HomeMy WebLinkAbout20052258.tiff RESOLUTION
RE: THE BOARD OF EQUALIZATION, 2005, WELD COUNTY, COLORADO - DENY
PETITIONER'S APPEAL AND AFFIRM ASSESSOR'S VALUE
PETITION OF:
LONGMONT GROUP INC
9100 E PANORAMA DR#300
ENGLEWOOD, CO 80112-7207
DESCRIPTION OF PROPERTY: ACCOUNT#: R0085887 PARCEL #: 131310100039 - PT
NE4 10-2-68 BEG E4 COR N89D49'W 451.4' NOD24'E 1323.4' TO TPOB N0D24'E 525.03'
N89D36'W 299.99' SOD24'W 523.2' S89D15'E 300' TO POB EXC COMM E4 COR N89D49'W
451.4' NOD24'E 1323.4'TO TPOB N0D24'E 262.09' N89D23'W 299.96'SOD24'W 261.33'S89D15
WHEREAS, the Board of County Commissioners of Weld County, Colorado, convened as
the Board of Equalization for the purpose of adjusting, equalizing, raising or lowering the
assessment and valuation of real and personal property within Weld County, fixed and made by
the County Assessor for the year 2005, and
WHEREAS, said petition has been heard before the County Assessor and due Notice of
Determination thereon has been given to the taxpayer(s), and
WHEREAS, the taxpayer(s) presented a petition of appeal of the County Assessor's
valuation for the year 2005, claiming that the property described in such petition was assessed too
high, as more specifically stated in said petition, and
WHEREAS, said petitioner being represented by Ian James, Deloitte & Touche, LLP, and
WHEREAS,the Board has made its findings on the evidence,testimony and remonstrances
and is now fully informed.
NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld
County, acting as the Weld County Board of Equalization, that the evidence presented at the
hearing clearly supported the value placed upon the Petitioner's property, after review by the Weld
County Assessor. Such evidence indicated the value was reasonable, equitable, and derived
according to the methodologies, percentages, figures and formulas dictated to the Weld County
Assessor by law. The assessment and valuation of the Weld County Assessor shall be, and
hereby is, affirmed as follows:
ACTUAL VALUE
AS DETERMINED
BY ASSESSOR
Land $ 431,734
Improvements OR
Personal Property 672,266
TOTAL $ 1,104,000
2005-2258
AS0061
/'�; ,1s oB=iD - 93c
RE: BOE - LONGMONT GROUP INC
PAGE 2
BE IT FURTHER RESOLVED that a denial of a petition, in whole or in part, by the Board of
Equalization may be appealed by selecting one of the following three options; however,said appeal
must be filed within 30 days of the denial:
1. Board of Assessment Appeals: You have the right to appeal the County
Board of Equalization's(CBOE's)decision to the Board of Assessment Appeals
(BAA). Such hearing is the final hearing at which testimony, exhibits, or any
other evidence may be introduced. If the decision of the BAA is further
appealed to the Court of Appeals, only the record created at the BAA hearing
shall be the basis for the Court's decision. No new evidence can be introduced
at the Court of Appeals. (Section 39-8-108(10), C.R.S.)
Appeals to the BAA must be made on forms furnished by the BAA, and
such appeals should be mailed or delivered within thirty (30) days of
denial by the CBOE to:
Board of Assessment Appeals
1313 Sherman Street, Room 315
Denver, CO 80203
Phone: 303-866-5880
Fees: A taxpayer representing himself is not charged for the first two appeals to the
Board of Assessment Appeals; however, a taxpayer being represented by an agent
or an attorney must submit a fee of$101.25 per appeal.
OR
2. District Court: You have the right to appeal the CBOE's decision to the District
Court of the county wherein your property is located. New testimony, exhibits
or any other evidence may be introduced at the District Court hearing. For filing
requirements, please contact your attorney or the Clerk of the District Court.
Further appeal of the District Court's decision is made to the Court of Appeals
for a review of the record. (Section 39-8-108(1), C.R.S.)
OR
3. Binding Arbitration: You have the right to submit your case to arbitration. If
you choose this option the arbitrator's decision is final and your right to appeal
your current valuation ends. (Section 39-8-108.5, C.R.S.)
Selecting the Arbitrator: In order to pursue arbitration, you must notify the
CBOE of your intent. You and the CBOE select an arbitrator from the official list
of qualified people. If you cannot agree on an arbitrator,the District Court of the
county in which the property is located will make the selection.
2005-2258
AS0061
RE: BOE - LONGMONT GROUP INC
PAGE 3
Arbitration Hearing Procedure: Arbitration hearings are held within sixty days
from the date the arbitrator is selected. Both you and the CBOE are entitled to
participate. The hearings are informal. The arbitrator has the authority to issue
subpoenas for witnesses, books, records, documents and other evidence. He
also has the power to administer oaths, and all questions of law and fact shall
be determined by him.
The arbitration hearing may be confidential and closed to the public, upon
mutual agreement. The arbitrator's written decision must be delivered to both
parties personally or by registered mail within ten (10) days of the hearing.
Such decision is final and not subject to review.
Fees and Expenses: The arbitrator's fees and expenses are agreed upon by
you and the CBOE. In the case of residential real property, such fees and
expenses cannot exceed$150.00 per case. The arbitrator's fees and expenses,
not including counsel fees, are to be paid as provided in the decision.
The above and foregoing Resolution was, on motion duly made and seconded, adopted by
the following vote on the 5th day of August, A.D., 2005.
BOARD OF COUNTY COMMISSIONERS
�j ��� ���� WELD COUNTY,
COLORADO
ATTEST: i6�",w.% ��'//'i .�' IE Z
cji William H. Jerke, Chair
Weld County Clerk to th- 1:oa .
��
1861 �{ j - , EXCUSED
M. J. Geile, Pro-Tem
BY:
Deputy Clerk to the B e,`' EXCUSED
-1 Long
APP AS TO FO
Robert D. Masdn ?)
iy�
LkssistaTit-County Attorney 4/
Glenn Vaad
Date of signature: /0
2005-2258
AS0061
07/07/05 12:00 FAX WELD ASSESSOR 10002
•
OFFICE OF COUNTY
NOTICE OF ADJUSTMENT 740000 ASSESSOR
NORTH 1741 AVE,E,
, GREELEY,CO 80631
t
w PT NE4 10-2-68 BEG E4 COR N89D49 W PHONE(970)353-3845,EXT.3650
f ' 451 .4 ' N0D24'E 1323 .4' TO .TPOB �ww.co.Wctd.ra.as
NOD24'E 525 . 03 ' N89D36'W 299 . 99'
SOD24'W 523 .2' S89D15' E 300' TO POB
•
E
OWNER:COMM 323 .4' TO B D24 451.4'
ONGMONTGROUPINC '
COLORADO
LONGMONT GROUP INC LOG 3856
9100 E PANORAMA DR #300 PARCEL 131310100039
ACCOUNT R0085887
ENGLEWOOD, CO 80112-7207 YEAR • 2005
•
The appraised value of property is based on the appropriate consideration of the approaches to value required by law. The Assessor has determined that•
your property should be included in the following caregory(ies):
Commercial property is valued by considering the coat; market,
and income approaches.
If your concern is the amount of your property tax,local taxing authorities(county,city,fire protection,and other special districts)hold budget
bearings In the fall, Please refer to your tax bill or ask your Assessor for a listing of these districts,and plan to attend these budget bearings,
The Assessor has carefully studied all available information,giving particular attention to the specifics included on your protest,and has determined the
valuations)assigned to your property. The reasons%r this determination of value are:
After review of your property, we have made adiustments . This was done because
of additional information obined, or provided thru the appeal process.
