HVS- 1_18_10

Consulting Services Letter

Proposed Luxury HotelGreensboro

Greensboro, North Carolina

Property Location: Proposed

200 S. Davie StreetGreensboro, North Carolina

Prepared by:

W&R Hospitality Services, Inc.dba HVS Global Hospitality Services7883 South Locust CourtCentennial, Colorado 80112+1 303 771-4104+1 303 290-6533 FAX

Submitted to:

Mr. Andrew ScottCity of Greensboro300 W. Washington StreetGreensboro, North Carolina [email protected]

7883 South Locust Court

Centennial, Colorado 80112

+1 303 771-4104

+1 303 290-6533 FAX

www.hvs.com

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January 18, 2010

Mr. Andrew ScottCity of Greensboro300 W. Washington StreetGreensboro, North Carolina [email protected]

Re: Proposed Luxury Hotel Greensboro

Greensboro, North Carolina

HVS Reference: 2010180001

Dear Mr. Scott:

Pursuant to your request, we herewith submit our analysis pertaining to aproposal to develop a 206-room luxury hotel in downtown Greensboro,North Carolina. The purpose of our analysis is to assist the City ofGreensboro in reviewing a Notification of Intent to Request Recovery ZoneEconomic Development and Facility Bonds submitted by Urban HotelGroup, LLC and Elm Street Center, LLC for a proposed luxury hotel to bedeveloped at 200 S. Davie Street in Greensboro, North Carolina.

Our opinions can be summarized as follows:

The developer’s positioned average daily rate for the first five years ofoperation is reasonable for a luxury or upper upscale hotel as proposedfor downtown Greensboro, but not at the occupancy rate projected.

The developer’s projection of occupancy at the proposed hotel over thefirst five years is highly unlikely to be achieved given the recentoccupancy levels achieved by the four hotels that will be primarycompetitors of the proposed hotel.

The revenue per available room (RevPAR) projected by HVS for theproposed hotels is well below the level necessary to cover debt serviceand a return on and return of the equity investment.

The Food & Beverage revenue projected by the developer on a peroccupied room (POR) basis is reasonable for a luxury or upper upscalefull-service hotel, but is highly dependent on the type and quality of therestaurant(s) and bar(s) located in the hotel, as well as the quality of thebanquet and catering department.

The 2009 HVS Hotel Valuation Index report issued in October 2009 listsGreensboro (ranked 63) near the bottom of 65 cities in the U.S. forprojected changes in per-room value from 2006 to (Projected) 2013. Hotelvalues in Greensboro are projected by HVS to fall -47.7% between 2006and 2013.

We hereby certify that we have no undisclosed interest in the property, andour employment and compensation are not contingent upon our findingsand opinions. This consulting services letter is subject to the commentsmade throughout this report and to all assumptions and limiting conditionsset forth herein.

Sincerely,

W&R Hospitality Services, Inc.

Richard D. Williams, MAI, Managing Director

[email protected], +1 303 771-4104

HVS Global Hospitality Services Table of Contents

Greensboro, NC

Table of Contents

Section Title

1 Executive Summary

2 Statement of Assumptions and Limiting Conditions

3 Certification

Addenda

Penetration Explanation

Qualifications of Richard D. Williams, MAI

HVS Global Hospitality Services Executive Summary 1-1

Greensboro, NC

1. Executive Summary

We have been asked to provide the City of Greensboro with our analysis ofthe projections of revenue included in the Notification of Intent to RequestRecovery Zone Economic Development and Facility Bonds submitted byUrban Hotel Group, LLC and Elm Street Center, LLC for a proposed luxuryhotel to be developed at 200 S. Davie Street in Greensboro, North Carolina.The Proposed Luxury Hotel Greensboro is to be a 206-room full-servicelodging facility, which is expected to be affiliated with an unidentifiednational hotel brand. Although the body of the Notification of Intent statesthat the hotel will contain 206 rooms, the five-year projection of revenue andexpense included in the Notification is based on the hotel having 200 rooms.Therefore, for the purpose of our analysis and to avoid confusing the readersof our analysis, we also have assumed the hotel will contain 200 rooms. Sixrooms more or less will have little impact on projected occupancy andaverage rate that can reasonably be projected for the proposed hotel. Thedeveloper has projected that the proposed hotel will open January 1, 2012;we have relied upon the developer’s projected opening date in our analysis.

The Notification of Intent proposes a “Luxury” hotel, but this may be a mis-classification of the proposed property. Luxury hotels include such brands asFairmont, Four Seasons, Mandarin Oriental, Le Meridien, Ritz-Carlton, andW Hotels. Upper Upscale brands include DoubleTree, Embassy Suites, HiltonHotels, Hyatt, Marriott, Omni, Renaissance, Sheraton, and Westin hotels toname a few. The final selection of a brand will determine the level of finishand amenities that will be expected by the hotel brand, and will determinethe average rate positioning of the hotel.

We have not inspected the subject site for this assignment, but we are familiarwith the greater Greensboro hotel market from previous visits to the city. Wehave not been asked to express any opinions regarding the feasibility of theproposed hotel. However, by comparing the hotel’s average daily rate (ADR),average occupancy, and RevPAR (Revenue Per Available Room) projected bythe Urban Hotel Group, LLC and Elm Street Center, LLC in their Notificationof Intent to historic occupancy and average rate compiled by Smith Travel

Subject of theConsulting Assignment


Greensboro, NC

Research, and to the same aggregate data for four hotels located in or neardowntown Greensboro that would be expected to compete directly with theproposed luxury hotel, we can render an opinion as to the reasonableness ofthe developer’s projections of revenue for the proposed hotel for a five-yearperiod commencing January 1, 2012.

In order to render an opinion regarding the food and beverage revenueprojected by the developer we have compared the developer’s projected foodand beverage revenue to the revenue generated by a sample of similar hotelson a dollar amount per occupied room (POR).

The 200-room Proposed Luxury Hotel Greensboro will be located inGreensboro, North Carolina. The greater market area surrounding theproposed subject property offers numerous hotels in all quality and pricecategories. We have chosen a sample of 9 hotels, comprising 1,695 rooms thatare most reflective of the market segment in which the proposed luxury hotelwould compete, based on an evaluation of the occupancy, rate structure,market orientation, chain affiliation, location, facilities, amenities, reputation,and quality of each area hotel. Smith Travel Research will not allow any onehotel of a specific brand to comprise more than 40% of the number of hotelrooms in the sample to protect the confidentiality of the occupancy andaverage rate for any one hotel or brand. This limitation poses a challenge inthe greater Greensboro hotel market because including the 988-roomSheraton Hotel Greensboro would necessitate using a sample of more than2,470 hotel rooms to keep the Sheraton’s percentage of rooms under 40% ofthe sample. Including the two full-service Marriott hotels (downtown andairport), requires a sample of more than 1,450 hotel rooms if the Sheratonhotel is omitted from the sample. Because the proposed luxury hotel is tocontain between 200 and 206 hotel rooms, we have intentionally excluded the988-room Sheraton from the STR sample, as we believe it would skew theaverages in the report. In order to include the two Marriott hotels we neededto add the Hilton Garden Inn and Hyatt Place hotel, resulting in a sample of 9hotels comprising 1,695 rooms.

Smith Travel Research (STR) is an independent research firm that compilesdata on the lodging industry; its published data is routinely used by typicalhotel buyers. STR has compiled historical supply and demand data for hotelsoperating in the Greensboro market that are anticipated to be primarily orsecondarily competitive with the proposed hotel.

Overview of Local AreaLodging Market Trends– Smith Travel TrendsReport


Greensboro, NC

Figure 1-1 Historical Supply and Demand Trends (STR)

Year

Average Daily

Room Count

Available Room

Nights Change

Occupied Room

Nights Change Occupancy

Average

Rate Change RevPAR Change

2003 1,382 504,515 — 301,354 — 59.7 % $104.19 — $62.23 —

2004 1,350 492,750 (2.3) % 304,808 1.1 % 61.9 105.65 1.4 % 65.35 5.0 %

2005 1,350 492,750 0.0 305,544 0.2 62.0 108.73 2.9 67.42 3.2

2006 1,372 500,924 1.7 320,312 4.8 63.9 114.28 5.1 73.07 8.4

2007 1,537 561,072 12.0 334,274 4.4 59.6 121.41 6.2 72.33 (1.0)

2008 1,695 618,675 10.3 355,218 6.3 57.4 122.10 0.6 70.10 (3.1)

Year-to-Date Through October

2008 1,695 515,280 — 311,503 — 60.5 % $123.29 — $74.53 —

2009 1,695 515,280 0.0 % 269,857 (13.4) % 52.4 116.11 (5.8) % 60.81 (18.4) %

4.2 % 3.3 % 3.2 % 2.4 %

Hotels Included in Sample

Marriott Greensboro Downtown 281 Dec-00 Jun 1984

Doubletree Greensboro 175 Oct-07 Jun 1972

Hyatt Place Greensboro 124 Oct-07 Oct 1995

O Henry Hotel 131 Nov-98 Nov 1998

Proximity Hotel 147 Oct-07 Oct 2007

Wyndham Garden Hotel Greensboro 185 Jun-08 Mar 1974

Hilton Garden Inn Greensboro 134 Nov-06 Nov 2006

Marriott Greensboro High Point Airport 299 Jun-83 Jun 1983

Embassy Suites Greensboro Airport 219 Feb-89 Feb 1989

Total 1,695

Source: Smith Travel Research

Year

Opened

Average Annual Compounded Change:

2003-2008

Number Year

of Rooms Affiliated

Since 2003, the average daily room count has grown by the opening of newhotels and the remodeling and conversion of existing hotels. The 175-roomDoubletree was formerly a Howard Johnson hotel, which moved into theUpper Upscale category with its remodel in 2007. The former Holiday Inn atthe airport was remodeled and changed brands in 2008, becoming aWyndham Garden Hotel, which is the only Mid-Range hotel with Food &Beverage chain scale included in the sample. The Upper Upscale hotels in thesample include the Marriott Greensboro Downtown, the Doubletree, theMarriott Greensboro High Point Airport hotel, and the Embassy SuitesAirport hotel. The proposed hotel would be included in the Luxury or UpperUpscale category, depending upon the hotel’s brand affiliation. The twoIndependent chain scale classification hotels are the O. Henry and theProximity hotels. The Hyatt Place and Hilton Garden Inn are classified in theUpper chain scale category. We note that in today’s competitive market forhotel rooms, it is common for Upscale category hotels, which are considered


Greensboro, NC

to be “Select-Service” rather than “Full-Service” hotels, to attain average ratesequal to or above average rates achieved by the full-service properties. Theselect-service hotels are typically more profitable to operate than a full-servicehotel because they do not have all of the meeting space, restaurants, and barsfound in full-service hotels.

The proposed luxury hotel is likely to compete directly with the two Marriottfull-service hotels, the O. Henry and Proximity hotels, and to a lesser extent,with the Embassy Suites and Doubletree hotels. Smith Travel Researchreported an average occupancy of 57.4% for the sample in 2008. Year-to-datethrough October 31, 2009, occupancy has declined (13.4)% over the sameperiod in 2008, declining from 60.5% to 52.4%. The lower-priced, limited-service hotels are performing better than the full-service hotels, as some full-service hotels have lowered rates and offered free breakfast to compete forthe reduced demand that still exists.

