Ideal Opportunity for Owner/Operator to Acquire First Hilton Asset

• The 73-key count is highly attractive for an owner/operator looking to acquire its first Hilton-branded asset.

Motivated Seller

• Current ownership acquired the property in September 2023 but now needs to exit given the different direction by the company; thus, the seller is motivated and will meet the market in terms of pricing.

Recently Renovated Asset

• From 2021 to 2023, the property underwent an extensive, $2.5-million renovation that reimaged both the interior and exterior.

• Current ownership completed a modest property improvement plan (PIP) upon acquisition of the asset in September 2023; as such, only a minor change-of-ownership PIP is expected.

• With an updated product offering, new ownership will have the ability to increase occupancy and average daily rate (ADR) by implementing aggressive sales tactics to capture more demand from corporate travelers and maximize RevPAR penetration to outperform the hotels in the competitive set.

Significant Upside for a New Operator

• Due to the extensive renovations affecting guestroom inventory in 2021 to 2023, the hotel was not able renew any corporate long-term contracts and lost out on revenues to its competitors.

• Based on the year-to-date (YTD) August 2024 financial statement, the hotel has suffered from a lack of operational efficiency, registering a low gross operating profit (GOP) of 21.1%.

• Based on a selection of operating statements from similar vintage Hampton Inn & Suites by Hilton hotels, the hotel should achieve a stabilized GOP margin between 44.0% and 48.0%.

• Per the September 2024 STR report, the hotel ranked last (out of five) among its competitors in terms of YTD occupancy and RevPAR, registering a 69.8% RevPAR penetration index. This presents upside for a more prudent operator to recapture demand from corporate travelers and transition the hotel into becoming a market leader.

• Based upon HVS’s pro-forma projections, stabilized rooms revenue in 2026 is anticipated to be in excess of $1.65 million, with a net operating income (NOI) flow-through of $509,000 (rounded).

Increasing Topline Revenue Trend

• The hotel’s rooms revenue for the trailing-twelve-month (TTM) period ending in October 2024 equated to $1,275,000 (rounded)—a 6.0% increase compared to last year.

• Per the STR report, the hotel’s capture of demand (occupied room nights) increased 1.0% (rounded) for the TTM period ending September 2024, whereas the competitive set’s occupied room nights increased 9.4%, indicating the opportunity to improve its market share.

• If the hotel were to capture its fair share of market demand, at a RevPAR index of 100.0%, it would be generating in excess of $1.7 million in rooms revenue.

Minimal Change-of-Ownership PIP and Discount to Replacement Cost

• Given the recent renovations, a minimal change-of-ownership PIP is expected.

• The PIP report has been ordered and will be uploaded to the virtual deal room (VDR) upon receipt.

• To construct a similar, limited-service hotel asset with comparable amenities, the estimated all-in investment would be a minimum of $150,000 to $180,000 per key.

• This opportunity presents an investor the ability to acquire the property at a price well below replacement cost.

Highly Sought-After Hilton Franchise

• An investor can expect a new franchise agreement with Hilton for the balance of current ownership’s existing term, which is just under ten years.

• 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. Hilton Honors™ boasts over 85 million members worldwide and offers direct marketing efforts to drive business to Hilton’s products.

• 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.

Excellent Location Along I-45 Among Demand Generators

• The property is located near multiple corporate demand generators in the area, including the growing City Place (formerly known as Springwoods Village) mixed-use development, Exxon, HP, Baker Hughes, Halliburton, HCA Houston Healthcare Northwest, CEVA Logistics, Richey Business Park, Oil Center Business Park, Schlumberger, ALL STOP! Survival & Safety Training, Vallourec Tube-Alloy Houston, Gulf State Toyota, and MiTek.

• Nearby leisure attractions in the area include The Woodlands Mall, Champions Golf Club, The Woodlands Market Street, Hurricane Harbor Splashtown, Sam Houston Raceway, Mercer Arboretum & Botanic Gardens, and Ashton Gardens North Houston (wedding venue).

• The property is also located ten miles from George Bush Intercontinental Airport (IAH), which is convenient for both business and leisure travelers.

Management Availability

• The hotel asset 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.