DoubleTree by Hilton: Prime Investment Opportunity

DoubleTree by Hilton represents a significant opportunity for investors, offering a well-positioned hotel with a robust growth outlook. With its prime location, modern amenities, and extensive facilities, this hotel is a valuable asset within a thriving market. Below are the key features and highlights of this property that make it an ideal investment choice.

Key Features

Location:

• Highly Visible: Situated in a prime location with excellent visibility, ensuring the property stands out to both leisure and business travelers.
• Proximity to Loop 202 Freeway: Located just moments away from the Loop 202 Freeway, providing easy access for guests arriving from different parts of the city.
• High Traffic Counts: The property benefits from heavy foot and vehicle traffic, ensuring high occupancy rates and visibility for surrounding businesses.
• Nearby Retail and Residential Areas: Surrounded by bustling retail hubs and established residential neighborhoods, making it attractive for both local and transient guests.

Amenities

Guest Building:

• Hotel Rooms: A four-story hotel with 121 rooms, offering a variety of accommodation options for both short-term and extended stays.

Convention Center:

• Size: 10,000 sq ft convention center with seven ballrooms and flexible meeting rooms, suitable for corporate events and large-scale conferences.
• Full-Size Kitchen: Equipped to support catering for events.
• Outdoor Patio: A 3,000 sq ft patio perfect for cocktails, meals, or social functions.

Facilities

• Two Commercial Kitchens: Large kitchens ideal for catering to high-volume events and large gatherings.
• Lobby Bar: A stylish lobby bar offering a relaxed space for guests to unwind, currently operating at limited hours with potential for expansion.
• Fitness Center: A state-of-the-art fitness center for guests to maintain their routines during their stay.
• Pools and Spas: Both pools and spas enhancing the overall guest experience.
• 221 Parking Spaces: Ample parking for both guests and event attendees, ensuring accessibility for visitors and business events.

Recent Upgrades

A $25 million Property Improvement Plan (PIP) was executed in 2021 to modernize the guest experience and improve operational efficiency. These upgrades ensure the hotel remains competitive in a growing market.

Investment Highlights

• As-Is Market Value: The current market value as of May 13, 2022, is $25,900,000, reflecting recent upgrades.
• Sale History: The land was purchased for $3.64M in 2008, and the hotel is now under LOI for a $27M sale price, showing a significant appreciation in value.
• Entry & Exit Cap Rates: The estimated entry cap rate is 9.5%, and the exit cap rate is 6.5%, offering strong long-term value and investor returns.

Upside Potential

• Liquor Bar & Convention Center Enhancements: The liquor bar’s hours could be extended and food service added for significant revenue growth. The convention center is underutilized, and with better management and marketing, it could generate up to $1M annually.
• Projected Annual Increase: These changes, along with operational improvements, could lead to an annual revenue increase of $1.5M to $2M.

Why Invest in DoubleTree by Hilton?

• Rebranding Opportunity: There is an opportunity to rebrand the hotel under higher-end brands like Hilton Garden Inn or Hyatt, increasing its marketability and improving the RevPAR (Revenue per Available Room).
• Revenue Growth: Strategic upgrades and better management, including short-term rental (STR) opportunities, could increase cash flow.
• Management Cost Savings: Transitioning from third-party management to in-house management could save $500,000 annually in fees, directly benefiting investors.
• Proximity & Location Advantages: Prime location near highways, retail centers, and Sky Harbor International Airport places the hotel in a high-demand area for both business and leisure travelers.

Arizona Lodging Market Overview

According to March 2022 data from Smith Travel Research (STR), Arizona’s hotel industry has seen strong recovery. The state’s occupancy levels reached 69.7%, and RevPAR skyrocketed to $121.55, reflecting a robust growth trajectory. DoubleTree by Hilton is positioned to benefit from this ongoing market recovery.

Key Performance Metrics (Q1 2022)

• RevPAR: $121.55 (78.5% increase YoY)
• ADR: $174.34 for the State of Arizona
• Occupancy: 69.7% (Statewide Average)

Risk Factors & Disclaimers

• No Guarantees: All financial targets are projections based on past performance, with no guarantees of achieving these targets.
• Accredited Investors Only: The investment opportunity is only available to accredited investors, as defined by the SEC.
• Environmental & ADA Compliance: The appraisal assumes no environmental hazards or non-compliance with ADA regulations. Any unforeseen issues could affect the property’s value.