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Case Study: Texas Place Hotel Properties, LLC |
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History in the Market – With a long successful history of developing, owning and managing hotels as well as the company’s objectives of growth, value creation and performance returns, FFC Capital identified an opportunity to acquire four AmeriSuites hotels in Texas that would further the diversification of the existing hotel portfolio by location and brand. FFC Capital’s strategy was to acquire the AmeriSuites hotels in Austin, San Antonio, Houston and Grand Prairie, with future plans to renovate and reposition the hotels under the Hyatt Place banner. On April 9, 2007, a subsidiary of FFC Capital acquired a 90% interest in the four AmeriSuites hotels for $39.8 million with $8.0 million in equity. |
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Opportunities |
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Austin, Texas – This 129 room hotel is located at 3612 Tudor Boulevard in the city of Austin, the capital of Texas and home to one of the largest universities in the country, The University of Texas. Austin is known as the cultural, political, environmental and educational center of Texas. The city attracts a diverse mix of business to the area and Austin’s economy is currently thriving. Austin continues to remain distinctively unique based on the city’s desirable location, diverse population and committed government agencies, increasing the city’s attractiveness as one of the premium corporate relocation sites in the country. The hotel’s location just minutes from downtown Austin and The University of Texas, as well as the property’s convenient access to and from the area interstates and regional highways, position the hotel to service the various demand generators in the market. The University of Texas, the largest employer in the market, generates a wide variety of hotel demand from visiting professionals, sport teams, orientation programs and several graduation ceremonies during each school year. The high tech industry is also important in Austin as Dell Computer Corporation is the second largest employer in the city and IBM Corporation has a large research facility in Austin that was recently awarded a three year $53.3 million research project. Samsung recently invested in a new $300 million fabrication line in Austin to be completed in 2007 to double the company’s existing facility to create the largest fabrication facility in the United States. With a strengthening of the market as well as expected growth in the foreseeable future in the office and retail sectors, the Austin market is expected to experience an increase in hotel demand as several new companies relocate to the area. |
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San Antonio, Texas – This six story 126 room hotel is located at 7615 Jones Maltberger Road, just 0.5 miles from the San Antonio International Airport. San Antonio is easily accessible from the state’s major population centers in Austin, Houston and Dallas/Fort Worth. The San Antonio area is also part of the greater south-central Texas economic base, which has seen tremendous growth in the past several years, both in the commercial and tourism sectors. The city of San Antonio features a variety of industries and employers, which represent a cross-section of hotel demand potential. During 2006, sixteen companies moved into new San Antonio facilities adding 6,885 jobs to the local economy. One of the biggest developments was Washington Mutual’s opening of their new Regional Operations Center in North San Antonio, to create 4,200 jobs over the next six years, the largest job creation project in North America for 2006. Toyota Motor Manufacturing North America also invested an additional $50 million at its San Antonio plant, which opened in late 2006, in order to increase overall production capacity. In 2007, Wachovia Bank announced the addition of 300 more jobs to its existing financial operations in San Antonio. To support the expected continued growth in the area, the San Antonio convention center, The Henry B. Gonzales Convention Center, completed a major expansion and the San Antonio International Airport is currently undergoing a major, multi-million dollar expansion project to add new terminals and increase the number of current gates by twenty-six percent. As San Antonio continues to lure businesses, the market also benefits from a variety of tourist and leisure attractions in the area to include the San Antonio Riverwalk, Paseo Del Rio, the Alamo, the HemisFair Park, Six Flags Fiesta Texas and SeaWorld San Antonio. The downtown district’s convention and tourist friendly environment generates considerable levels of demand, positioning San Antonio as a premium convention and vacation destination within Texas. |
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Houston, Texas – Located in the Greenspoint Business District and just minutes from the George Bush International Airport, this 126 room hotel at 300 Ronan Park Place is conveniently situated near shops, multiple sports venues and an array of restaurants and corporate business complexes. Houston is the fourth most populous city in the United States and enjoys the lowest cost of living among cities of comparable size. Traditionally Houston has been dominated by the oil and gas industry as Exxon Mobil Corporation, ranked the largest company in the world in 2006, has a substantial portion of their operations in Houston to include oil exploration, extraction, shipping and wholesale operations as well as their chemicals division. More recently, Houston has earned a growing reputation as a technology and health care center. Two out of the three largest employers in the area are engaged in health care, as The Texas Medical Center, located in downtown Houston, is the largest medical district in the world. The transportation industry also plays an important role in this region due to Continental Airlines and The Port of Houston. Continental Airlines is headquartered in downtown Houston and the George Bush Intercontinental Airport is the company’s largest U.S. hub providing an expanding portfolio of air routes and destinations as well as consistent annual increases in passenger traffic. In terms of total tonnage shipped, the Port of Houston is the world’s sixth largest port and was recently ranked number one in the nation for total volume of foreign tonnage imported. Also notable is that of the world’s 100 largest non-U.S. based corporations, over 51 have operations in Houston. With a strengthened business community and a growing transportation infrastructure, Houston is positioned as the United States south-central transportation gateway to the world. |
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Grand Prairie, Texas – Located in the heart of the Grand Prairie/Arlington area at 1542 North Highway 360, this 134 room hotel is only minutes away from all major area businesses as well as the Dallas/Fort Worth International Airport, one of the nation’s largest airports. Grand Prairie is located twelve miles west of downtown Dallas and fifteen miles east of Fort Worth. With quick access to the airport and the large markets of Dallas and Fort Worth, the Grand Prairie area continues to attract new construction of warehouse, distribution, and manufacturing buildings. One of the area’s largest employers, Lockheed Martin Missiles and Fire Control, was recently awarded a $166 million contract to be serviced by the company’s Grand Prairie facility. The hotel also benefits from the area’s growing entertainment and restaurant sectors as the hotel is situated just minutes from numerous tourist attractions to include Lone Star Park, a pavilion featuring quarter horse racing; Louis Tussaud’s Palace of Wax Museum and Ripley’s Believe It or Not; Six Flags Over Texas featuring 100 rides, shows and attractions; Six Flags Hurricane Harbor, the largest water park in the Southwest, and Ameriquest Field, home of the Texas Rangers Baseball Club including the Legends of the Game Baseball Museum and the Children’s Learning Center. In addition to the current entertainment complexes, amusement parks and stadiums, the future development of The Campus at CenterPoint will include new retail shops and restaurants, as well as the new Dallas Cowboys Stadium. With a strong business community and the growing entertainment and restaurant sectors, the hotel is ideally situated to service the large number of demand generators in the market. |
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Performance |
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With the conversion and repositioning of the four AmeriSuites hotels to the newly developed Hyatt Place, a focused-service protyped aligned with the Global Hyatt family of brands, the hotels will undergo a $15.6 million renovation in 2007. The conversion of these hotels to the new Hyatt Place concept will transform these locations into upscale properties with contemporary and stylish architecture as well as cutting-edge design to create a heightened guest experience. The lobby and breakfast areas will receive a full renovation and reconfiguration to allow for additional dining options emphasizing open, central gathering areas, featuring a casual café and bar area. Guestrooms will be redesigned to create spacious rooms with upscale and modern finishes and fixtures as well as highly functional work space. The new guestrooms will feature technological accents including a 42 inch plasma television that integrates with laptops and other electronics, a video and music entertainment system, and complimentary wireless high-speed Internet. The newly renovated Hyatt Place hotels will also offer a business center to include workstations and office technology. |
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