Thursday, October 17, 2013

Extended Stay Hotel for South Seattle Market

My Van Gogh Development partner Thomas Harper and I recently hosted a visit from Regional Franchise Director Herb Bowman of Choice Hotels to explore the possibility of a south Seattle site for an extended stay hotel. Here is his letter in response to that visit:

Mr. Harper and Ms. Ceccherelli:

Thank you for hosting my visit to Seattle recently to review the Othello[Garden Plaza] as a potential site for a MainStay Suites.

Choice Hotels, owner of several brands, including MainStay Suites, is interested in the Seattle market for our line of hotel products. I like Seattle as a market that seems to be ready for additional hotels, with a good number of tourists, visitors, employees and prospective residents. 

In my opinion, the Othello
[Garden Plaza] parcel is suited best for an extended stay hotel versus a nightly or transient hotel, since it isn’t located on an interstate with highway visibility.  Considering our two extended stay brands, MainStay Suites, and Suburban Extended Stay Hotels, it is my belief that MainStay is the better fit, as it is in the mid-market, to upper mid-market segment, versus the economy segment in which Suburban competes.  MainStay would allow the hotel to receive a higher rate than Suburban.

MainStay Suites consistently ranks among our highest occupancy and revpar (revenue per available room) brands, allowing a good operator to produce a very solid bottom line versus many transient or nightly hotels.  Our extended stay product line often works well in areas where demand may be generated more by local demand generators such as residents, industry, military, and medical, as opposed to proximity to the interstate. However, the Othello site offers easy access to nearby Seattle amenities, such as downtown Seattle, three busy airports, Lake Washington, Kubota gardens, and many diverse ethnic restaurants and businesses.

While we have standard prototypes for our MainStay Suites, we allow flexibility in the design that would allow you to incorporate the MainStay Suites within a larger mixed use commercial or residential use at the Othello site.  Our MainStays are typically built on land priced in the $8-9/square foot range.  If the Othello
[Garden Plaza] site is priced much more than this, it would need other income generating projects along with the MainStay to make the project pencil.  The average daily rate for the rooms in the Seattle area is strong, but a feasibility study should most likely be commissioned before moving forward.

Our prototypical MainStay is 97 units, but a developer is able to adjust the room count up or down depending on market needs.  I’d rely on the feasibility study results to give you a good idea of the room count needed in Othello.  Each of the units would be approximately 300 to 477 sf.  Choice Hotels’ parking requirement is one parking space per suite, but of course you’d need to check into the local code as well.  The parking need can be handled by a parking garage if need be.

The total investment necessary to begin operation of a 97-room newly constructed MainStay Suites hotel franchise is between $4,597,738 and $7,820,331.  Of course I can pass along third party management companies who would most likely be interested in operating a MainStay Suites for you and/or your investment group in Seattle.

We look forward to hearing more from you as you gain site control.  If there is anything we can do to be of further assistance, please let me know.

Kind regards,

Herb Bowman

No comments: