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Home My WebLink About083Pleasant Harbor Exhibit D Hospitality Advisorb Group Market Study PLEASANT HARBOR MARINA AND GOLF RESORT PROJECT Sponsored by Sound RC, LLC EXHIBIT D HOSPITALITY ADVISOR'S GROUP MARKET STUDY ACTUAT BUSINESS PIAN Exhibits 115 HO ITY AD OUP Market Analysis Prepared for The Statesman Group April L7,?OL$ Pleasant Harbor Marina and Golf Resort & Spa /,#* /, /* I I ^{'lItd...-ZP;- ' 1--e? - ' -*'d**W :'4-,1/t \ I I ! Ll LI I trF I Table of Contents Scope of Engagement Project Description Executive Summary Competitive Set Matrix Notes to Competitive Set Matrix Competitive Set Location Map Description of Competitive Set Properties Smith Travel Research (background narrative) STR Trend Report Maritime Village Suites Rate Analysis Competitive Advantages Customer Profile Market Segments Exhibits I Location Map with Renderings of Development Components II Proposed Cells for Draft EIS III EB-s Map with Phasing Legend Consultant Team Page 32 4-6 LL L2 _2L 22 23 24 -25 25-27 28 -29 30 30 31 3 7 8 9-10 33 2 Scope of Engagement Hospitality Advisors Group has been engaged by Statesman Group to undertake a market analysis, which specifically includes (1) identification of competing businesses and their relative strengths and weaknesses, (2) a comparison of the competition's products and pricing structures, and (3) a description of the target market / prospective customers. 3 PROJECT DESCRIPTION The proposed Pleasant Harbor Marina and Golf Resort & Spa development is sited on approximately 252 axes, which comprise two primary development districts in southeastern Jefferson County: The Black Point Property and the Marina Village. The developer has completed an upgrade to the Marina for 311 boat slips, of which 286 are serviced slips and 25 are non-serviced boat tie-ups. The Marina is equipped with a fuel dock for marine fueling of both boats and float planes. Pump-out facilities are located on the Gas/Diesel Dock providing sewage disposal for boats in the Harbor. Pleasant Harbor is an all-weather deep harbor that contains two approved marinas, and is accessed through a narrow channel from Hood Canal. The property is located just off Highway 101 (Coast Highway), which has a current traffic count of 1.5 million vehicle trips per annum. It is ideally situated south of the Village of Brinnon, and an entrance to The Olympic National Park. A State Boat Launch, owned by Washington State Department of Fish and Wildlife, is located at the southernmost rim of Pleasant Harbor. The development involves the creation of a Master Planned Resort [MPR) that has received FEIS (Final Environmental Impact Statement) approvals from fefferson County for 890 residential units for short-term and long-term accommodation. Pleasant Harbor will be developed in four 30-month phases (see Page 6 and Exhibit III), and, upon completion, will incorporate the following amenities: An 18-hole Golf Course and Clubhouse facility, Conference Center for up to 400 guests, Wedding Chapel and four quality themed restaurants/pubs. A SPA and Health Club for exercise and rejuvenation, including a Convalescence Recovery Center. 545 Vacation Resort Condo-Tel Units for short-term accommodation Phasel = 66Units Phase II = L9L Units Phase III = 288 Units a 292 Sea-Yiew VILLAS and VISTAS for second home ownership Phase III = 41 units Phase IV = 251 units 52 special suites to accommodate 104 staff (Phase III) o o a 4 a Project Description continued Expanded and upgraded Marina commercial areas to incorporate the Galley & PUB, a temporary grocery store, upgraded pool and pool house, laundry and public washrooms for boat owners and guests, and a children's interactive playground. A Family Fun Center at the Maritime Village, with Tree-Topper Adventure and ZIP Line(s) for both indoor and outdoor activities in order to attract vacationers, and day-trippers from the communities of Seattle, Tacoma, & Olympia. o a A new Yacht Club, walk-in Medi-Center, a Farmer's Market Grocery, Administration Offices, and Guest Reception. New Pool Facilities with water slide(s) and various amenities to entertain day-trippers and vacationers including hiking, biking, bird watching, plus sophisticated electronic games (Laser Skeet Shooting VRX simulated race car drivingJ. Tennis Courts, Bocce Ball, and numerous pathways throughout the community to encourage walking and running, and below-grade and surface parking for vehicles. Pleasant Harbor will, at all times, practice ecological sustainability: Structures will be developed to minimize their environmental footprint, to include geothermal technology, export of water to the aquifer, prevention of surface water run-off to Hood Canal, irrigation use of reclaimed water from the Waste-Water Treatment Plant, and