The Mandate
A boutique-hospitality operator converting a tired three-star property engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a SBA 504 financing request for a project located in Maui County, Hawaii. Total project capitalization fell within the $25M-$50M band. The capital provider, a SBA Certified Development Company partnered with a national bank, required documentation consistent with current program review standards. The analytical question put to the team: Did Maui leisure visitor inflows and post-conversion ADR positioning support 72 boutique keys at $548 stabilized ADR.
Engagement Scope
- Primary market area defined as a n/a drive-time
- Comparable supply set of 9 properties
- Demand model framework: destination leisure room-night and post-conversion ADR positioning analysis
- 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 n/a drive-time from the subject site, calibrated to the demand catchment behavior typical of resort assets in Hawaii. 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 9 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a destination leisure room-night and post-conversion ADR positioning analysis 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 8.7%.
Exhibit 1: Comparable Supply Set, Hawaii PMA
[Table or chart rendered in delivered report.]
Exhibit 2: Demand Projection Summary, 10 years Horizon
[Table or chart rendered in delivered report.]
Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- Maui annual leisure visitor demand totaled 2.4 million with 18% boutique-segment preference.
- Comparable boutique conversions cleared $498 to $612 ADR with 74% to 82% stabilized occupancy.
- Post-conversion RevPAR Index of 121 supported the financial projection.
- Stabilized 504 DSCR of 1.36x cleared the program review threshold.
Deliverable
The delivered report ran 162 pages with 38 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 national bank. The corresponding SBA 504 review framework guided exhibit selection and supporting documentation.