September 27, 2002

FINANCIAL FEASIBILITY STUDY:

HILTON HOTEL, DOWNTOWN FORT WORTH
Houston Street at 11th and 12th Streets
Fort Worth, Texas 76102
This study has been prepared to determine the feasibility and the financial
result of building a 600 unit Hilton Hotel as a headquarters hotel adjacent to
and west of the newly-expanded Fort Worth Convention Center. The study includes
a realistic projection of the downtown hotel market and assumes the project will
carry a Four-Diamond quality rating from the American Automobile Association.
As the "headquarters" hotel to the Fort Worth Convention Center, the proposed
Hilton Hotel plans to compete on a regional basis with other convention
destinations such as San Antonio, Houston, Austin, nearby Dallas and the new
Gaylord/Opryland Hotel and its major new convention center in Grapevine.
KEY FINDINGS
This study addresses these four key issues:
1) HOTEL AS A PRIVATE INVESTMENT: No private developer would or could develop
this hotel; it would be a total failure economically. The 'cash-on-cash'
return on investment amounts to minus 2.88% in an industry where at least a plus
14% return is required to gain serious developer interest. The total investment
is assumed to be $131,500,000 ($216,667 per rental unit improvements plus an
estimated $1,500,000 for land).
2) HOTEL AS A CITY-SUBSIDIZED, PRIVATE INVESTMENT: Public funds of $89,100,000
would have to be given to a developer, free and clear, to make the project
provide a typical 14% new-hotel return. Assuming a developer received all the
cash flow and invested a total of $42,400,000 in the project, the 'cash-oncash' return on investment would be 14%. A 14% project return is in the middle
range of normal expectations in the hotel industry. The developer's cash
investment, both equity and debt, would amount to $42,400,000 in this scenario,
just one third of the projected actual investment required to build the hotel.
This analysis assumes the City of Fort Worth would put up the $89,100,000
contribution needed for a private developer to undertake the project. These
funds would be a 'no strings attached' subsidy in order to allow a successful
private investor to receive a 14% 'cash-on-cash' return, appropriate to the risk
involved, in our opinion.
3) HOTEL AS A CITY-OWNED HOTEL VENTURE: Because the cash flow of the hotel
will be lower than the annual debt service, the hotel will almost certainly
default on its debt. Alternatively, the City would have to subsidize this hotel
out of tax-payer funds for the life of the hotel.
Consequently, no lender would make the proposed $120,000,000 loan with recourse
on default against the hotel; it would require recourse against the City's taxpayers. The annual tax-payer hotel subsidy would be over and above the
significant and additional opportunity cost incurred by the City's use of
$131,500,00 of its credit capabilities; it is likely that other worthwhile
investments will thus have to be foregone.
The hotel's projected annual cash flow is about $2,000,000 annually lower than
the required debt payment. The projected cash flow will average $5.7 million

during the first ten years, after which it will slowly erode. This compares to
a principal and interest payment of about $7.7 million annually.
4) Major Additional Costs to the Tax-Payer: There will be a major loss of
hotel real estate taxes downtown. This study does not address the severe
decline in the value of other downtown hotels, and the resultant reduction in
their real estate taxes, all as a result of opening a new Hilton Hotel that is
not needed nor can be absorbed in the market. Some hotels may close and become
derelict.
EXECUTIVE SUMMARY:
Building a Hilton Hotel of 600 units in downtown Fort Worth would result in an
unleveraged, pre-tax loss on total invested capital of 2.88%. This assumes a
total hotel investment of $131,500,000, regardless of funding source. This
study reveals the real economic result of building the hotel, eliminating any
hidden subsidies such as free land, tax abatements, low-cost debt, etc.
Further, a private project without subsidization would result in a 35.52% loss
of investor equity, making this project totally unfeasible to private
developers.
Investment and Return without Subsidization
Est. Land Investment $ 1,500,000
Improvements
$130,000,000 at $216,667 per unit
Total Investment
$131,500,000
Pre Tax Project Return*
Return on Equity**

-2.88%
-35.52%

* after reserves for renovations ** after reserves for renovations, and assuming
75% debt and 25% equity at a 8% pre-tax debt cost; calculated weighted average.

In light of this financial analysis, it is only with a subsidy of at least

$89,100,000 that this project could ever become a reality. For the project to
generate an unleveraged, pre-tax return on total invested capital of 14% (a
level of return that should begin to attract a qualified independent developer),
two-thirds of the total project capital investment would have to be given to the
developer by the city, amounting to an $89,100,000 cash contribution by the
city. This would leave a one-third share, or $42,400,000 in private equity and
debt, to be provided by a developer.
The capital requirements for a private/public investment are as follows:
Investment and Return with Subsidization
Est. Land Investment $ 1,500,000
Improvements
$130,000,000 at $216,667 per unit
Total Investment
$131,500,000
City cash subsidy
(89,100,000)
Developer investment $ 42,400,000
City Subsidization
$ 89,100,000
Private contribution $ 42,400,000

or
or

Pre Tax Project Return to Developer*

Return on Equity**

67.76%
32.24%
14.00%
32.00%

* after reserves for renovations ** after reserves for renovations, and assuming
75% debt and 25% equity at an 8% pre-tax debt cost; calculated weighted
average.
The actual level of quality and acceptance for Hilton Hotel products has been
quantified versus the market average and has been assumed for the Hilton Fort
Worth in developing this financial feasibility study. As an American Automobile
Association four-diamond headquarters hotel, project quality and revenue
performance is set to exceed the typical Hilton-branded property by about 5%.
Operating costs are set at the level of similar Full-Service hotels in the
Southwest.

Cash flow market projection, before-tax and after renovation reserves, would be
available for debt service, income tax and dividends as follows:

Year
Year
Year
Year
Year
Year
Year
Year
Year
Year

%
Occupancy
I
57.5%
II
64.5%
III
66.6%
IV
67.5%
V
68.3%
VI
68.1%
VII
67.8%
VIII
67.6%
IX
66.6%
X
65.3%

Average
Rate
$106.76*
$110.19
$113.73
$117.37
$121.13
$125.00
$129.00
$133.13
$137.12
$141.24

$
REVPAR
$61.36
$71.09
$75.72
$79.17
$82.77
$85.09
$87.48
$89.93
$91.25
$92.20

Total
Revenue
Cash Flow**
21,809,991 $4,712,180
25,268,771 $5,560,745
26,915,342 $6,026,630
28,139,989 $6,270,884
29,420,360 $5,994,718
30,245,309 $5,930,571
31,093,393 $5,578,244
31,965,256 $5,297,359
32,435,394 $6,009,964
32,770,800 $53,597,950***

*$98 in today's market in current dollars;

** Before Income Tax & Financing expense, but reflecting $12,440,587 in reserves
for renovation ($20,734 per unit) in the first ten years
*** includes valuing property at Year 10 CAP rate of 12.5% return-to-buyer, less
4% expense of sale, plus Year 10 cash flow.
REAL RETURN ON TOTAL INVESTMENT: The above cash flow, assuming a Year 10 sale,
has been discounted at a rate of minus 2.88% to a present value of $131,524,141,
approximating the actual total investment of $131,500,000. This negative 2.88%
is the project's unleveraged return, provided capital investment is kept at the
assumed level of $131,500,000. In our experience, a capital requirement of
$216,667 per unit is realistic for a hotel of this size, quality, and level of
amenities.

If actual investment varies from budget, returns would vary accordingly. The
following table and graph illustrate the linear change in financial returns as
capital requirements escalate or decline. Note the negative return on equity.
Effect on Returns of Capital Investment Changes
Variance
(85%)
(90%)
(95%)

Improvements
Per Unit
Total
$184.2
$110.5
$195.0
$117.0
$205.8
$123.5

Land
Total
Cost Investment
$1.5
$112.0
$1.5
$118.5
$1.5
$125.0

DCF Returns
Tot Proj.
Equity
-1.10% -28.40%
-1.70% -30.80%
-2.30% -33.20%

BUDGET

$216.7

$130.0

$1.5

$131.5

-2.88%

-35.52%

(105%)
(110%)
(115%)
(120%)

$227.5
$238.3
$249.2
$260.0

$136.5
$143.0
$149.5
$156.0

$1.5
$1.5
$1.5
$1.5

$138.0
$144.5
$151.0
$157.5

-3.50%
-4.10%
-4.65%
-5.15%

-38.00%
-40.40%
-42.60%
-44.60%.G.

Graphing the projected REVPAR performance of the Hilton Hotel versus the
Downtown Fort Worth lodging market demonstrates a realistic revenue stream:
hotel peaks in Years III through V, then slowly levels off. Versus the
depressed market average, the new hotel dramatically outperforms the area's
REVPAR average:

the

A detailed look at Year III, the first 'going' year shows the following:
Year III - 2007
Total Revenues
Room Revenues
Income Before Fixed Expense
Profit B.T. Before Financing
Cash Flow Before Financing*
Occupancy %
Avg. Rate
$ REVPAR

$26,915,342
$16,583,698
$ 7,533,890 (28.0%)
$ 3,177,773 (11.8%)
$ 6,026,630 (22.4%)
66.6%
$ 113.73
$ 75.72

* before financing deductions of principal and interest, before income tax

deductions, and before any equity payout
The critical statistic used in this study is REVPAR. REVPAR means REVenue Per
Available Room per day, and reflects the average daily room revenue yield of
every room in a property or market (not just occupied rooms). REVPAR is
generated by multiplying occupancy times rate (i.e. REVPAR = % occupancy times
average daily $ rate), and is the most effective and important tool in the
evaluation of the success of any lodging concern.

SUMMARY OF CRITICAL ASSUMPTIONS

Critical assumptions are summarized as follows, with detailed study and support
following the Methodology section.
1. Local area market projections are reasonable and realistic, characterized by
moderate levels of REVPAR growth for the average room. Occupancy declines in
the short term as new room supply is introduced, then gradually returns to the
expected equilibrium level of about 53% in the final year of our forecast.
Local REVPAR grows at a nominal 0.6% annually in the next nine years, far below
the expected rate of inflation.
Opening a new Hilton Hotel in downtown Fort Worth will not appreciably increase
market demand. Proponents of this project argue that introducing a new
headquarters hotel into the local market in conjunction with the Convention
Center expansion will create a significant level of new demand, making the
project viable: "If You Build It, They Will Come." We found no credence to
this premise in our research.
A special, new study of the San Antonio Convention Center and Hotel expansion
shows demand is not influenced by factors of convention space nor the
availability of a new 'headquarters' hotel property (see exhibit VIII). Rather
demand is influenced by ongoing nation-wide economic factors and trends,
competition, and changes in local attractions.
In light of this, we allowed for a normal, 3.5% market demand increase in the
proposed Hilton's opening year. This issue is addressed extensively in the
market projection section of this report, page 18.
DOWNTOWN FORT WORTH LODGING MARKET
Year
2001
2002
2005
2011

Occupancy %
51.7
51.4
46.5
52.4

$ REVPAR
44.38
43.41
38.89
47.13

Future Annual Growth Rate*

Next 9 Years Average
0.1%
Next 5 Years Average
-1.4%

0.6%
-2.1%

Historical CGR%
Past 9 Years Average
Past 4 Years Average

-0.5%
-3.0%

3.6%
0.3%

2. Versus the market average REVPAR projections above, the REVPAR index of the
Hilton Hotel in Downtown Fort Worth generates 192% of the moderate local market
average REVPAR in Years III through V. Thereafter, the REVPAR index declines
due to normal aging. The detailed Hilton Hotel REVPAR projection derivation
commences on page 41.
Hilton Hotel
All Data in '01/02 $s
Year I
Year II Year III
Base: Name, Type & Quality
1.49
1.49
1.49
x Brand Age Adjustment
1.15
1.15
1.15
x Site Value Adjustment
1.15
1.15
1.15

x
x
x
=

Size Adjustment
Other Adjustments
Newness Adjustment
Theoretical REVPAR Index

x Market REVPAR Avg '01/02

= Projected Performance

.83
1.05
.92
158%
$43.29
$68.40

.83
1.05
1.07
184%
$43.29
$79.55

.83
1.05
1.12
192%
$43.29
$83.26

3. Expenses are from the Smith Travel Research Host Reports, year 2001 edition,
typically inflated at 3% annually. Details page 59.

METHODOLOGY
To develop Pro Forma financial results for the proposed project, two major sets
of assumptions are developed. First, the future market's average REVPAR is
forecast on a reasonable and economically-sound basis; the specific performance
of the project is dependent on this overall market forecast and varies from it
only due to specific variables of the project. As survivors of hotel overbuilding of the early 1980's can testify, hotel occupancy and rate are
interdependent on a local market basis and no hotel is immune from the averages.
Second, the specific REVPAR variables of the project are expressed as an index
for each quarter of the forecast, an index that is used to adjust the overall
market dollar REVPAR performance to the specific project.
Market REVPAR Forecast
The Fort Worth / Arlington metropolitan is first projected. We have used this
larger market because the smaller downtown Fort Worth market is ultimately
subject to larger market trends. Market projections are based on growth rates
in real demand (roomnights sold), prices (average daily rates), and supply
(rooms available).
The key in this projection is to stabilize the total market in the future at a
sustainable, average equilibrium for occupancy, a level which we have determined
to be approximately 60% in most large, metro market areas, and lower for smaller
metro areas.
Over the past 20 years, according to the Source Strategies, Inc. database, from
1981 through 2001, overall hotel occupancy in Texas has averaged 58%, and 60% in
Texas metros. This occupancy level is highly relevant as a long-term,
equilibrium occupancy, a level where investors are neutral about adding new
hotel rooms to the market and an average that will reoccur over long periods of
time (e.g. 20 years).
After the total Fort Worth / Arlington metro area is forecast, we forecast the
performance of the local market on a similar basis (see Exhibit III for a
specific listing of existing hotels and motels in this market). Based upon
notably sluggish historical performance in this local market, we expect a 53%
occupancy at the end of the ensuing ten years, well below the typical Texas
metro equilibrium level.
We then compare the relationship of the local area's REVPAR to the entire metro
market REVPAR (as an index), both historically and in the future, to confirm the
reasonableness of the smaller market's projection. Any unusual differences that
may exist relative to each market area are taken into account (e.g. a faster or
slower economic growth outlook). The REVPAR projection of the local market is
then the pro forma market environment of the proposed subject development; the
project will vary from the norm for only project-specific differences, and then
only relatively.
Project Specific Variables
Development of the Project REVPAR Indices
The first variable from the averages to be developed has to do with the fact
that each product type and brand have a typical and identifiable influence on
REVPAR performance. This variable is based on its consumer acceptance, its
product definition, its level of quality, the price it can command from the

consumer, its marketing efforts, and other factors.

termed the Base Value.

The value of the brand is

The second adjustment used on the dollar value of the local area's REVPAR is the
Brand Age Adjustment. This is made to reflect the average age of similarly
branded hotels on the subject property's performance versus the market average.
In this case the opening dates of Hilton branded properties in similar markets
throughout Texas were examined in order to quantify this factor.
The next step to developing a project REVPAR index is to determine any further
adjustment based on deviation from a normal project Size. If the number of
proposed rooms in the project is significantly above or below the average for
that brand and product-type, its performance will also vary from the norm. A
lower than average number of rooms should increase per room performance and vice
versa. This is due to the fact that consumer demand for a single brand is
demand at the project's site, regardless of the number of rooms offered by the
hotel (a minor exception here would be a convention hotel).
An empirical proof of this evaluation of Size is the major increase in volume
enjoyed by the numerous hotels throughout Texas that have split into two branded
operations, using two different brand names. For example, the Hilton Hotel
Towers Austin added $1,000,000 annually to revenues by splitting off its
adjacent, ground-based rooms as a Super 8 Motel. By creating another brand at
the same site, the Super 8 began to fill demand for budget properties in the
immediate area, while the Hilton Towers kept its current customer base of
upscale consumers. Hence, smaller room counts than average generate higher
occupancy than average. Further proof is the correlation between project size
and occupancy: the smaller the property, the higher the occupancy.
A further, 'Other,' segment adjustment may be made if the proposed product type
is under- or over- supplied in the local market. In other words, a product type
commanding 10% of the Texas market - but zero locally - would command a higher
daily rate or occupancy locally because it is a relatively scarce commodity.
Other adjustments may also include significant quality variances from the
subject hotel brand's average.
Then the REVPAR potential of the subject Site, regardless of brand, is developed
in two ways. First, all other property factors except site are calculated for
nearby competitors, the site factor then being used to bring the calculated
REVPAR into a match with actual REVPAR performance. In other words, combining
all factors including a 'plugged' site factor results in the theoretical REVPAR
projection equalling actual REVPAR for each property studied, revealing the
mathematical value of individual hotel sites.
While there is usually a reasonably consistent pattern of site factors for the
nearby local chain properties selected, these factors often vary because of
unique situations, including: 1) visibility and access differences between
nearby sites; 2) any large variation from the norm in the usual number of rooms
for a local chain property at a site; 3) a nearby property's quality, the
quality of management, last renovation, etc.; and 4) any major new commercial
development nearby (e.g. shopping center, office complex, hospital).
Adjustments can be made for these differences within forecast site factor, based
on industry experience. This is the Segment, or Other adjustment.
With the development of the adjustments for Brand/product type, overall Brand
Age, Segment, project Size, and Site, a revenue projection for the proposed
operation begins to take form by combining these factors into a combined index

that is applied to the overall market-wide REVPAR projection, resulting in the

forecast of the project's dollar REVPAR. However, this combined index changes
with the cumulative age the specific project.
The physical Age of the individual project impacts this REVPAR index. A +12%
increase factor is applied to the combined REVPAR index in the operating Years
III-V. A first-year start-up adjustment of minus 8% and a second year positive
adjustment of 7%. This factor reflects the major revenue-generating power of
new versus old properties. In the sixth year and thereafter, the REVPAR index
is then diminished at a rate of 1.67% per annum in order to reflect aging and
the normal life-cycle of a hotel.
This pattern of declining performance with property aging is based on major
studies of economic life-cycle patterns. The first study was conducted on a
census of all 25,000 Texas rooms built between 1980 and 1982 (study published in
September 1994 issues of MarketShare and the October 1994 issue of Hotel & Motel
Management); the second investigation was conducted on all 17,231 rooms built
in Texas from 1990 through 1995. These Source Strategies, Inc. studies confirm
a similar, major study conducted in 1982 at the Holiday corporation on 160
company-owned and company-operated Holiday Inn hotels.
Combining all of these factors - Product Type, Brand Age, Site, Size, Segment
(other), and Newness (Age) - results in the REVPAR stream for the project. A
REVPAR stream from which room revenues, estimated rate, occupancy and roomnights
sold are derived. At this point, the investment and operational costs can be
laid against the revenue line to generate pro forma financial performance and
discounted cash flow analysis.
The calculation of the statistic of Operating Costs Per Occupied Room (before
fixed/capital costs are deducted) is typically the important cost to examine
carefully because it is highly stable and predictable, regardless of occupancy
and rate. The Smith Travel Research Host Report of Hotel Operating Statistics,
2001 edition (2000 data) with dollar costs inflated, and Source Strategies, Inc.
financial models are the source of operating cost statistics.
From national average occupancies, costs are categorized as fixed, semi-variable
or variable, resulting in the highly-leveraged profit performance characteristic
of lodging products, depending on occupancy and REVPAR performance (i.e.
variable costs increase proportionately with higher occupancy levels while fixed
costs do not). Furthermore, with a capital expenditures profile provided by the
International Society of Hospitality Consultants' CapEx, A Study of Capital
Expenditures in the U.S. Hotel Industry, a method has been applied to determine
an appropriate amount of renovation reserves to ensure that the property is
maintained at the franchisor's required level. Adjustments are made for any
expected cost deviations from the norm (i.e. delivering higher- or lower- levels
of quality).
All-study area chain and independent hotel/motel revenue, occupancy, rate and
REVPAR histories are included in the study, using the Source Strategies, Inc.
database of all Texas hotels and motels. The methodology of this database is
attached as an exhibit.

Market REVPAR History & Forecast:

1. Over the past nine years the Fort Worth / Arlington Metropolitan Statistical
Area has shown an average annual real growth of 4.8% (roomnights sold), annual
growth of 8% in total room revenues, and 2% in REVPAR. Occupancy lost 1%
annually over the measured period. Supply rose by 6% per year over the period,
with room rates rising 3% annually.
Over the past four years, demand growth moderated to 3.9%, and was easily
exceeded by new supply of 7.4%. Despite this high level of supply growth,
revenue over this period increased by only 4.3% per year because demand growth
was well below new supply. REVPAR actually fell 2.9% annually over each of the
past four years due to stagnant room rates (+0.3%) and an unfavorable supply /
demand ratio. Occupancy declined notably in the period, dropping 3.3% per year.
Over the last two years, supply increased by 4% year over year, still outpacing
new demand which was flat at only +0.2%. This trend caused occupancy to plummet
over the period by 3.6% annually, and REVPAR to drop a notable 3.5% annually.
We expect that this scenario of occupancy and REVPAR declines will continue
until market supply comes into a more reasonable balance with demand.
Without artificial stimulation or subsidized supply growth, market pressures
would prompt investors, developers and lenders to curtail new building plans in
response to the current low level of profitability of building hotels in the
Fort Worth area marketplace. A reduced level of supply growth would allow
demand to 'catch up' to current supply levels.
The most recent history particularly shows the effect of the recent economic
downturn on the local market. It is easy to attribute this downturn to the
events of September 11th, but it is clear from the numbers that the negative
performance trend began prior to those events.
Over the past year, demand fell 7.4% compared to the previous year, coupled with
weakening supply growth of 0.8%. In the latest year, REVPAR plunged 10.4% and
market revenues declined by 9.6%. Due to a very unfavorable supply / demand
balance, occupancy lost a very significant 8.2% (4.7 'points') while room rates
dropped 2.5%.
With these recent levels of weak demand growth, it is our expectation that the
lower than average profitability in the metro will encourage many potential new
projects to be shelved until market conditions are more favorable for
development.

