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3
VILLAGE OF PLAINFIELD
SPECIAL MEETING MINUTES
FEBRUARY 12, 2018
AT: VILLAGE HALL
BOARD PRESENT: M.COLLINS, L.NEWTON, E.O’ROURKE, B.WOJOWSKI, B.LAMB, AND
C.LARSON. BOARD ABSENT: M.BONUCHI. OTHERS PRESENT: B.MURPHY,
ADMINISTRATOR; M.GIBAS, VILLAGE CLERK S.THREEWITT, LEAD ENGINEER;
R.JESSEN, PUBLIC IMPROVEMENTS SUPERINTENDENT; A.PERSONS, PUBLIC WORKS
DIRECTOR; J.PROULX, PLANNING DIRECTOR; K.GOSKA, BUILDING OFFICIAL;
T.PLECKHAM, MANAGEMENT SERVICES DIRECTOR; AND J.KONOPEK, CHIEF OF
POLICE.
CALL TO ORDER, ROLL CALL, PLEDGE
Mayor Collins called the meeting to order at 7:00 p.m. Roll call was taken, Trustee Bonuchi was
absent, all other Trustees were present. Mayor Collins led the Pledge of Allegiance. There was 1
person in the audience.
PUBLIC COMMENTS (3-5 Minutes)
No Comments.
BUSINESS MEETING
1) APPROVAL OF THE AGENDA
Trustee Lamb moved to approve the Agenda. Second by Trustee Wojowski. Vote by roll call.
Newton, yes; O’Rourke, yes; Wojowski, yes; Bonuchi, absent; Lamb, yes; Larson, yes.
5 yes, 0 no, 1 absent. Motion carried.
2) SALT PURCHASE
Trustee Lamb moved to authorize the payment for the emergency purchase of 1,000 tons of roadway
salt from Cargill, Inc. at a total cost of $68,750.00. Second by Trustee Newton. Vote by roll call.
Newton, yes; O’Rourke, yes; Wojowski, yes; Bonuchi, absent; Lamb, yes; Larson, yes. 5 yes, 0 no,
1 absent. Motion carried.
3) LEGISLATIVE CONSULTING SERVICES
Trustee Lamb moved to approve a professional services agreement with Tai, Ginsberg, & Associates
LLC (TG&A) at a cost of $7,500 per month, including an annual rate adjustment for inflation based
on the CPI, plus standard expenses. Second by Trustee Newton. Vote by roll call. Newton, yes;
O’Rourke, yes; Wojowski, yes; Bonuchi, absent; Lamb, yes; Larson, yes. 5 yes, 0 no, 1 absent.
Motion carried.
Trustee Lamb moved to adjourn the Special Meeting. Second by Trustee Larson. Voice Vote. All in
favor, 0 opposed. Motion carried.
The meeting adjourned at 7:08 p.m.
Michelle Gibas, Village Clerk 4
Minutes of the Committee of the Whole Workshop of the President and the Board of Trustees
Held on February 12, 2018
In the Boardroom
Mayor Collins called the meeting to order at 7:09 p.m. Board Present, Trustee Newton, Trustee
O’Rourke, Trustee Wojowski, Trustee Lamb, and Trustee Larson. Trustee Bonuchi was absent.
Others present: Brian Murphy, Administrator; Michelle Gibas, Village Clerk; Scott Threewitt, Lead
Engineer; Randy Jessen, Public Improvements Superintendent; Allen Persons, Public Works
Director; Jon Proulx, Planning Director; Ken Goska, Building Official; Traci Pleckham, Management
Services Director; and John Konopek, Chief of Police. There was approximately 1 person in the
audience.
Trustee Lamb moved to approve the Minutes of the Committee of the Whole Workshop and
Executive Session held on January 22, 2018. Second by Trustee O’Rourke. Voice Vote. All in
favor, 0 opposed. Motion carried.
PRESIDENTIAL COMMENTS
Mayor Collins thanked Public Works and the subcontractors for their efforts with snow removal after
the recent storm.
TRUSTEE COMMENTS
Trustee Wojowski stated that he received positive comments regarding snowplowing.
Trustee Lamb referenced an article in the Herald News regarding spending per capita and pointed out
that Plainfield is very efficient.
PUBLIC COMMENTS
No Comments.
WORKSHOP
1) 2018-2019 DRAFT FISCAL YEAR BUDGET
Village staff gave a presentation regarding the draft 2018-2019 Capital Improvements Budget.
Village staff reviewed the proposed 2018 Street Improvement Program and pathways.
There was a lengthy discussion regarding pathways as well as the street improvement program. The
Board discussed a proposal from Patrick Engineering regarding Phase 1 and Phase 2 to design
pedestrian improvements at two locations, Van Dyke and 143rd Street/Route 30 and 127th Street and
Route 30. It was the general consensus to proceed with Patrick Engineering for the Van Dyke and
143rd Street/Route 30 project and push back the 127th Street and Route 30 project. It was also the
consensus of the Board to bring in a consultant to review future pathway improvements. There was
some further general discussion regarding the funding of the Street Improvement Project as well as
the timing of the bidding process for roadway work. It was the consensus of the Board to bring an
ordinance regarding municipal fuel tax to the next Village Board meeting and to wait until final
action on the ordinance is taken to procced with the bidding process.
Staff continued with the presentation highlighting roadway projects; Engineering Designs, Bridges
and Structures, ITEP/Grant opportunities, and vehicle conditions. Mrs. Pleckham then reviewed the 5
Village of Plainfield
Meeting Minutes – February 12, 2018
Page 2
draft 2018-2019 Capital Improvements Fund Summary, draft 2018-2019 Motor Fuel Tax Fund, and
the draft 2018-2019 Tax Increment Financing Fund.
Mayor Collins read the reminders.
Trustee Lamb moved to adjourn. Second by Trustee O’Rourke. Voice Vote. All in favor, 0
opposed. Motion carried.
The meeting adjourned at 9:08 p.m.
Michelle Gibas, Village Clerk
6
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21
TR Mandigo & Company
“Over 35 Years of Hospitality Consulting”
Market Feasibility Study
Market Feasibility Study for a
100-Unit Upscale Limited Service Hotel
To Be Located On:
Lockport St. and Van Dyke Rd.
Plainfield, IL 60544
Prepared by:
TR Mandigo & Company
338 N. Highland Avenue
Elmhurst, Illinois 60125
TEL: (630) 279-8144
FAX: (630) 279-4701
Submitted to:
Jake Melrose, AICP
Economic Development Manager
Planning Department
24401 W. Lockport Street
Plainfield, IL 60544
By E-mail: Jmelrose@goplainfield.com
Submitted on:
February 6, 2018
22
Tuesday, February 06, 2018
Jake Melrose, AICP
Economic Development Specialist
Planning Department
24401 W. Lockport Street
Plainfield, IL 60544
By E-mail: Jmelrose@goplainfield.com
Dear Mr. Melrose:
We have completed our market research to assess the potential market feasibility for the construction of
a proposed hotel to be developed in Plainfield Illinois. As part of this study, TR Mandigo & Co. was asked
to form an opinion on site location, size, market scale of property, and potential branding of the proposed
hotel. The conclusions formed for this study are intended to be taken a first step towards securing a
developer or franchise group to pursue the project to its conclusion.
This analysis addresses the level of demand for business, leisure, and social event-based hotel
accommodations for the proposed hotel property that emanates from the immediate market; results of
our research of local industry, market trends and competitive properties; and our conclusions on market
feasibility of hotel development for the subject property.
Our analysis included identification of a competitive set of properties and determination of the
performance of properties in the local market. The identification of a competitive set of properties and
determination of performance of this competitive set was followed by interviews and research to identify
the local sources of demand and other sources of business in the area.
We also analyzed and projected the absorption rate for other new developments in the regional hotel
market, researched the performance statistics on the hotel industry in the south and southwest suburban
Chicago markets; identified proposed projects under discussion deemed as relevant or competitive; and
prepared performance data for the property based on market trends, responses from the interviews and
projections of overall market performance.
The study concludes with estimates of level of demand for the subject property and determination of
attainable occupancy and average daily rate and absorption period for the development of the property
showing the salient market information and our conclusions on market feasibility to assist you in analysis
of the economics of the project.
This study also includes a Statement of Estimated Operating Results outlining the first six years of
operations. These provide a forecast of revenues and expenses for the property based on our market
findings, including departmental, undistributed, and fixed expenses considering local market conditions
and the results of operations of comparable properties. Both revenues and expenses are stated in
conformance with the Uniform System of Accounts for Hotels, the industry’s standard reporting format. 23
This market feasibility study and statements of estimated annual operating results will be used in your
analysis of the economic feasibility of the project, discussion and presentations to lenders, management
companies, investors and other interested parties.
The market feasibility and statements of estimated annual operating results as presented do not
constitute an economic feasibility study. They represent the expected operating results of the property as
described herein. As development costs are prepared by you, your architects, contractors and design
organizations, and when the balance of debt and equity and terms thereof are negotiated, the economic
feasibility of the project can be determined.
Pursuant to your authorization in December 2017, we submit herewith our short form narrative market
feasibility report and statements of estimated annual operating results for the referenced property. We
have inspected the site and surrounding area, evaluated the lodging market conditions, and particularly
the market in the immediate area and the central business district, and considered the local forces
influencing hotel operations.
As in all engagements of this type, the estimated results are based upon experienced competent and
efficient management; assume affiliation with a reservation system organization; and presume no
significant change in the competitive position of the lodging industry in the immediate area from that as
set forth in this report. The conclusions reached as to future performance are based upon our present
knowledge of the competitive area as of the completion of our research.
The terms of our engagement are such that we have no obligation to revise this report or the estimated
operating results to reflect events or conditions that occur subsequent to the date of completion of our
fieldwork. However, we are available to discuss the necessity for revision should subsequent events
significantly change the competitive or economic environment in which the proposed hotel will operate.
Since the operating results are based upon estimates and assumptions that are subject to uncertainty and
variation, we do not represent them as results that will actually be achieved. This study and report do not
include the possible impact of government restrictions or environmental regulations on the project except
those set forth in this report.
This market feasibility study has been specifically designed to address the potential operation of the
proposed property as a limited service hotel with appropriate service levels, amenities and furnishings. It
is intended for the use of the principals of the project, its advisors and other principals in the analysis of
the market and economic feasibility of providing equity and obtaining financing for this project and in the
analysis of the economics of pursuing the development as described herein. Neither our name nor the
material submitted may be included in any public offerings or in any debt or equity prospectus in
connection with the sale of securities or participation interest to the public without our express written
permission.
We would be pleased to hear from you if we can be of any further assistance in the interpretation and
application of our findings and conclusions.