The average ADR in 2008 was $122.10. Year-to-date through October 31, 2009,average rate has fallen from $123.29 to $116.11, or (5.8)%. The decline can beattributed to the national recession and high unemployment, which hasnegatively impacted business, leisure, and group & meeting demand forhotel rooms worldwide. Demand has lagged growth in new supply, asshown in the STR data. While supply grew 1.7% in 2006, 12.0% in 2007, and10.3% in 2008 in the Greensboro sample, demand, as reflected by OccupiedRoom Nights grew 4.8% in 2006, 4.4% in 2007, and 6.3% in 2008.

The proposed subject property is expected to compete with other full-servicehotels in the Greensboro market. In order to evaluate the reasonableness ofthe average daily rate projected for the proposed luxury hotel, we haveobtained operating data from four Greensboro full-service hotels: theDoubleTree Greensboro, the Marriott Greensboro Downtown, the O. HenryHotel, and the Proximity Hotel. We selected these four hotels because theywould be primary competitors with the proposed luxury hotel due to theiroperating style, age and condition of their facilities, geographical proximity todowntown Greensboro, and their actual achieved average rate andoccupancy.

The primary competitors performed better than the market in 2007, but theaggregate ADR for this group of four hotels fell in 2008 as the addition of 322hotel rooms to the market in the fourth quarter of 2007 began to be absorbed.The group of four primary competitors continued to lose occupancy in 2009as the recession deepened and luxury and upper upscale hotels began to

Average Daily Rate ofthe Competition


Greensboro, NC

experience cancellations of group and meeting business. The collapse of WallStreet banks, lead by Bear Stearns in March 2008 and Lehman Brothers inSeptember 2008, created a global economic meltdown. Following thisunprecedented event, a panic on Wall Street ensued, as the marketsfluctuated violently and consumer confidence evaporated.

In 2008, the U.S. saw five of the eight largest bankruptcy filings in the historyof the United States – Washington Mutual, Thornburg Mortgage, GeneralMotors, Chrysler, and Lehman Brothers. This recession has been the worst inthe U.S. since the Great Depression 70 years ago. The hotel business has beenparticularly hard hit because the three major market segments that comprisedemand for hotel rooms and hotel food & beverage have been severelyimpacted. These three market segments are commercial, group & meeting,and leisure.

Commercial demand has fallen as companies have drastically cut backemployee travel to cut costs. In addition, the mass layoffs have resulted in anational unemployment rate above 10%, further reducing the number ofbusiness travelers needing hotel rooms.

Group and meeting business has also fallen sharply, especially in the luxuryand upper upscale classes of hotels in the U.S. as companies cancelledcorporate gatherings and incentive travel after the negative publicitygenerated by the insurer A.I.G. hosting a lavish corporate retreat at the St.Regis Resort in Monarch Beach, California the same week that the companyreceived an $85 billion bailout from the Federal Government. The publicoutrage over this corporate behavior lead to A.I.G. cancelling a plannedcorporate retreat scheduled the week of October 12, 2008 at the Ritz-Carlton –Half Moon Bay Resort in California as the company received an additional$37.5 billion from taxpayers. The negative publicity lead many morecorporations to cancel planned events at luxury hotels, whether or not theywere receiving taxpayer bailout money, which resulted in these companiespaying hundreds of thousands of dollars in cancellation fees to hotels andbanquet facilities. The group and meeting business referred to in the hotelindustry as SMERFE (Social, Military, Educational, Religious, Fraternal,Ethnic), has also been negatively impacted by the recession as these groupshave canceled meetings, cut back on amounts paid for hotel rooms, and theamount spent for food & beverage during the meetings.

Leisure travel has also declined as unemployment rose to 9% and 10%nationally, with many parts of the country experiencing unemployment


Greensboro, NC

levels approaching 15% and higher. Leisure travel is discretionary to a largeextent. People can cancel vacations if they lose their job, are in fear of losingtheir job, or are being more budget-conscious.

Hotel managers typically lower rates during periods of falling demand inorder to capture a larger percentage of the demand that remains. History hasshown that this strategy is difficult to reverse once the market begins to turnaround, and increases in average rate typically lag behind increases inoccupancy by 12 to 24 months, depending on the supply of hotel rooms in aparticular market and the rate at which demand for hotel rooms returns tothe market.

Currently, there is a great deal of discounting occurring in the greaterGreensboro-High Point hotel market. The discounting is occurring not onlyduring traditionally slow months but also in April and October for the HighPoint Furniture Market. According to Brian Casey, President and CEO of theHigh Point Market Authority, hotel rates are almost 25% less than last spring,while eliminating any restrictions for minimum-night stays. The followingtable sets forth rates for approximately 50 hotels for the Spring Marketscheduled for April 17 – 22, 2010. In addition, most hotels previously imposedminimum stays of five to six nights; for 2010, hotels are not imposing anyminimum stay requirements.


Greensboro, NC

Figure 1-2 Hotel Rates for Spring 2010 Furniture Market

Hotel Name Rates

Airport Marriott $159

Ashford Suites $169

Baymont Inn & Suites $99

Best Western Airport $94

Best Western High Point $210

Best Western Windsor Suites $94

Biltmore Suites $109

Clarion Airport $79

Comfort Inn Archdale $119.95

Comfort Suites Airport $149

Comfort Suites Four Seasons $109

Comfort Suites Hanes Mall $89

Country Inn & Suites - Archdale $149

Country Inn & Suites - Greensboro $99.99

Courtyard - Airport $139

Courtyard - Hanes Mall $109

Courtyard - Wendover $129

Crestwood Suites High Point $99.99

Days Inn Four Seasons $69

DoubleTree Hotel $139

Embassy Suites - Greensboro $159

Embassy Suites - Winston-Salem $159

Fairfield Inn & Suites Hanes Mall $99

Fairfield Inn & Suites - Archdale $149

Fairfield Inn & Suites - Wendover $119

Grandover $225

Hampton Inn Airport $149

Hampton Inn - Archdale $129

Hampton Inn - Four Seasons $119

Hampton Inn - Hanes Mall $129

Hawthorne Inn $89

Hilton Garden Inn Wendover $139

Hilton Garden Inn Hanes Mall $129

Holiday Inn Express - Archdale $129

Holiday Inn Express & Suites - Airport $149

Holiday Inn Express & Suites - East (Cedar Park Road) $109.99

Homewood Suites $139

Hotel North Carolina $79

Hyatt Place $189

Innkeeper - Archdale $79

Marriott Downtown Greensboro $169.95

Marriott Winston-Salem $159

Microtel Hanes Mall $60

Microtel - Wendover $79

Park Lane $100

Quality Inn & Suites Airport $99

Quality Inn & Suites Hanes Mall $79.99

Quality Inn High Point $89

Sheraton Four Seasons $142

Sleep Inn Hanes Mall $65

SpringHill Suites - Wendover $159

SpringHill Suites - Hanes Mall $109

Wingate by Wyndham $129

Wyndham Garden Hotel $99

Source: www.highpointmarket.org - 1/17/10


Greensboro, NC

When hotel markets become distressed due to a fall in demand for rooms, asis currently the case in most markets around the U.S., but particularly so inthe Greensboro market, savvy hotel owners and managers may resist cuttingrates, and instead tolerate a decline in occupancy as they lose business tohotels willing to discount. There is strong evidence that this has occurred inthe Greensboro hotel market, as the market already had an oversupply ofhotel rooms before the recession began. HVS is currently projecting thatdemand for hotel rooms nationally will commence a recovery in 2011. Oncethe demand for hotel rooms begins to recover in 2011, it will take a longertime for hotels that did not discount room rates to recover occupancy than itdoes for the lower-priced hotels in the market that drove occupancy higherby discounting rates to the point that these hotels were able to steal businessaway from the other hotels in the market area. To judge the effectiveness ofeither strategy we will need to compare the differences in RevPAR among thecompetitive hotels in the market, which will be addressed later in this report.

The opening of the DoubleTree and the Proximity in the fourth quarter 2007gave an indication of how the addition of 322 new hotel rooms impacted theexisting downtown, or near downtown, hotels in this market. In order toprotect confidential operating data provided to HVS, we have aggregated thefour properties in order to provide overall average daily rate (ADR),occupancy, and RevPAR for the four hotels sampled. We also have includedthe STR sample of nine Greensboro hotels, which included the four primarycomparables, three Upper Upscale hotels, one Upscale hotel, and one Mid-level hotel with food and beverage hotel. The 988-room Sheraton HotelGreensboro was not included in the STR sample because the large number ofrooms in the hotel would skew the averages reported downward.

Figure 1-3 Aggregate Average Daily Rate of Four Primary Competitors vs. STR Sample

2007 2008 2009

Primary Comparables - # of Rooms 458 734 734

Primary Comparables - ADR $140.22 $141.01 $134.58

STR Sample - # of Rooms 1,537 1,695 1,695

STR Sample - ADR $121.41 $122.10 $116.11

In addition to the four primary competitors set forth previously, the STRsample included the Embassy Suites Greensboro Airport, the Hyatt PlaceGreensboro, the Hilton Garden Inn Greensboro, the Marriott Greensboro


Greensboro, NC

High Point Airport, and the Wyndham Garden Hotel Greensboro. Theaggregate average daily rate for these nine competitors was $121.41 in 2007,$122.10 in 2008 and $116.11 in 2009 through October, which was the mostrecent data available from Smith Travel Research when the sample was run.

The development team for the proposed 200 to 206-room subject hotel hasprojected average rates for the first five years of operation, which is assumedto begin on January 1, 2012 when the hotel is projected to open. Theseprojections are set forth in the following table.

Figure 1-4 Developer’s Projection of Average Daily Rate for Five Years

Year 1 Year 2 Year 3 Year 4 Year 5

2012 2013 % Increase 2014 % Increase 2015 % Increase 2016 % Increase

Developer's Projection $155.79 $163.58 5.0% $170.12 4.0% $175.23 3.0% $180.48 3.0%

The average daily rates projected by the developer for the first five years ofoperation are not unreasonable for a luxury or upper upscale hotel located indowntown Greensboro beginning in 2012, and are within the range ofaverage daily rates currently being achieved by the four primary competitorssampled for our analysis. However, the projected average daily rate isunlikely to be achieved at the occupancy projected by the developer.

Average daily rate (ADR) is calculated by dividing the total rooms revenueachieved during a specified period of time by the number of rooms sold andoccupied during the same period. Average rate is highly correlated withoccupancy. One cannot project occupancy without making specificassumptions regarding average daily rate. In other words, a hotel owner canset the average rate at a level that he or she would like to attain, but themarket determines if the rate is too high, just right, or too low, which isreflected in the actual occupancy achieved. This relationship is best illustratedby revenue per available room (RevPAR), which reflects a hotel property’sability to maximize rooms revenue and will be discussed later.

To test the reasonableness of the developer’s projected average daily rate, wehave positioned the average rate for the proposed hotel at $147 in 2009dollars, which is approximately $12.00 above the estimated average rate in2009 for the four primary competitors, and approximately $26.00 above theSTR sample of nine Greensboro hotels. We have considered the currenteconomic conditions in the downtown Greensboro hotel market in selecting

Developer’s Projectionof Average Daily Rate

HVS Opinion as toAverage Daily Rate


Greensboro, NC

inflation factors to be applied to the positioned base rate throughout theprojection period.

