ACQUISITION & MANAGEMENT
HILTON GREENVILLE
Greenville, SC
The Hilton hotel, located in Greenville, SC, is a remarkable property that encompasses a nine-story tower situated on over seven acres of land. With 256 keys, the hotel offers a variety of accommodations to its guests. The property also boasts impressive amenities, including 14,000 square feet of meeting space, an indoor heated pool, a fitness center, a business center, and a full-service restaurant.
Originally constructed in 1987, the hotel underwent a significant renovation just before Urbana's purchase. With an investment of $3.2 million (equivalent to $12,500 per key), the renovation focused on enhancing the public areas, meeting space, and guest rooms, ensuring a fresh and updated experience for guests. Conveniently located along I-385, and within minutes of the I-85/I-385 interchange, the hotel enjoys easy accessibility. Moreover, being only four miles away from downtown Greenville, it is in close proximity to major corporate demand generators such as IBM, General Electric, Flour, Hubbell, Michelin, BMW, Kemet, Verizon, and Charter Communications.
The hotel also benefits from additional demand generators, including weekend group business oriented towards social, military, educational, religious, and fraternal groups (SMERF). Additionally, the hotel attracts leisure demand from visitors attending Clemson and Furman universities, as well as those seeking to explore the vibrant downtown Greenville scene while enjoying the affordability compared to pricier downtown hotels.
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256 well-appointed smoke-free guest rooms.
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The Concierge Floor features private elevator access.
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Palmetto and Piedmont Ballrooms
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12,000 square feet of flexible meeting
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Banquet space for groups of up to 500 people.
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Two outstanding food and beverage outlets.
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On-site A/V staff and Corporate Catering Manager.
INVESTMENT SUMMARY
Due largely in part to favorable macroeconomic conditions as a result of pro-growth policies in the state of South Carolina, and a robust regional market in Greenvilledue to it having a large corporate presence, Urbana acquired the Hilton Greenville in October of 2013. Attempting to capitalizeon what it viewed at the time as a strengthening in the group/ corporatesegments, Urbana viewed this Hilton property as being ideal because of the property’s existing meeting space, its location, and Urbana’sexperience in the group sector.
Further, success in capturing more group and corporate base business would in turn allow for an increase in the transient segment average daily rates. The 256 key property was purchased for $16.75 million ($65,000 per key) with approximately $6.1million of equity and a $13.4 million debt facility.
INVESTMENT CHALLENGES
Project Improvement Plan(“PIP”).Even though the property had undergone a recent and fairlyextensiverenovation project ($3.2 millionor $12,500 per key) before Urbana’s purchase, Hilton required an additional PIP with the change in ownership(“COO”). Budgeted at nearly $1.3 million (or nearly $5,000 per key), major renovation work included an entire repaving of the property’s parking lot, enhancing existing and creating additional meeting space, upgrades to the fitness center in terms of equipment and painting, and betterment of guestrooms in terms of enhancements to case goods, windowtreatments, granite thresholds, mattress and box spring replacements, etc.
ACTION PLAN
Drive Rate Through Increasing Group Demand-Urbana’s principal strategy for the Hilton Greenville was to drive rate by increasing group and corporate demand,which would in turn drive transient rate as well. A strategy that proved to be successful as the Trailing Twelve MonthAverage Daily Rate (“ADR”) at the end of 2013 (a few months after purchase)was$103.64as compared to $128.33at time of sale in September of 2018. This was a 24% increase and demonstrates the effect Urbana’s execution of the PIP plan and group/corporate business strategy had on the success of the hotel.Hand in hand with theincrease in ADR, revenue per available room (“REVPAR)increased from $74.50 at the time of purchase to $85.15 at the time of sale.
OUTCOME
The successful execution of its ADR strategy combined with other operating improvement initiatives resulted in the property’s Income Before Fixed Charges margin increasing from 28% at the time of acquisition to 31% at the time of sale.
PERFORMANCE METRICS
Urbana sold the Hilton Greenville in Septemberof 2018for $30,750,000, or $120,000 per keyyielding (to total equity) an Internal Rate of Return of 39% and a Capital Return Multiple of 3.90x.