Based upon age/location I adjusted the value to $23, 000 per unit. Sales
suggest this to be within reason. Income value presented is unrealistic to
market .
•
• PETITIONER'S - ASSESSOR'S VALUATION
PROPERTY CLASSIFICATION ESTIMATE
OF VALUE ACTUAL VALUE ACTUAL VALUE
PRIOR TO REVIEW AMR
•
COMMERCIAL 1314249 1104000
•
•
TOTALS $ $ y -yia0n9 3innnpo
APPEAL DEADLINES: REAL PROPERTY—JULY 15,PERSONAL PROPERTY—JULY 20.
If you disagree with the Assessor's decision,you bave the right to appeal to the County Board of Equalization for further consideration. §39$-
, 106(1)(a),C.R.S. Please see the back of this form for detailed information on filing your appeal.
By: Stanley F.Sessions 06/30/2005
WELD COUNTY ASSESSOR DATE
•
ADDITIONAL INFORMATION ON REVERSE SIDE
•
PR-701431/03
U(/U1/u0 IL.V1 rnn YIELD ASSESSOR
• ._ .- —. 10005
YOU HAVE TI3E RIGHT TO APPEAL THE ASSESSOR'S DECISION
The County Board of Equalization will sit to hear appeals beginning July 1 and continuing through August 5 for real
property (land and buildings) and personal property (f imisbings,machinery, and equipment). § 9-8-104 and § 39-
8-107(2),C.R.S.
APPEAL PRO.CEDTIR:PS:
If you choose to appeal the Assessor' s decision, mail or deliver one copy of this completed form to the County
Board of Equalization, To preserve your right to appeal,your appeal'must be POSTMARKED OR DELIVERED
ON OR BEFORE JULY 15 FOR REAL PROPERTY,AND JULY 20 FOR PERSONAL PROPERTY.
WELD COUNTY BOARD OF EQUALIZATION
915 10th Street,P,O.Box 758
Greeley, Colorado 80632
Telephone(970)356-4000 Ext. 422$
NQTIPICATIOIN.OF sflL". t„G;
You will be notified of the time and place set for the hearing of your appeal. •
COUNT'KEBOAIWOP'lIMMF :' 11+[!;'�a:J�17� 1i�ll !iA'TiIlb15T:
The County Board of Equalization must make a decision on your appeal and mail you a determination within five
business days of that decision. The County Board must conclude its hearings and render decisions by August 5.
TAXPA,d i IlbraTSIBORFlatiliBB.iAPPRA.4°;S:
If you are not satisfied with the County Board of Equalization's decision you must file within thirty days of the .
County Board of Equalization's written decision with ONE of the following:
Board of Assessment Appeals AA): •
Contact the BAA at 1313 Sherman,Room 315,Denver Colorado 80203, (303)866-5880.
www.dola.colorado.gov/baa
District Court;
9th Avenue and 9th Street P.O.Box C
Greeley,Colorado 80632
Telephone(970) 3564000,Ext.4520
•
• Arbitration:
WELD COUNTY BOARD OP EQUALIZATION
915 10th Street,P.O.Box 758
• Greeley,Colorado 80632 •
• Telephone(970)356-4000,Ext.4225 •
If you do not receive a determination from the County Board of Equalization,you must file an appeal with the
Board of Assessment Appeals by September 12.
TO PRESERVE YOUR APPEAL RIGHTS,YOU MUST PROVE YOU HAVE FILED A TIMELY
APPEAL; IliEREFORE,WE RECOMMEND ALL CORRESPONDENCE BE MAILED WITH PROOF .
• OF MAILING.
PETITION-TO THE COUNTY BOARD OF EQUALIZATION
In the space below,please explain why you disagree with the Assessor's valuation. IN ACCORDANCE WITH§
39-8-106(1.5),C.R.S., IF YOUR APPEAL INVOLVES REAL PROPERTY,YOU MUST STATE YOUR
OPINION OF VALUE IN TERMS OF A.SPECIFIC DOLLAR AMO T. Attach additionaldocuments as
necessary. Zi 45 OW- Crfi/(A7 #n/7/ai 'ni s ea/Mke ,, non 00 .
The property is valued in excess of fair market value based on the three approaches to value; cost, market and
income approaches. In addition, the property is valued in excess of other similarly situated properties.
Due to scheduling conflicts, we request that a hearing be scheduled after July 24, 2005.
•
atthpw w Pnbng nATs- July 15, 2005
• 14420747/03
acto:Iss•ww)NOliv natL6VC98LCOC:a1S33C9C:SINarZCBASt[EUiU611AeauleaunoMWdc :Lt:e9oot1Mits GAM tfI!639dd
LETTER.OF AUTHORIZATION
To Whom It May Concern:
Property Owner Name: Longmont Group.Inc.
Hereby appoints and authorizes Deloitte Tax,LLP as taxpayer's representative to represent our firm's
property and all property controlled by our firm or any of its subsidiaries of partnerships on all
matters pertaining to the 2005 and 2006 ad valorem taxes. Until written notice of termination is
issued, they have the right to file returns, examine records, obtain all tax statements, and discuss or
appeal any tax assessments to the proper authorities when, in their opinion, the assessment does not
constitute fair market value. In addition hey have the right to file appeals to the appropriate
jurisdiction, if authorized by law.
By:
Name: Navin C.Dimond
Tide: President
Address: 9100 E.Panorama Drive,Suite 300
gnglewood,CO 80112
Phone Number: 303,785.3100
Property Desc:
Parcel Address Assessor State
R0085887 10805^7 Turner Blvd Weld County ^� CO
Subscribed and sworn before me this 23 day of 703, 7 S
117) eThfre btrrytrik:L
Notary Public /
State of ( I tYI.ara dx') M CAROL OONARSia
NOSY PtMOC
County of Ski*ct Cattalo t
D �
•
' My commission expires 211
Lawton
600'd S969# '3DO L6Tfg8L£0£ 6T:ET 500Z,4e'AYN
CLERK TO THE BOARD
PHONE (970)356-4000 EXT 4217
FAX: (970) 352-0242
WEBSITE: www.co.weld.co.us
Iret 4114:7(
915 10TH STREET
P.O. BOX 758
C. GREELEY, COLORADO 80632
WI PCOLORADO
July 20, 2005
LONGMONT GROUP INC
9100 E PANORAMA DR#300
ENGLEWOOD CO 80112-7207
Parcel No.: 131310100039 Account No.: R0085887
Dear Petitioner(s):
The Weld County Board of Equalization has set a date of August 5, 2005, at or about the hour of
9:30 AM,to hold a hearing on your valuation for assessment. This hearing will be held at the Weld
County Department of Planning Services, Conference Room, 918 10th Street, Greeley,
Colorado.
You have a right to attend this hearing and present evidence in support of your petition. The Weld
County Assessor or his designee will be present. The Board will make its decision on the basis of
the record made at the aforementioned hearing, as well as your petition, so it would be in your
interest to have a representative present. If you plan to be represented by an agent or an attorney
at your hearing, prior to the hearing you shall provide, in writing to the Clerk to the Board's Office,
an authorization for the agent or attorney to represent you. If you do not choose to attend this
hearing, a decision will still be made by the Board by the close of business on August 5,2005, and
mailed to you on or before August 12, 2005.
Because of the volume of cases before the Board of Equalization, all cases shall be limited to 15
minutes. Also due to volume, cases cannot be rescheduled. It is imperative that you provide
evidence to support your position. This may include evidence that similar homes in your area are
valued less than yours or you are being assessed on improvements you do not have. Please note:
The fact that your valuation has increased cannot be your sole basis of appeal. Without
documented evidence as indicated above, the Board will have no choice but to deny your appeal.