Sincerely,
Theodore R. Mandigo, CPA, ISHC
24
i Upscale Limited Service Hotel, Plainfield IL
TABLE OF CONTENTS
Table of Tables ............................................................................................................................................................... ii
Introduction ................................................................................................................................................................... 1
Purpose and Function of the Engagement ................................................................................................................ 1
Scope of Services ....................................................................................................................................................... 1
Summary of Conclusions ............................................................................................................................................... 3
Conclusions ............................................................................................................................................................... 5
Description of project .................................................................................................................................................... 7
Building Amenities ..................................................................................................................................................... 7
Hotel Amenities ......................................................................................................................................................... 7
Site Location .............................................................................................................................................................. 8
Neighborhood Analysis ................................................................................................................................................. 9
Introduction ............................................................................................................................................................... 9
Identification of the Neighborhood ........................................................................................................................... 9
Neighborhood Improvements ................................................................................................................................... 9
Transportation and Access ...................................................................................................................................... 10
Conclusion ............................................................................................................................................................... 10
Hotel Market Analysis ................................................................................................................................................. 10
Introduction ............................................................................................................................................................. 10
Chicago CBD Hotel Market Overview ...................................................................................................................... 11
Surrounding Hotel Market Overview ...................................................................................................................... 11
Source: TR Mandigo & Company ..................................................................................................................................... 12
Competitive Set ........................................................................................................................................................... 12
COMPETITIVE SET PERFORMANCE .................................................................................................................. 13
WEEKDAY/WEEKEND MARKET PERFORMANCE ............................................................................................ 14
MONTHLY PERFORMANCE ................................................................................................................................. 15
PROJECTED GROWTH IN MARKET ................................................................................................................... 16
Performance of Subject Property ............................................................................................................................ 16
Market Segmentation .............................................................................................................................................. 18
PIPELINE ....................................................................................................................................................................... 19
Conclusion ................................................................................................................................................................... 19
Statements of Estimated Annual Operating Results ................................................................................................... 19
Assumptions and Limiting Conditions ......................................................................................................................... 30
25
ii Upscale Limited Service Hotel, Plainfield IL
TABLE OF TABLES
TABLE 1: PERFORMANCE OF SUBJECT PROPERTY VERSUS COMP SET ............................................................................................. 4
TABLE 2: SUMMARY OF OPERATING RESULTS ........................................................................................................................... 6
TABLE 3: CHICAGO CENTRAL BUSINESS DISTRICT HOTEL PERFORMANCE ....................................................................................... 11
TABLE 4: MARKET HISTORY AND PROJECTIONS ....................................................................................................................... 12
TABLE 5: COMPETITIVE SET PERFORMANCE CHARTS................................................................................................................ 14
TABLE 6: AVERAGE OF 2014-2017 DAILY PERFORMANCE OF COMPETITIVE SET ......................................................................... 15
TABLE 7: CHARTED DATA MONTHLY OCCUPANCY TRENDS ....................................................................................................... 15
TABLE 8: SUPPLY AND DEMAND GROWTH ............................................................................................................................. 16
TABLE 9: PERFORMANCE OF SUBJECT PROPERTY ..................................................................................................................... 17
TABLE 10: COMPARISON TO COMPETITVE SET ....................................................................................................................... 18
TABLE 11: SUMMARY OF OPERATING RESULTS ....................................................................................................................... 19
TABLE 12: RENTALS AND OTHER INCOME PER OCCUPIED ROOM ............................................................................................... 21
TABLE 13: OTHER OPERATED DEPARTMENTS PER OCCUPIED ROOM .......................................................................................... 21
TABLE 14: ROOM DEPARTMENT EXPENSES ............................................................................................................................ 2 2
TABLE 15 OTHER OPERATED DEPARTMENTS .......................................................................................................................... 22
TABLE 16: ADMINISTRATIVE AND GENERAL ............................................................................................................................ 2 2
TABLE 17: MARKETING ....................................................................................................................................................... 22
TABLE 18: PROPERTY OPERATIONS AND MAINTENANCE ........................................................................................................... 23
TABLE 19: ENERGY COST ..................................................................................................................................................... 23
TABLE 20: REAL ESTATE TAXES ............................................................................................................................................. 23
TABLE 21: BUILDING AND CONTENTS INSURANCE .................................................................................................................... 23
TABLE 22: TYPICAL YEAR OF OPERATIONS .............................................................................................................................. 25
TABLE 23: FIRST 6 YEARS OF OPERATION ............................................................................................................................... 26
TABLE 24: DCF VALUATION ................................................................................................................................................. 28
TABLE 25: DIRECT CAP VALUATION ....................................................................................................................................... 29
26
iii Upscale Limited Service Hotel, Plainfield IL
MAP OF SITE LOCATION
27
1 Upscale Limited Service Hotel, Plainfield IL
INTRODUCTION
PURPOSE AND FUNCTION OF THE ENGAGEMENT
The purpose of this engagement is to analyze the market for a proposed new
construction hotel that would be developed on a site in Plainfield, Illinois. This
includes our findings and conclusions as to potential occupancy and average
daily rate that could be achieved by the hotel on completion and to prepare
statements of estimated annual operating results for a typical year and for the
first ten years of operation for the property, assuming a start of construction in
2018 with completion for opening in mid-2019. This study is based on
preliminary development plans as discussed with the developer regarding
concept, public space, and meeting facilities and other amenities and services.
SCOPE OF SERVICES
The scope of this market study involved the systematic research and analysis
necessary to reach a conclusion as to the performance of a prototypical Upscale
Limited Service Hotel and does not contemplate further development. The
assumptions included in our engagement are as follows:
The property will be developed as a limited service upscale hotel. The
property should include typical focused service amenities and have around
1,800 sq/ft of meeting space, subdividable into breakout rooms.
The property will initiate a reserve for replacement program that will sustain
the property in a competitive condition throughout and beyond the
projection period.
The property will be built as a standalone facility, which does not require, but
may benefit from, further economic development projects.
In view of the lack of other nearby hotels, the property will adopt an
appropriately aggressive marketing and positioning program, both pre-
opening and during the initial period of operation to raise its profile.
The property will receive appropriate zoning for operation as a transient
lodging facility.
The initial step was to discuss the immediate site area to observe the existing
infrastructure and surrounding businesses and residential development to
determine the ambience of the area and appropriate positioning of a hotel
property that would be consistent with the immediate neighborhood. This
enabled us to develop the general concept for the project in terms of quality of
product, market segments to be served, area amenities and services immediately
available to guests of the property and other development activity that would
28
2 Upscale Limited Service Hotel, Plainfield IL
have an impact on the positioning and operation of the property. We toured the
existing hotels and conducted interviews with relevant personnel.
Inspection Date: December 2017
Local business and organizations were contacted about development and
improvements in the neighborhood. Hotel information was drawn from
interviews done over several days in the neighborhood and beyond, as well as our
expert knowledge of the market. Information on the immediate competitive
market was obtained from databases and available published sources.
The information collected during field research was supplemented by in-house
data. TR Mandigo & Co. has completed market studies and has joint ventured
appraisals of several Chicago hotels. The director, the primary consultant in this
engagement, has over 40 years of experience in providing consulting services to
the industry, both in Chicago and internationally.
The function of the report is to present a market study and statement of
estimated annual operating results for the initial period of operation on the
assumption that the site location is developed as a transient hotel with facilities
as described, providing a limited service facility and appropriately priced for the
market.
29
3 Upscale Limited Service Hotel, Plainfield IL
SUMMARY OF CONCLUSIONS
We have completed our market feasibility study for the development of a 100-key
upscale limited service hotel to be located in Plainfield, Illinois.
The subject property will target a wide variety of clientele ranging from hospital
related corporate and transient business, and groups and SMERF meetings
business. The new hotel will be geared toward more upscale leisure and groups
business than the hotels at the nearby Joliet Mall cluster. Because it will be the
only Upscale Limited Service Hotel in around a 8 mile radius, it should achieve a
higher occupancy than those nearby hotels, and a slight premium in rate over the
competitive set of upscale hotels.
This proposed hotel will be in an advantageous location within the Plainfield
market. At the current time, there are two specific sites to choose from, though
they are adjacent. For the purposes of this study, we make no specific
recommendation to either one, rather the larger site would be superior for a
mixed-use development while the smaller would be a better standalone hotel,
owing to its location next to a very attractive park.
Based on our market analysis, demand interviews and competitive market
analysis TR Mandigo & Company has determined that there is market support for
the development of a 100-key select service hotel at the site location. We
recommend that the project be developed with a range of room types and
amenities featuring the latest brand standards of an upscale limited service hotel
franchise. While we do not make a specific recommendation, the quality should
be similar to a Home2 Suites or similar.
The hotel will contain a relatively large amount of meeting space, of at least to
1,800 sq/ft dividable into separate rooms. The hotel may provide coffee or soft
drink service, while anything beyond would be done by outside catering.
We have assumed that the proposed property would start construction in early-
2018 and would be open for operation in 2019 with an opening in early summer
of that year.
The property should operate at a stabilized level of 67%. It should achieve an
average daily rate (ADR) of $125.00 in 2018 value dollars over the life of the
property, given competent and efficient management, a local marketing program
and effective use of the yield management systems available through a
reservation system and other resources.
The pricing structure assumes some introductory discounting, internet marketing,
and off-season packaging as well as group rates for the off-season events market.
The pricing is above other nearby properties, owing to its new construction and
limited service upscale quality. The rate average includes the typical spread
30
4 Upscale Limited Service Hotel, Plainfield IL
between published rate structure and achieved ADR where discounting, package
plans and other promotional pricing result in a significant difference from the
published rack rates.
We expect the competitive market will be drawn mostly from the village and
nearby communities, however hotels in Bolingbrook and Joliet and lack of direct
interstate access will limit regional demand. The hotel is expected to achieve a
lower than typical first year as it will be open for a limited time, and will be in a
ramp-up period.
Our estimates of an occupancy and average daily rate for the first 6 full years of
operation are set forth below. We have projected occupancy and average daily
rate for the first year in 2019, assuming an opening in late spring, impacting the
initial year occupancy and ADR performance for the property.