reduced energy consumption through LEED compliant solar shading designs. Landscaping using native materials with outdoor spas located strategically around the property for vacationers and residents. Compliance with the fefferson County Comprehensive Plan policies, zoning regulations and development standards. The development is intended to be economically viable; and each of the four phases is able to function independently. The developer, Statesman Group of Companies, is the parent company, which operates its resorts from the American Head Office in Scottsdale, Arizona. a a a a a 5 a Project Description continued Pleasant Harbor will be developed in four 30-month Phases, as the accommodation, amenity, and residential components are summarized below: trlaritim village outdoor Amphldrcatcr Gollcoursr Zip Llnc Oltdoor fuol IleeTopperAdvrtuun Spa Rock Olmblqg lfiblt Conference Center Bisto Bnllding Fhe I Phrm tr Crndo-Tel Sultes Sufi Hoslng Sultes 52 RErldentlal Unltt 7191288 41 PhrraIII PhrnlY Totils 66 515 52 6 Executive Summary Hospitality Advisors Group recognizes that the Olympic Peninsula, encompassing 3,500 square miles, 40o/o of which is the Olympic National Park, is a unique leisure destination. There are 400-miles of saltwater coastline, the Olympic Mountains, a temperate rainforest and the 60-mile glacial fjord of the Hood Canal. Over 3,000,000 people visit the Peninsula annually. Tourism contributed $14 Billion to Washington State's economy in 2014, making it one of the state's largest 'export' industries. Unfortunately, the Hood Canal area in Central and South fefferson County saw very little of this revenue or tourism- supported employment, due to the severe lack of accommodations and amenities to attract the leisure visitor. The Statesman Group intends for Pleasant Harbor to be a major economic driver for Central and South fefferson County, and to bring tourist dollars and employment to the Hood Canal region. In support of that effort, Hospitality Advisors Group identified and inspected competitive resort properties, evaluated their respective accommodation product and amenities, and determined their price / value relationship. Based on this review, Hospitality Advisors Group has determined: I. Pleasant Harbor will be a first-choice travel destination for Olympic Peninsula visitors seeking an amenity-rich year-round vacation experience. II. Pleasant Harbor represents a high value proposition based on its suite style of accommodations, multiple dining venues, range of sport and recreation activities, and the proposed rate structure. In fact, Hospitality Advisors Group considers the pricing structure, in current dollars, to be conservative, and sees the opportunity for a higher pricing structure post-opening. III. Pleasant Harbor will compete aggressively in the corporate meeting and social event markets with its Conference Center and Wedding Chapel, and with its extensive resort amenities. IV. Based on the ease of accessibility and the year-round nature of the resort, Pleasant Harbor is positioned, upon stabilization, to exceed the 59%o annual transient occupancy posted by the Competitive Set. V. Based on an earlier Hospitaliry Advisors Group study, Pleasant Harbor will generate at least 225 full-time employment positions. 7 Pleasant Harbor Competitive Property Matrix Hlgh $crron Totrl R.ntrl Ftrndrtd lB 2BGuct Sultr/ Sultc/ Goilf FIB Ganhr Pool Hrrlna I szG - t409 $220 - $584 $199 - $35s $179 - t299 $182 - $315 t219 - f319 $r89 - 0429 t29!t - $449 Plulant Herbor Aldcrbrook Kllelodr Inn l.rlro Qulnault Lodgr Lahc Gr*ont Lodge Port Ludlow nGrort 545 93 64 91 55 3? 213 100 84 0 7-7 38 91 38 35 185 80 79 409 1 17 0 12 2 28 20 5 Yes Yes None None None Yes Yes Yes Yes Yes Yes None None None Yes Ycs 2l.llles 15 9 0 5 0 0 0 0 ! 1 I 1 1 z 4 2 2 10.,000 7,000 None 1,450 None 2,638 1Sr100 6,350 Yes_ (r) . Ycs (r) None None tts (;) Norrc Yee 111 Hot Ttrb 311 1,500 LF NA NA NA 3m 300 104 136 Woodmart Hotcl Rtron "tub 2000 B Notes to Competitive Set Matrix Competitive Set The first six competitive properties were selected for their location on the Olympic Peninsula / Puget Sound, and their position as upscale full service lodges and resorts serving the leisure and conference markets. Both of these travel segments are attracted to the unique beauty of the Olympic Peninsula, which offers visitors the opportunity to disconnect from the modern world. The last two properties, the Woodmark Hotel and Willows Lodge, are included based on their remote settings, albeit west of Seattle, and for the fact that they report monthly occupancy and ADR to Smith Travel Research, which is discussed under a separate section of this report. Although these two properties are not on the Olympic Peninsula, they attract a similar guest profile. The Woodmark is on Lake Washington, and Willows Lodge is at the threshold of the Woodinville Wine Country. Both properties are managed by MTM Management, which also manages the Alderbrook Resort. Total Rental Units A Rental Unit serves the short-term transient market and is a singular commodity regardless of its configuration. It may be a conventional bed-and-bath hotel room, or a multi-room suite or cottage with parlor, one or more bedrooms, and perhaps a kitchen. In the latter case, the suite or cottage cannot be divided into smaller rental units. Standard Guestrooms The guestroom count is a subset of Total Rental Units that only includes conventional bed-and-bath hotel rooms. 