Unique Hilton-Branded Portfolio
Rare opportunity for an investor to acquire a portfolio of two premium-branded Hilton assets located next to one another.
Upside Opportunity for a Robust Operator
In the last two years, the portfolio achieved an annual house profit of 39.0%.
Based on a selection of similar limited-service, Hilton-branded, operating statements, the portfolio should achieve a stabilized GOP margin between 45.0% and 50.0%.
The portfolio offers operational efficiencies of key property-level functions including a shared General Manager, Director of Sales, Sales Coordinators, and a Chief Engineer, allowing for reduced payroll costs and higher NOI flow-through.
Strong Rebounding Performance with Upside
Since the onset of the COVID-19 pandemic in 2020, rooms revenue for each hotel has been trending upward. Combined, the portfolio achieved $4,500,000 (rounded) in rooms revenue as of the trailing-twelve-month (TTM) period ending September 2023, a 17.3% increase compared to the amount in 2022.
The portfolio dominates the competitive set, with the Home2 Suites by Hilton registering a 121.3% RevPAR penetration index, and the Hampton Inn & Suites by Hilton registering a 143.8% penetration index as of the TTM period ending September 2023.
Given the rebounding market, new ownership will be able to capture each hotel’s competitive advantage by implementing aggressive sales tactics, increasing room rates, and improving guest satisfaction scores.
As of the TTM period ending September 2023, the Home2 Suites by Hilton registered a RevPAR level of $75, while the Hampton Inn & Suites by Hilton achieved a lower RevPAR level of $66, showing upside.
The portfolio’s stabilized rooms revenue is expected to reflect a RevPAR level of at least $80, with total (combined) annual rooms revenue of over $5 million.
Highly Sought-After Hilton Franchise, World-Class Affiliation and Distribution Platform
The Hampton by Hilton ﬂag is a proven brand that dominates the upper-midscale segment. Franchisees beneﬁt from Hilton’s global strength, reputation, and unrivaled Hilton Honors™ guest loyalty program.
The Home2 Suites by Hilton is one of the fastest growing brands in the industry. The modern-style, all-suite, mid-scale brand targets the sophisticated, value conscious extended-stay segment. The all-suite design promotes guest independence, which allows for lower housekeeping costs and higher profits. This business model benefits an investor in operating an asset that yields high GOP margins and NOI flow-through.
Well-Maintained, High-Quality Physical Products, Priced Below Replacement Cost
The properties are less than ten years old, and current ownership has maintained the physical assets well.
The change-of-ownership PIP reports can be found in the virtual deal room (VDR).
The Hampton Inn & Suites by Hilton is due for a refresh.
Given the newer construction of the Home2 Suites by Hilton, there is a minimal change-of-ownership PIP.
Based on the current pricing guidance, the properties are priced below replacement cost. To construct similar assets with comparable amenities, the estimated all-in investment would be a minimum of $140,000 per key.
Excellent Location Among Strong Corporate & Leisure Demand Generators
The properties are strategically located along Beltway 8 between Interstate 45 and the Hardy Toll Road, proximate to numerous dining, retail, and entertainment options.
Corporate demand generators in the area include the Houston Police Academy, Baker Hughes, Crane Worldwide Logistics Headquarters, Halliburton, Insperity, Memorial Hermann, United Airlines, Ritchie Bros. Auctioneers, Technip/FMC, Pinto Business Park, and the Mattress Firm Warehouse, as well as numerous business parks.
Leisure demand generators in the area include Houston Aquarium & Animal Adventure, Deerbrook Mall, The Woodlands Mall, W. W. Thorne Stadium, Rockstar Energy Bike Park, Hurricane Harbor Splashtown Waterpark, and Sam Houston Race Park.
Available dining options nearby include Denny’s, Waffle House, Taqueria El Dorado, and Pappas Seafood House.
George Bush Intercontinental Airport (IAH)
The properties are located only three miles from George Bush Intercontinental Airport (IAH).
Last year, nearly 41,000,000 (rounded) passengers traveled through IAH, reflecting a 21.7% increase over the number of passengers in 2021 (33 million). While this is still below the 2019 record level, it indicates a strong sign of recovery.
The strong growth of international travel has spurred Houston Airport System to redevelop and update multiple areas of IAH by 2024. Dubbed the IAH Terminal Redevelopment Program (ITRP), the multi-year expansion includes the construction of the new Mickey Leland International Terminal (MILT), which will consolidate current terminals D and E into one centralized hall. The most recent milestone is the demolition of the garage for Terminals D and E, which started in the second quarter of 2021.
This past January, United Airlines opened a new, 56,000-square-foot inflight training center (the airline’s largest training facility) at IAH, which is expected to train 4,000 flight attendants in 2023 alone.
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