Loading...
HomeMy WebLinkAboutCT 03-02; CARLSBAD RANCH PLANNING AREA 5; MARKET STUDY; 2000-09-01INTERNATIONAL Prepared by: HVS International Market Study and Forecast of Occupancy and Average Rate Proposed Full-Service H:otel Carlsbad, California 116 New Montgomery, Suite 620 San Francisco, California 94105 ( 415) 896-0868 ( 415) 896-0516 fax Submitted to: Mr. Tim Stripe Co-President Grand Pacific Resorts 5900 Pasteur Court, Suite 200 Carlsbad, California 92008 (760) 431-8500 (760) 431-4580 fax SOP Cf(oOI A-- CuP o3o L\~ INTERNATIONAL i¢iPMA@ 116 New Montgomery Street Suite 620 San Francisco, California 94105 415-896-0868 415-896-0516 FAX San Francisco New York London Miami Vancouver Boulder Mexico City New Delhi Singapore Sao Paulo Specialists in Hotel Consulting and Appraisal Worldwide September 1, 2000 Mr. Tim Stripe Co-President Grand Pacific Resorts 5900 Pasteur Court, Suite 200 Carlsbad, California 92008 (760) 431-8500 Re: Proposed Full-Service Hotel Carlsbad, California HVS Reference Number: 2000040114 Dear Mr. Stripe: Pursuant to your request, we herewith submit our market study and forecast of occupancy and average rate pertaining to the above-captioned property. We have conducted an inspection of the subject site and analyzed the hostelry market conditions in the Carlsbad, California area. This report is being prepared for use by Grand Pacific Resorts in connection with the development of the proposed subject property. No information presented in this report should · be distributed to or relied upon by the public or third parties without the express written consent of HVS International. This consulting assignment has been performed and reported in conformance to the requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), as provided by the Appraisal Foundation. INTERNATIONAL 2 We do hereby certify that we have no undisclosed interest in the property, and our employment and compensation are not contingent upon our findings. Additionally, the market study is expressly prepared subject to all normal and specific assumptions and limiting conditions, contained throughout and attached to this report. JH/ES/SRM/leg Very truly yours, HVS International a{\~ Jennifer Hsu Consulting and Valuation Analyst Elaine Sahlins Director . Suzanne R. Mellen, CRE, MAI Managing Director HVS International, San Francisco, California Proposed Full-Service Hotel Quality Assurance INTERNATJONAL Quality Assurance The HVS International division of M&R Valuation Services, Inc., strives to achieve the highest standards of quality during all phases of the consulting process. It is our goal to provide clients with the finest market study report available. The following staff members acknowledge their contribution to this report. Linda E. Gee -Editing and Report Production Editor (Extension 209) ~~ Jennifer Hsu -Fieldwork, Analysis, and Text Consulting and Valuation Analyst (Extension 306) ~ Elaine Sahlins -Fieldwork, Analysis, and Review Director (Extension 325) Suzanne R. ellen, CRE, MAI -Analysis and Review Managing Director (Extension 108) We are available to answer any questions and are pleased to have provided you with the finest quality product available. Kay McClanahan (extension 305) is available to answer any billing questions. We look forward to serving you again in the future. HVS International, San Francisco, California Proposed Full-Service Hotel Table of Contents INTERNATIONAL Table of Contents 1. Summary of Salient Data and Conclusions ........................... 1 2. Nature of the Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3. Description of the Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4. Market Area Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 5. Market for Transient Accommodations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 6. Statement of Assumptions and Limiting Conditions . . . . . . . . . . . . . . . . . 69 7. Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Addenda Engagement Letter Photographs of Hotel Site Qualifications Jennifer Hsu Elaine Sahlins Suzanne R. Mellen, CRE, MAI HVS International, San Francisco, California Proposed Full-Service Hotel Summary of Salient Data and Conclusions 1 INTERNATIONAL 1. Summary of Salient Data and Conclusions Property: Location: Date of Inspection: Interest Appraised: Date of Value: Land: Zoning: Assessor's Parcel Numbers: Flood Zone: Proposed Improvements: Proposed full-service hotel Carlsbad, California August 2, 2000 Fee simple August 4, 2000 ±56.525 acres (±2,462,229 square feet) C-T-Q -Commercial, Tourist with a Qualified Development Overlay 210-010-27; 211-023-08; and 212-041-05 X 350-room full-service hotel with complementary . facilities, including meeting space, restaurant(s), and lounge(s), and other amenities. HVS lntemational, San Francisco, California Proposed Full-Service Hotel Nature of the Assignment 2 INTERNATIONAL 2. Nature of the Assignment Subject of the Market Study and Forecast of Occupancy and average rate Objective of the Market Study and Forecast of Occupancy and Average Rate Use of the Market Study and Occupancy and Average Rate Method of Study The subject of the market study and forecast of occupancy and average rate is the fee simple interest in a vacant ±56.525-acre site, which is part of Carlsbad Ranch and is proposed for the development of a full-service hotel. The proposed developments include a mixed-use resort consisting of 350 hotel and 350 timeshare units. The proposed hotel improvements will accommodate leisure demand while operating in conjunction with the adjacent Legoland park and will also appeal to corporate and group meeting segments. Although not part of the study, the hotel's development is proposing an ancillary timeshare component to be developed in conjunction with the hotel. The site is located in the southern portion of the city of Carlsbad, just east of Interstate 5, and is adjacent to the northern boundary of the Legoland California theme park development. The city of Carlsbad is located in the county of San Diego and the state of California. The objective of the market study is to evaluate the supply and demand factors affecting the hotel market in the Carlsbad area for the purpose of developing a forecast of occupancy and average rate for the proposed improvement as of January 1, 2004, the planned date of opening. This market study and forecast of occupancy and average rate is being prepared for use by Grand Pacific Resorts in connection with the development of the proposed hotel improvements. No information presented in this report should be distributed to or relied upon by the public or third parties without the express written consent of HVS International. The methodology used to develop this market study is based on the market research and valuation techniques set forth in the textbooks we authored for the American Institute of Real Estate Appraisers and the Appraisal Institute, entitled The Valuation of Hotels and Motels, 1 Hotels, Motels and 1 Rushmore, S. The Valuation of Hotels and Motels. Chicago: American Institute of Real Estate Appraisers, 1978. HVS Intemational, San Francisco, California Proposed Full-Service Hotel Nature of the Assignment 3 INTERNATIONAL Scope of the Market Study Restaurants: Valuations and Market Studies, 2 The Computerized Income Approach to Hotel/Motel Market Studies and Valuations, 3 and Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations.4 The specific steps incorporated in our analysis are outlined as follows: 1. The subject site was evaluated from the viewpoint of its physical utility for the operation of a hotel, as well as access, visibility, and other relevant locational factors. 2. The surrounding economic environment, on both an area and neighborhood level, was reviewed to identify specific hostelry-related economic and demographic trends that may have an impact on future demand for hotels. 3. A market orientation and appropriate improvements for the proposed hotel were determined. 4. Dividing the market for transient accommodations into individual segments allowed us to define specific market characteristics for ·the types of travelers expected to utilize the area's hotels. The factors that were investigated include purpose of visit, average length of stay, facilities and amenities required, seasonality, daily demand fluctuations, and price sensitivity. 5. An analysis of existing and proposed competition provided an indication of the current accommodated demand. Occupancy and average rate projections were derived from the existing competitive landscape and an analysis of the lodging activity, as well as an understanding of the proposed hotel's operation. All information was collected and analyzed by the signatories to this report. Our determination of the proposed improvements is based on our assessment of opportunities in the market as well as the vision and desires of the client and the overall Legoland development. We have investigated the general economy of the area affecting the subject property, as well as the specifics of the competitive hotel market. The occupancy and average 2Ruslunore, S. Hotels, Motels and Restaurants: Valuations and Market Studies. Chicago: American Institute of Real Estate Appraisers, 1983. 3Rushmore, S. The Computerized Income Approach to Hotel/Motel Market Studies and Valuations. Chicago: American Institute of Real Estate Appraisers, 1990. 4Rushmore, S. Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations. Chicago: Appraisal Institute, 1992. HVS lntemational, San Francisco, Califomia Proposed Full-Service Hotel Nature of the Assignment 4 INTERNATIONAL Ownership and Management History and Assumptions Pertinent Date rate projections are based upon this investigation and analysis and are conveyed in this market study. The subject property is owned by Carlsbad Estate Holdings, Inc. (CEHI). The owners purchased ±52.8 acres from Carlsbad Ranch Company (CRC) on October 24, 1995 for $9,000,000, or $3.90 per square foot. At the time of purchase, the land was not zoned for resort development; since the purchase, CEHI has secured the zoning rights to develop a resort of up to 700 units. An additional ±3.7 acres were purchased for $309,000 in March 1998 from the Carltas Company. The addition of this acreage brings the total subject site to ±56.525 acres. Our market study assumes that the proposed hotel improvements will be affiliated with a management company of an established brand with a national reservation system. Our market study conclusion is in accordance with the description and plans provided by the client. The market study assumes that the proposed improvements will be developed consistent with these plans in a good, workmanlike manner. The effective date of the market study and forecast of occupancy and average rate is August 4, 2000. All projections are expressed in inflated dollars. The subject site was inspected by Jennifer Hsu and Elaine Sahlins. Suzanne R. Mellen, CRE, MAI, inspected the site during the course of a prior assignment and participated in the analysis and conclusions contained herein. HVS Intemational, San Francisco, Califomia Proposed Full-Service Hotel Description of the Real Estate 5 INTERNATIONAL 3. Description of the Real Estate LAND Description of the Land An important part of every market study is the description of the buildings and the land. The purpose of this section is to analyze the physical and functional attributes of the property that influence value. The following section addresses the real estate that comprises the subject property, including the land and the improvements. The zoning applicable to the site and the property's assessed value and tax issues are also discussed. The suitability of the land for development is an important consideration affecting the economic viability of a property and its overall value. Factors such as size, topography, access, visibility, and the availability of utilities have a direct impact on the desirability of a particular site. The site under consideration consists of ±56.525 acres (±2,462,229 square feet) located to the southeast of Cannon Road and Lego Drive. The site is part of the larger 450-acre Carlsbad Ranch development; this development includes various existing and proposed developments. The following table details the current land uses. Carlsbad Ranch Land Usage Legoland qalifomia theme park Proposed golf course land Commercial flower fields Proposed hotel improvements Specialty retail mall Grand Pacific Resort development Open space 12 research and development office sites Total Acreage ±128.3 93.1 53.4 56.525 26.7 10.5 10.0 various ±454.5 The southern boundary of Carlsbad Ranch is defined by Palomar Airport Road, across which is land designated as Encinas Open Space, as well as a Costco Wholesale Club. To the east of the ranch development and adjacent HVS Intematio11al, Sa11 Fra11cisco, California Proposed Full-Seruice Hotel Descriptio11 of the Real Estate 6 INTERNATIONAL Access and Visibility to the theme park is Hidden Valley Road. North of the ranch is undeveloped land, owned by San Diego Gas & Electric, which is occupied only by large power lines. Finally, to the west of the Ranch development are mixed commercial development along Interstate 5 (I-5), including multiple automobile dealerships and various retail outlets at the Carlsbad ,S=ompany Stores, which will be discussed in a later section. The large subject site is bound by the Legoland theme park to the south, open space to the east, and land zoned for golf course development to the north and west. At the time of our inspection, the hotel site remained ·undeveloped vacant land which, as reported by the client, is currently being used for commercial agriculture. The subject site is gently sloping from south to north. The southernmost portion is the narrowest as well as the highest portion of the site. As such, the views of the Pacific Ocean and I-5 to the west are possible from the slope at the southern portion of the site. The northern portion of the site is wider, flatter, and more conducive to hotel development. A water tower abuts the site's southeastern boundary. According to the client, this tower will remain, although no alternative options have been addressed. The site is readily accessible from local, county, and interstate routes. The main entrance will be via Cannon Road, which provides direct access to I-5 approximately one-quarter mile west of the site. Cannon Road is currently under construction to extend east to El Camino Real. The road is anticipated to be readily accessible come time for hotel operations. Interstate 5 is a major north-south, limited-access highway which originates at the U.S.-Mexico border and extends north through California, Oregon, and Washington, to its northern terminus at the U.S.-Canada border. Regionally, I-5 provides access to the coastal areas of San Diego and serves as the principal link for the commercial centers of San Diego, Orange County, and Los Angeles. Interstate 5 also provides easy access to Interstate 15, which extends northeast to Las Vegas, and Interstate 8, which extends west to Arizona. The San Diego International Airport is located approximately 35 miles to the south of the subject site. The McClellan-Palomar Airport, located approximately 3 miles to the east of the site, provides additional, but relatively infrequent and expensive, air service. Currently, two regularly scheduled airlines, America West and United Express, provide service to Phoenix and Los Angeles. HVS lntemational, San Francisco, California Proposed Full-Service Hotel Description of the Real Estate 7 JNTERNATIONAL Special Site Considerations Flood Zone Utilities Zoning In terms of visibility, the southern portion of the land can be seen from I-5, while the northern portion cannot. However, all visitors to Legoland California will enter the park via Cannon Road and will have clear visibility of the proposed hotel's entrance and, we assume, property signage. Additionally, the hotel improvements would be visible from various points throughout the Legoland theme park. Special site considerations can include soil and drainage conditions; environmental, hazardous materials, and toxic conditions; flood hazard zones; earthquake zones; wetlands; and encroachments indicated on the title report. As for soil and drainage conditions, they appear satisfactory, though the appraisers are only qualified to the extent of visual inspections. The appraisers have not been informed of any site-specific environmental hazards, and no visible signs of asbestos or toxic ground contaminants were apparent at the time of our inspection. Because the appraisers are not experts in this field, we do not warrant the absence of hazardous waste. According to city planning officials and Federal Emergency Management Agency (FEMA) panel #060285-1027F, effective June 19, 1997, the subject land is located in flood zone X, which is defined as "areas determined to be outside the 500-year flood plain." According to CEHI, all utilities, including water, sewer, electric, and gas, are available at the site perimeter. According to the city of Carlsbad zoning regulations, the ±56.525-acre subject site is zoned as follows: C-T-Q Commercial-Tourist with a Qualified Development Overlay (Carlsbad Ranch Specific Plan) The subject property's zoning includes a qualified development overlay, which is defined by the Carlsbad Ranch Specific Plan. The Carlsbad Ranch Specific Plan allows for the development of a full-service hotel facility. The plan specifies that most hotel facilities will be designed to encourage use by the general public as well as the hotel guest. In addition to meeting the General Development Standards and Design guidelines as defined by the city zoning ordinance, the subject's zoning plan includes the following development standards: HVS Intemational, San Francisco, California Proposed Full-Service Hotel Description of the Real Estate 8 INTERNATIONAL PROPOSED IMPROVEMENTS • Permitted uses: hotels; timeshare units as permitted by the city council and in conjunction with a hotel project; • Accessory uses: retail related to the hotel; restaurants; health and fitness clubs; daycare facilities; personal services; galleries/museums; administrative facilities; bars/nightclubs as part of the hotel; horse stables, provided certain setbacks; • Building and landscape setbacks: 50 feet at front yard on Cannon Road; 20 feet at front yard on Hidden Valley Road; 50 feet and rear yard adjacent theme park and golf course; 20 feet from side yard or open space; • Building height: a maximum of 35 feet; • Parking: shall be determined; • Building orientation: resort will be oriented to maximize ocean views; and, • Architecture: shall be determined. We assume that the improvements, when developed, will have all necessary permits and approvals, including an appropriate liquor license, and that the subject property will be in conformance with local building codes and all other applicable regulations. The quality of a lodging facility's physical improvements has a direct influence on marketability, and therefore attainable occupancy and average room rate. The design and functionality of the structure can also affect operating efficiency and overall profitability. Our market study of the proposed hotel development is based on discussions with the client, our understanding of the specific zoning regulations, our familiarity with numerous hotel-lodging products and markets across the county, our understanding of the intended synergy with the Legoland theme park, and our analysis of the existing competitive market for lodging demand in the city of Carlsbad. Additionally, we assume that the proposed hotel improvements will be affiliated with a reputable management company as well as an established brand, such as, but not limited to, Radisson, Sheraton, Marriott, or Hilton, with a national reservation system. This analysis also assumes the hotel will be actively marketed by Legoland. The hotel will be prominently featured in Legoland marketing and advertising collateral. Legoland will also significantly contribute to the hotel's operations. The resort improvements are proposed to be a three-to four-star property, primarily accommodating leisure demand, and operating in conjunction HVS Intemational, San Francisco, California Proposed Full-Service Hotel Description of the Real Estate 9 =H=-~ ~-=--V=---a= -INTERNATIONAL with the adjacent Legoland park. While the site had been considered for a five-star destination resort, the current market conditions indicate that a three-to four-star, full-service hotel property would more readily capture existing demand. In addition, a three-to four-star hotel with significant meeting space at the Legoland location would induce strong leisure and group demand without the infrastructure development that is required for a five-star property. A five-star property at this location would not be able to compete successfully with the existing destination luxury hotels in Southern California. The westward view orientation toward the back end of office buildings in the area and the noise impact from the McClellan-Palomar Airport make the proposed subject property less competitive with existing destination luxury hotels in Southern California, especially the A viara and La Costa resorts, which are well established in the region. In addition, the power lines to the east of the site would be inconsistent with the overall appearance of a five-star hotel. A good-quality, branded full-service hotel with adequate meeting space and the Legoland association could represent the highest-quality lodging facility in Carlsbad and would more effectively accommodate the year-round demand in Carlsbad than a five-star destination resort. In addition, the property will accommodate commercial and group meeting demand by featuring corporate amenities and significant meeting space. The public spaces are assumed to be comparable to those of similar full-service hotels while incorporating some aspects of the Lego brand. Additionally, it is assumed that the service level of the proposed hotel will be equal to that expected of a full-service, three-to four-star property and that it will be competitive with comparable hotel properties throughout the southwestern United States. The following chart outlines the recommended facilities for the subject site. HVS bztemational, San Francisco, California Proposed Full-Service Hotel Description of the Real Estate 10 INTERNATIONAL Proposed Hotel Improvements Guestrooms Phase One Phase Two Phase Three Total Food and Beverage Facilities Three Meal Restaurant Room Service Lobby Bar Cafe Meeting Rooms Phase One Phase Two Phase Three Total Recommended Amenities Number of Units 150 100 1QQ 350 Square Feet 4,500 3,000 5,000 12,500 Outdoor swimming pool (s) with extensive water feature Pool bar/cafe Children"s arcade/activity center Children's playground Fitness room Retail shops {Lego shop and gift shop) Opening Date January 1, 2004 January 1, 2006 January 1, 2009 January 1, 2004 January 1, 2006 January 1, 2006 January 1, 2009 January 1, 2004 January 1, 2006 January 1, 2009 Concierge Small spa fac illty Driving range Adequate guest parking The proposed hotel needs to create an inclusive hotel environment which caters to the needs of leisure-oriented as well as corporate and group meeting travelers. Expected to appeal to families and other leisure guests, the hotel will need to be designed to also accommodate incentive travel and high-end tour and travel groups. In the past year, the Carlsbad market (and the greater San Diego area) has experienced strong increases in the number of hotel rooms. Hotel supply is expected to continue to increase through the next few years and many projects are still in the construction pipeline. The recent increases in supply have yet to be fully absorbed. Although the recent trends of 2000 indicate