18 Suites / Cottases These rental units have a parlor / living room, a single private bedroom, and one or two bathrooms. In some instances, the parlor may have a convertible sofa bed to accommodate an additional two people. These units may be Suites located within a Hotel or Lodge, or free standing Cottages that are part ofa resort. 28 Suites / Cottases These rental units have a parlor / living room, two bathrooms, and two private bedrooms that are integral to the suite or cottage and cannot be rented separately. The case in which one of the bedrooms can be locked off and rented separately is counted as a 1B Suite and a Standard Guestroom. 9 High Season Rates It was determined that the selected properties vary in their respective calendar definition of High Season, but in all cases High Season Rates did apply to fune, fuly and August, which is the time period utilized in the Matrix for comparison purposes. The rate range for each property was determined by testing an availability pattern (ten weekday and weekend dates, excluding holidays) throughout the stated three- month period. The date requests were entered into the booking engine on the respective Website of each property. Discounted rates [i.e. AAA, Senior, etc) and package rates (e.g. the quoted rate contains non-guestroom components) were excluded. The hospitality industry would define the quoted rate range as Rack Rates. Food & Beverage Outlets The number of distinct F&B facilities available to the transient guests. Conference Center SF The aggregate net square feet of meeting and function space is listed for each property. The Semiahmoo Resort also has a7,200 SF Exhibition Hall. Soa Spa facilities at the listed properties are typically available to local patronage as well as registered guests. At Port Ludow, the spa is independent of the Resort; however, it is adjacent to the hotel, and will even offer treatments in the guestrooms. Pool Cool temperatures, even in the summer months, make indoor pools quite popular. Pleasant Harbor has two pools: the Maritime Village pool is outdoor; the second one at Davenport Center, Iike the pool at Semiahmoo, is indoor / outdoor in that one can enter the pool while indoors, and then swim to an open-air area. Golf The public 18 hole courses referenced for Willows Lodge and Woodmark Hotel are not immediately adjacent to the properties, but in both cases they are only two- miles distant. 10 Pardir Competitive Set Location Map Mount Vcmo Covirr Ar|ingt Marpvi 1.t o L{t ,a Rps{rvation Quinault Distance and Draving Time from Seattle International Airport (SeaTac) Miles Time 1 Pleasant Harbor 2 Alderbrook 3 Kalaloch Inn 4 Lake Quinault Lodge 5 Lake Crescent Lodge 6 Port Ludlow resort 7 Semiahmoo Resolt 8 Woodmark Hote! 9 Willows Lodge 106 7L L73 L44 L46 86 L28 22 27 2h 0m th 10m 3h 6m 2h 34m 2h 44m th 34m 2h 12m 27m 33m IL Conidran Centlet Saarich colu,ood ' 'Saanich Victoria Crelcent Port Ang€l"s Foresr rl\lI I,R, furtr <: : o '.p{ ?I 2 f*L,!auntoios Banpr Edmonds Seattle / 8ur*ln lfi Humptulipr Place I 5 3 Description of Competitive Set Properties Pleasant Harbor Pleasant Harbor is sited on the Hood Canal immediately adjacent to the Olympic National Park. The resort will enjoy a pristine setting and view. Brinnon WAu population 900 is three miles from Pleasant Harbor. There are several trailheads into the Park within a few miles of Pleasant Harbor. Quite surprisingly, some of the best SCUBA diving in Puget Sound is in the Hood Canal just off Pleasant Harbor. Except for the existing 311-slip marina, Pleasant Harbor will be 1000/o new construction on 252 acres, which will have only a LZo/o impervious area. The transient / residential resort will be developed in four 30-month phases (see Project Description and Exhibit III), and will comprise: t OO One-bedroom Maritime Village Suites (with Condo-Tel option) 'Condo-Tel' is shorthand for Hotel Condominium, whereby the units are sold to third parties under a condominium regime. These units remain in the transient rental inventory but the purchasers may use them periodically as vacation homes. Currently, the Statesman Group intends to retain the