Based upon the competitive data set forth previously and the projectedopening date of January 1, 2012, it is our opinion that the average daily ratelikely to be achieved by the Proposed Luxury Hotel Greensboro will be asshown in the table below. We expected the marketwide average rate for thenine hotels included in the STR sample to continue to show contraction ofaverage rate in 2010 as the hotel market hits bottom, before beginning torecover in 2011. Once recovery begins, average rate inflation is expected togrow rapidly between 2011 and 2015, as hotel owners raise rates in anattempt to recover the losses they have incurred since hotel demand began tocollapse in the fourth quarter of 2008.

Figure 1-5 HVS Projection of Average Daily Rate Growth for the Greensboro Market and the Proposed Luxury Hotel

0

Marketwide Average Rate Growth — -1.0 % 1.0 % 4.0 % 5.0 % 5.0 % 4.0 % 3.0 %

Marketwide Average Rate $134.58 $133.24 $134.57 $139.95 $146.95 $154.30 $160.47 $165.29

HVS Projection of ADR 147.00 145.53 146.99 152.86 160.51 168.53 175.27 180.53

2013 20142009 2010 2011 2012 2015 2016

The HVS projections of ADR for the proposed subject hotel are slightly belowthe projections provided in the Notification of Intent supplied by thedevelopment group.

In order to evaluate the reasonableness of the occupancy projected by thedeveloper in its Notification of Intent for the proposed luxury hotel, it isnecessary to have some understanding of the concepts of Latent Demand,Unaccommodated Demand, and Induced Demand.

Latent Demand reflects potential room night demand that has not beenrealized by the existing competitive supply of hotel rooms. This type ofdemand can be divided into unaccommodated demand and induceddemand. Unaccommodated Demand refers to individuals who are unable tosecure accommodations in the market because all of the local hotels are filled.These travelers must defer their trips, settle for less desirableaccommodations, or stay in properties located outside the market area. The

Occupancy of theCompetition


Greensboro, NC

demand created by the Furniture Market in April and October every year isan excellent example of Unaccommodated Demand. Because there are alimited number of hotel rooms in High Point, Furniture Market attendees areforced to stay in other communities that are farther away from High Point,depending on how far in advance a prospective attendee attempts to reservea room. If the attendee is unable to reserve a hotel room and cancels plans toattend the show, the demand did not yield any occupied room nights, and isconsidered to be Unaccommodated Demand. If additional lodging facilitiesare expected to enter the market, it is reasonable to assume that these guestswill be able to secure hotel rooms in the future, and therefore would beincluded in a calculation of Unaccommodated Demand.

Unaccommodated Demand is further indicated if the market is at all seasonal,with distinct high and low seasons; such seasonality indicates that althoughyear-end occupancy may not average in excess of 70%, the market sells outmany nights during the year. HVS considers unaccommodated demand toexist in any month where occupancy exceeds 70% and available rooms aresold out. Over the past six years from 2003 through 2009, there have beenvery few months that hotel occupancy in Greensboro exceeded 70%; thetypical exceptions being April and October each year when the High PointFurniture Market is held. Total full-year occupancy between 2003 and 2008ranged between 57.4% and 63.9%, with an average of 60.6% for the six-yearperiod. Occupancy in 2009 for the ten months through October 31, whichincluded the high-occupancy months of April and October, was 52.4%

Induced Demand represents the additional room nights that are expected tobe attracted to the market following the introduction of a new demandgenerator. Situations that can result in induced demand include the openingof a new company headquarters, the expansion of a convention center, or theaddition of a professional sports team and ballpark or stadium. In someinstances, with Las Vegas being a prime example, the addition of a new hotelwith a distinct chain affiliation or unique facilities can induce visitation to themarket that might not have occurred otherwise. The addition to downtownGreensboro of the proposed 200- to 206-room luxury hotel is not consideredto be significant enough to induce additional demand into the market. Thecurrent and historical demand for higher-end hotel rooms is already beingaccommodated by the existing independent and upper upscale hotels. It ismore likely that the proposed hotel will cannibalize existing demand awayfrom other hotels in the market, which will make it far more difficult for thesehotels to recover from the current recession. Adding a 200-room hotel to the


Greensboro, NC

market in 2012 will cause a setback to these hotels just after the recovery isprojected to begin in 2011.

We have obtained operating data from the same four Greensboro full-servicehotels used to analyze the ADR projections previously shown: theDoubleTree Greensboro, the Marriott Greensboro Downtown, the O.HenryHotel, and the Proximity Hotel. We also have included the aggregate resultsprovided by the STR sample of nine Greensboro hotels, including the fourprimary competitors listed, shown in the table below.

Figure 1-6 Aggregate Occupancy of Four Primary Competitors and STR Sampled Hotels

2007 2008 2009

Primary Competitors 63.4% 53.2% 48.5%

STR Sample 59.6% 57.4% 52.4%

The occupancy achieved by the four primary competitors declined from63.4% in 2007, to 53.2% in 2008, and 48.5% in 2009. The STR sample of ninecompetitors achieved occupancy of 59.6% in 2007, 57.4% in 2008, and 52.4%in 2009. The STR sampled hotels held up fairly well in 2008, losing 2.2% inoccupancy while average rate increased 0.57%, or $0.69. The full impact of therecession became apparent in 2009, as all of the primary competitors and theSTR sample lost occupancy, or, if they managed to increase occupancy, theincrease was achieved by discounting room rates.

The development team for the proposed 200 to 206-room subject hotel hasprojected occupancy for the first five years of operation, which is assumed tobegin on January 1, 2012 when the hotel is projected to open. Theseprojections are set forth in the following table.

Figure 1-7 Developer’s Occupancy Projections



Developer's Projection 64% 65% 1.6% 67% 3.1% 68% 1.5% 67% -1.5%

Developer’s Projectionof Occupancy


Greensboro, NC

Based upon a review of the market dynamics in the proposed subject hotel’scompetitive environment, we have forecast growth rates for each marketsegment. Using the calculated potential demand for the market we havedetermined accommodated demand for the existing four primarycompetitors, and assumed the addition of the proposed subject 200-roomhotel in 2012. Our calculations consider the inherent limitations of demandfluctuations and other factors in the market area.

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

HVS Opinion as toOccupancy


Greensboro, NC

Figure 1-8 Unaccommodated Demand

62,612 65,743 69,030 71,446 73,589

Unaccommodated Demand 636 667 701 725 747

63,248 66,410 69,731 72,171 74,336

Growth Rate 4.0 % 5.0 % 5.0 % 3.5 % 3.0 %

50,127 52,633 55,265 57,199 58,915

509 534 561 581 598

50,636 53,168 55,826 57,780 59,513

4.0 % 5.0 % 5.0 % 3.5 % 3.0 %

25,139 26,396 27,716 28,686 29,547

25,139 26,396 27,716 28,686 29,547

4.0 % 5.0 % 5.0 % 3.5 % 3.0 %

Base Demand 137,878 144,772 152,011 157,331 162,051

Unaccommodated Demand 1,144 1,202 1,262 1,306 1,345

Total Demand 139,023 145,974 153,273 158,637 163,396

less: Residual Demand 1,144 1,202 1,262 1,306 1,345

Total Accommodated Demand 137,878 144,772 152,011 157,331 162,051

Overall Demand Growth 4.0 % 5.0 % 5.0 % 3.5 % 3.0 %

734 734 734 734 734

Proposed Luxury Hotel Greensboro¹ 200 200 200 200 200

Available Rooms per Night 340,910 340,910 340,910 340,910 340,910

Nights per Year 365 365 365 365 365

Total Supply 934 934 934 934 934

Rooms Supply Growth 27.2 % 0.0 % 0.0 % 0.0 % 0.0 %

Marketwide Occupancy 40.4 % 42.5 % 44.6 % 46.2 % 47.5 %

¹ Opening in January 2012 of the 100% competitive, 200-room Proposed Luxury Hotel Greensboro

Commercial

2013 2014 2015 20162012

Base Demand

Growth Rate

Growth Rate

Leisure

Base Demand

Total Demand

Meeting and Group

Base Demand

Unaccommodated Demand

Total Demand

Total Demand

Totals

Proposed Hotels

Existing Hotel Supply

These room night projections for the downtown Greensboro market area willbe used in forecasting the subject property’s occupancy.


Greensboro, NC

Because the supply and demand balance for the competitive market isdynamic, there is a circular relationship between the subject property’sforecasted market share and occupancy levels, based upon its anticipatedcompetitive position within the market.

The proposed subject property’s occupancy forecast is set forth in the tableon the following page, with the adjusted projected penetration rates used asa basis for calculating the amount of captured market demand. (The conceptof penetration as it applies to hotels is explained in an addendum to thisletter report).


Greensboro, NC

Figure 1-9 Forecast of Subject Property’s Occupancy

Market Segment

Commercial

Demand 62,612 65,743 69,030 71,446 73,589

Market Share 19.7 % 20.4 % 21.1 % 21.4 % 21.4 %

Capture 12,331 13,405 14,548 15,299 15,758

Penetration 92 % 95 % 98 % 100 % 100 %

Meeting and Group

Demand 50,127 52,633 55,265 57,199 58,915

Market Share 20.7 % 21.1 % 21.4 % 21.4 % 21.4 %

Capture 10,393 11,093 11,834 12,248 12,616

Penetration 97 % 98 % 100 % 100 % 100 %

Leisure

Demand 25,139 26,396 27,716 28,686 29,547

Market Share 18.8 % 19.7 % 20.6 % 21.4 % 21.4 %

Capture 4,728 5,198 5,699 6,143 6,327

Penetration 88 % 92 % 96 % 100 % 100 %

Total Room Nights Captured 27,452 29,696 32,081 33,690 34,700

Available Room Nights 73,000 73,000 73,000 73,000 73,000

Subject Occupancy 38 % 41 % 44 % 46 % 48 %

Marketwide Available Room Nights 340,910 340,910 340,910 340,910 340,910

Fair Share 21 % 21 % 21 % 21 % 21 %

Marketwide Occupied Room Nights 137,878 144,772 152,011 157,331 162,051

Market Share 20 % 21 % 21 % 21 % 21 %

Marketwide Occupancy 40 % 42 % 45 % 46 % 48 %

Total Penetration 93 % 96 % 99 % 100 % 100 %

2012 2013 20162014 2015

The above table shows the occupancy projected for the subject property andthe market consisting of the four existing primary competitors for a projectionperiod of five years. We project that the subject property will open with anoccupancy rate of 38% in the first year of operation, 2012, and growing to48% by the fifth year of operation, 2016. It is typical for a new luxury hoteloperating in a depressed market to take four to five years to reach a stabilizedlevel of operation. We anticipate that it will take four years for the subjectproperty to penetrate the marketwide occupancy at 100% in 2015.


Greensboro, NC

The following table sets forth the developer’s projection of occupancy andthe HVS projection of occupancy for a five-year period, commencing with theprojected opening of the hotel on January 1, 2012.

Figure 1-10 Comparison of Occupancy Projections Presented by the Developer and Those Projected by HVS



Developer's Projection 64% 65% 1.6% 67% 3.1% 68% 1.5% 67% -1.5%

HVS Projection* 38% 41% 8.2% 44% 8.0% 46% 5.0% 48% 3.0%

* HVS has rounded the average occupancy projectons to the nearest whole percentage point, while the % increase is calculated on unrounded numbers.

As shown in the above table, there is a very wide discrepancy between thedeveloper’s projections of occupancy, and the occupancy projected by HVS.We note that the developer may be presenting projections made by theAtlanta office of HVS in early 2008, as well as projections made by at least oneother hotel consultant. We have not reviewed the feasibility study preparedin February 2008 by HVS – Atlanta for Mr. Randall Kaplan. We believe thatany feasibility study performed prior to the fourth quarter of 2008 can nolonger be relied upon as the market for hotel accommodations hasdeteriorated drastically since that time, and available financing for new hotelprojects has disappeared.

