market study the crosslands phase 1 proposed hotelocc.tupperware.com/folder 2/x.41 - hvs hotel...

MARKET STUDY

The Crosslands

Phase 1 Proposed Hotel

KISSIMMEE, FLORIDA

SUBMITTED TO:PR OPOSED

Thomas M. Roehlk, Executive Vice President & Secretary Deerfield Land Corporation 14901 South Orange Blossom Trail Orlando, Florida 32837 +1 (407) 826-4514

PREPARED BY:

CHR Consulting Services, Inc. D/B/A HVS Consulting & Valuation 8925 SW 148th Street, Suite 216 Miami, Florida, 33176 +1 (305) 378-0404

January-2014

February 7, 2014

Thomas M. Roehlk, Executive Vice President & Secretary Deerfield Land Corporation 14901 South Orange Blossom Trail Orlando, Florida 32837

Re: The Crosslands Phase 1 Proposed Hotel

Kissimmee, Florida

HVS Reference: 2013060162

Dear Mr. Roehlk:

Pursuant to your request, we herewith submit our market study pertaining to the above-captioned property. We have inspected the real estate and analyzed the hotel market conditions in the Orlando-Kissimmee, Florida area. We have studied the proposed project, and the results of our fieldwork and analysis are presented in this report. We have also reviewed the proposed improvements for this site.

We hereby certify that we have no undisclosed interest in the property, and our employment and compensation are not contingent upon our findings. This study is subject to the comments made throughout this report and to all assumptions and limiting conditions set forth herein.

Sincerely,

HVS Consulting & Valuation

Gary L. Johnson, Senior Consultant

[email protected], +1 (305) 378-0404 ext. 1015

Certified General Real Estate Appraiser (FL) RZ3512

John P. Lancet, MAI, Director/Partner

[email protected], +1 (305) 378-0404 ext. 1014

Certified General Real Estate Appraiser (FL) RZ2554

HVS MIAMI

8925 SW 148th Street, Suite 216

Miami, Florida, 33176

+1 (305) 378-0404

+1 (305) 378-4484 FAX

www.hvs.com

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Table of Contents

SECTION TITLE PAGE

1. Executive Summary 1

2. Description of the Site and Neighborhood 8

3. Market Area Analysis 19

4. Supply and Demand Analysis 40

5. Projection of Occupancy and Average Rate 63

6. Statement of Assumptions and Limiting Conditions 71

Addenda

Penetration Explanation i

Qualifications

January-2014 Executive Summary Phase 1 Proposed Hotel – Kissimmee, Florida 1

1. Executive Summary

The subject of the market study is a parcel that is slated to be improved with a limited- or select-service business-oriented hotel; we assume the hotel will be affiliated with a nationally recognized upscale or upper midscale brand. The property is assumed to open on September 1, 2015 and will feature 120 rooms, limited food and beverage offerings, a pool, a whirlpool, an exercise room, a business center, a gift shop, and a guest laundry room. The hotel will also feature all necessary back-of-the-house space.

The subject site is current vacant and unimproved; however, the developer intends to break ground by the end of February, 2014 for the development of a 410,000 square-foot retail center to be known as The Crosslands, Phase I. The planned retail center, as well as the proposed subject hotel, will represent the first phase of a planned mixed-use development. Note the subject site is located in Osceola County; however, the parent site encompasses land in both Osceola County as well as Orange County. The approved entitlements from each county individually and in total are summarized in the following table.

APPROVED ENTITLEMENTS

Osceola Orange

County County Total

Approved Use Entitlements Entitlements Entitlements

Commercial 1,779,500 SF 966,975 SF 2,746,475 SF

Office 1,852,200 SF 1,852,200 SF

Office/Warehouse 80,000 SF 80,000 SF

Hotel 500 Rooms 500 Rooms

Multi-Family 2,350 Units 200 Units 2,550 Units

According to the Osceola County Property Appraiser, the subject site’s location is West Osceola Parkway, Kissimmee, Florida 34741.

The effective date of the report is February 7, 2014. The subject site was inspected by Gary L Johnson on January 3, 2014.

Subject of the Market Study

Pertinent Dates


Based on our review of the competitive market and the subject site’s neighborhood and demand generators, we recommend the development of a Hilton Garden Inn or Hyatt Place on the subject site.

In regards to facilities and amenities, we recommend that the proposed subject property offer at least 1,500 square feet of meeting space. We also recommend the proposed hotel feature limited food and beverages outlets consistent with the brand standards of Hilton Garden Inn or Hyatt Place.

The owner of the subject parcel is Deerfield Land Corporation; the parent company of this entity is Tupperware Brands Corporation, which is based in Orlando, Florida. It is our understanding that the subject site, as well as the surrounding sites that are part of the approved DRI, have been owned by Deerfield Land Corporation for more than twenty years. We are not aware of any current or recent listings of the subject site.

Details pertaining to management terms were not yet determined at the time of this report.

We recommend that the proposed subject hotel operate as an upscale, select-service property. While we have recommended the Hilton Garden Inn or Hyatt Place brands, a specific franchise affiliation and/or brand has yet to be finalized.

Local employers and headquarter offices in the area, as well as compression from conventions and major tourist attractions represent the primary sources of demand for this market. Demand in the local market has fluctuated in the twelve-year period reviewed, resulting in an average annual compounded increase of 6.0%. Both occupancy and demand fluctuated in the first part of the last decade, declining in both 2003 and 2006, while recording positive growth in the remainder of the trend period. Demand was mostly stabilized from 2004 through 2008, with market occupancy remaining in range from roundly 68% to 73% throughout that period. The onset of the national economic recession resulted in slower growth in demand in 2009, although demand rebounded dramatically in 2010 as the economic recovery led to increased business and leisure demand in the local market. Market occupancy recorded consistent annual increases beginning in 2010 for each calender year through 2013. The latest data for 2013 indicates strong growth, with an increase in demand of 13.7% compared to 2012.

The following table provides a historical perspective on the supply and demand trends for a selected set of hotels, as provided by Smith Travel Research.

Brand and Facilities Recommendations

Ownership, Franchise, and Management Assumptions

Summary of Hotel Market Trends


FIGURE 1-1 HISTORICAL SUPPLY AND DEMAND TRENDS (STR)

Year

Average Daily

Room Count

Available Room

Nights Change

Occupied Room

Nights Change Occupancy Average Rate Change RevPAR Change

2002 1,384 505,160 — 306,493 — 60.7 % $76.06 — $46.15 —

2003 1,483 541,420 7.2 % 302,705 (1.2) % 55.9 72.27 (5.0) % 40.41 (12.4) %

2004 1,532 559,180 3.3 397,692 31.4 71.1 73.92 2.3 52.57 30.1

2005 1,532 559,180 0.0 407,063 2.4 72.8 80.76 9.2 58.79 11.8

2006 1,532 559,180 0.0 398,023 (2.2) 71.2 89.18 10.4 63.48 8.0

2007 1,546 564,243 0.9 400,497 0.6 71.0 96.98 8.7 68.84 8.4

2008 1,729 631,225 11.9 427,831 6.8 67.8 97.40 0.4 66.02 (4.1)

2009 1,809 660,308 4.6 430,236 0.6 65.2 84.82 (12.9) 55.27 (16.3)

2010 1,877 685,105 3.8 476,655 10.8 69.6 82.04 (3.3) 57.08 3.3

2011 1,877 685,105 0.0 493,975 3.6 72.1 85.18 3.8 61.42 7.6

2012 1,925 702,725 2.6 514,309 4.1 73.2 89.28 4.8 65.34 6.4

2013 2,125 775,625 10.4 584,562 13.7 75.4 94.08 5.4 70.91 8.5

4.0 % 6.0 % 2.0 % 4.0 %

Hotels Included in Sample

The Florida Hotel & Conf Ctr 510 May 2004 Apr 1986Courtyard Orlando Lake Buena Vista In The Marriott Village 312 Oct 2000 Oct 2000Springhill Suites Orlando Lake Buena Vista In The Marriott Village 400 Dec 2000 Dec 2000The Inn @ Calypso 110 Dec 2013 Oct 2001Holiday Inn Express & Suites Orlando Lake Buena 148 Oct 2007 May 2003Hampton Inn Suites Orlando John Young Pkwy S Park 83 Nov 2007 Nov 2007Hampton Inn Suites Orlando South Lake Buena Vista 125 Feb 2008 Feb 2008Hilton Garden Inn Lake Buena Vista Orlando 137 Jul 2009 Jul 2009Embassy Suites Orlando Lake Buena Vista South 300 Sep 2012 Sep 2012

Total 2,125

Source: STR Global

Year

Opened

Average Annual Compounded Change: 2002-

2013

Number Year

of Rooms Affiliated

The following table reflects our estimates of operating data for hotels on an individual basis. Note that we have deemed each of the proposed subject property’s competitors as secondary competitors. The room count of each secondary competitor was weighted based on its assumed degree of competitiveness the future with the proposed subject hotel. These trends are presented in detail in the Supply and Demand Analysis chapter of this report.


FIGURE 1-2 SECONDARY COMPETITORS – OPERATING PERFORMANCE

Est. Segmentation Estimated 2011 Estimated 2012 Estimated 2013

Weighted

Annual

Room

CountCo

mm

erci

al

Mee

tin

g an

d

Gro

up

Leis

ure

Weighted

Annual

Room

Count

Weighted

Annual

Room

Count

Total

Property

Number

of Rooms

Competitive

Level Occ.

Average

Rate RevPAR Occ.

Average

Rate RevPAR Occ.

Average

Rate RevPAR

The Inn @ Calypso (former Country Inn & Suites) 110 30 % 20 % 50 % 70 % 77 86 % $79 $67.94 77 83 % $63 $52.29 77 66 % $50 $33.00

Courtyard by Marriott Orlando Lake Buena Vista in the Marriott Village 312 25 25 50 80 250 71 86 61.07 250 77 88 67.76 250 77 92 70.84

Embassy Suites Orlando Lake Buena Vista South 300 25 50 25 70 0 0 0 0.00 70 35 105 36.75 210 69 116 80.37

Florida Hotel & Conference Center at the Florida Mall Orlando 510 40 40 20 50 256 69 91 63.40 256 71 99 70.03 255 74 100 74.00

Hampton Inn & Suites Orlando John Young Parkway 83 60 20 20 85 71 82 92 75.44 71 84 94 78.96 71 86 98 84.53

Hampton Inn & Suites Orlando South Lake Buena Vista 125 50 30 20 90 113 76 84 63.84 113 78 86 67.08 113 79 87 68.80

Hilton Garden Inn Lake Buena Vista Orlando 137 25 25 50 90 123 81 90 72.90 124 80 93 74.40 123 82 95 78.55

Holiday Inn Express Orlando Lake Buena Vista East 148 55 30 15 80 118 70 69 48.30 118 71 73 51.83 118 79 76 60.04

SpringHill Suites by Marriott Orlando Lake Buena Vista in Marriott Village 400 25 25 50 80 320 72 83 59.66 320 77 87 66.99 320 76 92 69.92

Totals/Averages 2,125 34 % 31 % 35 % 72 % 1,327 73.6 % $84.94 $62.54 1,397 74.3 % $87.90 $65.34 1,536 75.9 % $93.38 $70.84

Weighted

Annual

Room

CountCo

mm

erci

al

Mee

tin

g an

d

Gro

up

Leis

ure

Weighted

Annual

Room

Count

Weighted

Annual

Room

Count


Based on our analysis presented in the Projection of Occupancy and Average Rate chapter, we have chosen to use a stabilized occupancy level of 76% and a base-year rate position of $93.00 (2013 $) for the proposed subject hotel. The following table reflects a summary of our market-wide and proposed subject hotel occupancy and average rate projections.

FIGURE 1-3 MARKET AND SUBJECT PROPERTY AVERAGE RATE FORECAST

Year

Base Year 75.9 % — $93.38 — — $93.00 99.6 %

2014 76.7 5.0 % 98.05 — 5.0 % 97.65 99.6

2015 70.0 4.0 101.97 59.0 % 4.0 101.56 99.6

2016 67.9 3.0 105.03 62.0 3.0 104.60 99.6

2017 69.9 3.0 108.18 68.0 3.0 107.74 99.6

2018 72.0 3.0 111.42 74.0 3.0 110.97 99.6

2019 74.1 3.0 114.77 77.0 3.0 114.30 99.6

Average Rate

Growth

Area-wide Market (Calendar Year) Subject Property (Calendar Year)

Average

Rate

Average Rate

Penetration

Average Rate

Growth

Average

Rate OccupancyOccupancy

The following table summarizes the proposed subject hotel’s forecast, reflecting fiscal years and opening-year rate discounts as applicable.

FIGURE 1-4 FORECAST OF AVERAGE RATE

Year

2015/16 61 % $103.58 10.0 % $93.23

2016/17 66 106.69 5.0 101.36

2017/18 72 109.89 0.0 109.89

2018/19 76 113.19 0.0 113.19

Occupancy

Average Rate

Before Discount Discount

Average Rate

After Discount

Summary of Forecast Occupancy and Average Rate


The methodology used to develop this study is based on the market research and valuation techniques set forth in the textbooks authored by Hospitality Valuation Services for the American Institute of Real Estate Appraisers and the Appraisal Institute, entitled The Valuation of Hotels and Motels,1 Hotels, Motels and Restaurants: Valuations and Market Studies,2 The Computerized Income Approach to Hotel/Motel Market Studies and Valuations,3 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,4 and Hotels and Motels – Valuations and Market Studies.5

1. All information was collected and analyzed by the staff of HVS Consulting & Valuation. Information was supplied by the client and/or the property’s development team.

2. The subject site has been evaluated from the viewpoint of its physical utility for the future operation of a hotel, as well as access, visibility, and other relevant factors.

3. A brand recommendation was derived based on an analysis of the existing and proposed competitive supply and the demand dynamics of the subject market.

4. The surrounding economic environment, on both an area and neighborhood level, has been reviewed to identify specific hostelry-related economic and demographic trends that may have an impact on future demand for hotels.

5. Dividing the market for hotel accommodations into individual segments defines specific market characteristics for the types of travelers expected to utilize the area's hotels. The factors investigated include purpose of visit, average length of stay, facilities and amenities required, seasonality, daily demand fluctuations, and price sensitivity.

6. An analysis of existing and proposed competition provides an indication of the current accommodated demand, along with market penetration and

1 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of

Real Estate Appraisers, 1978). 2 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies.

(Chicago: American Institute of Real Estate Appraisers, 1983). 3 Stephen Rushmore, The Computerized Income Approach to Hotel/Motel Market Studies and

Valuations. (Chicago: American Institute of Real Estate Appraisers, 1990). 4 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment

Analysis, and Valuations (Chicago: Appraisal Institute, 1992). 5 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies.

(Chicago: Appraisal Institute, 2001).

Scope of Work


the degree of competitiveness. Unless noted otherwise, we have inspected the competitive lodging facilities summarized in this report.

7. Documentation for an occupancy and average rate projection is derived utilizing the build-up approach based on an analysis of lodging activity.

January-2014 Description of the Site and Neighborhood Phase 1 Proposed Hotel – Kissimmee, Florida 8

2. Description of the Site and Neighborhood

The suitability of the land for the operation of a lodging facility is an important consideration affecting the economic viability of a property and its ultimate marketability. Factors such as size, topography, access, visibility, and the availability of utilities have a direct impact on the desirability of a particular site.

The subject site is located along the west side of South Orange Blossom Trail, in the northwest quadrant of the intersection formed by Osceola Parkway and South Orange Blossom Trail. This site is in the city of Kissimmee, Florida.

The subject site will be apportioned from a larger parcel; thus, currently the specific dimensions and square feet of the subject site have not been determined. The parcel's adjacent uses are set forth in the following table.

FIGURE 2-1 SUBJECT PARCEL'S ADJACENT USES

Direction

North vacant land

South vacant land; local access road to be constructed

East South Orange Blossom Trail (road) / Osceola County School for

the Performing Arts (school)

West vacant land to be developed with The Crosslands retail center

Adjacent Use

Physical Characteristics


THE PROPOSED CROSSLANDS RETAIL CENTER SITE PLAN

Hotel Site


AERIAL PHOTOGRAPH (BING MAPS)

Hotel Site


VIEW FROM SITE TO THE NORTH

VIEW FROM SITE TO THE SOUTH

VIEW FROM SITE TO THE EAST

VIEW FROM SITE TO THE WEST

Primary vehicular access to the proposed subject hotel will be provided by South Orange Blossom Trail. Access will also be available from Osceola Parkway via an access road to be constructed that will provide access to the retail outlets within the proposed retail center. The topography of the parcel is generally flat, and the site’s shape is to be determined after it is apportioned from the larger parcel.


Upon completion of construction, we assume that the subject site will not contain any significant portion of undeveloped land that could be sold, entitled, and developed for alternate use. The site is expected to be fully developed with site or building improvements, which will contribute to the overall profitability of the hotel.

It is important to analyze the site in regard to ease of access with respect to regional and local transportation routes and demand generators. The subject site is readily accessible to a variety of local, county, state, and interstate highways.

MAP OF REGIONAL ACCESS ROUTES

Primary regional access through the area is provided by east/west Interstate 4, which provides access to such cities as Tampa to the southwest and Daytona Beach to the northeast. North/south Interstate 95 is another major highway, providing access to such cities as Miami to the south and Jacksonville to the north. Regional access through the area is also provided by the Florida Turnpike, which extends from southeast Florida, through Orlando, to Interstate 75 to the northwest. The

Site Utility

Access and Visibility


subject market is served by a variety of additional local highways, which are illustrated on the map.

From Interstate 4, motorists take the State Road 417, also known as the Central Florida Greeneway, Exit and proceed east on this thoroughfare to the Orange Blossom Trail Exit. Motorists execute a right turn (south) onto Orange Blossom Trail and travel south for approximately two miles to the subject site, which is located on the motorists’ right-hand side (west). The proposed subject hotel is assumed to have adequate signage at the street; thus, the hotel should benefit from very good visibility from within its local neighborhood. Overall, the subject site benefits from good accessibility, and the proposed hotel is expected to enjoy good visibility attributes.

The proposed subject hotel will be served by the Orlando International Airport, which is located approximately 14 miles to the northwest of the subject site. From the airport, motorists will follow signs to State Road 417, also known as the Central Florida Greeneway and travel west on this thoroughfare to Orange Blossom Trail. Motorists will then proceed south on Orange Blossom Trail, continuing to the subject site as previously noted.

The neighborhood surrounding a lodging facility often has an impact on a hotel's status, image, class, style of operation, and sometimes its ability to attract and properly serve a particular market segment. This section of the report investigates the subject neighborhood and evaluates any pertinent location factors that could affect its future occupancy, average rate, and overall profitability.

The neighborhood surrounding the subject site is generally defined by Hunters Creek Boulevard to the north, the Florida Turnpike to the east, West Carroll Street to the south, and Dyer Boulevard to the west. Note the neighborhood encompasses portions of northern Osceola County and southern Orange County. This neighborhood is in the growth stage of its life cycle, with pockets of moderate growth occurring in the retail sector. Within the immediate proximity of the site, land use is primarily commercial and office in nature. The neighborhood is characterized by restaurants, office buildings, and retail shopping centers along the primary thoroughfares, with residential areas located along the secondary roadways.

