EXECUTIVE SUMMARY
PKF'
CONSULTING
USA
A CBRE COMPANY
1-1
Executive Summary
SCOPE AND METHODOLOGY
In preparing this study, we completed the research and analysis listed below:
• Conducted an inspection and analysis of multiple sites and their surrounding
areas in order to determine the best location for the proposed Hotel and
Conference Center.
• Assembled, reviewed and analyzed economic, demographic and real estate
market data pertaining to the Columbia market area to evaluate the present
economic climate and to estimate future growth potential, particularly as it relates
to lodging and meeting demand.
• Interviewed representatives of University of Missouri to identify existing campus
meeting facilities, determine the current and future hotel and meeting needs of the
university, and assess the future growth of the university campus.
• Conducted a survey of the University of Missouri faculty and staff and Alumni to
quantify the university-related need for the proposed Hotel and Conference Center.
• Interviewed representatives of Boone County, Columbia government, Columbia
Convention and Visitors Bureau (CVB), Columbia Chamber of Commerce,
Regional Economic Development Incorporated (REDI), area hotels and
businesses to gather data on current and future area growth and the demand for
lodging and meeting facilities.
• Conducted a survey of the Columbia Chamber of Commerce Members and the
Columbia CVB meeting planners list to assess the demand for community and
conference-related use of the proposed Hotel and Conference Center.
• Toured and interviewed representatives of existing meeting facilities both on and
off campus to assess the quality and quantity of available meeting space in the
Columbia area, types of events captured and lost business.
• Evaluated the survey results, existing area hotels and comparable university hotel
and conference centers located throughout the US to determine the recommended
facilities and to estimate the performance of the subject Hotel and Conference
Center.
• Prepared a summary of historical market performance, including available rooms,
occupied rooms, market occupancy, market segmentation, and average daily
room rate for the period 2009 to 2013 and year-to-date July 2014.
• Identified other proposed hotels to assess their probability of completion and the
degree to which they will compete with the subject project.
Proposed Hotel & Conference Center - Columbia, Missouri PKF Consulting USA
Executive Summary
1-2
• Recommended the concept. size and type of facilities, and amenities appropriate
for the market for the proposed Hotel and Conference Center.
• Estimated future competitive position and market performance of the subject
proposed Hotel and Conference Center for the period 2018 to 2020.
• Based on the estimated future competitive position of the proposed Hotel and
Conference Center, prepared a schedule of prospective cash flow before debt
service and income taxes for the period 2018 to 2027.
• Conducted focus groups with representatives of the University of Missouri to
discuss the need for on-campus meeting space.
CONCLUSIONS
A concise summary of the conclusions of this report follows:
• Columbia is centrally located within the State of Missouri between st. Louis to the
east and Kansas City to the west, making it a regional hub for retail, leisure,
entertainment, medical and educational services. The largest economic driver is
the University of Missouri with almost 35,000 students and 8,600 employees.
Columbia is also the headquarters for several national insurance companies,
home to several major medical centers, incubator for numerous entrepreneurial
endeavors and leader in biomedical research due to the presence of one of the
largest nuclear reactors in the U.S.
Columbia's economy will be kept in the expansion mode as the University activity
increases employment in consumer and service industries. Strong retail demand
from the student population and low business costs will help offset the drag from
the State of Missouri fiscal situation.
Its central location, strong diverse economy and young student-oriented
environment makes Columbia attractive for convention and tourist activity. The
abundant number of tourist attractions, events and festivals attracts thousands of
visitors to the City. However, the lack of a designated hotel and conference
center limits Columbia's ability to attract convention activity, resulting in the loss
of potential economic activity.
• PKF Consulting USA considered six sites as potential locations for the proposed
Hotel and Conference Center. To determine the best site for the proposed
development, we considered a number of attributes which could help make the
project more suitable for success.
Proposed Hotel & Conference Center - Columbia, Missouri PKF Consulting USA
Executive Summary
1-3
After grading each of the sites, we determined that Site 6, the
Cliffview/Maintenance Facilities site, held the greatest number of attributes which
are critical to the success of a Hotel and Conference Center. It is adjacent to the
Hampton Inn University, proximate to the Holiday Inn Express University, Stoney
Creek, Broadway DoubleTree and Tiger Hotel, near the downtown market area,
easily accessible and visible from Stadium Drive, proximate to the University
campus and sports venues, proximate to other demand generators, easily
expandable and adjacent to University parking lots.
While all of the potential sites could work for a Hotel and Conference Center, Site
6, the Cliffview/Maintenance Facilities site, would maximize the potential for
attracting more groups to Columbia, meeting the needs of the community,
increasing the economic impact from outside visitors, energizing downtown
Columbia, promoting the Academic Mission of the University and providing a
working laboratory for the Mizzou Hospitality Management Program.