The major upheaval in the banking industry including the demise of WallStreet banks, specifically Bear Stearns in March 2008 and Lehman Brothers inSeptember 2008, multiplied the severity of the recession that began inDecember 2007. Any market or feasibility study performed prior to the fourthquarter of 2008 is unlikely to have anticipated the rapid and deep decline inhotel occupancy, average rate, and RevPAR that has actually occurred in 2009and is forecast for 2010. Hotel industry and banking experts are predicting arecord number of hotel foreclosures, bankruptcies, and loan restructurings in2010 and 2011. As hotel values continue to fall, borrowers will be unable toroll over, or refinance, loans made in 2005, 2006, and 2007, when hoteloccupancies and average rates were at an all-time high. Nationally, hotelowners are increasingly having difficulty servicing their hotel debt, andvalues have fallen 40% to 50%, or more, which leaves hotel asset values wellbelow the level required by banks to refinance an existing loan.

Comparison ofOccupancy Projections


Greensboro, NC

RevPAR, which stands for revenue per available room, is calculated by

multiplying the occupancy percentage of a hotel by the hotel’s average rate. Itis useful as a measure to show the true revenue generating capability of ahotel property, and to compare one hotel to another even though they maynot have the same number of rooms, have different occupancy rates, anddifferent average daily rates. For example, a hotel operating at 52%occupancy with a room rate of $150 has a RevPAR of 52% X $150, or $78.00.Despite its high room rate, this hotel is generating less room revenue than ahotel with 70% occupancy and a room rate of $115, which has a RevPAR of70% X $115, or $80.50.

In order to evaluate the reasonableness of the RevPAR projected for theproposed luxury hotel, we have considered operating data from same fourGreensboro full-service hotels used previously: the DoubleTree Greensboro,the Marriott Greensboro Downtown, the O.Henry Hotel, and the ProximityHotel. The following table shows the projected RevPAR for the proposedsubject based on the developer’s projection of occupancy and average rate,and the HVS projection of occupancy and average rate.

Figure 1-11 Developer’s RevPAR Projections Compared to HVS RevPAR Projections



Developer's Projection $99.71 $106.33 6.6% $113.98 7.2% $119.16 4.5% $120.92 1.5%

HVS Projection $57.48 $65.29 13.6% $74.07 13.4% $80.89 9.2% $85.82 6.1%

There is a large gap between the developer’s projection of RevPAR and theHVS projection of RevPAR. Even though HVS is projecting ADR to be verysimilar to the ADR projected by the developer, the difference in occupancyprojected by the developer and the occupancy projected by HVS issubstantial, resulting in a much lower RevPAR.

In 2009 the RevPAR for the four primary competitors averaged $65.31, havingfallen -26.5% from $88.88 in 2007, to $75.05 in 2008, and to $65.31 in 2009. TheSTR sample of nine Greensboro hotels reported average RevPAR of $72.33 in2007, $70.10 in 2008, and $60.81 year-to-date through October 2009. Thesubject property’s projected RevPAR in the first year of operation is expectedto be lower than the primary competitors as it is at the beginning of its ramp-

RevPAR of theCompetition


Greensboro, NC

up period, which is expected to take five years before the proposed hotelreaches a stabilized level of operation.

If average daily rate is kept high, as is projected by the developer and HVS,occupancy will be at the same levels as the primary competitors, and willgrow slowly as the subject’s 200 to 206 rooms are absorbed by the market.Based upon the competitive data set forth previously and the projectedopening date of January 1, 2012, it is our opinion that the RevPAR likely to beachieved by the Proposed Luxury Hotel Greensboro will be $57.48 in Year 1,growing to $85.82 in Year 5 of the projection period, which is 29.0% lowerthan the RevPAR projected by the developer.

A common industry measurement of food & beverage sales used to compareone hotel to another is the amount of income or expense on a Per OccupiedRoom basis. This number can be calculated for any income or expense lineitem on a hotel’s financial statement by dividing the income or expense itemby the number of rooms occupied during the period in question. Thefollowing table shows the developer’s projection of food & beverage sales peroccupied room for the five-year projection period beginning in 2012.

Figure 1-12 Developer’s Projection of Food & Beverage Revenue Per Occupied Room (POR)



Developer's Proj. Occ. Room Nts. 46,720 47,450 1.6% 48,910 3.1% 49,640 1.5% 48,910 -1.5%

Developer's Proj. F&B Revenue $4,672,000 $5,033,971 7.7% $5,344,528 6.2% $5,587,026 4.5% $5,670,009 1.5%

Developer's Proj. F&B Rev. POR $100.00 $106.09 6.1% $109.27 3.0% $112.55 3.0% $115.93 3.0%

Source: Urban Hotel Group, LLC and Elm Street Center, LLC Notification of Intent dated January 11, 2010

The most appropriate method of projecting food & beverage revenue forhotel restaurant facilities in a hotel is to first consider the proposed menupricing in each outlet, estimate the seat turnover per meal period per day,and multiply the seat turnover by the check average for each meal period orday-part in order to project annual sales in each outlet. In addition, otherrestaurants in the market, whether in hotels or free-standing, should besurveyed in an attempt to estimate their average check for food & beverage,and the average number of customers served per meal period, per day.

Banquet food and beverage revenue is estimated by surveying other banquetfacilities in the market, estimating the number and size of parties likely to be

HVS Opinion as toRevPAR

F&B Revenue PerOccupied Room

Comparable OperatingStatements – F&BRevenue Per OccupiedRoom


Greensboro, NC

held at the hotel in a year’s time, and multiplying the anticipated checkaverage by the number of guests served in a year.

A simpler method, given the limited information provided in the Notice ofIntent, is to research income and expense data for hotels of a similar size withthe same or similar brand. Income and expenses are reported as a percentageof revenue, i.e., as a ratio to department or total sales; and on a per occupiedroom basis, which is calculated by dividing the total income or expense lineitem by the number of hotel rooms that were actually occupied in theaccounting period.

We have researched the HVS database for food & beverage revenue as a ratioof total sales, and on a per occupied room basis for comparable full-servicehotels. The following tables set forth information on a per occupied roombasis for a sample of Westin, Marriott, and a variety of other branded hotelsin a size range of 170 to 250 rooms. This operating data is proprietary andconfidential. Therefore, we have not identified the specific hotels, but rathergrouped them by brand and number of rooms. It is important to note thatresort hotels often have higher food and beverage revenues than do hotelslocated in an urban or suburban market. This is due to the fact that resorthotels cater to corporate groups that use the banquet facilities and restaurantsin the hotel in order to keep their groups together while efficiently feedingthem and then having them get back to their meetings. Also, conferenceorganizers offer sponsored cocktail parties along with other meals toencourage networking and other business purposes. Resort hotels often servea captive clientele due to their remote locations and limited choices fordining. Hotels located in cities and well-developed suburban areas often havenumerous dining choices in close proximity to the hotel, which allow gueststo seek other dining options outside the hotel.

The following table provides revenue and expenses for three Westin brandhotels. Comp 1 is located in a resort setting, which is the reason that its food& beverage revenue was reported to be $156.66 per occupied room. The othertwo Westin properties reported food & beverage revenue of $100.76 and$87.86 per occupied room, which is more typical for hotels located in anurban setting.


Greensboro, NC

Figure 1-13 Comparable Westin Hotel Operating Statements: Amounts Per Occupied Room

Comp 1 Comp 2 Comp 3

Year: 2008/09 2007/08 2006/07

Number of Rooms: 270 to 340 200 to 250 220 to 290

Occupied Rooms: 61,246 49,714 63,353

Days Open: 365 366 365

Occupancy: 56% 60% 68%

Average Rate: $165 $152 $178

RevPAR: $92 $91 $121

REVENUE

Rooms $164.85 $151.51 $177.89

Food & Beverage Combined 156.66 100.76 87.86

Telephone 2.55 2.31 3.52

Rental Income 0.00 0.00 0.79

Garage/Parking 0.00 0.00 7.70

Other 0.00 7.95 8.49

Other Income 17.90 11.51 7.50

Total 341.96 274.03 285.26

DEPARTMENTAL EXPENSES

Rooms 40.82 42.97 40.55

Food & Beverage 106.99 63.52 66.25

Telephone 3.09 3.16 2.83

Garage/Parking 0.00 0.00 3.52

Other Operating Departments 0.00 0.00 3.52

Other Expenses 4.90 7.00 0.98

Total 155.80 116.65 114.12

DEPARTMENTAL INCOME 186.15 157.38 171.14

OPERATING EXPENSES

Administrative & General 25.70 22.75 25.63

Marketing 25.20 24.82 21.70

Franchise Fee 0.00 8.53 4.28

Property Operations & Maintenance 15.70 9.01 11.90

Utilities 12.57 17.22 10.53

Total 79.17 82.33 74.05

HOUSE PROFIT 106.99 75.05 97.09

Management Fee 15.60 8.07 8.56

INCOME BEFORE FIXED CHARGES 91.39 66.98 88.54

FIXED EXPENSES

Property Taxes 15.30 9.11 2.13

Insurance 2.25 2.45 2.87

Equipment Lease 0.00 0.00 0.82

Miscellaneous Fixed Expenses 0.00 9.88 0.82

Reserve for Replacement 13.68 10.96 11.41

Total 31.22 32.41 17.23

NET INCOME $60.17 $34.57 $71.31


Greensboro, NC

We have included a sample of five full-service Marriott brand hotels thatbracket the number of rooms proposed for the subject luxury hotel. Thecombined food & beverage revenue reported by these five hotels ranges from$31.95 to $92.29 per occupied room. The hotels that achieved food & beveragesales between $75.54 and $92.28 per occupied room are located in downtownareas of larger cities, while the hotels with lower food & beverage sales arelocated in suburban locations with less meeting and banquet space.


Greensboro, NC

Figure 1-14 Comparable Marriott Hotel Operating Statements: Per Occupied Room

Comp 1 Comp 2 Comp 3 Comp 4 Comp 5

Year: 2008/09 2008/09 2008/09 2008/09 2008/09

Number of Rooms: 180 to 240 250 to 310 550 to 680 270 to 340 170 to 220

Occupied Rooms: 50,052 59,166 136,634 84,145 33,485

Days Open: 365 365 366 371 365

Occupancy: 65% 58% 61% 73% 46%

Average Rate: $117 $131 $155 $129 $108

RevPAR: $76 $76 $94 $95 $50

REVENUE

Rooms $116.73 $131.46 $155.09 $129.34 $107.60

Food & Beverage Combined 45.03 75.54 80.81 92.28 31.95

Telephone 1.08 1.98 2.44 1.24 0.33

Other Income 4.41 1.25 4.78 6.57 3.73

Total 167.24 210.22 243.13 230.83 143.62


Rooms 26.31 27.71 34.50 29.85 24.52

Food & Beverage 25.76 42.96 50.31 58.23 14.54

Telephone 1.95 1.55 2.03 2.58 0.45

Other Expenses 0.70 0.57 0.36 0.78 1.43

Total 54.72 72.78 87.20 92.92 40.94

DEPARTMENTAL INCOME 112.52 137.44 155.93 137.90 102.67

OPERATING EXPENSES

Administrative & General 14.28 13.44 22.30 24.89 16.34

Marketing 12.30 14.20 19.64 14.99 3.34

Franchise Fee 9.44 10.99 0.00 0.00 16.13

Property Operations & Maintenance 5.44 6.68 10.47 10.04 7.14

Utilities 9.97 6.03 8.14 11.53 12.99

Total 51.43 51.34 60.55 61.44 55.94

HOUSE PROFIT 61.09 86.10 95.38 76.46 46.74

Management Fee 5.85 7.36 7.30 6.93 4.30

INCOME BEFORE FIXED CHARGES 55.23 78.74 88.08 69.53 42.44

FIXED EXPENSES

Property Taxes 8.50 10.32 9.48 6.23 6.54

Insurance 1.10 1.49 1.11 0.77 0.93

Incentive Management Fee 0.25 0.00 12.32 0.00 0.00

Miscellaneous Fixed Expenses 0.34 0.08 13.52 1.00 0.72

Reserve for Replacement 0.00 0.00 14.84 11.54 5.73

Total 9.94 11.88 38.94 19.54 13.92

NET INCOME $45.29 $66.86 $49.14 $49.99 $28.52

The five comparable hotels in the next table include full-service Sheraton,Sofitel, and Hilton brand properties. Combined food & beverage revenueranges from a low of $43.18 per occupied room in a suburban hotel, to $96.90


Greensboro, NC

for a downtown hotel. Four of the five comparables reported food &beverage revenue ranging between $82.88 and $96.90 per occupied room.