If you wish to obtain the data supporting the Assessor's valuation of your property, please request
it directly from the Assessor's Office by fax (970) 304-6433, or by calling (970) 353-3845. Upon
receipt of your request, the Assessor will notify you of the estimated cost of providing such
information. Payment must be made prior to the Assessor providing such information.
LONGMONT GROUP INC - R0085887
Page 2
Please advise me if you decide not to keep your appointment as scheduled. If you need any
additional information, please call me at your convenience.
Very truly yours,
BOAR UALGI TION
Donald D. Warden
Clerk to the Board
cc: Stanley Sessions, Assessor
DELOITTE & TOUCHE LLP
555 SEVENTEENTH STREET SUITE 3600
DENVER CO 802023942
Deloitte , Deloitte Tax LLP
Suite 3600
555 Seventeenth St.
Denver,CO 80202-3942
USA
Tel:+1 303 292 5400
Fax:+1 303 312 4000
July 15, 2005 www.deloitte.com
CERTIFIED RETURN RECEIPT
7004 1350 0001 8887 8709
Weld County
Board of Equalization
915 10th Street
Greeley, CO 80632
Re: 2005 County Board of Equalization
Real Estate Appeals
Enclosed are the 2005 Appeals for the following taxpayers and parcel numbers:
Taxpayer Parcel No.
Longmont Group, Inc. R0085887
Westlake Office Plaza LLC R0273493
SNKTW LLC R7433398
If you have questions, or need additional information, please contact Mr. Matt Poling at
(303) 308-2191.
Sincerely,
Kelly R. Ha
Property Tax Associate
/kh
Enclosures
Member of
Deloitte Touche Tohmatsu
Weld County, Colorado
Valuation Protest Information Submission
For:
STONEBRIDGE COMPANIES - LONGMONT GROUP, INC.
Longmont Group, Inc.
SUPER 8 - 10805 TURNER BOULEVARD
10805 Turner Boulevard
Weld County
Schedule #:
. 7 R0085887
Assessor's Actual Value: oo U tv-u
54 4 Ii to-1 oo1/4.0
Taxpayer's Opinion of Value:
$739,000
27 Analysis Completed
r ` 8/4/2005
ABy: Matt Poling
Kuid
Deloitte & Touche LLP
ph#: (303) 308-2191
1 EXHIBIT
RoO85£s8`7
STONEBRIDGE COMPANIES - LONGMONT GROUP, INC.
SUPER 8 - 10805 TURNER BOULEVARD
SUMMARY OF SALIENT FACTS
Property Name: SUPER 8- 10805 TURNER BOULEVARD
Property Owners: Longmont Group, Inc.
ID Number R0085887
Building Type: Hotel/Motel
Location: 10805 Turner Boulevard
Weld County
County: Weld County, Colorado
Year Built: 1986
Number of Units: 48
Building Area Sq. Ft.: 17,680
Land Area: 78,497
Average Daily Rate: 6/30/2004 $50.21
Average Occupancy: 6/30/2004 54.51%
Rev Par 6/30/2004 $27.37
Indicated Value By:
Income Approach: $739,000
Market Approach: N/A
Cost Approach: N/A
2004 Final Value: $1,275,000 $26,563 per room
2005 Initial Value: $1,314,250 $27,380 per room
2005 Final Value Estimate: $739,000 $15,396 per room
(1-
"'
.1
I 2 I
o
04 2 „'BP..^ „ "main ^00° $°
_ _ „ n r ^
R3, ^„ e^-n_8� _ „2080G$: e 0 07,
t:f pi o ^$w _ .,„ „ _rym8garyg^ rvo$3^xmer _^_ „ u o ion '00 g 1 it
,3a \010 o ^^-- „ „ „ry:8r P8N$ ^n^ „_ _ ^ „ _� 09-e'Cele $ CIS kt c C n „ c a
off ' .,. Go f 5 d
° .- -- A-rye$ 08 � SP as E �
F f eaw _ m$ee „ ^N _ g:. n .. .... - n nl f f
„, w - . nn . n n n o „-
o ^P,n__ .e c& v.V__ n.._no8 ... r mr„'$- n m m
i
pp o g ant-all 4 ,. ,. EE et a .tl9 EEILL ANA=415 jll�35 9 g` I n a nig a
o zs s:"o w In s°Z"_°zF'e�lli1mg 1d4 2 A 4 AigA ti i
Longmont Group, Inc.
Super 8
Profit and Loss
For the Twelve Months Ending December 31, 2004
Year to Date
Actuals Prior YR
Occupancy % 52.81% 54.28%
ADR $50.46 $50.31
RevPar $26.65 $27.31
Rooms Sold 9,278 9,509
Rooms Available 17,568 17,520
Income
Room Revenue 468,134 478,420
Telephone Revenue 1,027 934
MoviesNideo 0 28
Other Income 7,776 7,833
Total Income 476,937 487,215
Expenses
Franchise Fee 34,678 33,489
Management Fee 27,000 27,000
Credit Card Fees 7,281 7,289
Payroll 156,084 159,769
Management 37,925 37,536
Front Desk 71,897 71,592
Housekeeping 43,989 48,183
Maintenance 2,272 2,458
Payroll Taxes/Benefits 41,384 40,067
Training/Meetings/Trav 2,902 1,480
Advertising &Marketin≤ 2,787 4,003
Legal and Accounting 756 1,595
Cable Television 6,686 6,589
Repairs/Maintenance/F 8,015 6,768
Hotel Supplies 7,359 10,073
Utilities 26,702 26,616
Continental Breakfast 7,661 7,827
Property/Liability InsurF 7,836 6,262
Office Expense 6,863 7,384
Vending Expense 259 341
Telephone 6,601 7,292
Replacement Reserve 19,077 19,489
Property Tax 35,291 33,516
Travel Agent Commissi 1,848 747
Miscellaneous Expens( 0 317
-------------------------------------
Total Expenses 407,070 407,913
Net Operating Income 69,867 79,302
4
Limited-Service Hotel-2004
Ratios to Total Revenues
Figure Number 14
Property Size Classifications
Under 75 75 to 150 Over 150
Rooms(%)Rooms(%)Rooms(%)
Revenues:
Rooms 96.7 96.9 95.8
Telecommunications 0.5 0.5 0.5
Other Operated Departments 1.6 1.4 2.3
Rentals and Other Income 1.1 1.2 1.4
Total Revenues 100.0 100.0 100.0
Departmental Costs and Expenses:
Rooms 24.9 25.8 26.2
Telecommunications 0.9 1.0 0.9
Other Operated Departments 0.9 0.5 0.9
Total Costs and Expenses 26.7 27.2 27.9
Total Operated Departmental Income 73.3 72.8 72.1
Undistributed Operating Expenses?
Administrative and General 9.8 10.0 10.8
Franchise Fees-including Marketing Fees 4.9 5.6 5.3
Marketing 3.1 2.5 3.0
Property Operation and Maintenance 5.7 5.8 5.8
Utility Costs 5,3 5.2 5.4
Other Unallocated Operated Departments - - -
Total Undistributed Expenses 28.7 29.1 30.2
Income before Fixed Charges 44.6 43.7 41.8
Management Fees,Property Taxes,and Insurance?
