Operational Upside Potential for a Robust Operator

• Ideal opportunity for a more-hands on owner operator to restructure the hotel’s operations to maximize RevPAR penetration and net operating income (NOI) flow-through.

• The hotel achieved an average gross operating profit (GOP) of 43.0% from 2022 through 2024.

• Based on a selection of similar dual-brand hotel operating statements, the hotel should achieve a stabilized GOP margin between 46.0% and 52.0%.

• The hotel is currently operated with a full staff in place, making this an ideal turn-around opportunity for an active owner/operator.

Recently Renovated Asset

• In 2022/23, ownership completed an extensive, comprehensive renovation to update the Motel 6 per the brand’s “Genesis” design initiative, while also reconfiguring the property to incorporate the Studio 6 brand, thus creating a dual-branded hotel property (50 of the 114 rooms were converted to the Studio 6 brand).

Ideal Dual-Brand Combination

• Given the mix of limited-service and extended-stay room offerings, an investor will benefit from capturing both transient and extended-stay demand during the peak tourism season, as well as extended-stay demand from construction crews.

Underperforming Hotel, Significant Rooms Revenue Growth Expected

• As of year-end 2024, the hotel achieved $1,425,000 (rounded) in rooms revenue, registering a 88.7% RevPAR penetration index.
  

• Per the February 2025 STR trailing-twelve-month (TTM) data, the Studio 6 ranked seventh (out of eight) among its competitors in terms of both occupancy and RevPAR, registering a 66.3% RevPAR penetration index. Meanwhile, the Motel 6 ranked last (out of seven) among its competitors in average daily rate (ADR) and fifth in terms of RevPAR, registering an 88.7% RevPAR penetration index.

• Upside exists for an experienced operator to implement more aggressive sales strategies to improve both occupancy and top-line performance.

• Based upon HVS’s pro-forma projections, combined stabilized rooms revenue is anticipated to exceed $1.6 million, with an NOI flow-through of $530,000 (rounded).

Discount to Replacement Cost

• This opportunity presents an investor with the ability to acquire the dual-branded property at a price well below replacement cost, at $50,000 per key (rounded).

Robust Drive-To Leisure Market of Galveston

• An investor will have an exceptional opportunity to purchase an asset strategically located off I-45, within the “Texas Triangle” of Austin, Dallas/Fort Worth, Houston, and San Antonio.

• Approximately 21 million people reside within a four-hour drive of Galveston.

• 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.

Strong Lodging Demand and Tourism Industry

• Tourism demand in Galveston has increased in recent years along with citywide efforts to improve local roads and infrastructure, expand the beaches, and improve the cruise-ship terminals.

• Per the 2023 Galveston Economic Impact of Tourism Study, completed by city officials last summer, tourist visitation reached a peak of 8.9 million visitors in 2023, reflecting a 9.3% increase from 2022. These visitors spent a record $1.7 billion, which directly affected the local economy.

• According to the Visit Galveston Tourism Economics Travel Indicators, the 2024 aggregate lodging demand numbers equated to 4.2 million guests for the year, 11.5% higher than what was recorded for 2023. Additionally, over this same period, Galveston welcomed approximately three million cruise passengers, representing a 14.6% increase from the year prior.

• The Port of Galveston ranks as the fourth-busiest cruise port in North America. In 2024, the port hosted 380 cruise-ship sailings, accommodating over 3.4 million passengers and reflecting a 128.0% increase from 2023. Additionally, it is on track to be the third most popular cruise home port in the United States and is recognized as one of the top cruise ports globally.

Excellent Location Among Strong Corporate & Leisure Demand Generators

• The property benefits from its strategic location along the frontage road (Avenue J) of I-45, a major thoroughfare for those traveling to Galveston Island. Moreover, it is proximate to numerous dining, retail, and entertainment options, which is a positive attribute for both business and transient guests.

• 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, and the petrochemical refineries in Texas City.

• Texas City is home to the major petrochemical refineries of DOW Chemical Company, Marathon, Valero, Eastman Chemical Company, and INEOS Styrolution America; these facilities generate year-round demand related to plant shutdowns and maintenance.

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

Over $1 Billion in Developments Throughout Galveston

• Early last year, developers announced that they were in the beginning stages of constructing the $700-million Margaritaville Resort on 95 acres of land to the east of the island. Along with the 15-story resort, the development will include an expansive, elevated pool deck that overlooks the beach; a waterpark with a lazy river; a large ballroom; multiple restaurants; and 278 multi-bedroom cottages. This project will be the largest resort development in Galveston and the brand’s first lifestyle, ground-up resort development in Texas; construction is slated for completion by 2026.

• Galveston’s landscape is evolving with major developments driven by the Galveston Wharves, including the $90-million West Port Cargo Complex and the groundbreaking of the $151-million and fourth cruise terminal complex at the Port of Galveston, where MSC Seascape will homeport from November 2025 onward. These port expansions signal significant economic growth and job creation opportunities in Galveston. This past October, Norwegian Cruise Line confirmed a ten-year contract to sail out of the new terminal once completed.

• Additionally, the new Engineering Classroom and Research Building at Texas A&M University, scheduled for completion this fall, 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.

Unencumbered by Management Agreement

• The hotel 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.