FORT WORTH / ARLINGTON METROPOLITAN AREA HOTEL MARKET

#
Room-1 Total
Htls
nites
Rooms
Year &
and #
sold Revenue
Quarter Mtls Rooms 000's $ 000's
922
127 14,977
823 43,549
923
126 14,922
871 45,633
924
122 14,592
706 35,977
931
127 14,748
729 38,187
932
127 14,711
875 46,113
933
130 15,036
918 48,502
934
121 14,577
678 37,408
941
129 15,039
748 41,281
942
130 15,229
873 49,665
943
130 15,185
928 52,028
944
128 15,177
733 42,265
951
128 15,104
797 46,425
952
137 15,688
926 55,924
953
144 16,169
970 57,277
954
143 16,093
809 49,299
961
144 16,234
882 55,726
962
148 16,604
948 59,678
963
150 16,940 1,014 62,733
964
151 17,150
885 56,742
971
154 17,449
879 58,667
972
163 18,150 1,073 71,549
973
167 18,623 1,080 70,938
974
168 19,015
949 64,151
981
172 19,060 1,001 69,758
982
180 19,639 1,151 79,921
983
186 20,442 1,214 80,746
984
188 20,426
982 69,425
991
201 21,377 1,097 76,306
992
204 22,077 1,132 81,559
993
209 23,033 1,334 87,084
994
216 23,287 1,118 74,014
001
221 23,797 1,180 81,944
002
222 24,211 1,350 96,864
003
227 24,974 1,414 96,056
004
228 24,837 1,167 80,325
011
229 24,928 1,241 88,792
012
233 24,713 1,315 92,642
013
237 24,985 1,277 86,415
014
241 25,030 1,077 71,014
021
240 25,014 1,118 77,159
CGR%Past9yrs 6.0% 4.8%
8.0%
4yrs
7.4% 3.9%
4.3%
2yrs
4.0% 0.2%
0.4%
1yr
0.8% -7.4%
-9.6%

%
Occ.
60.4
63.5
52.6
54.9
65.3
66.3
50.6
55.2
63.0
66.4
52.5
58.6
64.9
65.2
54.6
60.4
62.7
65.1
56.1
56.0
65.0
63.1
54.2
58.3
64.4
64.5
52.3
57.0
56.3
63.0
52.2
55.1
61.3
61.5
51.1
55.3
58.5
55.5
46.8
49.7
-1.0%
-3.3%
-3.6%
-8.2%

$
Rate
52.92
52.37
50.95
52.38
52.71
52.85
55.16
55.21
56.88
56.05
57.64
58.28
60.40
59.03
60.93
63.16
62.97
61.88
64.11
66.73
66.66
65.67
67.61
69.71
69.44
66.53
70.68
69.56
72.05
65.28
66.18
69.48
71.75
67.96
68.83
71.57
70.47
67.69
65.93
69.00
3.0%
0.3%
0.0%
-2.5%

$
RPAR
31.95
33.24
26.80
28.77
34.45
35.06
27.89
30.50
35.84
37.24
30.27
34.15
39.17
38.50
33.30
38.14
39.50
40.25
35.96
37.36
43.32
41.40
36.67
40.67
44.72
42.93
36.94
39.66
40.60
41.10
34.55
38.26
43.97
41.81
35.15
39.58
41.19
37.59
30.84
34.27
2.0%
-2.9%
-3.5%
-10.4%

% Growth Vs Yr Ago
Sply

Real

ADR $ Rev

-1.8
0.8
-0.1
2.0
3.5
1.0
4.1
0.4
3.0
6.5
6.0
7.5
5.8
4.8
6.6
7.5
9.3
9.9
10.9
9.2
8.2
9.8
7.4
12.2
12.4
12.7
14.0
11.3
9.7
8.4
6.7
4.8
2.1
0.0
0.8
0.3

6.3
5.3
-4.0
2.6
-0.2
1.1
8.1
6.5
6.0
4.5
10.4
10.8
2.4
4.5
9.4
-0.4
13.2
6.5
7.2
13.8
7.2
12.4
3.5
9.6
-1.6
9.9
13.9
7.5
19.3
6.0
4.4
5.2
-2.6
-9.7
-7.7
-9.9

-0.4
5.9
0.9
6.3
8.3
4.0
5.4
8.1
7.9
7.7
6.1
7.3
4.5 13.0
5.6 12.5
6.2 12.6
5.3 10.1
5.7 16.6
8.4 20.0
4.3
6.7
4.8
9.5
5.2 15.1
5.7
5.3
5.9 19.9
6.1 13.1
5.5 13.1
4.5 18.9
4.2 11.7
1.3 13.8
4.5
8.2
-0.2
9.4
3.8
2.0
-1.9
7.8
-6.4
6.6
-0.1
7.4
-0.4 18.8
4.1 10.3
4.0
8.5
3.0
8.4
-1.8 -4.4
-0.4 -10.0
-4.2 -11.6
-3.6 -13.1

1. Roomnights sold (derived from est. rate and actual revenues) 2. Occupancy
nights sold divided by nights available for sale. 3. Avg. price for roomnights
sold; Directories, Surveys, & experience. 4. $ Revenue per available room per
day (room sales per day)

2. Overall market occupancy will likely continue to erode for a few years until
economic conditions begin to turn and existing supply is absorbed into the
market. We project that occupancy will recover to current levels by 2007/2008,
and eventually rise to a 58% equilibrium level by the end of our projection.
For the next nine years, real demand (room nights sold) is projected at an
average 3% growth rate, higher than the projected net supply growth of 2.3%.
With 2.2% average daily rate inflation, market gross revenues should gain 5.2%
annually during the nine year forecast.
Equilibrium occupancy has been calculated to 58% for the metro at the end of the
nine year projection. These assumptions relative to demand, supply, and
occupancy reflect the fact that over the past 20 years overall occupancy in
Texas has averaged about 58%, a level considered to be 'Equilibrium Occupancy.'
This considers that larger and more successful metro area markets generate
higher overall occupancy and REVPAR numbers than state averages, while rural
areas lag these averages (Source Strategies, Inc. database). 'Equilibrium
Occupancy' is further explained by the fact that new investment money tends to
be attracted to an under-supplied market until market occupancy falls and lower
returns on capital are the result. The equilibrium occupancy point is where
net, new supply is being added at about the same rate as growth in demand, and
where return on investment is in balance with the cost of capital.
Fueled by slow but steady demand growth, the Fort Worth / Arlington metro market
has room for some appropriately-positioned new development, added at rates lower
than new demand. Higher quality new lodging products at or above mid-priced
levels are performing adequately in the market despite overall performance
numbers being depressed by the large number of older, obsolete, budget and
independent hotels. These older, existing competitors (primarily poorly
maintained independent properties) are highly vulnerable to the superior
attractiveness of newly-built lodging. This pattern can be seen in the relative
success of chain operations at or above the mid-priced levels.
Given this growth scenario, room supply consequently grows from 25,014 rooms
currently to 31,066 by the fourth quarter of 2011, 24% higher and representing
6,052 net new rooms (gross new openings, less closings). The realistic scenario
is for the building boom of the last four years to slow to a nominal level,
reacting to sluggish market conditions (a decline that is already evident in the
latest year's numbers). The Fort Worth / Arlington metro area hotel market has
performed at a lower level than Texas averages in recent years, and was
particularly hard hit by the economic downturn of the past year.
Note that REVPAR growth for every individual hotel unit is well below the total
revenue growth of the market, with average REVPAR in our projection growing at
2.8% per annum over the next nine years (above the 2% average of the past nine
years). Revenues are forecast to grow at 5.2% per year on the strength of 3%
growth in demand and 2.2% growth in price (room-rates). Occupancy over the
period is expected to climb 0.7% per year after a short term decline.
If supply should grow 3,100 rooms over forecast (+10%), without demand also
growing faster than forecast, average individual hotel REVPAR would decline by
9% versus forecast, dropping from the forecasted $48 to $44 in 2011.

FORT WORTH / ARLINGTON METROPOLITAN AREA HOTEL MARKET PROJECTION

#
Room-1 Total
Htls
nites
Rooms
Year & and
#
sold Revenue
Quarter Mtls Rooms 000's $ 000's
022 240 25,207 1,288 88,971
023 242 25,235 1,251 82,991
024 246 25,280 1,077 70,310
031 245 25,264 1,118 76,384
032 246 25,585 1,301 89,861
033 248 25,613 1,264 83,821
034 252 25,660 1,099 72,433
041 251 25,643 1,141 78,691
042 267 27,504 1,366 96,241
043 269 27,534 1,327 89,772
044 274 27,584 1,154 78,336
051 279 28,207 1,198 85,104
052 278 28,329 1,421 103,094
053 280 28,360 1,380 96,164
054 285 28,411 1,200 83,914
061 286 28,631 1,245 91,164
062 285 28,754 1,478 110,434
063 287 28,786 1,435 103,011
064 292 28,838 1,242 89,456
071 293 29,060 1,289 97,185
072 292 29,186 1,529 117,728
073 294 29,218 1,485 109,815
074 299 29,270 1,285 95,365
081 301 29,496 1,334 103,604
082 300 29,623 1,583 125,504
083 302 29,656 1,537 117,068
084 307 29,709 1,330 101,664
091 308 29,938 1,381 110,447
092 307 30,068 1,638 133,793
093 309 30,101 1,591 124,800
094 315 30,155 1,377 108,379
101 316 30,387 1,429 117,742
102 315 30,519 1,696 142,630
103 317 30,552 1,647 133,044
104 323 30,607 1,425 115,537
111 324 30,843 1,479 125,519
112 323 30,977 1,755 152,051
113 325 31,010 1,704 141,831
114 331 31,066 1,475 123,168
121 332 31,306 1,531 133,810
122 331 31,441 1,817 162,094
123 333 31,476 1,764 151,199
124 339 31,532 1,527 131,303
131 341 31,775 1,585 142,648
CGR%9yrs
2.3% 3.0%
5.2%
1st 5yrs
3.0% 2.6%
4.1%
HISTORY
CGR%Past9yrs 6.0% 4.8%
8.0%
4yrs
7.4% 3.9%
4.3%

%
Occ.
56.2
53.9
46.3
49.2
55.9
53.6
46.5
49.4
54.6
52.4
45.5
47.2
55.1
52.9
45.9
48.3
56.5
54.2
46.8
49.3
57.6
55.3
47.7
50.3
58.7
56.3
48.7
51.2
59.9
57.5
49.6
52.3
61.1
58.6
50.6
53.3
62.3
59.7
51.6
54.3
63.5
60.9
52.6
55.4
0.7%
-0.4%

$
Rate
69.06
66.34
65.27
68.31
69.06
66.34
65.92
68.99
70.44
67.66
67.90
71.06
72.56
69.69
69.94
73.19
74.73
71.78
72.04
75.39
76.97
73.94
74.20
77.65
79.28
76.16
76.42
79.98
81.66
78.44
78.72
82.38
84.11
80.79
81.08
84.85
86.63
83.22
83.51
87.40
89.23
85.71
86.02
90.02
2.2%
1.5%

-1.0%
-3.3%

3.0%
0.3%

% Growth Vs
$
RPAR Sply Real
38.79
2.0 -2.0
35.75
1.0 -2.0
30.23
1.0
0.0
33.59
1.0
0.0
38.60
1.5
1.0
35.57
1.5
1.0
30.68
1.5
2.0
34.10
1.5
2.0
38.45
7.5
5.0
35.44
7.5
5.0
30.87
7.5
5.0
33.52 10.0
5.0
39.99
3.0
4.0
36.86
3.0
4.0
32.10
3.0
4.0
35.38
1.5
4.0
42.20
1.5
4.0
38.90
1.5
4.0
33.72
1.5
3.5
37.16
1.5
3.5
44.33
1.5
3.5
40.85
1.5
3.5
35.41
1.5
3.5
39.03
1.5
3.5
46.56
1.5
3.5
42.91
1.5
3.5
37.20
1.5
3.5
40.99
1.5
3.5
48.90
1.5
3.5
45.07
1.5
3.5
39.07
1.5
3.5
43.05
1.5
3.5
51.36
1.5
3.5
47.33
1.5
3.5
41.03
1.5
3.5
45.22
1.5
3.5
53.94
1.5
3.5
49.71
1.5
3.5
43.09
1.5
3.5
47.49
1.5
3.5
56.65
1.5
3.5
52.21
1.5
3.5
45.26
1.5
3.5
49.88
1.5
3.5
2.8%
1.1%
2.0%
-2.9%

Yr Ago
ADR
-2.0
-2.0
-1.0
-1.0
0.0
0.0
1.0
1.0
2.0
2.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
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
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0

$Rev
-4.0
-4.0
-1.0
-1.0
1.0
1.0
3.0
3.0
7.1
7.1
8.2
8.2
7.1
7.1
7.1
7.1
7.1
7.1
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6
6.6

3.
Impact on Downtown Fort Worth Demand of Headquarters Hotel Development
Proponents of a headquarters hotel project tend to adhere to the belief that a
new headquarters hotel in Fort Worth will attract additional conventions to the
Downtown, allowing the city to host larger and more prestigious events.
However, as an objective third party consultancy, our research finds no support
for the premise that a new headquarters hotel as proposed in downtown Fort Worth
would be able to generate a statistically significant portion of the demand
needed to fill its rooms.
Before any notable demand increase will be evident in Downtown from convention
traffic, the city must theoretically be able to compete effectively with other
potential convention locations. This involves promoting attractions to
convention planners that other destinations do not have. However, a
headquarters hotel is really no distinction at all in Texas, as other
municipalities in Texas are also encouraging or currently witnessing the
construction of such a hotel.
Headquarters hotels are being considered, constructed, or are opening in some of
the major Texas metro areas. San Antonio and Dallas are the only major metro in
Texas not to have built a headquarters hotel recently. This is for one simple
reason: hotels have historically been built as for-profit enterprises. That
is, they are built with private equity in response to actual levels of demand
that are generated by attractions that the city has to offer to visitors.
Houston and Austin have pursued and are building headquarters hotels in
historically strong downtown markets. It is ironic to note that Austin has seen
double digit declines in both demand for hotel rooms and in revenues over the
latest year, even though the market has added significant numbers of new hotels.
Houston has just begun a similar decline, with demand decreases over the last
six months, but with at least 2,000 Midscale to Luxury rooms scheduled to open
by 2004. It does not seem to be a smart decision to increase your stock when
the shelves are full and no-one is buying, unless you can make a profit over the
long term. A private shopkeeper would never make this choice, because they have
no large group of tax-payers to bail them out when the bills cannot be paid.
Closer to Fort Worth, Grapevine is soon going to have the Gaylord / Opryland
Hotel and its own convention space (178,000 square feet). Competition for
conventions will no doubt be fiercer than ever in the coming decade and in our
opinion, and having an attached hotel will not be the major deciding factor in
choosing a convention destination, because any municipality able to pass a bond
or taxation initiative can build a massive convention center and headquarters
hotel. Rather, it is the existent attractions (Alamo, Six Flags, Seaworld,
Riverwalk, etc.) that are the main factors in determining a convention
destination. While it is commonly thought that a headquarters hotel will be an
attraction to private convention planners, every major convention destination
typically has enough hotels (including one or more to serve large groups) to
meet demand. Even New Orleans, the premier convention destination in the U.S.,
does not have a headquarters hotel, for the reasons already mentioned above.
There are currently more than 20 hotels in Texas that have more than 500 units
with an upscale to luxury product.
Many of the competing destinations simply have more to offer prospective
conventioneers than downtown Fort Worth. It is not realistic to assume Fort
Worth will begin pulling conventions away from historically popular regional
destinations such as San Antonio, New Orleans, Houston, Austin, or even nearby
Dallas on the merits of its local attractions. It will be enough of a challenge
to compete with the new 1,500 room Gaylord / Opryland complex soon to open in

nearby Grapevine. What can Fort Worth offer visitors to the area that the
Opryland Hotel cannot? It is a relatively short commute for guests staying at
the Opryland Hotel to visit the Fort Worth Stockyards, and enjoy other venues
and experiences that the area has to offer.
According to Debbie Prost, Prost Marketing San Antonio and a respected Texas
research expert on the convention industry, adding a 600 unit, branded
headquarters hotel property cannot be counted on to increase demand in the Fort
Worth market. In her experience, hotels of less than 800 rooms do not typically
generate additional demand in a market. A new 600 room hotel would more likely
capture existing downtown demand at the expense of older hotels in the market.
Stan Hodge, head of research for Texas Department of Economic Development
(Market Texas), is not aware of any historical data or case studies which
support the premise that building a new hotel of this type will notably increase
market demand.
Furthermore, an examination of the last high quality hotel added to the downtown
Fort Worth market illustrates a new hotel's inability to generate demand. The
Courtyard Blackstone by Marriott, a 203 unit property, was added to the market
in 1999. In the Courtyard's first year of operation, demand (room nights sold)
in the Downtown market was up 4.6%, or 19,700 roomnights. On the surface, this
statistic appears to be positive. However, when you consider that Tarrant
County as a whole gained 7.8% in demand for the same period, it is apparent that
the downtown market actually lost ground versus the wider metro market demand
growth.
The actual additional 19,700 roomnights sold in the local market in the year
after the Courtyard's opening would only constitute an occupancy of 26.6%, if we
assume that this property were actually responsible for market demand growth and
absorbed all of this growth. Since the Courtyard actually generated an
occupancy of about 65% in 1999, approximately 28,500 room nights were siphoned
away from other properties in the downtown Fort Worth market that year. Though
the Courtyard Blackstone can be considered a successful project, it did not
become successful without imposing a noteworthy and adverse impact on local
competitors. While a 200 unit Courtyard is not the same as a headquarters
hotel, a 600 unit property is also not large enough to be considered a serious
concern in the convention market.
We further contend that there is no truth to the axiom, "If you build it, they
will come." It makes a good movie, but in the hotel business, hard empirical
data does not support the theory that a new hotel of this nature will generate a
significant portion of its own demand. This position is also supported by
extensive Holiday Inn research which shows that new hotels do not generally
increase demand; hotels typically allow people to stay near where they wish to
be (a destination resort is an exception here).
In order for a new 600 room hotel in downtown Fort Worth to generate a 65%
occupancy without pulling business from existing hotels, an additional 142,350
room nights of demand must be generated in the local market. Even using
estimates provided by the Fort Worth Convention and Visitors Bureau, with
convention center event room nights sold projected to more than double over the
next five years, there is still a serious shortfall in demand growth in the
market when compared to the projected increases in supply due to the
introduction of this property.
No convention hotel is entirely self-supporting; essentially creating demand
after opening through additional guests that come to the market solely because

that hotel is open and serving a convention center. It is much more likely that
the hotel will draw the top-end existing business away from other local
properties.
Part of the ability to attract conventions away from other popular destinations
will entail being very cost competitive. This means the property will not be
able to charge the premium rate levels needed to make a project of this nature
viable. Pressure will be put on all local hotels to lower rates to remain
competitive if a new property of this type is opened, further depressing the
market. Without an increase in local attractions, we see price competition to
be the major selling point for the convention center and the reliant hotel.
In the following local market projection, market average daily rates will remain
flat for a few years after the opening of the new Hilton property. This assumes
that the 600 room headquarters Hilton (15% of total market rooms) will open with
about 22% higher rates than the market average rate of $88. This is offset by
the remaining 85% of the rooms in the market significantly cutting prices in
order to continue and attract guests. Overall, we anticipate average room rates
will drop 5% for existing hotels in the market upon the opening of this hotel
project. The most prevalent concern expressed by hoteliers in the market is the
inevitable detrimental price competition that will take place if a new hotel
such as the proposed Hilton opens. This type of market reaction was already
witnessed to a lesser degree upon the opening of the Courtyard Blackstone in
1999, which introduced a product superior to most of the existing supply and
took business from those properties.
It is our opinion that without a significant increase in the number of actual
attractions and appeal of the downtown Fort Worth area to tourists and
conventioneers, there will be little or no increase in demand due to this
project.

DOWNTOWN FORT WORTH MARKET ANALYSIS & PROJECTION

4. The local downtown Fort Worth market currently generates a slightly lower
occupancy than the Fort Worth / Arlington metro (51% versus 53%) and a somewhat
higher REVPAR ($43 locally versus $36 in the metro). The levels of occupancy
and REVPAR performance in both the metro and local markets are well below what
is considered the 'norm' for both metro and particularly CBD markets:
PERIOD: TWELVE MONTHS ENDING MAR 31, 2002
FORT WORTH DOWNTOWN MARKET
INCLUDES ZIP CODES 76102, 76103, AND 76107
# *
#* RMS
BRAND
HTL 000S
RENAISSANCE
1
.5
RESIDENCE INN
1
.1

%
RMS
15.3
3.6

EST.
RNS
000S
121
33

%
RNS
19.7
5.4

$
EST.
AMT.
% EST.
$
000s
AMT %OCC
RATE
16,145 30.9 66.0 132.97
3,616 6.9 75.5 109.33

$
RPAR
87.76
82.56

CLARION
COURTYARD
RADISSON HTL
TOTAL MID/UPS
BEST WESTERN
COMFORT INN
FAIRFIELD INN
TOTAL LTD SERV

1
2
1
4
1
1
1
3

.3
.3
.5
1.1
.2
.1
.1
.3

9.0
10.0
15.6
34.7
5.1
3.0
2.5
10.5

38
79
112
228
28
12
21
61

6.1
12.8
18.1
37.0
4.5
1.9
3.4
9.9

1,722 3.3
7,885 15.1
10,055 19.3
19,662 37.7
1,531 2.9
521 1.0
1,829 3.5
3,881 7.4

HOMESTEAD VILL

.1

3.0

28

4.6

MOTEL 6L 6
RAMADA INN
TOTAL BUDGET
TOTAL CHAINS
INDEPENDENTS

1
2
3
13
7

.1
.6
.7
2.9
.4

2.9
18.4
21.3
88.3
11.7

21
76
97
570
48

3.5
12.3
15.8
92.3
7.7

TOTAL MARKET

20

3.3 100.0
617 100.0
52,207 100 51.2 84.57
43.29
* All figures annualized. Includes taxed and est non-tax

room revenues.

34.7
65.3
59.2
54.6
46.0
32.0
71.9
48.1

45.66
99.86
90.05
86.11
54.57
45.07
86.02
63.75

15.83
65.23
53.29
47.00
25.12
14.41
61.87
30.64

2.2

79.4

40.44

32.12

858 1.6
4,258 8.2
5,116 9.8
49,569 94.9
2,638 5.1

60.8
34.3
37.9
53.5
34.0

40.27
55.89
52.48
87.02
55.25

24.48
19.19
19.91
46.52
18.77

1,149

5. The Downtown Fort Worth market has historically trailed most other major
metro downtown / CBD areas in performance. An average REVPAR of $43 is far
below other prominent convention destinations in the state, despite having a mix
of hotels that could support a higher REVPAR level.
Over the last nine years demand growth
growth in supply. Revenue growth over
per year, and REVPAR growth was steady
the metro market. Occupancy fell 0.5%
while metro occupancy dropped 1%.
Over the
compared
annually
over the

rose 1.9% annually, compared to 2.4%

this period saw the local area at 6.2%
at 3.6%, compared to 2% annual growth for
over each year of the measured period,

past four years, supply in the local market has risen by 2.4% annually,
to a 0.6% decline in demand. This has caused occupancy to fall 3%
in each of the past four years. Average daily rates rose 3.4% per year
period. REVPAR only rose by 0.3% due mainly to waning demand.

In the past two years the negative trend continued, with demand declines
escalating to 3.5% per year, while supply continued to grow 1.4% annually. This
negative supply / demand balance caused occupancy to fall sharply by 4.8% per

year for the period. A 2% annual increase in average daily rates, combined with
falling occupancy, resulted in REVPAR falling by a notable 2.9% per year.
In the last twelve months the local market was essentially a disaster. Demand
continued its precipitous slide (-6.8%), while supply continued to grow at the
historical average pace of 2.4%. Average daily rates were stagnant (+0.7%), and
occupancy dropped a remarkable 8.9%, or a full 5 'points,' to 51.2%. This
combination resulted in REVPAR falling 8.1% in the latest year.

