High-Quality Hotel Asset

• This high-quality hotel asset is the premier lodging choice in Victoria, having been built with custom amenities tailored to both the leisure and corporate segments.

• The property features a resort-like indoor/outdoor swimming pool, a swim-up bar, and 7,004 square feet of meeting space (the largest offering of meeting space in the submarket).

Strong Historical Topline Performance

• From 2021 through 2023, rooms revenue consistently averaged over $3,600,000 (rounded), with gross revenue averaging over $4,200,000 (rounded). During the same period, the hotel maintained its status as the market leader with an average RevPAR penetration index of 120.2%.

• The Garden Grille & Bar includes a fully equipped commercial kitchen for banquets and event catering, having generated over $520,000 (rounded) in additional revenue in 2023.

Operational Upside Potential for a Robust Operator

• Per the trailing-twelve-month (TTM) March 2024 profit-and-loss (P&L) statement, the hotel’s gross operating profit (GOP) was 39.4%, with a net operating income (NOI) flow-through of about $1,070,000 (rounded). Great upside exists for a more “hands on” operator to restructure the hotel’s operations to maximize NOI flow-through.

• Based on a selection of similar vintage Hilton Garden Inn operating statements, the hotel should achieve a stabilized GOP margin between 44.0% and 48.0%.

• Per the March 2024 STR data, the hotel ranked third in terms of occupancy, indicating that upside exists to drive revenues even higher by increasing occupancy.

Increasing Revenue Trend

• The hotel’s rooms revenue for the trailing-twelve-month (TTM) period ending in April 2024 equated to $3,852,000 (rounded)—the highest performance since opening.

• Rooms revenue for the year-to-date period through April 2024 increased by 23.6%, compared to the same period last year.

• Per the March 2024 TTM STR data, the hotel’s occupied room nights (demand) have increased 4.7%.

High-Quality Physical Product Below Replacement Cost; Renovation Being Completed

• The hotel opened in 2013, and ownership has maintained the physical asset well.

• To construct a similar asset with comparable amenities in a high-barriers-to-entry location, the estimated all-in investment would be a minimum of $150,000 per key.

• Current ownership is in the process of completing the outstanding Fixed Renovation Cycle Management (FRCM) “soft” update from Hilton, which includes a refresh of the common areas and guestrooms at a cost of approximately $1.3 million; the renovation is scheduled to be completed in August 2024.

• Given the ongoing FRCM renovation, it is expected that new ownership will have a minimal change-of-ownership PIP during franchise transfer.

Highly Sought-After Hilton Franchise; World-Class Affiliation and Distribution Platform

• Upon acquisition and approval, an investor can expect a new long-term franchise agreement with Hilton.

• The Hilton Garden Inn franchise is an industry-proven brand with a strong reputation among corporate travelers. Per Hilton, the brand is able to drive a higher average rate than its competitors due to its leading food and beverage offerings and modern amenities, which result in improved profitability.

• An investor will benefit from operating a franchise of one of the world’s leading global hospitality companies. Every Hilton-branded property benefits from a unique system of innovative solutions and advanced technologies, known as the Hilton Performance Advantage, which delivers leading-edge support to consistently drive profits and efficiencies. It is a powerful resource for owners and operators, unrivaled in the industry. Hilton Honors™ is an award-winning guest loyalty program. Its roughly 190 million members account for more than 50.0% of all room nights globally for Hilton-branded hotels. Specifically for the Hilton Garden Inn brand, 65.0% of guests are Hilton Honors members.

Excellent Location Among Numerous Regional Demand Generators

• The property is strategically located at the Navarro Street Exit of State Route 463, a highly developed thoroughfare in Victoria.

• Victoria is located 30 miles from the Gulf of Mexico and within a two-hour drive of Corpus Christi, Houston, San Antonio, and Austin. Easy access to major highways, the Victoria Regional Airport, railway terminals, the Port of Victoria, and the Port of Port Lavaca-Point Comfort helps to sustain a healthy environment for business.

• Major business clusters in the Victoria area include industrial manufacturing, metals manufacturing, petroleum and chemical manufacturing, and plastics and materials manufacturing.

• Top employers in the Victoria region include Caterpillar, DOW Seadrift Operations, Formosa Plastics, Integrated Bagging Systems, INVISTA, Inteplast Group, Citizens Medical Center, and DeTar Healthcare System.

Management Availability

• The hotel asset is being offered free and clear of any management encumbrances, providing an investor with the flexibility to install its preferred management company or to self-operate, if approved by Hilton.