Some specific businesses and entities in the area include Tupperware World Headquarters, Osceola County School for the Performing Arts, Gatorland Theme Park, Osceola County Softball Complex, Osceola Business Park, Regal Cinema 16, JC Penny's, Kohl's, BJ's Wholesale Club, Lowe's, and Best Buy. Restaurants within immediate proximity of the subject site include Chipotle, Bonefish Grill. BJ's Restaurant & Brewhouse, Macaroni Grill, and Johnny Rockets.

Airport Access

Neighborhood


Major changes in this neighborhood include the development of the Phase 1 of The Crosslands Retail Center which is expected to have tenants such as Hobby Lobby, Dick's Sporting Goods, Marshall's, Petsmart, and Cheddar's Restaurant. In addition SunRail, a commuter rail system that is under construction in the Greater Orlando area, upon completion will provide access from Poinciana to the south and DeLand to the north through Downtown Orlando. When Phase 1 is completed, SunRail will run for 31 miles with 17 stations along the CSX Transportation "A" Line (former Atlantic Coast Line Railroad main line). In 2014, service is scheduled to begin from Volusia County through Orlando with eventual connectivity to south Osceola County. The SunRail system is expected to be fully completed in 2016.

SUNRAIL PROJECT

Hotel Site


In general, we would characterize the neighborhood as 5% office use, 20% retail/restaurant use, 5% residential use, 60% vacant, and 10% other. The proposed subject hotel's opening should be a positive influence on the area; the hotel will be in character with and will complement surrounding land uses.

MAP OF NEIGHBORHOOD

Overall, the supportive nature of the development in the immediate area is considered appropriate for and conducive to the operation of a hotel.

The subject site will reportedly be served by all necessary utilities. We assume that these will be acquired from the most cost-effective providers within the local market.

Utilities


Geological and soil reports were not provided to us or made available for our review during the preparation of this report. We are not qualified to evaluate soil conditions other than by a visual inspection of the surface; no extraordinary conditions were apparent.

We were not informed of any site-specific nuisances or hazards, and there were no visible signs of toxic ground contaminants at the time of our inspection. Because we are not experts in this field, we do not warrant the absence of hazardous waste and urge the reader to obtain an independent analysis of these factors.

According to the Federal Emergency Management Agency map illustrated below, the subject site is located in flood zone X.

COPY OF FLOOD MAP AND COVER

The flood zone definition for the X designation is as follows: areas outside the 500-year flood plain; areas of the 500-year flood; areas of the 100-year flood with average depths of less than one foot or with drainage areas less than one square mile and areas protected by levees from the 100-year flood.

Soil and Subsoil Conditions

Nuisances and Hazards

Flood Zone


According to the local planning office, the subject property is zoned as follows: DRI - Osceola Corporate Center Developments of Regional Impact.

OSCEOLA CORPORATE CENTER DRI

According to the Osceola County Planning Office, the Osceola Corporate Center DRI contains the following approved entitlements;

Commercial/retail - 1,779,500 square-feet; Office – 1,852,200 square feet; Office/warehouse – 80,000 square feet; Hotel (units can be converted to multi-family) – 500 rooms; and Multi-family – 2,350 units.

We assume that all necessary permits and approvals will be secured (including an appropriate liquor license) and that the proposed subject property will be constructed in accordance with local zoning ordinances, building codes, and all

Zoning


other applicable regulations. Our zoning analysis should be verified before any physical changes are made to the site.

We are not aware of any easements attached to the property that would significantly affect the utility of the site or marketability of this project.

We have analyzed the issues of size, topography, access, visibility, and the availability of utilities. The proposed subject hotel is anticipated to benefit from its location within a mixed-use, master-planned development that is scheduled to include phased development of office space, multi-family residential, and retail. In general, the site should be well suited for future hotel use, with acceptable access, visibility, and topography for an effective operation.

Easements and Encroachments

Conclusion

January-2014 Market Area Analysis Phase 1 Proposed Hotel – Kissimmee, Florida 19

3. Market Area Analysis

The economic vitality of the market area and neighborhood surrounding the subject site is an important consideration in forecasting lodging demand and future income potential. Economic and demographic trends that reflect the amount of visitation provide a basis from which to project lodging demand. The purpose of the market area analysis is to review available economic and demographic data to determine whether the local market will undergo economic growth, stabilize, or decline. In addition to predicting the direction of the economy, the rate of change must be quantified. These trends are then correlated based on their propensity to reflect variations in lodging demand, with the objective of forecasting the amount of growth or decline in visitation by individual market segment, e.g. commercial, meeting and group, and leisure.

The market area for a lodging facility is the geographical region where the sources of demand and the competitive supply are located. The subject site is located in the city of Kissimmee, the county of Osceola, and the state of Florida.

The proposed subject property’s market area can be defined by its Combined Statistical Area (CSA): Orlando-Deltona-Daytona Beach, FL. The CSA represents adjacent metropolitan and micropolitan statistical areas that have a moderate degree of employment interchange. Micropolitan statistical areas represent urban areas in the United States based around a core city or town with a population of 10,000 to 49,999; the MSA requires the presence of a core city of at least 50,000 people and a total population of at least 100,000 (75,000 in New England). The following exhibit illustrates the market area.

Market Area Definition


MAP OF MARKET AREA

A primary source of economic and demographic statistics used in this analysis is the Complete Economic and Demographic Data Source published by Woods & Poole Economics, Inc. – a well-regarded forecasting service based in Washington, D.C. Using a database containing more than 900 variables for each county in the nation, Woods & Poole employs a sophisticated regional model to forecast economic and demographic trends. Historical statistics are based on census data and information published by the Bureau of Economic Analysis. Projections are formulated by Woods & Poole, and all dollar amounts have been adjusted for inflation, thus reflecting real change.

These data are summarized in the following table.

Economic and Demographic Review


FIGURE 3-1 ECONOMIC AND DEMOGRAPHIC DATA SUMMARY

Average Annual

Compounded Change

1990 2000 2013 2015 1990-00 2000-13 2013-15

Resident Population (Thousands)

Osceola County 110.3 174.2 299.4 313.9 4.7 % 4.3 % 2.4 %

Orlando-Kissimmee, FL MSA 1,240.7 1,656.8 2,229.3 2,303.8 2.9 2.3 1.7

Orlando-Deltona-Daytona Beach, FL CSA 1,676.3 2,206.0 2,934.2 3,029.0 2.8 2.2 1.6

State of Florida 13,033.3 16,047.1 19,644.7 20,208.3 2.1 1.6 1.4

United States 249,622.8 282,172.0 319,116.2 325,343.4 1.2 1.0 1.0

Per-Capita Personal Income*

Osceola County $20,528 $23,096 $22,837 $23,436 1.2 (0.1) 1.3

Orlando-Kissimmee, FL MSA 25,243 30,919 31,622 32,422 2.0 0.2 1.3

Orlando-Deltona-Daytona Beach, FL CSA 24,400 29,607 30,883 31,657 2.0 0.3 1.2

State of Florida 26,940 32,391 34,872 35,764 1.9 0.6 1.3

United States 26,826 33,770 36,677 37,559 2.3 0.6 1.2

W&P Wealth Index

Osceola County 78.9 71.1 64.0 64.1 (1.0) (0.8) 0.1

Orlando-Kissimmee, FL MSA 96.6 93.1 88.4 88.4 (0.4) (0.4) 0.0

Orlando-Deltona-Daytona Beach, FL CSA 93.9 89.9 87.0 87.1 (0.4) (0.2) 0.0

State of Florida 104.3 99.3 99.6 99.8 (0.5) 0.0 0.1

United States 100.0 100.0 100.0 100.0 0.0 0.0 0.0

Food and Beverage Sales (Millions)*

Osceola County $263 $336 $569 $600 2.5 4.1 2.7



State of Florida 16,197 20,541 27,280 28,140 2.4 2.2 1.6

United States 257,805 341,525 424,500 434,221 2.9 1.7 1.1

Total Retail Sales (Millions)*

Osceola County $1,462 $2,158 $3,577 $3,800 4.0 4.0 3.1



State of Florida 159,785 223,684 277,869 289,415 3.4 1.7 2.1

United States 2,620,710 3,613,909 4,189,260 4,325,045 3.3 1.1 1.6

* Inflation Adjusted

Source: Woods & Poole Economics, Inc.


The U.S. population has grown at an average annual compounded rate of 1.0% from 2000 through 2013. The county’s population has grown at a quicker pace than the nation’s population; the average annual growth rate of 4.3% between 2000 and 2013 reflects a rapidly expanding area. Following this population trend, per-capita personal income decreased slowly, at -0.1% on average annually for the county between 2000 and 2013. Local wealth indexes have remained stable in recent years, registering a relatively low 64.0 level for the county in 2013.

Food and beverage sales totaled $569 million in the county in 2013, versus $336 million in 2000. This reflects a 4.1% average annual change, which is stronger than the 2.5% pace recorded in the prior decade, the latter years of which were adversely affected by the recession. Over the long term, the pace of growth is forecast to moderate to a more sustainable level of 2.7%, which is forecast through 2015. The retail sales sector demonstrated an annual increase of 4.0% registered in the decade 1990 to 2000, followed by an increase of 4.0% in the period 2000 to 2013. An increase of 3.1% average annual change is expected in county retail sales through 2015.

The characteristics of an area's workforce provide an indication of the type and amount of transient visitation likely to be generated by local businesses. Sectors such as finance, insurance, and real estate (FIRE); wholesale trade; and services produce a considerable number of visitors who are not particularly rate-sensitive. The government sector often generates transient room nights, but per-diem reimbursement allowances often limit the accommodations selection to budget and mid-priced lodging facilities. Contributions from manufacturing, construction, transportation, communications, and public utilities (TCPU) employers can also be important, depending on the company type.

The following table sets forth the county workforce distribution by business sector in 1990, 2000, and 2013, as well as a forecast for 2015.

Workforce Characteristics


FIGURE 3-2 HISTORICAL AND PROJECTED EMPLOYMENT (000S)

Average Annual

Compounded Change

Percent Percent Percent Percent

Industry 1990 of Total 2000 of Total 2013 of Total 2015 of Total

Farm 0.8 1.9 % 0.9 1.4 % 0.6 0.6 % 0.6 0.6 % 0.6 % (3.4) % 0.0 %

Forestry, Fishing, Related Activities And Other 0.4 0.8 0.6 1.0 0.6 0.6 0.6 0.6 6.0 (0.4) 1.7

Mining 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (1.5) (1.9) 0.0

Utilities 0.1 0.2 0.1 0.1 0.2 0.2 0.2 0.2 1.0 0.0 (0.0)

Construction 3.1 7.3 4.3 6.8 4.1 4.5 4.3 4.4 3.2 (0.3) 1.6

Manufacturing 1.6 3.6 1.5 2.3 1.2 1.3 1.2 1.3 (0.7) (1.3) 0.4

Total Trade 7.1 16.3 11.0 17.3 15.1 16.3 15.7 16.3 4.5 2.5 1.7

Wholesale Trade 0.8 1.8 2.0 3.1 2.5 2.7 2.6 2.7 9.7 1.9 1.7

Retail Trade 6.3 14.5 9.0 14.2 12.6 13.5 13.0 13.6 3.7 2.6 1.7

Transportation And Warehousing 0.5 1.1 0.8 1.3 1.7 1.8 1.8 1.8 5.9 5.9 1.6

Information 0.3 0.6 0.4 0.6 0.8 0.9 0.8 0.9 3.8 5.6 1.0

Finance And Insurance 0.5 1.2 1.1 1.7 1.9 2.1 2.0 2.1 8.0 4.5 1.3

Real Estate And Rental And Lease 1.6 3.8 3.1 4.8 5.3 5.7 5.4 5.6 6.5 4.3 0.9

Total Services 22.0 50.9 31.3 49.2 47.4 50.9 48.9 50.9 3.6 3.2 1.6

Professional And Technical Services 1.0 2.4 1.5 2.4 3.0 3.3 3.1 3.3 4.0 5.5 1.7

Management Of Companies And Enterprises 0.4 1.0 0.8 1.2 0.1 0.2 0.1 0.2 5.9 (12.2) 0.3

Administrative And Waste Services 1.6 3.8 3.9 6.2 7.3 7.9 7.7 8.0 9.2 5.0 2.6

Educational Services 0.2 0.4 0.3 0.5 1.0 1.0 1.0 1.1 5.1 9.2 3.2

Health Care And Social Assistance 3.7 8.6 5.3 8.3 10.3 11.0 10.7 11.1 3.5 5.3 1.8

Arts, Entertainment, And Recreation 3.0 7.0 4.5 7.1 7.3 7.8 7.6 7.9 4.0 3.8 2.1

Accommodation And Food Services 9.2 21.4 11.3 17.8 13.1 14.0 13.2 13.7 2.1 1.1 0.5

Other Services, Except Public Administration 2.7 6.2 3.7 5.8 5.3 5.7 5.5 5.7 3.2 2.8 1.8

Total Government 5.3 12.2 8.5 13.4 14.1 15.2 14.7 15.3 4.9 4.0 2.0

Federal Civilian Government 0.2 0.6 0.3 0.5 0.4 0.5 0.4 0.5 3.5 1.8 1.3

Federal Military 0.3 0.7 0.4 0.6 0.5 0.5 0.5 0.5 1.5 2.2 (0.1)

State And Local Government 4.7 10.9 7.8 12.3 13.2 14.2 13.8 14.3 5.1 4.1 2.1

TOTAL 43.2 100.0 % 63.5 100.0 % 93.1 100.0 % 96.2 100.0 % 3.9 % 3.0 % 1.6 %

MSA 739.6 — 1,068.0 — 1,299.7 — 1,338.1 — 3.7 % 1.5 % 1.5 %

U.S. 138,331.0 — 165,371.0 — 182,783.2 — 186,999.8 — 1.2 0.8 1.1

Source: Woods & Poole Economics, Inc.

1990-

2000

2000-

2013

2013-

2015


Woods & Poole Economics, Inc. reports that during the period from 1990 to 2000, total employment in the county grew at an average annual rate of 3.9%. This trend was above the growth rate recorded by the MSA and also outpaced the national average. More recently, the pace of total employment growth in the county slowed to 3.0% on an annual average from 2000 to 2013.

Of the primary employment sectors, Total Services recorded the highest increase in number of employees during the period from 2000 to 2013, increasing by 16,100 people, or 51.5%, and rising from 49.2% to 50.9% of total employment. Of the various service sub-sectors, Accommodation And Food Services and Health Care And Social Assistance were the largest employers. Strong growth was also recorded in the Total Government sector, as well as the Total Trade sector, which expanded by 73.4% and 37.7%, respectively, in the period 2000 to 2013. Forecasts developed by Woods & Poole Economics, Inc. anticipate that total employment in the county will change by 1.6% on average annually through 2015. The trend is above the forecast rate of change for the U.S. as a whole during the same period.

The following table illustrates historical and projected employment, households, population and average household income data as provided by REIS for the overall Orlando market.


FIGURE 3-3 HISTORICAL & PROJECTED EMPLOYMENT, HOUSEHOLDS, POPULATION, AND HOUSEHOLD INCOME STATISTICS

Year

2000 913,430 — 269,068 — 108,491 — 640,060 — 1,683,720 — $73,269 —

2001 896,230 (1.9) % 268,810 (0.1) % 105,680 (2.6) % 659,880 3.1 % 1,735,820 3.1 % 74,441 1.6 %

2002 914,330 2.0 278,016 3.4 102,652 (2.9) 677,890 2.7 1,784,830 2.8 76,739 3.1

2003 931,600 1.9 278,175 0.1 101,860 (0.8) 698,630 3.1 1,842,610 3.2 79,617 3.8

2004 986,170 5.9 294,159 5.7 107,401 5.4 725,590 3.9 1,917,110 4.0 84,275 5.9

2005 1,038,270 5.3 312,647 6.3 110,777 3.1 752,310 3.7 1,991,200 3.9 89,141 5.8

2006 1,077,100 3.7 328,953 5.2 113,395 2.4 769,890 2.3 2,041,030 2.5 93,539 4.9

2007 1,094,070 1.6 333,654 1.4 113,448 0.0 781,060 1.5 2,073,370 1.6 96,202 2.8

2008 1,048,300 (4.2) 322,577 (3.3) 105,143 (7.3) 790,090 1.2 2,099,920 1.3 93,142 (3.2)

2009 993,400 (5.2) 309,662 (4.0) 95,887 (8.8) 798,590 1.1 2,124,980 1.2 88,841 (4.6)

2010 1,006,570 1.3 308,942 (0.2) 95,636 (0.3) 809,850 1.4 2,156,030 1.5 92,582 4.2

2011 1,024,400 1.8 314,184 1.7 93,829 (1.9) 818,930 1.1 2,197,290 1.9 94,409 2.0

2012 1,046,970 2.2 319,558 1.7 94,555 0.8 832,230 1.6 2,245,190 2.2 99,160 5.0

Forecasts

2013 1,073,570 2.5 % 327,813 2.6 % 95,167 0.6 % 848,430 1.9 % 2,289,990 2.0 % $99,412 0.3 %

2013 1,073,570 (0.0) 327,813 0.0 95,167 0.0 848,430 0.0 2,289,990 0.0 99,412 (0.0)

2014 1,102,060 2.7 334,962 2.2 96,037 0.9 866,150 2.1 2,342,390 2.3 104,438 5.1

2015 1,137,710 3.2 344,882 3.0 97,331 1.3 892,310 3.0 2,400,700 2.5 107,990 3.4

2016 1,172,830 3.1 353,997 2.6 98,670 1.4 919,640 3.1 2,465,070 2.7 111,384 3.1

Average Annual Compound Change

2000 - 2012 1.1 % 1.4 % (1.1) % 2.2 % 2.4 % 2.6 %

2000 - 2007 2.6 3.1 0.6 2.9 3.0 4.0

2007 - 2010 (2.7) (2.5) (5.5) 1.2 1.3 (1.3)

2010 - 2012 2.0 1.7 (0.6) 1.4 2.0 3.5

Forecast 2012 - 2017 2.3 % 2.1 % 0.9 % 2.0 % 1.9 % 2.4 %

% Chg

Household

Avg. Income % Chg

Source: REIS Report, 4th Quarter, 2013

Households % Chg Population% Chg

Industrial

Employment % Chg

Total

Employment % Chg

Office

Employment


For the market, of the roughly 1,000,000 persons employed, 31% work in offices and are categorized as office employees, while 9% are categorized as industrial employees. Total employment decreased by an average annual compound rate of -2.7% during the recession of 2007 to 2010, followed by an improvement of 2.0% from 2010 to 2012. By comparison, office employment reflected compound change rates of -2.5% and 1.7%, during same respective periods. Total employment is expected to expand by 2.5% in 2013, while office employment is forecast to expand by 2.6% in 2013. Forecasts for the period 2012 through 2016 anticipate total employment will improve at an average annual compound rate of 2.3%, and office employment is forecast to improve by 2.1% on average annually during the same time frame.

The number of households are forecast to improve by 2.0% on average annually between 2012 and 2016. Population is forecast to expand during this same time frame, at an average annual compounded rate of 1.9%. Household average income is forecast to grow by 2.4% on average annually between 2012 through 2016.

The following table presents historical unemployment rates for the proposed subject hotel’s market area.