Figure 1-15 Comparable 170 to 250-Room Branded Full-Service Hotels: Amounts Per Occupied Room

Comp 1 Comp 2 Comp 3 Comp 4 Comp 5

Year: 2008/09 2008/09 2008/09 2008 2008/09

Number of Rooms: 180 to 230 210 to 270 180 to 230 170 to 220 160 to 210

Occupied Rooms: 53,052 65,571 52,484 49,464 41,315

Days Open: 365 365 365 365 365

Occupancy: 72% 76% 69% 68% 62%

Average Rate: $128 $274 $126 $142 $126

RevPAR: $91 $208 $87 $97 $79

REVENUE

Rooms $127.74 $274.01 $125.92 $142.31 $126.23

Food & Beverage 86.16 83.04 82.88 96.90 43.18

Telephone 1.60 0.00 1.45 0.18 0.12

Other Income 3.79 18.94 2.61 0.26 2.18

Total 219.29 375.99 212.86 239.65 171.71


Rooms 25.18 68.77 34.70 29.23 26.00

Food & Beverage 47.05 71.05 65.32 83.70 29.82

Telephone 1.39 0.00 2.40 0.65 0.94

Other Expenses 1.38 11.29 1.16 0.00 1.60

Total 75.00 151.10 103.57 113.58 58.36

DEPARTMENTAL INCOME 144.29 224.89 109.29 126.07 113.35

OPERATING EXPENSES

Administrative & General 16.10 27.44 20.04 26.16 18.52

Marketing 17.85 22.16 12.67 29.01 12.66

Franchise Fee 13.33 0.00 10.44 0.00 10.92

Property Operations & Maintenance 7.71 14.82 14.19 7.97 11.23

Utilities 9.18 15.08 19.74 12.01 15.03

Total 64.16 79.50 77.09 75.15 68.35

HOUSE PROFIT 80.13 145.38 32.20 50.93 45.00

Management Fee 6.48 11.29 5.16 11.04 4.26

INCOME BEFORE FIXED CHARGES 73.64 134.10 27.04 39.89 40.74

FIXED EXPENSES

Property Taxes 6.97 19.02 9.98 6.27 4.96

Insurance 2.41 1.85 1.30 1.29 1.38

Reserve for Replacement 8.76 12.17 0.00 0.00 0.00

Total 21.73 38.00 11.87 7.56 6.34

NET INCOME $51.91 $96.10 $15.17 $32.33 $34.40

While hotel food & beverage revenue is dependent on the market served andthe quality of the hotel and its kitchen and dining staff, there is a similarity in


Greensboro, NC

food & beverage revenue generated among these comparable hotels becausehotels with similar quality compete with each other for group & meetingbusiness, as well as local social catering business, and are limited in howmuch they can charge for food and beverage by the competition in themarket.

The developer has projected food & beverage revenue to equate to $100 peroccupied room in the first projection year, increasing to $115.93 by the fifthyear of operation. Whether or not these projections are reasonable andachievable will depend upon the quality of the restaurant(s) and bar(s)located in the hotel, as well as the quality of the catering function, includingthe banquet space, food, beverage, and service quality, and the degree towhich these facilities meet with acceptance by the public.

Members of Elm Street Center, LLC have local food & beverage experience byvirtue of the Empire Room catering operation that will become part of theproposed hotel. The City should request income and expense data for thisfacility in order to assess the reasonableness of the developer’s food &beverage revenue and expense projections. The developer’s first yearprojected revenue on a per occupied room basis is approximately three timesgreater than the food and beverage sales achieved by the downtown Marriotthotel over the past three years. The operating history of the Empire room isthe best indicator of how the proposed hotel’s food and beverage departmentmight perform in the downtown Greensboro market.

The HVS 2009 United States Hotel Valuation Index report, published in October

2009, provides historical and projected per-room hotel values for 65 U.S. citiesand the United States overall. The purpose of the Hotel Valuation Index(HVI) is to present a general estimate of market value for hotels in the 65cities tracked by HVS. The HVI was created in 1987 by HVS and is derivedfrom the income capitalization approach used to value hotel real estate. TheHVI is developed by utilizing market area data provided by Smith TravelResearch (STR) and historical operational information from HVS’s extensiveglobal experience in hotel feasibility studies and valuations. The data are thenaggregated to produce pro-forma performance estimates for a typical full-service hotel in each respective market in the U.S. Based on our experience ofreal-life hotel financing structures gained from valuing thousands of hotelseach year, we then apply appropriate valuation parameters for each market,including loan-to-value ratios, real interest rates, and equity returnexpectations. Our newly developed refinancing model forms the basis of ourestimation of value per room for the HVI markets. These market-specific

HVS 2009 U.S. HotelValuation Index


Greensboro, NC

valuation parameters are applied to the net operating income for a typicalfull-service hotel in each city.

Sixty of the 66 markets reviewed (including the United States as a whole)experienced declines in per room values in 2008. While not as drastic as the2001 change in per-room values, the severity of the current recession uponhotel values is illustrated in the fact that two-thirds of the marketsexperienced declines in 2007, and 60 markets were projected to decline in2009, once all data was in. Per-room values for over two-thirds of the marketsare expected to continue to decline in 2010. The four years of per-room valuedeclines for over half of all major U.S. markets is unprecedented in thehistory of the HVI. HVS projects that it will take roughly five years (by 2013-2014) for values to return to the highs recorded in 2006 and 2007, providedthat new hotel supply does not grow faster than 0.9% per year on averageover the next six years.

The HVI was reset in 2005 since the 2008 version of the index was released.Therefore, a typical U.S. hotel, which was previously indexed 1.000 in 1987,has now been indexed at 1.000 in 2005. The Greensboro market area has hadan oversupply of hotels for a number of years. The HVI for Greensboro hasbeen well below the index for the U.S. as a whole for the past five years asillustrated by the following table.

Figure 1-16 Greensboro HVI Compared to U.S. HVI

CAGR*

2005 2006 2007 2008 2009 (2005 - 2008)

Greensboro HVI 0.639 0.769 0.617 0.334 0.180 -19.50%

United States 1.000 1.214 1.154 0.985 0.669 -0.50%

* CAGR is the Compounded Annual Growth Rate

Source: HVS 2009 United States Hotel Valuation Index

The HVS projection for per-room value in the Greensboro market from 2009through 2013 is set forth in the following table.


Greensboro, NC

Figure 1-17 Greensboro Per-Room Value as Projected by HVS in the HVI

Proj. Value Per Room 2009 2010 2011 2012 2013

Greensboro $14,849 $530 $4,779 $15,274 $33,150

Source: HVS 2009 United States Hotel Valuation Index

Over the past 15 months, the deepening economic recession has had aprofound impact on hotel values. Not only have weakening demand levelscontributed to this trend, but the evaporation of credit has also contributedsignificantly to the decline in hotel real estate values. Generally, hotel valuesare projected to bottom out in 2010. Based on the economic and financialtrends that we have observed, hotel values are expected to recover over afive-year period, if or when earnings have recovered and the credit marketshave returned to some semblance of normalcy. Today, there areapproximately $40 billion in distressed hotel loans. Capital marketparticipants are expected to either foreclose on such assets or restructure andwork out their loan requirements.

Considering such factors, savvy investors with access to equity are expectedto capitalize on such opportunities and purchase distressed assets with anupside, at significantly discounted prices, well below replacement cost. Thispossibility has serious implications with regard to any new hotels proposedfor the Greensboro market within the next five years. It is likely that hotelbuyers will be able to purchase existing hotels at prices well belowreplacement cost, renovate and rebrand the hotel, and re-open the hotelcharging rates well below the level necessary to support new hotelconstruction.

Greensboro already has a good example of this strategy as evidenced by thesale and conversion of the Howard Johnson hotel to a DoubleTree hotel in2007. The hotel was purchased in May 2005 for a reported $2,850,000. Thebuyer invested an additional $14,700,000 plus incidental costs for a totalinvestment of approximately $18,580,000, or $106,170 per room for the 175-room property. Compare this cost to the projected total project cost of theproposed luxury hotel to be built in downtown Greensboro at $54,486,248, or$264,496 per room for the 206-room hotel, and it is clear that the proposedhotel will not be able to compete at an economically viable level.


Greensboro, NC

There will be more opportunities for smart buyers to buy properties in theGreensboro market at a deep discount and renovate and rebrand them atbelow replacement cost levels for the next two to three years. Adding a new206-room luxury or upper upscale hotel to the Greensboro market will be asetback to the four primary competitive hotels we have identified just as theybegin to recover average rate, occupancy, and RevPAR in 2011 or 2012.

HVS Global Hospitality Services Statement of Assumptions and Limiting Conditions 2-1

Greensboro, NC

2. Statement of Assumptions and LimitingConditions

1. This consulting services letter is set forth as an analysis and opinionletter; this is not a market study, a feasibility study, or an appraisalreport.

2. No responsibility is assumed for matters of a legal nature.

3. We assume that there are no hidden or unapparent conditions of thesub-soil or structures, such as underground storage tanks, that wouldimpact the property’s development potential. No responsibility isassumed for these conditions or for any engineering that may berequired to discover them.

4. We have not considered the presence of potentially hazardousmaterials or any form of toxic waste on the project site. Theconsultants are not qualified to detect hazardous substances, and weurge the client to retain an expert in this field if desired.

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

6. We have made no survey of the site, and we assume no responsibilityin connection with such matters.

7. All information, financial operating statements, estimates, andopinions obtained from parties not employed by W&R HospitalityServices, Inc. are assumed to be true and correct. We can assume noliability resulting from misinformation.

8. None of this material may be reproduced in any form without ourwritten permission, and the report cannot be disseminated to thepublic through advertising, public relations, news, sales, or othermedia.


Greensboro, NC

9. We are not required to give testimony or attendance in court or atpublic hearings by reason of this consulting letter without previousarrangements, and only when our standard per-diem fees and travelcosts are paid prior to the appearance.

10. If the reader is making a fiduciary or individual investment decisionand has any questions concerning the material presented in thisreport, it is recommended that the reader contact us.

11. We take no responsibility for any events or circumstances that takeplace subsequent to the date of our letter report.

