SpringHill Suites by Marriott Houston Katy Mills

2501 Texmati Drive, Katy, TX 77494, US

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THE OFFERING

HVS Brokerage & Advisory, as the sole and exclusive advisory firm to Ownership, is pleased to present the opportunity to acquire the 69-key SpringHill Suites by Marriott Houston-Katy Mills, a limited-service asset located in the historically strong-performing submarket of Katy in Houston, Texas. This offering presents an excellent opportunity for a private investor to enter the Marriott brand family with a highly sought-after franchise at a price well below replacement cost. A new investor can expect a new, 14-year franchise license agreement with Marriott upon completion of the brand-mandated change-of-ownership PIP.

Katy Freeway West

Submarket

Value-add

Investment Type

69

Keys

2005

Year Built

14 Years

Expected Franchise Term

INVESTMENT HIGHLIGHTS

Operational Upside After Renovation

  • Per the June 2021 STR Trend Report, the hotel ranked third out of five competitive hotels in terms of YTD RevPAR, which shows significant room for improvement for a stronger operator. Upon completion of the change-of-ownership PIP, an investor will have a newly updated, Marriott-branded, limited-service product and the ability to increase occupancy and rate by implementing aggressive sales tactics to capture more demand and maximize RevPAR penetration to outperform the hotels in the competitive set.
  • Prior to the COVID-19 pandemic, the hotel registered an average GOP of 33.0%. Great upside exists for a more “hands on” owner/operator to restructure the hotel’s operations, establish yield-management strategies, and initiate cost-containment initiatives to maximize RevPAR penetration and NOI flow-through.
  • Based on a selection of similar vintage SpringHill Suites by Marriott operating statements, the hotel should achieve a stabilized GOP margin between 45% and 48%. We see multiple opportunities for improvement that could lead to a collective decrease in rooms expenses by multiple percentage points.

Highly Sought-After Marriott Franchise

  • The 69-key count is highly attractive for an owner-operator looking to acquire its first Marriott-branded asset within one of the top five U.S. metropolitan areas.
  • Upon completion of the change-of-ownership PIP, an investor can expect a new, 14-year license agreement with Marriott. The PIP report is available in the Virtual Deal Room (VDR).
  • Per Marriott, the SpringHill Suites brand is an industry leader that benefits operators given the nationally recognized marketing campaigns and a cost-efficient operating model that delivers remarkable returns. 
  • The award-winning Marriott loyalty program, known as Bonvoy, is one of the largest in the hotel industry, offering members access to more than 6,700 hotels across 29 brands. Serving nearly 100 million enrolled members worldwide, it is an effective tool for driving customers to Marriott hotels and creating brand loyalty.

Rebounding Hospitality Industry

  • Given recent developments and wide distribution of the COVID-19 vaccines, the hospitality industry has experienced a surge of leisure travelers this year, resulting in one of the strongest summer seasons in terms of room-night demand and RevPAR performance.
  • Based on the June 2021 STR Report, year-to-date room-night demand for the competitive market and the hotel increased 25.7% and 60.7%, respectively.
  • The hotel is well positioned to capture leisure demand from Katy Mills and Typhoon Texas Waterpark.
  • The hotel has experienced a strong rebound in rooms revenue over the last three months, with 2021 monthly rooms revenue on pace with 2019. This trend is expected to continue throughout the remainder of the year, with performance on pace to return to pre-pandemic levels by next year.

Discount to Replacement Cost

  • Including the estimated change-of-ownership PIP, this opportunity presents an investor the ability to acquire the property at a price well below replacement cost. The PIP is estimated at $350,000 or $5,000 per key. 
  • In 2020, current ownership spent roughly $578,000 to update the property, including the repainting of the corridors and guestrooms, new guestroom softgoods, the replacement of carpet and flooring in the common areas, new lobby furniture, and renovations to the public restrooms and dining area of the lobby, as well as updates to the market pantry.
  • To construct a similar limited-service asset with comparable amenities, the estimated all-in investment would be a minimum of $130,000 per key.

Excellent Location Among Strong Corporate and Leisure Demand Generators

  • The property is strategically located off the Interstate 10/Katy Freeway/Energy Corridor, proximate to numerous dining, retail, and entertainment options, which is a positive attribute for both business and transient guests.
  • Katy Mills, an indoor destination retail center, offers over 175 retail shops and 9 anchor stores. In addition to the 1.3 million square feet of dining, retail, and entertainment venues, the Texas Typhoon Waterpark is situated within the parking lot of the mall. The facility attracts some international visitors, primarily from Mexico, who visit to area to take advantage of lower prices.
  • Corporate demand generators in the area include Winchester Business Park, Twinwood Business Park, Mason Creek Corporate Business Park, Williamsburg Business Park, Academy Sports + Outdoors Corporate Headquarters & Distribution Center, Igloo Products (headquarters), 99¢ Only Stores TX Headquarters + Distribution Center, Amazon Distribution Center, GEICO, Goya Foods, Schlumberger, and Memorial Herman Katy Hospital.
  • The 80-acre, mixed-use Katy Boardwalk District is currently in the process of completing Phase I of the project. The development will include multi-family residential units, over 155,000 square feet of retail space, 60,000 square feet of Class-A office space, and a full-service convention center hotel.

Management Availability

  • The property is being offered free and clear of any management encumbrances, providing an investor with the flexibility to revamp the operational strategies of the current operator.

PROPERTY OVERVIEW

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Property Details​​​​​​​​​​​​​​

  • Address: 2501 Texmati Drive, Katy, Texas 77494
  • Submarket: Katy Freeway West
  • Food & Beverage: Complimentary Breakfast & Market Pantry
  • Meeting Space: 550 Square Feet
  • Stories: Three
  • Structure: Wood Frame/Masonry
  • Foundation: Reinforced Concrete Slab
  • Elevators: One
  • Building Area: 42,969 Square Feet
  • Lot Size: 67,883 Square Feet (1.56 acres)
  • Parcel Number: 1214840010004
  • Management: Unencumbered
  • Brand: SpringHill Suites
  • Franchise: Marriott International, Inc.
  • Ownership Interest: Fee Simple
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Hotel Amenities

  • Fitness Room
  • Outdoor Swimming Pool and Whirlpool
  • Business Center
  • Market Pantry
  • Guest Laundry Facility
  • Daily Housekeeping Service
  • Valet Dry Cleaning Service 
  • Self Parking
  • 24-hour Common Area in the Lobby

Guestroom Amenities

  • Complimentary Wi-Fi and Wired Internet in Rooms
  • Premium Bedding
  • Microwave
  • Pantry Area
  • Mini-Fridge
  • Coffeemaker 
  • 32-inch Flat-screen Televisions 
  • Work Desk with Ergonomic Office Chair 
  • Iron and Ironing Board
  • Sofa 
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Guestroom Summary

Double/Double Suites41
King Suites28
Total69

MAP

CONTACT US

Investment Sales Contacts

Eric Guerrero

Managing Director, Brokerage & Advisory
HVS
Houston
+1 (713) 955-0012
eguerrero@hvs.com

James Rebullida

Senior Associate, Brokerage & Advisory
HVS
Houston
+1 (713) 955-5580
jrebullida@hvs.com

Fadi Rawashdeh

Senior Financial Analyst, Brokerage & Advisory
HVS
Houston
+1 (713) 955-0013
frawashdeh@hvs.com

Capital Markets Contact

Emil Iskandar

Senior Vice President, Capital Markets
HVS
Los Angeles
+1 (720) 231-3927
eiskandar@hvs.com