mile 1/3 Mile
3,688 17,169 14,504 4,760
2,580 8,432 3,354 1,369
8,948 34,029 27,862 11,098
25 47 53 37
0 0 14,000 0
6 15 20 9
Yes Yes Yes Yes
No No No No No No No
12 Miles 8 to 10 Miles Adjacent 3 Blocks 1.5 Miles 4 Miles 2 Miles
54,392 39,500 27,000 12,000 18,480 41,502 36,288
22,582 37,369 8,600 10,000 9,088 3,281 17,325
254,000 154,753 57,000 60,000 40,345 58,258 185,000
112 77 58 55 38 58 238
51,000 49,213 0 0 0 0 0
72 35 16 17 11 10 45
Yes Yes Yes Yes Yes Yes Yes
Yes
Attached
12,000
4,186
100,000
163
28,000
27
Yes
No No No No
3/4 Mile 2 Miles 3/4 Mile 3/4 Mile
10,212 27,600 1,228 6,270 978
20,000 34,638 15,156
53 0 44 49
10 0 0 6 5
Yes Yes Yes
No No No No No No
1/2 Mile 2 Miles 1.5 Miles 2 Miles 2 Miles 7 Miles
6,615 5,000 1,635 15,000 4,416 6,000
2,268 2,030 0 9,600 1,380 6,000
13,185 11,510 2,405 45,000 8,056 14,972
37 53 13 82 33 71
0 0 0 4,600 0
5 7 2 25 7 10
Yes Yes No Yes Yes Yes
No No No No No
14 Miles 1.6 Miles 1/2 Mile 1 Mile 1 Mile
50,002 14,900 7,810 3,812 7,500
19,631 8,030 3,724 2,178 5,900
209,000 30,000 16,962 18,900 25,000
209 46 29 38 65
39 10 16 9
Yes Yes Yes Yes Yes
No No No No No No
Adjacent 1 Block 3 Blocks 1 Block 2 Blocks Adjacent
31,000 41,600 5,901 5,757 10,700 9,800
21,000 0 3,100 4,623 4,264 0
115,000 57,300 21,568 25,468 31,000 13,666
115 57 46 53 49 27
0 0 0 0 0 0
29 23 12 15 20 7
Yes Yes Yes Yes Yes Yes
No No No No No No
Across Street 2 Blocks 9 Blocks 4 Blocks 9 Blocks 5 Blocks
28,000 24,000 10,290 5,400 9,600 4,059
16,000 14,500 0 0 0 3,410
60,000 50,000 19,378 9,600 17,252 20,000
75 50 43 23 48 53
0 NA 0 0 0 0
11 18 14 8 8 16
Yes NA Yes Yes Yes Yes
HVS
The total meeting space program should include a major ballroom divisible into parts of varying sizes by means of movable partitions. A junior ballroom, divisible into parts, is also recommended. The remainder of the space should be comprised of pre-function space, additional banquet and meeting rooms, and boardrooms. After a review of the comparable nationwide facilities, convention hotels proximate to or attached/adjacent to convention centers house a range of 25 to 249 square feet of function space per room, with the average at 87 square feet per room. Large convention headquarters hotels including the Hilton Austin, the Grand Hyatt San Antonio, the Hilton Baltimore, the Westin Charlotte, the Hilton Riverside New Orleans, the Tampa Marriott Waterside, and the Renaissance Nashville house from 46 to 115 square feet of meeting space per guestroom, which appears adequate for a hotel of this size. For the 1,000-room subject hotel is planning to include approximately 72,800 net rentable square feet or 73 square feet per room, which falls within this range. Planned meeting space at the Hilton includes a 27,000-square-foot Main Ballroom and a 16,500-square-foot Junior Ballroom. In addition, the Hilton is to offer numerous breakout rooms totaling 28,300 and two boardrooms totaling 1,000 square feet. This offering appears highly suitable for this type of property and in-line with the hotels surveyed. In addition to these interior rooms, the subject also plans to feature outdoor event space, which is typically excluded from meeting space totals. The hotel is recommended to offer an adequate business center to provide the necessary services and amenities to meeting patrons and commercial travelers. Most meeting planners prefer that all meeting space is located on one or two floors, which typically supports traffic flow and increased patronage of exhibit halls. Therefore, we recommend meeting space to be concentrated on as few floors as possible. The meeting space should feature the latest in technology, preferably offering a greater capability than the present hotels in the market. As illustrated in the above tables, the larger properties tend to offer ballrooms of 20,000 square feet or larger. The larger convention headquarters hotels, which have been recently constructed or under construction at this time, typically feature ballrooms of 16,000 to 31,000 square feet on average. The subject property plans to feature a ballroom of 27,000 square feet, consistent with the survey. The ballroom must offer the latest in available technology and a competitive ceiling height that allows for proper visibility of the stage area and overhead exhibits or screens.
HVS
Junior ballrooms vary in size in the sample. The inclusion of a junior ballroom is essential for the subject hotel, to serve multiple concurrent groups, or allow one large group to meet and dine in separate rooms. Typically, the junior ballroom can be used for exhibits or dining, while the grand ballroom is used for general sessions, or the like. As such, advantageous hotel design separates these two spaces somewhat so that two simultaneous groups do not necessarily conflict with one another. The subject propertys program includes a 16,500-square-foot junior ballroom, which is considered very desirable. Separate exhibit space is not absolutely needed in the case of the proposed subject. For smaller meetings requiring exhibits, the pre-function space of the junior ballroom can typically be utilized, or the grand ballroom can be utilized for this function (or a portion of a divided grand ballroom). Larger events requiring significant exhibits will most likely utilize the nearby convention center. The number of breakout rooms should be at least fifteen to twenty for a headquarters property. These breakout spaces are considered separately from the two ballrooms; however, the ballroom spaces can also be divided into additional breakouts, as needed. Review of Recreational Amenities and Parking Offering The following tables illustrate a review of the major group hotels in competitive national markets. This portion of the review illustrates each hotels number of retail outlets, pools, whirlpools, fitness centers, and other amenities.
HVS
Retail and Recreational Amenities Competitive Review 5

Number of Retail Hotel Name Outlets Indoor Outdoor Pool Pool Whirlpool/ Hot Tub Recreational Amenities Fitness Center Other
THE EAST Baltimore, MD Marriott Waterfront Sheraton City-Center Renaissance Harbor Place Marriott Inner-Harbor Hyatt Radisson Lord Baltimore Sheraton Inner-Harbor Courtyard by Marriott Hilton Baltimore Convention Center Charlotte, NC The Blake Hotel Marriott City Center Hilton City Center Westin Omni Myrtle Beach, SC Sheraton Springmaid Beach Hotel Hilton Myrtle Beach Resort Embassy Suites Oceanfront Landmark Resort Sea Mist Oceanfront Resort Marriott Resort & Spa Nashville, TN Renaissance Gaylord Opryland Resort and Conference Center Sheraton Hilton Downtown DoubleTree New Orleans, LA New Orleans Hyatt New Orleans Hilton Riverside New Orleans Sheraton New Orleans Marriott Crowne Plaza Astor Marriott at the Convention Center Embassy Suites Convention Center 2 1 1 1 2 1 2 Y Y Y Y Y Y Y N Y N N Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y rental car kiosk; sundeck, Club Lounge lazy rivers, kid pools, putt-putt, arcade, grill area Access to adjacent waterpark & 50,000-SF fitness center Splash! Carribbean Water Playground lap pool, wading pool, 9-hole putt putt lazy river, putt-putt, water park, 6 kid pools, theater, arcade Hibiscus Spa 1 1 2 1 1 1 1 1 1 Y N Y Y N N Y Y Y N Y N N Y N N N N Y N Y Y Y N N Y Y Y Y Y Y 24-hour Y Y Y Y Sauna Sauna Sundeck, basketball and tennis courts, jogging track Sauna, Nautilus equipment Sauna
1 1 2 1 0
Y Y N Y N
Y N N N Y
Y Y N N N
Y Y N Y Y
Racquetball, sauna coin laundry, tanning beds Connected shopping mall and YMCA Health Club Sauna rooftop sundeck
On-site mall
Y N Y Y Y
N Y N N N
Y Y Y Y Y
Y Y Y Y Y
Golf course
3 4 4 1 1 1
N N N N N N N
Y Y Y Y Y Y Y
Y Y Y N N N N
Y Y Y Y Y Y Y
Sauna 11 tennis,4 racquetball, 3 sqsh cts
HVS
Retail and Recreational Amenities Competitive Review 6

Number of Retail Outlets Recreational Amenities
Indoor Pool Outdoor Pool Whirlpool/ Hot Tub Fitness Center
Hotel Name
Other (List)
Tampa, FL Embassy Suites Tampa Marriott Waterside Hyatt Regency Westin Harbour Island Orlando, FL Disney's Swan and Dolphin Orlando World Center Marriott Peabody International Plaza Resort & Spa Wyndham Loews Royal Pacific Renaissance World Resort Miami, FL Hyatt Regency Miami Miami Beach, FL Ritz-Carlton South Beach Fontainbleau Hotel & Resort Loews Miami Beach Shore Club West Palm Beach, FL Marriott Crowne Plaza West Palm Beach Airport Radisson West Palm Beach Airport The Breakers Palm Beach Hilton Palm Beach Airport Four Seasons Fort Lauderdale, FL Westin Diplomat Resort & Spa Harbor Beach Marriott Resort & Spa Fort Lauderdale Grand Sheraton Yankee Clipper Hyatt Regency Pier 66 San Antonio, TX Grand Hyatt Marriott Rivercenter Westin Riverwalk Hilton Palacio Hyatt Marriott Riverwalk Austin, TX Hilton Austin Proposed Marriott Complex by White Lodging Hyatt Radisson Sheraton (former Marriott) Omni
N N N N
Y Y Y Y
Y Y Y Y
Y Y Y Y
Full-service spa, sauna
5 3 4
N Y N N N N N
4 Y Y Y Y Y Y
Y Y Y Y Y Y Y
Y Y Y Y Y Y Y
Waterslide, beach, 4 tennis courts, miniature golf Sauna, full spa (wet & dry), golf course Four tennis courts L'Esprit Day Spa 5,000-square foot fitness center
N N N N
Y Y Y Y
N N N N
Y Y Y Y
Ritz-Carlton Spa at South Beach Spa under construction Elemis Spa 8,000-square foot spa
1 1
N N N N N N
Y Y Y Y Y Y
Y Y Y Y Y Y
Y Y Y Y Y Y
Spa at the Breakers, 10 tennis courts, 20,000-SFspa Spa at the Four Seasons, two tennis courts
N N N N N
Y Y Y Y Y
Y Y Y Y Y
Y Y Y Y Y
30,000-square foot spa shared with sister hotel 20,000-square foot spa 33-slip Marina Spa, 127-slip Marina
3 1
N Y N N N Y
Y Y Y Y Y Y
Y Y Y Y Y Y
Y Y Y Y Y Y
Sauna, massage services Spa
Sundeck, sauna
1 NA 1 1 1 5
N NA N N Y N
Y NA Y Y Y Y
Y NA Y N Y N
Y NA Y Y Y Y
Spa 650-Rm Marriott; 200-Rm Renaissance; 150-Rm SpringHill
Sauna Dry sauna, massage service
HVS
The proposed subject property should feature amenities appropriate for a first-class hotel in this market. Our review of this market revealed that appropriate amenities include a swimming pool, a whirlpool, and a health club. A gift shop off of the lobby is expected to be the offered by the hotel. A tour desk, airline, and car rental counter are other possible retail services the subject property could offer. Additional amenities include a sauna, racquetball, sundeck, massage, spa, marina, tennis, etc. The subject property plans to offer a 12,000-square-foot full-service spa, an outdoor swimming pool, an exercise room, and a gift shop, which is consistent with or superior to the hotels surveyed. Ample parking for the hotel should be conveniently available to hotel guests. There should be both valet and self-park options at rates consistent with those charged at the other downtown area hotels. The subject property is expected to feature both parking options within its attached seven-story parking structure. A typical rule of thumb for parking capacity at a hotel is one space per guestroom, with the industry standard for convention hotels ranging from .75 to 1.2 spaces per room. The appropriate amount of parking can certainly vary, depending on agreements reached with possible adjacent parking facilities, or the likelihood of those traveling to the market to drive-in or rent a car at the airport. Parking is generally well supplied in the vicinity of the Convention Center, including the existing Convention Center parking garage. It will be necessary to have parking convenient to the proposed subject property, rather than relying on outside facilities to provide anything but overflow capacity. Based on these considerations, we recommend the subject property feature from 0.5 to 0.75 spaces per room, or 500 to 750 spaces. The current plan for the subject property is to incorporate 680 spaces, which equates to 0.68 spaces per guestroom; this level falls within the recommended range. Back-of-the-House Space The housekeeping department should include the linen issue, storage area, and the laundry. The linen room should have an office for the executive housekeeper and a room's status system joined to the front desk. Adequate storage areas are required for linens and supplies in use, as well as new, unused linen and supplies. These areas should be locked and secured at all times. A linen and uniform issue area should be situated adjacent to the linen storage rooms, where employees will pick up their clean uniforms and the linen supplies required for the day.
HVS
Sufficient storage is required in the maintenance area to hold items such as spare parts, mechanical equipment, furniture, carpet, wall covering, cleaning materials, and cleaning and maintenance equipment. Administrative Offices The offices should be located adjacent to the hotels reception desk. They should be attractively decorated. The office design should be functional with no wasted space. Fire safety should be planned on a structural level to separate areas of high fire risk (e.g., laundry room) from areas in which fire is likely to cause particular hazards (e.g., corridors, stairwells, public rooms). Smoke and heat detectors, sprinkler systems, exit signage, fire extinguishers, pull stations, standpipes, and emergency lighting should be installed according to code. System design considerations should be geared to adjust to future codes. Following the January 26, 1992, passage of the Americans with Disabilities Act (ADA), the proposed hotel will be subject to specific physical standards. ADA standards principally address the number and accessibility of guestrooms designed to accommodate physically challenged guests, though a variety of safety standards are also included that can touch on the status of building systems. We have assumed that the hotel will conform to all ADA requirements. In order to make detailed and accurate forecasts of occupancy, average rate, and financial performance, a proposed scope of facilities and amenities must be established. This chapter analyzed the proposed scope of facilities and amenities necessary to support the financial projections for the proposed subject property and positioned the subject property relative to local and nationally comparable facilities. Design and functionality features were discussed, as well as a review of the necessary features required within each hotel area. Overall, the subject property should offer a well-designed, functional layout of support areas and guestrooms. All typical and market-appropriate features and amenities appear to be included in the hotel's design. We assume that the building will be fully open and operational on the assumed opening date and will meet all local building codes and brand standards (as applicable). Moreover, we assume its construction will not create any environmental hazards (such as mold) and that the property will fully comply with the Americans with Disabilities Act. Furthermore, we assume that the hotel staff will be adequately trained to allow for a successful
Fire Protection
ADA Conformance
Conclusion
HVS
opening and that pre-marketing efforts will have introduced the product to major local accounts at least six months in advance of the opening date. The hotel is planned to offer a competitive array of amenities in order to effectively penetrate the market for in-house group room nights and convention demand from the Convention Center. Based on its facility program, related amenities, and quality orientation, it is our opinion that this hotel will be able to effectively compete for group business and be attractive to meeting planners on a national level. This program is consistent with our research of the local and national competitive markets. Furthermore, we find that the scope of facilities recommended here supports the financial projections made in the following chapters.
HVS
Hotel Induced Demand Analysis 6-1
6. Hotel Induced Demand Analysis
Introduction
The purpose of this section is to evaluate the potential for inducing new room night demand to the Fort Lauderdale market if a new 1,000-room convention headquarters hotel is developed. In this section, HVS analyzes the complimentary relationship between convention centers and headquarters hotels for facilities which are similar in size and scope to the Greater Fort Lauderdale/Broward County Convention Center and the proposed Hilton Fort Lauderdale. During the past decade convention hotels have become increasingly important for the success of regional and national convention centers. Many meeting planners and convention organizers now consider convention hotels a requirement in their selection process of finding host cities for their major conventions and tradeshows. In this section HVS evaluates comparable pairs of hotel and convention center facilities serving second-tier convention markets. HVS examined facilities physical characteristics, as well as performance measures and interviewed facility mangers to obtain estimates of the percent of room nights induced by each communitys headquarters hotels. This process helps us arrive at a reasonable range of induced demand within which to position the subject propertys projected induced demand. We also developed a detailed cross-check analysis; working with local convention and tourism officials, we identified specific events interested in coming to Fort Lauderdale, but that would likely not come to Fort Lauderdale without the proposed headquarters hotel.
Size & Scope of Comparable Facilities
HVS reviewed nine comparable facilities pairs around the country. HVS searched for convention facilities in second-tier convention markets that target a combination of statewide, regional and national event demand. The following facilities were included in this analysis:
HVS
Renaissance by Marriott in Nashville, Tennessee; Marriott Rivercenter and the Marriott Riverwalk in San Antonio, Texas; Downtown Marriott in Memphis, Tennessee; Hilton in Minneapolis, Minnesota; Hyatt Regency in Denver, Colorado; Hyatt Regency and Downtown Marriott in Louisville, Kentucky; Hilton in San Jose, California.
The selected facilities are not expected to compete directly with the Greater Fort Lauderdale Convention Center. Instead, these comparable projects, located elsewhere in the country, provide some background and precedent for estimating induced room night potential for the subject property. The following table shows a summary of the building programs of the convention centers adjacent to each selected comparable hotel. This table ranks the facilities by total exhibition space.
HVS
Comparison of Comparable Convention Centers and Headquarter Hotels

Facility/City Total Exhibition Total Function Divisions in Name of HQ/Attached Space (SF) Space (SF) Largest Space Hotel Number of Rooms Downtown Hotel Inventory
Colorado Convention Center (Denver, CO) Minneapolis Convention Center (Minneapolis, MN) Henry B. Gonzalez Convention Center (San Antonio, TX) Greater Ft. Lauderdale Convention Center (Ft. Lauderdale, FL) Memphis Cook Convention Center (Memphis, TN) Kentucky International Convention Center (Louisville, KY) San Jose McEnery Convention Center (San Jose, CA) Nashville Convention Center (Nashville, TN)
584,000 475,000 228,401 199,526 160,000 146,000 143,000 118,675
769,000 637,600 555,615 297,700 300,000 286,162 223,000 167,496
4 1 4 4 3 2 3 3
Hyatt Regency Hilton Marriott Rivercenter & Riverwalk Hilton Marriott Hyatt Regency & Marriott Hilton Renaissance
1,100 821 1,001+512 (1,513) 1,000 600 329+616 (945) 355 649
8,667 8,562 7,830 1,444 3,913 3,040 8,500 2,757
Source: Major Exhibit Hall Directory 2007, Respective Facilities and CVBs
HVS
The selected comparable facilities offer between 118,675 and 584,000 square feet of exhibition space. With its 584,000-square-foot exhibit hall and 769,000 square feet of total function space, the Colorado Convention Center is the largest facility within the comp set. All of the comparable facilities have at least one headquarters hotel attached or adjacent to their respective convention facilities. These hotels offer between 355 and 1,153 hotel rooms. Brief Overview of Comparable Facilities The Renaissance Nashville is owned and operated by the Marriott Corporation. Facilities include the Commerce Street Grill, the Lobbies Bar, the Bridge Deli, the Bridge Lounge, an indoor pool and whirlpool, an exercise room, the Athena Spa, and 31,000 square feet of meeting space. The hotel, which was built in 1987, was renovated in 2006; upgrades included new guestroom bedding and soft goods. There is an indoor concourse which connects the hotel to the Nashville Convention Center. The Nashville Convention Center sits in downtown Nashville, roughly eight miles from the Nashville International Airport. On the first floor, it features an exhibit hall of 118,675 square feet, divisible into three sections and twelve meeting rooms totaling 9,720 square feet. The second floor features a look-out to the exhibit hall below and fifteen meeting rooms with a total of 21,214 square feet of meeting space. The third floor provides pre-function space and the Renaissance Nashville 17,877 square-foot ballroom, divisible into three sections. The Marriott San Antonio Rivercenter, along with the 512-room Marriott Riverwalk, sits adjacent to the Henry B. Gonzalez Convention Center. The Marriott Rivercenter originally opened in 1988 and remains a corporately owned and operated facility. It features roughly 60,000 square feet of on-site meeting space and is attached to the upscale Rivercenter Mall and the Riverwalk, and is a short walk to the Alamo. Additionally, the hotel features four food and beverage venues and retail space. It has undergone select guestroom and public space upgrades and renovations over the past four years. Marriott Riverwalk is connected to the Henry B. Gonzalez Convention Center and sits adjacent to the Rivercenter Mall. The property features roughly 12,000 square feet of meeting space; the ballroom at the hotel received recent renovations and upgrades within the past two years. The facility houses several on-site food and beverage options in addition to those located across the street at the Marriott Rivercenter. The Marriott Riverwalk, which is the older of the two Marriott properties, was originally constructed
HVS
in 1979 and has undergone numerous renovations to guestrooms and public areas throughout its existence. The Henry B. Gonzalez Convention Center sits in the center of downtown San Antonio on the banks of the Riverwalk. It was built as part of the 1968 HemisFair but has expanded since then. The Ballroom Level features a ballroom of 39,469, divisible into three sections. The Concourse Level offers 34 meeting rooms totaling 55,551 square feet. The Street Level features two exhibit halls that combine for 172,701 and another two exhibit halls that combine for 228,401. Also on this level is a 28,317-square-foot ballroom, six meeting rooms totaling 12,318 square feet and a theatre with 2,521 seats. The River Level offers an additional 18 meeting rooms totaling 32,176 square feet. The Memphis Marriott Downtown is owned by Host Marriott and operated by Marriott International. Facilities include a restaurant and a bar, an indoor pool and whirlpool, an exercise room, and over 12,000 square feet of meeting space. The hotel, which was built in 1985, was renovated in 2004 when they opened a second tower with 200 additional guestrooms. It is connected to the Memphis Cook Convention Center. The Memphis Cook Convention Center is owned by the city of Memphis and operated by SMG management. The original structure, which included the 125,000-square-foot exhibit hall, was completed in 1974 and cost $31 million. Part of a larger revitalization effort, plans for a massive expansion of the convention center began in 1995. The $100 million expansion was completed in January of 2003 and included the renovation of existing space and construction of completely new facilities including a 35,000-square-foot exhibit hall, 28,000-square-foot grand ballroom, and the Cannon Center for the Performing Arts, which seats up to 2,100 patrons and is home to the Memphis Symphony Orchestra. Additional function space includes 31 meeting rooms and an executive conference center; the Memphis Marriott Downtown Hotel provides catering services and is connected to the convention center. The convention center is eight miles from the Memphis International Airport. The Hyatt Regency Louisville is owned and operated by the Commonwealth of KY LTD. The facility offers a restaurant, a lounge, an indoor pool and whirlpool, an exercise room, and 20,000 square feet of meeting space. The hotel, which was built in 1978, was renovated in 2006; upgrades included new guestroom soft goods, case goods, and new wall and floor treatments in the
HVS
corridors. It is directly connected to the Kentucky International Convention Center. The Marriott Louisville Downtown is owned and operated by Kentucky Convention Hotel Partners. It is connected to the Kentucky International Convention Center. Facilities include two full-service restaurants, a Starbucks kiosk, an indoor pool and whirlpool, an exercise room, and 38,000 square feet of meeting space. The hotel, which had been closed prior to its conversion to a Marriott, reopened in March of 2005 after a complete property renovation. The Kentucky International Convention Center sits in downtown Louisville, roughly a 10 minute drive from the Louisville International Airport. Level 1 features an exhibit hall of 45,000 square feet, divisible into two sections and a ballroom of 30,000 square feet, divisible into three sections. Sixteen meeting rooms on Level 1 total 20,952 square feet of meeting space. The second floor offers an exhibit hall, divisible into two parts of 146,000 square feet, and 18,420 square feet of meeting rooms among 19 meeting rooms. The Lower Level offers 25,790 square feet of meeting rooms among 15 meeting rooms. The Hilton San Jose opened in 1992. It is connected to the San Jose McEnery Convention Center via an enclosed concourse. Facilities include a business center, outdoor pool and Jacuzzi, and a fitness room. The HSJ features the City Bar Grill, a classic American grill, open for breakfast, lunch and dinner. It features 10,000 square feet of meeting space. The property was last renovated in 2000, including guestrooms and public areas. The San Jose McEnery Convention Center opened in April of 1989. It is one of the San Jose Convention & Cultural Facilities located in downtown San Jose. In addition to the 143,000-square-foot exhibit hall, function space includes a 22,000-square-foot ballroom and 31 meeting rooms. The convention center is attached to the San Jose Hilton Towers Hotel and is just three miles from the San Jose International Airport. Since December of 2003, the Center has been managed by Team San Jose, Inc. Team San Joses fiveyear management contract includes San Joses Center for the Performing Arts, the Civic Auditorium, Parkside Hall, South Hall, the California Theater, and the Montgomery Theaters. Due in part to its proximity to Silicon Valley, the Center routinely hosts large tech-focused events, and are reputed to be among the most technologically advanced facilities in the country.
HVS
The Hyatt Regency Denver Colorado Convention Center opened in December 2005 at a total construction cost of $285 million. The hotel is owned by the Denver Convention Center Authority and is operated by Hyatt Hotels and Resorts. The Hyatt Regency offers a variety of food and beverage outlets, including Altitude Restaurant; a 24-hour coffee and gift shop; the Strata Bar; and the Peaks Lounge, which is the hotel's rooftop bar on the 27th level. The hotel contains just over 60,000 square feet of meeting space. Recreational amenities include a 6,700-square-foot health club, which includes an indoor lap pool and sun deck, among other amenities. The Colorado Convention Center sits in downtown Denver, Colorado, roughly a thirty-minute drive from the Denver International Airport. It is owned by the city of Denver and operated by SMG. It features six contiguous exhibit halls totaling 584,000 square feet. A ballroom, divisible into four sections offers 35,000 square feet of ballroom space, while a larger ballroom, divisible into 18 sections totals 50,000 square feet. Sixty-three meeting rooms, all on one floor, total roughly 100,000 square feet. The facility also features a 5,000 fixed seat theater. A bridged walkway links the Colorado Convention Center to the Denver Performing Arts Complex. Under the 1,000 space parking garage, is a Light Rail Train Station connecting the facility to the rest of downtown Denver. The Hilton Minneapolis opened in downtown Minneapolis in 1992. The Victorian brick hotel features a restaurant and lounge, an indoor pool, and a large fitness center. It sits two blocks from the Minneapolis Convention Center and one block from the Orchestra Hall. With its connection to the Skywalk system, guests have access to the downtown core and quick access to the convention center. The facility recently converted a portion of the retail space on the Skywalk level into additional meeting space. The Minneapolis Convention Center sits on the southern edge of downtown Minneapolis, close to I-94 and 20 minutes from the Minneapolis-St. Paul International Airport. The lower level features an exhibit hall of 99,000 square feet and a ballroom of 54,500 square feet, while the Mezzanine Level offers 13 meeting rooms totaling 15,621 square feet. Level One features four exhibit halls totaling 376,000 square feet, a ballroom of 27,522 square feet, 37 meeting rooms totaling 28,192 square feet, and an auditorium with 3,433 seats. Level Two offers 46 meeting rooms totaling 36,798 square feet. Climate controlled skywalks connect the facility to the Hilton Minneapolis and downtown restaurants and shopping.
HVS
Exhibit Space Analysis
HVS will compare the facilities in Fort Lauderdale to those in each of the selected comparable markets to augment our understanding of demand potential in the subject market. The following table shows the amount of total function space available at each of the selected comparable facilities. The figure also shows how much exhibit space is available in each convention center.
Function Space Available at Comparable Facilities

