25_027_Addendum_1.pdf

F I N A N C E

P.O. BOX 447 ALBANY, GA 31702 | PHONE: 229.431.3211 | FAX: 229.431.2184 | www.albanyga.gov

12/18/2024

TO: All Potential Bidders

SUBJECT: Purchase and Development of 205/207 Pine Ave.

Bid Ref. #25-027

Bid Opening Date & Time: January 03, 2025, 5:00 p.m.

ADDENDUM NO. 1

The items contained in this addendum are added to and/or deleted from and become part of the specifications and proposal documents for the above-referenced Request for Proposal. Proposers must acknowledge receipt of all addenda on their cover sheet when the proposals are submitted.

QUESTION & ANSWERS

1. If possible, we would like a copy of the building plans. Answer: Link to drawings:

https://www.dropbox.com/scl/fo/nk0a9ttss64ingji8d71z/ABwJYc48mvEtFITwgIuC_gk?

rlkey=8atcce1yb25yfquxvnhohb75t&st=izht6avt&dl=0

2. Does this have to stay a hotel, or could it be converted to multifamily? Answer: The property at 205-207 Pine Avenue is envisioned to align with the recommendations of the Downtown Master Plan, which identifies this location as a key site for a boutique hotel. This aligns with broader goals to attract visitors, support tourism, and create a vibrant downtown experience. Notably, the Downtown Master Plan highlights 126 Washington Street as a prime location for residential apartments, along with several other properties identified as suitable for downtown living. These sites are strategically designated to support the plan's goal of creating a balanced mix of commercial, residential, and hospitality spaces. A link to the Downtown Master Plan has been provided within the RFP to offer detailed guidance on these strategic priorities. Also, a market analysis feasibility study is included below.

End of Addendum 1

Ricky Gladney Ricky Gladney, Buyer

Cc: Tripp Swilley, City of Albany Don Gray, City of Albany Lequrica Gaskins, City of Albany http://www.albanyga.gov/ https://www.dropbox.com/scl/fo/nk0a9ttss64ingji8d71z/ABwJYc48mvEtFITwgIuC_gk?rlkey=8atcce1yb25yfquxvnhohb75t&st=izht6avt&dl=0 https://www.dropbox.com/scl/fo/nk0a9ttss64ingji8d71z/ABwJYc48mvEtFITwgIuC_gk?rlkey=8atcce1yb25yfquxvnhohb75t&st=izht6avt&dl=0

Hotel Market Analysis Albany, GA

May 2023

HOTEL MARKET ANALYSIS

PROJECT FEASIBILITY

ALBANY, GEORGIA

Prepared by:

Sean Skellie, Principal

Grey Hospitality Consulting www.GreyHC.com

Member of Cayuga Hospitality Consultants

The International Network of Hospitality Consulting Professionals www.CayugaHospitality.com |262.442.4720 | Sean.Skellie@Gmail.com

Submitted to:

Nathan Watson CL Real Estate Development, LLC 315 Fifth Street Peru, IL 61354

(815) 224.6639 (Office) http://www.greyhc.com/ http://www.cayugahospitality.com/ mailto:Sean.Skellie@Gmail.com ii

TABLE OF CONTENTS

Section 1 - Executive Summary

Section 2 – Assignment Location |Albany, GA

Market Overview

Opportunity & Proposed Hotel Project Concept

Section 3 - Regional Hotel Market & Competitive Analysis

Type of Hotels Defined

Market Class & Chain Scale

Market Competition and Chain Scale

National Hotel Market Trends

Competitive Set Selection & Analysis

Regional Lodging Facilities

Primary Competitive Hotel Set

Competitive Set & Individual Property Performance Analysis

Positioning Against the Competitive Set

Seasonal & Day of Week Market Trends of the Primary Set

Subject Hotel Occupancy & Penetration Projections

Section 7 - Lodging Facility Recommendations

Section 8 - Summary Conclusions

Section 9 - Design & Development Analysis

Hotel Space Allocation & Facilities Programming Guideline

Hotel Development Cost Categories & Average Classification Costs

Subject Property Development Costs

Section 10 - Critical Development Considerations

Section 11- Certifications, Assumptions & Limiting Conditions Statement

May 2023

SECTION 1 - EXECUTIVE SUMMARY

The Client (the “Client” or “City”) engaged Grey Hospitality (the “Consultant”) to prepare the following Summary Market Analysis for the potential development of a lodging facility, possibly with or without franchise affiliation, in the Albany, Georgia Southwest Regional Market the subject area

(the “Project”, “Proposed Hotel” or “Subject Hotel”). The purpose of this study is to analyze the existing supply and demand of market competition, and to determine overall potential market share and the feasibility of the Project through an understanding of the impacts, costs, risks and benefits associated with a development of this nature. The market study is a supply-and-demand based analysis measuring local travel trends which is one of many key indicators that is used to determine the feasibility of a hotel development in the studied market.

Given the Consultant’s background, development portfolio and experience, regional hotel management history, client list for prior feasibility studies, and knowledge of the hospitality industry;

they are fully aligned to develop first-class hotels and qualified to offer market analysis and feasibility.

All parties remain confident that an independent review of this report would support the Consultant’s findings and opinions. Based on the documented opinions and projections in this report alone, the findings may or may not be acceptable for external investing parties and/or lending purposes, may require additional supportive analysis and should be used as a whole and not in part.

SECTION 2 – ASSIGNMENT LOCATION |ALBANY, GA

Market Overview Albany is a city in and the county seat of Dougherty County (a county located in the south-west portion of the state with a population of nearly 88,000 with nearly 15,000 students enrolled in area primary and higher educational facilities) in Georgia on the Flint River. The city is the eighth largest city in Georgia and was incorporated in 1838. Nelson Tift founded the city and named it after the capital of New York. It is the hub of Southwest Georgia for culture, shopping, education, healthcare, and recreation. Albany is marketed as a great place to live, work and play.

