03-05-07 Special Called Joint Meeting of the La Porte Development Corporation Board of Directors and the La Porte City Council Minutes

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EXECUTIVE SUMMARY I- 3 . As part of our market analysis, a survey was conducted of the major corporations located in the two major business parks within the primary market area for the proposed hotel. The respondents were asked to identify the hotels that they currently use for their hotel and meeting needs. The hotels which were identified are considered to be the competitive hotels located outside the market area. Occupancies at the competitive hotels reached the upper 60's in 2006. Since these properties are located outside the market area, they do not reflect the strength of the primary market area. · The market demand segmentation for the existing area hotels, comparable hotels and competitive hotels located outside the market are illustrated in the following table. Market Demand Segmentation Exist~' I"I'~ Area coale Competitive Market Segment Hot'll. .;.. ~ ~C~ Hotels Corporate 70% 28% 56% Group Meeting 20% 42% 29% Leisure 10% 30% 15% Total 100% 100% 100% Source: PKF Consulting The mix of demand for the existing area hotels is a good indication of the mix of demand located in the primary market area. Discussions with the local hotel representatives indicated that the higher rated properties are able to attract the less price sensitive engineers that are not leaving the market and international visitors to the Port and petrochemical industry, whereas the lower rated properties cater to the construction workers and trucking industry. The mix of the comparable properties shows their orientation toward the group and leisure markets. Corporate demand in these markets is not as strong as in the primary market area. Competitive hotels located outside the market area have stronger corporate and group markets, somewhat similar to the primary market area. · There are no other full-service hotels being developed in the La Porte market area, except for the proposed Sylvan Beach Hotel, which is scheduled to open in January 2010. · In order to evaluate the demand for an upscale, full-service hotel in the primary market area, we conducted a mail survey of corporations located in the Battleground Industrial District and Bayport Industrial District and La Porte community organizations. Of those that responded, 58% of the corporations and 50% of the community organizations indicated that they had a need for an upscale, full-service hotel for overnight accommodations.