Colorado Convention Center Minneapolis Convention Center Henry B. Gonzalez Convention Center Greater Ft. Lauderdale Convention Center Memphis Cook Convention Center Kentucky International Convention Center San Jose McEnery Convention Center Nashville Convention Center
584,000
769,000
475,000
637,600
288,401
555,615
199,526
297,000
160,000
300,000
146,000
286,162
143,000
223,000
118,675 167,496
00
0, 00
0, 00
,0 0
00
00
0, 0
0,
,0
60 0
00 0
20
40
80
20
1,
Source: Major Exhibit Hall Directory 2007, Respective Facilities
1,
1,
40
0,
00
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Total function space ranges from about 167,496 square feet at the Nashville Convention Center to roughly 769,000 square feet at the Colorado Convention Center. The Colorado Convention Center has the most exhibit space, with 584,000 square feet, followed by the Minneapolis Convention Center with 475,000 square feet. The San Jose McEnery Convention Center and the Nashville Convention Center have the least amount of exhibit space with 143,000 square feet and 118,675 square feet, respectively. Room Night Estimates - HVS
0B
HVS estimated the room night demand likely to be induced by the proposed Hilton headquarters hotel in Fort Lauderdale. To guide our estimate, HVS estimated comparable facilities total annual room night demand, the proportion of room night demand that was group-related in nature, and an estimate of how much of this room night demand would not have occurred in each respective community if these headquarters hotels did not exist. Our findings are based on data from our in-house HVS data library as well as interviews with hotel managers in each community. The initial estimate of induced room night demand is based on the premise that such demand will be affected both by the size of the proposed hotel and the size and success of the adjacent convention center. Therefore, HVS calculated induced demand per hotel room and induced demand per square foot of exhibit space at the adjacent convention centers in each community. These two calculations produced ranges to serve as a test of reasonableness for estimates of induced room night demand in Fort Lauderdale. HVS uses the term induced room night demand to mean only those room nights that are expected to be new to the Fort Lauderdale market because of the headquarters hotel. This analysis focuses on those overnight visits that would not occur in the Fort Lauderdale market without the proposed hotel.
HVS
Hotel Induced Demand

Renaissance Nashville Marriott San Marriott San Antonio Antonio Rivercenter Riverwalk Marriott Downtown Memphis Hilton Towers San Jose Hyatt Regency Louisville Marriott Downtown Louisville Hilton Minneapolis Hyatt Regency Denver Peer Average Proposed Hilton Ft. Lauderdale
Total Exhibit Space at Convention Center Guest Rooms Room Night Demand Group Demand Estimated Induced Demand Induced Demand per Room Induced Demand per Exhibit Space Square Foot
118,675 649 177,663 115,481 28,900 44.5 0.24
401,102 1,001 255,756 153,453 38,400 38.4 0.10
401,102 512 142,028 99,419 19,884 38.8 0.05
160,000 600 155,490 93,294 23,300 38.8 0.15
143,000 355 59,000 98,477 19,700 55.5 0.14
191,000 329 82,859 43,915 15,400 46.8 0.08
191,000 616 161,885 80,943 28,300 45.9 0.15
475,000 821 209,766 136,348 47,700 58.1 0.10
584,000 1,100 277,035 152,369 45,700 41.5 0.08
244,776 623 157,987 112,025 29,700 45.4 0.12
199,526 1,000
45,000 45.0 0.23
*January through June 2008 **Indicates number of induced room nights per square feet of convention center space
Source: HVS, Respective Facilities
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Hotel Induced Demand 6-11
As shown in the above table, the average induced demand per guest room, is 45.4 room nights annually. The Marriott San Antonio Rivercenter has the lowest estimated induced demand per room at 38.4, while the Hilton Minneapolis has the highest at 58.1. Both hotels connected to the Kentucky International Convention Center induce over 45.0 per room, while both hotels connected to the Henry B. Gonzalez Convention Center induce over 38.0 per room. Using a second metric, the average induced demand per square foot of exhibit space in each communitys respective convention center is 0.12 room nights annually per square foot of exhibit space. The Renaissance Nashville has the highest estimated induced demand per square foot of exhibit space at 0.24 annually; this may reflect the fact that the headquarters hotel is relatively large compared to the size of Nashvilles convention center. The Marriott San Antonio Riverwalk induces only 0.05 room nights per exhibit space square foot; this may be due to the fact that this hotel is relatively small compared to the size of San Antonios convention center as well as the fact that there is a second Marriott headquarters hotel nearby. The proposed Hilton Fort Lauderdale is expected to induce 45,000 room nights at 0.23 room nights per exhibit space square foot. This figure is near the top of the range of comparable facilities due to the large number of hotel rooms, only second in size to the Hyatt Regency Denver, paired with an exhibit hall that is below the peer average.
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Comparison of Induced Room Night Estimates from Comparable Facilities
Hilton Minneapolis Hyatt Regency Denver Proposed Hilton Ft. Lauderdale Marriott San Antonio Rivercenter Marriott Downtown Louisville Renaissance Nashville Marriott San Antonio Riverwalk Marriott Downtown Memphis Hilton Towers San Jose Hyatt Regency Louisville
47,700 45,700 45,000 38,400 32,400 28,900 24,900 23,300 19,700 17,600 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Source: HVS
We estimate the Hilton Minneapolis, with 821 rooms, induces the most room nights approximately 47,700 per year. The Hyatt Regency Denver follows with 45,700, while the proposed Hilton Fort Lauderdale is expected to induce 45,000. Combined, the Marriott Downtown Louisville and the Hyatt Regency Louisville, both connected to the Kentucky Convention Center, induce roughly 50,000 rooms. The Marriott Downtown Memphis and the Hilton Towers San Jose each induces less than 25,000 room nights annually, based on our initial estimates. Room Night Estimates Greater Fort Lauderdale CVB
1B
With data on current, forecasted and lost demand of the Greater Fort Lauderdale Convention Center, the Greater Fort Lauderdale CVB helped us estimate potential event demand and room night demand that would take place in Fort Lauderdale if the proposed headquarters hotel is built.
HVS
HVS also evaluated lost business reports, provided by the Greater Fort Lauderdale CVB, to augment our understanding of potential demand that could be induced by the proposed headquarters hotel. The CVB reported lost demand from 2003 to 2009, averaging a loss of 17 events and 37,200 room nights annually. Historical demand, lost specifically because of a lack of headquarter hotel, averages 10,240 room nights. Therefore roughly 28% of events that considered hosting their events in Fort Lauderdale did not host them there specifically because of a lack of headquarters hotel, indicating this is a strong factor in meeting planners decisions. This lost demand data reflects only those groups that expressed interested in hosting their event in Fort Lauderdale to the CVB and that further reported that a lack of a headquarters hotel was the reason for not choosing Fort Lauderdale. While even some of these reported lost demand groups would still not host future events in Fort Lauderdale due to other circumstances, there is a large number of groups who did not initiate contact with the city, but rather chose not to host their events in Fort Lauderdale based on their own research and knowledge of the Greater Fort Lauderdale Convention Center. Thus, estimated induced demand is considerably higher than merely the lost demand reported to the CVB. The CVB helped us estimate demand for the status quo scenario, in which the proposed headquarters hotel is not built. These two scenarios are shown in the following tables.
HVS
Demand Status Quo Without a Headquarters Hotel

Event Demand Number of Events by Roomnights Tier 1 (9,000+) Tier 2 (5,000 - 8,999) Tier 3 (3,000 - 4,999) Tier 4 (0-2,999) Sports Events Total High-Impact Events Attendance by Tier Tier 1 (9,000+) Tier 2 (5,000 - 8,999) Tier 3 (3,000 - 4,999) Tier 4 (0-2,999) Sports Events Total Attendance Aggregate Roomnights by Tier Tier 1 (9,000+) Tier 2 (5,000 - 8,999) Tier 3 (3,000 - 4,999) Tier 4 (0-2,999) Sports Events Total Annual Roomnights 2008 5 9 5 2 21 144,500 20,700 16,200 3,500 184,900 68,616 57,657 18,927 4,329 2009 2 8 5 3 18 134,800 20,000 21,000 10,000 185,800 75,000 40,000 15,000 10,000 2010 2 4 5 7 18 140,000 18,000 10,000 10,000 178,000 75,000 35,000 20,000 10,000 2011 2 4 5 7 18 140,000 20,000 10,000 10,000 180,000 75,000 35,000 20,000 10,000 2012 2 4 5 7 18 140,000 20,000 10,000 10,000 180,000 75,000 35,000 20,000 10,000 140,000 2013 2 4 5 7 18 140,000 20,000 10,000 10,000 180,000 75,000 35,000 20,000 10,000 140,000 2014 2 4 5 7 18 140,000 20,000 10,000 10,000 180,000 75,000 35,000 20,000 10,000 140,000
149,500 140,000 140,000 140,000 Source: Greater Fort Lauderdale CVB
The preceding table illustrates current and future projected event demand and room night demand associated with groups using the Greater Fort Lauderdale Convention Center as it stands now, without a headquarter hotel, as reported by the Greater Fort Lauderdale CVB. Tentative and definite booking data for 2008 indicates a total of 21 major out-of-town events, representing 184,900 attendees and demand for roughly 149,500 room nights. Demand from 2009 to 2014 is projected to remain stable with 18 major events attracting 180,000 attendees and 140,000 room nights annually.
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Demand With a Headquarters Hotel

Event Demand Number of Events by Roomnights Tier 1 (9,000+) Tier 2 (5,000 - 8,999) Tier 3 (3,000 - 4,999) Tier 4 (0-2,999) Sports Events Total High-Impact Events Attendance by Tier Tier 1 (9,000+) Tier 2 (5,000 - 8,999) Tier 3 (3,000 - 4,999) Tier 4 (0-2,999) Sports Events Total Attendance Aggregate Roomnights by Tier Tier 1 (9,000+) Tier 2 (5,000 - 8,999) Tier 3 (3,000 - 4,999) Tier 4 (0-2,999) Sports Events Total Annual Roomnights 2008 6 12 11 10 39 149,500 34,700 26,100 13,500 223,800 2009 5 11 8 7 1 32 147,000 30,000 25,600 15,300 217,900 2010 6 11 10 13 40 151,800 27,900 26,600 18,100 224,400 2011 6 11 10 13 40 151,800 27,900 26,600 18,100 224,400 2012 6 11 10 13 40 151,800 27,900 26,600 18,100 224,400 86,200 52,700 30,200 18,000 187,100 2013 6 11 10 13 40 151,800 27,900 26,600 18,100 224,400 86,200 52,700 30,200 18,000 187,100 2014 6 11 10 13 40 151,800 27,900 26,600 18,100 224,400 86,200 52,700 30,200 18,000 187,100
72,800 98,100 86,200 86,200 67,900 47,700 52,700 52,700 30,600 20,000 30,200 30,200 14,400 14,600 18,000 18,000 1,200 185,700 181,700 187,100 187,100 Source: Greater Fort Lauderdale CVB
The above table illustrates the Greater Fort Lauderdale CVB estimate of potential demand if the proposed Hilton headquarters hotel were currently open and operating. In 2008, potential demand for 39 events with 223,800 total attendees would have resulted in demand for approximately 185,700 room nights. Demand projections for 2009 show a slight decrease to 32 events producing 181,700 room nights, while projections from 2010 to 2014 show 40 events with 224,400 attendees, resulting in 187,100 room nights.
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Induced Demand
Event Demand Number of Events by Roomnights Tier 1 (9,000+) Tier 2 (5,000 - 8,999) Tier 3 (3,000 - 4,999) Tier 4 (0-2,999) Sports Events Total High-Impact Events Attendance by Tier Tier 1 (9,000+) Tier 2 (5,000 - 8,999) Tier 3 (3,000 - 4,999) Tier 4 (0-2,999) Sports Events Total Attendance Aggregate Roomnights by Tier Tier 1 (9,000+) Tier 2 (5,000 - 8,999) Tier 3 (3,000 - 4,999) Tier 4 (0-2,999) Sports Events Total Annual Roomnights 2008 1 3 6 8 18 5,000 14,000 9,900 10,025 38,900 2009 3 3 3 4 1 14 12,200 10,000 4,600 5,300 32,100 2010 4 7 5 6 22 11,800 9,900 16,600 8,100 46,400 22 11,800 7,900 16,600 8,100 44,400 2011 4 7 5 6 22 11,800 7,900 16,600 8,100 44,400 11,200 17,700 10,200 8,000 47,100 2012 4 7 5 6 22 11,800 7,900 16,600 8,100 44,400 11,200 17,700 10,200 8,000 47,100 2013 4 7 5 6 22 11,800 7,900 16,600 8,100 44,400 11,200 17,700 10,200 8,000 47,100 2014 4 7 5 6
4,100 23,100 11,200 11,200 10,300 7,800 17,700 17,700 11,600 5,000 10,200 10,200 10,100 4,600 8,000 8,000 1,200 36,200 40,500 47,100 47,100 Source: Greater Fort Lauderdale CVB
The difference between our estimates of demand without and demand with a headquarters hotel results in induced events, attendance and room nights by the proposed Hilton headquarters hotel, as shown in the table above. In 2008, an estimated 18 events would be induced to the Greater Fort Lauderdale Convention Center with 38,900 attendees and 36,200 induced room nights. In 2009, 14 events would be induced to the Greater Fort Lauderdale Convention Center with 32,100 attendees and 40,500 room nights. From 2010 to 2014, roughly 22 events would be induced to the Greater Fort Lauderdale Convention Center with 44,400 attendees. These induced events would result in approximately 47,100 room nights induced by the proposed Hilton headquarters hotel. This cross-check is consistent with estimates from our preceding methodology that indicate induced room night demand of roundly 45,000 room nights annually, upon stabilization.
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Overview of the U.S. Meetings Market 7-1
7. Overview of the U.S. Meetings Market
Meetings represent an important source of income for hotels. These events are generally planned for ten or more people, depending on the need of the group and the capacity of the hotels function space or nearby convention center. Meetings can be classified into many different categories, such as corporate, association, and SMERF; SMERF is an acronym for meetings that are social, military, educational, religious, or fraternal in purpose. This national trends overview will focus on the corporate and association meetings categories. Meetings and Conventions Magazine publishes a bi-annual report on the meetings industry, named the Meetings Market Report. This well-respected study has been published since 1974, and is a compilation of reports and opinions of meeting planners. We have illustrated samples of data from this report in this overview. The latest report was published in August of 2006, which includes mainly 2005 data. The next report will be published in August 2008, which will cover 2007 data. The following table provides an overview of the number of meetings, number of attendees, and dollars of expenditures from 1985 through 2005.
HVS
Summary of National Corporate, Convention, and Association Meetings Market

Year 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 Year 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 Year 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 Corporate 706,100 807,200 866,800 806,200 801,300 797,100 783,900 835,700 844,100 890,900 1,020,300 Corporate 39,800,000 47,300,000 58,400,000 49,600,000 55,100,000 49,300,000 49,900,000 51,111,111 51,500,000 56,400,000 79,742,000 Corporate 7.5 7.1 9.7 8.7 10.6 8.6 10.8 10.2 10.3 14.9 31.8 Total Number of Meetings Convention Association 12,200 12,700 12,600 10,200 11,800 10,900 11,300 11,600 11,800 12,200 12,700 185,400 181,700 186,600 215,000 206,500 175,600 189,500 174,200 177,700 155,600 210,600 Total 903,700 1,001,600 1,066,000 1,031,400 1,019,600 983,600 984,700 1,021,500 1,033,600 1,058,700 1,243,600 Total 71,500,000 74,300,000 93,700,000 80,800,000 84,500,000 77,400,000 79,500,000 78,900,000 79,900,000 84,600,000 136,519,000 Total 31.4 28.9 39.6 35.0 40.4 37.4 41.8 40.2 40.9 44.6 107.1
Total Number of Attendees Convention Association 13,500,000 10,700,000 13,600,000 8,600,000 10,700,000 13,000,000 11,700,000 12,188,889 12,500,000 12,400,000 18,930,000 18,200,000 16,300,000 21,700,000 22,600,000 18,700,000 15,100,000 17,900,000 15,600,000 15,900,000 15,800,000 37,847,000
Total Expenditures (In Billions) Convention Association 12.7 11.8 15.0 11.0 15.5 16.8 16.7 16.3 16.6 16.0 33.5 11.2 10.0 14.9 15.3 14.3 12.0 14.3 13.7 13.9 13.7 41.8
Sources: 1996, 2000, 2002, 2004 & 2006 Meetings Market Reports, Meetings & Conventions Magazine
HVS
In this illustrated trend, the total number of meetings peaked first in 1989 at just over one million. By 1991, the quantity of meetings began to decline until a turning point in the mid 1990s. Through its decline and recovery, the number of meetings has closely bracketed the one million mark throughout the last 16 years. The number of corporate meetings has steadily increased during each year tracked since the low point in 1997; however, we note that while data for 2000 is not tracked, meeting trends would have likely significantly surpassed 1999 trends, as the economy peaked in this year and millennium-related travel and meetings were at an all-time high. Also, were 2000 data shown, statistics for 2001 would have likely shown a decline from activity levels in this year. As the economy recovered from the economic turmoil caused by the events of September 11, 2001, corporate meeting activity increased, with over 890,000 meetings in 2003. As the economy has continued to strengthen, corporate meeting has once again increased, with over 1,020,300 meeting in 2005. This represents the highest level of activity in the illustrated trend, surpassing the previous high recorded in 1989. The number of conventions continued to bracket the upper 12,000-event mark, showing continued, gradual increases since 1995; again, the likely peak experienced in 2000 is not tracked. Non-convention association meetings increased to the second highest number within the illustrated period, up to 210,600 events, this considerable increase and the growth in the other sectors, resulted in the highest increase in the total number of all meetings held in 2005. Meeting attendance was also on the rise in 2003 through 2005, showing significant growth and reaching a total of roundly 137 million attendees. Overall attendance is at the highest point in the illustrated trend, surpassing the previous high recorded in 1989. Expenditures in the convention and association meeting have also increased significantly between 2003 and 2005, with the most significant increase seen in the association meeting expenditures, which increased to roughly 42 billion dollars so that total meeting expenditures neared the $107 billion mark. Trends in Corporate Meetings Corporate meetings consist of an integral component of the convention segment, and its attendees consist of over two thirds of all meeting, group, and convention attendees. Corporate groups tend to have a low double occupancy of 1.1 to 1.5, while social groups are likely to have somewhat higher double occupancy rates ranging from 1.5 to 1.9.
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Corporate groups generally meet during the workweek, thus generating lodging demand on Monday through Thursday nights. The average length of stay for typical meetings and conventions ranges from two to three days. According to the 2004 Meetings Market Report, the average duration of a corporate meeting is 2.8 days, with a six-month planning window. Feeder markets are an important factor influencing corporate meeting demand. Generally, facilities that attract travelers from distant areas are characterized by greater room night demand and longer lengths of stay than those destinations that draw a more local clientele. Corporate groups are one of the most profitable components of this segment, because they exhibit limited price sensitivity and they often sponsor banquets and other events that generate revenue for the host hotel. According to the 2004 Meetings Market Report (not detailed in the 2006 report), 56% of corporate expenditures went to the host hotel, with 30 out of the 56 points allocated to hotel rooms and 26 points allocated to food and beverage costs. The remaining 44% is spent on such areas as air transportation, speakers, entertainment, AV equipment, ground transportation, and thirdparty fees. The following table illustrates a breakdown of corporate meeting purpose by number of meetings and number of attendees.
Number of Meetings and Attendees by Type of Corporate Meeting
Type of Corporate Meeting Sales and Marketing Meetings Training and Educational Seminars Management Meetings Professional and Technical Meetings New Product Introductions Group Incentive Meetings Stockholder Meetings Other Meetings Total Corporate Meetings Number in Past Year 224,500 418,300 142,800 91,800 40,800 40,800 10,200 51,000 1,020,200 % of Total 22 % 41 14 9 4 4 1 5 100 % Attendance in Past Year 17,500,000 31,100,000 4,800,000 7,200,000 3,200,000 3,200,000 800,000 11,900,000 79,700,000 % of Total 22 % 39 6 9 4 4 1 15 100 %
Source: 2006 Meetings Market Report, Meetings and Conventions Magazine
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As the previous data indicates, the most important corporate meetings activity is for training and education, followed by sales and marketing meetings and management meetings. The following table illustrates the percentage of corporate meeting planners that utilize various types of facilities during a given year. Since the majority of meeting planners organize more than one meeting per year, the percentages will sum to greater than 100%.
Types of Hotels Used by Corporate Meeting Planners
Hotel Types Used For Corporate Meetings

Types of Hotels Used Downtown Hotels Resort Hotels (not including golf resorts) Suburban Hotels Convention Centers Suite Hotels Airport Hotels Golf Resorts Other Gaming Facilities Residential Conference Centers Non-residential Conference Centers Cruise Ships Source: 2006 Meetings Market Report, Meetings and Conventions Magazine Corporate Meetings 74 % 54 45 37 17 34 29 23 13 10 7 7
Downtown hotels, proximate to a city's central business district, are most likely to be recipients of corporate meeting demand, primarily due to the large percentage of businesses located in midtown areas. Resort hotels (not including golf resorts) are the second most used hotel type. As noted, 74% of meeting planners use downtown hotels and 37% use convention centers. The following table summarizes the factors cited as important by meeting planners when choosing a destination and a host hotel within that destination.
HVS
Factors in Choosing a Corporate Meeting Location and Facility

Corporate Meetings (except Incentive Trips) 77 % 78 61 62 58 37 33 26 48 21 15 12 Corporate Meetings (except Incentive Trips) 81 % 80 82 71 72 62 58 58 53 57 49 38 30 52 26 24 21 15 13 10 Group Incentive Trips 55 % 62 54 77 36 59 73 22 41 70 66 59 Group Incentive Trips 64 % 82 39 90 78 67 28 47 61 63 44 35 24 32 17 59 54 32 67 43
Top Factors When Choosing Location Affordability of Destination Availability of Suitable Hotels Ease of Transportation Safety and Security of Destination Distance Traveled by Attendees Clean and Unspoiled Environment Climate Mandated by Corporate Policy Transportation Costs Availability of Recreational Facilities Sightseeing, Cultural Events, Attractions Glamorous/Popular Image of Location
Top Factors When Choosing Hotel Within Location Cost of Hotel or Meeting Facility Negotiable Food, Beverage, and Room Rates Number, Size, and Quality of Meeting Rooms Quality of Food Service Number, Size, and Quality of Sleeping Rooms Efficiency of Billing Procedures Availability of Meeting Support Services High Speen Internet Access Efficiency of Check-in/Check-out Procedures Assignment of One Staff Person To Handle Meeting Previous Experience in Dealing with Facility and Staff Convenience to Other Modes of Transportation Proximity to Airport Meeting Rooms with Multiple High Speed Lines/Outlets Availability of Exhibit Space Number, Size, and Quality of Suites Proximity to Shopping, Restaurants, Off-site Entertainment Provision of Special Meeting Services Other On-site Recreational Facilities On-site Golf Course
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As the preceding table indicates, location factors cited as most important include the availability of suitable hotels, affordability, safety, and ease of transportation. A balance therefore must exist between what constitutes a suitable yet affordable hotel. We note that corporate planners reported an average room rate of $161.00 for hotel accommodations, but this number is somewhat skewed by higherpriced destinations (48% of respondents noted accepting rates of $161.00 or more). Approximately 83% of respondents accepted room rates more than $100.00, while 17% accepted room rates below $100.00. Following the economic recovery after 2001 and the subsequent economic strengthen, approximately 50% of meeting planners in the latest survey reported the 2005 meeting budgets remained unchanged versus 2003 budget levels. Of the remaining participants, 41% noted an increase in the budget, while 9% noted a decrease. Budget anticipations for 2006 in this survey reflect a slight shift towards an increase: 39% of budgets are expected to remain unchanged, 48% of budgets are expected to increase, and 13% of budgets are expected to decrease. The following table illustrates the top cities and states that were chosen for corporate meetings.
Locations of Corporate Meetings
City Chicago, IL Las Vegas, NV Orlando, FL Atlanta, GA New York, NY Dallas/Ft. Worth, TX San Diego, CA San Francisco/Oakland Area, CA Boston, MA Phoenix/Scottsdale, AZ Miami, FL Washington, D.C. Percent Held 36 % 30 26 26 23 22 19 18 16 15 15 14 State California Florida Texas Illinois Nevada New York Arizona Georgia Pennsylvania Massachusetts District of Columbia Colorado Percent Held 80 % 65 39 36 31 27 24 24 18 16 13 13
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As this data indicates, Chicago, Las Vegas, and Orlando remain the most popular destination cities for corporate meetings, while California and Florida are the top two state destinations. Meeting planners typically compose a selection list of several cities from which to choose an event location. For corporate meeting planners, 18% choose between two cities, 29% between three cities, and 25% have only one city in mind. As illustrated in the preceding table, Florida accounted for an estimated 65% of national corporate meetings in recent years. This data bodes well for the strength of the Florida group market. One of the after-affects of the terrorist attacks of September 11, 2001, is that more corporate meetings are being planned closer to home. Fewer meetings are being planned outside of the United States (27% in 2005 vs. 32% in 2003 vs. 36% in 2001). However, it is important to note a slight increase in 2006; confidence from corporate planners intending to use foreign or off-shore destinations increases to 34%. Trends in Association Meetings Association demand is generally divided on a geographical basis: the most common categories are national, regional, and state associations. Depending on their nature, these associations may be more rate sensitive than commercial groups. This is particularly true when members are not reimbursed by their employers, but must pay to attend (i.e., guestroom and conference fees). The scheduling pattern of associations also depends on the nature of the group. Professional associations and/or those supported by members' employers often meet on weekdays, while other associations prefer to hold events on weekends. While an event may span three to four days, the majority of delegates may mainly seek accommodations for one or two nights during the event. Therefore, event attendance typically mimics a curve, with fewer room nights booked the first and last nights of the event, and more rooms required during the middle. According to the 2006 Meetings Market Report, the average duration of an association meeting is 2.2 days, with a nineteenmonth planning window (the planning window for a corporate meeting was a shorter seven months). According to the 2006 Meetings Market Report, 65% of association expenditures went to the host hotel (versus 58% for corporate meetings), with 37 out of the 65 points allocated to food and beverage costs (versus 28 points for corporate meetings) and 28 points allocated to hotel costs (versus 30 points for corporate meetings). Hence, associations are apt to spend
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modestly more on food and beverage and less on hotel rooms, when compared to corporate groups. The remaining 35% is spent on remaining meeting needs. The following table illustrates a breakdown of association meeting purpose by number of meetings and number of attendees.
Number of Meetings and Attendees by Type of Association Meeting
Type of Association Meeting Training and Educational Seminars Board Meetings Professional and Technical Meetings Regional/Local Chapter Meetings Other Off-Premises Meetings Total Association Meetings Number in Past Year 54,300 62,800 35,800 26,500 31,200 210,600 % of Total 26 % 30 17 13 14 100 % Attendance in Past Year 6,642,000 1,853,000 11,028,000 4,177,000 14,147,000 37,847,000 % of Total 18 % 5 29 11 37 100 %
As the previous data shows and unlike with corporate meetings, the most important association meetings activity is for board meetings, while training and education show the second highest attendance level, followed by professional and technical meetings. The following table illustrates the percentage of association meeting planners that utilize various types of facilities during a given year; this data is illustrated for conventions and non-convention association meetings. Since the majority of meeting planners organize more than one meeting per year, the percentages will sum to greater than 100%.
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Types of Hotels Used by Association Meeting Planners

Types of Hotels Used Downtown Hotels Resort Hotels (not including golf resorts) Suburban Hotels Suite Hotels Airport Hotels Golf Resorts Gaming Facilities Residential Conference Centers Non-residential Conference Centers Cruise Ships Other Facilities Did Not Require Hotels Conventions 52 % 26 21 11 11 10 8 3 1 4 4 Association Meetings 68 % 42 48 16 26 16 9 9 6 1 32 -
The following table summarizes the factors cited as important by meeting planners when choosing a destination and a host hotel within that destination.
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Factors in Choosing an Association Meeting Location and Facility