positive absorption of the new hotel rooms, the ability of the area's hotels to sustain their recent occupancy levels through the slower seasons has yet to be proven. Based on this "wait and see" strategy, we recommend that the HVS Intemational, San Francisco, Califomia Proposed Full-Service Hotel Description of the Real Estate 11 -------- INTERNATIONAL subject property's improvements be constructed in phases. Phase One would include 150 guestrooms, a restaurant and lounge, 3,000 square feet of meeting space, and a modest complement of amenities. Two additional phases are set forth so that the entire development spans a period of approximately six years. Our analysis also assumes that timeshare units will be constructed concurrent with the hotel rooms. The consultants' recommendation regarding the hotel improvements assumes that approximately 75 timeshare rooms will be developed with Phase One of the hotel. These timeshare rooms will be available to the hotel to generate group meetings and will also accommodate leisure demand. As such, the hotel's food and beverage facilities and meeting rooms would be designed to service guests from both the hotel and the timeshare units. While the hotel is expected to be perceived as a stand-alone full-service property, the Legoland association is assumed to be a major marketing and operational component. The integration of Legoland and the hotel operations is expected to enhance the positioning of both properties. Groups using the hotel facilities are likely to enjoy the recreational and catering features of Legoland. The possibility of Legoland operating the food and beverage facilities of the hotel should be investigated. Although the specific opportunities to cross-sell business between the park and the hotel are outside the scope of this analysis, our recommendation for the hotel facilities assume that the subject property will be significantly associated with Legoland. To create a sense of destination, the proposed property is anticipated to feature significant water amenities. A large outdoor pool and a children's pool are recommended for the first phase of guestrooms. As the property expands, another outdoor pool can be added. Other amenities can be developed to complement the Legoland association, including an arcade, a children's activity center, and an outdoor playground. In addition, a golf course would enhance the marketability and attractiveness of the subject property, but according to the client, the proposed municipal golf course development has not obtained approvals from all of the required governmental agencies. A five-star destination resort would require a state-of-the-art designer golf course located at the resort and high green fees. The exact scope and quality level of the city's proposed golf course were not provided to the consultants. HVS Intemational, San Francisco, Califomia Proposed Full-Service Hotel Description of the Real Estate 12 INTERNATIONAL NEIGHBORHOOD The ability of the hotel to accommodate social and corporat_e groups would allow the hotel to successfully compete in the market. Many of the area's demand generators, including Legoland and the surrounding commercial businesses, attract groups using the area's existing meeting space for meetings and social events. With the Legoland association, the subject property is expected to attract significant numbers of leisure groups. Incentive and reunion groups are some of the segments which would require both the Legoland attractions and in-house meeting space. Meeting space at the hotel could also be used to attract corporate groups which could use the Legoland facilities for social events and the hotel's meeting space for business meetings. All of the hotel's facilities are intended to complement, and not compete with, the adjacent Legoland theme park. Significant meeting and recreational facilities will serve to differentiate the proposed Legoland hotel from the existing hotel competition. The neighborhood surrounding a lodging facility often has an impact on a hotel's status, image, class, style of operation, and sometimes its ability to attract and properly serve a particular market segment. This section of the report investigates the proposed subject property's neighborhood and evaluates any pertinent locational factors that could affect its occupancy level, average rate, and overall profitability. The subject neighborhood is clearly defined as the Carlsbad Ranch and Legoland California developments. The neighborhood is a commercially developing and tourist community and the nearby surface streets have quickly developed with freestanding retail shops, restaurants, and office space. Carlsbad Ranch, as detailed earlier in this section, contains numerous projects. Twelve commercial sites are plotted and all lots except one have been sold. Current tenants include the Gemological Institute of America, with a campus spread over ±29 acres, the National Association of Music Merchants, with ±36,000 square feet of office space, Natural Alternatives, Inc., with ±82,000 square feet, and Denso Automotive Engineering Company, with ±77,500 square feet of space. Several of the remaining sites are under consideration for development as well. A specialty retail mall is located on ±27 acres along I-5. This factory outlet mall, known as the Carlsbad Company Stores, houses tenants such as Polo, Calvin Klein, Barney's Outlet, Gap, Kenneth Cole, Levi's, Samsonite, Tommy, Reebok, and various other retailers and food outlets. Approximately 53.4 acres of HVS Internatio11al, San Francisco, California Proposed Full-Service Hotel Descriptio11 of the Real Estate 13 INTERNATIONAL Legoland California the ranch will continue to be used for flower bulb farming, the original use of the entire ranch site, and will continue to be an annual tourist attraction. Carlsbad has recently enjoyed a strong local economy, generally due to the burst of commercial and industrial developments in the area. The Carlsbad General Plan assigns approximately 2,500 acres at the center of the city for planned industrial use. This plan encourages light manufacturing, research and development, communications and corporate headquarters, and other types of high-technology and biotechnology industries. A review of the city's major employers shows that the area's major businesses are involved in the golfing, technology, and services industries. Callaway/Odyssey Golf, for example, is the number one employer in the area, with approximately 2,250 employees. Grand Pacific Resorts recently constructed a 200-unit timeshare and resort hotel development located within Carlsbad Ranch. This property, which is located on ±10.5 acres, opened for operation on March 1999. This hotel will be considered competitive with the subject property due to its location and market demand mix. _ Another hotel in the immediate neighborhood of .the subject property is the Holiday Inn, which is located at the intersection of Palomar Airport Road and I-5. This hotel operated in conjunction with a TGI Friday's restaurant and banquet facility. Given that this property is affiliated with a nationally recognized chain and has direct freeway visibility and accessibility, the Holiday Inn will be considered a direct competitor of the subject property. Legoland California held its grand opening on March 20, 1999. The -Legoland theme park was developed by Legoland Estates AG, a 100% owned subsidiary of INTERLEGO AG of Switzerland. This park was the company's third development, with existing parks in Billund, Denmark, and Windsor, England. The park entails 128 acres, complete with six main activity areas constructed with, and oriented around, Lego products. Legoland California, a uniqu~ family park, is intended to be an educational, interactive, and recreational theme park oriented toward families with children ages 2 through 12. In addition, the park also caters to planned group events; Legoland California will include various restaurant and retail outlets. Legoland received approximately 1.5 million visitors in the first full year of operation, 1999. Management estimated that approximately 65% of this HVS International, San Francisco, California Proposed Full-Service Hotel Description of the Real Estate 14 INTERNATIONAL Conclusion demand is generated from the San Diego, Orange County, and Los Angeles regions. Daily entrance fees for the park are $29 for children and $34 for adults. Overall, Legoland California is a high-quality theme park with strong name recognition. The synergy of this park with the proposed hotel facilities will be mutually beneficial for the hotel operator as well as for the Legoland theme park. The subject property's physical and locational attributes have been evaluated, with the following characteristics noted. The development site is well located within the North County of San Diego, with easy access to the area's and regional roadways and good visibility for patrons of the Legoland theme park. The proposed improvements are considered to be appropriate for a transient lodging facility in the subject market; we assume that it will be in compliance with all zoning regulations. The subject's neighborhood continues to grow and the Legoland California theme park has attracted many leisure travelers to the entire neighborhood. HVS lntemational, San Francisco, Califomia Proposed Full-Service Hotel Market Area Analysis 15 INTERNATIONAL 4. Market Area Analysis Market Area Definition The economic vitality of the market surrounding the subject property is an important consideration in forecasting lodging demand and income potential. Economic and demographic trends that reflect the amount of visitation provide a basis from which to project hostelry demand. The purpose of the market area analysis is to review available economic and demographic data to determine whether the local market will undergo economic growth, stability, or decline. In addition to predicting the direction of the economy, the rate of change must be quantified. These trends are then correlated based on their propensity to reflect variations in lodging demand with the objective of forecasting the amount of growth or decline in transient visitation by individual market segment (e.g., group meeting and leisure). The subject property is located in the city and county of San Diego. San Diego County corresponds to the San Diego Metropolitan Statistical Area (MSA), which is so defined for statistical purposes. The lodging market in the county draws a significant amount of its patronage from the entire Southern California region, a nine-county area that includes both the San Diego and Los Angeles MSAs, as well as the nation as a whole. San Diego County is located at the southwestern corner of the·continental United States. It is bordered by Orange and Riverside Counties to the north, Imperial County to the east, and the Pacific Ocean to the west; Mexico lies adjacent to the southern border of San Diego County. At the closest point, the city of San Diego is roughly 16 miles north of the Mexican border. San Diego County covers roughly 4,261 square miles and is most densely developed in its western and coastal areas. The terrain varies from mountains, deserts, and rolling hills in the inland areas to more than 70 miles of coastline and beaches to the west. Subtropical sun and the cooling California current produce a pleasant year-round climate, which is one of the area's greatest assets. HVS bztenzational, San Francisco, Califonzia Proposed Full-Service Hotel Market Area Analysis 16 Economic Overview Demographic and Economic Review San Diego County has been one of the nation's fastest-growing economies in the last several years, having recovered from the national economic recession of the early 1990s. Leading San Diego's economic recovery were technology-based, commercial industries, a departure from the defense- and military-oriented companies that dominated the local economy from the 1980s through the early 1990s. Emerging growth areas include telecommunications, computers and software, biotechnology, and medical instruments. The advanced telecommunications industry is the county's new employment growth leader, as locally headquartered Qualcomm set the industry standard for wireless communications and established San Diego as the nation's leading telecommunications center. In addition, the strong expansion of the service sector seen in the last two years is expected to continue, allowing for modest overall growth in the economy. Overall, San Diego County's economy is supported by the following key industries: agriculture, defense, fishing, technology, international trade, manufacturing, medical research, retail sales,. and tourism. According to statistics provided by the San Diego Chamber of Commerce, San Diego's gross regional product (GRP) is estimated to have reached $91.6 billion in 1999, which represents the sixth consecutive year of GRP growth. A diverse base of employment, combined with the anticipation of continued moderate growth, suggests a positive outlook for the regional economy. The following demographic and economic review sets forth population, per-capita income, and retail sales for the San Diego MSA, the state of California( and the United States as a whole from 1980 through 2010. While not directly correlated with hotel room night demand, population and retail sales serve as a general measure of a market's health. The per-capita income reflects the economic well-being of the populace. HVS International, San Francisco, California Proposed Full-Service Hotel Market Area Analysis 17 INTERNATIONAL Demographic and Economic Review Average Annual % Change 1980 1992 1999 2010 1980-92 1992-99 1999-10 Resident Population (Thousands) San Diego, CA MSA 1,875.3 23,792.8 227,225.6 2,598.4 30,854.2 254,995.9 2,826.3 33,022.2 272,895.7 3,297.2 36,581.5 298,405.8 2.8% 1.2% 1.4% State of California United States Per Capita Personal Income* San Diego, CA MSA State of California United States W&P Wealth Index San Diego, CA MSA State of California United States Total Retail Sales (Millions)* San Diego, CA MSA State of California United States * Inflation Adjusted 18,462.0 20,234.0 17,203.0 106.8 115.4 100.0 14,177.2 188,182.8 1,636,704.5 21,153.0 22,191.0 20,547.0 103.3 107.1 100.0 19,215.9 224,593.2 1,894,880.3 23,528.0 24,839.0 23,811.0 100.7 104.7 100.0 24,734.5 284,500.7 2,403,545.9 27,624.0 28,617.0 27,543.0 101.9 104.3 100.0 32,257.0 352,005.1 2,940,197.5 Source: Woods & Poole Economics, Inc. 2.2% 1.0% 1.1% 0.8% 1.5% -0.3% -0.6% 0.0% 2.6% 1.5% 1.2% 1.0% 1.0% 1.5% 1.6% 2.1% -0.4% -0.3% 0.0% 3.7% 3.4% 3.5% 0.9% 0.8% 1.5% 1.3% 1.3% 0.1% -0.0% 0.0% 2.4% 2.0% 1.8% The population of San Diego MSA increased at an average annual compounded rate of 2.8% between 1980 and 1992, and by 1.2% per year from 1992 to 1999. Average annual compounded growth is.projected to be 1.4% between 1999 and 2010, approximately twice the rate of state and national growth. Personal income in the MSA increased at an average annual compounded rate of 1.1% between 1980 ·and 1992 and 1.5% from 1992 to 1999, and is projected at this level from 1999 to 2010. Personal income growth rates for the MSA are forecast to be higher from 1999 to 2010 than for the state and nation. The W&P Wealth Index data presented in the preceding chart indicate that the San Diego MSA populace is slightly more affluent than the state and the nation as a whole. Between 1980 and 1992, retail sales in the MSA increased at an average annual compounded rate of 2.6%; slower growth rates of 1.5% and 1.2% were registered in the state and the nation, respectively. Between 1992 and 1999, retail sales in the county increased at a robust rate of 3.7%, compared to 3.4% and 3.5% for the state and nation, respectively. Between 1999 and 2010, inflation-adjusted retail sales are projected to increase by 2.4% annually in the San Diego MSA, 2.0% in California, and 1.8% in the United States. HVS lntemational, San Fra11cisco, California Proposed Full-Service Hotel Market Area Analysis 18 INTERNATIONAL Workforce Characteristics The characteristics of an area's workforce provide an indication of the type and amount of transient visitation likely to be generated by local businesses. Sectors such as finance, insurance, and real estate (FIRE); wholesale trade; and services produce a considerable number of visitors who are not particularly rate sensitive. The government sector often generates room nights, but per-diem reimbursement allowances often limit attainable rates. The manufacturing, construction, and transportation, communications, and public utilities (TCPU) sectors are least likely to generate a significant number of hotel guests. The following table sets forth the San Diego County workforce distribution by business sector in 1980, 1992, and 1999, as well as a forecast for 2010. San Diego County Historical and Projected Employment (000s) Average Annual Compounded Percent Change Percent Percent Percent Percent Industry 1980 ofTotal 1992 of Total . 1999 of Total 2010 of Total 1980-1999 1992-1999 1999-2010 Farm 16.8 1.7 % 13.6 1.0 % 13.5 0.8 % 12.5 0.6 % (1.1)% (0.1)% (0.7)% Agriculture Services, Other 11.7 1.2 17.7 1.2 24.3 1.5 29.8 1.5 3.9 4.7 1.9 Mining 1.5 0.1 2.2 0.2 2.0 0.1 1.9 0.1 1.7 (0.9) (0.4) Construction 46.6 4.7 66.0 4.6 86.2 5.3 106.0 5.4 3.3 3.9 1.9 Manufacturing 112.3 11.3 131.7 9.3 135.5 8.3 144.1 7.3 1.0 0.4 0.6 Trans., Comm. & Public Utils. 31.8 3.2 42.7 3.0 54.3 3.3 64.2 3.3 2.8 3.5 1.5 Total Trade 174.8 17.7 275.3 19.4 314.0 19.3 354.6 18.0 3.1 1.9 1.1 \lvllolesale Trade 27.2 2.7 51.7 3.6 56.8 3.5 66.8 3.4 4.0 1.3 1.5 Retail Trade 147.6 14.9 223.5 15.7 257.2 15.8 287.7 14.6 3.0 2.0 1.0 Finance, Insurance, & Real Estate 84.4 8.5 110.6 7.8 135.5 8.3 167.3 8.5 2.5 2.9 1.9 Services 223.1 22.5 442.8 31.1 566.5 34.7 772.0 39.1 5.0 3.6 2.9 Total Government 287.0 29.0 319.8 22.5 298.8 18.3 321.5 16.3 0.2 (1.0) 0.7 Federal Civilian Govt. 41.4 4.2 43.2 3.0 42.8 2.6 43.4 2.2 0.2 (0.2) 0.1 Federal Military Govt. 142.0 14.3 138.8 9.8 103.8 6.4 103.6 5.2 (1.6) (4.1) (0.0) State & Local Govt. 103.5 10.5 137.8 9.7 152.3 9.3 174.5 8.8 2.1 1.4 1.2 TOTAL 989.9 100.0 % 1,422.3 100.0 % 1,630.8 100.0 % 1,973.7 100.0 % 2.7 % 2.0 % 1.8 % Source: Woods and Poole Economics, Inc. Woods & Poole Economics, Inc., reports that between 1980 and 1999, the most rapid employment growth in San Diego County occurred in the service and wholesale trade sectors, which registered average annual compounded increases of 5.0% and 4.0%, respectively. Overall, services represents the largest employment sector, supporting 34.7% of the total employment base in 1999. Growth in overall employment grew moderately from 1992 to 1999, at 2.0%, moderated by the economic recession in the HVS Intemational, San Francisco, Califomia Proposed Full-Service Hotel Market Area Analysis 19 INTERNATIONAL Major Employers early 1990s. The forecast shows overall employment growth of 1.8% annually from 1999 through 2010; the anticipated annual gains of 2.9% in the service sector and 1.9% in the FIRE and construction sectors underpin the _expectation of continued economic health in the area during the next few years. Providing a context for the business and employment environment in the subject market area, we have researched major employers in San Diego and Carlsbad. The following table outlines some of the major employers in San Diego County, highlighting the importance of the government, health-care, and aerospace industries to the region. Due to different recording methods, we note that the government employee counts provided by the chamber of commerce differ somewhat from those detailed in the previous Woods & Poole chart. Major Employers -San Diego County Firm United States Government -Military United States Government -Civilian University of California, San Diego County of San Diego San Diego Unified School District Qualcomm City of San Diego Sharp Healthcare General Dynamics Scripps Institute of Medicine State of California Rohr Industries Hughes Aircraft Product U.S. Government U.S. Government Education Government Education Telecommunications Government Health Care Aerospace and Defense Manufacturing Research Government Aerospace Supplies Manufacturing Source: San Diego Chamber of Commerce Number of Employees 139,000 47,000 17,000 13,000 13,000 10,000 10,000 9,000 9,000 8,000 7,000 4,700 4,000 On a more local level, the major employers in Carlsbad, where the subject property is located, are presented in the following table. Note that Legoland California is the number two employer in Carlsbad, and Callaway Golf is the number one employer. Both businesses are located in close proximity to the proposed subject property. HVS International, San Francisco, California Proposed Full-Service Hotel Market Area Analysis 20 Office Market Summary Major Employers -Carlsbad Company Name Callaway Gott Legoland California Four Seasons Resort Aviara City of Carlsbad La Costa Resort & Spa Mallinckrodt Carlsbad Unified School District Taylor Made-Adidas Gott Grand Pacific Resort Acushnet (Cobra Gott, Titleist, Footjoy) Gemological Institute of America Ashworth Software of the Month Club (SOMC Group) Farmers insurance Group Regional Office ViaSat PinnFund USA SDG&E Asymtek Republic Tool & Mfg.Co. Syntron Bioresearch Inc. List revised June 2000 Source: Carlsbad Chamber of Commerce # of Employees 2,250 1,100 1,100 1,030 950 800 800 727 700 675 500 394 380 350 350 325 325 320 300 300 Office market statistics provide an indication of the overall health of the San Diego county economy. San Diego's office space inventory showed remarkable growth throughout the early 1980s. However, the impact of the national recession on both the local economy and the construction industry, coupled with increasing countywide vacancy rates, have caused office space construction in San Diego to slow dramatically in recent years. The San Diego County office market as a whole has posted high vacancy rates historically, while vacancy in the downtown submarket has consistently exceeded countywide averages. Much of downtown San Diego's office space is occupied by legal firms and government entities. Typically these types of firms do not produce large amounts of commercial lodging demand. The following table provides an overview of the downtown San Diego office market. HVS International, San Francisco, Calzfomia Proposed Full-Service Hotel Market Area Analysis 21 =l;;J_~e£ E;=-~ INTERNATIONAL Airport Traffic Downtown San Diego Office Data Year 1992 1993 1994 1995 1996 1997 1998 1,999 1st Quarter 2000 Square Feet Rentable Available 9,209,000 2,302,000 9,203,000 2,117,000 9,152,000 2,274,000 9,171,000 1,865,000 9,155,000 1,762,000 9,199,000 1,889,000 9,199,000 1,379,850 8,927,172 939,034 8,927,824 939,035 Vacancy Rate 25 % 23 24.8 20.3 19.2 20.5 15 10.5 7.9 Source: Grubb & Ellis Square Feet of Net Absorption (99,830) 155,001 (299,000) 326,000 153,000 (28,000) 509,150 72,431 233,475 As mentioned, the county witnessed high vacancy rates historically; however, improving economic conditions led to a noticeable decline in vacancy rates from 25.0% in 1992 to 10.5% in 1999 and 7.9% through the first quarter of 2000. According to Grubb & Ellis, the downtown submarket has led the county in office absorption since 1995. It should be noted that the recent marked decreases in downtown vacancy were spurred by a decrease of over 200,000 square feet in supply, as several smaller office buildings have been razed to make room for retail and residential uses. According to Grubb & Ellis, the average asking rent on Class-A space equated to $23.71 in 1999 and increased to $24.20 through the first quarter of 2000. With declining vacancies, rental rates are expected to increase in the near term. San Diego International Airport is located approximately 35 miles south of the proposed subject property. The following table summarizes historical passenger activity since 1990. HVS lntemational, San Francisco, Calzfomia Proposed FrJII-Seruice Hotel Market Area Analysis 22 INTERNATIONAL Passenger Activity -San Diego International Airport Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Average Annual Compounded Percent Change: 1990-99 YTD June 1999 YTD June 2000 Airport Arrivals 5,597,347 5,672,420 5,952,555 5,978,078 6,457,742 6,598,278 6,859,472 7,160,373 7,423,691 7,646,108 3,035,255 3,126,313 Source: San Diego International Airport Percent Change 1.3 % 4.9 0.4 8.0 2.2 4.0 4.4 3.7 3.0 3.5 % 3.0 % Since 1990, San Diego International Airport has experienced an average annual compounded increase in passenger activity of 3.5%. The 4.9% growth in 1992 reflects the effect of America's Cup participants and spectators traveling to San Diego. Strong growth of 8.0% was evidenced in 1994,· due to the recovering Southern California economy. In 1997, passenger arrivals were up by 4.4% from 1996. Activity at the airport is projected to continue to grow in the future. As such, the airport's current runway configuration is insufficient to handle the traffic forecasted for the next decade. The San Diego Association of Governments has studied options for the relocation of San Diego's airport, and the issue has been partially resolved with the expansion of an existing terminal and 8 new gates which opened in January 1998; another 10 gates are expected to open by 2005. Locally, in Carlsbad, the McClellan Palomar Airport houses two airlines and approximately 500 passengers per day. Currently, United Express runs 11 flights to Los Angeles International Airport per day and America West runs 4 flights to Phoenix per day. Airport officials have development plans to expand the runways and to build another terminal by approximately 2003. This proposal is currently undergoing an Environmental Impact Analysis. In addition, airport officials are also planning to build another parking HVS International, Sa11 Francisco, California Proposed Full-Service Hotel Market Area Analysis 23 INTERNATIONAL Convention Center garage by 2005. In general, airport officials expect the city of Carlsbad to create enough demand to accommodate these expansions. Vital to the analysis are trends in convention visitation and tourism. While the subject is located further north and is not anticipated to be directly affected by the convention center, such activity is a good indicator of San Diego's overall -attraction and awareness as a destination. Opened in November 1989, the San Diego Convention Center is primarily a demand generator for downtown San Diego hotels. The first-class facility is located downtown on the shore of the San Diego Bay, roughly 10 minutes from San Diego International Airport. The facility measures ±942,000 square feet in size, including service and support areas. The following table presents the number of groups, delegate attendance, associated room nights, and expenditures attributable to the convention center, as provided by the San Diego Conventio:11 and Visitors Bureau. Historical Convention Activity -San Diego Convention Center Number Year of Grou~s 1990 33 1991 36 1992 39 1993 52 1994 48 1995 49 1996 52 1997 59 1998 60 1999 55 Avg. Ann. Comp.