Maritime and Resort Terrace under resort ownership; however, it retains the right to sell the units as Condo-Tel units. * +Zg One and two-bedroom Resort Terrace Suites (with Condo-Tel option) * ZgZ Two and three-bedroom Sea View Villa residential units targeted to the senior retirement market L2 ffi : '{#l,f I It 'L._ Lm- * Err-rtip Marina Pleasant Harbor continued tL fg Hole par-72 Golf Course with Pro Shop * + Rest"urantVenues with various themes and menu concepts * Spa & Health Center, including convalescent rejuvenation iL Maritime Village Indoor Bungee fumping, Mini Zip Line, Playhouse with slide, Speedway Race Center Outdoor Tree-Topper adventure,Zip Line over the harbor $ Conference Center * weaaing Chapel 13 Alderbrook Resort Alderbrook , founded in 1913 and located at the foot of Hood Canal, is the closest competitive property to Pleasant Harbor. At its inception, it was unique to the Pacific Northwest. No roads existed, so visitors arrived by steamer from Seattle. Accommodations were tents heated by wood-burning stoves. After World War II, the tents were replaced by a lodge building and twenty-one cottages. In 2001, Alderbrook was purchased and repositioned as a modern, albeit rustic, resort. The lodge and cottages (five are now privately owned) were extensively remodeled, conference facilities were built, and amenities, such as a spa and waterfront pool, were added. A retirement and vacation home community, which includes a 6,338-yard golf course, has grown up around the resort. The 71-acre property comprises: * ZZ Guestrooms in the Lodge * fS Two-bedroom Cottages + l One-bedroom Cottage tL f g-Hote Golf Course (owned by the Alderbrook Homeowner's Assoc.) * t,sOO LF Dock (no permanent moorings) 1 Restaurant (2 restaurants are within Yz mile, and several quality restaurants are in Union WA, which is 8.5 miles from the resort) .t L4 f!.,t #,{, fr ' irr' i.;4fir$,( .l')#l -i& t- -:"d -i _\ -----:--:------- -"'llL--',.xarJ * sp, rL Conference Center Kalaloch Lodge The Quinault Indians first called this coastal area "Kalaloch" or "good place to land". The lodge and cottages are the only guest accommodations within the Olympic National Park to directly overlook the Pacific Ocean. Unfortunately, the beach is more mud than sand, and it is densely strewn with large driftwood. The property, privately developed in L925, was purchased by the National Park Service in L978, and operates under a concession contract. The Lodge is a base camp for exploring the surrounding Park area: Ranger Programs, Whale Watching, Fishing and Clamming, Hiking and Mountain Biking. Even though the property is quite dated, it receives very good guest reviews. The 4O-acre coastal plot comprises: $ Sg Guestrooms in the Lodge and Seacrest House ,tl, ZOstudio, One and Two-Bedroom Cabins with kitchens and fireplaces * 1 Rest"urant {L Outdoor Wedding Venues *1, Cit Shop {L Gun"r"l Store with groceries and hiking provisions 15 I L I ts. I i :-.*'-I .t il II ,t 7m Lake Quinault Lodge Lake Quinault Lodge, designed in a Rustic Colonial Revival style, opened in 1925 and was named to the National Register of Historic Places in 1998. The signature feature of the Lodge is its wood-beamed Lobby with a large fireplace flanked by tall windows overlooking Lake Quinault. Most guestrooms are rather spacious considering their vintage, although the bathrooms are quite small. Lodge guests can take interpretive tours of Lake Quinault and the surrounding Rainforest. Hiking and biking trails are at the doorstep of the Lodge. The 3-arce property comprises: *1. gf Guestrooms * 1 Restaurant (a highly rated seafood restaurant is located within 1 mile) dl, Irrdoo. Swimming Pool L6 (, J'- J |. )j* -U .U5 .I Eiit: n * Wrt". Sports (kayaks, skiing) * t,+50 SF of Meeting and Private Dining Space Lake Crescent Lodge Lake Crescent Lodge, designed in the Arts and Craft Style, opened in 1915 as Singer's Tavern. Throughout the following three decades, there were modifications and additions, including four cabins with fireplaces and kitchenettes. The comfortably spacious guestrooms underscore an escape from the modern lifestyle by eschewing televisions, telephones, and Wi-Fi. Boating and hiking to Marymere Falls and Pyramid Mountain, are popular guest activities. The Lodge is open May through December; the Roosevelt Cottages remain open on weekends throughout the winter season. The 3-acre property comprises: * gg Lodge Guestrooms * f S One and two-bedroom Singer Cottages tt 4 One and nvo-bedroom Roosevelt Fireplace Cabins * 1 Restaurant L7 tlt- t I fr{' I E t_ \ i' J= cr--E p.B I.ir ,b T , * Weddings staged in the meadow overlooking Lake Crescent tL Wate. Sports (boating and kayaking) Port Ludlow Resort The modern 37-room Port Ludlow Resort, designed in the Arts and Craft Style, sits on a spit of land