EXTENDED STAY HOTEL

The hospitality market in Montgomery, Alabama, is a needle in the haystack when it comes to the performance of markets across the United States. In Montgomery, the economy and midscale market lost 2 hotels that were shut down over the last 2 years. The Country Inn & Suites is a Choice Hotel property with 108 units and the independent Budgetel that has 106 units. 

The Country Inn was a wood structure that caught on fire and the Budgetel closed as a result of inexperienced management and high interest rate debt that was used to acquire the property. This drop in inventory led to an increase in occupancy in the nearby market with many of the hotels on Carmichael Road, selling out on a regular basis.  In particular, the Holiday Inn Express and the Best Western are charging rates between $90-$160 per night and selling out on a regular basis. The 5175 Carmichael Road property is located directly in between these two hotels. 

INVESTMENT OPPORTUNITY 

Offered at $2,000,000, this property can be purchased without any ties to existing franchise agreements. This opens up the door for incentives offered by operators like Choice Hotels that will assist the new owner with their Property Improvement Plan. The projected valuation after a stabilization is $7,000,000, based on a RevPar of $40 per night.

PROPERTY REPAIRS

The hotel was vandalized and we are working to make some of the necessary repairs including repairing 37 broken windows, cleaning up the trash at the property, restoring the electrical service, and restoring the water service. We are also drafting the site plans that will include the 2D drawings of the facility that can be used by the new owner for planning and improvements.

WHY ARE WE SELLING

We are headquartered out of Louisiana where we recently launched our new brand Boardwalk Suites. We acquired 109 units, 160 units, and we will soon be adding another 200 units to the portfolio. While we love the Alabama market, it makes more sense for us to focus on the Louisiana market for now.

ALTERNATE PLANS

If we do not sell the hotel, we will expand the operations to Montgomery, which is a 6 hour drive from Baton Rouge. We have a strong brand that we have established with an average review score above 4.5 across the platforms in Baton Rouge and Lafayette. We focus on direct booking and 90% of our reservations are booked direct on our website or over the phone. If we do come to the market, we believe we would do very well. 

THE MARKET

As of March, 12-month average RevPAR in the Alabama South hotel market was climbing at an annual rate of 2.1%, essentially in line with the national average.  Alabama South recorded 11 hotel trades over the past year—a bit below the norm over the past several years. Employment in the market was recently increasing at an annual rate of 2.0%, or a gain of about 11,000 jobs. While a positive result, this does represent the weakest rate of job creation in the past 12 months, which at one point was as high as 3.1%.