% Change YTD 7/99 $29 YTD 7/00 25 Percentage Delegate Percentage Room Percentage Percentage Change Attendance Change Nights Change Ex~enditures Change 183,600 251,825 $123,931,050 9.1 % 196,930 7.3 % 248,970 (1.1) % 123,181,630 (0.6) % 8.3 317,500 61.2 416,983 67.5 184,575,546 49.8 33.3 236,600 (25.5) 333,727 (20.0) 160,112,046 (13.3) (7.7) 232,600 (1.7) 455,000 36.3 210,435,456 31.4 2.1 330,510 42.1 507,942 11.6 243,669,716 15.8 6.1 285,812 (13.5) 521,506 2.7 247,375,380 1.5 13.5 290,802 1.7 535,246 2.6 257,276,868 4.0 1.7 428,743 47.4 641,665 19.9 337,697,662 31.3 (8.3) 320,050 (25.4) 562,821 (12.3) 288,460,396 (14.6) 5.8 % 6.4 % 9.3 % 9.8 % $165,302 323,047 $166,836,465 (13.8) % 120,340 (27.2)% 253,915 (21.4) % 129,298,260 (22.5) % Source: San Diego Convention & Visttors Bureau The number of convention groups, total attendance, and rooms nights (the vital indicator for the hotel industry) increased at average annual rates of 5.8%, 6.4%, and 9.3%, respectively, from 1990 to 1999. HVS Intemational, San Francisco, California Proposed Full-Service Hotel Market Area Analysis 24 INTERNATIONAL Tourism After several delays, the city of San Diego has begun a major expansion of the San Diego Convention Center, estimated to cost $216 million. The plan for the expanded center calls for adding 276,000 square feet of exhibit space and 106,000 square feet of meeting/ballroom space. Reportedly, the expansion will allow for continuous convention activity, as conventions can be held in one wing while a prior convention is being dismantled or a new one set up in another wing, offering more dates and growth opportunities for existing clients. Overall, convention center officials estimate that the expanded center could increase overall bookings by 50% to 100%. Construction of the expansion began in October 1998 and is expected to be completed by third-quarter 2001. While the expanded center will undoubtedly increase convention activity in San Diego once it is completed, in the short term, disruptions during construction have negatively impacted bookings. A major disruption occurred when the section of Harbor Drive immediately in front of the center was closed beginning in early 1999 so the street could be lowered by six feet. According to the San Diego Convention and Visitors Bureau, several groups have canceled events or placed them "on hold" during the construction period. Several meeting planners have also expressed their concerns and have taken a "wait and see" attitude toward the potential construction disruptions. As future bookings for the convention center are in flux, the San Diego Convention and Visitors Bureau will not release estimates of potential bookings; however, officials remain confident that bookings will maintain a steady pace during the expansion's construction and will increase significantly after the expansion is complete. The tourism industry within the San Diego region is outranked only by the manufacturing and government sectors in terms of revenue contributed to the area's economy. Visitor spending in San Diego totaled over $4.0 billion in 1996, $4.4 billion in 1997, $4.7 billion in 1998, and $4.9 billion in 1999, a 4.26% increase from the prior year. Year-to-date data through July 2000 indicate that visitor spending continues to increase, accounting for approximately $2.4 billion in 2000, an increase of approximately 5.0% over the same period in 1999. The San Diego area has a well-developed base of tourist attractions. San Diego's Old Town State Park is the most frequented attraction in the region. Sea World and the San Diego Zoo are easily accessed via highway travel. Other tourist attractions in the San Diego area include the San Diego Wild Animal Park, the Scripps Aquarium/Museum, the newly opened Legoland, and the Cabrillo National Monument. HVS International, San Francisco, California Proposed Full-Service Hotel Market Area Analysis 25 INTERNATIONAL In addition to the preceding facilities, San Diego offers museums specializing in topics ranging from aerospace to history to oceanography. Art galleries, shopping facilities, and restaurants abound and are located throughout the region. Theaters, comedy clubs, dinner cruises, bicycle and boat rentals, and beaches also help to make the San Diego region attractive to tourists. Additionally, golf, tennis, horseback riding, bicycling, and skating facilities are available. Sports facilities in San Diego include the Qualcomm Stadium (previously known as Jack Murphy Stadium) and the San Diego Sports Arena. Professional athletic teams in the city include baseball's Padres and football's Chargers. The United States' first warm-weather, multi-sport, Olympic training complex recently opened in the San Diego area. The complex is expected to attract additional leisure visitation to the San Diego region. Additionally, the San Diego area has approximately 72 golf courses, many of which lie within the "North County" area. The following table illustrates recent trends in San Diego's visitor industry, as measured by both expenditure level and number of travelers. Overall, these statistics have been on the increase in recent years. These statistics bode well for the region's lodging market. HVS International, San Fr.ancisco, California Proposed Full-Service Hotel Market Area Analysis 26 INTERNATIONAL San Diego Visitation Statistics Number of Percent Total Visitor Percent Expenditure Percent Year Visitors (000) Change Spending (000) Change per Visitor Change 1990 12,544 $3,092,600 $246.54 1991 12,765 1.8 % 3,280,000 6.1 % 256.95 4.2 % 1992 13,030 2.1 3,510,500 7.0 269.42 4.9 1993 12,867 (1.3) 3,451,000 (1.7) 268.21 (0.4) 1994 13,394 4.1 3,636,000 5.4 271.46 1.2 1995 13,692 2.2 3,797,100 4.4 277.32 2.2 1996 13,982 2.1 4,048,600 6.6 289.56 4.4 1997 14,366 2.7 4,366,300 7.8 303.93 5.0 1998 14,551 1.3 4,703,400 7.7 323.24 6.4 1999 14,692 1.0 4,881,800 3.8 332.28 2.8 Average Annual Compounded Percentage Change 1990 to 1999 1.8 % 5.2 % 3.4 % YTD 7/99 6,921 $2,309,143 $333.67 YTD 7/00 7,052 1.9 % 2,424,600 5.0 % 343.82 3.0 % Source: San Diego Convention & Visitors Bureau As indicated by the preceding chart, San Diego has experienced healthy growth rates in the number of visitors, total visitor spending, and expenditure per visitor. Specifically, data for year-end 1997, 1998, 1999, and year-to-date 2000 are particularly encouraging, boding well for the subject property. Transient Occupancy Tax To gain a perspective on the level of tourism generated in the Carlsbad area, the Carlsbad Convention and Visitors Bureau keeps track of transient occupancy taxes that are levies on the area's hotels. Transient occupancy taxes are those taxes levied on lodging operations which are collected for every room night sold. The following table depicts how these taxes have dramatically increased in recent years, particularly in 1998 due to a major boom in the economy, and how lodging demand continues to improve in the area. HVS International, San Francisco, California Proposed Full-Service Hotel Market Area Analysis 27 INTERNATIONAL Conclusion Transient Occupancy Tax -Carlsbad Fiscal Year 1994/95 1995/96 1996/97 1997/98 1998/99 YTD 1998/99 * YTD 1999/00 Transient Occupancy Tax Revenues $3,256,069 3,407,881 3,879,827 5,841,214 6,985,843 $3,788,152 4,413,306 Source: Cartsbad Convention & Visitors Bureau * Year-to-date statistics accountfor six months, January through June. Percentage Change 4.7 % 13.8 50.6 19.6 16.5 % Economic analysis of the San Diego region indicates a favorable hotel market environment in the foreseeable future. As such, hotel demand, as well as average rates, are surging. In addition, the expansion of the San Diego Convention Center and airport capacity should positively impact the regional hotel market. Other area data also bode well for the subject's market. Tourism, a large sector of the area's economy, is growing at a favorable rate, reflected by visitation statistics and passenger activity at the area's major airport. Overall, the subject's resort market area appears poised for further growth, as Carlsbad becomes a more desirable destination for all demand segments. Additionally, the subject's neighborhood is in a stage of continued growth and appears to be well suited to support the operation of a three-to four-star hotel. HVS Intenzational, San Francisco, Califonzia Proposed Full-Service Hotel Market for Transient Accommodations 28 5. Market for Transient Accommodations Regional Supply and Demand Overview In the economic principle of supply and demand, price varies directly, but not proportionately, with demand and inversely, but not proportionately, with supply. In the lodging industry, supply is measured by the number of guestrooms available and demand is measured by the number of guestrooms accommodated; the net effect of supply and demand is gauged by the occupancy rate. The balance of lodging supply and demand towards equilibrium results in a prevailing price, or the average rate. Overall supply and demand data compiled by Smith Travel Research (STR) were obtained for the subject lodging market, which includes all of the primary and secondary competitors listed in our analysis, except for Inns of America, which does not report data to STR. STR is an independent research firm which compiles data on the lodging industry. We find that Smith Travel· Research data are generally relied upon by typical hotel buyers. Information since 1994 is presented in the following table. San Diego County Hotel Market Trends % Change from Previous Year % Average % Room Year Occupancy Change Rate Change Supply Demand Sales 1994 60.5 % $62.46 1995 61.5 1.7 % 63.14 1.1 % 0.0 % 1.9 % 1.5 % 1996 65.0 5.7 68.87 9.1 0.0 5.7 15.3 1997 70.7 8.8 76.17 10.6 0.0 8.8 20.3 1998 78.6 11.2 88.46 16.1 0.0 11.2 29.1 1999 75.9 (3.4) 95.30 7.7 14.9 10.9 19.5 YTD 6/99 79.8 % $92.93 YTD 6/00 80.3 0.6 % 96.55 3.9 % 22.2 % 22.9 % 27.7 % Source: Smith Travel Research HVS lntemational, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodations 29 INTERNATIONAL Competitive Supply In reviewing the data compiled by STR, it is important to note some of the inherent limitations. We have found that since hotels are occasionally dropped in and out of the sample and not every property reports data in a totally consistent and timely manner, the overall quality of this information may be affected. These variables can sometimes skew the data for a particular market. However, we find that STR data are generally relied upon by typical hotel buyers, and these data will therefore be considered in this study. A review of the STR data yields the following observations: • While year-end occupancies remained in the low-to mid-60% range from 1994 to 1996, with the strong economic strides in Southern Cali- fornia and the opening of Legoland, occupancy in 1998 and 1999 reached the mid-to high-70% range. • Average rate increased markedly, from $62.46 in 1994 to $95.30 in 1999. This trend is favorable in light of the approximately 14.9% in- creased in supply in 1999. • Although occupancy dropped by 3.4% from 1998 to 1999 due to the new supply,· the market remains favorable. • Supply grew by 22.2% from year-to-date 1999 to 2000, yet occupancy rates increased by 0.6% and average rate increased by 3.9%. • Year-to-date trends show that the new supply has been absorbed, oc- cupancy remains strong, and that average rate is continuing to in- crease above inflationary growth. An integral component of the supply and demand relationship is the current and anticipated supply of competitive lodging facilities. Based on our evaluation of the market orientation, chain affiliation, location, facilities, and amenities of the region's hotels, we have identified seven hotels that will compete most directly with the proposed property. Analysis of these hotels provides an indication as to how the proposed subject property is likely to compete when opened. The primary competitors total 919 rooms. In addition to the primary competitors, three properties are considered to be somewhat competitive with the proposed subject property. These hotels are competitive with the proposed subject property to lesser degrees than the primary competitors and have been weighted based on their degree of competitiveness. The weighted room count of the secondary competitors HVS International, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodations 30 was 68 in 1999. The primary and secondary competitors totaled 987 rooms in 1999. The following chart describes the characteristics pertinent to the subject property and each of its competitors for 1997, 1998, and 1999. The data for these properties were compiled through interviews and a review of our in-house store of operating data. Note that the data presented in the following chart are weighted, while the STR data presented earlier are not weighted. Competitive Resort Properties Estimated 1999 Market Segmentation Estimated 1997 Estimated 1998 Estimated 1999 Year No. ol Meeting Meeting Group Average Average Average Occupancy Yield Property/Location Opened Rooms Space Space/Rm. Commercial Meeting Leisure Occupancy Rate RevPAR Occupancy Rate RevPAR Occupancy Rate RevPAR Penetration Penetration Grand Pacttic Palisades 5805 Armada Olive 1999 90 8,716 96.8 40 % 30 % 30 % 79.6 % $82.70 $65.82 105.9 % 94.2 % Hilton Del Mar 15575 Jimmy Durante Boulevard 1989 245 15,000 61.2 20 60 20 75.0 % $93.00 $69.75 83.0 % $101.00 $83.83 80.0 109.00 87.20 106.4 124.8 Residence Inn 2000 Faraday Avenue 1999 121 1,100 9.1 75 5 20 92.0 107.00 98.44 122.4 140.8 Olympic Resort, Hotel, and Spa 6111 El Camino Real 1984 78 4,659 59.7 40 20 40 83.0 75.00 62.25 78.0 82.00 63,96 82.0 95.00 77.90 109.1 111.5 Holiday Inn 850 Palomar Airport Road 1983 144 6,800 47.2 40 20 40 50.0 76.00 38.00 65.0 79.00 51.35 55.0 83.00 45.65 73.2 65.3 Ramada Suites 751 Macadamia Drive 1986 121 943 7.8 50 20 30 78.0 63.00 49.14 84.0 68.00 57.12 76.0 73.00 55.48 101.1 79.4 Quallty Inn & Suites 760 Macadamia Olive 1985 120 500 4.2 50 20 30 60.0 50.00 30.00 74.0 65.00 48.10 72.0 71.00 51.12 95.8 73.1 ---------- Subtotal/Average 919 37,718 41.0 39 % 33 % 28 % 70.6 % $80.42 $56.74 78.1 % $86.70 $67.74 75.0 % $92.24 $69.19 99.8 % 99.0 % Secondary Competition 68 33 % 11 % 55 % 75.5 % $88.52 $66.83 78.7 % $95.48 $75.16 76.8 % $101 .57 $78.00 102.2 % 111.6 % Total/Average 987 38 % 31 % 31 % 71.1 % $81.31 $57.79 78.2 % $87.62 $68.51 75.2 % $93.00 $69.90 100.0 % 100.0 % Map No. Property * Subject Property 1 Grand Pacific Palisades 2 Hilton Del Mar 3 Residence Inn 4 Olympic Resort, Hotel, & Spa 5 Holiday Inn 6 Ramada Suites 7 Quality Inn & Suites COMPE·TITION IMAP Secondary Competition Estimated 1999 Market Segmentation Estimated 1997 Estimated 1998 Estimated 1999 Actual Rm. Percentage Weighted Group Average Average Average Proeerty Count Competitive Rm. Count Commercial Meetin~ Leisure Occupancy Rate RevPAR Occupancy Rate RevPAR Occueancy Rate RevPAR Cartsbad Inn 62 50 % 31 40 % 10 % 50 % 90.2 % $103.01 $92.87 89.2 % $114.48 $102.12 85.0 % $122.68 $104.22 Tamarack Beach Resort 23 25 6 10 0 90 65.0 105.00 68.25 70.0 110.00 77.00 70.0 120.00 84.00 Inns of America 126 25 32 30 15 55 63.0 65.00 40.95 70.0 69.00 48.30 70.0 73.00 51.10 ------ Total/Average 211 68 33 % 11 % 55 % 75.5 % $88.52 $66.83 78.7 % $95.48 $75.16 76.8 % $101.57 $78.00 HVS lntematio11al, San Francisco, Califomia Proposed Full-Service Hotel Market for Transient Accommodations 33 INTERNATIONAL The primary competitors are those hotels that are considered to be the most comparable properties in terms of quality of product, location, rate structure, and amenities offered relative to the proposed subject property. The primary competitors include the Grand Pacific Palisades, Hilton Del Mar, Residence Inn, Olympic Resort, Hotel, and Spa, Holiday Inn, Ramada Suites, and Quality Inn & Suites. The secondary competitors include the Carlsbad Inn, Tamarack Beach Resort, and Inns of America. Although the facilities, rate structure, or market orientations of these secondarily competitive hotels preclude their inclusion among the primarily competitive supply, they compete with the subject hotel to some extent. Each of these property's room counts has been weighted according to its perceived competitiveness with the proposed subject property. In general, marketwide demand is evenly distributed among the three market segments, with a slight majority generated by commercial travelers. The commercial segment accounted for 38% of demand and both the group meeting and leisure segments accounted for 31 % of demand in 1999. The competitive market has enjoyed strong demand levels in recent years. Specifically, the subject market achieved an overall occupancy of 71.1 % in 1997, 78.2% in 1998, and 75.2% in 1999. Marketwide average rate growth has also been strong in recent years. Specifically, areawide average rate increased from $81.31 in 1997 to $93.00 in 1999. Area hotel operators are cautiously optimistic concerning further growth in future years, particularly as it pertains to average rate growth and anticipated increases in incentive business trip and commercial travel budgets. A general trend toward the development of more commercial buildings in the area has created more commercial demand. In addition, the creation of Carlsbad as a travel destination with the grand opening of Legoland has increased leisure travelers to the area. Overall, this is a favorable trend for the proposed subject property. The Hilton Del Mar achieved the highest RevPARs in 1997 ($69.75) and 1998 ($83.83), and the Residence Inn achieved the highest RevPAR ($98.44) in 1999. The Residence Inn's high RevPAR is attributable to its close proximity to commercial buildings and brand-name recognition for business travelers. In 1999, the Residence Inn and Hilton Del Mar accomplished yield penetrations of 140.8% and 124.8%, respectively, the highest among the primary competitors. Each of the primary competitors is reviewed on the following pages. HVS International, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodatio11s 34 INTERNATIONAL Grand Pacific Palisades Location: Carlsbad, California Number of Rooms: 90 Historical Operating Performance Occupancy Yield Year Occupancy Average Rate RevPAR Penetration Penetration 1999 79.6 % $82.70 $65.82 105.9 % 94.2 % The Grand Pacific Palisades, owned by Grand Pacific Resorts, opened in March 1999. The hotel is located on a hill overlooking the Pacific Ocean and the Carlsbad flower Fields, approximately one mile east of the proposed site. The Grand Pacific Palisades features an Olympic-size pool, spacious sun decks, one Jacuzzi, a full fitness center complete with lockers and a sauna, a clubroom, and an activity center with a game room. The hotel is currently HVS International, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodations 35 INTERNATIONAL under construction to build another family pool and Jacuzzi, which are expected to be completed in September 2000. The Karl Strauss Brewery & Restaurant provides on-site dining, and features approximately 8,700 square feet of meeting space. In 1999, the Grand Pacific Palisades achieved an occupancy penetration of 105.9% and a yield penetration of 94.2%. The property was able to capture more than this high occupancy penetration due to its lower introductory rates and new facilities, situated in a prime location. According to the manager, average rate is expected to be increased in 2001. In addition, the hotel is also used to market its timeshare component by selling mini-vacations to potential timeshare owners. Therefore, this will help increase occupancy and average rate. Currently, 40% of the property's business is attributed to the commercial demand segment, 30% to the group meeting segment, and 30% to the leisure segment. The property accommodates slightly more commercial demand than the primary competitors as a whole due to its close proximity to commercial buildings such as the Gemological Institute of America (GIA), and the overall commercial growth in the market area. The property is considered a primary competitor of the proposed subject property due to its proximity, facilities, and market demand mix. HVS Intemational, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodatio11s 36 arm ±&ft INTERNATIONAL Hilton Del Mar Location: Del Mar, California Number of Rooms: 245 Historical Operating Performance Occupancy Yield Year OCCUQancy: Average Rate RevPAR Penetration Penetration 1997 75.0 % $93.00 $69.75 105.5 % 120.7 % 1998 83.0 101.00 83.83 106.1 122.4 1999 80.0 109.00 87.20 106.4 124.8 The Hilton Del Mar, opened in 1989, is located next to the Del Mar Race Track, which was built in 1936 by Jimmy Durante and Bing Crosby. The hotel is situated at the intersection of Jimmy Durante