protruding into Puget Sound. The town of Port Ludlow is on the far side of the Bay, about six miles from the Resort. Although the property is relatively small, its amenities and quality dining attracts a large number of corporate meetings and destination weddings. These groups often reserve the entire facility for their events. The Resort comprises: * SZ Guestrooms with gas fireplaces and jetted soaking tubs qL 1 Restaurant + several acclaimed restaurants in the town of Port Ludlow * Spr services from adjacent independent spa * fg-Hote Golf Course (172 miles away at Port Ludlow Golf Club) * soo-stip Marina * z,o5o SF of Meeting and Function Space 18 [Iu! I 7 "J',.t. fr'- II. Ia-I a I trI b T .L"f,t t dG:J+ I,I ! IT E a( j II tl r Semiahmoo Resort The Skagit Indians named the site "Semiahmoo", or "half moon", which accurately describes the crescent spit of land at the mouth of Drayton Harbor on the northern part of Puget Sound. The resort opened in L994, then closed briefly for renovations after being purchased by a Seattle business group in20L2. Semiahmoo Resort is a mid-market family and group oriented facility. The lS-acre site comprises: { Zp Guestrooms, some with wood-burning fireplaces and balconies $ Indoor / outdoor swimming pool * Sp" & Fitness Center * Z Outaoor Tennis Courts 2 Indoor Tennis Courts 1 Racquetball Court * goo-stip Marina (kayak rentals) * Z f A-Hole Golf Courses (public with hotel guest access). Semiahmoo Golf & Country Club is 3.2 miles from the resort; Loomis Trail Golf Club is 7.6 miles * 2 Restaurants + a restaurant at each golfclubhouse t9 -g! \ { Ir! * ts,too SF Conference Center 7,200 SF Exhibit Hall (doubles as Indoor Tennis facility) * Xiar Kamp: large privately operated complex at the Resort entry for local family enrollment with separate programs for toddlers, pre-school, and grades 1-6. Drop-in rate for children staying at the Resort is $10 per hour fminimum 3 hours). Woodmark Hotel Although the Woodmark Hotel is an urban property, it is part of the competitive set because it effectively turns its back on the City of Kirkland and focuses on its lakefront setting flanked by a marina and shoreline parks. Additionally, the hotel is managed by the same company as the Alderbrook Resort; and reports its monthly average rate and occupancy to Smith Travel Research, the importance of which is explained in the following section of this report. The property focuses on the leisure and group market segments, and blends the two as a very popular destination-wedding venue. The Woodmark Hotel comprises: * roo Guestrooms rL 2 R.rtrurants + numerous acclaimed restaurants within walking distance 20 -TI !l tl II ,:-f, r'I"tr'lI tl lE* I t[r !:{a.ll I Ii'tl frn It1nrrt"*flt*f ,.TI I t! sp, nL ro+-stip Marina rL 0,350 SF Meeting & Function Space (most of the function rooms open onto patios and terraces, which make them idea for social events) Willows Resort The Willows Lodge, designed in the Craftsman Style, is sited on the banks of the Sammamish River east of Seattle at the gateway to the Woodinville Wine Country. Although not on the Olympic Peninsula or Puget Sound, the Lodge is part of the competitive set because it has a resort setting and draws on the same customer base as the other properties in the set. Like the Woodlark Hotel described above, it is managed by the same company that manages the Alderbrook Resort; and reports its monthly average rate and occupancy to Smith Travel Research, the importance of which is explained in the following section of this report. The Lodge, considered a culinary destination, focuses on the leisure and corporate meeting markets. The S-acre property comprises: cL g+ Guestrooms, all with stone fireplaces and soakingtubs qL 2 Restaurants The highly acclaimed Barking Frog S-Diamond Herb Farm Restaurant Numerous fine-dining opportunities within minutes of the Lodge tL Spr & Fitness Center cL Garden Wedding venue with Mt. Rainer as a backdrop 21 * s,ooo sF of Meeting & Banquet Space * Guest Activities focus on tours of the Woodinville Wine Country currently home to over 50 wineries and tasting rooms. Also, guests can walk out the backdoor to visit Red Hook Brewery, one of the country's most highly regarded microbrews. Smith Travel Research Smith Travel Research ("STR") provides a standardized platform, consistent methodology and transparency for tracking hotel supply and demand, market share analysis, and historical performance trends. Over 50,000 hotels provide daily, weekly and monthly empirical data on occupancy, and average daily rate ("ADR"). In return, the participating properties, which comprise virtually every branded hotel in the United States and most independent hotels, receive a Benchmark STR Report of the respective properq/s performance against the aggregated performance