LODGING

MARKET:

DOWNTOWN FORT WORTH

#
Room-1
Total
Htls
nites
Rooms
% Growth Vs Yr Ago
Year & and
#
sold Revenue
%
$
$
Quarter Mtls Rooms 000's $ 000's Occ.
Rate
RPAR Sply Real
ADR $ Rev
922
14 2,662
127
7,571
52.4 59.60 31.25
923
14 2,662
147
8,530
60.2 57.89 34.83
924
14 2,662
121
7,066
49.3 58.53 28.85
931
14 2,662
126
7,329
52.6 58.17 30.59
932
14 2,662
150
8,753
61.8 58.47 36.14
0.0 17.9 -1.9 15.6
933
13 2,618
150
8,849
62.1 59.14 36.74 -1.7
1.6
2.2
3.7
934
13 2,618
110
6,706
45.6 61.12 27.84 -1.7 -9.1
4.4 -5.1
941
14 2,962
120
7,106
44.9 59.31 26.66 11.3 -4.9
2.0 -3.0
942
14 2,937
148
8,900
55.3 60.25 33.30 10.3 -1.3
3.0
1.7
943
14 2,895
164
9,886
61.5 60.36 37.12 10.6
9.5
2.1 11.7
944
14 2,895
123
7,929
46.1 64.58 29.77 10.6 11.9
5.7 18.2
951
14 2,866
122
7,970
47.2 65.43 30.90 -3.2
1.7 10.3 12.2
952
14 2,862
149
9,623
57.3 64.43 36.95 -2.6
1.1
6.9
8.1
953
15 2,915
152
9,659
56.7 63.57 36.02
0.7 -7.3
5.3 -2.3
954
15 2,831
134
9,045
51.6 67.28 34.73 -2.2
9.4
4.2 14.1
961
15 2,868
143
9,842
55.5 68.71 38.13
0.1 17.6
5.0 23.5
962
16 2,958
153 10,537
56.8 68.89 39.14
3.4
2.5
6.9
9.5
963
15 2,953
162 10,793
59.7 66.49 39.73
1.3
6.8
4.6 11.7
964
15 2,910
150 10,633
55.9 71.05 39.72
2.8 11.4
5.6 17.6
971
15 2,913
136 10,234
51.9 75.22 39.04
1.6 -5.0
9.5
4.0
972
16 2,992
168 12,082
61.7 71.91 44.38
1.1
9.8
4.4 14.7
973
16 2,991
153 10,838
55.5 70.91 39.39
1.3 -5.9
6.6
0.4
974
16 3,032
153 11,413
54.7 74.74 40.92
4.2
2.0
5.2
7.3
981
17 3,004
160 12,511
59.2 78.22 46.27
3.1 17.5
4.0 22.2
982
17 2,998
179 13,982
65.5 78.29 51.25
0.2
6.3
8.9 15.7
983
17 3,037
187 13,909
66.9 74.43 49.78
1.5 22.3
5.0 28.3
984
17 2,997
153 12,316
55.3 80.77 44.67 -1.2 -0.1
8.1
7.9
991
18 3,041
169 13,719
61.6 81.41 50.13
1.2
5.4
4.1
9.7
992
18 3,185
174 14,858
59.9 85.53 51.26
6.2 -2.7
9.2
6.3
993
18 3,284
185 14,340
61.1 77.68 47.46
8.1 -1.2
4.4
3.1
994
18 3,178
150 11,886
51.3 79.17 40.65
6.0 -1.6 -2.0 -3.5
001
18 3,201
155 12,770
53.7 82.55 44.33
5.3 -8.2
1.4 -6.9
002
18 3,197
172 14,622
59.2 84.95 50.26
0.4 -0.9 -0.7 -1.6
003
18 3,296
188 15,453
61.9 82.33 50.96
0.4
1.7
6.0
7.8
004
18 3,196
137 11,649
46.7 84.84 39.62
0.6 -8.5
7.2 -2.0
011
19 3,222
166 13,869
57.1 83.72 47.83
0.7
7.1
1.4
8.6
012
20 3,257
165 13,982
55.7 84.70 47.18
1.9 -4.1 -0.3 -4.4
013
20 3,356
154 12,640
50.0 81.87 40.94
1.8 -17.7 -0.6 -18.2
014
21 3,298
146 12,607
48.1 86.39 41.55
3.2
6.3
1.8
8.2
021
21 3,305
152 12,977
51.1 85.38 43.63
2.6 -8.3
2.0 -6.4
CGR%Past9yrs 2.4% 1.9%
6.2% -0.5%
4.2%
3.6%
Past 4yrs
2.4% -0.6%
2.7% -3.0%
3.4%
0.3%
2yrs
1.4% -3.5%
-1.5% -4.8%
2.0% -2.9%
1yr
2.4% -6.8%
-6.1% -8.9%
0.7% -8.1%
Wider Market History
CGR%Past9yrs 6.0% 4.8%
8.0% -1.0%
3.0%
2.0%
4yrs
7.4% 3.9%
4.3% -3.3%
0.3% -2.9%
1. Roomnights sold (derived from est. rate and actual revenues). 2. Occupancy
nights sold divided by nights available for sale. 3. Avg. price for roomnights
sold; Directories, Surveys, & experience. 4. $ Revenue per available room per
day (room sales per day)

6. In the local market we expect future supply growth to be curtailed following

the proposed Hilton Hotel opening in 2005. Preceding this opening, from the
period of second quarter 2002 to fourth quarter 2004, we expect supply to also
remain flat due to low demand growth. This will allow the market to begin a
recovery to a healthier performance level.
This performance recovery will halt, and a decline in REVPAR and room rates will
commence upon the opening of the subject Hilton. The new hotel is expected to
pull a significant amount of business from other local properties, and is not
expected to be able to generate enough of its own demand to keep the market out
of a downward slide.
Over the next 9 years, growth in room revenues is forecast at 2.5% per annum.
REVPAR growth is expected to be 0.6% for the average room in the market. REVPAR
growth will only be able to attain this level because further hotel development
will be minimal after the Hilton opens, due to unfavorable market conditions.
Supply over the projection is expected to grow by 1.9% per year, with most of
this attributed to the 600 room addition of the subject Hilton.
Demand is expected to grow slightly faster, at 2%, allowing for a very gradual
long term market recovery. Average daily rates are expected to rise by only
0.5% per year. The current 51.2% occupancy level is considered to be well below
'equilibrium' in most markets of this type. Investment money is easier to
obtain when developing in what could be viewed as an under-supplied market (one
operating above equilibrium), until occupancy climbs to the point where only
average returns on capital are available. In a market operating below
equilibrium such as this one, development capital is much harder to raise,
because the profitability of any new project is seriously questioned by
prospective lenders.
Outside data sources support the projection. According to PKF Consulting, the
Fort Worth market has declined year to date compared to 2001, as has most of the
Dallas / Fort Worth / Arlington CMSA. PKF numbers indicate that the city of
Fort Worth dropped 1.6 occupancy 'points', 11.1% ADR, and a resulting 13.3%
slide in REVPAR through May of 2002. This decline is 5.1 percentage points
larger than the 8.1% statewide decline cited by PKF.
Our projection is for local occupancy to drop below 50% immediately after the
new 600 room headquarters property opens, and gradually recover to about 53% in
the later years of our forecast. An alternate scenario is for one or more of
the poorer performing existing local properties to be forced to close since they
will be at a competitive disadvantage to a heavily subsidized convention
property. Assuming that 400 rooms are forced out of the market in this manner
without any new properties opening, occupancy would recover somewhat faster than
our current projection, ending up at about 59% by the later years projected.
Typically, a healthy downtown market should operate at an equilibrium occupancy
level approaching 65%. The fact that this market is too soft to attract private
development without major subsidization is a strong indication of the state of
lodging demand in downtown Fort Worth. If development was warranted in the
current economy, private developers would step in without additional financial
enticement. As it is, hoteliers in the market have difficulty in conducting
significant renovations to existing properties due to the market's poor
performance.
The overall projection reflects a supply growth of 620 net new rooms over the
next nine years (gross new rooms less closures). This is a net supply increase

of 19%, from 3,305 in the latest year to 4,925 in the first quarter of 2012.
Net, the local market area forecast assumes that net new rooms (building less
closing) beyond the 620 rooms plus closures projected increase in the local area
market will not take place because of the constraints of financing and the
general caution regarding Texas real estate in general. If greater building did
occur, then all REVPAR projections would be reduced. For example, REVPAR could
decline by 9% in the first quarter of 2012, from $49 to $45, if an additional
400 (+10%) rooms were built over forecast. The local market projection follows:

PROJECTION:

DOWNTOWN FORT WORTH

#Htls
Year &
&
Quarter Mtls
022
21
023
20
024
21
031
21
032
21
033
20
034
22
041
22
042
21
043
20
044
22
051
26
052
25
053
24
054
26
061
26
062
25
063
25

#
Rooms
3,325
3,325
3,325
3,325
3,325
3,325
3,325
3,325
3,325
3,325
3,325
3,925
3,925
3,925
3,925
3,925
3,925
3,925

Room- Total
nights $Rooms
sold1 Revenue
000's
000's
167 14,124
156 12,767
147 12,730
154 13,370
169 14,551
158 13,153
150 13,115
157 13,978
173 15,213
161 13,751
153 13,712
163 13,744
179 14,958
167 13,521
158 13,482
166 13,669
182 14,876
170 13,447

064
26 3,925
161
071
26 3,925
169
072
26 3,925
186
073
25 3,925
174
074
27 3,925
164
081
26 3,925
173
082
26 3,925
190
083
25 3,925
177
084
27 3,925
168
091
27 3,925
176
092
26 3,925
193
093
25 3,925
181
094
27 3,925
171
101
27 3,925
180
102
26 3,925
197
103
26 3,925
184
104
27 3,925
174
111
27 3,925
183
112
27 3,925
201
113
26 3,925
188
114
28 3,925
178
121
28 3,925
187
CGR%Next9yrs 1.9% 2.0%
1st 5yrs
3.5% 2.0%
HISTORY
CGR%Past9yrs 2.4% 1.9%
Past 4yrs
2.4% -0.6%

%
OCC2
55.1
51.0
48.2
51.6
55.9
51.7
48.9
52.6
57.0
52.8
49.9
46.1
50.0
46.3
43.7
47.0
51.0
47.2

$
Rate3
84.70
81.87
86.39
86.66
85.97
83.10
87.69
88.83
88.12
85.18
89.88
84.39
83.71
80.92
85.38
82.28
81.62
78.89

% Growth Vs.
$
RPAR4 Spply Real
46.67
2.1
1.0
41.73 -0.9
1.0
41.62
0.8
1.0
44.68
0.6
1.5
48.08
0.0
1.5
43.00
0.0
1.5
42.88
0.0
1.5
46.71
0.0
2.0
50.27
0.0
2.0
44.95
0.0
2.0
44.83
0.0
2.0
38.90 18.1
3.5
41.87 18.0
3.5
37.44 18.1
3.5
37.33 18.1
3.5
38.69
0.0
2.0
41.64
0.0
2.0
37.24
0.0
2.0

Yr Ago
ADR
0.0
0.0
0.0
1.5
1.5
1.5
1.5
2.5
2.5
2.5
2.5
-5.0
-5.0
-5.0
-5.0
-2.5
-2.5
-2.5

Rev$
1.0
1.0
1.0
3.0
3.0
3.0
3.0
4.6
4.5
4.6
4.5
-1.7
-1.7
-1.7
-1.7
-0.6
-0.6
-0.6

13,408
13,942
15,173
13,716
13,676
14,576
15,864
14,340
14,298
15,240
16,585
14,992
14,949
15,933
17,340
15,674
15,629
16,658
18,129
16,388
16,340
17,416
2.5%
1.3%

44.6
48.0
52.0
48.1
45.5
48.9
53.1
49.1
46.4
49.9
54.1
50.1
47.3
50.9
55.2
51.1
48.3
51.9
56.3
52.1
49.2
53.0
0.1%
-1.4%

83.25
82.28
81.62
78.89
83.25
84.33
83.66
80.87
85.33
86.44
85.75
82.89
87.46
88.60
87.90
84.96
89.65
90.82
90.09
87.08
91.89
93.09
0.5%
-0.7%

37.13
39.46
42.48
37.98
37.87
41.26
44.41
39.71
39.60
43.14
46.43
41.51
41.40
45.10
48.54
43.40
43.28
47.15
50.75
45.38
45.25
49.30
0.6%
-2.1%

-2.5
0.0
0.0
0.0
0.0
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5

-0.6
2.0
2.0
2.0
2.0
4.5
4.5
4.5
4.5
4.5
4.5
4.6
4.6
4.5
4.6
4.5
4.5
4.5
4.5
4.6
4.5
4.6

6.2%
2.7%

-0.5%
-3.0%

4.2%
3.4%

3.6%
0.3%

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0

7. The downtown local market REVPAR index dipped slightly below that of the
metro in the mid-1990's. Since 1996, however, local market REVPAR has exceeded
metro REVPAR by a steadily widening margin, posting a 121 REVPAR index in the
latest year:

Year &
Quarter
922
923
924
931
932
933
934
941
942
943
944
951
952
953
954
961
962
963
964
971
972
973
974
981
982
983
984
991
992
993
994
001
002
003
004
011
012
013
014
021
CGR%9yr
4yrs
1yr

MARKET REVPAR HISTORY

Local/Total Market
Total
Local Quarter
Year
Metro
Market
Index
Index
31.95
31.25
98
33.24
34.83
105
26.80
28.85
108
28.77
30.59
106
104
34.45
36.14
105
35.06
36.74
105
27.89
27.84
100
30.50
26.66
87
99
35.84
33.30
93
37.24
30.27
34.15
39.17
38.50
33.30
38.14
39.50
40.25
35.96
37.36
43.32
41.40
36.67
40.67
44.72
42.93
36.94
39.66
40.60
41.10
34.55
38.26
43.97
41.81
35.15
39.58
41.19
37.59
30.84
34.27
2.0%
-2.9%
-10.4%

37.12
29.77
30.90
36.95
36.02
34.73
38.13
39.14
39.73
39.72
39.04
44.38
39.39
40.92
46.27
51.25
49.78
44.67
50.13
51.26
47.46
40.65
44.33
50.26
50.96
39.62
47.83
47.18
40.94
41.55
43.63
3.6%
0.3%
-8.1%

100
98
90
94
94
104
100
99
99
110
104
102
95
112
114
115
116
121
126
126
115
118
116
114
122
113
121
115
109
135
127

95

98

103

106

119

119

117

121

8. The forecast calls for the local market REVPAR to continue to rise versus
the Fort Worth / Arlington metro REVPAR average until the proposed Hilton is
projected to open. In 2005, the projected opening year, average REVPAR in the
local market will decline notably as competition for available guests
intensifies. In subsequent years, local market REVPAR falls to the historic
lows seen in the mid-1990's:
MARKET REVPAR PROJECTION
Year &
Quarter
022
023
024
031
032
033
034
041
042
043
044
051
052
053
054
061
062
063
064
071
072
073
074
081
082
083
084
091
092
093
094
101
102
103
104
111
CGR%9yr
5yrs

Total
Metro
38.79
35.75
30.23
33.59
38.60
35.57
30.68
34.10
38.45
35.44
30.87
33.52
39.99
36.86
32.10
35.38
42.20
38.90
33.72
37.16
44.33
40.85
35.41
39.03
46.56
42.91
37.20
40.99
48.90
45.07
39.07
43.05
51.36
47.33
41.03
45.22
2.8%
1.1%

Local/Total Market
Local Quarter
Year
Market
Index Index
46.67
120
41.73
117
41.62
138
44.68
133
127
48.08
125
43.00
121
42.88
140
46.71
137
131
50.27
131
44.95
127
44.83
145
38.90
116
130
41.87
105
37.44
102
37.33
116
38.69
109
108
41.64
99
37.24
96
37.13
110
39.46
106
103
42.48
96
37.98
93
37.87
107
41.26
106
100
44.41
95
39.71
93
39.60
106
43.14
105
100
46.43
95
41.51
92
41.40
106
45.10
105
99
48.54
95
43.40
92
43.28
105
47.15
104
99
0.6%
-2.1%

9. Graphing the REVPAR history and projection clearly illustrates the local
market recovery through 2004, and the subsequent decline after the proposed
Hilton opens. We anticipate that the local market will fall back into its
historical level versus the metro market averages:

10. Graphing the occupancy history and projection for both the metro and local
markets clearly illustrates the recent decline in occupancy in both areas. It
also expresses the depressed level of occupancy and very gradual recovery after
the subject hotel opens in 2005:

PROJECT REVPAR - DEVELOPMENT OF INDICES

Within the above market REVPAR forecast, the expected performance of the
proposed Hilton Hotel is based on six factors. All six factors are independent
and modify the market's projected REVPAR average to reflect the subject
property's particular characteristics.
First, what is the property's Base Value; the effect of the brand, including
product type and quality? Second, what is the effect of the current age of the
brand's properties on Base Value performance? Third, what is the effect of the
project's size, or room-count, on results? Fourth, what is the effect of the
project's newness (versus older competition on its way to obsolescence)? Fifth,
are there any other adjustments needed? And lastly, what is the likely
influence of the selected site on results?
1. The Base Value factor sets property type/brand/quality at 1.49 in Texas midsized and larger metro areas, the Exhibit IV Market. This valuation is based on
the performance of 17 existing Hilton Hotels in these markets. The Exhibit IV
market average REVPAR of $43.39 virtually matches the local market's average
REVPAR of $43.29.
These 17 Hilton properties consist of about 4,981 rental units and generated a
combined average REVPAR of $64.69 for the latest twelve months. This REVPAR is
149% of the overall Exhibit IV market average REVPAR of $43.39:
$64.69 / $43.39 = 1.49
This sample of 17 Hilton Hotels throughout the state firmly grounds the basic
REVPAR performance of operating a Hilton Hotel in a market such as the Exhibit
IV market.
2. The second adjustment factor, Brand Aging, is set at 1.15, (+15%). The Brand
Age Adjustment represents the overall average age of each studied brand names.
This factor is used to neutralize the effects of physical age on brand
performance.
In this case, the average Hilton Hotel in Texas mid- and larger sized metros was
20 years old (typical opening date of 1982). Through our extensive studies of
the physical aging of hotel brands, a 20 year old brand is past its peak
performing years and requires a notable positive age adjustment to offset this
inherent disadvantage in performance.
This factor adjusts for the effect of the age of the existing hotels on the
current performance of the brand (point #5 adjusts for the physical life-cycle
of the specific property, a different and additional consideration). The brand
age adjustment, or life-cycle adjustment, for this and other brands examined
includes:

Ramada
Radisson

Average
Built
1976
1977

Brand Age
Adjustment
1.30
1.27

Hilton

1982

1.15

Clarion

1984

1.11

Renaissance
Courtyard

1985
1992

1.09
.97

3. The Property Size factor - reflecting room count - calls for a notable
negative adjustment for this property; it is assigned 0.83 (83% or a -17%
adjustment). This is due to the fact that the typical Hilton Hotel in similar
markets averaged only 293 rental units per hotel, or 51% smaller than the
proposed 600 unit project. Assigning one third of this size differential as a
penalty results in our -17% factor for larger size.
This factor gives a penalty to the property for being significantly larger than
average. By the same token, were the property to be less than 293 units, it
would earn a premium. The size adjustment is necessary because demand is not
affected by the number of rental rooms offered, the individual consumer only
seeking one room. Customers don't care whether one offers 100, 125 or 150 units
and their behavior and resulting demand should be the same regardless of the
number of rooms. Hence, keeping a project conservatively sized assures a higher
per-unit revenue yield.
The highly-positive effect on revenues and return on capital due to building
small, and not 'over-sizing' projects is best explained by the following study,
a study that can be replicated with any brand, in almost any situation. The net
effect of building small is to run higher occupancy and rate, thereby increasing
brand REVPAR by building a below-average number of rental units.
A STUDY OF THE EFFECT OF HOTEL SIZE ON PERFORMANCE
IN THE TEXAS HOTEL INDUSTRY
THE CASE FOR DOWNSIZING NEW HOTELS
Source Strategies, Inc., has long contended that the number of rooms a developer
offers in a new property is one of the key factors in determining a venture's
relative success or failure. It is every bit as important to size a hotel
project properly as it is to select the appropriate brand, and to have chosen to
develop in a suitable market and location.
For the purposes of this study, we analyzed two separate samplings of hotels.
We first looked at Comfort Inns across Texas as a selected brand sampling: then
we examined all branded hotels built during a set period of time for a wider
sampling.
1) COMFORT INN - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE
In our initial analysis, we selected a group [55 properties] of Texas Comfort
Inn branded properties ranging in size from 36 to 75 units. The following chart
of performance statistics clearly illustrates the fact that on average, the
smaller property will perform better, in terms of REVPAR and occupancy, than a
larger property of the same brand:
12 Months Ending
Units Occupancy
36-40
66.9
41-45
65.3
46-50
66.5
51-55
62.8
56-60
61.8
61-65
56.6
66-70
44.6

June 30, 1999

Rate
REVPAR
55.25
36.95
57.34
37.45
57.38
38.17
56.02
35.20
54.26
33.55
55.33
31.33
45.71
20.41

71-75
Combined:
52

43.8
63.2

44.20
55.46

19.38
35.03

Further, properties with lower room counts were clearly able to sustain a higher
level of occupancy. Average occupancy ranged from 66.9% for properties of 36-40
units, downward to a much lower 43.8% average occupancy for properties in the
71-75 unit size bracket.
The above chart and graph clearly illustrate that developers often miss the
mark, building more rooms than 'optimum'. 'Optimum' is defined as generating
the highest return on invested capital, and is closely tied to occupancy and
REVPAR. Analyzing the above data provides a measure of the effect of overbuilding. For the typical range of rooms for Comfort Inn projects occupancy
dropped 23 points (a full 35%) from 67% to 44% as room counts escalated.
The key question is, 'how to apply this principle to a given hotel project.'
Naturally, each project would have to be judged on its individual merits, but
looking at an 'average' project for a single brand and product is very
revealing.
BRANDED HOTELS - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE
In our second analysis, we looked at a sampling [91 properties] of Texas branded
hotels of less than 135 units which were constructed from 1970-1975. For our
analysis we examined performance results from the year 1985 when all subject
hotels were 10 to 15 years old, to well into their aging life cycles.
The following table of performance statistics from 1985 for branded properties
throughout Texas clearly illustrates the downward curve, with a pronounced and
methodical erosion of performance as room counts increased:
# of Hotels

Combined:

2
3
7
14
29
16
20
91

Units
00-44
45-59
60-74
75-89
90-104
105-119
120-134
98

Occupancy

Rate

REVPAR

70.0
73.9
66.8
62.7
60.9
57.8
55.5
59.8

37.88
36.13
31.10
31.65
32.42
26.25
29.35
30.34

26.50
26.71
20.77
19.86
19.75
15.18
16.28
18.14

The following graph provides a clear picture of descending performance as room

counts increase. Average occupancy ranged from 70% for properties of 44 units
or less, downward to a much lower 55.5% average occupancy for properties in the
120-134 unit size bracket, after peaking at 73.9% in the 45-59 size range.
The data is clear: in almost every case small hotels outperform larger ones.
Common sense explains this occurrence: a successful 100 room hotel will
inevitably prompt the development of one or more new, small hotels of similar
quality in the immediate area. In a competitive market environment, the smaller
hotel has a distinct advantage and wins - almost every time.
The fact remains that if you build a smaller than average property for a given
brand, project results should be improved over the average: the converse of
this fact is also true. Thus, the subject hotel warrants a significant penalty
for being larger than the typical Hilton Hotel in this type of market.

4. Fourth, the Segment / Other adjustment factor is set at 105% (+5%). A 5%

premium is awarded for the increased level of quality expected at this fourdiamond rated hotel, a rating higher than the usual three-diamond award for
Hilton and Marriott hotels by AAA. The level of capital budgeted for this
project allows for this higher level of quality.
5. Fifth, the aging adjustment factor reflects the standard hotel life cycle:
92% (-8%) in Year I; 107% for Year II; 112% for Years III through V; followed
by a 1.67% annual decline starting after Year VI. The life-cycle or aging
factor illustrates consumer demand being greater for new hotels than for old,
and reflects comprehensive Source Strategies Inc. research into the performance
of new hotels opened in the state of Texas since 1990.
The aging factor also mirrors extensive studies of hotel life-cycles conducted
by the principal of Source Strategies, Inc., Bruce Walker, when heading the
Holiday Inn Corporation's strategic planning department (1979-83). It also
reflects recent research on the life cycles of 25,000 Texas hotel rooms,
developed from 1980 through 1982, with their performance versus the market
tracked to the present (MarketShare newsletter, "The Hotel Life Cycle - It's
Very Real" published September 1994). Full analysis is shown in Exhibit VI.
6. The last factor, Site, is set at 1.15, or 15% above average for the local
market. Looking at the derived site values for local competition in the past
year supports this valuation.
In our assessment, any proposed site adjacent to the convention center is
superior to most others in the market, marginally better than the Radisson site.
However, with the added competition in the market due to significantly increased
room supply, all site values in the competitive market will be reduced by about
15 points. If an operating hotel in the current market were located on the
proposed site, it would warrant a site value of about 130. With the anticipated
erosion of local site values due to supply dilution, the site would warrant a
115 valuation.
Site Value Quantification: The site values of existing competitors have been
developed by quantifying the influence site has had on their performance.
Applying known adjustment factors to existing properties, except for a site
factor, lets us solve for the site value itself.
The site methodology 'backs into' the value of the site by matching actual
performance against known factors, using the site factor as the arbitrary
'plugged number.' The differences between the closest key competitors appear to
be both explainable and reasonable.

