DUE DATE/TIME: November 5, 2014, 4:00 PM (Mountain Time)

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1 DOWNTOWN BILLINGS PARTNERSHIP, INC ND AVENUE NORTH BILLINGS, MT Phone (406) Fax (406) [email protected] Request for Proposals for Professional Services to Conduct a Market Feasibility Study for a Potential Hotel and Executive Conference Center to be Located in Downtown Billings, MT DUE DATE/TIME: November 5, 2014, 4:00 PM (Mountain Time) All proposals shall be sealed and marked "Downtown Hotel Study" and must be received by the Downtown Billings Partnership, Inc. by the above stated due date and time. POINT OF RECEIPT: Mailing and Physical Address: Greg A. Krueger, Development Director Downtown Billings Partnership, Inc nd Ave. North Billings, MT Requests for information regarding this Request for Proposals should be directed in writing by letter, or by telephone call to Greg A. Krueger at (406) [email protected] 1

2 Downtown Billings Montana Request for Proposals for Professional Services to Conduct a Market Feasibility Study for a Potential Hotel and Executive Conference Center to be Located in Downtown Billings, MT OVERVIEW The Downtown Billings Partnership, Inc. (DBP) wishes to promote development of a hotel facility and possible executive conference center within the boundaries of the N. 27 th Expanded Tax Increment District and within or near the historical district of Downtown Billings. There are several potential sites within the designated area that may provide an opportunity for lodging development along with an executive conference center. The goal of the DBP is to determine if a new luxury/business hotel is feasible by the private sector. If this hotel and conference facility is not fully feasible by the private sector, it is the DBP s desire to determine what financial gap might exist that could be filled by public incentives, along with recommendations of the most appropriate incentives to fill any identified financial gap. This study will also compliment a simultaneous study by another firm on a general Convention Center feasibility that would serve the entire lodging community of the City of Billings, MT. Additionally, the study will attempt to update a similar report commissioned and completed in It is of particular importance to the DBP that this study must explore the immediate and long range financial impact of a new hotel on the existing downtown lodging properties. The successful bidder will conduct a study to determine the optimal site, recommend a facility program and determine the overall market feasibility of the recommended facility or facilities (separate executive conference center).the resulting analysis will be provided to potential hotel developers, management companies and brands who may be interested in participating in a hotel project. APPROACH The work program for the study includes the determination of current and potential future lodging demand in the market area, the assessment of existing and potential future hotel supply and the share of the market that could reasonably be attained by the potential hotel, and the estimation of potential cash flows from operations available to service debt and provide a return on invested capital (ROI). 2

3 SCOPE OF WORK Analysis of the Sites The successful bidder will evaluate potential sites to assess opportunities and constraints for development. Some of the factors to be analyzed include: Access, both vehicular and pedestrian; Visibility from principal access routes; Ambiance of the surrounding neighborhood; Current land uses in the vicinity; Topography of the site and immediate vicinity; Relationship to demand generators; Parking demand; Relationship to area amenities; and Advantages/disadvantages of the site versus the major competitors. Market Area Review The successful bidder will gather and analyze relevant economic data regarding the market area to determine whether the overall economic environment in the area appears to be suitable for the proposed development. The successful bidder will examine correlations between key economic factors and the demand for lodging and will utilize any available forecasts of these indicators in the evaluation of potential future demand. The successful bidder will review the current and future demands of the Billings airline market and compare the potential hotel/conference demand to the availability and affordability of current air travel to and from Billings. The successful bidder will perform primary market research in the area, consisting of interviews with key demand generators, inspection and evaluation of competition and discussions with people familiar with development patterns and the local hotel market. Among those with whom interviews will be conducted are: Representatives from the 3 Boards that comprise the Downtown Alliance; Representatives of the City of Billings; Representatives from Montana State University Billings; Representatives from the two major hospitals in Downtown Billings; The local Convention and Visitors Bureau; Owners and managers of potentially competitive lodging facilities; Government officials in zoning, development and transportation; and Managers of tourist and cultural attractions. 3

