Aartha

Project 1 & 2

Tri-Cities Investment District, LLC – Regional Center Developments #1 & #2 Embassy Suites Hotel & Homewood Suites Hotel by Hilton

Overview

Two new Hilton Hotels, a 160 room Embassy Suites facility and a 123 room Homewood Suites facility (or another national brand) will each be designed with a vineyard theme, conference center, meeting rooms, banquet facilities, full service restaurants, pools and fitness centers and boutique vineyard, surrounded by an award-winning 18 Hole Championship golf course. These two hotels will be the newest built in the Tri-Cities area since 2004, and together these two hotels will be the leaders in the local marketplace in terms of style, luxury and amenities. The developer has been granted approval by Embassy Suites Hotels to open a franchise at the planned location.


The Need

Demand for hotel rooms in the Tri-Cities area has experienced a steady increase in each of the past three years, with 2011 bookings surpassing those of 2010. The proposed hotels will be the newest in the local supply and the only hotel in the Tri-Cities region that is located in a masterplanned golf community. Higher-end hotels in the Tri-Cities area have experienced occupancy levels in the 75%-80% plus range for the past 6 years, which surpasses the nationwide industry average. Competitive hotels cater to three primary segments of lodging demand: individual business travelers, group meeting guests, and leisure and other travelers.

Richland and the Tri-Cities area have posted steady population increases in the last few decades. The region benefits from its proximity to the Hanford Nuclear Site, the U.S. Department of Energy’s research and development of that site, and the numerous labs and firms that have become involved in various aspects of the clean-up and development of the area. The Tri-Cities area also benefits from the high number of PhDs and scientists who reside and work there. The Tri-Cities area is likely to continue to experience growth in various fields of scientific research, energy and high technology.

With the area’s population growth trends and increasing earning power, increasing employment and associated tax base contributions, the outlook for the future of the Tri-Cities area is very positive generally, while the outlook for housing demand specifically is very strong.


Industry Growth

Extended-stay hotels, such as the Homewood Suites (or another national brand), had a very good recovery year in 2010 and the segment is set for an even better, possibly record breaking, 2011.

Supply and demand moved in opposite directions with both indicators setting new records going back several years, resulting in an increased level of unmet demand in 2010. Room supply growth of 2.2% was the lowest for at least 20 years and the 13.4% increase in demand was the strongest since 2000. The impact on average occupancy was a 9.3% gain which is the largest annual increase ever recorded. Extended-stay rooms under construction fell to a new low in 2010, meaning that record low supply growth will follow in 2011 and possibly again in 2012.

Rates are on an upward trend and there is plenty of room for growth in occupancy which is still well below the peak level it reached in 2000.

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