The site value is 'plugged' so that projected REVPAR versus market approaches
the actual REVPAR over the past 12 months, as follows:
LOCAL COMPETITION
Radisson Renaiss- Courtyard Clarion
All Data in '01/02 $s
Hotel Worthing Blckstone
Hotel
Base: Name, Type & Quality
1.04
1.60
1.40
.66
x Brand Age Adjustment
1.27
1.09
.97
1.11
x Site Value Adjustment
1.27
1.20
.97
.88
x Size Adjustment
.87
.95
.89
.84
x Other Adjustments
1.00
1.20
1.00
.80
x Newness Adjustment
.84
.85
1.12
.84
= Theoretical REVPAR Index
123%
203%
131%
36%

Ramada
Inn
.47
1.30
1.17
.80
1.00
.74
42%

x Market REVPAR Avg

= Projected Performance

$43.29
$53.07

$43.29
$87.79

$43.29
$56.84

$43.29
$15.75

$43.29
$18.32

Actual Performance Past Yr $53.29

Index (Projected Vs. Actual)
100

$87.76
100

$57.05
100

$15.83
100

$18.33
100

504
423
.84
.95

203
139
.68
.89

298
158
.53
.84

430
171
0.40
0.80

Units in Above Subjects

Average Units in Chain
Relationship
Resulting Factor*

517
314
.61
.87

*1/3 of relationship used in size adjustment

Combining all six factors that affect a hotel's REVPAR performance, we calculate
that the proposed Hilton Hotel's REVPAR will achieve 158% of the local market
average REVPAR for Year I, 184% for Year II, and 192% for Years III through V.
In Year VI and thereafter, REVPAR indices will slowly decline:

All Data in '01/02 $s

Base: Name, Type & Quality
x Brand Age Adjustment
x Site Value Adjustment
x Size Adjustment
x Other Adjustments
x Newness Adjustment
= Theoretical REVPAR Index

Hilton Hotel
Year I
Year II Year III
1.49
1.49
1.49
1.15
1.15
1.15
1.15
1.15
1.15
.83
.83
.83
1.05
1.05
1.05
.92
1.07
1.12
158%
184%
192%

x Market REVPAR Avg '01/02

= Projected Performance

$43.29
$68.40

$43.29
$79.55

$43.29
$83.26

COMBINING THE ABOVE MARKET REVPAR PROJECTION AND THE HOTEL'S REVPAR INDEX TO
DEVELOP REVENUES, OCCUPANCY, AND RATE
Using the projected Year III REVPAR index of 192%, the above process would
generate a theoretical REVPAR of $83.26 (in 2002 dollars). This is the result
of the Year III index of 192% (1.92) multiplied by a market average of $43.29.
Therefore, if the property were open today and were in its third year of
operation, it would theoretically be operating at the following level against
last year's market: an $83.26 REVPAR computes to gross room revenues of
approximately $18,233,940 ($83.26 REVPAR times 600 units times 365 days).
Please note that the actual expected affect on the market due to the
introduction of the Hilton Hotel and other new units is fully reflected in
subsequent pro forma market projections and financials.
In current year dollars, this projection for the Hilton Hotel's Year III revenue
breaks down seasonally as follows:
Quarter:
First
Second
Third
Fourth
Year III
Market %
24.9%
26.3%
24.5%
24.4%
100
Seasonal Index
101
106
97
97
100
REVPAR$
$83.93
$87.85
$80.78
$80.55
$83.26
Room Revenue $4,532,372 $4,796,652 $4,458,796 $4,446,120 $18,233,940
In turn, we believe the optimum rate/occupancy mix, in current dollars, would be
as follows:
Quarter:
REVPAR$
ADR - $
Occupancy %

First
$83.93
$125.05
67.1%

Second
$87.85
$125.05
70.3%

Third
$80.78
$125.05
64.6%

Fourth
$80.55
$125.05
64.4%

Year III
$83.26
$125.05
66.6%

Tests For Reasonableness of Projections

Comparisons can be made to assess the 'reasonableness' of the above projection:
1. The projections depend importantly on the projection of local market REVPAR
- forecast to drop short term upon the opening of the proposed Hilton, then
begin a gradual recovery over the later years of our projection. Over the
course of our projection market REVPAR is projected to grow a nominal 0.6%, well
below the expected rate of inflation (versus 3.6% REVPAR growth for the past
nine years). REVPAR encompasses the net effect of supply and demand. Over the
next nine years, we are also comfortable with the 2% real compound growth
projected for the local market, exceeding the projected 1.9% supply growth,
resulting in a very gradual improvement in local occupancy to a 53% level by the
end of our projection.
2. The derived Base Value of 149 for the Hilton Hotel in Texas mid- to larger
sized metro markets appears to be quite reasonable when compared to the Base
Values of other hotel chains in these same markets. The Hilton brand can be
expected to perform at a higher level than many of its prominent competitors in
this type of market. The hierarchy of REVPAR indices for selected brands is
shown below:
REVPAR Index Comparison
Four Seasons
Westin Hotels
Marriott Hotels
Hyatt Hotels
Embassy Suites
Residence Inn
Renaissance
Hilton Hotels
Courtyard
Radisson Hotels
Holiday Inn
Holiday Express
La Quinta
Best Western

343
201
200
198
180
164
160
149
140
104
103
103
89
73

3. Developing actual adjustment factors for the existing properties - so that

their projected REVPAR equals actual REVPAR - indicates why the Hilton Hotel's
REVPAR projection has a high probability of being achieved. The REVPAR
differences between the closest key competitors appear to be both explainable
and reasonable, using the standard, Source Strategies' adjustment factor
quantification. For each property, revenues are driven first by chain name
affiliation and product type, and are further adjusted for size, segment, hotel
age and site location. The REVPAR index is then multiplied by the actual market
average to generate dollar REVPAR, as follows:
Opened:

2005
1980
1981
1999
1980
Hilton Radisson Renaiss. Courtyrd Clarion
All Data in 2002 $s
Yr III
Hotel Worthing Blckston
Hotel
Base: Name/Type/Quality
1.49
1.04
1.60
1.40
.66
x Brand Age Adjustment
1.15
1.27
1.09
.97
1.11
x Site Value Adjustment
1.15
1.27
1.20
.97
.88
x Size Adjustment
.83
.87
.95
.89
.84
x Other Adjustments
1.05
1.00
1.20
1.00
.80
x Newness Adjustment
1.12
.84
.85
1.12
.84
= Theoretical REVPAR Index 192%
123%
203%
131%
36%

1974
Ramada
Inn
.47
1.30
1.17
.80
1.00
.74
42%

x Market REVPAR Avg

= Projected Performance

$43.29
$83.26

Actual Performance Past Yr

Index (Proj Vs. Actual)
# Units
Age in Years*

$43.29
$53.07

$43.29
$87.79

$43.29
$56.84

$43.29
$15.75

$43.29
$18.32

N/A
N/A

$53.29
100

$87.76
100

$57.05
100

$15.83
100

$18.33
100

600
new

517
25

504
24

203
6

298
25

430
31

4. The theoretical Year III REVPAR of $83.26 by the new, Hilton branded
'headquarters' hotel of 600 units in markets of this type is realistic in
comparison to the results of current competitors.
First, the highest quality property currently in the market, the Four-diamond
Renaissance Hotel, located 8 blocks north of the convention Center and
constructed in 1981, generated a healthy REVPAR of $87.76 in the latest year.
Further, the 517 unit, three-diamond Radisson Hotel built in 1980 along the
north side of the Convention Center generated a REVPAR of $53.29 in the period,
64% of what we expect for the Hilton. Lastly, the new, three-diamond Courtyard
Blackstone Hotel, a 203 unit property built in 1999, generated a REVPAR of
$57.05, 69% of the Hilton projection.
5. In the overall market, any new hotel will have an inordinate advantage over
the old; the playing field here is not level as the lodging consumer almost
always votes for 'new' versus old. From Holiday Inn consumer research, 'new'
means 'clean,' and 'old' means 'dirty' to the consumer; cleanliness is the
number one consumer selection factor in lodging. Hence, a new, high quality
branded '& suite' hotel entry should operate well above the chain market average
occupancy, currently at 53.5% in the local market.
Newness is a major factor in a market where some of the competition in this
market is old, tired, and approaching obsolescence. On average, the 21 hotels
in the local market were constructed in 1981, making the typical hotel in this
market over 20 years old. Further, 13 hotels in the local market were built in
1986 or before (15+ years old).
Many hotels are effectively 'finished' in thirty years because their
construction was wood-frame, their plumbing and wiring of a limited life, but
most importantly, they become stylistically and functionally obsolete compared
to new construction. High-rise downtown hotels are admittedly more resistant to
this trend of decline because of the more durable and expensive construction
methods used in their construction. After a hotel's performance peaks in Years
III-V, an inevitable gradual decline begins, and will continue until the hotel
is obsolete and no longer a viable lodging establishment.
6. The projected 2007 occupancy for the Hilton Hotel of 66.6% and rate of
$113.73 compares reasonably to the Exhibit IV Upscale Hotel Segment brand
averages, which had an average occupancy of 60.2% and a rate of $120.43 in the
latest year. This level of performance reflects the fact that this project will
be in its peak performing years in 2007. Offering a high quality, desirable
product and brand gives the Hilton Hotel an advantage over much of its
competition.
7. The projected REVPAR performance of the Hilton Hotel versus the downtown
Fort Worth market is at a reasonably high level compared to many new hotels of
this quality in similar metro areas. Hotel REVPAR climbs sharply in the Years I

through III then levels off, growing at a more normal inflationary pace. Being
a high quality property, it would perform at a level well above the moderate
REVPAR average of the local market.

8. Graphing the projected occupancy performance of the Hilton Hotel versus the
downtown Fort Worth market demonstrates a realistic pattern: the hotel peaks in
Years III through V at a level well above the local market, then begins to
recede, steadily losing ground to the market average as the property ages:

PRO FORMA
The Hilton REVPAR ratio, 192% of the local market in Years III-V, results in the
following REVPAR stream:
HILTON HOTEL REVPAR PROJECTION
Yr &
Qtr
051
052
053
054
061
062
063
064
071
072
073
074
081
082

Local
Market
38.90
41.87
37.44
37.33
38.69
41.64
37.24
37.13
39.46
42.48
37.98
37.87
41.26
44.41

Subj
Hotel
57.19
64.07
61.03
63.10
68.10
74.96
70.00
71.29
75.77
81.55
72.92
72.71
79.22
85.26

Subject /
Market Index
147
153
163
169
158
176
180
188
192
184
192
192
192
192
192
192
192

083
084
091
092
093
094
101
102
103
104
111
112
113
114
121
122
123
124

39.71
39.60
43.14
46.43
41.51
41.40
45.10
48.54
43.40
43.28
47.15
50.75
45.38
45.25
49.30
53.06
47.44
47.31

76.24
76.02
82.82
89.14
79.71
79.48
85.15
91.64
81.94
81.71
87.53
94.21
84.24
84.00
89.99
96.86
86.60
86.36

192
192
192
192
192
192
189
189
189
189
186
186
186
186
183
183
183
183

51.54
54.52
48.75
48.61
52.96
56.02
50.09
49.95
3.3%
3.0%

92.51
97.86
87.50
87.25
93.47
98.87
88.40
88.15
4.6%
6.8%

179
179
179
179
176
176
176
176
1.2%
3.6%

131
122
123
124
131
132
133
134
*CGR%9yrs
First 5yrs

*from hotel opening

192

192

189

186

183

179

176

This REVPAR forecast is then extended to room revenues (multiplying REVPAR by

the number of days in the period and by the number of rooms in the project), and
to occupancy, estimated rate and roomnights sold:
RESULTING PROJECTION:

HILTON HOTEL

Resulting
Average RoomYear &
Room
Annual
%
Daily nights
Qtr
Revenues
Basis Occup
Rate
Sold
RNS
20051 $3,088,277
54.0 $106.00 29,135
52 $3,498,030
58.8 $109.00 32,092
53 $3,368,825
57.6 $106.00 31,781
54 $3,482,901 $13,438,032 59.5 $106.00 32,858 125,866
20061 $3,677,192
62.2 $109.39 33,615
62 $4,092,695
66.6 $112.49 36,383
63 $3,864,146
64.0 $109.39 35,324
64 $3,935,142 $15,569,175 65.2 $109.39 35,973 141,295
20071 $4,091,712
67.1 $112.89 36,244
72 $4,452,852
70.3 $116.09 38,358
73 $4,025,289
64.6 $112.89 35,656
74 $4,013,845 $16,583,698 64.4 $112.89 35,555 145,812
20081 $4,277,885
68.0 $116.51 36,718
82 $4,655,457
71.2 $119.80 38,859
83 $4,208,439
65.4 $116.51 36,122
84 $4,196,475 $17,338,256 65.3 $116.51 36,020 147,720
20091 $4,472,528
68.9 $120.23 37,199
92 $4,867,280
72.1 $123.64 39,368
93 $4,399,923
66.3 $120.23 36,595
94 $4,387,415 $18,127,147 66.1 $120.23 36,491 149,652
20101 $4,597,939
68.6 $124.08 37,056
102 $5,003,759
71.8 $127.59 39,217
103 $4,523,298
66.0 $124.08 36,454
104 $4,510,438 $18,635,434 65.9 $124.08 36,351 149,078
20111 $4,726,866
68.4 $128.05 36,914
112 $5,144,066
71.5 $131.68 39,066
113 $4,650,132
65.8 $128.05 36,315
114 $4,636,912 $19,157,975 65.6 $128.05 36,211 148,506
20121 $4,859,408
68.1 $132.15 36,772
122 $5,288,306
71.3 $135.89 38,916
123 $4,780,522
65.5 $132.15 36,175
124 $4,766,932 $19,695,167 65.3 $132.15 36,072 147,936
20131 $4,995,666
68.0 $136.11 36,702
132 $5,342,991
69.9 $139.97 38,174
133 $4,829,956
64.3 $136.11 35,485
134 $4,816,225 $19,984,839 64.1 $136.11 35,384 145,745
20141 $5,047,325
66.7 $140.20 36,002
142 $5,398,242
68.6 $144.16 37,445
143 $4,879,902
63.1 $140.20 34,808
144 $4,866,029 $20,191,497 62.9 $140.20 34,709 142,963
*CGR % First 9 yrs
4.6% 1.4%
3.2%
1.4%
First 5 Years
6.8% 3.5%
3.2%
3.4%
*from hotel opening

Annual Basis
Occ.
Rate

57.5% $106.76

64.5% $110.19

66.6% $113.73

67.5% $117.37

68.3% $121.13

68.1% $125.00

67.8% $129.00

67.6% $133.13

66.6% $137.12

65.3% $141.24

Operating Costs
Profitability and returns reflect the above revenue projections and the
following other critical assumptions: - operating costs per occupied room
approximate Full Service hotels of similar type, size, rate, occupancy and
geography, (Smith Travel Research's Host Report for 2000 data, and Source
Strategies data).
Full Service Hotel operating cost estimates take into account the lower costs of
the West South Central United States, which had an average Per Occupied Roomsonly Cost of $26.66 in 2000 - versus a national average of $32.30 - or 82.5% of
the U.S. average. Subsequent cost comparisons have been adjusted to reflect
this 17.5% lower-cost environment that may be expected in operating a Full
Service hotel in a West South Central area of the U.S. such as Texas.
- Specific Food, Beverage, Other Revenue assumptions, and cost assumptions for
all revenue items in the study are as follows:
Food Volume: was set at 38% of Room Sales, which equates to 23.4% of total
project revenues. This is 5 points above the norm for Full Service urban hotels
in 2000 in the West South Central region of the U.S., as published in the 2001
Host Report, Smith Travel Research. It reflects the fact that Urban convention
headquarters hotels will run 15% higher than other urban hotels.
Beverage / Other F&B Volume: was set at 10% of Room Sales, which equates to
6.2% of total project revenues. This was slightly higher than the norm of 9.5%
for U.S. urban hotels.
Other Volume: was set at 10% of room revenues, and 6.2% of total revenues,
about the norm for U.S. hotels of more than 500 units.
Telecommunications Volume: was set at 4.3% of room revenues, and 2.6% of total
revenues, the norm for U.S. Urban hotels.
Rooms-only Expense was set at $32.43 Per Occupied Room for 2000 ($37.60 when
inflated to 2005 dollars), and compares reasonably to the Host Report sample for
the following types of Full-Service operations. Note that the cost per occupied
room is set lower than the typical resort and urban costs nationwide.
This lower rooms cost is a product of a lower cost structure in Fort Worth due
to the depressed hotel market in the local area. We assigned a 5% lower rooms
cost for this Fort Worth property when compared to other Texas Full Service
urban and resort destinations (San Antonio, Houston, Dallas, Grapevine, Austin)
This lower than normal cost is readily supported by Source Strategies research
into actual financial records of existing hotel properties.
Host Report Sample
2000 Basis 2005 Basis
West South Central
$26.66
$30.91
U.S. Urban* 30.58 35.45
Resort*
33.82 39.21
Roomcount 300 to 500*
26.08 30.23
Roomcount Over 500*
34.14 39.58
*adjusted to the South West Central U.S.

Food & Beverage Expense was set at 73% of Food and Beverage revenues. This
compares to the Host Report sample for the following types of Full-Service
operations:

Host Report Sample

West South Central
U.S. Urban 75.9%
Roomcount 300 to 500
Roomcount over 500
Resort
72.7%
Average of above:

2000 Basis
71.4%
71.6%
73.7%
73.1%

Departmental Profit: the resulting Departmental Profit forecast in Year I was

55% in comparison to the Host numbers.
Host Dept Profit
West South Central
U.S. Urban 59.9%
Roomcount 300 to 500
Roomcount over 500
Resort
56.6%

2000 Basis
61.6%
59.1%
59.6%

- versus room revenues, a 5% franchise royalty fee; 7.5% marketing expense Year
I and thereafter, including franchise reservation and brand advertising/frequent
traveler fees (in addition to royalties), and property advertising; also, a 4%
management fee.
- an on-going reserve for renovations is taken and subtracted from project cash
flows; such renovation reserves and investments insure that future revenue
streams continues by maintaining product quality at the highest levels.
Reserves are set at $12,440,587 for the first ten years, or $20,734 per unit;
Reserves are based on an extensive 2000 study, CapEx, by the International
Society of Hospitality Consultants. The study shows that required reserves
average 5.5% over a 20 year period. However, average expenditures vary by year,
with peak spending occurring in year ten at over 12% of gross revenues (details
in Exhibit VII).
- An initial capital investment of $130,000,000 allocated to improvements plus
an assumed land value of $1,500,000 (actual land cost may vary depending upon
final architectural building plans and fair market value of land required). The
estimated improvement capital estimate of $216,667 per unit appears adequate for
a hotel of Hilton/AAA four diamond quality, in our experience.
Should capital needs prove to be greater or less, then returns would change
proportionately. The estimates of necessary capital include:
Assumed Land Value
Improvements
Total

$
1,500,000
$ 130,000,000
$ 131,500,000

The pro forma profit and cash flow statements are shown overleaf:

Open 1/1/05
$1,500,000
# Rooms: 600
$216,667

Hilton Hotel

Est Land Value:

Investment/room ex. land:

QUARTER
Rmnites Sold
Rmnites Avail

First
29,135
54,000

Second
32,092
54,600

Third
31,781
55,200

Fourth
32,858
55,200

Occupancy %
Avg Rate
REVPAR

54.0%
106.00
$57.19

58.8%
109.00
$64.07

57.6%
106.00
$61.03

59.5%
106.00
$63.10

Room Revenues $3,088,310 $3,498,028 $3,368,786 $3,482,948

Food
1,173,558 1,329,251 1,280,139 1,323,520
Beverage
308,831
349,803
336,879
348,295
Telephone
132,797
150,415
144,858
149,767
Other
308,831
349,803
336,879
348,295
Total Revenues $5,012,327 $5,677,299 $5,467,540 $5,652,825

Year
125,866
219,000
57.5%
$106.76
$61.36
%
Revenues
13,438,072
61.6%
5,106,467
23.4%
1,343,807
6.2%
577,837
2.6%
1,343,807
6.2%
$21,809,991
100.0%

Room Dept Expen-Payroll

Administration
149,618
Head Housekprs
30,883
Housekeeping
145,675
Laundry
50,123
Maintenance
100,247
Front Desk
205,200
Vacation/Holida
23,861
Taxes/Benefits
98,785
Total Payroll
804,392
Other Room Expe
303,004
Total Room Expe 1,107,396

169,467
34,980
160,460
56,773
113,546
207,480
25,995
107,618
876,320
333,757
1,210,076

163,206
33,688
158,905
54,675
109,351
209,760
25,535
105,717
860,837
330,522
1,191,360

168,737
34,829
164,290
56,528
113,056
209,760
26,152
108,269
881,622
341,723
1,223,346

651,028
134,381
629,330
218,100
436,200
832,200
101,543
420,389
3,423,172
1,309,006
4,732,178

3.0%
0.6%
2.9%
1.0%
2.0%
3.8%
0.5%
1.9%
15.7%
6.0%
21.7%

F & B Expense
Payroll
592,956
Other
489,188
Total F & B Exp 1,082,144

671,621
554,088
1,225,709

646,807
533,616
1,180,423

668,726
551,699
1,220,425

2,580,110
2,128,591
4,708,700

11.8%
9.8%
21.6%

100,044

96,347

99,612

384,329

1.8%

Departmental Profits
Rooms
1,980,914 2,287,952 2,177,426 2,259,602
F & B
400,245
453,344
436,595
451,390
Other
353,303
400,174
385,389
398,449
Total
$2,734,462 $3,141,470 $2,999,410 $3,109,442

8,705,894
1,741,574
1,537,315
11,984,784

39.9%
8.0%
7.0%
55.0%

Other, Expense

88,326

-Undistributed Op Expense
Admin & General
350,863
Marketing
375,925
Franchise Fees
154,416
Energy
205,505
Property Ops &
225,555
Tot Admin & Gen 1,312,263

397,411
425,797
174,901
232,769
255,478
1,486,358

382,728
410,065
168,439
224,169
246,039
1,431,441

395,698
423,962
174,147
231,766
254,377
1,479,950

1,526,699
1,635,749
671,904
894,210
981,450
5,710,011

7.0%
7.5%
3.1%
4.1%
4.5%
26.2%

Gross Oper Prof 1,422,199

Management Fees
123,532

1,655,113
139,921

1,567,969
134,751

1,629,492
139,318

6,274,772
537,523

28.8%
2.5%

Income Bef Fix

1,298,666

1,515,192

1,433,218

1,490,174

5,737,249

26.3%

Open 1/1/05
$1,500,000
# Rooms: 600
$216,667
QUARTER
Rmnites Sold
Rmnites Avail
Occupancy %
Avg Rate
REVPAR

Hilton Hotel

Est Land Value:

Investment/room ex. land:

First
29,135
54,000
54.0%
106.00
$57.19

Second
32,092
54,600
58.8%
109.00
$64.07

Third
31,781
55,200
57.6%
106.00
$61.03

Fourth
32,858
55,200
59.5%
106.00
$63.10

Room Revenues $3,088,310 $3,498,028 $3,368,786 $3,482,948

Food
1,173,558 1,329,251 1,280,139 1,323,520
Beverage
308,831
349,803
336,879
348,295
Telephone
132,797
150,415
144,858
149,767
Other
308,831
349,803
336,879
348,295
Total Revenues $5,012,327 $5,677,299 $5,467,540 $5,652,825
Income Bef Fix

Year
125,866
219,000
57.5%
$106.76
$61.36
%
Revenues
13,438,072
61.6%
5,106,467
23.4%
1,343,807
6.2%
577,837
2.6%
1,343,807
6.2%
$21,809,991
100.0%

1,298,666

1,515,192

1,433,218

1,490,174

5,737,249

26.3%

-Fixed: Insur
43,620
Property Tax
163,575
Deprec SL 39 Yr
833,333
Tot Fixed Expen 1,040,528

43,620
163,575
833,333
1,040,528

43,620
163,575
833,333
1,040,528

43,620
163,575
833,333
1,040,528

174,480
654,300
3,333,334
4,162,113

0.8%
3.0%
15.3%
19.1%

Net Income Befo

258,138
Tax & Financing

474,663

392,689

449,645

1,575,136

7.2%

Deprec. Add-back 833,333

Replacemnt Reserv (49,072)

833,333
(49,072)

833,333
(49,072)

833,333
(49,072)

3,333,334
(196,290)

15.3%
-0.9%

4,712,180

21.6%

Cash Before
Fin & Tax

1,042,399

1,258,924

1,176,950

1,233,906

- See table overleaf for the following 9 years -

September 27, 2002

OPINION
This report is based on independent opinion, surveys and research from sources
considered reliable. No representation is made as to accuracy or completeness
and no contingent liability of any kind can be accepted.
The projections in this study are dependent on the developer using the name
'Hilton Hotel', delivering the level of product quality as required by the
franchisor, including certain amenities, and spending the appropriate operating
funds necessary to generate projected revenues, most especially budgeted funds
for aforementioned Four-Diamond quality and amenities and for marketing.
It is our opinion that this fairly and conservatively represents the revenues,
profitability and return on investment performance that can be achieved by
developing and operating a 600 unit Hilton Hotel on the proposed site adjacent
to the Fort Worth Convention Center, as a private development, as a Citysubsized private development, and as a City-owned hotel venture. Please contact
us with any questions at (210) 734-3434.
Respectfully Submitted,

Bruce H. Walker, President

Source Strategies, Inc.