12. The quality of a lodging facility's on-site management has a directeffect on a property's economic viability. The financial forecastspresented in this analysis assume responsible ownership andcompetent management. Any departure from this assumption mayhave a significant impact on the projected operating results.

13. The analysis presented in this report is based upon assumptions,estimates, and evaluations of the market conditions in the local andnational economy, which may be subject to sharp rises and declines.Over the projection period considered in our analysis, wages andother operating expenses may increase or decrease due to marketvolatility and economic forces outside the control of the hotel’smanagement. We do not warrant that our estimates will be attained,but they have been developed on the basis of information obtainedduring the course of our market research and are intended to reflectthe expectations of a typical hotel buyer as of the stated date of thisreport.

14. This analysis assumes continuation of all provisions of the InternalRevenue Code of 1986, as amended to date.

15. Many of the figures presented in this report were generated usingsophisticated computer models that make calculations based onnumbers carried out to three or more decimal places. In the interest ofsimplicity, most numbers have been rounded to the nearest tenth of apercent. Thus, these figures may be subject to small rounding errors.

16. It is agreed that our liability to the client is limited to the amount ofthe fee paid as liquidated damages. Our responsibility is limited to theclient, and use of this report by third parties shall be solely at the riskof the client and/or third parties. The use of this report is also subject


Greensboro, NC

to the terms and conditions set forth in our engagement letter withthe client.

17. Evaluating and comprising financial forecasts for hotels is both ascience and an art. The forecasts are subjective and may be influencedby our experience and other factors not specifically set forth in thisreport.

18. This study was prepared by W&R Hospitality Services, Inc.. Allopinions, recommendations, and conclusions expressed during thecourse of this assignment are rendered by the staff of W&RHospitality Services, Inc. as employees, rather than as individuals.

HVS Global Hospitality Services Certification 3-1

Greensboro, NC

3. Certification

The undersigned hereby certifies that, to the best of my knowledge andbelief:

1. The statements of fact presented in this report are true and correct;

2. The reported market data are limited only by the reported assumptionsand limiting conditions;

3. I have no present or prospective interest in the property that is the subjectof this letter and no personal interest with respect to the parties involved;

4. I have no bias with respect to the property that is the subject of this reportor to the parties involved with this assignment;

5. My engagement in this assignment was not contingent upon developingor reporting predetermined results;

6. My compensation for completing this assignment is not contingent uponthe development or reporting of a predetermined result or direction inperformance that favors the cause of the client, the attainment of astipulated result, or the occurrence of a subsequent event directly relatedto the intended use of this study;

7. Richard D. Williams, MAI did not inspect the property described in thisreport;

8. No one other than the undersigned prepared the analyses, conclusions,and opinions concerning the real estate that are set forth in this report;

9. The reported market data was obtained, and this report has beenprepared, in conformity with the requirements of the Code ofProfessional Ethics and the Standards of Professional Appraisal Practice ofthe Appraisal Institute;

10. The use of this report is subject to the requirements of the AppraisalInstitute relating to review by its duly authorized representatives; and

HVS Global Hospitality Services Certification 3-2

Greensboro, NC

11. As of the date of this report, Richard D. Williams, MAI has completed therequirements of the continuing education program of the AppraisalInstitute.

Richard D. Williams, MAIManaging DirectorW&R Hospitality Services, Inc.dba HVS Global Hospitality Services

HVS Global Hospitality Services Penetration Explanation 1

Greensboro, NC

Penetration Explanation

Let us illustrate the penetration adjustment with an example.

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

Base-Year Occupancy and Penetration Levels

Property

Number of

Rooms Fair Share Commercial

Meeting and

Group Leisure Occupancy

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

Hotel B 125 29.4 70 10 20 65.0 87.4

Hotel C 200 47.1 30 60 10 80.0 107.5

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

Penetration

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

Market-wide Room Night Demand

Market

Segment

Annual Room

Night

Demand

Commercial 54,704 47.4 %

Meeting and Group 43,481 37.7

Leisure 17,246 14.9

Total 115,431 100.0 %

Percentage of

Total

The following discussion will be based upon an analysis of the commercialmarket segment. The same methodology is applied for each market segmentto derive an estimate of a hotel’s overall occupancy. The table below sets forth


Greensboro, NC

the commercial demand accommodated by each hotel. Each hotel’scommercial penetration factor is computed by:

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

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

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

Commercial Segment Penetration Factors

Property

Number of

Rooms Fair Share

Commercial

Capture

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

Hotel B 125 29.4 20,759 37.9 129.0

Hotel C 200 47.1 17,520 32.0 68.1

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

Commercial

Penetration

Commercial

Market Share

If a new 100-room hotel enters the market, the fair share of each hotelchanges due to the new denominator, which has increased by the 100 roomsthat have been added to the market.

Commercial Segment Fair Share

Property

Number of

Rooms

Hotel A 100 19.0 %

Hotel B 125 23.8

Hotel C 200 38.1

New Hotel 100 19.0

Total 525 100.0 %

Fair Share

The new hotel’s penetration factor is projected for its first year of operation. Itis estimated that the hotel will capture (penetrate) only 85% of its fair share asit establishes itself in the market. The new hotel’s market share and room


Greensboro, NC

night capture can be calculated based upon the hotel’s estimated penetrationfactor. When the market share of the existing hotels and that of the new hotelare added up, they no longer equal 100% because of the new hotel’s entryinto the market. The market share of each hotel must be adjusted to reflectthe change in the denominator that comprises the sum of each hotel’s marketshare.

This adjustment can be mathematically calculated by dividing each hotel’smarket share percentages by the new denominator of 97.1%. The resultingcalculations reflect each hotel’s new adjusted market share. The sum of theadjusted market shares equals 100%, indicating that the adjustment has beensuccessfully completed. Once the market shares have been calculated, thepenetration factors can be recalculated (adjusted market share divided by fairshare) to derive the adjusted penetration factors based upon the new hotel’sentry into the market. Note that each existing hotel’s penetration factoractually increases because the new hotel is capturing (penetrating) less thanits fair share of demand.

Commercial Segment Projections (Year 1)

Property

Number of

Rooms Fair Share

Hist./Proj.

Penetration

Factor

Hist./Proj.

Market Share

Adjusted

Market

Share

Adjusted

Penetration

Factor

Projected

Capture

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

Hotel B 125 23.8 129.0 30.7 31.6 132.8 17,299

Hotel C 200 38.1 68.1 25.9 26.7 70.1 14,600

New Hotel 100 19.0 85.0 16.2 16.7 87.5 9,117

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

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


Greensboro, NC

Once the market shares of each hotel have been adjusted to reflect the entryof the new hotel into the market, the commercial room nights captured byeach hotel may be projected by multiplying the hotel’s market sharepercentage by the total commercial room-night demand. This calculation isshown below.

Commercial Segment Projections (Year 2)

Property

Number of

Rooms Fair Share

Hist./Proj.

Penetration

Factor

Hist./Proj.

Market Share

Adjusted

Market

Share

Adjusted

Penetration

Factor

Projected

Capture

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

Hotel B 125 23.8 132.8 31.6 29.3 122.9 16,004

Hotel C 200 38.1 70.1 26.7 24.7 64.8 13,507

New Hotel 100 19.0 130.0 24.8 22.9 120.3 12,531

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

HVS, Centennial, Colorado Qualifications of Richard D. Williams, MAI

HVS Global Hospitality Services

7883 S. Locust CourtCentennial, Colorado 80112

303-771-4104FAX 303-290-6533

Richard D. Williams, MAI

EmploymentSeptember 1993 - Present HVS GLOBAL HOSPITALITY SERVICES

HVS FOOD & BEVERAGE SERVICESDivisions of W&R Hospitality Services, Inc.PresidentCentennial, Colorado

October 1993 - Present ARBITRATOR – PROPERTY TAXArapahoe, Boulder, Denver, Douglas, El Paso andJefferson Counties

April 1989 – Present R.D. WILLIAMS & ASSOCIATES - OwnerRestaurant & Hotel AppraisalCentennial, Colorado

January 1984 – April 1989 COLDWELL BANKER COMMERCIAL REAL ESTATESERVICESBroker Licensed in ColoradoDenver, Colorado

October 1982 – June 1983 CAFÉ KANDAHARManaging PartnerLittleton, Colorado

October 1978 – October 1982 BUCKHORN EXCHANGE RESTAURANTManaging PartnerDenver, Colorado

September 1976 – October 1978 CHATEAU PYRENEES RESTAURANTExecutive ChefEnglewood, Colorado

February 1970 – September 1976 CAFÉ PROMENADESous ChefDenver, Colorado

April 1973 – April 1984 R.D. WILLIAMS CATERING, INC.PresidentDenver, Colorado


Education and Other Training CORNELL UNIVERSITYBachelor of Science - Hotel & Restaurant Administration(1970)

UNIVERSITY OF COLORADO – DENVERPost Graduate Courses Completed:

BUSN 6000 Accounting for ManagersBUSN 6020 Quantitative Business AnalysisBUSN 6040 Human Behavior in OrganizationsBUSN 6060 Marketing ManagementBUSN 6080 Management of OperationsBUSN 6100 Management of Information Systems

APPRAISAL INSTITUTEMember of the Appraisal Institute (MAI) ClassesCompleted:Course 1A1 – Real Estate Appraisal PrinciplesCourse 1A2 – Basic Valuation ProceduresCourse 1BA – Capitalization Theory and Techniques,Part A

Course 1BB – Capitalization Theory and Techniques,Part B

Course 540 – Report Writing and Valuation AnalysisCourse 550 – Advanced ApplicationsCourse SPP – Standards of Professional Practice,Part A & B

Course 410 – Standards of Professional Practice, Part ACourse 420 – Standards of Professional Practice, Part BCourse 520 – Highest and Best Use, and Market AnalysisCourse 430 – Standards of Professional Practice Part C

Course 800 – Separating Real & Personal Property fromIntangible Business Assets

Course 400 – USPAP Update 2003, 2005 & 2007Course 510 – Advanced Income CapitalizationCourse 310 – Basic Income Capitalization

An Introduction to Valuing Green Buildings, 2008

Case Studies in Partnership and Common TenancyValuation, 2008

Appraisal Curriculum Overview (2-Day General), 2009


General Appraiser Certifications Held Colorado and New Mexico

Licensed Real Estate Broker – Colorado

Memberships and Affiliations Appraisal Institute – Member (MAI)

Cornell Hotel Society, Rocky Mountain ChapterBoard of Directors, 1982 to present

Cornell Club of ColoradoPresident, 1986 to 1994Board of Directors, 1986 to 1998

Colorado Restaurant Association

Culinary Advisor, American Express Openforum.com,2008

Hyatt Mountain LodgeBoard of Directors, 2008 to present

Ownership Interests BUCKHORN EXCHANGE RESTAURANTDenver, Colorado

W&R HOSPITALITY SERVICES, INC.Centennial, Colorado

R. D. WILLIAMS & ASSOCIATESCentennial, Colorado

Publications and Awards Stuck on Cooking, Children’s Cookbook Co-Author, 1990Real Estate Workouts & Asset Management, “Arbitration:

A Better Way to Lower the Property Tax of YourHospitality Property,” April 1994

HVS Food & Beverage Hospitality Report “Meeting theChallenges of a Slowing Economy,” October 2001

HVS Food & Beverage Hospitality Report “Five CommonMistakes in Valuing a Hotel or Restaurant for PropertyTax Purposes,” April 15, 2002

HVS Food & Beverage Hospitality Report “What is MyRestaurant Business Worth? Part 1 and Part II,” June &July, 2002

The Real Estate Finance Journal, Fall 2002 “What is aRestaurant Business Worth?”

