report pflugerville hotel feasibility revised-mar 2010-final (1)

Management

Research

Marketing

Gregory R. Hanis, ISHC

President

Member of

Professionally Serving the United

States & Canada for Over 27 Years with Offices in

Milwaukee, Wisconsin and Fort Myers, Florida

P.O. Box 510445 New Berlin, WI 53151-0445

10014 Majestic Avenue #50 Fort Myers, FL 33913

800-657-0835 Fax: 239-334-6562

[email protected]

HMI Inc.

PHASE I COMMUNITY OVERVIEW MARKET STUDY REPORT

PFLUGERVILLE, TEXAS November, 2009

Prepared Exclusively For: Mr. Charles Simon, Director Pflugerville Community Development Corp. Prepared By:

Hospitality Marketers International, Inc.

Gregory R. Hanis, ISHC President

TABLE OF CONTENTS

Pflugerville, Texas

Introduction...................................................................................1-2 General Market Overview.............................................................3-5 -Geographic Characteristics -General Market Characteristics -Exhibits Site Analysis ..............................................................................6-12 -Site 1 -Site 2 -Site 3 -Site 4 Economic Overview..................................................................13-17 Lodging Demand ......................................................................18-29 Lodging Supply.........................................................................30-36 Issues, Risks and Opportunities ...............................................37-39 Conclusions..............................................................................40-46 -Property Performance -Projected Preliminary Operating Results -Benchmark Development Cost Factor -Property Recommendations

EXHIBITS

EXHIBIT 1 - Geographic Location of the Pflugerville Market Area Within the United States EXHIBIT 2 - Geographic Location of the Pflugerville Market Within the State of Texas Including the Primary Regional Market Area Served by this Market EXHIBIT 3 - Pflugerville Market Area as it Relates to the Austin Area and Surrounding Markets Including Locations of the Hotels in the Primary Competitive Set EXHIBIT 4 - More Detailed View of the Immediate Pflugerville Market Area and the Location of the Subject Site

Exhibit 1: The geographic location of the Pflugerville market area within the United States

Exhibit 2: The geographic location of the Pflugerville market area within the State of Texas. Also shown, the regional market area served by Pflugerville

Exhibit 3: The Pflugerville market area as it relates to Austin, Texas and the surrounding markets. Also shown, the locations of the hotels in the primary competitive set

Exhibit 4: A more detailed view of the Pflugerville market area and the locations of the subject sites

Carolyn

Text Box

Subject Site 4

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INTRODUCTION Hospitality Marketers International, Inc., (HMI) has been engaged by the Pflugerville Development Corporation in Pflugerville, Texas to provide this Phase I Community Overview Market Study Report analysis of the Pflugerville, Texas market area. This report will provide research regarding the proposed development of a hotel in this market area. This Market Study will provide an initial overview of the market area and the market factors that would affect the possible development of a hotel facility in this community. It is written in an overview format that will highlight key information to provide a preliminary indication of this market’s ability to support the proposed hotel development. The focus of this preliminary report was on the potential development of a hotel property in the market. The style of hotel, size of hotel and other pertinent details of this hotel development will be highlighted in this report. The hotel would offer features, amenities and services that are compatible with any brand selected for this property. Any additional amenities and services required would be addressed accordingly in this report. At this time, no food and beverage services are expected to be offered at the proposed hotel. It is anticipated that the hotel would be a limited-service style hotel. A continental breakfast would be part of the services offered to its guests. The proposed hotel would be located in the community of Pflugerville. In this market, there are several potential sites identified for this development. Four site areas were specifically highlighted. These will be addressed in this report and highlights of these sites will be provided as to the potential of each to support a hotel development. This report will provide information about the market in which the proposed hotel would operate. The City of Pflugerville requested that the community’s ability to support a hotel be addressed. If the community could support a hotel, recommendations for its brand, type, and size would be made. The projections and evaluations presented in this report focus on development of the proposed property within the criteria established. This report could be expanded, at a later date by a potential developer, to a Phase II Comprehensive Market Study of the subject area. The Phase II Comprehensive Market Study would provide more specific and comprehensive supportive information, statistical data, observations, and research on the market. Also, more detailed property recommendations and operational projections of property performance would be presented. A representative from Hospitality Marketers International, Inc., met with Pflugerville representatives as well as those from the surrounding area to gather information pertinent to the proposed hotel development. Comprehensive research was

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performed regarding the community’s economic indicators, competitive Lodging Supply, and Lodging Demand generators. This research was performed to determine the relationship between the community and the proposed facility’s Lodging Supply competitors and Lodging Demand generators. Economic indicators were studied to determine the stability and future growth potential of the general market area. This research focused on macro- and micro-market analysis of Pflugerville and the immediate market areas surrounding the proposed hotel to determine the viability of this market to support the proposed hotel. This report will present preliminary projections for stabilized hotel operation based upon current operating performance in the market area. The hotel’s Preliminary Occupancy, Average Daily Room Rate, and Sales Revenue projections were based upon a detailed review of the field research and preliminary estimates of Average Daily Room Rate, Lodging Demand, and Lodging Supply Growth. Also included are preliminary recommendations as to the property type, suggested property size, brand affiliation, and services and amenities to be offered. These projections and recommendations were based upon the market demand research for the proposed facility. In addition, preliminary recommendations are provided as to the preferred site for development of this hotel. This report may or may not be acceptable for external investing and/or lending purposes and would depend upon financial requirements and the desire for more specific information concerning the market’s ability to support this hotel. More specific multi-year operational performance projections and more specific community research may also be required by investors and lenders for a specific hotel development. Thus, a Phase II Comprehensive Market Study may be necessary. Hospitality Marketers International, Inc. would assist a proposed hotel developer in expanding this report into the required Phase II Comprehensive Market Study Report.

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GENERAL MARKET OVERVIEW GEOGRAPHIC LOCATION

• Pflugerville is located in the central section of the State of Texas. • It is located along Interstate 35 which travels from Duluth, Minnesota to

Laredo, Texas. This highway is a major north/south interstate highway which travels through the United States. It also intersects major interstate highways as it travels throughout the country.

• Pflugerville is located just east of I-35. It is estimated to be ninety-five miles

north of San Antonio, ninety miles south of Waco, and one hundred and eighty-five miles south of Dallas/Fort Worth. All of these cities are located along I-35, which would be the major corridor serving the market and would establish the regional market for the area.

• Pflugerville is located just north of the city limits of Austin, Texas. From

Pflugerville, it is about 17.1miles south to the city center of Austin via I-35. • Immediately to the north of Pflugerville is Round Rock. The city center is

located about 8.8 miles from Pflugerville via I-35.

GENERAL MARKET CHARACTERISTICS • Pflugerville is located in the northern suburbs of Austin, Texas. Austin is the

state capital of Texas and the home of the University of Texas. Both entities generate a significant amount of Lodging Demand for the market. Being located north of the city center, Pflugerville does receive overflow Lodging Demand, via a ripple effect, from the government activity and University events.

• The area immediately surrounding Pflugerville is a mix of corporate,

commercial, retail and residential activity. In addition, the busy I-35 corridor carries traffic through the Austin area from Dallas to San Antonio to create a regional market for the area.

• Immediately to the north, Round Rock is a well-developed suburban area with

a corporate base centered around the headquarters of Dell Computers. It also has a well-developed commercial, retail, medical and residential base. This development is found along the I-35 corridor and East Palm Valley Boulevard. Commercial retail development and other support services for travelers are found along the I-35 corridor and at the exits serving this community. This well-developed infra-structure of hotels and support services for travelers offers a broad range of hotels from economy, limited-service to upscale, full-service hotels. There are also many restaurant options in this community. A major medical facility that serves the region is located on the

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northern side of the community. Round Rock also has the Dell Diamond with its minor league baseball team, in addition to hosting many sporting events/tournaments. These form a center of activity in this suburban market.

• Along the I-35 corridor there are well-developed retail and commercial

facilities. This provides a depth of support service for the traveler. There are also extensive hotel accommodations along this route from Austin to the Pflugerville exits.

• Pflugerville has several commercial corridors in its community. The most

developed is the Pecan Street corridor. This stretches from the I-35 intersection to the downtown area. Primarily local residential support retail and support services are located in this area. There are a variety of restaurants located in this area as well.

• Another developing area is along FM 685 on the east side of the city in the

area near the Pflugerville Parkway intersection. This is a large mixed-use retail development with Wal-Mart as its anchor retailer. Support retail and other commercial businesses are located in this area.

• A third developing retail area is at the interchange of Highways 130 and 45 in

the northeast section of the city. This subject site is only one-half mile away from the FM 685 subject site area. This development is a large mixed-use development and is anchored by big box retailers and support commercial activities. Home Depot, Super Target, Bealls, Office Depot, Petco and Best Buy are located in this development.

• The Highway 130 & 45 corridors are new highway areas that will soon

develop with new growth. With its recent completion, Highway 130 now provides a bypass route around the east side of Austin for through traffic. It currently connects with I-35 in the north at Georgetown and reconnects on the south side of the City of Austin. This highway will relieve congestion on I-35 and bring travelers along the east side of Pflugerville. Transient travelers will pass the community on this route. Currently, there are advantages to this new highway as it provides a more direct and less congested route to the Austin-Bergstrom International Airport, about seven miles south of Pflugerville.

• There are some industrial areas located around the city. However, these

areas are not large and do not have many industrial components to them. Most of the Corporate/Commercial Lodging Demand would come from suppliers and vendors servicing the commercial businesses in the area. There is some distribution activity and the potential for training for area businesses as well.

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• Pflugerville’s population was defined as being younger, residing mostly in single family homes and a few multi-family dwellings.