Although the city is surrounded by pecan groves, pine trees, farms and plantations, almost none of the population is employed in agriculture. The community and its economy have become heavily industrialized, and most business is conducted on a multinational scale. The city developed on both sides of the Flint River. Health care, education and the Marine Corps Logistics Base Albany are the largest employers. Manufacturing, transportation, and retail trade are also important foundations of

Albany's economy, and the city acts as a hub for commerce in southwest Georgia.

The area’s economic and cultural diversity is structured on its workforce’s expansive skill sets serve a range of industries, from brewing and manufacturing to defense and agriculture. This diversity, combined with our wealth of resources, provides stability and contributes to a cost of living that’s almost 25 percent lower8 than the national average.

(Source: Wikipedia, Visit Albany website)

Opportunity & Proposed Hotel Project Concept The City of Albany is looking at a redevelopment of the Hotel Gordon (currently closed and in need of complete renovation and rehab), a historic property in the community. The Hotel Gordon (“Subject

Hotel”) can be positioned as a boutique, full-service hotel that would be in downtown Albany. The

80-room hotel offers a full-service hotel and restaurant, bar lounge, café and coffee bar, fitness center and approximately 5,000 square feet of meeting space. Initial development analysis shows the project is approximately 65,000 gross sq. ft. of conditioned interior space and potentially outdoor event space of approximately 6,000 gross sq. ft. The room or key size ranges from 224 sq. ft. king bedded rooms and 342 sq. ft. double queen rooms and suites of up to 385 sq. ft. and overall, 80 rooms in total key count based on current work to date done by developers and shared with the Client and Consultant.

The community hopes that the Subject Hotel redevelopment will reinvigorate life back into the heart of downtown Albany, Georgia by paying homage to the long traditions of family reunions, and people gathering together against the backdrop of the Flint River. The city is looking for a development opportunity meeting the needs of the community’s plan to further stimulate the local economy and increase tourism. The opportunity exists to enhance the city’s ability to accommodate larger wedding and event groups by developing a larger hotel that could accommodate groups and transient guests.

Currently, the area has a defined sense of place and identity, as well as local businesses, traveler support services attracting visitors and creating uses that would contribute to its growth as a vibrant tourism.

This market feasibility study was commissioned by the community to see if the market and community could support a lodging facility. The purpose of the study is to analyze regional supply & demand and determine if a lodging facility in the community could be supported.

SECTION 3 - REGIONAL HOTEL MARKET & COMPETITIVE ANALYSIS

The first step in the process of forecasting the potential rate and occupancy of the Subject Hotel is to understand historical trends of the nation, market, competitive set, and the region in which the property resides. The purpose of this section is to investigate current regional supply and demand trends of the competition, compare them to national trends (as indicated by the competitive market) and to then set forth a baseline and benchmark to project future supply and demand growth of the market and competition.

Hotels are typically defined by service levels and market class, defined next. These factors will help in comparing the performance of regional properties and estimating future demand levels of a given market. This will assist in the evaluation and impact when repositioning a property or adding new market supply in the form of a new project. The goal of growth estimation as it relates to trends in occupancy and the average rate in a group of properties (defined as a competitive set provided later in this section) allows us to base future projections of the Subject Hotel on market data collected, as seen in the included tables.

Type of Hotels Defined

The competitive market set(s) is typically made up of several types of hotels offering a variety of services, staffing levels, amenities, outlets, rooms, and room types. The types of lodging facilities across the U.S. are ever-changing in today’s market with the growing popularity of experiential facilities. The differences in service levels, design and offerings at properties typically result in varying types of guests and average room rates travelers are willing to pay for lodging. Pricing of rooms based on amenities has a direct result in occupancies based on guest usage.

Hotels are traditionally categorized based on the level of service, style of hotel and its amenities, all of which are delivered to travelers at different pricing levels. The various types of lodging facilities found in most markets are traditionally categorized based on the level of service, style of hotel and its amenities and will be classified into one of the following segments.

Full-Service Hotel

These facilities are generally mid-priced, upscale, or luxury hotels with a restaurant(s), lounge(s) facilities, and multiple meeting and event spaces as well as higher service levels, often including bell service, valet, concierge and room service. These hotels report multiple departmental revenue sources, most commonly rooms, food & beverage, and others such as valet, spa, water park and banquets.

Limited-Service Hotel

These properties are hotels with rooms-only operations (i.e., without food or beverage service) or hotels that offer a bedroom and bathroom for the night but few other services or amenities. These hotels are often in mid-priced, budget, or economy groups and do not report food and beverage revenue.

Select Service Hotel

The term select service has evolved over the last 10 years. Once hotels strived to be all things to all travelers and now the attention has shifted to designing properties for different travel occasions or more specific to certain traveler’s needs and expectations. Historically speaking a significant segment of the target customer did not want to pay for services they were not utilizing like meetings and event space or a restaurant; developers chose not to build those amenities and limited-service hotels emerged. Today in some markets hotels need certain offerings or amenities to make the property competitive and to compensate for the lack of area services not represented in a regional marketplace and select service properties emerged. This has become very challenging for branded hotels not conforming to a brand standards model or one that fits all markets; and thus, this select-service differential spurred the boutique development arena. Boutique hotels are select service or focused service properties by design offering need or perceived necessary unique services to attract or induce demand.

Motel or Seasonal Motel/Bed & Breakfast

These properties are usually economy, modest, or small private, unique hotel environments that differentiate themselves from larger chain/branded hotels by providing personalized accommodations and services/facilities. Typically, they are furnished in a themed, stylish, or inspirational manner and can be quite experiential. They are usually considerably smaller than mainstream hotels, often ranging from 10 to 50 guest rooms. They might offer minimal food & beverage outlets or only offer guest room accommodations.