FIGURE 3-4 UNEMPLOYMENT STATISTICS

Year

2003 5.4 % 5.1 % 5.3 % 6.0 %

2004 4.7 4.4 4.7 5.5

2005 3.8 3.5 3.8 5.1

2006 3.3 3.1 3.3 4.6

2007 4.1 3.7 4.0 4.6

2008 6.3 5.9 6.3 5.8

2009 11.1 10.3 10.4 9.3

2010 12.4 11.3 11.3 9.6

2011 11.3 10.2 10.3 8.9

2012 9.3 8.4 8.6 8.1

Recent Month - Nov

2012 8.7 % 7.7 % 7.9 % 7.8 %

2013 6.5 5.8 6.2 7.0

Source: U.S. Bureau of Labor Statistics

U.S.StateCounty MSA

The unemployment rate for the U.S. fluctuated within the narrow range of 4.6% to 6.0% in the period spanning from 2003 to 2007. The recession and financial crisis in 2007 and 2008 resulted in heightened unemployment rates, which peaked at

Unemployment Statistics


10.0% in October of 2009. Job growth resumed in late 2009; the national unemployment rate has steadily declined since 2010. Total nonfarm payroll employment increased by 203,000 jobs in November of 2013, which brought the unemployment rate down to 7.0%, falling to the lowest level in over four years. The number of people on temporary-layoff status declined by 377,000, as federal employees that were affected by the shutdown returned to work. This positive trend reflects steady progress by the U.S. economy. Job gains were most significant in the transportation and warehousing, healthcare, and manufacturing sectors.

Locally, the unemployment rate was 9.3% in 2012; for this same area in 2013, the most recent month’s unemployment rate was registered at 6.5%, versus 8.7% for the same month in 2012. Unemployment rates in this area declined from 2003 through 2010, concurrent with the general recovery trend after a difficult period earlier this decade. However, unemployment began to rise in 2007 as the nation entered an economic slowdown. This trend continued through 2010; however, 2011 and 2012 data illustrated a marked decrease in the unemployment rate, and most recent comparative period shows further improvement. Local economic development officials noted that over the last year, Orlando has led the state in terms of job creation; job growth has been fueled largely by the hospitality sector. As the economy continues to emerge from the recession in coming years, local employment is expected to improve. Furthermore, local medical and higher education facilities continue to expand in the area, and local employment is strong within these sectors. Continued growth in the biotechnology sector is anticipated to help stabilize this economic indicator. Our interviews with economic development officials reflect a positive but cautious outlook for the area.

Providing additional context for understanding the nature of the regional economy, the following table presents a list of the major employers in the subject property’s market.

Major Business and Industry


FIGURE 3-5 MAJOR EMPLOYERS

Number of

Rank Firm Employees

1 Walt Disney World Resort 64,000

2 Orange County Public Schools 22,789

3 Florida Hospital 17,600

4 Universal Orlando 16,000

5 Orlando Health 14,310

6 Walgreen Co. 11,927

7 Orange County Government 7,372

8 Lockheed Martin Corp. 7,000

9 Lake County Schools 6,796

10 Darden Restaurants, Inc. 5,968

Source: Orlando Business Journal's 2013 Book of Lists

The following bullet points highlight major demand generators for this market:

Year-round tourism remains a cornerstone of lodging demand, drawing nearly 50 million visitors to this Central Florida market area annually. World-class theme parks and attractions create a unique family destination that cannot be found anywhere else in the world. Walt Disney World Resort, the heart of Orlando’s attraction experience, includes the following four theme parks: Magic Kingdom, Epcot, Disney’s Hollywood Studios, and Disney’s Animal Kingdom. Other major theme parks in the area include Universal Studios Orlando and SeaWorld Orlando. Walt Disney’s Magic Kingdom opened its doors in 1971 following an intensive site selection process by Walt Disney himself, selecting Orlando because of its abundant available land as well as its inland location, sheltering the theme park from seasonal hurricanes. Following the success of the Magic Kingdom, Walt Disney World Resorts opened Epcot Center in 1982, Disney’s Hollywood Studios in 1989, and Disney’s Animal Kingdom in 1998. Additionally, Walt Disney World Resort features two water parks, 23 themed hotels, and a variety of dining and entertainment venues. The Wizarding World of Harry Potter at Universal Studios Orlando opened in June of 2010; this attraction spans 20 acres and is the sixth Island of Adventure found at the theme park. In April of 2011, SeaWorld debuted its new killerwhale show, "One Ocean.” Changes in this sector include the transformation of Cypress Gardens in nearby Winter Haven into the world's largest LEGOLAND, which opened on October 15, 2011, and the completion of renovations at Fantasyland in Disney's Magic Kingdom, which opened December 4th 2012.


The success of Orlando’s healthcare system has led the way for the city’s surging biotechnology industry. Some 155 biotechnology and life science companies with combined annual revenues of $2.6 billion employ approximately 9,250 people in the area. The University of Central Florida (UCF) Health Sciences Campus at Lake Nona is becoming an international hub for health and biotech services. Once completely developed, the 7,000-acre Lake Nona Medical City will include the Burnett School of Biomedical Sciences, UCF College of Medicine’s Medical Education building, UCF College of Nursing, Harriet F. Ginsburg Health Sciences Library, Burnham Institute for Medical Research East Coast Campus, Orlando VA Medical Center, and MD Anderson Cancer Center – Orlando Cancer Research Institute, among other medical and educational uses. The Burnham Institute for Medical Research East Coast Campus, the Burnett School of Biomedical Sciences, and the MD Anderson Cancer Center – Orlando Cancer Research Institute were completed in 2009, while the UCF College of Medicine’s Medical Education building opened in July of 2010. Additionally, the University of Florida Research & Academic Center and the Nemours Children's Hospital opened their doors to patients in 2012. The Orlando VA Medical Center is currently under construction and is scheduled to open in the summer of 2014.

Florida Hospital is one of the largest hospital systems in the country, treating nearly one million patients on a yearly basis and spanning seven hospitals and fifteen Central Care walk-in medical centers. This healthcare system specializes in a diverse range of services, including globally recognized programs in cardiology, cancer, women’s medicine, neurology, diabetes, orthopedics, and rehabilitation. Florida Hospital is routinely recognized as one the best medical facilities in the country by U.S. News & World Report and serves as a prominent referral hospital throughout areas of the southeastern United States, the Caribbean, and South America. In March of 2011, the Walt Disney Pavilion at Florida Hospital for Children opened. The Disney-themed facility features 200 beds in addition to an 81-bed neonatal intensive care unit. In late 2011, Florida Hospital and the Burnham Institute for Medical Research opened a 54,000-square-foot, state-of-the-art medical facility focusing on diabetes, obesity, and the metabolic origins of cardiovascular disease.

Orlando's popularity as a year-round tourism destination has historically contributed to the area's overall economic strength; however, the national recession significantly affected the local economy. During this time, leisure visitation decreased because of reduced discretionary spending, while negative publicity surrounding corporate junkets and diminishing popularity of upscale destinations reduced group demand to the area. Despite the economic conditions that led to reduced visitation to the region through 2009, the area began experiencing stabilization and some renewed growth in 2010/11. Tourism growth is expected to continue as broader economic conditions improve, and recovery in


the greater Orlando area is anticipated to be supported by continued growth in the medical and biotechnology fields. Additionally, the development of a high-speed rail line between Tampa and Orlando, which is expected to be complete by 2015, should help support the overall economy. Orlando is projected to remain a top destination for business and leisure travel; therefore, the long-term outlook for the area is optimistic.

Trends in occupied office space are typically among the most reliable indicators of lodging demand, because firms that occupy office space often exhibit a strong propensity to attract commercial visitors. Thus, trends that cause changes in vacancy rates or in the amount of occupied office space may have a proportional impact on commercial lodging demand, and a less direct effect on meeting demand. The following table details office space statistics for the pertinent market area.

FIGURE 3-6 OFFICE SPACE STATISTICS – MARKET OVERVIEW

Submarket

1 Downtown 70 6,587,000 5,289,400 19.7 % $25.55

2 South Orlando 95 6,077,000 5,050,000 16.9 21.01

3 East/UCF 76 3,777,000 3,214,200 14.9 18.65

4 Altamonte/Casselbery 58 1,997,000 1,525,700 23.6 17.17

5 Sanford 61 5,016,000 4,098,100 18.3 22.20

6 Maitland 66 5,683,000 4,654,400 18.1 20.84

7 Northwest Orlando 32 1,290,000 1,068,100 17.2 18.15

8 Winter Park 50 1,657,000 1,368,700 17.4 20.99

9 Kissimmee 17 663,000 556,900 16.0 20.18

Totals and Averages 525 32,747,000 26,825,500 18.1 % $21.44

Inventory Occupied Office

Space

Vacancy

Rate

Average Asking

Lease RateBuildings Square Feet


The greater Orlando market comprises a total of 32.7 million square feet of office space. For the 4th Quarter of 2013, the market reported a vacancy rate of 18.1% and an average asking rent of $21.44. The subject property is located in the Kissimmee submarket, which houses 663,000 square feet of office space. The submarket's vacancy rate of 16.0% is below the overall market average. The average asking lease rate of $20.18 is below the average for the broader market.

The following table illustrates a trend of office space statistics for the overall Orlando market and the Kissimmee submarket.

Office Space Statistics


FIGURE 3-7 HISTORICAL AND PROJECTED OFFICE SPACE STATISTICS – GREATER MARKET VS. SUBMARKET

Year

2000 26,943,000 — 24,273,000 — 9.9 % $19.43 — 410,000 — 385,000 — 6.0 % $15.48 —

2001 29,142,000 8.2 % 24,979,000 2.9 % 14.3 19.59 0.8 % 541,000 32.0 % 394,000 2.3 % 27.2 17.05 10.1 %

2002 29,769,000 2.2 24,967,000 (0.0) 16.1 19.35 (1.2) 541,000 0.0 463,000 17.5 14.4 17.43 2.2

2003 30,369,000 2.0 24,990,000 0.1 17.7 19.01 (1.8) 541,000 0.0 408,000 (11.9) 24.6 17.27 (0.9)

2004 30,665,000 1.0 26,068,000 4.3 15.0 19.33 1.7 541,000 0.0 447,000 9.6 17.4 17.69 2.4

2005 31,145,000 1.6 27,395,000 5.1 12.0 19.91 3.0 541,000 0.0 457,000 2.2 15.6 18.44 4.2

2006 31,759,000 2.0 28,796,000 5.1 9.3 20.81 4.5 541,000 0.0 506,000 10.7 6.5 19.70 6.8

2007 32,229,000 1.5 28,703,000 (0.3) 10.9 21.79 4.7 562,000 3.9 524,000 3.6 6.7 21.04 6.8

2008 32,519,000 0.9 28,410,000 (1.0) 12.6 21.81 0.1 562,000 0.0 505,000 (3.6) 10.1 20.49 (2.6)

2009 32,315,000 (0.6) 27,065,000 (4.7) 16.2 21.18 (2.9) 663,000 18.0 586,000 16.0 11.6 19.17 (6.4)

2010 32,205,000 (0.3) 26,557,000 (1.9) 17.5 21.06 (0.6) 663,000 0.0 560,000 (4.4) 15.5 19.47 1.6

2011 32,514,000 1.0 26,481,000 (0.3) 18.6 21.06 0.0 663,000 0.0 561,000 0.2 15.4 19.73 1.3

2012 32,661,000 0.5 26,647,000 0.6 18.4 21.22 0.8 663,000 0.0 546,000 (2.7) 17.6 19.88 0.8

Forecasts

2013 32,747,000 0.3 % 26,825,000 0.7 % 18.1 % 21.44 1.0 % 663,000 0.0 % 557,000 2.0 % 16.0 % $20.18 1.5 %

2013 32,747,000 0.0 26,825,000 0.0 18.1 21.44 0.0 663,000 0.0 557,000 0.0 16.0 20.18 0.0

2014 32,841,000 0.3 27,111,000 1.1 17.4 21.85 1.9 663,000 0.0 557,000 0.0 16.0 20.46 1.4

2015 33,427,000 1.8 27,779,000 2.5 16.9 22.46 2.8 663,000 0.0 557,000 0.0 16.0 20.74 1.4

2016 33,802,000 1.1 28,351,000 2.1 16.1 23.23 3.4 663,000 0.0 561,000 0.7 15.5 20.99 1.2

Average Annual Compound Change

2000 - 2012 1.6 % 0.8 % 0.7 % 4.1 % 3.0 % 2.1 %

2000 - 2007 2.6 2.4 1.7 4.6 4.5 4.5

2007 - 2010 (0.0) (2.6) (1.1) 5.7 2.2 (2.6)

2010 - 2012 0.7 0.2 0.4 (0.0) (1.3) 1.0

Forecast 2012 - 2017 0.7 % 1.2 % 1.8 % 0.0 % 0.5 % 1.1 %

Orlando Market Kissimmee Submarket

Available

Office Space % Chg

Occupied

Office Space % Chg

Vacancy

Rate

Asking

Lease Rate

Vacancy

Rate

Asking

Lease Rate % Chg% Chg

Available

Office Space % Chg

Occupied

Office Space


% Chg


The inventory of office space in the Orlando market increased at an average annual compound rate of 1.6% from 2000 through 2012, while occupied office space expanded at an average annual rate of 0.8% over the same period. During the period of 2000 through 2007, occupied office space expanded at an average annual compound rate of 2.4%. From 2007 through 2010, occupied office space contracted at an average annual compound rate of -2.6%, reflecting the impact of the recession. The onset of the recovery is evident in the 0.2% average annual change in occupied office space from 2010 to 2012. From 2012 through 2016, the inventory of occupied office space is forecast to increase at an average annual compound rate of 1.2%, with available office space expected to increase 0.7%, thus resulting in an anticipated vacancy rate of 16.1% as of 2016.

A convention center serves as a gauge of visitation trends to a particular market. Convention centers also generate significant levels of demand for area hotels and serve as a focal point for community activity. Typically, hotels within the closest proximity to a convention center – up to three miles away – will benefit the most. Hotels serving as headquarters for an event benefit the most by way of premium rates and hosting related banquet events. During the largest of conventions, peripheral hotels may benefit from compression within the city as a whole.

The Orange County Convention Center (OCCC) is a vital component of the economic health of Orlando’s hotel market. This center is the second largest in contiguous space in the United States, with over 2.5 million gross square feet. Positioned eleven miles southwest of Downtown Orlando, the center is located on International Drive, just northeast of the intersection formed by Interstate 4 and the Beeline Expressway. The OCCC comprises two separate facilities, the west building and the north/south building. Features of the OCCC include 2.1 million square feet of exhibit space, 74 meeting rooms, 235 breakout rooms, a 2,643-seat theatre, four business centers, three full-service restaurants, and eight food courts. In 2013, the OCCC will begin a five-year reinvestment and renovation project at a total cost of approximately $187 million; upgrades will include a complete renovation of the west building and new furnishings in the pre-function areas.

Convention Activity


ORANGE COUNTY CONVENTION CENTER

The following table illustrates recent use statistics for this facility.

FIGURE 3-8 CONVENTION CENTER STATISTICS

Percent Percent

Year Change Change

2006 297 — 1,407,777 —

2007 257 (13.5) % 1,472,615 4.6 %

2008 231 (10.1) 1,310,377 (11.0)

2009 215 (6.9) 1,077,085 (17.8)

2010 201 (6.5) 1,178,408 9.4

2011 179 (10.9) 1,214,434 3.1

2012 181 1.1 1,319,829 8.7

2013 194 7.2 1,244,543 (5.7)

Number of

Delegates

Source: Orange County Convention Center

Number of

Conventions


Airport passenger counts are important indicators of lodging demand. Depending on the type of service provided by a particular airfield, a sizable percentage of arriving passengers may require hotel accommodations. Trends showing changes in passenger counts also reflect local business activity and the overall economic health of the area.

The Orlando International Airport (MCO) is located approximately six miles southeast of Downtown Orlando. Major airlines that service MCO include AirTran Airways, American Airlines, Delta Air Lines, JetBlue Airways, Southwest Airlines, and United Airlines, among others. The modern terminal facility offers a convenient passenger transportation system linking the concourse gates to the multilevel terminal. Orlando International Airport offers a variety of retail outlets and services, including numerous restaurants and bars. In 2009, the airport was awarded approximately $26 million in grants through the American Recovery and Reinvestment Act of 2009 (ARRA). According to airport officials, ARRA funding has allowed for taxiway improvements and a variety of other infrastructure improvements. While plans for a new southern terminal have been put on hold due to lower-than-expected passenger traffic growth, the airport authority is moving forward with plans for a new $470-million parking garage as of 2013, as well as the infrastructure for a new train station that is expected to begin service in 2015.

The following table illustrates recent operating statistics for the Orlando International Airport, which is the primary airport facility serving the proposed subject hotel’s submarket.

Airport Traffic


FIGURE 3-9 AIRPORT STATISTICS - ORLANDO INTERNATIONAL AIRPORT

Year

2003 27,319,223 — —

2004 31,146,537 14.0 % 14.0 %

2005 34,128,048 9.6 11.8

2006 34,640,451 1.5 8.2

2007 36,480,416 5.3 7.5

2008 35,661,269 (2.2) 5.5

2009 33,693,649 (5.5) 3.6

2010 34,877,899 3.5 3.6

2011 35,426,006 1.6 3.3

2012 35,288,887 (0.4) 2.9

Year-to-date, Nov

2012 32,288,630 — —

2013 31,736,495 (1.7) % —

*Annual average compounded percentage change from the previous year

**Annual average compounded percentage change from first year of data

Source: Orlando International Airport

Passenger

Change*Traffic

Percent Percent

Change**

FIGURE 3-10 LOCAL PASSENGER TRAFFIC VS. NATIONAL TREND

-10%

-5%

0%

5%

10%

15%

2004 2005 2006 2007 2008 2009 2010 2011 2012

Ch

an

ge

in P

ass

en

ge

r Act

ivit

y

Source: HVS, Local Airport Authority

Local Passenger Volume National Passenger Volume


This facility recorded 35,288,887 passengers in 2012. The change in passenger traffic between 2011 and 2012 was -0.4%. The average annual change during the period shown was 2.9%. Passenger traffic for Orlando International Airport started the decade off with a significant decrease as the national economy was in a recession and the airline industry was dealing with the effects of the terrorist attacks of 2001. Beginning in 2003, through 2007, passenger traffic increased year over year as the national economy recovered. In 2008 and 2009 as the nation entered the second recession of the decade, passenger traffic declined again. This trend has reversed and the airport experienced growth in 2010 and 2011, and remained relatively stable in 2012 and year-to-date in 2013.

The market benefits from a variety of tourist and leisure attractions in the area. The peak season for tourism in this area is from May to September. However, visitation remains strong during other times of the year because of the worldwide appeal of Orlando as a major tourism destination. A favorable year-round climate also contributes to strong tourism throughout the year. Primary attractions in the area include the following:

Walt Disney World Resort is one of the world's preeminent vacation destinations. The resort offers four major theme parks (Magic Kingdom, Epcot, Hollywood Studios, and Animal Kingdom Park) and two water parks (Blizzard Beach and Typhoon Lagoon). Disney's current promotions revolve around the theme "Celebrations" and the tag line "What Will You Celebrate?" In September of 2009, Disney announced that Walt Disney World's Fantasyland would be renovated. The new area will focus on Disney princesses, Dumbo the flying elephant, and Winnie the Pooh and will feature three attractions, including a Little Mermaid ride, in addition to two new food and beverage outlets. The new Fantasyland opened in September 2013. Disney has reopened the section of downtown Disney which was known as Pleasure Island and is now called Hyperion Wharf. The port city and amusement pier-themed area now feature boutique retail and dining options.

