Confidential MARKET ANALYSIS Market Analysis The Ranch, Resort and Conference Center at Moab Utah Index The following areas are covered in this section Introduction Research Approach Industry Summaries for Our Ranch SBU’s Workforce Statistics for Our Ranch SBU’s Moab Area Overview Market Segment Analysis SWOT Analysis Customer Profile Target Audience Profile Market Summary Introduction The saying among cynics in Moab is that a climber/hiker/biker comes to town with a dirty pair of shorts and a $20 bill in their pocket and leaves two days later with both. But times have changed. Now, more often than not, that grungylooking adventurer has an SUV, piles of expensive gear, and loads up on fuel, ice, gas, snacks, maps and beverages upon entering town. Then he'll rent a mountain bike, jeep, ATV and a tour guide. "People who say that really don't understand the people they're talking about," says Marian DeLay, executive director with Moab Travel Council. "And those that do leave with dirty shorts and $20 still send more people back." Locals were lucky to have $20 in their pocket when the uranium mines died in Moab in 1983. Moab was already a Mecca for rafters, dirt bikers, and jeepers, with 90,000 visitors annually, but "the community realized it was not enough," she says. © Copyright The WellSpring Institute All Rights Reserved 1 Confidential MARKET ANALYSIS In 1985 Bill and John Groff started bike tours on the dirt-bike trails and by 1990 mountain biking put Moab on the map. More than 1.5 million visitors annually now spend an average of $115 per day in town, up from $76 in '95. So what's the big deal? Riding redrock gives mountain bike tires supernatural traction, making Moab to mountain bikers what the North Shore is to surfers. Word about the stunning country and climate spread and now, Moab sees three seasonal waves: spring roars in with mountain bikers, families of fourwheeling enthusiasts and hordes of spring breakers--mostly from out of state-packing all 2060 rooms and 1700 campsites; summer sees crowds of Harley Davidson’s and the main wave of adventure seekers--river runners, rafters, climbers, photographers, hikers--then the heavy-spending Germans, French, Italians and Canadians; and fall brings backroad cyclists, four-wheelers, and an influx of seniors who jam the RV parks on their way south for the winter. Darwin Barker, manager of Eddie McStiff's brewery and restaurant, says foreign tourist numbers fluctuate with the euro. Festivals with themes of bikes, music, off-roading (Jeep Safari is the single biggest week), and even rodeo provide huge boosts, too. Barker's "ideal visitors," however, are yuppies. "We love the couples in BMW's who pull up with mountain bikes in the trunk and sit and drink martinis," he says. "Money is not an issue, no kids; they eat from the top of the menu and are not afraid to order a bottle of wine." He likes all visitors, though, and is happy to see Moab cutting into St. George's spring break traffic. "I'll get a group of 20 kids from Kansas in here tonight," he said in mid-March, "and a group last Friday from Holy Cross in Indiana." Yuppies or no, Moab is seeing more visitors who don't want to sleep in a Motel 6. Down the river from town, Red Cliffs Lodge is home to a winery and restaurant, with 80 rooms, on-site sports, a film museum, riverside hot tubs, and a four-diamond AAA rating. Over 2,000 movies and commercials have been filmed in Moab, and Hollywood crews often stay at Red Cliffs or the newer Sorrell River Ranch, a similar luxury lodge on the mesas above Castle Valley. Riverview rooms, Cataract Canyon raft trips, a spa, and four-wheel-drive tours pull celebrities and executives to the century old ranch, says spokesperson Sara Snider. Rooms are $200 to $400 per night, with most guests dropping about $1,000 per person on a single weekend. Snider came from New Orleans nine years ago, and is shocked at how little overall growth there is in Moab, despite the five-year-old Sorrell outfit being "incredibly busy, during season" with affluent, repeat clientele packing its 55 rooms. © Copyright The WellSpring Institute All Rights Reserved 2 Confidential MARKET ANALYSIS "The high desert is such an amazing experience for people. They are surprised by it and want to come back ... but overall there is so little growth," she says. "It's amazing how stagnant it is. A lot of people think Moab is Monument Valley and Grand Canyon. We don't really have an identity we're marketing." Moab will inevitably be "another Telluride, another Vail, another Sedona," she says, but it may take a few years. In addition to tourism, start-up businesses incubate well in the redrock. Zeal Optics was founded six years ago by Michael and Wink Jackson, competitive cyclists, and went on to win awards as a top Utah growth company. Another mountain biker, Ashley Korenblat, owner of Western Spirit cycling tours, has expanded her local touring business internationally, as far as Costa Rica. International tourists make up only 3.4 percent of non-resident travelers to Utah but as high as 40 percent on some summer days in Arches National Park. There are snow and mountains in Europe but nothing close to Utah's Navajo sandstone cliffs, deserts and formations. The Ranch, Resort and Conference Center at Moab Utah is soon to become one of the highest rated resort hotel and guest ranch vacation destinations in the Western Untied States taking advantage of the World’s most unique and varied landscapes including Arches National Park, Canyon lands, Dead Horse Point, Goblin Valley and Needles recreation areas. The Ranch, Resort and Conference Center at Moab Utah will focus on the following product and service lines that will become Strategic Business Units (SBU’s) with profit and loss responsibility: The Ranch Operations - Sector 11--Agriculture, Forestry, Fishing And Hunting The Country Store and Western Town Mall - Sector 44-45--Retail Trade The Sale Of Private Homes And Timeshares - Sector 53--Real Estate And Rental And Leasing The Training And Conference Center - 611430 Professional And Management Development Training Hunting Lodge, Bunk Houses, Hotel And Food Services - Sector 72. 721--Accommodation And Food Services Golf Course, Tennis Operations, Sports Center And Other Recreation Services - Sector 71--Arts, Entertainment, and Recreation Elder Care Center- Community Care Facilities for the Elderly: NAICS Code 623311 Youth Development Center - - Fitness and Recreational Sports Centers; NAICS Code 713940 © Copyright The WellSpring Institute All Rights Reserved 3 Confidential MARKET ANALYSIS Indian Nation Culture Center In addition we will focus on or target the following market segments and key customers: Executive, Management and Team Training Personal Development Retreats Women Conferences Family Reunions and Youth Conferences Vacationers Asian and European Travelers Young Adult Programs Sports Camps Elder Care Research Approach Information in this analysis was developed from data covering more than 300 US establishments and 50 world wide companies and all of the businesses in the Moab and San Juan Counties of Utah. While we believe that the information contained in this report represents an accurate picture of trends and performance, no claim is made as to the accuracy of the database(s) utilized or the results of subsequent analyses. In addition, we have taken the opportunity to do extensive perusal on the Internet looking for evidence in the industry literature from pundits’ and industry leaders to suggest any general trends or fads that would either support or refute our hypotheses for success. We researched numerous articles in mainstream media, and the industry specific media and accumulated for the most part corroborating evidence. Our conclusions come from research gathered in the eight industry cluster and nine market segments identified above. We have quoted information and statistics that have come from sources that have used at minimum twenty five different businesses from and around the United States and the World. Our findings come from over 1,357 separate organization listings. Starting from the general or very basic industry perspective, and gathering a very macro or “thirty thousand foot” view… and then working to © Copyright The WellSpring Institute All Rights Reserved 4 Confidential MARKET ANALYSIS the specifics of a fairly new niche within that broader industry, we’ve tried to narrow the view and come to a surer conclusion. The overall impression after months of research suggests that there is certainly an awareness of and recognition that each of our product lines is in high demand and currently producing billions of dollars of revenue world wide. We are also convinced that our combination of products, our unique target markets and the synergy that can be gained by combining these products and services into one destination resort will fill a an every growing need and generate prosperity for all stakeholder for the new organization. Industry Summaries for Our Ranch SBU’s Resort Industry Recent studies have shown what folks in the travel industry have been noticing for the past several months—the economic downturn of the past year is reshaping the tourism landscape. With smaller vacation budgets, many travelers are downsizing their vacations by staying closer to home and going on shorter trips, such as long weekends. “Staycations” and day trips have become increasingly more popular. A recent aol.com survey found that 49% of Americans are considering a vacation planned around local tourist attractions, such as museums, aquariums or amusement parks, to save on travel costs. According to TripAdvisor.com, 52% of travelers said it takes them less than one day to unwind, making weekend getaways a nice option for a quick rejuvenation. “An emerging trend is travelers getting greener. They plan to be more environmentally-conscious, and will be more active outdoors this year, taking advantage of some of the outstanding resources in the U.S., such as our beautiful national parks,” said Michele Perry, vice president of global communications for TripAdvisor. Many in the industry are also noticing more reservations are last minute this year. Weekend travelers, in fact, tend to plan their vacations at the last minute. Many hotels and resorts are responding to this trend by offering last-minute deals online. Although aol.com found that 67% of Americans prefer to plan their longer trips weeks to months in advance rather than cash in on last-minute deal savings, according to a study by the Travel Industry Association (TIA), most weekend travelers make last-minute plans and select their destination within two weeks of their trip. Many travel experts recommend checking for last-minute deals through the destinations’ websites. Internet comparison-shopping is on the rise as travelers seek more value for their vacation dollars. Consumers are also favoring all-inclusive vacation © Copyright The WellSpring Institute All Rights Reserved 5 Confidential MARKET ANALYSIS packages as a way to budget trips. According to TIA, 76% “expect to book a packaged vacation to save money”, 58% “plan to comparison shop for prices and rates specifically on the Internet.” and 67% expect to “spend less on food, beverages and entertainment” when traveling. Jayne O’Connor, president of the White Mountains Attractions Association. But a good deal is not the main social trend in travel today. Travelers want unique experiences that they can describe to their friends back home, says Daniel Levine, executive director of the New York-based Avant-Guide Institute, a guidebook publisher and consultant on cultural trends. “It’s about brag-ability. It’s about telling people something you’ve done that they haven’t done.” Levine’s advice to the travel industry? “Think about what experience you can give people that they can’t get anyplace else. The bottom line is about surprising and delighting your customer.” Developing Nations Travel What is it that emerging middle classes crave most after they've secured a decent house and a spanking new car? Yup, TRAVEL. So, with millions of consumers in major Chinese metropolitan areas having joined the MASS CLASS Walhalla, it should come as no surprise that Chinese tourism within China, to Hong Kong and to the rest of the world is booming. More than 16 million people traveled from mainland China last year, and this year that number is projected to rise by at least 18 percent -- the highest growth rate of any Asian nation, studies show. Where are they all staying? Well, with Chinese incomes still modest compared to most developed nations, affordable two and three star resorts and hotels are most popular. Hence the rebirth taking place for many resorts and hotels once popular with Germans, Americans and Swedes. Chinese government officials and businessmen routinely detour to Las Vegas and lose so much money that U.S. casinos like the MGM Grand, Harrah's, the Venetian, and Caesar's Palace have opened offices in China and are dispatching representatives to China to organize groups of high-stakes gamblers and attract more business. Casinos from South Korea, the Philippines, Australia and North Korea have followed suit. By 2020, the World Tourism Organization has predicted, more Chinese tourists -- a massive 100 million -- will head overseas than tourists from any other country. They made up just 1 percent of the Australian tourism market in 1995; that figure is expected to rise to 25 percent by the end of the decade. The Honolulu Advertiser, Hawaii's leading daily newspaper, recently reported that China, not Japan, is the state's long-term hope of boosting its sagging travel industry. © Copyright The WellSpring Institute All Rights Reserved 6 Confidential MARKET ANALYSIS Attracting Families For the Western ski industry as a whole, several levels of a multitiered strategy for attracting new generations as the core group of big spenders that fueled the industry's growth over the past 30 years starts thinking about hanging up its skis. "The industry's economic well-being is based on a transition of skiing passion from the baby boomers across the bridge to the millennials," said Ralf Garrison, whose Mountain Travel Research Program tracks lodging trends for ski resorts in western North America. Fortunately for the ski industry, baby boomers, who wield the bulk of the country's discretionary income, don't act like their parents. With 60 being the new 40 (and with the aid of technology ranging from easy-to-maneuver parabolic skis to knee replacements), many will ski well into their 70s. So resorts like Breckenridge and its parent, Vail Resorts, are working aggressively to make sure they offer everything aging baby boomers (and their children and grandchildren) might want, even if sore knees start to limit the amount of time they can spend on the slopes. "The most important thing to keep baby boomers coming back is to make sure their kids want to come back -- and their grandkids," said Rob Katz, CEO of Vail Resorts, which owns the Breckenridge, Keystone, Vail and Beaver Creek resorts in Colorado and Heavenly at Lake Tahoe. The company also has a lodging arm, which includes Rock Resorts. "If you can take the kids and the grandkids on vacation, you know it's probably going to be a huge success. "Properties like One Ski Hill Place are really an interesting place, where people and families can congregate and come together," Katz said. "It really is providing a comprehensive experience. You have luxury opportunities, but you also have family opportunities, things for everyone to do on the mountain. That allows the baby boomers to come back, because everyone in their family wants to come back." Although adding luxury was key for a resort like Breckenridge, the economic realities of the past few years have largely put any new development on hold. Still, the new resorts here, and this mountain town as a whole, offer a glimpse into what ski resorts, particularly in the West, are doing to prepare for the generational shift that some predict could create a 10-year trough in demand. At the Arrabelle, a luxury hotel that was developed at the height of the ultra luxury boom and which opened just before the global economy collapsed, Paul Toner, senior vice president and COO of Rock Resorts and Vail Resorts Hospitality, says the company has made some changes. © Copyright The WellSpring Institute All Rights Reserved 7 Confidential MARKET ANALYSIS There is less emphasis on amenities such as 24-hour butler service, he said. And the fine-dining restaurant was scaled down to make way for an upscale tavern. "That really hit a home run," he said, explaining that Rock Resorts is focusing more on "smart, savvy" luxury. The company is also working to offer more value-oriented packages that make the whole vacation easier. Baby Boomers Rebound Coming out of the recession boomers have been the least affected in terms of real wealth. He said Generation Y is saddled with high credit card debt, while Gen X is feeling the pinch of unemployment. At the same time, "Unemployment [among] boomers has decreased. There are fewer unemployed boomers now than before the recession, so what you have is a group of people who still have a lot of money." "Twenty and 30 years ago, when the 80 million boomers in North America were in their 20s and 30s, and when the number of people under the age of 50 was nearly double the number of people over 50, you could get away with the bias of youth, because there were way more people under the age of 30. Now there are as many people over 50 as there are under 50, and the people over 50 have the money. Seventy-two percent of our nation's wealth is in the hands of people over 50." Because of that, resorts need a dual-pronged marketing program to keep the wealthy boomers coming back while building interest among their children, who have cheaper alternatives, such as urban skating parks, than baby boomers ever had when they were seeking an adrenaline rush in their 20s. Training and Development Industry Training Magazine's 2007 Industry Report finds the training budget of organizations has grown to $58.5 billion. However, growth is down compared with 2005 to 2006, when training budgets increased 7 percent, compared with 6 percent from 2006 to 2007. Organizations reported that an average of $1,202 (including staff salaries) was spent per learner on training. Instructor-led classroom training remains the dominant delivery method, used for 65% of all formal training, while self-study e-learning now accounts for 20% of student hours. However, the lines are becoming blurred because what used to be pure instructor-led training now is typically a blend of classroom and online learning. Leadership development, which includes management/supervisory training and executive development, is a $12 billion industry, including internal © Copyright The WellSpring Institute All Rights Reserved 8 Confidential MARKET ANALYSIS and external spending. That said, the number of training organizations reporting budget increases still far outweighs the number (16 percent) reporting budget decreases. Approximately one-third of training organizations reported no change in their budgets over last year. Across all companies, budgets increased 6 percent this year, on average. Small businesses (those with 100 to 999 employees) saw budget increases of nearly 7 percent, on average; midsize and large companies reported increases in the 6 percent range. But even with these larger budgets, the amount of spending per learner has not risen. This year, organizations spent $1,202 per learner on training (including staff salaries), which is roughly equivalent to last year’s figure of $1,273. Why? Companies now have more employees to train, and they are still hiring and expanding their workforces, keeping per-learner spending stable. In terms of staffing, approximately one-third (30 percent) of training groups added headcount over the last 12 months, which is also a decline from the 37 percent reporting staff increases in 2006. In most training organizations (67 percent), the number of training personnel has remained steady over the last year. Only a small number (3 percent) of training groups said they have fewer staff this year than last. Overall, the average staff-to-learner ratio remained the same as last year, at 6.7 training personnel for every 1,000 learners. Total payroll spending for training staff personnel has remained fairly consistent over the last several years. This is due, in part, to the changing composition of training groups. As senior training personnel retire, they are replaced by younger, lower-cost workers. In addition, organizations once heavily staffed with instructors now are hiring higher proportions of content developers and technology specialists to facilitate their online learning strategies, roles that come at a lower cost than a senior trainer or instructor. Over the years, the proportion of training dollars spent on saw overall training budgets and staffing go up, but growth tailed off somewhat, and the number of training organizations reporting increases in their training budgets and reporting staffing increases dropped. Overall, U.S. organizations shelled out $58.5 billion for training this year (including payroll and training budgets), with $16.3 billion earmarked for external learning products and services. These numbers are up 4.8 percent and 3.1 percent, respectively, from last year’s figures of $55.8 billion and $15.8 billion. However, growth is down compared with 2005 to 2006, when training budgets increased 7 percent, compared with 6 percent from 2006 to 2007. Approximately half (54 percent) of all training organizations reported increases in their training budgets this year versus 63 percent in 2006. With the increase in e-learning, organizations are spending a greater proportion of their training budgets on learning technologies. They also are © Copyright The WellSpring Institute All Rights Reserved 9 Confidential MARKET ANALYSIS spending more on outside services. With the high numbers of external vendors and consultants available today, training groups are outsourcing more