of a chosen competitive set. Individual proprietary data is never shared. Industry Partners (Developers, Investors, Consultants, Bankers and Destinations Marketing Organizations) can purchase a Trend Report that tracks aggregate supply and demand, and top-line performance for a selected set of properties. The rules of the game require that a minimum of four properties be in the competitive set, and that no single property has more than 40% of the aggregate number of guestrooms. To aid in this study, Hospitality Advisors Group ordered a STR Trend Report for the Olympic Peninsula area. Resort properties similar to the Pleasant Harbor development were selected to be in the competitive set. Unfortunately, it was discovered that, contrary to most areas of the US, very few Olympic Peninsula properties, including Lake Crescent Lodge and Lake Quinault Lodge, report their performance to STR. Consequently, Woodmark Hotel and Willows Lodge were selected to round out the required four property minimum, and to bring the proportional weight of Semiahmoo's 213 rooms under the 40o/o limit. As mentioned in the individual property descriptions above, Woodmark and Willows are both managed by the same company that manages Alderbrook. The STR Trend Report is summarized for analysis on the following page. 22 STR Trend Report SfR Tturd R.port (AH*irEk, Woodmrrlg Wlllowr, 3rmlrhmoor ntllodr) lrn F.b ttlrr Apr l{rV Jun to13 Oocupanry tl6 46.!r{tt 63.1t}t 64.6% 68.3% 70.4% 82.6qt ADR lt74 $l75 $168 t170 t201 3214 RR/PAR iEZ ir10 il09 $116 $142 il77 Reryenue (fi)O's) $862 il,O53 31,149 $1,191 $1,498 i1,806 20t{ Oocupancy 9o 41.0% 4S.ltlt 51.9% 33.5% 61.5% 72.2% ADR $162 i180 $168 ir72 i185 3202 RBTPAR i65 i81 $87 t92 $113 S146 Renenue (0O0's) 3l,10g $1,22E $1,454 Sl,.t86 $1,896 i2,35? lul lug S.p ffi llov Dcc Tot lt 87.5% i246 $216 *2,276 91.59r $206 $r88 $3,142 80.6% 1237 $191 $3,193 85.1% $184 $156 s2,527 71.4% $218 $156 $2,515 46.5% $192 $89 $1,.[88 57.0% $192 sl10 $1,830 44.5% i174 177 11,251 30.4% i188 i9s $1,529 46.3% $171 s79 $1,320 I18.695 $181 $88 sI,466 c3.?* 1192 l1!6 f10r5c3 50.OryD 119t lrr, 122,976 Smith Travel Research The Semiahmoo Resort was closed ]anuary - September 2013 for renovations by a new owner. [t depressed the aggregate competitive set occupancy for twelve months thereafter as it ramped-up market awareness. The first three months of 2015, not shown in t]le chart above, have posted a 3.896 improvement in Occupancy, and an 8.396 improvement in Average Daily Rate, which combined for a 12,4r,6 Revenue increase. 24 73.3% $238 $174 $2,913 Rate Analysis for the Maritime ViIIage Suites Rates for the Maritime Village Suites, in current dollars, are proposed to match those atToscana ofDesert Ridge Resort in Scottsdale A& a Statesman Group development, In the top-line Pro Forma below, the 2014 Monthly Occupancy from the STR Trend Report is used with the proposed average seasonal rates. High Season Shoulder Seasons Low Season 75o/o One-bedroom $20e - $2e9 $L69 - $229 $10e - $169 Avg $274 $199 $13e 25o/o Two-bedroom $zee - $409 $21e - $319 $1se - $25e Blended Average $294 $ZL6 $1s6 AW $3s4 $zog $2oe Low Season Shoulder Hiqh Season Shoulder Low 66 Village Suites Jan Feb Mar Apr May lun Jul Aug Sep Oct Nov Dec Totals Units Available 2,046 1,848 2,046 1,980 2,046 1,980 2,046 2,046 1,980 2,046 1,980 2,046 24,O9O Units Sold 839 833 1,062 1,059 1,258 L,430 1,500 t,649 1,414 1,166 998 1,015 L4,223 Occupancy9o 47.O9o 45.L 51.9% 53.5% 6L.5o/o 72.290 73.3 ao.69o 77.4Vo 57.Oor'o 5O.4Vo 49.6% 59.0% ADR $1s6 $1s6 $1s6 $1s6 $216 $27s $27s $27s $27s $216 $216 $1s6 $22s Room Revenue ($000's) $13t $ru fl66 $165 $272 $420 $44L $485 $416 $82 $Zt6 $158 $3-25t z5 Rate Analysis continued Even at $31 over the STR Report Year-end ADR, the Village Suites ADR is conservative. The STR Report is based on properties with predominately conventional single-bay hotel rooms; the Pleasant Harbor Village Suite product has a living area, an efficiency kitchen, and in 25o/o of the units, a second bedroom. Hospitality Advisors Group does not envision any performance dilution when the l9L units in Phase II, and the 288 units in Phase III, are placed in service. There is a thirty-month construction period between phases, during which time market awareness of Pleasant Harbor will have increased substantially. Additionally, the breadth of amenities increases with each phase: the Conference Center, which will be a specific demand generator, comes online with Phase II; the Golf Course is completed with Phase III. The short-term transient rental product Maritime Village Suites and Resort Terrace Suites, are configured to be Condo-Tel units. The Statesman Group intends to retain these units solely within the transient rental inventory; however, it retains the right to sell the units as hotel condominiums, whereby the purchasers may use them periodically as vacation homes. Under this scenario, rate and occupancy performance of these units will be impacted by the duration and seasonality of owner occupancy. 