Distressed Property Turnaround
The client’s development plan was to purchase a distressed hotel property in the Scottsdale, Arizona area, renovate it and convert an excess of conference space into extensive fitness and spa facilities. An appraisal of the ‘as is’ (before) and ‘as completed’ (after) values appeared difficult to believe as the ‘before’ scenario had low ADR and relatively low occupancy, and the ‘after’ scenario had not only improved ADR and occupancy, but also significant spa revenue.
In addition to ‘as is’ and ‘as completed’ values, the appraisal discussed the growth of wellness trends in hotels and the new brand’s positioning with ‘a la carte’ wellness services in place of the traditional destination spa package rates that can reach $1,000 per day or more. The appraisal provided an interim value, based on the transition from a traditional hotel to a spa- and fitness-focused resort.
The hotel renovation is complete, and the soft opening is scheduled for March 2018. In the client’s recommendation letter, he wrote:
Horwath HTL provided market analysis to understand the competitive set and then layered on top of that a ‘wellness lifestyle quotient’… Since the leisure wellness/spa traveler spends 60% more than a typical FIT customer, this if a valuable tool.