Shared Residences, Home & Apartment Rentals

The introduction of unique lodging offerings by providers such as AirBnB has transformed the lodging industry in the past few years, much as Uber and Lyft have done with the hired car industry.

Home and apartment rentals through Vacation Rental by Owner (VRBO), HomeAway, and AirBnB added inventory to many compressed (or under supplied and high demand) markets. These markets were then perceived as expensive markets due to limited or the lack of supply based on high barriers of entry; These markets often reported average rates for overnight accommodations are 5-10 times the country’s national industry average in rate.

In some places like San Francisco, Silicon Valley and New York, residents rent their homes to travelers in order to pay the rising cost of rent. High rates of hotel occupancy in these markets and their rising rates have made these options (shared residences) viable for travelers and residents, creating a new type of demand and are now found in almost every community. These lodging facilities are and have been very common in vacation destination markets throughout the country with ample inventory and seasonal demand; yet offer a different type of accommodation sought by those visiting for longer periods of time or those with small groups and families traveling together.

Resort Hotels

Resort hotels are more of a destination driven type and could be defined as limited service or full-service properties. Resort properties typically utilize a prime location to influence the development, amenities, and demand. In traditional destination resort markets, amenities such as a spa, sports or recreation facilities, waterparks, event space, gaming and retail are provided and required for market flexibility to varying consumers. Resort programming, site layout, accessibility to attractions, and design are critical to the success of this property type.

Today many resort amenities are often added to non–resort properties to broaden the markets and travelers they attract. It is not just travelers on vacation that seek resort facilities but also groups of travelers in various market segments such as social, educational, meeting, incentive, and conventions, which are increasingly looking for properties to attract regional participants and attendees. Resorts often add value to the overall event and can be influenced by cultural or environmental factors.

Boutique Hotel

Boutique or Lifestyle Hotels can consist of limited, select, or full-service lodging properties that are typically described as “small hotels” which have between 10 and 120 rooms (and usually under 100 rooms) in unique settings or locations, and key markets with upscale accommodations through a focused design niche. Boutique hotels began appearing in the 1980’s in major cities like London, New

York, Chicago, and San Francisco.

Today ownership groups and brands alike have independent and boutique hotels in most markets throughout the U.S. Changing traveler tastes and technology have also opened the door for larger brands to follow the boutique hotel model. Recent acquisition of boutique brands like W Hotels, Moxy, of Joie De Vivre and Kimpton by the industry leading brands like Marriott and Intercontinental

Hotel Group (IHG) are signs of this segment’s growing popularity and industry foothold.

Beginning in the '90s, hotel chains, with W Hotels leading the charge, started recognizing the boutique hotel model as a concept they could adopt. Large hotel brands and franchises used to prize uniformity, highlighting "no surprises" in their advertising. Today, uniformity does not carry the same weight in lodging facilities. Today’s travelers are looking for something that is genuine, that respects local materials and culture and traditions and food. Boutique and independent hotels started off as synonymous, but that is no longer the case. Kimpton is one example: While it retains its "boutique" identifier and most hotels are different with a variety of amenities and design features, Intercontinental

Hotels Group acquired the brand in 2015.

Boutique hotels constantly adapt to the changing expectations of travelers. Instead of prescribed standards and design and service uniformity, modern travelers want to experience something novel when they are on the road. It is an appetite that social platforms are fueling and guests’ desire.

Market Class & Chain Scale “Market Class” is an industry categorization of both chain-affiliated and independent hotels. The class for a chain-affiliated hotel is the same as its chain scale. An independent hotel is typically assigned a class based on its ADR relative to those of the chain-affiliated hotels in its geographic proximity, as defined by national brands, trends and reporting agencies.

Chain scale segments are a method by which classes of similar hotels are grouped based on the actual average room rates they yield, and the estimated development costs required to position them in the scale. Understanding which class, the Proposed Hotel will compete in allows it to be measured against national averages. National firms, such as formally known Smith Travel Research (now STR) and PKF

Hospitality Research, forecast industry benchmarks based on the following market class and chain scale segments categorized as follows:

• Luxury Chains

• Upper Upscale Chains

• Upscale Chains (potential chain scale of the Subject Hotel)

• Upper Midscale Chains (potential chain scale of the Subject Hotel)

• Midscale Chains

• Economy Chains

• Independents or Unaffiliated

Market Competition and Chain Scale The Consultant analyzed and reported on the subject area’s lodging facilities and the corresponding chain scale within a limited 25-mile radius of the subject market. The Consultant identified 39 hotels with 2,650 total rooms and reported them in the following chain scale or market class:

(Source: Consultant & STR)

The current mix of properties in the market shows: 26 facilities in the economy segment representing

56 percent of the total market; 4 properties with 16 percent of rooms inventory in the midscale segment; 7 properties or 21 percent of rooms inventory in the upper midscale segment, 2 properties in the upscale segment and 8 percent market share, and no properties in the upper upscale segment or luxury segment.

The majority leader in the market are the 26 facilities and 56 percent of rooms inventory representing the economy segment. There were a handful of additional small independent properties that feature

20 or less rooms that were not considered in these numbers. Again, most of the market supply is independent economy properties catering to workforce housing and economy leisure traveler and do not meet the need of basic travelers. The limited supply and age of the properties in this segment creates an opportunity for new product.

When analyzing a market, it is important to identify and understand the trends of occupancy, average rate, and revenue for groups of hotels, whole market patterns, and segments of specific properties;

and compare them to national trends. STR, INC (STR), formally known as Smith Travel Research is the industry leader in gathering and sourcing hospitality data and is used specifically to report trend information by the majority of active properties worldwide. The company tracks supply and demand data for multiple market sectors, including the global hotel industry. STR provides market share analysis for all major hotel chains and brands in North America, Europe, Asia Pacific, Middle East, and Africa.

