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HomeMy WebLinkAboutRes.2818.05-19-2014BILL NO. 14-71 A RESOLUTION EXECUTE AN PROFESSIONAL STUDY, IN MISSOURI RESOLUTION NO. �?81g AUTHORIZING THE CITY AGREEMENT WITH SERVICES FOR A THE CITY OF CAPE MANAGER TO HVS, FOR FEASIBILITY GIRARDEAU, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF CAPE GIRARDEAU, MISSOURI, AS FOLLOWS: ARTICLE 1. The City Manager, for and on behalf of the City of Cape Girardeau, Missouri, is hereby authorized to execute an Agreement with HVS, for professional services for a feasibility study, in the City of Cape Girardeau. The Agreement shall be in substantially the form attached hereto as Exhibit A, which document is hereby approved by the City Council, with such changes therein as shall be approved by the officers of the City executing the same. PASSED AND ADOPTED THIS Iq;�J, DAY OF , 2014. 44yE. Rediger, Mayor ATTEST: dgo '� &., Gaylo L. Conrad, City Clerk CITY of CAPE GIRARDEAU PARKS & RECREATION DEPARTMENT Consultant HVS 111 N. Wabash Ave. Suite 1717 Chicago, Illinois, 60602 HVS Contact. Hans Detlefsen, Managing Director HVS — Global Hospitality Services HDetlefsen@hvs.com (312)526-3885 Client/Owner. City of Cape Girardeau, Missouri (also referred to as the City) Parks and Recreation Department 401 Kiwanis Drive Cape Girardeau, MO 63701 Attention: Julia Thompson, Director jthompson@cityofcape.org Phone: (573) 339-6340 Fax: (573) 339-6393 OBJECTIVE The objective of the Professional Services to be provided by HVS to the City will be the preparation of a feasibility study and analysis that identifies the prospective Return on Investment (ROI) involving the development of a Hotel/Convention Center for the City of Cape Girardeau, MO. This study is intended to be used as a guide in the long term planning for future positive economic impact within the Cape Girardeau region. SCOPE OF SERVICES In order to achieve the above stated objectives, HVS will provide the following Professional Services through a feasibility study, which would contain the following sections: 1. Fieldwork and interviews, which will include: a. Interview management representatives of competing hotels b. Interview key project stakeholders identified by the client (e.g. community leaders, tourism representatives, city officials) 2. Market area analysis a. Evaluation of macroeconomic trends and local economic indicators, such as: i. Population growth ii. Income statistics iii. Unemployment trends b. Quantify and analyze recent trends in variables generally correlated with lodging demand in this market, as applicable: i. Airport statistics ii. Employment trends Agreement between HVS and The City of Cape Girardeau, MO. 5.1,2014 7 iii. Convention/arena statistics c. Develop conclusions about these directional trends of key economic indicators that influence the lodging industry 3. Hotel supply and demand analysis a. Define existing competitive set of hotels in area b. Unlike our competitors, HVS accurately estimates occupancy and average daily rates of each hotel in the defined competitive set; this augments our understanding of why certain hotels are outperforming others locally and allows us to make recommendations accordingly c. Identify and evaluate proposed new competitors in the region, including statewide and within the broader Southeast Missouri regional market area. HVS will model the resulting impact on occupancies and average rates of the recommended hotel scenario d. Estimate demand segmentation of accommodated demand (i.e. % business, % leisure, % meeting/group) e. Unlike many of our competitors, HVS has led extensive research on how to measure "pent up" demand that may not be currently accommodated in most lodging markets. HVS will analyze and quantify our estimates of unaccommodated demand related to local sell-out patterns and seasonality trends f. Includes a discussion of potential induced demand from any proposed major developments in the area 4. Conference center induced demand analysis a. Evaluate comparable hotel conference centers b. Estimate demand segmentation from these comparable facilities c. Interview management to determine what portion of lodging demand was induced by the presence of conference or similar type facilities d. Conclude to induced room night impact of the conference space 5. Facility program recommendation a. HVS will review several potential development scenarios and potential development models to provide final recommendations b. Working with the client team, HVS will make a recommendation that best matches the City's policy goals with the market's economic potential c. Our recommendation will define the hotel and conference center's recommended size, room mix, amenities, facility program, service level, branding, and chain scale d. HVS will analyze the anticipated development cost of the recommended scenario 6. Real financials from comparable hotel conference centers a. We will identify a set of comparable hotel conference centers in similar settings that share key characteristics with your proposed hotel conference center Agreement between HVS and The City of Cape Girardeau, MO. 5.1.2014 2 b. HVS will obtain detailed, proprietary financial