TOWN PLACE SUITES
Greenville, S.C.

OPPORTUNITY

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Urbana viewed the purchase as having many opportunistic elements –

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• Favorable macroeconomic conditions as a result of pro-growth policies in the state of South Carolina, and a robust regional market in Greenville due to a large corporate presence.

• As a Marriott branded hotel, the TPS Greenville was poised to benefit under the Marriott umbrella which affording it access to Marriott’s immense sales and marketing program. As an extended-stay property, Urbana saw the TPS as prime to capitalize on clientele that were traveling into Greenville and staying multiple nights for work purposes, and/or or as an alternative place to stay for visiting neighboring universities (Clemson is only 40 minutes away).

• Attempting to capitalize on what it viewed at the time as a strengthening in the corporate segment combined with being a member of the Marriott family, Urbana viewed the TPS Greenville as being poised to improve its negotiated rates with local corporations as well as increase its base corporate business, together which afforded property with the ability to increase transient segment average daily rates.

• An attractive “per pound” all-in acquisition prices of $53,000 per key that was well below estimated replacement cost (at the time of purchase) of $100,000 per key. 

• Greenville, SC as a market was backed by a strong local economy that was supported by the private sector, with 9,700 new jobs created in the previous six years (2017 – 2013).

• The property’s performance against the competitive set had fallen in recent years and Urbana believed that the Marriott mandated improvement plan described below would allow the property to recapture the nearly 7 percentage point decline in its RevPar penetration index.   rebounded quite well since the crash in 2008, which lent credence to the theory that with necessary property improvements set in place by Urbana, the Hilton could also achieve that similarly successful rebound.

• On-going strengthening market as the Greenville MSA is the largest exporting market in SC and among the largest in the US. The market itself since the Great Recession has been in self-sustaining expansion.

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INVESTMENT CHALLENGES

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Urbana invested $1.2 million (nearly $13,000 per key”) into PIP upgrades for the TPS, which made the property “like-new”. Guest room improvements included new paint, carpeting, sofa-beds, sofa seating, and ottomans.  Guest room bathrooms were upgraded with new granite countertops, cabinetry, and sinks. Public area improvements included upgrades to corridors, guest laundry, business center, public bathrooms, exercise room, and pool facility.  Urbana also created a new kitchen and breakfast area enabling service of the hot and cold breakfast buffet.

 

ACTION PLAN

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Evidence of the PIP’s impact combined with Urbana’s strategy on increasing its base corporate business at higher negotiated rates can be seen in the change in hotel’s ADO, ADR and RevPAR.  At the time of acquisition, these metrics were 71.8%, $70.61 and $50.66, respectively.  Whereas at the time of sale, these metrics were 67.6%, $97.31 and $65.73, reflective of a nearly 30% increase in room revenue.  Further to this top line improvement, Urbana was able to maintain control over expenses as the property’s EBITDA margin increased from 34% at the time of acquisition to 38% at the time of sale.

 

PERFORMANCE METRICS

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The excellent annual cash-on-cash yield of the TownePlace Suites led to impressive property level IRR and equity performance metrics of 31% and 2.97x, respectively.