Exhibits:
I

Market History, Aggregated Basis:

-Metro Market
-Local Market

II

Local market
By Segment and Brand, Past Five
Years, Annual Basis

III

Individual Hotel/Motel Histories For

Local Market: Downtown Fort Worth

IV

Texas Mid- and Large sized Metro Markets

The Case For Downsizing Hotels

VI

Start-up Performance of New Hotels

VII

CAPEX Study of Capital Expenditures

VIII

Impact of Convention Center Renovation

& Theme Park Opening in San Antonio

IX

Preparer Qualifications and Client List

Source Strategies Database Methodology

XI

Hotel Brand Report

EXHIBIT I
LODGING MARKET: FORT WORTH / ARLINGTON METROPOLITAN AREA
#
Hotels
YRQ Motels
--- -----901
119
902
124
903
139
904
126
*TOTAL 1990

#
Rooms
-----14,902
15,128
15,662
15,337

Rnights
sold 1
(000s)
------754.2
825.2
858.9
681.8
3,120.2

$ Rooms
Revenues
(000 s)
---------35,978
40,195
42,227
32,906
151,306

%
OCC2
---56.2
59.9
59.6
48.3
56.0

$
Rate3
----47.70
48.71
49.16
48.26
48.49

$
RPAR4
----26.83
29.20
29.31
23.32
27.17

911
912
913
914
*TOTAL 1991

129
131
130
126

15,371
15,161
15,116
14,972

673.7
777.0
844.5
718.6
3,013.8

33,261
39,554
42,455
35,290
150,560

48.7
56.3
60.7
52.2
54.5

49.37
50.91
50.27
49.11
49.96

24.04
28.67
30.53
25.62
27.22

921
922
923
924
*TOTAL 1992

125
127
126
122

14,843
14,977
14,922
14,592

696.5
822.9
871.3
706.1
3,096.8

35,859
43,549
45,633
35,977
161,018

52.1
60.4
63.5
52.6
57.2

51.49
52.92
52.37
50.95
51.99

26.84
31.95
33.24
26.80
29.74

931
932
933
934
*TOTAL 1993

127
127
130
121

14,748
14,711
15,036
14,577

729.1
874.8
917.7
678.1
3,199.7

38,187
46,113
48,502
37,408
170,210

54.9
65.3
66.3
50.6
59.4

52.38
52.71
52.85
55.16
53.20

28.77
34.45
35.06
27.89
31.58

941
942
943
944
*TOTAL 1994

129
130
130
128

15,039
15,229
15,185
15,177

747.7
873.2
928.2
733.2
3,282.3

41,281
49,665
52,028
42,265
185,239

55.2
63.0
66.4
52.5
59.3

55.21
56.88
56.05
57.64
56.44

30.50
35.84
37.24
30.27
33.48

951
952
953
954
*TOTAL 1995

128
137
144
143

15,104
15,688
16,169
16,093

796.5
925.9
970.2
809.1
3,501.7

46,425
55,924
57,277
49,299
208,925

58.6
64.9
65.2
54.6
60.8

58.28
60.40
59.03
60.93
59.66

34.15
39.17
38.50
33.30
36.30

961
962
963
964
*TOTAL 1996

144
148
150
151

16,234
16,604
16,940
17,150

882.2
947.8
1,013.8
885.1
3,729.0

55,726
59,678
62,733
56,742
234,879

60.4
62.7
65.1
56.1
61.0

63.16
62.97
61.88
64.11
62.99

38.14
39.50
40.25
35.96
38.45

971
972
973
974
*TOTAL 1997

154
163
167
168

17,449
18,150
18,623
19,015

879.1
1,073.3
1,080.2
948.9
3,981.6

58,667
71,549
70,938
64,151
265,305

56.0
65.0
63.1
54.2
59.6

66.73
66.66
65.67
67.61
66.63

37.36
43.32
41.40
36.67
39.69

LODGING MARKET: FORT WORTH / ARLINGTON METROPOLITAN AREA

#
Hotels
YRQ Motels
--- -----981
172
982
180
983
186
984
188
*TOTAL 1998

#
Rooms
-----19,060
19,639
20,442
20,426

Rnights
sold 1
(000s)
------1,000.7
1,150.9
1,213.7
982.2
4,347.6

$ Rooms
Revenues
(000 s)
---------69,758
79,921
80,746
69,425
299,850

%
OCC2
---58.3
64.4
64.5
52.3
59.9

$
Rate3
----69.71
69.44
66.53
70.68
68.97

$
RPAR4
----40.67
44.72
42.93
36.94
41.29

991
992
993
994
*TOTAL 1999

201
204
209
216

21,377
22,077
23,033
23,287

1,096.9
1,132.0
1,334.1
1,118.4
4,681.4

76,306
81,559
87,084
74,014
318,963

57.0
56.3
63.0
52.2
57.1

69.56
72.05
65.28
66.18
68.13

39.66
40.60
41.10
34.55
38.92

001
002
003
004
*TOTAL 2000

221
222
227
228

23,797
24,211
24,974
24,837

1,179.5
1,350.1
1,413.5
1,167.1
5,110.1

81,944
96,864
96,056
80,325
355,189

55.1
61.3
61.5
51.1
57.2

69.48
71.75
67.96
68.83
69.51

38.26
43.97
41.81
35.15
39.79

011
012
013
014
*TOTAL 2001

229
233
237
241

24,928
24,713
24,985
25,030

1,240.6
1,314.6
1,276.6
1,077.2
4,908.9

88,792
92,642
86,415
71,014
338,863

55.3
58.5
55.5
46.8
54.0

71.57
70.47
67.69
65.93
69.03

39.58
41.19
37.59
30.84
37.26

021
240
*TOTAL 2002 YTD

25,014

1,118.2
1,118.2

77,159
77,159

49.7
49.7

69.00
69.00

34.27
34.27

47,091.3

2,917,468

57.6

61.95

35.70

*TOTAL
1.
2.
3.
4.

Roomnights sold (derived from est. rate and actual room revenues)
Occupancy: nights sold divided by nights available for sale(x 100)
Average price for each roomnight sold;from Directories and surveys
$ Revenue per available room per day (room sales per day)

FORT WORTH DOWNTOWN AREA MARKET

INCLUDES ZIP CODES 76102, 76103, AND 76107
#
Hotels
YRQ Motels
--- -----901
14
902
15
903
16
904
15
*TOTAL 1990

#
ROOMS
-----2,648
2,778
2,794
2,778

RNIGHTS
SOLD 1
(000S)
------127.2
116.5
145.0
121.9
510.6

$ ROOMS
REVENUES
(000 S)
---------7,223
6,488
8,047
6,791
28,549

%
OCC2
---53.4
46.1
56.4
47.7
50.9

$
Rate3
----56.76
55.69
55.50
55.71
55.91

$
RPAR4
----30.31
25.66
31.31
26.57
28.44

911
912
913
914
*TOTAL 1991

15
14
14
15

2,782
2,528
2,528
2,542

107.5
119.5
117.2
105.8
450.1

6,059
6,977
6,852
6,224
26,112

42.9
51.9
50.4
45.3
47.5

56.35
58.39
58.46
58.80
58.02

24.20
30.33
29.46
26.61
27.58

921
922
923
924
*TOTAL 1992

14
14
14
14

2,528
2,662
2,662
2,662

104.1
127.0
147.3
120.7
499.2

6,270
7,571
8,530
7,066
29,437

45.8
52.4
60.2
49.3
52.0

60.22
59.60
57.89
58.53
58.97

27.56
31.25
34.83
28.85
30.68

931
932
933
934
*TOTAL 1993

14
14
13
13

2,662
2,662
2,618
2,618

126.0
149.7
149.6
109.7
535.1

7,329
8,753
8,849
6,706
31,638

52.6
61.8
62.1
45.6
55.5

58.17
58.47
59.14
61.12
59.13

30.59
36.14
36.74
27.84
32.84

941
942
943
944
*TOTAL 1994

14
14
14
14

2,962
2,937
2,895
2,895

119.8
147.7
163.8
122.8
554.1

7,106
8,900
9,886
7,929
33,821

44.9
55.3
61.5
46.1
52.0

59.31
60.25
60.36
64.58
61.04

26.66
33.30
37.12
29.77
31.71

951
952
953
954
*TOTAL 1995

14
14
15
15

2,866
2,862
2,915
2,831

121.8
149.3
151.9
134.4
557.5

7,970
9,623
9,659
9,045
36,297

47.2
57.3
56.7
51.6
53.3

65.43
64.43
63.57
67.28
65.10

30.90
36.95
36.02
34.73
34.67

961
962
963
964
*TOTAL 1996

15
16
15
15

2,868
2,958
2,953
2,910

143.2
153.0
162.3
149.7
608.2

9,842
10,537
10,793
10,633
41,804

55.5
56.8
59.7
55.9
57.0

68.71
68.89
66.49
71.05
68.74

38.13
39.14
39.73
39.72
39.19

971
972
973
974
*TOTAL 1997

15
16
16
16

2,913
2,992
2,991
3,032

136.1
168.0
152.8
152.7
609.6

10,234
12,082
10,838
11,413
44,567

51.9
61.7
55.5
54.7
56.0

75.22
71.91
70.91
74.74
73.11

39.04
44.38
39.39
40.92
40.94

FORT WORTH DOWNTOWN AREA MARKET

INCLUDES ZIP CODES 76102, 76103, AND 76107
#
Hotels
YRQ Motels
--- -----981
17
982
17
983
17
984
17
*TOTAL 1998

#
ROOMS
-----3,004
2,998
3,037
2,997

RNIGHTS
SOLD 1
(000S)
------159.9
178.6
186.9
152.5
677.9

$ ROOMS
REVENUES
(000 S)
---------12,511
13,982
13,909
12,316
52,717

%
OCC2
---59.2
65.5
66.9
55.3
61.7

$
Rate3
----78.22
78.29
74.43
80.77
77.77

$
RPAR4
----46.27
51.25
49.78
44.67
48.00

991
992
993
994
*TOTAL 1999

18
18
18
18

3,041
3,185
3,284
3,178

168.5
173.7
184.6
150.1
677.0

13,719
14,858
14,340
11,886
54,803

61.6
59.9
61.1
51.3
58.5

81.41
85.53
77.68
79.17
80.95

50.13
51.26
47.46
40.65
47.32

001
002
003
004
*TOTAL 2000

18
18
18
18

3,201
3,197
3,296
3,196

154.7
172.1
187.7
137.3
651.8

12,770
14,622
15,453
11,649
54,494

53.7
59.2
61.9
46.7
55.4

82.55
84.95
82.33
84.84
83.60

44.33
50.26
50.96
39.62
46.33

011
012
013
014
*TOTAL 2001

19
20
20
21

3,222
3,257
3,356
3,298

165.7
165.1
154.4
145.9
631.1

13,869
13,982
12,640
12,607
53,099

57.1
55.7
50.0
48.1
52.7

83.72
84.70
81.87
86.39
84.14

47.83
47.18
40.94
41.55
44.30

021
21
*TOTAL 2002 YTD

3,305

152.0
152.0

12,977
12,977

51.1
51.1

85.38
85.38

43.63
43.63

7,114.1

500,314

54.4

70.33

38.28

*TOTAL
1.
2.
3.
4.

Roomnights sold (derived from est. rate and actual room revenues)
Occupancy: nights sold divided by nights available for sale(x 100)
Average price for each roomnight sold;from Directories and surveys
$ Revenue per available room per day (room sales per day)

EXHIBIT II

BRAND
CHAINS
RENAISSAN
TOT UPSCALE

PERIOD: TWELVE MONTHS ENDING MAR 31, 2002

FORT WORTH DOWNTOWN MARKET
INCLUDES ZIP CODES 76102, 76103, AND 76107
# *
#* RMS
HTL 000S

%
RMS

EST.
RNS
000S

%
RNS

$
AMT.
000s

1
1

.5
.5

15.3
15.3

121
121

19.7
19.7

RESIDENCE
TOT SUITES

1
1

.1
.1

3.6
3.6

33
33

5.4
5.4

CLARION
COURTYARD
RADIS HTL
TOT MID/UPS

1
2
1
4

.3
.3
.5
1.1

9.0
10.0
15.6
34.7

38
79
112
228

6.1
12.8
18.1
37.0

BEST WEST
COMFO INN
FAIRFIELD
TOT LTD SVE

1
1
1
3

.2
.1
.1
.3

5.1
3.0
2.5
10.5

28
12
21
61

4.5
1.9
3.4
9.9

1,531
521
1,829
3,881

HOMESTEAD
TOT EXT STA

1
1

.1
.1

3.0
3.0

28
28

4.6
4.6

MOTEL 6
RAMAD INN
TOT BUDGET

1
2
3

.1
.6
.7

2.9
18.4
21.3

21
76
97

3.5
12.3
15.8

TOT CHAINS

13

2.9

88.3

570

92.3

2
5
7

.0
.3
.4

1.5
10.2
11.7

7
41
48

1.1
6.6
7.7

1,229
1,409
2,638

617 100.0

52,207

INDEPENDENTS
$100+
LT 60
TOT INDEP
TOT MARKET

20

3.3 100.0

%
AMT

16,145 30.9
16,145 30.9

EST.
%OCC

EST.
$
RATE

$
RPAR

66.0 132.97
66.0 132.97

87.76
87.76

75.5 109.33
75.5 109.33

82.56
82.56

34.7
65.3
59.2
54.6

45.66
99.86
90.05
86.11

15.83
65.23
53.29
47.00

2.9
1.0
3.5
7.4

46.0
32.0
71.9
48.1

54.57
45.07
86.02
63.75

25.12
14.41
61.87
30.64

1,149
1,149

2.2
2.2

79.4
79.4

40.44
40.44

32.12
32.12

858
4,258
5,116

1.6
8.2
9.8

60.8
34.3
37.9

40.27
55.89
52.48

24.48
19.19
19.91

49,569 94.9

53.5

87.02

46.52

2.4
2.7
5.1

39.2 175.51
33.2 34.58
34.0 55.25

68.71
11.49
18.77

100

51.2

43.29

3,616
3,616

6.9
6.9

1,722 3.3
7,885 15.1
10,055 19.3
19,662 37.7

84.57

* All figures annualized. Includes taxed and est non-tax room revenues.
Independents are categorized by price: $100+, $60-99.99, and under $60)

PERIOD: TWELVE MONTHS ENDING MAR 31, 2001

FORT WORTH DOWNTOWN MARKET
INCLUDES ZIP CODES 76102, 76103, AND 76107

BRAND
-----

# *
#* RMS
HTL 000S
--- ----

%
RMS
----

EST.
RNS
000S
------

%
RNS
----

$
AMT.
%
000s
AMT
-------- ----

EST.
$
RATE
-----

$
RPAR
----

17,647 31.7
17,647 31.7

73.0 131.37
73.0 131.37

95.93
95.93

6.5
6.5

78.4 105.18
78.4 105.18

82.48
82.48

2,337 4.2
8,981 16.2
10,817 19.5
22,135 39.8

46.6 46.08
72.8 101.89
64.3 89.13
62.2 85.06

21.49
74.18
57.32
52.89

EST.
%OCC
----

CHAINS
RENAISSAN
TOT UPSCALE

1
1

.5
.5

15.6
15.6

134
134

20.3
20.3

RESIDENCE
TOT SUITES

1
1

.1
.1

3.7
3.7

34
34

5.2
5.2

CLARION
COURTYARD
RADIS HTL
TOT MID/UPS

1
2
1
4

.3
.3
.5
1.1

9.2
10.3
16.0
35.5

51
88
121
260

7.7
13.3
18.3
39.3

COMFO INN
FAIRFIELD
TOT LTD SVE

1
1
2

.1
.1
.2

3.1
2.5
5.6

13
22
35

1.9
3.3
5.2

580
1,832
2,412

1.0
3.3
4.3

35.1
74.7
52.9

45.76
82.96
69.40

16.04
61.98
36.71

HOMESTEAD
TOT EXT STA

1
1

.1
.1

3.0
3.0

26
26

3.9
3.9

1,010
1,010

1.8
1.8

72.7
72.7

38.86
38.86

28.23
28.23

DAYS INN
MOTEL 6
RAMAD INN
TOT BUDGET

1
1
2
4

.1
.1
.6
.8

3.0
3.0
18.8
24.8

13
24
90
127

1.9
3.6
13.6
19.1

481
.9
940 1.7
5,075 9.1
6,496 11.7

36.0
67.3
40.7
43.3

37.37
39.82
56.25
51.27

13.45
26.81
22.87
22.19

TOT CHAINS

13

2.9

88.3

616

93.0

53,313 95.9

59.2

86.50

51.24

1
1
3
5

.0
.2
.2
.4

.3
5.2
6.2
11.7

2
20
24
46

.3
3.1
3.7
7.0

283
1,196
802
2,280

.5
2.2
1.4
4.1

50.8 152.42
33.3 58.83
33.2 33.08
33.7 49.12

77.50
19.61
10.97
16.56

663 100.0

55,593

100

INDEPENDENTS
$100+
$60-99
LT 60
TOT INDEP
TOT MARKET

18

3.2 100.0

3,613
3,613

56.3

83.88

* All figures annualized. Includes taxed and est non-tax rooms revenues.
Independents are categorized by price: $100+, $60-99.99, and under $60)

47.19

PERIOD: TWELVE MONTHS ENDING MAR 31, 2000

FORT WORTH DOWNTOWN MARKET
INCLUDES ZIP CODES 76102, 76103, AND 76107

BRAND
----CHAINS
RESIDENCE
TOT SUITES

# *
#* RMS
HTL 000S
--- ----

%
RMS
----

EST.
RNS
000S
------

%
RNS
----

$
AMT.
%
000s
AMT
-------- ----

EST.
%OCC
----

EST.
$
RATE
-----

$
RPAR
----

6.2
6.2

77.0
77.0

99.39
99.39

76.54
76.54

2,238 4.2
8,347 15.5
1,441 2.7
11,325 21.0
23,352 43.4

47.1
69.5
43.5
68.0
60.7

43.66
99.28
58.58
88.27
81.01

20.58
69.05
25.49
60.02
49.17

1
1

.1
.1

3.7
3.7

34
34

5.1
5.1

CLARION
COURTYARD
HOLID INN
RADIS HTL
TOT MID/UPS

1
2
1
1
5

.3
.3
.2
.5
1.3

9.3
10.3
4.8
16.1
40.5

51
84
25
128
288

7.7
12.7
3.7
19.4
43.5

COMFO INN
FAIRFIELD
TOT LTD SVE

1
1
2

.1
.1
.2

3.1
2.5
5.6

13
22
35

2.0
3.3
5.3

600
1,640
2,240

1.1
3.0
4.2

35.8
74.7
53.3

46.33
74.31
63.97

16.60
55.49
34.10

HOMESTEAD
TOT EXT STA

1
1

.1
.1

3.1
3.1

23
23

3.5
3.5

893
893

1.7
1.7

65.1
65.1

38.37
38.37

24.97
24.97

DAYS INN
MOTEL 6
RAMAD INN
TOT BUDGET

1
1
2
4

.1
.1
.6
.8

3.1
3.0
19.0
25.0

15
24
92
132

2.3
3.6
13.9
19.8

545 1.0
916 1.7
5,163 9.6
6,624 12.3

42.7
68.8
41.4
44.8

35.73
38.01
56.03
50.37

15.24
26.13
23.19
22.57

TOT CHAINS

13

2.5

77.9

512

77.2

36,462 67.7

56.0

71.25

39.91

2
3
5

.5
.2
.7

16.0
6.1
22.1

130
22
151

19.6
3.3
22.8

16,709 31.0
683 1.3
17,391 32.3

69.1 128.86
30.4 31.54
58.5 114.94

89.06
9.59
67.20

INDEPENDENTS
$100+
LT 60
TOT INDEP
TOT MARKET

18

3.2 100.0

663 100.0

3,352
3,352

53,853

100

56.6

81.22

* All figures annualized. Includes taxed and est non-tax rooms revenues.
Independents are categorized by price: $100+, $60-99.99, and under $60)

45.93

PERIOD: TWELVE MONTHS ENDING MAR 31, 1999

FORT WORTH DOWNTOWN MARKET
INCLUDES ZIP CODES 76102, 76103, AND 76107

BRAND
----CHAINS
RESIDENCE
TOT SUITES

# *
#* RMS
HTL 000S
--- ----

%
RMS
----

EST.
RNS
000S
------

%
RNS
----

$
AMT.
%
000s
AMT
-------- ----

79.4 100.62
79.4 100.62

79.95
79.95

53.8
83.3
57.4
71.8
66.4

42.82
99.91
59.41
87.68
76.46

23.05
83.18
34.10
62.92
50.79

.1
.1

4.0
4.0

35
35

5.1
5.1

CLARION
COURTYARD
HOLID INN
RADIS HTL
TOT MID/UPS

1
1
1
1
4

.3
.1
.2
.5
1.1

9.9
4.6
5.0
17.1
36.6

59
42
32
135
268

8.5
6.2
4.6
19.7
39.0

COMFO INN
FAIRFIELD
TOT LTD SVE

1
1
2

.1
.1
.2

3.3
2.7
6.0

15
24
38

2.2
3.4
5.6

682
1,696
2,377

1.3
3.1
4.4

41.1
79.6
58.4

45.92
72.06
61.95

18.86
57.36
36.19

HOMESTEAD
TOT EXT STA

1
1

.1
.1

3.2
3.2

28
28

4.1
4.1

1,147
1,147

2.1
2.1

79.3
79.3

40.44
40.44

32.06
32.06

DAYS INN
MOTEL 6
RAMAD INN
TOT BUDGET

1
1
2
4

.1
.1
.6
.8

3.2
3.2
20.3
26.7

16
24
120
160

2.3
3.5
17.5
23.4

604 1.1
874 1.6
6,848 12.7
8,326 15.4

44.2
69.0
53.9
54.5

38.24
36.13
56.85
51.89

16.90
24.93
30.65
28.30

TOT CHAINS

12

2.3

76.5

530

77.2

35,838 66.5

62.9

67.63

42.52

2
3
5

.5
.2
.7

17.0
6.5
23.5

130
27
157

18.9
3.9
22.8

17,224 31.9
863 1.6
18,088 33.5

69.3 132.48
37.2 32.58
60.5 115.56

91.81
12.13
69.89

TOT MARKET

17

3.0 100.0

686 100.0

6.5
6.5

$
RPAR
----

1
1

INDEPENDENTS
$100+
LT 60
TOT INDEP

3,502
3,502

EST.
$
RATE
-----

EST.
%OCC
----

2,508 4.6
4,226 7.8
1,879 3.5
11,874 22.0
20,487 38.0

53,926

100

62.3

78.56

* All figures annualized. Included taxed and est non-tax rooms revenues.
Independents are categorized by price: $100+, $60-99.99, and under $60)

48.95

PERIOD: TWELVE MONTHS ENDING MAR 31, 1998

FORT WORTH DOWNTOWN MARKET
INCLUDES ZIP CODES 76102, 76103, AND 76107

BRAND
----CHAINS
RESIDENCE
TOT SUITES

# *
#* RMS
HTL 000S
--- ----

%
RMS
----

EST.
RNS
000S
------

%
RNS
----

$
AMT.
%
000s
AMT
-------- ----

EST.
%OCC
----

EST.
$
RATE
-----

$
RPAR
----

7.5
7.5

83.9
83.9

95.16
95.16

79.87
79.87

1,362 2.9
3,885 8.3
1,551 3.3
10,589 22.6
17,387 37.1

33.8
84.9
50.4
69.4
58.9

37.00
96.96
55.83
80.88
73.81

12.52
82.31
28.14
56.11
43.49

1
1

.1
.1

4.0
4.0

37
37

5.8
5.8

CLARION
COURTYARD
HOLID INN
RADIS HTL
TOT MID/UPS

1
1
1
1
4

.3
.1
.2
.5
1.1

9.9
4.3
5.0
17.2
36.5

37
40
28
131
236

5.8
6.3
4.4
20.7
37.2

COMFO INN
FAIRFIELD
TOT LTD SVE

1
1
2

.1
.1
.2

3.3
2.7
6.0

15
23
38

2.4
3.6
6.1

685
1,591
2,276

1.5
3.4
4.9

42.8
77.4
58.4

44.24
69.56
59.34

18.95
53.81
34.64

HOMESTEAD
TOT EXT STA

1
1

.1
.1

3.3
3.3

30
30

4.7
4.7

1,037
1,037

2.2
2.2

84.1
84.1

34.49
34.49

29.00
29.00

DAYS INN
MOTEL 6
RAMAD INN
TOT BUDGET

1
1
2
4

.1
.1
.6
.8

3.3
3.2
20.5
27.0

16
21
112
149

2.5
3.3
17.7
23.5

581 1.2
719 1.5
6,086 13.0
7,387 15.8

43.9
60.5
49.8
50.4

37.05
33.92
54.35
49.61

16.25
20.53
27.07
24.99

TOT CHAINS

12

2.3

76.7

490

77.3

31,585 67.4

58.2

64.51

37.57

1
3
4

.5
.2
.7

16.9
6.5
23.3

118
25
144

18.7
4.0
22.7

14,456 30.9
803 1.7
15,259 32.6

64.0 122.10
35.7 31.56
56.2 106.09

78.20
11.28
59.60

INDEPENDENTS
$100+
LT 60
TOT INDEP
TOT MARKET

16

3.0 100.0

633 100.0

3,498
3,498

46,844

100

57.8

73.95

* All figures annualized. Included taxed and est non-tax rooms revenues.
Independents are categorized by price: $100+, $60-99.99, and under $60)