statements from these hotel conference centers on which to base many of our estimates about key revenue and expense ratios c. Provide a detailed analysis of performance metrics, including all revenue and expense line items 7. Projection of occupancy and average daily rate a. Penetration analysis of commercial (i.e. business) demand segment b. Penetration analysis of leisure demand segment c. Penetration analysis of meeting/group/conference demand segment d. Estimate the subject's likely ability to penetrate each demand segment relative to the defined competitive set of hotels and conference centers in this market and the broader regional market, including potential new competitors e. Forecast of occupancy and average daily rate through the estimated stabilization period 8. Analysis of income and expense a. HVS will provide a 10 -year detailed projection of income and expense b. This projection will conform to the Uniform System of Accounts for the Lodging Industry, which members of HVS help to author along with other key industry leaders c. Conclude subject's potential to generate net operating income available to pay debt and equity investors 9. Feasibility analysis a. Evaluate the recommended project's development cost, which would be based on a comparative analysis of our extensive database of proprietary development budgets from several hundred of the most recently developed hotels in the United States b. Calculate the net present value of projected income stream, as forecasted in previous section c. This net present value conclusion will represent the "when complete" market value of the proposed hotel, as requested, HVS will also provide an opinion of "when stabilized" market value d. Comparison of project's cost and project's "when complete" value to determine the project's feasibility or quantify its feasibility gap e. An independent, unbiased opinion of the project's feasibility gap (if one exists) may become a key finding to inform the City's policy decisions and negotiations with private sector developers who may seek to maximize access to public -sector funds. Agreement between HVS and The City of Cape Girardeau, M0. 5.1.2014 3 DELIVERABLES A key component of the study will be to meet with key stakeholders; the City and the local Chamber of Commerce and Convention and Visitor's Bureau (CVB) and reviews any information that has been developed to date regarding the proposed hotel/convention center. At the time of this meeting, HVS will review and update any market studies that have been conducted, visitor data, regional draw capabilities and distances, previous master plans and the like. In addition to reviewing this information HVS will want to ensure they have a clear understanding of the City's goals for the study and how the information provided will fit into these goals. It will be important to have the entire project team involved in this initial meeting as well. In addition HVS will provide: 1. Regular written updates on progress and the status of the study as a matter of record 2. Regular communications and information exchange is to be expected between the two entities. 3. Final Report: The information gathered will then be developed through the work of both entities to refine into an Executive Summary type report (Inclusive of PowerPoint presentation with visuals/graphics) that provides recommendations from the consultant team on the future direction that the City should explore with regards to the renewal of the hotel/restaurant tax. This report will provide the client and interested stakeholders with direction for increasing the economic impact to the region based upon the goals of providing a new hotel/convention center facility. This information will be provided in both paper and electronic copy. 4. HVS will make a final report presentation to the Cape Girardeau City Council at a date to be determined but no later than October 31s'2014. 5. Items not identified in this Task Order will be addressed on a case by case basis, in writing, and may include amendments to this Task Order as needed. SCHEDULE The completion of the Final Report is expected within 45 days of the date of the executed agreement. Any deviation from this schedule will be mutually agreed upon in writing by both parties. Notification of any delay or change must be made in writing no later than 15 working days prior to the expected conclusion of the project. COMPENSATION The City will compensate HVS for the requested Scope of Services the Lump Sum Amount of $20.000 to be paid in two installments, 50% at the outset of the study and the balance upon the acceptance of the final report and recommendations. In addition the City will compensate HVS for reasonable and agreed upon reimbursable items such as travel, meals, STIR data, printing, and postage to be itemized and approved in advance by the City. Agreement between HVS and The City of Cape Girardeau, MO. 5.1.2014 q ACCEPTANCE The following authorized representatives of HVS and The City hereby execute this agreement. HVS The C' of ape Girardeau, MO Hans Detlefsen Managing Director Title May 2, 2014 Date � er Title 5- do -N Date Agreement between HVS and The City of Cape Girardeau, MO. 5.1.2014 5