• There is a well established amateur and youth sports market in Pflugerville.

On the east side of the city, south of Pecan Street and along Highways 130 & 45, there is a larger soccer, baseball and softball complex. This facility is host to many weekend tournaments and events. In Round Rock, another large sports market exists, and due to its location and access, Pflugerville is in close proximity to service overflow from these events.

• The Dell Diamond, located in Round Rock, is a large minor league baseball

facility. This venue is host to Round Rock Express, an affiliate of the Houston Astros. In addition to baseball, this facility is also host to other events including exhibitions, youth/amateur sport tournaments, soccer tournaments, and concerts. There is the potential that overflow Lodging Demand could come from some of the larger events held at this venue, with hotels in Round Rock receiving direct Lodging Demand potential. A hotel in Pflugerville would also receive overflow Lodging Demand.

• Social/Leisure group business is also present in the market with several free-

standing banquet facilities that currently send Lodging Demand into the nearby Austin hotels and into Round Rock.

EXHIBITS

• Exhibit 1 of this report shows the geographic location of the Pflugerville market area within the United States.

• Exhibit 2 of this report shows the geographic location of the Pflugerville

market within the State of Texas. Also highlighted is the primary regional market area served by this market.

• Exhibit 3 shows the Pflugerville market area as it relates to the Austin area

and surrounding markets. Also included are locations of the hotels in the primary competitive set.

• Exhibit 4 shows a more detailed view of the immediate Pflugerville market

area and the location of the subject site.

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SITE ANALYSIS This section of the report describes the various sites identified for the proposed hotel facility. There are four specific hotel sites identified for development, and they are highlighted in Exhibit 4 of this report. The following will highlight details for each of these sites. SITE 1

• Site 1 is located on the east side of the city, on the west side of the Highway 130 & 45 corridor. It is owned by the Pflugerville Community Development Corporation.

• This site is adjacent to the Northeast Metro County Park where extensive

sports facilities are developed. These include soccer, baseball and softball fields. Numerous tournaments are held at this park.

• There are plans for a waterpark development is this area. Construction has

not yet begun on this facility. A future developer should monitor progress on this project accordingly.

• Regarding Site Preparation, the subject site is undeveloped at this time. Its

rating is “Good”. The land would have to be prepared for development. This would include clearing the land, grading and potential fill for development.

• Major utilities are in this area and are serving the county park facilities. They

would have to be brought to the area of the subject site. The developer should investigate accessing these items at the site.

• Environmental concerns appear to be minimal. This includes water drainage,

water seepage, flood plain and toxic waste issues. The developer should conduct the necessary environmental testing of the site to ensure its integrity to support a hotel project.

• Visibility to the site would be “Good to Very Good”. It could have direct

visibility to the Highway 130 & 45 corridor. Highway signage may also be needed to identify the site.

• Accessibility would be “Very Good”, off of an access road to the county park.

This road accesses East Pecan Street. There is an interchange off Highways 130 & 45 in this area. Traffic congestion in this area is minimal at this time.

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• Support Services are minimal at this time and rated as “Fair”. Development of restaurants, fuel and convenience stores would be desirable to support travelers. Currently, the Highway 130 & 45 corridor is not well-developed in this regard. Being a new highway route, the existing interchanges are not well-developed. This should change in the future as this corridor is better developed.

• The Competitive Position for this site is rated as being “Good”. This site is

removed from the activity of Pflugerville on the west side of the city. However, it is convenient to the county park facility and the Highway 130 & 45 corridor. It also is on a convenient route that will bring travelers from the south and the airport to the Round Rock area.

The following chart will recap the rating for this subject site area.

SUBJECT SITE EVALUATIONSUBJECT SITE 1

CATEGORY RATING

Visibility Good-Very Good

Accessibility Very Good

Site Prep Very Good

Area Support Services Fair

Competitive Position Good

Overall Good

Source: HMI

• Overall, this subject site is rated as being “Good”. In comparison to the three

other sites, its ranking is fourth. SITE 2

• Site 2 is located on the east side of the city in the Pflugerville Crossing area. This is a large retail and commercial development that has the Super Wal-Mart as its anchor. It is located along the FM 685 corridor. Pflugerville Parkway intersects this area and is on the north side of the Pflugerville Crossing development.

• There are available sites in Pflugerville Crossing. Additional sites may be

available in the immediate area which are not part of Pflugerville Crossing.

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• Regarding Site Preparation, this will depend upon where the specific subject site is located. If it is in the Pflugerville Crossing development, land preparation should be “Excellent”. These sites have been prepared for the mixed-use retail and commercial development. Land preparation includes clearing the land, grading and potential fill for development.

• If the site is located outside the Pflugerville Crossing development, there may

be more site preparation required. The developer should address this accordingly.

• Major utilities are in this area and are serving the FM 685 and Pflugerville

Parkway corridor. If development occurred in the Pflugerville Crossing project, these utilities should be in place. If the development took place in another location outside this area, utilities may have to be brought to the area. The developer should investigate accessing these items at the site.


water seepage, flood plain and toxic waste issues. The developer should conduct the necessary environmental testing of the site to ensure its integrity to support a hotel project. Within Pflugerville Crossing, these concerns should have already been addressed.

• Visibility to the site would be very good from both FM 685 and Pflugerville

Parkway. However, visibility from the Highway 130 & 45 corridor would not be directly available. A high-rise building would improve potential visibility. Highway signage on Highways 130 & 45 would be needed to identify the location of the hotel. The visibility rating would be “Good”.

• Accessibility would be off FM 685 and Pflugerville Parkway into the

Pflugerville Crossing development. The rating is “Very Good”. This access has been developed and provides very good access to the hotel. There is an interchange off Highways 130 & 45 to service this area. Traffic congestion in this area is minimal. There could be heavier traffic during morning and afternoon drive times. Access to other potential sites in this area would have to be evaluated accordingly by the developer.

• Support Services are developed in the area and would be rated as being

“Very Good”. The Pflugerville Crossing area has retail and restaurants to service hotel guests. There may be the need to develop fuel and convenience stores to support travelers.

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• The Competitive Position for this site is rated as being “Good”. This site is removed from the activity of Pflugerville on the west side of the city. However, it is convenient to the Pflugerville Crossing development and the Stonehill Town Center just to the north. It is also in a good position to serve the Highway 130 & 45 corridor. It also is on a convenient route that will bring travelers from the south and the airport to the Round Rock area.



CATEGORY RATING

Visibility Good


Site Prep Good

Area Support Services Very Good


Overall Very Good

Source: HMI

• Overall, this subject site is rated as being “Very Good”. In comparison to the

three other sites, its ranking is third. SITE 3

• Site 3 is located on the east side of the city just north of Site 3. It is in the Stonehill Town Center which is a large, mixed-use retail and commercial development. This development includes big box retail with Home Depot, Super Target, Petco, Best Buy, Dick’s Sporting Goods and Bealls. It is located on the west side of the Highway 130 & 45 corridor and where FM 685 meets this highway.

• Regarding Site Preparation, this will depend upon where the specific subject

site is located. If it is in the Stonehill Town Center development, land preparation should be “Excellent”. These sites have been prepared for mixed-use retail and commercial development. Land preparation includes clearing the land, grading and potential fill for development.

• If the site is located outside the Stonehill Town Center development, there

may be more site preparation required. The developer should address this accordingly.

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• Major utilities are in this area and are serving the FM 685 area. If development occurred in the Stonehill Town Center project, these utilities should be in place. If the development took place in another location outside this area, utilities may have to be brought to the area. The developer should investigate accessing these items at the site.


water seepage, flood plain and toxic waste issues. The developer should conduct the necessary environmental testing of the site to ensure its integrity to support a hotel project. Within the Stonehill Town Center, these concerns should been addressed at this time.

• Visibility to the site would be “Very Good” from both FM 685 and from the

Highway 130 & 45 corridor. Highway signage on Highways 130 & 45 would be needed to identify the location of the hotel.

• Accessibility would be off FM 685 into the Stonehill Town Center

development. This access has been developed and provides “Very Good” access to the hotel. There is an interchange off Highways 130 & 45 to service this area. Traffic congestion in this area is minimal. There could be heavier traffic during morning and afternoon drive times. Access to other potential sites in this area would have to be evaluated accordingly by the developer.

• Support Services are developed in the area and would be rated as being

“Very Good”. The Stonehill Town Center has retail and restaurants to service hotel guests. There may be the need to develop fuel and convenience stores to support travelers.

• The Competitive Position for this site is rated as being “Good”. This site is

removed from the activity of Pflugerville on the east side of the city. However, it is convenient to the Pflugerville Crossing and the Stonehill Town Center just to the north. It is also in a good position to serve the Highway 130 & 45 corridor. It also is on a convenient route that will bring travelers from the south and the airport to the Round Rock area.

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CATEGORY RATING

Visibility Very Good


Site Prep Very Good

Area Support Services Very Good


Overall Very Good

Source: HMI

• Overall, this subject site is rated as being “Very Good”. In comparison to the three other sites, its ranking is second.

SITE 4

• Site 4 is located on the west side of the city and owned by a private owner. It is located along the Pecan Street corridor and links the downtown area with I-35. This site is along the Pecan Street commercial corridor with well-developed retail and other commercial support services. The actual site is on the south side of Pecan Street and west of Heatherwilde Boulevard.

• Regarding Site Preparation, the subject site is undeveloped at this time but

could be rated “Very Good”. The land would have to be prepared for development which would include clearing the land, grading and potential fill for development.

• Major utilities are in this area and are in the Pecan Street area. They could

be easily brought to the site area. The developer should investigate accessing these items at the site.


water seepage, flood plain and toxic waste issues. The developer should conduct the necessary environmental testing of the site to ensure its integrity to support a hotel project.