Boulevard and Highland Drive, approximately 13 miles south of the proposed subject property. HVS Intenzational, San Francisco, Califonzia Proposed Full-Service Hotel Market for Transient Accommodations 37 INTERNATIONAL The Hilton Del Mar features an olympic-size pool, two Jacuzzis, a health club, a business center, two restaurants, a lounge, and a lobby lounge. The hotel is also adjacent to eight lighted tennis courts and a PGA 59 tee driving range with a miniature golf course. In addition, the hotel has approximately 15,000 square feet of meeting space. The hotel owners recently renovated the facilities in 1998. The Hilton Del Mar consistently achieved the highest average rate compared to the competitive market from 1997 to 1999 due to its large amount of meeting space, brand, and location proximate to the race course. The hotel also achieves higher RevPARs than the competitive market, with the exception of the Residence Inn in 1999. The property currently derives approximately 60% of its demand from the group meeting segment, 20% from the commercial segment, and 20% of its demand from the leisure segment. Due to larger meeting facilities and on-site tennis and golf facilities, the Hilton Del Mar accommodates the majority of its demand from the group meeting segment. The property is a primary competitor of the proposed property due to its extensive meeting facilities and its location next to a major entertainment demand generator. HVS Intemational, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodations 38 m~~ ---:: --- INTERNATIONAL Residence Inn Location: Number of Rooms: Carlsbad, California 121 Historical Operating Performance Year Occupanicy Average Rate, RevPAR 1999 92.0 % $107.00 $98.44 Occupancy Yield Penefrafii!ln Penetration 122.4 % 140.8 % The Residence Inn, owned by Carlsbad HHG Hotel Development; was opened in August 1999. The hotel is located at the intersection of College Boulevard and Faraday Avenue, approximately three miles northeast of the proposed subject property. The property features an outdoor pool, a Jacuzzi, a fitness center, a lounge serving complimentary breakfast and cocktail, and suites equipped with full HVS Intemational, San Francisco, Califomia Proposed Full-Service Hotel Market for Transient Accommodations 39 INTERNATIONAL kitchen facilities. In addition, the hotel has approximately 1,100 square feet of meeting space. The Residence Inn recorded the highest occupancy of the primary competition, at 92.0% in 1999. Combined with a high average rate, the Residence Inn achieved a RevPAR of $98.44. In addition, the hotel achieved the highest occupancy and yield penetrations, at 122.4% and 140.8%, respectively, in 1999. In general, this property was considered the market leader in the primary competitive set in 1999. The property derives approximately 75% of its demand from the commercial segment, 5% from the group meeting segment, and 20% from the leisure segment. Due to the hotel's close proximity to commercial buildings located in downtown Carlsbad, it derives a majority of its demand from the commercial segment. In addition, the Residence Inn is closely located to Legoland, which generates the remaining leisure demand. The property is considered a primary competitor due to its market segmentation and close proximity to the proposed subject property. HVS International, San Fra11cisco, California Proposed Full-Seroice Hotel Market for Transient Accommodations 40 m~~ -=--=----- INTERNATIONAL Olympic Resort, Hotel, and Spa Location: Carlsbad, California Number of Rooms: 78 Historical Operating Performance Occupancy Yield Year Occueancr Average Rate RevPAR Penetration Penetration 1997 83.0 % $75.00 $62.25 116.8 % 107.7 % 1998 78.0 82.00 63.96 99.8 93.4 1999 82.0 95.00 77.90 109.1 111.5 The-Olympic Resort, Hotel, and Spa, located at the intersection of Palomar Airport Road and El Camino Real, is approximately four miles southeast of the proposed subject property. The hotel originally opened in 1984 and was refurbished in 1998, which included all of the soft-and casegoods in the guestrooms, and the carpets and wall coverings throughout the hotel. HVS International, San Francisco, California Proposed Full-Seruice Hotel Market for Transient Accommodations 41 INTERNATIONAL The property features a recreational pool, a 25-meter lap pool, a Jacuzzi, a full fitness center with Nautilus equipment, a sauna, and steam rooms, a health club, five tennis courts, 48 golf practice tee stations, a restaurant, and a cocktail lounge. In addition, the hotel has approximately 4,659 square feet of meeting space. In 1999, the property recorded the second-highest occupancy rate, at 82%, and third-highest average rate, at $95, compared to · the primary competitors. In addition, the hotel achieved occupancy and yield penetrations greater than 100% of their fair share. As a result of its many facilities, the property appeals to all of the area's demand segments. Approximately 40% of its demand is derived from the commercial segment, 20% from the group meeting segment, and 40% from the leisure segment. The property, although a relatively older property, is considered a primary competitor due to its market segmentation and meeting and leisure facilities offered. HVS International, San Francisco, California Proposed Full-Service Hotel Market for Transient Acco111111odatio12s 42 m~1 ------------ INTERNATIONAL Holiday Inn Location: Number of Rooms: Carlsbad, California 144 Historical Operating Performance Year 1997 1998 1999 Occupancy 50.0 % 65.0 55.0 Average Rate $76.00 79.00 83.00 RevPAR $38.00 51.35 45.65 Occupancy Yield Penetration Penetration 70.4 % 65.8 % 83.1 74.9 73.2 65.3 The Holiday Inn, located at the intersection of Interstate 5 and Palomar Airport Road, is approximately two miles southwest of the proposed subject property. The hotel originally opened in 1983 and the guestrooms and meeting rooms were most recently renovated at the end of 1999. HVS lntemational, San Francisco, Califomia Proposed Full-Service Hotel Market for Transient Accommodations 43 INTERNATIONAL The property features an outdoor pool, a Jacuzzi, a TGIF Friday's restaurant, and approximately 6,800 square feet of meeting space. In addition, the hotel is across the street from Carlsbad Company Stores, a retail outlet shopping mall. The hotel, although located at a busy intersection, recorded the lowest occupancy rate in 1997, 1998, and 1999 at 50%, 65%, and 55%, respectively, compared to the primary competitors. The hotel's average rate was $83 in 1999, which was the fourth highest among the primary competitors. Similar to the Olympic Resort, Hotel, and Spa, the Holiday Inn's demand is distributed among three market segments. Approximately 40% of its demand is derived from the commercial segment, 20% from the group meeting segment, and 40% from the leisure· segment. In December 1999, the property became affiliated with Holiday Inn. Prior to this branding, the hotel operated independently as the Anderson's Inn and before that, a Best Western. As a result of its shifting affiliations, the hotel achieved occupancy and yield penetrations below 100% in all three years. The Holiday Inn, although a relatively older property, is considered a primary competitor due to its similar market segmentation and close proximity to a major highway, with excellent visibility and accessibility. HVS International, San Francisco, Califomia Proposed Full-Service Hotel Market for Transient Accommodations 44 -ffl·~-------- ---------- lNTERNATION,H ·::;~~~-' rt~::'.? i':~:·-· ;; Ramada Suites Location: Number of Rooms: Carlsbad, California 121 Historical Operating Performance Year 1997 1998 1999 Occupancy Average Rate RevPAR 78.0 % 84.0 76.0 $63.00 68.00 73.00 $49.14 57.12 55.48 Occupancy Yield Penetration Penetration 109.7 % 107.4 101.1 85.0 % 83.4 79.4 The Ramada Suites, located at the intersection of Macadamia Drive and Avenida Encinas Street, is approximately three miles southwest of the proposed subject property. The hotel was built in 1986, located approximately half a mile from the beach. HVS International, San Francisco, Califonzia Proposed Full-Service Hotel Market for Transient Accommodations 45 INTERNATIONAL The property features a heated pool, a Jacuzzi, a restaurant serving breakfast, and approximately 950 square feet of meeting space. In addition, each suite is equipped with a full kitchen. Although the hotel achieved strong occupancies in 1997 and 1998, at 78% and 84%, respectively, it recorded a 76% occupancy in 1999, one of the lowest rates among the primary competition. The lower occupancy in 1999 is a result of the introduction of new supply in the market, the Grand Pacific Palisades and Residence Inn hotels. The Ramada Suites derives approximately 50% of its demand from the commercial segment, 20% from the group meeting segment, and 30% from the leisure segment. Due to the hotel's all-suite facilities, the hotel derives approximately half of its demand from the commercial segment. In addition, as a result of the hotel's close proximity to the beach, it derives approximately one-third of its demand from the leisure segment. The property is considered a primary competitor of the proposed subject property due to its market segmentation. HVS l11tenzatio11al, Sa11 Fra11cisco, Califomia Propo,:ed Full-Sen,ice Hotd 1\lfarket for T rmzsi,mt Accommod11tio11s 46 tW • INTER NATI ON ,H Quality Inn & Suites Location: Carlsbad, California Number of Rooms: 120 Historical Operating Performance Year 1997 1998 1999 Occupancy 60.0 % 74.0 72.0 Average Rate $50.00 65.00 71.00 RevPAR $30.00 48.10 51.12 Occupancy Yield Penetration Penetration 84.4 % 51.9 % 94.6 70.2 95.8 73.1 The Quality Inn & Suites, located at the intersection of Macadamia Drive and Avenida Encinas Street, is approximately three miles southwest of the proposed subject property and directly across from the Ramada Suites. The hotel was built in 1985 and was flagged as a Travel Lodge until it was renovated and re-branded in January 2000. HVS Intemational, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodations 47 fflW -- INTERNATIONAL The property features a heated pool, a Jacuzzi, a restaurant serving breakfast, and approximately 500 square feet of meeting space. The hotel recorded low occupancies and average rates from 1997 to 1999 compared to the primary competition. Similar to the Ramada Suites, the property derives approximately 50% of its demand from the commercial segment, 20% from the group meeting segment, and 30% from the leisure segment. In general, the property operates as a lower-tiered product compared to the primary competition, but is considered a primary competitor due to its market segmentation. HVS International, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodations 48 INTERNATIONAL Secondary Competition In addition to the primary competitors, three hotels compete with the proposed subject property to a lesser extent. These hotels have been weighted accordingly. Additions to Supply Secondary competition is characterized as such by having a different market orientation and or average rate structures. The secondarily competitive hotels comprise an un-weighted aggregate of 211 guestrooms and are deemed to be either 25% or 50% competitive with the proposed subject property. This equates to an effective guestroom count for the secondary competition of 68 units. All of the properties are located in Carlsbad. Performance of the secondary competitors varied on an individual basis, although the aggregate of these competitors experienced an increase in RevPAR in 1999. On an aggregate basis in 1999, the secondary competition achieved an occupancy of 76.8% at an average rate of $101.57. Our fieldwork, which included discussions with hotel operators, developers, and government officials, indicates that two hotels recently opened for operation in 1999 and three are planned for development, including the proposed subject property. Two hotels will be primarily competitive with the proposed subject property and two of the projects will be secondarily competitive with the subject upon their completion. The total weighted room count of the proposed new supply equates to 1,122, including the subject property, by 2009. This equates to an increase, in ten years, of approximately 132% over the 1999 room count of 853. Each of the projects is described below, including the proposed subject property. The 150-unit Courtyard by Marriott recently opened in June 2000, at the intersection of Owens Avenue and Camino Vida Roble off Palomar Airport Road, approximately three miles southeast of the proposed subject property. The hotel was developed by Carlsbad HHG/APM Hotel Ventures, which also developed the Residence Inn in Carlsbad. Due to the hotel's brand-name recognition and expected market segmentation, we have assigned this property as a primary competitor. The 161-unit Hilton Garden Inn, located at the corner of Carlsbad Boulevard and Palomar Airport Road, is approximately three miles southwest of the proposed subject property. According to the general manager, the hotel has achieved high occupancy levels since its opening in July 2000. Due to the hotel's market segmentation and similar facilities, we have assigned this property as a primary competitor. HVS bztemational, San Francisco, Califomia Proposed Full-Service Hotel Market for Transient Accommodations 49 ::13="\=~ ~-=-~ -INTERNATIONAL The proposed 106-unit Staybridge Suites is located west of Interstate 5, between Laguna Drive and Grand Avenue, approximately four miles northwest of the proposed subject property. Completion of construction of the hotel is proposed for September 2001. The hotel is expected to cater to extended-stay travelers, primarily commercial demand. Due to the hotel's facilities and target market, we have assigned this property a SO% competitiveness factor. The proposed 98-unit Inns of America is located at the corner of Avenida Encinas and Cannon Road and is approximately three miles west of the proposed subject property. Completion of construction of the hotel is proposed for January 2002, on an approximately 2.7-acre site. According to the general manager of the Inns of America on Poinsettia Lane, the proposed hotel is expected to cater to all demand segments, with a slight emphasis on commercial demand. Due to the hotel's lower-end pricing strategy and market segmentation, we have assigned this property a SO% competitiveness factor. In addition to these proposed hotels, the 350 rooms of the proposed full-service subject property are to be built in three phases. The first phase is proposed for 2004, with 150 ··rooms, phase two is proposed to be completed in 2007 with 100 rooms, and phase three is expected to open in 2009 with another 100 rooms. Further, 75 units of the timeshare component of the project are considered additions to supply in our analysis due to their accessibility by patrons of the hotel. Due to the length of buildout of the proposed subject property, we have forecast an additional 150 rooms corning into the market in 2006. These are only speculative rooms, and are used for our calculation models. While we have taken reasonable steps to investigate proposed hotel projects and their status, due to the nature of real estate development, it is impossible to determine with certainty every hotel that will be opened in the future, or what their marketing strategies and effect in the market will be. Depending on the outcome of current and future projects, the value of the subject property may be positively or negatively affected. The following chart presents the additions to supply. Additions to Supply Historical 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Existing Supply 853 987 987 987 987 987 987 987 987 987 987 987 987 987 Proposed Full Service Hotel 150 1 150 150 250 250 350 350 350 350 Courtyard by Marriott 88 2 150 150 150 150 150 150 150 150 150 150 150 150 Hilton Garden Inn 81 3 161 161 161 161 161 161 161 161 161 161 161 161 Stayb ridge Suites 18 4 53 53 53 53 53 53 53 53 53 53 53 Inns of America 49 5 49 49 49 49 49 49 49 49 49 49 Legoland Time Share 75 5 75 75 75 75 75 75 75 75 Speculative Rooms 150 7 150 150 150 150 150 150 Available Rooms/Night 853 1,156 1,316 1,400 1,400 1,625 1,625 1,775 1,875 1,875 1,975 1,975 1,975 1,975 Nights per Year 365 365 365 365 365 365 365 365 365 365 365 0 365 0 TOTAL SUPPLY 311,264 421,829 480,327 511,091 511,091 593,216 593,216 647,966 684,466 684,466 720,966 720,966 720,966 720,966 Overall Supply Growth 35.5 % 13.9 % 6.4 % 0.0 % 16.1 % 0.0 % 9.2 % 5.6 % 0.0 % 5.3 % 0.0 % 0.0 % 0.0 % MARKETWIDE OCCUPANCY 75.2 % 73.0 % 72.0 % 72.2 % 74.1 % 70.5 % 72.1 % 70.5 % 70.1 % 71.4 % 71.0 % 72.2 % 73.4 % 74.6 % January 2004 opening of tlie 250-unit proposed subject hotel June 2000 opening of the 100% competitive 150-unit Courtyard by Marriott 3 July2000 opening of the 100% competitive 161-unitHilton Garden Inn 4 September 2001 opening of the 50% competitive 106-unit Staybridge Suites 5 January 2002 opening of the 50% competitive 98-unit Inns of America 6 January 2004 opening of the 75-room time share component of proposed hotel 7 January 2006 opening of 50% competitive 150 speculative rooms HVS lntemational, San Francisco, California Proposed Full-Service Hotel Market for Transie11t Accommodatio11s 51 INTERNATIONAL Demand Trends Historical Market Trends Accommodated Year Room Nights 1997 170,237 1998 187,302 1999 233,929 Average Annual Compounded Percent Change 1997-1999 Demand Analysis Using Market Segmentation The following chart presents the most recent market trends for the subject hotel market. The data pertain to the competitive properties previously discussed in this section. Percent Room Nights Percent Market Market Percent Market Percent Change Available Change Occu~anc:t ADR Change RevPAR Change 239,531 71.1 % $81.31 $57.79 10.0 % 239,531 0.0 % 78.2 87.62 7.8 % 68.51 18.6 % 24.9 311,264 29.9 75.2 93.00 6.1 69.90 2.0 17.2 % 14.0 % 6.9 % 10.0% Source: HVS International As indicated in the preceding table, marketwide demand has exhibited continued growth since 1997; the market achieved an occupancy above 70% each year, with an occupancy of 75.2% achieved in 1999. While supply has grown dramatically in 1999, by 29.9%, occupancy decreased slightly, by 3.9%. Due to strong lodging demand, marketwide average rate grew at an average annual compounded rate of 6.9% between 1997 and 1999. Marketwide average rate growth is expected to moderate but remain above inflation. With healthy demand levels and robust growth in average rate, marketwide RevPAR increased by an average annual compounded rate of 10.0% from 1997 to 1999. Based on our fieldwork, area analysis, and knowledge of the local lodging market, we have estimated the 1999 distribution of accommodated hotel room night demand, by segment, for the market as follows: HVS lntenzational, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodations 52 INTERNATIONAL Induced Demand Marketwide Accommodated Room Night Demand Annual Room Night Demand Percentage of Market Segment Market Total Commercial 89,185 38.1 % Group Meeting 73,381 31.4 Leisure 71,363 30.5 Total 233,929 100.0 % Commercial demand slightly dominates in the local market, accounting for 38.1 % of the estimated 1999 room night demand, while group meeting demand accounted for 31.4% and leisure demand accounted for 30.5%. Induced demand represents additional room nights that are likely to be attracted to the market following the introduction of new supply or new demand generators. We are of the opinion that the additions to supply will induce additional commercial, group meeting, and leisure demand due to their new facilities, as well as their marketing and sales efforts. Based on the number of additional rooms, we estimated the potential demand mix to be attracted to the market based on a market segmentation of 35% commercial demand, 25% group meeting demand, and 40% leisure demand, and an assumed occupancy of 74%. We estimate that, of the accommodated demand, 20% of the commercial demand, 75% of the group meeting demand, and 25% of the 'leisure demand will be induced. Note, the above calculations also consider a small amount of demand that is not able to be accommodated by the current supply during peak operating periods, such as the summer months when the competitive set is generally sold out. The additions to supply will be able to accommodate this demand during future sell-out periods. The following chart details our quantification of total induced demand. HVS International, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodations 53 INTERNATIONAL Induced Demand Calculation Total Total Additional No. of Market Segment Estimated Percentage Induced Market Segment Room Supply Days Percentage Occupancy Induced Room Nights Commercial ( Group Meeting ( Leisure ( Induced Demand Forecast 2000 Phase-in: 27 % Commercial 5,721 Group Meeting 15,328 Leisure 8,177 Total 29,226 1,122 X 365 X 35 % X 74.0 % X 20.0 % = 21,200 1,122 X 365 X 25 X 74.0 X 75.0 = 56,800 1,122 X 365 X 40 X 74.0 X 25.0 = 30,300 Total Induced 108,300 As the increases in supply are forecast to occur, induced demand is phased in. The latent demand projection for each forecast year are based on the ratio of the build up of new rooms per year to the total new supply. The following chart details our induced demand projection. 2001 2002 2003 2004 2005 2006 2007 2008 2009 41 % 49 % 49 % 69 % 69 % 82 % 91 % 91 % 100 % 8,748 10,340 10,340 14,590 14,590 17,423 19,311 19,311 21,200 23,438 27,703 27,703 39,089 39,089 46,679 51,740 51,740 56,800 12;503 14,778 14,778 20,852 20,852 24,901 27,601 27,601 30,300 44,689 52,821 52,821 74,531 74,531 89,003 98,652 98,652 108,300 Based on this procedure, we forecast the following average annual compounded market segment growth rates. Note that these growth rates consider induced demand. Forecast of Demand Growth by Segment 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Commercial 10.0 % 5.0 % 2.0 % 3.0 % 3.0 % 3.0 % 2.0 % 2.0 % 2.0 % 2.0 % 1.0 % Group Meeting 10.0 8.0 6.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Leisure 25.0 5.0 4.0 4.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Weighted Average* 31.6 % 12.3 % 6.7 % 2.6 % 10.5 % 2.2 % 6.8 % 5.0 % 1.9 % 4.8 % 1.6 % *Includes latent demand HVS lntemational, San Francisco, Califomia Proposed Full-Service Hotel Market for Transient Accommodations 54 forecast of Marketwide Occupancy The forecast of marketwide occupancy is based on a forecast of marketwide demand and supply. Based on our market research and discussions with hotel operators, we have estimated the occupancy rates of the subject's competitors. The 1999 areawide estimate of room night demand, by market segment, forms the historical base demand. To the segmented demand base we have applied annual growth factors that were derived from the most relevant economic and demographic data previously analyzed. To the accommodated demand forecasts, we have added induced demand. In the following table, total demand is then divided by the forecast of market supply, rendering an overall estimate of areawide occupancy. Thus, the forecast of marketwide occupancy is calculated as follows. Forecast of Marketwide Occupancy Historical · 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Commercial Growth Rate 10.0 % 5.0 % 2.0 % 3.0 % 3.0 % 3.0 % 2.0 % 2.0 % 2.0 % 2.0 % 1.0 % 1.0 % 1.0 % Accommodated Demand 89,185 98,103 103,008 105,068 108,220 111,467 114,811 117,107 119,449 121,838 124,275 125,518 126,773 128,041 Latent Demand 7,045 10,873 12,902 12,979 18,426 18,541 22,235 24,751 24,860 27,414 27,476 27,539 27,602 Group Meeting Growth Rate 10.0 % 8.0 % 6.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % Accommodated Demand 73,381 80,720 87,178 92,409 94,257 96,142 98,065 100,026 102,027 104,068 106,149 108,272 110,437 112,646 Latent Demand 18,596 28,834 34,464 34,599 49,014 49,212 59,010 65,681 65,960 72,722 73,041 73,366 73,697 Leisure Growth Rate 25.0 % 5.0 % 4.0 % 4.