Management Fees 5.7 3.4 3.3
Property Taxes and Other Municipal Charges 3.3 4.7 4.3
Insurance 2.5 1.8 1.6
Total Management Fees,Property Taxes,
and Insurance 11.4 9.9 9.3
Income before Other Fixed Charges' 33.1 33.8 32.6
Rooms Department:
Rooms Net Revenue 100.0 100.0 100.0
Departmental Expenses:
Salaries and Wages including Vacation 13.8 14.3 14.2
Payroll Taxes and Employee Benefits 3.9 3.0 3.4
Subtotal 17.7 17.3 17.6
Laundry,Linen,and Guest Supplies 2.0 1.3 1.3
Commissions and Reservation Expenses 2.0 2.9 3.5
Complimentary Food and/or Beverage Expenses 2.2 2.5 2.2
Ail Other Expenses 1.9 2.7 2.9
Total Rooms Expense 25.7 26.6 27.4
Rooms Departmental Income 74.3 73.4 72.7
Percentage of Occupancy 64.7% 65.9% 66.0%
Average Daily Rate per Occupied Room $ 73.33 $ 62.37 $ 68.99
Average Size(Rooms) 57 120 179
Note: Payroll Taxes&Employee Benefits distributed to each department
5
SOURCE: PKF-HR/PKF Consulting Page 3 of 3
Limited-Service Hotel-2004
Ratios to Total Revenues
Figure Number 14
Geographic Divisions
New England Mountain
and Middle North South South and
Atlantic Central Atlantic Central Pacific
(%) (%) (%) (%) (i)
Revenues:
Rooms 95.6 97.0 97.4 96.9 96.0
Telecommunications 0.6 0.6 0.5 0.4 0.5
Other Operated Departments 2.6 1.6 1.1 1.2 1.9
Rentals and Other Income 1.1 0.8 0.9 1.4 1.5
Total Revenues 100.0 100.0 100.0 100.0 100.0
Departmental Costs and Expenses:
Rooms 25.0 27.8 25.5 25.1 26.5
Telecommunications 0.9 0.9 1.0 1.0 0.9
Other Operated Departments 1.1 0.7 0.3 0.4 0.7
Total Costs and Expenses 27.0 29.5 26.7 26.5 28.1
Total Operated Departmental Income 73.0 70.6 73.3 73.5 71.9
Undistributed Operating Expenses?
Administrative and General 9.8 10.5 10.0 10.2 10.2
Franchise Fees-including Marketing Fees 7.6 7.1 5.4 5.1 4.9
Marketing 3.6 3.1 2.5 2.4 2.5
Property Operation and Maintenance 5.5 5.9 5.7 5.7 5.9
Utility Costs 5.5 4.8 5.5 5.4 5.0
Other Unallocated Operated Departments - - - - -
Total Undistributed Expenses 32.0 31.4 29.0 28.8 28.5
Income before Fixed Charges 41.0 39.2 44.4 44.7 43.4
Management Fees,Property Taxes,and Insurance?
Management Fees 4.2 3.9 3.3 3.2 3.6
Property Taxes and Other Municipal Charges 5.0 6.4 3.9 4.8 4.1
Insurance 1.7 1.5 1.7 1.9 1.8
Total Management Fees,Property Taxes,
and Insurance 10.9 11.8 8.9 9.8 9.5
Income before Other Fixed Charges' 30.1 27.4 35.4 34.9 33.9
Rooms Department:
Rooms Net Revenue 100.0 100.0 100.0 100.0 100.0
Departmental Expenses:
Salaries and Wages including Vacation 14.0 15.7 14.1 13.6 14.9
Payroll Taxes and Employee Benefits 3.2 3.5 2.6 2.8 3.7
Subtotal 17.1 19.2 16.7 16.4 18.6
Laundry,Linen,and Guest Supplies 1.4 1.5 1.2 1.1 1.4
Commissions and Reservation Expenses 2.8 2.7 3.1 3.2 2.7
Complimentary Food and/or Beverage Expenses 2.1 2.5 2.5 2.5 2.3
All Other Expenses 2.8 2.8 2.7 2.7 2.6
Total Rooms Expense 26.2 28.7 26.1 25.9 27.6
Rooms Departmental Income 73.8 71.3 73.9 74.1 72.4
Percentage of Occupancy 65.5% 62.9% 70.1% 63.6% 67.4%
Average Daily Rate per Occupied Room $ 77.99 $65.11 $ 62.21 $ 59.47 $ 66.57
Average Size(Rooms) 115 118 129 126 120
Note: Payroll Taxes&Employee Benefits distributed to each department
6
SOURCE: PKF-HR I PKF Consulting Page 2 of 3
Hotel Capitalization Rates Drop / David J. Sangree, MAI, CPA, ISHC/ February 2003 Page I of 5
Hotel Online Special Report
In
nLi 1 * r 1#drie r?vato L I
Dice ttsrr R;s sts
GDS
erusemem ..._ ._..
Hotel Capitalization Rates Drop
by:David J Sangree, MAI, CPA, ISHC
February 2003
The Winter 2003 USRC Hotel Investment Survey of 27 hotel
investors indicates that discount rates and capitalization rates for
both limited service and full service hotels have decreased since our
Winter 2002 survey. The author has completed this hotel
investment survey annually since 1995. The drop in both types of
rates is due to increased confidence in the hotel market even though
declines in occupancy and average daily rates in most markets have
weakened hotels' net operating incomes. hi addition, interest rates
fell during 2002 allowing for a drop in the debt component of
capitalization and discount rates. Full-service hotels achieved a
larger decrease in rates as compared to limited service hotels. This
larger decrease brings full-service hotel rates back to a level similar
to our 2001 survey. The decreases have occurred as the risk
associated with hotel investments has returned closer to normal
levels following the impact from the terrorist attacks of September
11, 2001 on last year's survey. In 2002, many markets have
recorded declines in occupancy levels and average daily rates as
compared to the previous year due to the weakening economy.
Capitalization Rates
Our 2003 survey indicates that investors require higher
capitalization rates for limited-service hotels as compared to full-
service hotels due to the higher barriers to entry in the full-service
market. The direct capitalization rate for full-service hotels of
10.7% is 90 basis points lower than the average for the 2002 survey
but the same as the 2001 survey average. The average direct
capitalization rate for limited service hotels of 11.8% is 40 basis
points lower than last year's survey. The capitalization rate has two
components: equity and debt. As interest rates have continued to
fall during 2002, the overall equity capitalization rates have
remained steady.
7
http://www.hotel-online.com/News/PR2003_1st/Feb03_CapRates.html 5/10/2005
Hotel Capitalization Rates Drop / David J. Sangree, MAI, CPA, ISHC /February 2003 Page 2 of 5
USRC Hotel Investment Survey
Winter 2003 Winter 2003 Full- Winter 2002 Limited Winter 2002 Full—
Limited Service Service Service Service
Direct Capitalization Rate
Average 11.8% 10.7% 12.2% 11.6%
Range 9.5%-14.0% 8.0%- 14.0% 9.0%-16.0% 9.0%- 15.0%
Terminal Capitalization Rate
Average 12.2% 11.1% 12.2% 11.6%
Range 10.0%-15.0% 8.0%-14.0% 9.0%-15.0% 10.0-15.5%
Discount Rate
Average 14.4% 13.6% 14.9% 14.6%
Range 12.0%-20.0% 11.0%-15.5% 12.0%-20.0% 9.0%-20.0%
Selling Expense
Average 3.7% 2.8% 3.1% 2.3%
Range 1.0%-6.0% 1.0%-6.0% 2.0%-6.0% 1.0%-4.0%
Management Fee Expense
Average 4.1% 3.3% 3.7% 3.4%
Range 3.0%-6.0% 2.0%-5.0% 2.5%-5.0% 2.5%-5.0%
ADR Growth
Average 2.4% 2.5% 2.6% 1.4%
Range -2.0%-7.0% -0.0%-8.0% -5.0%-3.0% -5.0%-5.0%
Expense Growth
Average 2.8% 2.7% 2.6% 2.6%
Range 1.0%-5.0% 1.0%-4.0% 0.0%-5.0% 1.0%-5.0%
Holding Period
Average 7.0 8.1 7.6 7.6
Range 3-10 years 3-40 years 3-10 years 3-12 years
Marketing Period
Average 8.6 9.5 7.4 8.3
Range • 3-12 months 3-24 months 3-12 months 4-12 months
Reserve for Replacement
Average 4.1% 4.2% 4.1% 4.7%
Range 3.0%-6.0% 3.0%-6.0% 2.0%-7.0% 3.0%-7.0%
Rooms Revenue Multiplier
Average 2.6 2.4 3.0 2.5
Range 1.5-3.5 1.5-3.0 2.0-3.5 1.9-3.5
Source:US Realty Consultants,Inc.