functions and are utilizing their internal teams for more strategic, value added activities. Top Priorities Training organizations have a variety of program areas competing for funding. This year, the top areas for funding include management training and profession- or industry-specific training. Each of these areas receives 15 percent of training dollars. Profession- or industry-specific training includes programs in areas such as accounting, engineering, or the telecommunications market. This training can be provided internally or through outside conferences, seminars, or classes. As most skilled workers need continual training in their specific profession or industry, a large amount of money is spent in this area. Management and supervisory training receives a great deal of funding due, in part, to the aging of the workforce. With large numbers of retirements looming, companies are focused on succession planning. The combined leadership training and development category, which includes both management/supervisory training and executive development, captures 21 percent of training dollars, the single largest category. This underscores the critical nature of this program area, as organizations realize they must invest heavily to fuel their leadership pipelines. Mandatory/compliance training and sales training also are among the top areas for funding. Each of these program areas receives 13 percent of training dollars. Meeting compliance requirements is a critical issue in regulated industries such as the financial services and health-care sectors. Other types of mandatory training, such as operational safety, are important in the manufacturing sectors. Corporate-wide tracking and reporting on these programs can be problematic, as many companies struggle with pulling the requisite data from their internal learning systems. Many companies are investing more in online learning to facilitate the delivery, tracking, and reporting of these programs. Sales training is of critical importance to most companies. The rapid pace of new products and features necessitates continuous updating of the sales force. And these programs can be expensive to deliver, as they generally entail a large amount of face-to-face training and involve learners from all over the globe. Many companies now are using online training to deliver parts of their sales training, and some are experimenting with new methods, such as podcasting, to efficiently deliver these programs. © Copyright The WellSpring Institute All Rights Reserved 10 Confidential MARKET ANALYSIS Spending allocations by employee group have remained fairly constant over the last few years. Sixty-four percent of the funding goes toward training employees (exempt and nonexempt). Managers receive 26 percent of the resources. And although executives represent a tiny fraction of the overall workforce, they receive 10 percent of training dollars. This again illustrates that organizations are willing to spend an extraordinarily high proportion of their budgets on training their current and next generation of leaders. These programs typically are conducted in a classroom or face-to-face setting with outside experts to facilitate the sessions, making them costly to deliver. E-Learning Acceleration Delivery strategies continue to evolve as online training becomes a mainstream delivery vehicle. Instructor-led classroom training remains the dominant delivery method, used for 65 percent of all formal training hours consumed by learners. This number has dropped considerably over the last several years, but has remained fairly steady from 2006-’07. The use of selfstudy e-learning continues to grow, now accounting for 20 percent of student hours, up from last year’s figure of 15 percent. Live virtual classroom training accounts for another 10 percent of student hours. Many of these virtual programs are recorded and available for playback, contributing to the growth of self-study online learning. When taken together, self-study e-learning and virtual classroom training account for 30 percent of formal training hours consumed by learners. Use of other methods for formal training—such as videos and paper based workbooks— has declined slightly since last year. As online training becomes feasible for more organizations, these methods gradually are being phased out. In general, large organizations make greater use of online methods, as they are more likely to have the budget and technology necessary to accommodate online training. Among companies with more than 10,000 employees, 25 percent of formal training is online self-study, and another 12 percent is delivered by virtual classroom. These proportions have remained the same over the last year. The use of online training jumped significantly among small companies. Last year’s study found that self-study e-learning accounted for 14 percent of formal training delivered in small organizations (100 to 999 employees). This year, the number shot to 20 percent, demonstrating that more small companies are acquiring the skills and technology to make online training a reality. “We expect e-learning to continue to grow, both in standalone programs and in combination with other modalities,” says Karen O’Leonard, principal analyst for Bersin & Associates and project lead for the study. “The lines are becoming blurred because what used to be pure instructor-led training (ILT) now is typically a blend of classroom-based and online learning.” © Copyright The WellSpring Institute All Rights Reserved 11 Confidential MARKET ANALYSIS Online methods are used most extensively for mandatory or compliance training, in which 28 percent of training is conducted “mostly or completely” online. Because of the critical nature of these programs, many firms are turning to online delivery to make them easier to deploy, measure, and report. Not surprisingly, online training also is used widely for training on desktop applications and IT/systems training, where the nature of the content makes online delivery a natural choice. Online training is used more sparingly in the areas of interpersonal (“soft”) skills, executive development, customer service, and sales training, where classroom or face-to-face training still dominates. When online methods are used in these areas, it is primarily as prerequisite or supplemental material to live, inperson training. Maximum Impact This year, the primary focus among training organizations is on increasing the effectiveness of their programs. Just less than half (44 percent) of organizations report this as a No. 1 or No. 2 training priority. The importance of training effectiveness has ratcheted up significantly in the last year, as organizations look for ways to affect the transfer of learning and ultimately the bottom line. Measuring the impact of training programs goes hand-in-hand with increasing effectiveness, and was mentioned by 28 percent of companies as a top priority. This number is consistent with last year, as despite the large number of books, seminars, and articles written about training measurement, most organizations continue to struggle with the process. Although there has been an intense focus on measuring the business impact of training, most organizations measure tactical aspects such as completions and volumes— things that are relatively easy to measure, but aren’t very valuable. The current hype over measurement will continue in the short term as organizations define their measurement plans (i.e., what to measure and when). Ultimately, most companies will choose a few programs for measuring business impact, those that are worthy of the time and resources required for this effort. Reducing costs/improving efficiencies is also near the top of the list, cited by 29 percent of training organizations as one of the top two priorities this year. This number is roughly equivalent to last year, and underscores the fact that, as primarily cost centers, training organizations must remain constantly vigilant over expenditures. One area that has come to the forefront this year is integration with performance and competency management initiatives. Part of the reason is that, driven by the shortage of talent, organizations are focusing more closely than ever on career development programs. These talent-driven learning initiatives are multi-year, multi-class programs that require integration of learning activities © Copyright The WellSpring Institute All Rights Reserved 12 Confidential MARKET ANALYSIS with competencies and job families. As such, organizations increasingly are asking their suppliers to link these applications together, and many vendors are rushing to design and implement their performance/learning management strategies. Ultimately, many companies would like to integrate all of their performance, talent, and learning activities. This has created a new category of HR applications we call “talent management.” In addition to learning, performance, and competencies, “talent management” includes other HR activities such as recruiting and succession planning. Although just 12 percent of organizations today view this as a top priority, we expect this area to grow in importance over the next few years. The two top priority areas from last year have fallen in importance this year. Faster deployment was the second highest priority in 2006, but this year is near the bottom of the list. This could be due to the widespread adoption of rapid e-learning tools, which have satisfied many companies’ need for getting out programs quicker. And the top priority last year—learning technology and infrastructure—was cited by only 24 percent of companies as a top consideration this year. Now that most organizations have technology in place, they are focused on making the greatest use of it. More Midmarket LMS’s Today’s learning organizations have a plethora of tools and technologies at their disposal. According to the research, the percentage of companies using most learning tools has not changed significantly over the last year. Nearly 40 percent of organizations are using a learning management system (LMS); more than half are using a virtual classroom tool; and between 20 and 30 percent are using application simulation and rapid e-learning tools. Among large companies, these numbers nearly double. Within the LMS market, the percentage of small and large companies using an LMS has not changed significantly. However, the mid-market segment (1,000 to 9,999 employees), which has been heavily courted by LMS vendors, has seen a significant jump in usage of learning management systems over the last year. This has been the fastest growing segment of the LMS market, and nearly every large vendor has introduced an offering specifically targeted toward mid-market buyers. (For more information on the LMS market and vendors, see “LMS 2008” at http://store.bersinassociates.com/lms.html. For many large enterprises, the primary challenge is supporting and integrating their technologies. Among those using an LMS, nearly two-thirds now have a single, company-wide LMS. Just two years ago, this figure was 55 percent, underscoring the consolidation that is happening within corporate infrastructures. One-quarter of large companies said they have consolidated or reduced the number of learning management systems in the last 12 months. This © Copyright The WellSpring Institute All Rights Reserved 13 Confidential MARKET ANALYSIS consolidation should continue as organizations strive to eliminate redundancies and streamline their processes and systems. Approximately one-quarter of large enterprises still have multiple LMS’s running internally. New Technologies and Approaches Training groups must continually rethink how they develop and deliver learning programs. Learning on-demand and collaborative learning methods are emerging categories that are poised to revolutionize how learning is conducted in the enterprise. Learning on-demand implies that information and digital learning assets are made immediately available—just as the learner needs them. These solutions today include online support materials, agents, and electronic performance support systems (EPS'S). Organizations are recognizing that monolithic courseware that takes weeks to deliver is not the answer for many learning challenges. Learners need access to chunks of information while they are working or while they are on the road. Learning assets need to be modularized into short segments for easy access and consumption. Podcasting is one example of how organizations are providing small segments of information to learners that can be accessed from almost anywhere. Usage of podcasting for training purposes grew from 5 percent in 2006 to 15 percent this year, and organizations are finding that podcasts are used by more than just mobile professionals. Many learners like to listen to podcasts while at their desks or at home, not only while they are on the road. Another strategy still in its infancy is the use of learning portals. These portals offer a single place for learning resources, including access to online learning, documents, blogs, discussion groups, and even people. Although the notion of a single place for learning sounds ideal, companies are finding it takes a great deal of time and effort to create, maintain, and manage the sites. These factors are contributing to the slow adoption of learning portals. Collaborative learning is a fairly new approach designed for the new generation of workers who are accustomed to social networks and cooperative learning. One example is communities of practice, used by 11 percent of training organizations today. Blogs and wikis are other examples of collaborative learning, and are mainly in the experimental stages from a learning standpoint. All of these tools promote a group learning format, underscoring the idea that “many minds are better than one.” “With the younger generation of employees, organizations need to rethink how they deliver learning,” explains © Copyright The WellSpring Institute All Rights Reserved 14 Confidential MARKET ANALYSIS O’Leonard. “Today the most important trends are toward audio, mobile, and collaborative environments.” Out-Tasking Grows Training organizations typically turn to outside providers when they lack internal expertise or bandwidth. As they become more strategically focused, they tend to outsource more tactical and specialized functions. This has driven the growth in outsourcing (or “outtasking”) in two main areas: instruction and custom content development. Most organizations turn to outside professionals for some of their facilitation and teaching needs. Today, 53 percent of organizations report using external instructors, up from 44 percent last year. Companies may choose to bring in outside experts, particularly in the areas of management and leadership training and some areas of technical training. Use of outside suppliers for custom content development likewise has increased, from 29 percent of organizations using outside developers in 2006 to 43 percent this year. This, too, traditionally has been a popular area for outsourcing, as training groups are under increased pressure to quickly meet learning gaps and don’t have the expertise, bandwidth, or desire to do it themselves. Content development often can be expensive, however, prompting some organizations to turn to offshore providers for their custom content. This year, 4 percent of organizations reported using offshore custom content developers, down from 11 percent last year. Many customers have experienced problems with offshore firms, primarily around communications and project management. To alleviate these challenges, offshore companies have set up U.S.- based sites or partnerships (and many U.S.-based vendors, in turn, have established partnerships or offices abroad), allowing customers to work with local personnel while still enjoying some of the cost savings of overseas labor. In the areas of learner support and LMS hosting, use of external suppliers has remained steady over the last year. One out of five organizations outsources learner support/help desk activities. And slightly more (28 percent) host their LMS with a third party. Indeed, the SaaS (software as a service) model has changed the LMS market considerably with lower-cost, easy-to-use products. One area of outsourcing that has declined over the last year is LMS administration, which includes managing learner registrations and uploading data. Today, 18 percent of organizations are outsourcing this function, down from 24 percent last year. Most training organizations now have sufficient volumes of online training programs to warrant hiring a dedicated internal resource to handle LMS administrative tasks, rather than outsource to a third party. © Copyright The WellSpring Institute All Rights Reserved 15 Confidential MARKET ANALYSIS “Today, there are large numbers of third-party content developers and instructors/facilitators,” says O’Leonard. “We expect that outsourcing will remain high in these areas, as training groups turn to outside specialists for many of their training needs.” T Construction Industry Economic Outlook If this recession plays out like previous ones, there still are significant declines ahead. In the early 1980s recession, nonresidential construction activity fell by almost 28 percent before growth resumed, a figure exceeded in the early 1990s recession (31 percent) and almost matched in the early 2000s downturn (25 percent). Kermit Baker, Chief Economist, AIA Consensus Construction Forecast. 1/16/09. Last quarter the outlook for construction as “the good, the bad and the ugly.” Now that 2009 is past, the outlook is just plain ugly. Nonresidential construction will plummet and begin at least three years of contraction. The bottom in terms of both dollar volume and percent decline will not be until 2010. Residential construction is not expected to recover until 2011. FMI’s Construction Outlook: First Quarter 2009 Report. 3/10/09. “2010 is going to be a tough year for the North American construction industry.” “While no one has perfect knowledge about the future and there are certainly serious economic issues yet to be faced, some indicators hint that our survey may have been taken at or near an economic low point. It’s possible that a slow recovery is underway or is about to begin. Let’s hope so. A government stimulus package that includes an infrastructure revitalization component could go a long way to helping this industry.” Ron Riecks, General Manager, Wells Fargo While the outlook in the construction looks bleak, it creates a real benefit for us. In today's construction market you are able to get a lot more value for less. Building costs are still way down, but edging up a bit from last year. High quality contractors have been able to stay afloat while less focused contractor have not, allowing for a better pool of builders to get our project done right. In addition, real estate costs are back down to where they were about 10 years ago. They are starting to creep up, but not by much. So, on the real estate front, now is a good time to buy as well. Material Costs Building Costs 20-CITY: 1913 = 100 20-CITY: 1913 = 100 MATERIALS CEMENT $/TON STEEL $/CWT LUMBER $/MBF SEPT 2010 INDEX VALUE % CHANGE MONTH % CHANGE YEAR 2703.53 -0.7 +2.8 CEMENT $/TON 102.90 +0.2 +1.5 STEEL $/CWT 45.22 0.0 +3.8 LUMBER $/MBF 396.58 -0.3 -0.4 © Copyright The WellSpring Institute All Rights Reserved MATERIALS 16 SEPT 2010 INDEX VALUE % CHANGE MONTH % CHANGE YEAR 2703.53 -0.7 +2.8 102.90 +0.2 +1.5 45.22 0.0 +3.8 396.58 -0.3 -0.4 Confidential MARKET ANALYSIS Construction Costs 20-CITY: 1913 = 100 MATERIALS CEMENT $/TON STEEL $/CWT LUMBER $/MBF SEPT 2010 INDEX VALUE % CHANGE MONTH % CHANGE YEAR 2703.53 -0.7 +2.8 102.90 +0.2 +1.5 45.22 0.0 +3.8 396.58 -0.3 -0.4 Restaurant Industry WASHINGTON, Jan. 20 /PRNewswire-US Newswire/ -- With the economic downturn easing, the restaurant industry is expected to show gradual improvement in 2010, according to the National Restaurant Association's Restaurant Industry Forecast. Industry sales are projected to reach $580 billion in 2010, a 2.5 percent increase in current dollars over 2009 sales. When adjusted for inflation, 2010 sales will be essentially flat, which is an improvement over the 1.2 percent and 2.9 percent negative growth in real sales that the industry experienced in 2008 and 2009, respectively. Restaurants will continue to be strong contributors to the recovery of the nation's economy, with industry sales representing 4 percent of the U.S. gross domestic product and employees comprising 9 percent of the U.S. workforce. "The past two years have been a very challenging time for our industry. While there are still substantial challenges ahead, we are encouraged that the outlook is improving," said Dawn Sweeney, President and CEO of the National Restaurant Association. "With a total economic impact of more than $1.5 trillion, the restaurant industry is a strong player in the economic recovery. Restaurants are the cornerstone of communities across this nation and we are a key player in propelling job retention and creation across the United States." Industry Segment Growth Continuing the trend from last year, the quick service restaurant segment is expected to fare slightly better than the full service segment as diners focus on value and specials. Quick service restaurants are projected to post sales of $164.8 billion in 2010, a gain of 3.0 percent over 2009. Sales at full service restaurants are projected to reach $184.2 billion in 2010, an increase of 1.2 percent in current dollars over 2009. The eating-and-drinking place segment expected to show the strongest growth in 2010 is social caterers, whose sales are expected to increase by 4.5 percent. Among all commercial industry segments, the strongest growth is © Copyright The WellSpring Institute All Rights Reserved 17 Confidential MARKET ANALYSIS expected in retail-host restaurants (including those located in gas/service stations and drug and grocery stores) with a 4.9 percent sales increase. Workforce Outlook For only the second time in nearly half a