SeaWorld Orlando’s Aquatica water park spans nearly 60 acres. The park was designed to model the natural scenery of New Zealand and Australia and includes live animals such as dolphins and macaws, as well as other tropical wild and sea life. Offering 80,000 square feet of beach area and featuring lagoons, 6 rivers, and 36 water slides, Aquatica is a premier water attraction in Florida. The most noteworthy attraction of the park is a series of slides constructed of clear tubes that extend underwater through a habitat of Commerson's dolphins. Aquatica also offers side-by-side wave pools. SeaWorld Orlando debuted its newest Shamu show, One Ocean, in April of 2011. In the spring of 2012, SeaWorld opened TurtleTrek, a 3D film experience about sea turtles, and SeaWorld's animal encounter-themed water park, Discovery Cove,

Tourist Attractions


opened a swimming and wading adventure with otters and other marmosets known as Freshwater Oasis.

Universal Orlando Resort offers major theme parks such as Islands of Adventure and Universal Studios, as well as the Wet 'n Wild water park. Islands of Adventure features marquis rides including the Amazing Adventures of Spider Man and Jurassic Park River Adventure, while Universal Studios offers Shrek 4-D and Revenge of the Mummy, among many others. In June of 2010, Universal Orlando opened the Wizarding World of Harry Potter, which is based on the popular Harry Potter books and movies. The park opened a new attraction, Despicable Me: Minion Mayhem, in July of 2012.

Orlando is a major golfing destination, with a multitude of golf resorts drawing thousands of visitors annually. The metro area offers over 170 golf courses and 23 golf academies. David Leadbetter, known as one of the world's top golf instructors, calls Orlando home at the world headquarters of David Leadbetter’s Golf Academy at ChampionsGate. In addition, Orlando boasts a host of other nationally-ranked instruction schools, including the Fred Griffin Grand Cypress Academy of Golf, voted one of the top 25 golf schools in America by Golf Magazine, as well as the Arnold Palmer Golf Academy at Bay Hill, the Faldo Golf Institute by Marriott, and the Graves Golf Academy at Eagle Creek Golf Club.

WALT DISNEY WORLD


This section discussed a wide variety of economic indicators for the pertinent market area. After a period of economic expansion, the market area entered into a period of contraction as the local economy began to experience the challenges felt across the nation associated with the recession. Our market interviews and research revealed that as the national economy improves and people have more discretionary income the market will continue to improve. The outlook for the area is generally optimistic.

Our analysis of the outlook for this specific market also considers the broader context of the national economy. The U.S. economy entered a recession in December of 2007, which worsened in the fall of 2008 when the financial crisis shocked the world economy. The U.S. fell into economic decline for most of 2009, but the nation’s gross domestic product (GDP) and corporate profits began to grow again in the third quarter of 2009. In 2010, the economy experienced four consecutive quarters of economic growth, reflecting a rebound from the recession. Following a slight contraction in the first quarter of 2011, the economy has grown at positive, albeit fluctuating rates, as evidenced in the following table.

FIGURE 3-11 UNITED STATES GDP GROWTH RATE

1.5

-2.7

2.0

-2.0

-8.3

-5.4

-0.4

1.3

3.9

1.6

3.92.8 2.8

-1.3

3.2

1.4

4.93.7

1.2

2.8

0.11.1

2.5

4.1

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

2008 2009 2010 2011 2012 2013

Source: tradingeconomics.com, Bureau of Economic Analysis

Gross domestic product (GDP) increased at an annual rate of 4.1% in the third quarter of 2013, beating preliminary projections and substantially exceeding the 2.5% annual growth rate in the second quarter. The U.S. GDP has averaged 3.2% since it was first recorded in 1947. The strong growth was driven by increases of 7.9% in durable goods, 13.4% in non-residential structures, and 10.3% in real

Conclusion


residential investment. This growth occurred despite the 1.5% contraction in government spending and investment. The economic outlook continues to be positive; GDP is projected to grow at an annual rate of 3.0% in 2014, according to the Federal Open Market Committee.

January-2014 Supply and Demand Analysis Phase 1 Proposed Hotel – Kissimmee, Florida 40

4. Supply and Demand Analysis

In the lodging industry, price varies directly, but not proportionately, with demand and inversely, but not proportionately, with supply. Supply is measured by the number of guestrooms available, and demand is measured by the number of rooms occupied; the net effect of supply and demand toward equilibrium results in a prevailing price, or average rate. The purpose of this section is to investigate current supply and demand trends, as indicated by the current competitive market, and to set forth a basis for the projection of future supply and demand growth.

The 120-room proposed hotel will be located in Kissimmee, Florida. The greater Orlando market surrounding the subject site offers 453 hotels and motels, spanning 116,499 rooms.

Of this larger supply set, the proposed subject hotel is expected to compete with a smaller set of hotels based on various factors. These factors may include location, price point, product quality, length of stay (such as an extended-stay focus vs. non-extended-stay focus), room type (all-suite vs. standard), hotel age, or brand, among other factors. We have reviewed these pertinent attributes and established an expected competitive set based upon this review. Our review of the proposed subject hotel’s specific competitive set within the Orlando/Kissimmee area begins after our review of national occupancy, average rate, and RevPAR trends.

The proposed subject hotel’s local lodging market is most directly affected by the supply and demand trends within the immediate area. However, individual markets are also influenced by conditions in the national lodging market. We have reviewed national lodging trends to provide a context for the forecast of the supply and demand for the proposed subject hotel’s competitive set.

Smith Travel Research (STR) is an independent research firm that compiles and publishes data on the lodging industry, routinely used by typical hotel buyers. Figure 4-1 presents annual hotel occupancy and average rate data since 1987. Figures 4-2 and 4-3 illustrate the more recent trends, categorized by geography, price point, type of location, and chain scale. The statistics include occupancy, average rate, and rooms revenue per available room (RevPAR). RevPAR is calculated by multiplying occupancy by average rate and provides an indication of how well rooms revenue is being maximized.

Definition of Subject Hotel Market

National Trends Overview


FIGURE 4-1 NATIONAL OCCUPANCY AND AVERAGE RATE TRENDS

45.0%

50.0%

55.0%

60.0%

65.0%

70.0%

$0

$20

$40

$60

$80

$100

$120

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Source: STR

RevPAR Average Rate Occupancy


FIGURE 4-2 NATIONAL OCCUPANCY AND AVERAGE RATE TRENDS – YEAR-TO-DATE DATA

United States 61.3 % 62.3 % 1.5 % $106.25 $110.35 3.9 % $65.15 $68.69 5.4 %

Region

New England 61.4 % 62.5 % 1.8 % $127.18 $131.46 3.4 % $78.11 $82.19 5.2 %

Middle Atlantic 66.5 66.0 (0.7) 150.64 155.74 3.4 100.12 102.83 2.7

South Atlantic 60.8 62.0 1.9 103.49 106.64 3.0 62.89 66.06 5.0

East North Central 58.4 59.1 1.2 92.47 95.70 3.5 53.97 56.53 4.7

East South Central 56.2 56.9 1.2 79.48 82.24 3.5 44.69 46.78 4.7

West North Central 57.3 57.9 1.0 84.20 86.54 2.8 48.23 50.07 3.8

West South Central 60.5 61.4 1.5 88.87 93.19 4.9 53.75 57.20 6.4

Mountain 59.1 60.3 1.9 96.20 99.02 2.9 56.86 59.67 4.9

Pacific 67.8 69.5 2.5 126.30 133.73 5.9 85.65 92.94 8.5

Price

Luxury 69.5 % 70.6 % 1.6 % $175.21 $181.98 3.9 % $121.73 $128.52 5.6 %

Upscale 65.5 66.1 0.9 129.00 133.43 3.4 84.48 88.16 4.4

Midprice 62.3 63.1 1.4 101.65 104.91 3.2 63.29 66.24 4.7

Economy 56.2 57.3 2.1 75.40 78.44 4.0 42.36 44.99 6.2

Budget 55.5 56.3 1.5 59.24 61.68 4.1 32.86 34.73 5.7

Location

Urban 69.4 % 70.5 % 1.6 % $154.02 $160.80 4.4 % $106.85 $113.31 6.0 %

Suburban 61.6 62.8 1.9 89.74 92.80 3.4 55.30 58.26 5.3

Airport 68.0 69.8 2.6 94.75 97.53 2.9 64.46 68.08 5.6

Interstate 54.5 54.8 0.6 74.29 76.18 2.5 40.49 41.77 3.1

Resort 63.2 64.1 1.4 142.28 150.22 5.6 89.99 96.36 7.1

Small Metro/Town 54.3 54.9 1.0 86.79 89.14 2.7 47.16 48.91 3.7

Chain Scale

Luxury 73.3 % 74.6 % 1.8 % $274.81 $290.31 5.6 % $201.36 $216.47 7.5 %

Upper Upscale 70.9 71.9 1.5 154.36 161.04 4.3 109.40 115.84 5.9

Upscale 70.9 71.7 1.2 116.89 121.72 4.1 82.85 87.28 5.3

Upper Midscale 63.0 63.8 1.2 97.42 100.29 2.9 61.42 63.99 4.2

Midscale 54.8 55.8 1.8 74.62 76.33 2.3 40.89 42.57 4.1

Economy 54.2 55.0 1.5 52.54 54.27 3.3 28.46 29.85 4.9

Independents 58.0 58.9 1.6 105.15 108.90 3.6 60.94 64.11 5.2

2012 % Change2012 20132013 % Change% Change

Occupancy - Thru December Average Rate - Thru December RevPAR - Thru December

Source: STR - December 2013 Lodging Review

2012 2013


FIGURE 4-3 NATIONAL OCCUPANCY AND AVERAGE RATE TRENDS – CALENDAR YEAR DATA

United States 59.9 % 61.4 % 2.5 % $101.85 $106.10 4.2 % $61.02 $65.17 8.2 %

Region

New England 61.2 % 61.6 % 0.7 % $120.66 $126.80 5.1 % $73.84 $78.13 8.6 %

Middle Atlantic 65.4 66.5 1.8 145.05 150.55 3.8 94.80 100.15 8.1

South Atlantic 59.4 60.9 2.5 100.20 103.28 3.1 59.50 62.86 7.0

East North Central 56.5 58.5 3.6 88.20 92.28 4.6 49.82 53.98 8.4

East South Central 55.5 56.4 1.5 77.22 79.47 2.9 42.89 44.78 5.7

West North Central 56.2 57.4 2.2 80.92 83.82 3.6 45.48 48.13 6.5

West South Central 58.1 60.6 4.4 84.80 88.78 4.7 49.23 53.81 8.5

Mountain 59.1 59.2 0.2 93.39 96.57 3.4 55.20 57.20 8.4

Pacific 65.6 67.9 3.5 119.05 125.98 5.8 78.06 85.49 10.3

Price

Luxury 68.3 % 69.7 % 2.0 % $167.35 $173.50 3.7 % $114.26 $120.86 8.2 %

Upscale 63.9 65.5 2.4 124.88 129.09 3.4 79.80 84.51 7.4

Midprice 60.5 62.1 2.6 96.51 100.30 3.9 58.37 62.27 8.0

Economy 53.9 55.6 3.1 72.78 76.12 4.6 39.24 42.30 7.2

Budget 54.9 56.1 2.1 54.54 57.49 5.4 29.97 32.26 7.2

Location

Urban 67.5 % 69.5 % 2.9 % $147.44 $153.94 4.4 % $99.53 $106.91 8.2 %

Suburban 60.1 61.8 2.7 86.18 89.86 4.3 51.81 55.49 8.4

Airport 66.3 68.1 2.7 91.01 94.70 4.1 60.37 64.49 7.1

Interstate 53.3 54.6 2.4 71.66 74.18 3.5 38.22 40.53 6.7

Resort 61.8 63.3 2.3 135.45 141.60 4.5 83.75 89.60 9.8

Small Metro/Town 53.5 54.5 1.9 84.06 86.72 3.2 44.95 47.26 6.3

Chain Scale

Luxury 71.0 % 73.2 % 3.1 % $262.64 $274.51 4.5 % $186.43 $200.98 11.2 %

Upper Upscale 69.3 70.9 2.3 147.99 154.36 4.3 102.60 109.43 6.6

Upscale 69.5 70.9 2.0 111.70 116.88 4.6 77.64 82.87 8.0

Mid-scale w/ F&B 61.3 63.0 2.8 93.93 97.41 3.7 57.58 61.36 8.6

Mid-scale w/o F&B 53.2 54.8 3.0 72.34 74.45 2.9 38.50 40.79 3.0

Economy 53.4 54.3 1.8 50.47 52.50 4.0 26.94 28.52 6.0

Independents 56.8 58.3 2.6 101.24 105.12 3.8 57.49 61.27 6.5

2012% Change % Change

Occupancy Average Rate RevPAR

2011 2012 2012 % Change2011 2011

Source: STR - December 2012 Lodging Review


Following the significant occupancy and RevPAR decline experienced during the last recession, demand growth resumed in 2010, led by select markets that had recorded growth trends in the fourth quarter of 2009. The pace of demand growth accelerated through the year; in 2010, lodging demand in the U.S. increased by 7.7% over that registered in 2009. A return of business travel and some group activity contributed to these positive trends. The resurgence in demand was partly fueled by the significant price discounts that were widely available in the first half of 2010. These discounting policies were largely phased out in the latter half of the year, balancing much of the early rate loss. Average rate decreased by only 0.1% in 2010 when compared to 2009.

Strong demand growth continued in 2011 and 2012, at 5.0% and 3.0%, respectively. Demand increased 2.1% in the year-to-date through November 2013 period. Average rate rebounded by respective rates of 3.7% and 4.2%, in 2011 and 2012, followed by a 3.8% increase in the year-to-date through November 2013 period. In 2012, occupancy reached 61.4% (exceeding the ten-year average); moreover, occupancy is on track to gain another point in 2013. Average rate finished the year just over $106 in 2012, with year-to-date trends suggesting that another $4 to $5 gain in rate in 2013 is likely. Demand and average rates should continue to strengthen in the near term. These trends, combined with the low levels of supply growth anticipated through 2014, should boost occupancy to just over 63% by year-end 2014. On a national average, strengthening occupancy levels should also permit hotels to increase room rates beyond the 4.2% achieved in 2012. HVS forecasts U.S. average rate growth of 4.5% for 2013 and 5.0% for 2014.

Smith Travel Research (STR) is an independent research firm that compiles and publishes data on the lodging industry, routinely used by typical hotel buyers. HVS has ordered and analyzed an STR Trend Report of historical supply and demand data for a group of hotels considered applicable to this analysis for the proposed subject hotel. This information is presented in the following table, along with the market-wide occupancy, average rate, and rooms revenue per available room (RevPAR). RevPAR is calculated by multiplying occupancy by average rate and provides an indication of how well rooms revenue is being maximized.

Historical Supply and Demand Data


FIGURE 4-4 HISTORICAL SUPPLY AND DEMAND TRENDS

Year

Average Daily

Room Count

Available Room

Nights Change

Occupied Room

Nights Change Occupancy Average Rate Change RevPAR Change

2002 1,384 505,160 — 306,493 — 60.7 % $76.06 — $46.15 —

2003 1,483 541,420 7.2 % 302,705 (1.2) % 55.9 72.27 (5.0) % 40.41 (12.4) %

2004 1,532 559,180 3.3 397,692 31.4 71.1 73.92 2.3 52.57 30.1

2005 1,532 559,180 0.0 407,063 2.4 72.8 80.76 9.2 58.79 11.8

2006 1,532 559,180 0.0 398,023 (2.2) 71.2 89.18 10.4 63.48 8.0

2007 1,546 564,243 0.9 400,497 0.6 71.0 96.98 8.7 68.84 8.4

2008 1,729 631,225 11.9 427,831 6.8 67.8 97.40 0.4 66.02 (4.1)

2009 1,809 660,308 4.6 430,236 0.6 65.2 84.82 (12.9) 55.27 (16.3)

2010 1,877 685,105 3.8 476,655 10.8 69.6 82.04 (3.3) 57.08 3.3

2011 1,877 685,105 0.0 493,975 3.6 72.1 85.18 3.8 61.42 7.6

2012 1,925 702,725 2.6 514,309 4.1 73.2 89.28 4.8 65.34 6.4

2013 2,125 775,625 10.4 584,562 13.7 75.4 94.08 5.4 70.91 8.5

4.0 % 6.0 % 2.0 % 4.0 %

Hotels Included in Sample

The Florida Hotel & Conf Ctr 510 May 2004 Apr 1986Courtyard Orlando Lake Buena Vista In The Marriott Village 312 Oct 2000 Oct 2000Springhill Suites Orlando Lake Buena Vista In The Marriott Village 400 Dec 2000 Dec 2000The Inn @ Calypso 110 Dec 2013 Oct 2001Holiday Inn Express & Suites Orlando Lake Buena 148 Oct 2007 May 2003Hampton Inn Suites Orlando John Young Pkwy S Park 83 Nov 2007 Nov 2007Hampton Inn Suites Orlando South Lake Buena Vista 125 Feb 2008 Feb 2008Hilton Garden Inn Lake Buena Vista Orlando 137 Jul 2009 Jul 2009Embassy Suites Orlando Lake Buena Vista South 300 Sep 2012 Sep 2012

Total 2,125

Source: STR Global

Year

Opened

Average Annual Compounded Change: 2002-

2013

Number Year

of Rooms Affiliated


It is important to note some limitations of the STR data. Hotels are occasionally added to or removed from the sample, and not every property reports data in a consistent and timely manner; these factors can influence the overall quality of the information by skewing the results. These inconsistencies may also cause the STR data to differ from the results of our competitive survey. Nonetheless, STR data provide the best indication of aggregate growth or decline in existing supply and demand; thus, these trends have been considered in our analysis. Opening dates, as available, are presented for each reporting hotel in the previous table.

The STR data for the competitive set reflect an overall market occupancy level of 75.4% in 2013, which compares to 73.2% for 2012. The overall average occupancy level for the calendar years presented equates to 70.7%. Local employers and headquarter offices in the area, as well as compression from conventions and major tourist attractions represent the primary sources of demand for this market. Demand in the local market has fluctuated in the twelve-year period reviewed, resulting in an average annual compounded increase of 6.0%. Both occupancy and demand fluctuated in the first part of the last decade, declining in both 2003 and 2006, while recording positive growth in the remainder of the trend period. Demand was mostly stabilized from 2004 through 2008, with market occupancy remaining in range from roundly 68% to 73% throughout that period. The onset of the national economic recession resulted in slower growth in demand in 2009, although demand rebounded dramatically in 2010 as the economic recovery led to increased business and leisure demand in the local market. Market occupancy recorded consistent annual increases beginning in 2010 for each calender year through 2013. The latest data for 2013 indicates strong growth, with an increase in demand of 13.7% compared to 2012.

The STR data for the competitive set reflect an overall market average rate level of $94.08 in 2013, which compares to $89.28 for 2012. The average across all calendar years presented for average rate equates to $88.90. Average rate in the local market registered positive growth mid-decade from 2004 through much of 2008. The strength of the economy during that time, with little rate-resistance from corporate accounts allowed hotel operators to increase rates. The entrance of new high-quality hotels, as well as renovations to existing hotels, also allowed local hotel operators to increase rates. Upon the onset of the economic recession, average rate growth began to slow in late 2008. Average rates declined in 2009, and this downward trend continued through much of 2010, along with the contraction of the national economy; however, average rates bottomed out in the low $80s that year. Average rates rebounded in 2011, and this positive trend continued through 2012 as the national and local lodging markets began to normalize. The latest 2013 data illustrate continued consistent month-over-month increases, indicating that rate recovery is underway as economic conditions


strengthen and demand levels continue to rise. These occupancy and average rate trends resulted in a RevPAR level of $70.91 in 2013.