CHAIN SCALE NUMBER OF PROPERTIES NUMBER OF ROOMS %

Luxury 0 0%

Upper Upscale 0 0%

Upscale 2 206 8%

Upper Midscale 7 557 21%

Midscale 4 412 16%

Economy 26 1475 56%

Unaffiliated 0 0%

Total 39 2,650 100%

Hotel Market Competitive Set

SUBJECT MARKET NUMBER OF HOTELS BY CHAIN SCALE

STR has the most comprehensive database of hotel performance information available to the industry.

STR is an independent research firm that compiles and publishes data and trends on the lodging industry, and this information is routinely used by hotel operators, franchises, buyers, developers, and lenders. All branded and franchised hotel chains in the world report their performance to STR as a requirement of the franchise.

STR/Costar

STR’s world-leading hotel performance sample comprises 68,000 hotels and 9.1 million hotel rooms around the globe. STR provides premium data benchmarking, analytics, and marketplace insights for global hospitality sectors. Founded in 1985, STR maintains a presence in 15 countries with a corporate

North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics, and online marketplaces. For more information, please visit str.com and costargroup.com.

Units of Performance Measurement

Nationally, hotels and competitive properties are measured by three key performance indicators or benchmarks: Occupancy, Average Rate, and Revenue per Available Room (RevPAR). Occupancy identifies the number of sold rooms in a given period and measures demand. Average Rate identifies the average selling price during a given period of time. Lastly, RevPAR is a measure that, regardless of hotel size, occupancy, and average rate, compares revenue for each room the property has in its inventory or supply. RevPAR takes the total revenue and divides it by the total rooms a facility has to offer, giving a standardization of performance measurement. This number is a baseline measure, allowing a uniform comparison of hotels within the competitive set regardless of property size. (See industry definitions in the Glossary attached for clarification of terms.)

National Hotel Market Trends

National historic trends are important to any hotel development or potential project because all markets face similar supply-and-demand challenges, benchmarks, and indicators of market changes.

National trends identify baseline projections and thresholds for key performance indicators. The

Subject Hotel’s local lodging market is most directly affected by the supply and demand trends within the immediate area but are also influenced by conditions nationally. National lodging trends will be summarized to provide a baseline of performance and a background for the forecast of the supply and demand for the Subject Hotel’s and that of its competitive set. The following information on national trends demonstrates the characteristics of the U.S. Lodging Market as reported by STR through available full year 2019, 2020 and 2021. Drastic changes in the reporting statistics are highlighted in the following table.

STR has been reporting trends of hotel markets to operators and owners since its inception in the mid-1980s (1985-1988 when it started collecting and sharing data). Prior to 2015, national occupancy last peaked in 1995 at 65.1 percent and decreased to a low of 59 percent after the 9/11 terrorist attacks on the United States. The latest recession of 2009 was the most severe drop in the hotel industry occupancy, recording a 54.5 percent historical low, nearly a 10 percent-point drop in demand. The average daily rate hit its high in 2008 at $106.55 and bottomed two years later in 2010 at a reported

$98.08. The recession’s severe impact on the industry resulted in a significant RevPAR decline reported at -18.4 percent (an all-time high percentage change).