century, the restaurant industry lost jobs in 2009. Despite the losses, the industry still outperformed the national economy, and job growth is expected to resume in 2010. The restaurant-andfoodservice industry remains one of the nation's largest private sector employers with its 12.7 million employees. By 2020, the industry is projected to employ 14 million people - an increase of 1.3 million jobs. State Sales Growth Colorado is expected to post the strongest sales growth in 2010 at 2.9 percent (2010 industry sales of $8.7 billion), followed by Idaho at 2.8 percent ($1.6 billion). Forecasted to post growth of 2.7 percent: New Jersey ($12.8 billion), New York ($29.0 billion), North Carolina ($12.8 billion) and Texas ($34.8 billion). The top states by restaurant sales volume in 2009 will be California at $58.0 billion (2.3 percent growth); Texas at $34.8 billion (2.7 percent growth); New York at $29.0 billion (2.7 percent growth); Florida at $27.6 billion (2.4 percent growth); and Illinois at $18.7 billion (1.9 percent growth). Senior Housing Industry The Senior Housing Industry provides a remarkable opportunistic period of time with the baby boomer demographics and during this time period that is the largest market corrections that the United States has ever seen. Senior Housing has offered higher stability in earnings than all other real estate asset classes during this period of economic turbulence as reported by industry leaders. A Unique Industry Within Real Estate The underwriting, investment and ownership of seniors housing has some commonality with core real estate. Importantly though, seniors housing has unique attributes to real estate due to demand factors that are relatively independent of typical economic indicators. As a result, the seniors housing sector has performed better than core real estate types in recent years reporting the lowest yearover-year drop in occupancy. It is also the only property type to post year-over-year © Copyright The WellSpring Institute All Rights Reserved Number of people 65 & 85 and older 18 Confidential MARKET ANALYSIS rental rate growth. Chart Source: U.S. Census Bureau; release date: August 14, 2008. Note: “A” indicates actuals based on estimate from 2000 Census and “F” indicates forecasted population estimates from 2007 actuals. The following section provides additional detail on the performance of various property types as compared to seniors housing. Bucking the downward trend seen in core sectors, the seniors housing sector is expected to perform well both in the short and long term due to a confluence of events, namely: limited new supply of seniors housing product, exponential growth in the 75-plus age group over the next decade, pent-up demand created by delayed consumer decisions due to current economy and greater acceptance by the general population of seniors housing as a viable retirement option. As said, seniors housing fits well within both consumer non-discretionary investments and also within growth-oriented investments. National Health Expectations National Health Expectations per Capita Chart Source: Centers for Medicare & Medicaid Services; released in January 2010. Chart Source: Centers for Medicare & Medicaid Services; released in January 2010. Healthcare Demand Will Increase In Line With Demographic Increases The 75-plus age category is expected to increase by 19.9% from 2010 to (1) 2020, an increase of approximately 3.7 million Seniors! In addition to the dramatic increase in the number of Seniors (defined as age 65 plus) creating demand for seniors housing, societal factors such as a greater awareness and acceptance of various retirement options increases the percentage of Seniors that utilize seniors housing, creating an exponential increase in demand. © Copyright The WellSpring Institute All Rights Reserved 19 Confidential MARKET ANALYSIS A Trillion Dollar Industry Annual United States healthcare services expenditures are projected to be (2) over $2.6 trillion for the current year. Seniors Housing Versus Other Asset Classes Seniors housing/healthcare investments have anticipated long term stability of earnings and the systematic risks generally appear favorable over the long term. Demand for seniors housing (and thus occupancy) is less impacted by economic forces because it is offset by the dramatic increase in Seniors that will occur over the next several decades as the “Baby Boomers” age. As illustrated in the chart below, seniors housing all property occupancy declined by (4) 1.4% between the fourth quarter of 2008 and the fourth quarter of 2009, which is relatively mild compared to the 9.5% decline in the hotel (3) sector. Comparison of Occupancy and Rental Rate Growth Seniors Housing versus Other Commercial Property Types* Percent Change I Occupancy Percent Change in Rent Importantly, over the same period, seniors housing properties actually still achieved moderate rental rate growth of (4) 1.4% while the other real estate property sectors experienced decreases in rental (3) rates. Many operators/owners have sustained and even increased their communities’ Net Operating Income levels in spite of a drop in census. Thus, seniors housing has offered a higher stability in earnings than other real estate property types during this economic recession. *Chart Sources and dates of year-to-year comparisons: Seniors Housing source is NIC MAP Data & Analysis Service 4Q09; Retail, Office and Multifamily source is Mortgage Bankers Association Quarterly Data Book, Property and © Copyright The WellSpring Institute All Rights Reserved 20 Confidential MARKET ANALYSIS Portfolio Research 3Q09; Hotel source is Hotel News Now as of October 2009 YTD. Liquidity still exists in the sector enhanced by the availability of attractively priced agency debt from Fannie Mae, Freddie Mac and HUD. Agency debt is currently priced 150 to 200 basis points lower than conventional debt and has reportedly become more aggressive due to lack of product. With the availability of this lower priced debt, seniors housing may offer comparatively higher equity cash yields than other real estate property types. This being said, the availability of debt, particularly for non-performing properties, will continue to be the biggest challenge Seniors housing has one of the lowest default rates yet higher interest rate spreads, thus incentivizing conventional lenders to re-enter the sector and new debt sources to become attracted to the sector. Loan Performance Loans Placed Loans Performing Seniors Housing Returns The third quarter 2009 Property Index Performance Report published by the National Council of Real Estate Fiduciaries (NCREIF) shows that reporting seniors housing properties have outperformed the broader National Property Index (NPI) since at least 2003. More specifically, as of the third quarter of 2009, © Copyright The WellSpring Institute All Rights Reserved 21 Confidential MARKET ANALYSIS the seniors housing component had produced a cumulative return that is 2.3 times its mid-2003 value. This compares with a cumulative gain of 1.4 for the apartment index and 1.5 for the entire index. This performance is the result of greater gains in both the appreciation component (1.4 versus 1.0 and 1.1, respectively) and the income component (1.6 versus 1.4 and 1.5, respectively). The charts below illustrate the returns achieved by the Seniors Housing (8) Sector as compared to the apartment component and the overall index. Cumulative NCREIF Total Returns Cumulative NCREIF Appreciation Returns NPI vs. Apartments vs. Seniors Housing Cumulative NCREIF Income Returns NPI vs. Apartments vs. Seniors Housing Total NPI Apartment Senior Living Stabilized Chart is replication of chart provided in article titled “Senior Housing Returns Outperform the NPI” included in the 2009 Property Index Performance Report published by NCREIF. Specific chart source: NCREIF Query Tool. 2Q03=1000. 4Q05 Senior Living appreciation return has been set to zero (was 17.7%), as it reflects atypical results. © Copyright The WellSpring Institute All Rights Reserved 22 Confidential © Copyright The WellSpring Institute All Rights Reserved MARKET ANALYSIS 23 Confidential MARKET ANALYSIS The onset of the credit crisis has caused a severe contraction in construction lending for seniors housing projects. The seniors housing pipeline (construction versus inventory) was as high as 3.8% as recently as the first quarter of 2008. As of the fourth quarter 2009, construction versus inventory was (4) 1.8%. New Construction Started by Quarter Seniors Housing Inventory Growth (Top 100 MSAs) (Top 100 MSAs) Major Independent Living Majority Assisted Living Major Nursing Care © Copyright The WellSpring Institute All Rights Reserved 24 Confidential Seniors Housing Providers (Independent Living “IL”/ Assisted Living “AL”) MARKET ANALYSIS 1 2 3 4 5 6 7 8 9 10 Brookdale Senior Living, Inc. Sunrise Senior Living, Inc. Holiday Retirement Professional Community Management Emeritus Senior Living Life Care Services, LLC Erickson Retirement Communities, LLC Five Star Quality Care, Inc. Atria Senior Living Group Horizon Bay Retirement Living Public -->BKD Public -->SRZ Private Private Public -->ESC Private Private Public -->FVE Private Private 51,888 40,160 36,706 31,215 27,234 22,746 20,985 17,846 14,915 13,054 This is a highly fragmented (“cottage industry”) market. The top 50 seniors housing providers control 38.3% of the IL/ AL total (5) supply. The average size of the top 50 providers is only 9,121 units per (5) provider compared to an average of 27,675 units for the top ten providers. Only six providers in the top 50 are publicly traded companies. 547 371 313 30 309 80 20 161 129 72 Nursing Care Providers Also a highly fragmented (“cottage industry”) market. The top 50 1 HCR ManorCare Private 38,140 nursing care 2 Golden Living Private 33,351 3 Life Care Centers of America Private 29,367 providers control 4 Kindred Healthcare Public -->KIND 28,525 26.4% of the total 5 Genesis Healthcare Corp. Private 27,947 nursing care supply. 6 Sun HealthCare Group Public -->SUNH 23,345 (6) Public -->(OTC: The average size 7 Extendicare Real Estate Investment Trust 18,157 EXETF.PK) of the top 50 The Evangelical Lutheran Good Samaritan 8 Non Profit 13,409 Society providers is only 9 National HealthCare Corp. Public -->NHC 9,772 7,451 beds per 10 Skilled Healthcare Group Public -->SKH 9,373 provider compared Source: Provider Magazine; June 2009 issue. Rankings are based on 12/31/08 bed counts. to 23,139 beds for (6) the top ten providers. Only seven providers in the top 50 are publicly traded companies. © Copyright The WellSpring Institute All Rights Reserved 25 277 324 223 228 227 207 175 185 76 75 Confidential MARKET ANALYSIS SENIORS HOUSING GRAPPLES WITH IMPACT OF HEALTHCARE REFORM The Community Living Assistance Services and Supports (CLASS) Act, part of the federal government’s sweeping healthcare reform legislation, will likely have a significant impact on the seniors housing sector. This portion of the bill will set up government-sponsored, long-term care insurance, which could revalue skilled nursing communities across the country over the next several years. Users of government-sponsored healthcare will be automatically enrolled in the program, though the high cost will likely drive many to opt out shortly after implementation. Consequently, premiums will fall short of benefits paid out after the five-year vesting period, leading to further stress on Medicaid and reduced payouts under the current system. Since most of the value in skilled nursing facilities relates to the profitability of the business and not its physical site, any decrease in Medicaid payouts will lower the value of the business. This trend will wedge a divide between new, state-of-the-art facilities that cater to Medicare and private-pay users and older communities that depend on Medicaid supplements. While the CLASS Act will likely impair operations at some skilled nursing properties, assisted living units may benefit from the legislation. Projected reimbursements will be at least $50 per day, helping pay for the less expensive living arrangement. Anyone enrolled, vested and needing support for at least two activities of daily living can opt for home healthcare or assisted living properties, rather than skilled nursing beds. With approximately half of the cost of assisted living covered, more seniors will stay in these facilities longer. The resulting evolution in the census at skilled nursing facilities will cut further into margins as residents with more challenges move into beds later and the cost of care escalates. Over the next 10 years, these changes will encourage developers to build CCRCs with larger assisted living components to stay solvent. A severe shortage of skilled nursing facilities will emerge as margins fall, requiring additional government intervention to spur development and supplement the high cost of care. © Copyright The WellSpring Institute All Rights Reserved 26 Confidential MARKET ANALYSIS SENIORS HOUSING MARKET HIGHLIGHTS 1 Occupancy in the IL segment is expected to fall to 87.5 percent this year, down 70 basis points from year-end 2009. Average rents are forecast to finish 2010 at $2,668 per month, an annual climb of 0.9 percent. Assisted Living (AL): The AL sector is projected to post a 50 basis point occupancy decrease to 87.9 percent in 2010, while average rents will reach $3,565 per month, a rise of 1.2 percent from last year. Skilled Nursing (SN): Positive absorption in the SN arena will push occupancy to 89.8 percent this year, 100 basis points higher than at the close of 2009. Average perdiem revenue will end 2010 at $266 per occupied bed, an annual gain of 3.5 percent. Continuing Care Retirement Communities (CCRCs): Occupancy in CCRCs is forecast to slide 60 basis points to 89.5 percent in 2010. The Opportunity and Sustainability – The Vision The Senior Housing Industry is now in a period of restructuring and consolidation. The Senior Housing Industry is still strong in spite of the rest of the economy and the demographics show it is going to get much stronger. Senior Housing has offered higher stability in earnings than all other real estate asset classes during this period of economic turbulence as reported by industry leaders. The United States economy is in the largest market correction that the United States has ever seen. Investors have been hoarding money; concerned about the unstable markets. Yet, they are looking for and need a good haven to invest in and get a great return. The Senior Housing Industry provides a remarkable and opportunistic period of time © Copyright The WellSpring Institute All Rights Reserved 27 Confidential MARKET ANALYSIS The Senior Housing market (Independent Living, Assisted Living, and Memory Care) currently presents an excellent and immediate opportunity to develop facilities at opportune pricing. The market sector is highly fragmented with numerous local and regional owners operating an estimated $194 billion in property value. This is made up of an estimated 16,000 properties with 1.9 million units currently operating at approximately 88% occupancy. The six public companies comprise 8.7% of the industry capacity. Market demand is expected to grow by at least 20% through 2020, fueled by the aging population, working adult children, and increasing acceptance of Senior Housing as an essential part of the aging process. Only 5.8% of Senior citizens (65+) currently live in Senior Housing properties in the nation’s 31 largest MSA’s. Penetration rates are expected to increase by 7% per annum. A 7% increase per annum nationally in the number of Seniors is more than the total of the entire existing supply of professionally managed Senior Housing beds/units. Fastest growing age cohort >75, and 50% people over the age of 85 have Alzheimer's. This age cohort is expected to increase from 18.5 million people to 22.5 million by 2020 (21.7% increase). Rapid expansion of the sector over the last nine years has been achieved by significant new construction (total of 297,900 units); this has all but stopped. The sector fundamentals remain solid, and demand will outstrip supply in the coming years, especially where the need-driven demand continues to increase. Historically, the Senior Housing Industry has seen several cycles of growth fueled by inexpensive capital, lax underwriting standards and over construction. The last downturn was 1998-2000. Between 2002 and August 2007 the industry experienced substantial growth due to an unprecedented amount of equity capital and debt © Copyright The WellSpring Institute All Rights Reserved 28 Confidential MARKET ANALYSIS financing. As a result, cap rates plunged to historical lows of 6-7% and valuations were at an all time high. However, this all changed with the collapse of the credit and housing markets. Since then, occupancy has weakened due to Senior’s inability to sell their homes and their significant real and/or perceived loss of invested wealth. While this has had minimal impact of less than 2% on needdriven Assisted Living, Memory Care and Skilled Nursing, it has had substantial impact on Independent Living sector. The long term industry outlook is positive. With the lack of new construction, when the housing market begins to recover, demand will quickly outweigh supply. The average price per unit more than doubled from 2003 to 2007 ($79,800 to $164,500). Cap rates have cycled: 2000 @ 11.2%; 2007/2008 @ 6.5%-8.0%; 2009 @ 9.5% -11.5%. Significant difference in prices between stabilized and non-stabilized properties: o 2005: 41.4% higher. o 2006: 65.8% higher. o 2007: 62% higher. o On average, $55,700 per unit difference over all 3 years. o $66,000 difference in 2007. Development is a solid position to be established in Assisted Living and Memory Care for the pent up demand and the next wave of Baby Boomers. A significant opportunity exists to enhance the reputation of facilities to provide a higher level of care to a attract residents where the move-in decision is need-driven – high acuity Assisted Living and age related memory loss. Workforce Statistics for Our Ranch SBU’s The Ranch Operations - Sector 11--Agriculture, Forestry, Fishing and Hunting © Copyright The WellSpring Institute All Rights Reserved 29 Confidential MARKET ANALYSIS With the exception of our hunting operations, most of the products and services for this SBU are specifically designed to provide resources for internal use by the ranch operations. Hay and oats for the livestock. Vegetables, fruits, berries, herbs, and fish for our restaurants. Using our “Activity Based Accounting System”, these services and products will be sold internally to the Ranch operated SBU’s and must demonstrate at least a breakeven position or they will be outsourced. Some of these products, like our fruits and berries may be canned or processed for sale and distribution in regional markets. WORKFORCE STATISTICS This section provides information relating to employment and unemployment in agriculture, forestry, fishing and hunting. While most data are obtained from employer or establishment surveys, information on industry unemployment comes from a national survey of households. The following tables present an overview of the industry including the unemployment rate of those previously employed in the industry, mass layoffs, data for occupations common to the industry, and projections of occupational employment change. Unemployment and Layoffs Back May Jun. Jul. Aug. data 2009 2009 2009 2009 Data series Unemployment Unemployment rate Layoffs Mass layoff events Initial claimants for unemployment benefits 10.0% 12.3% 12.1% 13.1% 27 50 93 22 2,066 3,485 7,519 1,727 (Source: Current Population Survey, Mass Layoff Statistics) Employment by Occupation Data series Agricultural equipment operators Farm workers and laborers, crop, nursery, and greenhouse First-line supervisors/managers of farming, fishing, and forestry workers Logging equipment operators Truck drivers, heavy and tractor-trailer (Source: Occupational Employment Statistics) © Copyright The WellSpring Institute All Rights Reserved 30 Employment, 2008 15,040 186,030 10,900 22,020 12,080 Confidential MARKET ANALYSIS Projections For projected (future) employment estimates, see the National Employment Matrix, which includes employment estimates by industry and occupation for agriculture, forestry, fishing and hunting. (Source: Office of Occupational Statistics and Employment Projections) EARNINGS Recent hourly and annual earnings for occupations commonly found in agriculture, forestry, fishing and hunting. Earnings by Occupation Data series Agricultural equipment operators Farm workers and laborers, crop, nursery, and greenhouse First-line supervisors/managers of farming, fishing, and forestry workers Logging equipment operators Truck drivers, heavy and tractor-trailer Wages, 2008 Hourly Annual Median Mean Median Mean $10.08 $11.15 $20,960 $23,200 $8.51 $8.94 $17,700 $18,600 $17.33 $19.03 $36,050 $39,570 $15.38 $15.87 $32,000 $33,000 $14.72 $15.41 $30,620 $32,050 (Source: Occupational Employment Statistics) WORK-RELATED FATALITIES, INJURIES, AND ILLNESSES This section presents data for the industry on the number of workplace fatalities and the rates of workplace injuries and illnesses per 100 full-time workers in agriculture, forestry, fishing and hunting. An injury or illness is considered to be work-related if an event or exposure in the work environment either caused or contributed to the resulting condition or significantly aggravated a pre-existing condition. Data series Fatalities Number of fatalities Rate of injury and illness cases per 100 full-time workers Total recordable cases Cases involving days away from work, job restriction, or transfer Cases involving days away from work Cases involving days of job transfer or restriction Footnotes © Copyright The WellSpring Institute All Rights Reserved 31 2005 2006 2007 2008 719 666 589 (P) 661 6.1 6.0 5.4 3.3 3.2 2.8 2.1 1.9 1.8 1.2 1.2 1.0 Confidential MARKET ANALYSIS Data series 2005 2006 2007 2008 (P) Preliminary (Source: Injuries, Illnesses, and Fatalities) PRICES This