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040307 Convention Center HotelProposal for Embassy Suites Proposal for Embassy Suites Convention Hotel Convention Hotel Presented to the City of Virginia Beach Presented to the City of Virginia Beach Tuesday, April 3, 2007 Tuesday, April 3, 2007 Harmony Hospitality Harmony Hospitality Page Johnson Page Johnson Schedule of Topics Schedule of Topics •Page Johnson –Harmony Hospitality –Current Projects •Grey Folkes –Embassy Suites Proposal –Doubletree Improvements •Harvey Moore –The Embassy Suites Brand •Page Johnson –Project Recap & Conclusion Harmony Hospitality Harmony Hospitality •Currently owns/manages 8 hotels, including 5 full-service •One additional hotel scheduled to open in May and two others under development •Company is expected to double in size in the next 36 months •Harmony is a Virginia Beach company and comprised of investors local to the area Hilton/Hampton Inn Project Hilton/Hampton Inn Project •Parties Involved –City of Norfolk –VDOT –USAA –Wachovia Bank –Hilton Hotels Corporation Hilton/Hampton Inn Project Hilton/Hampton Inn Project Hilton/Hampton Inn Project Hilton/Hampton Inn Project •Hilton –Renovation –Max & Erma’s Restaurant •Creating better overall value for investors Hilton/Hampton Inn Project Hilton/Hampton Inn Project •Hampton Inn & Suites –Completing construction May 2007 •Very successful brand with loyal following Wyndham Virginia Beach Wyndham Virginia Beach •Conversion of Ramada Plaza Oceanfront into a first class Wyndham Hotel –Other hotels have proven there is demand for upscale hotels in the city –Hotel will be a much better product •Offers vacationers and conventioneers another upscale hotel option –Brand is distinctive and known for exceptional guest service The Doubletree/Embassy The Doubletree/Embassy Suites Hotel Complex Suites Hotel Complex Grey Folkes Grey Folkes Existing Doubletree Hotel Existing Doubletree Hotel •292 rooms •12,024 sfof meeting space, including a 5,000 sfGrand Ballroom •$5 MM already spent in last 18 months •Brand new Max & Erma’s Restaurant Doubletree Upgrades Doubletree Upgrades •Another $5 MM planned for additional improvements •Facelift of the exterior will blend in with the Embassy Suites •Will give the appearance of a new hotel Proposed Embassy Suites Proposed Embassy Suites •156 rooms •4,561 sfof meeting space •Full service restaurant •Business center •Indoor pool •Exercise facility •New prototype appeals to the upscale market •Ranks among highest in guest satisfaction •Will drive rate into market, even as a non- oceanfront hotel Doubletree/Embassy Complex Doubletree/Embassy Complex •Similar to Hilton/Hampton Inn Project –Refacingand renovation of existing hotel –Very recognizable brand built next door •New Welcome Plaza –Large fountain –Common lobby for both hotels –Creates a great sense of arrival •Rooftop Garden –Positioned between the hotels –Includes an outdoor pool Doubletree/Embassy Complex Doubletree/Embassy Complex •Enclosed elevated walkway to convention center •Outdoor Event Area –Directly across from convention center –Allows conventioneers opportunity to enjoy the outdoors without leaving the complex •Landscaping –Completely updated to reflect the quality of the center and the complex Complex Perspective Complex Perspective Complex Site Plan Complex Site Plan The Embassy Suites The Embassy Suites Advantage Advantage Harvey Moore Harvey Moore Hilton Hotels Corporation Hilton Hotels Corporation •Leading global hospitality company –2,900 hotels, 500,000 rooms –Representation in 80 countries •Some of best known and highly regarded brands –Hilton –Hilton Garden Inn –Doubletree –Conrad –Embassy Suites –Hampton Inn –Homewood Suites –Waldorf=Astoria Collection •Adding 2,000 hotels in next 5 years (1,000 International) •Has largest development pipeline of any US-based company •June 2006 –Announced merger with Hilton International to bring all domestic and international hotels under one umbrella Embassy Suites: A Category of One Embassy Suites: A Category of One Market PositionProduct •Upper upscale•Full service amenities •Marriott•Highly bundled •Sheraton•Suite •Hyatt•Complimentary bar •Westin•Complimentary breakfast •Omni•Business center •Hilton•Exercise facilities •All suite•Strong, highly competitive value proposition PersonalityTargets •Upscale•Upscale transient •Casual•Small Group (<100 attendees) •Open•Families •Unpretentious•Travel intermediaries •Warm •Unique •One of the industry’s most differentiated products Brand Performance Brand Performance FY 2005YTD 2006 •Occupancy74%75% •ADR$129$139 •RevPAR$94$104 •RevPARGrowth+8%+11% •RevPARIndex122.7123.0 YE 2005 ~ Mature Hotels Only Source: Smith Travel Research Among the Highest in Customer Satisfaction Among the Highest in Customer Satisfaction EmbassyHyattMarriottSheratonWestin Renaissance 8.23 Exceptionally Clean8.058.198.207.908.08 8.56 Good Night’s Sleep8.358.498.508.338.51 8.67 Brand I Trust8.418.658.418.378.39 8.22 Consistent Quality7.988.207.927.807.98 8.47 Fast Check-in8.158.438.458.198.24 8.21 Good