Association Meetings 84 % 79 65 50 36 50 29 19 10 16 24 10 Association Meetings 93 87 82 70 79 53 54 55 51 56 44 24 22 24 29 16 30 36 8 8
Top Factors When Choosing Location Availability of Suitable Hotels Affordability of Destination Safety and Security of Destination Ease of Transportation Transportation Costs Distance Traveled by Attendees Clean and Unspoiled Environment Climate Availability of Recreational Facilities Sightseeing, Cultural Events, Attractions Mandated by By-Laws Glamorous/Popular Image of Location
Conventions 68 % 77 62 45 40 53 26 17 10 10 22 10
Top Factors When Choosing Hotel Within Location Number, Size, and Quality of Meeting Rooms Negotiable Food, Beverage, and Room Rates Cost of Hotel or Meeting Facility Quality of Food Service Number, Size, and Quality of Sleeping Rooms Efficiency of Billing Procedures Availability of Meeting Support Services Assignment of One Staff Person To Handle Meeting Efficiency of Check-in/Check-out Procedures Availability of Exhibit Space Previous Experience in Dealing with Facility and Staff Proximity to Shopping, Restaurants, Off-site Entertainment Number, Size, and Quality of Suites Proximity to Airport Convenience to Other Modes of Transportation Provision of Special Meeting Services Meeting Rooms with Multiple High Speed Lines/Outlets High Speed Internet Other On-site Recreational Facilities On-site Golf Course
Conventions 69 % 80 80 63 54 53 44 42 43 17 37 19 13 24 30 9 25 30 6 5
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As the preceding table indicates, location factors cited as most important include the availability of suitable hotels, affordability, safety, and ease of transportation. Association planners reported an average room rate of $137.00 for hotel accommodations, roughly $24.00 lower than the corporate mark of $161.00. Again contrasting the economic downturn of late 2000 into 2001 with the recovery seen in 2003 and the strengthening seen in 2005, approximately 48% of association meeting planners in the latest survey reported the 2003 meeting budgets remained unchanged versus 2004 budget levels. Of the remaining participants, 47% noted an increase in the budget, and only 5% noted a decrease. Budget anticipations for 2006 in this survey suggest continued expansion: 42% of budgets are expected to remain unchanged, 51% of budgets are expected to increase, and 7% of budgets are expected to decrease. Hotel Room Availability By Major City As shown previously, the availability of hotel rooms in a city is an important criterion when event planners are making meeting location decisions. The Salt Lake Convention and Visitors Bureau publishes a biannual survey on available hotel supply in various cities throughout the United States. We have illustrated the following selection of data from this report.
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Total Hotel and Motel Rooms In The Community (Including Committable to Convention and Not Committable)
Eastern Cities Orlando Atlanta Chicago New York Washington, DC Miami Detroit New Orleans Nashville St. Louis Minneapolis Philadelphia Cincinnati Baltimore Indianapolis Columbus Cleveland Charlotte Memphis Tampa Boston Louisville Birmingham Pittsburgh Raleigh Milwaukee Little Rock Hartford Lexington Norfolk Opryland Nashville Rank 3 4 5 6 7 8 15 16 17 19 23 25 27 28 29 30 31 32 33 34 37 41 42 43 44 45 51 53 54 58 60 Rooms 101,833 85,000 79,234 68,900 64,935 63,000 34,603 33,022 31,642 31,000 28,000 26,000 23,000 21,120 20,788 20,000 19,500 19,304 19,000 17,738 17,400 14,232 14,000 14,000 13,189 13,000 8,000 7,600 7,488 5,205 4,476 Western Cities Las Vegas Los Angeles Dallas Phoenix San Diego Anaheim Houston Denver San Francisco Honolulu Seattle Reno San Antonio Kansas City Salt Lake Portland, OR Tucson Albuquerque Palm Springs Oklahoma City Fort Worth Corpus Christi Sacramento Des Moines El Paso San Jose Arlington, TX Anchorage Long Beach Rank 1 2 9 10 11 12 13 14 18 20 21 22 24 26 35 36 38 39 40 46 47 48 49 50 52 55 56 57 59 Rooms 124,200 110,147 62,000 51,476 50,000 48,000 46,000 36,246 31,101 30,641 30,000 28,093 27,000 25,200 17,549 17,500 15,100 15,000 15,000 13,000 11,000 9,018 8,500 8,050 7,900 7,312 6,453 6,109 5,000
Source: Salt Lake Convention and Visitors Bureau
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Committable Hotel and Motel Rooms In The Community

Eastern Cities Orlando Chicago Atlanta New York New Orleans Minneapolis Tampa Philadelphia Charlotte Miami Nashville Columbus Indianapolis Memphis Detroit St. Louis Louisville Cincinnati Pittsburgh Milwaukee Cleveland Boston Birmingham Baltimore Washington, DC Raleigh Little Rock Hartford Lexington Norfolk Rank 2 3 5 10 11 13 15 16 17 19 20 21 22 28 29 31 33 34 36 38 41 42 43 44 46 47 48 49 54 57 Rooms 80,000 60,000 45,000 25,000 20,000 18,000 17,000 17,000 15,000 14,000 12,830 12,500 12,000 10,000 10,000 9,200 9,000 9,000 8,500 6,370 6,000 6,000 6,000 5,500 5,000 5,000 5,000 5,000 3,000 2,600 Western Cities Las Vegas Los Angeles San Diego Phoenix Houston Anaheim San Francisco Dallas Seattle Albuquerque Denver Kansas City San Antonio Palm Springs Tucson Honolulu Salt Lake Portland, OR Corpus Christi Oklahoma City Anchorage Sacramento Des Moines Long Beach Arlington, TX Fort Worth El Paso Reno San Jose Rank 1 4 6 7 8 9 12 14 18 23 24 25 26 27 30 32 35 37 39 40 46 50 51 52 53 55 56 58 59 Rooms 124,200 55,000 33,000 29,000 26,000 25,000 19,500 17,509 15,000 12,000 12,000 11,400 10,000 10,000 9,500 9,000 8,854 8,000 6,000 6,000 5,000 4,500 4,200 4,125 3,000 2,800 2,700 2,000 1,620
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Committable Hotel and Motel Rooms Within One Mile of the Convention Center
Eastern Cities New York New Orleans Orlando Atlanta Philadelphia Miami Boston Washington, DC St. Louis Opryland Nashville Milwaukee Minnepolis Indianapolis Charlotte Baltimore Detroit Louisville Pittsburgh Cincinnati Nashville Columbus Cleveland Memphis Tampa Birmingham Norfolk Hartford Little Rock Chicago Lexington Raleigh Rank 3 4 5 6 10 13 14 15 20 21 22 23 25 26 27 28 31 33 34 36 39 41 42 43 47 48 49 53 55 58 59 Rooms 17,000 16,548 10,900 10,000 7,000 5,300 5,000 5,000 3,900 3,725 3,714 3,600 3,315 3,088 3,000 2,906 2,500 2,400 2,100 2,025 2,000 1,800 1,800 1,800 1,400 1,388 1,300 1,000 800 650 600 Western Cities San Francisco Las Vegas Anaheim Honolulu Seattle San Antonio San Diego Dallas Los Angeles Salt Lake Portland, OR Denver Kansas City Anchorage Palm Springs Reno Long Beach Sacramento Houston Phoenix Arlington, TX Fort Worth Corpus Christi Des Moines Albuquerque Tucson San Jose Oklahoma City El Paso Rank 1 2 7 8 9 11 12 16 17 18 19 24 29 30 32 35 37 38 40 44 45 46 50 51 52 54 56 57 60 Rooms 19,500 18,376 10,000 9,000 7,500 6,317 6,000 4,833 4,768 4,220 4,000 3,455 2,800 2,800 2,400 2,054 2,000 2,000 1,910 1,795 1,500 1,410 1,200 1,120 1,058 915 770 700 350
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Total Rooms of Three Largest Hotels Within One Mile of the Convention Center
Eastern Cities New York New Orleans Atlanta Orlando Opryland Nashville Boston Detroit Philadelphia Washington, DC Miami St. Louis Baltimore Cincinnati Minneapolis Louisville Pittsburgh Indianapolis Milwaukee Tampa Nashville Columbus Charlotte Cleveland Memphis Birmingham Norfolk Hartford Lexington Little Rock Chicago Raleigh Rank 2 4 6 9 10 11 12 15 17 19 20 25 27 28 29 30 32 33 35 36 37 38 43 44 45 46 50 54 55 56 57 Rooms 5,663 5,215 4,300 3,418 3,402 3,286 3,212 2,668 2,541 2,420 2,380 2,079 1,994 1,932 1,930 1,926 1,685 1,541 1,535 1,488 1,475 1,454 1,361 1,350 1,295 1,194 1,000 807 800 800 753 Western Cities Las Vegas Honolulu San Francisco Anaheim Dallas Los Angeles Long Beach San Diego Kansas City Denver Seattle Salt Lake San Antonio Reno Houston Anchorage Fort Worth Portland, OR Phoenix Sacramento San Jose Palm Springs Corpus Christi Arlington, TX Des Moines Albuquerque Oklahoma City Tucson El Paso Rank 1 3 5 7 8 13 14 16 18 21 22 23 24 26 31 34 39 40 41 42 47 48 49 51 52 53 58 59 60 Rooms 9,346 5,627 4,614 3,913 3,679 3,075 2,951 2,542 2,455 2,348 2,280 2,140 2,135 2,054 1,705 1,539 1,452 1,434 1,404 1,372 1,149 1,100 1,020 960 908 900 700 550 477
This data indicates that San Francisco (1), Las Vegas (2), New York (3), New Orleans (4), Orlando (5), Atlanta (6), Anaheim (7), Honolulu (8), Seattle (9), and Philadelphia (10) are able to commit the largest total room blocks within one mile of their center -- to convention center events in the United States. However, once you look beyond the mile-limit and review the community wide committable-room rankings, Las Vegas and Orlando rise to
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the number one and two positions, respectively, with available committable room counts well above the remainder of the survey cities. Meeting and Convention Timing and Seasonal Patterns Nationwide, the meeting and convention segment of the market has exhibited a strong preference for planning events during the late spring/early summer and fall months, with September and October representing the strongest months. The table below depicts the breakdown of percentages for the favorability of planning meetings in each month throughout the year.
Frequency and Seasonality of Major Conventions
Frequency Every Other Year Annually Twice a Year Four Times Per Year Other No Major Convention Seasonality January February March April May June July August September October November December Percentage 5% 74 8 0 5 8 Percentage 4% 4 8 9 6 10 8 8 12 18 8 5
As the table above indicates, summer months are popular to group business to a lesser degree, for lifestyle and vacation reasons. The summer months are oftentimes selected by those groups in need of a price discount, which generally occurs during this season. Association meetings typically display slightly different characteristics than commercial meetings. State and regional associations often hold their meetings during the summer season,
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contributing to the annual occupancies of lodging facilities with meeting space at a time when commercial activity and room rates may be at their lowest. This typically occurs in May through August. Association gatherings are generally larger than corporate meetings and utilize a convention center and require larger amounts of exhibition and/or meeting space.
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Supply and Demand Analysis 8-1
8. Supply and Demand Analysis
Definition of Subject Hotel Market
The subject site is located in the Fort Lauderdale market area. Lodging facilities in the Fort Lauderdale area are generally clustered in three submarkets: along the beach or the Intracoastal Waterway, near the airport, and in the vicinity of the 17th Street Causeway. The subject property is located within the 17th Street Causeway sub-market, which is served by a variety of lodging facilities consisting predominantly of full-service hotels. We note that the Fort Lauderdale beach sub-market is currently undergoing a significant renaissance, as older, low- and medium-rise residential and commercial developments are being replaced with upscale, high-rise and luxury hotel and condominium developments. While the subject property is not expected to compete with all these high-end hotels or condo projects, the presence of these new properties can be expected to establish a high price point, which supports average rate growth for existing hotels in the market. Moreover, the shift in the caliber of these developments is also expected to support further upgrades in the retail and restaurant sectors, as well. Factors determining competitive levels may include location, price point, product quality, length of stay (such as an extended-stay focus vs. nonextended-stay focus), room type (all-suite vs. standard), hotel age, or brand, among others. We have reviewed these pertinent attributes and established a competitive set based upon this review.
National Trends Overview
The U.S. lodging industry is in a period of slowing RevPAR growth, driven primarily by average rate increases while occupancy remains stable. Yearend results for 2007 reflect 1.2% growth in room nights sold, gaining slightly on the 1.1% pace in 2006. Year-end average rate growth in 2007 has cooled somewhat to 5.9%, following a heated 7.0% in 2006. These 2007 trends have resulted in a 5.7% RevPAR gain, down modestly from the 2006 increase of 7.5%. This follows a strong 2005, which registered RevPAR growth of 8.6%. Managers were able to continue to command healthy increases to their negotiated rates in 2007, following a trend which first took hold in 2004; this strength in rates for primary users supported higher rates for other segments
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of demand. A still strong economy in the first half of 2007 also supported higher demand levels, and improved pricing power remained in place. The following table illustrates nationwide occupancy and average rate trends from 1987 through 2007.
National Occupancy and Average Rate Trends
70 68 66 64 $110 $100 $90 $80 $70 $60 $50 $40 $30
19 97 19 99 20 01 20 03 20 05 19 89 19 91 19 93 19 95 20 07
Occupancy Percentage 60
58 56 54 52 50
19 87
62
Average Rate
Occupancy
Source: STR
Average Rate
The year-end statistics for 2007 reflect national hotel occupancy of 63.2%, down just slightly from 63.3% during 2006. The occupancy for the year was trending slightly higher than 2006 until December, when weaker occupancy levels pushed the average below the 2006 overall level. Year-end 2007 average rate was $103.64, roughly six dollars higher than the $97.89 level for 2006. This gain is similar to the 2006 increase over the 2005 level. The net gain in available rooms increased by 1.4% by year-end 2007, up from the 2006 year-end gain of 0.6% (the 2005 year-end increase was slightly lower at 0.4%); the relative lack of new hotel openings and the continued conversion of hotels to residential use in some key markets continue to contribute to the stability in occupancy. However, the rate of supply increase continues to accelerate.
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National Occupancy and Average Rate Trends

Occupancy 2007 % Change 63.2 % 61.3 % 66.8 62.3 57.7 59.4 59.3 62.2 66.5 68.7 70.9 % 64.8 60.4 57.7 59.4 68.6 % 63.4 69.5 58.0 66.1 57.3 (0.2) % 1.5 % 1.2 (1.3) 0.2 (1.3) 2.4 (1.1) 0.6 (0.4) 0.0 % (0.6) (0.5) (0.2) 0.5 0.4 % (0.8) 0.3 0.3 (0.5) 0.7 Average Room Rate 2006 2007 % Change $97.89 $112.51 136.42 98.58 86.09 71.25 72.75 78.92 94.66 114.60 $159.87 107.54 77.72 59.01 49.15 $137.72 85.31 93.76 63.57 136.73 74.94 $103.64 $118.44 148.06 104.00 89.75 74.98 76.01 83.41 100.20 121.74 $168.88 113.56 82.18 61.29 50.57 $148.93 90.07 99.67 66.93 143.19 78.70 5.9 % 5.3 % 8.5 5.5 4.3 5.2 4.5 5.7 5.9 6.2 5.6 % 5.6 5.7 3.9 2.9 8.1 % 5.6 6.3 5.3 4.7 5.0 RevPAR 2007 $65.50 $72.60 98.90 64.79 51.79 44.54 45.07 51.88 66.63 83.64 $119.74 73.59 49.64 35.36 30.04 $102.17 57.10 69.27 38.82 94.65 45.10
2006 United States Region New England Middle Atlantic South Atlantic East North Central East South Central West North Central West South Central Mountain Pacific Price Luxury Upscale Midprice Economy Budget Location Urban Suburban Airport Interstate Resort Small Metro/Town 63.3 % 60.4 % 66.0 63.1 57.6 60.2 57.9 62.9 66.1 69.0 70.9 % 65.2 60.7 57.8 59.1 68.3 % 63.9 69.3 57.8 66.4 56.9
2006 $61.96 $67.96 90.04 62.20 49.59 42.89 42.12 49.64 62.57 79.07 $113.35 70.12 47.18 34.11 29.05 $94.06 54.51 64.98 36.74 90.79 42.64
% Change 5.7 % 6.8 % 9.8 4.2 4.4 3.8 7.0 4.5 6.5 5.8 5.6 % 5.0 5.2 3.7 3.4 8.6 % 4.8 6.6 5.6 4.3 5.8
Source: STR
Both urban and airport areas continued to show the strongest RevPAR growth, followed by small metro/town locations. All price categories enjoyed RevPAR growth in excess of 3.0%, and the Middle Atlantic, West North Central, and Mountain regions experienced the fastest upward RevPAR movement. Indications for 2008 point to continued growth, with forecasts for national RevPAR growth in excess of 3.0%, which will be driven primarily by room rate increases. Lodging Performance by Chain Scale As noted in the previous table, RevPAR continues a healthy growth trend nationwide. Although the rate of price gains experienced in the middle years of the decade is now cooling off somewhat, room rates should again improve in 2008. Rate gains will be most heightened in cities which have not
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experienced substantial new supply growth, and in areas where hotels have recently renovated. Also pertinent to this analysis is a review of lodging statistics by chain scale; this provides greater indication of differences between price segments and occupancies based on product quality level.
Operating Results by Chain Scale
Occupancy 2007 % Change 71.0 % 71.3 69.4 59.0 65.5 56.9 61.5 0.0 % 0.1 (1.1) (0.8) (1.1) (0.4) 0.5 Average Room Rate 2006 2007 % Change $271.83 150.73 111.61 82.18 81.52 52.34 95.04 $290.54 159.32 118.28 85.94 87.27 53.77 100.87 6.9 % 5.7 6.0 4.6 7.1 2.7 6.1 RevPAR 2007 $206.28 113.60 82.09 50.70 57.16 30.60 62.04
2006 Luxury Upper Upscale Upscale Mid-scale w/ F&B Mid-scale w/o F&B Economy Independents 71.0 % 71.2 70.2 59.5 66.2 57.1 61.2
2006 $193.00 107.32 78.35 48.90 53.97 29.89 58.16
% Change 6.9 % 5.8 4.8 3.7 5.9 2.4 6.7
Source: STR
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RevPAR Results by Chain Scale

$250
$200
$150
RevPAR
$100
$50
$0 Luxury Upper Upscale Upscale Mid-scale w/ Mid-scale F&B w/o F&B Economy Independents
2006
Source: STR
2007
The RevPAR gain among the luxury chains reached nearly 7.0% in 2007, diminishing from the 10.0%+ gains for 2004 through 2006. The 2007 RevPAR gains for independents and mid-scale without food and beverage were also notable, at 6.7% and 5.9%, respectively. Historical Supply and Demand Data Smith Travel Research (STR) is an independent research firm that compiles data on the lodging industry; its published data is routinely used by typical hotel buyers. HVS International has ordered and analyzed an STR Trends Report with historical supply and demand data for the proposed subject propertys anticipated competitive set. This information is presented in the following table, along with the market-wide occupancy, average rate, and rooms revenue per available room (RevPAR). RevPAR is calculated by multiplying occupancy by average rate, and provides an indication of how well rooms revenue is being maximized.
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Historical Supply and Demand Trends (STR)

Occupied Room Nights 876 ,564 886 ,703 845 ,017 833 ,238 890 ,391 850 ,735 1,045 ,549 1,138 ,224 1,210 ,877 1,141 ,236 1,110 ,001 Available Room Nights Change 1,238,810 1,238,810 1,238,810 1,238,810 1,246,110 1,303,195 1,664,487 1,695,425 1,695,425 1,695,425 1,695,425 0.0 % 0.0 0.0 0.6 4.6 27.7 1.9 0.0 0.0 0.0 3.2 %
Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Change 1.2 % (4.7 ) (1.4 ) 6.9 (4.5 ) 2 2.9 8.9 6.4 (5.8 ) (2.7 ) 2.4 %
Occupancy 70.8 % 71.6 68.2 67.3 71.5 65.3 62.8 67.1 71.4 67.3 65.5
Change 1.2 % (4.7) (1.4) 6.2 (8.6) (3.8) 6.9 6.4 (5.8) (2.7) 0.0 %
Average Rate $112.26 122.47 134.12 141.65 141.97 146.10 146.11 147.86 149.46 163.66 182.67
Change 9.1 % 9.5 5.6 0.2 2.9 0.0 1.2 1.1 9.5 11.6 5.0 %
RevPAR $79.43 87.66 91.49 95.28 101.44 95.37 91.78 99.27 106.75 110.16 119.60
Change 10 .4 % 4 .4 4 .1 6 .5 (6 .0) (3 .8) 8 .2 7 .5 3 .2 8 .6 4 .2 %
Average Annual Compounded Change: 1996-200 6 Y ear-to-Date Through November 2006 2007 1,020 ,700 1,089 ,372
6.7 %
1,551,430 1,570,389
1.2 %
65.8 % 69.4
5.4 %
$182.85 193.89
$120.30 6.0 % 134.50
11 .8 %
Source: Smith Travel Research
Hotels Included in Sample Sheraton Hotel Yankee Trader Sheraton Hotel Yankee Clipper Hyatt Regency Pier 66 Marriott Harbor Beach Resort Hyatt Bonaventure Resort & Spa Embassy Suites Fort Lauderdale 17th Street Westin Diplomat Resort Hotel Renaissance Fort Lauderdale Hotel Hilton Fort Lauderdale Fort Lauderdale Grande Hotel & Yacht Club*
City & State Fort Lauderdale, FL Fort Lauderdale, FL Fort Lauderdale, FL Fort Lauderdale, FL Fort Lauderdale, FL Fort Lauderdale, FL Hollywood, FL Fort Lauderdale, FL Fort Lauderdale, FL Fort Lauderdale, FL
Rooms 459 500 380 637 501 358 998 233 374 589
Opened Jun-66 Jun-59 Jun-57 Oct-84 Jan-82 Dec-86 Feb-02 May-01 Jan-07 Jan-08
*Formerly the Marina Marriott, this hotel closed for a major renovation in mid-2007 and reopened in January 2008.
The average daily room count in 2006 was 4,645 for this reporting set, showing an average annual rate of change of 3.2% over the period. It is important to note some limitations of the STR data. Hotels are occasionally added to or removed from the sample, and not every property reports data in a consistent and timely manner; these factors can influence the overall quality of the information by skewing the results. These inconsistencies may
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also cause the STR data to differ from the results of our competitive survey. Nonetheless, STR data provide the best indication of aggregate growth or decline in existing supply and demand, and thus these trends have been considered in our analysis. According to data compiled by Smith Travel Research, until the opening of the Hilton Beach Resort in 2007, the hotel supply directly supportive of the Convention Center remained stable since the 2001 addition of the Renaissance and the 2002 opening of the Westin Diplomat. More recently, the former Marriott Marina closed in mid-2007 and reopened in January 2008 as the Fort Lauderdale Grande Hotel & Yacht Club. The remaining competitive supply dates to the 1950's, 1960's, and 1980's. Upscale, full-service hotels in downtown Fort Lauderdale, combined with select competitive group-oriented properties located in the greater Fort Lauderdale area, achieved an overall occupancy and average rate of roundly 71% and $150, respectively, in 2004. This performance calculates to a 2004 RevPAR (revenue per available room) of $107. (We note that STR data is not weighted by competitive level.) RevPAR trends during 2004 represent a rebound from the impact of a soft US economy experienced earlier in the decade and finally surpassed the market's historical high posted in 2000. In 2005 and 2006, these competitive hotels posted continued RevPAR gains of $3.50 and $9.50, respectively. The Fort Lauderdale markets performance over these three years represents a notable recovery from the declines in 2001 and 2002 that were attributable to several factors: the slowing U.S. economy, the events of September 11, 2001, and a reduction in overall travel throughout the U.S. Through November 2007, year-to-date RevPAR continues strong improvement, with growth of approximately twelve percentage points or a sizeable $14.00, over the same period in 2006. Due to the attractiveness of development of new lodging in this market, further additions to hotel supply are anticipated over the near-term and during the ramp-up of the subject hotel; these proposed rooms are factored into our analysis quantitatively. Our study also discusses other lodging projects which have been recently constructed or are proposed for the market which have not been deemed competitive with the subject hotel and are only factored in qualitatively.
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Seasonality
As a result of the generally warm climate specifically, the favorable winter weather and extremely high temperatures in the summer months the Fort Lauderdale lodging market is highly seasonal. This seasonality is evident in both occupancy and average rate. Occupancy levels are reported to reach the high-70% to low-80% range in the winter and early spring months as vacationing families use school breaks to visit the myriad of tourist attractions in the area and tourists from colder climates visit the area. Demand softens beginning in May, with its nadir often in September due to the hurricane season. Average rate levels follow similar trends as occupancy, with peak demand in the winter/early spring capturing rates well over $100 higher than what is achieved in the summer months. The following tables detail the monthly and annual occupancy and average rate trends of the proposed subject property's market.
Historical Monthly Occupancy Trends (STR)

Month January February March April May June July August September October November December Annual Occupancy Year-to-Date Through Nov 1996 77.3 % 86.7 82.1 80.0 67.9 61.9 65.8 62.8 64.1 68.2 68.8 64.8 70.8 % 71.3 1997 80.7 % 86.6 84.6 83.7 75.4 62.2 67.4 60.9 55.0 75.2 68.8 59.4 71.6 % 72.7 1998 76.8 % 83.8 76.6 77.3 66.7 57.1 62.9 59.6 58.2 72.5 65.6 62.5 68.2 % 68.7 1999 77.6 % 86.2 76.9 78.4 68.3 60.2 62.2 53.9 50.5 66.0 68.7 59.8 67.3 % 68.0 2000 74.8 % 85.5 82.9 80.9 74.3 70.4 68.4 59.2 64.4 68.2 68.0 61.8 71.5 % 72.4 2001 75.3 % 86.1 81.2 78.2 68.1 68.6 62.0 62.1 38.8 52.9 58.8 56.3 65.3 % 66.1 % 2002 69.5 % 74.6 76.8 68.0 60.8 56.6 59.5 64.7 48.1 59.1 60.1 57.9 62.8 % 63.3 % 2003 72.2 % 85.6 73.4 74.3 65.2 61.7 63.3 58.3 55.5 69.3 66.1 62.2 67.1 % 67.6 % 2004 74.9 % 89.0 87.4 83.7 68.0 67.6 71.3 61.5 53.7 75.2 62.3 63.6 71.4 % 72.1 % 2005 76.0 % 81.3 85.9 80.3 72.0 67.8 68.7 57.2 59.2 44.8 60.0 55.9 67.3 % 68.4 % 2006 70.6 % 80.0 81.5 77.6 68.0 63.7 67.3 49.0 47.9 55.6 63.5 62.0 65.5 % 65.8 % 2007 71.7 % 80.0 81.8 72.7 62.8 66.8 71.8 66.3 54.9 63.7 68.5 69.4 %
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Historical Monthly Average Rate Trends (STR)