TABLE 1: PERFORMANCE OF SUBJECT PROPERTY VERSUS COMP SET
Competitive Set Performance Subject Property Performance
OCC ADR RevPAR OCC ADR RevPAR
TYPICAL YEAR 56.61% $120.96 $68.48
2019 56.0% $123.38 $69.11 56.0% $126.08 $70.60
2020 59.1% $125.85 $74.37 60.0% $129.23 $77.54
2021 61.5% $128.37 $78.89 62.0% $132.46 $82.12
2022 63.3% $130.93 $82.88 65.0% $135.77 $88.25
2023 64.6% $133.55 $86.23 66.0% $139.16 $91.85
2024 65.9% $136.22 $89.71 67.0% $142.38 $95.39
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
2019 2020 2021 2022 2023
Proposed Hotel
RevPAR ADR OCC
31
5 Upscale Limited Service Hotel, Plainfield IL
It is expected that the primary source of rooms business will come from
midweek corporate and commercial business, as well as transient leisure
travelers and groups on the weekend. We expect meeting facility usage to be
highest during the day on weekdays and evenings for the weekend. The
business and corporate traveler will need an aggressive marketing campaign as
it will require pushing rates somewhat higher than the existing properties, both
to differentiate itself, and because it will be difficult to compete against the
older, lower end properties based on solely rate. Word of mouth and direct
sales will be critical components in achieving success within the corporate and
meetings markets. Marketing and sales should consider focusing on local
hunting and fishing clubs, as they are a strong local draw. The leisure business
will be based off the untapped local market, internet sales, as well as brand
loyalty Thus, it is crucial to secure a flag that is not overrepresented in the
regional market, if possible.
When projecting the source of future business, we have considered stabilized
sources of business in addition to the initial impact of construction on the
subject.
CONCLUSIONS
There is sufficient market support for the proposed 100 key Upscale Limited
Service Hotel at the planned site. The location is just to the west of the historic
downtown district, and features easy access from numerous commercial
developments, as well as retail and area leisure clubs.
The property will require the typical 18-month stabilization period assuming
there are no other proximate developments under construction at the same
time. Any mixed-use or nearby development will provide a short-term boost
during the ramp up period as the hotel will benefit from contract and
construction business.
We have prepared statements of estimated annual operating results for the
proposed property based on the configuration and recommendations as stated
above and further defined in this report. A summary of the operating results is
set forth in the table on the following page.
32
6 Upscale Limited Service Hotel, Plainfield IL
TABLE 2: SUMMARY OF OPERATING RESULTS
Year Total Revenue Income (1) Ratio to Revenue
Typical Year $2,833,000 $921,000 32.5%
2019 $1,750,000 $520,000 29.7%
2020 $2,877,000 $933,000 32.4%
2021 $3,042,000 $1,008,000 33.1%
2022 $3,285,000 $1,159,000 35.3%
2023 $3,408,000 $1,217,000 35.7%
2024 $3,534,000 $1,279,000 36.2%
(1) Income before other deductions such as interest, amortization, depreciation and income taxes.
Details of our market research, recommendations and conclusions are
presented in the following sections.
33
7 Upscale Limited Service Hotel, Plainfield IL
DESCRIPTION OF PROJECT
The subject project entails the construction of a new generation Upscale Limited Service Hotel on
a site in downtown Plainfield, Illinois. As of the time of this writing, there are two possible sites,
described in the site section of this report.
Plainfield currently does not have any hotels, though there are several near the Joliet Mall to the
southeast. The village features numerous amenities in the area to the east of the sites in the
downtown area. To the west the land consists of single family homes in planned developments
with farmland beyond.
BUILDING AMENITIES
The proposed plans for the subject property include 100 rooms spread among 4 stories in the
prototypical Upscale Limited Service Hotel fashion:
A 100 room upscale limited service property, such as a Home2 Suites or similar, which
provides somewhat more flexibility than a typical limited service hotel, allowing limited
access to the extended stay market.
An open-concept lobby and great room space, allowing for easy circulation.
A pool and fitness center for guest use.
Standard complimentary hot breakfast.
Meeting space totaling 1,800 sq/ft and dividable into smaller units. Banquet revenue will be
limited to snack and drink service, and outside catering fee.
HOTEL AMENITIES
The subject property will be positioned as an upscale hybrid select service and extended-stay
hotel, featuring generous room layouts in a suite-style design. Furnishings and style will be
contemporary, including a built-in table with a pullout wheeled worktable, wall mounted TVs, a
sofa that pulls out to a full bed, and a kitchenette with fridge, stove, microwave, and adequate
silverware. Beds will feature comfortable modern mattresses, a choice of pillows, and
comforter/duvets. The bathrooms will be bright, well lit, and include high pressure or adjustable
setting showerheads.
The exterior of the hotel will feature the current generation flat roof design, with a porte-
cochere entrance.
Guests will enter through the porte-cochere into a large, open lobby area, which will include a
front desk, sundry grab-and-go stand, breakfast bar and common seating area, including a variety
of seating choice and a business center with ample space for work and featuring printers for
guest use.
Two elevators should be located past the check in stands, and past the elevators, the pool,
fitness, and laundry rooms should be key locked for guest use. Amenities should include
weights, elliptical and treadmills.
Immediately to the right of the lobby area should be the meeting rooms, which should de
dividable into smaller rooms from their largest configuration as a single grand ballroom able to
accommodate up to 100. Though the hotel will not provide catering, it should be able to provide
drinks and light snacks. 34
8 Upscale Limited Service Hotel, Plainfield IL
The second through fourth floors should feature guest rooms. Sufficient handicapped-accessible
rooms should be made available to meet ADA guidelines.
SITE LOCATION
We have designated the sites 1 and 2, and have provided details about our assessment regarding their suitability
below.
1. Lockport St. & Wallin Dr., Village Center Property. A 36.25 acre site with mixed use potential. The site is
currently the largest open farm lot in an otherwise developed area along Lockport St. To the northwest
lie several hundred acres of farmland, but most of the other land around it has been developed as single
family homes, parkland, or other complimentary uses.
Positives:
Located along Lockport Street west of the historic downtown area, this site features superior visibility of
the two.
There are talks to develop other parts of the site.
It is close to downtown, though still easily accessible from industrial demand sources.
It is relatively close the YMCA and may be able to utilize its facilities.
Negatives
The location requires a mixed use development and would struggle without it.
As a standalone, it is slightly inferior to site 2 from a hotel perspective.
This site is preferable if it is included in a mixed-use project, though without a large surrounding
development to sustain it, it will be difficult.
2. Village Center Dr. & Van Dyke, Settler’s Park Development Opportunity. A nearly 3 acre site located
directly behind village hall, and east of site 1, and north of Settler’s Park.
Positives:
This site is small enough that a hotel could be developed without necessitating a larger development.
The park, pond and river are all highly attractive landscaping elements that would elevate the appearance
of the property, and ensure that storm water is not a problem.
It is close enough to site 1 that it would directly benefit from any development taking place in the area
while not requiring it.
Negatives:
Worse visibility than site 1. Would require some signage to direct traffic towards its entrance.
As a hotel development without a larger project, this lot is ideal due to the size and location next to a
well-designed park.
Both sites hold some potential for a hotel development, while the first would work best as a larger,
planned mixed use development with a hotel component. The advantage of the second as a standalone site is that
it would likely require less detailed planning and fewer moving parts, therefore it would likely be able to be
constructed quicker.
35
9 Upscale Limited Service Hotel, Plainfield IL
NEIGHBORHOOD ANALYSIS
INTRODUCTION
A neighborhood is a group of complimentary land uses. All actual and potential influences on
property values created by proximate land uses delineate the neighborhood boundaries. This
section summarizes our investigation of the subject property's neighborhood and the pertinent
locational factors that could affect its value.
IDENTIFICATION OF THE NEIGHBORHOOD
The subject property is located in Plainfield, Illinois, the oldest village in Will County, and covers
25 sq/mi. The site proper is located to the west of historic downtown Plainfield, which consists
of a three block stretch of storefronts located east of the DuPage river. The village underwent
massive expansion in the 1990’s which increased its population tenfold, expanding the village
from its core to the north, south, and west. The proposed site location is along Lockport Road in
an area of expansion. Much of the area has been developed into single family homes, and
support structures, such as a middle school have been built to accommodate this influx. There
are still several remaining patches of farmland, including the ones on which the proposed hotel
would be located.
NEIGHBORHOOD IMPROVEMENTS
In addition to single family homes, a small downtown, and numerous chain stores along Route
59, Plainfield features numerous wetlands and waterways for fishing in the east of the village,
while the western end of the village consists of a high amount of open farmland. Numerous
planned developments of single family homes have been built on former farms, particularly
starting in the 1990’s, when the village’s population was a mere 4,550. By 2000 it had increased
to 13,000 and by 2010, to 39,500. As of 2016 it stands at 42,900, indicating that growth is
slowing somewhat, but still much stronger than the Chicagoland region as a whole, which is
largely negative. Estimates through 2030 indicate that the area is expected to grow to as large as
62,000 by that time.
In many ways, Plainfield is a bedroom community, although it is around 35 miles from the city of
Chicago, it is a fairly direct commute via I-88, as well as Lincoln Highway (US 30). It is an upper-
middle class village, with a median age above average at 53.3 years with a high median income of
about $110,000. The demographic breakdown is 75% white, 11% Asian, 7% black, and 15%
latino. These do not add up to 100% due to how Hispanic origin is calculated.
The largest employers in the village are the Consolidated School District, with 3,000 employees,
Chicago Bridge & Ironworks with 440, Diageo North America (a spirits brewing company) with
300, Edwards-Elmhurst Health with 245, and Meijer, Wal-Mart, Jewel-Osco, and Target.
36
10 Upscale Limited Service Hotel, Plainfield IL
TRAFFIC COUNT AT SITE LOCATION
TRANSPORTATION AND ACCESS
Automobile access to the property will be required, and regionally would involve taking the I-55
exit at Lincoln Highway or Main Street, and driving along either road to where they intersect at
Route 59, followed by heading west along Lockport Street, over the river to Van Dyke Rd, where
a left turn at the light will lead to the site.
Immediate access to the new property should be easy, and the site should have sufficient space
to provide parking.
CONCLUSION
The surrounding neighborhood is well suited to support an upscale hotel operation. The
complimentary mix of area retail, restaurants, and recreation options will be very attractive to
hotel guests, while the lack of nearby hotels of comparable orientation will reduce competition
for demand.
HOTEL MARKET ANALYSIS
INTRODUCTION
Chicago is the largest and most prominent hotel market in the Midwest. The position as a
transportation and commercial hub have enhanced the development the city as a major
convention center, once the leading city in terms of attendance, square footage of exhibit usage
and economic impact. The expansion of the Orlando and Las Vegas convention centers and
aggressive predatory pricing practices have slightly diminished the importance of the convention
market; however, it remains the dominant room demand generator in the downtown market
and contributes heavily to room demand throughout the metropolitan area. The diverse
manufacturing, healthcare, tourism financial industry and technology sectors all generate 37
11 Upscale Limited Service Hotel, Plainfield IL
significant demand within the area, supporting the nearly 110,000 hotel rooms in the Chicago
metropolitan market.