42.71

EXHIBIT III

CITY
----

FORT WORTH DOWNTOWN AREA MARKET

INCLUDES ZIP CODES 76102, 76103, AND 76107
ADDR
----

#
TAXABLE
YRQ RMS
BRAND
REVENUE
--- ---- ----------FORT WORTH
612 MAIN ST
012
39
151,287
013
39
215,689
014
39
296,684
021
39
295,544

E
3
ZIP
S EST
--T AVG.
GROSS
ADJ 1
DAILY
REVENUE FACTOR 2 RATE
-------- ------ - ----76102 ASHTON HOTEL
156,253 1.033
185.00
224,447 1.041
165.77
299,299 1.009
185.77
298,593 1.010
185.77

YR
4
OP
%
-OCC $ 5
EST REVPAR
--- -----01
24 44.03
38 62.55
45 83.42
46 85.07

991
992
993
994
001
002
003
004
011
012
013
014
021

298
298
298
298
298
298
298
298
298
298
298
298
298

600 COMMERCE ST 76102 CLARION HOTEL FMR

CLARI
603,651
676,089
.000
45.08
CLARI
605,820
678,518
.000
47.56
CLARI
461,964
517,400
.000
40.03
CLARI
461,170
516,510
.000
42.87
CLARI
469,483
525,821
.000
43.73
CLARI
642,583
719,693
.000
47.94
CLARI
586,189
656,532
.000
45.02
CLARI
307,161
344,020
.000
44.31
CLARI
550,668
616,748
.000
46.17
CLARI
511,123
572,458
.000
46.17
CLARI
419,511
469,852
.000
45.85
CLARI
266,981
299,019
.000
44.00
CLARI
373,480
380,561 1.019
46.00

991
992
993
994
001
002
003
004
011
012
013
014
021

41
187
247
185
189
187
247
186
189
187
247
185
189

601 MAIN ST
COURT
231,651
COURT 1,095,289
COURT 1,413,664
COURT
990,634
COURT 1,074,407
COURT 1,051,161
COURT 1,461,372
COURT
871,561
COURT 1,133,093
COURT
837,540
COURT 1,069,026
COURT
850,067
COURT 1,011,012

991
992
993
994
001
002
003
004

10
10
10
10
10
10
10
10

200 W 3RD ST
69,035
71,259
62,427
76,691
63,282
70,268
65,057
65,711

AVG
ADJ 1
-----

.000

CHISM/DA 80
56 25.21
53 25.02
47 18.87
44 18.84
45 19.61
55 26.54
53 23.95
28 12.55
50 23.00
46 21.11
37 17.14
25 10.91
31 14.19

1.120

76102 COURTYARD BLACKSTONE 203 R 99

238,403 1.029
94.55
68 64.61
1,116,027 1.019
102.29
64 65.58
1,492,014 1.055 1 99.20
66 65.66
1,050,072
.000
101.18
61 61.70
1,141,510 1.062
103.20
65 67.11
1,268,549 1.207
100.75
74 74.55
1,619,628 1.108
98.73
72 71.27
1,047,501 1.202
103.75
59 61.21
1,261,311 1.113
107.76
69 74.15
1,061,770 1.268
98.76
63 62.39
1,133,168
.000
96.18
52 49.87
901,071
.000
95.18
56 52.94
1,071,673
.000
97.18
65 63.00

1.060

76102 ETTA'S PLACE

71,796
.000
143.06
74,109
.000
150.93
64,924
.000
141.95
79,759
.000
144.79
65,813
.000
147.69
73,079
.000
151.53
67,659
.000
148.50
66,591 1.013
152.96

56
54
50
60
49
53
49
47

79.77
81.44
70.57
86.69
73.13
80.31
73.54
72.38

98

1.040

#
TAXABLE
YRQ RMS
BRAND
REVENUE
--- ---- ----------FORT WORTH
200 W 3RD ST
011
10
72,648
012
10
69,493
013
10
57,298
014
10
56,169
021
10
57,756

E
3
ZIP
S EST
--T AVG.
GROSS
ADJ 1
DAILY
REVENUE FACTOR 2 RATE
-------- ------ - ----76102 ETTA'S PLACE
75,554
.000
155.87
72,273
.000
155.87
59,590
.000
158.21
58,416
.000
158.21
60,066
.000
158.21

306 W 7TH ST
19,735
15,935
13,010
13,655
10,843

76102 FORT WORTH CLUB

63,298 3.207
50.95
52,053 3.267
50.95
58,237 4.476
51.71
80,331 5.883
55.71
61,946 5.713
55.71

CITY
----

YR
4
OP
%
-OCC $ 5
EST REVPAR
--- -----98
54 83.95
51 79.42
41 64.77
40 63.50
42 66.74

AVG
ADJ 1
-----

01

.000

1010 HOUSTON ST 76102 PARK CENTRAL HOTEL (CONV C 85

109,424
133,199 1.217
38.85
38 14.80
97,750
116,014 1.187
39.03
33 12.75
106,523
120,479 1.131
36.71
36 13.10
61,353
63,434 1.034
37.44
18
6.89
72,320
84,835 1.173
38.19
25
9.43
71,541
94,670 1.323
39.18
27 10.40
140,078
149,093 1.064
38.40
42 16.21
44,025
51,611 1.172
39.55
14
5.61
107,719
123,183 1.144
37.48
37 13.69
95,003
121,546 1.279
37.48
36 13.36
78,696
124,823 1.586
38.04
36 13.57
45,809
52,846 1.154
38.04
15
5.74
54,633
64,012 1.172
38.04
19
7.11

1.150

ADDR
----

011
012
013
014
021

21
21
21
21
21

991
992
993
994
001
002
003
004
011
012
013
014
021

100
100
100
100
100
100
100
100
100
100
100
100
100

991
992
993
994
001
002
003
004
011
012
013
014
021

517
517
517
517
517
517
517
517
517
517
517
517
517

815 MAIN ST
RADIS 2,412,524
RADIS 2,740,019
RADIS 1,805,353
RADIS 2,263,994
RADIS 2,009,827
RADIS 2,300,000
RADIS 2,025,500
RADIS 1,527,855
RADIS 1,884,896
RADIS 1,439,430
RADIS 1,925,792
RADIS 1,966,181
RADIS 1,760,267

76102 RADISSON PLAZA FMR HYATT

80
3,029,499 1.256
87.84
74 65.11
3,203,483 1.273
92.67
73 68.09
2,582,953 1.431
80.72
67 54.30
2,692,330 1.189
89.30
63 56.60
2,846,706 1.416
90.09
68 61.18
2,800,000 1.217 1 92.44
64 59.51
2,774,169 1.370
84.17
69 58.32
2,333,343 1.527
87.70
56 49.06
2,909,739 1.544
92.35
68 62.53
2,709,723 1.882
90.77
63 57.60
2,502,205 1.299
89.16
59 52.61
2,386,583 1.214
88.18
57 50.18
2,456,708 1.396
92.09
57 52.80

1.150

991
992
993

430
430
430

1701
RAMAD
RAMAD
RAMAD

S 76102 RAMADA HOTEL FMR HILTON 02 74

1,220,831 1.380
58.38
54 31.55
1,220,788 1.548
61.59
51 31.20
1,115,924 1.435
53.22
53 28.21

1.158

COMMERCE
728,944
788,637
777,449

66
53
58
75
59

33.49
27.24
30.14
41.58
32.78

1.040

E
3
ZIP
S EST
--T AVG.
#
TAXABLE
GROSS
ADJ 1
DAILY
YRQ RMS
BRAND
REVENUE
REVENUE FACTOR 2 RATE
--- ---- ------------------ ------ - ----FORT WORTH
1701 COMMERCE S 76102 RAMADA HOTEL FMR
994 430 RAMAD
593,495
813,432 1.371
54.28
001 430 RAMAD
617,665
750,484 1.215
55.37
002 430 RAMAD
690,858 1,078,988 1.562
61.94
003 430 RAMAD
668,992 1,009,070 1.508
52.92
004 430 RAMAD
397,719
570,027 1.433
54.51
011 430 RAMAD
917,085 1,007,440 1.099
56.56
012 430 RAMAD
569,777
779,429 1.368
56.56
013 430 RAMAD
559,193
698,876 1.250
57.41
014 430 RAMAD
377,727
569,639 1.508
53.41
021 430 RAMAD
750,000
825,000 1.100 1 58.41
CITY
----

YR
4
OP
%
-OCC $ 5
EST REVPAR
--- -----HILTON 02 74
38 20.56
35 19.39
45 27.57
48 25.51
26 14.41
46 26.03
35 19.92
31 17.67
27 14.40
36 21.32

AVG
ADJ 1
-----

76102 RENAISSANCE WORTHINGTON H

81
4,580,076
.000
136.94
74 100.97
4,579,674
.000
134.36
74 99.85
4,384,094
.000
126.37
75 94.55
3,419,773 1.050
125.22
59 73.75
4,040,389 1.065
127.72
70 89.07
4,579,784 1.050
131.04
76 99.86
5,005,510 1.059
131.24
82 107.95
3,938,516 1.064
130.39
65 84.94
4,122,790
.000
132.86
68 90.89
4,434,728
.000
132.86
73 96.69
3,134,228 1.032
128.25
53 67.59
4,454,030 1.009
135.69
71 96.06
4,121,756 1.036
133.92
68 90.87

1.015

76103 BEST WESTERN 01/01 INN SUI 73

421,308 1.238
57.25
54 31.00
382,650 1.051
63.56
44 27.85
422,490 1.138
55.07
55 30.41
331,738 1.082
58.21
41 23.88
304,493 1.103
58.35
35 20.26
334,737
.000
63.97
34 22.03
297,666 1.011
60.73
32 19.37
199,006 1.048
54.59
24 12.95
364,138 1.152
55.63
44 24.23
444,067 1.203
55.63
53 29.22
475,888 1.127
56.46
55 30.97
283,727 1.097
52.46
35 18.47
327,809 1.109
52.46
42 21.81

1.100

ADDR
----

991
992
993
994
001
002
003
004
011
012
013
014
021

504
504
504
504
504
504
504
504
504
504
504
504
504

991
992
993
994
001
002
003
004
011
012
013
014
021

151
151
151
151
167
167
167
167
167
167
167
167
167

991
992
993
994
001

60
60
60
60
60

200 MAIN ST
4,512,390
4,511,994
4,319,304
RENAS 3,256,027
RENAS 3,795,233
RENAS 4,362,976
RENAS 4,726,737
RENAS 3,700,297
RENAS 4,061,862
RENAS 4,369,190
RENAS 3,037,422
RENAS 4,414,290
RENAS 3,978,027
2000
HOLID
HOLID
HOLID
HOLID

BWEST
BWEST
BWEST
BWEST
BWEST

BEACH ST
340,348
363,983
371,241
306,676
276,156
304,306
294,570
189,810
316,052
368,993
422,424
258,718
295,642

3434 E LANCASTE
47,610
51,781
53,024
47,978
50,731

76103 CENTURY MOTEL

49,522 1.040
27.46
53,133 1.026
28.97
54,378 1.026
27.24
49,331 1.028
27.78
52,084 1.027
28.34

33
34
36
32
34

9.17
9.73
9.85
8.94
9.65

72

1.158

1.229

CITY
----

ADDR
----

YR
4
OP
%
-OCC $ 5
EST REVPAR
--- -----72
36 10.61
37 10.26
34
9.61
32
9.33
34
9.97
32
8.69
32
8.39
32
8.36

AVG
ADJ 1
-----

76103 COMFORT INN 021 50459/6312 73

154,107 1.160
45.76
38 17.30
151,465 1.027
48.28
35 16.81
177,340 1.105
45.41
43 19.47
118,076 1.076
44.28
29 12.96
152,932 1.076
47.21
36 17.16
172,489 1.154
48.44
40 19.15
154,222 1.032
45.08
38 16.93
105,288 1.390
43.43
27 11.56
147,677 1.120
45.27
37 16.57
143,338 1.534
47.57
33 15.91
122,630 1.279
46.25
29 13.46
104,639 1.180
43.25
27 11.49
150,000 1.111 1 43.25
39 16.84

.000

ZIP
--#
TAXABLE
GROSS
ADJ 1
YRQ RMS
BRAND
REVENUE
REVENUE FACTOR
--- ---- ------------------ -----FORT WORTH
3434 E LANCASTE 76103 CENTURY
002
60
56,553
57,905 1.024
003
60
55,290
56,643 1.024
004
60
51,669
53,053 1.027
011
60
48,940
50,389 1.030
012
60
52,973
54,422 1.027
013
60
46,487
47,973 1.032
014
60
44,775
46,298 1.034
021
60
43,708
45,157 1.033
991
992
993
994
001
002
003
004
011
012
013
014
021

99
99
99
99
99
99
99
99
99
99
99
99
99

014
021

44
44

991
992
993
994
001
002
003
004
011
012
013
014
021

96
96
96
96
96
96
96
96
96
96
96
96
96

991
992
993

35
35
35

2425
COMFO
COMFO
COMFO
COMFO
COMFO
COMFO
COMFO
COMFO
COMFO
COMFO
COMFO
COMFO
COMFO

SCOTT AVE
132,872
147,477
160,448
109,701
142,137
149,513
149,377
75,738
131,798
93,459
95,907
88,700
135,000

1815 E LANCASTE
12,000
12,500
1236
MTL 6
MTL 6
MTL 6
MTL 6
MTL 6
MTL 6
MTL 6
MTL 6
MTL 6
MTL 6
MTL 6
MTL 6
MTL 6

E
S
T

3
EST
AVG.
DAILY
2 RATE
- ----MOTEL
29.08
27.52
28.35
28.89
28.89
27.41
26.41
26.41

76103 GREAT WESTERN INN

28,000 2.333
24.06
29
30,000
.000
24.06
31

OAKLAND BL 76103 MOTEL 6 #1341

214,516
214,731
.000
36.00
239,124
239,363
.000
39.46
230,607
230,838
.000
37.12
215,824
217,856 1.009
36.84
224,418
227,529 1.014
38.60
260,764
264,030 1.013
40.63
244,146
252,041 1.032
39.82
197,233
205,912 1.044
38.95
211,974
217,592 1.027
39.69
215,595
222,530 1.032
40.69
220,405
224,461 1.018
41.30
205,277
205,482
.000
39.50
203,515
205,313 1.009
39.50

2009 EAST LANCA

10,645
10,869
12,240

6.92
7.58

69
69
70
67
68
74
72
60
63
63
62
59
60

24.85
27.40
26.14
24.67
26.33
30.22
28.54
23.31
25.18
25.47
25.41
23.27
23.76

76103 VALLEY VIEW MOTEL

21,290
.000
21.56
31
21,738
.000
22.75
30
24,480
.000
21.39
36

6.76
6.83
7.60

1.229

87

2.400

79

1.001

69

2.000

E
3
YR
ZIP
S EST
4
OP
--T AVG.
%
-#
TAXABLE
GROSS
ADJ 1
DAILY OCC $ 5
YRQ RMS
BRAND
REVENUE
REVENUE FACTOR 2 RATE EST REVPAR
--- ---- ------------------ ------ - ----- --- -----FORT WORTH
2009 EAST LANCA 76103 VALLEY VIEW MOTEL
69
994
35
10,652
21,304
.000
21.82
30
6.62
001
35
10,648
21,296
.000
22.26
30
6.76
002
35
10,000
20,000
.000 1 22.84
27
6.28
003
35
15,131
30,262
.000
22.38
42
9.40
004
35
11,955
23,910
.000
23.05
32
7.43
011
35
13,911
27,822
.000
23.49
38
8.83
012
35
14,751
29,502
.000
23.49
39
9.26
013
35
17,703
35,406
.000
23.84
46 11.00
014
35
15,988
31,976
.000
23.84
42
9.93
021
35
15,916
31,832
.000
23.84
42 10.11
CITY
----

ADDR
----

991
992
993
994
001
002
003
004
011
012
013
014
021

121
119
158
118
121
119
158
119
121
119
158
118
121

991
992
993
994
001
002
003
004
011
012
013
014
021

98
98
98
98
98
98
98
98
98
98
98
98
98

991
992
993
994
001

81
81
81
81
81

3150 RIVERFRONT 76107 COURTYARD BY MARRIOTT

COURT
881,434
913,365 1.036
108.64
77
COURT
904,813
929,049 1.027
110.61
78
COURT 1,106,191 1,140,477 1.031 1 95.03
83
COURT
670,171
687,508 1.026
89.79
71
COURT
768,039
790,226 1.029
91.59
79
COURT
941,371
968,815 1.029
102.92
87
COURT 1,141,576 1,165,150 1.021
97.92
82
COURT
776,348
789,260 1.017
100.86
71
COURT
832,295
860,947 1.034
104.81
75
COURT
926,565
940,228 1.015
108.81
80
COURT 1,145,364 1,157,464 1.011
100.29
79
COURT
749,017
790,397 1.055
100.29
73
COURT
805,537
829,563 1.030
105.29
72

AVG
ADJ 1
-----

2.000

130
90
83.87
85.79
78.46
63.33
72.56
89.46
80.16
72.09
79.06
86.83
79.63
72.81
76.18

1.030

76107 DAYS INN FMR CLAYTON HOUSE 62

123,416 1.109
37.40
37 13.99
132,983 1.015
36.92
40 14.91
162,384 1.047
34.72
52 18.01
121,418 1.057
35.41
38 13.47
128,390 1.165
36.12
40 14.56
136,799 1.095
38.09
40 15.34
125,918 1.031
37.33
37 13.97
112,526
.000
36.60
34 12.48
105,705 1.120
37.30
32 11.98
91,445 1.012
36.30
28 10.25
95,364 1.010
35.83
30 10.58
110,472
.000
35.53
34 12.25
115,137 1.120
35.53
37 13.05

1.243

DAYS

S UNIVERSI
111,257
131,291
155,037
114,834
110,201
124,965
122,119
90,528
94,382
90,367
94,388
88,875
102,812

1505
FAIRF
FAIRF
FAIRF
FAIRF
FAIRF

S UNIVERSI
389,556
398,772
387,863
381,293
398,701

76107 FAIRFIELD INN S UNIVERSITY 97

425,417 1.092
72.07
81 58.36
428,449 1.074
75.09
77 58.13
405,934 1.047
70.63
77 54.47
388,003 1.018
75.10
69 52.07
418,094 1.049
76.60
75 57.35

1.040

1551
DAYS
DAYS
DAYS
DAYS
DAYS
DAYS

E
ZIP
S
--T
#
TAXABLE
GROSS
ADJ 1
YRQ RMS
BRAND
REVENUE
REVENUE FACTOR 2
--- ---- ------------------ ------ FORT WORTH
1505 S UNIVERSI 76107 FAIRFIELD
002
81 FAIRF
447,347
475,749 1.063
003
81 FAIRF
477,833
489,227 1.024
004
81 FAIRF
393,788
400,920 1.018
011
81 FAIRF
431,961
466,534 1.080
012
81 FAIRF
469,633
488,560 1.040
013
81 FAIRF
443,849
461,511 1.040
014
81 FAIRF
423,124
445,402 1.053
021
81 FAIRF
395,101
433,753 1.098
CITY
----

ADDR
----

1660
HOMES
HOMES
HOMES
HOMES
HOMES
HOMES
HOMES
HOMES
HOMES
HOMES
HOMES
HOMES
HOMES

RIVER RUN
137,542
138,160
165,536
146,470
119,516
200,051
189,819
185,735
167,818
212,809
233,510
162,242
160,000

3
EST
4
AVG.
%
DAILY OCC $ 5
RATE EST REVPAR
----- --- -----INN S UNIVERSITY
81.67
79 64.54
81.02
81 65.65
83.45
64 53.80
86.05
74 64.00
86.05
77 66.28
87.34
71 61.93
87.34
68 59.77
83.34
71 59.50

76107 HOMESTEAD VILLAGE

253,622 1.844
40.17
263,616 1.908
42.38
236,280 1.427
37.04
218,960 1.495
37.78
174,154 1.457
35.70
262,812 1.314
40.73
256,610 1.352
39.92
248,668
.000
37.00
241,762 1.441
37.83
294,688 1.385
40.00
311,319 1.333
42.63
277,770 1.712
39.50
265,000 1.656 1 39.50

021
72
70
71
64
55
72
71
75
72
83
81
78
76

YR
OP
--

AVG
ADJ 1
-----

97

1.040

9244 96
28.76
29.56
26.21
24.29
19.75
29.47
28.46
27.58
27.41
33.04
34.53
30.81
30.05

2.100

991
992
993
994
001
002
003
004
011
012
013
014
021

98
98
98
98
98
98
98
98
98
98
98
98
98

991
992
993
994
001
002
003
004
011
012
013
014
021

182
182
182
178
178
178
178
178
178
178
178
178
178

401 S UNIVERSTY
RAMAD
291,162
RAMAD
340,454
RAMAD
321,349
RAMAD
299,187
RAMAD
220,222
RAMAD
344,659
RAMAD
396,050
RAMAD
304,251
RAMAD
277,600
RAMAD
338,093
RAMAD
341,529
RAMAD
341,272
RAMAD
274,413

76107 RAMADA INN FMR HOLIDAY

66
349,067 1.199
53.40
40 21.31
368,500 1.082
58.45
38 22.25
347,289 1.081
54.97
38 20.74
302,866 1.012
53.11
35 18.49
244,068 1.108
54.17
28 15.24
361,851 1.050
56.60
39 22.34
415,095 1.048
55.47
46 25.35
321,289
.000
54.04
36 19.62
311,705 1.123
55.07
35 19.46
353,989 1.047
55.07
40 21.85
361,757 1.059
54.88
40 22.09
346,230 1.015
53.88
39 21.14
323,102 1.177
53.88
37 20.17

1.056

991
992
993
994
001
002
003

120
120
120
120
120
120
120

1701
RESID
RESID
RESID
RESID
RESID
RESID
RESID

76107 RESIDENCE INN S UNIVERSITY 83

843,739 1.239
101.97
77 78.12
897,998 1.146
107.58
76 82.23
859,976 1.255
93.60
83 77.90
793,565 1.265
96.49
74 71.88
800,930 1.422
100.46
74 74.16
952,300 1.233
104.29
84 87.21
928,712 1.379
104.16
81 84.12

1.300

S UNIVERSI
681,142
783,582
685,489
627,156
563,150
772,628
673,577

E
3
ZIP
S EST
4
--T AVG.
%
#
TAXABLE
GROSS
ADJ 1
DAILY OCC $ 5
YRQ RMS
BRAND
REVENUE
REVENUE FACTOR 2 RATE EST REVPAR
--- ---- ------------------ ------ - ----- --- -----FORT WORTH
1701 S UNIVERSI 76107 RESIDENCE INN S UNIVERSITY
004 120 RESID
655,009
837,238 1.278
107.28
71 75.84
011 120 RESID
703,899
894,520 1.271
105.24
79 82.83
012 120 RESID
730,902
959,483 1.313
105.24
83 87.86
013 120 RESID
634,496
940,874 1.483
111.89
76 85.22
014 120 RESID
642,635
835,816 1.301
111.89
68 75.71
021 120 RESID
576,962
879,772 1.525
108.89
75 81.46
CITY
----

ADDR
----

YR
OP
--

AVG
ADJ 1
-----

83

1.300

FOOTNOTES:
--------1. Factor used to adjust taxable to gross revenues. Area factor used
if property data not available. Taxable equals 89% of gross Statewide.
2. A number or a 'Y' indicates quarter's revenues were estimated.
3. Estimated Average Daily Rate (e.g. 60-85% of 'rack single');
4. Occupancy derived from calculated roomnights sold (gross room revenues divided by Average Daily Rate), divided by roomnights available.
5. Total REVenues Per Available Room per day, or 'REVPAR';
Prepared from State Comptroller, chain directories and private records.
Includes all quarterly reports exceeding $14,000 (otherwise omitted).