• Visibility to the site would be “Very Good”. It could have direct visibility to the

Pecan Street corridor. There is no highway visibility to I-35 as the site is located too far off this highway by at least 1½ to 2 miles.

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• Accessibility would be “Excellent” and is assumed to be off Pecan Street. This would need to be verified.

• Support Services are “Excellent” in this area. There is a variety of

restaurants, fast food and casual dining, and retail in this area. Fuel services are also available along Pecan Street.

• The Competitive Position for this site is rated as being “Excellent”. This site

is in the area where the activity of Pflugerville has developed. This is the entry route to the city from I-35.



CATEGORY RATING

Visibility Good-Very Good

Accessibility Excellent

Site Prep Very Good

Area Support Services Excellent

Competitive Position Excellent

Overall Very Good

Source: HMI

• Overall this subject site is rated as being “Very Good”. In comparison to the

three other sites, its ranking is first.

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ECONOMIC OVERVIEW This section describes the preliminary general economic conditions observed in this area through various research sources.

• The Pflugerville, Texas area is driven by residential development, retail and commercial activity. There is some distribution and light industry also located in the community. The latter economic elements are less developed as the residential, retail and commercial activities.

• The majority of the economic activity is located along Pecan Street, east of

the downtown area. Also, activity is developing in two major mixed-use retail areas along FM 685 at the Pflugerville Crossing and Stonehill Town Center areas.

• The community, being located along the new eastern bypass route around

Austin, with Highways 130 & 45 in Pflugerville, has the potential to see significant new development at the interchanges along this toll road route. Currently, this route is now completed and connects the northern and southern sections of Austin with I-35. With this route now completed, it will be a major transient traveler route from Dallas to San Antonio. It also provides a convenient access route from the northern suburbs, such as Round Rock, with the Austin-Bergstrom International Airport.

• A unique economic driver in this market is the youth and amateur sports

market that has developed in the regional area. Pflugerville and Round Rock are centers for this activity. Soccer, baseball and softball events are held regularly in this regional area. Pflugerville gets a direct economic benefit from events held in its community. It also could receive overflow potential from events held in Round Rock. On many weekends, the area sees amateur sports tournaments bringing participants from broad regional and national areas.

• Retail development is stable. There are some big box retailers in the area,

however, destination retail is not present. The retail activity is designed for residential support. More developed retail is located along Pecan Street and in the new Pflugerville Crossing and Stonehill Town Center developments.

• Medical activity is located north of the community in Round Rock. There are a

few clinics in Pflugerville, but no major hospital is located in this market. • The residential market is stable. The residential market was described as

being mostly single family housing with a few multi-family developments. This community was also described as being a younger family market and middle-class in nature. There is a significant commuting base to Austin, Round Rock and other northern Austin suburban areas.

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• There is a well-developed school system in the community, but no community college, four-year colleges or universities in the area. The community will receive overflow from University of Texas events due to Lodging Demand being pushed outward from hotels closer to the university.

• Regionally, Pflugerville does rely on Austin and Round Rock for more

economic base. Both areas are well-developed with retail, dining and entertainment activity. The I-35 corridor, which connects these two economic areas with this support activity, is about 1 to 1½ miles west of the city limits of Pflugerville.

• Pflugerville is a rapidly growing market. In 2000, according to the U.S.

Census data, the city had 16,335 residents. The population was projected to be around 50,850 in the 2010 census, representing a 21.1% annual growth rate. Through 2008, Pflugerville was estimated to have a population of around 40,000 people, indicating an 18.1% annual growth rate. In comparison, the City of Austin and the County of Travis, where Pflugerville is located, has grown at a rate of only 3.3% in each area through 2008. This indicates a rapidly expanding community with no hotel facility to service this growth. In this community, there is still considerable available land for future growth. The community also uses annexation to expand its borders and population growth.

• As reported by Sales and Marketing Management’s Survey of Buying Power,

the Effective Buying Income in the Pflugerville market, on a per capita basis, shows average annual growth of 2.2% over the past ten years. The range in growth is 1.7% to 2.9% over this period. The Effective Buying Income is higher than the City of Austin by 8.5%, and the county by 1.3%. The Effective Buying Income in the city is currently estimated at $24,113. In Austin, it is estimated at $22,224 and in the county, at $23,804.

• Detailed Retail Sales data for Pflugerville, as reported by Sales and Marketing

Management’s Survey of Buying Power, was not available. Therefore, this analysis could not be completed. With recent development in Pflugerville at the Pflugerville Crossing and Stonehill Town Center, this area of economic activity should be showing considerable growth. The Pecan Street corridor and other smaller retail and commercial developments in the community are showing additional growth. The Pecan Street corridor has much available land for additional growth in this area. This growth is drawing Retail Sales back to the Pflugerville area that had been leaving the area for Round Rock and Austin. This community has limited destination retail to draw external retail demand.

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• Similar to Retail Sales, Eating and Drinking Place Sales data in the Pflugerville area, as reported by Sales and Marketing Management’s Survey of Buying Power, was not available. This is also a developing economic factor in the community. The Pecan Street, Pflugerville Crossing and Stonehill Town Center are major areas where Eating and Drinking Place Sales is taking place and expanding. It would be estimated that this economic area will show considerable future growth as the newer areas are more established. The Eating and Drinking Place Sales are centered in fast food and casual dining. Some chain restaurants are locating in this area. There are also several local dining options in the community.

• In Pflugerville, the Workforce Distribution shows that the following are the top

three industries employing people in the community: 1) Retail (16.0%), 2) Manufacturing (15.0%) and 3) Education, Health & Social Services (13.0%). These three industries represent 44.0% of the total employment. This is low and normally the top three industries represent slightly over 50% of total employment. This indicates diversity of industry and employment in the market. The fourth largest employment group is Business/Professionals (11.0%). This is an unusual employment group to be in the top employment categories. Adding this group into the top three employment areas, the distribution is at 55%. The fifth largest employment group is Government (10.0%). This distribution verifies the activities that support the local residential base. The Education, Health and Social Services sector is related to the Pflugerville School District. The Manufacturing is related to the smaller and more limited activities in this area located in the community. The Retail activity is the most diverse with considerable new growth entering the community.

• Specific Unemployment data for Pflugerville shows a healthy employment

base. On average, Pflugerville has an Unemployment Rate of 3.7%. This compares to the Austin area at 4.8%, Travis County at 4.7% and the State of Texas at 5.5%.

• In 2009, the Unemployment Rates are more balanced. Pflugerville is at 6.0%

year-to-date compared to the Austin area at 6.5%, Travis County at 6.2% and the State of Texas at 7.1%. Pflugerville is still out-performing other areas during this recessionary year.

• Labor Supply should adequately support a hotel development. The hotel will

draw employment from the broad geographic area of Travis County including Pflugerville, Round Rock and north Austin. The immediate Travis County regional area near Pflugerville will be the prime area to attract employment for the hotel. With current higher Unemployment levels, attracting Labor Supply

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availability is also positive. Labor Supply was reported to be adequate in the Pflugerville market area.

• Wage pressures were not reported to be a concern in attracting Service

employees for a hotel. Wage competition was indicated as normal. • The major highways serving the subject market site are I-35 on the west and

Highways 130 & 45 on the east.

o Traffic counts in the Pflugerville area are showing some changes due to the opening of Highways 130 & 45 on the east side of the city. The following are some highlights of the traffic patterns in this area.

Traffic on I-35 at the Pecan Street area was averaging 171,500

vehicles per day in 2008. This is down from 2005, when traffic volume was averaging 176,500 vehicles per day in this same area. This is a decline of (4,560) vehicles or (2.6%).

However, on Highways 130 & 45 at Pecan Street, average vehicle

traffic is at 13,500 per day. This highway was not yet opened in 2005.

It appears that traffic has been diverted from I-35 to Highways 130 &

45. If combining counts on the two highways, average traffic counts have increased 8.7% from 2005 to 2008. The average traffic volume is around 185,000 vehicles per day compared to 176,060 vehicles per day in 2005.

Traffic on Pecan Street, east of I-35, has declined by (20.0%) from

2005 to 2008. The average vehicle counts are 28,000 in 2008 compared to 34,980 in 2005. The traffic counts on Pecan Street west of Highways 130 & 45 basically remained the same at around 18,550 in 2008 compared to 19,100 in 2005. This is in the area of Pecan Street and FM 685.

Changes in traffic patterns in this market should be monitored as the

Highway 130 & 45 corridor becomes more established. Highways 130 & 45 are a Toll Road which requires a toll to use. Even with this toll, it appears that this route is drawing traffic from the more heavily traveled and congested I-35 corridor.

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• Another major access method to the market is via air service. The Austin-Bergstrom International Airport is located about eighteen miles south via Highways 130 & 45, via the most direct route. This airport serves around 750,000 passengers per year. It offers connecting air service via major hub airports to most domestic destinations. Major hub cities area Houston, Dallas, Atlanta, Denver, Memphis, Chicago, Charlotte, Phoenix, New York and St. Louis. Major airlines are American, Continental, Delta, JetBlue, Frontier, Southwest and United. International service is not directly offered from this airport but is available through hub connections.

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LODGING DEMAND This section of the report will be a brief overview of the Lodging Demand highlights identified in this market. A more comprehensive Phase II Market Study would enhance this information.

The preliminary Market Segmentation identified for the proposed hotel is in the areas of Lodging Demand shown in the following chart.