Monthly occupancy and average rate trends are presented in the following tables. Seasonality


FIGURE 4-5 MONTHLY OCCUPANCY TRENDS

Month 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

January 56.1 % 61.7 % 57.7 % 65.3 % 65.5 % 74.0 % 70.8 % 61.3 % 67.3 % 64.6 % 70.5 % 75.9 %

February 63.5 64.9 75.3 78.9 77.7 78.5 73.1 72.1 71.7 74.6 79.4 79.9

March 73.7 67.0 81.4 85.8 85.7 86.2 82.1 74.1 80.5 88.8 89.6 89.4

April 66.9 59.1 87.3 76.5 87.9 83.1 77.6 78.1 78.5 84.1 79.9 78.9

May 58.1 49.3 63.1 65.1 71.6 70.5 68.0 68.3 63.6 71.1 71.6 71.1

June 64.2 60.3 71.1 79.5 80.3 78.5 74.2 73.2 70.9 74.6 78.1 80.1

July 67.8 63.9 80.1 83.3 82.7 78.1 76.5 71.1 80.8 82.8 81.0 78.2

August 57.1 51.6 69.6 64.3 67.8 67.9 61.4 58.1 63.2 60.4 67.5 71.8

September 40.4 29.3 64.8 61.0 43.8 50.3 43.9 43.6 50.6 57.1 59.2 58.7

October 60.3 55.1 75.3 76.1 59.2 63.4 67.3 64.3 71.2 69.9 66.6 71.9

November 62.0 58.3 65.3 71.2 65.3 61.7 53.8 55.8 64.2 68.1 67.8 73.0

December 57.9 53.4 63.0 66.9 67.1 61.1 64.7 64.8 72.1 69.3 71.7 75.7

Annual Occupancy 60.7 % 55.9 % 71.1 % 72.8 % 71.2 % 71.0 % 67.8 % 65.2 % 69.6 % 72.1 % 73.2 % 75.4 %

Source: STR Global


FIGURE 4-6 MONTHLY AVERAGE RATE TRENDS

Month 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

January $75.12 $75.97 $82.87 $88.32 $101.36 $104.00 $113.14 $101.69 $93.24 $94.25 $94.47 $101.01

February 82.59 79.28 80.85 89.98 100.09 121.34 117.80 100.04 88.47 100.67 102.10 105.79

March 87.03 75.90 77.14 90.47 96.86 103.82 117.07 93.44 86.34 94.76 101.04 111.43

April 81.54 75.18 73.53 78.80 92.65 97.73 97.73 89.28 84.86 91.66 94.23 95.63

May 74.12 68.37 68.11 78.96 84.77 88.10 97.06 85.38 76.09 79.82 83.29 87.47

June 73.11 70.60 65.78 75.82 86.25 90.86 92.63 81.00 80.67 81.20 83.72 95.32

July 70.04 68.95 74.20 74.69 83.76 87.46 86.98 77.33 77.52 80.61 84.67 89.70

August 70.14 66.85 69.03 66.71 78.29 84.73 80.43 71.99 75.59 72.88 76.70 80.01

September 69.49 67.56 68.63 71.91 74.08 84.03 77.71 74.89 72.49 71.70 80.62 75.87

October 73.08 73.41 75.08 79.59 84.43 99.12 95.35 77.95 78.73 81.39 84.77 87.34

November 74.81 71.50 74.88 84.01 87.03 97.04 90.24 78.83 78.40 80.30 84.83 87.89

December 77.18 71.29 77.32 87.50 93.22 101.08 90.18 83.25 88.19 86.78 96.66 102.61

Annual Average Rate $76.06 $72.27 $73.92 $80.76 $89.18 $96.98 $97.40 $84.82 $82.04 $85.18 $89.28 $94.08

Source: STR Global


The illustrated monthly occupancy and average rates patterns reflect important seasonal characteristics. We have reviewed these trends in developing our forthcoming forecast of market-wide demand and average rate.

A review of the trends in occupancy, average rate, and RevPAR per day of the week over the past three fiscal years provides some insight into the impact that the current economic conditions have had on the competitive lodging market. The data, as provided by Smith Travel Research, are illustrated in the following table.

Patterns of Demand


FIGURE 4-7 OCCUPANCY, AVERAGE RATE AND REVPAR BY DAY OF WEEK

Occupancy (%)

Jan 11 - Dec 11 59.8 % 67.7 % 73.4 % 72.9 % 73.4 % 77.8 % 79.6 % 72.1 %

Jan 12 - Dec 12 61.7 68.5 72.6 73.8 74.9 79.5 81.6 73.2

Jan 13 - Dec 13 63.0 69.5 74.9 75.9 77.4 83.3 83.7 75.4

Change (Occupancy Points)

FY 11 - FY 12 1.9 0.8 -0.8 0.9 1.6 1.7 2.0 1.1

FY 12 - FY 13 1.3 1.0 2.3 2.1 2.5 3.7 2.0 2.2

ADR ($)

Jan 11 - Dec 11 $83.84 $87.29 $88.90 $87.71 $84.86 $81.67 $82.44 $85.18

Jan 12 - Dec 12 88.27 92.56 92.16 91.56 88.90 85.65 86.53 89.28

Jan 13 - Dec 13 91.36 94.89 97.20 95.35 93.51 93.11 92.97 94.08

Change (Dollars)

FY 11 - FY 12 $4.43 $5.28 $3.26 $3.85 $4.04 $3.98 $4.09 $4.10

FY 12 - FY 13 3.09 2.32 5.04 3.79 4.62 7.46 6.45 4.80

Change (Percent)

FY 11 - FY 12 5.3 % 6.0 % 3.7 % 4.4 % 4.8 % 4.9 % 5.0 % 4.8 %

FY 12 - FY 13 3.5 2.5 5.5 4.1 5.2 8.7 7.5 5.4

RevPAR ($)

Jan 11 - Dec 11 $50.12 $59.10 $65.23 $63.96 $62.25 $63.54 $65.63 $61.42

Jan 12 - Dec 12 54.42 63.43 66.88 67.56 66.62 68.13 70.62 65.34

Jan 13 - Dec 13 57.52 65.95 72.79 72.39 72.38 77.53 77.78 70.91

Change (Dollars)

FY 11 - FY 12 $4.30 $4.33 $1.65 $3.60 $4.37 $4.59 $4.99 $3.93

FY 12 - FY 13 3.09 2.52 5.91 4.83 5.76 9.40 7.15 5.57

Change (Percent)

FY 11 - FY 12 8.6 % 7.3 % 2.5 % 5.6 % 7.0 % 7.2 % 7.6 % 6.4 %

FY 12 - FY 13 5.7 4.0 8.8 7.1 8.7 13.8 10.1 8.5

Source: STR Global

Sunday Monday Total YearSaturday

Total Year

Total Year

Thursday Friday Saturday

Thursday Friday SaturdaySunday Monday Tuesday Wednesday

FridayTuesday Wednesday Thursday

WednesdaySunday Monday Tuesday

In most markets, business travel, including individual commercial travelers and corporate groups, is the predominant source of demand on Monday through Thursday nights. Leisure travelers and non-business-related groups generate a majority of demand on Friday and Saturday nights.


Based on an evaluation of the occupancy, rate structure, market orientation, chain affiliation, location, facilities, amenities, reputation, and quality of each area hotel, as well as the comments of management representatives, we have identified several properties that are expected to be competitive with the proposed subject hotel. However, it is our opinion that each of the competitive hotels will only be secondarily competitive with the proposed subject property. The room count of each secondary competitor has been weighted based on its assumed degree of competitiveness the future with the proposed subject hotel. By assigning degrees of competitiveness, we can assess how the proposed subject hotel and its future competitors may react to various changes in the market, including new supply, changes to demand generators, and renovations or franchise changes of existing supply. The following table sets forth the pertinent operating characteristics of the competitors.

SUPPLY


FIGURE 4-8 COMPETITORS – OPERATING PERFORMANCE

Est. Segmentation Estimated 2011 Estimated 2012 Estimated 2013

Co

mm

erci

al

Mee

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g an

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up

Leis

ure

Weighted

Annual

Room

Count

Weighted

Annual

Room

Count

Weighted

Annual

Room

Count

Total

Property

Number

of Rooms

Competitive

Level Occ.

Average

Rate RevPAR Occ.

Average

Rate RevPAR Occ.

Average

Rate RevPAR

The Inn @ Calypso (former Country Inn & Suites) 110 30 % 20 % 50 % 70 % 77 86 % $79 $67.94 77 83 % $63 $52.29 77 66 % $50 $33.00

Courtyard by Marriott Orlando Lake Buena Vista in the Marriott Village 312 25 25 50 80 250 71 86 61.07 250 77 88 67.76 250 77 92 70.84

Embassy Suites Orlando Lake Buena Vista South 300 25 50 25 70 0 0 0 0.00 70 35 105 36.75 210 69 116 80.37

Florida Hotel & Conference Center at the Florida Mall Orlando 510 40 40 20 50 256 69 91 63.40 256 71 99 70.03 255 74 100 74.00

Hampton Inn & Suites Orlando John Young Parkway 83 60 20 20 85 71 82 92 75.44 71 84 94 78.96 71 86 98 84.53

Hampton Inn & Suites Orlando South Lake Buena Vista 125 50 30 20 90 113 76 84 63.84 113 78 86 67.08 113 79 87 68.80

Hilton Garden Inn Lake Buena Vista Orlando 137 25 25 50 90 123 81 90 72.90 124 80 93 74.40 123 82 95 78.55

Holiday Inn Express Orlando Lake Buena Vista East 148 55 30 15 80 118 70 69 48.30 118 71 73 51.83 118 79 76 60.04

SpringHill Suites by Marriott Orlando Lake Buena Vista in Marriott Village 400 25 25 50 80 320 72 83 59.66 320 77 87 66.99 320 76 92 69.92

Totals/Averages 2,125 34 % 31 % 35 % 72 % 1,327 73.6 % $84.94 $62.54 1,397 74.3 % $87.90 $65.34 1,536 75.9 % $93.38 $70.84

Co

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Weighted

Annual

Room

Count

Weighted

Annual

Room

Count

Weighted

Annual

Room

Count


The following map illustrates the locations of the proposed subject hotel and its future competitors.

MAP OF COMPETITION

Our survey of the competitive hotels in the local market shows a range of lodging types and facilities.


It is important to consider any new hotels that may have an impact on the proposed subject hotel’s operating performance. Based upon our research, new supply (including the proposed subject property) considered in our analysis is presented in the following table.

FIGURE 4-9 NEW SUPPLY

Total

Proposed Property

Number

of Rooms

Competitive

Level

Estimated Opening

Date Development Stage

The Crosslands Phase 1 Proposed Hotel 120 100 % 120 September 1, 2015 Early Development

Courtyard @ Darden HQs 128 100 128 November 1, 2014 Broke Ground

Courtyard / Residence Inn Lake Nona 204 100 204 May 1, 2015 Early Development

Totals/Averages 452 452

Weighted

Room

Count

A 128-room, six-story Marriott Courtyard is under development adjacent to the headquarters of Darden Restaurants at the intersection of John Young Parkway and Martin Andersen Beachline Expressway. Concord Hospitality was selected to be the developer in 2013 after the original developer, Legacy Companies, terminated their plans in late 2012. In September 2013, Concord Hospitality signed a ground lease with Darden Restaurants and closed on a $10.8 million mortgage loan from S&T Bank of Pennsylvania. The Courtyard is scheduled to open in November 2014.

Orlando-based Tavistock Group is planning to develop a 204-room dual-branded Marriot Courtyard and Residence Inn at Lake Nona Town Center. This hotel will be part of the initial phase of the Lake Nona mixed-use development located near the south entrance of the Orlando International Airport. Other planned components in the first phase of the Lake Nona Town Center include a 7,000 square-foot bank and approximately 15,000 square feet of retail. Lake Nona Medical City, a 650-acre health and sciences park is located across the street from this proposed hotel. The designs for the hotel are now being refined and construction is expected to commence in early 2014.

We have determined that both proposed hotels will be 100% competitive with the proposed subject property.

While we have taken reasonable steps to investigate proposed hotel projects and their status, due to the nature of real estate development, it is impossible to determine with certainty every hotel that will be opened in the future, or what

Supply Changes


their marketing strategies and effect in the market will be. Depending on the outcome of current and future projects, the future operating potential of the proposed subject hotel may be positively or negatively affected. Future improvement in market conditions will raise the risk of increased competition. Our forthcoming forecast of stabilized occupancy and average rate is intended to reflect such risk.

We have identified various properties that are expected to be competitive to some degree with the proposed subject hotel. We have also investigated potential increases in competitive supply in this submarket. The Crosslands Phase 1 Proposed Hotel should enter a dynamic market of varying product types and price points. Next, we will present our forecast for demand change, using the historical supply data presented as a starting point.

The following table presents the most recent trends for the subject hotel market as tracked by HVS. These data pertain to the competitors discussed previously in this section; performance results are estimated, rounded for the competition, and the competitors are weighted for their estimated competitiveness with the proposed subject property. In this respect, the information in the table differs from the previously presented STR data and is consistent with the supply and demand analysis developed for this report.

FIGURE 4-10 HISTORICAL MARKET TRENDS

Year

Est. 2011 356,580 — 484,300 — 73.6 % $84.94 — $62.54 —

Est. 2012 379,131 6.3 % 510,044 5.3 % 74.3 87.90 3.5 % 65.34 4.5 %

Est. 2013 425,452 12.2 560,768 9.9 75.9 93.38 6.2 70.84 8.4

Avg. Annual Compounded

Chg., Est. 2011-Est. 2013: 9.2 % 7.6 % 4.9 % 6.4 %

Accommodated

Room Nights % Change

Room Nights

Available

Market

RevPAR % Change% Change% Change

Market

Occupancy Market ADR

For the purpose of demand analysis, the overall market is divided into individual segments based on the nature of travel. Based on our fieldwork, area analysis, and knowledge of the local lodging market, we estimate the 2013 distribution of accommodated-room-night demand as follows.

Supply Conclusion

DEMAND

Demand Analysis Using Market Segmentation


FIGURE 4-11 ACCOMMODATED ROOM NIGHT DEMAND

Marketwide

Market Segment

Commercial 143,792 34 %

Meeting and Group 131,269 31

Leisure 150,391 35

Total 425,452 100 %

Accommodated

Demand

Percentage

of Total

The market’s demand mix comprises commercial demand, with this segment representing roughly 34% of the accommodated room nights in this submarket. The remaining portion comprises meeting and group at 31%, with the final portion leisure in nature, reflecting 35%.

Using the distribution of accommodated hotel demand as a starting point, we will analyze the characteristics of each market segment in an effort to determine future trends in room-night demand.

According to our research, the following demand generators located within the subject neighborhood will be important contributors to the proposed subject property’s accommodated demand. Because of its location, the proposed subject property is expected to directly benefit from each of these demand generators. We have considered these local demand generators qualitatively in our concluded penetration rates presented later in this narrative.

Tupperware World Headquarters – is expected to contribute commercial demand to the proposed subject property in terms of both meeting room rentals and room night demand. Typically, Tupperware generates roundly 1,200 to 1,800 room nights annually, with hotel guests currently staying in a variety of hotels, primarily at the Florida Hotel & Conference Center at the Florida Mall.

Gatorland – this theme park attraction recorded attendance of 400,000 and 430,000 in 2012 and 2013, respectively. According to our discussions with Mark McHugh, General Manager of Gatorland, approximately 20% of the park’s visitors are day trippers from within the state of Florida, with the remaining 80% of visitors from outside the state. Of the 80% non-resident visitors, approximately 15% of the visitors stay in the area specifically to visit Gatorland, while the remainder stay in the area to visit several attractions. Currently these guests are typically staying in hotels

Local Demand Generators


along the U.S. 192 strip in Kissimmee or in the Sea World area. Assuming an average party size of three guests and a conservative 50% capture rate, we have estimated there are roundly 8.600 potential room nights from Gatorland visitors.

Osceola County Softball Complex - According to our discussions with representatives at the Osceola County Department of Tourism Development, the Osceola County Softball Complex generated in excess of 100,000 room nights during both the 2011 and 2012 fiscal years. 2013 fiscal year data was not available but is expected to exceed the two-year average.

Osceola Corporate Center future phased development – Long-term the proposed subject property will benefit from its location within the Osceola Corporate Center mixed-use development. As previously discussed, the DRI has entitlements for 1,779,500 square feet of commercial/ retail, 1,852,200 square feet of office, 80,000 square feet of office/warehouse, and 2,350 developable units of multifamily. There are also 500 hotel rooms approved which represent future hotels to be developed in accordance with future demand that will be induced into the market. Furthermore, the developer has approved development entitlements on adjoining land in Orange County immediately north of the Osceola Corporate Center DRI. This planned development (PD) contains entitlements for 966,975 square feet of commercial development on 51.6-acres and 200 units of age restricted multi-family development on ten acres.

Commercial demand consists mainly of individual businesspeople passing through the subject market or visiting area businesses, in addition to high-volume corporate accounts generated by local firms. Brand loyalty (particularly frequent-traveler programs), as well as location and convenience with respect to businesses and amenities, influence lodging choices in this segment. Companies typically designate hotels as “preferred” accommodations in return for more favorable rates, which are discounted in proportion to the number of room nights produced by a commercial client. Commercial demand is strongest Monday through Thursday nights, declines significantly on Friday and Saturday, and increases somewhat on Sunday night. It is relatively constant throughout the year, with marginal declines in late December and during other holiday periods.

Considering both current and historical trends, we project demand change rates of 5.0% in 2014, 6.0% in 2015, and 4.0% in 2016. After these first three projection years, we have forecast demand change rates of 3.0% annually through the remainder of the projection period.

Commercial Segment


The meeting and group market includes meetings, seminars, conventions, trade association shows, and similar gatherings of ten or more people. Peak convention demand typically occurs in the spring and fall. Although there are numerous classifications within the meeting and group segment, the primary categories considered in this analysis are corporate groups, associations, and SMERFE (social, military, ethnic, religious, fraternal, and educational) groups. Corporate groups typically meet during the business week most commonly in the spring and fall months. These groups tend to be the most profitable for hotels, as they typically pay higher rates and usually generate ancillary revenues including food, beverage and banquet revenue. SMERFE groups are typically price-sensitive and tend to meet on weekends and/or during the summer months or holiday season, when greater discounts are usually available. These groups generate limited ancillary revenues. The profile and revenue potential of associations varies depending on the group and the purpose of their meeting or event.


Leisure demand consists of individuals and families spending time in an area or passing through en route to other destinations. Travel purposes include sightseeing, recreation, or visiting friends and relatives. Leisure demand also includes room nights booked through Internet sites such as Expedia, hotels.com, and Priceline; however, leisure may not be the purpose of the stay. This demand may also include business travelers and group and convention attendees who use these channels to take advantage of any discounts that may be available on these sites. Leisure demand is strongest Friday and Saturday nights and all week during holiday periods and the summer months. These peak periods represent the inverse of commercial visitation trends, underscoring the stabilizing effect of capturing weekend and summer tourist travel. Future leisure demand is related to the overall economic health of the region and the nation. Trends showing changes in state and regional unemployment and disposable personal income correlate strongly with leisure travel levels.