Month January February March April May June July August September October November December Annual Average Rate 1996 $136.23 150.84 137.44 117.95 95.66 83.99 81.45 82.00 92.89 116.03 110.48 118.79 $112.26 1997 $143.66 162.35 151.82 124.95 105.43 93.95 87.62 88.87 100.52 128.98 120.74 133.76 $122.47 $121.61 1998 $167.33 174.08 168.07 146.25 120.72 99.92 93.70 94.55 106.20 137.31 128.06 139.30 $134.12 $133.68 1999 $184.47 183.62 170.96 149.59 128.35 105.29 95.03 95.76 107.49 147.31 139.07 148.74 $141.65 $141.07 2000 $179.11 183.80 171.69 153.31 134.75 111.49 98.69 97.45 105.69 148.61 141.99 152.55 $141.97 $141.13 2001 $184.42 200.36 185.03 161.92 140.25 114.79 101.58 103.61 105.48 152.55 127.78 134.96 $146.10 $147.00 2002 $173.39 189.27 175.10 154.64 140.54 115.41 105.95 112.49 110.93 152.13 158.64 145.28 $146.11 $146.18 2003 $181.32 197.72 172.15 164.26 141.61 111.74 106.52 103.49 112.29 155.18 147.91 146.68 $147.86 $147.96 2004 $174.91 187.41 183.52 165.45 135.23 119.80 107.29 107.02 120.49 170.70 135.32 150.35 $149.46 $149.39 2005 $193.22 215.23 194.98 174.73 153.73 131.64 119.93 117.22 129.99 160.42 170.73 173.52 $163.66 $162.91 2006 $218.20 239.56 222.03 201.83 171.45 144.91 130.67 127.54 133.32 199.32 174.70 180.67 $182.67 $182.85 2007 $222.98 278.11 230.65 210.77 184.76 150.64 141.24 137.33 138.55 207.76 179.64 $193.89
Year-to-Date Through Nov $111.71
These tables reflect an overall market occupancy level of 65.5% in 2006 (which compares to 67.3% for 2005) and an overall market average rate level of $182.67 in 2006 (comparing to $163.66 for 2005). The overall average occupancy level for the calendar years presented equates to 67.9%. Year-todate November 2007 occupancy and average rate trends illustrate a roundly 3.5-point gain in occupancy and $11.00 increase in ADR over the same period in 2006. The following table illustrates overall averages of occupancy, average rate, and RevPAR during peak, off-peak, and shoulder seasons. Monthly Seasonality
1996 High Season Occupancy Average Rate RevPAR Low Season Occupancy Average Rate RevPAR Shoulder Season Occupancy Average Rate RevPAR 81.4 % $135.68 110.48 64.2 % $85.35 54.81 66.3 % $105.36 69.88
1997 83.8 % $145.63 122.11 61.1 % $91.82 56.14 68.2 % $116.66 79.60
1998 78.5 % $164.01 128.78 60.3 % $97.92 59.01 64.9 % $125.97 81.76
1999 79.6 % $172.30 137.15 55.6 % $98.96 55.01 64.6 % $134.12 86.65
2000 80.9 % $171.85 139.05 64.0 % $100.60 64.36 68.5 % $137.52 94.24
2001 80.1 % $183.08 146.59 54.5 % $103.27 56.24 60.9 % $133.44 81.30
2002 72.4 % $173.27 125.36 57.5 % $109.79 63.17 58.9 % $142.73 84.10
2003 76.2 % $179.18 136.49 59.0 % $107.28 63.32 64.9 % $141.22 91.68
2004 83.6 % $177.97 148.82 62.3 % $110.91 69.07 67.3 % $143.13 96.40
2005 80.9 % $194.28 157.12 61.7 % $122.23 75.47 60.0 % $156.92 94.19
2006 77.4 % $220.30 170.43 54.8 % $130.48 71.50 62.6 % $173.67 108.64
2007 76.5 % $235.65 180.25 64.4 % $139.14 89.65 65.3 % $180.70 118.00
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SUPPLY
An integral component of the supply and demand relationship that has a direct impact on the availability of lodging demand is the current and anticipated supply of competitive lodging facilities. With 28,005 rooms available in the market area as a whole (according to STR), the proposed subject propertys competitive set constitutes roundly 18% of the total areawide supply.
Map of Competition
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Map of Competition - Continued - Hyatt Bonaventure and Westin Diplomat
Primary Competitors
The following tables summarize the important operating characteristics of the primary and secondary competitors. This information was compiled from personal interviews, inspections, lodging directories, and our in-house library of operating data.
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Primary Competitors Operating Performance

Est. Segmentation Weighted Annual Room Count 998 637 579 501 500 459 380 4,054 366 4,420
Comm ercia l Conve ntion use Gr oup
Estimated 2005 Weighted Annual Room Count 998 637 579 501 500 459 380 4,054 366 4,420
Estimated 2006 Weighted Annual Room Count 998 637 240 501 500 459 380 3,715 478 4,193
Estimated 2007
Property Westin Diplomat Harbor Beach Marriott Resort & Spa Fort Lauderdale Grande Hotel & Yacht Club Hyatt Bonaventure Resort & Spa Sheraton Yankee Clipper Sheraton Yankee Trader (Westin Conversion) Hyatt Regency Pier 66 Sub-Totals/Averages Secondary Competitors Totals/Averages
Number of Rooms 998 637 579 501 500 459 380 4,054 965 5,019
Occ.
Average Rate
RevPAR $149.80 173.28 107.25 31.32 79.95 82.76 87.63 $110.74 $103.17 $110.11
Occ. 75 % 77 40 36 72 73 67 64.1 % 77.6 % 65.2 %
Average Rate $231.00 244.00 175.00 115.00 124.00 124.00 185.00
RevPAR $173.25 187.88 70.00 41.40 89.28 90.02 123.95
Occ.
Average Rate
RevPAR $183.00 198.75 8.00 87.58 100.86 100.32 137.52
Occupancy Penetration 107.2 % 107.2 28.6 82.9 117.2 108.6 102.9 99.9 % 100.8 % 100.0 %
Yield Penetration 135.7 % 147.4 5.9 65.0 74.8 74.4 102.0 100.6 % 95.3 % 100.0 %
In-Ho
0 % 70 % 10 40 20 30 0 51 7 20 7 20 20 17 6 % 41 % 10 % 25 % 7 % 40 %
28 % 40 40 30 50 50 41 38 % 43 % 39 %
Leisu
re
2% 10 10 19 23 23 22 14 % 22 % 15 %
70 % $214.00 76 228.00 65 165.00 36 87.00 65 123.00 73 114.00 69 127.00 65.6 % $168.78 76.7 % $134.59
75 % $244.00 75 265.00 20 40.00 58 151.00 82 123.00 76 132.00 72 191.00
$187.36 $120.11 $151.66 $117.67
69.9 % $193.97 $135.62 70.6 % $182.08 $128.50
66.5 % $165.52
$183.84 $119.91
70.0 % $192.60 $134.81
HVS
Primary Competitors Facilities, Ownership & Management

Facilities and Amenities
Re sta ura nt Lo un ge Kit che ne tte Ro om Se rvi He ce alt hC lub Bu sin ess Ce Me nte etin r gR oo ms
Property Westin Diplomat 3555 S. Ocean Drive Harbor Beach Marriott Resort & Spa 3030 Holiday Drive Fort Lauderdale Grande Hotel & Yacht Club 1881 SE 17th Street Hyatt Bonaventure Resort & Spa 250 Racquet Club Road Sheraton Yankee Clipper 1140 Seabreeze Boulevard Sheraton Yankee Trader (Westin Conversion) 321 N. Fort Lauderdale Beach Boulevard Hyatt Regency Pier 66 2301 S.E. 17th Street Totals/Averages
Number of Rooms 998 637 579 501 500 459 380
Year Renovated/R Distance To Year Opened efurbished Subject 2002 1984 1980 1982 1959 1966 1957 None 2007 2008 2007 N/A N/A 2007 11 Miles 1.25 Miles 2 Blocks 17 Miles .75 Miles 2 Miles .25 Miles
Meeting Space (SF) 209,000 30,000 20,000 50,000 8,100 8,900 32,431
Meeting Space per Room Ownership Entity 209.4 47.1 34.5 99.8 16.2 19.4 85.3 Pipefitter's Union N/A LXR Tom Ireland Starwood/Gill Family Starwood/Gill Family LXR
Management Company Starwood Hotels Marriott LXR Hyatt Worldwide Starwood Starwood LXR
6 4 2 3 1 2 3
1 1 1 1 1 1 1
N N N N N N N
Y Y Y Y Y Y Y
Y Y Y Y Y Y Y
Y Y Y Y Y Y Y
39 28 19 17 4 8 7
4,054
358,431
88.4
HVS
Our survey of the competitive hotels in the local market shows a range of lodging types and facilities. The total anticipated competitive market encompassing the proposed subject property offers ten properties, totaling 5,019 rooms in 2007. Lodging demand in the competitive market consists of a mix of properties, most with major brand affiliations, with locations ranging from beachfront, to waterfront marina, to urban inland, and accommodating a mix of lodging demand. The selected competitive set is weighted slightly more toward transient demand - derived from commercial and leisure travelers, at approximately 54% of total market demand. Group room nights - derived from in-house or convention groups - support the balance of demand for lodging in this market, with in-house groups accounting for the bulk of this market segmentation. The hotels with the greatest amount of meeting space in the primary competitive set also accommodate the highest proportion of meeting and group demand in the market, such as the Westin Diplomat and the Hyatt Bonaventure. Overall, operating performance for the primary competitive set follows a very similar trend when compared to the STR data mentioned earlier in this section. In 2007, the primary competitors are estimated to have posted gains of six occupancy points and $6.50 ADR over the 2006 levels, indicating continued strong growth for these properties. This continued positive trend for the primary competitors equates to very strong RevPAR growth in 2007 at roundly $15.50, following $9.50 growth in RevPAR in 2006. Each primary competitor was inspected and evaluated. Descriptions of our findings are presented below.
HVS
Westin Diplomat 3555 S. Ocean Drive Hollywood, Fl

Number of Rooms: Property Type: Year Opened: Year Refurbished/Renovated: Distance from Subject: Ownership Entity: Management Company: 998 Full-Service 2002 None 11 Miles Pipefitter's Union Starwood Hotels INSERT PHOTO OF PROPERTY HERE
Estimated Historical Operating Statistics Wtd. Annual Room Count Estimated 2005 Estimated 2006 Estimated 2007 Estimated 2007 Market Segmentation Convention In-House Group Leisure Commercial Property Condition, Refurbishments, and Competitive Position Guestroom Condition: Condition of Other Improvements: Recent Renovations: Competitive Advantage: Competitive Disadvantage: Good condition due to hotel opening in 2002 Very good to excellent condition due to hotel opening in 2002 Renovation of guestrooms planned for late-2008 Beachfront, large room count, large column-free exhibit space, access to Intracoastal Waterway Union labor restrictions challenging, limited outdoor function space, guestrooms reaching time for renovation 0% 70% 28% 2% 998 998 998 Occupancy 70 % 75 75 Average Rate $214 $231 $244 RevPAR $149.80 $173.25 $183.00 Occupancy Penetration 105 % 115 107 Yield Penetration 136 % 144 136
HVS
Harbor Beach Marriott Resort & Spa 3030 Holiday Drive Fort Lauderdale, Fl
Number of Rooms: Property Type: Year Opened: Year Refurbished/Renovated: Distance from Subject: Ownership Entity: Management Company:
Estimated Historical Operating Statistics Wtd. Annual Room Count Estimated 2005 Estimated 2006 Estimated 2007 Estimated 2007 Market Segmentation Convention In-House Group Leisure Commercial Property Condition, Refurbishments, and Competitive Position Guestroom Condition: Condition of Other Improvements: Recent Renovations: Competitive Advantage: Competitive Disadvantage: Excellent condition due to renovation completed in December 2007 Overall good; public areas and meeting space need upgrading Completed hard and soft goods renovation December 2007 Beachfront; renovated guestrooms; guestroom view; meeting space layout; spa Meeting rooms and lobby in declining condition; lack of ballroom space 10% 40% 40% 10% 637 637 637 Occupancy 76 % 77 75 Average Rate $228 $244 $265 RevPAR $173.28 $187.88 $198.75 Occupancy Penetration 114 % 118 107 Yield Penetration 157 % 157 147
637 Full-Service 1984 2007 1.25 Miles N/A Marriott
INSERT PHOTO OF PROPERTY HERE
HVS
Fort Lauderdale Grande Hotel & Yacht Club 1881 SE 17th Street Fort Lauderdale, Fl
Estimated Historical Operating Statistics Wtd. Annual Room Count Estimated 2005 Estimated 2006 Estimated 2007 Estimated 2007 Market Segmentation Convention In-House Group Leisure Commercial Property Condition, Refurbishments, and Competitive Position Guestroom Condition: Condition of Other Improvements: Excellent condition due to total renovation and redesign as of January 2008 Excellent condition; former Marriott Marina closed in mid-2007 and reopened in January 2008 after a $65-million renovation of public spaces, guestrooms and suites, meeting space and event facilities Closed from early 2007 to January 2008 for $65-million renovation and redesign Blackstone Hilton relationship, 33-slip marina, water taxi stop, $65-million renovation and redesign of public spaces, guestrooms and suites, meeting space and event facilities Difficult access from local arterials; limited parking; very limited outdoor function space; no spa 20% 30% 40% 10% 579 579 579 Occupancy 65 % 40 20 Average Rate $165 $175 $40 RevPAR $107.25 $70.00 $8.00 Occupancy Penetration 98 % 61 29 Yield Penetration 97 % 58 6
579 Full-Service 1980 2008 2 Blocks LXR LXR
Recent Renovations: Competitive Advantage:
Competitive Disadvantage:
HVS
Hyatt Bonaventure Resort & Spa 250 Racquet Club Road Weston, Fl
Number of Rooms: Property Type: Year Opened: Year Refurbished/Renovated: Distance from Subject: Ownership Entity: Management Company: 501 Full-Service 1982 2007 17 Miles Tom Ireland Hyatt Worldwide INSERT PHOTO OF PROPERTY HERE
Estimated Historical Operating Statistics Wtd. Annual Room Count Estimated 2005 Estimated 2006 Estimated 2007 Estimated 2007 Market Segmentation Convention In-House Group Leisure Commercial Property Condition, Refurbishments, and Competitive Position Guestroom Condition: Condition of Other Improvements: Recent Renovations: Competitive Advantage: Competitive Disadvantage: Excellent condition due to recent completion of $100-million renovation in 2007 Excellent condition due to recent completion of $100-million renovation in 2007 Completed $100 million renovation to conference center and hotel in 2007 State-of-the-art 100,000-square-foot conference center; Elizabeth Arden Red Door Spa; quality of meeting space; 4 pools; golf course on property; guestroom condition No beach or water access; reported poor quality golf course; distance from airport; distance from Fort Lauderdale activities 0% 51% 30% 19% 501 501 501 Occupancy 36 % 36 58 Average Rate $87 $115 $151 RevPAR $31.32 $41.40 $87.58 Occupancy Penetration 54 % 55 83 Yield Penetration 28 % 35 65
HVS
Sheraton Yankee Clipper 1140 Seabreeze Boulevard Fort Lauderdale, FL

500 Number of Rooms: Full-Service Property Type: Year Opened: 1959 Year Refurbished/Renovated: N/A .75 Miles Distance from Subject: Starwood/Gill Family Ownership Entity: Starwood Management Company:
Estimated Historical Operating Statistics Wtd. Annual Room Count Estimated 2005 Estimated 2006 Estimated 2007 Estimated 2007 Market Segmentation Convention In-House Group Leisure Commercial Property Condition, Refurbishments, and Competitive Position Guestroom Condition: Condition of Other Improvements: Recent Renovations: Competitive Advantage: Competitive Disadvantage: Poor condition; however, a major revovation is planned to commence May 2008 Poor condition; however, a major revovation is planned to commence May 2008 Nothing major in recent past; a major renovation is planned for May 2008 to be completed January 2009 Beachfront, room count size Guestroom condition, limited meeting space, no amenities such as golf or spa, poor parking for guests 7% 20% 50% 23% 500 500 500 Occupancy 65 % 72 82 Average Rate $123 $124 $123 RevPAR $79.95 $89.28 $100.86 Occupancy Penetration 98 % 110 117 Yield Penetration 73 % 74 75
HVS
Sheraton Yankee Trader (Westin Conversion) 321 N. Fort Lauderdale Beach Boulevard Fort Lauderdale, Fl
Number of Rooms: 459 Property Type: Full-Serv ice Year Opened: 1966 Year Refurbished/Renov ated: N/A Distance from Subject: 2 Miles Ownership Entity: Starwood/Gill Family Management Company: Starwood
E stimated Historical Operating Statistics Wtd. Annual Room Count Estimated 2005 Estimated 2006 Estimated 2007 E stimated 200 7 Market Segmentation Conventi on In-House Group Leisure Commercial Property Condition, Refurbishments, and Competitive Position Guestroom Condi tion: Condition of Other Improvements: Recent Renovations: Competitive Advantage: Competitive Disadvantage: Poor condition; however, a major revovation is planned to commence May 2008 Poor condition; however, a major revovation is planned to commence May 2008 Nothing major in recent past; a major renovation is planned for May 2008 to be completed January 2009 along with a brand conversion to Westin Beachfront, room count size, anti cipated conversion to Westin brand Guestroom condition, limited meeti ng space, no amenities such as golf or spa, poor parking for guests 7% 20% 50% 23% 459 459 459 Occupancy 73 % 73 76 Average Rate $114 $124 $132 RevPAR $82.76 $90.02 $100.32 Occupancy Penetration 109 % 111 109 Yield Penetration 75 % 75 74
HVS
Hyatt Regency Pier 66 2301 S.E. 17th Street Fort Lauderdale, Fl

Estimated Historical Operating Statistics Wtd. Annual Room Count Estimated 2005 Estimated 2006 Estimated 2007 Estimated 2007 Market Segmentation Convention In-House Group Leisure Commercial Property Condition, Refurbishments, and Competitive Position Guestroom Condition: Condition of Other Improvements: Some guestrooms very good condition, others poor awaiting renovation in 2008 or 2009 Lobby and public areas excellent due to recent $30 million renovation and redesign of Lanai and Tower guestrooms, transformation of the pool, waterfall, and cabanas. The lobby was redesigned adding a new bar and ballroom, and meeting space was renovated.Completed late 2007 Lobby and public areas excellent due to recent renovation completed late 2007 IntraCoastal Waterway direct access, recent lobby and public space renovation in late 2007, Hyatt brand, spa, main bldg meeting space renovated late 2007 Some guestrooms need renovation, guestrooms spread out from main tower to out buildings, half of meeting space located external to main building with no protected walkway or transport 20% 17% 41% 22% 380 380 380 Occupancy 69 % 67 72 Average Rate $127 $185 $191 RevPAR $87.63 $123.95 $137.52 Occupancy Penetration 104 % 103 103 Yield Penetration 80 % 103 102
380 Full-Service 1957 2007 .25 Miles LXR LXR
Recent Renovations: Competitive Advantage: Competitive Disadvantage:
HVS
Secondary Competitors
The secondary competitors were deemed less competitive due to differences in location, amenities, facilities, rate structure, or market orientation. Considering these factors, the consultants assigned each secondary competitor a percentage of competitiveness that expresses the extent to which it may compete with the proposed subject property. The room count of each of the secondary competitors, as weighted, as well as other pertinent data, is included in the following table.
HVS
Secondary Competitors
Est. Segmentation Total Competitive Level 30 % 60 65 50 % Weighted Annual Room Count 215 151 366
Co m m e rc ia nti on In -Ho us e Gr o up l
Estimated 2005 Weighted Annual Room Count 215 151 366
Estimated 2006 Weighted Annual Room Count 112 215 151 478
Estimated 2007
Property Hilton Beach Resort Embassy Suites Renaissance Hotel Totals/Averages
Number of Rooms 374 358 233 965
Occ.
Average Rate
RevPAR $103.50 102.70 $103.17
Occ.
Average Rate
RevPAR $122.46 110.88 $117.67
Occ.
Average Rate
C o nv e
L eisu
re
RevPAR $145.28 125.56 120.24 $128.50
2% 10 15 10 %
23 % 70 % 5 % 32 38 20 17 33 35 25 % 43 % 22 %
75 % $138.00 79 130.00 76.7 % $134.59
78 % $157.00 77 144.00 77.6 % $151.66
64 % $227.00 73 172.00 72 167.00 70.6 % $182.08
HVS
We have identified three hotels that are expected to compete with the proposed subject property on a secondary basis. Due to its Hilton affiliation and new upscale construction, we have weighted the Hilton Beach Resort as 30% competitive with the subject hotel. The Hilton Beach Resort's competitive weight was lowered due to its more distant location from the convention center, its smaller room count and meeting space, and its more transient orientation. The all-suite Embassy Suites is located proximate to the Convention Center Complex and shares the Hilton affiliation; therefore, this property was weighted 60% competitive with the proposed subject property. We note the Embassy Suites was not considered to be fully competitive due to its all-suite product-offering, transient orientation, smaller meeting space, and room count. The Renaissance is located very proximate to the subject site and was weighted 65% competitive with the subject hotel. The Renaissance was not considered a 100% competitor due to its smaller room count and meeting space, as well as its transient market orientation. Supply Changes It is important to consider any new hotels that may have an impact on the proposed subject propertys operating performance. Based on our fieldwork in the market and our discussions with the City of Fort Lauderdale Planning Office and hotel developers, we have identified one property (in addition to the subject) that is proposed to be competitive with the subject property. The $205-million W Hotel will be a luxury product compared to the upscale subject property; due to this positioning and price point, as well as its distance from the subject site, the W Hotel has been weighted as 10% competitive. The W Hotel is currently under construction on a beachfront site approximately two and one-half miles northeast of the subject property. The W Hotel is expected to feature 309 rooms, 171 suites, three WOW suites, 13,000 square feet of meeting space, 8,000 square feet of prefunction space, two food and beverage outlets, a 10,000-square-foot Bliss Spa, and a Sweat Fitness Center. The 23-story, two-tower development currently under development by Capri Resorts, LLC, an affiliate of CL Financial Ltd., and will be operated by Starwood Hotels and Resorts. The W Hotel site is situated in an area of new beachfront development including the 2007-opened luxury $240-million St. Regis Hotel by Starwood; the 24-story, $200-million Trump International Hotel & Tower to open in late-2008 or early-2009; and the recently-opened Atlantic condotel project by Starwood. The ultra-luxury caliber or condotel orientation of these projects, as well as other proposed high-end hotels or redevelopment projects located along the beach, are expected to open with a much higher price point and target a different customer base than the subject hotel. Therefore, these
HVS
luxury hotels have been considered only qualitatively only in our positioning of the proposed subject property's stabilized occupancy level. We do note the addition of such high caliber hotels to the market is expected to bolster stronger ADRs for other existing hotels, which should benefit the subject property. Due to the attractiveness of development of new lodging in this market, further additions to hotel supply are anticipated over the near-term and during the ramp-up of the subject hotel. We consider that some of these hotel rooms may compete with the subject property and have been factored into our analysis quantitatively as 500 Potential Full-Service Rooms. The following tables show these current and potential changes in supply for the lodging market as well as room count changes.
New Supply
Number of Rooms 1,000 482 500 1,982 Total Competitive Level 100 % 10 100 Estimated Opening Date March 1, 2011 October 1, 2008 January 1, 2013
Proposed Property Proposed Proposed Hilton Hotel Proposed W Hotel Potential Full-Service Hotel Development Totals/Averages
Development Stage/Details Subject Property Under Construction Assumption due to increased demand from conv ctr / Hilton package
Room Count Changes

Room Count Change 10 -150 145 -19 -14 Total Competitive Level 100 100 100 100 % % % %
Room Countt Changes at Competitors Fort Lauderdale Grand Hotel & Yacht Club Sheraton Yankee Clipper Sheraton Yankee Clipper Sheraton Yankee Trader (Westin Conversion) Totals/Averages
Opening Date January 1, 2008 April 1, 2008 January 1, 2009 January 1, 2009
Development Stage Recently Reopened Planned Renovation & Room Count Decrease Planned Renovation & Room Count Increase Planned Renovation, Conversion, & Room Count Decrease
Based on our research, due to the major renovations anticipated over the next two years at the Sheraton Yankee Clipper and Sheraton Yankee Trader, room count changes and improved positioning have been factored into our
HVS
analysis. We further note that the Sheraton Yankee Trader will reportedly convert to a Westin flag as part of its renovation. While we have taken reasonable steps to investigate proposed hotel projects and their status, due to the nature of real estate development, it is impossible to determine with certainty every hotel that will be opened in the future, or what their marketing strategies and effect in the market will be. Depending on the outcome of current and future projects, the subject property may be positively or negatively affected. Future improvement in market conditions will raise the risk of increased competition. Our forthcoming forecast of stabilized occupancy and average rate is intended to reflect such risk.
HVS
DEMAND
The following table presents the most recent trends for the subject hotel market as tracked by HVS. These data pertain to the subjects competitors discussed previously in this section; performance results are estimated, rounded for the competition, and in some cases weighted if there are secondary competitors present. In this respect, the information in the table differs from the previously presented STR data and is consistent with the supply and demand analysis developed for this appraisal.
Historical Market Trends

Year Estimated 2005 Estimated 2006 Estimated 2007 Accommodated Room Nights % Change 1,073,322 1,052,275 1,071,214 (2.0) % 1.8 Room Nights Available 1,613,391 1,613,391 1,530,438 % Change 0.0 % (5.1) Market Occupancy 66.5 % 65.2 70.0 Market ADR $165.52 183.84 192.60 % Change 11.1 % 4.8 Market RevPAR $110.11 119.91 134.81 % Change 8.9 % 12.4
Average Annual Compounded Change, Estimated 2005-Estimated 2007
(0.1) %
(2.6) %
7.9 %
10.6 %
Demand Analysis Using Market Segmentation
For the purpose of demand analysis, the overall market is divided into individual segments based on the nature of travel. Although a market may have various segments, the three primary classifications occurring in most areas are commercial, meeting and group, and leisure. Based on our fieldwork, area analysis, and knowledge of the local lodging market, we estimate the 2007 distribution of accommodated room night demand as follows.
HVS
Accommodated Room Night Demand