MARKET SEGMENTATIONSUBJECTMARKET PROPOSED

PROBABLE PROPERTYPERCENT PROBABLE MARKET

OF MARKET RANGE MARKET PENET. RANGE

Individual Travel Markets 80.0% 77.5%-82.5% 65.0% 81.3% 62.5%-67.5%Corporate/Commercial 35.0% 32.5%-37.5% 25.0% 71.4% 22.5%-27.5%Social/Leisure 45.0% 42.5%-47.5% 40.0% 88.9% 37.5%-42.5%

Group Markets 20.0% 17.5%-22.5% 35.0% 175.0% 32.5%-37.5%Business Related 5.0% 2.5%-7.5% 5.0% 100.0% 2.5%-7.5%Social/Leisure Related 15.0% 12.5%-17.5% 30.0% 200.0% 27.5%-32.5%

TOTAL 100.0% 100.0%

Source: HMI

• At this time, the proposed hotel should draw nearly similar Market

Segmentation as the overall market. This would be a slight modification in the Pflugerville hotel’s Market Segmentation versus the overall market. In general, this Market Segmentation closely matches the majority of the type of hotels currently in the regional market as well as the type of hotel being planned for the Pflugerville market. Also, this is the estimate at this time based upon no hotels currently being located in Pflugerville.

• The strength of this market will be in through Social/Leisure markets, both

Individual and Group. The Corporate/Commercial market does not seem as diverse in Pflugerville as in the broader market. As a result, 70% of the Lodging Demand is expected from the Social/Leisure Market Segments, and 30% from the Corporate/Commercial Market Segments.

• Amateur and Youth sports, weddings, reunions and other social events will

drive this market. The bulk of this demand will come from the Group Social/Leisure market as opposed to the Individual Social/Leisure markets.

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• The Corporate/Commercial markets are not well-developed at this time. The Retail sector is the most developed sector within the Corporate/Commercial Market Segment. These are located along the Pecan Street and FM 685 corridors. New developments such as the Pflugerville Crossing and Stonehill Town Center offer increasing activity in this sector.

• When touring the area, there are some smaller, light industrial facilities on the

north side of the city. Currently, communities surrounding Pflugerville are more developed in this regard. Round Rock has the large Dell Corporate headquarters as its anchor. As a result, it has additional support industries and services developed in this area. This factor could be changing in the near future for Pflugerville. There are many sites available for additional corporate and commercial development. It appears that Pflugerville has been skipped over for this development from the expansion of Austin to the south and Round Rock to the north. Lack of direct access to I-35 may have prevented this type of growth. However, now with direct access to Highways 130 & 45 as a major future traffic pattern through this area, development in the Corporate/Commercial sector could increase.

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The following chart details the diversity of Lodging Demand identified in this market.

MARKET SEGMENTATION PROFILESDemand Potential

Transient = T Subject Extended= E Market

Group= G PotentialCorporate/Commercial Markets

Area CompaniesAdministration T AverageSales & Marketing T AverageVisiting Customers & Clients T AverageHuman Resources T, E AverageProduct Transportation T BelowService Technicians T Average

Vendors & Suppliers to Local Market T AverageMeetings and Seminars

Corporate G BelowAssociation G BelowGovernment G Below

Training Groups G AverageAustin Overflow (Transient Displacement)

Legislative Activity T AverageConventions-State Associations T Average

Inventory and Auditing Companies G, E AveragePotential Average

Social/Leisure MarketsVisiting Friends & Relatives T, E AverageHighway Travelers

I-35 Travelers T BelowHighway 130 &45 Travelers T Average

Area EventsRot Rally-Motorcycle T AboveDeutschen Fest T AboveSouth by Southwest T Average

Austin Events (Overflow Displacement)Austin City Limits T AverageFilm & Music Festivals T Average

University of Texas Events (Overflow-Displacement)Football Games T AverageParent Weekends T AverageGraduation T Average

Area Sites, Activities & RecreationLake Pflugerville T Below

Relocation-Real Estate T,E AboveDistressed Social-Interim Housing T,E AverageSocial, Military, Educational, Religious, Fraternal (S.M.E.R.F.) Groups

Weddings G AboveReunions G AverageFunerals T,G AverageOther T,G AverageAssociation G Below

Amatuer & Youth Sports Visiting Teams G AboveRound Rock Sporting Events G Average

Potential Average

Overall Potential Average

Source: HMI

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• As described in the above chart, the overall market potential appears to be about Average. As stated previously, the Corporate/Commercial market may be slightly less than the mid-Average level, but it is still in the Average range. The Social/Leisure market potential will be just slightly above the mid-Average level, and still in the Average range. Overall, the market is at slightly below the mid-Average level, but in the Average range. Some highlights of these Market Segmentation Demand Profiles are as follows.

o One of the more dynamic elements of this market is the diversity in the

amateur and youth sports events. These events are held in the Pflugerville and surrounding Round Rock area. The Pflugerville events will bring direct Lodging Demand to the market. The Round Rock events will bring overflow to Pflugerville due to its location and proximity to sport venues. Also, its access to these events will be advantageous for the market.

o Pflugerville has many sporting organizations that bring events to this

area. These include the groups that represent soccer, little leagues, youth football, swimming and basketball. All have the potential to bring events and tournaments to the area. The Northeast Metro Park in Pflugerville is a major venue for these activities. This facility will host soccer, baseball and softball tournaments all year.

o In Round Rock, the Convention and Visitors Bureau focuses on the

amateur and youth sports market. This organization brings numerous tournaments to the area. They have indicated that a hotel in Pflugerville would provide overflow accommodations for many of these events if developed in the mid-priced range.

o Contact with the Dell Diamond facility in Round Rock also indicated the

need for accommodations for minor league baseball games, concerts, tournaments and other events held at this facility. Many of these fill the Round Rock hotels and overflow would be possible for Pflugerville.

o There are three event centers in the immediate Pflugerville area. These

host weddings, reunions, and anniversary type events all year. One major event complex, the Plantation House, hosts over seventy weddings per year that average 250 people in size. They estimate that on average, 20% to 30% of the attendees require overnight accommodations. A hotel in Pflugerville would be welcomed as currently they have to send this demand to Round Rock. A hotel in Pflugerville would be closer to this venue. This facility is currently booking weddings into 2011.

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• The Corporate/Commercial sector will be dominated more by suppliers and

vendors servicing the area. Major demand generators in this sector were not noted. In reviewing the major employers within a five mile radius of Pflugerville, which includes northern Austin and Round Rock, there were no major employers listed in Pflugerville. Pflugerville is an island surrounded by major employers. If a hotel were located along Highways 130 & 45, it may be able to service major employers in Round Rock. It would be removed from the major employers along the I-35 corridor.

• Major employers in Pflugerville include:

o Span International o Laser Manufacturing o Progressive Manufacturing Technology o EVS Metals o Austin Foam Plastics o Tandem Logistics o Sears Distribution

The following chart will highlight the major employers with a 5- to 7-mile radius of Pflugerville.

MAJOR EMPLOYERS

Austin, Texas Area

TOTALCOMPANY SERVICE OR PRODUCT EMPLOYEES

Dell (including Dell Financial Services) Computer Mfr. of Equipment/Sales 16,000

Sears Teleserve Retailer Customer Service Center 1,460

Harte-Hanks Response Management Marketing/Advertising Services Call Center 1,100

Farmers Insurance Group Insurance 1,030

Samsung Austin Semi-Conductor Electronics 950

Texas Guaranteed Student Loan Corp. Student Financial Aid Program. Adm. 660

Hewlett-Packard Computer Maker Data Ctr./Customer Svce. 550

Pearson Educational Measurements Test Design, Scoring & Pkg. Center 530

American Cancer Society Non-Profit, Call Center & Reg. Hdqtrs. 500

Dresser Wayne Gasoline Dispenser & Control Systems 500

Teco-Westinghouse Motor Co. Electric Motors & Wind Generators 370

Michael Angelo's Gourmet Foods Food Manufacturer 350

Toppan Photomaska Photomasks Manufacturer 344

Austin Foam Plastics Plastics-Based Cushioned Pkg. Mfr. 325

Sysco Foods Restaurant, Hotel & Food Svce. Dist. 300

Source: City of Pflugerville

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• There are transient overflow possibilities from major Austin events and

conventions. As these major events are held in the downtown Austin area, the typical transient demand is pushed to the surrounding suburbs. A prime area for this overflow is along the I-35 corridor. Events that will produce this overflow include:

o Texas State Legislator - This group of lawmakers meets every two years

and fills the downtown and surrounding area with travelers.

o University of Texas - Major football, parent and graduation events fill the greater Austin area. With over 50,000 students, the demand during these periods is significant.

o State Associations - Each state association group holds its annual

meeting in Austin. This is a state regulation for state associations.

o Austin City Limits

o International Film and Music Festival - South by Southwest (SXSW)

o ROT Motorcycle Rally

• As the Highway 130 & 45 corridor becomes more established and the interchanges are developed with support services, this route will become a preferred way to bypass the more congested I-35 corridor. This will be true for the more through travelers from Dallas/Fort Worth to San Antonio. This will open this route up to the transient hotel guests passing through this area. Completion of the route with a southern connection with I-35 has to take place to fully develop this corridor as a transient through route.

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The following chart will highlight the overall preliminary Lodging Demand potential for this market. This chart is based upon a 5-point scale with 5 being high and 2.5 being average. This would be expanded accordingly in a more comprehensive market study for a specific hotel and subject site area.