4 On the basis of the foregoing research, the successful bidder will prepare estimates of future growth, by segment, in the demand for, and the supply of similar quality hotel facilities in the market area. Demand Growth Estimates The successful bidder will analyze historical economic growth in the area and the characteristics of each of the principal segments of demand. Then, using the information gathered from the research, estimates will be made of growth in demand for each market segment and demand for the hotel/conference project for each of the next seven to ten years, expressed in room nights and potential conference bookings. Facilities Recommendations As part of the analysis, and based on the nature and kind of requirements associated with the identified potential users of the hotel, the successful bidder will recommend the facilities program relating to the: Number and mix of guest rooms; Room configuration; Food and beverage concept; Banquet and meeting space requirements; Potential of mixed use development including housing; Brand affiliation and Other facilities and amenities. Market Share Estimates The focus here will be on estimated demand for the hotel project. Upon completion of the estimate of market area supply and demand for the future, the successful bidder will estimate the share of the market that the proposed recommended facilities should reasonably be expected to capture for the property s first five years of operation. The analysis will include an estimate of the demand that could be induced through the development of the subject property. Based upon an analysis of the sources of demand available to the subject property and its estimated competitive position, the successful bidder will estimate the average daily room rate that could potentially be achieved in a representative year, in current value dollars, and over the first five years of operation of the subject hotel. Statements of Estimated Annual Operating Results Based upon the analysis of market demand, the successful bidder will estimate occupancy, average daily room rate, revenues and operating expenses for the subject hotel, with and without additional executive conference facilities, for its first ten years of operation. These estimates will result in a bottom line of net operating income after management fees and reserves for replacement of fixed assets but before interest, depreciation, amortization and income taxes. 4

5 DRAFT AND FINAL REPORTS The successful bidder shall issue a full draft narrative report of the completed study. The report will be a comprehensive document that sets forth findings, conclusions, and recommendations concerning the proposed project. The draft report will be an executive summary to include a discussion (bullet points) of the demand for and supply of the existing lodging facilities in the market, recommendations of the appropriate concept and facility program, demand (penetration analysis) that the proposed project should be able to capture as well as the expected average daily rate the project will be able to achieve. Cash flow projections will present comparable historical operating results of similar hotels as well as a projection of cash flow for the subject with only a summary discussion. The report is to be a comprehensive document that sets forth the successful bidder s findings, conclusions and recommendations concerning the proposed hotel and potential added executive conference facility. After the DBP has reviewed the draft narrative report and any review comments the DBP may have are resolved, the successful bidder will prepare the report in its final written form sufficient for the DBP s internal use and for distribution in support of hotel development and financing purposes. The report will be provided to potential hotel developers, lending institutions, management companies and franchisers that may be interested in participating in the hotel project. Seven print copies and a digital copy of the final report are to be provided to the DBP. Finally, the successful bidder will meet with the DBP and its designees to present findings, conclusions, and recommendations, which will be prioritized based on identified market demand and potential economic importance. Coordination with other Lodging/Conference and Downtown studies: The successful bidder for this hotel feasibility study will be required to review and compare findings of this study to recent similar studies performed for Downtown Billings and the Local CVB. Project Time Frame: presentation. Approximately eight (8) weeks from kickoff to final Project Fee: The fee for completion of the project shall be stated in a lump sum dollar amount with any anticipated travel expenses outlined and billed at cost with a not to exceed cap. 5

6 The response to the Request for Proposal shall also include the following: Name and address of the consulting firm submitting a proposal Names and professional qualifications of the representatives of the firm that will be conducting the study List of firms or entities, including the names and contact information, for which the bidder has conducted similar studies (list of references). Include a brief summary of the purpose of the study and any measurable results to date. Statement on the qualifications of the firm to conduct the proposed hotel feasibility study. The Downtown Billings Partnership, Inc. reserves the right to accept or reject any or all proposals based solely on its analysis of the proposals received including the cost thereof. 6