AVAILABLE OCCUPANCY AVERAGE ADR REVENUE REVPAR

REPRESENTATIVE NATIONAL PERCENT DAILY PERCENT PER PERCENT

YEAR OCCUPANCY CHANGE RATE CHANGE AVAILABLE ROOM CHANGE

1992 61.9% $59.62 $36.90

1993 63.1% 1.9% $61.30 2.8% $38.68 4.8%

1994 64.7% 2.5% $64.24 4.8% $41.56 7.4%

1995 65.1% 0.6% $67.17 4.6% $43.73 5.2%

1996 65.0% -0.2% $70.81 5.4% $46.03 5.3%

1997 64.5% -0.8% $75.31 6.4% $48.57 5.5%

1998 63.8% -1.1% $78.15 3.8% $49.86 2.7%

1999 63.1% -1.1% $81.29 4.0% $51.29 2.9%

2000 63.5% 0.6% $85.24 4.9% $54.13 5.5%

2001 59.8% -5.8% $84.45 -0.9% $50.50 -6.7%

2002 59.0% -1.3% $83.20 -1.5% $49.09 -2.8%

2003 59.2% 0.3% $83.28 0.1% $49.30 0.4%

2004 61.3% 3.5% $86.70 4.1% $53.15 7.8%

2005 63.1% 2.9% $91.29 5.3% $57.61 8.4%

2006 64.2% 1.7% $96.77 6.0% $62.13 7.8%

2007 64.1% -0.2% $102.38 5.8% $65.63 5.6%

2008 60.4% -5.8% $106.55 4.1% $65.61 0.0%

2009 54.5% -9.8% $98.20 -7.8% $53.55 -18.4%

2010 57.6% 5.7% $98.08 -0.1% $56.47 5.5%

2011 60.1% 4.3% $101.64 3.6% $61.06 8.1%

2012 61.4% 2.2% $106.10 4.4% $65.17 6.7%

2013 62.3% 1.5% $110.35 4.0% $68.69 5.4%

2014 64.4% 3.4% $115.32 4.5% $74.28 8.1%

2015 65.6% 1.9% $120.01 4.1% $78.67 5.9%

2016 65.5% 0.0% $123.97 3.1% $81.19 3.2%

2017 65.9% 0.9% $126.72 2.1% $83.57 3.0%

2018 66.2% 0.5% $129.83 2.4% $85.96 2.9%

Benchmark YR. 2019 66.1% -0.2% $131.21 1.1% $86.76 0.9%

2020 44.0% -33.4% $103.25 -21.3% $45.48 -47.6%

2021 57.6% 30.9% $124.67 20.7% $71.87 58.0%

2022* 62.5% -4.9% $148.39 13.9% $92.77 8.3%

2023 YTD

*Percent Change from 2019

STR Forecast 2023 63.6% 1.8% $151.00 1.8% $96.00 3.5%

STR Forecast 2024 65.3% 2.7% $157.00 4.0% $103.00 7.3%

STR Forecast 2025 66.0% 1.1% $163.00 3.8% $108.00 4.9%

Avg. Annual CAGR From 1992 -0.25% 2.58% 2.33%

Avg. Annual CAGR From 2000 -0.46% 1.83% 1.36%

Avg. Annual CAGR From 2010 0.00% 2.20% 2.22%

Avg. Annual CAGR From 2015 -2.14% 0.64% -1.50%

Note: CAGR = Combined Average Annual Growth Rate

US Lodging Industry Annual Trends in Occupancy, ADR, & RevPAR 1992- 2023

Demand growth resumed in 2010, led by select markets recording trends in the fourth quarter of 2009.

A return of business travel and some group activity contributed to these positive trends with occupancy up 5. percent and yet ADR remained nearly flat. The resurgence in national demand was partly fueled by the significant price discounts and the use of newly created and highly competitive advertising sources widely available in the first half of 2010 which seemed to transition out in the latter half of the year, balancing much of the early rate loss. Demand growth remained strong, but decelerated from 2011 through 2013, decreasing at rates of 4.3 percent, 2.2 percent, and 1.5 percent, respectively. Demand growth then surged to 4.0 percent in 2014, driven by, among other factors, a strong economy, a robust oil and gas industry and limited new supply.

By 2014, national occupancy had surpassed the 64 percent mark, a benchmark and key performance indicator not achieved since 2007. The average rate rebounded similarly during this time, notching 4.0 percent annual gains from 2011 through 2014. Since 2014 and 2015, the industry saw much needed improvements, resulting in the reporting of record statistics almost annually. The occupancy in 2014 at 64.4 percent was the strongest year since 1997—a twenty-year recession in demand — with an average rate at $115.32 — highest ever reported annually — and revenue per available room at $74.27, which was up over 8 percent from 2013.

In 2015, demand continued to outpace supply growth (a trend since 2010.) The U.S. reported an all-time high with record occupancy for the year at 65.6 percent, up 1.9 percent and ADR at $120.01, up

4.1 percent. This trend would continue in 2017 with growth in occupancy to 65.9 percent, average rate at $126.72 and RevPAR at $83.57.

In 2018 the industry continued its record-breaking numbers reporting occupancy at 66.2 percent — an increase of 0.5 percent and an average rate of a then all-time high of $129.83. The recorded revenue per available room was $85.96, up 2.9 percent from the prior year. This combined with occupancy and average rates makes 2018 the strongest year on record going back nearly 30 years.

In 2019, U.S. hotels posted additional industry benchmarks including flat occupancy growth at 66.1 percent compared to 66.2 percent in 2018; ADR rose 1 percent to $131.21, and RevPAR increased

0.9 percent to $86.76 compared to the previous year. The U.S. hotel industry registered record-breaking performance levels during 2019 but its lowest growth rate in revenue per available room

(RevPAR) since the current cycle began in 2010, according to data from STR.

In addition to 2020, U.S. hotel occupancy failed to reach 60 percent for just the second time since

2011. On a nominal basis, 2021 ADR was the fourth highest on record. The country’s RevPAR level was its second lowest in eight years behind only 2020. Among the Top 25 Markets, Tampa reported the highest occupancy level (68.4 percent), which was still down 5.2 percent from the market’s 2019 benchmark. None of the Top 25 Markets experienced an occupancy increase over 2019.

In 2021 the industry demonstrated strong repositioning with travel once again opening and the resurgence in travel demand increased occupancy to 57.6 percent, up 30.9 percent from 2021. ADR was struggling to recover and although it increased 20.7 percent to $124.67 it was still off $6.00 from the benchmark year in 2019.

The annual reporting in 2022 painted a strong picture of ADR growth with national prices on the rise in most all industries. The lodging industry reported occupancy closing the gap to 2019 at 62.5 percent and ADR at $148.39 up 13.9 percent and nearly $20.00 more than ever reported as a national average beating the once all-time high in 2019 at $131.21. This increase is expected to carry forward through

2023-2025 with an increase in both rate and occupancy.

Competitive Set Selection & Analysis For the purpose of this report the Consultant has analyzed sources of information from STR, the lodging industry’s leading data provider on competitive market performance. The competitive market was analyzed to identify the history of occupancy, average rate, and revenue per available room from select regional facilities to then forecast the Subject Hotel’s.

A competitive set consists of a group of hotels by which a property can compare itself to the group’s aggregate performance; and can be based on location, equivalent market classification, segment of traveler and similar amenities offered. When selecting a group there must be a minimum of four hotels in any competitive set and three hotels when including an existing property. To protect proprietary data, a single hotel (or brand) cannot exceed 40 percent of the competitive set for North American hotels. A single hotel company or brand (i.e., Marriott, Hilton, IHG or Choice, etc.) may only comprise

60 percent of the competitive set room supply. The complete competitive set STR report may be requested from the Consultant as supporting materials if they are not in the report addenda.

Subject Market Competitive Set: Defined for Subject Hotel

A competitive set consists of a group of hotel properties that directly compete for room nights, or demand, due to proximity, brand or franchise affiliation, chain scale or consumer segment and similarity of product and the amenities offered. The selected competitive set enables the Consultant and individuals to compare property performance with the aggregate performance of their direct competition. The Consultant reviewed all the regional supply in the market (reported on the following table) and selected a competitive set for reporting purposes. The following hotels exist in the subject area and compete for overnight lodging demand.

Regional Lodging Facilities Analyzing the subject market and the specific class, brand, number of rooms, age and location of existing supply and lodging facilities is the next step in the evaluation process. The greater market was reviewed and the following properties in the subject market were evaluated for regional competition.