Value7.798.067.937.787.85 8.15 Caring Staff7.938.098.137.777.91 8.19 Staff Resolve Problems8.158.008.137.908.02 7.89 Recognized Value Customer7.537.887.847.597.62 8.18 Locations I Want7.947.717.467.737.66 8.40 Service/Amenities Needed8.118.268.228.018.16 8.62 Safety8.408.548.598.348.42 8.35 Room Type Requested7.998.198.177.918.01 8.03 Great Free Breakfast6.336.775.786.196.00 7.75 Great Dining/Room Service7.587.647.747.377.49 7.66 Great Frequent Stay Program7.457.337.597.437.59 8.09 Technology/Service Needed7.898.067.937.807.97 8.24 Technology/Entertainment Needed7.968.198.097.917.99 8.36 Excellent Condition8.128.348.318.038.18 Average scores on a scale of 1 to 10, with 10 being the best What’s Behind the Performance? What’s Behind the Performance? •Strong brand; strong value proposition •Among highest in guest satisfaction •Appeal across all market segments •Comprehensive, well-executed brand support platform –Hotel performance support services –National brand marketing •Power of the Hilton Family –Hilton HHonors –National Sales –Reservations –Technology Brand Distribution Brand Distribution •Open: 185 •Under Construction: 8 •In Design: 28 3 International Locations: 1 WA ME Caracas, Venezuela MT ND VT Dorado, Puerto Rico 4 3 MN2 NH OR San Juan, Puerto Rico ID WI NY SD Bogotá, Colombia 3 Niagara Falls, Canada MA -2 WYMI 3 CT – 1 Montreal, Quebec PA 2 RI - IA6 Juan Dolio, Dom. Republic 2 NE 2 OH 6 1 1IN NV 8 NJ –3 IL 1 WV UT 5 5 3 28VA DE –1 KS CO MO Primary Targets: MD -2 KY CA 5 DC -3 Northeast 4 NC 2 Southwest TN 5 3 1 OK Canada 9 SC AR NM 7 Mexico AZ2 MS GA AL 2 18 LA TX AK 16 FL Design Option III Design Option III Design Option III Advantages Design Option III Advantages •Retains and enhances core brand pillars •Reduces site acreage requirements •Creates “kit of parts”design for increased product flexibility •Improves operational and energy efficiencies •Develops F&B concept with less operating overhead •Provides cost-effective gift shop element •Incorporates enclosed business center •Creates upscale fitness center to fit key account/guest expectations •Increases use of natural light in suites and public spaces •Provides turnkey design packages for faster development and lowers costs Ground Floor Ground Floor Atrium Atrium Features: •Community of neighborhoods •Increased natural lighting •Hub of activity Marketplace Marketplace Features: •Branded bistro/coffeehouse concept •Programmed solution •Lower staffing •Incorporation of gift shop element Breakfast Area Breakfast Area Features: •Open, airy layout •Buffet line easy to access •Exhibition-style kitchen Suite Parlor Suite Parlor Features: •Residential entry •Less square feet •Modular elements •Shower-only option •Improved work environment •Flexible furnishings •Side-by-side, double loaded corridor Standard King Standard King 462 sq. ft. Standard Double Queen Standard Double Queen 498 sq. ft. Brand Recap Brand Recap •Focused, well-positioned, highly differentiated •Embassy Advantage –Dominant, all-suite player –Efficient operations model –Recession resistant –Strong, consistent top line and Gross Operating Profit –Product appeal across all market segments •Embassy Design Option III –Highly flexible prototype that addresses the realities of today’s development environment Harmony Hospitality’s Harmony Hospitality’s Proposal to the Proposal to the City of Virginia Beach City of Virginia Beach Page Johnson Page Johnson Doubletree/Embassy Suites Complex Doubletree/Embassy Suites Complex •Combined Hotels –Provide 450 convention-quality rooms to the convention center –Adds an additional 16,000 sfof meeting space to the area –Positioning would be primarily convention center groups, then government and transient Advantages of the Project Advantages of the Project •Property is zoned B-1 Hotel Use so any rezoning will not be required •Property is 8.65 acres and is largest parcel adjacent to the convention center –With current use, there is 4.0 acres of land that can be used for additional development •Doubletree is 12 stories, Embassy Suites would be only 7 –More acceptable to Navy and other aviation interests •Ownership has ability to complete this project in as little as 24 months Advantages of the Project Advantages of the Project •Several blocks from the oceanfront –Would not be a threat to hotels on the beach, but rather a complement for overflow use –Primary purpose would be to serve the convention center •To position the hotel closer to the center, a land swap would be entertained •This is the only proposal that does not require the use of public land Considerations Considerations •Harmony Hospitality is asking for: –Designation of the complex as “Headquarter Hotels of the Convention Center” –Walkway connecting the hotel to the VBCC •Estimated cost of $2.6-4.4 MM –Development restriction on public property –Stipulation that city would fund additional upgrades intended for the sole benefit of city –City would work with our firm to cultivate business for the convention center as well as the hotels Questions/Comments Questions/Comments