The Mandate
A boutique hospitality operator converting a heritage office building engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a SBA 7(a) financing request for a project located in Multnomah County, Oregon. Total project capitalization fell within the $25M-$50M band. The capital provider, a specialty SBA lender, required documentation consistent with current program review standards. The analytical question put to the team: Did Portland inner-east leisure and corporate demand support a soft-brand boutique conversion at $189 stabilized ADR.
Engagement Scope
- Primary market area defined as a 5-mile radius
- Comparable supply set of 10 properties
- Demand model framework: soft-brand boutique room-night and segmentation analysis
- Financial projection horizon: 7 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 5-mile radius from the subject site, calibrated to the demand catchment behavior typical of hotel assets in Oregon. 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 10 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a soft-brand boutique room-night and segmentation analysis approach over a 7 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 1.5 across the projection window, with a stabilized capture rate of 11.4%.
Exhibit 1: Comparable Supply Set, Oregon PMA
[Table or chart rendered in delivered report.]
Exhibit 2: Demand Projection Summary, 7 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
- Inner-east Portland recorded 1.12 million annual leisure room-night demand against 7,800 competitive room-nights.
- Soft-brand comparable properties operated at 68% to 74% occupancy with $182 to $214 ADR.
- Subject's projected 71% occupancy and $189 ADR cleared the comparable median.
- Stabilized DSCR of 1.27x satisfied the SBA 7(a) review threshold.
Deliverable
The delivered report ran 152 pages with 36 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 specialty SBA lender. The corresponding SBA 7(a) review framework guided exhibit selection and supporting documentation.