Meeting and Group Segment

Leisure Segment


The purpose of segmenting the lodging market is to define each major type of demand, identify customer characteristics, and estimate future growth trends. Starting with an analysis of the local area, three segments were defined as representing the subject property’s lodging market. Various types of economic and demographic data were then evaluated to determine their propensity to reflect changes in hotel demand. Based on this procedure, we forecast the following average annual compounded market-segment growth rates.

FIGURE 4-12 AVERAGE ANNUAL COMPOUNDED MARKET SEGMENT GROWTH RATES

Annual Growth Rate

Market Segment

Commercial 5.0 % 6.0 % 4.0 % 3.0 % 3.0 % 3.0 %

Meeting and Group 5.0 6.0 4.0 3.0 3.0 3.0

Leisure 5.0 6.0 4.0 3.0 3.0 3.0

Base Demand Growth 5.0 % 6.0 % 4.0 % 3.0 % 3.0 % 3.0 %

20182014 2015 2016 2017 2019

A table presented earlier in this section illustrated the accommodated-room-night demand in the subject property’s competitive market. Because this estimate is based on historical occupancy levels, it includes only those hotel rooms that were used by guests. Latent demand reflects potential room-night demand that has not been realized by the existing competitive supply; this type of demand can be divided into unaccommodated demand and induced demand.

Unaccommodated demand refers to individuals who are unable to secure accommodations in the market because all the local hotels are filled. These travelers must defer their trips, settle for less desirable accommodations, or stay in properties located outside the market area. Because this demand did not yield occupied room nights, it is not included in the estimate of historical accommodated-room-night demand. If additional lodging facilities are expected to enter the market, it is reasonable to assume that these guests will be able to secure hotel rooms in the future, and it is therefore necessary to quantify this demand.

Unaccommodated demand is further indicated if the market is at all seasonal, with distinct high and low seasons; such seasonality indicates that although year-end occupancy may not average in excess of 70%, the market sells out many nights during the year.

The following table presents our estimate of unaccommodated demand in the subject market.

Conclusion

Latent Demand

Unaccommodated Demand


FIGURE 4-13 UNACCOMMODATED DEMAND ESTIMATE

Market Segment

Commercial 143,792 2.4 % 3,420

Meeting and Group 131,269 2.4 3,122

Leisure 150,391 2.4 3,577

Total 425,452 2.4 % 10,119

Unaccommodated

Demand Percentage

Unaccommodated

Room Night Demand

Accommodated Room

Night Demand

Accordingly, we have forecast unaccommodated demand equivalent to 2.4% of the base-year demand, resulting from our analysis of monthly and weekly peak demand and sell-out trends.

Induced demand represents the additional room nights that are expected to be attracted to the market following the introduction of a new demand generator. Situations that can result in induced demand include the opening of a new manufacturing plant, the expansion of a convention center, or the addition of a new hotel with a distinct chain affiliation or unique facilities. Although increases in demand are expected in the local market, we have accounted for this growth in the determination of market segment growth rates rather than induced demand.

Based upon a review of the market dynamics in the subject property’s competitive environment, we have forecast growth rates for each market segment. Using the calculated potential demand for the market, we have determined market-wide accommodated demand based on the inherent limitations of demand fluctuations and other factors in the market area.

The following table details our projection of lodging demand growth for the subject market, including the total number of occupied room nights and any residual unaccommodated demand in the market.

Induced Demand

Accommodated Demand and Market-wide Occupancy


FIGURE 4-14 FORECAST OF MARKET OCCUPANCY

150,981 160,040 166,442 171,435 176,578 181,875

Unaccommodated Demand 3,591 3,806 3,959 4,078 4,200 4,326

154,572 163,847 170,400 175,512 180,778 186,201

Growth Rate 7.5 % 6.0 % 4.0 % 3.0 % 3.0 % 3.0 %

137,833 146,103 151,947 156,505 161,200 166,036

3,278 3,475 3,614 3,722 3,834 3,949

141,111 149,578 155,561 160,228 165,034 169,985

7.5 % 6.0 % 4.0 % 3.0 % 3.0 % 3.0 %

157,911 167,385 174,081 179,303 184,682 190,223

3,756 3,981 4,140 4,265 4,393 4,524

161,666 171,366 178,221 183,568 189,075 194,747

7.5 % 6.0 % 4.0 % 3.0 % 3.0 % 3.0 %

Base Demand 446,724 473,528 492,469 507,243 522,460 538,134

Unaccommodated Demand 10,625 11,263 11,713 12,065 12,427 12,799

Total Demand 457,350 484,791 504,182 519,308 534,887 550,934

less: Residual Demand 21,169 14,512 11,713 12,065 12,427 12,799

Total Accommodated Demand 436,181 470,278 492,469 507,243 522,460 538,134

Overall Demand Growth 2.5 % 7.8 % 4.7 % 3.0 % 3.0 % 3.0 %

Market Mix

33.8 % 33.8 % 33.8 % 33.8 % 33.8 % 33.8 %

30.9 30.9 30.9 30.9 30.9 30.9

35.3 35.3 35.3 35.3 35.3 35.3

1,536 1,536 1,536 1,536 1,536 1,536

The Crosslands Phase 1 Proposed Hotel ¹ 40 120 120 120 120

Courtyard @ Darden HQs ² 21 128 128 128 128 128

Courtyard / Residence Inn Lake Nona ³ 137 204 204 204 204

Available Rooms per Night 568,576 672,108 725,748 725,748 725,748 725,748

Nights per Year 365 365 365 365 365 365

Total Supply 1,558 1,841 1,988 1,988 1,988 1,988

Rooms Supply Growth 1.4 % 18.2 % 8.0 % 0.0 % 0.0 % 0.0 %

Marketwide Occupancy 76.7 % 70.0 % 67.9 % 69.9 % 72.0 % 74.1 %

¹ Opening in September 2015 of the 100% competitive, 120-room The Crosslands Phase 1 Proposed Hotel² Opening in November 2014 of the 100% competitive, 128-room Courtyard @ Darden HQs³ Opening in May 2015 of the 100% competitive, 204-room Courtyard / Residence Inn Lake Nona

Totals

Proposed Hotels

Commercial

Meeting and Group

Leisure

Existing Hotel Supply

Growth Rate

Leisure

Base Demand


Base Demand

Growth Rate

Total Demand

Total Demand

Total Demand

Meeting and Group

Base Demand


Commercial

2017 2018 20192014 2015 2016

These room-night projections for the market area will be used in forecasting the proposed subject hotel's occupancy and average rate in Chapter 6.

January-2014 Projection of Occupancy and Average Rate Phase 1 Proposed Hotel – Kissimmee, Florida 63

5. Projection of Occupancy and Average Rate

Along with average rate results, the occupancy levels achieved by a hotel are the foundation of the property's financial performance and market value. Most of a lodging facility's other revenue sources (such as food, beverages, other operated departments, and rentals and other income) are driven by the number of guests, and many expense levels vary with occupancy. To a certain degree, occupancy attainment can be manipulated by management. For example, hotel operators may choose to lower rates in an effort to maximize occupancy. Our forecasts reflect an operating strategy that we believe would be implemented by a typical, professional hotel management team to achieve an optimal mix of occupancy and average rate.

The proposed subject property's forecasted market share and occupancy levels are based upon its anticipated competitive position within the market, as quantified by its penetration rate. The penetration rate is the ratio of a property's market share to its fair share. A complete discussion of the concept of penetration is presented in the addenda.

Because the supply and demand balance for the competitive market is dynamic, there is a circular relationship between the penetration factors of each hotel in the market. The performance of individual new hotels has a direct effect upon the aggregate performance of the market, and consequently upon the calculated penetration factor for each hotel in each market segment. The same is true when the performance of existing hotels changes, either positively (following a refurbishment, for example) or negatively (when a poorly maintained or marketed hotel loses market share).

A hotel’s penetration factor is calculated as its achieved market share of demand divided by its fair share of demand. Thus, if one hotel’s penetration performance increases, thereby increasing its achieved market share, this leaves less demand available in the market for the other hotels to capture and the penetration performance of one or more of those other hotels consequently declines (other things remaining equal). This type of market share adjustment takes place every time there is a change in supply, or a change in the relative penetration performance of one or more hotels in the competitive market.

Our projections of penetration, demand capture, and occupancy performance for the subject property account for these types of adjustments to market share within the defined competitive market. Consequently, the actual penetration factors

Penetration Rate Analysis

Forecast of Subject Property’s Occupancy


applicable to the subject property and its competitors for each market segment in each projection year may vary somewhat from the penetration factors delineated in the previous tables.

The following tables set forth, by market segment, the projected adjusted penetration rates for the proposed subject hotel and the competitive set.

FIGURE 5-1 COMMERCIAL SEGMENT ADJUSTED PENETRATION RATES

Hotel 2014 2015 2016 2017 2018 2019

Secondary Competition 100 % 100 % 96 % 93 % 91 % 91 %

The Crosslands Phase 1 Proposed Hotel — 120 130 135 142 142

Courtyard @ Darden HQs 90 106 117 129 127 127

Courtyard / Residence Inn Lake Nona — 90 102 114 124 124

FIGURE 5-2 MEETING AND GROUP SEGMENT ADJUSTED PENETRATION RATES

Hotel 2014 2015 2016 2017 2018 2019





FIGURE 5-3 LEISURE SEGMENT ADJUSTED PENETRATION RATES

Hotel 2014 2015 2016 2017 2018 2019





These positioned segment penetration rates result in the following market segmentation forecast.


FIGURE 5-4 MARKET SEGMENTATION FORECAST – SUBJECT PROPERTY

Commercial 48 % 48 % 47 % 46 % 46 %

Meeting and Group 21 22 23 25 25

Leisure 31 31 30 29 29

Total 100 % 100 % 100 % 100 % 100 %

2018201720162015 2019

The subject property's occupancy forecast is set forth as follows, with the adjusted projected penetration rates used as a basis for calculating the amount of captured market demand.

FIGURE 5-5 FORECAST OF SUBJECT PROPERTY'S OCCUPANCY

Market Segment

Commercial

Demand 158,942 166,442 171,435 176,578 181,875

Market Share 2.6 % 7.8 % 8.1 % 8.5 % 8.5 %

Capture 4,150 13,021 13,958 15,082 15,534

Penetration 120 % 130 % 135 % 142 % 142 %

Meeting and Group

Demand 145,100 151,947 156,505 161,200 166,036

Market Share 1.3 % 3.9 % 4.5 % 5.0 % 5.0 %

Capture 1,834 5,891 6,972 8,111 8,354

Penetration 58 % 64 % 74 % 83 % 83 %

Leisure

Demand 166,237 174,081 179,303 184,682 190,223

Market Share 1.6 % 4.8 % 4.9 % 5.1 % 5.1 %

Capture 2,655 8,343 8,834 9,358 9,638

Penetration 73 % 79 % 82 % 84 % 84 %

Total Room Nights Captured 8,640 27,255 29,764 32,551 33,527

Available Room Nights 14,640 43,800 43,800 43,800 43,800

Subject Occupancy 59 % 62 % 68 % 74 % 77 %

Marketwide Available Room Nights 672,108 725,748 725,748 725,748 725,748

Fair Share 2 % 6 % 6 % 6 % 6 %

Marketwide Occupied Room Nights 470,278 492,469 507,243 522,460 538,134

Market Share 2 % 6 % 6 % 6 % 6 %

Marketwide Occupancy 70 % 68 % 70 % 72 % 74 %

Total Penetration 84 % 92 % 97 % 103 % 103 %

20192015 2016 2017 2018

Based on our analysis of the proposed subject hotel and market area, we have selected a stabilized occupancy level of 76%. The stabilized occupancy is intended to reflect the anticipated results of the property over its remaining economic life,


given all changes in the life cycle of the hotel. Thus, the stabilized occupancy excludes from consideration any abnormal relationship between supply and demand, as well as any nonrecurring conditions that may result in unusually high or low occupancies. Although the subject property may operate at occupancies above this stabilized level, we believe it equally possible for new competition and temporary economic downturns to force the occupancy below this selected point of stability.

One of the most important considerations in estimating the value of a lodging facility is a supportable forecast of its attainable average rate, which is more formally defined as the average rate per occupied room. Average rate can be calculated by dividing the total rooms revenue achieved during a specified period by the number of rooms sold during the same period. The projected average rate and the anticipated occupancy percentage are used to forecast rooms revenue, which in turn provides the basis for estimating most other income and expense categories.

Although the average rate analysis presented here follows the occupancy projection, these two statistics are highly correlated; in reality, one cannot project occupancy without making specific assumptions regarding average rate. This relationship is best illustrated by revenue per available room (RevPAR), which reflects a property's ability to maximize rooms revenue. The following table summarizes the historical average rate and the RevPAR of the subject property’s future competitors.

FIGURE 5-6 BASE-YEAR AVERAGE RATE AND REVPAR OF THE COMPETITORS

Property

The Inn @ Calypso $50 53.5 % $33.00 46.6 %

Courtyard Lake in Marriott Village 92 98.5 70.84 100.0

Embassy Suites Lake Buena Vista South 116 124.2 80.37 113.4

Florida Hotel & Conference Center 100 107.1 74.00 104.5

Hampton Inn & Suites John Young Parkway 98 105.0 84.53 119.3

Hampton Inn & Suites Lake Buena Vista 87 93.2 68.83 97.2

Hilton Garden Inn Lake Buena Vista 95 101.7 78.55 110.9

Holiday Inn Express Lake Buena Vista 76 81.4 60.04 84.7

SpringHill Suites in Marriott Village 92 98.5 69.92 98.7

Overall Average $93.38 $70.84

Estimated 2013

Average Room

Rate

Rooms Revenue

Per Available

Room (RevPAR)

Average

Room Rate

Penetration

RevPAR

Penetration

Average Rate Analysis

Competitive Position


The defined competitive market realized an overall average rate of $93.38 in the 2013 base year. The Embassy Suites achieved the highest estimated average rate in the local competitive market, by a measurable margin, because of its new product and upscale facilities. The selected rate position for the proposed subject hotel, in base-year dollars, was based on a comparative brand analysis of the average rates achieved by Hilton Garden Inns in the same markets within Florida as Hampton Inn & Suites during the calender year 2011. Overall, Hilton Garden Inn’s achieved an ADR penetration rate of 1.01 compared to Hampton Inn & Suites within the same markets. The 2013 average rate of the Hampton Inn & Suites John Young Parkway and the Hampton Inn & Suites South Lake Buena Vista was roundly $98 and $87, respectively, for average of $92.50. Application of a 1.01 rate penetration (for Hilton Garden Inn) results in roundly $93. We have selected the rate position of $93.00, in base-year dollars, for the proposed subject.

As illustrated previously, the average rate for the competitive market averaged $84.94 in 2011, before reaching $93.38 in 2013. The average annual compounded average rate growth for the past three calender years was 4.7%. In addition, the introduction of the dual-branded Courtyard/Residence Inn and the Courtyard @ Darden HQ are expected to support additional average rate growth in the market.

Based on these considerations, the following table illustrates the projected average rate and the growth rates assumed.

FIGURE 5-7 MARKET AND SUBJECT PROPERTY AVERAGE RATE FORECAST

Year

Base Year 75.9 % — $93.38 — — $93.00 99.6 %

2014 76.7 5.0 % 98.05 — 5.0 % 97.65 99.6

2015 70.0 4.0 101.97 59.0 % 4.0 101.56 99.6

2016 67.9 3.0 105.03 62.0 3.0 104.60 99.6

2017 69.9 3.0 108.18 68.0 3.0 107.74 99.6

2018 72.0 3.0 111.42 74.0 3.0 110.97 99.6

2019 74.1 3.0 114.77 77.0 3.0 114.30 99.6

Area-wide Market (Calendar Year) Subject Property (Calendar Year)

Average

Rate

Average Rate

Penetration

Average Rate

Growth

Average

Rate OccupancyOccupancy

Average Rate

Growth

As illustrated above, a 5.0% rate of change is expected for the proposed subject hotel's positioned 2013 room rate in 2014. This is followed by growth rates of 4.0% and 3.0% in 2015 and 2016, respectively. The competitive market should enjoy positive rate growth through the near term. The proposed subject hotel's rate position should reflect growth similar to market trends because of the


proposed hotel's new facility, and assumed strong brand affiliation. The proposed subject hotel’s penetration rate is forecast to reach 99.6% by the stabilized period.

The North American lodging market bottomed out in late 2009, at which time demand rebounded and the supply pipeline diminished. In 2010, occupancy rebounded strongly, and by 2011, average rates in most U.S. markets showed increases. In many urban markets, strong occupancy levels are allowing hotel operators to continue to make aggressive average rate gains in 2013, while in some less-robust markets, average rate growth is still constrained by weak demand levels. With demand largely recovered from the correction in 2009, and new supply remaining muted in 2013 and 2014, markets should be able to support healthy average rate gains in the near term.

A new property must establish its reputation and a client base in the market during its ramp-up period; as such, the proposed subject hotel’s average rates in the initial operating period have been discounted to reflect this likelihood. We forecast 10.0% and 5.0% discounts to the proposed subject hotel’s forecast room rates in the first two operating years, which would be typical for a new operation of this type.

The following occupancies and average rates will be used to project the subject property's rooms revenue; this forecast reflects years beginning on September 1, 2015, which correspond with our financial projections.

FIGURE 5-8 FORECAST OF OCCUPANCY, AVERAGE RATE, AND REVPAR

Year

2015/16 61 % $103.58 10.0 % $93.23 $56.87

2016/17 66 106.69 5.0 101.36 66.90

2017/18 72 109.89 0.0 109.89 79.12

2018/19 76 113.19 0.0 113.19 86.02

Occupancy

Average Rate

Before Discount Discount

Average Rate

After Discount RevPAR

Based on our review of the competitive market and the subject site’s neighborhood and demand generators, we recommend the development of a Hilton Garden Inn or Hyatt Place on the subject site.

In regards to facilities and amenities, we recommend that the proposed subject property offer at least 1,500 square feet of meeting space. We also recommend the proposed hotel feature limited food and beverages outlets consistent with the brand standards of Hilton Garden Inn or Hyatt Place.

Brand and Facilities Recommendations


Brief overviews and representative pictures of the selected potential brands follow.

HILTON GARDEN INN ORLANDO AT SEAWORLD

Hilton Garden Inn properties are select-service hotels with limited food and beverage facilities. The franchise typically targets the individual business and the weekend leisure segments. The Hilton Garden Inn concept is “value-engineered” to provide those services expected of its targeted guests and eliminate expenses related to unsought amenities. Hilton Garden Inns feature the Pavilion Lounge; a casual, buffet-style restaurant; the Pavilion Pantry (offering microwavable and packaged foods and beverages); and a business center. Standard guestroom amenities include two telephones with data ports, complimentary high-speed Internet access, a hospitality center with microwave and refrigerator, and a spacious work desk. Most properties offer a swimming pool, whirlpool, and fitness room, as well as a proprietary Stay Fit Kit for in-room exercise. In 2012, the Hilton Garden Inn brand operated at an average occupancy level of 70.8%, with an average daily rate of $119.61 and average RevPAR of $84.62.