section provides industry-specific pricing information. The import price index reflects the percentage change in prices paid to foreign producers for their goods and services within the U.S., while the export price index measures the percentage change in prices received by U.S. producers for goods and services sold outside the U.S. Back May Jun. Jul. Aug. data 2009 2009 2009 2009 134.6 (R) 133.3 (R) 129.0 133.0 Import index -2.0% (R) -1.0% (R) -3.2% (R) 3.1% Percent change from previous month 144.5 (R) 151.7 (R) 139.9 140.4 Export index 4.4% (R) 5.0% (R) -7.8% (R) 0.4% Percent change from previous month Footnotes (R) Revised Data series (Source: International Price Program) WORKPLACE TRENDS This section presents data on the number of establishments in agriculture, forestry, fishing and hunting. Establishments Data series Back 1st quarter 2nd quarter 3rd quarter 4th quarter data 2008 2008 2008 2008 Number of establishments Private industry Local government State government Federal government Footnotes (P) Preliminary (P) 95,154 (P) 66 (P) 143 (P) 82 (P) 95,112 (P) 67 (P) 143 (P) 82 (P) 95,600 (P) 67 (P) 144 (P) 82 (P) 95,832 (P) 67 (P) 144 (P) 82 (Source: Quarterly Census of Employment and Wage The Country Store and Western Town Mall - Sector 44-45--Retail Trade WORKFORCE STATISTICS © Copyright The WellSpring Institute All Rights Reserved 32 Confidential MARKET ANALYSIS This section provides information relating to employment and unemployment in retail trade. While most data are obtained from employer or establishment surveys, information on industry unemployment comes from a national survey of households. The following tables present an overview of the industry including the number of jobs, the unemployment rate of those previously employed in the industry, job openings and labor turnover, union membership and representation, gross job gains and losses, mass layoffs, data for occupations common to the industry, and projections of occupational employment change. Employment, Unemployment, Layoffs, and Openings, Hires, and Separations Data series Back May data 2009 Employment (in thousands) Employment, all employees (seasonally adjusted) Employment, nonsupervisory workers (seasonally adjusted) Unemployment Unemployment rate Layoffs Mass layoff events Initial claimants for unemployment benefits Job openings, hires, and separations (in thousands) Job openings Hires Separations Footnotes (P) Preliminary Jun. 2009 Jul. 2009 Aug. 2009 14,811.6 14,791.5 (P) 14,748.3 (P) 14,738.7 12,728.1 12,703.5 (P) 12,660.3 (P) 12,643.2 9.5% 9.6% 9.4% 9.2% 202 155 161 111 18,360 15,318 17,388 320 606 567 293 537 486 10,173 (P) 248 (P) 551 (P) 584 (Source: Current Employment Statistics, Current Population Survey, Mass Layoff Statistics, Job Openings and Labor Turnover Survey) Union Membership and Representation Back 2005 2006 2007 2008 data Data series Union membership and representation Members of unions (percent of wage and salary workers) Represented by unions (percent of wage and salary workers) © Copyright The WellSpring Institute All Rights Reserved 33 5.2% 5.0% 5.3% 5.2% 5.8% 5.3% 5.7% 5.9% Confidential MARKET ANALYSIS (Source: Current Population Survey) Dynamic Changes in Employment Data series 1st Back quarter data 2008 Dynamic changes in employment (in thousands) Gross job gains Gross job losses 954 979 2nd quarter 2008 939 1,080 3rd quarter 2008 892 1,062 4th quarter 2008 835 1,181 (Source: Business Employment Dynamics) Extended Mass Layoffs Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 92 202 (P) 382 (P) 163 Extended mass layoff events 20,896 61,492 (P) 90,379 (P) 31,653 Separations 22,712 54,896 (P) 82,415 (P) 32,347 Initial claimants Footnotes (P) Preliminary Data series (Source: Mass Layoff Statistics) Employment by Occupation Employment, 2008 2,956,140 Cashiers 247,350 Customer service representatives First-line supervisors/managers of retail sales workers 1,054,190 4,081,720 Retail salespersons 1,278,960 Stock clerks and order fillers Data series (Source: Occupational Employment Statistics) PROJECTIONS For projected (future) employment estimates, see the National Employment Matrix, which includes employment estimates by industry and occupation for retail trade. (Source: Office of Occupational Statistics and Employment Projections) EARNINGS AND HOURS © Copyright The WellSpring Institute All Rights Reserved 34 Confidential MARKET ANALYSIS This section presents data on employee earnings and weekly hours. The latest industry averages of hourly earnings and weekly hours for production or nonsupervisory employees, as well as weekly earnings by union membership status, are shown. In addition, recent hourly and annual earnings are shown for occupations commonly found in retail trade. This section also contains information on the average cost of benefits paid by employers, as well as recent rates of change in wages and total compensation. Earnings and Hours of Production Workers Back May Jun. Jul. Aug. data 2009 2009 2009 2009 $12.97 $12.96 (P) $12.96 (P) $13.09 Average hourly earnings 29.9 29.8 (P) 29.8 (P) 29.8 Average weekly hours Footnotes (P) Preliminary Data series (Source: Current Employment Statistics) Union Membership and Representation Data series Back Median weekly earnings data 2005 2006 2007 2008 Union membership and representation Full-time workers Members of unions Represented by unions Nonunion $515 $590 $585 $513 $520 $583 $582 $518 $538 $608 $601 $532 $564 $598 $596 $561 (Source: Current Population Survey) Earnings by Occupation Data series Cashiers Customer service representatives First-line supervisors/managers of retail sales workers Retail salespersons Stock clerks and order fillers (Source: Occupational Employment Statistics) © Copyright The WellSpring Institute All Rights Reserved 35 Wages, 2008 Hourly Annual Median Mean Median Mean $8.52 $9.07 $17,720 $18,870 $11.17 $12.23 $23,240 $25,440 $16.84 $19.02 $35,030 $39,560 $9.80 $9.35 $11.96 $20,380 $24,880 $10.13 $19,440 $21,060 Confidential MARKET ANALYSIS Employer Compensation Costs Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 Data series 12-month percent change Total compensation Wages and salaries 2.9% 2.9% 1.9% 1.9% 1.6% 1.8% 1.1% 1.2% (Source: Compensation Cost Trends) Data series Compensation costs Total compensation Wages and salaries Total benefits Insurance Retirement 2nd quarter 2009 Back Compensation component data Percent of total compensation ($ per hour worked) 16.88 12.72 4.15 1.15 0.35 100.0 75.4 24.6 6.8 2.0 (Source: Compensation Cost Trends) WORK-RELATED FATALITIES, INJURIES, AND ILLNESSES This section presents data for the industry on the number of workplace fatalities and the rates of workplace injuries and illnesses per 100 full-time workers in retail trade. An injury or illness is considered to be work-related if an event or exposure in the work environment either caused or contributed to the resulting condition or significantly aggravated a pre-existing condition. Data series Fatalities Number of fatalities Rate of injury and illness cases per 100 full-time workers Total recordable cases Cases involving days away from work, job restriction, or transfer Cases involving days away from work Cases involving days of job transfer or restriction Footnotes (P) Preliminary (Source: Injuries, Illnesses, and Fatalities) © Copyright The WellSpring Institute All Rights Reserved 36 2005 2006 2007 2008 401 359 348 (P) 290 5.0 4.9 4.8 2.6 2.6 2.5 1.5 1.4 1.4 1.2 1.2 1.2 Confidential MARKET ANALYSIS PRICES This section provides industry-specific pricing information. The producer price index measures the percentage change in prices that domestic producers receive for goods and services. The prices included in the producer price index are from the first commercial transaction. Back data Data series Producer price index Percent change from previous month Footnotes (P) Preliminary May Jun. Jul. Aug. 2009 2009 2009 2009 (P) 107.3 (P) 108.4 (P) 107.8 (P) 107.2 (P) -0.7% (P) 1.0% (P) -0.6% (P) -0.6% (Source: Producer Price Indexes) WORKPLACE TRENDS This section presents data on the number of establishments and the number of establishments experiencing job gains or job losses in retail trade. Also included in this section is information on productivity, presented as the rate of change in output per hour of workers in the industry. Establishments Data series Number of establishments Private industry Local government State government Federal government Establishments with changes in employment (in thousands) With job gains (seasonally adjusted) With job losses (seasonally adjusted) Footnotes (P) Preliminary Back 1st quarter data 2008 2nd quarter 3rd quarter 4th quarter 2008 2008 2008 (P) 1,052,988 (P) 540 (P) 417 (P) 587 (P) 1,053,274 (P) 544 (P) 417 (P) 587 (P) 1,053,234 (P) 1,054,226 (P) 543 (P) 549 (P) 417 (P) 420 (P) 588 (P) 588 264 257 255 248 296 309 301 320 (Source: Business Employment Dynamics, Quarterly Census of Employment and Wages) Productivity Data series Back 2005 data © Copyright The WellSpring Institute All Rights Reserved 37 2006 2007 2008 Confidential MARKET ANALYSIS Back 2005 2006 2007 2008 data 141.298 146.653 150.686 147.994 Labor productivity index, output per hour 2.5 3.8 2.8 -1.8 Percent change from previous year 103.322 102.858 102.418 100.565 Labor index, total labor hours 1.1 -0.4 -0.4 -1.8 Percent change from previous year 145.992 150.845 154.330 148.830 Output index 3.6 3.3 2.3 -3.6 Percent change from previous year 94.236 93.780 94.667 96.934 Unit labor costs index 0.7 -0.5 0.9 2.4 Percent change from previous year Data series (Source: Productivity and Costs) The Sale of Private Homes and Timeshares - Sector 53--Real Estate and Rental and Leasing WORKFORCE STATISTICS This section provides information relating to employment and unemployment in real estate and rental and leasing. While most data are obtained from employer or establishment surveys, information on industry unemployment comes from a national survey of households. The following tables present an overview of the industry including the number of jobs, the unemployment rate of those previously employed in the industry, job openings and labor turnover, union membership and representation, mass layoffs, data for occupations common to the industry, and projections of occupational employment change. Employment, Unemployment, Layoffs, and Openings, Hires, and Separations Data series Employment (in thousands) Employment, all employees (seasonally adjusted) Employment, nonsupervisory workers Unemployment Unemployment rate Layoffs Mass layoff events Initial claimants for unemployment benefits Job openings, hires, and separations (in thousands) Job openings © Copyright The WellSpring Institute All Rights Reserved Back May data 2009 Jun. 2009 Jul. 2009 2,002.7 1,990.6 (P) 1,988.5 Aug. 2009 (P) 1,980.5 1,584.9 1,611.8 (P) 1,624.8 8.2% 6.5% 14 985 20 12 1,590 819 39 31 38 7.1% (P) 43 6.3% 7 404 Confidential MARKET ANALYSIS Data series Hires Separations Back May Jun. Jul. data 2009 2009 2009 72 89 (P) 95 57 59 (P) 96 Aug. 2009 Footnotes (P) Preliminary (Source: Current Employment Statistics, Current Population Survey, Mass Layoff Statistics, Job Openings and Labor Turnover Survey) Union Membership and Representation Back 2005 2006 2007 2008 data Data series Union membership and representation Members of unions (percent of wage and salary workers) Represented by unions (percent of wage and salary workers) 4.0% 3.3% 3.2% 3.3% 4.6% 3.5% 3.7% 4.0% (Source: Current Population Survey) Extended Mass Layoffs Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 11 27 (P) 39 (P) 18 Extended mass layoff events 1,458 3,592 (P) 4,325 (P) 3,010 Separations (R) 1,850 4,061 (P) 4,445 (P) 2,303 Initial claimants Footnotes (R) Revised (P) Preliminary Data series (Source: Mass Layoff Statistics) Employment by Occupation Employment, 2008 212,630 Counter and rental clerks 244,910 Maintenance and repair workers, general Property, real estate, and community association managers 120,340 45,830 Real estate brokers 126,330 Real estate sales agents Data series (Source: Occupational Employment Statistics) © Copyright The WellSpring Institute All Rights Reserved 39 Confidential MARKET ANALYSIS PROJECTIONS For projected (future) employment estimates, see the National Employment Matrix, which includes employment estimates by industry and occupation for real estate and rental and leasing. (Source: Office of Occupational Statistics and Employment Projections) Earnings and Hours This section presents data on employee earnings and weekly hours. The latest industry averages of hourly earnings and weekly hours for production or nonsupervisory employees, as well as weekly earnings by union membership status, are shown. In addition, recent hourly and annual earnings are shown for occupations commonly found in real estate and rental and leasing. This section also contains information on the average cost of benefits paid by employers, as well as recent rates of change in wages and total compensation. Earnings and Hours of Production Workers Back Apr. May Jun. Jul. data 2009 2009 2009 2009 $16.75 $16.73 $16.61 (P) $16.50 Average hourly earnings 32.8 32.7 33.0 (P) 33.1 Average weekly hours Footnotes (P) Preliminary Data series (Source: Current Employment Statistics) Union Membership and Representation Data series Back Median weekly earnings data 2005 2006 2007 2008 Union membership and representation Full-time workers Members of unions Represented by unions Nonunion $653 $711 $696 $649 $663 $701 $700 $660 $691 $739 $718 $690 $703 $789 $783 $696 (Source: Current Population Survey) Earnings by Occupation Wages, 2008 Hourly Annual Median Mean Median Mean $10.12 $11.30 $21,050 $23,500 $14.17 $14.96 $29,470 $31,120 Data series Counter and rental clerks Maintenance and repair workers, general © Copyright The WellSpring Institute All Rights Reserved 40 Confidential MARKET ANALYSIS Wages, 2008 Hourly Annual Median Mean Median Mean Data series Property, real estate, and community association managers Real estate brokers Real estate sales agents $20.24 $24.78 $42,100 $51,540 $27.62 $37.20 $57,440 $77,370 $18.16 $25.11 $37,770 $52,230 (Source: Occupational Employment Statistics) Employer Compensation Costs Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 Data series 12-month percent change Total compensation Wages and salaries 2.2% 1.6% 2.8% 2.5% 1.0% 1.1% 1.1% 1.1% (Source: Compensation Cost Trends) Data series Compensation costs Total compensation Wages and salaries Total benefits Insurance Retirement 2nd quarter 2009 Back Compensation component data Percent of total compensation ($ per hour worked) 24.81 17.91 6.90 1.87 0.58 100.0 72.2 27.8 7.5 2.3 (Source: Compensation Cost Trends) WORK-RELATED FATALITIES, INJURIES, AND ILLNESSES This section presents data for the industry on the number of workplace fatalities and the rates of workplace injuries and illnesses per 100 full-time workers in real estate and rental and leasing. An injury or illness is considered to be work-related if an event or exposure in the work environment either caused or contributed to the resulting condition or significantly aggravated a pre-existing condition. Data series Fatalities © Copyright The WellSpring Institute All Rights Reserved 2005 2006 2007 41 2008 Confidential MARKET ANALYSIS Data series Number of fatalities Rate of injury and illness cases per 100 full-time workers Total recordable cases Cases involving days away from work, job restriction, or transfer Cases involving days away from work Cases involving days of job transfer or restriction Footnotes (P) Preliminary 2005 2006 2007 2008 59 83 73 (P) 81 3.7 3.3 2.9 2.1 1.8 1.6 1.3 1.1 1.0 0.7 0.7 0.5 (Source: Injuries, Illnesses, and Fatalities) WORKPLACE TRENDS This section presents data on the number of establishments in real estate and rental and leasing. Establishments Data series Number of establishments Private industry Local government State government Federal government Footnotes (P) Preliminary Back 1st quarter 2nd quarter 3rd quarter 4th quarter data 2008 2008 2008 2008 (P) 373,762 (P) 373,019 (P) 1,693 (P) 1,687 (P) 34 (P) 34 (P) 6 (P) 6 (P) 372,271 (P) 1,688 (P) 33 (P) 6 (P) 372,266 (P) 1,691 (P) 33 (P) 6 (Source: Quarterly Census of Employment and Wages) The Training and Conference Center - 611430 Professional And Management Development Training WORKFORCE STATISTICS This section provides information relating to employment and unemployment in professional, scientific, and technical services. While most data are obtained from employer or establishment surveys, information on industry unemployment comes from a national survey of households. The following tables present an overview of the industry including the number of jobs, the unemployment rate of those previously employed in the industry, union membership and representation, mass layoffs, data for occupations common to the industry, and projections of occupational employment change. © Copyright The WellSpring Institute All Rights Reserved 42 Confidential MARKET ANALYSIS Employment, Unemployment, and Layoffs Back May data 2009 Data series Employment (in thousands) Employment, all employees (seasonally adjusted) Employment, nonsupervisory workers Unemployment Unemployment rate Layoffs Mass layoff events Initial claimants for unemployment benefits Footnotes (P) Preliminary Jun. 2009 Jul. 2009 7,652.4 7,615.6 (P) 7,606.6 Aug. 2009 (P) 7,595.3 5,993.1 6,003.8 (P) 6,019.8 6.8% 7.5% 7.6% 8.1% 83 53 95 32 7,030 4,503 10,555 2,302 (Source: Current Employment Statistics, Current Population Survey, Mass Layoff Statistics) Union Membership and Representation Back 2005 2006 2007 2008 data Data series Union membership and representation Members of unions (percent of wage and salary workers) Represented by unions (percent of wage and salary workers) 1.5% 1.4% 1.4% 1.3% 1.9% 1.8% 2.1% 1.8% (Source: Current Population Survey) Extended Mass Layoffs Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 50 88 (P) 154 (P) 122 Extended mass layoff events 8,877 12,803 (P) 21,862 (P) 30,884 Separations 9,442 13,909 (P) 24,142 (P) 21,546 Initial claimants Footnotes (P) Preliminary Data series (Source: Mass Layoff Statistics) Employment by Occupation Data series Employment, 2008 © Copyright The WellSpring Institute All Rights Reserved 43 Confidential MARKET ANALYSIS Employment, 2008 Accountants and auditors 366,990 Architectural and civil drafters 94,020 372,100 Lawyers 210,420 Management analysts Market research analysts 69,210 Data series (Source: Occupational Employment Statistics) Projections For projected (future) employment estimates, see the National Employment Matrix, which includes employment estimates by industry and occupation for professional, scientific, and technical services. (Source: Office of Occupational Statistics and Employment Projections) EARNINGS AND HOURS This section presents data on employee earnings and weekly hours. The latest industry averages of hourly earnings and weekly hours for production or nonsupervisory employees, as well as weekly earnings by union membership status, are shown. In addition, recent hourly and annual earnings are shown for occupations commonly found in professional, scientific, and technical services. This section also contains information on the average cost of benefits paid by employers, as well as recent rates of change in wages and total compensation. Earnings and Hours of Production Workers Back Apr. May Jun. Jul. data 2009 2009 2009 2009 $28.55 $28.82 $28.82 (P) $28.95 Average hourly earnings 35.5 35.4 35.5 (P) 35.3 Average weekly hours Footnotes (P) Preliminary Data series (Source: Current Employment Statistics) Union Membership and Representation Data series Back Median weekly earnings data 2005 2006 2007 2008 Union membership and representation Full-time workers Members of unions Represented by unions © Copyright The WellSpring Institute All Rights Reserved $961 $996 $1,031 $1,065 $770 $940 $991 $1,129 $858 $966 $1,041 $1,140 44 Confidential MARKET ANALYSIS Back Median weekly earnings data 2005 2006 2007 2008 $963 $996 $1,031 $1,064 Data series Nonunion (Source: Current Population Survey) Earnings by Occupation Wages, 2008 Data series Hourly Annual Median Mean Median Mean Accountants and auditors $29.75 $34.49 $61,880 $71,730 Architectural and civil drafters $21.34 $22.22 $44,390 $46,230 $56.16 $63.37 $116,820 $131,810 Lawyers $39.08 $45.24 $81,290 $94,100 Management analysts Market research analysts $29.03 $32.39 $60,390 $67,360 (Source: Occupational Employment Statistics) Employer Compensation Costs Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 Data series 12-month percent change Total compensation Wages and salaries 4.1% 4.4% 4.4% 4.8% 2.9% 3.2% 2.0% 2.1% (Source: Compensation Cost Trends) Data series Compensation costs Total compensation Wages and salaries Total benefits Insurance Retirement 2nd quarter 2009 Back Compensation component data Percent of total compensation ($ per hour worked) 44.66 31.94 12.72 2.74 1.35 100.0 71.5 28.5 6.1 3.0 (Source: Compensation Cost Trends) WORK-RELATED FATALITIES, INJURIES, AND ILLNESSES This section presents data for the industry on the number of workplace fatalities and the rates of workplace injuries and illnesses per 100 full-time workers in professional, scientific, and technical services. An injury or illness is © Copyright The WellSpring Institute All Rights Reserved 45 Confidential MARKET ANALYSIS considered to be work-related if an event or exposure in the work environment either caused or contributed to the resulting condition or significantly aggravated a pre-existing condition. Data series Fatalities Number of fatalities Rate of injury and illness cases per 100 full-time workers Total recordable cases Cases involving days away from work, job restriction, or transfer Cases involving days away from work Cases involving days of job transfer or restriction Footnotes (P) Preliminary 2005 2006 2007 84 85 78 2008 (P) 68 1.4 1.2 1.3 0.6 0.5 0.5 0.4 0.3 0.3 0.2 0.2 0.2 (Source: Injuries, Illnesses, and Fatalities) WORKPLACE TRENDS This section presents data on the number of establishments in professional, scientific, and technical services. Establishments Data series Number of establishments Private industry Local government State government Federal government Footnotes (P) Preliminary Back 1st quarter 2nd quarter 3rd quarter 4th quarter data 2008 2008 2008 2008 (P) 988,567 (P) 997,973 (P) 871 (P) 879 (P) 386 (P) 398 (P) 1,493 (P) 1,494 (P) 1,005,190 (P) 1,014,636 (P) 883 (P) 887 (P) 394 (P) 382 (P) 1,497 (P) 1,496 (Source: Quarterly Census of Employment and Wages) Hunting Lodge, Bunk Houses, Hotel And Food Services - Sector 72. 