Upside Potential for a Robust Operator

• An investor will have an exceptional opportunity to purchase two hotel assets on Seawall Boulevard in the highly sought-after Galveston market, both directly across from the beach.

• As an independent hotel, the Beachfront Palms Hotel has the ability to be converted to a franchised hotel in the future.

• The hotels are absentee owned, and great upside exists for a more hands-on owner/operator to restructure the hotels’ operations, establish yield-management strategies, and initiate cost-containment initiatives.

Strong Historical Topline Performance and Stability

• Historically, the hotels have recorded strong in-place room revenues; over the past three years, the hotels’ rooms revenue averaged $6,578,753 combined.

• Per the August 2024 STR data, the Quality Inn & Suites’ competitive set operated at an aggregate average daily rate (ADR) of $128.31, while the Quality Inn & Suites only managed to yield an ADR level of $103.92, highlighting significant upside potential.

Existing Revenue-Generating Lease Agreement

• In addition to its stable operational performance, there is an existing ten-year lease, which began on November 23, 2022, with Doc Holliday’s Roadhouse (a restaurant) in front of the Quality Inn & Suites Galveston – Beachfront, generating $16,666 per month in additional revenue until November 2026, with rent increasing in the following years.

  • Please see below for lease terms. We note that the monthly base rent is halved due to sharing the income with another landlord.

*The base rent set forth for year 9 of the lease term reflects the addition of $100,000 of the base rent deferral.

**The base rent set forth for year 10 of the lease term reflects the addition of $100,000 of the base rent deferral and the reduction of $200,000 of prepaid base rent.

High-Barriers-to-Entry Market with Beach Access

• Galveston is a high-barriers-to-entry market due to limited developable land, strict zoning regulations, and a historic district that restricts new construction.

• The two adjacent hotels have an irreplaceable location just off Seawall Boulevard where guests can walk to the beach.

Highly Desirable Assets Among Strong Leisure & Corporate Demand Generators

• The properties benefit from very good visibility on the Galveston Seawall, near numerous dining, retail, and entertainment options, which is a positive attribute for both business and transient guests. Guests can easily walk across the street to access the many beaches along Seawall Boulevard.

• Leisure demand generators in the area include the Port of Galveston Cruise Terminal, Moody Gardens, Schlitterbahn Waterpark & Resort, Pleasure Pier, 61st Street Fishing Pier, Galveston Island Convention Center, and historic Downtown Galveston.

• Corporate demand generators in the area include the University of Texas Medical Branch (UTMB), Galveston College, Texas A&M University, Landry’s, Moody Gardens, Moody Bank, ANICO, Mitchell Family Companies, Marathon Petroleum, and Valero.

• The Port of Galveston ranks as the fourth-busiest cruise port in North America, accommodating over 1.7 million passengers each year. Additionally, it is the fourth most popular cruise home port in the United States and is recognized as one of the top cruise ports globally.

• There are numerous festivals, special events, sporting events, and gatherings held throughout the year in Galveston, with particularly strong demand generated during the spring and summer months.

New Developments Coming to Galveston, Making it the Go-to Beach Destination in Texas

• The 334-room, 15-story Margaritaville Resort, situated on 95 acres of land to the east of the island, is under construction and is expected to be complete by 2026. The development will include a 2.5-acre elevated pool deck overlooking the beach, a waterpark with a lazy river, a large ballroom, multiple restaurants, and 278 multi-bedroom cottages for larger gatherings. The $250 million project, developed by RREAF Holdings LLC and Innisfree Hotels, will be the largest resort development in Galveston and the brand’s first lifestyle, ground-up resort development in Texas, bringing high demand to the area.

• Galveston’s landscape is evolving with major developments driven by the Galveston Wharves, including the $90-million West Port Cargo Complex and the finalized agreement with MSC Cruises for a fourth cruise terminal complex at the Port of Galveston, where MSC Seascape will homeport from November 2025 onwards. These port expansions signal significant economic growth and job creation opportunities in Galveston. Additionally, the new Engineering Classroom and Research Building at Texas A&M University, scheduled for completion in the fall of 2025, further contributes to the city’s transformation, enhancing educational offerings and bolstering Galveston’s appeal as a dynamic coastal destination.

• In addition to these projects, notable real estate developments, such as Roseate Beach (a 160-home beachfront community) and Tiara on the Beach (a ten-story condominium complex), are under construction in Galveston’s West End neighborhood. These ventures, along with a planned, $250-million, beachside, mixed-use development nearby, illustrate the city’s growing diversity and attractiveness.