Marketwide Accommodated Percentage Demand of Total 7 2,514 42 3,812 41 7,724 15 7,164 1,07 1,214 7% 40 39 15 100 %
Market Segment Convention In-House Group Leisure Commercial Total
The markets demand mix is weighted most heavily toward in-house group demand, with this segment representing roughly 40% of the accommodated room nights in this Fort Lauderdale sub-market. The other segments consist of leisure at 39%, commercial at 15%, and convention at 7%. Using the distribution of accommodated hotel demand as a starting point, we will analyze the characteristics of each market segment in an effort to determine future trends in room night demand. Convention and In-House Group Segments The meeting and group market includes meetings, seminars, conventions, trade association shows, and similar gatherings of ten or more people. Peak convention demand typically occurs in the winter and spring with moderate demand during the late-spring, and late-fall. Because of the hot weather and vacations, the summer months represent the slowest period for this market segment. Although there are numerous classifications within the meeting and group segment, the primary categories considered in this analysis are corporate groups, associations, and SMERFE (social, military, ethnic, religious, fraternal, and educational) groups. Factors related to group demand considered in our development of growth rates for this segment include this markets dependence on local corporate and regional/national association sources for group business. Trends relating to these types of meetings are detailed in Chapter 7 - Overview of US Meetings Market. Growth in the corporate meetings market is contingent on the strength of the US and local economies, and the amount of meeting volume driven by local corporations. Association meetings are drawn to this market from local, regional, and national organizations which desire a warm, leisure destination near the ocean in which to hold their events.
HVS
Furthermore, the in-house group SMERFE sub-segment is very strong, as well as association demand, which is reported dominant at competitive properties such as the two Sheraton properties. In the local market, the Fort Lauderdale Convention Center houses convention demand from all group sub-categories. Future meeting and group demand is closely related to growth in the commercial segment. Because most meetings have either a direct or an indirect business purpose, the economic considerations that have an impact on commercial travel also affect meeting and group demand. The exception is non-commercial meetings, which are tied to the economic factors that influence leisure travel. It should be noted that meetings and similar events are booked in advance, and thus growth in this segment tends to lag slightly behind increases in commercial demand. Leisure Segment The leisure market segment consists of individuals and families who are spending time in the area or passing through en route to other destinations. Their travel purposes may include sightseeing, recreation, visiting friends and relatives, or numerous other non-business activities. Leisure demand is strongest Friday and Saturday nights and during holiday periods and the peak winter months. A portion of the leisure segment can be highly priceinsensitive during peak periods, while price is a much greater consideration during off-peak. Leisure demand in the subject propertys market is generated by the sites and attractions described earlier in this report, including the beaches and the Intracoastal Waterway, the Port Everglades Cruise Terminal, the Broward Center for Performing Arts, and the Las Olas Riverfront Entertainment Complex and Riverwalk Arts & Entertainment District in downtown Fort Lauderdale. Other area attractions include the International Swimming Hall of Fame, Museum of Art - Fort Lauderdale, Museum of Discovery/Science, the Art Institute of Fort Lauderdale, Jungle Queen Cruise, Fashion MallPlantation, Davie Rodeo Track (professional rodeo association), Dania JaiAlai, Jacaranda Golf Course, and the Bank Atlantic Center (entertainment center and home of Florida Panthers NHL team). Outside of the greater Fort Lauderdale area are Gulfstream Park Racing & Casino, Calder Race Track (horseracing), Dolphins Stadium, and Sawgrass Mills (Florida's largest outlet store and entertainment venue). Local leisure events include such draws as the International Film Festival.
HVS
Future leisure demand is related to the overall economic health of the region and the nation. Trends showing changes in state and regional unemployment and disposable personal income often have a strong correlation to non-commercial visitation. Traffic counts on nearby highways and attendance levels at local attractions can also form a basis for projections. Of the economic and demographic data presented earlier in this report, trends in retail sales, retail sector employment, total employment, and air traffic counts tend to have the strongest influence on leisure demand. Commercial Segment The commercial segment consists of individual businesspeople that are visiting various firms in the subject propertys market. This demand is strongest during the week, and typically drops off substantially on weekends. Commercial demand is relatively constant throughout the year, although some declines are noticeable in late December and during other holiday periods. Demand generated by government activity is typically included in this segment, and generally consists of government employees or contractors traveling on government business; the rate paid by these travelers is tied to the per diem reimbursement rate established for the market area. Commercial demand in the Fort Lauderdale market is generated by businesses in the area, including many of the countys major employers. Major area firms include ANC Corporation/Republic Industries, AT&T, Bank of America, Broward General Hospital District, Deloitte and Touche, Embraer, Federal Express, Florida Power & Light, Fort Lauderdale Jet Center, American Express, Tenet Healthcare, Motorola, Continental Group, Citrix, Wachovia (SouthTrust), Bank of Florida Center, the Federal Courthouse, GMP, Guardian Industries, Signature Flights, and SunSentinal. Due to the beach location of several of the competitive hotels, they are generally not reliant upon any one company for commercial business. Some hotels noted, however, that a handful of business travelers working with downtown firms (roughly three miles away) prefer to stay in the competitive market due to the beach environment. All the economic and demographic data presented earlier have some influence on commercial lodging demand; the trends that have the most direct correlation are changes in FIRE, service, wholesale trade, and total employment; occupied office space; and air passenger counts.
HVS
The purpose of segmenting the lodging market is to define each major type of demand, identify customer characteristics, and estimate future growth trends. Starting with an analysis of the local area, four segments were defined as representing the proposed subject propertys lodging market. Various types of economic and demographic data were then evaluated to determine their propensity to reflect changes in hotel demand. Based on this procedure, we forecast the following annual base market segment growth rates, before consideration of unaccommodated or induced demand.
Annual Market Segment Base Demand Growth
Market Segment Convention In-House Group Leisure Commercial Base Demand Growth
2008 -5.0 % 3.0 4.0 5.0 3.1 %
2009 0.0 % 4.0 5.0 5.0 4.3 %
2010 3.0 % 5.0 6.0 4.5 5.2 %
Annual Growth Rate 2011 2012 6.0 % 5.0 5.0 4.0 4.9 % 10.0 % 5.0 4.0 3.5 4.7 %
2013 8.0 % 4.0 4.0 3.0 4.1 %
2014 5.0 % 3.0 3.0 2.0 3.0 %
2015 2.0 % 2.0 2.0 2.0 2.0 %
These growth rates will be used in subsequent sections of this report to forecast changes in lodging demand. Unaccommodated Demand Unaccommodated demand refers to individuals who are unable to secure accommodations in the market because all the local hotels are filled. These travelers must defer their trips, settle for less desirable accommodations, or stay in properties located outside the market area. Because this demand did not yield occupied room nights, it is not included in the estimate of historical accommodated room night demand. If additional lodging facilities are expected to enter the market, it is reasonable to assume that these guests will be able to secure hotel rooms in the future, and it is therefore necessary to quantify this demand. The following table delineates our forecast of unaccommodated demand in the subject market.
HVS
Unaccommodated Demand Estimate - Base Year

Market Segment Convention In-House Group Leisure Commercial Total Accommodated Room Night Demand 72,514 423,812 417,724 157,164 1,0 71,214 Unaccommodated Demand Percentage 2 % 5 5 4 5 % Unaccommodated Room Night Demand 1,135 21,206 20,901 6,168 49,409
Our interviews with market participants found that the market generally sells out during the peak travel season January through April, as well as sporadically within other shoulder periods throughout the year. A portion of this demand, which is currently turned away, should return to the market concurrent with the supply increase. Accordingly, we have forecast 5% of the base year demand to be classified as unaccommodated, based upon an analysis of monthly and weekly peak demand and sell-out trends. Induced Demand Induced demand represents the additional room nights that are expected to be attracted to the market following the introduction of a new demand generator. Situations that can result in induced demand include the opening of a new manufacturing plant, the expansion of a convention center, or the addition of a new hotel with a distinct chain affiliation or unique facilities. Our estimates of induced demand account for the opening of the subject hotel and are detailed in Chapter 6 - Hotel Induced Demand Analysis. Accordingly, we have incorporated 45,000 room nights (rounded) into our analysis, phased-in over an appropriate ramp-up period. Accommodated Demand and Marketwide Occupancy Based upon a review of the market dynamics in the proposed subject propertys competitive environment, we have forecast growth rates for each market segment. We have also analyzed the existence of unaccommodated demand in the market, as well as the potential for induced demand to occur in the future. Using the calculated potential demand for the market, we have determined marketwide accommodated demand based on the inherent limitations of demand fluctuations and other factors in the market area.
HVS
The following table details our projection of lodging demand growth for the subject market, including the total number of occupied room nights and any residual unaccommodated demand in the market. The table also details any residual demand (demand still remaining after base and latent demand is absorbed); high levels of residual demand can be an indicator of likely longterm supply increases in a market.
HVS
Accommodated Demand
2011 Convention Base Demand Unaccommodated Demand Induced Demand Total Demand Growth Rate In-House Group Base Demand Unaccommodated Demand Induced Demand Total Demand Growth Rate Leisure Base Demand Unaccommodated Demand Total Demand Growth Rate Commercial Base Demand Unaccommodated Demand Total Demand Growth Rate Totals Base Demand Unaccommodated Demand Induced Demand Total Demand less: Residual Demand Total Accommodated Demand Overall Demand Growth Market Mix Convention In-House Group Leisure Commercial Existing Hotel Supply Proposed Hotels Proposed Proposed Hilton Hotel Proposed W Hotel Potential Full-Service Hotel Development Changes to Existing Hotels Fort Lauderdale Grande Hotel & Yacht Club Sheraton Yankee Clipper Sheraton Yankee Clipper Sheraton Yankee Trader (Westin Conversion) Available Rooms per Night Nights per Year Total Supply Rooms Supply Growth Marketwide Occupancy
A B C D
2012 82,733 1,294 22,950 106,978 24.5 % 525,547 26,296 5,063 556,906 5.5 % 528,008 26,419 554,427 4.0 % 194,905 7,649 202,554 3.5 %
2013 89,352 1,398 32,513 123,262 15.2 % 546,569 27,348 6,750 580,667 4.3 % 549,128 27,476 576,604 4.0 % 200,752 7,879 208,631 3.0 %
2014 93,820 1,468 38,250 133,537 8.3 % 562,966 28,169 6,750 597,884 3.0 % 565,602 28,300 593,902 3.0 % 204,767 8,036 212,803 2.0 %
2015 95,696 1,497 38,250 135,443 1.4 574,225 28,732 6,750 609,707 2.0 576,914 28,866 605,780 2.0 208,863 8,197 217,059 2.0
75,212 1,177 9,563 85,951 19.3 % 500,521 25,044 2,250 527,815 5.4 % 507,700 25,403 533,103 5.0 % 188,314 7,390 195,704 4.0 %
1,271,747 1,331,193 1,385,801 1,427,154 1,455,698 59,014 61,659 64,101 65,973 67,292 11,813 28,013 39,263 45,000 45,000 1,342,574 1,420,864 1,489,164 1,538,127 1,567,990 29,394 16,454 0 0 4,885 1,313,179 1,404,410 1,489,164 1,538,127 1,563,105 7.3 % 6.9 % 6.0 % 3.3 % 1.6 % 6.4 % 39.3 39.7 14.6 4,532
A B C D
7.5 % 39.2 39.0 14.3 4,532 1,000 48
8.3 % 39.0 38.7 14.0 4,534 1,000 48 499 10 -150 145 -19
8.7 % 38.9 38.6 13.8 4,532 1,000 48 500 10 -150 145 -19
8.6 % 38.9 38.6 13.8 4,532 1,000 48 500 10 -150 145 -19
838 48
10 -150 145 -19
10 -150 145 -19
1,972,827 2,031,827 2,214,327 2,214,327 2,214,327 365 365 365 365 365 5,405 5,567 6,067 6,067 6,067 18.4 % 3.0 % 9.0 % 0.0 % 0.0 % 66.6 % 69.1 % 67.3 % 69.5 % 70.6 %
Opening in March 2011 of the 100% competitive, 1000-room Proposed Proposed Hilton Hotel Opening in October 2008 of the 10% competitive, 482-room Proposed W Hotel Opening in January 2013 of the 100% competitive, 500-room Potential Full-Service Hotel Development Opening in January 2008 of the 100% competitive, 10-room Fort Lauderdale Grande Hotel & Yacht Club Reduction in April 2008 of 150 rooms at the 100% competitive, Sheraton Yankee Clipper Opening in January 2009 of the 100% competitive, 145-room Sheraton Yankee Clipper Reduction in January 2009 of 19 rooms at the 100% competitive, Sheraton Yankee Trader (Westin Conversion)
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As illustrated in the preceding table, marketwide occupancy is projected to grow strongly through 2012, followed by a moderate decrease in 2013 attributed to absorption of new supply. Due to the markets strong demand base and the potential for growth in all four segments with the market's addition of a Convention Headquarters Hotel, the market is forecast to sustain an occupancy level near the 70%-range by 2014; this level is consistent with the market's historical levels posted over the last decade. These room night projections for the market area will be used in forecasting the proposed subject property's occupancy and average rate in the following section.
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Projection of Occupancy and Average Rate 9-1
9. Projection of Occupancy and Average Rate
The occupancy and average rate levels achieved by a hotel are the foundation of the property's financial performance. Most of a lodging facility's other revenue sources (such as food, beverages, and telephone income) are driven by the number of guests, and many expense levels also vary with occupancy. To a certain degree, occupancy attainment can be manipulated by management. For example, hotel operators may choose to lower rates in an effort to maximize occupancy. Our forecasts reflect an operating strategy that we believe would be implemented by a typical, professional hotel management team to achieve an optimal mix of occupancy and average rate. Penetration Rate Analysis The proposed subject property's forecasted market share and occupancy levels are based upon its anticipated competitive position within the market, as quantified by its penetration rate. The penetration rate is the ratio of a property's market share to its fair share. A complete discussion of the concept of penetration is presented in the addenda. In the following table, the penetration rates attained by the primary competitors and the aggregate secondary competitors are set forth for each segment for the base year, 2007.
Historical Penetration Rates by Market Segment
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Historical Penetration Rates

use Gro up
Co mm erc ia
Co nve nt io n
ure
Property Westin Diplomat Harbor Beach Marriott Resort & Spa Fort Lauderdale Grande Hotel & Yacht Club Hyatt Bonaventure Resort & Spa Sheraton Yankee Clipper Sheraton Yankee Trader (Westin Conversion) Hyatt Regency Pier 66 Secondary Competition
0% 158 84 0 121 112 304 148
190 % 108 22 107 59 55 44 64
77 % 110 29 64 150 139 108 112
15 % 73 19 10 7 18 4 17 0 15 4 14 9
In the base year, the Sheraton Yankee Clipper achieved the highest overall occupancy penetration of the competitive set. This property was followed by the Sheraton Yankee Trader, the Westin Diplomat, and the Harbor Beach Marriott. While the Fort Lauderdale Grande's overall penetration was very low, we note this property was partially closed in 2007 and reopened in January 2008 after a major renovation; this property's penetration level is projected to improve considerably as this newly repositioned property ramps up in the market. The majority of competitors recorded total occupancy penetration levels above 100%. The commercial segment is most highly penetrated by the Sheraton Yankee Clipper and Sheraton Yankee Trader, which is attributed to the airline contract demand housed at these hotels. The strongest convention group competitor is, by far, the Hyatt Pier 66, attributed to its proximity to the Convention Center and its active participation in citywide blocks. In-house group demand is much stronger at the Westin Diplomat than the other competitors, due to its sizeable meeting space and lack of participation in convention groups. The leisure market segment is most penetrated by the Sheraton Yankee Clipper and Sheraton Yankee Trader; in particular, the lower-rated leisure demand is housed at these hotels due to their poor condition.
Ove rall
In-H o
Le i s
107 % 107 29 83 117 109 103 101
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Forecast of Subject Propertys Occupancy
Because the supply and demand balance for the competitive market is dynamic, there is a circular relationship between the penetration factors of each hotel in the market. The performance of individual new hotels has a direct effect upon the aggregate performance of the market, and consequently upon the calculated penetration factor for each hotel in each market segment. The same is true when the performance of existing hotels changes, either positively (following a refurbishment, for example) or negatively (when a poorly maintained or marketed hotel loses market share). A hotels penetration factor is calculated as its achieved market share of demand divided by its fair share of demand. Thus, if one hotels penetration performance increases, thereby increasing its achieved market share, this leaves less demand available in the market for the other hotels to capture and the penetration performance of one or more of those other hotels consequently declines (other things remaining equal). This type of market share adjustment takes place every time there is a change in supply, or a change in the relative penetration performance of one or more hotels in the competitive market. Our projections of penetration, demand capture and occupancy performance for the subject property account for these types of adjustments to market share within the defined competitive market. Consequently, the actual penetration factors applicable to the subject property and its competitors for each market segment in each projection year may vary somewhat from the penetration factors delineated in the previous table. Dividing the total number of room nights captured by the proposed subject property's annual number of available room nights (calculated as 1,000 x 365) produces the projected occupancy percentage.
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Forecast of Subject Property's Occupancy
Market Segment Convention Demand Market Share Capture Penetration In-House Group Demand Market Share Capture Penetration L eisure Demand Market Share Capture Penetration Commercial Demand Market Share Capture Penetration Total Room Nights Captured Available Room Nights Subject Occupancy Marketwide Availa ble Room Nights F air Share Marketwide Occupied Room Nights Market Share Marketwide Occupancy Total Penetration
2011 85,058 24.2 % 20,615 156 % 515,593 19.2 % 99,055 124 % 520,705 7.4 % 38,335 47 % 191,824 15.0 % 28,777 97 % 186,782 305,999 61 % 1,972,827 16 % 1,313,179 14 % 67 % 92 %
2012 106,632 31.4 % 33,523 175 % 549,888 24.1 % 132,436 134 % 547,377 7.2 % 39,540 40 % 200,513 17.9 % 35,908 100 % 241,408 365,000 66 % 2,031,827 18 % 1,404,410 17 % 69 % 96 %
2013 123,262 30.8 % 37,977 187 % 580,667 24.7 % 143,590 150 % 576,604 5.4 % 30,971 33 % 208,631 17.4 % 36,373 106 % 248,911 365,000 68 % 2,214,327 16 % 1,489,164 17 % 67 % 101 %
2014 133,537 31.2 % 41,655 189 % 597,884 26.1 % 155,965 158 % 593,902 4.2 % 25,113 26 % 212,803 17.4 % 36,957 105 % 259,689 365,000 71 % 2,214,327 16 % 1,538,127 17 % 69 % 102 %
2015 135,066 31.1 % 41,983 189 % 607,785 26.1 % 158,548 158 % 603,865 4.2 % 25,214 25 % 216,388 17.4 % 37,579 105 % 263,324 365,000 72 % 2,214,327 16 % 1,563,105 17 % 71 % 102 %
We have chosen to use a stabilized occupancy of 71% (after fiscalizing). The stabilized occupancy is intended to reflect the anticipated results of the property over its remaining economic life, given any and all changes in the life cycle of the hotel. Thus, the stabilized occupancy excludes from
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consideration any abnormal relationship between supply and demand, as well as any nonrecurring conditions that may result in unusually high or low occupancies. Although the subject property may operate at occupancies above this stabilized level, we believe it equally possible for new competition and temporary economic downturns to force the occupancy below this selected point of stability. The following table summarizes the subject propertys projected market segmentation. This forecast illustrates the anticipated strong group focus at the subject hotel, with a mix typical of other convention headquarters properties.
Market Segmentation Forecast Subject Property
2011 Convention In-House Group Leisure Commercial Total 11 % 53 21 15 100 % 2012 14 % 55 16 15 100 % 2013 15 % 58 12 15 100 % 2014 16 % 60 10 14 100 % 2015 16 % 60 10 14 100 %
The following projections reflect years beginning March 1, 2011, corresponding to the first projection year for the subject propertys forecast of income and expense.
Forecast of Occupancy
Subject Property's Occupancy 62 % 66 69 71
Year 2011/12 2012/13 2013/14 2014/15
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Average Rate Analysis
One of the most important considerations in projecting the performance of a lodging facility is a supportable forecast of its attainable average rate, which is more formally defined as the average rate per occupied room. Average rate can be calculated by dividing the total rooms revenue achieved during a specified period by the number of rooms sold during the same period. The projected average rate and the anticipated occupancy percentage are used to forecast rooms revenue, which in turn provides the basis for estimating most other income and expense categories. Although the average rate analysis presented here follows the occupancy projection, these two statistics are highly correlated; in reality, one cannot project occupancy without making specific assumptions regarding average rate. This relationship is best illustrated by revenue per available room (RevPAR), which reflects a property's ability to maximize rooms revenue. The following table summarizes the historical average rate and the RevPAR of the proposed subject property's competitors.
Base Year Average Rate and RevPAR of the Subject's Competitors
Estimated 2007 Average Room Rate $ 244.00 265.00 40.00 151.00 123.00 132.00 191.00 $ 193.97 Rooms Revenue Per Available Room $183.00 198.75 8.00 87.58 100.86 100.32 137.52 $135.62
Competitive Position
Property W estin Diplomat Harbor Beach Marriott Resort & Spa Fort Lauderdale Grande Hotel & Yacht Club Hyatt Bonaventure Resort & Spa Sheraton Yankee Clipper Sheraton Yankee Trader (Westin Conversion) Hyatt Regency Pier 66 Average
The defined competitive market realized an overall average rate of $193.97 in the 2007 base year, improving from the 2006 level of $187.36. The Fort Lauderdale market is forecast to experience a continuation of the positive ADR growth trends of recent years. Furthermore, we project the market's addition of high-rated luxury hotels and condos to bolster ADR in the market. The proposed subject property's average rate is positioned at $175.00 in 2007 dollars, reflecting its very good location and strong brand affiliation, mitigated by a lack of beach or marina access and its sizeable room count. This level equates to a positioned RevPAR, in 2007 dollars, of $125.00.
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As further support for this positioning, the following table illustrates estimated RevPAR levels for convention hotels throughout the US.
Estimated RevPAR of US Convention Hotels
Room Year Count Opened 1,616 1,100 800 700 673 450 402 360 1977 2006 2003 2003 1987 2004 2003 2006
Market New Orleans, LA Denver, CO Austin, TX Charlotte, NC Nashville, TN Omaha, NE Myrtle Beach, SC Tampa, FL
Headquarters Hotel Hilton New Orleans Riverside Hyatt Regency Convention Center Hilton Austin Westin Charlotte Renaissance Nashville Hotel Hilton Convention Center Sheraton Convention Center Embassy Suites Convention Hotel
2004 Estimated RevPAR $120 - Hotel not open $83 $82 $86 $61 $34 - Hotel not open -
2005 Estimated RevPAR $112 - Hotel not open $104 $93 $98 $78 $47 - Hotel not open -
2006 Estimated 2007 Estimated RevPAR $80 $101 $119 $109 $105 $91 $66 $55 RevPAR $105 $123 $130 $117 $110 $102 $72 $109
Market Segmentation
In the market segmentation method, average room rate is projected by individual market segment. This is the preferred method for forecasting average rate, based on the operational and marketing practices of hotel operators. Consistent with hotel managements tracking of historical average rates by market segment and their own budgeting methods, segmentation of demand and average rate allows for yield management resulting in the maximization of room revenue. We can forecast the proposed subject property's rate on a segment-by-segment basis. The projected rate in each segment is then multiplied by the number of room nights the hotel is expected to capture in that segment (as determined earlier in this analysis). These amounts are totaled, yielding the overall rooms revenue. Average rate is then calculated by dividing the property's total rooms revenue by the estimated number of occupied rooms. The advantage of the market segmentation method is its ability to reflect anticipated changes in the proposed subject property's market mix and their impact on average rate. The subject property's overall positioned average rate and RevPAR fall within the range of the competitive set and the US convention hotels analyzed. The proposed subject property's new construction, high-level finishes, full-service nature, and very good location are anticipated to support this positioning. These positioned ADR and RevPAR levels fall well below those of the beachfront Marriott and Westin properties and slightly below the levels posted by the Hyatt Pier 66, which features a much smaller
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room count and a more desirable marina offering on the Intracoastal Waterway. Based on these considerations, the following table illustrates the projected average rate and the growth rates assumed. As a context for the average rate growth factors, note that we have applied a base underlying inflation rate of 3.0% annually throughout our projection period.
Market and Subject Property Average Rate Forecast
2011 Convention Average Rate Growth Captured Room Nights Rooms Revenue Average Rate In-House Group Average Rate Growth Captured Room Nights Rooms Revenue Average Rate Leisure Average Rate Growth Captured Room Nights Rooms Revenue Average Rate Commercial Average Rate Growth Captured Room Nights Rooms Revenue Average Rate Total Average Rate Growth Captured Room Nights Rooms Revenue Average Rate Average Rate Penetration Marketwide Average Rate Growth Marketwide Average Rate
2012
2013
2014
2015
7.0 % 20,615 $3,856,455 $187.07 8.0 % 99,055 $21,057,156 $212.58 6.0 % 38,335 $8,850,956 $230.88 6.0 % 28,777 $6,407,634 $222.67 186,782 $40,172,201 $215.08 94.6 % 5.0 % $227.46
6.0 % 33,523 $6,647,506 $198.30 6.0 % 132,436 $29,842,445 $225.33 5.0 % 39,540 $9,585,649 $242.43 5.0 % 35,908 $8,395,356 $233.80 4.9 % 241,408 $54,470,956 $225.64 95.4 % 4.0 % $236.56
5.0 % 37,977 $7,907,355 $208.21 5.0 % 143,590 $33,973,663 $236.60 5.0 % 30,971 $7,883,576 $254.55 4.0 % 36,373 $8,844,030 $243.15 4.4 % 248,911 $58,608,625 $235.46 96.6 % 3.0 % $243.65
4.0 % 41,655 $9,020,065 $216.54 4.0 % 155,965 $38,377,605 $246.07 4.0 % 25,113 $6,648,058 $264.73 3.0 % 36,957 $9,255,630 $250.45 3.5 % 259,689 $63,301,358 $243.76 97.1 % 3.0 % $250.96
3.0 % 41,983 $9,363,789 $223.04 3.0 % 158,548 $40,183,527 $253.45 3.0 % 25,214 $6,875,158 $272.67 3.0 % 37,579 $9,693,908 $257.96 3.0 % 263,324 $66,116,382 $251.08 97.1 % 3.0 % $258.49
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The following average rates will be used to project the subject property's rooms revenue; this forecast reflects years that begin March 1, 2011 and correspond with our financial projections.
Forecast of Occupancy, Average Rate, and RevPAR
Year 2011/12 2012/13 2013/14 2014/15
Occupancy 62 % 66 69 71
Average Rate $216.78 227.23 236.80 244.94
RevPAR $134.41 149.97 163.39 173.91
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Development Cost Review 10-1
10. Development Cost Review
Because the subject property is a proposed hotel, in performing a cost analysis of the subject property, we have relied upon the actual development budget for the subject property. As this budget takes into consideration all of the physical, structural, and design elements specific to the property, it is believed to be the most accurate assessment of the actual cost of developing a hotel facility of this type. The details of this budget, prepared by the developers of the proposed Hilton Convention Hotel, are presented in the following table.
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Development Cost Budget

Item Labor Material Subcontract Equipment Contingency Preconstruction Services Insurance & Bond Construction Overhead & Profit FF&E, ITCosts OSE Costs Master Planning Reimbursement Transit Oriented Occupancy Fee Architectural & Engineering Interior Design Other Consultants Taxes, Legal & Insurance Building Permits & Fees Design/Builder Fees Pre-Opening Expense Working Capital TSA Total Per Room Source: Broward County Cost $18,716,245 34,303,799 131,074,174 901,293 9,249,776 924,978 7,088,972 10,112,962 35,000,000 5,000,000 5,000,000 806,000 10,725,818 1,892,791 630,930 2,035,708 2,050,976 11,020,577 9,500,000 2,600,000 350,000 $298,984,999 $298,985
As a check against the developer's budget, we have used a hotel development cost survey conducted by HVS. This survey is published annually in a newsletter entitled The Hotel Valuation Journal. The survey presents the range of per room costs associated with various components of hotel development, including improvements, furniture and equipment, preopening expenses, and operating capital. Statistics are compiled for budget hotels, mid-scale hotels with and without food and beverage, extended-stay hotels, full-service and luxury hotels. The results of this survey are presented in the following table.
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Hotel Development Cost Survey (Amounts per Room)

