The Mandate
A repeat hospitality sponsor with two prior extended-stay deliveries in Northern Virginia engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a SBA 504 financing request for a project located in Loudoun County, Virginia. Total project capitalization fell within the $10M-$25M band. The capital provider, a SBA Certified Development Company partnered with a regional bank, required documentation consistent with current program review standards. The analytical question put to the team: Did Dulles-corridor data center and federal-contractor demand support 110 extended-stay keys at 78% stabilized occupancy.
Engagement Scope
- Primary market area defined as a 10-mile drive-time
- Comparable supply set of 11 properties
- Demand model framework: extended-stay corporate-project room-night demand model
- Financial projection horizon: 10 years
- Site inspection completed; operator interviews where applicable
- Primary data collection through field reconnaissance and third-party market data
Methodology Applied
Primary Market Area
The PMA was defined as a 10-mile drive-time from the subject site, calibrated to the demand catchment behavior typical of hotel assets in Virginia. The boundary captured the population, employment, and competitive supply base relevant to the subject's operating thesis.
Supply and Demand Reconciliation
The comparable supply set comprised 11 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a extended-stay corporate-project room-night demand model approach over a 10 years horizon. The reconciliation tested whether incremental supply, including the subject, could be absorbed within the projection window without compromising stabilized occupancy assumptions.
Capture Rate Calibration
The subject's capture rate was calibrated against the absorption capacity of the PMA. The analysis concluded that PMA absorption capacity exceeded subject build-out by a factor of 1.8 across the projection window, with a stabilized capture rate of 9.6%.
Exhibit 1: Comparable Supply Set, Virginia PMA
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Exhibit 2: Demand Projection Summary, 10 years Horizon
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Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- Dulles-corridor data center construction supported 1,840 extended-stay project room-nights monthly.
- Comparable extended-stay properties operated at 76% to 82% occupancy with $128 to $146 ADR.
- Subject's projected 78% stabilized occupancy was supported by the project-demand pipeline.
- Stabilized 504 DSCR of 1.36x cleared the program review threshold.
Deliverable
The delivered report ran 148 pages with 34 exhibits distributed across nine analytical sections, plus appendices documenting comparable supply data, demographic inputs, and financial projection assumptions. The document was prepared to the documentation standards of the SBA Certified Development Company partnered with a regional bank. The corresponding SBA 504 review framework guided exhibit selection and supporting documentation.