CHICAGO CBD HOTEL MARKET OVERVIEW
The heart and soul of the Chicago Metropolitan Statistical Area is the Chicago CBD (Central
Business District), which comprises over 1/3rd of the total rooms in the region, and may be over
2/5ths by 2019. While the subject is far from downtown Chicago, tracking CBD performance
shows broader trends in the core of the Chicago market, and has historically been the leading
indicator in overall Chicago hotel market performance.
TABLE 3: CHICAGO CENTRAL BUSINESS DISTRICT HOTEL PERFORMANCE
The historic trends shown above illustrate the cyclical nature of the Chicagoland market.
Typically, there’s a 6-year cycle of performance gains before a drop – the result of a recession
and/or an influx of new supply in the market driving down occupancies and rates. We saw a
similar pattern in 1995 before falling in 2001. The chart above shows the recovery up to 2007,
before dropping to new lows in 2009. From there, the economy recovered, with a sharp jump in
occupancy, followed by slow growth of rate. We note that we anticipate a dip in occupancy over
the short term, which we attribute to rapid hotel development downtown, rather than an
external shock. As such, the dip is expected to be mild.
SURROUNDING HOTEL MARKET OVERVIEW
SOUTH
The south market, a tract that covers a large geographic area roughly south of the city recovered
fairly quickly from the recession compared to other areas, going from a low occupancy of 51.6%
in 2009 to the mid 60’s by 2012. Rates in this market have improved over the same period, from
around $75 at the worst point, to about $93 today. Because the market tract covers a large
geographic territory, it is somewhat difficult to speak about the market in broad terms.
However, generally, it can be said to consist of two distinct types of hotels; highway and
industrial franchised properties built in a wave in the 1990’s and beyond, and older properties.
Many of the franchised properties are consequently near the end of their typical useful life, and
are renovating, rebranding, or closing. Some of these properties are being replaced with newer
hotels, which in general have been performing better than this set as a whole. This is most
50%
55%
60%
65%
70%
75%
80%
$0
$50
$100
$150
$200
$250 Historic and Projected Growth
ADR RevPAR OCCUPANCY
38
12 Upscale Limited Service Hotel, Plainfield IL
clearly seen in areas such as Tinley Park or Bloomingdale. Because of this shift, the market went
from 9,350 rooms in 2008 to 8,363 currently.
Year to Date data for 2017 indicates that the market is gaining rate year over year, but is about
flat in occupancy. Long term prospects indicate slow ADR growth with a near-term dip in
occupancy as around 400 more rooms are added to the market.
SOUTHWEST
While the south market improved over the course of the last 10 years, the southwest market
stayed essentially flat. Although it improved from the recessionary lows, it never succeeded in
gaining ground over its historic averages. Year to date data for this year indicate it will likely lose
occupancy compared to 2016, while long term RevPAR prospects remain essentially flat. While
some of this stagnation is attributable to flooding in 2012 slowing recovery, the market is full of
older supply than other areas.
TABLE 4: MARKET HISTORY AND PROJECTIONS
South Southwest Chicago
Occ ADR RevPAR Occ ADR RevPAR Occ ADR RevPAR
2008 58.60% $81.55 $47.79 59.00% $84.92 $50.10 72.09% $193.01 $137.42
2009 51.60% $75.83 $39.13 50.00% $78.23 $39.12 67.72% $161.49 $110.75
2010 56.40% $74.61 $42.08 53.70% $75.54 $40.56 69.65% $164.20 $118.19
2011 58.60% $76.56 $44.86 55.70% $77.17 $42.98 72.53% $171.73 $128.06
2012 62.10% $79.41 $49.31 58.60% $78.77 $46.16 75.20% $181.95 $140.86
2013 63.80% $81.49 $51.99 57.65% $79.81 $46.01 75.68% $198.77 $150.42
2014 66.81% $84.84 $56.68 58.65% $82.39 $48.32 74.18% $191.90 $142.35
2015 67.40% 91.04 $61.36 62.00% 87.02 $53.95 70.00% 142.50 $99.75
2016 66.40% $92.71 $61.56 62.00% $88.03 $54.58 69.10% $144.45 $99.81
2017 65.50% $93.00 $60.92 60.50% $90.67 $54.86 68.50% $144.00 $98.64
2018 66.81% $96.26 $64.31 61.11% $92.48 $56.51 71.50% $213.30 $152.51
2019 65.14% $99.62 $64.89 61.17% $94.33 $57.70 73.00% $217.04 $158.44
2020 63.51% $103.11 $65.49 61.47% $96.22 $59.15 74.50% $217.04 $161.69
Source: TR Mandigo & Company
COMPETITIVE SET
Hotel room demand is categorized as “demonstrated” demand, or that demand which can be
quantified by examining occupancies of existing hotels; “unsatisfied” demand, or that demand
which is turned away or denied at existing hotels because of capacity limits and finding
accommodations outside the defined competitive market; and “induced” demand, defined as
that demand which does not now seek accommodations in the market but which would, given an
acceptable quality hotel, the proper sales efforts and the availability of additional rooms supply
prefer to stay within the local market or change travel plans to use local facilities.
The market that the Upscale Limited Service Hotel draws its competitive properties from is a
fairly wide region, as discussed above. Though there is a local cluster of hotels in Joliet, it
consists of several older, midrange properties. Because the area is large geographically,
competition is drawn from up to 12 miles away, and includes mostly properties from Bolingbrook 39
13 Upscale Limited Service Hotel, Plainfield IL
to the northeast, and Naperville, to the north. The set of selected hotels includes the hotels
listed on the following page:
Holiday Inn & Suites Joliet Southwest UNDER Const. 120
Hilton Garden Inn Bolingbrook I 55 Oct 2015 129
Residence Inn Chicago Bolingbrook Jun 2017 103
Springhill Suites Chicago Bolingbrook Sep 2000 82
Hampton Inn Suites Bolingbrook Apr 2005 90
aloft Hotel Bolingbrook Oct 2009 155
Homewood Suites Aurora Naperville Jul 2017 146
Hotel Indigo Naperville Riverwalk Nov 2016 158
COMPETITIVE SET PERFORMANCE
The basis for future performance in our report comes from historic data, including that of STAR
reports, Trend reports, industry papers, and our own proprietary data, including a 57-year history
of the performance of the Chicago metropolitan area hotel industry from 1960 through 2017. In
our analysis of the industry, there is a distinctive cyclical pattern to occupancy performance. This
pattern develops as a result of increasing performance of properties until the market economics
support new development and upgrading of existing hotels. This, in turn, supports a higher
average daily rate, extending the development cycle past its peak, with overbuilding resulting in
declining occupancies and an extended recovery period.
We are currently in the late stage of the development cycle, as evidenced by the numerous
projects opening in the city of Chicago itself. Typically, in this phase of the cycle, other markets
become more appealing to investors, including the surrounding metro area. It is our conclusion
that this cyclical pattern will continue, with strong performance engendering new construction
and upgrading of existing properties, and that eventually new development will outpace
increases in demand, leading to a decline in overall occupancy and a recovery period while new
rooms are absorbed by the economy. This is what we see as a baseline scenario.
Although the historic data for this competitive set only begins in 2011, regional data going back to 2001
indicates that this cyclical pattern holds, with data from the competitive set doubly mirroring that of
the region from 2011-current. Occupancies in the region overall hit their low point in 2009 and began
to recover somewhat over the next two years, while rates bottomed out in 2010 before growing again.
While the data for 2009 and 2010 is not present in the comp set, this pattern almost assuredly was
repeated there as well. This shows a competitive set that was hit by the recession and recovered in
occupancy first, followed by rate.
The results for the competitive market are somewhat mixed, but overall fairly strong.
Occupancies in the market rose above 70% for 2013-2015 and then dropped somewhat in 2016-
17. Rates were also higher than the region by around $10. These are both positive signs for the
proposed hotel. We do caution that these results are extremely biased towards Bolingbrook and
Naperville, and that nearby Joliet likely underperforms these results.
Although the results show a drop in occupancy, this is due entirely to a large increase in supply of
new rooms between 2015 and 2017. Four new hotels opened during this time with a fifth
scheduled for early 2018. This resulted in a change in supply of around 25% in two consecutive
years, with demand increasing at a slower rate. Over the historic period this translated into a
Year Over Year increase of 10.2% and 8.42% respectively. Typically, when a new hotel opens,
occupancies will drop regionally, as the new hotel engages in its ramp up period, attempting to
capture new and existing demand until it is firmly established in a process that takes around 18
months to 3 years. The number of new properties opening in quick succession has had a fairly 40
14 Upscale Limited Service Hotel, Plainfield IL
strong impact on the comp set, but it still outperforms the overall region. In other words,
although the impact is dramatic, the market also appears fairly resilient.
We anticipate a slight drop when the proposed property opens from increased supply.
Regionally, there may be a sharper drop, particularly in Bolingbrook, Naperville, and areas such
as Joliet, due to rapid supply growth.
It is expected with an additional hotel opening next year, that overall occupancies for the
competitive set could reach a low of 62.3% in 2018, though ADR will continue to increase slowly
during the same period. We note that this effect is magnified due to the relatively close
proximity of the competitive hotels to each other in two distinct clusters in Naperville and
Bolingbrook, leading to overbuilding in those two areas. Plainfield, being some distance away, is
likely to be insulated from these concerns, but may have a slower ramp up period than these
other markets as it is not an established hotel destination and is not along a major highway.
In our forecasts, we have included the positive effects of a strong reservation system on the new
hotels, which will add a baseline of inelastic demand that other brands will be unable to capture.
Further, we anticipate some induced demand will enter the area from surrounding markets,
along with a slight uptick in demand previously unaccommodated due to occasional compression
periods. Despite overall demand growth, it is most likely that supply will outpace it for several
years.
TABLE 5: COMPETITIVE SET PERFORMANCE CHARTS
Source: 2017 STR Global
WEEKDAY/WEEKEND MARKET PERFORMANCE
In our interviews and through research, the market in the area was found to draw demand from a
variety of sources, including group or other event, hospital contract, extended stay, OTC, and CRS. As
discussed in the competitive set section, different hotels in the area attract these categories in different
percentages, with the general rule being that weekday business tends to come from negotiated
corporate, while weekends consist of groups and events. Of these, weekend demand tends to
command the highest price.
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
Comp Set Historic and Projected
RevPAR ADR OCC
41
15 Upscale Limited Service Hotel, Plainfield IL
Day of week performance indicates a strong mix of weekday commercial and secondary weekend
leisure business. Given the variety of these properties, it can be hypothesized that some hotels
may focus on commercial demand while others, such as the hotel Indigo, may receive a decent
portion of their business from groups, particularly given the extreme difference between
Saturday and Sunday. Notably, the low of around 40% occupancy on Sunday is the typical
inelastic demand for properties in the region.