721--Accommodation and Food Services WORKFORCE STATISTICS This section provides information relating to employment and unemployment in accommodation and food services. While most data are obtained from employer or establishment surveys, information on industry unemployment comes from a national survey of households. The following tables present an overview of the industry including the number of jobs, the © Copyright The WellSpring Institute All Rights Reserved 46 Confidential MARKET ANALYSIS unemployment rate of those previously employed in the industry, job openings and labor turnover, union membership and representation, mass layoffs, data for occupations common to the industry, and projections of occupational employment change. Employment, Unemployment, Layoffs, and Openings, Hires, and Separations Back May data 2009 Data series Employment (in thousands) Employment, all employees (seasonally adjusted) Employment, nonsupervisory workers Unemployment Unemployment rate Layoffs Mass layoff events Initial claimants for unemployment benefits Job openings, hires, and separations (in thousands) Job openings Hires Separations Footnotes (P) Preliminary Jun. 2009 Jul. 2009 Aug. 2009 11,293.6 11,290.0 (P) 11,281.1 (P) 11,270.0 10,171.6 10,341.9 (P) 10,376.4 12.1% 12.3% 11.6% 12.6% 189 136 124 74 21,484 18,499 9,651 262 719 543 250 693 603 6,034 (P) 275 (P) 635 (P) 659 (Source: Current Employment Statistics, Current Population Survey, Mass Layoff Statistics, Job Openings and Labor Turnover Survey) Union Membership and Representation Back 2005 2006 2007 2008 data Data series Union membership and representation Members of unions (percent of wage and salary workers) Represented by unions (percent of wage and salary workers) 2.4% 2.4% 2.0% 2.5% 2.8% 2.8% 2.4% 2.8% (Source: Current Population Survey) Extended Mass Layoffs Data series Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 © Copyright The WellSpring Institute All Rights Reserved 47 Confidential MARKET ANALYSIS Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 84 153 (P) 158 (P) 215 Extended mass layoff events 20,187 33,908 (P) 29,854 (P) 55,013 Separations 15,859 34,368 (P) 32,421 (P) 45,338 Initial claimants Footnotes (P) Preliminary Data series (Source: Mass Layoff Statistics) Employment by Occupation Employment, 2008 Combined food preparation and serving workers, including fast food 2,226,150 531,720 Cooks, fast food 849,300 Cooks, restaurant 219,880 Hotel, motel, and resort desk clerks 2,189,330 Waiters and waitresses Data series (Source: Occupational Employment Statistics) PROJECTIONS For projected (future) employment estimates, see the National Employment Matrix, which includes employment estimates by industry and occupation for accommodation and food services. (Source: Office of Occupational Statistics and Employment Projections) EARNINGS AND HOURS This section presents data on employee earnings and weekly hours. The latest industry averages of hourly earnings and weekly hours for production or nonsupervisory employees, as well as weekly earnings by union membership status, are shown. In addition, recent hourly and annual earnings are shown for occupations commonly found in accommodation and food services. This section also contains information on the average cost of benefits paid by employers, as well as recent rates of change in wages and total compensation. Earnings and Hours of Production Workers Back Apr. May Jun. Jul. data 2009 2009 2009 2009 $10.34 $10.34 $10.37 (P) $10.36 Average hourly earnings 24.7 24.9 25.2 (P) 25.4 Average weekly hours Footnotes (P) Preliminary Data series © Copyright The WellSpring Institute All Rights Reserved 48 Confidential MARKET ANALYSIS (Source: Current Employment Statistics) Union Membership and Representation Back Median weekly earnings data 2005 2006 2007 2008 Data series Union membership and representation Full-time workers Members of unions Represented by unions Nonunion $388 $487 $486 $384 $399 $515 $515 $395 $413 $534 $528 $410 $435 $563 $552 $427 (Source: Current Population Survey) Earnings by Occupation Wages, 2008 Hourly Annual Median Mean Median Mean Data series Combined food preparation and serving workers, including fast food Cooks, fast food Cooks, restaurant Hotel, motel, and resort desk clerks Waiters and waitresses $7.76 $8.09 $16,130 $16,820 $8.10 $10.53 $9.34 $8.00 $8.44 $16,850 $17,550 $10.88 $21,890 $22,640 $9.88 $19,420 $20,550 $9.38 $16,640 $19,500 (Source: Occupational Employment Statistics) Employer Compensation Costs Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 Data series 12-month percent change Total compensation Wages and salaries 3.1% 3.2% 3.2% 3.5% 3.2% 3.4% 2.4% 2.5% (Source: Compensation Cost Trends) Data series Compensation costs Total compensation Wages and salaries Total benefits 2nd quarter 2009 Back Compensation component data Percent of total compensation ($ per hour worked) 11.18 8.85 2.33 © Copyright The WellSpring Institute All Rights Reserved 100.0 79.2 20.8 49 Confidential Data series Insurance Retirement MARKET ANALYSIS 2nd quarter 2009 Back Compensation component data Percent of total compensation ($ per hour worked) 0.59 5.3 0.09 0.8 (Source: Compensation Cost Trends) WORK-RELATED FATALITIES, INJURIES, AND ILLNESSES This section presents data for the industry on the number of workplace fatalities and the rates of workplace injuries and illnesses per 100 full-time workers in accommodation and food services. An injury or illness is considered to be work-related if an event or exposure in the work environment either caused or contributed to the resulting condition or significantly aggravated a pre-existing condition. Data series Fatalities Number of fatalities Rate of injury and illness cases per 100 full-time workers Total recordable cases Cases involving days away from work, job restriction, or transfer Cases involving days away from work Cases involving days of job transfer or restriction Footnotes (P) Preliminary 2005 2006 2007 2008 138 185 165 (P) 146 4.5 4.5 4.4 1.7 1.7 1.6 1.0 1.1 1.0 0.6 0.6 0.6 (Source: Injuries, Illnesses, and Fatalities) WORKPLACE TRENDS This section presents data on the number of establishments in accommodation and food services. Establishments Data series Number of establishments Private industry Local government State government Federal government Footnotes Back 1st quarter 2nd quarter 3rd quarter 4th quarter data 2008 2008 2008 2008 (P) 605,556 (P) 609,024 (P) 670 (P) 676 (P) 16 (P) 17 (P) 283 (P) 283 © Copyright The WellSpring Institute All Rights Reserved 50 (P) 612,340 (P) 680 (P) 17 (P) 282 (P) 615,505 (P) 678 (P) 17 (P) 282 Confidential MARKET ANALYSIS Data series Back 1st quarter 2nd quarter 3rd quarter 4th quarter data 2008 2008 2008 2008 (P) Preliminary (Source: Quarterly Census of Employment and Wages) Golf Course, Tennis Operations, Sports Center and Other Recreation Services - Sector 71--Arts, Entertainment, and Recreation WORKFORCE STATISTICS This section provides information relating to employment and unemployment in arts, entertainment, and recreation. While most data are obtained from employer or establishment surveys, information on industry unemployment comes from a national survey of households. The following tables present an overview of the industry including the number of jobs, the unemployment rate of those previously employed in the industry, job openings and labor turnover, union membership and representation, mass layoffs, data for occupations common to the industry, and projections of occupational employment change. Employment, Unemployment, Layoffs, and Openings, Hires, and Separations Data series Employment (in thousands) Employment, all employees (seasonally adjusted) Employment, nonsupervisory workers Unemployment Unemployment rate Layoffs Mass layoff events Initial claimants for unemployment benefits Job openings, hires, and separations (in thousands) Job openings Hires Separations Footnotes (P) Preliminary Back May data 2009 Jun. 2009 Jul. 2009 Aug. 2009 1,901.8 1,885.5 (P) 1,895.8 (P) 1,886.4 1,707.1 1,849.5 (P) 1,917.2 11.0% 11.1% 9.7% 9.7% 37 45 38 2,676 2,671 2,611 19 1,403 25 130 63 17 171 92 (P) 29 (P) 98 (P) 77 (Source: Current Employment Statistics, Current Population Survey, Mass Layoff Statistics, Job Openings and Labor Turnover Survey) © Copyright The WellSpring Institute All Rights Reserved 51 Confidential MARKET ANALYSIS Union Membership and Representation Back 2005 2006 2007 2008 data Data series Union membership and representation Members of unions (percent of wage and salary workers) Represented by unions (percent of wage and salary workers) 6.3% 6.3% 6.2% 6.4% 7.2% 7.1% 7.0% 7.3% (Source: Current Population Survey) Extended Mass Layoffs Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 39 63 (P) 45 (P) 76 Extended mass layoff events 11,762 14,609 (P) 7,147 (P) 16,402 Separations 5,722 8,696 (P) 7,183 (P) 8,766 Initial claimants Footnotes (P) Preliminary Data series (Source: Mass Layoff Statistics) Employment by Occupation Employment, 2008 19,260 Actors Amusement and recreation attendants 166,720 Fitness trainers and aerobics instructors 157,470 6,110 Gaming supervisors 33,480 Musicians and singers Data series (Source: Occupational Employment Statistics) PROJECTIONS For projected (future) employment estimates, see the National Employment Matrix, which includes employment estimates by industry and occupation for arts, entertainment, and recreation. (Source: Office of Occupational Statistics and Employment Projections) EARNINGS AND HOURS This section presents data on employee earnings and weekly hours. The latest industry averages of hourly earnings and weekly hours for production or nonsupervisory employees, as well as weekly earnings by union membership © Copyright The WellSpring Institute All Rights Reserved 52 Confidential MARKET ANALYSIS status, are shown. In addition, recent hourly and annual earnings are shown for occupations commonly found in arts, entertainment, and recreation. Earnings and Hours of Production Workers Back Apr. May Jun. Jul. data 2009 2009 2009 2009 $15.20 $15.05 $14.48 (P) $14.23 Average hourly earnings 23.9 23.6 24.0 (P) 24.6 Average weekly hours Footnotes (P) Preliminary Data series (Source: Current Employment Statistics) Union Membership and Representation Data series Back Median weekly earnings data 2005 2006 2007 2008 Union membership and representation Full-time workers Members of unions Represented by unions Nonunion $521 $652 $618 $515 $545 $617 $604 $537 $587 $633 $634 $581 $590 $651 $638 $586 (Source: Current Population Survey) Earnings by Occupation Wages, 2008 Hourly Annual Median Mean Median Mean $15.58 $25.97 (1) $(1) $Actors $8.79 $17,050 $18,280 Amusement and recreation attendants $8.20 Fitness trainers and aerobics $14.69 $17.06 $30,560 $35,490 instructors $21.69 $22.57 $45,110 $46,940 Gaming supervisors $23.48 $30.97 (1) $(1) $Musicians and singers Footnotes (1) Wages for some occupations that do not generally work year-round, full time, are reported either as hourly wages or annual salaries depending on how they are typically paid. Data series (Source: Occupational Employment Statistics) WORK-RELATED FATALITIES, INJURIES, AND ILLNESSES © Copyright The WellSpring Institute All Rights Reserved 53 Confidential MARKET ANALYSIS This section presents data for the industry on the number of workplace fatalities and the rates of workplace injuries and illnesses per 100 full-time workers in arts, entertainment, and recreation. An injury or illness is considered to be work-related if an event or exposure in the work environment either caused or contributed to the resulting condition or significantly aggravated a pre-existing condition. Data series Fatalities Number of fatalities Rate of injury and illness cases per 100 full-time workers Total recordable cases Cases involving days away from work, job restriction, or transfer Cases involving days away from work Cases involving days of job transfer or restriction Footnotes (P) Preliminary 2005 2006 2007 2008 92 87 106 (P) 99 6.1 5.3 5.3 2.9 2.5 2.5 1.6 1.3 1.4 1.4 1.2 1.1 (Source: Injuries, Illnesses, and Fatalities) WORKPLACE TRENDS This section presents data on the number of establishments in arts, entertainment, and recreation. Establishments Data series Number of establishments Private industry Local government State government Federal government Footnotes (P) Preliminary Back 1st quarter 2nd quarter 3rd quarter 4th quarter data 2008 2008 2008 2008 (P) 124,288 (P) 125,192 (P) 3,669 (P) 3,698 (P) 876 (P) 883 (P) 932 (P) 942 (P) 125,992 (P) 3,706 (P) 875 (P) 947 (P) 126,700 (P) 3,708 (P) 866 (P) 950 (Source: Quarterly Census of Employment and Wages) Elder Care Center - Community Care Facilities for the Elderly: NAICS Code 6232 WORKFORCE STATISTICS This section provides information relating to employment in nursing and residential care facilities. These data are obtained from employer or © Copyright The WellSpring Institute All Rights Reserved 54 Confidential MARKET ANALYSIS establishment surveys. The following tables present an overview of the industry including the number of jobs, mass layoffs, data for occupations common to the industry, and projections of occupational employment change. Employment and Layoffs Data series Employment (in thousands) Employment, all employees (seasonally adjusted) Employment, nonsupervisory workers Layoffs Mass layoff events Initial claimants for unemployment benefits Footnotes (P) Preliminary Back May data 2009 Jun. 2009 Jul. 2009 3,049.1 3,056.3 (P) 3,063.0 Aug. 2009 (P) 3,073.3 2,716.6 2,728.3 (P) 2,737.0 4 7 11 6 277 375 658 421 (Source: Current Employment Statistics, Mass Layoff Statistics) Extended Mass Layoffs Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 9 6 (P) 7 (P) 3 Extended mass layoff events 1,116 688 (P) 874 (P) 204 Separations 922 412 (P) 721 (P) 240 Initial claimants Footnotes (P) Preliminary Data series (Source: Mass Layoff Statistics) Employment by Occupation Employment, 2008 388,170 Home health aides 256,050 Licensed practical and licensed vocational nurses 32,350 Medical and health services managers 775,510 Nursing aides, orderlies, and attendants 162,190 Registered nurses Note: These employment estimates include employment in both the private-sector and government. Data series (Source: Occupational Employment Statistics) © Copyright The WellSpring Institute All Rights Reserved 55 Confidential MARKET ANALYSIS PROJECTIONS For projected (future) employment estimates, see the National Employment Matrix, which includes employment estimates by industry and occupation for nursing and residential care facilities. (Source: Office of Occupational Statistics and Employment Projections) EARNINGS AND HOURS This section presents data on employee earnings and weekly hours. The latest industry averages of hourly earnings and weekly hours for production or nonsupervisory employees are shown. In addition, recent hourly and annual earnings are shown for occupations commonly found in nursing and residential care facilities. This section also contains information on the average cost of benefits paid by employers, as well as recent rates of change in wages and total compensation. Earnings and Hours of Production Workers Back Apr. May Jun. Jul. data 2009 2009 2009 2009 $14.06 $13.97 $14.02 (P) $14.07 Average hourly earnings 31.6 31.5 31.6 (P) 32.0 Average weekly hours Footnotes (P) Preliminary Data series (Source: Current Employment Statistics) Earnings by Occupation Wages, 2008 Data series Hourly Annual Median Mean Median Mean $9.81 $10.16 $20,410 $21,130 Home health aides Licensed practical and licensed vocational nurses $19.44 $19.94 $40,440 $41,470 $32.13 $34.75 $66,830 $72,270 Medical and health services managers $11.07 $11.31 $23,030 $23,520 Nursing aides, orderlies, and attendants $27.20 $27.82 $56,570 $57,870 Registered nurses (Source: Occupational Employment Statistics) Employer Compensation Costs Data series 12-month percent change Total compensation Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 3.0% © Copyright The WellSpring Institute All Rights Reserved 2.9% 56 2.6% 2.2% Confidential MARKET ANALYSIS Data series Wages and salaries Back 3rd quarter 4th quarter 1st quarter 2nd quarter data 2008 2008 2009 2009 2.9% 3.0% 2.7% 2.3% (Source: Compensation Cost Trends) Data series Compensation costs Total compensation Wages and salaries Total benefits Insurance Retirement 2nd quarter 2009 Back Compensation component data Percent of total compensation ($ per hour worked) 19.81 14.43 5.37 1.48 0.29 100.0 72.9 27.1 7.5 1.5 (Source: Compensation Cost Trends) WORK-RELATED FATALITIES, INJURIES, AND ILLNESSES This section presents data for the industry on the number of workplace fatalities and the rates of workplace injuries and illnesses per 100 full-time workers in nursing and residential care facilities. An injury or illness is considered to be work-related if an event or exposure in the work environment either caused or contributed to the resulting condition or significantly aggravated a pre-existing condition. Data series Fatalities Number of fatalities Rate of injury and illness cases per 100 full-time workers Total recordable cases Cases involving days away from work, job restriction, or transfer Cases involving days away from work Cases involving days of job transfer or restriction Footnotes (P) Preliminary 2005 2006 2007 15 23 21 2008 (P) 20 9.1 8.9 8.8 5.7 5.4 5.2 2.9 2.6 2.6 2.8 2.7 2.6 (Source: Injuries, Illnesses, and Fatalities) WORKPLACE TRENDS This section presents data on the number of establishments in nursing and residential care facilities. © Copyright The WellSpring Institute All Rights Reserved 57 Confidential MARKET ANALYSIS Establishments Data series Number of establishments Private industry Local government State government Federal government Footnotes (P) Preliminary Back 1st quarter 2nd quarter 3rd quarter 4th quarter data 2008 2008 2008 2008 (P) 67,565 (P) 802 (P) 999 (P) 9 (P) 67,835 (P) 803 (P) 992 (P) 9 (P) 68,165 (P) 802 (P) 1,010 (P) 9 (P) 68,425 (P) 799 (P) 1,015 (P) 9 (Source: Quarterly Census of Employment and Wages Area Overview Community of Moab - The Moab area lies in the heart of the Colorado Plateau, which, because of its pristine environment and magnificent scenery, has long been thought a national treasure. The area is a geological wonder. Moab, the only Utah community located on the Colorado River, is nestled in a valley with scenic red rock cliffs on both sides. Moab is surrounded by an extremely rugged and beautiful desert terrain. The La Sal Mountains, just 18 miles to the east, reach elevations of over 12,000 feet. Mt. Peale, at nearly 13,000 feet, is the third-highest peak in Utah. Meadows, lakes and streams abound in the pine, spruce, fir and aspen forests. The lush mountain valleys and alpine beauty provide striking contrast to the panoramic view of the deserts and canyons below. This varied topography offers excellent and practically unlimited recreational opportunities throughout the year. © Copyright The WellSpring Institute All Rights Reserved 58 Confidential MARKET ANALYSIS Some folks are discovering that a recreation destination can also make a wonderful site for business and industry. Today's high-tech communications have made it possible for literally hundreds of companies to operate in this refreshing country environment. Moab's unique setting is guaranteed to foster creative inspiration and intellectual productivity. The community of Moab offers a wholesome way of life with very little crime and plenty of activities for all ages, especially if you enjoy the outdoors. Moab's trend toward arts and culture, coupled with the magnificent scenery and recreational opportunities, creates an irresistible atmosphere for retirement. Activities - The Moab community offers over 30 motels, numerous camping areas, many bed and breakfast establishments, and apartment type lodging. There are also over 40 restaurants, camping supplies, sport outfitters, tour guides, and plenty of gift shopping available. Arts and Entertainment - The beauty and tranquility of the area inspire creativity and the area is home to artists of all kinds. Visitors and residents alike enjoy theater productions, a variety of galleries, concerts, and arts and music festivals. Other events include vintage car shows, rodeos and horse events, volleyball and fast pitch softball tournaments, marathons, parades, archery and shooting meets, mountain bike races, the Annual Fat Tire Mountain Bike Festival, and the Annual East Jeep Safari and the annual Classic Car Show. Moab has a spectacular 18-hole golf course as well as tennis courts, bowling, a movie theater, and a water park, amusement center. Climate - Because of its moderate climate, Moab has become a popular year-round playground. Moab has a short, mild winter and a long, moderate spring. Spring and fall are the most pleasant times of the year. Average Annual Temperatures: Highs and Lows: January 39°F 18°F April 79°F 41°F July 99°F 64°F October 74°F 41°F Average Annual Precipitation: 9.09 inches © Copyright The WellSpring Institute All Rights Reserved 59 Confidential MARKET ANALYSIS Elevation - City of Moab 4,025 ft. above sea level; The Ranch Mountain location in the LaSalle Mountain Range; 9,000-12000 feet above sea level and The Ranch Desert Location around 3,000 feet above sea level. Bus Service from Green River - Greyhound, 800-231-2222, 525 E. Main Street, Green River; Railroad: AMTRAK (from Green River depot) 800-872-7245, 250 S. Broadway, Green River; Air: Great Lakes Airlines (1-800-554-5111 or 307-433-2899) offers daily scheduled service from the Moab Canyon lands Airport (located 16 miles from downtown Moab) to Denver, Colorado. Thrifty Car Rental (435259-7317; 