Operational Upside Potential for a Robust Operator

• The 76-key count is considered an ideal size for an experienced owner/operator.

• Since opening, the hotel has achieved an average gross operating profit (GOP) of 40.5%. Based on a selection of similar limited-service hotel operating statements, the hotel should achieve a stabilized GOP margin between 46.0% and 50.0%.

• Given the newer construction, location, and brand affiliation, great upside exists for a more hands-on operator to restructure the hotel’s operations to maximize RevPAR penetration and net operating income (NOI) flow-through.

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

Underperforming Hotel, Significant Rooms Revenue Growth Expected

• Per the February 2025 STR trailing-twelve-month (TTM) data, the hotel ranked fifth (out of six) among its competitors in terms of occupancy and fifth in terms of RevPAR, registering a 74.8% RevPAR penetration index.

• If the hotel were to capture its fair share of market demand, at a RevPAR index of 100.0%, it would be able to generate over $2.7 million in rooms revenue.

• Based upon HVS’s pro-forma projections, stabilized rooms revenue in 2027/28 (Year 3) is anticipated to exceed $2.6 million, with an NOI flow-through of $900,000 (rounded).

Well-Maintained, High-Quality Physical Product with Minor PIP Expected

• The property was built as a podium-style structure with concrete and steel framing, situated on top of a parking garage.

• The hotel opened in March 2022, and ownership has maintained the physical asset well; thus, a minor change-of-ownership property improvement plan (PIP) is expected.

Attractive Assumable Financing Available

• An assumable financing package with attractive terms is available for a qualified buyer, as summarized below; please reach out to the deal team for more details.

  • Existing loan balance: $6,894,000 (rounded)

  • Current interest rate: Fixed at 4.6% until April 2027, then floating at Prime + 0.25%

  • Term: Ten-year term from April 2022 (seven years remaining)

  • Amortization: 25 years

  • Current monthly payment: $40,638

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.

• Per 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 over 380 cruise-ship sailings, accommodating over 3.0 million passengers and reflecting a 14.6% increase from 2023.

• The Port of Galveston ranks as the fourth-busiest cruise port in North America. 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.

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.

Excellent Location Among Strong Corporate & Leisure Demand Generators

• The property benefits from its strategic location at the 61st Street Exit off I-45, the thoroughfare for those traveling to Galveston Island, 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.

La Quinta Inn & Suites by Wyndham Franchise

• Upon approval from the franchise, an investor can expect a new, 20-year license agreement with Wyndham Hotels & Resorts.

• La Quinta by Wyndham is a well-established, limited-service, upper-midscale hotel brand that appeals to both business and leisure travelers. The brand’s RevPAR index averages over 100.0% nationally, and franchisees benefit from the 100 million Wyndham Rewards members to help drive guest stays.

Unencumbered of Management

• 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.