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DISCUSSION ONLY
Headquarters Hotel Market Study
Presentation to the
Convention Partnership
Boston Massachusetts
July 14, 2010
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HVS role and purpose of study
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DISCUSSION ONLY
 HVS is the leading global hospitality consulting firm
 Conduct thousands of studies each year
 Established methods of hotel analysis
 Use Uniform Standards of Professional Appraisal Practice
 HVS provides an independent forecast of hotel operations
 No ongoing interest in project
 No advocacy role
 The HVS “Market Study” provides
 Starting point for financing analysis
 Partial basis for policy decision on project
 No opinion of feasibility
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Methodology and Market Study Process
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Site Inspection
Market Area Analysis
Hotel Supply/Demand
CC Demand Analysis
Forecast
“Market”
Performance
ADR and
Occupancy
Penetration*
Forecast
Financial
Operations
* By market segment: 1) commercial, 2) group, 3) leisure
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DISCUSSION ONLY
I. Overview of Results
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DISCUSSION ONLY
Options Studied
# of Rooms
Hotel
Function
Space SF
BCEC
Ballroom
Expansion
Stabilized
Occupancy
Stabilized
ADR
Stabilized
NOI
1
1,000
83,000
No
71%
$245
$30.8 M
2
1,000
83,000
Yes
74%
$245
$33.1 M
3
1,200
100,000
No
69%
$245
$35.2 M
4
1,200
100,000
Yes
73%
$245
$38.8 M
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DISCUSSION ONLY
Ten-year net operating income
forecasts for each of 4 development scenarios
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DISCUSSION ONLY
Has HVS properly identified and
weighted the importance of the
competition for the proposed hotel?
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DISCUSSION ONLY
Competitive Set
Property
Renaissance Boston Waterfront Hotel*
InterContinental Boston*
Westin Boston Waterfront*
The Seaport Hotel*
Hyatt Regency Boston
Westin Copley Place Boston
Marriott Boston Copley Place
Hilton Boston Back Bay
Sheraton Hotel Boston
Boston Park Plaza Hotel
Omni Parker House
Primary Competitors*
Secondary Competitor
Total Comp Set
# of
Rooms
471
424
793
426
498
803
1,139
390
1,216
941
551
Year
Affiliated
Feb 2008
Nov 2006
Jun 2006
May 1998
Jun 2003
Jun 1984
May 1984
Nov 1982
Jun 1965
Jun 1998
Jun 1985
Year Opened
Feb 2008
Nov 2006
Jun 2006
May 1998
Jun 1985
Jun 1984
May 1984
Nov 1982
Jun 1965
Jun 1927
Jan 1900
2,114 rooms
5,538
7,652 rooms
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Location of Competitive Hotels
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DISCUSSION ONLY
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Historical Trends in Supply and Demand
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Source: Smith Travel Research
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Competitors Historical Performance
Occupancy, ADR and RevPAR
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Source: Smith Travel Research
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Are the HVS forecasts of future
growth in the hotel market consistent
with historical patterns of growth
during periods of economic recovery?
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National Perspective
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DISCUSSION ONLY
Source: Smith Travel Research
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Comparison of historical room night
demand to forecasted recovery (annual % change)
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Forecast change in demand growth
(annual % change)
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DISCUSSION ONLY
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DISCUSSION ONLY
Are the HVS assumptions of rate and
occupancy penetration of the
proposed hotel reasonable?
Baseline Scenario
1000 Rooms No Ballroom Expansion
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HVS estimated market penetration for
each of three demand segments
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DISCUSSION ONLY
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Forecast of occupancy penetration
rates by market segment in stabilized year
Market Occupancy = 75%
Subject Occupancy = 71%
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Subject Property’s Average Daily Rate
Penetration in $ 2008
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ADR
Competitors
Primary Competitors
Secondary Competitors
Total
Subject Property
Average Rate Penetration
Subject Property ADR
$216.21
$202.74
$207.60
98.7%
$205.00
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Occupancy Rate Comparison:
Subject Property vs. Market
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Average Daily Rate Comparison:
Subject vs. Competitive Market
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Projected Stabilized Occupancies (2017)
Scenario
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DISCUSSION ONLY
Market
Subject
1) 1000 rooms no expansion
75%
71%
2) 1000 rooms with expansion
77%
74%
3) 1200 rooms no expansion
74%
69%
4) 1200 rooms with expansion
76%
73%
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DISCUSSION ONLY
Are the forecasts of operating
revenue and expense consistent with
the performance of similar hotel
properties?
Baseline Scenario
1000 Rooms No Ballroom Expansion
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House profit - revenue per available
room in 2009 dollars
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DISCUSSION ONLY
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House profit - revenue per occupied
room night in 2009 dollars
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House profit - % of total revenue
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Stabilized Year Income and Expenses
(2017)
Total Revenues
Total Departmental Expenses
Total Undistributed Operating Expenses
House Profit
Insurance
Management Fees
Amount Available for Debt Service
Other Fixed Charges
NET INCOME
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Total
(in thousands)
$104,699
(44,346)
(21,268)
39,085
(913)
(3,141)
35,031
(4,188)
$30,843
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DISCUSSION ONLY
What are the key risk factors in future
hotel performance?
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Key Risk Factors*
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DISCUSSION ONLY
 Risks that can be managed
 Project completion (BCEC and hotel on budget - on time)
 Adequate marketing effort
 Competent management and labor agreements
 Neighborhood development
 Uncontrollable Risks
 Market performance – slower than forecast economic
growth
 Geopolitical
 New supply
*Risks are not limited to these items. Reader is advised to read the HVS report in its entirety for a more complete
discussion of risk factors, assumptions and limiting conditions.
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