TABLE 6: AVERAGE OF 2014-2017 DAILY PERFORMANCE OF COMPETITIVE SET
MONTHLY PERFORMANCE
Monthly the competitive set shows a typical “Chicago” pattern, with some exceptions. The monthly
pattern of business indicates a strong summer season with a typical late summer bump.
Additionally, spring ramp ups are somewhat stronger than other markets, while winter
experience a typical midwestern drop to just above 40%.
The intervening months remain relatively high, indicating that the demand for other activities, such as
business and leisure, overlap with this period. As seen in the months of February through April, there is
a decent floor of inelastic demand, of around 45%. Additionally, ramp up hits around 70% in June,
typical of the region
TABLE 7: CHARTED DATA MONTHLY OCCUPANCY TRENDS
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
Sun Mon Tue Wed Thu Fri Sat
Day of Week
RevPAR ADR OCC
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
JanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSeptOctNovComp Set Monthly
RevPAR ADR OCCec
Source: Smith Travel Research 2017
42
16 Upscale Limited Service Hotel, Plainfield IL
PROJECTED GROWTH IN MARKET
Based on historic growth in demand following recessions, patterns of business and anticipated capture
of demand by the proposed property we anticipate continued stable demand in the competitive
market with anticipated slow growth in demand.
An influx of rooms entering into the market will continue to surpass regional occupancy near term, but
we continue to anticipate that overall demand will continue to grow. In particular, as there is a
significant geographic distance between the proposed upscale property and other area properties, the
reservation systems should provide a higher than typical increase in supply compared to other res
systems. In addition, as discussed earlier, 2015 was a particularly strong year, while 2016 and YTD
2017 show slight declines. Calculations to year end show a dip to 64% in 2017, while the opening of f
other western suburban projects will drive occupancies in the competitive set down to around 57% in
2018. However, despite the rapid supply increase which will nearly double from 2014 to 2019,
demand is expected to continue to grow strongly as well. Because there are no other known potential
new developments after 202 we are aware of at this time, we have projected occupancies as
recovering in the next few years, though we have capped future performance at a lower level than the
highs of 2015.
We anticipate that rates will climb upward in 2018 and beyond, though at a muted rate when
compared to the nearly double-digit percentages seen in the recovery period following the 2008
recession.
TABLE 8: SUPPLY AND DEMAND GROWTH
Historic %CHG
OCC ADR RevPAR OCC ADR RevPAR SUP %CHG DEM %CHG
2011 68.5% $99.52 $68.18 173375 118771
2012 68.7% $101.57 $69.81 0.3%2.1%2.4% 173375 0.0%119163 0.3%
2013 70.4% $103.38 $72.77 2.4% 1.8%4.2% 173375 0.0%122046 2.4%
2014 74.4% $106.72 $79.40 5.7%3.2%9.1% 173375 0.0%129001 5.7%
2015 72.0% $113.74 $81.90 -3.2% 6.6%3.1% 185243 6.8%133396 3.4%
2016 67.4% $114.58 $77.22 -6.4%0.7%-5.7% 230098 24.2%155085 16.3%
2017 64.37% $117.44 $75.59 -4.5% 2.5% -2.1% 294013 26.0%189246.1 22.0%
2018 56.6% $120.96 $68.48 -12.0%3.0%-9.4%365730 11.3%207,051 9.4%
2019 56.0% $123.38 $69.11 -1.1% 2.0% 0.9% 402230 9.1% 225,301 8.8%
2020 59.1% $125.85 $74.37 5.5%2.0%7.6%402230 0.0%237,692 5.5%
2021 61.5% $128.37 $78.89 4.0% 2.0% 6.1% 402230 0.0% 247,200 4.0%
2022 63.3% $130.93 $82.88 3.0%2.0%5.1%402230 0.0%254,616 3.0%
2023 64.6% $133.55 $86.23 2.0% 2.0% 4.0% 402230 0.0% 259,708 2.0%
2024 65.9% $136.22 $89.71 2.0%2.0%4.0%402230 0.0%264,903 2.0%
PERFORMANCE OF SUBJECT PROPERTY
We have projected the performance of the proposed property based on its ability to position
itself in the market and create and promote a new market, drawing demand to its location from 43
17 Upscale Limited Service Hotel, Plainfield IL
existing competitive properties, the Hyatt reservation system, as well as capturing displaced
demand which would prefer to stay in an upscale extended stay but currently electing to stay in
properties other than those defined in the competitive set.
The hotel will be a prototypical select service upscale extended stay franchised hotel which
would be the only hotel in the immediate area. It will provide a unique flag with strong
amenities, including a large amount of meeting space.
A key factor in the proposed hotel’s success will be in creating connections within the community
and promoting the project regionally to attract guests to an untapped location, which should be
eased somewhat by the upscale extended stay accommodations and strong reputation of Hyatt
properties. When considering pre-opening campaigns, it will be important to analyze the sources
of business within the community, as well as in a radius outside the village, and attempt to focus
on which sources of business would be the most profitable. While corporate contract business
will be necessary, careful consideration should be made so that rate is not set too low. While the
hotel will be competitive with the hotels in Matteson due to its location, it should not attempt to
compete against those properties on rate, as it is difficult to raise corporate rates significantly
year over year.
Projections are based on competitive advantages of a “new construction” hotel with proximity to
area attractions, commercial businesses, strong current reputation, and easy transportation.
The subject property will see an opening in mid-2019,, skipping the slow months of January
through April, and finish the year with occupancy of 56%. This should be around that of the
competitive set, owing, as discussed earlier, to regional conditions. During this period it will be
marketing aggressively while it establishes itself in the market. This ramp-up period will continue
through 2023 before stabilizing.
It should be noted that other development construction business is not a requisite of hotel
success. In the event that other projects are brought online, we anticipate the performance of
the subject to be boosted to around 58% in its opening year, climbing up to around 69% in the
stabilized period. These numbers are still highly indicative of a successful property and
significantly higher than overall regional performance.
TABLE 9: PERFORMANCE OF SUBJECT PROPERTY
Competitive Set Performance Subject Property Performance
OCC ADR RevPAR OCC ADR RevPAR
TYPICAL YEAR 56.61% $120.96 $68.48
2019 56.0% $123.38 $69.11 56.0% $126.08 $70.60
2020 59.1% $125.85 $74.37 60.0% $129.23 $77.54
2021 61.5% $128.37 $78.89 62.0% $132.46 $82.12
2022 63.3% $130.93 $82.88 65.0% $135.77 $88.25
2023 64.6% $133.55 $86.23 66.0% $139.16 $91.85
2024 65.9% $136.22 $89.71 67.0% $142.38 $95.39
44
18 Upscale Limited Service Hotel, Plainfield IL
Source: Projections – TR Mandigo & Co.
We the subject property capturing more than its fair-share of the market during its ramp up
period, and achieving occupancy above the competitive set in the long term. Again, this is due
to the strong proposed flag and new construction, with a disparate competitive set more
susceptible to the influx or rooms.
As shown below, the hotel outperforms the competitive set in all periods in all metrics, owing to
its newer construction, hybrid extended-stay nature allowing for a higher average occupancy,
and its upscale class. Note that average ADR is not expected to be even across the year, meaning
winter periods will likely see ADR in or around $120 while compression periods may be
significantly higher.
TABLE 10: COMPARISON TO COMPETITVE SET
Competitive Set Subject Property
Supply Occ Demand Occ Demand Fair Share % Fair Share
2016 230,098 67.40% 155,085
2017 294,013 64.37% 189,246
2018 365,730 56.61% 207,051
2019 402,230 56.01% 225,301 56% 20440 5.08% 99.98%
2020 402,230 59.09% 237,692 60% 21900 5.44% 101.53%
2021 402,230 61.46% 247,200 62% 22630 5.63% 100.88%
2022 402,230 63.30% 254,616 65% 23725 5.90% 102.68%
2023 402,230 64.57% 259,708 66% 24090 5.99% 102.22%
MARKET SEGMENTATION
In our projections, we have anticipated a relatively unique mix of business when compared to
existing properties. While this targeting may wind up displacing some business from Joliet, it
should target a higher rate, and thus, higher level employee, than existing contracts staying
there, offering smaller discounts compared to nearby hotel’s contract business. Conversely, it
will not be able to compete against Naperville or Bolingbrook based business contracts. As this
segment will be highly competitive, we are not suggesting or advising that no discounting should
occur, rather, that rates in general should be higher overall to accommodate this discounting. In
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
2019 2020 2021 2022 2023
Proposed Hotel
RevPAR ADR OCC
45
19 Upscale Limited Service Hotel, Plainfield IL
practice this means that although the projections anticipate a $125 typical year average rate, this
should not suggest that the rack rate be that low. This is something that an established
management company should be aware of and able to handle as part of their revenue
management strategy, and it is our recommendation that such a company be hired to run the
operations.
In our day of the week section, we noted that the market has a mid-week occupancy in the near
80% range. The proposed property should perform strongly in this market, though it will take a
concerted and aggressive marketing effort to develop a sufficient demand base from the
commercial sector, in particular because it will be higher priced than other area properties. To
achieve this mix, it will need to go after meetings, conferences, and higher level corporate
functions. We note that these events have peaks in the spring and fall seasons, making the
proposed property likely to perform similar to the regional demand patterns noted in the
competitive set section.
Overall, we anticipate a strong Central Reservation System contribution of around 25%, with
Online Travel Companies contributing about 25%. We anticipate around 20 rooms of business
from the Hospital alone, or around 17%, with group business, with other corporate making up to
an additional 8% of stays. Groups, social, religious, educational, and fraternal events should
account for 25% of the business. Extended stay leisure and corporate business will likely account
for around 35% of business, lower than a fully dedicated extended stay property such as a
Residence Inn, and will most likely come through central or outside reservation channels.
PIPELINE
At the current time, we are unaware of any additional properties planned for the immediate
area, though the radius of around 15 miles will likely see the construction of around 400 rooms in
the future. Regionally, development in the Chicagoland area will continue for a period of around
3 more years, with a likely lull in construction after that time.
CONCLUSION
We find there is ample support to indicate the success of a new development Upscale Limited
Service Hotel. The demographics, amenities, and job base are able to support a new hotel, and
will be boosted greatly by the development of other complimentary commercial businesses.
STATEMENTS OF ESTIMATED ANNUAL OPERATING RESULTS
We have prepared a statement of Estimated Annual Operating Results for a Typical Year in 2018 dollars for the
subject property and for the first partial year of operation and the next five full years of operation thereafter. The
following table summarizes the results of operation for the property over this period.