Hotels have higher capitalization rates than other forms of real
estate due to increased risk associated with hotel ownership because
of the changing occupancy levels of hotels,particularly during an
economic recession. The range of capitalization rates for each
category was wide and depended upon the quality of product and its
location. Upper-end, luxury, full-service hotels in locations with
strong barriers to entry had capitalization rates of 9%to 11%.
TLfininal capitalization rates for both categories were slightly
higher than the direct capitalization rates as these are utilized five to
ten years in the future.
Discount Rates Higher for Limited Service Hotels
Discount rates for limited-service hotels averaged 14.4% and for
full-service hotels averaged 13.6%. Discount rates for full-service
hotels showed a 100 basis point decrease over last year's survey,
8
http://www.hotel-online.com/News/PR2003_1st/Feb03_CapRates.html 5/10/2005
Hotel Capitalization Rates Drop/David J. Sangree, MAI, CPA, ISHC / February 2003 Page 3 of 5
but a figure similar to our 2001 survey. The range is wide for
discount rates with respondents indicating from 11% to 20%. The
average holding period for users utilizing a discounted cash flow
analysis for both limited service and full-service hotels ranged from
7.0 years to 8.1 years.
ADR Growth Limited
The investors surveyed indicated that they project that ADR growth
rates to be lower than operating expense growth rates for both
categories of hotels. Some investors project ADR growth rates to be
negative in 2002 although the overall average was 2.5% for full-
service hotels and 2.4% for limited service hotels. The expense
growth rates were higher than the ADR growth rates as well as
slightly higher than last year's survey. The selling expense ranged
from 1% to 6% for both categories of hotels. The average selling
expense was lower for full-service hotels as these transactions are
typically for higher amounts, and brokers are willing to reduce their
commission percentage.
Management Fee Expense Range
Management fee expenses averaged 4.1% of total hotel revenues
for limited-service hotels and 3.3% for full-service hotels.
Management fees are typically higher on a percentage basis for
limited service hotels due to the disparity in total revenues versus
full-service hotels.
Marketing Period Remaining Stable despite Change in
Economy
The marketing period was 9.5 months for full-service hotels and 8.6
months for limited-service hotels. The investors indicated that the
marketing periods have increased since last year's survey which is
reflected by the decline in the number of sale transactions in 2002
and 2003 to date. The reserve for replacement as a percentage of
total revenue for limited service hotels was 4.1%while for full-
service hotels was 4.2%. The higher rate for full-service hotels is
due to the larger size of building and increased amount of amenities
as compared to limited service properties. The room revenue
multiplier was typically used by limited-service hotel buyers and
averaged 2.6 with a range of 1.5 to 3.5 times room revenue. Only a
few of the investors utilized a room revenue multiplier for full-
service hotels and this averaged 2.4 with a range of 1.5 to 3.0. This
was highly dependent upon the type of property.
Hotel Interest Rates Decrease
DEBT PARAMETERS
Winter 2003 Winter 2002
9
http://www.hotel-online.com/News/PR2003_1st/Feb03_CapRates.html 5/10/2005
Hotel Capitalization Rates Drop/David J. Sangree, MAI, CPA, ISHC /February 2003 Page 4 of 5
INTEREST RATE
Average 6.9% 8.2%
Range 3.0%-9.0% 6.0%-10.0%
TERM(YEARS)
Average 11.6 9.5
Range 3-25 3-25
AMORTIZATION PERIOD(YEARS)
Average 22 22.3
Range 5-30 15-25
DEBT COVERAGE RATIO
Average 1.45 1.45
Range 0.5-2.3 1.25-1.75
LOAN TO VALUE
Average 67% 65%
Range 50%-80% 50%-80%
Source:US Realty Consultants,Inc.
The average interest rate of 6.9% for the Winter 2003 survey
decreased from 8.2% as illustrated in Winter 2002 survey. The
range of rates from 3% to 9%was lower than in last year's survey
and is due to the continued decline in the prime rate from 4.75%on
January 1, 2002 to 4.25% on December 1, 2002. The average term
was 11.6 years which is 2.1 years higher than our 2002 survey. The
years amortized was 22 years with the range from 5-30 years which
was similar to the previous year's range. The debt coverage ratio
averaged 1.45 with a range from 0.5 to 2.3. The loan-to-value ratio
was 67%with a range from 50% to 80%. Investors indicate that
financing is still difficult for most new development projects
around the nation.
Major Concerns
The possible war in Iraq, continued economic recession, ADR
decreases, and higher oil prices are the major concerns of the
investors in the survey. The impact on travel and tourism from the
possible war in Iraq is a major uncertainty in the hospitality
marketplace. If the war does not occur or if it is short-term, there
should be limited impact; however, if the war occurs and it extends
into a longer time frame, there could be a negative impact on the
hospitality industry. The economic recession is reducing net
operating incomes at most hotels, which has translated into declines
in value for hotels as investors typically look most closely at the
trailing 12 months of performance. Potential further ADR decreases
are a concern of some respondents due to rate cutting from usage of
Internet portals as well as increased competition. The higher oil
prices were a concern mentioned by some investors as this would
result in higher utility and energy costs at hotels as well as have an
impact on travel overall.
Respondents to the survey include:
Boykin Lodging Company Kinseth Hospitality
Cendant LaQuinta Inns, Inc.
Coldwell Banker LaSalle Partners
10
http://www.hotel-online.com/News/PR2003_1 stIFeb03_CapRates.html 5/10/2005
Hotel Capitalization Rates Drop /David J. Sangree, MAI, CPA, ISHC/ February 2003 Page 5 of 5
Commonwealth Hotels Marcus Hotels
Concord Hospitality Molinaro Koger
David L. Babson and Morns, Smith & Fehy
Company Rockbridge Capital
Forest City Salomon Brothers Realty
GMAC Schahet Hotels
The Great Lakes Companies Six Continents Hotels
Hardin Capital Tharoldson
Hotel Partners Wells Fargo
Hotel Source White Lodging Services
Hunter Realty Associates
David J. Sangree, MAI, CPA, ISHC is Director of Hospitality
Consulting and a Principal with US Realty Consultants, a national
hospitality consulting and real estate valuation firm with offices in
Cleveland, Columbus, Chicago, and Atlanta. He can be reached at
• 216-221-9191 or at dsangree@usrc.com.
Contact:
US Realty Consultants
14805 Detroit Avenue, Suite 415
Cleveland, Ohio 44107-3921
Phone: 216-221-9191
Fax: 216-221-9097
Also See The Effect on Capitalization Rates and Discount Factors After September I I/Canadian
Lodging Outlook/Dec 2001
Will Hotel NOls and Property Prices Follow Revenues in Their Downward Spiral?/John
flack)B.Cored.Ph.D/Hospitality Research Group of PKF Consulting/June 2002
To search Hotel Online data base of News and Trends Go to Hotel.Online Search
Home I Welcome!I Hospitality News I Classifieds I Catalogs&Pricing I Viewpoint Forum I Ideas/Trends
Please contact Hotel.Online with your comments and suggestions.