The following table shows the subject market supply of inventory to also include brand, market class, number of rooms and date the property opened.

In the market, there are 39 regional hotels with a total of 2,650 rooms within a 25-mile radius of the subject market. These hotels consist of select-service facilities, limited-service, and economy properties and no full-service properties in the area. The average size of hotels in the market is 67 rooms with the largest hotel at 100 rooms each and the smallest at 11 rooms. The average age of hotels in the market is 39 years old and the lodging industry reports that most hotel facilities and buildings today have run a useful life span of 38-40 years of age.

From the listed properties the Consultant identified those properties that would be competitive with the Proposed Hotel and market for room accommodations, and location. This competitive set was determined through consideration of several factors such as location, size, consumer attraction, amenities offered, rate structure, management, and demand generators. Some supply has been excluded within the local market due to uncompetitive offerings in their size, location, target consumer, facility, brand or unaffiliated status to get the best possible representation of key performance indicators.

Albany Georgia Area Market Supply of Lodging

GREATER MARKET HOTEL SUPPLY

PROPERTY NAME DIST FRM SUBJECT CITY CENTER CITY MARKET CLASS DATE OPENED # ROOMS

Econo Lodge Albany 0.9 Albany, GA Economy Class 11/1/1996 81

Red Roof Inn & Suites Albany 0.91 Albany, GA Economy Class 4/1/1993 60

Merry Acres Inn 0.91 Albany, GA Midscale Class 4/1/1969 110

Knights Inn Albany 1.03 Albany, GA Economy Class 6/1/1987 55

Mabry Motel 1.04 Albany, GA Economy Class 11/1/1950 35

Superior Creek Lodge 1.19 Albany, GA Midscale Class 6/1/1973 158

Oglethorpe Inn 1.4 Albany, GA Economy Class 7/1/1954 32

Regent Motel 1.47 Albany, GA Economy Class 12/1/1957 32

Tow nhouse Motel 1.47 Albany, GA Economy Class 9/1/1958 35

Royal Inn 1.52 Albany, GA Economy Class 1/1/1950 31

Palace Inn 1.63 Albany, GA Economy Class 30

Kings Inn 1.63 Albany, GA Economy Class 7/1/1987 119

Days Inn by Wyndham Albany 1.75 Albany, GA Economy Class 4/1/1960 75

Traveler Inn & Suites 1.79 Albany, GA Economy Class 2/1/2002 66

Hilton Garden Inn Albany 1.99 Albany, GA Upscale Class 8/1/2005 122

Budget Inn 2.4 Albany, GA Economy Class 6/1/1974 60

Country Inn & Suites Albany 2.49 Albany, GA Upper Midscale Class 7/1/2008 70

Albany 8 Inn 3.05 Albany, GA Economy Class 6/1/1973 49

Araamda Inn 3.09 Albany, GA Economy Class 6/1/1972 152

Hampton by Hilton Inn & Suites Albany At Albany Mall 3.11 Albany, GA Upper Midscale Class 8/1/2013 94

Quality Inn At Albany Mall 3.13 Albany, GA Midscale Class 9/1/1993 82

Baymont Inn & Suites Albany at Albany Mall 3.38 Albany, GA Midscale Class 5/1/1995 62

Park Inn Albany 3.5 Albany, GA Upper Midscale Class 1/1/1999 61

Motel 6 Albany 3.51 Albany, GA Economy Class 7/1/1998 37

Holiday Inn Express & Suites Albany 3.53 Albany, GA Upper Midscale Class 11/1/2014 80

InTow n Suites Albany 3.53 Albany, GA Economy Class 6/1/1998 139

La Quinta Inns & Suites Albany 3.6 Albany, GA Upper Midscale Class 2/1/1999 85

Fairf ield Inn & Suites Albany 3.64 Albany, GA Upper Midscale Class 1/1/2010 87

Tow nePlace Suites Albany 3.67 Albany, GA Upper Midscale Class 1/1/2018 80

Courtyard Albany 3.69 Albany, GA Upscale Class 11/1/2004 84

Luxury Inn 4.23 Albany, GA Economy Class 11/1/1974 101

Econo Lodge Inn & Suites Albany 4.57 Albany, GA Economy Class 5/1/1994 47

Relax Inn 4.68 Albany, GA Economy Class 5/1/1997 45

Deep South Motel 4.85 Leesburg, GA Economy Class 6/1/1980 30

Fairfax Motel 4.92 Daw son, GA Economy Class 1/1/1955 28

Western Motel 18.9 Daw son, GA Economy Class 6/1/1996 30

Country Hearth Inn & Suites Daw son 19.22 Sylvester, GA Economy Class 2/1/2000 39

Worth Inn 21.34 Sylvester, GA Economy Class 6/1/1989 27

Sylvester Inn 21.46 Kansas Area Economy Class 6/1/1996 40

Total Properties w ithin 25 Miles 39 Average Age 37 years 2,650

Primary Competitive Hotel Set The subject market area competitive set consists of the following hotels (based primarily on location) for which historical data on business trends was reviewed; these properties offer 467 rooms in the upper midscale class and upscale class. These hotels are almost all limited-service lodging offering very few amenities. Many of the hotels in the competitive set and the majority of those in the region are non-franchise economy properties and are independently run.

The markets competitive set includes the following hotels, and the table below lists the property age, number of rooms, class and date of opening and franchise affiliation for each of the properties:

Subject Market Competitive Set

The primary set of competitive hotels were the properties located in close proximity to the subject area and reported to STR. The competitive set of hotels are all upper midscale or upscale class properties in the greater region with an average age of 13 years from when they originally opened. The average sized property in the set is approximately 94 keys. The last facility to open in the market was the TownePlace Suites by Marriott in 2018, 5 years ago. This creates an opportunity for a new facility with modern design elements and unique amenities, which is properly positioned with service standards that meet or exceed the expectations of today’s regional travelers to induce new demand.

