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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PROSPECTIVE FINANCIAL ANALYSIS V -1 BASES OF ESTIMATIONS On the basis of our evaluation of market findings relative to the proposed 250-room Sylvan Beach Hotel in La Porte, Texas, we have prepared schedules of estimated operating results, which we believe could be generated by the operation of a facility of the type, size and caliber as described in the preceding sections of the report. In estimating the future operating results, we analyzed historical 2005 operating statements of five comparable full-service hotels. We have not identified them by location, in order to protect the confidentiality of our sample. These properties ranged in size from 237 to 293 rooms with an average of 258. Occupancy rates ranges from 69% to 75% with an average of 72%. ADR ranged from $121 to $164 with an average of $136. The amount of meeting space at the comparables ranged from 9,000 to 22,000 square feet with an average of 16,200. We estimated revenues and expenses based on the market analysis described herein, the performance of comparable properties, typical industry parameters, premiums and efficiencies for a branded, full-service hotel. In evaluating comparables, we considered expenses as a percent of revenue, as well as per occupied room (POR) and per available room (PAR). We then incorporated such estimates into the assumptions that we have made, regarding inflation (3% per year), start-up period and market penetration rates, in order to generate the estimated annual operating results, presented at the end of this section. Our estimates are for the years 2010 through 2019. All dollar financial POR and PAR are expressed in 2006 dollars. The classification of income and expenses in the statements presented in this report generally follows the Uniform System of Accounts for Hotels, recommended by the American Hotel & Lodging Association. DEPARTMENTAL REVENUES Revenue from guestroom rentals is a result of two factors: occupancy level, or occupied room nights, and average daily room rate (ADR). Based on data presented in the Market Analysis section of this report, estimated occupancy levels, average daily room rates, and resulting room revenue for the subject hotel over the projection period are summarized in the following table.