11
http://www.hotel-online.com/News/PR2003_1st/Feb03_CapRates.html 5/10/2005
Hotel Capitalization Rates Drop Again/David J. Sangree, MAI, CPA, ISHC/April 2004 Page 1 of 6
Hotel Online Special Report
tt ' �r )I44,1ER1 R
Urr
l I' sn. . P, 3NAGGL TNT SOF WARc
advettisernen Is
Hotel Capitalization Rates Drop Again
by:David J Sangree, MAI, CPA, ISHC
February 2004
The Winter 2004 USRC Hotel Investment Survey of hotel investors
indicates that discount rates and capitalization rates for both limited
service and full service hotels have decreased since our Winter
2003 survey. The author has completed this hotel investment survey
annually since 1995. The drop in both types of rates is due to
increased confidence in the overall hotel market, as most markets
are projected to achieve increases in occupancy and ADR in 2004,
which will increase overall revenue and net operating incomes. In
addition, new hotel development maintained its slow pace during
2003, while interest rates remained low. Full-service hotels
recorded a larger decrease in direct capitalization rates as compared
to limited service hotels. The decreases have occurred as the risk
associated with hotel investments has returned closer to normal
levels following the impact from the recession and pending war
with Iraq on last year's survey. The lower rates also reflect the poor
performance of many hotels in 2003 which investors have
purchased at lower capitalization rates.
Capitalization Rates
Our 2004 survey indicates that investors continue the trend of
requiring higher capitalization rates for limited-service hotels as
compared to full-service hotels. The direct capitalization rate for
full-service hotels of 9.5% is 120 basis points lower than the
average for 2003, and 210 basis points lower than the 2002 survey
average. The average direct capitalization rate for limited service
hotels of 10.9% is 90 basis points lower than the average for 2003,
and 130 basis points lower than the 2002 survey average.
12
http://www.hotel-online.com/News/PR2004_2nd/Apr04_CapRates.html 5/10/2005
Hotel Capitalization Rates Drop Again /David J. Sangree, MAI, CPA, ISHC/April 2004 Page 2 of 6
i -. tf d, r 4 . d % .4
i
14 -a 6"alcaliMilnitlirlYaY '1
Winter 2004 Winter 1094 %Inlet 2003 Winter 2003.
1.i97;1ed Service Full-$tr*irc 1.1911144 Senlea Full-Service
131me Caplbfaatka.714%
Avenge 103% -
tinny 9.3'% 11.3% 51,1%
01 r 36 to i5:1% 2.E%tn 1449% 93%.14.194 $.0346 14.0%
Fermioal Cepib9raUwn Rate
Areie 4444 11.3% 4444.. 10.3% 12.2% 11.1%
Paw 9.9%3 162% .53%iv 13.0% I0J%-15,0% 49%.14.E
Die.ne4 Nat.
Ate 13.7% 13.49% 14A% 13.E
Hate 11. to 22.0% 10.00.04 4424% i2i% no% 11.17,5-1545%
8.61uS$tyaaw
4444 4444 . _ 4444.. . 4444
A 44 3,2% V 2.5% 3.7% 2234
..R 1. 1.6.$16 In-6.17% I 1.676.617%. .1915.6.0%
34mg:.w%Eke Lrpeoiee _.
Avg 3 1:2% 4.1% 33%
RmOe 25%%1,5% 22%453.056 33'05,6.%6 24%.5.0%
ADP Grey%
Aettris 2.7% 22% 2.4% 44 4 4 444 23%
NsnR. 0. 67:544 02%103:0% u2.1PAi-1.0% 4U'% 8.0%
Evens.Gra9ghAirline 4 4 4 4
2.936 3.1% 2214 2.7%4
REDO 0A%to7.5% 2-014e0 5.0% 1034-54% 1.2%.4.014
1104.20d3W1ad
Avaaya 63 7.0 7,0..... 5.1
Rap 2-i0}vat 3-10
4444 vim _ 3-10 yens 1'46 mon
ir1 Perked
AVett01 6.6 w 7.7. 444 4 k4 v 9.5
04000 3-ISmoths 3-12 sweat 3-12:meths 3-2419001bs
Arent pr.firplantaatt
Attu 4.0% _4.2%. 4.1% 42%
Raq. 3694-5.0,5 3:0%-5.2% 3.0%46*% 3.0%-6.O%
llbwsIFuseme bkalllptkr
,
Awls. 2,9 2.d 4 4 4 4 3.$. 2.4
bits 13-32 i3.-4.5 1.'5..33. 13.32.
Sent US aSwy IM,014.331.9141
A
The range of capitalization rates for each category was wide and
depended upon the quality of product and its location. Upper-end,
luxury, full-service hotels in locations with strong barriers to entry
13
http://www.hotel-online.com/News/PR2004_2nd/Apr04_CapRates.html 5/10/2005
Hotel Capitalization Rates Drop Again/David J. Sangree, MAI, CPA, ISHC/April 2004 Page 3 of 6
had capitalization rates of 5% to 9%. Terminal capitalization rates
for both categories were slightly higher than the direct
capitalization rates as these are utilized five to ten years in the
future.
Discount Rates Higher for Limited Service Hotels
Discount rates for limited-service hotels averaged.13.7% and for
full-service hotels averaged 13.4%. Discount rates for full-service
hotels showed a 20 basis point decrease from the average for 2003
and a 120 basis point decrease from our 2002 survey average.
The decrease indicates increased confidence in the hotel market and
reflects the lower interest rates and slow pace of new development.
The range is wide for discount rates with respondents indicating
from 10%to 22%. The average holding period for users utilizing a
discounted cash flow analysis for both limited service and full-
service hotels ranged from 6.5 years to 7.0 years.
ADR Growth Limited
The investors surveyed indicated that they project ADR growth
rates to be similar to operating expense growth rates for limited
service hotels and lower than operating expense growth rates for
full service hotels. All investors project ADR growth rates to be
positive in 2004. The overall averages were 2.7% and 2.8% for
limited service and full service hotels respectively. The ADR and
expense growth rates for full service properties were slightly higher
than last year's survey.
Management Fee Expense Range
Management fee expenses averaged 3.8% of total hotel revenues
for limited-service hotels and 3.2% for full-service hotels.
Management fees are typically higher on a percentage basis for
limited service hotels due to the disparity in total revenues versus
full-service hotels. The selling expense ranged from 1% to 6% for
both categories of
hotels. The average selling expense was lower for full-service
hotels as these transactions are typically for higher amounts,
rendering brokers more willing to reduce their commission
percentage.
Marketing Period Decreasing as Economy Improves
The marketing period was 7.7 months for full-service hotels and 6.6
months for limited-service hotels down from 9.5 months for full
service and 8.6 months for limited service hotels as indicated in our
2003 survey. The investors indicated that the marketing periods
have decreased since last year's survey which is reflected by the
14
http://www.hotel-online.com/News/PR2004_2nd/Apr04_CapRates.html 5/10/2005
Hotel Capitalization Rates Drop Again/David J. Sangree, MAI, CPA, ISHC/ April 2004 Page 4 of 6
increase in the number of sale transactions in 2003 and 2004 to
date. The reserve for replacement as a percentage of total revenue
for limited service hotels was 4.0% while for full-service hotels was
4.2%. The higher rate for full-service hotels is due to the larger size
of the structures and increased amount of amenities as compared to
limited service properties.