LODGING DEMAND POTENTIAL INDEXLODGINGDEMAND

PERCENT POTENTIALMARKET SEGMENTATION OF MARKET INDEX

Individual Travel Markets - Corporate/Commercial Markets 25.0% 2.5 - Social/Leisure Markets 40.0% 3.0

Group Markets - Business Related 5.0% 2.0 - Social Leisure Related 30.0% 3.5

TOTAL 100.0% 3.0LODGINGDEMAND

PERCENT POTENTIALINDUSTRY DISTRIBUTION OF MARKET INDEX

Agriculture, Forestry, Fishing, Mining 1.0% 0.5 Construction 5.0% 2.0 Manufacturing 15.0% 3.0 Wholesale Trade 3.0% 1.5 Retail Trade 16.0% 3.5 Transportation and Public Utilities 6.0% 1.0 Information 2.0% 2.5 Finance, Insurance & Real Estate 7.0% 3.0 Services - Business/Professional 11.0% 3.0 - Health, Education & Social Services 13.0% 2.0 - Entertainment, Recreation, Hotel & Food Service 7.0% 2.5 - Other 5.0% 1.5 - Government 10.0% 1.5

TOTAL 101.0% 2.5

Source: HMI • Preliminary Lodging Demand Potential is rated above average with a yield of

120.0% to average.

• The proposed hotel’s strength will lie in the Individual and Group Social/Leisure markets. Each of these markets will yield 120.0% and 140.0% above average, respectively. The amateur sporting events, weddings, area events and general Social/Leisure traffic to this area will lead this activity.

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• The Individual and Group Corporate/Commercial markets will under-perform the market at this time. The Individual sector will yield about average but the Group Corporate/Commercial sector will yield 80.0%. The strength in this sector will be Retail Trade, Manufacturing, Finance, Insurance & Real Estate and Business Professional Services.

The following chart shows the seasonality patterns in the market. Highlights of this chart follows. These highlights would be expanded in a more comprehensive market study.

SEASONALITY OF LODGING DEMANDDeviation From Average Monthly DemandMONTH DEMAND ADR REVPARJanuary 86.4% 101.1% 85.2%February 92.1% 101.5% 101.0%

March 108.9% 101.6% 108.0%April 105.9% 101.6% 105.0%May 112.0% 100.3% 102.1%June 113.6% 102.0% 108.8%July 105.7% 99.0% 92.4%

August 103.2% 99.6% 90.7%September 107.7% 102.4% 100.6%

October 105.9% 101.8% 104.7%November 96.6% 100.3% 97.2%December 82.3% 97.4% 77.9%

ITALICS = RevPAR Exceeds at Least One FactorBOLD = RevPAR Exceeds Both Factors

Source: Smith Travel Research and HMI

In the above chart the following abbreviations were used:

ADR-Average Daily Room Rate - The average Daily Room Rate attained by the hotel

for its rooms.

RevPAR-Revenue per Available Room - This is a revenue figure attained by dividing

Revenue by Available Rooms.

• Seasonality of Lodging Demand for this market appears to be strong from March through October. The market drops off slightly in November but it is not unusually low in the period of November through February. It appears to have a relatively stable demand base.

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• The strongest quarter of the year is either April through June or May through July. Both three-month periods generate 27.6% of the annual demand for a yield of 110.4%. This is not a higher amount of yield and shows that the remainder of the year has relatively good balance in demand.

• The strongest half of the year is March through August with 54.1% of the

annual demand. This is a yield of 108.2% to average. Again, this is not an usually high peak in demand and shows balance throughout the year.

• The slowest season is December through February with 21.8% of the annual

demand for a yield of 87.2%. This period supports the strength of the Corporate/Commercial demand that comes to the area surrounding Pflugerville.

• The market seems to hold rates constant during the year. There is very little

change in rate from the peak seasons to the slower months. ADR changes only 3.4% from its low in July to its high in September. Demand changes 38.0% from its low in December to its high in June. During peak demand months when demand is above average, the market has rates that are below average. This occurs in July and August. Likewise, when demand is low in November, January and February, rate remains high.

• As result of the above comments, this market does not seem to be maximizing

revenue well. It is not adjusting rates higher during peak demand periods and may be holding rates too high in slower demand periods. This seems particularly true in January and November when rates may be too high. They seem to have the potential to increase rates from May through September. This may increase the maximization of revenue as, at this time, only one month during the year, June, has maximized revenue.

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The following chart shows the preliminary anticipated Rate Sensitivity expected in the market. This chart is based upon a 5-point scale with 5 being high and 2.5 being average. This would be expanded accordingly in a more comprehensive market study for a specific hotel and subject site area. Rate Sensitivity indicates the potential for rate discounting to attract the identified Market Segment to the market. Rate Resistance relates to the same definition.

RATE SENSITIVITY FACTORRate

Sensitivity Market Segmentation % of Market Factor

Individual Travel Markets - Corporate/Commercial 25.0% 2.4 - Social/Leisure 40.0% 2.7

Group Markets - Business Related 5.0% 2.4 - Social/Leisure Related 30.0% 2.7

TOTAL 100.0% 2.6

Source: HMI

• Rate Resistance in the market was estimated to be slightly below average. It will yield, overall, 104.0% to average.

• The Corporate/Commercial market will be the least Rate Sensitive. It will

yield 96% to the average. Weekday rates average 109.4% higher than weekend rates. The weekday rates average 106.7% higher than the overall ADR in the market.

• The Social/Leisure market will be more Rate Sensitive. This sector is

projected to yield 108% to the average. These rates are (8.8%) lower than the weekday rates and average (2.7%) lower than the average ADR in the market. Rate Sensitivity in this area will come from the group amateur sport travelers.

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• The Feeder Markets for this hotel will come primarily from a broad regional geographic area. The key Feeder Markets will be

o Dallas o Forth Worth o Waco o San Antonio o Houston o Remainder of the State of Texas

• The Corporate/Commercial market will be generated mainly from national and

regional areas. Major regional feeder cities would be the same as the above. This list would be expanded based upon where the local companies conduct business. There could be some international travel to the area.

• There are national amateur sports tournaments that draw from the greater

Texas and south-central region of the United States.

• Unaccommodated Lodging Demand could always potentially occur in this market. Unaccommodated Lodging Demand is described as demand desiring to stay in the market but having to find accommodations in other areas due to high Occupancy or the lack of available Lodging Supply. This does seem to be an issue in Pflugerville. With no major hotel in the community, there are clear signs of Lodging Demand being displaced into the north Austin and Round Rock areas for hotel accommodations. Quantifying this demand is difficult without a hotel in the market. However, sources stated that Lodging Demand is displaced for Corporate/Commercial and Social/Leisure travelers coming to this area. During the week, the Corporate/Commercial (area companies, suppliers/vendors, etc.) need hotel rooms. On weekends, the amateur sports, weddings, reunions, events and other activities in the market displace demand to other hotel accommodations in the region.

• There were 100 nights when Occupancy rates are over 70% in the regional

market (five-mile radius). This is the Occupancy level where newer and better hotels should be nearing maximum Occupancy. These 100 nights represent 27.4% of the nights in a year. These nights occur on Tuesdays and Wednesdays in February, March, April, June, and October. They occur on Saturdays during the same months and on Fridays in March, April and June, on Thursdays in March, June and November, and on Mondays in October.

• The average weekday Occupancy over the past three years was 74.3% and

the average weekend Occupancy was 68.4%.

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• Of these 100 nights, 76 nights have Occupancies over 75%. This is a high number of nights with strong Occupancy.

• A secondary definition of Unaccommodated Lodging Demand is demand

desiring to stay in other markets but having to stay in the Pflugerville market due to the lack of Lodging Supply in the market they preferred. This type of Unaccommodated Lodging Demand does not occur as there aren’t any hotels in Pflugerville to accommodate this demand. There appear to be adequate hotel accommodations in the regional market to accommodate this demand.

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LODGING SUPPLY This section of the report describes the primary competitive Lodging Supply that will affect the subject property, particularly for hotel room demand usage. A more comprehensive Phase II Market Study would enhance this information. The following chart highlights the primary competitive hotels identified for this report. These hotels were the most mentioned hotels that accommodate the variety of Corporate/Commercial and Social/Leisure Lodging Demand identified for the Pflugerville market area. There are many hotels in the regional area from north Austin to Round Rock. All of these hotels are located along the I-35 corridor as they serve the markets in this area. Within a five-mile radius, there are 11 hotels identified with 1,105 rooms. These hotels are felt to be the immediate competitive set for a proposed hotel in Pflugerville. Also, there is one full-service, upscale hotel within this area, Marriott Austin North. This hotel would not be a direct competitor with a proposed hotel in Pflugerville. This increases the available rooms within a five-mile radius to 1,400 rooms. This is an exceptionally large number of rooms serving a five-mile radius. Within a 5- to 7-mile radius of Pflugerville, there are another 12 hotels with an additional 1,247 rooms. This brings the total number of hotels within 7 miles of Pflugerville to 24 hotels and 2,647 rooms.

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The following chart highlights the immediate five-mile radius of the market and the hotels that were felt to be the primary competitive hotels with the Pflugerville market area.

PRIMARY COMPETITIVE HOTELS Number of Hotels: 11 Number of Hotel Rooms: 1,105

Chain Related: Hotels: 11 % Overall Market: 100.0%Rooms: 1,105 % Overall Market: 100.0%

Non-Chain Related: Hotels: 0 % Overall Market: 0.0%Rooms: 0 % Overall Market: 0.0%

PRODUCT DIFFERENTIATION ANALYSISNUMBER PERCENT NUMBER PERCENT

CATEGORY OF HOTELS OF MARKET OF ROOMS OF MARKET

Budget 0 0.0% 0 0.0%

Economy 1 9.1% 49 4.4% (Days Inn-49 rms.)

Economy Suite 0 0.0% 0 0.0%

Mid-Priced 4 36.4% 414 37.5% (Limited-Service) (Hampton Inn Round Rock-94 rms., Holiday Inn Express Austin North/Pflugerville-84 rms., LaQuinta Round Rock-86. rms., Fairfield Inn & Suites Austin-150 rms.)