Mortgage and Real Estate Report, September 1, 2002“Restaurants: Valuing the Real Estate”


Real Estate Monitor, Summer 2002 “Valuing Restaurant RealEstate”

HVS Food & Beverage Hospitality Report “Technology IssuesIn Restaurants – Summary of FS/TEC 2002 Presentation,”November 2002

HVS Food & Beverage Hospitality Report “Getting YourRestaurant Ready for the Holiday Season,” November2002

HVS Property Tax Services Hospitality Report “How toLower the Property Taxes on Your Hotel or Restaurant,”January 2003

HVS Food & Beverage Hospitality Report “When Do I NeedAn Appraisal of My Restaurant’s Real Estate?,” May2004

HVS International Global Hospitality Report “RestaurantRent: How Much is Too Much?,” October 2006

HVS Global Hospitality Report “Why New RestaurantsFail”, February 2008

OpenForum.com “What’s Hot in the Restaurant Business”,October 2008

Northwest Stir “2009 Restaurant Trends,” January 2009Florida Restaurant & Lodging “Future-Proof Your

Business,” January 2009

Outstanding Achievement in Real Estate Marketing,Top Producer for Coldwell Banker’s DowntownDenver Retail Department, 1986

Speaking Engagements The Lodging Conference at the Biltmore, Scottsdale, AZ,September 1999, “Repositioning Your Hotel Restaurant”

Hotel Design 2000 Expo & Conference, Las Vegas, NV,April 2000, Destination Dining Panel

Resort Forum, Newport Beach, CA, June 2000,Developing, Managing and Marketing All SeasonResorts – “Determining the Highest and Best Use ofSpace at Your Property”

Hotel Food & Beverage Educational Forum 2002,Washington, D.C., February 2002, Keynote Speaker“10 Ways to Meet the Challenges of a Slowing Economy”

FS/TEC 2002, Orlando, FL, October 2002, “Food &Beverage Cost Control and Financial ManagementSystems”


Colorado Chapter of the Appraisal Institute – CopperMountain, Colorado, September 2003, “Food forThought - Restaurant Appraisal Methodology &Management Issues”

University of Colorado School of Business, Boulder,Colorado, October 2003 and March 2004, Guest lecturer:“Food & Beverage Issues in the Hotel Business”

University of Denver School of Hotel Restaurant &Tourism Management, Denver, Colorado, April 2005,Guest Lecturer: “Hotel & Restaurant Appraisal”

Hotel Valuation: The Players; What, Why & How TheyDo It!, Atlantic City, New Jersey, November 2006,Speaker

Colorado Chapter of the Appraisal Institute,Breckenridge, Colorado, September 2007, Moderator:“Tourism = Value”

University of Denver School of Hotel Restaurant &Tourism Management, Denver, Colorado, May 2008,Guest Lecturer: “Restaurant Appraisal”

CNN, December 2008, “How the Tables Have Turned”Colorado Art Institute, Denver, Colorado, February 2009,

Guest Lecturer: “Restaurant Entrepreneurship”

HVS, Centennial, Colorado Qualifications of RichardD. Williams, MAI

Examples of Corporate andInstitutional Clients Served

Arapahoe County, ColoradoBaker & Hostetler LLP

Banff Centre

BB&TBeneficial Savings Bank

Capmark Finance, Inc.Chart House, Inc.

Cherokee County, Georgia

Cipriani USA, Inc.CiticorpCity and County of Denver

City of Salem, VirginiaColumbia Sussex CorporationCrescent Real EstateDeutsche Bank

Douglas County, ColoradoEl Paso County, ColoradoEquity Inns

Evans & Petree

Faulkner USAFirstar Bank

GE Real EstateGMAC Capital Corporation

GMAC Commercial Mortgage

Harp GroupHilton Hotels CorporationHost Marriott

Jefferson County, ColoradoM Booth & AssociatesMarriott InternationalMeriStar Hospitality Corporation

MONY Capital ServicesNC State UniversityNorth Fork Bank

Novack and Macey

Paragon DevelopmentPiper Jaffray & Co.

Quaintance Weaver Restaurantsand Hotels

Shaner Hotel Group

Shinsei BankShreck BrignoneSoutheast Restaurant Properties

South Suburban Park &Recreation District

SpiritBank of TulsaStarwood Resorts & Hotels

Worldwide

Stonebridge Companies

Suitt ConstructionTexas Tech UniversityUBS AG

University of Arizona Science

& Technology ParkUniversity of Arkansas

University of DelawareUniversity of Missouri-Kansas City

University of Texas - Austin

US BankVail ResortsVillage of Wheeling, Illinois

Young, de Normandie &

Oscarsson, P.C.Wells Fargo – American

Commercial CreditWhite Lodging Services Corp.

Willow Grove BankXanterra Parks & Resorts

Examples of Properties Appraised orEvaluated

ARIZONA

Proposed Hampton Inn & Suites,

GoodyearHoliday Inn, Kingman

Proposed Clarion Suites Hotel,

ScottsdaleHoliday Inn Express, TucsonProposed Hotel, Conference

Center & Golf Course, Universityof Arizona Science & TechnologyPark, Tucson

Windmill Inn Suites, Chandler

Windmill Inn Suites, TucsonWindmill Inn Suites, SurpriseProposed Hawthorn Suites Hotel

& Conference Center, TucsonProposed Homewood Suites,

Tucson

ARKANSAS

Proposed Conversion of Carnall

Hall to Hotel Use, University of

Arkansas, FayettevilleGreen Leaf Hotel, Little Rock

CALIFORNIA

Embassy Suites, Los Angeles

International AirportRadisson San Francisco Airport at

Sierra Point, Brisbane

Radisson LAX, Los Angeles

COLORADO

Best Western Country Villa Inn,Wheat Ridge

Best Western Inn at Pueblo West,Pueblo

Brown Palace Hotel, Denver

Burnsley Hotel, DenverComfort Inn, DenverDays Inn, Ft. Morgan

Fairfield Inn by Marriott, Denver

Hampton Inn, AuroraProposed Hampton Inn, LovelandProposed Hampton Inn, Louisville

Hampton Inn, Englewood

Hampton Inn, PuebloHampton Inn Southwest,

LakewoodProposed Holiday Inn Express,

Boulder

Holiday Inn Southeast, DenverHoliday Inn, Ft. CollinsLodge at Vail, Vail

The Lodge & Spa at Cordillera,Edwards

Proposed Longmont Hotel,

Longmont


COLORADO (CONTINUED)

Marriott Hotel, Ft. Collins

Ramada Inn, Ft. CollinsMarriott Mark Resort, Vail

Oxford Alexis Hotel, DenverRed Lion Inn, Durango

Proposed Sleep Inn, Durango

Super 8 Motel, Glenwood SpringsSuper 8 Motel, Wheat RidgeTabor Lake Inn, Wheat Ridge

Vail Athletic Club, VailWarwick Hotel, DenverWinchester Inn, Ft. Collins

Winter Park Ski Resort, Winter Park

Radisson Inn - North, ColoradoSprings

Proposed Comfort Inn, Colorado

Springs

Proposed Hampton Inn & Suites,Pueblo

Proposed Holiday Inn Express,Glenwood Springs

Proposed Comfort Inn & Suites

Glenwood SpringsHyatt Regency Beaver Creek, AvonDrury Inn, Colorado Springs

Proposed Bradford Homesuites,

WestminsterProposed Bradford Homesuites,

Colorado SpringsProposed AmeriSuites, Colorado

SpringsProposed Homewood Suites,

Colorado SpringsProposed Comfort Suites,

Highlands Ranch

Proposed Fairfield Inn by MarriottHighlands Ranch

West Vail Lodge, West Vail

Executive Tower Inn, DenverHoward Johnson Lodge, DenverLazy L Motel, Boulder

Proposed Lakeshore at Keystone,

KeystoneHampton Inn Denver West, Golden

St. Regis Resort, AspenBoulder Outlook Hotel & Suites

BoulderTwo Keystone Sites, DillonSteamboat Sheraton Hotel & Golf

Course, Ski Time Square,

Thunderhead Lodge andCondominiums, SteamboatSprings

Four Points by Sheraton Denver

Southeast, DenverGalatyn Lodge, Vail

DELAWARE

Proposed Courtyard by Marriott,University of Delaware, Newark

FLORIDA

Residence Inn by Marriott, Miami

Holiday Inn & Marina, SarasotaProposed Residence Inn by

Marriott, NaplesTiffany House Assisted Living,

Ft. LauderdaleProposed Focused-Service Hotel,

Banquet Facility & ConferenceCenter, Fort Myers

Gaylord Palms Hotel & Convention

Center, Kissimmee

GEORGIA

Proposed Cherokee CountyHotel, Canton

HAWAII

Proposed Courtyard by Marriott,Honolulu

ILLINOIS

Proposed Hotel & ConferenceCenter with Two Restaurants,

LombardProposed Kaskaskia Hotel, LaSalle

Proposed Westin-North ShoreHotel with Signature Restaurant,Wheeling

Proposed Hotels, Maywood

InterContinental Chicago O’Hare,Rosemont

INDIANA

Proposed Fairfield Inn by Marriott,Mishawaka

Proposed Courtyard by Marriott,

South Bend

IOWA

Courtyard by Marriott, CliveHilton Hotel, Sioux City

KENTUCKY

Proposed Trailhead Inn,Shepherdsville

LOUISIANA

Courtyard by Marriott, Baton

RougeProposed Carter Plantation Hotel

& Conference Center, Springfield

Proposed Staybridge Suites atSouthgate, Baton Rouge

Proposed Holiday Inn & Suites,

Lake CharlesProposed Candlewood Suites,

Lake Charles

MARYLAND

Super 8, College ParkSuper 8, Lexington ParkHoliday Inn – Inner Harbor,

BaltimoreHoliday Inn North, Glen Burnie


MARYLAND (CONTINUED)

Holiday Inn, Belmont

Holiday Inn, TowsonHoliday Inn, Silver Spring

Town Center Hotel, Silver SpringHoliday Inn, Frederick

Proposed Radisson Hotel &

Waterpark, Linthicum HeightsGaylord National Resort &

Convention Center, National

Harbor

MASSACHUSETTS

Regal Bostonian Hotel, BostonSuper 8, Lexington Park

MICHIGAN

Carlton Lodge, Benton Harbor

Carlton Lodge, Goshen

MISSOURI

Regency Inn, ColumbiaProposed University of Missouri-

Kansas City Hotel, Kansas City

NEBRASKA

Proposed Hampton Inn & Suites,Grand Island

NEVADA

Proposed Hampton Inn, Las VegasProposed Embassy Suites, Las

Vegas

Proposed Residence Inn byMarriott, Las Vegas

Comfort Inn, North Las Vegas

Westgate Planet Hollywood, Las

Vegas

NEW JERSEY

Proposed Bradford Homesuites,

SecaucusHoward Johnson Inn, Atlantic City

NEW MEXICO

AmeriSuites, AlbuquerqueHampton Inn, Las CrucesHilton Garden Inn, Rio Rancho

Marriott Hotel, Albuquerque

Proposed Convention CenterHotel, Albuquerque

Proposed Hilton Garden Inn,Albuquerque

Proposed Country Inn & Suites,

AlbuquerqueRancho Encantado, Santa FeResidence Inn by Marriott, Santa Fe

Proposed Hilton Garden Inn,

RoswellProposed Marriott Resort Hotel &

Spa, Santa FeProposed Rio Rancho Hotel, Rio

RanchoProposed Resort Hotel, Taos Ski

ValleyProposed Residential Village, Taos

Ski Valley

NEW YORK

The Regent Wall Street, New York

City

NORTH CAROLINA

Holiday Inn, Dortches

Sheraton Inn, CharlotteHoliday Inn Select, Winston-SalemProposed Comfort Suites, Winston-