EXHIBIT IV
PERIOD: TWELVE MONTHS ENDING MARCH 31, 2002
LODGING MARKET: EL PASO, GALVESTON, CORPUS CHRISTI, FORT WORTH, WACO, TYLER,
SAN ANTONIO, AUSTIN, DALLAS, AND HOUSTON
# *
EST.
$
EST.
#* RMS
%
RNS
%
AMT.
%
EST.
$
$
BRAND
HTL 000S
RMS 000S
RNS 000s
AMT %OCC
RATE
RPAR
------- ---- ---- ------ ---- -------- ---- ---- -------CHAINS
FOURSEAS
3 1.1
.5
253
.5
57,197 1.6 65.7 226.46 148.82
WESTIN
7 3.3
1.5
691
1.5
103,800 2.9 58.2 150.17
87.38
TOT LUXURY
10 4.3
1.9
944
2.0
160,996 4.5 60.0 170.59 102.40
ADMS MARK
DOUBLTREE
HILTON
HYATT
INT-C
MARRIOTT
OMNI
RENAISSAN
WYNDHAM
TOT UPSCALE

3 2.9
7 2.7
17 5.0
7 4.9
2
.7
18 7.1
10 3.7
6 2.5
10 3.7
80 33.1

1.3
1.2
2.2
2.2
.3
3.2
1.6
1.1
1.7
14.7

550
594
1,148
1,072
139
1,709
769
516
763
7,260

1.2
1.3
2.5
2.3
.3
3.6
1.6
1.1
1.6
15.5

53,148 1.5
68,995 1.9
117,705 3.3
151,999 4.3
17,260
.5
225,155 6.3
86,736 2.4
62,948 1.8
90,414 2.5
874,359 24.6

52.8
61.3
63.1
60.4
53.2
65.8
57.6
57.0
56.0
60.2

96.62
116.24
102.55
141.82
123.87
131.75
112.74
121.94
118.47
120.43

50.98
71.30
64.69
85.72
65.86
86.72
64.98
69.51
66.30
72.47

DOUBL STE
EMBASSY
HAWTHORN
HOMEWOOD
OTH SUITE
RADIS STE
RESIDENCE
STAYB
TOT SUITES

2
.5
15 3.4
12 1.2
18 1.9
29 4.5
2
.3
30 3.4
6
.7
113 15.9

.2
1.5
.5
.8
2.0
.1
1.5
.3
7.1

137
802
231
451
832
73
863
157
3,546

.3
1.7
.5
1.0
1.8
.2
1.8
.3
7.6

19,139
.5
98,139 2.8
18,713
.5
45,953 1.3
71,417 2.0
6,530
.2
87,312 2.5
13,987
.4
361,189 10.2

71.6
64.0
52.6
66.5
50.3
62.0
70.5
65.8
61.2

139.84
122.42
81.10
101.81
85.80
89.33
101.21
88.81
101.85

100.07
78.30
42.67
67.70
43.14
55.39
71.32
58.46
62.29

4 POINTS
CLARI
COURTYARD
CROWNPLZA
HILT GARD
HOLID INN
OTHER MUP
RADIS HTL
RED LION
SHERATON
TOT MID/UPS

2
.5
7 1.1
37 5.2
6 1.9
4
.5
51 11.9
3 1.1
12 3.6
1
.3
8 2.4
131 28.6

.2
.5
2.3
.9
.2
5.3
.5
1.6
.1
1.1
12.7

98
204
1,256
419
113
2,528
181
710
57
516
6,081

.2
.4
2.7
.9
.2
5.4
.4
1.5
.1
1.1
13.0

7,974
.2
11,493
.3
113,502 3.2
34,817 1.0
10,138
.3
193,612 5.4
15,000
.4
59,648 1.7
4,301
.1
46,032 1.3
496,517 14.0

52.7
50.5
66.5
60.2
59.6
58.3
45.1
53.6
51.7
58.2
58.3

81.00
56.37
90.40
83.10
89.72
76.60
83.01
84.03
75.96
89.15
81.65

42.67
28.44
60.08
49.99
53.46
44.63
37.43
45.08
39.28
51.87
47.63

2.7
1.0
1.7
2.2
1.0
.3
.5
.6

1.2
.4
.8
1.0
.4
.1
.2
.2

610
230
392
481
193
69
94
119

1.3
.5
.8
1.0
.4
.1
.2
.3

48,200
15,770
24,010
33,304
13,936
4,369
6,323
9,076

1.4
.4
.7
.9
.4
.1
.2
.3

61.7
64.8
62.6
60.8
55.5
56.7
49.4
58.9

79.00
68.54
61.27
69.19
72.28
63.23
67.24
75.96

48.75
44.45
38.33
42.08
40.09
35.84
33.25
44.72

8
.9
108 10.8

.4
4.8

192
2,381

.4
5.1

13,238
168,225

.4
4.7

60.0
60.4

68.89
70.66

41.35
42.65

AMERI STS
BRADFORD
CANDLWOOD
COMFO STE
HAWTH LTD
MAINSTAY
QUAL STES
SPRNGHILL
TOWNPLACE
TOT MIN STE

21
7
14
33
10
4
6
5

BRAND
AMERIHOST
BEST WEST
CNTRY INN
COMFO INN
CTRY HRTH
DOUBL CLB
DRURY INN
FAIRFIELD
HAMPTON
HOLID EXP
LA QUINTA
SHONEYS
SLEEP INN
WINGATE
TOT LTD SVE

# *
#* RMS
HTL 000S
3
.2
73 5.4
12
.8
49 3.6
1
.0
5 1.0
14 2.1
26 2.5
50 5.3
48 3.6
71 9.2
8
.8
8
.7
11 1.1
379 36.3

%
RMS
.1
2.4
.3
1.6
.0
.4
.9
1.1
2.4
1.6
4.1
.3
.3
.5
16.2

EST.
RNS
000S
44
1,113
150
743
12
218
476
555
1,273
833
2,002
160
137
222
7,938

%
RNS
.1
2.4
.3
1.6
.0
.5
1.0
1.2
2.7
1.8
4.3
.3
.3
.5
16.9

BUDG STES
CROSSLAND
EXT AMERI
HOMEGATE
HOMESTEAD
STUDIO +
SUBUR LDG
SUNST
WELLESLEY
X.EXT
TOT EXT STA

10 3.6
8 1.1
12 1.4
5
.6
11 1.5
16 1.4
15 2.0
8 1.1
11 1.3
42 5.6
138 19.6

1.6
.5
.6
.3
.7
.6
.9
.5
.6
2.5
8.7

787
289
372
88
387
331
501
281
276
1,386
4,699

1.7
.6
.8
.2
.8
.7
1.1
.6
.6
3.0
10.0

23,615
8,996
16,745
3,603
16,345
16,319
15,405
9,162
15,624
44,850
170,664

BAYMONT
DAYS INN
ECONOLODG
HO JO
MICROTEL
MOTEL 6
OTHER BUD
QUALITY
RAMAD INN
RAMAD LTD
RED ROOF
SUPER 8
TOT BUDGET

10 1.1
74 5.9
21 1.2
22 1.9
17
.9
62 6.9
41 3.5
14 1.3
23 3.9
27 1.9
22 2.9
65 4.2
399 35.7

.5
2.6
.5
.8
.4
3.1
1.6
.6
1.7
.8
1.3
1.9
15.9

234
1,067
229
323
174
1,585
641
243
541
335
618
850
6,840

.5
2.3
.5
.7
.4
3.4
1.4
.5
1.2
.7
1.3
1.8
14.6

11,640
48,771
9,772
15,840
7,909
65,010
25,963
13,125
29,121
16,092
29,308
40,034
312,585

TOT CHAINS 1,360184.2

82.1

39,689

TOT INDEP

17.9

7,157

779 40.2

TOT MARKET 2,138224.4 100.0

$
AMT.
%
000s
AMT
2,781
.1
63,019 1.8
9,207
.3
42,681 1.2
657
.0
16,026
.5
35,245 1.0
36,460 1.0
92,520 2.6
59,119 1.7
130,181 3.7
7,931
.2
7,244
.2
13,832
.4
516,903 14.5

EST.
%OCC
66.4
56.0
53.1
56.2
66.3
62.3
63.4
61.5
65.5
62.7
59.5
56.7
51.5
56.5
59.9

EST.
$
RATE
63.03
56.63
61.39
57.46
56.58
73.50
74.01
65.65
72.65
70.99
65.04
49.63
52.70
62.35
65.12

$
RPAR
41.87
31.70
32.60
32.29
37.49
45.78
46.94
40.36
47.58
44.53
38.68
28.15
27.15
35.24
38.99

.7
.3
.5
.1
.5
.5
.4
.3
.4
1.3
4.8

59.3
70.7
75.0
40.5
71.2
65.4
68.9
70.9
56.3
68.0
65.7

29.99
31.13
45.04
40.86
42.21
49.36
30.73
32.65
56.56
32.35
36.32

17.79
22.02
33.79
16.53
30.05
32.31
21.18
23.16
31.85
21.98
23.86

.3
1.4
.3
.4
.2
1.8
.7
.4
.8
.5
.8
1.1
8.8

59.1
49.6
51.4
46.6
50.5
62.7
50.1
50.7
38.0
48.3
58.5
55.4
52.5

49.73
45.70
42.75
48.98
45.41
41.02
40.50
53.96
53.87
48.05
47.41
47.10
45.70

29.38
22.67
21.97
22.84
22.93
25.72
20.28
27.34
20.47
23.22
27.75
26.12
24.00

84.7 3,061,438 86.1

59.0

77.14

45.53

15.3

48.8

68.82

33.59

57.2

75.87

43.39

492,565 13.9

46,846 100.0 3,554,003

100

* ALL FIGURES ANNUALIZED. INCLUDES TAXED AND EST NON-TAX ROOM REVENUES.
INDEPENDENTS ARE CATEGORIZED L=LARGE ($100+ AVERAGE DAILY RATE), M=MEDIUM ($6099 ADR), AND S=SMALL (UNDER $60 ADR).

EXHIBIT V
A STUDY OF THE EFFECT OF HOTEL SIZE ON PERFORMANCE
IN THE TEXAS HOTEL INDUSTRY
THE CASE FOR DOWNSIZING NEW HOTELS
11/30/99
By Douglas W. Sutton and Bruce H. Walker
Source Strategies has long contended that the number of rooms a developer offers
in a new property is one of the key factors in determining a venture's relative
success or failure. It is every bit as important to size a hotel project
properly as it is to select the appropriate brand, and to develop in a suitable
market and location. We have previously conducted extensive studies of the
lodging market that support our hotel sizing contention, and we have taken this
opportunity to re-examine the issue using our extensive database of hotel and
motel performance for the State of Texas.
Before delving into the numbers that define the role of room count in a hotel's
performance, we should first highlight the basic industry theory of 'rightsizing' a property. The premise offered by many inexperienced developers is "If
I can make a profit constructing a 50 unit hotel in a given market, it would be
twice as profitable to develop 100 units." In virtually all cases nothing could
be farther from the truth. At some point adding rooms to a project reaches a
point of diminishing returns, and the investment in the additional units cannot
be economically justified.
To illustrate this point, mentally divide our hypothetical 100 unit project into
two 50 unit hotels. The initial 50 units may perform very well, with
occupancies over 70% and a very strong rate structure. However, the second 50
units are only utilized when there is overflow from the first hotel because its
rooms are 100% occupied. Effectively, the second 50 units may only attain an
occupancy of 30% or less. This low level of occupancy may prompt the general
manager to lower rates to bolster occupancy, but this is a losing battle.
Ultimately, overbuilding causes REVPAR erosion in the property, and in the
market as a whole.
Today's developers and lenders would not seriously consider involvement in a 50
unit project operating at this low level, but often times they accomplish the
same end by pushing for more units in a project than the market can effectively
support. If we now mentally put these two 50 unit properties back together (one
operating at 70%, the other at 30% occupancy), what we end up with is an
oversized 100 unit hotel that is running a mediocre 50% occupancy.
Over-sizing a hotel makes it difficult, if not impossible, to be competitive in
a marketplace. There are a finite number of roomnights sold to be divided among
existing hotels in the market, and developing a more conservatively sized
property helps insure that a profitable level of those roomnights can be
captured. Building a hotel is not the 'Field of Dreams'.... If you build it they won't come.... With the exception of destination resorts and some unique
convention hotels, people do not go someplace because there is a hotel. Rather,
they stay in a hotel because they want to be near someplace.
Builders who construct too many units usually put themselves in unenviable
financial situations. Many hotels which we see put up for sale were developed

with far too many units. The owners, having had difficulty getting a return on
their investment, are often trying to get out from under a bad investment.
There are even drastic cases of properties bulldozing entire wings to provide
additional parking, because those extra units are a financial burden, remaining
unsold the vast majority of the time.
Now that we've outlined the basic economic benefits of 'building small', let's
look into hotel performance numbers and see if they support this development
principle. We analyzed two separate hotel samplings: First we will look at
Comfort Inns across Texas as a selected brand sampling. Then we will look at
all branded hotels built during a given period of time for a more diverse
sampling.

COMFORT INN - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE

In our initial analysis, we selected a sampling of Texas Comfort Inn branded
properties ranging in size from 36 to 75 units; they are all 'Limited Service'
hotels. We excluded those properties located in exclusive, higher priced
markets, since they would naturally support larger room counts while maintaining
strong performance levels and would distort the findings. The resulting sample
included 55 Comfort Inn hotels located across Texas.
The following chart of performance statistics from the latest year on file (12
months ending June 30, 1999) clearly illustrates the consistent curve, showing
marked declines in performance as room count increases. This decline was
exhibited in all three measures shown, Occupancy, Average Daily Rate, and
REVPAR:

Year Ending 6/30/99 Results

# of
Units
36-40
41-45
46-50
51-55
56-60
61-65
66-70
71-75
Combined:
52

Occupancy
66.9
65.3
66.5
62.8
61.8
56.6
44.6
43.8
63.2

Average
Daily
Rate
55.25
57.34
57.38
56.02
54.26
55.33
45.71
44.20
55.46

REVPAR
36.95
37.45
38.17
35.20
33.55
31.33
20.41
19.38
35.03

Looking only at occupancy, the following graph gives a clear depiction of the
notable negative impact of larger room counts on a hotel's ability to maintain
an acceptable level of roomnights sold. Properties with lower room counts were
clearly able to sustain a higher level of occupancy. Average occupancy ranged
from 66.9% for properties of 36-40 units, downward to a much lower 43.8% average
occupancy for properties in the 71-75 unit size bracket.
When looking at REVPAR, the following graph follows a very similar performance
curve, ranging from an average REVPAR of $36.95 for properties of 36-40 units,
downward to a mediocre $19.38 average REVPAR for properties in the 71-75 unit
size bracket. Note that the downward slide in both graphs did not begin until
room counts exceeded 50 units. Prior to that, a mild upward trend is
experienced. This appears to indicate that, on average, 50 units is the
'optimum' size for a Comfort Inn in Texas markets (excluding high priced areas).
Of course, this is an average number for this type of market. Each project must
be examined on an individual basis to determine the proper size to develop
within its given market.
The above chart and graphs clearly illustrates that Developers often missed the
mark, building more rooms than 'optimum.' 'Optimum' is defined as generating
the highest return on invested capital, and is closely tied to occupancy and
REVPAR generation.
Analyzing the above data provides a measure of the effect of over building. For
the typical range of rooms for Comfort Inn projects (40-75 rooms) outside of
higher priced areas, the occupancy dropped 23.1 points (a full 35%) from 66.9%
to 43.8% as room counts escalated. With a 35 unit increase in rooms from the
36-40 unit size bracket to the 71-75 unit size bracket, a resulting 35% drop in
occupancy is experienced.
The key question, is how to apply this principle to a given hotel project.
Naturally, each project would have to be judged on its individual merits, but
looking at an 'average' project for a single brand and product is very
revealing. All are Comfort Inns. All are very similar products in similar
market environments, leaving size as the major variable in performance.
In our sampling, the average project is 52 units in size. At this size, the
average occupancy is 62.8%. If we built 36% fewer rooms (38 units) our average
occupancy would rise a moderate 6.5% to 66.9%. Conversely, if we built 36% more
than average, (71 units) our average occupancy plummets by 42.5% to 43.8%.

Clearly there are some basic economic principles at work. Comfort Inns are
conservatively-sized. Building smaller than the average of 52 units yields
slightly higher occupancies, but the ability to charge ever higher rates as size
decreases is marginal. As rates rise, some consumers perceive lost value and
will stay at another property. On the other side of the coin, properties built
larger than the average 52 units suffer serious occupancy declines. At some
point the need for additional units that was envisioned by the optimistic
developer is simply not there, and the extra rooms only serve to depress the
overall performance of the property.
BRANDED HOTELS - ANALYSIS OF SIZING AND ITS IMPACT ON PERFORMANCE
In our second analysis, we selected a sampling of all Texas branded hotels
constructed from 1970-1975; 91 properties across Texas, predominantly 'Full
Service'. Our sampling was limited to hotels of less than 135 units. We once
again excluded those properties located in exclusive, higher priced markets.
For our analysis we examined performance results from the year 1985 when all
subject hotels were 10 to 15 years old, well into their aging life cycles.
The following chart of performance statistics from 1985 for branded properties
throughout Texas clearly illustrates the downward curve, with definite erosion
in performance measures as room count increases:

1985 Performance Results

# of
Hotels
2
3
7
14
29
16
20
Combined: 91

# of
Units Occupancy
00-44
70.0
45-59
73.9
60-74
66.8
75-89
62.7
90-104
60.9
105-119
57.8
120-134
55.5
98
59.8

Average
Daily
Rate
37.88
36.13
31.10
31.65
32.42
26.25
29.35
30.34

REVPAR
26.50
26.71
20.77
19.86
19.75
15.18
16.28
18.14

With occupancy declines being the strongest indicator of the negative impact of
building too large, the following graph provides a clear picture of the
descending performance slide as room counts increase. Once again, properties
with lower room counts were more insulated from market competition and were
therefore able to be more competitive in both favorable and depressed market
environments. Average occupancy ranged from 70% for properties of 44 units or
less, downward to a much lower 55.5% average occupancy for properties in the
120-134 unit size bracket, after peaking at 73.9% in the 45-59 size range.
As with the Comfort Inn analysis, the above data provides a measure of the
effect of over building. However, since a number of varying brands are
considered in this sample, the typical range in size of these projects ranges
from about 40 to 135. This is a wider range than the Comfort sampling, since
many of the brands in this sample typically have larger room counts than a
Comfort Inn. This is partially due to some brands' ability to support higher

room counts, and partially due to the tendency to overbuild in the early 1970s,
when all hotels in this sample were constructed.
While the 52 unit average for our Comfort Inn sample is reasonably close to
optimum sizing for that brand, the 98 unit average for this analysis appears to
be oversized. In our assessment, the optimum average number of rooms for this
sampling would have been 60 to 70 units, depending upon brand. In 1985, this
roomcount supported occupancies near 70%, with an average REVPAR of almost $27.
Compare this to the average capacity of 98 units attaining a much lower average
occupancy of 60.9% and REVPAR below $20. Clearly this lower level of
performance can be attributed to over-sizing projects in the early 1970s.
Looking at our average (oversized) roomcount of 98 units, increasing the size by
30% (135 units) would cause occupancy to slide 10% from 60.9% to 55.5%. On the
other hand, making the average project smaller (60 units, or 75% smaller) would
improve occupancy to 73.9%, or a healthy 21% increase.
For the sake of comparison, let us assume that the average property was more
appropriately sized at about 60 units. If the project size were increased to
135 units, the largest range in our sample, occupancy would suffer a significant
33% decline from optimum levels.
Of course this assumes that locational differences are not significant. We
believe this is true; the large sample and clear correlation between size and
performance support this conclusion.
SUMMARY
The data is clear. In most cases, small hotels outperform large hotels, with
the exception of higher-priced markets where competitive barriers to entry exist
(e.g. lack of land, excessive land cost, building restrictions, etc.).
Common sense explains this occurrence: a successful 100 room hotel will
inevitably prompt the development of one or more new, small hotels of similar
quality in the immediate area. In a competitive market environment, the smaller
hotel has a distinct advantage and wins - almost every time.

EXHIBIT VI
START-UP PERFORMANCE OF NEW HOTELS AND MOTELS
A new study by Source Strategies, Inc., utilizing all new chain hotels opened in
Texas between 1990 and 1994, shows that new hotels and motels provide their peak
performance in Years III through V, when they typically reach 112% of their 20year average REVPAR performance level.
In other words, the newness of a property is an advantage on the order of a 12%
premium in Years III through V - versus the average REVPAR that would otherwise
be expected for that property over a twenty-year period. That's because the
consumer almost always picks new over old because, to them, 'new' means 'clean'
and 'new' means 'value.' Perhaps this is not news to many, but it is highly
important to those who forecast the performance of new properties.
Here's what the graph looks like for the first twelve years for new properties
opened in the moderately-good and improving markets of the 1990's. The years
after peak are projected based on two major previous studies: one by La Quinta
in the early 1980's and the second last year by Source Strategies, Inc.
Year I at 92% of the 20 Year Average, Year II at 107%
The study found that a property could expect a REVPAR at Year I of 92% of the
twenty-year average for a project. In Year II, this would move to 107% and to
112% in Years' III through V.
For example, if over the twenty-year span of the project, we expect a
hypothetical new hotel to generate 105% of the market average REVPAR, this means
that in Year I it would generate 97% of market (105% times 92%), and in Year II
112% (105% times Year II's 107%), and then peak at 118% for Years III-V.
Study Method
The underlying design for this study was to determine what effect a property's
age had on its REVPAR during the first five years of operation.
From two other studies, we know that properties will decline at 1.67% per year,
versus the market average, over long periods of time. The second study sample
consisted of all new Texas development in the early 1980's, a time of major
under-supply. Consequently, the first few years performance of this group of
hotels and motels was probably be overstated - versus the current, more-normal
times. The current study confirmed that belief.
The current study's design was to develop the REVPAR index for every new chain
property (each new property's REVPAR, divided by the REVPAR of all nearby hotels
and motels). Then all the resulting indices were averaged.
This process was done for each year of development, 1990, 1991, 1992, 1993 and
1994, in order to obtain data for "Year I," "Year II" and so on. These were
averaged as well to obtain an over-all, average Year I result.
This process produced the graph curve shown above, and is reflective of the
particular mix of chain properties, a mix which produced REVPAR slightly above
the market average. To eliminate the effect of a specific mix of chains, the
scale was moved down slightly, so that the application of the year-by-year
REVPAR indices to any project would result in averaging 100 of the first twenty
years of the project.

REVPAR OF ALL NEW CHAIN HOTELS OPENED 1990-1994

INCLUDES THEIR LOCAL MARKET AVERAGES (SAME ZIP-CODES)
Opened 1990
9 Chain hotels
Local Market Average
Index New Chain/Market

Year I
41.97
35.38
119

Opened 1991
8 Chain hotels
Local Market Average
Index New Chain/Market

Year I
32.06
29.96
107

Year II Year III

49.45
54.76
37.40
39.72
132
138
(Peak)
Year II Year III
37.95
41.49
31.26
32.36
121
128

Year IV
54.17
39.71
136

Year V
59.45
43.31
137

Year VI
66.16
48.87
135

Year IV
44.18
33.04
134

Year V
46.26
33.70
137
(Peak)

Year VI

Year IV
41.74

Year V

Year VI

Above assumes Year VI index decline of 1.67%

Opened 1992
7 Chain hotels

Year I
25.07

Local Market Average

Index New Chain/Market

30.60
82

Opened 1993
16 Chain hotels
Local Market Average
Index New Chain/Market

Year I
24.51
30.70
80

Year II Year III

36.53
39.76

est
135

33.62
109

34.36
37.49
est
116
111
111
(Peak)
Above assumes Year V is "flat" and Year VI index declines by 1.67%
Year II Year III
29.15
33.19
31.88
35.27
91
94
(Peak)

est
109

Year IV

Year V

Year VI

est
94
(Peak)

est
93

est
91

Above assumes Year III and IV are Peak, and Year V and Year VI index
declines by 1.67% annually

Opened 1994
29 Chain hotels
Local Market Average
Index New Chain/Market

Year I
30.40
38.68
79

Year II Year III

35.97
41.29
est
87
90

Year IV

Year V

Year VI

est
89

est
87

est
86

Above assumes Year III and Year IV Peak equals Year II plus 4%, as above,
and Year V and Year VI index declines by 1.67% annually

COMBINED INDICES
Year I
Average of Raw Data
93
Adjusted 100 over 20 years
92

Peak
Year II Year III
108
113
107
112

Year IV
113
112

Year V
113
112

Year VI
111
110

After Year V, Declines Average 1.67% Per Annum

In the sixth year and thereafter, the twenty-year average REVPAR index is
diminished at a rate of 1.67% per annum in order to reflect aging and the normal
life-cycle of a hotel.
This pattern of declining performance with property aging is based on major
studies of economic life-cycle patterns, studies which were conducted on a
census of all 25,000 Texas rooms built between 1980 and 1982 (study published in
September 1994 issues of MarketShare and the October 1994 issue of Hotel & Motel
Management). These Source Strategies studies confirm a similar, major study
conducted in 1982 at the Holiday corporation on 160 company-owned and companyoperated hotels.

