Ideal Opportunity for an Experienced Owner/Operator to Improve Performance and NOI Flow-Through

According to the past three years of financial statements, the hotel registered an average gross operating profit (GOP) below 30.0%. Based on a selection of operating statements from similarly aged hotels affiliated with Choice, the hotel should achieve a stabilized GOP margin between 45.0% and 50.0%.

Highly Desirable Location Within the High-Barriers-to-Entry Galleria/Uptown District

The property benefits from its location near Houston’s Galleria/Uptown District, a densely developed and highly sought-after submarket in Houston that is anchored by The Galleria mall. The submarket presents significant cost barriers for entry into the hotel industry given the high land costs and limited franchise options.

Strong Historical Topline Revenue 

Prior to the COVID-19 pandemic, the hotel generated more than $1,500,000 in revenue, showing tremendous upside for a new investor. Based on HVS pro-forma projections, following the completion of the PIP, stabilized rooms revenue is anticipated to exceed $1,600,000 ($72 RevPAR), with an NOI flow-through of $600,000 (rounded).

Rebounding Galleria Submarket Performance 

When comparing the year-to-date period through August 2023 against the same eight-month period in 2022, this Galleria lodging submarket experienced a 17.4% increase in occupancy, while ADR rose 4.9%, and RevPAR increased 23.2%; moreover, lodging demand in this submarket rose 11.8%.

Ability to Increase Guestroom Key Count

The hotel contains a two-room suite that is currently being used as an office, which could be converted back to a guestroom to bring the key count to 62. Current ownership had plans created to expand the guestroom key count by 27, bringing the total key count to 89; the expansion would comprise three levels, with five king-bedded suites and four double-queen-bedded suites on each level, equating to nine suites per level.

Choice International Franchise

An investor can expect a new, 20-year franchise license agreement with Choice Hotels International Inc. upon completion of the brand-mandated change-of-ownership property improvement plan (PIP). The PIP report can be found in the VDR.

Excellent Location Among Strong Corporate & Leisure Demand Generators

The property is located near various dining, retail, and entertainment options, which is a positive attribute for both business and transient guests. Over 2,000 companies call the Galleria/Uptown District home, including some of the most prominent energy, financial, real estate, and professional companies in the world, such as Air Liquide, Apache Corp., Bechtel Corp., BHP, GE Energy, Williams, PNC Bank, Enbridge, Hines, iHeart Media, Laundry’s Restaurants Inc., Quanta Services, Skanska USA, and Alliantgroup.