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % Accommodated Demand 71,363 89,203 93,663 97,410 101,306 104,345 107,475 110,699 114,020 117,441 120,964 124,593 128,331 132,181 Latent Demand 14,195 22,165 26,656 27,131 38,804 39,343 47,645 53,567 54,346 60,541 61,448 62,383 63,345 Totals Commercial 89,185 105,148 113,881 117,970 121,199 129,893 133,352 139,342 144,200 146,698 151,689 152,994 154,312 155,643 Group Meeting 73,381 99,316 116,012 126,873 128,856 145,156 147,277 159,036 167,708 170,028 178,871 181,313 183,803 186,343 Leisure 71,363 103,398 115,828 124,066 128,437 143,149 146,818 158,344 167,587 171,787 181,505 186,041 190,714 195,526 TOT AL DEMAND 233,929 307,862 345,721 368,909 378,492 418,198 427,447 456,722 479,495 488,513 512,065 520,348 528,829 537,512 Annual Forecasted Growth 31.6 % 12.3 % 6.7 % 2.6 % 10.5 % 2.2 % 6.8 % 5.0 % 1.9 % 4.8 % 1.6 % 1.6 % 1.6 % Existing Supply 853 987 987 987 987 987 987 987 987 987 987 987 987 987 Proposed Full-Service Legoland Hotel 150 1 150 150 250 250 350 350 350 350 Courtyard by Marliott 88 2 150 150 150 150 150 150 150 150 150 150 150 150 Hilton Garden Inn 81 3 161 161 161 161 161 161 161 161 161 161 161 161 Staybrtdge Suites 18 4 53 53 53 53 53 53 53 53 53 53 53 Inns of America 49 5 49 49 49 .49 49 49 49 49 49 49 Legoland Time Share 75 5 75 75 75 75 75 75 75 75 Speculative Rooms 150 7 150 150 150 150 150 150 Available Roomsft'Jight 853 1,156 1,316 1,400 1,400 1,625 1,625 1,775 1,875 1,875 1,975 1,975 1,975 1,975 Nights perYear 365 365 365 365 365 365 365 365 365 365 365 0 365 0 TOT Al SUPPLY 311,264 421,829 480,327 511,091 511,091 593,216 593,216 647,966 684,466 684,466 720,966 720,966 720,966 720,966 Overall Supply Growth 35.5 % 13.9 % 6.4 % 0.0 % 16.1 % 0.0 % 9.2 % 5.6 % 0.0 % 5.3 % 0.0 % 0.0 % 0.0 % MARKETWIDE OCCUPANCY 75.2 % 73.0 % 72.0 % 72.2 % 74.1 % 70.5 % 72.1 % 70.5 % 70.1 % 71.4 % 71.0 % 72.2 % 73.4 % 74.6 % 1 January 2004 opening of the 350-unilproposed subject hotel. 2 June 2000 opening of the 100% competitive 150-unilCourtyard by Marriott 3 July2000 opening of the 100% competitive 161-unitHllton Garden Inn 4 September 2001 opening of the 50% competitive 106-unil Sla}bridge Suites 5 January 2002 opening of the 50% colJlletitive 98-unit Inns of America 6 January 2004 opening of the 75-room time share component of proposed hotel 7 January2006 opening of 50% colJlletitive 150 speculative rooms HVS lntemational, San Francisco, Califomia Proposed Full-Service Hotel Market for Transient Accommodations 56 INTERNATIONAL Average Rate Forecast of the Proposed Subject Property As shown, marketwide occupancy is expected to decline in 2004 due to the addition of new rooms into the competitive market. As the market absorbs the new supply, areawide occupancy is expected to rebound, eventually returning to the low-to mid-70% range. Use 1999 average rates as a starting point, we have applied a forecasted growth rate to each segment's average rate. It is important to note that room rate inflation does not necessarily conform to the underlying monetary inflation rate. Lodging facilities are typically most influenced by market conditions indicated by the relationship between supply and demand. Based on our analysis of the market and a January 2004 opening date, we forecast that the proposed property will have an average rate of $136.39 in 2004, $150.98 in 2007, and $160.91 in 2009. These average rates are intended to reflect our opinion of how the proposed hotel facility would compete in the existing market during the three phases; each phase will consist of 150 new rooms. The following table illustrates the methodology we have used for projecting the subject property's average rate. Forecast of Average Rate by Market Segment Historical 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Segmented ADR Growth Rates Commercial N/A 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % 3.0 % Group Meeting N/A 3.0 3.0 3.0 3.0 3.0 3.0 3.0 5.0 4.0 3.0 5.0 4.0 3.0 Leisure N/A 5.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 5.0 3.0 3.0 Segmented ADR Commercial $125.00 $128.75 $132.61 $136.59 $140.69 $144.91 $149.26 $153.73 $158.35 $163.10 $167.99 $173.03 $178.22 $183.57 Group Meeting 120.00 123.60 127.31 131.13 135.06 139.11 143.29 147.58 154.96 161.16 166.00 174.30 181.27 186.71 Leisure 110.00 115.50 118.97 122.53 126.21 130.00 133.90 137.91 142.05 146.31 150.70 158.24 162.98 167.87 Segmented Rooms Captured Commercial 11,185 11,185 11,185 11,185 11,185 10,190 11,692 11,185 18,263 17,601 20,159 20,332 20,507 20,684 Group Meeting 10,078 10,078 10,078 10,078 10,078 10,048 10,195 10,078 21,240 24,934 36,449 41,766 43,968 44,575 Leisure 19 400 19,400 19,400 19,400 19,400 17,836 18,970 19,400 24,576 25,192 32,161 31,317 30 414 31181 Total 40,663 40,663 40,663 40,663 40,663 38,074 40,857 40,663 64,079 67,728 88,769 93,414 94,889 96,440 Segmented Rooms Revenue (000s) Commercial $1,398 $1,440 $1,483 $1,528 $1,574 $1,477 $1,745 $1,720 $2,892 $2,871 $3,386 $3,518 $3,655 $3,797 Group Meeting 1,209 1,246 1,283 1,322 1,361 1,398 1,461 1,487 3,291 4,018 6,050 7,280 7,970 8,323 Leisure 2,134 2,241 2,308 2,377 2,448 2,319 2,540 2,676 3,491 3,686 4 847 ·4,955 4,957 5,234 Total $4,742 $4,926 $5,074 $5,226 $5,383 $5,193 $5,746 $5,882 $9,674 $10,575 $14,284 $15,753 $16,582 $17,354 Imputed ADR $116.60 $121.15 $124.79 $128.53 $132.39 $136.39 $140.63 $144.66 $150.98 $156.14 $160.91 $168.64 $174.75 $179.94 Overall Growth N/A 3.9 % 3.0 % 3.0 % 3.0 % 3.0 % 3.1 % 2.9 % . 4.4 % 3.4 % 3.1 % 4.8 % 3.6 % 3.0 % Fiscal Year: 2004 2005 2006 2007 2008 2009 2010 2011 Average Rate $136.39 $140.63 $144.66 $150.98 $156.14 $160.91 $168.64 $174.75 Expressed in Base-Year Dollars $117.65 $117.78 $117.62 $119.18 $119.67 $119.73 $121.83 $122.57 HVS Intemational, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodations 58 INTERNATIONAL Occupancy Forecast of the Proposed Subject Property We feel that the resulting average rates for each scenario are appropriate given the proposed improvements, the property's affiliation with Legoland, the subject site's location, and the assumed professional management. Our forecast of the subject property's occupancy is detailed as follows. Projection of Subject Property's Occupancy Historical 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Commercial Demand 89,185 105,148 113,881 117,970 121,199 129,893 133,352 139,342 144,200 146,698 151,689 152,994 154,312 155,643 Penetration Factor 85.0 % 95.0 % 95.0 % 95.0 % 90.0 % 75.0 % 75.0 % 75.0 % 75.0 % Capture 10,190 11,692 11,185 18,263 17,601 20,159 20,332 20,507 20,684 Group Meeting Demand 73,381 99,316 116,012 126,873 128,856 145,156 147,277 159,036 167,708 170,028 178,871 181,313 183,803 186,343 Penetration Factor 75.0 % 75.0 % 75.0 % 95.0 % 110.0 % 115.0 % 130.0 % 135.0 % 135.0 % Capture 10,048 10,195 10,078 21,240 24,934 36,449 41,766 43,968 44,575 Leisure Demand 71,363 103,398 115,828 124,066 128,437 143,149 146,818 158,344 167,587 171,787 181,505 186,041 190,714 195,526 Penetration Factor 135.0 % 140.0 % 145.0 % 110.0 % 110.0 % 100.0 % 95.0 % 90.0 % 90.0 % Capture 17,836 18,970 19,400 24,576 25,192 32,161 31,317_ 30,414 31,181 Total Capture 38,074 40,857 40,663 64,079 67,728 88,769 93,414 94,889 96,440 Available Rooms 150 150 150 250 250 350 350 350 350 Available Room Nights 54,750 54,750 54,750 91,250 91,250 127,750 127,750 127,750 127,750 Occupancy 69.5 % 74.6 % 74.3 % 70.2 % 74.2 % 69.5 % 73.1 % 74.3 % 75.5 % Rounded 70 % 75 % 74 % 70 % 74 % 69 % 73 % 74 % 75 % Overall Penetration Fair Share 9.2 % 9.2 % 8.4 % 13.3 % 13.3 % 17.7 % 17.7 % 17.7 % 17.7 % Market Share 9.1 9.6 8.9 13.4 13.9 17.3 18.0 17.9 17.9 Overall Penetration 98.6 103.6 105.4 100.2 104.0 97.8 101.3 101.3 101.3 Market Mix Commercial 27 % 29 % 28 % 29 % 26 % 23 % 22 % 22 % 21 % Group Meeting 26 25 25 33 37 41 45 46 46 Leisure 47 46 48 38 37 36 34 32 32 Total 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % HVS lntematio11al, San Francisco, California Proposed Full-Service Hotel Market for Transient Accommodat1011s 60 INTERNATIONAL This forecast of occupancy levels reflects typical rates of growth for a new hotel property such as the proposed Legoland facility. Considering the size, quality, and orientation of the proposed developments, the subject property's occupancy is forecast at 70% in 2004, when the property first opens, and increases to 75% in 2005. Occupancy is then forecast to decrease to 70% in 2007 when phase two of the development opens. In 2009, when the third phase of 150 rooms enters the market supply, we have forecast occupancy at 69%. When all the phases have been constructed, an occupancy level of 73% in 2010 is considered appropriate due to the property's proposed facilities and the market area. The following chart summarizes our forecast of occupancy and average rate for the proposed full-service hotel through 2010, the stabilized year. Forecast of Occupancy and Average Rate Occupancy Average Rate 2004 69.5 % $136.39 2005 74.6 % $140.63 2006 74.3 % $144.66 2007 70.2 % $150.98 2008 74.2 % $156.14 2009 69.5 % $160.91 2010 73.1 % $168.64 HVS lntenzational, San Francisco, Califonzia Proposed Full-Service Hotel Statement of Assumptions and Limiting Conditions 61 INTERNATIONAL 6. Statement of Assumptions and Limiting Conditions 1. This study is to be used in whole and not in part. 2. No responsibility is assumed for matters of a legal nature, nor do we render any opinion as to title, which is assumed to be marketable and free of any deed restrictions and easements. 3. There are no hidden or unapparent conditions of the property, sub-soil or structures, such as underground storage tanks, that would render it more or less valuable. No responsibility is assumed for these conditions or any engineering that may be required to discover them. 4. We have not considered the presence of any form of toxic waste. The appraisers are not qualified to detect any hazardous substances and urge the client to retain an expert in this field if desired. 5. We have made no survey of the property, and assume no responsibility in connection with such matters. 6. All information, financial operating statements, estimates, and opinions obtained from parties not employed by HVS International are assumed to be true and correct. We can assume no liability resulting from misinformation. 7. Unless noted, we assume that there are no encroachments, zoning violations, or building violations encumbering the subject property. 8. All mortgages, liens, encumbrances, leases, and servitudes have been disregarded unless specified otherwise. HVS lntemational, San Francisco, Califonzia Proposed Full-Service Hotel Statement of Assumptions and Limiting Conditions 62 INTERNATIONAL 9. No portions of this report may be reproduced in any form without our permission, and the report cannot be disseminated to the public through advertising, public relations, news, sales, or other media. 10. We are not required to give testimony or attendance in court by reason of this analysis without previous arrangements, and only when our standard per diem fees and travel costs are paid prior to the appearance. 11. If the reader is making a fiduciary or individual investment decision and has any questions concerning the material presented in this report, it is recommended that the reader contact us. 12. We take no responsibility for any events or .circumstances that take place subsequent to the date of our field inspection. 13. The quality of a lodging facility's on-site management has a direct effect on a property's economic viability. The occupancy and average rate forecasts presented in this analysis assume responsible ownership and competent management. Any variance from this assumption may have a significant impact on the projected operating results. 14. The estimated operating results presented in this report are based on an evaluation of the overall economy, and neither take into account nor make provision for the effect of any sharp rise or decline in local or national economic conditions. We do not warrant that the estimates will be attained, but they have been prepared on the basis of information obtained during the course of this study and are intended to reflect the expectations of typical investors. 15. This study was prepared by HVS International, a division of M&R Valuation Services, Inc. All opinions, recommendations and conclusions expressed during this assignment have been rendered by the staff of M&R Valuation Services, Inc., acting solely as employees and not as individuals. 16. This study assumes the proposed improvements will be constructed as described in this report in a good, workmanlike manner. 17. Our market study assumes that the proposed hotel improvements will be affiliated with a management company of an established HVS lntenzational, San Francisco, Califonzia Proposed Full-Service Hotel Statement of Assumptions and Limiting Conditions 63 ::l;f::_"\=-~ ~-a INTERNATIONAL brand with a national reservation system. Our market study conclusion is in accordance with the description and plans provided by the client. 18. The developer of the proposed improvements is planning to build a timeshare project to be associated with the proposed subject property. Although not quantified in the hotel's forecast occupancy, this analysis assumes that the timeshare units are constructed in tandem with the proposed hotel improvements and at least 75 timeshare units are available for booking by the hotel. 19. The analysis assumes that Legoland will be a significant contributor to the marketing of the proposed subject hotel. The occupancy and average rate forecast assumes that the proposed hotel will be prominently featured by and facilities cross-sold with Legoland. HVS International, San Francisco, California Proposed Full-Service Hotel Certification 64 =EJ~=-le= ~ia INTERNATIONAL 7. Certification We, the undersigned consultants, hereby certify: 1. that the statements and opinions presented in this report, subject to the limiting conditions set forth, are correct to the best of our knowledge and belief; 2. that Jennifer Hsu and Elaine Sahlins personally inspected the property described in this report; Suzanne R. Mellen, CRE, MAI, inspected the site during the course of a prior assignment and participated in the analysis and conclusions contained herein; 3. that the consultants have extensive experience in hotel market studies and believe that they are competent to undertake this assignment; 4. that we have no current or contemplated interests in the real estate that is the subject of this report; 5. that we have no personal interest or bias with respect to the subject matter of this report or the parties involved; 6. that this report sets forth all of the limiting conditions (imposed by the terms of this assignment) affecting the analyses, opinions, and conclusions presented herein; 7. that this report has been prepared in accordance with and is subject to the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute; 8. that the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives; HVS lntemational, San Francisco, California Proposed Full-Service Hotel Certification 65 INTERNATIONAL 9. that this report has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice ( as adopted by the Appraisal Foundation); 10. that no one other than the undersigned prepared the analyses, conclusions, and opinions concerning real estate that are set forth in this market study report; 11. that as of the date of this report, Suzanne R. Mellen, CRE, MAI, has completed the requirements of the continuing education program of the Appraisal Institute; 12. that our engagement in this assignment was not contingent upon the development or reporting of predetermined results. employee of M&R Valuation Services, Inc. Elaine Sahlins, as an employee of M&R Valuation Services, Inc. Suzanne R. Mellen, CRE, MAI, as an employee of M&R Valuation Services, Inc. HVS International, San Francisco, California Proposed Full-Service Hotel INTERNATIONAL Addenda Engagement Letter Photographs of Subject Site Addenda . ' '(_{ INTERNATIONAL Submitted to: Mr. Tim Stripe Co-President Grand Pacific Resorts 5900 Pasteur Court, Suite 200 Carlsbad, CA 92008 (760) 431-8500- (760) 431-4580 FAX Prepared by: HVS International Division of M&R Valuation Services, Inc. 116 New Montgomery Street, Suite 620 San Franci~co, California 94105 ( 415) 896-0868 June23,2000 . . ,. . . Proposal for a Mark~t Study, Feasibility Analysis, and Appraisal Report Proposed Legolaiiif Hot¢1 Carlsbad, California ·. . . . . ~ HVS International, San Francisco, California Proposal 2 INTERNATIONAL Proposal for a Market Study, Feasibility Analysis, and Appraisal Report Objective Phase One: Fiel~ Research Pursuant to our conversation, I am ·pleased to submit this proposal for ' services of the HVS International division of M&R Valuation Services in connection with the Proposed Legoland Hotel, Carlsbad, CA. This proposal sets forth a description of the objectives and scope of the assignment, along with the m.~thodology to be employed, an estimate of the time requirements and a sched,ule of professional fees. The preliminary objective of this assignment is to evaluate market supply and · demand {Phase One) and provide a_ recommendation for the optin_,.al hotel prodµct(s) for your site. We will analyze the relevant economics and prepare a concise market study with a projection of rooms revenues (Phase Two). A ten-year cash flow projection (Phase Three) will then be prepared. Should you decide to proceed with the project we will extend our analysis in~o a · complete self-contained feasibility study and appraisal report (Phase Four). Our valuation will be perforµi.ed in accordance with the standards stipulated by the µniform Standards of Professional Appraisal Practice (USP AP). Please note that the feasibility analysis and valuation are set forth to be performed in Phase Four, but they can also be performed as part of Phase Three, depending upon your preference. In order to accomplish the objectives described above, our work will be conducted in four phases✓ which typically include the following steps: 1. We will meet with you, your client, and/or your client1s representatives to discu·ss our study in more detail and formulate a schedule for performing the fieldwork. At this time, we will gather any information from yo:u that m.ay assist us in performing this assignment (a list of necessary information is set forth in this proposal). 2. An on-site inspection of the site will be made to determine the suitability of the land for the proposed development. . The physical orientation of the subject site with respect to access to and visibility from. highways, other ··, HVS International, San Francisco, California Proposal3 INTERNATIONAL forms of transportation, and the local demand for accommodations will be analyzed. We will also review_ the supportive nature of surrounding land uses as they relate·to the subject property. 3. Arclutectural plans or preliminary c;onceptttal drawings for the proposed improvements will be reviewed, if available. 4. _ The demand for transient accommodations will be investigated to identify the various generators of visitation operating within the local market. The current and anticipated potential of each of these_ market segments will be · evaluated to determine the extent 9f existing and future demand based on interviews with officials of business and government as well as ·statistical data collected during-fieldwork. In conjunction with_the identification of potential demand, an investigation will be made of the· strengths of the respe_ctive market segments. Seasonality,. weekly demand fluctuations·,- vulnerability to economic trends and changes in travel patterns, and other related factors will be ·analyzed. 5. Potentially competitive lodging facilities will be evaluated to determine their market position with respect to ·the subject. Identified properties displaying similar market attributes will receive a physical inspection along with selective management interviews to ·estimate levels of occupancy, room rates, market pe1:1etrations,· -~d other pertinent operational characteristics. The.competitive factors that will be specifically reviewed include: location, market orientation, quality of facilities and amenities, physical condition, management expertise, operating performance, and chain affiliation. 6. The potential for future hotel development will be assessed to determine the prognosis of the northern San Diego County market over the short- and long-term. Through interviews with hotel operators, ·developers, government officials, and others, we will ascertain whether any potentially competitive projects are under construction, proposed, or rumored. 7. Statistical data relating to general economic and demographic trends often foreshadow future potential for market areas and neighborhoods. Interviews with local chambers of commerce, economic development agencies, demand generators, and other related organizations, along with an ll).yestigation of the subject's primary market area, will reveal patterns reflecting growth, stability, or decline and the impact upon the demand for lodging accommodations. · HVS International, San Francisco, California Proposal4 INTERNATIONAL Phase Two: Market Study 8. Based upon our field research and supply and demand analysis, we will develop a recpnunendation as to the optimum lodging facilities for the proposed property. 9. · Depending on the nature of the assignment and the. individual characteristics of the subject's market, our fieldwork may also include: . . • Interviews witJ+ zoning and building officials, local planners, highway officials, and property assessors; • Discussions with other appraisers, counselors, hotel companies, real estate and mortgage brokers, architects, builders, and devek>pers. At. the conclusion of Phase One we will organize and analyze all of ~e data compiled during our field research and fill in any missing information. · Economic and demographic statistics, market supply and demand trends, competitive data, and pertinent observations will be set for~ for discussion .. Based upon our research we will provide you with a verbal overview of our findings regarding what size hotel can be supported within. the market, and what we believe would be the· optimal facilities and amenities for your proposed development. 1. Based on the data and information gathered during the fieldwork phase, along with our extensive library of actual hotel operatin~ statements, financing statistics, area hotel trends, and investor requirements, we will :first perform a supply and demand analysis to determine historical and projected overall market performance. . . 2. Our supply a:n.d demand analysis will then be expanded into a forecast of the proposed subject's performance based upon pote.ntial market penetration by demand segment and/or through a seasomility analysis resulting in a forecast of occupancy up through a stabilized level of operation. 3. Average rate for the subject property will be forecast based upon segmented rates, cross-checked with comparative competitive average rates, resulting in a quantification of the subject's overall rooms revenue. At .the conclusion of Phase Two we will provide you with a concise Market Study report setting forth our conclusions regarding what is supportable within the local hotel market, a supply and demand analysis, our recommendation regarding the size of the subject hotel and the facilities to be offered, and a five-year forecast of the_ subject property's occupancy and average daily rate with supporting schedules. - HVS International, San Francisco, California Proposals tiW INTERNATIONAL Phase Three: Ten-Year Forecast of Income and Expense Phase· Four: · Feasibility Study and Appraisal Report Upon your review of our Phase Two findings, and with your authorization, we will proceed with Phase Three, a ten-year forecast of income and expense. This phase entails the following steps: 1. Local data relating to departmental revenues, other ·than rooms, will be researched. In most-instances, we will attempt. to utilize actual departmental revenue results from comparable properties in our economic analysis of your proposed ~otel. 2. Local labor costs, sales, energy rates, and assessed val'Ll;~S and taxes will be res_earched and considered in the analysis. Using actual expense statements from comparable lodging ·facilities, we will develop expense estimates corresponding to the level of activity and quality -of operations · indicated by the projected occupancy and average rate and other departmental revenues. 