Select Hotel Investment targets a selected class of hotels: upscale branded focused service properties. Typical brands in this sector include Marriott’s Courtyard and Residence Inn, Hilton’s Garden Inn and Hampton, Holiday Inn Express and Sheraton Four Points, as well as others. Locations include urban, suburban, airport, highway and secondary municipalities in Canada.
We have a detailed financial model to underwrite investments. The model analyzes number of rooms, occupancy, room rate, other revenue sources, departmental expenses, administration expenses, management fees, franchise royalties, marketing expenses, maintenance expenses, energy costs, property taxes, insurance, and a reserve for furniture, fixtures and equipment. Historical information is entered into the model and then future performance is projected on an annual basis for future years. Our assessment of purchase price is based on the financial analysis. We believe in conservative assumptions for future projections
We have a rigorous diligence process. It involves a detailed inspection of the physical property and operating activities. It involves a careful review and analysis of financial and operating information, including guest data, business mix, forward bookings, suppliers and trends. It covers property tenure, zoning status, mortgage terms, franchise and management arrangements, salaried and hourly employee arrangements, structural condition, property standards, environmental assessment, operating contracts, parking facilities, liabilities, commitments and contingencies, taxes, and intellectual property. Where advisable, third party reports are obtained.
We evaluate the market in which the property is located, demand drivers and trends in the market, the property’s position in the market, and existing and potential supply competition. We identify well situated properties that can maintain and improve occupancy and rate.
In some cases, hotel owners may be having trouble meeting their loan covenants, or they may be finding it difficult to renew their previous loans. In other cases, proprietors without extensive resources may be unable to improve revenue and expense management, or they may lack the capital necessary to maintain property standards. We can be of assistance in these and other situations for owners wishing to sell their properties or requiring additional equity investment in them. We can use vendor take-back debt or equity participation as well as earn-out pricing if appropriate.