Table 11: Summary of Operating Results
Proposed Upscale Limited Service Hotel Property
Year Total Revenue Income (1) Ratio to Revenue
Typical Year $2,833,000 $921,000 32.5%
2019* $1,750,000 $520,000 29.7%
2020 $2,877,000 $933,000 32.4%
2021 $3,042,000 $1,008,000 33.1%
2022 $3,285,000 $1,159,000 35.3% 46
20 Upscale Limited Service Hotel, Plainfield IL
2023 $3,408,000 $1,217,000 35.7%
2024 $3,534,000 $1,279,000 36.2%
(1) Income before other fixed charges such as interest, amortization, depreciation and income
taxes.
*7 months of operation
In the analysis that follows we present the basis for the estimate of the prospective cash flow from operations
before debt service and income taxes for the proposed Upscale Limited Service Hotel for the first six years of
operation from the year 2019 to 2024 (The 2019 operation reflects a 7-month period with an opening in June
2019). The estimates were based on the following assumptions:
The property will be developed and ready for operation in June 2019.
The property will be designed as the current proto-type of its selected brand, will be consistent with
the quality of the surrounding office, retail and commercial and will carve a niche from the upper end
of the extended stay market currently served by area hotels, establishing itself as the newest limited
service product serving the university and the numerous manufacturing and commercial firms in the
immediate area.
The property will provide infrastructure in terms of meeting space (1,800 square feet), recreational
facilities and service levels consistent with its prototypical franchise standard
The property will be competently managed by an experienced operator throughout the analysis
period.
The property will achieve the levels of utilization as set forth in this report.
All amounts have been rounded to the nearest one thousand dollars and account classifications
generally confirm to the definitions prescribed by the American Lodging Association in the Uniform
System of Accounts for Hotels.
All gross revenue amounts and the ratios presented on the Statements of Estimated Annual
Operating Results were computed on the basis of the revenue and expenses expressed in constant
2018 dollars. They were then adjusted for the effect of inflation, the ramp up time required to
develop the projected gross volumes as set forth and pricing and operations policy adjustments over
time.
A 2.5 percent per annum rate of inflation has been applied for revenues and expenses through the
analysis period based on the current level of economic growth and inflation and as generally forecast
by econometric analysis of the economy except that a higher growth rate was used during the initial
years to reflect pricing policy and booking policy following a brief introductory pricing structure
during the initial year of operation, recovering to stabilized levels at the stated inflation rate by year
three of the operation.
The comparative data provided is drawn from STR’s Host Almanac 2016 presenting year-end 2015
operating results. Data for telecommunication has been consolidated with Other Operated
Department results as of 2015. We show food revenue consisting of commissions for food served in
the meeting space for meals and breaks by outside services, and we list other f & b revenue as
reflecting the rental of the meeting space to area forms and organizations., so we used total US
property results for that category. All other data is presented for Limited Service Hotels with the
designations as stated.
REVENUES
Rooms Revenue is calculated based upon the number of available room the occupancy level and the
average daily rate as set forth in this study.
Food and Beverage Revenue is comprised of three different revenue sources, Food
Revenue; Beverage Revenue and Other Food and Beverage Department Revenue
which is the rental charge for the meeting space for business and social occasions. 47
21 Upscale Limited Service Hotel, Plainfield IL
Food Revenue represents commission from food delivery to meetings, coffee breaks, and catering
surcharges. This is estimated based on $.13 per occupied room or $8,000. Additional revenue is derived from
providing coffee break service for meeting activity. This is based on 120 functions per year (each even using
approximately 50% of the meeting space) with 50 persons in attendance on average.
Other Food and Beverage Revenue is the revenue from daily rental of the meeting space. We have
estimated the achievable meeting room rental income from approximately 120 events per year at $150. An event
can consist of a brief rental of from 2 to 4 hours up to full day or multiple day rentals for longer functions. Total
Other Food and Beverage Department Revenue is estimated at $18,000 annually.
Rentals and Other Income are based on $11,498 or $.50 per occupied room in pay per view movies,
vending income, commissions and other miscellaneous sources of revenue. We selected a revenue level
consistent with the price point, anticipated amenities and services, and location of the property. A Table of
comparables follows:
Table 12: Rentals and Other Income per Occupied Room
Limited Service Hotels
Average for All Properties $1.17
Small Metro $.49
Upper Midscale $1.03
Projected for Subject Property $.50
Other Operated Departments are based on estimated revenue derived from the operation of the
gift/sundry shop sales, revenues from laundry and valet, and other miscellaneous income. We based this on a
$34,493 level in current value dollars, or $1.50 per occupied room, assuming commission revenue from local
service providers and the revenue from the gift shop/sundry operation. The rates are higher than the comparables
because of the commercial market location and expected retail sales through a sundry operation for the extended
stay guest.
Table 13: Other Operated Departments per Occupied Room
Limited Service Hotels
Average for All Properties $1.68
Suburban $1.01
Upscale $2.62
Projected for Subject Property $1.50
DEPARTMENTAL EXPENSES
Rooms Departmental Expenses are based on a per available room operating cost of $6,260, The
operating ratio of 22.5 percent is comparable to that presented in industry averages and comparisons, but is
driven by a higher cost to provide the continental breakfast service, off-set by the lower cost of housekeeping
associated with smaller community hotel operations, and is also impacted by a higher average daily rate
achievement than that of properties in the comparison. This expense category includes central reservation,
frequent traveler incentive programs and other rooms related franchise charges. The comparable for both dollars
per available room and percent of room revenues are presented below:
48
22 Upscale Limited Service Hotel, Plainfield IL
Table 14: Room Department Expenses
Limited Service Hotels Per Room Ratio
Average for All Properties $7367 23.4%
Suburban $5,822 21.7%
Upscale $9,830 23.2%
Subject Property $6,260 22.5%
Food and Beverage and Other F & B Expenses are based on 33.3% departmental operating costs.
Other Operated Departments expenses are estimated at 50 percent of revenues, consistent with the
current concept for this type and scale of operation, running a small sundry operation through the front office, and
collecting commissions as net of guest charges minus contracted costs for cleaning, valet and other services.
Results of this department are property specific. The tabulated comparable results are presented below:
Table 15 Other Operated Departments
Limited Service Hotels
Average for All Properties 64.8%
Suburban 62.7%
Upscale 65.1%
Projected for Subject Property 50%
UNDISTRIBUTED EXPENSES
Administrative and General expenses are based on a per available room operating cost of $2,250 in
current value dollars. This is comparable to the operating results of luxury full service hotels in the upper rate
category and in urban areas. We have included start-up inefficiencies for the first two years of operation to reflect
a more intensive management team in getting the property open and stabilized.
Table 16: Administrative and General
Limited Service Hotels
Average for All Properties $2,846
Suburban $2,454
Upscale $3,546
Projected for Subject Property $2,250
Marketing is based on a $2,200 per available room budget, providing $220,000 for marketing and
promotion of the property. The more conservative amounts reflect the replacement of the existing property with
a new construction Holiday Inn Express that already has a built-in market. Combined with an aggressive pre-
opening budget, this should enable the property to adequately penetrate the local market and continue to develop
its client base. We have included some additional start-up costs in the first-year numbers. This expense category
includes chain wide assessments and local and regional marketing programs.
Table 17: Marketing
Limited Service Hotels
Average for All Properties $1,592
Suburban $1,323
Upscale $2,220
Projected for Subject Property $2,200
49
23 Upscale Limited Service Hotel, Plainfield IL
Franchise Fees were estimated at 4.4 percent of room revenues. This includes royalty payments and
other franchise related fees. The costs of marketing and reservation system are included in the appropriate
categories. The total franchise fees including these other costs would be approximately 7.5 to 9.5 percent of total
revenues.
Property Operations and Maintenance costs are based on the industry averages for similar size and type
properties, and are equal to $1,550 per available room. Our estimates include a reduced cost during the first three
years when much of the equipment is under warranty and the property is new.
Table 18: Property Operations and Maintenance
Limited Service Hotels
Average for All Properties $1,524
Suburban $1,1368
Upscale $1,852
Projected for Subject Property $1,550
Energy costs are likewise based on comparable operations from industry databases. The estimated
amount of $1,450 per available room assumes an energy efficient construction and operation that is consistent
with the current “Green” movement.
Table 19: Energy Cost
Limited Service Hotels
Average for All Properties $1,275
Suburban $1,184
Upscale $1,541
Projected for Subject Property $1,450
FIXED CHARGES
Real Estate and Property Taxes have been estimated at 7.9 percent of total revenues, or a level of
$225,000 for the property. Based on the location, type of property, and an aggressive appeal process, we believe
the property can achieve this tax level. We have included in our forecast for the first six years of operation (five
full years and the initial partial year) a reduced real estate tax level during the ramp up period, with full real estate
taxes coming into play in year four. The result of this is a slight drop in profitability in year four, with continued
“normalized” real estate tax levels.
Table 20: Real Estate Taxes
Limited Service Hotels
Average for All Properties $1,542
Suburban $1,146
Upscale $2,734
Projected for Subject Property $2,250
Building and Contents Insurance was estimated on the basis of $300 per available room, and should
provide for customary coverage of building and contents as well as the liability for van service and swimming pool
and recreation equipment. Other categories of insurance, such as business interruption, boiler, bonding, etc. have
been included in the estimated Administrative and General category.
Table 21: Building and Contents Insurance
Limited Service Hotels
Average for All Properties $320
Suburban $274
Upscale $359
Projected for Subject Property $300 50
24 Upscale Limited Service Hotel, Plainfield IL
Reserve for Replacement is budgeted at 5 percent of total revenues, taking into account the need to
continuously refurbish the property. This amount is consistent with the results of the recent ISHC study on Capital
Expenditure that determined this as a minimum amount to retain the competitive status of a property. The
amount is phased in over the first three years beginning with 3 percent in 2019 and reaching 5 percent by year 3
(2021).
The Statements of Estimated Annual Operating Results for a typical year, expressed in 2018 dollars and for the
period 2019 through 2024, expressed in inflation adjusted dollars are presented on the following pages.