HYATT PLACE FORT LAUDERDALE AIRPORT SOUTH

In 2007 and 2008, most properties under the AmeriSuites chain, an upscale chain of all-suite business class hotels, were renovated and rebranded as Hyatt Place hotels; the concept has also been developed via new construction. With this rebranding, Hyatt Place has been able to compete with other select-service products – specifically, Courtyard and Hilton Garden Inn. Hyatt Place is distinguished among hotels in its asset class through a variety of amenities and guest-service offerings. These include the Gallery, a lobby area featuring the option of self-service check-in kiosks and free access to computers and a printer; the 24/7 Guest Kitchen and Bakery for purchase, as well as he Kitchen Skillet, a complimentary breakfast offered daily in the Guest Kitchen. Hyatt Place hotels typically range in size from 125 to 200 rooms and feature a pool, an exercise room, and meeting space - typically 1,800 to 2,000 square feet. Guestrooms feature high-tech equipment including wireless Internet access and 42-inch flat-panel televisions with the Hyatt Plug Panel capable of accepting inputs from computers, portable media players, and smart phones. In 2013, J.D. Power and Associates ranked Hyatt Place highest in guest satisfaction among upscale hotel brands. There are roundly 165 Hyatt Place hotels in operation in the United States with more than 35 announced hotels in development throughout the United States, China, Europe, India, Latin America, and the Middle East.

January-2014 Statement of Assumptions and Limiting Conditions Phase 1 Proposed Hotel – Kissimmee, Florida 71

6. Statement of Assumptions and Limiting Conditions

1. This report is set forth as a market study of the proposed subject hotel; this is not an appraisal report.

2. This report is to be used in whole and not in part.

3. No responsibility is assumed for matters of a legal nature, nor do we render any opinion as to title, which is assumed to be marketable and free of any deed restrictions and easements. The property is evaluated as though free and clear unless otherwise stated.

4. We assume that there are no hidden or unapparent conditions of the sub-soil or structures, such as underground storage tanks, that would impact the property’s development potential. No responsibility is assumed for these conditions or for any engineering that may be required to discover them.

5. We have not considered the presence of potentially hazardous materials or any form of toxic waste on the project site. The consultants are not qualified to detect hazardous substances, and we urge the client to retain an expert in this field if desired.

6. The Americans with Disabilities Act (ADA) became effective on January 26, 1992. We have assumed the proposed hotel would be designed and constructed to be in full compliance with the ADA.

7. We have made no survey of the site, and we assume no responsibility in connection with such matters. Sketches, photographs, maps, and other exhibits are included to assist the reader in visualizing the property. It is assumed that the use of the described real estate will be within the boundaries of the property described, and that no encroachment will exist.

8. All information, financial operating statements, estimates, and opinions obtained from parties not employed by HVS Consulting & Valuation are assumed to be true and correct. We can assume no liability resulting from misinformation.

9. Unless noted, we assume that there are no encroachments, zoning violations, or building violations encumbering the subject property.

10. The property is assumed to be in full compliance with all applicable federal, state, local, and private codes, laws, consents, licenses, and regulations (including a liquor license), and that all licenses, permits,


certificates, franchises, and so forth can be freely renewed or transferred to a purchaser.

11. All mortgages, liens, encumbrances, leases, and servitudes have been disregarded unless specified otherwise.

12. None of this material may be reproduced in any form without our written permission, and the report cannot be disseminated to the public through advertising, public relations, news, sales, or other media.

13. We are not required to give testimony or attendance in court by reason of this analysis without previous arrangements, and only when our standard per-diem fees and travel costs are paid prior to the appearance.

14. If the reader is making a fiduciary or individual investment decision and has any questions concerning the material presented in this report, it is recommended that the reader contact us.

15. We take no responsibility for any events or circumstances that take place subsequent to the date of our field inspection.

16. The quality of a lodging facility's on-site management has a direct effect on a property's economic viability. The financial forecasts presented in this analysis assume responsible ownership and competent management. Any departure from this assumption may have a significant impact on the projected operating results.

17. The financial analysis presented in this report is based upon assumptions, estimates, and evaluations of the market conditions in the local and national economy, which may be subject to sharp rises and declines. Over the projection period considered in our analysis, wages and other operating expenses may increase or decrease because of market volatility and economic forces outside the control of the hotel’s management. We assume that the price of hotel rooms, food, beverages, and other sources of revenue to the hotel will be adjusted to offset any increases or decreases in related costs. We do not warrant that our estimates will be attained, but they have been developed based upon information obtained during the course of our market research and are intended to reflect the expectations of a typical hotel investor as of the stated date of the report.

18. This analysis assumes continuation of all Internal Revenue Service tax code provisions as stated or interpreted on either the date of value or the date of our field inspection, whichever occurs first.

19. Many of the figures presented in this report were generated using sophisticated computer models that make calculations based on numbers carried out to three or more decimal places. In the interest of simplicity,


most numbers have been rounded to the nearest tenth of a percent. Thus, these figures may be subject to small rounding errors.

20. It is agreed that our liability to the client is limited to the amount of the fee paid as liquidated damages. Our responsibility is limited to the client, and use of this report by third parties shall be solely at the risk of the client and/or third parties. The use of this report is also subject to the terms and conditions set forth in our engagement letter with the client.

21. Evaluating and comprising financial forecasts for hotels is both a science and an art. Although this analysis employs various mathematical calculations to provide value indications, the final forecasts are subjective and may be influenced by our experience and other factors not specifically set forth in this report.

22. This study was prepared by HVS Consulting & Valuations. All opinions, recommendations, and conclusions expressed during the course of this assignment are rendered by the staff of HVS Consulting & Valuations as employees, rather than as individuals.

January-2014 Penetration Explanation Phase 1 Proposed Hotel – Kissimmee, Florida i

Penetration Explanation

Let us illustrate the penetration adjustment with an example.

A market has three existing hotels with the following operating statistics:

BASE-YEAR OCCUPANCY AND PENETRATION LEVELS

Based upon each hotel’s room count, market segmentation, and annual occupancy, the annual number of room nights accommodated in the market from each market segment can be quantified, as set forth below.

MARKET-WIDE ROOM NIGHT DEMAND

The following discussion will be based upon an analysis of the commercial market segment. The same methodology is applied for each market segment to derive an estimate of a hotel’s overall occupancy. The table below sets forth the commercial demand accommodated by each hotel. Each hotel’s commercial penetration factor is computed by:

Property

Number

of Rooms Fair Share Commercial

Meeting and

Group Leisure Occupancy

Hotel A 100 23.5 % 60 % 20 % 20 % 75.0 % 100.8 %

Hotel B 125 29.4 70 10 20 65.0 87.4

Hotel C 200 47.1 30 60 10 80.0 107.5

Totals/Average 425 100.0 % 47 % 38 % 15 % 74.4 % 100.0 %

Penetration

Market

Segment

Annual Room

Night

Demand

Commercia l 54,704 47.4 %

Meeting and Group 43,481 37.7

Leisure 17,246 14.9

Total 115,431 100.0 %

Percentage of

Total

January-2014 Penetration Explanation Phase 1 Proposed Hotel – Kissimmee, Florida ii

1) calculating the hotel’s market share % of commercial demand (commercial room nights accommodated by subject hotel divided by total commercial room nights accommodated by all hotels) and

2) dividing the hotel’s commercial market share % by the hotel’s fair share %.

The following table sets forth each hotel’s fair share, commercial market share, and commercial penetration factor.

COMMERCIAL SEGMENT PENETRATION FACTORS

If a new 100-room hotel enters the market, the fair share of each hotel changes because of the new denominator, which has increased by the 100 rooms that have been added to the market.

COMMERCIAL SEGMENT FAIR SHARE

The new hotel’s penetration factor is projected for its first year of operation. It is estimated that the hotel will capture (penetrate) only 85% of its fair share as it establishes itself in the market. The new hotel’s market share and room night capture can be calculated based upon the hotel’s estimated penetration factor. When the market share of the existing hotels and that of the new hotel are added up, they no longer equal 100% because of the new hotel’s entry into the market. The market share of each hotel must be adjusted to reflect the change in the denominator that comprises the sum of each hotel’s market share.

Property

Number

of Rooms Fair Share

Commercial

Capture

Hotel A 100 23.5 % 16,425 30.0 % 127.6 %

Hotel B 125 29.4 20,759 37.9 129.0

Hotel C 200 47.1 17,520 32.0 68.1

Totals/Average 425 100.0 % 54,704 100.0 % 100.0 %

Commercial

Penetration

Commercial

Market Share

Property

Number of

Rooms

Hotel A 100 19.0 %

Hotel B 125 23.8

Hotel C 200 38.1

New Hotel 100 19.0

Total 525 100.0 %

Fair Share

January-2014 Penetration Explanation Phase 1 Proposed Hotel – Kissimmee, Florida iii

This adjustment can be mathematically calculated by dividing each hotel’s market share percentages by the new denominator of 97.1%. The resulting calculations reflect each hotel’s new adjusted market share. The sum of the adjusted market shares equals 100%, indicating that the adjustment has been successfully completed. Once the market shares have been calculated, the penetration factors can be recalculated (adjusted market share divided by fair share) to derive the adjusted penetration factors based upon the new hotel’s entry into the market. Note that each existing hotel’s penetration factor actually increases because the new hotel is capturing (penetrating) less than its fair share of demand.

COMMERCIAL SEGMENT PROJECTIONS (YEAR 1)

In its second year of operation, the new hotel is projected to penetrate above its fair share of demand. A penetration rate of 130% has been chosen, as the new hotel is expected to perform at a level commensurate with Hotel A and Hotel B in this market segment. The same calculations are performed to adjust market share and penetration factors. Note that now the penetration factors of the existing hotels decline below their original penetration rates because of the new hotel’s above-market penetration. Also, note that after the market share adjustment, the new hotel retains a penetration rate commensurate with Hotel A and Hotel B, though the penetration rates of all three hotels have declined by approximately nine percentage points because of the reapportionment of demand.

Once the market shares of each hotel have been adjusted to reflect the entry of the new hotel into the market, the commercial room nights captured by each hotel may be projected by multiplying the hotel’s market share percentage by the total commercial room-night demand. This calculation is shown below.

Property

Number

of Rooms Fair Share

Hist./Proj.

Penetration

Factor

Hist./Proj.

Market

Share

Adjusted

Market

Share

Adjusted

Penetration

Factor

Projected

Capture

Hotel A 100 19.0 % 127.6 % 24.3 % 25.0 % 131.4 % 13,688

Hotel B 125 23.8 129.0 30.7 31.6 132.8 17,299

Hotel C 200 38.1 68.1 25.9 26.7 70.1 14,600

New Hotel 100 19.0 85.0 16.2 16.7 87.5 9,117

Totals/Average 525 100.0 % 97.1 % 100.0 % 54,704

January-2014 Penetration Explanation Phase 1 Proposed Hotel – Kissimmee, Florida iv

COMMERCIAL SEGMENT PROJECTIONS (YEAR 2)

Property

Number

of Rooms Fair Share

Hist./Proj.

Penetration

Factor

Hist./Proj.

Market

Share

Adjusted

Market

Share

Adjusted

Penetration

Factor

Projected

Capture

Hotel A 100 19.0 % 131.4 % 25.0 % 23.1 % 121.5 % 12,662

Hotel B 125 23.8 132.8 31.6 29.3 122.9 16,004

Hotel C 200 38.1 70.1 26.7 24.7 64.8 13,507

New Hotel 100 19.0 130.0 24.8 22.9 120.3 12,531

Totals/Average 525 100.0 % 108.1 % 100.0 % 54,704

1

Gary L. Johnson

HVS CONSULTING & VALUATION Senior Consultant Miami, Florida HCI-HOTEL CONSULTING INTERNATIONAL Consulting and Valuation Analyst Miami, Florida LUXBURY HOTELS Operations Assistant Cincinnati, Ohio

Southern University Bachelor of Science – Business Administration Collegedale, Tennessee

Certified General Appraiser #RZ-3512

(Florida)

Employment

2004 to present

2002 to 2004

1992 to 2002

Education

Professional Affiliations

1

Partial List of Properties Evaluated:

UNITED STATES

California

-The Club at Big Bear Village, Big Bear Lake -Hilton Grand Vacations Club @ MarBrisa, Carlsbad -Laguna Cliff Marriott, Dana Point -Welk Mountain Villas, Escondido -Proposed Vina Bello Resort, Napa -Proposed Palazzo Lido, Newport Beach -Inn at the Park, San Diego -Proposed eSuites, San Jose -Hyatt Residence Club, Truckee

Colorado

-Grand Lodge on Peak 7, Breckenridge -Hotel Monaco, Denver -Best Western Rio Grande, Durango -Proposed Upscale Hotel, Durango -Wyndham, Steamboat Springs -Proposed Four Seasons, Vail

Florida

-Tidemark Beach Resort, Anna Maria Island -Turnbury Isle Resort, Aventura -Marriott, Boca Raton -Proposed Cedar Key Village, Cedar Key -Mona Lisa Suites Hotel, Celebration -Sandpearl Resort, Clearwater Beach -Summer Bay Resort, Clermont -Proposed Harbor Club, Cocoa Beach -Doubletree, Coconut Grove -Residence Inn, Coconut Grove -Plantation Inn, Crystal River -Wyndham Airport, Dania Beach -Holiday Inn Express, Davenport -Comfort Suites, Davie -Perry’s Ocean Edge Resort, Daytona Beach -Hampton Inn, Daytona Beach Shores -Holiday Inn Express, Daytona Beach Shores -Hilton, Deerfield Beach -Hampton Inn & Suites, Estero -Seaside Amelia Inn, Fernandina Beach

-Holiday Motel, Florida City -AmeriSuites, Fort Lauderdale -Best Western Inn, Fort Lauderdale -Best Western Oakland Park Inn, Fort Lauderdale -Best Western Rolling Hills, Fort Lauderdale -Holiday Inn Commercial Ave, Fort Lauderdale -Proposed Orion Resort, Fort Lauderdale -Proposed Trump Hotel, Fort Lauderdale -Radisson Sanibel Gateway, Fort Myers -Best Western Beach Resort, Fort Myers Beach -Diamondhead Island Beach Resort, Fort Myers Beach -Comfort Inn, Fort Pierce -Hampton Inn, Fort Walton Beach -Gainesville Hotel & Conference Center, Gainesville -SpringHill Suites, Gainesville -Days Inn South, Jacksonville -Proposed eSuites, Jacksonville -Courtyard by Marriott, Jensen Beach -Sheraton, Key Largo -Days Inn, Key West -Proposed PRC, Key West -Best Western Maingate East, Kissimmee -Howard Johnson West, Kissimmee -Mystic Dunes Resort, Kissimmee -Proposed Oakwater Resort, Kissimmee -Villas at Old Town, Kissimmee -Westgate Town Center, Kissimmee -Best Western, Lake Buena Vista -Royal Plaza Hotel, Lake Buena Vista -Wyndham, Lake Buena Vista -Super 8, Lantana -Hilton, Longboat Key -Sheraton Orlando North, Maitland -Proposed b2 Hotel, Miami -Best Western Airport West, Miami -Proposed Courtyard Dolphin Mall, Miami -Proposed Design District Hotel, Miami -Fairfield Inn & Suites, Miami -Hampton Inn Blue Lagoon, Miami -Proposed Hilton Garden Inn Airport, Miami -Proposed Homewood Suites Airport, Miami -Hotel Vila, Miami -Proposed Le Meridien, Miami

2

-Mandarin Oriental, Miami -Proposed Microtel Airport, Miami -Proposed Shangri-La, Miami -Sheraton Miami Airport, Miami -Proposed Westin Airport, Miami -Proposed Cabana on Collins, Miami Beach -Claridge Hotel, Miami Beach -Clevelander Hotel, Miami Beach -Crowne Plaza Z Ocean Hotel, Miami Beach -Wyndham, Miami Beach -Courtyard by Marriott, Miramar -Residence Inn, Miramar -Hilton, Naples -Holiday Inn, New Smyrna Beach -Adam’s Mark, Orlando -Proposed Bella Vista Hotel, Orlando -Proposed Floridan Hotel, Orlando -Orlando Vista Hotel, Orlando -Westgate Lakes Resort, Orlando -Days Inn / Scottish Inn, Ormond Beach -Bay Point Marriott, Panama City Beach -Proposed Pensacola Beach Resort, Pensacola Beach -Renaissance, Plantation -Residence Inn, Plantation -Best Western, Port St Lucie -Best Western Spanish Quarters, St Augustine -Holiday Inn, St Augustine -Ocean Sands, St Augustine -Best Western Ocean Inn, St Augustine Beach -Tradewinds Resort Complex, St Pete Beach -Proposed Zamora Hotel, St Pete Beach -Best Western Beach Resort, Sanibel Island -AmericInn, Sarasota -Holiday Inn Lido Beach, Sarasota -Proposed Upper Upscale Hotel, Sarasota -Crowne Plaza, Singer Island -Hampton Inn Ybor City, Tampa -Mainsail Conference Center, Tampa -Ramada, Titusville -Liki Tiki Village, Winter Garden

Georgia

-Jekyll Island Resort, Jekyll Island

Illinois

-Hotel Monaco, Chicago

Hawaii

-Hilton Hawaiian Village, Honolulu -Shell Vacations Club Waikiki, Honolulu -Proposed Hyatt Vacation Club, Kapaa, Kauai -Hilton Kings Land Resort, Kona -Proposed Hyatt Vacation Club, Lahaina, Maui

Kentucky

-Extended Stay America (2 locations), Lexington -Extended Stay America (3 locations), Louisville -Homestead Studio Suites, Louisville

Louisiana

-Bluegreen Club La Pension, New Orleans -Frenchman Orleans, New Orleans -Sheraton, New Orleans

Missouri

-Colonnade Resort, Branson -Grand Regency Resort, Branson -Westgate Woods Resort, Branson -Bluegreen Paradise Point, Hollister

Montana

-St Marys Lodge, St Marys

Nevada

-Desert Rose Resort, Las Vegas -Elara, A Hilton Grand Vacation Club, Las Vegas -Hilton Grand Vacation Club, Las Vegas -Westgate Planet Hollywood, Las Vegas

New Jersey

-Legends Resort, McAfee

New Mexico

-Proposed eSuites, Albuquerque

3

New York

-Gurney’s Inn, Montauk

North Carolina

-Quality Inn, Burlington -Best Western, Cary -Proposed eSuites, Charlotte -Proposed Embassy Suites, Winston-Salem -Holiday Inn Select, Winston-Salem -Proposed Marriott, Winston-Salem

Rhode Island

-Vanderbilt Hall Hotel, Newport

South Carolina

-Hilton, Hilton Head Island -Hampton Inn & Suites, Mount Pleasant -Westgate Oceanside Resort, Myrtle Beach

Tennessee

-Marriott, Chattanooga -Baymont Inn, Goodlettsville -Extended Stay America (2 locations), Knoxville -Fairfield Inn, Memphis -Blackberry Farm Resort, Walland

Texas

-Proposed Staybridge Suites, Austin -Flying L Guest Ranch, Bandera -Proposed Hotel and Conference Center, Mercedes -The Falls Resort, New Ulm -Salado Creek Villas, San Antonio -Proposed Timeshare Resort, South Padre Island

Utah

-Westgate Resort & Spa, Park City -Hotel Monaco, Salt Lake City

Virginia

-Colonial Crossings, Williamsburg

CANADA

British Colombia

-Mountainside Lodge, Whistler

CARIBBEAN

Bahamas

-Abaco Beach Resort, Abaco -Proposed Papillon Resort, Exuma

Haiti

-Mont Joli Hotel, Cap Haitien

Puerto Rico

-Aquarius Vacation Club, Dorado

St Barthelemy

-Isle de France

St John

-Proposed Pond Bay Club

St Kitts

-Proposed Mandarin Oriental

St Maarten

-Oyster Bay Beach Resort, Dawn Beach -Proposed Embassy Suites, Philipsburg

CENTRAL AMERICA

Costa Rica

-Proposed Canyon Ranch Resort, Guanacaste -Proposed Crowne Plaza, Playa Hermosa

4

Panama

-Proposed Buenaventura Resort, Playa Blanca -Proposed Lazur Hotel, Naos Island

OTHER INTERNATIONAL

Dubai

-Proposed Timeshare Resort, Dubailand

HVS Consulting & Valuation – Miami, Florida Qualifications of John Lancet, MAI

John Lancet, MAI

John Lancet, MAI is a Director/Partner for the Miami office of HVS Consulting&Valuation, as well as the Director-Partner of the HVS Shared OwnershipServicesDivision. Over the past 17 years that John has been with HVS, he has appraised and/or consulted on more than 280 hotels, resorts, vacation ownership, and

mixed-use developments in 22 states and 26 countries. Prior to joining HVS, John obtained his operating xperience from several hotels located in South Florida and also worked as a regional manager for a major timeshare company. A graduate of Florida International University’s School of Hospitality Management, John is a certified general real estate appraiser in Florida (RZ 2554) and holds an MAI membership designation with the

Appraisal Institute.