EXHIBIT VII
CapEx: A STUDY OF CAPITAL EXPENDITURES IN THE US HOTEL INDUSTRY
THE FOLLOWING IS A SUMMARY OF THE INTERNATIONAL SOCIETY OF HOSPITALITY
CONSULTANTS' 2000 "CAPEX STUDY, A STUDY OF CAPITAL EXPENDITURES IN THE US HOTEL
INDUSTRY" AS IT APPLIES TO LIMITED SERVICE PROPERTIES:
The objective of our historical analysis in CapEx 2000 was to determine what has
been spent in the past to maintain a hotel in good, competitive condition.
Hotel owners and management companies were contacted to provide data for the
study.
Definition of CapEx
"Capital Expenditure" is defined as: investments of cash or the creation of
liability to acquire or improve an asset, e.g., land, buildings, building
additions, site improvements, machinery, equipment; Comparatively, the "reserve
for replacement" for a hotel asset has been narrowly defined as the funds set
aside for the periodic replacement of furniture, fixtures and equipment (FF&E).
The reserve was not contemplated to fund the replacement of major building
components, such as roofs, elevators, and chillers.
For this study the term has been defined as: the cost of replacing worn out
FF&E, as well as the cost of;
- updating design and decor
- curing functional and economic obsolescence...
- complying with franchisors' brand requirements
- technology improvements
- product change to meet market demands
- adhering to government regulatory requirements
- replacing all short and long lived building components due to wear and tear
Although many equity investors frequently argue against the necessity of a
reserve, particularly if the investor does not plan to hold the property for
greater than five years, the requirement for and amount of reserves are
typically contractual issues between ownership, lender, manager, and/or
franchisor/franchisee.
Significant Findings of CapEx 2000
The average amount spent per year by limited-service hotels in the survey was
determined to be 5.5% of total revenue for the time period covered by CapEx 2000
(1988-1998). As these limited-service hotels have matured, CapEx has increased,
underscoring one of our principal findings that CapEx requirements increase as a
hotel ages.
CapEx Spending is highly dependent upon a hotel's point in its life cycle. The
following chart shows the range of CapEx spending (as a percentage of total
revenues) over a 25-year time period; the table following the chart identifies
the specific ranges of CapEx spending as a%age of total revenues by year.

Percentage Range of
CapEx Spending by Year
Year
Range Minimum
Range Maximum
1
1.65%
4.51%
2
1.72%
3.29%
3
1.48%
3.15%
4
1.31%
3.64%
5
3.21%
6.23%
6
4.80%
6.77%
7
4.15%
5.85%
8
3.60%
5.23%
9
4.83%
7.01%
10
8.43%
11.94%
11
4.66%
6.55%
12
5.42%
9.36%
13
4.66%
9.93%
14
4.66%
7.82%
15
3.35%
5.72%
16
5.12%
12.40%
17
5.10%
10.50%
18
2.51%
9.72%
19
2.93%
8.10%
20
2.37%
8.68%
21
2.37%
6.99%
22
3.20%
6.84%
23
5.07%
16.98%
24
3.45%
12.88%
25
5.05%
10.24%
As the data indicates, CapEx spending increases over time for all (U.S.) hotels,
with large differences in both the level of CapEx spending and timing across
different hotels. The data illustrates that, over time, the minimum and maximum
levels of CapEx spending generally widens as a hotel increases in age.
For limited-service hotels, the first major increase in spending occurs in the
sixth year, which likely represents the replacement of soft goods. The first
major spike occurs in year 10, which is likely to be the result of a rooms and
corridors renovation. Smaller spikes in CapEx spending occur in the following
years, with the next major spending spike occurring in year 17, which is likely
building and some mechanical renovation and replacement.
The following series of tables illustrates limited-service CapEx spending levels
in various demographic categories:
CapEx 2000- Limited Service Hotels by Location
Location
All Properties
Airport
Urban
Small City/Hwy
Suburban

Average
Age
12.0 yrs
9.8 yrs
15.2 yrs
9.2 yrs
10.5 yrs

Capex/Total
Revenue
5.5%
5.4%
4.3%
5.1%
5.7%

CapEx per
Room per Year
$1,111
$1,268
$ 820
$ 773
$1,172

CapEx 2000- Limited Service Hotels by Average Daily Rate

Average

Average

Capex/Total

CapEx per

Daily Rate
All Properties
< $60
$60-$80
> $80

12.0
12.7
12.5
12.0

Age
yrs
yrs
yrs
yrs

Revenue
5.5%
5.0%
6.3%
5.3%

Room per Year

$1,111
$ 687
$1,134
$1,570

CapEx 2000- Limited Service Hotels by Property Size

Property Size
All Properties
< 100 rooms
100-150 rooms
> 150 rooms

Average
Age
12.0 yrs
8.7 yrs
10.3 yrs
20.0 yrs

Capex/Total
Revenue
5.5%
3.3%
5.4%
6.9%

CapEx per
Room per Year
$1,111
$ 475
$1,107
$1,360

CapEx 2000- Limited Service Hotels by Age of Property

Average
Daily Rate
All Properties
> 15 yrs old
5-15 yrs old
< 5 yrs old

Capex/Total
Revenue
5.5%
6.5%
4.8%
3.0%

CapEx per
Room per Year
$1,111
$1,372
$ 897
$ 547

Overall, the study details the varying levels of capital required to keep a
hotel competitive in its life cycle. Historically, many operators have held no
more than 3-4% of gross revenues in reserve, a level which may be sufficient for
FF&E replacement, but is woefully inadequate for other required expenditures.

EXHIBIT VIII
HISTORICAL EXAMINATION OF SAN ANTONIO
CENTRAL BUSINESS DISTRICT: IMPACT OF CONVENTION CENTER
RENOVATION & THEME PARK OPENINGS
This section has been prepared to illustrate the fact that convention
renovations/expansions do not necessarily have any impact on Room Nights Sold
(RNS). For this case study we looked at the San Antonio Central Business
District and the impact that historical events, such as theme park openings, as
well as convention center renovations/expansion, have had on RNS.
Approaching the question of impact on a historical timeline, we found that both
theme parks opened following a decline in annual RNS contribution from
conventions in San Antonio. Seaworld opened in the 2nd quarter of 1988
following an 8% decline in RNS from conventions in 1987, and a 4% decline in RNS
contribution in 1986. While the CBD market saw a total decline in RNS of 11% in
1986, it saw a 7% increase in RNS in 1987. Following the opening of Seaworld,
both convention RNS (+28%) and CBD RNS (+21%) saw significant increases. Part
of these increases were driven by the openings of significant demand generators,
while part of the increases were natural continuations of a growing hotel market
which was recovering ground lost in previous years.
In 1991, preceeding the opening of Fiesta Texas, convention RNS declined 4%
versus the year before, while CBD RNS increased 2%. Following the opening of
Fiesta Texas in the first quarter of 1992, CBD RNS rose 7% while convention RNS
rose 3%.
Summary: It is our opinion that the opening of theme parks as economic
generators for RNS, both for tourism and conventions, is significant. This is
particularly true when examined in terms of the synergy that attractions like
the San Antonio Riverwalk, the Alamo, and large theme parks have in attracting
visitors.
The expansion of the San Antonio Convention Center began with much fanfare on
the 2nd quarter of 1998, following two years of declines in convention RNS (-2%
per year). While the expansion was underway, RNS from conventions rose 10% in
1998 and fell 10% in 1999. The expansion was completed in the 4th quarter of
1999, after which the renovation of the existing convention center space was
begun. The renovation of the convention center finished in the 2nd quarter of
2001.
TABLE I

ACTUAL
ANNUAL ACTUAL ANN. ACTUAL ANNUAL
CONVENT. CONVENT. %GAIN
CBD
%GAIN METRO
%GAIN
YEAR
ATTEND.
RNS
/LOSS
RNS /LOSS RNS
/LOSS
1980
270.4
432.7
867.9
2,648.4
81
320.3
512.5
18%
961.4
11% 3,034.3
15%
82
332.0
531.1
4%
997.4
4% 3,018.8
-1%
83
372.1
595.4
12% 1,070.8
7% 2,952.0
-2%
84
384.3
614.8
3% 1,169.9
9% 3,216.9
9%
85
374.8
599.7
-2% 1,247.2
7% 3,689.4
15%
86
361.5
578.4
-4% 1,108.5
-11% 3,348.7
-9%
87
333.8
534.1
-8% 1,182.7
7% 3,504.7
5%
SEAWORLD 88
387.9
685.3
28% 1,435.1
21% 4,292.1
22%
89
443.9
728.6
6% 1,644.6
15% 4,566.3
6%
1990
521.3
797.1
9% 1,740.5
6% 4,684.9
3%
91
536.7
764.8
-4% 1,780.4
2% 4,831.0
3%
FIESTA TX 92
513.2
786.6
3% 1,904.8
7% 5,095.0
5%

93
94
95
96
97
Begin Exp 98
Exp/Renov 99
2000
Finis Ren 01

576.7
489.0
512.1
575.7
572.0
607.9
552.2
515.5
524.7

976.7
947.8
982.1
959.5
944.8
1,038.5
939.0
921.5
903.0

24%
-3%
4%
-2%
-2%
10%
-10%
-2%
-2%

1,963.8
1,922.2
1,937.1
2,061.1
2,107.8
2,263.4
2,305.4
2,487.0
2,380.4

3%
-2%
1%
6%
2%
7%
2%
8%
-4%

5,296.9
5,364.8
5,386.3
5,674.5
5,816.2
6,238.1
6,326.6
6,712.7
6,696.5

4%
1%
0%
5%
2%
7%
1%
6%
0%

The data above indicates that while the CBD tends to trend with the metro area
in annual gains and losses of RNS, the convention center follows its own path,
as convention center business is in our opinion driven by advertising and
promotion through the San Antonio Convention and Visitors Bureau. Growth in RNS
coincides across all three market areas when a major economic generator like a
theme park opens, not when a convention center is expanded.
While convention center RNS has grown steadily since 1985, it has not kept pace
with the CBD's growth in RNS. Since 1980, convention RNS have averaged 44.3% of
total CBD RNS. However, this percentage has been declining steadily since the
beginning of the history studied, as follows:
TABLE II

YEARS
80-84
85-89
90-94
95-99
2000
2001

% OF
CBD
RNS
52.9
47.5
45.8
45.7
37.1
37.9

Even after the expansion of the convention center it is clear that convention
RNS are not able to keep pace with the wider RNS growth in the San Antonio CBD
market.
It is our opinion that conventions and RNS through conventions are dependent on
outside economic factors. In other words, the economy of a nation or of a metro
area with significant attractions will influence the number of RNS generated
through conventions. Convention Centers do not in themselves cause Room Nights
Sold to be generated. Rather, convention planners choose destinations based on
the attractions that exist in an area, not simply the availability of facilities
in that area. Furthermore, the construction of a 1,000 room hotel in San
Antonio (the Marriott Rivercenter) did not significantly effect either CBD
REVPAR nor RNS because it opened at a time when demand for hotel rooms was very
high. Rather than creating demand for its rooms, it filled demand that was
created by the opening of Seaworld and natural market growth.
1) SEAWORLD OPENS 2) FIESTA TEXAS OPENS 3) CC EXPANSION BEGINS
FINISHES & RENOV. BEGINS 5) RENOVATION FINISHES

4)

CC EXP.

TABLE III
RNS PROJECTIONS WITH FORECAST FOR CONVENTION RNS
ACTUAL
ACTUAL
ACTUAL
CONVENT. CONVENT. %GAIN
CBD
%GAIN METRO
YEAR
ATTEND.
RNS
/LOSS
RNS /LOSS RNS
02
574
952
5%
2,389
0%
7,136
03
363
993
4%
2,465
3%
7,340
04
405
1,004
1%
2,564
4%
7,561
05
399
1,031
3%
2,654
4%
7,787
06
385
1,073
4%
2,737
3%
8,021
07
357
1,113
4%
2,819
3%
8,261
08
775
1,144
3%
2,903
3%
8,509
09
798
1,173
3%
2,990
3%
8,765
2010
822
1,208
3%
3,080
3%
9,027

%GAIN
/LOSS
7%
3%
3%
3%
3%
3%
3%
3%
3%

We have also graphed the projections of RNS growth for conventions, CBD, and
Metro.
Looking at the history and the projection of just the estimated convention RNS,
it is clear that expectations for growth in this market are stable and realistic
in comparison with the past. However, previous graphs illustrate that as a
percentage of total CBD RNS, convention roomnights are shrinking. This is
essentially because of increased competition with other convention destinations,
and the ease of expanding the San Antonio CBD hotel room supply. More and more
it is the leisure traveler who is taking advantage of lodging and facilities
that were originally developed to be used by convention delegates.
CONCLUSIONS
It is obvious from Table I that RNS from conventions are not clearly tied to
growth in the CBD market, and vice versa. Typically, for the opening of a theme
park there is a large increase in RNS which is independent of barriers between
different markets in the San Antonio Metro.
However, in light of the lack of RNS increases following the renovation of the
convention center or following the completed expansion of the convention center,
it must be noted that there is no proven increase in roomnights sold based on
convention center expansion. While the convention business throughout the U.S.
is suffering significantly after the fall of the World Trade Centers and the
continuing economic woes the country is enduring, it may also have simple
reached its peak in San Antonio. In other words, were a convention
'headquarters' hotel be built alongside the expanded center, it would likely not
significantly increase the number of convention RNS expected to be generated by
the C&VB in the future.

Hilton Hotel

Compound

Growth
Year
2
3
4
8
9
10 Yr 2-10
Rmnites Sold
141,295
145,812
147,720
147,936
145,745
142,963
1.4%
Rmnites Avai
219,000
219,000
219,000
219,000
219,000
219,000
0.0%
Occupancy %
64.5%
66.6%
67.5%
67.6%
66.6%
65.3%
1.4%
Avg Rate*
$110.19
$113.73
$117.37
$133.13
$137.12
$141.24
3.2%
REVPAR
$71.09
$75.72
$79.17
$89.93
$91.25
$92.20
4.6%

149,652

149,078

148,506

219,000

219,000

219,000

68.3%

68.1%

67.8%

$121.13

$125.00

$129.00

$82.77

$85.09

$87.48

Room Revenue15,569,175 16,583,698 17,338,256 18,127,147 18,635,434 19,157,975

19,695,167 19,984,839 20,191,497
4.6%
Food
5,916,287 6,301,805 6,588,537 6,888,316 7,081,465 7,280,031
7,484,163 7,594,239 7,672,769
4.6%
Beverage
1,556,918 1,658,370 1,733,826 1,812,715 1,863,543 1,915,798
1,969,517 1,998,484 2,019,150
4.6%
Telephone
669,475
713,099
745,545
779,467
801,324
823,793
846,892
859,348
868,234
4.6%
Other
1,556,918 1,658,370 1,733,826 1,812,715 1,863,543 1,915,798
1,969,517 1,998,484 2,019,150
4.6%
Total Sales 25,268,771 26,915,342 28,139,989 29,420,360 30,245,309 31,093,393
31,965,256 32,435,394 32,770,800
4.6%
Room Dept Expense
Administrati
670,559
690,676
711,396
800,683
824,703
849,444
3.0%
Head Houseke
138,412
142,565
146,841
165,271
170,229
175,336
3.0%
Housekeeping
727,669
773,460
807,088
909,713
923,127
932,671
4.5%
Laundry
252,180
268,049
279,704
315,269
319,918
323,226
4.5%
Maintenance
504,361
536,099
559,407
630,538
639,836
646,451
4.5%
Front Desk
962,240 1,022,791 1,067,260
1,202,967 1,220,705 1,233,326
4.5%
Vacation/Hol
113,940
120,177
125,009
140,855
143,448
145,616
4.1%
Taxes/Benefi
471,710
497,534
517,539
583,142
593,875
602,850
4.1%
Total Payrol 3,841,071 4,051,351 4,214,245
4,748,439 4,835,842 4,908,921
4.1%
Other Room E 1,513,552 1,608,796 1,678,743
1,892,203 1,920,104 1,939,957
4.5%
Total Room E 5,354,623 5,660,147 5,892,988
6,640,642 6,755,946 6,848,877
4.2%
F & B Exp -P 2,989,282 3,184,070
3,781,472 3,837,089 3,876,767

3,328,945
4.6%

732,738

754,720

777,362

151,247

155,784

160,458

842,173

864,111

886,620

291,863

299,465

307,266

583,725

598,931

614,532

1,113,655

1,142,665

1,172,429

130,039

133,549

137,153

538,362

552,892

567,815

4,383,801

4,502,117

4,623,634

1,751,720

1,797,352

1,844,169

6,135,522

6,299,469

6,467,803

3,480,412

3,578,003

3,678,331

Other
2,466,157 2,626,858
3,119,714 3,165,598 3,198,333
Total F & B 5,455,439 5,810,928
6,901,187 7,002,688 7,075,101

2,746,380
4.6%
6,075,325
4.6%

2,871,340

2,951,853

3,034,623

6,351,752

6,529,856

6,712,954

Oth Expense
445,278
474,294
495,874
563,282
571,566
577,477
4.6%

518,436

532,973

547,918

Departmental Profits
Rooms
10,214,552 10,923,551 11,445,268 11,991,625 12,335,965 12,690,172
13,054,525 13,228,893 13,342,620
4.9%
F & B
2,017,765 2,149,247 2,247,038 2,349,278 2,415,152 2,482,874
2,552,494 2,590,035 2,616,818
4.6%
Other
1,781,114 1,897,175 1,983,496 2,073,746 2,131,894 2,191,672
2,253,127 2,286,266 2,309,907
4.6%
Total
14,013,430 14,969,973 15,675,802 16,414,649 16,883,011 17,364,718
17,860,146 18,105,194 18,269,345
4.8%

Hilton Hotel

Compound

Growth
Year
2
3
4
8
9
10 Yr 2-10
Rmnites Sold
141,295
145,812
147,720
147,936
145,745
142,963
1.4%
Rmnites Avai
219,000
219,000
219,000
219,000
219,000
219,000
0.0%
Occupancy %
64.5%
66.6%
67.5%
67.6%
66.6%
65.3%
1.4%
Avg Rate*
$110.19
$113.73
$117.37
$133.13
$137.12
$141.24
3.2%
REVPAR
$71.09
$75.72
$79.17
$89.93
$91.25
$92.20
4.6%

149,652

149,078

148,506

219,000

219,000

219,000

68.3%

68.1%

67.8%

$121.13

$125.00

$129.00

$82.77

$85.09

$87.48

Room Revenue15,569,175 16,583,698 17,338,256 18,127,147 18,635,434 19,157,975

19,695,167 19,984,839 20,191,497
4.6%
Food
5,916,287 6,301,805 6,588,537 6,888,316 7,081,465 7,280,031
7,484,163 7,594,239 7,672,769
4.6%
Beverage
1,556,918 1,658,370 1,733,826 1,812,715 1,863,543 1,915,798
1,969,517 1,998,484 2,019,150
4.6%
Telephone
669,475
713,099
745,545
779,467
801,324
823,793
846,892
859,348
868,234
4.6%
Other
1,556,918 1,658,370 1,733,826 1,812,715 1,863,543 1,915,798
1,969,517 1,998,484 2,019,150
4.6%
Total Sales 25,268,771 26,915,342 28,139,989 29,420,360 30,245,309 31,093,393
31,965,256 32,435,394 32,770,800
4.6%
Departmental Profits
Rooms
10,214,552 10,923,551 11,445,268 11,991,625 12,335,965 12,690,172
13,054,525 13,228,893 13,342,620
4.9%
F & B
2,017,765 2,149,247 2,247,038 2,349,278 2,415,152 2,482,874
2,552,494 2,590,035 2,616,818
4.6%
Other
1,781,114 1,897,175 1,983,496 2,073,746 2,131,894 2,191,672
2,253,127 2,286,266 2,309,907
4.6%
Total
14,013,430 14,969,973 15,675,802 16,414,649 16,883,011 17,364,718
17,860,146 18,105,194 18,269,345
4.8%
-Undistributed Op Expense
Admin & Gene 1,572,500 1,619,675 1,668,266
1,877,648 1,933,977 1,991,996
3.0%
Marketing
1,895,158 2,018,651 2,110,499
2,397,394 2,432,655 2,457,810
4.6%
Franchise Fe
778,459
829,185
866,913
984,758
999,242 1,009,575
4.6%
Energy
1,033,939 1,099,002 1,146,785
1,292,604 1,311,663 1,325,225
4.5%
Property Ops 1,134,811 1,206,222 1,258,666
1,418,711 1,439,630 1,454,515
4.5%
Tot Admin & 6,414,867 6,772,735 7,051,128
7,971,115 8,117,167 8,239,121
4.2%
Gross Op Pro 7,598,563 8,197,238
9,889,031 9,988,026 10,030,224

8,624,674
5.4%

1,718,314

1,769,863

1,822,959

2,206,527

2,268,398

2,332,005

906,357

931,772

957,899

1,196,637

1,227,808

1,259,790

1,313,382

1,347,595

1,382,697

7,341,216

7,545,436

7,755,349

9,073,433

9,337,575

9,609,369

Management
787,807
Income Bef
9,101,224
Fixed

Fee 622,767
663,348
693,530
799,394
807,660
4.6%
6,975,796 7,533,890 7,931,144
9,188,633 9,222,564
5.4%
Charges

-Fixed: Insu
202,150
215,323
225,120
255,722
259,483
262,166
4.6%
Property Tax
758,063
807,460
844,200
958,958
973,062
983,124
4.6%
Deprec SL 39 3,333,334 3,333,334 3,333,334
3,333,334 3,333,334 3,333,334
0.0%
Tot Fixed Ex 4,293,547 4,356,117 4,402,653
4,548,014 4,565,879 4,578,624
1.1%
Net Income B 2,682,249 3,177,773 3,528,490
4,553,211 4,622,754 4,643,940
12.8%
Tax & Financing

725,086

745,417

766,319

8,348,347

8,592,158

8,843,050

235,363

241,962

248,747

882,611

907,359

932,802

3,333,334

3,333,334

3,333,334

4,451,308

4,482,656

4,514,883

3,897,039

4,109,502

4,328,167

Depreciation 3,333,334 3,333,334 3,333,334 3,333,334 3,333,334 3,333,334

3,333,334 3,333,334 3,333,334
0.0%
Replacement
(454,838) (484,476)
(590,940)(1,235,655)(1,512,265)(2,083,257)(2,589,186)(1,946,124)(1,802,394)
27.9%
Cash Before
Fin & Tax 5,560,745 6,026,630 6,270,884 5,994,718 5,930,571 5,578,244
5,297,359 6,009,964 6,174,879
3.0%

Assumes 30 year note at 5%, on $120,000,000, with $11,500,000 down in up-front

cash.
All $ amounts in thousands.
The local hotel market is made up of three zipcodes in the downtown Fort Worth
area: 76102, 76103, and 76107.
The REVPAR index quantifies by how much the hotel will trail or exceed the
market's dollar REVPAR average.
Study detailed in size factor derivation in analysis section.
600 rooms x 365 days x 65% occupancy = 142,350 room nights.
Projections which, in our opinion, are overly optimistic.
Approaching 200,000 room nights sold per year.
-40,000 room nights per year.
Possible slogan: "Come to Fort Worth, we charge less because we have to."
On the order of 2,580 room nights generated per quarter for the first year of
operation.
The local market includes zipcodes 76102, 76103 and 76107.
The average REVPAR of central Houston, Dallas, Austin, San Antonio, and Corpus
Christi is $72.46.
Market projections have incorporated the opening of the subject property. Were
the property to not open, we would expect the projection to be significantly
altered.
This is the case even though we have projected no supply increases after the
project's opening. No additional properties would be expected to open (without
the closure of existing properties) due to poor overall market performance.
Five months ending March, 2002.
The Exhibit IV hotel market is selected to closely mimic the local market
situation/mix and to provide a wide body of information from which to draw the
characteristics of specific brand performance. This specific market includes
all Texas hotel properties in mid- to large metro areas.
Analyzed and compiled by Douglas W. Sutton and Bruce H. Walker.
Theoretical REVPAR, were the property to be currently open and competing in
today's market.
The REVPAR index quantifies by how much the hotel will trail or exceed the
market's dollar REVPAR average.
Unadjusted for physical aging of each brand.
Data compiled and organized from the CapEx report of the International Society
of Hospitality Consultants, copyright 2000.
All convention room night data has been provided by the San Antonio Convention
and Visitors Bureau. While we cannot guarantee its accuracy, it is our opinion
that they are a very reliable source for this information.
Forecasts are all from Source Strategies, Inc. financial models. Convention
RNS have been increases annually based on the average increase of the previous
ten years of growth.
In fact the San Antonio C&VB forecasts a 37% decline in convention RNS in 2003
versus 2002. While it is our opinion that some of this business will be
recovered over the next six to eight months, this lack of bookings cannot be
overlooked.