51
25 Upscale Limited Service Hotel, Plainfield IL
Table 22: Typical Year of Operations
PERCENTAGE OF OCCUPANCY 63%
AVERAGE DAILY RATE $121.00
REVENUES: AMOUNT RATIO AMOUNT\ROOM
ROOMS 2,782,000$ 98.2% 27,820$
OTHER F & B 6,000 0.2% 60
RENTALS & OTHER INCOME 11,000 0.4% 110
OTHER OPERATED DEPTS 34,000 1.2% 340
TOTAL REVENUE 2,833,000$ 100.0% 28,330$
DEPARTMENTAL EXPENSES (1):
ROOMS 626,000$ 22.5% 6,260$
OTHER F & B 2,000 33.3% 20
OTHER OPERATED DEPTS 17,000 50.0% 170
TOTAL 645,000$ 22.8% $6,450
TOTAL OPERATED INCOME 2,188,000$ 77.2% 21,880$
UNDISTRIBUTED EXPENSES:
ADMINISTRATIVE & GENERAL 225,000$ 7.9% 2,250$
MANAGEMENT FEE (2) 0 0.0% 0
MARKETING 220,000 7.8% 2,200
FRANCHISE FEES (3) 125,000 4.4% 1,250
PROPERTY OPERATION & MAINT. 155,000 5.5% 1,550
ENERGY 145,000 5.1% 1,450
TOTAL 870,000$ 30.7% 8,700$
INCOME BEFORE FIXED CHARGES 1,318,000$ 46.5% 13,180$
FIXED CHARGES:
REAL ESTATE & PROPERTY TAXES 225,000$ 7.9% 2,250$
BUILDING & CONTENTS INSURANCE 30,000 1.1% 300
TOTAL 255,000$ 9.0% 2,550$
INCOME BEFORE RESERVE 1,063,000$ 37.5% 10,630$
RESERVE FOR REPLACEMENT 142,000$ 5.0% 1,420$
INCOME BEFORE OTHER DEDUCTIONS (5) 921,000$ 32.5% 9,210$
NOTES:(1)
(2)
(3)
(4)
(5)
* Totals may not add due to rounding.
THIS STATEMENT SHOULD BE READ SUBJECT TO THE COMMENTS CONTAINED IN THE ATTACHED REPORT
STATEMENT OF ESTIMATED ANNUAL OPERATING RESULTS
FOR A TYPICAL YEAR OF OPERATION IN 2018 DOLLARS
BASED ON 100 AVAILABLE ROOMS. GENERATED 25-JAN-18; REVISED 25-JAN-18 2:21 PM
Proposed 100 Room Hotel
Plainfield, Illinois
Each departmental expense ratio is based on the department's estimated
revenue and does not add to the total departmental expense ratio.
The basic management fee is normally classified as an administrative and
general expense.
Royalties only; franchise fees are normally classified as marketing expenses.
Income before other fixed charges such as interest, amortization,
depreciation and income taxes.
Rent may be at base rate, percentage rate, or a base + percentage.
52
26 Upscale Limited Service Hotel, Plainfield, IL Table 23: First 6 Years of Operation 56% at $126.00 60% at $129.00 62% at $132.00REVENUES: AMOUNT RATIO AMT\ROOM AMOUNT RATIO AMT\ROOM AMOUNTRATIO AMT\ROOM ROOMS 1,717,000$ 98.1% 17,170$ 2,825,000$ 98.2% 28,250$ 2,987,000$ 98.2% 29,870$ OTHER F & B3,0000.2%30 5,0000.2%50 6,0000.2%60 RENTALS & OTHER INCOME8,0000.5%80 12,0000.4%120 12,0000.4%120 OTHER OPERATED DEPTS22,0001.3%220 35,0001.2%350 37,0001.2%370 TOTAL REVENUE 1,750,000$ 100.0% 17,500$ 2,877,000$ 100.0%28,770$ 3,042,000$ 100.0% 30,420$DEPARTMENTAL EXPENSES (1): ROOMS 424,000$ 24.7% 4,240$ 656,000$ 23.2% 6,560$ 673,000$ 22.5% 6,730$ FOOD & BEVERAGE00.0%000.0%000.0%0 OTHER F & B1,00033.3%10 2,00040.0%20 2,00033.3%20 OTHER OPERATED DEPTS12,00054.5%120 18,00051.4%180 18,00048.6%180TOTAL 437,000$ 25.0% 4,370$ 676,000$ 23.5% 6,760$ 693,000$ 22.8% 6,930$TOTAL OPERATED INCOME 1,313,000$ 75.0% 13,130$ 2,201,000$ 76.5% 22,010$2,349,000$ 77.2% 23,490$UNDISTRIBUTED EXPENSES: ADMINISTRATIVE & GENERAL 166,000$ 9.5% 1,660$ 234,000$ 8.1% 2,340$ 241,000$ 7.9% 2,410$ MANAGEMENT FEE (2)00.0%000.0%000.0%0 MARKETING163,0009.3%1,630 252,0008.8%2,520 236,0007.8%2,360 FRANCHISE FEES (3)77,0004.4%770 127,0004.4%1,270 134,0004.4%1,340 PROPERTY OPERATION & MAINT.91,0005.2%910 148,0005.1%1,480 159,0005.2%1,590 ENERGY94,0005.4%940 149,0005.2%1,490 155,0005.1%1,550TOTAL 591,000$ 33.8% 5,910$ 910,000$ 31.6% 9,100$ 925,000$ 30.4% 9,250$INCOME BEFORE FIXED CHARGES 722,000$ 41.3% 7,220$ 1,291,000$44.9%12,910$ 1,424,000$ 46.8% 14,240$FIXED CHARGES: REAL ESTATE & PROPERTY TAXES 128,000$ 7.3% $1,280 211,000$ 7.3% $2,110 232,000$ 7.6% $2,320 BUILDING & CONTENTS INSURANCE21,0001.2%210 32,0001.1%320 32,0001.1%320TOTAL 149,000$ 8.5% 1,490$ 243,000$ 8.4% 2,430$ 264,000$ 8.7% 2,640$INCOME BEFORE RESERVE 573,000$ 32.7% 5,730$ 1,048,000$ 36.4% 10,480$ 1,160,000$ 38.1% 11,600$RESERVE FOR REPLACEMENT 53,000$ 3.0% 530$ 115,000$ 4.0% 1,150$ 152,000$ 5.0% 1,520$INCOME BEFORE OTHER DEDUCTIONS (5) 520,000$ 29.7% 5,200$ 933,000$ 32.4% 9,330$ 1,008,000$ 33.1% 10,080$NOTES:(2) The basic management fee is normally classified as an administrative and general expense. (3) Franchise fees are normally classified as marketing expenses.2.667(4) Rent may be at base rate, percentage rate, or a base + percentage. (5) Income before other fixed charges such as interest, amortization, depreciation, and income taxes.*Totals may not add due to rounding.THIS STATEMENT SHOULD BE READ SUBJECT TO THE COMMENTS CONTAINED IN THE ATTACHED REPORTJAN-DEC 2021(1) Each departmental expense ratio is based on the department's estimated revenue and does not add to the total departmental expense ratio.Proposed 100 Room HotelPlainfield, IllinoisSTATEMENT OF ESTIMATED ANNUAL OPERATING RESULTSBASED ON 100 AVAILABLE ROOMS. GENERATED 25-JAN-18; REVISED 25-JAN-18 2:22 PMOCCUPANCY AND ADR:YEAR #:PERIOD:1.6670.667JUN-DEC 2019 JAN-DEC 2020 53
27 Upscale Limited Service Hotel, Plainfield, IL 65% at $136.00 66% at $139.00 67% at $142.00REVENUES: AMOUNT RATIOAMOUNT\ROOM AMOUNT RATIOAMOUNT\ROOM AMOUNT RATIOAMOUNT\ROOM ROOMS3,227,000$ 98.2% 32,270$ 3,349,000$ 98.3% 33,490$ 3,473,000$ 98.3% 34,730$ OTHER F & B7,0000.2%70 7,0000.2%70 7,0000.2%70 RENTALS & OTHER INCOME12,0000.4%120 12,0000.4%120 13,0000.4%130 OTHER OPERATED DEPTS39,0001.2%390 40,0001.2%400 41,0001.2%410 TOTAL REVENUE 3,285,000$ 100.0% 32,850$ 3,408,000$ 100.0% 34,080$ 3,534,000$ 100.0% 35,340$DEPARTMENTAL EXPENSES (1): ROOMS 692,000$ 21.4% 6,920$ 711,000$ 21.2% 7,110$ 729,000$ 21.0% 7,290$ FOOD & BEVERAGE00.0%000.0%000.0%0 OTHER F & B2,00028.6%20 2,00028.6%20 2,00028.6%20 OTHER OPERATED DEPTS19,00048.7%190 19,00047.5%190 20,00048.8%200TOTAL 713,000$ 21.7% 7,130$ 732,000$ 21.5% 7,320$ 751,000$ 21.3% 7,510$TOTAL OPERATED INCOME 2,572,000$ 78.3% 25,720$ 2,676,000$ 78.5% 26,760$ 2,783,000$ 78.7% 27,830$UNDISTRIBUTED EXPENSES: ADMINISTRATIVE & GENERAL 249,000$ 7.6% 2,490$ 257,000$ 7.5% 2,570$ 263,000$ 7.4% 2,630$ MANAGEMENT FEE (2)00.0%000.0%000.0%0 MARKETING244,0007.4%2,440 251,0007.4%2,510 257,0007.3%2,570 FRANCHISE FEES (3)145,0004.4%1,450 151,0004.4%1,510 156,0004.4%1,560 PROPERTY OPERATION & MAINT.172,0005.2%1,720 176,0005.2%1,760 182,0005.1%1,820 ENERGY162,0004.9%1,620 167,0004.9%1,670 173,0004.9%1,730TOTAL 972,000$ 29.6% 9,720$ 1,002,000$ 29.4% 10,020$ 1,031,000$ 29.2% 10,310$INCOME BEFORE FIXED CHARGES 1,600,000$ 48.7% 16,000$ 1,674,000$ 49.1% 16,740$ 1,752,000$ 49.6% 17,520$FIXED CHARGES: REAL ESTATE & PROPERTY TAXES 244,000$ 7.4% $2,440 253,000$ 7.4% $2,530 261,000$ 7.4% $2,610 BUILDING & CONTENTS INSURANCE33,0001.0%330 34,0001.0%340 35,0001.0%350TOTAL 277,000$ 8.4% 2,770$ 287,000$ 8.4% 2,870$ 296,000$ 8.4% 2,960$INCOME BEFORE RESERVE 1,323,000$ 40.3% 13,230$ 1,387,000$ 40.7% 13,870$ 1,456,000$ 41.2% 14,560$RESERVE FOR REPLACEMENT 164,000$ 5.0% 1,640$ 170,000$ 5.0% 1,700$ 177,000$ 5.0% 1,770$INCOME BEFORE OTHER DEDUCTIONS (5)1,159,000$ 35.3% 11,590$ 1,217,000$ 35.7% 12,170$ 1,279,000$ 36.2% 12,790$NOTES:Proposed 100 Room HotelPlainfield, IllinoisSTATEMENT OF ESTIMATED ANNUAL OPERATING RESULTSBASED ON 100 AVAILABLE ROOMS. GENERATED 25-JAN-18; REVISED 25-JAN-18 2:22 PM*Totals may not add due to rounding.THIS STATEMENT SHOULD BE READ SUBJECT TO THE COMMENTS CONTAINED IN THE ATTACHED REPORT5.667JAN-DEC 2024OCCUPANCY AND ADR:(1) Each departmental expense ratio is based on the department's estimated revenue and does not add to the total departmental expense ratio.(2) The basic management fee is normally classified as an administrative and general expense. (3) Franchise fees are normally classified as marketing expenses.(4) Rent may be at base rate, percentage rate, or a base + percentage. (5) Income before other fixed charges such as interest, amortization, depreciation, and income taxes.YEAR #: 3.667 4.667PERIOD: JAN-DEC 2022 JAN-DEC 2023 54