3. A ten-year forecast of income and expenses (net income available for debt service) representing future expectations of income potential will be made through a series of build-up years, a stabilized year and beyond. Our projected inc_ome statements conform with the Uniform System of Accounts for Hotels anq include a detailed line-by-line account of all revenue and expense sources. At the conclusion of our analysis we will incorporate the ten year fo~ecast of income and expense into the Market Study Report prepared in the· earlier phase. This document will be useful for obtaining preliminary interest in the project by lenders, investors, and hotel management companies. Should you decide to proceed with development of the project we will then expand om: initial report into a complete Feasibility Study and Appraisal Report. Additional research and analysis will include the.following: 1. Land sales will be researched in order to develop an estimate of the subject's land. The cost to construct ~he proposed improvements will be estimated via a cost estimating service to which we subsrnbe, or will be provided by you from an alternative source. Other development costs, such as pre-opening expenses, etc., will be projected by HVS in order to derive an estimate of complete development cost. 2. The current market for hotel and motel. transfers,' mortgage rates, and hostelry equity investment requirements will be researched. Using these market indicators as a base, and adjusting for potential investment · HVS International, San Francisco, California Proposal 6 benefits and risks displayed by the subject property, we will formulate appropriate capitaliz~tion· and discount rates. 3. Following the recommended procedures set forth in the textbook, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,1 which we' authored for the Appraisal Institute, an estimate of market value will be· developed by the income capitaljza-i:ion approach. A mortgage-equity, ten-year discounted cash flow analysis will be utilized to convert our ten-year forecas~ into an estimate of value. 4. Sales of comparable hotels will be researched and adjusted in order to develop an estimate of market value via the sales comparison approach. This approach is generally included to assess market activity and to provfde a value cross-check to our value via the income· approach. 5. A feasibility analysis will be prepared based upon the project's estimated development cost, the ten-year forecast of net income available for debt service and our income approach value conclusion.· Depending upon your preference, this analysis can be as simple as presenting that the market value via the income approach exceeds project cost, or we can hypothesize debt service · and equity contributions, and set forth the equity yield and annual cash:-on-cash returns_ which are forecasted to be generated by the project. - Docu:i:nentation of our findings, value estimate, and feasibility conclusions will be set forth in our self-contained Feasibility Study and Appraisal report. Conforming to the standards of the Appraisal Institute (MAI) and USP AP, the report will contain the following sections: 1. Purpose of the feasibility study and appraisal and definition of value; 2. Description of the site and proposed physical improvements and amenities; 3. Review of the area and neighborhood; 4. Analysis of the market for transient accommodations; 5. Examination of existing and proposed competition; 6. Forecast of income and expense; 7. Development of appropriate discount arid capitalization-rates; 1Rushmore, Stephen. Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations. Chicago: Appraisal Institute; 1992. HVS International, San Francisco, California Proposa17 ,INT"ERNATIONAL Requested Information Timing Professional Fees 8. Estimation of land value and total project development cost; 9. Review of comparable hotel sales, where relevant data is available; 10. Feasibility analysis and value conclusion; and 11. Signed MA.I° certifica~on. Graphics such as photographs, maps, surveys, plans and charts will be _included in the report to assist in visualizing our findings. To aid us in performing this assignment, we request that you provide us with the following information (where applicable): 1. Any pertinent leases, managem,ent contracts, title reports, latest real and, personal property tax bills, etc.; · 2. Architectural and plot plans, surveys, and legal descripticms; 3. Any documentation pertaining to existing zoning, development approvals, conditional use permits, water rights, etc.; 4. Operating budgets, projections, marketing plans, etc.; and 5. Past appraisals, market and feasibility studies, and prospectuses: We anticipate that Phase One: Field Research can be completed wi~ approximately 15 to 20 days of your execution of this agreement and receipt . of all requested information. At this time, we will provide you with our computer printouts and verbally summarize our conclusions and recommendations. After your review of our findings and upon your authorization, we will then proceed with Phase Two: Market Study, which will take an· additional 5 to 10 days to prepare. Preparation of Phase Three: Ten-Yeru; Forecast of Income and Expense will take an additional 5 to 10 days to prepare. · Preparation of the Phase Four: Feasibility Study and Appraisal Report will take an additional 20 to 30 days to prepare following your authorization to proceed. Phase One: Field Research will be $,.._, which is due and payable upon execution of this agreement. The fee for Phase Two: Market Study will be an additional ~ payable upon your request that we proceed. The fee for Phase Three: Ten-Year Forecast of Income and Expense report will be an additional $1 · ~, payable upon your request that we proceed. An additional HVS International, San FTancisco, California ProposalB INTERNATIONAL· fee of~ will be payable upon your request for. the Phase Four: Fea~ibility Study and Appraisal Report. · -. Please keep in mind that additional fieldwork and analysis may be required to update our findings if a significant amount of time elapses between· Phases One and Two and Phase Four. We retain the right to revise our timing and · fee estimates if additional fieldwork and analysis are required. Also note that as the _hotel project is undefined at this time, our fees for Phases Two and Three may be revised upwards or downwards to reflect the scope of the project once it has been further d~fined. It is our normal policy to provide a draft copy of our final report for your review. Upon your approval of this draft,.we will commence printing the final report, which will be delivered to you when our invoice for services has been paid in full. This fee covers all report preparation costs, such as graphics, photographs, ·typing, proofreading, printing and binding, and includes three copies of the final report which will be delivered to you. In the event that after completing the fieldwork phase {Phase One) of the study it becomes necessary to alter the parameters of the s-t;udy, such as the property description; date of value; financial, management, or ownership structure; or any other factor which could change the final estimate of value, HVS International will be entitled to charge an additional fee based upon our current per-diem rates and the time required to incorporate the necessary changes into our analysis and report. In addition, the estimate of timing will be extended by an amount equal to the added work. Additional fees will also be charged on an hourly basis for any work which exceeds the scope of this proposal, including performing additional research, analysis and/or alternate valuation scenatios; reviewing other appraisals and/or other studies and documents related to the property; telephone aµIs and/or ni.~etings with any party which we believe goes beyond the time generally expended during the course of an assignment of this nature; and attending out-of-town meetings. Hourly rates of professional staff are as·· follows: Managing Dir~ctor -$350; Director -$250; Senior Vke President -$225; Vice President -$200; Senior Associate. -$175; Associate -$160; Consulting and Valuation Analyst -$150; Editor -$100. Any meeting or presentation not previously agreed to as being part of this assignment which requires the Managing Director to travel out of --HVS International, San Francisco, California Proposal.9 INTERNATIONAL the San Francisco Bay Area will be charged at a minimum per-diem rate of $3,000. . . Notwithstanding the fee payment schedule set forth above, if at any. time while performing this assignment it becomes necessary to suspend work for a period of thirty (30) days or more, then HVS International will be entitled to bill for the portion of the assignm~nt completed up to the suspension (less -any retainer paid) at its current per-diem rates. . . In addition to our professional fee, you agr~e to reimburse us for out-of- pocket research, travel, and related expenses incurred on your behalf. You will be billed periodically for these expenses, which will be due and payable upon presentation of our bills. If payment for professional fees and out-of-pocket research, travel, and related expenses is not receiv~d within thirty (30) days of the billing date, HVS International reserves the right to suspend all work until payment is made arid apply a service charge of 1.5 percent per month or fraction thereof to the total unpaid sum., His further agreed that in the_ event legal action becomes necessary to enforce collection of. bills rendered, you will be responsible for all collection costs, including, but not limited to, court costs and reasonable legal fees. It is understood that HVS International may extend the time for payment on any part of billings rendered without affecting the understanding outlined above. · It is agreed that the liability of HVS International, its employees, and anyone else associated with this assignment is limited to the amount of ~e fee paid as liquidated damages. You acknowledge that any opinions, recommendations, and conclusions expressed during this assignment will be rendered by the staff of M&R V~uation Services, Inc., acting solely as employees and not as individuals. Any responsibility 6£ HVS International is limited to the client, and use of our product by third parties· shall be ~olely at the risk of the client and/or third parties. - The study described in this proposal will be made subject to certain assU1I1ptions and limiting conditions. A copy qf our normal assumptions and limiting conditions will be provided upon request: If in the sole opinion of HVS International it becomes necessary to add additional assumptions and limiting conditions in order to properly characterize and represent our conclusions, these additi_onal assumptions and limiting conditions will become a part of our final report. ., ,. ' HVS International,. San Francisco, California Proposal11 Bf\1-i INTERNATIONAL We appreciate the opportunity of submitting this proposal and look forward to working with you on this assignment. Very truly yours, HVS INTERNATIONAL A Division of M&R Valu·ation Services, Inc.· e R. Mellen, CRE, MAI anaging Director AGREED TO ANb ACCEPTED: Date: __ f-:---..,,S...i. ____ o_o __ ~--- SRM/pkh Hotel Site A Hotel Site B Hotel Site C HVS International, San Francisco, California INTERNATIONAL Qualifications Jennifer Hsu Elaine Sahlins Proposed Full-Service Hotel Suzanne R. Mellen, CRE, MAI Qualifications HVS bztemational, San Francisco, Califomia mw -- --- INTERNATIONAL Jennifer Hsu Employment 2000 to present 1999 to2000 1998 to 1999 1997 to 1998 Education Professional Affiliations HVS INTERNATIONAL San Francisco, California Consulting and Valuation Analyst Qualifications of Jennifer Hsu (Hotel/Motel Valuations, Market Studies, Feasibility Reports, and Investment Counseling) Cornell University Ithaca, NY (Teaching Assistant) Guam Visitors Bureau Tuman, Guam (Marketing Assistant) Hyatt Regency Guam Tuman, Guam (HR Intern) Hyatt Regency Guam Tuman, Guam (Front Office Intern) BS -School of Hotel Administration, Cornell University Cornell Hotel Society HVS Intemational, San Francisco, California Qualifications of Elaine Sahlins INTERNATIONAL Elaine Sahlins Employment 1997 to present 1989 to 1997 1987 to 1989 1984 to 1985 1983 to 1984 Professional Affiliations Education HVS INTERNATIONAL San Francisco, California Director (Hotel-Motel Valuations, Market Studies) BANK OF AMERICA San Francisco, California Review Appraiser (Hotel-Motel, Casino, and Commercial Real Estate Valuations, Appraisal Management) VMS REALTY PARTNERS Chicago, Illinois Senior Acquisition Analyst (Hotel-Resort Market Studies, Due Diligence, Operation Studies, Investment Analysis) JUDSON HOTELS New York, New York Credit/Collection Manager/Paymaster (Credit Policies and Procedures, Payroll Administration) PIERRE HOTEL New York, New York Guest History Supervisor (Marketing and MIS Administration) Certified General Real Estate Appraiser -States of California and Nevada AB -Barnard College, Columbia University MPS -School of Hotel Administration, Cornell University Professional Coursework -Appraisal Institute HVS Intenzational, San Francisco, California Qualifications of Elaine Sahlins ~w INTERNATIONAL PARTIAL LIST OF HOTELS, MOTELS AND CASINOS APPRAISED OR EVALUATED BY ELAINE SAHLINS ALASKA Cusack's Ramada Inn, Anchorage Hawthorne Suites, Anchorage Westmark Hotel, Anchorage Best Western Bidarka inn, Homer ARIZONA Best Western, Flagstaff E-Z Metro Center, Phoenix Scottsdale Princess Resort, Scottsdale CALIFORNIA Renaissance Hotel, Beverly Hills Embassy Suites, Brea Embassy Suites, Emeryville Cambell Inn, Campbell Hilton Garden Inn, Campbell Pruneyard, Campbell Carlsbad Inn Hotel, Carlsbad Carmel Mission Inn, Carmel Carmel Valley Ranch, Carmel Highlands Inn, Carmel Pine Inn Hotel & Retail, Carmel Doubletree Hotel, Cathedral City The Trees Inn, Concord Proposed Hilton Garden Inn, Corte Madera Red Lion Hotel, Costa Mesa Singing Hills Ranch, El Cajon Best Western, El Toro Days inn Emeryville, Emeryville Holiday Inn, Foster City Blackstone Plaza Inn, Fresno Chateau Inn, Fresno Piccadilly Inn Airport, Fresno Piccadilly Inn Shaw, Fresno Piccadilly Inn University, Fresno Proposed Motel 6, Gilroy Days Inn-LAX, Inglewood Hyatt Hotel, La Jolla Scripps Inn, La Jolla Marriott Rancho Las Palmas, Las Palmas Springtown Motel, Livermore West Coast Hotel & Marina, Long Beach Beverly Hills Residence Inn, Los Angeles Crowne Plaza-LAX Hilton-LAX, Los Angeles Holiday inn, Marina Del Rey Marriott, Marina Del Rey Stanford Park Hotel, Menlo Park Candlewood Hotel, Milpitas Hilton Garden Inn Hotel, Milpitas Larkspur/Hilton Garden, Milpitas Monterey Plaza Hotel, Monterey Jack London Inn, Oakland Resort at Squaw Creek, Olympic Valley Proposed Hotel, Pacifica Stanford Park Hotel, Palo Alto Stanford Terrace Inn, Palo Alto Hacienda Hotel, Patterson Proposed Hotel, Pinole Embassy Suites, Pleasant Hill Candlewood Hotel, Pleasanton Pleasanton Hilton Hotel, Pleasanton Sierra Suites, Pleasanton Summerfield Suites, Pleasanton Holiday Inn, Rancho Bernardo Comfort Inn Rancho Cordova, Rancho Cordova Hallmark Suites Hotel, Rancho Cordova Westin Mission Hills, Rancho Mirage Microtel Inn & Suites, Redding Hotel & Convention Center, Prop., Roseville Hyatt Regency Hotel, Sacramento Candlewood Hotel, Sacramento Prop. Candlewood Hotel, Sacramento Hilton Garden Inn, Sacramento Bay Club Hotel & Marina, San Diego Carmel Highland Doubletree, San Diego Comfort Suites, San Diego Holiday Inn Miramar, San Diego Pacific Terrace Inn, San Diego Radisson Suite Hotel, San Diego The Clift Hotel, San Francisco Comfort Inn by the Bay, San Francisco Fairmont Hotel, San Francisco Hotel Rex, San Francisco Kensington Park Hotel, San Francisco Mission/Steuart Hotel, San Francisco Powell West Hotel, San Francisco Richilieu Hotel, San Francisco Sir Francis Drake Hotel, San Francisco Tuscan Inn, San Francisco Westin St. Francis Hotel, San Francisco Radisson Plaza Hotel Airport, San Francisco San Jose Fairmont, San Jose Twin Oaks Golf Course, San Marcos Santa Barbara Club Resort, Santa Barbara Days Inn Hotel Seaside, Seaside Holiday Inn, South San Francisco Embassy Suites, Santa Clara Sheraton Miramar Hotel, Santa Monica Ramada Inn Airport North, South San Francisco Ramada Inn, Retail, Apts., West Hollywood Microtel Inn & Suites, Willows COLORADO Hyatt Regency Beavercreek, Avon Old Towne Guesthouse Inn, Colorado Springs Denver Embassy Suites, Denver Silvertree Hotel, Snowmass Wildwood Lodge, Snowmass Days Inn at Vail, Vail CONNECTICUT Stamford Tara Hotel, Stamford DISTRICT OF COLUMBIA Comfort Inn, Washington, D.C. FLORIDA Boca Raton Hotel and Resort, Boca Raton Holiday Inn, Ft. Lauderdale Pier 66 Hotel & Marina, Ft. Lauderdale Proposed Resort, Key Biscayne Hyatt Resort, Key West Howard Johnson Inn, Kissimmee Knights Inn-Kissimmee, Kissimmee Ramada Inn-Jacksonville, Jacksonville Best Western, Orlando Days Inn, Orlando Orlando Twin Towers, Orlando Comfort Inn, Pensacola HAWAII Westin Kauai, Kalapaki Beach, Lihue IDAHO Resort Development, Coeur d'Alene Super 8, Coeur d'Alene Super 8, Lewiston Motels of America, Lewiston Super 8, Ponderay ILLINOIS Jumers Chateau, Bloomington Westin Hotel, Chicago Jumers Continental Inn, Galesburg Jumers Castle, Peoria Doubletree Hotel -North Shore, Skokie Jumers Castle Lodge, 1./rbana INDIANA Fairfield Inn, Fort Wayne Four Points Sheraton, Indianapolis HVS International, San Francisco, California INTERNATIONAL Omni Severin Hotel, Indianapolis IOWA Jumers Castle Lodge, Bettendorf LOUISIANA Boomtown New Orleans, Harvey Days Inn, New Orleans MASSACHUSETTS Copley Plaza Hotel, Boston Sheraton Tara Lexington, Lexington Proposed Sierra Suites Hotel, Waltham MISSISSIPPI Boomtown Biloxi, Biloxi Treasure Bay Hotel & Casino, Biloxi University Inn, Oxford Proposed Hotel, Tunica MISSOURI RiverFront Station, St. Charles MONTANA Sheraton Hotel, Billings Holiday Inn-Parkside, Missoula NEW JERSEY Holiday Inn, Jamesburg NEVADA Ormsby House, Carson City Crystal Park Casino Hotel, Crystal City Gem Casino, Henderson Joker's Wild Casino, Henderson Tom's Sunset Casino, Henderson Aladdin Hotel & Casino, Las Vegas Boardwalk Hotel & Casino, Las Vegas Boulder Station, Las Vegas El Morocco Motel, Las Vegas Eureka Saloon Casino, Las Vegas Hacienda Casino Hotel, Las Vegas La Concha Motel, Las Vegas MGM Grand, Las Vegas Monte· Carlo Casino Hotel, Las Vegas New York, New York Hotel & Casino, Las Vegas Palace Station, Las Vegas Proposed Sunset Station, Las Vegas Rio Hotel, Las Vegas Santa Fe Casino Hotel, Las Vegas Texas Station, Las Vegas Peppermill Resort Hotel, Mesquite Whiskey Pete's, Primm Holiday inn, Reno Proposed Hotel, Sparks Hobey's Casino, Sun Valley Nevada Crossing Casino, Wendover NEW YORK Omni Park Central Hotel, New York Proposed Soho Hotel, New York OHIO 200-Room Boutique Hotel, Cleveland Fairfield Inn, Columbus Holiday Inn-Airport, Columbus OREGON Monarch Hotel & Convention Ctr., Clackamas Proposed Hilton Garden Inn, Corvallis Candlewood Hotel, Hillsboro Avalon Hotel, Portland Sunriver Resort, Portland Execulodge, Salem Gateway Motor Inn Nendels Motor Inn, Springfield TEXAS Amarillo Super 8 Motel, Amarillo The Crescent Hotel, Dallas Fairmont Hotel, Dallas Melrose Hotel, Dallas UTAH Cavanaugh's Olympus Hotel, Salt Lake City VIRGINIA Holiday Inn, Arlington Sheraton Inn Coliseum Richmond Holiday Inn, Richmond WASHINGTON Best Western Bellevue Inn, Bellevue Qualifications of Elaine Sahlins Candlewood Hotel, Bellevue Residence Inn, Bellevue Pony Soldier Inn, Chehalis Homecourt All Suite Hotel, Kent Alexis Hotel, Seattle University Plaza Motor, Seattle West Coast Paramount, Seattle West Coast Vance Hotel, Seattle Embassy Suites, Tukwila WISCONSIN Holiday Inn-Airport, Milwaukee Milwaukee Marriott Hotel, Milwaukee WYOMING Executive Inn, Evanston Super 8, Jackson BRITISH VIRGIN ISLANDS Little Dix Bay, Virgin Gorda CANADA Trite! Hotel "Ramada" Montreal L'Emerillon Hotel, Quebec City U.S. VIRGIN ISLANDS Caneel Bay Resort, St. John Frenchman's Reef Resort, St. Thomas Grand Palazzo Hotel, St. Thomas EUROPE Proposed Monte Carlo Resort, Monaco Proposed Dordogne Resort, France Hanbury Manor, Great Britain HVS lntenzational, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, lvfAI Suzanne R. Mellen, CRE, MAI Employment 1985 to present 1981 to 1985 1980 to 1981 1980 1978 to 1980 1976 to 1978 1976 HVS INTERNATIONAL San Francisco, California Managing Director (Hotel-Motel Valuations, Market Studies, Feasibility Reports, and Investment Counseling) HOSPITALITY VALUATION SERVICES Mineola, New York Director of Consulting and Valuation Services (Hotel-Motel Valuations, Market Studies, Feasibility Reports, and Investment Counseling) MORGAN GUARANTY TRUST COMPANY New York, New York Real Estate Appraiser and Consultant (Real Estate Investment Valuation and Analysis) LAVENTHOL & HORWATH New York, New York Senior Consultant (Management Advising Services -Market and Feasibility Studies) HELMSLEY-SPEAR HOSPITALITY SERVICES New York, New York Senior Consultant (Management Advising Services -Market and Feasibility Studies) WESTERN INTERNATIONAL HOTELS The Plaza, New York City Management Trainee (Rooms Operations and Accounting) HARLEY, LITTLE ASSOCIATES Toronto, Canada Junior Consultant (Food Facilities Design, Market Studies) HVS International, San Francisco, California Qualifications of Suzanne R. Mellen, CRE, MAI INTERNATIONAL Professional Affiliations Education State Certification Teaching and Lecture Assignmments Appraisal Institute -Member (MAI) • Board of Directors -San Francisco Bay Area Chapter (1994, 1995) • Education Committee Chairperson -Northern California Chapter 11 •Workshop Committee Chairperson -Northern California Chapter 11 • Division of Courses -National Committee •Continuing Education Committee -New York Committee •Director, Real Estate Computer Show-New York Chapter American Society of Real Estate Counselors -Member (CRE) •Vice Chair -Northern California Chapter (1994, 1995) •Chair -Northern California Chapter (1996) National Association of Review Appraisers & Mortgage Underwriters (CRA) International Society of Hotel Consultants -Member (ISHC) Cornell Hotel Society San Francisco Board· of Realtors American Hotel and Motel Association California Hotel and Motel Association National Trust for Historic Preservation Urban Lq.nd Institute BS -School of Hotel Administration, Cornell University Liberal Arts Undergraduate Study-Carnegie Mellon University Completion of MAI course work -Appraisal Institute New York University-School of Continuing Education -Real Estate Division Arizona, California, Colorado, Hawaii, Michigan, Nevada, Utah, Virginia, and Washington American Institute of Real Estate Appraisers -Approved Instructor - Hotel/Motel Valuations California Hotel and Motel Association, 1985 Annual Convention - Development Overview 1995 -Annual Meeting -The Capital Expenditure Requirements Citibank, N.A. -Hotel/Motel Valuations Cornell University -Real Estate Finance HVS Intemational, San Francisco, Califomia Qualifications of Suzanne R. Mellen, CRE, MAI INTERNATIONAL Teaching and Lecture Assignments (cont'd) Published