OPEN AFF # OF

COMPETITION CITY DATE DATE MARKETCLASS ROOMS

Hilton Garden Inn Albany Albany, GA 8/1/2005 8/1/2005 Upscale Class 122

Hampton Inn & Suites Albany, GA 8/1/2013 8/1/2013 Upper Midscale Class 94

Courtyard Albany Albany, GA 11/1/2004 11/1/2004 Upscale Class 84

Fairf ield Inn & Suites Albany Albany, GA 1/1/2010 1/1/2010 Upper Midscale Class 87

Tow nePlace Suites Albany Albany, GA 1/1/2018 1/1/2018 Upper Midscale Class 80

Hotel Market Competitive Set

SUBJECT MARKET SELECTED COMPETITION

Total Number of Rooms

STR Historical Trend of the Primary Competitive Set

For the Consultant to forecast the potential rate and occupancy of the Subject Hotel (defined later) it is necessary to understand the historical trends of the competitive set or the region in which the

Subject Hotel resides; as well as the position or class in which the Project will compete against competition. These factors will help create a baseline performance in estimating future demand levels.

The Consultant has forecasted estimated growth on the historical changes in occupancy and the average rate of the competitive set from the historical performance defined later. The historical performance of the competition is reported in the following table.

The table above quantifies the past eight years’ trends for room occupancy, Average Daily Rate (ADR), and the ratio of rooms available to rooms’ revenue (RevPAR) for the market.

Overall, the competitive set has historically reported strong performance with increases in occupancies, which were higher than the national average occupancies of mid-60 percent range. The market reported strong occupancy in 2015/2016 at 70 percent and then grew to 80 percent in

2017/2018 and 75 percent in 2019 before the pandemic dropped demand to 62 percent- much better than reported nationally. The market recovered in 2021 back to 70 percent and is still increasing today.

The competitive set also reported a lower average rate at or near $110-$120 compared to that or the national averages in the $125-$135 (and $148 in 2022) ADR range. This supply of hotels reported a high of 80.86 percent occupancy in 2017. Another record was occupancy at 71.1 percent in 2021 which, given the pandemic recovery national trends was higher than anticipated by the Consultant.

Most markets with that level of recovery featured major outdoor demand generators and destination

ROOMS ROOMS

AVAILABLE OCCUPIED

ROOMS PERCENT ROOMS PERCENT PERCENT PERCENT REGIONAL

AVAILABLE CHANGE OCCUPIED OCCUPANCY CHANGE ADR CHANGE REVPAR CHANGE ROOM REVENUE

2015 141,255 100,080 70.9% $108.86 $77.12 10,894,228$

2016 141,255 0.0% 101,155 71.6% 1.1% $110.93 1.9% $79.44 3.0% 11,221,414$

2017 141,255 0.0% 114,072 80.8% 12.8% $117.38 5.8% $94.79 19.3% 13,389,563$

2018 170,455 20.7% 131,407 77.1% 15.2% $119.04 1.4% $91.77 -3.2% 15,643,262$

2019 170,455 0.0% 127,933 75.1% -2.6% $125.73 5.6% $94.36 2.8% 16,084,905$

2020 170,455 0.0% 105,838 62.1% -17.3% $107.56 -14.5% $66.78 -29.2% 11,383,786$

2021 170,455 0.0% 121,242 71.1% 14.6% $119.14 10.8% $84.74 26.9% 14,444,682$

2022 170,455 0.0% 123,006 72.2% 1.5% $126.84 6.5% $91.53 8.0% 15,601,698$

2023 56,040 0.0% 40,660 72.6% -0.4% $131.87 3.9% $95.68 3.5% 5,361,730$

5 Year CAGR 3.8% 1.5% 1.6% -0.7% 3.1%

3 Year CAGR 0.0% -1.3% 0.3% -1.0% -1.0%

Note: CAGR = Combined Average Annual Grow th Rate

Dec 2022 YE Data Reported

*2023 DataYTD April

Albany Gerogia Subject Competitive Set

HISTORICAL GROWTH IN ROOMS SUPPLY & DEMAND

2015-2022 markets like Florida. Year-to-date reporting for the set in April 2022 is 72.9 percent occupancy and likely be new record occupancy will be achieved in total annual occupancy in 2023. Currently the market reported a 5-year growth rate in demand at 1.5 percent (even with the pandemic drop of -14.5 percent), ADR at 1.6 percent, with regional room revenue up 3.1 percent through 2022.

The average daily rate (ADR) achieved its high at $125.73 in 2019, a 5.65 percent increase from the previous year; and then reported signs of record growth in 2022 up to $126.84, up 1.5 percent from the previous year. Year to date through April of 2023 ADR is $131.87, a 3.9 percent increase. The overall market and the industry have seen significant improvements in the economic trends.

Nationally, occupancies and rates reached all-time highs in 2018 and 2019 and currently rate trends in

2022 and 2023 are outpacing occupancy at a national level which remain to seem true for the subject market.

Competitive Set & Individual Property Performance Analysis Consultant has analyzed: (a) the national and regional market STR data: (b) interviews with demand-generating businesses and managers of hotels: (c) existing hotel supply; (d) brand affiliation;

(e) consultant-estimated occupancy; (f) ADR; and (g) revenues for hotels in the immediate area. These statistics were derived from STR reports, individual property reports, and specific property interviews.

This analysis identifies the likely performance of each of the hotels within the identified market using the year end 2022 as a baseline of comparison due to the negative impact to the industry in 2020 and

2021.

Based on interviews, franchise affiliation and knowledge of the overall market performance it is believed that the Hilton Garden Inn and Courtyard by Marriott lead the market annually in occupancy at or near 73-74 percent and average rate near $130 to $135, respectively, based on the franchise affiliation and interstate location. The next likely performance indicators expect TownePlace by

Marriott to exceed or to perform at or near 72-74 percent occupancy and closer to $120 -$125 in ADR given the age and market location.