Mid-Priced 0 0.0% 0 0.0% (Full-Service)

Mid-Priced Suite 1 9.1% 64 5.8% (Limited-Service) (Comfort Suites Pflugerville-64rms.)

Mid-Priced Extended Stay 1 9.1% 132 11.9% (Springhill Suites Austin-132 rms.)

Upscale 2 18.2% 262 23.7% (Select-Service)(Hilton Garden Inn Austin-117 rms., Courtyard Austin-145 rms.)

Upscale 0 0.0% 0 0.0% (Boutique)

Upscale Suite 0 0.0% 0 0.0% (Full-Service)

Upscale Extended Stay 2 18.2% 184 16.7% (Residence Inn-Round Rock-96 rms., Residence Inn-Austin-88 rms.) TOTALS 11 100.0% 1,105 100.0%

Average Room Size: 100.5

Source: HMI

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• As indicated in the above chart, the mid-priced product category represents 55.2% of the overall rooms. The upscale product category represents 40.4% of the available rooms, and this includes the extended-stay hotel products in this area. The economy product category represents only 4.4% of the available rooms.

• Positioning the proposed hotel in the mid-priced product category would be

the most competitive. However, it would allow for the most flexibility to serve the market area. There is the potential for the market to require more upper-economy hotel product as this market appears to be under-served by the product distribution.

• The average sized hotel is 100.5 rooms. In the mid-priced hotel product

category, the average size is 101.7 rooms. Two hotels in this category, the Springhill Suites and Fairfield Inn & Suites, skew this average size with 132 and 150 rooms, respectively. Factoring these hotels out of this mix, the average sized mid-priced hotel is 82 rooms. An 80-room hotel was factored into the preliminary projections in this report. This generates a 125.63% yield adjustment to the primary competitive set performance in Occupancy.

• The most competitive hotels will be along the I-35 corridor. These will be the

closest hotels to the Pflugerville market and are highlighted in Exhibit 3 of this report.

• Having no hotel rooms in the Pflugerville market at the current time, the

market displaces rooms to the regional hotels identified in the primary competitive set. As a result, the rooms planned at the proposed hotel will have a lower impact on the statistical and primary competitive set. It was estimated that 75.0% of the new rooms would have direct impact on the overall regional market. The new hotel would attract the Unaccommodated Lodging Demand identified in the Lodging Demand section of this report, to the Pflugerville area. This factor could be verified further in a more comprehensive market study.

• Of the hotels identified in the market area, 100.0% are chain-affiliated,

representing 100.0% of the rooms. Operating without a brand affiliation would not be recommended.

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The following chart will highlight the current rate positioning of the hotels in the market area.

COMPETITIVE HOTEL OCCUPANCY & RATESOcc. RATE ANALYSIS PROJECTED

PROPERTY Perform. SINGLE DOUBLE WEEKEND CORP. ADR

Austin Courtyard North Parmer Lane Average $110-$120 $110-$120 $110-$120 Same $103.50 Comfort Suites- Pflugerville/Austin Average $95 $95 $100 Same $83.41 Fairfield North Parmer Lane Average $100-$130 $100-$130 $100-$130 Same $94.88 Hilton Garden Austin North Average $93-$109 $93-$109 $101-$119 Same $95.96 Holiday Inn Express Austin North Average $95-$123 $95-$123 $95-$123 Same $92.65 LaQuinta Austin Round Rock Average $72-$107 $72-$107 $85-$114 Same $73.96 Residence Inn North Parmer Lane Average $120-$150 $120-$150 $120-$150 Same $111.38 Springhill North Parmer Lane Average $106-$130 $106-$130 $106-$130 Same $97.35

Round Rock Days Inn Average $57-$90 $57-$90 $57-$90 Same $55.13 Hampton Inn Average $129 $129 $129 Same $112.88 Residence Inn Average $120-$160 $120-$160 $120-$160 Same $115.50

COMPETITIVE MARKET AVERAGE DAILY ROOM RATE (ADR): $96.83

Source: HMI

• There are several rate tiers operating in this market area. The highest tier is

from $100 and above, and four hotels are in this tier. These properties consist of two upscale, extended-stay hotels, one upscale, select-service hotel, and one upper-mid-priced, limited-service hotel.

• The second tier is in the $90 to $99 range. There are four hotels in this rate

range. They are one upscale, select-service hotel, one mid-priced extended-stay hotel, and two mid-priced, limited-service hotels.

• Below the $90 range are three hotels. On is a mid-priced, limited-service

suite hotel, one is a mid-price, limited-service hotel, and one is an economy, limited-service hotel.

• Rate positioning for the proposed hotel would place it in the mid-tier of the

market.

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The following chart highlights the preliminary suggested rate positioning.

COMPETITIVE HOTEL OCCUPANCY & RATES

Occ. RATE ANALYSIS PROJECTED PROPERTY Perform. SINGLE DOUBLE WEEKEND CORP. ADR Fairfield North Parmer Lane Above $100-$130 $100-$130 $100-$130 Same $94.88 Holiday Inn Express Austin North Above $95-$123 $95-$123 $95-$123 Same $92.65 LaQuinta Austin Round Rock Average $72-$107 $72-$107 $85-$114 Same $73.96 Comfort Suites- Pflugerville/Austin Average $95 $95 $100 Same $83.41 Hampton Inn Above $129 $129 $129 Same $112.88

COMPETITIVE MARKET AVERAGE DAILY ROOM RATE (ADR): $92.73

Source: HMI

• The recommended rate positioning is with the solid mid-priced, limited-

service hotels in the five mile radius and primary competitive set identified. This rate positioning would position the hotel with an average yield of 95.8% to hotels in this competitive set.

• The Hampton Inn has the highest yield at 116.6% to the overall competitive

set. The La Quinta has the lowest yield at 76.4%.

• It is felt, for the preliminary projections of ADR in this report, that the proposed hotel could achieve a slight rate premium to the average yield. A 5.0% yield premium was factored into this market study. This would produce a preliminary yield at 100.63% by the third year.

The following chart shows the preliminary overall competitive position of the primary competitive set identified for the rate positioning in the market. The ratings are based upon a 5-point scale with 5 being highest and 2.5 indicating average competition factors.

COMPETITIVE FACTOR ANALYSISAGE # OF AAA MKT. COMP.

PROPERTY NAME (Yrs.) ROOMS RATING RATE FACILITY BRAND LOCAT. SEG. FACTOR

Fairfield North Parmer Lane 1 150 3.0 2.6 3.0 4.0 2.0 2.5 2.9 Holiday Inn Express Austin North 10 84 3.0 2.7 3.5 4.5 2.0 2.5 3.0 LaQuinta Austin Round Rock 11 86 3.0 3.4 2.5 3.0 2.0 2.5 2.7 Comfort Suites 1 64 3.0 3.0 3.5 3.0 2.0 2.5 2.8 Hampton Inn 8 94 3.0 2.2 3.5 4.5 2.0 2.5 3.0

COMBINED RATING 7.5 3.0 2.8 3.3 3.8 2.0 2.5 2.9

Source: HMI

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• The overall Competitive Factor is estimated to be above average. This is due to the Facilities and Brand Competitive Factor categories. Location will give a hotel in Pflugerville an advantage to serve the Lodging Demand generated in the market and now displaced to other hotel accommodations in the regional market.

• Operating without a brand affiliation is not recommended as there are strong

brands represented in this market. Hampton and Holiday Inn are expected to be the strongest brand in the regional market competitive set. Marriott’s Fairfield Inn is also a strong brand represented in the market. Comfort Suites and La Quinta also offer above average competition in this market.

• Age will be a factor in the competition in the market. With an average age of

7.5 years, this indicates that these hotels are at their first major renovation phase. However, two hotels are under one year old and they will be highly competitive. The two hotels over ten years old will be approaching their second major renovation period and will need to have on-going renovations to remain competitive.

• As a result of the age and brand affiliation of the competitive properties,

facilities will be highly competitive. Strong brand compliance will dictate well maintained facilities.

• The operating performance of the statistical competitive set is listed below.

o Lodging Demand is growing at an annual rate of 5.5% per year over the past 5 years. The market has seen steady growth in demand except in 2007 when it dropped (3.5%). It did recover in 2008, a recessionary year, by 3.5%. In 2009, again a recessionary year, demand growth is up 5.8%. This market appears to be absorbing recessionary pressure very well.

o In projecting Lodging Demand Growth, 5.7% growth in 2009 was

factored in. In forecasting future demand growth, an average growth rate of 6.35% was used for 2009 through 2013.

o There has been considerable growth in Lodging Supply in 2008 and

2009. Four hotels have opened in 2008 through 2009. The 64-room Comfort Suites, 150-room Fairfield Inn & Suites, 117-room Hilton Garden, and 145-room Courtyard were opened. This represented 476 rooms or 43.1% of the 1,105 rooms within a five-mile radius. Supply growth increased 12.5% last year and 34.1% this year.