Building and Site Improvements Pre-Opening and Working Capital
Land
2005 Budget/Economy Hotels Mid-Scale Hotels w/o F&B Extended-Stay Hotels Mid-Scale Hotels w/ F&B Full-Service Hotels Luxury Hotels and Resorts 2004 Budget/Economy Hotels Mid-Scale Hotels w/o F&B Extended-Stay Hotels Mid-Scale Hotels w/ F&B Full-Service Hotels Luxury Hotels and Resorts 2003 Budget/Economy Hotels Mid-Scale Hotels w/o F&B Extended-Stay Hotels Mid-Scale Hotels w/ F&B Full-Service Hotels Luxury Hotels and Resorts 2002 Budget/Economy Hotels Mid-Scale Hotels w/o F&B Extended-Stay Hotels Mid-Scale Hotels w/ F&B Full-Service Hotels Luxury Hotels and Resorts 2001 Budget/Economy Hotels Mid-Scale Hotels w/o F&B Extended-Stay Hotels Mid-Scale Hotels w/ F&B Full-Service Hotels Luxury Hotels and Resorts
Soft Costs
FF&E
Total
$4,300 700 2,500 3,800 3,800 13,500
$27,400 35,700 46,700 58,600 102,400 243,400
$25,300 43,600 49,900 44,200 46,800 181,400
$77,600 148,800 155,500 131,300 268,600 1,291,600
$600 2,100 2,100 3,200 2,200 25,000
$12,600 37,700 43,800 43,000 74,400 226,700
$4,200 5,200 3,300 6,200 7,800 32,000
$15,900 21,000 21,400 32,100 42,400 109,800
$1,300 800 600 100 1,700 9,900
$6,600 23,000 11,000 17,500 29,900 46,000
$36,000 56,200 61,900 64,200 86,400 371,000
$121,100 335,400 222,700 260,700 373,700 1,490,900
$4,100 4,100 2,400 3,600 3,500 12,900 $4,100 4,200 5,600 3,500 5,800 36,000 $4,500 4,200 5,700 3,400 5,400 36,000 $4,400 5,500 5,500 6,000 8,000 18,500
$25,400 33,100 44,500 53,300 93,100 231,800 $25,400 33,100 42,800 65,200 89,500 220,800 $14,100 32,100 32,100 50,700 57,300 128,300 $9,500 27,500 38,600 31,500 79,500 115,200
$22,000 37,900 43,400 38,400 50,800 157,700 $20,800 30,200 45,500 36,200 54,300 150,200 $20,800 30,100 42,700 36,200 52,500 150,200 $13,500 28,500 31,500 28,200 53,000 145,000
$69,300 132,900 138,800 163,300 233,600 1,123,100 $65,400 108,200 130,900 154,100 222,500 1,069,600 $51,800 105,000 99,400 161,800 235,900 322,900 $44,600 84,000 120,500 157,200 227,800 290,500
$600 2,000 2,000 3,100 2,100 24,300 $600 2,800 3,800 3,000 3,500 33,000 $400 2,000 3,800 3,000 3,400 32,900 $300 1,400 2,000 3,200 3,600 25,000
$12,200 36,600 42,500 41,700 72,900 222,300 $6,500 36,200 41,700 41,600 72,000 214,100 $4,100 35,200 21,300 40,500 70,700 140,400 $3,400 18,000 18,500 40,900 67,800 140,100
$4,100 5,000 3,200 6,000 7,600 31,100 $3,100 5,500 7,800 6,200 6,800 47,100 $2,900 5,300 7,600 6,100 6,700 44,300 $2,900 4,500 3,200 6,700 11,500 36,000
$15,300 20,200 20,400 30,600 40,400 104,600 $15,000 16,500 20,000 23,000 50,100 116,600 $14,700 16,300 19,400 21,800 48,400 98,300 $12,700 19,000 20,400 21,100 41,000 106,700
$1,300 800 600 1,000 1,700 9,700 $1,200 1,200 1,300 1,300 1,600 15,600 $1,100 1,200 1,300 1,300 1,500 15,100 $800 1,000 1,400 1,600 2,300 5,500
$6,400 22,300 10,700 17,000 29,300 45,100 $6,400 12,500 8,500 7,800 23,100 45,100 $5,300 12,300 7,100 7,700 22,900 28,500 $5,400 12,600 8,600 9,200 23,200 28,500
$32,700 51,100 57,300 57,300 77,100 343,500 $32,400 53,000 74,400 61,100 78,200 333,500 $32,900 49,000 67,400 61,100 53,400 353,300 $29,800 43,500 46,500 50,500 67,200 254,300
$109,100 190,100 198,800 237,000 339,700 1,406,500 $108,000 188,200 193,000 227,900 323,500 1,365,500 $79,200 188,200 187,600 203,900 323,500 804,000 $65,500 136,600 185,300 205,500 336,200 584,000
Source: HVS International
The property is expected to open on March 1, 2011 and will feature 1,000 rooms, a three-meal restaurant, a specialty restaurant, a coffee shop, a lobby bar, a sports bar, a pool bar, 72,800 square feet of meeting space, a 12,000square-foot full-service spa, an outdoor swimming pool, an exercise room, a business center, and a gift shop. Building and Site Improvements Building and site improvements include all buildings and other relatively permanent structures located on, or attached to, the subject parcel. The cost of the improvements includes costs of materials, fees, and labor to construct the subject propertys improvements. We estimate the development cost of
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the subject property's improvements to be roughly $185,000 per room, or a total of $185,000,000. Furniture, Fixtures and Equipment Furniture, fixtures, and equipment (FF&E) include all non-permanent, removable items at the subject property, such as guestroom furnishings, kitchen equipment, and items of decor. The cost of the furniture, fixtures, and equipment, along with all fees associated with installing and furnishing the items in the subject property comprise the total cost of furniture, fixtures, and equipment. We estimate the development cost of the subject property's furniture, fixtures, and equipment at roundly $40,000 per room, or a total of $40,000,000. Pre-opening costs include expenses such as marketing, staffing, training and administrative expenditures. Working capital includes a working capital reserve to maintain adequate cash flow until the operation reaches a breakeven point. We estimate the pre-opening costs for the subject property to be roughly $14,000 per room, or a total of $14,000,000. Soft costs include items other than labor and material that are necessary for construction, but are not typically part of the construction contract. Soft costs can include professional fees, financing costs and the interest paid on construction loans, taxes and the builders or developers all-risk insurance during construction, marketing, sales, and lease-up costs incurred to achieve occupancy or sales. We estimate the amount of soft costs for the subject property to be roundly $45,800 per room, or a total of $45,800,000. Based on the preceding analysis, we estimate the development cost of the subject property, before developer's profit, as follows.
Development Cost Summary
Item Building Furniture, Fixtures, & Equipment Pre-Opening Costs and Working Capital Soft Costs Total Replacement Cost Cost per Room $185,000 40,000 14,000 45,800 $284,800 Cost $185,000,000 40,000,000 14,000,000 45,800,000 $284,800,000
Pre-Opening and Working Capital Costs
Soft Costs
Development Cost Summary
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Land Cost
Based on information provided by Broward County, the subject property will operate on a ground lease. As such, no estimate of land cost will be included in this feasibility study. Developer's profit represents the entrepreneurial incentive anticipated by hotel developers to induce the construction of a new hotel project. As a result of economic conditions in the hotel industry, developer's profit has not always been in evidence. If the economic value of a new hotel does not exceed development cost, indicating that developers will not earn any profit from their effort, it would most likely not be a project which would be completed since the financial incentive is not present. We have stipulated a developer's incentive of 5% in our analysis to represent the level required in this market for new construction.
Allocation of Developer's Profit
Conclusion
In the estimation of development cost for the subject property, the costs of several components of the total property were quantified. The following table summarizes our estimate of the total cost to develop the subject property.
Recap of Total Development Cost Estimate
Item Improvements Furniture, Fixtures, & Equipment Developer's Profit Total Cost New Estimate Cost $244,800,000 40,000,000 14,240,000 $299,040,000
We have estimated the development cost of the subject property to be approximately $299,000,000, including developers profit.
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Return on Investment Analysis 11-1
11. Return on Investment Analysis
The forecast of income and expense is expressed in current dollars for each year. The stabilized year is intended to reflect the anticipated operating results of the property over its remaining economic life, given any or all applicable stages of build-up, plateau, and decline in the life cycle of the hotel. Thus, income and expense estimates from the stabilized year forward exclude from consideration any abnormal relationship between supply and demand, as well as any nonrecurring conditions that may result in unusual revenues or expenses. The 10-year period reflects the typical holding period of large real estate assets such as hotels. The forecasted income streams reflect the future benefits of owning specific rights in income-producing real estate. Comparable Operating Statements In order to project future income and expense for the proposed subject property, we have included a sample of individual comparable operating statements from our database of hotel statistics. The following data reflect the performance six Hilton-branded hotels in the US. These six comparable properties contain room counts ranging from roundly 700 to 1,300 units. All financial data is presented according to the three most common measures of industry performance: ratio to sales (RTS), amounts per available room (PAR), and amounts per-occupied-room night (POR).
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Comparable Operating Statements: Ratio to Sales

Comp 1 Year: Number of Rooms: Occupied Rooms: Days Open: Occupancy: Average Rate: RevPAR: REVENUE Rooms Food & Beverage Telephone Other Income Total DEPARTMENTAL EXPENSES* Rooms Food & Beverage Telephone Other Expenses Total DEPARTMENTAL INCOME OPERATING EXPENSES Administrative & General Marketing Franchise Fee Property Operations & Maintenance Utilities Total HOUSE PROFIT 2006 770 to 950 241,162 365 76% to 80% $165 to $170 $127 to $132 60.8 % 22.2 2.2 14.8 100.0 26.7 77.6 37.4 4.3 34.9 65.1 7.7 6.2 0.0 4.6 1.7 20.2 44.9 % Comp 2 2005/06 720 to 880 217,400 365 73% to 77% $142 to $147 $105 to $110 60.9 % 30.1 1.3 7.7 100.0 24.3 68.0 70.3 46.8 39.8 60.2 6.5 6.6 0.0 3.7 5.0 21.8 38.4 % Comp 3 2005/06 730 to 900 264,634 365 88% to 92% $141 to $146 $125 to $130 64.5 % 29.4 0.9 5.2 100.0 22.5 58.6 54.2 4.5 32.4 67.6 6.7 5.2 0.0 4.2 3.8 20.0 47.6 % Comp 4 2005 730 to 910 209,440 365 69% to 73% $124 to $129 $86 to $91 64.4 % 30.9 1.9 2.8 100.0 27.5 66.8 43.8 8.9 39.4 60.6 8.1 7.2 0.0 5.1 3.7 24.1 36.5 % Comp 5 2006 1100 to 1350 293,680 365 65% to 69% $136 to $141 $88 to $93 65.5 % 30.5 2.1 1.9 100.0 28.8 73.4 49.8 4.1 42.3 57.7 8.8 8.1 0.0 5.7 4.0 26.6 31.1 % Comp 6 2006/07 660 to 820 178,354 365 65% to 69% $139 to $144 $90 to $95 68.7 % 24.6 0.5 6.1 100.0 21.0 68.5 169.1 68.2 36.4 63.6 8.9 9.1 2.5 3.9 7.8 32.3 31.3 %
* Departmental expense ratios are expressed as a percentage of departmental revenues
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Comparable Operating Statements: Amounts Per-Available-Room

Comp 1 Year: 2006 Number of Rooms: 770 to 950 Occupied Rooms: 241,162 Days Open: 365 Occupancy: 76% to 80% $165 to $170 Average Rate: $127 to $132 RevPAR: REVENUE Rooms $47,294 Food & Beverage 17,280 Telephone 1,688 Other Income 11,470 Total 77,731 DEPARTMENTAL EXPENSES Rooms 12,606 Food & Beverage 13,411 Telephone 632 Other Expenses 491 27,140 Total DEPARTMENTAL INCOME 50,591 OPERATING EXPENSES Administrative & General 5,958 Marketing 4,829 Franchise Fee 0 Property Operations & Maintenance 3,584 Utilities 1,337 Total 15,707 $34,884 HOUSE PROFIT Comp 2 2005/06 720 to 880 217,400 365 73% to 77% $142 to $147 $105 to $110 $39,283 19,410 843 4,948 64,483 9,536 13,198 593 2,314 25,640 38,843 4,170 4,261 0 2,408 3,219 14,058 $24,785 Comp 3 2005/06 730 to 900 264,634 365 88% to 92% $141 to $146 $125 to $130 $46,660 21,267 630 3,787 72,344 10,491 12,464 342 170 23,467 48,877 4,827 3,767 0 3,068 2,783 14,443 $34,434 Comp 4 2005 730 to 910 209,440 365 69% to 73% $124 to $129 $86 to $91 $32,364 15,505 951 1,417 50,238 8,910 10,359 417 127 19,812 30,425 4,091 3,598 0 2,571 1,853 12,113 $18,312 Comp 5 2006 1100 to 1350 293,680 365 65% to 69% $136 to $141 $88 to $93 $33,228 15,455 1,089 967 50,739 9,555 11,347 542 40 21,485 29,254 4,487 4,088 0 2,905 2,035 13,515 $15,739 Comp 6 2006/07 660 to 820 178,354 365 65% to 69% $139 to $144 $90 to $95 $34,097 12,218 261 3,031 49,606 7,173 8,371 441 2,066 18,051 31,555 4,395 4,509 1,253 1,957 3,884 15,999 $15,556
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Comparable Operating Statements: Amounts Per-Occupied-Room

Comp 1 Year: 2006 Number of Rooms: 770 to 950 Occupied Rooms: 241,162 Days Open: 365 Occupancy: 76% to 80% $165 to $170 Average Rate: $127 to $132 RevPAR: REVENUE Rooms $168.26 Food & Beverage 61.48 Telephone 6.00 Other Income 40.81 Total 276.55 DEPARTMENTAL EXPENSES Rooms 44.85 Food & Beverage 47.71 Telephone 2.25 Other Expenses 1.75 96.56 Total DEPARTMENTAL INCOME 179.99 OPERATING EXPENSES Administrative & General 21.20 Marketing 17.18 Franchise Fee 0.00 Property Operations & Maintenance 12.75 Utilities 4.76 Total 55.88 $124.11 HOUSE PROFIT Comp 2 2005/06 720 to 880 217,400 365 73% to 77% $142 to $147 $105 to $110 $144.55 71.43 3.10 18.21 237.29 35.09 48.56 2.18 8.51 94.35 142.93 15.34 15.68 0.00 8.86 11.84 51.73 $91.21 Comp 3 2005/06 730 to 900 264,634 365 88% to 92% $141 to $146 $125 to $130 $143.52 65.41 1.94 11.65 222.53 32.27 38.34 1.05 0.52 72.18 150.34 14.85 11.59 0.00 9.44 8.56 44.43 $105.92 Comp 4 2005 730 to 910 209,440 365 69% to 73% $124 to $129 $86 to $91 $126.87 60.78 3.73 5.55 196.93 34.93 40.61 1.63 0.50 77.66 119.27 16.04 14.10 0.00 10.08 7.26 47.48 $71.78 Comp 5 2006 1100 to 1350 293,680 365 65% to 69% $136 to $141 $88 to $93 $138.71 64.52 4.55 4.04 211.82 39.89 47.37 2.26 0.17 89.69 122.13 18.73 17.07 0.00 12.13 8.50 56.42 $65.70 Comp 6 2006/07 660 to 820 178,354 365 65% to 69% $139 to $144 $90 to $95 $142.23 50.97 1.09 12.64 206.93 29.92 34.92 1.84 8.62 75.30 131.63 18.33 18.81 5.23 8.16 16.20 66.74 $64.89
House profit for the comparables ranged from 31.1% to 47.6% of total revenue, while departmental income ranged from 57.7% to 67.6% of total revenue. The subject propertys projected house profit and departmental income levels are in line with the ranges formed by the comparables. We have also analyzed an aggregate comparable operating statement provided by Hilton which includes three large Hilton properties - the Hilton Houston Americas, the Hilton Austin, and the Hilton Orlando Walt Disney World.
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Hilton Aggregate Comparable Operating Statement
We will refer to the preceding comparable operating data in our discussion of each line item that follows later in this section of the report.
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Premise of Forecast
The forecast of income and expense is intended to reflect the consultants subjective estimate of how a typical market participant would project the proposed subject property's future operating results. HVS uses a fixed and variable component model to project a lodging facility's revenue and expense levels. This model is based on the premise that hotel revenues and expenses have one component that is fixed and another that varies directly with occupancy and facility usage. A projection can be made by taking a known level of revenue or expense and calculating its fixed and variable components. The fixed component is then increased in tandem with the underlying rate of inflation, while the variable component is adjusted for a specific measure of volume such as total revenue. The following table illustrates the revenue and expense categories that can be projected using this fixed and variable component model. These percentages show the portion of each category that is typically fixed and variable; the middle column describes the basis for calculating the percentage of variability while the last column sets forth the fixed percentage that has been utilized in this study.
Fixed and Variable Component Analysis
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Range of Fixed and Variable Ratios

Category Revenues Food & Beverage Telephone Garage/Parking Other Income Departmental Expenses Rooms Food & Beverage Telephone Garage/Parking Other Expenses Undistributed Operating Expenses Administrative & General Marketing Prop. Operations & Maint. Utilities Management Fee Fixed Expenses Insurance Ground Lease Reserve for Replacement Percent Fixed 25 - 50 % 10 - 40 30 - 70 30 - 70 50 - 70 35 - 60 40 - 60 30 - 70 30 - 70 65 - 85 65 - 85 55 - 75 75 - 95 0 100 100 0 Percent Variable 50 - 75 % 60 - 90 30 - 70 30 - 70 30 - 50 40 - 65 40 - 60 30 - 70 30 - 70 15 - 35 15 - 35 25 - 45 5 - 25 100 0 0 100 Index of Variability Occupancy Occupancy Occupancy Occupancy Occupancy Food & Beverage Revenue Telephone Revenue Garage/Parking Revenue Other Income Total Revenue Total Revenue Total Revenue Total Revenue Total Revenue Total Revenue Total Revenue Total Revenue Fixed Ratio 25 % 10 70 70 60 55 60 100 70 75 75 75 75 0 100 100 0
Our fixed and variable projection model is based upon variables that we input for each revenue and expense item for a base year (typically the most recent twelve-month historical period for a property). The base-year forecast sets forth the ratios to revenue, amounts per available room, or amounts peroccupied-room, which we believe can be achieved at the stated base-year average rate and occupancy. Our input variables are derived from the subjects historical operating performance and comparable hotel statements. The model then calculates a base-year forecast of income and expense in these base year dollars. The actual forecast is derived by adjusting each years revenue and expense by the amount fixed (the fixed expense multiplied by the inflated base-year amount) plus the variable amount (the variable expense multiplied by the inflated base-year amount) multiplied by the ratio of the projection years occupancy to the base-year occupancy (in the case of departmental revenue
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and expense) or the ratio of the projection years revenue to the base-years revenue (in the case of undistributed operating expenses). Fixed expenses remain fixed, increasing only with inflation. Our discussion of the revenue and expense forecast in this report is based upon the output derived from the fixed and variable model. This forecast of revenue and expense is accomplished through a step-by-step approach, following the format of the Uniform System of Accounts for Hotels. Each category of revenue and expense is estimated separately and combined at the end in the final statement of income and expense. Inflation Assumption A general rate of inflation must be established that will be applied to most revenue and expense categories. The following table shows inflation estimates made by economists at some noted institutions and corporations.
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Inflation Estimates
Previous Projections through Dec. 2007 3.0 % 2.7 2.3 3.1 2.1 1.8 2.7 2.8 2.4 3.6 3.0 3.2 3.6 2.5 3.7 3.2 3.6 3.9 3.0 3.8 1.9 3.3 3.6 3.4 3.7 3.3 2.4 2.8 3.3 2.7 2.5 3.4 2.5 3.0 3.0 3.0 3.2 3.7 3.0 2.8 4.2 3.5 3.1 3.8 3.6 3.1 4.0 3.4 2.8 4.3 0.9 2.5 3.1 3.8 3.6 3.2 3.0 3.8 2.4 2.6 3.1 % 2.8 % Source: wsj.com, January 16, 2008 Projected Increase in Consumer Price Index (Annualized Rate Versus 12 Months Earlier) June December 2008 2008 3.0 % 3.0 1.6 2.7 2.0 2.5 2.6 3.1 3.0 2.3 3.1 2.6 2.8 3.0 2.6 2.6 3.2 3.2 2.9 3.0 2.8 2.7 2.7 2.2 2.5 2.7 2.5 2.0 2.6 1.9 2.9 2.4 2.8 3.2 3.2 2.5 2.9 3.3 3.2 2.6 3.5 2.5 3.1 3.3 -1.8 2.0 3.0 2.9 2.7 3.1 3.3 3.1 2.4 3.0 2.7 % 2.7 % 2.3 0.9 2.3 1.6 3.0 2.3 2.8 3.5 2.2 2.7 2.0 3.0 2.7 1.6 1.6 2.5 2.2 2.3 2.6 2.9 2.5 2.2 1.7 1.1 2.3 1.8 1.8 3.0 1.0 2.4 2.4 2.4 2.5 3.4 2.8 2.5 3.1 2.7 1.9 2.9 1.5 3.0 2.5 0.6 2.3 2.5 2.7 1.8 2.6 3.2 3.2 1.9 2.3 2.3 %
Name Scott Anderson Paul Ashworth Nariman Behravesh Richard Berner/David Greenlaw David W. Berson Ram Bhagavatula Kathleen M. Camilli Joseph Carson Mike Cosgrove Lou Crandall J. Dewey Daane Richard DeKaser Robert DiClemente Charles Dumas Douglas Duncan Steve East Maria Fiorini Ramirez/Joshua Shapiro Gail Fosler Stephen Gallagher Ethan S. Harris Maury Harris Jan Hatzius Tracy Herrick Stuart Hoffman Peter Hooper/Joseph A. LaVorgna Gene Huang William B. Hummer Saul Hymans/Joan Crary/Janet Wolfe Dana Johnson Kurt Karl/ Arun Raha Bruce Kasman Paul Kasriel Lawrence Kudlow Daniel Laufenberg Edward Leamer David Lereah Mickey D. Levy John Lonski Dean Maki Robert T. McGee Jim Meil/Tianlun Jian Mark Nielson Michael P. Niemira Nicholas S. Perna Joel Prakken/Chris Varvares David Resler David Rosenberg John Ryding Ian Shepherdson John Silvia Allen Sinai James F. Smith Sung Won Sohn Neal Soss Stephen Stanley Susan M. Sterne Diane Swonk Gary Thayer Brian S. Wesbury/Robert Stein William T. Wilson David Wyss Lawrence Yun Averages Actual Inflation for the Period
Firm Wells Fargo & Co. Capital Economics Global Insight Morgan Stanley Fannie Mae Combinatorics Capital Camilli Economics, LLC AllianceBernstein Econoclast Wrightson ICAP Vanderbilt University National City Corporation Citigroup Lombard Street Research Mortgage Bankers Association Friedman Billings Ramsey MFR, Inc. The Conference Board Societe Generale Lehman Brothers UBS Goldman Sachs & Co. The Private Bank PNC Financial Services Group Deutsche Bank Securities Inc. FedEx Corp. Wayne Hummer Investments LLC RSQE, U. of Michigan Comerica Bank Swiss Re JP Morgan Chase & Co. The Northern Trust Kudlow & Co. LLC Ameriprise Financial UCLA Anderson Forecast National Association of Realtors Bank of America Moody's Investors Service Barclays Capital U.S. Trust Eaton Corp. MacroEcon Global Advisors International Council of Shopping Centers Perna Associates Macroeconomic Advisers Nomura Securities International Inc. Merrill Lynch Bear Stearns & Co. Inc. High Frequency Economics Wachovia Corp. Decision Economics Inc. Western Carolina Univ. and Parsec Financial Mgmt. Hanmi Bank Credit Suisse RBS Greenwich Capital Economic Analysis Mesirow Financial A.G. Edwards First Trust Advisors, L.P. Keystone Business Intelligence India Standard & Poor's National Association of Realtors
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As the preceding table indicates, the economists who were surveyed by the Wall Street Journal in 2007 anticipate inflation rates ranging from deflation of 1.8% to inflation of 3.3% (on an annualized basis). The average estimates for the next 6 and 12 months are 2.7% and 2.3%, slightly below the actual 2.8% inflation for calendar year 2007. As a further check on these inflation projections, we have reviewed historical increases in the Consumer Price Index (CPI-U). Because the value of real estate is predicated on cash flows over a relatively long period, inflation should be considered from a long-term perspective.
National Consumer Price Index (All Urban Consumers)
National Consumer Price Index 160.5 163.0 166.6 172.2 177.1 179.9 184.0 188.9 195.3 201.6 207.3 Percent Change from Previous Year 1.6 % 2.2 3.4 2.8 1.6 2.3 2.7 3.4 3.2 2.8
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Average Annual Compounded Change, 1997-2007: 2002-2007: Source: Bureau of Labor Statistics
2.6 % 2.9
Between 1997 and 2007, the national CPI increased at an average annual compounded rate of 2.6%, and between 2002 and 2007, the national CPI increased at a slightly higher average annual compounded rate of 2.9%. In consideration of the most recent trends, the projections set forth previously, and our assessment of probable property appreciation levels, we have applied an underlying inflation rate of 3.0% annually. This stabilized inflation rate takes into account normal, recurring inflation cycles. Inflation
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is likely to fluctuate above and below this level during the projection period. Any exceptions to the application of the assumed underlying inflation rate are discussed in our write-up of individual income and expense items. Summary of Projections Based on an analysis that will be detailed throughout this section, we have formulated a forecast of income and expense. The subjects house profit is forecast at 38.6% by the stabilized year, within the range indicated by the comparables. The following table presents a detailed forecast through the first five projection years, including amounts per available room and peroccupied-room. The second table illustrates our ten-year forecast of income and expense, presented with a lesser degree of detail. The forecasts pertain to years beginning March 1, 2011 and are expressed in inflated dollars for each year.
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Detailed Forecast of Income and Expense

2011/12 1000 62% $216.78 $134.41 365 226,300 %Gross $49,058 2012/13 1000 66% $227.23 $149.97 365 240,900 %Gross $54,739 2013/14 1000 69% $236.80 $163.39 365 251,850 %Gross $59,638 Stabilized 1000 71% $244.94 $173.91 365 259,150 %Gross $63,477 2015/16 1000 71% $252.29 $179.13 365 259,150 %Gross $65,381
Number of Rooms: Occupancy: Average Rate: RevPAR: Days Open: Occupied Rooms: REVENUE Rooms Food & Beverage Telephone Garage/Parking Other Income Total Revenues DEPARTMENTAL EXPENSES * Rooms Food & Beverage Telephone Garage/Parking Other Expenses Total DEPARTMENTAL INCOME UNDISTRIBUTED OPERATING EXPENSES Administrative & General Marketing Prop. Operations & Maint. Utilities Total HOUSE PROFIT Management Fee INCOME BEFORE FIXED CHARGES FIXED EXPENSES Insurance Ground Lease Reserve for Replacement Total NET INCOME
PAR
POR $216.78 115.33 4.02 8.72 17.23 362.08 60.92 82.28 2.38 2.81 5.84 154.23 207.86 30.08 27.77 16.49 15.81 90.15 117.70 7.24 110.46 12.50 0.00 3.62 16.12 $94.35
PAR
POR $227.23 116.80 4.11 8.59 16.97 373.69 60.34 81.19 2.35 2.72 5.68 152.28 221.41 29.54 27.27 16.62 15.53 88.96 132.44 9.34 123.10 12.09 0.00 7.47 19.56 $103.54
PAR
POR $236.80 118.92 4.21 8.57 16.93 385.44 60.49 81.16 2.35 2.68 5.62 152.29 233.15 29.43 27.17 16.98 15.47 89.05 144.10 11.56 132.54 11.91 0.00 11.56 23.47 $109.06
PAR
POR $244.94 121.61 4.33 8.65 17.09 396.63 61.24 82.02 2.38 2.68 5.64 153.95 242.67 29.66 27.38 17.11 15.59 89.75 152.93 11.90 141.03 11.92 1.93 15.87 29.72 $111.31
PAR
POR $252.29 125.26 4.46 8.91 17.61 408.52 63.07 84.48 2.45 2.76 5.80 158.57 249.95 30.55 28.20 17.63 16.06 92.44 157.52 12.26 145.26 12.28 1.99 16.34 30.61 $114.65
59.9 % $49,058 26,099 909 1,974 3,900 81,940 13,786 18,619 538 636 1,321 34,901 47,038 6,808 6,284 3,731 3,579 20,402 26,637 1,639 24,998
60.8 % $54,739 28,137 990 2,069 4,087 90,022 14,537 19,559 566 655 1,368 36,685 53,337 7,117 6,570 4,003 3,741 21,432 31,905 2,251 29,655
61.4 % $59,638 29,951 1,061 2,158 4,264 97,073 15,233 20,440 593 675 1,414 38,355 58,718 7,412 6,842 4,276 3,896 22,426 36,292 2,912 33,379
61.8 % $63,477 31,516 1,121 2,242 4,430 102,785 15,869 21,255 617 695 1,461 39,896 62,889 7,687 7,096 4,435 4,041 23,258 39,632 3,084 36,548
61.8 % $65,381 32,461 1,155 2,309 4,563 105,869 16,345 21,893 635 716 1,504 41,093 64,776 7,917 7,308 4,568 4,162 23,955 40,820 3,176 37,644
26,099 31.9 909 1.1 1,974 2.4 3,900 4.8 81,940 100.0 13,786 18,619 538 636 1,321 34,901 47,038 6,808 6,284 3,731 3,579 20,402 26,637 1,639 24,998 2,828 0 819 3,647 $21,351 28.1 71.3 59.2 32.2 33.9 42.6 57.4 8.3 7.7 4.6 4.4 25.0 32.4 2.0 30.4
28,137 31.3 990 1.1 2,069 2.3 4,087 4.5 90,022 100.0 14,537 19,559 566 655 1,368 36,685 53,337 7,117 6,570 4,003 3,741 21,432 31,905 2,251 29,655 2,912 0 1,800 4,713 $24,942 26.6 69.5 57.2 31.7 33.5 40.8 59.2 7.9 7.3 4.4 4.2 23.8 35.4 2.5 32.9
29,951 30.9 1,061 1.1 2,158 2.2 4,264 4.4 97,073 100.0 15,233 20,440 593 675 1,414 38,355 58,718 7,412 6,842 4,276 3,896 22,426 36,292 2,912 33,379 3,000 0 2,912 5,912 $27,467 25.5 68.2 55.9 31.3 33.2 39.5 60.5 7.6 7.0 4.4 4.0 23.0 37.5 3.0 34.5
31,516 30.7 1,121 1.1 2,242 2.2 4,430 4.3 102,785 100.0 15,869 21,255 617 695 1,461 39,896 62,889 7,687 7,096 4,435 4,041 23,258 39,632 3,084 36,548 3,090 500 4,111 7,701 $28,847 25.0 67.4 55.0 31.0 33.0 38.8 61.2 7.5 6.9 4.3 3.9 22.6 38.6 3.0 35.6
32,461 30.7 1,155 1.1 2,309 2.2 4,563 4.3 105,869 100.0 16,345 21,893 635 716 1,504 41,093 64,776 7,917 7,308 4,568 4,162 23,955 40,820 3,176 37,644 3,183 515 4,235 7,932 $29,712 25.0 67.4 55.0 31.0 33.0 38.8 61.2 7.5 6.9 4.3 3.9 22.6 38.6 3.0 35.6
3.5 2,828 0.0 0 1.0 819 4.5 3,647 25.9 % $21,351
3.2 2,912 0.0 0 2.0 1,800 5.2 4,713 27.7 % $24,942
3.1 3,000 0.0 0 3.0 2,912 6.1 5,912 28.4 % $27,467
3.0 3,090 0.5 500 4.0 4,111 7.5 7,701 28.1 % $28,847
3.0 3,183 0.5 515 4.0 4,235 7.5 7,932 28.1 % $29,712
*Departmental expenses are expressed as a percentage of departmental revenues.
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Ten-Year Forecast of Income and Expense