28 Upscale Limited Service Hotel, Plainfield, IL Table 24: DCF Valuation ASSUMPTIONS:43. Renovation Costs: Unit Total38. Discount Rate: 11.5% 40. Costs of Sale: 3.0% Quantity Units Value Value11.0%(1) - systems -$ per system -$ 10.5% 41. Avg Annual Inflation Rate: 2.5% / year, or (2) - systems -$ per system -$ 39. Overall Rates: 0.20598% monthly (3) - rooms -$ per room -$ A. Current, Hi Value- 8.0% 42. CRITICAL DATES: (4) - rooms -$ per room -$ B. Current, Low Value- 8.5% 1st Forecast Year Open Date: 01-Jun-19 (5) - rooms -$ per room -$ C. Reversion- 9.0% Apprs'l "As Of" Date: 25-Jan-18-$ Months- "As Of" Date to Opening: 14 44. PIP Cost: -$ Income P.V. @ 11.5% P.V. @ 11.0% P.V. @ 10.5% Low Value High ValueYear Before Other P.V. Present P.V. Present P.V. Present Typical Year NOI $921,000 $921,000Number Year Deductions Factor Value Factor Value Factor Value Divided by OAR 0.085 0.0800.667 2019 520,000 0.9300 483,601 0.9328 485,052 0.9356 486,514 Indicated Value $10,835,294 $11,512,5001.667 2020 933,000 0.8341 778,198 0.8404 784,049 0.8467 789,971 Less Renovation Costs 0 02.667 2021 1,008,000 0.7481 754,040 0.7571 763,131 0.7662 772,374 Less PIP 0 03.667 2022 1,159,000 0.6709 777,575 0.6820 790,495 0.6934 803,690 Net Value $10,835,294 $11,512,5004.667 2023 1,217,000 0.6017 732,276 0.6145 747,796 0.6275 763,718 Rounded 10,800,000$ 11,500,000$ 5.667 2024 - 0.5396 - 0.5536 - 0.5679 - Price per Room $108,000 $115,0006.667 2025 - 0.4840 - 0.4987 - 0.5139 - 7.667 2026 - 0.4341 - 0.4493 - 0.4651 - Net Income for Year: 2024 $1,279,0008.667 2027 - 0.3893 - 0.4048 - 0.4209 - Divided by Reversion OAR 0.099.667 2028 - 0.3491 - 0.3647 - 0.3809 - Gross Reversion $14,211,11110.667 2029 - 0.3131 - 0.3285 - 0.3447 - Less Costs of Sale @: 3.0% 426,33311.667 2030 - 0.2808 - 0.2960 - 0.3120 - Net Reversion $13,784,778Subtotal PV From Cash Flow $3,525,689 $3,570,524 $3,616,267Reversion2023 13,784,778 0.6017 8,294,376 0.6145 8,470,178 0.6275 8,650,525 Indices: $137,848 per hotel unitTotal PV As Of: 01-Jun-19 $11,820,065 $12,040,702 $12,266,7922.50%14 0.9716 0.9716 0.9716Present Value As Of: 25-Jan-18 $11,484,410 $11,698,781 $11,918,452Less Renovation Costs 0 0 0Less PIP - - - Adjusted Present Value $11,484,410 $11,698,781 $11,918,452Rounded:$11,500,000 $11,700,000 $11,900,000Per Room$120,888.53$123,145.07$125,457.39 Months to Appraisal Date:GENERATED 25-JAN-18; REVISED 25-JAN-18 2:23 PMFor the Proposed 100 Room Hotel in Plainfield, IllinoisVALUATION ANALYSISItemTotal Conversion Costs:DISCOUNTED CASH FLOW ANALYSISDIRECT CAPITALIZATION ANALYSISREVERSION CALCULATION:Deflated to Appraisal Date @: 55
29 Upscale Limited Service Hotel, Plainfield, IL Table 25: Direct Cap Valuation 11.5% 11.0% 10.5% CALCULATION OF INCOME DIFFERENCE$11,500,000 $11,700,000 $11,900,000 DCF Income Inflated TimesPrice Per Hotel Room: $115,000 $117,000 $119,000 Year Before Other Rep Year PV Factor @ PV ofNumber Year Deductions Income Difference 11.0% DifferenceOVERALL RATE (OAR)0.667 2019 520,000 614,000 (94,000) 0.9328 (87,682) OAR- 1st Yr: 4.52% 4.44% 4.37% 1.667 2020 933,000 967,626 (34,626) 0.8404 (29,098) OAR- 2nd Yr: 8.11% 7.97% 7.84% 2.667 2021 1,008,000 1,042,027 (34,027) 0.7571 (25,761) OAR- 3rd Yr: 8.77% 8.62% 8.47% 3.667 2022 1,159,000 1,150,203 8,797 0.6820 6,000 OAR- 4th Yr: 10.08% 9.91% 9.74% 4.667 2023 1,217,000 1,301,349 (84,349) 0.6145 (51,829) OAR- Typ Year: 8.01% 7.87% 7.74% 5.667 2024 0 0 0 0.0000 06.667 2025 0 0 0 0.0000 0GROSS ROOM RENT MULTIPLIER (GRRM)7.667 2026 0 0 0 0.0000 0 GRRM- 1st Yr: 6.698 6.814 6.931 8.667 2027 0 0 0 0.0000 0 GRRM- 2nd Yr: 4.071 4.142 4.212 9.667 2028 0 0 0 0.0000 0 GRRM- 3rd Yr: 3.850 3.917 3.984 10.667 2029 0 0 0 0.0000 0 GRRM- 4th Yr: 3.564 3.626 3.688 11.667 2030 0 0 0 0.0000 0 GRRM- Typ Year: 4.134 4.206 4.277Total PV of Difference ($188,370)Rounded: ($190,000)% of PV from CF: 30.66% 30.52% 30.39% COMPARISON OF TWO APPROACHESDirect Capitalization Value $11,500,000Less PV of Difference (190,000)Adjusted Direct Capitalization Value 11,690,000Less DCF Value @ 11.0% 11,700,000Difference (10,000)Percent Difference -0.09%VALUATION INDICESIndiceAppraised Value:COMPARISON OF DIRECT CAPITALIZATION ANALYSIS WITH DISCOUNTED CASH FLOW APPROACH56
30 Upscale Limited Service Hotel, Plainfield IL
ASSUMPTIONS AND LIMITING CONDITIONS
The report has been made with, and subject to, the following general limiting conditions and
includes the following general assumptions:
No responsibility is accepted by the consultant for considerations requiring expertise in other
fields. Included in this category are ownership legal description and other legal matters, survey
of property boundaries, geologic considerations including soils and seismic stability, civil,
structural or other engineering, and identification of hazardous or toxic substances. Data
furnished or obtained from public sources relative to these matters has been adopted and is
assumed to be correct.
Under the operating projection the property is assumed to be under responsible ownership and
management.
The definitions and assumptions upon which our analyses, opinions and conclusions are based
are set forth in appropriate sections of this report and in this section and are to be part of these
general assumptions as if included here in their entirety.
The information furnished us by others and contained in this report is considered to be from
reliable sources and, where feasible, has been verified; however, no responsibility is assumed for
its accuracy. We reserve the right to modify the estimates of operating results should more
reliable information become available subsequent to delivery of this report.
The sketches, plot plans and drawings included in this report are included only to assist the
reader in visualizing the property.
There are no hidden or unapparent conditions in the property, soil, subsoil, or structures, which
would render the site unsuitable for its intended use or would constrain the continued operation
of the property. No responsibility is assumed for such conditions or for arranging for engineering
studies, which would be required to discover them. The consultants are not construction,
engineering, environmental, or legal experts, and any statement given on these matters in this
report should be considered preliminary in nature.
It is assumed that there is full compliance with all applicable federal, state and local
environmental regulations and laws, that all applicable zoning and use regulations and
restrictions have been complied with or can and will be complied with, unless a nonconformity
has been stated, defined and considered in the report, and that all required licenses, certificates
of occupancy, legislated or administrative consents from any local, state or national government
or private entity or organization have been or can be obtained for any use on which the
estimates of future operating results contained in this report are based.
The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We have not
made a specific compliance survey and analysis of the property to determine whether or not it is
in conformity or can be brought into conformity with the various detailed requirements of the
ADA. It is likely that a compliance survey of the property together with a detailed analysis of the
requirements of the ADA could reveal that the property is not in compliance with one or more of
the requirements of the act. If so, this fact could have an effect upon the capital spending plans
for the property. Since we have no direct evidence relating to this issue, we did not consider
possible non-compliance with the requirements of ADA in estimating the results of future
operations of the property.
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31 Upscale Limited Service Hotel, Plainfield IL
All estimates shown in the report are projections based on our analysis as of the date of the
study. These estimates may not be valid in other time periods or as conditions change. We take
no responsibility for events, conditions, or circumstances affecting the property's operation that
take place subsequent to either the date of this report or the date of our field inspection,
whichever occurs first.
By reason of this report, we are not required to give further consultation, testimony or to be in
attendance in court or at any governmental or other hearing with reference to the property
without prior arrangements having been made relative to such additional employment.
Possession of this report, or a copy thereof, does not carry with it the right of publication. It may
not be used for any purpose by any person other than the party to whom it is addressed without
the written consent of TR Mandigo & Co. and in any event only with properly written
qualifications and only in its entirety.
The party for whom this report was prepared may distribute copies of this report only in its
entirety to such third parties as may be selected by the party for whom this report was prepared;
however, portions of this report shall not be given to third parties without our written consent.
Liability to third parties will not be accepted.
Neither all nor any part of the contents of this report shall be disseminated to the general public
through advertising or sales media, public relations media, news media, or other public means of
communication without prior written consent and approval of the consultant.
In any case, this report is not intended for use in registered or unregistered security offering
documents without consultation and an opportunity for a complete review of the use of the
report and a review of all related documents.
58