800-THRIFTY) provides service from the Moab Canyon lands Airport. Additional passenger and air freight service is offered at the airport, Walker Field, located in Grand Junction, Colorado, 120 miles northeast of Moab. The airport has several major airlines and commuter services, including SkyWest Airlines (Delta interconnect), United Express, and America West Airlines. Access Highways: U.S. I-70; U.S. Highway 191, Utah Scenic Byway 128 National Park Visitation - Having two national parks easy driving distance from Moab provides visitors outstanding recreational opportunities. The number of visitors to Arches National Park (4 miles from downtown Moab) from January through October, 2006 was 791,412, up 6.3% during the same period for 2005. The number of visitors to Canyon lands National Park from January through October, 2006 was 373,397, down .6% during the same period for 2005. Mileages to Recreation Areas Colorado River 2 Arches National Park - UT 4 Dead Horse Point State Park - UT 33 Canyon lands Nat'l Park (Islands in the Sky District) - UT 45 © Copyright The WellSpring Institute All Rights Reserved 60 Confidential MARKET ANALYSIS Canyon lands Nat'l Park (Needles District) - UT La Sal National Forest - UT Bryce Canyon National Park - UT Capitol Reef National Park - UT Goblin Valley National Monument - UT Lake Powell (Hite Marina) - UT Natural Bridges National Monument - UT Zion National Park - UT Monument Valley - AZ Hovenweep National Monument - CO Mesa Verde National Park - CO 68 18 275 145 82 162 70 289 150 85 150 Over 90 percent of Grand County is "public land" administered by the Bureau of Land Management, the U.S. Forest Service, the State of Utah, and the National Park Service. These lands have diverse uses, including recreation, woodland products, wildlife management, livestock grazing, and mineral resources. Different recreational activities are permitted in these areas, depending on which government agency administers the land. Many of these public areas may be reached with a standard automobile. Paved roads provide access to much of the "front country." Trailheads, visitor centers, overlooks and other sights are generally easily accessible. Off-highway Vehicles (OHV) - Any OHV being operated or transported on public lands, roads or trails in the state of Utah must display a current OHV registration sticker. Dual sport off-highway motorcycles may be registered as street legal vehicles if they possess the proper safety equipment, have passed a state safety inspection, and carry the proper insurance, or they may be registered as off-highway vehicles. Business and Economic Development - The Moab Area Economic Development Committee has adopted the following Economic Development Goals: 1. We will work with entrepreneurs and small businesses to increase longterm employment opportunities. We will pursue providing more business counseling and education, easier access to capital, and more employee training programs. We will also work to provide new and expanding businesses with incentives, improved physical infrastructure and streamlined rules and regulations to permit businesses to grow. 2. We will work with businesses on the facilitation of infrastructure needed to grow through the development of public projects, health care, airport service, adequate housing, and transportation planning. 3. We will support the development of natural resources and the protection of resources important to the ongoing health of tourist businesses. This © Copyright The WellSpring Institute All Rights Reserved 61 Confidential 4. 5. 6. 7. 8. 9. MARKET ANALYSIS includes working with energy exploration companies to provide employee training resources. We will work to protect and enhance the scenic assets and quality community life of Grand County. This includes community clean-up campaigns, downtown improvements and efforts to promote the preservation of agricultural land use. We will work to help local residents develop new job skills and career opportunities, which in turn will attract business investment. We will work to improve local higher education, both to provide educational options for local residents and to develop destination-oriented higher education programs. We will work to enhance tourism-related economic development, including efforts to expand convention and conference activities and film and video projects. Goal 8. We will work to expand and promote cultural and recreational activities. We will work to better inform local elected officials, local businesses, and local residents of economic development activities, trends, and opportunities, and we will present for approval to Grand County and Moab City an annual work plan. Demographics: Population, Education Level, Income & Labor Force Moab Population 4,825 Castle Valley 354 La Sal approx 400 Thompson Springs 52 Grand County Population 8,826 (2005), 2.5% increase over 2004 Population by Race 2000 Census Under 18 26.9% White 92.6% 65 Years & Over 12.5% Black 0.2% Median Age 36.9 American Indian 3.9% Persons per Household 2.44 Asian 0.2% Persons per Family 3.06 Pacific Islanders 0.1% Female-Headed Families 10.7% Other 3.0% High School Graduates 82.5% Hispanic/All Races 5.6% © Copyright The WellSpring Institute All Rights Reserved 62 Confidential College Graduates MARKET ANALYSIS 22.9% Income Labor Force $39,095 Female Participation 64.2% Per Capita Income (2003) $20,634 Male Participation 73.5% Average Monthly Wage (2005) Self Employed 12.9% Median Family Income $ 1,964 Median Earnings Male, full-time, yearend $31,000 Female, full-time, yearend $21,769 2004 and 2005 Preliminary 6 month Jan - June Averages 2005 Preliminary 2004 Civilian Labor Force 4,332 4,632 Employed 3,950 4,623 Unemployed 382 399 Percent of Labor Force 8.8 8.6 Total Nonagricultural Jobs 4,212 4,033 Goods Production 412 354 Mining 87 77 Construction 269 227 Manufacturing 57 50 Service Production 3,799 3,678 Trade, Transportation, & Utilities 790 777 Wholesale Trade 66 65 Retail Trade 634 621 Transportation & Warehousing 63 64 Utilities 28 28 Information 45 46 © Copyright The WellSpring Institute All Rights Reserved 63 Confidential MARKET ANALYSIS Financial Activities 202 166 Finance & Insurance 70 60 Real Estate & Renting & Leasing 132 107 Professional & Business Services 203 186 Education & Health Services 308 247 Leisure & Hospitality 1,342 1,388 Other 69 71 Government 842 849 Education: Grand County School District, Moab Community School Charter School Private Schools: DayStar Seventh Day Adventist Academy, located in Castle Valley, enrolls 50 students in grades 9 through 12. Utah State University: The Moab branch of Utah State University, a four-year university, offers opportunities to complete Associate, Bachelor, and Master degrees. Out-of-state extension students pay in-state resident tuition while attending USU in Moab. Employment - Grand County's Largest Employers Allen Memorial Hospital Grand County School District National Park Service Quinstar Bureau of Land Management City Market, Inc. Moab Brewery City of Moab State of Utah Zax Wood Fired Pizza Grand County Non-Agricultural Employment Government - City of Moab, Grand County, San Juan County Corporate Tax - Corporations with a tax liability of $3,000 or more in the current tax year, or with a tax liability of $3,000 or more in the previous tax year, must make estimated tax payments. Contact Taxpayer Services 801297-7705. © Copyright The WellSpring Institute All Rights Reserved 64 Confidential MARKET ANALYSIS Sales & Use Tax - The combined Utah and City of Moab tax is 7.75 percent on retail sales, 8.75 percent on restaurant food and beverage sales, 12.25 percent on overnight accommodations, and 10.75 percent on car rentals. Purchases of certain equipment by manufacturing companies may be exempt. Also exempt are purchases of approved water and air pollution equipment. At the end of June, 2006, collection of sales tax for Grand County increased 13% and 11% for the City of Moab compared to the same time frame in 2005. Transient room tax collections (rent of rooms in hotels, motels, inns, trailer courts, campgrounds, and similar accommodations for stays of less than 30 consecutive days) were up 12 percent for the City of Moab at the end of June, 2006 compared to the same time frame in 2005. Property Tax - The Grand County Assessors Office, located in the County Courthouse, 125 E. Center Street, determines market value every five years, or when the property is sold. A primary residence is taxed at 45% of market value in Grand County and San Juan County. A second home, or nightly rental is taxed at 100% of market value, unless the renter is a primary resident. Mobile homes not on a foundation are considered personal property, and will be assessed as such. Property taxes are due November 30th of each year; when a property is purchased, the title company will pro-rate the amount due, with the buyer only paying the portion of taxes starting after their closing date. Health Care - Allen Memorial Hospital - For more than 50 years, AMH has served the Moab community. Currently AMH has 14 Board Certified physicians here in Moab and 6 specialists who visit from urban medical facilities on a regular basis. The existing facility has 2 birthing suites, 14 longterm care beds and a full compliment of wellness services and medical treatment options. AMH, currently housed in an older building, is planning a new facility, the Moab Regional Medical Center. The medical staff offers the following services: Anesthesiology (Pain Management, Acupuncture) Cardio-Pulmonary Services Emergency and Critical Care Services Family Practice General Surgery Obstetrics and Gynecology Ophthalmology Orthopedic Surgery Podiatry Consult/Services Radiology and Pathology Health Department of Southeastern Utah - 471 S. Main Street, Moab UT 84532; 435-259-5602 or 435-259-8448 © Copyright The WellSpring Institute All Rights Reserved 65 Confidential MARKET ANALYSIS Four Corners Mental Health - 198 E. Center Street, Moab UT 84532; 435-259-6131 Real Estate and Housing - The average price of homes and condos continues to increase. The third quarter 2006 average price of homes was $181,653, and $268,392 for condos, increases over third quarter 2005 average sales prices for homes by 16.32% and for condos by 18.56%. Total home sales in Grand and San Juan Counties in 2005 were 206, an increase of 24% over 2004. The average sale price for 2005 was $160,041 for a home, (an increase of 13.65% over 2004), and $210,841 for a condominium, (an increase of 10.47% over 2004). New construction consists mostly of custom homes and townhouses, but there are some older homes available in city neighborhoods. Several developments have been proposed in the surrounding area, supplementing existing projects. Because commercial real estate is scarce in downtown Moab, most development is occurring on the outskirts of town. With a strong real estate market and the ever increasing interest in Southeastern Utah, Moab should continue to see appreciation in prices in the fourth quarter of 2006 and beyond. Real estate rental and purchasing information is available through any of the real estate companies listed in this directory. Information on rent-subsidized housing for low-income, senior, or disabled persons is available from the Grand County Housing Authority, 2595891. San Juan County, Utah. Nowhere else will you find such diversity! Canyons, desert, rivers, mountains and lakes as well as past and present Native American cultures create the Canyon Country of San Juan County. This is where the true west of myth and legend is alive today. Free from the distractions of metropolitan and urban life, the relaxing lifestyle in our charming towns and villages offers the perfect vacation, residential, or business environment. We are located in the Four Corners region of the southwest United States. This is the heart of the Colorado Plateau with the textbook geology that created the breathtaking canyons and majestic mountains of Canyon Country. San Juan County provides a perfect, centralized base of travel to the world renowned features that surround us. National Parks and Monuments, including the Grand Canyon, Monument Valley, Canyon lands, Arches, Lake Powell, Natural Bridges, Hovenweep, and Mesa © Copyright The WellSpring Institute All Rights Reserved 66 Confidential MARKET ANALYSIS Verde are all within Canyon Country or easy driving distance. State parks include Edge of the Cedars Museum and the great Goosenecks of the San Juan River. All of this and more is easily visited from our excellent selection of motels, lodges, RV parks, campgrounds, and resorts. Fine dining as well as family restaurants complements the visitor experience. Cultural and natural history experiences abound in Canyon Country. Edge of the Cedars State Park & Museum highlights the Ancestral Puebloan (Anasazi) culture with the largest display of artifacts in the Four Corners. Newspaper Rock Recreation Site offers a large petroglyph panel. Cowboy and Mormon history add color to the county's foundation as do Navajo, Hopi, Zuni, and Ute artisans whose work is available at local trading posts and galleries. Our annual crafts fairs, rodeos, ATV Safari, and the International Balloon Festival add to San Juan County's sense of excitement and adventure. Enjoy river rafting with an excellent guide, jeep into hidden canyons and across mountain ridges, hike, bike, 4-wheel, and ATV into and through Utah's Canyon Country for the vacation of a lifetime! With 9,000 feet of elevation change almost 2 miles between 3,700 feet and 12,600 feet - from red rock canyons to alpine splendor, San Juan County has it all! Traffic Frequency When looking at the frequency of travelers stopping in Moab you can see from the cart that 31% of the visits come from regulars and 69% come from passerby. This suggests that there is still an untapped market to increase the planned visits of people. The following chart demonstrates the three peak season of spring, summer and fall. Our plan is to increase the winter season activity by brining in executive development courses and workshops and offering winter activities in our La Salle mountain facility. © Copyright The WellSpring Institute All Rights Reserved 67 Confidential MARKET ANALYSIS Market Segment Analysis Arches National Park - A red rock wonderland containing some of the most scenic and inspiring landscapes on Earth, Arches National Park contains the world's largest concentration of natural sandstone arches. Although over 2,000 arches are located within the park's 76,518 acres, the park also contains an astounding variety of other geological formations. Colossal sandstone fins, © Copyright The WellSpring Institute All Rights Reserved 68 Confidential MARKET ANALYSIS massive balanced rocks, soaring pinnacles and spires dwarf visitors as they explore the park's viewpoints and hiking trails. Geologic faulting has exposed millions of years of geologic history within the park. Arts - Visitors from around the world visit Moab for its incredible landscapes and scenic beauty. Many are moved by the beauty found here and express that beauty in the arts. Some actually move to Moab because of their desire to be more closely connected with the inspiration for their art. Whether you come to Moab for adventure, to play, or for business, you can always find something going on in the arts to extend and enhance your stay! Moab may have more artists-per-capita than any other town in America, certainly in Utah! Here you can find painters, potters, poets, photographers, and writers, dancers, actors, musicians and mimes. There are also jewelers, sculptors, playwrights and just about any other form of artist and art that you can think of, including body art! The Moab Artist Directory has identified over 200 practicing artists (almost 2.5% of the county population) and the number keeps on growing. Well before Moab was founded, the people of the Fremont and Anasazi cultures practiced their own forms of art. Rock art, in the form of petroglyphs and pictographs, are found at hundreds of sites within a short radius of Moab. Combined with the art forms of the early pioneers and the thriving arts community of today, Moab has nurtured creativity for eons. Canyonlands National Park - Canyonlands is the largest national park in Utah, and its diversity staggers the imagination. It is divided into three districts by the Green and Colorado Rivers - the Island in the Sky, the Needles and the Maze. Named for their most prominent geologic characteristics, these districts are quite varied in what they have to offer. © Copyright The WellSpring Institute All Rights Reserved 69 Confidential MARKET ANALYSIS Island in the Sky - This section of the park sits atop a massive 1500 foot mesa - quite literally an Island in the Sky. 20 miles of paved roads lead to many of the most spectacular views in Canyon Country. From these lofty viewpoints visitors can see nearly 100 miles in any given direction, resulting in panoramic views that encompass thousands of square miles of canyon country. Take a short day-hike or spend a relaxing late afternoon enjoying the sunset. Whether you have a few hours to spend or a few days, the Island in the Sky provides an unforgettable Canyon Country experience for the entire family. Green River Overlook Island in the Sky District The Needles - A ten mile paved scenic drive gives visitors a wonderful taste of what The Needles was named after - beautiful sandstone spires that jut out of the ground creating an unforgettable spectacle. For those willing to venture off the paved roads, however, this section offers an amazing diversity of terrain. Arches, canyons, gardens, and beautiful sculpted rock formations await hikers, backpackers and 4WD enthusiasts. The scenic drive can be done in an hour or two, however hikers and 4 wheel drive enthusiasts will need at least a day or two to get a good taste of this section. The Maze - Definitely considered the wildest district in Canyonlands National Park, the Maze ranks as one of the most remote and inaccessible sections in the United States. There is, in the Maze itself, a perplexing jumble of canyons that has been described as a "30 square mile puzzle in sandstone". If you crave solitude and are ready for some serious backcountry travel and hiking, the Maze may be just what you're looking for. Colorado River way - The Colorado River way encompasses the public lands along the Colorado River. A number of activities take place in this red rock haven, including river running, technical rock climbing, scenic drives, hiking, cycling, picnicking, and wildlife watching. The Colorado River way includes the Public Lands managed by the Bureau of Land Management in the following areas: Along the Colorado River and Utah Highway 128 from Dewey Bridge to U.S. 191 © Copyright The WellSpring Institute All Rights Reserved 70 Confidential MARKET ANALYSIS Along the Colorado River and Utah Highway 279 from Moab Valley to Potash Along Kane Creek Road from Moab Valley to the block of State land south of Hunter Canyon Dead Horse Point SP - Dead Horse Point is one of Utah's most spectacular state parks. Towering 2,000 feet above the Colorado River, the park provides a breathtaking panorama of Canyonlands' sculpted pinnacles and buttes. Access to Dead Horse Point is nine miles north of Moab on US 191. (Turn west on SR 313, then go 22 miles.) The visitor center, interpretive museum, developed campground and large overlook shelter make the park comfortable and informative as well as spectacular. It is open from 6 a.m. to 10 p.m. daily. Movie Sites - Since 1949 the Moab area has been a popular location for Hollywood movies. Movies filmed in our area range from the old John Wayne classics to more recent hits such as Geronimo, City Slickers II, and Mission Impossible II. Thelma and Louise took their final leap into the Colorado River from along the Shafer Trail under Dead Horse Point near Moab! Numerous commercials, and more recently music videos, have been filmed here. Museums - Museums, galleries, and a variety of interesting shops are available in the Moab area. Because of this, many visitors prefer to alternate their vacation days, reserving several for hiking and sightseeing, and several set aside for museum touring and shopping. Moab's Main Street has dozens of shops featuring authentic Indian jewelry, statuary, clothing, and rock shops, as well as the products of local artisans. The Film Museum provides a great turnaround point for a beautiful drive down Scenic Byway 128. National Forests - Almost 160,000 acres of area woodlands are designated National Forest. The Moab Ranger District, of the USFS, administers a large block of the Manti-La Sal National Forest in the La Sal Mountains southeast of Moab. The second highest range in Utah, these © Copyright The WellSpring Institute All Rights Reserved 71 Confidential MARKET ANALYSIS alpine mountains offer excellent opportunities for hiking, camping, cycling and mountain climbing and are a perfect place to escape the summer heat. Capped with snow much of the year, they also serve as nature's backdrop for Arches and Canyonlands National Parks. Fishing is available in small mountain lakes throughout the forest. Bicycles, motorcycles and all-terrain vehicles may be used on designated roads. Dozens of miles of cross-country trails and 'hut to hut' ski systems provide winter fun. Many beautiful campsites, including Warner Lake, are available on a first come, first serve basis. Rock Art Sites -The Moab area has numerous examples of Indian rock art to enjoy. There are two types of rock art: petroglyphs (motifs that are pecked, ground, incised, abraded, or scratched on the rock surface) and pictographs (paintings or drawings in one or more colors using mineral pigments and plant dyes on the rock surface). Although many images may have originally been executed as a combination of both techniques, most now appear only as a petroglyph because the paint material has faded or washed away over many years. On closer examination you might be able to see a painted design accompanying the pecked image. Examples of both types of rock art are found along the sites described in this guide. Each site is unique. The patterns and motifs may be similar, but are never quite the same. Styles vary from place to place, and from people to people. Sand Flats/Slickrock Trail - The Sand Flats Recreation Area near Moab, Utah is a nationally significant public lands treasure at the heart of the Colorado Plateau. A high plain of slick rock domes, bowls and fins, it rises on the south to meet the colorful mesas and nearly 13,000 foot peaks of the La Sal Mountains. Cutting into the area on the east and west are the altered canyons of the Negro Bill and Mill Creek Wilderness Study Areas. To the north lies the deep gorge of the Colorado River and a hundred mile vista over Arches National Park. © Copyright The WellSpring Institute All Rights Reserved 72 Confidential MARKET ANALYSIS SFRA is home to the famous Slickrock Bike Trail enjoyed annually by over 100,000 visitors. The 7,320 acre SFRA is also popular for camping and jeeping and is seeing an increase in motorcycle and ATV use. The Sand Flats Recreation Area is managed through a unique partnership between Grand County and the Bureau of Land Management. In 1995 this area was developed through the collaborative efforts of Americorps, the BLM, Grand County and the Moab community. Wetlands - The Matheson Wetlands Preserve, located just a half-mile from Moab, provides some of the best wetlands wildlife watching in Utah. It is the only major wetland along the Colorado River in Utah. It is a critical 'steppingstone' for migrating waterfowl, raptors and shorebirds. Point of entry is on Kane Creek Road. Wineries - Wine tasters and connoisseurs from around the world are often quite surprised to learn that there are two vineyards and wineries right here in Moab area. Moab's long growing season coupled with its fertile, sandy soils has resulted in production of quite a few world-class wines. Visitors can spend half a day enjoying both Moab area wineries and their tasting rooms, or take a quick tour of either one. Spanish Valley Vineyards & Winery is conveniently located just a few miles south of Moab - the perfect way to relax after a hike in Arches or near Moab. Castle Creek Winery is located just 15 miles from Moab, along beautiful Scenic Byway 128. Its location makes it the perfect destination after a sightseeing drive down Highway 128, or a hike to the Fisher Towers. 