The room revenue multiplier was typically used by limited-service
hotel buyers and averaged 2.9 with a range of 1.5 to 3.8 times room
revenue. Only a few of the investors utilized a room revenue
multiplier for full-service hotels, which averaged 2.4 with a range
of 1.5 to 4.0.
Hotel Interest Rates
•_. a tiw e os.y "i-744,172,3:717,433=7;
;° f.vcz
Winter 2004 I Wham'2003
Average 6.2% 6.9%
Rose 45%4.5 % 30%-9..0%
A,'. '
A*'are 204 114
Rost 3.25 3.25
A 8 23 22
Range S-30 3-30
Amnia 15 1.4$
$3►0MM 1.0
Maw 67% 67%
Rap 50%-65% 50%-60%
Souse US Salty Camshaft;tea.121642141913
The average interest rate of 6.2% for the Winter 2004 survey
decreased from 6.9% as illustrated in Winter 2003 survey. The
average rate declined 70 basis points from last year's survey. The
decline is due to the slight decline in the LIBOR rate from 1.477%
on January 1, 2003 to 1.461% on January 1, 2004, and increased
competition from lending institutions for hotel loans. The average
term was 10.8 years which is 0.8 years lower than our 2003 survey.
The years amortized was 23 years with the range from 5-30 years
which was similar to the previous year's range. The debt coverage
15
http://www.hotel-online.com/News/PR2004_2nd/Apr04_CapRates.html 5/10/2005
Hotel Capitalization Rates Drop Again/David J. Sangree, MAI, CPA, ISHC/April 2004 Page 5 of 6
ratio averaged 1.5 with a range from 1.0 to 3.0. The loan-to-value
ratio was 67%with a range from 50% to 85%. Investors indicate
that financing is still difficult for most new development projects
around the nation.
Major Concerns
The possibility of additional terrorist attacks on US soil, interest
rate increases, and higher oil prices are the major concerns of the
investors in the survey. The end of the economic recession is
projected to help most hotels record increases in RevPAR, which in
turn should increase net operating incomes. Increases in NOI are
expected to translate into increases in value for most hotels, as
investors typically look most closely at the trailing 12 months of
performance. Higher oil prices were a concern mentioned by some
investors as gasoline prices are expected to reach record highs
during the summer 2004 travel season, which may negatively
impact hotels in "drive-to"markets as well as result in higher utility
and energy costs at hotels. Increasing the supply of hotel rooms too
aggressively is a concern also mentioned by some survey
respondents.
Respondents to the survey include:
Briad Group Hotel Source, Inc.
Boykin Lodging Company Hyatt Hotel Groups
CBRE Hotels Insignia Hotel Partners
Cendant Corp. Kinseth Hospitality
Coldwell Banker LaQuinta Hotels
Capital Hotel Management Lasalle Partners
Commonwealth Hotels Molinaro Koger
David L. Babson& Company Plasencia Group
Forest City Commercial Group Schahet Hotels
GE Real Estate Salomon Brothers
Hodges Ward Elliott White Lodging Services
Hotel Financial
David J. Sangree, MAI, CPA, ISHC is Director of Hospitality
Consulting and a Principal with US Realty Consultants, a national
hospitality consulting and real estate valuation firm with offices in
Cleveland, Columbus, Chicago, and Atlanta. He can be reached at
216-221-9191 or at dsangreec usrc.cmn. Laurel A. Keller,
Associate with USRC's Cleveland office, contributed to this article.
Ott
Contact:
16
http://www.hotel-online.com/News/PR2004_2nd/Apr04_CapRates.html 5/10/2005
Hotel Capitalization Rates Drop Again/David J. Sangree, MAI, CPA, ISHC /April 2004 Page 6 of 6
US Realty Consultants
14805 Detroit Avenue, Suite 415
Cleveland, Ohio 44107-3921
Phone: 216-221-9191
Fax: 216-221-9097
http://www.usrc.com
Also See Hotel Capitalization Rates Drop/David J.Sangree,MAI,CPA,ISHC/February 2003
Appraisal and Financing of Indoor Watermark Resorts/David J.Sangree/October 2003
The Effect on Capitalization Rates and Discount Factors After September I 1/Canadian
Lodging Outlook/Dec 2001
Will Hotel NOls and Property Prices Follow Revenues in Their Downward Spiral?/John
flack)B.Corgel,Ph.D/Hospitality Research Group of PKF Consulting/June 2002
To search Hotel Online data base of News and Trends Go to Hotel.Online Search
Home I Welcome!l Hospitality News I Classifieds I Catalogs&Pricing I Viewpoint Forum I Ideas/Trends
Please contact Hotel.Online with your comments and suggestions.
•
•
•
17
http://www.hotel-online.corn/News/PR2004_2nd/Apr04_CapRates.html 5/10/2005
-"RESS RELEASE Contact: Rick Pastorino 703.838.9707
October 23, 2000
ISHC RELEASES CAPEX 2000 — A STUDY ON CAPITAL EXPENDITURES IN THE HOTEL
INDUSTRY
Seeking to broaden the base of information available on the subject of hotel capital expenditures (CapEx), the
International Society of Hospitality Consultants (ISHC), has published CapEx 2000, a successor study to the
original CapEx publication released by the Society in 1995.
In what the ISHC hopes will become a regular five-year look at the issue of CapEx, they again surveyed the
industry at large to see whether spending patterns related to CapEx have changed over time, from the total
(dollar) amount spent to the specific areas of a hotel where expenditures are spent.
Similar to the 1995 study, this study was performed from two perspectives:
1) Through a retrospective analysis of what a representative sample of hotels actually spent on CapEx over
time to remain competitive; and
2) Through a prospective analysis of the cost to replace the various components of a hotel based upon their
typical useful lives.
.`order to obtain relevant data for CapEx 2000, the authors, Kathe Nylen, Suzanne Mellen, and Rick Pastorino,
all ISHC members, polled hotel owners and operators for CapEx data related to the 1988 to 1998 time period.
This resulted in useable survey data from approximately 350 hotels. In order to fund the cost of the research, the
ISHC sought sponsorship money from the industry at large. They asked for $5,000 per sponsor — no more, no
less — to avoid the possible perception that any one entity may have influenced the results. In the end, they
collected a total of$50,000 from the following sponsors:
CapEx 2000 Sponsors
Baymont Inns and Suites Cornerstone Real Estate Advisors
Creative Hotel Associates Four Seasons Hotels & Resorts
Hyatt Hotels and Resorts Molinaro Koger
Starwood Hotels and Resorts Strategic Hotel Capital, Inc.
Sunstone Hotel Investors, Inc. Waterford Hotel Group, Inc.
The ISHC gratefully acknowledges the sponsors of ISHC and commends them on their willingness to
participate in CapEx 2000.
CapEx 2000 expands upon the original 1995 research and thus includes additional property types and breakouts.
Specifically, an all-suite category was added to the full and limited-service hotel categories, with all categories
showing CapEx spending patterns by location, average daily rate, property size and age of property. The study
10 investigates CapEx spending among public and private hotel owners, as well as repairs and maintenance
'-expenditures.
18
-The publication also provides a comparison of the CapEx 2000 data with the data from the initial CapEx study,
?blished in 1995. That study (referred to as CapEx 1995) encompassed a time period from 1983 to 1993. As a
result, the sample includes over 20 years of actual data specific to CapEx for hotels.
Generally, what the historical (retrospective) data collectively reveals is that, regardless of product type, CapEx
spending for a hotel generally increases as a hotel ages, as illustrated in the following chart.