ESTIMATED OCCUPANCY, MARKET MIX, PENETRATION RATES AND ADR

2022 December Year-end

MARKET NUMBER OF ROOMS ESTIMATED ROOMS ROOMS

PROPERTY NAME CLASS ROOMS AVAILABLE OCCUPANCY OCCUPIED ADR REVENUES

Hilton Garden Inn Albany Upscale Class 122 44,530 73.0% 32,507 133.00$ 4,323,418$

Hampton Inn & Suites Upper Midscale Class 94 34,310 70.0% 24,017 126.00$ 3,026,142$

Courtyard Albany Upscale Class 84 30,660 73.0% 22,382 130.00$ 2,909,634$

Fairf ield Inn & Suites Albany Upper Midscale Class 87 31,755 70.0% 22,229 120.00$ 2,667,420$

Tow nePlace Suites Albany Upper Midscale Class 80 29,200 74.0% 21,608 122.00$ 2,636,176$

TOTAL PRIMARY 467 170,455 72.0% 122,742 126.79$ 15,562,790$

Dec 2019 YE Market STR Reported Data 75.1% 127,933 125.73$ 16,084,905$

Dec 2022 YE Market STR Reported Data 72.2% 123,006 126.84$ 15,601,698$

2023 Estimated Forecast 74.0% 126,137 132.00$ 16,650,044$

Albany Gerogia Subject Competitive Set

Positioning Against the Competitive Set Given the age of the regional hotels present in the immediate market and the level of offerings at the independent properties in the immediate and greater markets, it is essential that this Proposed Hotel be positioned to compete at the amenities offered within the group at a 3 Diamond level of AAA

Standards. The Proposed Hotel needs to be perceived as an efficient, full or select-service hotel, discussed in detail later and offer a product that is positioned for transient social, leisure and business travelers. This allows the Subject Hotel to be competitive with all properties and capture market share from all hotels in the market based on location, quality, new product and rate. AAA Diamond ratings are an industry guideline for levels of design and guest comfort.

The Subject Hotel needs to be capable of competing at the 3-Diamond level against the regional area properties and brands that are in the competitive set and also, as an example, commonly found lodging that include Courtyard by Marriott, Fairfield Inns, Holiday Inn Express, and Hampton Inn, among others. The following excerpts from AAA Diamond rating descriptions offer a simple guide to the differences of the ratings:

To be eligible for evaluation, establishments meet basic requirements for cleanliness, comfort, safety

& security, food preparation and service (restaurants). After establishments are designated as AAA

Approved, inspectors assign a rating of One to Five (diamonds). Diamonds are awarded based on the extensiveness of services, facilities and amenities typical of each rating level. The Diamond Ratings guide members in selecting establishments appropriately matched to their needs and expectations in service and rater.

1 Diamond Appeal to budget-minded travelers. Provide essential, no-frills accommodations. Meet basic requirements pertaining to comfort, cleanliness, and hospitality.

2 Diamonds Appeal to travelers seeking more than basic accommodations. Provide modest enhancements to overall physical attributes, design elements and amenities, typically at a moderate price.

3 Diamonds Appeal to travelers with comprehensive needs. Multifaceted with a distinguished style, including marked upgrades in the quality and level of physical attributes, amenities, and comfort.

4 Diamonds Upscale in all areas. Progressively more refined and stylish. Physical attributes reflect enhanced quality throughout. Fundamental hallmarks include extensive amenities and a high degree of hospitality, service, and attention to detail.

5 Diamonds The ultimate in luxury and sophistication. Physical attributes are extraordinary in every manner. Fundamental hallmarks include meticulous service that exceeds guest expectations, impeccable standards of excellence and personalized services and amenities that provide an unmatched level of comfort.

With the trends of design ever changing in the hotel industry AAA inspectors have carefully noted property amenities that start to bleed into higher designations such as a prevalence of open and active lobby areas, dramatic headboards, wood and laminate flooring options and the increased use of glass, marble, and stone. The observation and use of sustainable and allergy-free products in amenities and expanded fitness and pool options tend to blur the lines and differentiation of a 3 – 4 Diamond status.

There are many 3 Diamond hotels that choose to push a 4 Diamond level of design and finish (at a minimum) through the property to remain competitive for years to come; this strategy is recommended objective for the Subject Hotel.

Meeting space is typically important for social business and corporate group business. Meeting space would allow the hotel to fill room nights in off-peak or low-demand periods with group or social functions. It is uncertain that the Subject Hotel could rely solely on transient business, given its location and the need to rely on group demand for occupancy. Including small event space in the

Subject Hotel will give it a competitive edge in regional demand compared to the competition, allowing the Subject Hotel to cater to small groups, however it will drive up the overall project cost of development.

Seasonal & Day of Week Market Trends of the Primary Set It is typical of the hospitality industry overall, and especially in the Midwest, to experience occupancy trends and travel patterns tied not only to local demand generators but also impacted by events such as weather, travel trends, regional events, holidays, and seasonality. The seasonal trends of this market are traditional for this region in the United States and are represented in the tables included in this section. The subject market reported the following average monthly trends over the last 8 years.

Occupancy ADR REVPAR

67.5% 115.89$ 78.23$

78.6% 119.64$ 94.04$

76.3% 121.02$ 92.37$

73.4% 117.79$ 86.50$

74.5% 118.23$ 88.04$

73.1% 114.46$ 83.69$

71.9% 115.19$ 82.81$

71.4% 115.64$ 82.61$

71.0% 117.46$ 83.37$

77.4% 128.16$ 99.17$

72.7% 118.45$ 86.06$

61.8% 113.28$ 69.97$

72.5% 117.51$ 85.16$

October

Novem…