4 Wheeling - here are thousands of miles of jeep trails in Grand County. Most are unmaintained relics from mining or prospecting for minerals such as uranium, vanadium radium copper, gold, and oil. Yet, except for the trails themselves, there are few scars on the landscape. Some trails are used in current mining and grazing activities, and major access roads receive some maintenance from the county. Others are repaired just enough to get through. © Copyright The WellSpring Institute All Rights Reserved 73 Confidential MARKET ANALYSIS The trails described on this page were selected because they are close to Moab and short enough for a partial-day trip. Among the trails are a variety of scenery and a range of challenge to the off-highway abilities of vehicle and driver. The map shows trail locations; the chart gives distances, difficulty, and minimum time to drive each trail without stops. ATV Riding - Moab has numerous trails suitable for ATV's. Much of the public land surrounding the National Parks is open to ATV travel on existing trails. (However, please note that ATV riding is not allowing within either Arches or Canyonlands National Park.) ATV enthusiasts can use all of the popular Ballooning - Imagine ascending to greet the sunrise as you drift among geologic wonders created when dinosaurs roamed the earth. Behold the fragile sandstone formations of Arches National Park as the 13,000 foot La Sal Mountains cast long shadows upon the town of Moab and Canyonlands National Park. As you drift over the river carved canyons of the Colorado River, let the pilot and wind be your navigator while you capture photographic images that will last a lifetime. Since hot air ballooning is an activity that is best suited for areas away from major population centers, ballooning near Moab and Castle Valley is the perfect location. Balloon flights in this region encompass some of the most incredible and awe inspiring scenery in the country. Fishing - Enjoy fishing? What’s your preference…trout or catfish? Bait or Fly? Lake or River? Moab has it all, with the Colorado River offering many sandy beaches from which anglers can try their luck at cat fishing. Great trout fishing can be found in the beautiful lakes and streams of the nearby La Sal Mountains. Whispering pines, quaking aspens, bubbling brooks, all of nature’s music harmonizes into a beautiful symphony making a family outing in the forest an unforgettable experience. The La Sal National Forest just a few miles Southeast of Moab offers many great opportunities for recreational angling with its many lakes and © Copyright The WellSpring Institute All Rights Reserved 74 Confidential MARKET ANALYSIS streams. Eight lakes, ranging in size from 2 to 5 acres, are scattered amidst fir, spruce, tall quaking aspen and beautiful mountain meadows often colored with wild flowers. While the lakes are accessible by two-wheel drive vehicles during the summer months, periodically wet weather can at times make roads impassable. Golfing - The Moab Golf Course is one of the most visually appealing in the state with its contrast of smooth, bright greens set amid rough, eroded red cliffs and boulders. The public course has 18 holes and a par of 72. It is open seven days a week, year-round. It has a pro shop, a driving range, and a snack bar open for breakfast and lunch. Cart rentals and lessons are available. Hiking - Great hiking doesn't end with your visits to Arches and Canyonlands National Parks. The Moab area contains a large number of trails to suit any taste and experience level. From cool stream-side hikes (Negro Bill & Hunter Canyons) to spectacular sandstone arches (Corona Arch), the Moab area is full of exciting day-hikes suitable for the entire family. The day-hikes described on this page are all located within a one-half hour drive of Moab. The closest trailhead to town is about 2 miles from downtown, while the farthest away is 23 miles. All of the trails are suitable for half-day outings. The Hidden Valley and Moab Rim Trails can be combined for a longer one-way hike. Hiking times described represent the number of hours needed to complete a leisurely round trip hike. Motorcycle Touring - Sweeping curves, twisting turns, and scenery that takes your breath away. Could you ask for more? If so Moab, Utah will deliver with arches, canyons, red rock formations, the Colorado River Gorge, petrogylphs, dinosaur tracks, historical bridge, and the LaSalle Mountains. Home to three National Scenic Byways, one Scenic Back way, two National Parks and one State Park, Moab is a perfect destination for a motorcycling vacation or a great “extra day” stop on your way to the next rally Scenic Byway 128 along the Colorado River is the preferred route into Moab from Interstate 70. You start your journey across the open desert with a few sweeping curves, until you reach the Colorado River where considerably © Copyright The WellSpring Institute All Rights Reserved 75 Confidential MARKET ANALYSIS sharper turns will command your attention. The route crosses the mighty river near the historic Dewey Bridge. Built in 1916 and used until 1986, this suspension bridge is on the National Register of Historic places and is now only open to foot traffic. A nearby rest area makes this a perfect stop to stretch your legs. Beyond the bridge, the byway continues to follow the Colorado River with more twists and turns, before giving way to a straight, but spectacularly scenic, section. Along this stretch, you will pass the majestic Fisher Towers and the famous Castle Rock, a finger-like spiral to the southwest, which was the location for many films and commercials, and can be seen, just before the Castle Valley Junction. Mountain Biking - Welcome to the home of the greatest mountain biking on the planet. Moab offers a huge variety of trails for mountain bikers of any experience level, from beginners looking for a scenic ride through beautiful canyons and mesa tops, to seasoned bikers looking for the ultimate challenge. Moab is well known for the world famous, and highly technical, Slickrock Bike Trail. This challenging 9.6 mile trail is considered by many to be the ultimate mountain biking experience. Moab, however, also contains an assortment of easy and extremely scenic biking trails. The Bar-M Loop Trail, for example, provides a great introduction to the varied terrain and beautiful scenery adjacent to Arches National Park. Look around this page and create your own mountain biking adventure! Photography - Southeastern Utah is a paradise for photographers. Under conditions of constantly changing light, the red rock landscapes of southeastern Utah provide limitless photographic opportunities. Often, the difference between an average photograph and an exceptional photograph is good lighting. Low sun angles at sunrise and sunset add great depth to many of the panoramic vistas in southeastern Utah, such as the views from the Island in the Sky District of Canyonlands National Park and Dead Horse Point State Park. Scattered clouds can also add depth to an image and a passing storm can provide extremely dramatic lighting. River Activities - Southeastern Utah is blessed with an abundance of river recreation opportunities. Visitors may select river environments that © Copyright The WellSpring Institute All Rights Reserved 76 Confidential MARKET ANALYSIS range from the wilderness settings of Cataract and Desolation-Gray canyons to the more easily accessible sections of the Colorado and Green Rivers. While the area is known for its whitewater float trips, there are also several scenic calm water segments suitable for canoes and small powerboats. Although the Colorado River often conjures images of wild, churning rapids and heart-stopping near capsizes; the rivers of the Moab area have a softer side as well. For miles at a time they are simply wide, quiet streams that, on clear days, reflect a mosaic of rock cliffs and sky. Calm water float trips in canoes, kayaks and rafts are available. The river stretches are administered by either the BLM or the National Park Service. Individuals or groups may raft the river on their own or with a professional river outfitter. On any trip, calm or white water, special river rules apply to fires, campsites and sanitation. Permits and fees may be required for private use. Scenic Drives -touring the Moab area in an automobile? The following auto tours will take you through some of the most spectacular scenery in the area. Arches, canyons, the Colorado River gorge, mountain vistas, petroglyphs, and dinosaur tracks these routes have it all! Scenic Flights - The wild and untamed landscape of southern Utah contains some of the most rugged and inaccessible terrain in the country. Visitors to this area are awestruck by the enormity of the landscape its vast size and colossal dimensions are overwhelming to the senses. Taking it all in during a brief visit is impossible - exploring this spectacular landscape can take a lifetime. However, even an hour-long scenic flight will allow you to experience thousands of square miles of ruggedly spectacular canyon country! No other mode of transportation will allow you to see so much in so short a period of time. A scenic flight over the Canyonlands Region can be the perfect compliment to any vacation. A birds-eye view of our unique terrain is the perfect way to put your entire visit into perspective. Peer down on the enormous canyons cut by the Colorado and Green River over millions of years. Experience the remoteness, desolation, and unspoiled beauty of hundreds of square miles of pure wilderness. Fly around magnificent mesas, buttes, pinnacles, and spires. Journey back in time as eons of geological evolution, often perplexing from the ground, are clearly revealed from the air. © Copyright The WellSpring Institute All Rights Reserved 77 Confidential MARKET ANALYSIS From your aerial vantage point, suspended in time and space over a truly remarkable one-of-a-kind landscape, take a respite from the routine of daily life and let your spirit soar! Skydiving - or many, skydiving is a once in a lifetime adventure. Others continue on to become licensed skydivers that jump all over the US and the world. In either case, making that first skydive is an experience you will never forget! Moab’s spectacular canyon country offers the perfect backdrop to make this exciting event even more unforgettable! Winter Activities - Located within the Manti-La Sal National Forest, the LaSalle offer many areas open to cross-country skiing, sledding and a small amount of snowmobiling. Access to most areas is off the Geyser Pass Road which is plowed to a parking lot. For skiers, the LaSalle offer both worked trails and backcountry terrain. Some of these same areas are shared by snowmobile users, although some restrictions apply. Winter backcountry users should call 435-259-SNOW, November through April, for current taped information on mountain weather, road conditions and avalanche potential. The steep LaSalle Mountains have a greater potential for avalanche than the mountains of northern Utah, so please use caution and common sense. Guided day and overnight ski tours, and ski rentals are available in Moab. Strengths, Weaknesses, Opportunities & Threats (SWOT Analysis) Strengths - The following are a few of the strengths of the RANCH Proximity to Moab Only private land available in the area Private land is surrounded by forest service and BLM land allowing us unlimited access and use Already established and county maintained ATV and horse trails Proximity to LaSalle Mountain Rangers with Pine Forest and escape from summer heat and access to winter activities Property is located directly off the main highway Electric power is located within 5 miles of the property Property offers space for a wide variety of activities that will appeal to a wide range of customers © Copyright The WellSpring Institute All Rights Reserved 78 Confidential MARKET ANALYSIS Existing business relationships with o Fortune 500 Companies o Asian youth markets o Japanese travel agencies o Las Vegas bookers o The WellSpring Institute Clients o I Learning Pros Clients Abundant wildlife for hunting activity including: white mule deer, wild turkey, elk, bear, white tail squirrel and jackrabbits just to name a few Large acreage of land so operations can spread out to create an old west environment Highly trained and experienced personnel Synergistic product mix that provide a destination retreat environment Strong and growing tourist season history in the Moab and San Juan county areas Positive business development environment in San Juan County Current positive trend in the continuing education environment Development of own power plant provides opportunities for resale of energy Relationship and experience of the Wellspring Institute Gas line and rights currently available on property Unlimited water rights Large acreage of grazing rights available Built in “product launch with the Entrepreneur Fast Track Program and Seven days to prosperity and fulfillment” to help cover operating expenses Weaknesses - The following are a few of the weaknesses of the RANCH Opportunities Large integrated business development effort Large funding requirements No current infrastructure on prosperity Close nit “green” community in Moab Opportunities - The following are a few of the opportunities to the RANCH Build a “one of kind” business Purchase some of the most pristine land in southern Utah Create a showplace for American Western culture Develop a Indian Culture Center Create a showplace for “green” construction and self supplied resources © Copyright The WellSpring Institute All Rights Reserved 79 Confidential MARKET ANALYSIS Generate jobs and prosperity for hundreds of individuals Threats - The following are a few of the threats to the RANCH Economy stays flat and travel and training business does not grow. Other competitors enter market Attitudes of Moab residents resistant to change and business development Customer Profile Demographics of the Moab Visitor Sex of Visitors There is just about a split between men and women visitors to the Moab area which suggest that couples typically travel and vacation together. Age of Visitor There are two spikes in the age of individuals visiting Moab. The over 50 are the primary visitors with teenagers coming in a close second. This suggest that families are the primary source of visitors. Race of Visitor Consistent with the demographics of Utah, over 90% of visitors to Utah are Caucasian. There could a real opportunity to market y to people of color © Copyright The WellSpring Institute All Rights Reserved 80 Confidential MARKET ANALYSIS Family Make-up of Visitor While this slide suggest, most of the visitors to Moab do not have children. When you combine the numbers of ages. It is clear that families are indeed your number one traveler. It also show a trend that families with younger are visiting which suggest providing activities for all ages along the spectrum Income of Visitors This chart suggest that Moab attracts an affluent audience with income over 100K. In practical terms, this means the visitors to Moab have the money to spend on the activities provided. Education of Visitors There is a high index of College Graduates visiting the Moab area. This may be accountable for the Spring Break crowd and the high family oriented crowd. The following chart show the earnings of the visitors to you by age Table 3. Age of reference person: Average annual expenditures and characteristics, Consumer Expenditure Survey, 2007 Item All consumer units Under 25 years 25-34 years © Copyright The WellSpring Institute All Rights Reserved 35-44 years 81 45-54 years 55-64 years 65 years and older 65-74 years 75 years and older Confidential Number of consumer units (in thousands) MARKET ANALYSIS 120,171 8,150 20,499 23,416 25,245 19,462 23,400 12,011 11,390 Consumer unit characteristics: Income before taxes $63,091 $31,443 $57,256 $76,540 $80,560 $71,048 $40,305 $47,708 $32,499 Income after taxes $60,858 $30,802 $55,765 $74,051 $77,075 $67,965 $39,179 $46,334 $31,634 48.8 21.5 29.6 39.6 49.4 59.2 75.2 69.1 81.5 Persons 2.5 2.0 2.8 3.2 2.7 2.1 1.7 1.8 1.5 Children under 18 0.6 0.4 1.1 1.3 0.6 0.2 0.1 0.1 a/ Persons 65 and over 0.3 a/ a/ a/ a/ 0.1 1.4 1.4 1.3 Earners 1.3 1.3 1.5 1.6 1.7 1.4 0.4 0.7 0.2 Vehicles 1.9 1.2 1.7 2.2 2.3 2.2 1.6 1.8 1.3 Male 47 47 48 46 49 49 43 47 39 Female 53 53 52 54 51 51 57 53 61 Homeowner 67 16 47 68 75 81 79 81 77 With mortgage 43 11 41 60 59 47 21 30 11 Without mortgage 23 5 6 9 16 34 58 51 66 Renter 33 84 53 32 25 19 21 19 23 12 12 15 14 12 11 9 10 7 88 88 85 86 88 89 91 90 93 Age of reference person Average number in consumer unit: Percent distribution: Sex of reference person: Housing tenure: Race of reference person: Black or AfricanAmerican White, Asian, and all other races Hispanic or Latino origin of reference person: Hispanic or Latino 12 14 18 16 11 7 6 7 5 Not Hispanic or Latino 88 86 82 84 89 93 94 93 95 Education of reference person: Elementary (1-8) 5 3 4 4 4 4 11 8 14 High school (9-12) 35 31 30 33 33 33 45 44 46 College 60 66 66 63 62 63 43 47 38 b/ c/ b/ b/ b/ b/ 1 b/ 1 88 73 89 92 91 93 83 88 78 Never attended and other At least one vehicle owned or leased Table 3. Age of reference person: Average annual expenditures and characteristics, Consumer Expenditure Survey, 2007 Continued Item All consumer units Under 25 years Other meats $104 $71 $89 $127 $125 $107 $83 $93 75 years and older $72 Poultry $142 $90 $138 $179 $173 $134 $101 $125 $73 Fish and seafood $122 $64 $99 $152 $146 $127 $103 $122 $81 $43 $27 $41 $49 $47 $44 $39 $42 $36 Dairy products $387 $238 $368 $459 $442 $384 $332 $376 $284 Fresh milk and cream $154 $103 $157 $187 $172 $142 $126 $136 $115 Other dairy products $234 $136 $211 $271 $271 $242 $206 $240 $169 Fruits and vegetables $600 $340 $529 $677 $684 $640 $557 $628 $479 Eggs 25-34 years © Copyright The WellSpring Institute All Rights Reserved 35-44 years 82 45-54 years 55-64 years 65 years and older 65-74 years Confidential MARKET ANALYSIS Fresh fruits $202 $112 $168 $227 $232 $219 $193 $212 $172 Fresh vegetables $190 $103 $163 $220 $217 $207 $175 $205 $142 Processed fruits $112 $66 $111 $125 $123 $113 $106 $113 $99 $96 $58 $87 $105 $112 $102 $84 $99 $67 $1,241 $922 $1,194 $1,465 $1,447 $1,219 $976 $1,147 $789 $124 $69 $100 $151 $150 $119 $118 $136 $99 $91 $53 $76 $101 $107 $95 $89 $97 $80 Miscellaneous foods $650 $528 $683 $781 $729 $599 $489 $569 $403 Nonalcoholic beverages Food prepared by consumer unit on out-oftown trips Food away from home $333 $255 $305 $382 $411 $343 $247 $297 $192 $43 $17 $30 $50 $50 $63 $33 $49 $16 $2,668 $1,876 $2,790 $3,268 $3,178 $2,784 $1,610 $1,878 $1,319 $457 $461 $514 $469 $498 $533 $285 $346 $218 Housing $16,920 $9,598 $17,329 $20,952 $19,195 $17,223 $12,396 $13,547 $11,173 Shelter $10,023 $6,220 $10,536 $12,758 $11,617 $9,763 $6,656 $7,271 $6,009 $6,730 $1,398 $5,985 $9,232 $8,626 $7,063 $4,414 $5,329 $3,448 Mortgage interest and charges Property taxes $3,890 $919 $4,286 $6,239 $5,093 $3,421 $1,320 $2,049 $550 $1,709 $325 $1,076 $1,950 $2,178 $2,127 $1,651 $1,767 $1,529 Maintenance, repairs, insurance, other expenses $1,131 $154 $623 $1,043 $1,356 $1,515 $1,443 $1,513 $1,369 $2,602 $4,649 $4,288 $2,849 $2,055 $1,539 $1,639 $1,277 $2,020 $691 $173 $263 $677 $936 $1,161 $604 $664 $540 $3,477 $1,813 $3,063 $3,928 $4,053 $3,754 $3,117 $3,392 $2,828 $480 $169 $379 $534 $539 $557 $497 $522 $470 $1,303 $706 $1,148 $1,479 $1,499 $1,403 $1,175 $1,289 $1,055 $151 $28 $85 $132 $192 $171 $208 $185 $232 $1,110 $744 $1,094 $1,295 $1,330 $1,135 $806 $946 $659 $434 $166 $357 $487 $493 $488 $431 $451 $411 $984 $363 $1,175 $1,422 $867 $860 $825 $715 $941 Processed vegetables Other food at home Sugar and other sweets Fats