2011/12 Number of Rooms: Occupied Rooms: Occupancy: Average Rate: RevPAR: REVENUE Rooms Food & Beverage Telephone Garage/Parking Other Income Total DEPARTMENTAL EXPENSES* Rooms Food & Beverage Telephone Garage/Parking Other Expenses Total DEPARTMENTAL INCOME UNDISTRIBUTED OPERATING EXPENSES Administrative & General Marketing Prop. Operations & Maint. Utilities Total HOUSE PROFIT Management Fee INCOME BEFORE FIXED CHARGES FIXED EXPENSES Insurance Ground Lease Reserve for Replacement Total NET INCOME 2,828 0 819 3,647 3.5 0.0 1.0 4.5 2,912 0 1,800 4,713 3.2 0.0 2.0 5.2 3,000 0 2,912 5,912 $27,467 1 3.1 0.0 3.0 6.1 28.4 % 3,090 500 4,111 7,701 $28,847 1 3.0 0.5 4.0 7.5 28.1 % 3,183 515 4,235 7,932 $29,712 1 3.0 0.5 4.0 7.5 28.1 % 3,278 530 4,362 8,170 $30,604 1 3.0 0.5 4.0 7.5 28.1 % 3,376 546 4,493 8,415 $31,522 1 3.0 0.5 4.0 7.5 28.1 % 3,478 563 4,627 8,668 $32,467 1 3.0 0.5 4.0 7.5 28.1 % 3,582 580 4,766 8,928 $33,441 1 3.0 0.5 4.0 7.5 28.1 % 3,689 597 4,909 9,196 $34,445 1 3.0 0.5 4.0 7.5 28.1 % 6,808 6,284 3,731 3,579 20,402 26,637 1,639 24,998 8.3 7.7 4.6 4.4 25.0 32.4 2.0 30.4 7,117 6,570 4,003 3,741 21,432 31,905 2,251 29,655 7.9 7.3 4.4 4.2 23.8 35.4 2.5 32.9 7,412 6,842 4,276 3,896 22,426 36,292 2,912 33,379 7.6 7.0 4.4 4.0 23.0 37.5 3.0 34.5 7,687 7,096 4,435 4,041 23,258 39,632 3,084 36,548 7.5 6.9 4.3 3.9 22.6 38.6 3.0 35.6 7,917 7,308 4,568 4,162 23,955 40,820 3,176 37,644 7.5 6.9 4.3 3.9 22.6 38.6 3.0 35.6 8,155 7,528 4,705 4,287 24,674 42,045 3,271 38,774 7.5 6.9 4.3 3.9 22.6 38.6 3.0 35.6 8,400 7,753 4,846 4,415 25,414 43,306 3,369 39,937 7.5 6.9 4.3 3.9 22.6 38.6 3.0 35.6 8,652 7,986 4,991 4,548 26,177 44,606 3,471 41,135 7.5 6.9 4.3 3.9 22.6 38.6 3.0 35.6 8,911 8,226 5,141 4,684 26,962 45,944 3,575 42,369 7.5 6.9 4.3 3.9 22.6 38.6 3.0 35.6 9,178 8,472 5,295 4,825 27,771 47,322 3,682 43,640 7.5 6.9 4.3 3.9 22.6 38.6 3.0 35.6 13,786 18,619 538 636 1,321 34,901 47,038 28.1 71.3 59.2 32.2 33.9 42.6 57.4 14,537 19,559 566 655 1,368 36,685 53,337 26.6 69.5 57.2 31.7 33.5 40.8 59.2 15,233 20,440 593 675 1,414 38,355 58,718 25.5 68.2 55.9 31.3 33.2 39.5 60.5 15,869 21,255 617 695 1,461 39,896 62,889 25.0 67.4 55.0 31.0 33.0 38.8 61.2 16,345 21,893 635 716 1,504 41,093 64,776 25.0 67.4 55.0 31.0 33.0 38.8 61.2 16,836 22,549 654 737 1,549 42,326 66,719 25.0 67.4 55.0 31.0 33.0 38.8 61.2 17,341 23,226 674 759 1,596 43,596 68,721 25.0 67.4 55.0 31.0 33.0 38.8 61.2 17,861 23,923 694 782 1,644 44,904 70,782 25.0 67.4 55.0 31.0 33.0 38.8 61.2 18,397 24,640 715 806 1,693 46,251 72,906 25.0 67.4 55.0 31.0 33.0 38.8 61.2 18,949 25,379 736 830 1,744 47,638 75,093 25.0 67.4 55.0 31.0 33.0 38.8 61.2 $49,058 26,099 909 1,974 3,900 59.9 % 31.9 1.1 2.4 4.8 $54,739 28,137 990 2,069 4,087 60.8 % 31.3 1.1 2.3 4.5 $59,638 29,951 1,061 2,158 4,264 61.4 % 30.9 1.1 2.2 4.4 $63,477 31,516 1,121 2,242 4,430 61.8 % 30.7 1.1 2.2 4.3 $65,381 32,461 1,155 2,309 4,563 61.8 % 30.7 1.1 2.2 4.3 $67,343 33,435 1,189 2,379 4,700 61.8 % 30.7 1.1 2.2 4.3 $69,363 34,438 1,225 2,450 4,841 61.8 % 30.7 1.1 2.2 4.3 $71,444 35,471 1,262 2,523 4,986 61.8 % 30.7 1.1 2.2 4.3 $73,587 36,535 1,300 2,599 5,135 61.8 % 30.7 1.1 2.2 4.3 $75,795 37,631 1,339 2,677 5,289 61.8 % 30.7 1.1 2.2 4.3 1000 226,300 62% $216.78 % of $134.41 Gross 2012/13 1000 240,900 66% $227.23 $149.97 % of Gross 2013/14 1000 251,850 69% $236.80 $163.39 % of Gross 2014/15 1000 259,150 71% $244.94 $173.91 % of Gross 2015/16 1000 259,150 71% $252.29 $179.13 % of Gross 2016/17 1000 259,150 71% $259.86 $184.50 % of Gross 2017/18 1000 259,150 71% $267.66 $190.04 % of Gross 2018/19 1000 259,150 71% $275.68 $195.74 % of Gross 2019/20 1000 259,150 71% $283.96 $201.61 % of Gross 2020/21 1000 259,150 71% $292.47 $207.66 % of Gross
81,940 100.0
90,022 100.0
97,073 100.0
102,785 100.0
105,869 100.0
109,045 100.0
112,316 100.0
115,686 100.0
119,156 100.0
122,731 100.0
$21,351 25.9 % $24,942 27.7 % 1 1 *Departmental expenses are expressed as a percentage of departmental revenues.
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Forecast of Income and Expense
The following description sets forth the basis for the forecast of income and expense. We anticipate that it will take four years for the proposed subject property to reach a stabilized level of operation. Each revenue and expense item has been forecast based upon our review of comparable income and expense statements. Our forecast is based upon fiscal years beginning March 1, 2011 and is expressed in inflated dollars for each year. Rooms revenue is determined by two variables: occupancy and average rate. We projected occupancy and average rate in a previous section of this report. The proposed subject property is expected to stabilize at 71% with an average rate of $244.94 in 2014/15. Following the stabilized year, the subject propertys average rate is projected to increase along with the underlying rate of inflation. Food and beverage revenue is generated by the restaurants, bars, and other food and beverage outlets discussed earlier in the report. Additionally, meeting and banquet catering and room service generate food revenue. The proposed Hilton Convention Hotel will offer a three-meal restaurant, a specialty restaurant, a coffee shop, a lobby bar, a sports bar, a pool bar, and 72,800 square feet of meeting space, all of which will generate revenue as well as assist in the sale of guestrooms. Although food and beverage revenue varies directly with changes in occupancy, the portion generated by banquet sales and outside capture is relatively fixed. The proposed subject property's food and beverage operation is expected to be an important component of the hotel. Therefore, based upon our review of comparable operating statements, we have positioned this property at an appropriate level given its planned facility and price point. We would expect future moderate growth to occur within this category during the hotel's ramp-up period. The HVS comparable statements illustrate a range of $50.97 to $71.43 on a per-occupied-room basis in this category in 2005, 2005/06, 2006, and 2006/07 dollars. The Hilton aggregate comparable statement denotes $87.00 per-occupied-room in 2006/07 dollars. As such, the proposed subject property has been positioned to generate $87.00 in 2007 dollars. This level equates to $121.61 per-occupied-room in food and beverage revenue in the stabilized year. The following table details the historical ranges in the food and beverage revenue category for the comparable hotels, along with our positioned level and forecast.
Rooms Revenue
Food and Beverage Revenue
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Comparable Operating History and Subject Forecast - Food and Beverage Revenue
$ Per Occupied Room Low High Comparable Statements 50.97 71.43 % of Rooms Revenue Low High 22.2 30.9
Subject Forecast $ Per Occupied Room % of Rooms Revenue Year One 115.33 31.9 Stabilized 121.61 30.7
Telephone Revenue
Telephone revenue is generated by hotel guests who charge local and longdistance calls to their rooms, and by individuals who use the property's public telephones. Declining telephone revenues is a nationwide trend, due largely to the proliferation of cellular phone usage. The HVS comparable statements illustrate a range of $1.09 to $6.00 on a per-occupied-room basis in this category. The aggregate Hilton comparables posted roundly $3.00 peroccupied-room in 2006/07 dollars. The proposed subject property has been positioned to generate $4.02 per-occupied-room in telephone revenue in the first projection year, stabilizing at a level of $4.33. The following table details the historical ranges in the telephone revenue category for the comparable hotels, along with our positioned level and forecast.
Comparable Operating History and Subject Forecast - Telephone Revenue
Garage/Parking Income
Garage/Parking income is derived from the hotel's planned attached sevenstory parking garage. The subject property is forecast to generate garage and parking revenue from valet and self-parking in the parking structure. The subject property plans a total of 680 parking spaces in this facility to be shared by the Convention Center and Port Everglades. HVS comparable #2 reportedly posted garage/parking expense of roundly $7.00 per-occupied-
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room, in 2005/06 dollars. Garage and parking revenues have been forecast at $7.00 per-occupied-room in 2007 dollars which equates to $8.72 peroccupied-room in the first projection year, stabilizing at $8.65 per occupied room or 2.2% or revenues, in 2014/15.
Comparable Operating History and Subject Forecast - Garage/Parking Revenue
Other Income
Other income is derived from sources other than guestrooms, food and beverage, and telephone services. The proposed subject property's other income sources are expected to be generated from the hotel's gift shop, business center services, commissions, movies, vending, the full-service health spa, and other miscellaneous revenue sources. The subject hotel's spa revenue is expected to be generated from the sale of spa services such as massages, wraps, scrubs, manicures, pedicures, facials, body peels, spa products, as well as other services. Based on our review of operations with a similar extent of offerings, we have positioned an appropriate revenue level for the proposed subject property. The HVS comparable statements illustrate a range of $4.04 to $40.81 on a peroccupied-room basis in the Other Income category, with the majority of properties in the $11.00 to $18.00 range. The proposed subject property has been positioned to generate $12.00 per-occupied-room in other income in 2007 dollars. This level equates to $17.23 per-occupied-room in other income in the first projection year, stabilizing at a level of $17.09. The following table details the historical ranges in the other income category for the comparable hotels, along with our positioned level and forecast.
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Comparable Operating History and Subject Forecast - Other Income

Rooms Expense
Rooms expense consists of items related to the sale and upkeep of guestrooms and public space. Salaries, wages, and employee benefits account for a substantial portion of this category. Although payroll varies somewhat with occupancy (because managers can schedule maids, bell personnel, and house cleaners to work when demand requires), much of a hotel's payroll is fixed. Front desk personnel, public area cleaners, the housekeeper, and other supervisors must be maintained at all times. As a result, salaries, wages, and employee benefits are only moderately sensitive to changes in occupancy. Commissions and reservations are usually based on room sales, and thus are highly sensitive to changes in occupancy and average rate. While guest supplies vary 100% with occupancy, linen and other operating expenses are only slightly affected by volume. The proposed subject property's rooms department expense has been positioned based upon our review of the comparable operating data and our understanding of the hotel's future services levels and price point. The comparable statements illustrate an expense range of 21.0% to 28.8% (of rooms revenue) in this category. The proposed subject property's room expense has been forecast at 28.1% of rooms revenue in the first projection year, stabilizing at a level of 25.0%. The following table details the historical ranges in the rooms expense category for the comparable hotels, along with our positioned level and forecast.
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Comparable Operating History and Subject Forecast - Rooms Expense

Food and Beverage Expense
Food expenses consist of items necessary for the primary operation of a hotel's food and banquet facilities. The costs associated with food sales and payroll are moderately to highly correlated to food revenues. Items such as china, linen and uniforms are less dependent on volume. Although the other expense items are basically fixed, they represent a relatively insignificant factor. Beverage expenses consist of items necessary for the operation of a hotels lounge and bar areas. The costs associated with beverage sales and payroll are moderately to highly correlated to beverage revenues. The proposed subject property's food and beverage operation is expected to be efficiently managed and operate at an expense level that is in-line with other comparable operations. The comparable statements illustrate an expense range of 58.6% to 77.6% (of food and beverage revenue) in this category. The proposed subject property's food and beverage expense has been forecast at 71.3% of food and beverage revenue in the first projection year, stabilizing at a level of 67.4%. The following table details the historical ranges in the food and beverage expense category for the comparable hotels, along with our positioned level and forecast.
Comparable Operating History and Subject Forecast - Food and Beverage Expense
$ Per Occupied Room Low High Comparable Statements 34.92 48.56 % of F&B Revenue Low High 58.6 77.6
Subject Forecast $ Per Occupied Room % of F&B Revenue Y ear One 82.28 71.3 Stabilized 82.02 67.4
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Telephone Expense
Telephone expense consists of all costs associated with this department. In the case of small and mid-sized hotels with automated systems, the operation of telephones is typically the responsibility of front desk personnel; however, large properties employ full-time operators. The bulk of the telephone expense consists of the cost of local and long-distance calls billed by the telephone companies that provide these services. The comparable statements illustrate an expense range of 37.4% to 169.1% (of telephone revenue) in this category, with the majority in a range between 37.4% and 70.3%. The proposed subject property's telephone expense has been forecast at 59.2% of telephone revenue in the first projection year, stabilizing at a level of 55.0%. The following table details the historical ranges in the telephone expense category for the comparable hotels, along with our positioned level and forecast.
Comparable Operating History and Subject Forecast - Telephone Expense
$ Per Occupied Room Low High Comparable Statements 1.05 2.26 % of Telephone Revenue Low High 37.4 169.1
Subject Forecast $ Per Occupied Room % of Telephone Revenue Y ear One 2.38 59.2 Stabilized 2.38 55.0
Garage/Parking Expense
Garage/Parking expense at the subject will be associated with the costs of operating the parking garage and for providing valet parking. Garage and parking expense has been forecast at 32.2% of departmental revenue in the first projection year, stabilizing at 31.0% of garage and parking revenue in 2014/15. The following table details our forecast of Garage/Parking expense for the subject hotel.
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Comparable Operating History and Subject Forecast - Garage/Parking Expense

Subject Forecast $ Per Occupied Room % of Garage/Parking Revenue 2.81 32.2 Y ear One Stabilized 2.68 31.0
Other Income Expense
Other income expense consists of costs associated with other income, and is dependent on the nature of the revenue. For example, if a hotel leases its gift shop or spa to an outside operator, these expenses are limited to items such as rental fees and commissions. If the property operates its own gift shop or spa, both revenues and expenses will be higher, and the hotel is responsible for the cost of goods sold, payroll, and so forth. Expenses related to the proposed subject property's other income sources should be minimal and associated with the other revenue components discussed previously. The comparable statements illustrate an expense range of 4.1% to 68.2% (of other income) in this category. The proposed subject property's other income expense has been forecast at 33.9% of other income in the first projection year, stabilizing at a level of 33.0%. The following table details the historical ranges in the other income expense category for the comparable hotels, along with our positioned level and forecast.
Comparable Operating History and Subject Forecast - Other Income Expense
$ Per Occupied Room Low High Comparable Statements 0.17 8.62 % of Other Income Low High 4.1 68.2
Subject Forecast $ Per Occupied Room % of Other Income Y ear One 5.84 33.9 Stabilized 5.64 33.0
Administrative and General Expense
Administrative and general expense includes the salaries and wages of all administrative personnel who are not directly associated with a particular department. Expense items related to the management and operation of the property are also allocated to this category.
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Most administrative and general expenses are relatively fixed. The exceptions are cash overages and shortages; commissions on credit card charges; provision for doubtful accounts, which are moderately affected by the number of transactions or total revenue; and salaries, wages, and benefits, which are very slightly influenced by volume. Based upon our review of this comparable operating data and the expected scope of facility for the proposed subject property, we have positioned the administrative and general expense level at a market-supported level. The comparable statements illustrate an expense range of $4,091 to $5,958 peravailable-room in this category, or 6.5% to 8.9% of total revenue. The subject property's administrative and general expense has been forecast at $6,808 on a per-available-room basis in the first projection year (8.3% of revenue), stabilizing at a level of $7,687 (7.5% of revenue). The following table details the historical ranges in the administrative and general expense category for the comparable hotels, along with our positioned level and forecast.
Comparable Operating History and Subject Forecast - Administrative and General Expense
$ Per Available Room Low High Comparable Statements 4,091 5,958 % of Total Revenue Low High 6.5 8.9
Subject Forecast $ Per Available Room % of Total Revenue Year One 6,808 8.3 Stabilized 7,687 7.5
Marketing Expense
Marketing expense consists of all costs associated with advertising, sales, and promotion; these activities are intended to attract and retain customers. Marketing can be used to create an image, develop customer awareness, and stimulate patronage of a property's various facilities. The marketing category is unique in that all expense items, with the exception of fees and commissions, are totally controlled by management. Most hotel operators establish an annual marketing budget that sets forth all planned expenditures. If the budget is followed, total marketing expenses can be projected accurately.
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Marketing expenditures are unusual because although there is a lag period before results are realized, the benefits are often extended over a long period. Depending on the type and scope of the advertising and promotion program implemented, the lag time can be as short as a few weeks or as long as several years. However, the favorable results of an effective marketing campaign tend to linger, and a property often enjoys the benefits of concentrated sales efforts for many months. Based upon our review of this comparable operating data and the expected scope of facility for the proposed subject property, we have positioned the marketing expense level at a market-supported level. The comparable statements illustrate an expense range of $3,598 to $4,829 per-available-room in this category, or 5.2% to 9.1% of total revenue. The subject property's marketing expense has been forecast at $6,284 on a per-available-room basis in the first projection year (7.7% of revenue), stabilizing at a level of $7,096 (6.9% of revenue). The following table details the historical ranges in the marketing expense category for the comparable hotels, along with our positioned level and forecast.
Comparable Operating History and Subject Forecast - Marketing Expense
Property Operations and Maintenance
Property operations and maintenance expense is another expense category that is largely controlled by management. Except for repairs that are necessary to keep the facility open and prevent damage (e.g., plumbing, heating, and electrical items), most maintenance can be deferred for varying lengths of time. Maintenance is an accumulating expense. If management elects to postpone performing a required repair, they have not eliminated or saved the expenditure; they have only deferred payment until a later date. A lodging facility that operates with a lower-than-normal maintenance budget is likely to accumulate a considerable amount of deferred maintenance.
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The age of a lodging facility has a strong influence on the required level of maintenance. A new or thoroughly renovated property is protected for several years by modern equipment and manufacturers' warranties. However, as a hostelry grows older, maintenance expenses escalate. A wellorganized preventive maintenance system often helps delay deterioration, but most facilities face higher property operations and maintenance costs each year, regardless of the occupancy trend. The quality of initial construction can also have a direct impact on future maintenance requirements. The use of high-quality building materials and construction methods generally reduces the need for maintenance expenditures over the long term. We expect the proposed subject property's maintenance operation to be well managed, and expense levels should stabilize at a typical level for a property of this type. The comparable statements illustrate an expense range of $1,957 to $3,584 per-available-room in this category, or 3.7% to 5.7% of total revenue. The subject property's property operations and maintenance expense has been forecast at $3,731 on a per-available-room basis in the first projection year (4.6% of revenue), stabilizing at a level of $4,435 (4.3% of revenue). The following table details the historical ranges in the property operations and maintenance expense category for the comparable hotels, along with our positioned level and forecast.
Comparable Operating History and Subject Forecast - Property Operations and Maintenance Expense
Utilities Expense
Utility consumption at the subject property includes water and space heating, air conditioning, lighting, cooking fuel, and other miscellaneous power requirements.
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Total utility cost depends on the source and quantity of fuel used. Electricity tends to be the most expensive source, followed by oil and gas. Although all hotels consume a sizable amount of electricity, many properties supplement their utility requirements with less expensive sources, such as gas and oil, for heating and cooking. The comparable statements illustrate an expense range of $1,337 to $3,884 per-available-room in this category, or 1.7% to 7.8% of total revenue. The subject property's utilities expense has been forecast at $3,579 on a peravailable-room basis in the first projection year (4.4% of revenue), stabilizing at a level of $4,041 (3.9% of revenue). The following table details the historical ranges in the utilities expense category for comparable hotels, along with our positioned level and forecast.
Comparable Operating History and Subject Forecast - Utilities Expense
Management Fee
We are finding that in today's market, total management fees for a first-tier management company that provides both a brand name and management expertise are ranging from 4% to 5% of total revenue. Fees paid to second tier management companies that provide management expertise but no brand identity are ranging from 2% to 3% of total revenue. The proposed subject property is expected to be managed by Hilton Hotels Corporation and operate under a Hilton flag. At the time of our analysis, a January 2008 draft Letter of Intent (LOI) for the Broward County Convention Center Hotel Development Project is being finalized between Broward County, FaulknerUSA - the developer, and Hilton - the management company. According to the LOI, management fee terms call for a senior unsubordinated base management fee of 3.0% of total revenues annually, ramping up from 2.0% in projection year one and 2.5% in projection year two. These terms have been included in our proforma.
Property Taxes
Per information from Broward County, the subject property will be exempt from property taxes.
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Insurance Expense
The insurance expense category consists of the cost of insuring the hotel and its contents against damage or destruction by fire, weather, sprinkler leakage, boiler explosion, plate glass breakage, and so forth. General insurance costs also include premiums relating to liability, fidelity, and theft coverage. Insurance rates are based on many factors, including building design and construction, fire detection and extinguishing equipment, fire district, distance from the firehouse, and the area's fire experience. Insurance expenses do not vary with occupancy. Our forecast takes into consideration current insurance premiums for new-build assets of the subject property's proposed quality level.
Ground Lease Expense
The hotel site is located on land owned by Broward County. The hotel property is expected to operate subject to a ground lease with Broward County (lessor) with an initial term of 50 years and subject to renewal. Lease terms provided to this consultant include a ground lease payment commencing in the hotel's fourth year of operation of $500,000, which is expected to increase by 3.0% annually thereafter. These terms have been included in our proforma. Furniture, fixtures, and equipment are essential to the operation of a lodging facility, and their quality often influences a property's class. This category includes all non-real estate items that are capitalized, rather than expensed. The furniture, fixtures, and equipment of a hotel are exposed to heavy use and must be replaced at regular intervals. The useful life of these items is determined by their quality, durability, and the amount of guest traffic and use. Periodic replacement of furniture, fixtures, and equipment is essential to maintain the quality, image, and income-producing potential of a lodging facility. Because capitalized expenditures are not included in the operating statement but nevertheless affect an owner's cash flow, an appraisal should reflect these expenses in the form of an appropriate reserve for replacement. The International Society of Hospitality Consultants (ISHC) undertook a major industry-sponsored study of the capital expenditure requirements for full-service/luxury, select-service and extended-stay hotels. The most recent findings of the study were published in a report in 20071. Historical capital
1
Reserve for Replacement
The International Society of Hotel Consultants, CapEx 2007, A Study of Capital Expenditure in the U.S. Hotel Industry.
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expenditures of well-maintained hotels were investigated through the compilation of data provided by most of the major hotel companies in the United States. A prospective analysis of future capital expenditure requirements was also performed based upon the cost to replace short- and long-lived building components over a hotel's economic life. The study showed that the capital expenditure requirements for hotels vary significantly from year to year, and depend upon both the actual and effective age of a property. Based on the results of this study, it is our opinion that hotel lenders and investors are requiring reserves for replacement ranging from 4% to 6% of total revenue. According to the LOI, a senior FF&E reserve for replacement is stipulated at 4.0% of total revenues annually, increasing from 1.0% in projection year one, 2.0% in year two, and 3.0% in year three. These terms have been included in our proforma. Based on an analysis of comparable lodging facilities, we estimate that this stabilized level of reserve for replacement at 4.0% of total revenues is sufficient to provide for the timely and periodic replacement of the subject property's furniture, fixtures, and equipment. Return on Investment/Feasibility Analysis Return on investment can be defined as the future benefits of an income producing property relative to its acquisition or construction cost. The first step in performing a return on investment analysis is to determine the amount to be initially invested. For a proposed property, this amount is most likely to be the development cost of the hotel. Based on the total development cost, the individual investor will utilize a return on investment analysis to determine if the future cash flow from a current cash outlay meets his or her own investment criteria and at what level above or below this amount such an outlay exceeds or fails to meet these criteria. As an individual or company considering investment in hotel real estate, the decision to use your own cash, an equity partner's capital, or lender financing will be an internal one. Because hotels typically require a substantial investment, only the largest investors and hotel companies generally have the means to purchase properties with all cash. For the typical investor, those who may be entering the market for hotel acquisitions at this time, we would anticipate the involvement of some third party financing.
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In leveraged acquisitions and developments where investors typically purchase or build upon real estate with a small amount of equity cash (20% to 40%) and a large amount of mortgage financing (60% to 80%), it is important for the equity investor to acknowledge the return requirements of the debt participant (mortgagee), as well as his or her own return requirements. Therefore, we will begin our rate of return analysis by reviewing the debt requirements of typical hotel mortgagees. Mortgage Component Data for the mortgage component may be developed from statistics of actual hotel mortgages made by long-term lenders. The American Council of Life Insurance, which represents 20 large life insurance companies, publishes quarterly information pertaining to the hotel mortgages issued by its member companies. Because of the six- to nine-month lag time in reporting and publishing hotel mortgage statistics, it was necessary to update this information to reflect current lending practices. Our research indicates that the greatest degree of correlation exists between the average interest rate of a hotel mortgage and the concurrent yield on an average A corporate bond. The following table summarizes the average mortgage interest rates of the hotel loans made by these lenders. For the purpose of comparison, the average A corporate bond yield (as reported by Moody's Bond Record) is also shown.
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Average Mortgage Interest Rates and Average A Corporate Bond Yields