Articles Cornell Center for Professional Development -Hotel Workouts Country Hospitality Conference -Hotel Development Challenges in the Nineties Econo-Travel Motor Hotel Corp., Annual Financial Seminar -Hotel Valuation Institute of Property Taxation, 1984 Real Estate Symposium -Simultaneous Valuation National Association of Review Appraisers and Mortgage Underwriters - Reviewing a Hotel Appraisal Report 1990 National Conference of State Tax Judges -Valuation and the Hospitality Industry Northwest Center for Professional Development -1986-87 Hotel Development Seminars Southhampton College -Feasibility Studies and Appraisals University of Denver -Hotel/Motel Valuation American Bar Association -Property Tax '92 -Income Approach UCLA Hotel Industry Investment Conference, 1995, 1996 NYU Hospitality Industry Investment Conference, 1991, 1992, 1993, 1994, 1995 Jeffer, Mangels, Butler & Marmara Forum -Answers to Three of the Most Provocative Questions in Hotel Valuation Today The Appraisal Journal "Simultaneous Valuation: A New Technique," April 1983 Appraisal Review & Mortgage "How to Review a Hotel Appraisal," November 1989 Underwriting Journal California Inntouch Magazine "Value and Proper Use of Feasibility Studies," December 1990 The Hotel Valuation Journal "The Future of Full-Service Hotel Development" The HVS Journal Computer Software "Simultaneous Capitalization Software" Appearance as an Expert Witness "How Much Should I Pay For the Land?," January 1996 "Strong Rates of Return Driving Hotel Development," January 1998 "Hotel Cap Rates and Values -The 1998 Rollercoaster Ride and What Lies Ahead," January 1999 Software for the capitalization of a variable income stream Superior Court of the State of Arizona, County of Maricopa Superior Court of the State of California, City and County of San Francisco Superior Court of the State of California, County of Los Angeles (Deposition) Superior Court of the State of California, County of San Diego, North County Branch Federal Tax Court, New York, New York HVS International, San Francisco, Califomia INTERNATIONAL Corporate and Institutional Clients Served Qualifications of Suzanne R. Mellen, CRE, MAI U.S. District Court, Eastern District of Arkansas, Little Rock, Arkansas U.S. District Court, Central District of California (Deposition) U.S. District Court, Southern District of California Federal Bureau of Investigation, New York, New York (Deposition) U.S. Bankruptcy Court, Northern District of California U.S. ~ankruptcy Court, Eastern District of California U.S. Bankruptcy Court, Colorado (Deposition) U.S. Bankruptcy Court, Southern District of Texas, Houston Division U.S. Bankruptcy Court, Utah, Salt Lake City U.S. Bankruptcy Court, Southern District of California American Arbitration Association, Los Angeles American Arbitration Association, San Francisco Tax Appeal Board Los Angeles County, California Contra Costa County, California Orange County, California San Francisco County, California San Mateo County, California Utah County, Utah Aegon USA Realty Advisors, Inc. Aetna Life Insurance Co. Aetna Real Estate Investment Allied Capital Advisors, Inc. American Hotels, Inc. American Realcorp American Savings and Loan Amfac Parks & Resorts AMRESCO Amstart Group, Inc. Andrew Daveridge Corp. ARCON,Inc. Avista Bank of America Bank Boston The Bank of New York Bank of Nova Scotia Bank of San Francisco Bank of the West Bankers Trust Company Banque Nationale de Paris Barclay's Bank The Beacon Companies Boykin Management Co. Broad, Schultz, Larson & Wineberg Burlingame Bank and Trust Comp. Buss-Shelger Associates C. A. Rickert & Associates Caesars World Gaming Cala Properties California Federal Bank California Department of Transportation CIBC World Markets Carlsbad Estate Holding, Inc. Carpenters Pension Trust for Southern California Carroll, Burdick, McDonough CASC Corporation Case, Knowlson, Mobley, Burnett and Luber Central Core Corp. Champion Development Group Chartwell Leisure Chase Manhattan Bank Chase Real Estate Finance Group Chemical Bank CIGNA Capital Advisors, Inc. Citibank HVS Intenzalional, San Francisco, Califomia m~----- INTERNATIONAL Corporate and Institutional Clients Served (cont'd) Citicorp Real Estate, Inc. City and County of San Francisco City of Boulder, Colorado Cleary, Gottlieb, Steen & Hamilton Contra Costa County Coast Commercial Bank Column Financial, Inc. Coopers & Lybrand Comerica Bank -California Commercial Bank of Korea, Ltd. Coudert Brothers Credit Lyonnais Credit Suisse First Boston Cupertino National Bank and Trust Dai-Ichi Kangyo Bank, Ltd. Daiwa Bank Days Inns Deutsche Morgan'Grenfell Disney Development Company Dollar Savings and Loan Doubletree Inns Drury Inns Duckor & Spradling EDA, U.S. Government EP AM Corporation Equitable Real Estate Investment Management E. S. Merriman & Sons Estate of James Campbell Eureka Bank Exchange Bank Farmers National Bank Fidelity Federal Savings & Loan First Boston First Federal Savings and Loan First Interstate Bank First National Bank First Security Fox Hotel Investors Fred Reed & Associates Fiji Bank GECC Commercial Real Estate GMAC Commercial Mortgage Co. Geller & Company General Electric Capital Company Qualifications of Suzanne R. Mellen, CRE, MAI Gibraltar Savings and Loan Equitable Life Assurance Society Gibson, Dunn & Crutche.r Goldman Sachs Graham Taylor Hospitality Group Gray, Cary, Ames & Frye Gray, Cary, Ware & Freidenrich Great Eagle Holdins Limited Great Western Bank Greenwich Capital Markets Greys tone HMG Lodging Management HYPO Securities Hardage Suite Hotels Hare, Brewer & Kelley, Inc. Haruyoshi Kanko K.K. Heller, Ehrman, White & McAuliffe Heller Real Estate Financial Services The Heymann Group, Inc. Hibernia Bank Hodges Ward Elliott Holiday Inns Hong Kong Bank Hongkong Bank Alliance Host Marriott Hotel Investors Trust Howard Johnson's Hudson Hotels Corporation Huntington Bank Hyatt Development Corporation ITT Sheraton Corporation Impac Hotel Group Inter-Continental International Bank of California International Bank of Singapore Intracorp Developments, Ltd. J.E. Robert Company, Inc. J. W. Colachis Company Japan Airlines Jeffer, Mangels, Butler, & Marmara John B. Coleman & Co. John Q. Hammons John Hancock Life Insurance Key Bank of New York Key Corporation HVS Intemational, San Francisco, Califomia INTERNATIONAL Kwong Hing Investment Center Lake County Business Outreach and Response Team Lankford & Associates Larkspur Hospitality, LLC Latham & Watkins Laurence Peters & Co. Lehman Brothers, Inc. Leisure Sports, Inc. Leonard, Street & Deinard Local Federal Bank, F.S.B. Long Term Credit Bank of Japan, Ltd. Lovitt & Hannan, Inc. M&M Development Co. The Maher Company Marriott Hotels Mellon Bank Mercury Savings and Loan Merril Lynch Miramar Asset Management, Inc. Mitsui Trust & Banking Co., Ltd. The Money Store Commercial Mortgage, Inc. Morgan Guaranty Trust Morgan Stanley & Co. Morrison & Foerster NS Development Co. Nations Credit Commercial Corp. Nations Financial Capital Corp. Network Mortgage Services Nomura Asset Capital Corp. Nomura Securities International, Inc. Northwinds N.V. Ny-West Development Ocean Links Corp. Octavian, Inc. O'Neill Hotels & Resorts ORIX USA Corp. Orrick, Herrington & Sutcliffe Outlook Income Fund Qualifications of Suzanne R. Mellen, CRE, MAI OZ Resorts and Entertainment The Pacific Bank Pacific Hotel Group Pacific Union Company Pannell Kerr Forster Parabas Bank Park Plaza International Patrick M. Nesbitt Associates, Inc. Patriot American Hospitality Paul, Hastings, Janofsky & Walker Peninsula Bank of Commerce Picadilly Inns Pillsbury, Madison & Sutro Presideo Group Property Capital Trust Prudential Realty Group Punjab National Bank Queen Emma Foundation R.C. Hedreen Co. RT Capital Corporation Radisson Hospitality Worldwide Ramada Inns Real Estate Capital Markets Red Lion Hotels & Inns The RIM Corp. Riverboat Delta King, Inc. S.D. Malkin Properties, Inc. Sage Hospitality Resources San Francisco International Airport San Leandro Development Services Department Seafirst Bank Security Pacific National Bank Salomon Brothers Seven Seas Associates, LLC Shearman & Sterling Simpson, Thatcher & Bartlett Societe General Solit Interest Group Sonoma Valley Bank Southern California Savings HVS bztematio11al, Sa11 Fra11cisco, Califomia INTERNATIONAL Ssang Yong Engineering and Construction Company, Limited Starwood Lodging Stephen W. Noey & Associates Stem & Goldberg Stonebridge Realty Advisors Strategic Hotel Capital, Inc. Strategic Realty Advisors, Inc. Streich Lang Suburban Capital Markets, Inc. Sumitomo Bank Sunriver Resort Swig Investment Company TCFBank TYBA Group, Inc. Teachers Insurance and Annuity Association Three Sisters Resorts Tipton Management Tokai Bank Tom Grant, Jr. Transamerica Realty Services, Inc. Travelers Insurance Company The Travelers Companies Treadway Hotels Tully & Wezelman, P.C. Union Bank United Pacific Bank U.S. Bancorp U.S. Trust Company VMS Realty Villa del Lago Associates W.R.C. Properties, Inc. Wailua Associates Wells Fargo Bank, N.A. Wells Fargo RETECHS West Coast Bancorp West LB Westin Hotels & Resorts Windsor Capital Group Wolf, Rifkin & Shapiro Qualifications of Suzanne R. Mellen, CRE, MAI Woodfin Suites Hotel Co. Wrather Corp. Yasuda Trust and Banking Co., Ltd. HVS lntenzational, San Francisco, California Qualifications of Suzan11e R. Melle11, CRE, MAI ~~~ INTERNATIONAL PARTIAL LIST OF HOTELS AND MOTELS APPRAISED OR EVALUATED BY SUZANNE R. MELLEN, CRE, MAI ALABAMA Fairfield Inn, Birmingham Ramada Inn, Gadsden Proposed Hotel, Mobile Fairfield Inn, Montgomery Holiday Inn, Montgomery Howard Johnson's, Montgomery Residence Inn, Montgomery ALASKA Best Western Barratt Inn, Anchorage Clarion Suites Hotel, Anchorage Hawthorne Suites, Anchorage Hotel Captain Cook, Anchorage Northern Lights Hotel, Anchorage Rose Garden Hotel, Anchorage Sheraton Anchorage Hotel, Anchorage ARIZONA Best Western, Flagstaff Motel 6, Flagstaff Rodeway Inn, Flagstaff Woodlands Plaza Hotel, Flagstaff Bright Angel Lodge, Grand Canyon El Tovar Hotel, Grand Canyon Kachina Lodge, Grand Canyon Maswik Lodge, Grand Canyon Moqui Lodge, Grand Canyon Phantom Ranch, Grand Canyon Thunderbird Lodge, Grand Canyon Yavapai Lodge, Grand Canyon Best Western Green Valley, Green Valley Hampton Inn-Proposed, Holbrook Rodeway Inn, Kingman Nautical Inn, Lake Havasu Best Western Executive Park Hotel, Phoenix Bobby McGee's Conglomeration, Phoenix Caravan Inn, Phoenix Crescent Hotel, Phoenix Doubletree Inn, Phoenix Embassy Suites-Camelback, Phoenix Embassy Suites-Camelhead, Phoenix Fountain Suites Hotel, Phoenix Full-Service Hotel, Proposed, Phoenix Granada Royale Camelhead, Phoenix Holiday Inn, Phoenix Holiday Inn Crowne Plaza, Phoenix Hyatt Regency, Phoenix Knights Inn, Phoenix Omni Adams Hotel, Phoenix Quality Inn, Phoenix Courtyard by Marriott, Scottsdale Doubletree Inn, Scottsdale Holiday Inn Old Town, Scottsdale Marriott Camelback Inn, Scottsdale Phoenician Resort, Scottsdale Red Lion-La Posada, Scottsdale Rodeway Inn, Scottsdale Scottsdale Conference Resort, Scottsdale Scottsdale Hilton Resort, Scottsdale Scottsdale Princess, Scottsdale Proposed Summerfield Suites, Scottsdale Sunburst Resort Hotel & Conference Center, Scottsdale L'Auberge de Sedona, Sedona Los Abrigados, Sedona Orchard's Inn & Grill, Sedona Motel 6, Sierra Vista Country Suites Hotel, Tempe Mixed-Use Development, Tuba City Clarion Tucson, Tucson Doubletree Inn, Tucson Loews Ventana Canyon Resort, Tucson Lodge at Ventana Canyon, Tucson Marriott Hotel, Prop., & Starr Pass, Tucson Marriott Resort, Prop., Tucson Proposed Hotel, Tucson Proposed Microtel Inn, Tucson Radisson Suite Hotel, Tucson Rodeway Inn, Tucson Westward Look Resort, Tucson Shilor Inn, Yuma ARKANSAS Hilton, Hot Springs Holiday Inn, Little Rock Red Carpet Inn, Little Rock CALIFORNIA Radisson Hotel, Agoura Hills Ramada Inn, Agoura Hills Anaheim Marriott, Anaheim Anaheim Park Motor Inn, Anaheim Best Western Anaheim Inn, Anaheim Best Western Stovall's Inn, Anaheim Best Western Pavillions Inn, Anaheim Boulevard Inn, Anaheim Carousel Inn and Suites, Anaheim Disneyland Hotel, Anaheim Doubletree Hotel, Anaheim Golden Forest Motel, Anaheim Hilton Hotel, Anaheim Holiday Inn, Anaheim Howard Johnson Hotel, Anaheim Jolly Roger, Anaheim Marriott Courtyard, Anaheim Pan Pacific Hotel, Anaheim Pitcairn Inn, Anaheim Ramada Maingate Hotel, Anaheim Raffles Inn & Suites, Anaheim Station Inn, Anaheim TraveLodge Inn at the Park, Anaheim WestCoast Anaheim Hotel, Anaheim Proposed Fairfield Suites, Arcadia Proposed Hilton Garden Inn, Arcadia Auburn Inn, Auburn Sleep Inn, Auburn Ramada, Augora Hills Allstar Inn, Bakersfield Clarion Suites, Bakersfield Economy Inn, Bakersfield (2) Marriott Courtyard, Bakersfield Red Lion Hotel, Bakersfield Residence Inn, Bakersfield Sheraton Hotel, Bakersfield Travelodge Hotel, Bakersfield Hilton Hotel, Baldwin Park Allstar Inn, Barstow Economy Inn, Barstow Holiday Inn Express, Belmont Proposed Summerfield Suites, Belmont Summerfield Suites, Belmont Berkeley Marina Marriott, Berkeley Shattuck Hotel, Berkeley Beverly Hills Country Club, Beverly Hills Beverly Hilton, Beverly Hills Beverly Wilshire, Beverly Hills Four Seasons Hotel, Beverly Hills L'Ermitage, Beverly Hills Peninsula Beverly Hills, Beverly Hills Regent Beverly Wilshire Hotel, Beverly Hills Renaissance Hotel, Beverly Hills Best Western, Big Bear Lake Motel 6, Big Bear Lake Proposed hotel, Big Bear Lake Post Ranch Inn, Big Sur Ventana Inn, Big Sur Rodeway Inn, Blythe Embassy Suites Hotel, Brea Holiday Inn, Brentwood Hilton Residential Suites, Brisbane HVS International, San Francisco, Califomia INTERNATIONAL Rancho Santa Barbara Marriott, Buellton Fairfield Inn, Buena Park Hampton Inn, Buena Park Marriott Courtyard, Buena Park Burbank Airport HIiton, Burbank Hilton Hotel, Burbank Ramada Inn, Burbank Hyatt Regency, Burlingame Hyatt Regency SFO, Burlingame Airport Marriott, Burlingame Radisson Plaza-Proposed, Burlingame Good Nite Inn, Buttonwillow Country Inn, Calabassas Good Nite Inn, Calabassas Del Norte Inn, Camarillo Good Nite Inn, Camarillo Cambria Pines Lodge, Cambria Best Western Fireside Inn, Cambria Campbell Inn, Campbell Hilton Garden Inn, Campbell Pruneyard Inn, Campbell Proposed Hotel, Capitola Allstar Inn, Carlsbad Carlsbad Inn, Carlsbad Four Seasons Resort Aviara, Carlsbad Inn of America, Carlsbad La Costa Resort and Spa, Carlsbad Legoland, Carlsbad Olympic Resort, Carlsbad Carmel Mission Inn, Carmel Carmel Valley Ranch, Carmel Highlands Inn, Carmel Proposed Hotel, Casa de Fruta Doubletree Hotel, Cathedral City Proposed Hotel, Cathedral City Royce Hotel, Cathedral City Sheraton Cerritos Towne Center, Cerritos Sheraton Hotel, Cerritos Neighborhood Inn-Proposed, Chatsworth Days Inn, Chico Holiday Inn, Chico Proposed Microtel Inn and Suites, Chico Red Lion Hotel, Chico Otay Valley Travel Lodge, Chula Vista Harris Ranch, Coalinga Howard Johnson's, Colton Concord Hilton, Concord Sheraton Hotel, Concord Trees Inn, Concord Motel 6, Corona Loews Coronado Bay Resort, Coronado Proposed Hilton Garden Inn, Corte Madera Ha'Penny Inn, Costa Mesa Marriott Suites, Costa Mesa Red Lion Hotel, Costa Mesa Residence Inn, Costa Mesa Pacifica Hotel & Conference Center, Culver City Ramada Inn, Culver City Hilton Garden Inn, Cupertino Marriott Courtyard, Cupertino Ritz-Carlton Laguna Niguel, Dana Point Proposed Spa, Danville Furnace Creek Inn, Death Valley Furnace Creek Resort, Death Valley Stove Pipe Wells Village, Death Valley Hilton Hotel, Del Mar Marriott Resort & Spa, Desert Springs Days Inn Diamond Bar, Diamond Bar Best Western, El Toro Carlos Murphy's Restaurant, Emeryville Days Inn, Emeryville Hardage Suites Hotel Site, Emeryville Lyon's Restaurant, Emeryville Woodfin Suite Hotel, Prop., Emeryville Woodfin Suite Hotel, Emeryville Budget Motel, Encinitas Hilton Garden Inn, Proposed, Escondido Marriott Tenaya Lodge, Fish Camp Proposed Hotel, Folsom All-Suites-Proposed, Foster City Clubtel-Proposed, Foster City Holiday Inn, Foster City Marriott Courtyard, Foster City Hilton, Fremont Marriott Courtyard, Fremont Motel 6, Fremont Quality Inn, Fremont Proposed Westin Clubsport, Fremont Allstar Inn, Fresno (2) Chateau Inn, Fresno Economy Inn, Fresno (2) Hacienda Resort and Conference Center, Fresno Holiday Inn, Fresno Marriott Courtyard, Fresno Picadilly Inns, Fresno (3) Travelers Inn, Fresno (3) Sierra Sport and Racquet Club, Fresno Griswold's Hotel, Fullerton Marriott Hotel, Fullerton Hyatt Regency-Proposed, Goleta Motel 6, Gilroy Red Lion Hotel, Glendale Ocean Colony Resort, Half Moon Bay Qualifications of Suzanne R. Mellen, CRE, MAI Proposed Healdsburg Plaza Hotel, Healdsburg Hollywood Clarion Roosevelt Hollywood Hollywood Palm Hotel, Hollywood Waterfront Hilton, Huntington Beach Grand Champions Resort, Indian Wells Miramonte Resort, Indian Wells Hilton Orange County Airport, Irvine Marriott Courtyard, Irvine Registry Hotel, Irvine Amador Inn, Jackson Proposed Hotel, Kern Co. Lafeyette Park Hotel, Lafeyette Surf & Sand Hotel, Laguna Beach Ritz-Carlton Hotel, Laguna Niguel Hyatt Hotel, La Jolla Residence Inn, La Jolla Scripps Inn, La Jolla Hilton Lodge, Lake Arrowhead Lake Arrowhead Resort, Lake Arrowhead Proposed Hotel, Lake Country Resort at Squaw Creek, Lake Tahoe Marriott Courtyard, Larkspur Marriott Rancho Las Palmas, Las Palmas Proposed 5O-Unit Motel, Little Lake Residence Inn, Livermore Embassy Suites, Lompoc Breakers Hotel, Long Beach Holiday Inn, Long Beach Holiday Inn -Airport, Long Beach Hyatt Regency, Long Beach Marriott Hotel, Long Beach Residence Inn, Long Beach West Coast Hotel & Marina, Long Beach Airport Park Hotel, Los Angeles Biltmore Hotel, Los Angeles Checkers Hotel, Los Angeles Courtyard by Marriott, Los Angeles Crowne Plaza LAX, Los Angeles Doubletree Hotel at LAX, Los Angeles Econolodge-Proposed, Los Angeles Embassy Suites, Los Angeles Four Seasons, Los Angeles Hilton Hotel & Towers, Los Angeles Hilton LAX, Los Angeles Holiday Inn Brentwood/Bel Air, Los Angeles Holiday Inn-LAX, Los Angeles Holiday Inn Crowne Plaza-LAX, Los Angeles Holiday Inn Express-Van Nuys, Los Angeles Hotel Inter-Continental, Los Angeles Hotel Sofitel Ma Maison, Los Angeles Marriott Courtyard-LAX, Los Angeles New Seoul Hotel, Los Angeles HVS International, San Francisco, Califomia INTERNATIONAL Playa Vista Development, Los Angeles Proposed Residence Inn Beverly Hills, Los Angeles Sofitel Ma Maison, Los Angeles Westin Bonaventure, Los Angeles Westmoreland Place, Los Angeles Hotel & Restaurant, Proposed, Los Gatos Los Gatos Lodge, Los Gatos Economy Inns of America Motel, Madera Courtyard by Marriott , Mira Mesa Barnabey's Hotel, Manhattan Beach Courtyard by Marriott, Marina del Rey Doubletree Hotel, Marina del Rey Holiday Inn Express, Marina del Rey Marina Suites Hotel, Marina del Rey Marina Beach Hotel, Marina del Rey Marriott Hotel, Marina del Rey Hill House, Mendocino Stanford Park Hotel, Menlo Park Comfort Inn, Millbrae Candlewood Hotel, Milpitas Hilton Garden Inn, Milpitas Holiday Inn, Milpitas Holiday Inn, Miramar Motel Orleans, Modesto Red Lion Hotel, Modesto Miramar Resort Hotel, Montecito Doubletree Fisherman"s Wharf, Monterey Doubletree Inn, Monterey Monterey Plaza Hotel, Monterey Proposed Hotel, Monterey Sheraton Hotel, Monterey Inn at Morro Bay, Morro Bay Proposed Hilton Garden Inn, Mountain View Proposed Westin ClubSport, Mountain View Aetna Springs Resort, Proposed, Napa Best Western Inn, Napa Valley Clarion Inn, Napa Valley Inn at Napa Valley, Napa Valley Sheraton Inn Napa Valley, Napa Proposed Windmill Inn, Napa Valley Silverado, Napa Valley Newark/Fremont Hilton, Newark Park Inn, Newark Hyatt Newporter, Newport Beach Marriott Suites, Newport Beach Proposed Newport Coast Development, Newport Beach Newporter Resort Hotel, Newport Beach Sheraton Hotel, Newport Beach Shilo Inn, Oakhurst Holiday Inn Oakland Airport, Oakland Pare Oakland Hotel, Oakland Resort at Squaw Creek, Olympic Valley Clarion Hotel, Ontario Holiday Inn, Ontario Red Lion Hotel, Ontario Residence Inn, Orange Woodfin Suite Hotel, Orange Hilton Garden Inn, Proposed, Oxnard Holiday Inn, Oxnard Proposed Hotel, Pacifica Super 8 Motel, Palmdale Embassy Suite, Palm Desert Hawthorne Suites, Palm Desert Canyon Resort Hotel, Palm Springs Desert Princess, Palm Springs Hyatt Palm Springs, Palm Springs Marriott Rancho Las Palma, Palm Springs Palm Canyon, Palm Springs Palm Springs Spa Hotel, Palm Springs Spa Hotel & Mineral Springs, Palm Springs Wyndham Hotel, Palm Springs Cardinal Hotel, Palo Alto Holiday Inn, Palo Alto Proposed Hotel, Palo Alto Stanford Park Hotel, Palo Alto Stanford Terrace Inn, Palo Alto Ambassador College Hotel, Prop., Pasadena - Holiday Inn Express, Pasadena Marriott Courtyard, Pasadena Hacienda Hotel, Patterson Proposed Hotel and Restaurant, Patterson Cascade Ranch Lodge, Pescadero Elks Lodge, Petaluma Beverly Hills Residence Inn, Pico Proposed Hotel, Pinole Best Western Grande Arroyo, Pismo Beach Proposed Hilton, Pismo Beach Fairfield Inn, Placentia AmeriSuites & Homstead Village, Pleasant Hill Black Angus Restaurant, Pleasant Hill Embassy Suites, Pleasant Hill Pleasant Hill Inn, Pleasant Hill Residence Inn, Pleasant Hill Savoy Restaurant, Pleasant Hill Woodfin Suite Hotel, Proposed, Pleasant Hill Candlewood Hotel, Pleasanton Hilton Hotel, Pleasanton Holiday Inn, Pleasanton Marriott Courtyard, Pleasanton Pleasanton Hilton Hotel, Pleasanton Sierra Suites, Pleasanton Summerfield Suites, Pleasanton Qualifications of Suzanne R. Mellen, CRE, MAI Shilo Inn, Pomona Country Inn, Port Hueneme Holiday Inn, Rancho Bernardo Economy Inn, Rancho Cordova Hallmark Suites Hotel, Rancho Cordova Marriott Courtyard, Rancho Cordova Quality Suites, Rancho Cordova Marriott's Rancho Las Palmas, Rancho Mirage Grand Manor Inn, Redding Microtel Inn & Suites, Redding Motel Orleans East, Redding Motel 6, Redding Park Terrace, Redding Red Lion Inn, Redding Shasta Inn, Redding Good Nite Inn, Redlands Sheraton Redondo Beach, Redondo Beach Hotel Sofitel at Redwood Shores, Redwood City Carriage Inn, Ridgecrest Good Nite Inn, Rohnert Park Ramada Limited Hotel, Rohnert Park Red Lion Hotel, Rohnert Park Hilton Gardens Hotel, Roseville Hotel & Convention Center, Prop., Roseville Mission Inn, Riverside Allstar Inn, Sacramento (4) Arco Arena, Sacramento Proposed Candlewood Hotel, Sacramento Candlewood Hotel, Sacramento Clarion Hotel, Sacramento Proposed Convention Hotel, Sacramento Proposed Docks Hotel, Sacramento Dodge City Motel, Sacramento Hilton Garden Inn, Sacramento Hilton Hotel, Sacramento Hilton Inn, Sacramento Holiday Inn, Sacramento Hyatt Regency, Sacramento Hyatt Regency at Capitol Park, Sacramento Marriott Courtyard, Sacramento Motel Orleans, Sacramento Peregrine Real Estate Trust, Sacramento Radisson Hotel, Sacramento Red Lion Hotel-Sacramento, Sacramento Red Lion-Sacramento Inn, Sacramento Residence Inn South Natomas, Sacramento Riverboat Delta King, Sacramento Sacramento Hilton, Sacramento Sacramento Inn, Sacramento Sierra Inn, Sacramento Sterling Hotei, Sacramento HVS Internatioizal, San Francisco, Califomia INTERNATIONAL Travelers Inn, Sacramento Proposed Vizcaya Catering Hall, Sacramento Woodlake Inn, Sacramento Proposed 60-Unit Hotel, Sacramento Marriott Courtyard, San Bruno Best Western Hanalei, San Diego Best Western Seven Seas Lodge, San Diego Carmel Highland Doubletree, San Diego Clarion Bay View, San Diego Comfort Inn Old Town, San Diego Proposed Coutryard, San Diego Doubletree Hotel at Horton Plaza, San Diego Embassy Suites-La Jolla, San Diego Executive Lodge, San Diego Hanalei Hotel, San Diego Proposed Hilton Garden Inn, San Diego Holiday Inn, San Diego Holiday Inn Express Sea World, San Diego Hotel Del Coronado Howard Johnson, San Diego Hyatt Islandia, San Diego Hyatt Regency, San Diego Intercontinental Hotel, San Diego Kings Inn, San Diego La Jolla Village Inn, San Diego Marriott Hotel and Marina, San Diego Marriott Mission Valley, San Diego Marriott Suites, San Diego Mission Valley Inn, San Diego