• In order to understand the needs of the University of Missouri and the
surrounding Columbia community, as well as the facilities needed in the market,
PKF Consulting USA conducted a series of interviews. The individuals that we
interviewed indicated a strong need for a hotel and conference center in the
Columbia area. Some of their comments are listed below.
• Potential groups that are being lost due to lack of adequate meeting facilities
include state associations, groups related to the university, medical centers,
insurance companies, entrepreneur incubator and the nuclear reactor, and
international groups attracted to Columbia for various reasons.
• Hoteliers indicated a need for a larger conference center to attract new
lodging demand. However, a smaller hotel with about 200 rooms is preferred
to reduce the impact on the existing hotels.
• Several people indicated that the proposed Hotel and Conference Center is
important to the Academic Mission of the University of Missouri by enabling
the faculty and staff to attract academic conferences and seminars to the
Mizzou campus and increasing the exposure of the faculty and students to
more outside influences.
• The interviewees stated that the proposed Hotel and Conference Center
would provide a competitive advantage for the Mizzou Hospitality
Management Program. It would be a working lab for the students providing
hospitality jobs and internships and would enable the Program to attract
better students since most of the top Hospitality Programs have an existing
hotel on or near campus. Hospitality Program representatives indicated that
the hotel would also enable the faculty to conduct additional research projects
in a real life environment.
Proposed Hotel & Conference Center - Columbia, Missouri PKF Consulting USA
1-4
Executive Summary
• In order to maximize the input from the University of Missouri, Mizzou alumni,
state and local meeting planners, and the Columbia community, PKF Consulting
conducted four email surveys to identify the types, number and size of the
potential events, number of breakout rooms, number of hotel rooms and the
potential average daily room rate for the proposed Hotel and Conference Center.
The surveys identified a large number of potential events that would use a
conference center in Columbia. The University of Missouri Faculty and Staff
survey identified 1,197 potential events of which 77% indicated that they would
consider relocating their events to the proposed Hotel and Conference Center.
The Mizzou Alumni survey identified 846 potential events that could be relocated
to Columbia. The CVB Meeting Planner survey identified 995 potential events of
which 81 % would consider Columbia for these events. The Chamber of
Commerce Member survey identified 72 potential events of which 83% could
relocate to the proposed Center.
The survey respondents were asked to identify new events that could be
attracted to Columbia if there was a Hotel and Conference Center available. The
Faculty and Staff identified 915 potential events of which 37 were larger than
1,000 attendees. The Chamber Members identified 31 potential events of which
one was larger than 1,000. The various surveys identified 238 potential events
that require seating for more than 1,000 people. The surveys also indicated that
40% to 50% of the events need up to five breakout rooms, while another 10% to
20% need more than five.
• Based on the interviews and surveys, PKF recommended the following facilities
for the proposed Hotel and Conference Center.
Proposed Hotel & Conference Center
Columbia, Missouri PKF Consulting USA
1-5
Executive Summary
Recommended Facilities Proposed Hotel & Conference Center Type of Hotel Number of Guestrooms Conference Center Space
Grand Ballroom
Jr. Ballroom
Additional Meeting Rooms
Total
Full-Service
range 175 to 225
200
18,000
6,000
6,000
30,000
Amenities Restaurant & Bar
Room Service
Coffee Shop
Area Shuttles
Business Center
Fitness Center/Spa
Pool
Potential Brand Affiliation Embassy Suites
Marriott
Sheraton
sq.
sq.
sq.
sq.
ft. divisible by 5 or 6
ft. divisible by 3 or 4
ft. various sizes
ft.
Source: PKF Consulting USA
With the recommended facilities, the Hotel will offer many of the amenities and
services necessary to serve both the local community and outside visitors and
conferences. Based on PKF's interviews, the proposed Hotel needs to have
enough rooms to act as a host hotel for the Conference Center but it should be
downsized to minimize the impact on the local hotel market. Therefore, we have
recommended 200 rooms. However, the actual number of rooms can range from
175 rooms to 225 rooms, depending on the layout and design of the hotel.
According to interviews, the Conference Center should offer a large ballroom
capable of seating up to 1,200 people for a banquet. The recommended 18,000­
square foot ballroom would accommodate 1,200 people for a banquet type of
event The hotel should also offer a junior ballroom and a number of smaller
meeting rooms to accommodate smaller meetings/trainings, conferences, local
social eventstwedding and University and company functions.