26 Competitive Advantages (see Page 5 Matrix) Access There are excellent roads to the Resort from the I-5 Corridor and from SeaTac Airport (naro hours). The Pleasant Harbor experience actually begins as one connects with Hwy 101 for an enjoyable one-hour drive along Hood Canal to the Resort. Weather Due to the proximity of the Olympic Mountains, which elevate the clouds east towards Seattle, Pleasant Harbor has agreeable temperate weather. Guestroom Product The basic guestroom product at Pleasant Harbor is a suite configuration with a living room, kitchen or kitchenette, one or more bedrooms, and spacious bathrooms. The basic guestroom product at the competitive properties is a rectangular box, although at Port Ludlow and Willows Lodge, there are fireplaces and soaking tubs. High Barrier to Entry Pleasant Harbor is protected against the rapid growth of future competitive development on the Olympic Peninsula by the scarcity of similar sites and the difficultly to secure entitlements (a 7-year effort for the Statesman Group). The Olympic National Park comprises 40o/o of the Olympic Peninsula, and development outside the Park must compete with the legacy industries of fishing and timber. The North Olympic Land Trust and the Nature Conservancy routinely raise objections to development on ecological arguments. ResortAmenities Pleasant Harbor will have the most extensive collection of amenities of any property in the Competitive Set. And where it does compete directly on amenities, it will typically have the superior product: IoS hryirilI.F ffitrffcl Atqr pndphrm hdllmml 0lm* drh lor Brirrron ,fi i0i s t4l 5qp.li. r.e9 {fiu M?;,in Jol s {q h I!! l*15!0$ IIr {tol {14 3t 33 35t-rt ru 0r s{3{tIt) (il 0l uk$tA(ill rts$ PI IJI 7,S (rs7 tl 7J8 (tflo 58 Sfi i1500I (s0 {6 trm rofi) teol ti6 t?|o.fl 6r.s {lJs.n 27 Oct a Irr] Comoetitive Advantases Continued In addition to kayak rental, which is the extent of water sport activities at the other waterfront properties, Pleasant Harbor will offer SCUBA diving and sailing lessons. Destination Weddings are big business at all properties within the Competitive Set. Most properties offer a tent; Pleasant Harbor will have a purpose built Chapel. Five of the competitive properties have only one restaurant, and two properties have two restaurants. Pleasant harbor has four dining venues. The competitive properties are silent on family-oriented activities, although the Semiahmoo Resort provides access to a large daycare facility (see the Property Description on page 16). Pleasant Harbor has a purpose built Family Fun Center with Mini Zip Line, Children's Playhouse, Indoor Bungee fumping and a Race Center Speedway. Amongst the competitive properties, only Kalaloch Lodge has a General Store with groceries and hiking provisions. Pleasant Harbor has a Grocery Store and Farmers Market. Other unique Pleasant Harbor retail services include a Hair and Nail Salon, Yacht Sales Center, a Walk-in Health Center, and Pro Shop for the Golf Course. 28 Customer Profile The Description of Competitive Set Properties featured a photograph of each subject property. One needs only to turn the camera around to appreciate the stunning views enjoyed by these properties. Visitors savour the singular beauty, and revel in a break from the modern world. They arrive from nearly Seattle, from throughout the US, and from around the globe. Visitor Spending in Washington State by Origin r Washington State r Other U.S. * International b I Washington Tourism Alliance 29 \ \- -l -aL. f.- -rd LLo/o 34o/o 55o/o fapan China UK Korea Germany France Australia 32o/o 23o/o L4o/o L3a/o LLo/o 60/o 1o/o Overseas Tourism Markets for n State: Visit Seattle 20LZ The I-5 Corridor, and the excellent airlift into SeaTac Airport (Seattle-Tacoma), transports this demand to the Olympic Peninsula gateway. I-5 extends from San Diego to the Canadian border, and passes by every major West Coast population center. From the I-5 exit onto Hwy 101 at Olympia, the distance to Pleasant Harbor is just sixty-two miles. Population of counties served by I-5 Washington 4.6 Million Oregon 1.6 Million I-5 continues into Canada as Hwy 99 and places Greater Vancouver's 2.4 Million population within four hours of Pleasant Harbor. Many cities, domestic and international, have direct flights to The SeaTac Airport: Domestic International 76 Cities 17 Cities Major population centers have multiple flights daily: NS Flight Boston Chicago Dallas Denver Los Angeles New York San Francisco Fliehts 6 19 12 77 25 12 29 o6 Full 89o/o 920/o 9Lo/o 9to/o 800/o 9Lo/o 79o/o 30 Market Sesments