Appraisal Institute, (MAI) 2012 Member of the Appraisal Institute - South Florida Chapter Florida Certified General Real Estate Appraiser #RZ-0002554

1995 to Present HVS CONSULTING & VALUATION and HVS SHARED OWNERSHIP SERVICES Director-Partner Miami, FL Florida International University Bachelor of Science in Hospitality Management North Miami, Florida

Course 410-Standards of Professional Practice, Part A, Appraisal Institute Course 420-Standards of Professional Practice, Part B, Appraisal Institute Course 510-Advanced Income Capitalization, Appraisal Institute Course 520-Highest and Best Use and Market Analysis, Appraisal Institute Course 530-Advanced Sales Comparison and Cost Approaches Course 540-Report Writing and Valuation Analysis Course 550-Advanced Applications

Career Resume

Professional Affiliations

State Certification

Employment History

Education


UNITED STATES

Arizona - Wyndham Garden, Chandler - Wyndham Garden, North Phoenix - Residence Inn, Phoenix - Wyndham Garden, Phoenix Airport - Courtyard by Marriott, Scottsdale - Scottsdale Villa Mirage, Scottsdale - Sedona Summit, Sedona

California - San Luis Bay Inn, Avila Beach - Four Seasons Aviara, Carlsbad - Hilton Ontario, Ontario - ANA Hotel, San Francisco - Embassy Vacation Resort, South Lake Tahoe COLORADO -Wyndham Resort, Steamboat Springs - Doubletree Hotel, Westminster

Florida - Hilton, Altamonte Springs - Proposed aLoft Hotel, Aventura - Turnberry Isle Resort, Aventura - Boca Raton Resort & Club, Boca Raton - Holiday Inn, Boca Raton - Holiday Inn Express, Bonita Springs - Hyatt Coconut Plantation, Bonita Springs - Proposed Hotel, Boynton Beach - Proposed Hotel, Bradenton - Homestead Village, Brandon - Hampton Inn & Suites, Clearwater - Homestead Village, Clearwater - Proposed Hotel, Clearwater - Hyatt Regency Aqualea Resort, Clearwater Beach - Proposed SpringHill Suites, Clearwater Beach

Florida (Continued) - Proposed Ritz-Carlton, Coconut Grove - Extended Stay America, Coral Gables - Land Valuation, Dania Beach - Courtyard by Marriott, Dania Beach - Proposed Best Western, Dania Beach - Proposed Hotel, Daytona Beach - Proposed Hilton Garden Inn-Delray Beach - Proposed Seagate Resort, Delray Beach - Baymont Inn & Suites, Doral - Extended Stay America, Doral - Hawk’s Cay Resort & Marina, Duck Key - Seaside Inn, Fernandina Beach - Proposed Convention Center Hotel, Ft. Lauderdale - Proposed Mandarin Oriental, Fort Lauderdale - Proposed PRC, Fort Lauderdale - Proposed St. Regis Hotel, Fort Laud. - Proposed TownePlace Suites, Ft. Lauderdale - Ritz-Carlton / St. Regis Resort, Fort Lauderdale - Sheraton Airport, Fort Lauderdale - Hilton Garden Inn, Ft. Myers - Radisson Inn, Fort Myers - Ramada Inn Redevelopment, Fort Myers - Proposed Hotel, Fort Pierce - Hampton Inn, Fort Walton Beach - Homewood Suites, Gainesville - Extended Stay America, Gainesville - SpringHill Suites by Marriott, Gainesville - Howard Johnson Hotel, Hialeah - Ramada Hotel, Hialeah - Proposed Hotel, Hollywood - Ambassador Hotel, Hollywood Beach - Days Inn, Homestead - Proposed Courtyard by Marriott, Homestead - Adam’s Mark Hotel, Jacksonville - Homestead Village, Jacksonville

Partial List of Hotel Properties Appraised or Evaluated


- Hampton Inn and Suites, Clermont - Harbor Club, Cocoa Beach Florida (continued) - Fairfield Inn, Jacksonville Beach - Holiday Inn Sunspree, Jacksonville Beach - Proposed Hotel, Jupiter - Proposed Ritz-Carlton, Key Biscayne - Fairfield Inn by Marriott, Key West - Project Key West, Key West - Courtyard by Marriott, Kissimmee - Doubletree Guest Suites, Kissimmee - Proposed Fractional Development, Kissimmee - Radisson Resort Worldgate, Kissimmee - Sheraton Four Points, Lakeland - Super 8, Lantana - Proposed Hotel, Mayport - Baymont Inn & Suites, Miami - Conrad Hotel, Miami - Extended Stay America, Miami - Homestead Studio Suites, Miami - J.W. Marriott Hotel, Miami - Kendall Hotel and Suites, Miami - Miami Airport Hilton, Miami - Four Seasons Hotel, Miami - Proposed Convention-Oriented Hotel, Miami - Proposed Four Points by Sheraton, Miami - Proposed Hotel, Miami Dadeland - Proposed Hotel, Miami Design District - Proposed Kubik Hotel, Miami - Proposed MUD, Miami-Downtown - Proposed Shangri-La Resort and PRC, Miami (Watson Island) - Radisson Hotel & Suites, Miami - Residence Inn, Miami-Airport - 524 Suites, Miami Beach - Anglers Resort, Miami Beach - Beacon Hotel, Miami Beach - Best Western, Miami Beach - Betsy, The, Miami Beach - Blue Moon Hotel, Miami Beach - Comfort Inn, Miami Beach - Coral Sands, Miami Beach - Days Inn, Miami Beach - Eden Roc Resort, Miami Beach - Edgewater Hotel, Miami Beach

- Proposed Courtyard by Marriott, Jacksonville - Proposed Residence Inn, Jacksonville Florida (continued) - Fontainebleau Resort, Miami Beach - Four Points by Sheraton, Miami Beach - Greystone Hotel, Miami Beach - Habana Libre Beach Resort, Miami Beach - Henrosa Hotel, Miami Beach - Hotel Ocean, Miami Beach - Loews Hotel, Miami Beach - Marlin Hotel, Miami Beach - Marriott South Beach, Miami Beach - Plaza Hotel, The, Miami Beach - Proposed Bijou Hotel, Miami Beach - Ritz-Carlton Resort, Miami Beach - Royal Polo Hotel, Miami Beach - Sagamore Hotel, Miami Beach - Shore Club, The, Miami Beach - SoHo Beach House, Miami Beach - Sovereign Hotel, Miami Beach - Traymore Hotel, Miami Beach - W Hotel, Miami Beach - Winterhaven Hotel, Miami Beach - Extended Stay America, Miami Springs - MainStay Suites, Miami Springs - Courtyard by Marriott, Miramar - Residence Inn by Marriott, Miramar - Wingate Inn, Miramar - Hilton Hotel, Naples - Proposed Hotel, Naples, FL - Proposed Holiday Inn and Suites, Ocala - Baymont Inn & Suites, Orlando - Blue Tree Resort, Orlando - Cypress Pointe Resort, Orlando - Crowne Plaza Universal Hotel, Orlando - Embassy Vacation Resort, Orlando - Floridian Hotel, Orlando - Grand Hyatt Cypress, Orlando - Hilton Grand Vacations Club- - SeaWorld Resort - Tuscany Village - Ruby Lake Resort - International Plaza Resort, Orlando - Land Valuation-Western Beltway, Orlando - Marriott Hotel, Orlando-downtown


- Fairfield Inn, Miami Beach - Fairwind Hotel, Miami Beach Florida (continued) - Proposed Universal Hotel Complex, Orlando - Proposed Palazzo del Lago, Orlando - Proposed Condo-Hotel, Orlando - Brazilian Court Hotel, Palm Beach - Proposed Palm House Hotel, Palm Beach - Ocean Club Beach Resort, Palm Beach - Proposed Marina Village Hotel, Panama City - Hampton Inn, Pensacola Beach - Hilton Garden Inn, Pensacola Beach - Proposed Bradford Homesuites, Pinellas Park - Renaissance, Plantation - Residence Inn by Marriott, Plantation - Proposed ‘Liquid’ Hotel, Pompano Beach -Proposed Hotel, Pompano Beach - Club Med Sandpiper, Port St. Lucie - Proposed Amrit Spa and Hotel, Riviera Beach - Proposed Hotel, St. Petersburg - Proposed Hampton Inn and Suites, Sarasota - Proposed Residence Inn, Sarasota - Proposed Island Spa Resort, Singer Island - Loews Don Cesar Resort, St. Pete Beach - Proposed Hotel and Vacation Ownership Resort, St. Pete Beach - Sirata Beach Resort, St. Pete Beach - Ritz-Carlton Resort, South Beach - Doubletree Ocean Point Resort, Sunny Isles - Proposed Solis Hotel, Sunny Isles - Proposed Hotel, Sunrise - Beach House Resort, Surfside - Courtyard by Marriott, Tampa - Fairfield Inn by Marriott, Tampa - Holiday Inn Downtown, Tampa - Homewood Suites by Hilton, Tampa - Proposed Hotel, Tampa - Proposed Westin Hotel, Tampa - Tampa Airport Hilton, Tampa - Wyndham Harbour Island, Tampa - Homestead Village, Tampa Airport - Costa D’Este Hotel, Vero Beach - Proposed aLoft Hotel, West Palm Beach - Proposed Clematis Hotel, West Palm Beach - Proposed Renaissance Hotel, West Palm Beach

- Nickelodeon Family Suites, Orlando - Peabody Hotel, Orlando

Georgia - Proposed Boutique Hotel, Atlanta - Wyndham Garden, Atlanta - Best Western, Savannah - Proposed Fractional Resort, Savannah - Staybridge Suites, Savannah - Ocean Plaza Beach Resort, Tybee Island Hawaii - Hilton Grand Vacations Club- - Kalia Tower - Waikoloa Beach Resort - Hilton Hawaiian Village - Waikoloa King’s Land - The Grand Waikikian - Ritz-Carlton Kapalua

Illinois

- Proposed Hotel and Spa, Glencoe - Holiday Inn, Gurnee - Proposed Orrington Hotel, Evanston Kentucky - Courtyard by Marriott, Louisville - Marriott, Louisville - Residence Inn by Marriott, Louisville - SpringHill Suites by Marriott, Louisville Maine - Proposed Resort, Brownville

Maryland

- Baltimore Hilton and Towers, Baltimore

Michigan - Waterfront Inn, Traverse City

Minnesota

- The DeCathlon Club, Minneapolis


- Proposed Courtyard by Marriott, Weston

Mississippi - South Beach Hotel & Suites, Biloxi - Proposed Timeshare Resort, Tunica

Nevada - Residence Inn by Marriott, Las Vegas - Ridge Pointe, Stateline - Hilton Grand Vacations Club- - Las Vegas Flamingo - Las Vegas Blvd I & II - Lake Las Vegas

New Jersey - Proposed Radisson Hotel, Atlantic City - Proposed condo-hotel, Ocean City - Proposed Hotel, Wildwood New York - Hilton Grand Vacations Club, New York 57th

North Carolina

Street Tower

- Autumn Woods, Carrboro - Proposed Resort, Cashiers - Hilton Executive Park, Charlotte - Wyndham Garden, Charlotte - Inn at Corolla Light, Corolla - Radisson, Research Triangle Park South Carolina - Proposed Hotel, Bay Point Island - Two Proposed Hotels, Columbia - Proposed Condo-Hotel, Daniel Island - Inter-Continental Hotel, Hilton Head - Hilton Oceanfront Resort, Hilton Head

Tennessee - Fairfield Inn & Suites by Marriott, Memphis - Days Inn, Nashville

Texas

- Flying L Guest Ranch, Bandera - Marriott Suites, Dallas - Sheraton North Houston, Houston - Courtyard by Marriott, Plano - MainStay Suites, Plano - Residence Inn by Marriott, Plano - Proposed Radisson, San Antonio - San Antonio Hilton, San Antonio

Virginia - Embassy Suites, Tysons Corner - Colonial Crossings, Williamsburgt - Greensprings Plantation, Williamsburg - Powhatan Plantation, Williamsburg - Proposed Hotel, Woodbridge

Washington - Courtyard by Marriott, Seattle Wyoming - Proposed Hotel, Jackson Hole


INTERNATIONAL

Anguilla - Cap Juluca Resort - Proposed Temenos Resort

Antigua - Halcyon Cove, Dickenson Bay - Proposed Le Meridien Resort, Willikies

Aruba - Proposed Fractional Resort, Eagle Beach - Wyndham Resort, Casino, and Spa

Australia

- Timeshare Research Bahamas - Abaco Beach Resort & Boat Harbour - Green Turtle Cay, Abaco - Breezes Resort, Cable Beach - Proposed Resort, Cat Island - Proposed Hotel and Fractional, Lee Stocking Island - British Colonial Hilton, Nassau Belize - Proposed Resort, Plasensia Canada - Georgian Manor Resort, Collingwood

Cayman Islands - Proposed Condo/Fractional Development, North Point, Grand Cayman Island - Grand Cayman Marriott Beach Resort, Grand Cayman Costa Rica - Four Seasons Resort, Peninsula Papagayo - Proposed Novotel Hotel, San Jose

Curacao - Breezes Hotel and Casino - Floris Hotel - Hilton Hotel and Casino Dominica - Proposed Mixed-Use Resort, Hampstead Estate - Proposed Resort, Woodford Hill

Dominican Republic - Casa de Campo - Proposed Hotel and Residences, Cabrera - Club Med Punta Cana - LTI Beach Resort, Punta Cana - Timeshare Research

Dubai

- Palm Crescent Vacation Club @ The Palm Sun Resort, Palm Island

Grenada

- Grand Beach Hotel - Proposed Resort, Prickly Bay - Proposed Hotel, St. George Honduras - Proposed Hotel and Fractional Units, Roatan

Mexico

- Proposed Puerto Cancun Project, Cancun - Proposed Hotel, Playa del Carmen Panama - Buenaventura Resort and PRC, Farallon - Proposed Luxury Resort, Isla del Rey - Proposed Albrook Hotel, Panama City - Proposed City Center MUD, Panama City - Proposed Panama Bay Hotel and Casino, Panama City - Proposed Riviera Hotel, Panama City


Puerto Rico - Mayaguez Resort and Casino - San Juan Beach Resort St. Barths - Proposed Ultra-Luxury Resort, Pointe Milou St. Kitts - Proposed Mandarin Oriental Resort, Majors Bay St. Lucia - Ladera Resort, Soufreire St. Maarten - Proposed Martin Quarter MUD Trinidad - Proposed Sheraton Hotel

Turks and Caicos Islands - Amanyara Resort - Proposed Mandarin Oriental, Dellis Cay - Beaches Resort, Providenciales - Proposed Luxury Hotel and Villas - Third Turtle Club, Providenciales - Parrot Cay Resort, Parrot Cay United States Virgin Islands - Bluebeard’s Beach Club, Bluebeard’s Castle, and Elysian Beach Resort – St. Thomas -Proposed Crowne Plaza – St. Thomas Zanzibar - Proposed Timeshare Resort

- Proposed Lazur Resort and Convention Hotel, Naos Harbour Island


UNITED STATES

Arizona - Scottsdale Villa Mirage, Scottsdale - Sedona Summit, Sedona California - San Luis Bay Inn, Avila Beach - Four Seasons Aviara, Carlsbad - Embassy Vacation Resort, South Lake Tahoe - Palazzio Bel'Lido Development, Newport Beach Florida - Boca Raton Resort & Club, Boca Raton - Proposed Hyatt Coconut Plantation, Bonita Springs - Sheraton Yankee Clipper, Fort Lauderdale - Proposed Fractional Development, Kissimmee - Coral Sands, Miami Beach - Fairwind Hotel, Miami Beach - Traymore Hotel, Miami Beach - Blue Tree Resort, Orlando - Cypress Pointe Resort, Orlando - Embassy Vacation Resort, Orlando Michigan - Waterfront Inn, Traverse City Mississippi - Proposed Timeshare Resort, Tunica Nevada - Ridge Pointe, Stateline New Jersey - Proposed Radissson Hotel, Atlantic City

South Carolina - Proposed Hotel/Fractional Development, Bay Point Island Utah - Westgate at the Canyons, Park City Virginia - Greensprings Plantation, Williamsburg - Powhatan Plantation, Williamsburg

INTERNATIONAL

Australia - Timeshare Research

Cayman Islands - Proposed Condo/Fractional Development, North Point, Grand Cayman Island -The Grand Caymanian Club & Resort, Grand Cayman

Dominican Republic - Timeshare Research-ARDA survey

Mexico

- Proposed Puerto Cancun Project, Cancun

Turks and Caicos Islands - Proposed Tropical Dream Resort and Casino, Grand Turk

Partial List of Timeshare Properties Appraised or Evaluated


United States Virgin Islands - Bluebeard’s Beach Club – St. Thomas - Bluebeard’s Castle – St. Thomas - Elysian Beach Resort – St. Thomas

- Proposed East End Village Timeshare Development, St. Thomas

Sample Expert Witness Experience Southern District of Georgia - Bankruptcy Court (2004) Resort Inns, Savannah, Georgia. State Circuit Court – Charles Hotel Group (2005) Valuation of 4 hotels in Miami Beach, Florida. Owned by Charles Group and related to a shareholder dispute. Southern District of Florida - Bankruptcy Court (2006) Soverign Hotel, Miami Beach, Florida Southern District of Florida – Bankruptcy Court (2010) The Kendall Hotel, Miami, Florida Southern District of Florida – Bankruptcy Court (2011) Celebrity Resorts, Kissimmee, Florida Southern District of Florida – Bankruptcy Court (2011) Grand Seas Timeshare Resort, Daytona Beach, Florida Middle District – Bankruptcy Court (2011) Island One Resorts, Orlando, Florida

Expert Witness


Speaking Engagements


Contributing Author - Resort Development, Second Edition, Urban Land Institute, 2008 Buying a Hotel To House Your Tour Flow (March 2006 by Kathy Conroy and John P. Lancet) Tour flow alone typically will not fill a hotel. Business travelers, meeting and convention travelers, and pleasure or leisure travelers are the three primary market segments that comprise the total of lodging demand.

Publications

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