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o For the projections in this preliminary report, no other new supply growth was factored in other than the hotels already developed. In 2009, the projections show a 37.8% overall increase in supply through the entire year. The carry-over of these new rooms into 2010 will be another 13.3% increase in supply. Any additional supply growth would have to be updated in future reports.

o Occupancy reached its peak in 2006, at 79.9%. As new supply growth

entered the market in 2008, Occupancy dropped to 71.0%. In year-to-date 2009, Occupancy is 58.3% compared to 73.9% last year. However, supply has gone up 34.1% year-to-date this year and demand has gone up 5.8% this year. With no new supply growth, the market should see Occupancy rebounding in 2011 and beyond.

o Average Daily Room Rates are decreasing in the market in 2009. This is

probably due to supply increasing. The average five-year ADR growth is 4.5%. However, ADR dropped (11.3%) in 2009. The market reached its peak ADR in 2008 at $108.77. This year it is at $96.85 compared to $109.14 last year. The market has seen positive ADR growth in each year except 2009.

o Part of the ADR declines may also be related to significant ADR growth

in 2005 through 2007 when the market’s ADR grew by 38.5% or an average of 12.8% per year. This may have overpriced the market and when new supply competition entered it, the rates needed to be adjusted.

o The preliminary projections for ADR are factoring in the (11.3%)

decrease in 2009. A conservative approach to ADR growth was used in these projections to return the market to an annualized growth rate of 4.5%. Normally, ADR does not recover as fast as demand. It was estimated that growth in ADR could recover in 2010 to about 2.0%. This could increase to 4.0% in 2011, 5.0% in 2012 and stabilize at 6.0% growth in 2013.

o Revenue per Available Room is affected by the declines in demand,

available room supply and ADR. In 2009, RevPAR is expected to decrease by (30.0%). The significant drop in ADR and increase in supply in 2009 will lower future RevPAR annual growth to (13.8%) from 2008 levels to projected 2013. The growth from anticipated 2010 RevPAR levels to projected 2013 should see an annualized growth rate of 10.9%, showing a recovery from the recessionary period.

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ISSUES, RISKS and OPPORTUNITIES There are areas that should be addressed since they may affect the operational performance of the subject hotel. Certain areas will require additional research to determine how they will affect hotel operation. In this preliminary Phase l Community Overview Market Study, these Issues, Risks and Opportunities are presented as advisory at this time. In a Phase II Comprehensive Market Study, these Issues, Risks and Opportunities would be more developed. The following are the highlights of the research performed for this section.

• The Growth in Lodging Demand has been positive in this market. Even during the recessionary years of 2008 and 2009, the market has shown growth in demand. Future growth will come from serving the under-served Lodging Demand markets that currently come to the Pflugerville area. Additionally, there is potential growth that will come from the surrounding regional area. The Highway 130 & 45 corridor should generate new transient and regional destination traffic into the Pflugerville and Round Rock area. Additional corporate, commercial, retail and residential growth in Pflugerville and eastern Round Rock will bring increased demand potential to this market.

• The lack of adequate hotel accommodations in Pflugerville is forcing travelers

to stay in other hotel accommodation areas, primarily Round Rock and the nearby northern Austin area. Both of these are along the I-35 corridor. Bringing a new hotel to the Pflugerville market will serve the Corporate/Commercial and Social/Leisure markets coming for business, sports and pleasure travel.

• Future growth will be potentially rapid and definitely steady as the economy

improves. This is based upon past growth patterns and the availability of vacant land to accommodate this growth.

• Modest growth was factored into this preliminary report. The historical

average demand growth in the region, with the projected growth in 2009, has been in the 6.3% range. In 2009, growth does not seem to be affected by the United States recession. Future demand growth should increase to a 6.3% level for the next five years.

• Growth of Lodging Supply is always a concern. However, this does not

appear to be significant in the immediate Pflugerville area. However, supply growth in the regional area should be monitored.

• Room rate competition for a limited-service, mid-priced hotel product in the

market will be present throughout the year. The hotel will need to be aware of other competitors in its competitive set. The five hotels identified in the

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report for rate positioning should establish the base for the proposed hotel. As previously stated, the new hotel, at this time, was factored to attain a 5% premium over the average rate yield for these five hotels. This could be modified accordingly in a more comprehensive market study when a specific hotel property is researched.

• Due to the newness of the hotel product and the fact that this property will be

built in Pflugerville with its limited competitive Lodging Supply, it should offer an attractive price/value to travelers to this area. The convenient location to serve the market area should also be a factor to support this rate positioning with other mid-priced hotels in the regional market.

• The Political Climate in the Pflugerville area appears to be positive and

generally pro-growth. The city seems to be positioning itself as an area of growth and expansion.

• There is available land for additional development within the Pflugerville

area. This will allow for additional economic growth to enter the market. Also, as the interchanges around the Highway 130 & 45 corridor are developed, additional hotel sites may become available. This should be monitored accordingly.

• Environmental Concerns would require the research to be performed by the

prospective developer. However, the subject site areas researched for this report appear to be basically ready for development. There will be some improvements required and they will have to be addressed accordingly. The developer should also make sure to investigate that all major environmental concerns are addressed with each site. These environmental concerns should address issues regarding previous use, toxic waste, floods plain, water drainage, water seepage, etc. Several of the sites have major developments around them and this should not be a major issue.

• Zoning and Architectural Controls should not be a factor for this hotel. The

sites should be zoned for business/commercial development. Also, the subject site areas do not appear to have any unusual architectural controls in place and standard building code requirements seem to exist. The developer should verify this with the city.

• Property Taxes should be examined by the developer to determine how taxes

will affect this project.

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• It is recommended that a national or strong regional brand be selected for the proposed hotel. This would provide competitive awareness. The regional market has strong brand awareness associated with the hotels identified in this report. Having a brand associated with the hotel would allow visitors to identify the type of hotel and may also assist in drawing additional support services to the surrounding area. Located in Pflugerville it is felt that having a national or strong regional brand would be critical for the success of the hotel in this preliminary report.

• Assuming that a brand affiliation is selected for this property, an Area of

Franchise Protection should be addressed by the owner of the subject hotel. This Area of Franchise Protection should be reviewed to be made compatible with the Pflugerville market area. This also needs to be compared with the brand’s Incremental Impact Policy. The owner should seek the largest Area of Franchise Protection that can be obtained. At times, using the Incremental Impact Policy may provide the most protection. This market needs to be protected from similar brand development within the regional Pflugerville market area. A larger area of protection may not be feasible. It is recommended that the necessary impact research be performed in relation to these markets, prior to development.

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CONCLUSIONS This section will recap the research performed within the Conclusions of this report. These preliminary conclusions are related to the projected operational performance of the subject hotel. PROPERTY PERFORMANCE The following chart shows the preliminary Projected Performance for a mid-priced property. This will indicate preliminary projections for Occupancy, ADR, Room Revenue, and RevPAR at a stabilized year of operation. For these projections, this was estimated to be 2013. The opening date was expected to be 2011. More detailed projections would be provided in a Phase II Comprehensive Market Study.

PROJECTED PERFORMANCE

PROJECTED MARKET PROJECTED

PERFORMANCE PROJECTED HOTELPRESENT MARKET PERFORMANCEMARKET PENETRATION 80 ROOMS

OCCUPANCYProbable 58.2% 130.6% 76.0%

ADRProbable $114.36 100.8% $115.27

RevPARProbable $66.56 131.7% $87.64

REVENUEProbable NA NA $2,559,033

*Projected performance is +/- 5 percentage points and will be affected by changes in

Lodging Supply and Demand growth levels used to formulate these projections.

Source: HMI

80-ROOM MID-PRICED, LIMITED-SERVICE PROPERTY

• In regard to Occupancy, this property should be able to achieve an estimated preliminary 125.6% yield to the market. An additional preliminary 5.0% premium was also added due to the newness of the property. This will generate a yield of 130.6% by the third year.

• Affecting the yield factor will be the size of the hotel, 80 rooms, which will be

below the average size of 100.5 rooms in the competitive set. This will allow the hotel to out-perform the market due to its size.

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• The impact of 80 rooms on the overall competitive set market was estimated to be 75.0% or 60 rooms. This hotel should perform similarly to the region in performance but serve the Pflugerville market directly. As a result, not all rooms would have incremental impact on the regional market. This impact factor would need to be verified and adjusted accordingly once a specific hotel property is identified in the market.

• No other new rooms were factored into this preliminary market study.

• The regional competitive set developed by Smith Travel Research was

extended to the Pflugerville market. The competitive set, within a five mile radius, was felt to be representative of the overall competitive supply market.

• Demand growth was estimated at 5.65% in 2009. A growth rate was used in

this report until the average 6.3% growth rate was achieved over the term of these projections. This matches the historic demand growth rate projected through 2009. The regional market has been successful in generating demand growth even in the recessionary years of 2008 and 2009. Continuing this trend was felt to be possible in this market.

• ADR growth was factored at (10.95%) for 2009. This was increased to an

annual ADR growth of 4.52% over the term of these projections. This matches the historic ADR growth rate of 4.74% projected through 2009. The market will slowly rebuild ADR growth as the new hotel properties in the market are absorbed. Prior to the supply growth in 2008 and 2009, the historic ADR growth was 9.7%. It is not felt that the market will return to this level during the term of these projections. At 4.52% growth, this is 46.5% of the historic growth rate for 2007.

• The rate positioning was estimated at 95.8% to the market. A 5.0% premium

was added to this yield to achieve 100.8% rate positioning. This would have to be adjusted once a specific hotel product is identified for the market. However, this yield factor would be consistent with the rate positioning defined in this preliminary report. It would place the rate positioning slightly above the five hotels identified to establish this rate positioning.

• RevPAR is a composite of the projected demand, Occupancy and ADR

factored for the market. The historic growth for RevPAR is 10.0%. These projections show an annual growth in RevPAR of 4.0% in the market. The significant declines in ADR in 2009 and increases in supply in 2008 and 2009, impact the market’s ability to recover to previous levels. Again, this was felt to be conservative in light of the current economic recession in the United States. Due to the rate positioning, along with a smaller sized hotel,

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the proposed property should achieve a 131.7% yield to the competitive set in the market.

Projected Preliminary Operating Results The following chart depicts the preliminary Projected Operating Results through Gross Operating Profit (GOP) based upon applying industry standard results to the revenues projected above.