and oils Alcoholic beverages Owned dwellings Rented dwellings Other lodging Utilities, fuels, and public services Natural gas Electricity Fuel oil and other fuels Telephone services Water and other public services Household operations Personal services $415 $174 $780 $844 $193 $159 $205 $83 $334 Other household expenses Housekeeping supplies $569 $189 $394 $579 $674 $701 $620 $632 $607 $639 $278 $522 $646 $724 $902 $562 $661 $453 Laundry and cleaning supplies $140 $84 $129 $178 $161 $134 $115 $138 $90 Table 3. Age of reference person: Average annual expenditures and characteristics, Consumer Expenditure Survey, 2007 Continued Item Other household products Postage and stationery Household furnishings and equipment Household textiles Furniture Floor coverings All consumer units Under 25 years 25-34 years $347 $134 $265 $343 $365 $572 $296 $348 75 years and older $240 $152 $60 $127 $125 $198 $197 $150 $175 $123 $1,797 $925 $2,034 $2,198 $1,933 $1,944 $1,235 $1,508 $943 $133 $65 $120 $169 $120 $170 $117 $145 $86 $446 $281 $537 $625 $461 $437 $235 $308 $159 $46 $4 $48 $50 $54 $48 $48 $58 $37 © Copyright The WellSpring Institute All Rights Reserved 35-44 years 83 45-54 years 55-64 years 65 years and older 65-74 years Confidential MARKET ANALYSIS Major appliances $231 $122 $213 $251 $285 $266 $180 $205 $152 Small appliances, miscellaneous house wares Miscellaneous household equipment $101 $59 $103 $110 $115 $92 $98 $115 $79 $840 $394 $1,013 $993 $898 $931 $558 $678 $429 Apparel and services $1,881 $1,477 $2,106 $2,335 $2,191 $1,888 $1,040 $1,323 $732 Men and boys $435 $323 $508 $582 $514 $402 $209 $255 $160 Men, 16 and over $351 $290 $396 $403 $428 $367 $187 $220 $152 $84 $33 $112 $178 $87 $35 $22 $36 $8 Women and girls $749 $535 $729 $855 $952 $793 $487 $636 $325 Women, 16 and over $627 $510 $570 $604 $822 $723 $460 $590 $316 Girls, 2 to 15 $122 $25 $158 $251 $130 $70 $28 $46 d/ 8 Boys, 2 to 15 Children under 2 $93 $145 $206 $119 $54 $55 $23 $32 $14 $327 $237 $383 $399 $383 $351 $160 $209 $106 $276 $237 $281 $381 $287 $286 $160 $190 $128 Transportation $8,758 $5,708 $9,065 $10,558 $9,943 $9,608 $5,785 $7,669 $3,784 Vehicle purchases (net outlay) Cars and trucks, new $3,244 $2,273 $3,930 $4,183 $3,223 $3,348 $1,977 $2,701 $1,213 $1,572 $1,058 $1,541 $1,955 $1,645 $1,700 $1,209 $1,721 $668 Cars and trucks, used $1,567 $1,126 $2,256 $2,106 $1,404 $1,582 $740 $925 $545 Footwear Other apparel products and services $105 d/ 89 $133 $122 $174 d/ 66 d/ 29 d/ 56 c/ Gasoline and motor oil Other vehicles $2,384 $1,760 $2,446 $2,870 $2,846 $2,504 $1,461 $1,862 $1,039 Other vehicle expenses $2,592 $1,365 $2,293 $2,966 $3,213 $2,993 $1,928 $2,536 $1,270 Vehicle finance charges $305 $221 $384 $400 $335 $325 $122 $197 $43 Maintenance and repairs $738 $437 $609 $809 $941 $885 $543 $693 $384 $1,071 $492 $802 $1,173 $1,382 $1,214 $975 $1,321 $597 $478 $216 $498 $584 $555 $569 $287 $325 $247 Vehicle insurance Vehicle rental, leases, licenses, and other charges Public transportation $538 $310 $396 $540 $661 $763 $420 $569 $262 Healthcare $2,853 $800 $1,740 $2,315 $2,792 $3,476 $4,631 $4,967 $4,275 Health insurance $1,545 $397 $918 $1,269 $1,386 $1,751 $2,770 $2,821 $2,716 Medical services $709 $267 $556 $651 $772 $883 $844 $1,027 $651 Drugs $481 $103 $203 $303 $498 $674 $859 $935 $777 Medical supplies $118 $34 $64 $93 $135 $168 $159 $184 $132 Table 3. Age of reference person: Average annual expenditures and characteristics, Consumer Expenditure Survey, 2007 Continued Item All consumer units Entertainment Fees and admissions Under 25 years 25-34 years 35-44 years 45-54 years 55-64 years 65 years and older 65-74 years $2,698 $1,448 $2,462 $3,551 $3,163 $2,730 $1,966 $2,636 75 years and older $1,255 $658 $290 $500 $967 $823 $645 $450 $575 $318 Audio and visual equipment and services Pets, toys, hobbies, and playground equipment $987 $726 $1,034 $1,196 $1,126 $965 $694 $812 $570 $560 $243 $480 $730 $711 $653 $338 $429 $239 Other entertainment supplies, equipment, and services $493 $189 $448 $658 $504 $468 $484 $821 $128 Personal care products and services $588 $337 $512 $662 $686 $632 $528 $599 $451 © Copyright The WellSpring Institute All Rights Reserved 84 Confidential MARKET ANALYSIS Reading $118 $51 $72 $107 $137 $151 $143 $151 $136 Education $945 $1,787 $604 $819 $1,687 $929 $292 $245 $341 Tobacco products and smoking supplies $323 $290 $331 $379 $388 $353 $176 $243 $106 Miscellaneous $808 $368 $589 $845 $1,008 $1,084 $672 $787 $548 Cash contributions $1,821 $549 $1,027 $1,569 $1,972 $2,746 $2,282 $1,923 $2,661 Personal insurance and pensions $5,336 $2,440 $5,159 $6,980 $7,489 $6,193 $1,819 $2,600 $996 Life and other personal insurance $309 $39 $164 $286 $402 $461 $329 $375 $279 $5,027 $2,401 $4,995 $6,694 $7,087 $5,732 $1,491 $2,225 $716 $63,091 $31,443 $57,256 $76,540 $80,560 $71,048 $40,305 $47,708 $32,499 Pensions and Social Security Sources of income and personal taxes: Money income before taxes Wages and salaries $50,322 $27,685 $52,914 $69,903 $70,023 $54,021 $12,011 $18,489 $5,180 Self-employment income Social Security, private and government retirement Interest, dividends, rental income, other property income Unemployment and workers' compensation, veterans' benefits Public assistance, supplemental security income, food stamps Regular contributions for support Other income $3,445 $1,310 $2,523 $3,557 $5,326 $4,478 $1,993 $2,880 $1,058 $6,379 $180 $302 $898 $2,355 $8,704 $21,754 $22,616 $20,846 $1,746 $662 $387 $756 $1,439 $2,651 $3,881 $3,053 $4,755 $216 $101 $168 $196 $299 $268 $186 $96 d/ 281 $332 $279 $320 $428 $351 $339 $239 $282 $195 $463 $797 $380 $604 $591 $463 $139 $154 $123 $189 $429 $263 $198 $175 $122 $100 $137 $61 Personal taxes $2,233 $641 $1,491 $2,489 $3,485 $3,083 $1,126 $1,374 $864 Federal income taxes $1,569 $433 $982 $1,741 $2,490 $2,234 $760 $1,003 $505 $468 $191 $413 $561 $754 $551 $143 $139 $147 State and local income taxes Other taxes Income after taxes $196 $17 $96 $188 $241 $298 $223 $232 $212 $60,858 $30,802 $55,765 $74,051 $77,075 $67,965 $39,179 $46,334 $31,634 Target Audience Profile In order to book our facilities and make better use of our activities, we are going to focus on the following market segments. We have provided a brief analysis of each of these market segments. Executive, Management and Team Training and Retreats Almost all Fortune 500 companies use formal vacation destination and conference centers for their training and retreats. In an informal study of corporate planners, we discovered that there is yet a great need for professional facilities with a unique “play” experience that pampers guests. The continuing education business is really thriving in this economic © Copyright The WellSpring Institute All Rights Reserved 85 Confidential MARKET ANALYSIS downturn. Either as a result of a planned or forced transition, professionals displaced from their careers often explore other educational options to prepare them for another line of work. Or, in some cases, many come to the classroom just to learn more about something in which they are interested. Either way, the wide variety of continuing education programs available can meet the need. Those who administer continuing education programs tell us that they are benefiting from the aging of the baby boomer generation, as more and more nontraditional students are returning to the classroom. A study conducted by the U.S. Department of Education in 2002 highlights the older undergraduate population as well, which is more likely to attend parttime due to family and work responsibilities. Continuing education is on the upswing for several reasons : o Mergers, acquisitions and closures are sending more and more highly competent professionals into the job market. Many need to refine or update their skills to be best positioned for future employment. o As service-industry jobs feel the pressures of outsourcing and manufacturing jobs decrease, the need for employees to stay current in industry-related skills is critical. o More than half of the world's 500 largest corporations were located in the U.S. in the 1970s; today less than one third are located here. A trained workforce is essential for the nation to maintain our share of the global economy. o Uncertain economic conditions in the past several years have sent many people directly into the workforce rather than to colleges and universities. Part-time continuing education programs offer them the opportunity to pursue their education while maintaining their careers. o Having completed their careers, many retirees are interested in learning in other subject matter areas unrelated to their former work lives. o The Baby Boomer generation is well-educated. Researchers believe that well-educated people drive the demand for more educational opportunities. They know that there is a positive relationship between the level of education attained and the tendency to pursue continuing education opportunities. o That same generation will drive a high demand for healthcare professionals. Continuing education is critical to those who work caring for others and how need to stay updated on the latest technologies and treatments. © Copyright The WellSpring Institute All Rights Reserved 86 Confidential MARKET ANALYSIS o Nearly half of all federal government employees will face retirement age in the next 5-10 years. Job openings will be extensive, and individuals seeking to change careers will need training. o Paid for continuing education opportunities are popular benefits and help employers retain qualified and high-performing employees. o Learning for the sake of learning, particularly among the growing senior citizens market, drives the development of courses in history, the arts and language. o With the advent of a more diverse workforce, English as a Second Language classes are become more popular. o Increasing awareness of the importance of entrepreneurship for the national economy is driving many individuals to pursue an idea for business ownership, often requiring extensive education in company start-up, marketing, finance and management. o The rapid growth in online learning makes continuing education more convenient for working adults. A recent Wall Street Journal article reported that most Americans can expect to change careers at least three to five times and hold 7-12 different positions in their work lifetimes. The disappearance of lifetime employment opportunities has required workers to become more agile and flexible in adapting to changing conditions. As a result, those in the business of preparing those workers have had to become more agile themselves. The positive result in central Missouri is a wide array of educational offerings to meet nearly any budget, schedule, interest area and delivery method. The choice is ours. Personal Development Retreats Based on the soon to be released books “Seven Days to Personal Prosperity and Fulfillment” and “The Entrepreneur Fast track program” offered by the WellSpring Institute, individuals will solicited from across the country to attend boot camps at the ranch for their own persona development. Women Conferences Our unique blend of resort and education facilities offer themselves to a wide market of women looking for personal development and relaxation. Borrowing form the success of the BYU education week, we will offer an alternative for women seeking personal development. © Copyright The WellSpring Institute All Rights Reserved 87 Confidential MARKET ANALYSIS Family Reunions and Youth Conferences At the beginning of the summer of 2002, we conducted an informal survey of typical family reunion sites in Utah, Colorado, and Nevada. To our surprise, all of these sites were booked for the summer, and many had reservations 1-3 years in advance. As we personally visited a few of these sites, we discovered that families were paying top dollar for little or no services and activities, let alone less than professional facilities. Only two organization’s offered formalized activities by a trained recreation specialist. When visiting with some of the guests we discovered that they were vacationing at these facilities because they were the only ones available. More than 72 million Americans attend family reunions, and more than half do so every year. Reunions magazine [reunionsmag.com], a leader in tracking the growth and trends of various kinds of reunion groups, reports that families are unique in that the motivation is to create a meaningful way for relatives to stay in touch and pass on their heritage to new generations. Family reunions account for an increasing share of travel. The TIA reports that 34 percent of Americans have traveled to a family reunion in the past three years. But increasingly, families are not just getting together, they're traveling together. Vacationers With the current unrest around the world, many Americans have said that they will vacation in their own backyards. With the current crowds at traditional vacations spots, particularly around the Grand Canyon, one of the Seven Wonders of the World, we can offer unique, uncrowned experience with unlimited growth potential. Our research indicates that by providing the right facilities and activities, we can draw business from the other ranches and resorts in the area. Asian and European Travelers With most of the Asian travel controlled by three travel agencies, gaining their favor almost guarantees success with any vacationing destination. Today the Asians look for safe activities like horseback riding, ATV’s and shooting ranges. Our research indicates that Europeans visit sites like the Grand Canyon, Zion’s, Arches and Bryce Canyon more than any other foreign nationality. Our conveyance to Las Vegas and our unique access to the Colorado River and the river excursion companies create additional appeal for these travelers. Young Adult Program © Copyright The WellSpring Institute All Rights Reserved 88 Confidential MARKET ANALYSIS A retreat facility provides an excellent venue for 3 to 6 day youth camps where young adults can gather and learn in a fun non-threatening environment. Coping and preventative skills can be developed in a natural setting. Sports Camps Our unique sports facilities will provide the perfect venue for schools and other professional and not for profit organization to come in a “boot camp” atmosphere to train and bond before their season begins. Special camps offered by professionals will be provided for individuals seeking to learn specific skills on their own. Several trends have emerged over the past 20 years in the camping industry. Highlighted below are the trends that the Company believes most impact its business. o Increasing Demand for Camp Reflects Parental Desire for Supervision of their Children During the Summer Many adults now in their 40's, 50's or 60's spent the summers of their youth riding, swimming, fishing or playing ball with friends. Today's parents are less willing to give their children this type of freedom. Summer camp provides an envelope of safety and supervision that today's parent’s desire. Consequently, demand for all sorts of supervised summer activities, largely camp related, has grown. o Increasing Demand for Camp Reflects Parental Desire for Childhood Enrichment Programs Today's parents are far more likely to seek to enrich the lives of their children through supervised, structured instructional and enrichment programs. Thirty years ago, few if any children were introduced to supervised sports or paid sports instruction before the age of 9 or 10. In contrast, it is quite common for today's 4, 5 and 6 year olds to take tennis lessons and play in soccer leagues. The demand for child supervision and enrichment fuels demand for camps of all sorts. The trend extends to teens and pre-teens (now often referred to as "tweens"). Summer academic enrichment programs geared to children 12 to 17 years of age have proliferated on college campuses and prep schools in recent years. In addition, for-profit community service programs have multiplied to serve parents seeking to give their children an edge in the increasingly © Copyright The WellSpring Institute All Rights Reserved 89 Confidential MARKET ANALYSIS competitive college admissions process. o Steady Demand for Premium Traditional Resident and Day Camps As noted above, over the past 25 years, the number of traditional resident and day camps declined. Beginning in 1989, the United States experienced an "echo baby boom." Birth rates rose to their highest levels since the original, post-war "baby boom." As a result, beginning in 1996, demand for traditional resident and day camps started to rise. Indeed, demand outstripped supply so that those camps that continued to run quality programs increased capacity and raised prices. o The Growth of Shorter Session Residential and Day Camping Demand has increased in recent years for traditional resident and day camps offering sessions of one to four weeks. These camps appeal to a broader segment of the population because of their lower price points. o The Growth of Specialty Camps and Non-Traditional Day Camps The ACA attributes most of the growth in summer camps over the last 20 years to growth in specialty camps and non-traditional day camps. These camps typically occupy facilities where camp is a secondary use such as prep schools, colleges and universities and public and private recreational facilities such as tennis clubs and indoor athletic complexes. The growth in this type of camping is fueled by low barriers to entry as well as demand by owners of such facilities for additional summer income. Hundreds of colleges and private schools now run their own summer programs or lease their facilities to private operators. The same goes for tennis clubs and indoor athletic complexes which used to be empty during the summer. We believe that the growth in demand for day camp is largely fueled by demand for summer day care. The Company believes that many of the newer "day camps" are really summer childcare service providers masquerading as day camps. Day camps that are sponsored or set up by corporations seeking to become more family friendly fit this description. o Volatility in the Not-For-Profit Camp Sector © Copyright The WellSpring Institute All Rights Reserved 90 Confidential MARKET ANALYSIS Many traditional not-for-profit camps that operate on their own land have fallen victim to the same economic phenomena that affected their for-profit brethren. Although not-for-profit camps are typically exempt from real estate taxes, they must still comply with a complex web of governmental regulations and competing demands for the real estate which they occupy. Moreover, they are often partially or completely dependent on charitable contributions. After the tragic events of September 11, 2001, donations too many charities that operated camps declined, and these camps suffered substantially. Many had no choice but to sell their land, discontinue operations or sell their camp to better managed, not-for-profit or forprofit operators. o Year-Round Use of Traditional Camps As the fixed costs of operating a traditional camp have risen, many owners and operators have sought to bolster their revenues and profits by expanding their business into the off-season. According to a recent survey, more than half of ACA accredited camps rent their facilities to outside groups during the off-season. An increasing number of traditional camps are winterizing some of their facilities to make them suitable for year round rental. In our faster-better-more culture, the notion of a vacation as time "off," as pure getaway, seems almost quaint. Not surprisingly, many Americans are using summer vacation time to pursue interests that are all but impossible to fit into their packed daily routine -- like learning to cook a new type of cuisine or whipping their bodies into shape at a fitness boot camp. These interests and many more can be satisfied at a growing number of immersive camps and workshops, dedicated to everything from en plein air painting to, well, something a lot like a military boot camp. Soccer camp is not just for kids anymore; in fact, in many sports, the fastest growing segment of participants is among master’s athletes. It makes sense; Little League, the mother of all kids' leagues in the U.S., was established in 1939, and it flourished in the post-War period. The kids of those kids (not to mention some of those original kids as well, who continue to compete in their 80's and 90's) are now running age-group marathons, doing laps before dawn in masters swimming programs, and learning to roll kayaks on glacier lakes. The first kids to experience the "football" boom in America are even starting up adult and age-group soccer leagues. Elder Care With our unique elder care facilities, families of our guest will come to stay © Copyright The WellSpring Institute All Rights Reserved 91 Confidential MARKET ANALYSIS and participate in our activities while they visit with their older family members. US demand to grow 6.6% annually through 2011. Revenues for elder care services in the US are expected to increase 6.6 percent per year to $26.4 billion in 2011. Advances will be driven largely by demographic changes. Medical advances and trends toward healthier lifestyles are increasing the life expectancy of all age groups and contributing to the growing number of individuals in the older population segments. Such gains are augmented by the large, post-World War II "baby boom" generation that will be entering their retirement years. Growth will also stem from the rising cost of providing care on a per capita basis. Additionally, advances are spurred by the rising number of older adults who either do not have family members who are able to care for them, or simply prefer using professional care. Further revenue gains will be restrained by limitations on government reimbursements that have not generally kept pace with the rising cost of providing care, a particular concern because a large number of older adults rely on Medicare and Medicaid to pay for elder care services. © Copyright The WellSpring Institute All Rights Reserved 92