HVS Brokerage & Advisory, as the sole and exclusive advisory firm to ownership, presents the opportunity to acquire both the 92-key Home2 Suites by Hilton Houston IAH Airport Beltway 8 and the 82-key Hampton Inn & Suites by Hilton Houston North IAH.
This offering presents an excellent opportunity for an investor to enter the Hilton brand family at a price well below replacement cost. A new investor can expect new, long-term franchise license agreements with Hilton.
Unique Hilton-Branded Portfolio
Upside Opportunity for a Robust Operator
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In the last two years, the portfolio achieved an annual house profit of 39.0%.
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Based on a selection of similar limited-service, Hilton-branded, operating statements, the portfolio should achieve a stabilized GOP margin between 45.0% and 50.0%.
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The portfolio offers operational efficiencies of key property-level functions including a shared General Manager, Director of Sales, Sales Coordinators, and a Chief Engineer, allowing for reduced payroll costs and higher NOI flow-through.
Strong Rebounding Performance with Upside
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Since the onset of the COVID-19 pandemic in 2020, rooms revenue for each hotel has been trending upward. Combined, the portfolio achieved $3,840,000 (rounded) in rooms revenue last year, an 18.7% increase compared to the amount in 2021.
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The portfolio dominates the competitive set, with the Home2 Suites by Hilton registering a 115.3% RevPAR penetration index, and the Hampton Inn & Suites by Hilton registering a 130.7% penetration index in 2022.
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Given the rebounding market, new ownership will be able to capture each hotel’s competitive advantage by implementing aggressive sales tactics, increasing room rates, and improving guest satisfaction scores.
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As of the trailing-twelve-month (TTM) period ending February 2023, the Home2 Suites by Hilton registered a RevPAR level of $69, while the Hampton Inn & Suites by Hilton achieved a lower RevPAR level of $59.
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On the running three months, the Home2 Suites by Hilton experienced a 34.0% (rounded) increase in RevPAR, while the Hampton Inn & Suites by Hilton realized a 66.0% (rounded) increase in RevPAR, showing that 2023 is off to a strong start.
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The portfolio’s stabilized rooms revenue is expected to reflect a RevPAR level of at least $80, with total (combined) annual rooms revenue of over $5 million.
Highly Sought-After Hilton Franchise, World-Class Affiliation and Distribution Platform
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The Hampton by Hilton flag is a proven brand that dominates the upper-midscale segment. Franchisees benefit from Hilton’s global strength, reputation, and unrivaled Hilton Honors™ guest loyalty program.
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The Home2 Suites by Hilton is one of the fastest growing brands in the industry. The modern-style, all-suite, mid-scale brand targets the sophisticated, value conscious extended-stay segment. The all-suite design promotes guest independence, which allows for lower housekeeping costs and higher profits. This business model benefits an investor in operating an asset that yields high GOP margins and NOI flow-through.
Well-Maintained, High-Quality Physical Products, Priced Below Replacement Cost
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The properties are less than ten years old, and current ownership has maintained the physical assets well. The change-of-ownership PIP reports can be found in the virtual deal room (VDR).
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The Hampton Inn & Suites by Hilton is due for a refresh.
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Given the newer construction of the Home2 Suites by Hilton, a minimal change-of-ownership PIP is expected.
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Based on the current pricing guidance, the properties are priced below replacement cost. To construct similar assets with comparable amenities, the estimated all-in investment would be a minimum of $140,000 per key.
Excellent Location Among Strong Corporate & Leisure Demand Generators
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The properties are strategically located along Beltway 8 between Interstate 45 and the Hardy Toll Road, proximate to numerous dining, retail, and entertainment options.
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Corporate demand generators in the area include the Houston Police Academy, Baker Hughes, Crane Worldwide Logistics Headquarters, Halliburton, Insperity, Memorial Hermann, United Airlines, Ritchie Bros. Auctioneers, Technip/FMC, Pinto Business Park, and the Mattress Firm Warehouse, as well as numerous business parks.
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Leisure demand generators in the area include Houston Aquarium & Animal Adventure, Deerbrook Mall, The Woodlands Mall, W. W. Thorne Stadium, Rockstar Energy Bike Park, Hurricane Harbor Splashtown Waterpark, and Sam Houston Race Park.
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Available dining options nearby include Denny’s, Waffle House, Taqueria El Dorado, and Pappas Seafood House.
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