The majority of the interviewees agreed that the proposed Hotel and Conference
Center would need to be a full-service, nationally branded franchise to be
successful. We have recommended the Embassy Suites (by Hilton), Marriott and
Sheraton (by Starwood) as potential brands.
Proposed Hotel & Conference Center - Columbia, Missouri PKF Consulting USA
Executive Summary
1-6
•
The proposed Hotel and Conference Center is considered a critically needed
facility to host Columbia community, medical and corporate events, to attract new
groups and events to Columbia, to generate economic impact within the City of
Columbia, to accommodate University-related events and meetings, to promote
the Academic Mission of the University of Missouri and to provide a working
laboratory for the Mizzou Hospitality Management Program. The proposed Hotel
and Conference Center is considered to be a missing component within the
Columbia market compared to similar facilities which exist near other major
universities.
•
The competitive set includes the highest quality, nationally branded limited,
select and full-service hotels in the Columbia area. The Holiday Inn Executive
Center is the largest hotel with the largest complement of meeting space. This
hotel has been the primary local and conference meeting facility for many years.
Other hotels with an adequate amount of meeting space include the Hilton
Garden Inn, Stoney Creek Inn, Marriott Courtyard, Tiger Hotel and Hampton Inn
University. The Marriott Courtyard is in the process of expanding its meeting
space by converting the adjacent Applebee's restaurant into a small conference
center.
•
The competitive set has shown occupancy growth from 55.5% in 2009 to 64.1 %
in 2013, following the national recession. Occupied rooms have averaged 6.1%
annual growth during this period. Despite the addition of two new hotels to the
competitive set in 2014, the competitive set's occupancy has remained stable,
indicating pent up demand in the market.
Average Daily Rate (ADR) has increased at an average annual rate of 2.4% over
the past five years. Rates accelerated in 2012 and 2013 at 3.5% and 3.4%,
respectively, as occupancies began to exceed 60%. Rates continued to increase
at 3.3% through July 2014 when compared to the same period in 2013.
•
The following table summarizes the competitive market's mix of demand in 2013.
Competitive Market
2013 Mix of Demand
Market Se~ment Room Ni~hts
Corp Individual
67,800
Leisure
50,900
Group
67,800
University
101,800
Medical
50,900
Total
339,000
Source: ~~F Consultin~ USA
Proposed Hotel & Conference Center - Columbia, Missouri
Ratio
20%
15%
20%
30%
15%
100%
PKF Consulting USA
1-7
Executive Summary
• We identified six comparable conference centers located on university campuses
throughout the US. These university conference centers range in size from 120
to 300 rooms with an average of 242 rooms. Meeting space ranged from 20,000
to 58,000 square feet with an average of 32,583 square feet. The amount of
square feet of meeting space per guest room varies from 101 to 193 with an
average of 135.
Occupancies at the university conference centers ranged from 56% to 62% with
an average of 58%. ADR ranged 'from $121 to $169 with an average of $145.
These comparable university conference centers have been used as a
benchmark for the proposed Hotel and Conference Center in Columbia.
• The following additions to supply have been added to the market analysis.
• The 114-room Broadway DoubleTree was added to the Columbia market in
the downtown area in March of 2014.
• The 121-room Holiday Inn Express opened on Stadium Drive near US
Highway 63 in mid-2014.
• A 120-room proposed extended-stay hotel is being planned for the Discovery
Park development on south US Highway 63. The estimated opening date is
January 2017.
• The 200-room proposed Hotel and Conference Center is estimated to open in
January 2018 near the University of Missouri campus.
• The market is projected to drop from 64% in 2013 to 62% in 2014 and 61% in
2015 with the addition of the Broadway DoubleTree and Holiday Inn Express.
Occupancy is expected to increase slightly to 62% in 2016 with no new additions
in that year. However, with the addition of the Discovery Park hotel in 2017,
occupancy is estimated to decrease to 61%. Then, with the addition of the
proposed Hotel and Conference Center in 2018, occupancy will drop again to
60%. With no new additions to supply, the market is expected to rebound to 66%
by 2020, buoyed by the new demand attracted to the Columbia market by the
proposed Hotel and Conference Center.
• The proposed Hotel and Conference Center is expected achieve an occupancy
of 64% in its opening year (2018). grow to 69% in 2019 and stabilize in its third
year (2020) of operation at 74%. Upon stabilization, the Subject is projected to
penetrate the market at 112% of its fair share.
