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Case Study: Providence Courtyard by Mariott |
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Providence, RI |
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History in the Market – Milton Fine and Interstate Hotels Corporation developed, owned and operated the full service Providence Marriott Downtown hotel located on Orms Street. The hotel opened in 1975 with 250 rooms and was renovated in 1980 to become a 350 room hotel. The Providence Marriott Downtown was very successful winning numerous awards to include Mobile Travel Guide Four Star Awards. In May of 1999, the property was sold to Meyer-Jabara. With a long successful history in the Providence market, an opportunity to develop a limited service 216 room 12 story Courtyard by Marriott in downtown Providence was identified in 1998. The long-term outlook for the Providence area economy was for modest growth in population, households, employment and income levels. With Providence being the state capital and the largest city in the state, the metropolitan area of Providence accounted for most of the state’s population and labor force. |
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Opportunities |
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The City of Providence had entered into a redevelopment phase in the late 1990’s to revitalize the downtown area. Part of the redevelopment phase was the construction of the Courtyard by Marriott as well as the Providence Place Mall, a 1.2 million square foot, four-level, super-regional mall to be located across from the hotel. The Convention Center and Civic Center were also located one block from the hotel with Johnson & Wales University being one quarter mile southwest. Proximity to the Providence Place Mall, Convention Center and Interstate 95, one of the city’s major highways, positioned the hotel to take advantage of the various demand segments generated by the market. The redevelopment trend was also expected to continue to enhance the overall desirability of the downtown area. The hotel was under construction from December 1998 through July 2000. A subsidiary of FFC Capital was organized to open and operate the newly constructed hotel with a total acquisition cost of $22.5 million with $6.9 million in equity. The Providence Courtyard by Marriott opened on August 3, 2000. |
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Performance |
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Being the newest product in the competitive set, the hotel opened very strong in occupancy, rate and profitability achieving year to date occupancies of 83.4%, 83.7% and 82.1% in 2000, 2001 and 2002, respectively. With 3,000 square feet of meeting space, a limited service restaurant with a capacity of 70 guests, a lobby bar and lounge area, the hotel was also successful in accommodating small groups, meetings held by hotel guests as well as group and catering services for many surrounding businesses in the area. With exceptionally strong operating results over the past 26 months combined with property appreciation, the hotel was sold on October 14, 2002 for $34.5 million with FFC Capital realizing cash on cash returns of 20.39%, 32.26% and 375.66% in 2000, 2001 and 2002, respectively. |
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