Can we support it?
Hotel market feasibility study conducted to answer the question on the potential Warren development
The decision by City of Warren staff to pursue the development of a hotel at the base of Liberty Street wasn’t a decision made in isolation.
A hotel market feasibility study was conducted by Core Distinction Group, LLC.
“This document is written in a format that highlights key information and offers a preliminary indication of the market’s ability to support potential hotel development,” the firm concludes.
How exactly is that done? The methods indicated in the study include interviews, economic indicator research, analysis of competitive lodging supply, a review of lodging demand generators, various projections and data as well as “field research to determine the relationship between the community and it’s lodging need…. Economic indicators were studied to determine the stability and future growth potential of the general market.”
The study ultimately takes all that information and recommends a property type, suggest property size, services and amenities.
Projections: “report will present projections for stabilized hotel operation based upon current operating performance in the market area.”
Based upon “current operating performance in the market area” – occupancy, average daily room rate, sales revenue projections
The study defines the region’s hotel market and identifies the Hampton Inn, Days Inn and Quality Inn in Warren as well as four hotels in Jamestown as a part of the market, identifies the number of rooms and conducts a rate analysis on those rooms, identifying the average rate across those hotels as between $95 and $97 dollars over a total of 524 available rooms.
Citing data from STR, a firm that specializes in hotel data as well as their own data, the report details occupancy and average rate data from 2012 to 2016, where occupancy fluctuated between a low of 53.8 percent in 2016 and a high of 59.6 percent in 2014 while the average rate steadily rose from $98.04 in 2012 to $105.79 in 2016.
Projected data pegs occupancy at 54.3 percent in 2017, 54.5 percent in 2018 and 50 percent in 2019.
A separate lodging demand analysis “based on general observations of the surrounding market are and the overall Warren, Pa. market area” was also conducted based on the construction of a new 58 guestroom hotel.
The firm calls that aspect the study a “forward looking projection” based on “participation in other projects, similar” as well as additional STR data and “community feedback.”
They acknowledge the projections are “subject to change and fluctuation” but project 59.5 percent occupancy at an average daily rate of $104.50 per night, which would result in total revenue of $1,316,800.
A year-by-year projection for the potential hotel indicate revenue to increase from the $1.316 million in year one to $1,527,868 in year five.
Demand in the form of occupancy rate is also projected by days of the week: 27 percent on Sunday, 45 percent on Monday, 63 percent on Tuesday, 74 percent on Wednesday, 65 percent on Thursday, 105 percent on Friday and 108 percent on Saturday.
Strengths, weaknesses and opportunities present in Warren are also identified in the report:
Strengths include the city’s low crime rate and cost of living, proximity to major metropolitan areas, walkability, natural scenery, healthcare, business friendliness, fine arts, slow paced, small town charm, short work commute, minimal traffic and outdoor recreation.
Weaknesses were identified as the lack of an airport, finding a qualified or long-term workforce, lack of downtown and recreation marketing, low population, lack of rental housing and lack of access to an interstate.
The study also identifies potential opportunities for growth in Warren including a brewery, increasing manufacturing, restaurants, shopping, increase in river/recreation marketing, coffee shops, office space and rental housing.
“There are multiple economic impacts of building and developing a new hotel in a community,” also identified, specifically including 8-12 full time jobs plus variable part time; taxes including sales tax, payroll tax and property tax as well as a host of indirect benefits.
The specific site was analyzed for visibility, accessibility, traffic counts, site prep, major utilities, zoning, area support services and competition position and scored a 90 percent on a 1-5 ranking scale.
Beyond all the data, members of the firm spoke with people from a host of local organizations – Warren County Visitors Bureau, City Redevelopment Authority, City Planning Commission, former mayor, County Planning and Zoning, Betts Industries, Warren General Hospital, Whirley DrinkWorks, Targeted Pet Treats, Allegheny Outfitters, Struthers Library Theatre, the Warren County School District, Blair, the current mayor, a representative from the City of Warren, Northwest Bank and United Refining about the specifics need those entities see or may have for additional lodging options in Warren.
What did all that conclude and what is the firm recommending?
An “upper midscale hotel” that is “anticipated… (to) capture displaced Lodging Demand currently staying in markets surrounding Warren, PA. Additionally, the newness of the hotel should be well received in the market place. It’s location will be ideal to serve warren and regional markets.’
The consultant specifically recommends a hotel between 50 and 60 guestrooms and notes that “it is not advisable to over-build in this market at this time.”