Proposed Hotel & Conference Center
Columbia, Missouri PKF Consulting USA
1-8
Executive Summary
•
Estimated market segmentation for the proposed Hotel and Conference Center is
summarized, as follows:
Proposed Hotel & Conference Center 2020 Mix of Demand and Market Penetration Market Segment Room Nights
Ratio
Penetration
Corp Individual
5,400
10%
60% Leisure
2,900
5%
50% Group
21,500
40%
185% University
16,500
31%
112% 7,400
14%
108% 53,700
100%
112%
Medical
Total
Sourcf3: PKF9onsultin~ U~A
• The proposed Hotel and Conference Center is projected to achieve an average
daily rate of $125 based in 2014 dollars. This rate positions the proposed Hotel
and Conference Center at the upper end of the market. The various surveys
indicated that the demand for events in Columbia is somewhat price sensitive.
The majority of the respondents indicated that they would like to pay less than
$125 for a hotel room, which will greatly benefit the lower-priced hotels in
Columbia. However, there were a significant number of respondents that would
pay more than $125. Of the total number of respondents, 28% of the
Faculty/Staff, 46% of the Alumni, 19% of the CVB Meeting Planners and 41% of
the Chamber Members indicated that they would pay more than $125 with some
willing to pay as much as $200.
• The estimated operating performance of the proposed Hotel and Conference
Center in Columbia, Missouri is, as follows:
Year
2018**
2019
2020
2021
2022
Proposed Hotel and Conference Center
Estimated Operating Performance
Annual
Average
Net Operating
Income
Occupancy
Daily Rate*
64%
69%
74%
74%
74%
$140
$144
$149
$153
$158
$2,521,000
$2,997,000
$3,539,000
$3,621,000
$3,750,000
• Stated Year Dollars, rounded to the nearest dollar
Based on an ADR of $125 in 2014 dollars .
.. The subject hotel is estimated to open in January 2018
Source: PKF Consulting USA
Proposed Hotel & Conference Center - Columbia, Missouri PKF Consulting USA
Executive Summary
1-9
• The University of Missouri is also considering the addition of meeting space on
campus for University meetings and events that would not likely use the
proposed Hotel and Conference Center. PKF conducted three focus group
sessions to discuss the need for these on-campus facilities. One group included
six attendees from the Conferences, Events and Programming departments.
Another group included seven attendees from the Student Affairs, Admissions
and Catering/Reynolds Center. The third group included seven attendees from
Athletics, Advancement, Alumni and Visitors Relations.
The three groups identified the following ways in which they believe that these
new on-campus meeting facilities would assist the University in reaching its
Academic Mission.
• Enhance the recruitment of students, faculty and athletes.
• Improve the engagement with alumni, recruits, future students, parents
and other visitors.
• Provide more effective utilization of University facilities for educational
purposes and recruitment efforts, creating a positive Mizzou experience.
• Meet the expectations of visitors regarding what a Tier One University
should be.
• Bring corporate groups and organizations to the Mizzou campus to
interact with faculty and students and to hire the graduating Mizzou
students.
• Enable Mizzou to host academic conferences that would bring renowned
researchers, scientists and academics to the Mizzou campus to interact
with the faculty and students.
• Provide additional opportunities for the Mizzou Hospitality Management
Program to provide real-life work experience for their students in the areas
of event planning and food and beverage operations.
• During the 2013/2014 academic year, the University of Missouri had 15,462
events on campus which resulted in 68,805 event hours. These events were
attended by 362,028 people. Additionally, the Mizzou Faculty/Staff survey
identified 1,197 events that they are responsible for booking and indicated that, if
they had better meeting space, there are 915 new events that could be brought
to Columbia. The University also estimates that 1,000 to 2,000 events of varying
sizes are lost each year due to a lack of space. Therefore, there is no question
that there is a strong demand for meeting space on-campus.
Proposed Hotel & Conference Center - Columbia, Missouri PKF Consulting USA
Executive Summary
1-10
• The University is considering two potential on-campus meeting space projects.
One of the projects would be the renovation and expansion of the Memorial
Union. The other project would be the development of a Welcome Center at the
corner of Stadium Boulevard and Mick Deaver Memorial Drive.
If there is not adequate funding for both projects, the Memorial Union project
should take priority. First, from a practical point of view, the second floor of the
Memorial Union must be renovated because of its deferred maintenance, lack of
aesthetic appeal and functional obsolescence of its meeting space. Second, its
location in the heart of the campus, proximate to the student center, make it an
ideal location for faculty, staff and student events and a great place to showcase
the University to visitors. Third, the number of events and revenues that would be
generated by the Memorial Union project would more than offset the cost of the
project.
Last and most important, the location in the heart of campus and the amount and
type of meeting space that would be created at the Memorial Union are more
conducive to fulfilling the Academic Mission of the University of Missouri.
Therefore, PKF Consulting highly recommends the funding of the Memorial
Union project.
Proposed Hotel & Conference Center - Columbia, Missouri PKF Consulting USA