PRELIMINARY OPERATIONAL PROFORMA2011 2012 2013

Revenue $1,591,737 $2,134,914 $2,617,677

DepartmentalExpenses $379,099 $508,465 $623,443

Undistributed Operating Expenses $391,302 $524,833 $643,512

Gross Operating

Profit $821,336 $1,101,615 $1,350,721 *Note: GOP is before Fixed Costs of P&I, Real Estate Tax,

Insurance, Management Fees, Franchise Fees & Reserve for

Replacement.

Source: HMI

The expense amounts and the Gross Operating Profit in the chart above were arrived at by applying the performance results for a Chain-Affiliated, Limited-Service, Mid-Priced segment located in a suburban market in the West South Central region of the country, with 75 to 125 rooms, as reported in the Smith Travel Research Host Report - 2009 on the US Lodging Market. In a full Operational Proforma, the results in the above chart can be expanded to show great detail and to forecast the results for cash flow after debt service. (This is a preliminary review of operational performance. There are many factors which would affect these projections. They reflect industry averages for a standard limited-service hotel property. Any modifications from a standard limited-service operation would affect these projections accordingly.)

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Benchmark Development Cost Factor This preliminary benchmark calculation, based upon preliminary Occupancy and Average Daily Room Rate projections, was established for Benchmark Development Costs. This provides a preliminary indication of the viability of developing this hotel project based upon these Occupancy and Average Daily Room Rate projections. More comprehensive feasibility research should be performed regarding anticipated operational expenses and fixed cost structuring such as debt service, property taxes, insurance, and depreciation, to formulate a more thorough analysis of the financial viability of this hotel project. The land cost will also be another factor that will have significant impact on the Benchmark Development Costs. Benchmark Development Costs take into account all costs associated with the hotel’s development up to its stabilized year of operation. This includes: land costs; land preparation costs; development costs; construction/renovation costs; furniture, fixtures and equipment (FF&E); pre-opening operational and marketing expenses; and cash flow shortages to a stabilized year of operation. Any other associated development costs would also be part of this calculation. A developmental Occupancy factor of 60.0% for this limited-service, mid-priced to upper mid-priced hotel was used. A development cost factor of $1.40 of Average Daily Room Rate per thousand dollars of development cost was utilized for a limited-service, mid-priced to upper-mid-priced hotel. Deviations from the developmental Occupancy and Average Daily Room Rate Factors were calculated based upon Occupancy and Average Daily Room Rate Projections established in this report. These preliminary Benchmark Development Costs are based upon a 30% equity investment and an anticipated return of 15% on the equity investment. Adjusting this equity amount and rate of return will adjust the preliminary Benchmark Development Costs accordingly.

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Using this calculation, the following preliminary Benchmark Development Costs were established.

BENCHMARK DEVELOPMENT COSTSALLOWABLE

ALLOWABLE TOTALPER ROOM* PROJECT COST*

80Rooms $106,862 $8,548,964

*These projections will be affected by changes in Projected Occupancy or Projected ADR.

Source: HMI

Ideally, as the developer calculates development costs for this property, the total development costs should not exceed these preliminary break-even Benchmark Development Costs. Exceeding these Benchmark Development Costs may indicate that the property is not financially feasible to pursue. However, projected development costs below these Benchmark Development Costs may indicate that additional research should be performed by the developer to determine the overall economic feasibility of developing this hotel property. The Benchmark Development Cost calculation above, as well as the return calculations above, are only two of many benchmarks which the developer should utilize in determining the feasibility of this project. This calculation does not take into account any present value calculations. This would be accounted for in an actual Operational Proforma or an Analysis of Cash Flow and Return on Investment. The actual Return on Investment should include returns on both the projected sales value and Cash Flow analysis for the property. PROPERTY RECOMMENDATIONS

• The Property Type for this proposed hotel is recommended to be mid-priced, limited-service. This would be in line with the research performed in this Phase l Community Overview Market Study. Further, this type of hotel would allow the property to position itself properly at one of the subject sites and best fit the demographics of the competitive set and future Lodging Demand market in the area. It could be expected that a new mid-priced brand hotel would capture displaced Lodging Demand currently staying in other markets surrounding Pflugerville. Additionally, the newness of the hotel should be well received in the marketplace. Its location will be positive to serve the Pflugerville and regional market.

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• This type of property will also have the potential to serve the near future economic development of the Pflugerville market. It should be well received by the business community and the residential market in this area. It should also serve the sports and events market well.

• The Property Size of the mid-priced hotel was researched in this preliminary

market study report as an 80-room hotel. This appears to best serve the market demand and seasonality in this market. This would be below the average size of other chain affiliated brands in the competitive set, at 100.5 rooms. Adjusting the room count will modify Occupancy performance accordingly.

• After researching the demographics of the Lodging Demand market that could

stay from two to several nights, having about 10% to 15% of the rooms designed as suites would serve this market well. Given the recommendation above that 10% to 15% of the rooms be configured as suites, 8 to 12 rooms would be configured in this manner. The remaining 68 to 72 rooms would be traditional guest rooms. Slightly enlarging the guest rooms may be advised to accommodate the tourist and amateur sport markets. Also, connecting rooms to the suites and among the traditional rooms would assist in serving the family market traveling to this area for sporting events.

• As previously presented, the preliminary suggested Rate Positioning for the

proposed hotel would place it with a yield to the regional competitive set of 95.8%. This will position it with the five limited-service, mid-priced hotels identified for this position in the report. This positioning should also allow the hotel to compete effectively with other mid-priced hotels in the regional market. A 5.0% premium in this yield was felt to be possible for this new hotel in the market.

• The Product Features of the hotel should satisfy the market that it is

attempting to attract. Standard features and amenities required by the franchise/brand chosen for the proposed hotel should be followed. There may be some special features required to attract the target markets identified in this report. At this time, they may include the following amenities:

o An attractive outdoor pool area is advised due to the number of

Social/Leisure travelers in the area. o A fitness center should also be considered for this property as it is an

amenity used by both Market Segments.

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o Adequate parking for recreational vehicles should be allocated to accommodate tourists and highway travelers on Highways 130 & 45.

o Having small meeting facilities are also advised to service the

Corporate/Commercial market. This space should accommodate around 30 to 50 people.

• The recommended Sleeping Room Configuration should be compatible with the overall Market Segmentation for the area. Given the fact that the property will have the majority of its demand coming from the Social/Leisure segment with a strong mix of families, the property should have a larger mix of double queen-bedded rooms. There should also be an appropriate allocation of king-bedded rooms. It is suggested that additional two-bedded rooms be developed to accommodate families and multiple guests per room.

• Brand Affiliation should be considered for this hotel to enhance its

marketability. The brand should position the hotel well in this market. It should be competitive with the Market Segments identified for the hotel. A mid-price brand should be pursued. Potential impact issues would need to be addressed when pursuing a brand affiliation.

• The Opening Date for the hotel should be in line with the seasonality of the

market. Ideally, opening the hotel in spring to capture the maximum revenue months prior to the softer seasonal period in late Fall (December) is recommended.

Management

Research

Marketing

Gregory R. Hanis, ISHC

President

Member of

Professionally Serving the United

States & Canada for Over 27 Years with Offices in

Milwaukee, Wisconsin and Fort Myers, Florida

P.O. Box 510445 New Berlin, WI 53151-0445

10014 Majestic Avenue #50 Fort Myers, FL 33913

800-657-0835 Fax: 239-334-6562

[email protected]

HMI Inc.

DISCLAIMER

The decisions presented herein were based upon the information available and received at the time this report was compiled. Hospitality Marketers International, Inc., (HMI) has taken every possible precaution to evaluate this information for its completeness, accuracy and reliability. To the best of its knowledge, HMI feels the information and decisions presented herein are sound and reliable. It must be noted that on September 11, 2001, the United States was attacked by terrorists. The results of that attack had significant effects on the economy and social attitudes of the United States. These attacks also significantly altered normal travel patterns by various market segments generating potential lodging demand. At the time of the writing of this report, the United States travel industry, and specifically, the hotel industry are still recovering from these events. The actual long-term results are still uncertain. There are expectations that the United States will ultimately recover from these events and their effects on the economy and society. There are further expectations that some travel patterns will be changed indefinitely. This report will look at historical trends prior to these significant events. Performance since September 11th to the time of this report will also be reviewed and will attempt to factor the effect of these events into the future projections and conclusions presented in this report. Given the present state of uncertainty, HMI is not responsible for effects that occur from future political, economic or social events that ultimately alter these projections. Also, it should be understood that normal economic and marketplace conditions change constantly. HMI assumes no responsibility for information that becomes outdated once this report is written; nor is it responsible for keeping this information current after November, 2009. It should be understood that the results presented in this report are the professional opinion of HMI and are based upon the information available at this time. These opinions infer proper and professional management of the business operation. The opinions also infer that market conditions do not change the information received upon which those opinions have been based. HMI assumes no responsibility for changes in the marketplace. Furthermore, it is presumed that those reading this report completely understand its contents and recommendations. If the reader is unclear of the understanding of the contents, clarification should be received from its writer, HMI. Lastly, HMI assumes that those who receive this study act in accordance with its recommendations. Any deviation from these recommendations is solely the responsibility of those receiving this report. Further questions concerning this report should be directed to HMI. Sincerely, HOSPITALITY MARKETERS INTERNATIONAL, INC.

Gregory R. Hanis

Gregory R. Hanis, ISHC President

report pflugerville hotel feasibility revised-mar 2010-final (1)

Documents

market exhibit

texas market area

pflugerville exhibit

market factors

primary regional market

general market overview

austin area

subject site exhibit