The Mandate
A repeat hotel sponsor with prior select-service deliveries across the Midwest engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a SBA 504 financing request for a project located in Franklin County, Ohio. Total project capitalization fell within the $10M-$25M 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: Could the Columbus submarket comp set support a Tier-2 select-service RevPAR index of 108 within a 24-month ramp.
Engagement Scope
- Primary market area defined as a 5-mile drive-time
- Comparable supply set of 6 properties
- Demand model framework: STR comp set RevPAR index projection with segment mix 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 5-mile drive-time from the subject site, calibrated to the demand catchment behavior typical of hotel assets in Ohio. 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 6 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a STR comp set RevPAR index projection with segment mix 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 1.5 across the projection window, with a stabilized capture rate of n/a.
Exhibit 1: Comparable Supply Set, Ohio 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
- Franklin County commercial and group segment demand grew 8% over the trailing 24 months against limited Tier-2 supply additions.
- Comparable Tier-2 select-service hotels held RevPAR of $92 to $108 at 68% to 72% stabilized occupancy.
- Subject reached RevPAR of $104 at 71% occupancy in year two of the ramp schedule.
- Stabilized 504 senior-debenture DSCR of 1.41x cleared the program review threshold.
Deliverable
The delivered report ran 146 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 SBA Certified Development Company partnered with a national bank. The corresponding SBA 504 review framework guided exhibit selection and supporting documentation.