Salem

Comfort Inn, Buxton (CapeHatteras)

Holiday Inn, Statesville

Howard Johnson, StatesvilleHampton Inn, Statesville

Proposed Conference Center Hoteland Golf Course, NCSU, Raleigh

Proposed Proximity Hotel,

Greensboro

O.Henry Hotel, GreensboroProposed 21C Museum Hotel,

Durham

OHIO

Mentor Country Inn, MentorHoliday Inn, Dayton

Holiday Inn, Lima

Holiday Inn, ColumbusProposed 21c Hotel, Cincinnati

OKLAHOMA

Howard Johnson Inn, Tulsa

Ramada Inn, Norman

PENNSYLVANIA

Normandy Farm Hotel and

Conference Center, Blue Bell

SOUTH CAROLINA

Days Inn, Myrtle Beach

Lodge Alley Inn, Charleston

(Timeshare)Shore Crest II, Myrtle Beach

(Timeshare)

Ramada Plaza, Fort Mill(Bankruptcy)

Proposed Holiday Inn &Waterpark, Myrtle Beach

SOUTH DAKOTA

Radisson Encore Hotel, Sioux FallsProposed Hotel & Conference

Center, Sioux Falls


TENNESSEE

Holiday Inn – Airport, Memphis

Proposed Fairfield Inn by Marriott,Memphis

French Quarter Hotel, MemphisHampton Inn - East, Memphis

Howard Johnson Plaza, Memphis

AmeriSuites, CordobaEmbassy Suites, East MemphisHomewood Suites, East Memphis

Homewood Suites, GermantownEmbassy Suites at Vanderbilt,

Nashville

Marriott Nashville Airport,

NashvilleSpringHill Suites Nashville Airport,

Nashville

TEXAS

Proposed Residence Inn byMarriott, Brownsville

Proposed Courtyard by Marriott,Brownsville

La Quinta Inn, HoustonProposed Residence Inn by

Marriott, IrvingProposed Courtyard by Marriott,

San Antonio

Proposed Fairfield Inn by Marriott,Austin

Holiday Inn South, Austin

Proposed Bradford Homesuites,Austin

Proposed Conference Hotel –

University of Texas, Austin

Proposed Fairfield Inn by Marriott,San Antonio

Residence Inn by Marriott, LubbockProposed Residence Inn by

Marriott, PlanoProposed Courtyard by Marriott,

PlanoProposed Marriott Suites Hotel,

Dallas Market Center

Proposed Courtyard by Marriott,Addison

Proposed Texas Tech UniversityCampus Hotel and ConferenceCenter, Lubbock

Hampton Inn, Lubbock

Courtyard by Marriott, LubbockFairfield Inn by Marriott, LubbockProposed 21C Museum Hotel,

Austin

Proposed Westin @ Domain,Austin

VIRGINIA

Comfort Inn, Virginia BeachCourtyard by Marriott, HamptonFairfield Inn by Marriott, Hampton

Holiday Inn, Covington

Holiday Inn Executive Center,Virginia Beach

Holiday Inn, LexingtonHoliday Inn, MarionHoliday Inn, Salem

Sheraton Inn, RoanokeSuper 8, CulpeperSuper 8, Fredericksberg

Super 8, Tappahannock

Holiday Inn, ChesapeakeCourtyard by Marriott, Richmond

Quality Inn, RichmondHoliday Inn Surfside, Virginia

BeachCourtyard by Marriott, Virginia

BeachFairfield Inn by Marriott, Virginia

Beach

Clarion Hotel, Virginia BeachComfort Inn, Tysons Corner

(Vienna)

Proposed Courtyard by Marriott,Tysons Corner

Proposed Homewood Suites,

Alexandria

Proposed Aloft Hotel, ChantillyProposed Comfort Suites, Salem

Proposed Focused-Service Hotel,Salem

WASHINGTON

Proposed Fair Haven Inn,Bellingham

Proposed Westin Hotel,

BellevueSummerfield Suites, Seattle

WASHINGTON, D.C.

Washington Hilton & Towers

WISCONSIN

Comfort Suites, Pewaukee

International

ARGENTINA

Market Survey, Buenos Aires

BRAZIL

Market Survey, São PaulMarket Survey, Rio de JaneiroMarket Survey, Belo Horizonte

MEXICO

Camino Real, MazatlanHoward Johnson, San José del

Cabo, Baja California Sur

Proposed Hilton Cabo Real, LosCabos, Baja California Sur

Proposed Boutique Hotel, Cabo San

Lucas, Baja California Sur

Proposed Condo-Hotel, Cabo SanLucas, Baja California Sur

Vacant Land, San José del Cabo,

Baja California Sur


ITALY

Proposed Hotel Cipriani, Palermo,

Sicily

TURKS & CAICOS ISLANDS

Proposed Third Turtle Club Condo-

Hotel, Providenciales

URUGUAY

Market Survey, Punta del Esté

Food and BeverageConsulting & RestaurantAppraisal

ARKANSAS

Proposed Ella’s Restaurant,

University of Arkansas,Fayetteville

CALIFORNIA

Chart House Restaurant – SanDiego Rowing Club

Sea World, San Diego - Ballroom

Expansion Market StudyTazzina Bistro, Woodland

COLORADO

Beaver Run Resort, Breckenridge

Jackson’s Hole Sports Grills,Denver

Tivoli Mall Student Union, Denver

Brittany Hill Restaurant, DenverDenver Athletic Club, DenverEl Rancho Restaurant, El Rancho

South Suburban Park and

Recreation Golf CourseRestaurant, Centennial

Lone Tree Golf Club and Hotel,Lone Tree

Embassy Suites Downtown, DenverSpencer’s Restaurant, Beaver Run

Resort, Breckenridge

Tivoli Deer Restaurant, Kittridge

Wendy’s Restaurant, GlenwoodSprings

Wendy’s Restaurant, Golden

Wendy’s Restaurant, Silverthorne

Char’s Restaurant, AspenStuart Anderson’s Black Angus

Restaurant, Lone TreeProposed Hilton Garden Inn,

Denver

Arrowhead Golf Club, LittletonPark Hill Golf Club, DenverSilver Creek Restaurant, Granby

Flatirons Golf Course, Boulder

CONNECTICUT

Burning Tree Country Club,

Greenwich

Avon Old Farms Inn, Avon

DELAWARE

Christiana Hilton, Newark

FLORIDA

Walt Disney World, Orlando

Proposed Shooters Waterfront Café

U.S.A., SarasotaPopeyes Chicken & Biscuits,

Fort MyersPopeyes Chicken & Biscuits

Palm Beach Blvd., Fort Myers

Popeyes Chicken & Biscuits,Clearwater

Popeyes Chicken & Biscuits,

North Fort Myers

Popeyes Chicken & Biscuits,Tampa

The Clevelander Restaurant & Bar,

South Beach, Miami BeachBennigan’s Restaurant, Bradenton

Proposed Bennigan’s Restaurant,Naples


Spring Hill

Proposed Fairwind Restaurant &Bar, South Beach, Miami Beach


New Port Richey

Proposed Carrabba’s Italian GrillRestaurant, Miami Beach

Popeyes Chicken & Biscuits,Holiday

Islander Beach Club, New Smyrna

BeachProposed Landmark Entertainment

Facility, Ft. Lauderdale

Proposed Cipriani Banquet Facility

and Hotel F&B Facilities, MiamiBeach

Proposed Banquet Facility &Conference Center, Fort Myers

Big Chef, Holiday

ILLINOIS

Illinois Machine Shed, Rockford

Planted Earth Café, MolineThunder Bay Grille, Rockford

Proposed Gibson’s Bar &Steakhouse, Lombard

Proposed Renovation of KaskaskiaHotel & Banquet Facility, La Salle

Thunder Bay Grille, PewaukeeWisconsin Machine

Proposed Hugo’s Frog Bar &

Fish House, WheelingProposed Restaurant, RockfordProposed Wildfire Grill, Chicago

IOWA

Iowa Machine Shed, DavenportIowa Machine Shed, Urbandale

Thunder Bay Grille, Davenport


KANSAS

Kansas Machine Shed, Olathe

KENTUCKY

Proposed Trailhead Restaurant &

Music Hall, Clermont

MICHIGAN

Quality Inn and ConventionCenter, Coldwater

Proposed Dining Club, GrandRapids

NEVADA

Boison’s Restaurant, Las Vegas

NEW MEXICO

Radisson Picacho Hotel, Santa Fe

Proposed Damon’s, Las CrucesProposed Denny’s, Las Cruces

Proposed KFC/Long John Silver’s,Santa Rosa

NEW YORK

Cipriani International –

Rainbow Room, New York City

Buffalo Hilton Hotel, BuffaloJ.G. Melon Restaurant, New York

City

The Castle at Tarrytown and Equus

Restaurant, TarrytownBarneys New York/Pierre Hotel,

New York CityCipriani 55 Wall Street, New York

City

Proposed Restaurant, NewburghFormer Chi Chi’s Restaurant,

Johnson City

NROTB Teletheater and Race

Palace, PlainviewCipriani 42nd Street, New York City

Proposed Trump on the OceanBanquet/Catering Facility,Wantagh

Crest Hollow Country Club,

WoodburyProposed Williamsburg Hotel

Restaurants, Bars, Museum, and

Club, Brooklyn

Proposed Restaurant, SaratogaSprings

NORTH CAROLINA

O. Henry Hotel, GreensboroLone Star Steakhouse, Winston-

Salem

Proposed Proof Restaurant,

Durham

OKLAHOMA


TulsaPopeyes Chicken & Biscuits

Muskogee

OREGON

Proposed Restaurant & Gift Shop,Crater Lake National Park

PENNSYLVANIA

Normandy Farm Restaurant,Conference Center, and BanquetFacility, Blue Bell

TEXAS

Proposed Restaurant Development,Corpus Christi

Proposed Proof Restaurant, Austin

UTAH

Proposed Hotel & Convention

Center, Logan

VIRGINIA

Ramada Inn & Convention Center,

Lynchburg

WASHINGTON

Yakima Grill, Seattle

WISCONSIN

Thunder Bay Grille, PewaukeeWisconsin Machine Shed,

Pewaukee

WYOMING

Yellowstone National ParkRestaurants

RESTAURANT PORTFOLIOS

90 Restaurants on La QuintaOutparcels

78 Restaurants on La Quinta

Outparcels

INTERNATIONAL

Market & Feasibility Study for a

Proposed Planet Hollywood,Kuwait City, Kuwait

Proposed Enoch Cree Restaurants

& Food Court, Edmonton, Alberta,Canada

Fish House in Stanley Park,

Vancouver, British Columbia,Canada

The Cannery Seafood House,

Vancouver, British Columbia,

CanadaThe Banff Centre, Banff, Alberta,


CanadaRestaurant Research, India

Hotel Food & Beverage Consulting,Dubai

HVS- 1_18_10

Documents

Transcript of HVS- 1_18_10