Mission Valley Hilton, San Diego Radisson Hotel, San Diego Ramada Limited Suites, San Diego Rancho Bernardo Inn, San Diego Red Lion Hotel, San Diego Residence Inn, San Diego Renaissance Hotel, Proposed, San Diego Summer House Inn, San Diego Sheraton Grand, San Diego Sheraton Harbor Island East, San Diego Sheraton Hotel & Marina, San Diego Super 8 Motel-Point Loma, San Diego Symphony Towers, San Diego Town and Country Hotel, San Diego U.S. Grant Hotel, San Diego Westin Horton Plaza, San Diego Wyndham Emerald Hotel, San Diego ANA Hotel, San Francisco Bellevue Hotel, San Francisco Campton Place, San Francisco Cartwright Hotel, San Francisco Chancellor Hotel, San Francisco The Clift Hotel, San Francisco Comfort Inn by the Bay, San Francisco Donatello Hotel, San Francisco Embarcadero Inn, San Francisco Excipio San Francisco, San Francisco Fairmont Hotel, San Francisco Four Seasons Clift, San Francisco Grand Hyatt, San Francisco Griffon Hotel, San Francisco Harbor Court Hotel, San Francisco Proposed Hilton Garden Inn, San Francisco Hilton Hotel SFO, San Francisco Hilton San Francisco Airport North, San Francisco Holiday Inn-Civic Center, San Francisco Holiday Inn-Fisherman's Wharf, San Francisco Holiday Inn-Golden Gateway, San Francisco Holiday lnn-SFO, San Francisco Holiday Lodge, San Francisco Hotel Diva, San Francisco Hotel Griffon & Roti Restaurant, San Francisco Hotel Nikko, San Francisco Hotel Rex, San Francisco Hotel Triton, San Francisco Hotel Union Square, San Francisco Howard Johnson's Pickwick Hotel, San Francisco Hyatt at Fisherman's Wharf, San Francisco Hyatt Regency, San Francisco Hyatt Regency Embarcadero, San Francisco Proposed Hotel, San Francisco Proposed Inn at Fisherman's Wharf, San Francisco Inn at the Opera, San Francisco Juliana Hotel, San Francisco King George Hotel, San Francisco Lambourne Hotel, San Francisco Le Meridian Hotel, San Francisco The Majestic, San Francisco Mark Twain Hotel, San Francisco Marriott Fisherman's Wharf, San Francisco Maxwell Hotel, The, San Francisco Mission & Steuart Hotel, Proposed, San Francisco Orchard Hotel, San Francisco Pare Fifty-Five, San Francisco Park Hyatt, San Francisco Piers 30/32, San Francisco Portman Hotel, San Francisco Prescott Hotel, San Francisco Presidio Travelodge, San Francisco Queen Anne Hotel, San Francisco Qualifications of Suzanne R. Mellen, CRE, MAI Ramada Fisherman's Wharf, San Francisco Ramada Hotel, San Francisco Ramada Plaza Hotel, San Francisco Regis Hotel, San Francisco Richilieu Hotel, San Francisco Ritz Carlton-Proposed, San Francisco San Francisco Airport Hilton, San Francisco San Francisco Hilton, San Francisco San Francisco Hotel, San Francisco San Francisco Marriott, San Francisco Savoy Hotel, San Francisco Sheraton Fisherman's Wharf, San Francisco Sir Francis Drake Hotel, San Francisco Stanford Court, San Francisco Super 8 Motel at Fisherman's Wharf Proposed Inn at 2961 Pacific Avenue, San Francisco Tuscan Inn, San Francisco Westin St. Francis Hotel, San Francisco Marriott Courtyard, San Francisco Airport Crowne Plaza, San Jose Fairmont Hotel, San Jose Holiday Inn, San Jose Hyatt San Jose, San Jose Hyatt St. Claire, San Jose Ramada Renaissance Hotel, San Jose · Radisson Plaza Hotel Airport, San Jose Red Lion-San Jose, San Jose Proposed Sierra Suites;San Jose Islander Lodge Motel, San Leandro Apple Farm Inn, San Luis Obispo Embassy Suites Hotel, San Luis Obispo Pacific Suites Hotel, San Luis Obispo Twin Oaks Golf Course, San Marcos Benjamin Franklin Hotel, San Mateo Dunfey Hotel, San Mateo Holiday Inn, San Mateo Holiday Inn Express, San Mateo Hilton Hotel, San Pedro Embassy Suites, San Rafael Marriott Hotel, San Ramon Proposed Hotel, San Ramon Residence Inn, San Ramon California Palms, Santa Ana Compri Hotel, Santa Ana Embassy Suites, Santa Ana Executive Inn, Santa Ana Executive Lodge, Santa Ana Orange County Ramada Hotel, Santa Ana Quality Suites, Santa Ana El Encanto Hotel, Santa Barbara HVS International, San Francisco, California INTERNATIONAL Fess Parker's DoubleTree Resort, Santa Barbara Fess Parker's Red Lion Resort, Santa Barbara Santa Barbara Inn, Santa Barbara Santa Barbara Club Resort &·spa, Santa Barbara San Ysidro Ranch, Santa Barbara Budget Inn, Santa Clara Embassy Suites, Santa Clara Howard Johnson's Hotel, Santa Clara Marriott Hotel, Santa Clara Quality Suites, Santa Clara Hilton Garden Inn, Santa Clarita Hilton Town Center, Santa Clarita Inn at Pasatiempo, Santa Cruz Dream Inn, Santa Cruz Motel 6, Santa Maria Santa Maria Airport Hilton, Santa Maria Proposed Hotel, San Mateo Casa Del Mar, Santa Monica Holiday Inn, Santa Monica Holiday Inn at the Pier, Santa Monica Loews Santa Monica Beach Hotel, Santa Monica Ocean Avenue Hotel, Santa Monica Proposed EconoLodge, Santa Monica Park Hyatt Hotel, Santa Monica Santa Monica Beach Hotel, Santa Monica Sheraton Miramar Hotel, Santa Monica Holiday Inn, Santa Nella · Flamingo Hotel, Santa Rosa Fountain Grove Inn, Santa Rosa Holiday Inn, Santa Rosa Days Inn Seaside, Seaside Embassy Suites, Seaside Seaside 8, Seaside Radisson Valley Center Hotel, Sherman Oaks Ramada Inn, Solana Beach Danish CountrY Inn, Solvang Lodge at Sonoma, Prop., Sonoma Red Lion Inn, Sonoma Sonoma Valley Inn, Sonoma Hardage Suites Hotel Site, Sorrento Mesa Proposed Woodfin Suite Hotel, Sorrento Mesa Timberwolf Lodge, South Lake Tahoe Crown Sterling Suites, South San Francisco Grosvenor Hotel, South San Francisco Holiday Inn, South San Francisco La Quinta Inn, South San Francisco Proposed 390-room hotel, South San Francisco Ramada Inn, South San Francisco Proposed Hotel, Squaw Valley Harvest Inn, St. Helena Meadowood Resort, St. Helena Motel Orleans, Stockton Sheraton Hotel-Proposed, Stockton Stockton Hilton, Stockton Holiday Inn, Sunnyvale Neighborhood Suites Hotel, Sunnyvale The Proposed Grand Hotel, Sunnyvale Residence Inn Silicon Valley II, Sunnyvale Sunnyvale Hilton, Sunnyvale Super 8, Sunnyvale Good Nite Inn, Sylmar Embassy Suites-Temecula, Temecula Temecula Creek Inn & Golf, Temecula Temecula Inn, Temecula Hilton Hotel, Torrance Holiday Inn -Torrance, Torrance MCA Hotel, Proposed, Universal City Hilton Garden Inn, Valencia Holiday Inn, Van Nuys Hotel Van Nuys, Van Nuys Habortown Marina Resort, Ventura Ocean Resorts/Harbortown Hotel, Ventura Sheraton Hotel, Ventura Holiday Inn, Walnut Creek Marriott Hotel, Walnut Creek Parkside Hotel, Walnut Creek Proposed Royce Hotel, Walnut Creek Walnut Creek Marriott, Walnut Creek Proposed Westin ClubSport, Walnut Creek Le Bel Age, West Hollywood Le Duty, West Hollywood Le Mondrian, West Hollywood Le Montrose, West Hollywood Ramada Hotel, West Hollywood Summerfield Suites, West Hollywood Golden Pheasant, Willows Microtel Inn & Suites, Willows Whittier Hilton, Whittier Proposed Hotel, Woodland Woodland Hotel & Conference Center- Proposed, Woodland Warner Center Marriott, Woodland Hills Skylonda Retreat, Woodside Marriott Tenaya Lodge-Proposed, Yosemite Bonanza & Convention Center, Yuba City Motel Orleans, Yuba City COLORADO Hotel Jerome, Aspen Hampton Inn, Aurora Qualifications of Suzanne R. Mellen, CRE, MAI Holiday Inn Southeast, Aurora Downtown Boulder Hotel, Boulder Hilton Harvest House, Boulder Holiday Inn, Boulder Proposed Casino Hotel, Central City Best Western Le Baron Hotel, Colorado Springs Proposed Double Eagle Casino Hotel, Colorado Springs Embassy Suites, Colorado Springs Hilton, Colorado Springs Proposed Double Eagle Casino Hotel, Cripple Creek Le Baron Hotel, Denver Brown Palace, Denver Days Inn-Arapahoe, Denver Days Inn-Colfax, Denver Embassy Suites, Denver Radisson, Denver Denver Hilton, Englewood Proposed Summerfield Suites, Greenwood Village Proposed Hampton Inn, Lakewood Silvertree Hotel, Snowmass Wildwood Lodge, Snowmass Westin Hotel, Vail CONNECTICUT Holiday Inn, Darien Proposed Days Inn, Enfield Hartford Hilton, Hartford Motel 6, Hartford Residence Inn, Meriden Executive Hotel, Stamford Harley Hotel, Stamford Holiday lnn-Crowne Plaza, Stamford Fairfield Inn, Windsor Locks DISTRICT OF COLUMBIA ANA Hotel, Washington Fairmont Hotel, Washington Harambee House, Washington Hyatt Regency, Washington Ritz-Carlton, Washington River Inn, Washington St. James, Washington Sheraton Washington Hotel, Washington FLORIDA Holiday Inn, Altamonte Springs HVS lntemational, San Francisco, Califomia INTERNATIONAL Embassy Suites, Boca Raton Petite Suites, Boca Raton Holiday Inn, Clearwater Holiday Inn Gulfview, Clearwater Holiday Inn Surfside, Clearwater Beach Doubletree Oceanfront, Ft. Lauderdale Galleria Doubletree Guest Suites, Ft. Lauderdale Holiday Inn-Airport, Ft. Lauderdale Holiday Inn-Beach, Ft. Lauderdale Holiday Inn-North, Ft. Lauderdale Fairfield Inn, Gainesville Embassy Suites, Lake Buena Vista Embassy Suites Orlando, Buena Vista Woodfin Suite Hotel, Proposed, Lake Buena Vista Holiday Inn-Madeira, Madeira Beach Fairfield Inn, Miami Holiday Inn-Calder, Miami Fairfield Inn International, Miami Fairfield Inn South, Miami Holiday Inn-International Drive, Orlando Holiday Inn-Lee Road, Orlando Peabody Hotel, Orlando Sheraton Jetport Inn, Orlando Sheraton Lakeside, Orlando Holiday Inn, Palm Beach Gardens Plantation Sheraton Suites, Plantation Holiday Inn-Lido Beach, Sarasota Holiday Inn-Airport, Tampa Ramada Inn, Tampa GEORGIA Fairfield Inn Northlake, Atlanta Proposed Hyatt-Airport, Atlanta Motel 6, Atlanta Neighborhood Inn, Atlanta Residence Inn, Atlanta Stouffer's Hotel-Proposed, Atlanta Westin Peachtree Plaza, Atlanta Fairfield Inn, College Park Holiday lnn-Crowne Plaza, College Park Fairfield Inn-Gwinnett, Duluth Howard Johnson's Forsyth Fairfield Inn, Marrietta Fairfield Inn, Morrow Fairfield Inn, Norcross Motel 6, Norcross Fairfield Inn, Savannah HAWAII Ritz-Carlton Mauna Lani Royal Sea Cliff Resort, Hawaii Gateway Hotel, Honolulu Miramar Hotel, Honolulu Outrigger East Hotel, Honolulu Outrigger Waikiki Hotel, Honolulu Outrigger West Hotel, Honolulu Sand Villa Hotel, Honolulu Coco Palms Resort, Kauai Westin Kauai at Kauai Lagoons Resort, Kauai Grand Wailea Resort, ·Maui Kea Lani Resort, Maui Maui Lu Resort, Maui Royal Hawaiian Hotel, Oahu IDAHO Motel 6, Coeur d'Alene Resort Development, Coeur d'Alene Cotton Tree Inn, Pocatello ILLINOIS Indian Lakes Resort, Bloomingdale Jumers Chateau, Bloomington Super 8 Motel, Bloomington Super 8 Motel, Champagne Fairmont Hotel, Chicago Hyatt at University Village, Chicago Mayfair Regent, Chicago Proposed Radisson Hotel, Chicago Westin Hotel, Chicago Woodfin Suite Hotel, Proposed, Chicago Super 8 Motel, Crystal Lake Super 8 Motel, Decatur Proposed Hotel, Des Plaines Radisson Suites, Downers Grove Hampton Inn, Elk Grove Holiday Inn, Elmhurst Orrington Hotel, Evanston Drury Inn, Fairview Heights Jumers Continental Inn, Galesburg Fairfield Inn, Hinsdale Proposed Westin Hotel & ClubSport, Hoffman Estates Nordic Hills Resort, Itasca Empresss Hotel & Casino, Joliet Holiday Inn, Joliet Fairfield Inn, Lansing Fairfield Inn, Normal Qualifications of Suzanne R. Mellen, CRE, MAI Fairfield Inn, Peoria Jumer's Castle, Peoria Super 8 Motel, Peru Fairfield Inn, Rockford Marriott Hotel, Schaumburg Proposed Woodfin Suite Hotel, Schaumberg DoubleTree Hotel -North Shore, Skokie Jumer's Castle, Urbana Super 8 Motel, Waukegan INDIANA Super 8 Motel, Columbus Fairfield Inn, Fort Wayne Sheraton Hotel, Gary Empress Casino, Hammond Caesars Riverboat Casino Complex-Proposed, Harrison County Fairfield Inn, Indianapolis Four Points Sheraton, Indianapolis Motel 6, Indianapolis Westin Hotel, Indianapolis Woodfin Suite Hotel, Prop., Indianapolis Wyndham Garden Hotel, Indianapolis Hilton Inn, Jeffersonville Brown County Inn, Nashville IOWA Jumers Castle Lodge, Bettendorf Holiday Inn, Cedar Falls Collins Plaza, Cedar Rapids Fairfield Inn, Cedar Rapids Fairfield Inn, Clive KANSAS Proposed Emerald City Resort, Kansas City The Emerald City Resort Hotel, Kansas City Fairfield Inn, Merriam Fairfield Inn, Overland Park Canterbury Inn/Knights Inn, Wichita KENTUCKY Holiday Inn-Central, Louisville Holiday Inn-Northeast, Louisville Ramada Inn East, Louisville HVS bztemational, San Francisco, California INTERNATIONAL LOUISIANA Howard Johnson's, Alexandria Embassy Suites, Baton Rouge Hilton Hotel, Baton Rouge Horseshoe Casino, Bossier City Sheraton At New Orleans Airport, Kenner Fairmont Hotel, New Orleans Harrah's Jazz Casino, New Orleans Chateau Sonesta, New Orleans Hyatt Regency, New Orleans The Iberville Hotel, New Orleans Lakeside DoubleTree, New Orleans The Maison Dupuy, New Orleans Ramada Inn St. Charles, New Orleans MAINE Inn by the Sea, Cape Elizabeth MARYLAND Holiday Inn, Aberdeen Marriott Waterfront Hotel, Annapolis Maryland Inn, Annapolis Residence Inn, Bethesda Best Western Motor Lodge, Chicopee Abbey, College Park Holiday Inn, Laurel Days Inn, Rockville DoubleTree Hotel, Rockville Holiday Inn Crowne Plaza, Rockville Ramada Inn, Rockville MASSACHUSETTS Marriott Copley Place, Boston Meridian Hotel, Boston Residence Inn, Boston Federal House Inn, South Lee Holiday Inn, Springfield Sheraton, Sturbridge Proposed Sierra Suites Hotel, Waltham Proposed Summerfield Suites Hotel, Waltham Proposed Sierra Suites Hotel, Woburn MICHIGAN Fairfield Inn, Auburn Hills Super 8 Motel, Battle Creek Howard Johnson's, Belleville Fairfield Inn, Canton Holiday Inn, Detroit Golden Harp-Proposed, Detroit Radisson Hotel, Farmington Hills Fairfield Inn, Kalamazoo Super 8 Motel, Kalamazoo Embassy Suites-Proposed, Livonia Embassy Suites, Livonia Fairfield Inn, Madison Heights Super 8 Motel, Mount Pleasant Super 8 Motel, Muskegon Inn at the Bridge, Port Huron Fairfield Inn, Romulus Super 8 Motel, Saginaw Proposed Woodfin Suite Hotel, Southfield Comfort Suites, Sterling Heights Holiday Inn, Troy Fairfield Inn, Warren Holiday Inn, Warren Motel 6, Warren Super 8 Motel, Wyoming MINNESOTA Holiday Inn, Duluth Motel 6, Minneapolis Proposed Motel, Montevideo Motel 6, Rochester Radisson Plaza Hot~!. Rochester MISSISSIPPI Treasure Bay Hotel & Casino, Biloxi Motel 6, Hattiesburg Howard Johnson's, Jackson Quality Inn, Oxford Horseshoe Casino Center, Robinsonville Sam's Town Hotel & Gambling Hall Robinsonville MISSOURI Fairfield Inn, Hazelwood Holiday Inn, Kansas City Sam's Town Hotel & Gambling Hall, Kansas City Holiday Inn, Springfield Clarion Hotel, St. Louis Executive Inn, St. Louis Holiday Inn Sports Complex, St. Louis Sheraton Airport, St. Louis Sheraton Westport, St. Louis Proposed Hotel, Unity Village Qualifications of Suzanne R. Mellen, CRE, MAI MONTANA Holiday Inn, Bozeman Holiday Inn, Missoula Red Lion Hotel, Missoula NEBRASKA Marriott Hotel, Omaha Red Lion Inn, Omaha NEVADA Ormsby House Hotel and Casino, Carson City Eldorado Casino, Henderson Joker's Wild Casino, Henderson Airport Inn, Las Vegas Aladdin Hotel & Casino, Las Vegas Alexis Park Hotel, Las Vegas California Hotel & Casino, Las Vegas Fremont Hotel & Casino, Las Vegas Proposed Hilton Garden Inn, Las Vegas Proposed Homewood Suites, Las Vegas Hotel & Casino El Rancho, Las Vegas Howard Johnson Hotel & Casino, Las Vegas Jockey Club, Las Vegas Paradise Resort Hotel, Las Vegas Residence Inn, Las Vegas Sam's Town Hotel & Gambling Hall, Las Vegas Stardust Resort and Casino, Las Vegas Sunrise Hotel & Casino, Las Vegas Proposed Hotel, Sparks NEW JERSEY Deauville Hotel, Atlantic City Harrah's Marina Hotel Casino, Atlantic City Sands Hotel & Casino, Atlantic City Tropicana Hotel & Casino, Atlantic City Cherry Hill Inn, Cherry Hill Proposed Ramada Inn, Elizabeth Proposed Ramada Inn, Franklin Township Proposed Summerfield Suites Morristown, Hanover Proposed Summerfield Suites Parsippany, Hanover Holiday Inn, Jamesburg Headquarters Plaza, Morristown Howard Johnson's Mount Holly Mt. Laurel Hilton, Mt. Laurel Holiday Inn, Newark Howard Johnson's, Saddle Brook HVS International, San Francisco, California INTERNATIONAL DoubleTree Hotel, Somerset Marriott Hotel, Somerset Motel, Wrightstown Five Churches Chicken Restaurants, Various Locations · NEW MEXICO Doubletree Hotel, Albuquerque Hampton Inn, Albuquerque Ramada Hotel Classic, Albuquerque Radisson Inn, Albquerque Las Cruces Hilton, Las Cruces Homewood Suites, Santa Fe Inn at Loretto, Santa Fe Sheraton de Santa Fe, Santa Fe Rancho Ramada Inn de Taos, Taos NEW YORK Hilton Hotel, Albany Buffalo Hotel, Buffalo Proposed Airport Hotel, Buffalo Nevele Hotel, Ellenville Howard Johnson's, Elmsford Ramada Inn, Hauppauge Hilton Hotel, Lake Placid Proposed Hotel, New Rochelle Ramada Plaza, New Rochelle Sheraton Inn, New Rochelle Barbizon Plaza Hotel, New York Berkshire Place, New York Century Paramount Hotel, New York Essex House, New York Executive Hotel, New York Halloran House, New York Hampton House, New York Holland Hotel, New York Howard Hotel, New York Marriott Eastside, New York Mayfair Regent, New York Nova-Park Gotham, New York Parker Meridien Hotel, New York Proposed Soho Hotel, New York Tudor Hotel, New York York Club, New York Sheraton Inn, Ossining Proposed Hotel, Saratoga Howard Johnson's, Smithtown Hampton Inn, Syracuse Sheraton Nassau Hotel, Uniondale Turning Stone Casino, Verona Roger Smith Hotel, White Plains Fairfield Inn, Williamsville NORTH CAROLINA Fairfield Inn, Charlotte Fairfield Inn, Durham Motel 6, Durham Fairfield Inn, Fayetteville Embassy Suites, Greensboro Fairfield Inn, Greensboro Hilton Inn, Greensboro Fairfield Inn, Raleigh Hilton Inn, Raleigh Motel 6, Rocky Mount Cleghorn Plantation, Rutherfordton Fairfield Inn, Wilmington Hilton Inn, Winston-Salem OHIO Holiday Inn Cascade, Akron Embassy Suites, Blue Ash Fairfield Inn, Brook Park Proposed Embassy Suites, Cincinnati Howard Johnson's, Cincinnati Marriott Inn, Cincinnati Radisson Inn, Cincinnati Residence Inn, Cincinnati Vernon Manor, Cincinnati Holiday Inn Lakeside, Cleveland Hotel, Proposed, Cleveland Sheraton Hopkins, Cleveland 200-Room Boutique Hotel, Cleveland Fairfield Inn, Columbus Holiday Inn, Columbus Holiday Inn -Airport, Columbus Woodfin Hotel, Columbus Daytonian Hilton, Dayton Fairfield Inn, Dayton Motel 6, Dayton Proposed Woodfin Suite Hotel, Dublin Fairfield Inn, Holland Holiday Inn, Toledo Fairfield Inn, Willoughby OKLAHOMA Fountainhead Resort, McIntosh County Arrowhead Resort, Pittsburgh County Qualifications of Suzanne R. Mellen, CRE, MAI OREGON Red Lion Inn, Astoria Inn at Face Rock, Bandon Shilo Inn, Beaverton Proposed Hotel, Bend Red Lion Inn -North, Bend Red Lion Inn -Coos Bay, Coos Bay Proposed Hilton Garden Inn, Corvallis Econolodge, Eugene Execulodge, Eugene Red Lion Inn, Eugene Big Creek Resort, Florence Salishan Lodge, Gleneden Beach Shilo Inn, Grants Pass Candlewood Hotel, Hillsboro Proposed Courtyard Hotel, Hillsboro Proposed Residence Inn, Hillsboro Red Lion Inn, Medford Residence Inn, Lake Oswego Red Lion Hotel, Pendleton Avalon Hotel, Portland Columbia River Red Lion, Portland Embassy Suites, Portland Holiday Inn, Portland Proposed Sheraton Suites, Portland Red Lion Hotel-Portland Downtown, Portland Red Lion Inn-Lloyd Center, Portland Residence Inn-Lloyd Center, Portland Residence Inn, Proposed, Portland Sunriver Resort, Portland Vintage Plaza Hotel, Portland Wells Building, Portland West Coast Benson Hotel, Portland Proposed Westin Hotel, Portland Capitol Inn, Salem Execulodge, Salem Red Lion Inn, Seaside Red Lion Inn, Springfield Skamania Lodge, Stevenson Sunriver Resort, Sunriver Embassy Suites, Tigard Red Lion Inn, Tigard PENNSYLVANIA Embassy Suites -Pittsburgh, Coraopolis Days Inn, Danville Ramada Inn, Erie Fairfield Inn, Harrisburg Rittenhouse Towers, Philadelphia Fairfield Inn, Pittsburgh HVS International, San Francisco, California INTERNATIONAL Motel 6, Pittsburgh Embassy Suites, Philadelphia DoubleTree Guest Suites, Plymouth Meeting Hilton At Lackawanna Station, Scranton SOUTH CAROLINA Holiday Inn, Charleston Holiday Inn -Airport, Charleston Holiday Inn, Charleston-Riverview Travelodge, Charleston Embassy Suites, Columbia Motel 6, Columbia Fairfield Inn, Greenville Ramada Inn, Greenville Fairfield Inn, Florence Fairfield Inn, Hilton Head Hilton Head Inn, Hilton Head Holiday Inn Express, Hilton Head Hyatt Regency, Hilton Head Save Inn, Lake Hartwell SOUTH DAKOTA Proposed Four Points Hotel, Sioux Falls TENNESSEE Motel 6, Chattanooga Holiday Inn, Jackson Fairfield Inn, Johnson City Holiday Inn, Memphis Howard Johnson -Airport, Memphis Motel 6, Memphis Days Inn, Nashville Hampton Inn, Nashville Hampton Inn, Pigeon Forge TEXAS Courtyard by Marriott, Addison Proposed Hotel, Addison Proposed Marriott Courtyard, Addison Proposed Summerfield Suites Hotel, Addison Days Inn, Amarillo Motel 6, Amarillo Super 8 Motel, Amarillo Holiday Inn, Austin Holiday Inn -Airport, Austin Sheraton Hotel, Austin Proposed Woodfin Suite Hotel, Austin Days Inn, Corpus Christi Doubletree Inn, Dallas Fairmont Hotel, Dallas Hyatt Regency, Dallas Marriott Park Central, Dallas Marriott Quorum, Dallas Melrose Hotel, Dallas Motel 6, Dallas Park Plaza, Dallas Ramada Inn Convention Center, Dallas Residence Inn, Dallas Summit Hotel, Dallas Howard Johnson's, East Dallas Allstar Inn, El Paso Embassy Suites, El Paso Travelers Inn, El Paso Proposed Westin Hotel, Frisco Metro Center Hotel, Fort Worth Embassy Suites, Houston Holiday Inn-Hobby, Houston Houston House, Houston Houstonian Hotel, Houston Motel 6, Houston Residence Inn, Houston Stouffer Renaissance, Houston Proposed Hampton Inn, Irving Summerfield Suites, Irving Holiday Inn, Lubbock Townplace Suites, Plano Crockett Hotel, San Antonio Fairmont Hotel, San Antonio UTAH Utah Trails Resort, Kanab Seven Peaks Resort Hotel, Provo Cavanaugh's Olympus Hotel, Salt Lake City Red Lion Hotel, Salt Lake City VIRGINIA Howard Johnson's, Alexandria Embassy Suites Crystal City, Arlington Hyatt Arlington, Arlington Holiday Inn Crowne Plaza, Crystal City Motel 6, Fredericksburg Fairfield Inn, Hampton Omni International Hotel, Norfolk Embassy Suites, Richmond Holiday Inn West End, Richmond Qualifications of Suzanne R. Mellen, CRE, MAI WASHINGTON Best Western Bellevue Inn, Bellevue Candlewood Hotel, Bellevue DoubleTree Bellevue Center, Bellevue Embassy Suites, Bellevue Hampton Inn, Bellevue Red Lion Inn Bellevue Center, Bellevue Residence Inn, Bellevue Semiahmoo Hotel Company, Blaine Semi-ah-moo Resort, Blaine Motel 6, Issaquah Red Lion Inn, Kelso Embassy Suites, Lynnwood Residence Inn, Lynnwood Red Lion Inn, Pasco Residence Inn, Redmond Hilton Gardens Hotel, Redmond Red Lion Inn, Richland Best Western Tower Inn, Richland Hampton Inn, Sea-Tac Holiday Inn Sea-Tac, Sea-Tac Red Lion Hotel, Sea-Tac Alexis Hotel, Seattle Doubletree Inn, Seattle Extended-Stay Hotel, Proposed, Seattle Hampton Inn, Seattle Holiday Inn Crowne Plaza, Seattle Madison Hotel, Seattle Red Lion Hotel, Seattle Proposed Seattle Hotel, Seattle West Coast Paramount, Seattle West Coast Sea-Tac Hotel, Seattle West Coast Vance Hotel, Seattle Springhill Suites, Seattle The Bay Silverdale Hotel, Silverdale Red Lion Inn, Spokane Red Lion Inn, Spokane Valley Park Shore Inn, Tacoma Red Lion Inn, Tacoma Sheraton Hotel, Tacoma Doubletree Suites, Tukwila Embassy Suites, Tukwila Residence Inn, Tukwila Hampton Inn, Tukwila Red Lion Inn at the Quay, Vancouver Residence Inn, Vancouver Red Lion Inn, Wenatchee Red Lion Inn, Yakima HVS Intenzational, San Francisco, Califonzia INTERNATIONAL WEST VIRGINIA Holiday Inn Charleston House, Charleston Holiday Inn, Huntington Howard Johnson's, Wheeling WISCONSIN Fairfield Inn, Brookfield Milwaukee Marriott Hotel, Brookfield Wyndham Garden Hotel, Brookfield Super 8 Motel, Jamesville Super 8 Motel, Kenosha . Fairfield Inn, Madison Holiday Inn-Airport, Milwaukee Holiday Inn-West, Milwaukee WYOMING Days Inn, Casper Flying L Skytel, Cody CANADA 119-Unit Hotel, Canmore, Alberta EconoLodge, Hull, Quebec Sutton Place Hotel & Apartments, Toronto FRANCE Marriott Champs Elysee, Paris GUAM Royal Palm Resort, Tuman Hyatt Regency Hotel, Tuman Bay Proposed Hotel, Tamuning MEXICO Esperanza Hotel, Proposed, Cabos San Lucas Omni Hotel, lxtapa La Jolla de Mismaloya, Puerto Vallarta PUERTO RICO Carib Inn, San Juan VARIOUS Starwood Analysis Qualifications of Suzanne R. Mellen, CRE, MAI