Pleasant Harbor is designed to attract and accommodate every leisure and group market segment seeking accommodations on the Olympic Peninsula: Boating on the Hood Canal and hiking into Olympic National Forest Couples will enjoy the suite style of accommodations and the many available activities The Family Fun Center is unique to Pleasant Harbor Foursome outings from the drive-in market will be very popular The remote, yet accessible, setting of Pleasant Harbor will appeal to corporate meetings that want to retreat from business distractions, while being able to build camaraderie through group activities (fishing boating, gol0. The Wedding Chapel will set Pleasant Harbor apart, and the Resort's many activities and dining venues will create a full social program leading up to the wedding ceremony and reception. The resort amenities at Pleasant Harbor (Family Fun Center, restaurants, golf, etc.J will also be utilized by two groups that sit at opposite ends of the client spectrum: portion of the 1.5 Million automobiles per annum that currently pass Pleasant Harbor. 31 Exhibit I - Location Map with Renderings of Development Components t -r EIF #, Cilt.!-€} r.rotI 16 Ei ry rrd{.l r I HGiI rl tql 2 ilffit 32 I I 51 L ,t -:--\\- -t L l*x *:*#** _.-I (}rr*t tl! -,-?{ry ET L r,er,+ t"\ a+{x-[ a r€U J >ou r tl fi{rr rl tl trer t f* ^:l / '#ttr * 'rr ts I' .lo{l 1 r.-\lro,r-d, 4a{:lJ, (l e {! (} \ ('.J ' I-rh {{aEat r€,u t Hty-, t*r C} PRELIMINASY DBAFT Flgurc l-6 Proporcd Cclle (:EIL O a"' G'6' a i I o Go"o ?attd. O'r9s LeeEND J Dra?r Ela A.sa Hooa eai^L t l-l I i - c3r! A I t(,99 cea! PROFC'SEG, CELLS PLEASANT HARBOR MARINA & GOLF RESOR? - DRAFT EIS 'x9 (ifl L A' crLL CCrLr O.DNR 9 Vr'olcr Baeo,lr rlhnrol,rrfl 33 PrelctlYm: PLGaarrn/ritorLmAam.riattt 1ffi** .EEa.Banlma> EWtN r6rsrulsEglhu t^n .qrr.ual,tg rr!ffirsrlllqr r[ry blol&gm 1-o.*ffiPls.lE!ffiWhErt.6B!r-r. ffimLtm ffimlw r*i,2*Jr^sr\ Er:mr:r: ffiffi| .Ere unnsiyr.tg@3 N*retffir c.lmlndaiE .@lwaw IH*-** aflr,tIu]atrillarsrl(FwB6E&,lqtr.iar.& E@ffiIEI 4@tf,ffiru-sDillBmttGna.lmgG^!q& a16rfrr1 rr-inm rn, rlr@qr{mtffi 6SLC|'ES.E ^mrx-i.sfrir. ffir.!I.s.ual@uliJssffiwr& M.E.l4@n&rts, x utt mEll&AlllmTs ffiN.*Alre %r,3FlArNtrq'nr'Ml@s'A .m@ffiDirtlrn.t&r.M'ffiE'M ffi re. EE'Es @ana mFrto$wa9N&rfff&a.rnrN& 34 ffito l_ I Lr.- t ^/d r \ fu6DG !iffiomT i7*l 5t a t*r,C.l\:I PLEASANT HARBOR ffi- & Oavld Hmlllil ArchltoctwAgiEbtffirro Hospitality Advisors Group Consultant Team ZacharyZoul Chairman and Chief Executive Officer Zachary Z.Zoul has thirty years of executive experience managing hospitality, development and property management operations. Prior to creating Hospitality Advisors Group, Zoul was President, Chief Executive Officer, and Director of the Cote Family Companies, a resort, hospitality, and real estate / development company with holdings in the Midwest and Southwest, including the award winning Grand View Lodge Resort and the Tanque Verde Ranch Resort. He served on the executive team of Palmetto Bluff in Hilton Head, South Carolina overseeing operations for one of the largest resort and residential communities in the United States, including the Five-diamond Inn at Palmetto Bluff. Zoul has served as General Manager of various full service hotels and resorts including Hotel Deco XV, Hampton Island Preserve, and Greyfield Inn. Zoul has been actively involved in hospitality facility design and development and is a certified Hotel Administrator by the American Hotel and Lodging Association. Eric A. Brooks Vice President and Senior Associate Eric A. Brooks has forty years of experience in the development and management of hotels and resorts. Brooks specializes in creating the design program and directing the design team on the development of luxury projects. He recently served as Chief Operating officer and Development Director for the award winning Tuckers Point Resort in Bermuda. He served as President of Hardin Capital with responsibilities for developing full service hotels throughout the United States, including Kimpton, Hilton and Marriott properties. Brooks has extensive experience in hotel and resort operations having served as Managing Director of Bermuda's Southampton Princess Resort, the Tremont and Whitehall Hotels in Chicago, and the Mills House in Charleston. His experience with luxury properties was recently highlighted in a story on the Boutique Hotel concept within the context of New Urbanism. Hospitality Advisors Group is a management and development consulting firm specializing in full service resort and hotel properties. It services include creation of business and development plans, marketing studies, asset management, and hospitality operations. Information on our firm, including client lists and credentials, may be found at mailto:www.hospitalityadvisorsgroup.com. 35