Average Interest Rate 5.90 % 5.70 6.33 6.99 6.40 5.84 5.80 5.43 5.66 5.73 5.65 6.04 5.80 6.21 5.72 4.33 7.89 8.82 8.19 7.32 Average A Corporate Bond Yield 6.16 % 5.90 6.28 6.18 6.35 5.87 5.81 5.47 5.47 5.64 5.85 6.07 6.40 5.99 6.38 4.78 7.70 8.10 7.52 6.93
Year 2007 2006
Period 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. Annual Annual Annual Annual Annual Annual
2005
2004
2003 2002 2001 2000 1999 1998
Sources: American Council of Life Insurance; Moody's Bond Record
The relationship between hotel interest rates and the yields from the average A corporate bond can be detailed through a regression analysis, which is expressed as follows.
Y = 1.29732900 X 1.86915000
Where:
Y = Estimated Hotel/Motel Mortgage Interest Rate X = Current Average A Corporate Bond Yield (Coefficient of correlation is 91%)
The average yield on average A corporate bonds, as reported by Moody's Bond Record, for February 15, 2008 was 6.34%. Using a factor of 6.34 in the equation presented above produces an estimated hotel/motel interest rate of roundly 6.36%.
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The capital markets are currently in a state of uncertainty due to stricter loan criteria being mandated by the rating agencies. Some lenders are holding back on loan commitments until the market normalizes, though many lenders are still active. In addition to the mortgage interest rate estimate derived from this regression analysis, HVS constantly monitors the terms of hotel mortgage loans made by our institutional lending clients. In the current market, hotel projects are typically able to secure mortgage financing at interest rates ranging from 5.50% to 6.75%, depending on the property, location, affiliation, operator, and loan-to-value ratio. According to our discussions with lenders and brokers, current interest rates for lodging properties range from 100 to 200 basis points over the corresponding yield on U.S. Treasury notes. The average ten-year Treasury note yield for the week ending February 15, 2008 was 3.72, indicating an interest rate range from 4.72% to 5.72%. Spreads for shortterm floating rate mortgages (three to five years) range from 150 to 300 basis points above LIBOR. As of January 2008, LIBOR was 3.91764. Even with a floor of 1.50 as specified by some lenders, the average floating rates generally range from 5.42% to 6.92%. At present, we find that lenders who are active in the market are using loanto-value ratios of 65% to 80% and amortization periods of 25 to 30 years. Based on the subject property's quality, location, market setting, and borrower profile, we are of the opinion that an appropriate loan-to-value ratio for this valuation is 75%. A 75% loan-to-value ratio, which is reasonable to expect based on this interest rate and current parameters, was used in the mortgage-equity analysis. A direct correlation between the interest rate and the loan-to-value ratio exists, where at a lower interest rate, a lower loan-tovalue is applied. Based on the preceding analysis of the current lodging industry mortgage market and adjustments for specific factors such as the property's location and conditions in the local hotel market, it is our opinion that a 6.50% interest, 30-year amortization mortgage with a 0.075848 constant is appropriate for the proposed subject property.
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Equity Component
The remaining capital required for a hotel investment generally comes from the equity investor. The rate of return that an equity investor expects over a ten-year holding period is known as the equity yield. Unlike the equity dividend, which is a short-term rate of return, the equity yield specifically considers a long-term holding period (generally ten years), annual inflationadjusted cash flows, property appreciation, mortgage amortization, and proceeds from a sale at the end of the holding period. The equity yield for an investor will generally reflect the individuals or companys current cost of capital, risk perception, and affiliated interests (partners, parent company, stockholders, etc.) Based on these factors, the equity investor knows the internal rate of return (IRR) that they require for a particular real estate investment. It is with this IRR in mind, that the equity investor will comprehend the acceptability and desirability of a particular deal. Hotel Sales Each appraisal performed by HVS uses a similar mortgageequity approach in which income is projected and then discounted to a current value at rates reflecting the cost of debt and equity capital. In the case of hotels that are sold in close time proximity to our valuations, we were able to determine an appropriate equity yield rate by inserting the projection into a valuation model, and adjusting the appraised value to reflect the actual sales price by modifying the return assumptions. The following table shows a representative sample of hotels that were sold shortly after we appraised them, along with the imputed equity return based on our valuation approach.
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Sample of Hotels Sold

Overall Rate Based on Net Operating Income Number of Rooms 495 405 195 195 336 395 179 92 201 395 395 300 657 182 297 365 393 289 365 242 308 388 462 462 369 246 317 270 224 651 258 339 312 467 444 410 1195 217 310 Source: HVS Date of Sale Aug-07 Aug-07 Aug-07 Aug-07 Jun-07 Apr-07 May-07 May-07 Apr-07 Apr-07 Apr-07 Mar-07 Feb-07 Feb-07 Feb-07 Jan-07 Dec-06 Nov-06 Nov-06 Oct-06 Oct-06 Oct-06 Oct-06 Oct-06 Oct-06 Oct-06 Oct-06 Oct-06 Sep-06 Sep-06 Sep-06 Aug-06 Aug-06 Aug-06 Jul-06 Jul-06 Jun-06 Jun-06 Jun-06 Total Property Yield 11.6 % 13.8 11.3 11.1 13.2 13.8 11.0 11.1 14.5 12.4 13.8 10.2 9.6 9.1 8.6 11.5 8.1 11.0 12.0 9.8 10.0 9.7 12.5 9.3 11.3 8.5 9.4 9.7 11.6 9.7 11.2 11.7 11.7 12.8 13.2 10.7 10.0 9.7 11.0 Equity Yield 21.7 % 26.8 20.8 21.0 25.2 27.5 20.0 22.2 27.6 24.2 27.5 18.2 17.7 15.1 13.9 21.2 11.7 20.4 21.2 16.3 17.5 17.4 23.7 15.1 21.0 13.5 17.3 16.5 21.4 16.8 19.9 20.9 21.7 21.0 23.5 20.2 17.3 16.2 20.0 Historical Projected Stabilized Equity Year Year One Year Dividend 6.6 % 6.9 6.8 5.0 5.5 7.4 5.6 1.9 -6.8 7.4 5.8 3.9 3.5 5.8 5.3 -4.9 2.3 3.9 4.8 8.6 7.7 4.1 7.1 4.8 -5.6 9.3 6.2 6.5 7.1 8.7 7.2 1.7 8.0 5.7 4.4 4.5 8.1 % 7.7 7.8 7.6 8.0 9.2 6.7 6.5 4.5 8.5 9.2 6.8 5.5 5.2 7.2 6.6 1.4 8.1 2.7 4.0 7.2 8.8 7.5 4.0 6.9 6.0 5.9 6.8 7.6 7.4 5.2 7.0 8.2 2.3 2.8 9.6 5.9 5.6 7.2 9.0 % 10.2 8.6 8.8 10.4 10.6 8.3 7.5 11.6 9.5 10.6 8.0 7.5 7.0 7.5 8.9 8.0 8.3 10.7 8.2 8.3 7.9 9.6 7.9 8.7 7.0 6.9 7.2 8.7 7.5 8.9 8.9 9.2 10.6 11.2 8.3 7.9 6.9 8.9 8.7 % 7.6 7.8 8.7 7.9 9.2 3.6 2.4 -10.9 9.2 6.8 5.5 5.2 7.2 6.6 1.4 8.1 2.7 -4.9 13.1 7.7 4.0 5.5 2.0 5.9 3.8 7.5 7.3 8.2 3.6 5.2 --15.3 1.9 -5.2
Hotel Westin Airport Holiday Inn LAX Hilton Downtown Hotel Palomar Sheraton Hotel Sheraton Sheraton Hotel Hotel Jerome Radisson Love Field Sheraton Hotel Sheraton St. Louis Marriott West Renaissance Mayflower Villa Florence Hilton Westchase & Towers Sheraton Austin Stanford Court Hotel Sheraton Hotel Hyatt Regency Sheraton Hilton Arlington Westin Southfield Detroit Sheraton Westin Hotel Sheraton Buckhead Hilton Sonoma County W Hotel Washington W Union Square Marriott Livonia Fairmont Scottsdale Princess Hilton Suites PGA National Resort & Spa Holiday Inn Sheraton Rancho Las Palmas Crowne Plaza Westin St. Francis Chatam Bars Inn Wyndham Galleria
Location Atlanta, GA Los Angeles, CA St. Louis, MO San Francisco, CA Nashua, NH Oklahoma City, OK Bellevue, WA Aspen, CO Dallas, TX Oklahoma City, OK Oklahoma City, OK St. Louis, MO Washington, DC San Francisco, CA Houston, TX Austin, TX San Francisco, CA North Charleston, NC Lexington, KY Danbury, CT Arlington, TX Southfield, MI College Park, MD Stamford, CT Atlanta, GA Santa Rosa, CA Washington, DC New York, NY Livonia, MI Scottsdale, AZ Dallas, TX Palm Beach Garden, FL Albany, NY Atlanta, GA Rancho Mirage, CA San Antonio, TX San Francisco, CA Chatam, MA Dallas, TX
We have also reviewed several recent investor surveys. The measured yields and other parameters vary from survey to survey, but can include equity yield rates (alternately known as leveraged yield rates), discount rates (alternately known as free and clear equity internal rates of return),
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terminal capitalization rates (alternately known as exit or reversion capitalization rates), and overall capitalization rates (calculated based on either historical, first year, or deflated stabilized years net income). The following table summarizes the range of equity yields, discount rates, terminal capitalization rates, and overall capitalization rates indicated by the hotel sales and the investor surveys. The averages for each survey are listed directly underneath the ranges.
Summary of Investment Parameters
Source HVS/Hotel Sales Full-Service Hotels Korpacz Real Estate Investor Survey Full-Service Hotels 3rd Quarter 2007 CRE/RERC Real Estate Report 1st Tier Hotels Winter 2008 NR = Not reported by Survey
Equity Yield Rate Average 11.7% - 27.6% 20.00%
Discount Rate Average 8.1% - 14.5% 11.10% 9.00% - 14.0% 11.02%
Terminal Rate Average NR
Overall Rate Average 1.7% - 9.3% 5.80% 6.0% - 10.5% 8.30%
NR
6.0% - 11.0% 8.98%
NR
9.0% - 12.3% 10.50%
7.5% - 10.5% 8.98%
7.0% - 9.8% 8.28%
Equity Yield Rate
Based on the assumed 75% loan-to-cost ratio, the risk inherent in achieving the projected income stream, and the anticipated market position of the subject property, it is our opinion that an equity investor is likely to require an equity yield rate ranging from 18% to 22%. Concurrent with loan-to-value ratios increasing in the past twelve months, investors are accepting lower returns on their equity. Equity yields have decreased while interest rates have risen, as equity investors are assuming a modestly lower proportion of the risk associated with hotel investments. Inherent in evaluating the rates of return for a particular investment is the assumption of a sale at the end of the ten-year holding period. The estimated reversionary sales price as of that date is calculated by capitalizing the projected eleventh-year net income by an overall terminal capitalization rate. An allocation for the selling expenses is deducted from this sales price, and the net proceeds to the equity interest (also known as the equity
Terminal Capitalization Rate
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residual) are calculated by deducting the outstanding mortgage balance from the reversion. For purposes of this analysis, we have applied a terminal capitalization rate of 9.0%. This terminal capitalization rate is in line with the industry surveys presented earlier. Rates of Return for Investment Participants As the two participants in a real estate investment, investors and lenders must evaluate their equity and debt contributions based on their particular return requirements. After carefully weighing the risk associated with the projected economic benefits of a lodging investment, the participants will typically make their decision whether or not to invest in a hotel, motel or resort by determining if their investment will provide an adequate yield over an established period of time. For the lender, this yield will typically reflect the interest rate required for a hotel mortgage over a period of what can range from seven to ten years. The yield to the equity participant may consider not only the requirements of a particular investor, but also the potential payments to cooperative or ancillary entities such as limited partner payouts, stockholder dividends, and management company incentive fees. The return on investment analysis in a hotel acquisition would not be complete without recognizing and reflecting the yield requirements of both the equity and debt participants. The analysis will now calculate the yields to the mortgage and equity participants during a ten-year projection period. The annual debt service is calculated by multiplying the mortgage component by the mortgage constant.
Mortgage Component Mortgage Constant Annual Debt Service $224,273,000 0.075848 $17,010,695
The 11-year forecast of net income and 10-year forecast of net income to equity are presented in the following table.
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Eleven-Year Forecast of Net Income and Ten-Year Forecast of Net Income to Equity
2011/12 Occupancy Average Rate Net Income Before Debt Service ($000's) Less: Debt Service ($000's) Net Income to Equity ($000's) Debt Coverage Ratio Cash-on-Cash Return
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
62 % 66 % 69 % 71 % 71 % 71 % 71 % 71 % 71 % 71 % 71 % $216.78 $227.23 $236.80 $244.94 $252.29 $259.86 $267.66 $275.68 $283.96 $292.47 $301.25 21,351 24,942 27,467 28,847 29,712 30,604 31,522 32,467 33,441 34,445 35,478 * 17,011 17,011 17,011 17,011 17,011 17,011 17,011 17,011 17,011 17,011 $4,340 1.26 5.8 % $7,931 1.47 10.6 % $10,456 1.61 14.0 % $11,836 1.70 15.8 % $12,701 1.75 17.0 % $13,593 1.80 18.2 % $14,511 1.85 19.4 % $15,456 1.91 20.7 % $16,430 1.97 22.0 % $17,434 2.02 23.3 %
* The eleventh year's net income is projected prior to the deduction of real estate taxes. The overall going-out rate used to capitalize the eleventh year's net income is loaded with the applicable real estate tax rate to derive a reversionary value estimate, as of the end of year ten, which takes into account the reassessment of the property upon sale.
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The yield to the lender based on a 75% debt contribution equates to a 6.50% interest rate and is calculated as follows.
Return to the Lender
Total Annual Debt Service $17,011,000 17,011,000 17,011,000 17,011,000 17,011,000 17,011,000 17,011,000 17,011,000 17,011,000 207,141,000 * x x x x x x x x x x Present Worth of $1 Factor at 6.5% 0.939370 0.882416 0.828915 0.778658 0.731448 0.687100 0.645441 0.606308 0.569547 0.535016 = = = = = = = = = = Discounted Cash F low $15,980,000 15,011,000 14,101,000 13,246,000 12,443,000 11,688,000 10,980,000 10,314,000 9,689,000 110,824,000 $224,276,000
Year 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21
Value of Mortgage Component
*10th year debt service of $17,011,000 plus outstanding mortgage balance of $190,130,000
In order for the present value of the equity investment to equate to the $74,757,000 capital outlay, the investor must accept a 20.25% return, as shown in the following table.
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Equity Component Yield

N et Income to Equity $4,340,000 7,931,000 10,456,000 11,836,000 12,701,000 13,593,000 14,511,000 15,456,000 16,430,000 213,620,000 * x x x x x x x x x x Present Worth of $1 Factor at 20.25% 0.831602 0.691563 0.575105 0.478259 0.397721 0.330746 0.275049 0.228732 0.190214 0.158182 = = = = = = = = = = Discounted Cash F low $3,609,000 5,485,000 6,013,000 5,661,000 5,051,000 4,496,000 3,991,000 3,535,000 3,125,000 33,791,000 $74,757,000
Year 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21
Value of Equity Component
*10th y ear net income to equity of $17,434,000 plus s ales proceeds of $196,186,000
Conclusion
In determining the potential feasibility of the proposed Hilton Convention Hotel, we analyzed the lodging market, researched the areas economics, reviewed the estimated development cost, and prepared a ten-year forecast of income and expense, which was based on our review of the current and historical market conditions, as well as comparable income and expense statements. We have compared the potential returns generated by the proposed Hilton Convention Hotel as indicated in the forecast of income and expense with the estimated cost of construction. The conclusion of this analysis indicates that an equity investor contributing $74,757,000 (25% of the development cost) could expect to receive a 20.25% internal rate of return over a ten-year holding period. Therefore, assuming our market parameters for debt service, 20.25% is considered adequate for market feasibility.
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Statement of Assumptions and Limiting Conditions 12-1
12. Statement of Assumptions and Limiting Conditions
1. This report is to be used in whole and not in part. 2. No responsibility is assumed for matters of a legal nature. 3. We assume that there are no hidden or unapparent conditions of the subsoil or structures, such as underground storage tanks, that would render the property more or less valuable. No responsibility is assumed for these conditions or for any engineering that may be required to discover them. 4. We have not considered the presence of potentially hazardous materials such as asbestos, urea formaldehyde foam insulation, any form of toxic waste, polychlorinated biphenyls (PCBs), pesticides, mold, or lead-based paints. We are not qualified to detect hazardous substances, and we urge the client to retain an expert in this field if desired. 5. We have made no survey of the property, and we assume no responsibility in connection with such matters. Sketches, photographs, maps, and other exhibits are included to assist the reader in visualizing the property. It is assumed that the use of the land and improvements is within the boundaries of the property described, and that there is no encroachment or trespass unless noted. 6. All information, estimates, and opinions obtained from parties not employed by H&R Valuation Services, Inc. (DBA HVS) are assumed to be true and correct. We can assume no liability resulting from misinformation. 7. Unless noted, we assume that there are no encroachments, zoning violations, or building violations encumbering the subject property. 8. All mortgages, liens, encumbrances, leases, and servitudes have been disregarded unless specified otherwise.
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9. None of this material may be reproduced in any form without our written permission, and the report cannot be disseminated to the public through advertising, public relations, news, sales, or other media. 10. We are not required to give testimony or attendance in court by reason of this analysis without previous arrangements, and only when our standard per diem fees and travel costs are paid prior to the appearance. 11. If the reader is making a fiduciary or individual investment decision and has any questions concerning the material presented in this report, it is recommended that the reader contact us. 12. We take no responsibility for any events or circumstances that take place subsequent to the date of our field inspection. 13. The quality of a lodging facility's on-site management has a direct effect on a property's economic viability. The financial forecasts presented in this analysis assume responsible ownership and competent management. Any departure from this assumption may have a significant impact on the projected operating results. 14. The estimated operating results presented in this report are based on an evaluation of the overall economy, and neither take into account nor make provision for the effect of any sharp rise or decline in local or national economic conditions. To the extent that wages and other operating expenses may advance during the economic life of the property, we expect that the prices of rooms, food, beverages, and services will be adjusted to at least offset those advances. We do not warrant that the estimates will be attained, but they have been prepared on the basis of information obtained during the course of this study and are intended to reflect the expectations of a typical hotel buyer. 15. This analysis assumes continuation of all Internal Revenue Service tax code provisions as stated or interpreted on the date of our field inspection. 16. Many of the figures presented in this report were generated using sophisticated computer models that make calculations based on numbers carried out to three or more decimal places. In the interest of simplicity, most numbers have been rounded to the nearest tenth of a percent. Thus, these figures may be subject to small rounding errors. 17. It is agreed that our liability to the client is limited to the amount of the fee paid as liquidated damages. Our responsibility is limited to the client, and use of this report by third parties shall be solely at the risk of the
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client and/or third parties. The use of this report is also subject to the terms and conditions set forth in our engagement letter with the client. 18. This study was prepared by H&R Valuation Services, Inc. (DBA HVS). All opinions, recommendations, and conclusions expressed during the course of this assignment are rendered by the staff of H&R Valuation Services, Inc. as employees, rather than as individuals. 19. This report is set forth as a feasibility study of the proposed subject property; this is not an appraisal report.
HVS International
Certification 13-1
13. Certification
We, the undersigned, hereby certify: 1. that the statements of fact presented in this report are true and correct to the best of our knowledge and belief; 2. that the reported analyses, opinions, and conclusions presented in this report are limited only by the assumptions and limiting conditions set forth, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions; 3. that Bethany Cronk, MBA personally inspected the site described in this report; Hans Detlefsen and Gregory Hartmann, MAI participated in the analysis and reviewed the findings, but did not personally inspect the site; 4. that we have no current or contemplated interests in the real estate that is the subject of this report; 5. that we have no personal interest or bias with respect to the subject matter of this report or the parties involved; 6. that this report sets forth all of the limiting conditions (imposed by the terms of this assignment) affecting the analyses, opinions, and conclusions presented herein; 7. that the fee paid for the preparation of this report is not contingent upon our conclusions, or the occurrence of a subsequent event directly related to the intended use of this report; 8. that this report has been prepared in accordance with, and is subject to, the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute; 9. that the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives;
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Certification 13-2
10. that this report has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (as adopted by the Appraisal Foundation); 11. that no one other than those listed above and the undersigned prepared the analyses, conclusions, and opinions concerning the real estate that are set forth in this report; 12. that as of the date of this report, Gregory Hartmann, MAI has completed the requirements of the continuing education program of the Appraisal Institute; and 13. that our engagement in this assignment was not contingent upon developing or reporting predetermined results. DRAFT DOCUMENT
Bethany Cronk, MBA Vice President Colorado Certified General Appraiser #CG40020961
DRAFT DOCUMENT
Hans Detlefsen Director
DRAFT DOCUMENT
Gregory Hartmann, MAI Managing Director Colorado Certified General Appraiser #CG01327683 BC: HD: GH:mc
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Penetration Explanation
Let us illustrate the penetration adjustment with an example. A market has three existing hotels with the following operating statistics:
Base Year Occupancy and Penetration Levels
Estimated Market Segmentation Property Hotel A Hotel B Hotel C Total/Average Number of Rooms 100 125 200 425 Fair Share 23.5% 29.4 47.1 100.0% Commercial 60% 70 30 47% Meeting 20% 10 60 38% Leisure 20% 20 10 15% Occupancy 75.0% 65.0 80.0 74.4% Penetration 100.8% 87.4 107.5 100.0%
Based upon each hotels room count, market segmentation and annual occupancy the annual number of room nights accommodated in the market from each market segment can be quantified, as set forth below:
Marketwide Room Night Demand
Annual Room Percentage of Night Demand Total 54,704 43,481 17,246 115,431 47.4% 37.7 14.9 100.0%
Market Segment Commercial Meeting Leisure Total
The following discussion will be based upon an analysis of the commercial market segment. The same methodology is applied for each market segment to derive an estimate of a hotels overall occupancy. The chart below sets
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forth the commercial demand accommodated by each hotel. Each hotels commercial penetration factor is computed by: 1) calculating the hotels market share % of commercial demand (commercial room nights accommodated by subject hotel divided by total commercial room nights accommodated by all hotels) and 2) dividing the hotels commercial market share % by the hotels fair share %. The following chart sets forth each hotels fair share, commercial market share and commercial penetration factor.
Commercial Segment Penetration Factors
Number of Rooms 100 125 200 425 Commercial Capture 12,973 14,054 27,677 54,704 Commercial Market Share 30.0% 37.9 32.0 100.0% Commercial Penetration 127.6% 129.0 68.1 100.0%
Property Hotel A Hotel B Hotel C Total/Average
Fair Share 23.5% 29.4 47.1 100.0%
When a new 100-room hotel enters the market the fair share of each hotel changes due to the new denominator which has been increased by the 100 rooms which have been added to the market.
Commercial Segment Fair Share
Number of Rooms 100 125 200 100 525
Property Hotel A Hotel B Hotel C New Hotel Total
Fair Share 19.0% 23.8 38.1 19.0 100.0%
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The new hotels penetration factor is projected for its first year of operation. It is estimated that the hotel will capture (penetrate) only 85% of its fair share as it establishes itself in the market. The new hotels market share and room night capture can be calculated based upon the hotels estimated penetration factor. The market share of the existing hotels and that of the new hotel are added up and they no longer equal 100% because of the new hotels entry into the market. The market share of each hotel must be adjusted to reflect the change in the denominator which is comprised of the sum of each hotels market share. This adjustment can be mathematically calculated by dividing each hotels market share percentages by the new denominator of 97.1%. The resulting calculations reflect each hotels new adjusted market share. The sum of the adjusted market shares equals 100%, indicating that the adjustment has been successfully completed. Once the market shares have been calculated, the penetration factors can be recalculated (adjusted market share divided by fair share) to derive the adjusted penetration factors based upon the new hotels entry into the market. Note that each existing hotels penetration factor actually increases because the new hotel is capturing (penetrating) less than its fair share of demand.
Commercial Segment Projections (Year 1)
Number of Rooms 100 125 200 100 525 Hist./Proj. Hist./Proj. Market Adjusted Adjusted Penetration Fair Share Penetration Factor Share Market Share Factor 19.0% 23.8 38.1 19.0 100.0% 127.6% 129.0 68.1 85.0 24.3 % 30.7 25.9 16.2 97.1% 25.0% 31.6 26.7 16.7 100.0% 131.4% 132.8 70.1 87.5 Projected Capture 13,687 17,299 14,600 9,117 54,704
In its second year of operation the new hotel is projected to penetrate above its fair share of demand. A penetration rate of 130% has been chosen, as the new hotel is expected to perform at a level commensurate with Hotel A and Hotel B in this market segment. The same calculations are performed to adjust market share and penetration factors. Note that now the penetration factors of the existing hotels decline below their original penetration rates due to the new hotels above market penetration. Also note that after the market share adjustment the new hotel retains a penetration rate
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commensurate with Hotel A and Hotel B, though the penetration rates of all three hotels have declined by approximately nine percentage points due to the reapportionment of demand. Once the market shares of each hotel have been adjusted to reflect the entry of the new hotel into the market, the commercial room nights captured by each hotel may be projected by multiplying the hotels market share percentage by the total commercial room night demand. This calculation is shown below.
Commercial Segment Projections (Year 2)
Number of Rooms 100 125 200 100 525 Hist./Proj. Hist./Proj. Market Adjusted Adjusted Penetration Fair Share Penetration Factor Share Market Share Factor 19.0% 23.8 38.1 19.0 100.0% 131.4% 132.8 70.1 130.0 25.0 % 31.6 26.7 24.8 97.1% 23.1% 29.3 24.7 22.9 100.0% 121.5% 122.9 64.8 120.3 Projected Capture 12,662 16,004 13,507 12,531 54,704

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Feasibility Study Proposed Hilton Convention Hotel Fort Lauderdale, Florida

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February 22, 2008

Specialists in Hotel Consulting and Appraisal Worldwide

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Bethany Cronk, MBA Vice President bcronk@hvs.com

Hans Detlefsen Director hdetlefsen@hvs.com

Gregory Hartmann, MAI Managing Director ghartmann@hvs.com BC:HD:GH:mc

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Proposed Hilton Convention Hotel - Fort Lauderdale, Florida

Summary of Salient Data and Conclusions 1-1

1. Summary of Salient Data and Conclusions

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Summary of Salient Data and Conclusions 1-2

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Summary of Salient Data and Conclusions 1-3

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Summary of Salient Data and Conclusions 1-4

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Summary of Salient Data and Conclusions 1-5

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Nature of the Assignment 2-1

2. Nature of the Assignment

Subject of the Feasibility Study

Ownership and Ground Lease

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Nature of the Assignment 2-2

Intended Use of the Feasibility Study Method of Study

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Nature of the Assignment 2-3

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Description of the Real Estate

3. Description of the Real Estate

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Description of the Real Estate

Proposed Subject Property and Adjacent Uses

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Description of the Real Estate

View from Site to the Northwest

View from Site to the South

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Description of the Real Estate

View from Site to the East

View from Site to the West

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Description of the Real Estate

View from Site to the Southeast

View from Site to the East and 17th Street Causeway/Bridge