Average CapEx Range by Year as a Ratio to Total Revenue
I6%
la%
12X j
10%
ex
6% ,
2%
1 2 3 4 5 6 ) a 9 10 11 12 13 la 15 16 1] 16 19 20 21 22 23 24 25
Years
What the survey doesn't specifically tell us is whether these averages are the right amount for a given hotel.
A few other highlights of CapEx 2000 findings are provided below:
• Capital Expenditures (CapEx) for full-service hotels, as a ratio of total revenue, from 1988 and 1998
remained relatively consistent with CapEx spending patterns between 1983 and 1993, the period covered
in the 1995 study. Specifically, full-service hotels spent an annual average of 6.1 percent of total
revenue on CapEx between 1988 and 1998, compared to 6.9 percent between 1983 and 1993 (1995
study).
CapEx as a%of Total Revenue-Full-Service Hotels
5%
o%s. -- —-----
fa061995 ( &2000
• Comparatively, CapEx for limited-service hotels increased significantly over the same time period. The
average amount spent per year by limited-service was 5.5 percent of total revenue for CapEx 2000(1988
— 1998), while 3.7 of total revenue was spent in the period from 1983 — 1993, as reported in CapEx
1995.
19
CapEx as a%of Total Revenue-LimitedService Hotels
7%
6%.
5%
4%
-
cape 1935 Cape 300
• In light of the proliferation of all-suite hotels (inclusive of extended-stay properties) over the past 10
years, the ISHC was able to collect sufficient data to include this segment separately for CapEx 2000.
All-suite hotels in the survey spent an average of 4.9 percent of their annual total revenues on CapEx,
covering the time period 1988 — 1998. (Comparable data for the all-suite group was not presented in
CapEx 1995.) The sample of all-suite hotels is still relatively new, and CapEx averages for this group
are likely to increase over time.
CapEx to Total Revenue-All-Suite Hotels 113%
10%+
8%!
6%r
2% -
2%
1 2 3 4 5 s 7 8 9 ID 11 12 13 14 15
Age of Hotel
—CapCx/Total Revenue —0-4%Reserve
The second part of the study is a prospective look at CapEx spending under several different hotel prototypes,
including:
• Economy Limited-Service
• Moderate Limited-Service
• Moderate Full-Service
• Upscale Full-Service
The objective of the authors here is to provide the reader a consolidated look, useful timeline and current costs
for replacement of most components of a hotel. Samples of this data are shown below:
)
20
List of Major Capital Expenditures by Year
Upscale Full-Service Hotel
Item Unit of Measure #of Units Average Cost Total
Year 1
No Major Capital Expenditures $0
Year 2
No Major Capital Expenditures $0
Year
Technology
Office Automation Per Room 300 $125 $37,500
Total
$37,500
Year 4
Guest Rooms
Bed Treatment Per Room Bay 300 $200 $60,000
Total
$60,000
Year 5
Guest Rooms
Carpet/Pad(material only) Per Key 300 $466 $139,662
Carpet/Pad(installation labor) Per Key 300 $130 $39,066
Bathroom
t.4 )grout Wall Tile Per Bathroom 300 $500 $150,000
Regrout Flooring Per Bathroom 300 $350 $105,000
Lobby Bar
Carpet/Pad(material only) Per Square Yard 89 $45 $4,005
Carpet/Pad(installation labor) Per Square Yard 89 $8 $712
Window Treatments Per Lineal Foot 40 $101 $4,022
Full Service Bar
Carpet/Pad(material only) Per Square Yard 66 $45 $2,970
r
Carpet/Pad(installation labor) Per Square Yard 66 $8 $528
Window Treatments Per Lineal Foot 10 $91 $907
Three Meal Restaurant
Tables(36"Square+base) Each 20 5441 $8,816
Chairs(w/Arms) Each 75 5261 $19,575
Artwork/Accessories Per Room 1 $13,813 $13,813
Specialty Restaurant
Tables Each 16 $320 $5,120
Chairs Each 60 $325 $19,500
Carpeted/Pad(material only) Per Square Yard 189 $42 $7,938
Carpet/Pad(installation labor) Per Square Yard 189 $10 $1,890
'-,_r,,k:xecutive Offices
21
- List of Major Capital Expenditures by Year
Upscale Full-Service Hotel
Item Unit of Measure #of Units Average Cost Total
Office Carpet(material only) Per Square Yard 153 $22 $3,366
Carpet(glue down labor) Per Square Yard 153 $5 $765
Wall Covering(material only) Per 54"Lineal Yard 101 $12 81,212
Wall Covering(installation labor) Per 54"Lineal Yard 101 $8 $808
Entrance/Lobby/,Front Desk
Carpet/Pad(material only) Per Square Yard 289 $42 S 12,138
CarpeU Pad(installation labor) Per Square Yard 289 • $8 $2,312
Total
$544,125
Together, the historical and prospective sections of the study quantify the amount of CapEx required to
adequately maintain a hottl over its life cycle.
Note: The ISHC does not advocate a position on the amount of funds to be reserved or the amount of CapEx
required by a hotel at any point in time. Both CapEx 2000 and its predecessor, address solely the actual amount
of money spent (retrospectively) by a group of hotel owners to renovate and refurbish their property and/or
replace FF&E in their hotel properties, as well as an estimated amount of CapEx likely to be spent
/arospectively) to remain competitive into the future.
i
To order CapEx 2000, please log onto to the ISHC Website at www.ishc.com, or contact the ISHC
Headquarters office at 515 King Street, Suite 420, Alexandria, VA 22314, Phone: (703) 684-6681, Fax: (703)
684-6048.
For further information on CapEx 2000, please contact one of the CapEx 2000 authors:
Rick Pastorino, ISHC, Phone: (703) 838-9707; E-mail: rpastorinoArevparintl.com;
Kathe Nylen, ISHC, Phorfe: (702) 384-1120; E-mail: knylen c pbtk.com
Suzanne Mellen, ISHC, Phone: (415) 896-0868: E-mail: smellenAhvsinternational.com
International Society of Hospitality Consultants (ISHC) ---- is a professional organization of hospitality
consultants who dedicate themselves to providing the highest quality of professional service. The ISHC was
founded in recognition of the public need for competent, unbiased advice, and professional guidance on the
many issues affect and influence the hospitality industry.
( )
{
22
8C•te:Iss'wlu)NOLIYfl0 t L6 VC98LCOC:OISD x C9C:SINCI Y?GRAS x iowa ulelunoµJ via conic IV 01108;P116 30Vd
•
LETTER OF ACTRORIZATION
To Whom It May Concern:
Property Owner Name: Longmont Group,Inc.
Hereby appoints and authorizes Deloitte Tax,LLP as taxpayer's representative to represent our firm's
property and all property controlled by our firm or any of its subsidiaries of partnerships on all
matters pertaining to the 2005 and 2006 ad valorem taxes. Until written notice of termination is
issued, they have the right to file returns, examine records, obtain all tax statements, and discuss or
appeal any tax assessments to the proper authorities when, in their opinion, the assessment does not
constitute fair market value. In addition hey have the right to file appeals to the appropriate
jurisdiction,if authorized by law.
13y:
Name: Navin C.Dimond
Title: President
Address: 9100 E.Panorama Drive,Suite 300
Englewood,CO 80112
Phone Number; 303,785.3100
Property Dese:
Parcel Address Assessor State
R0085887 10805^ Turner Blvd Weld County CO
Subscribed and sworn before me this 23 day of PIO
y , 7.OJ
it l (d-r,lAL
Notary Public de of e_ C'�� � ` M
County of th1 Qp/A h Weir'talc
l� Ski dColorado •
' My commission expires 1/1 7 rYY
23
600'd 5569# apaiafialloJs L6TE58LE0E 6T:ET 500Z,5Z'AKW
Hello