1. HMI Inc.
PHASE I COMMUNITY OVERVIEW
MARKET STUDY REPORT
PFLUGERVILLE, TEXAS
November, 2009
Management
Research
Marketing
Prepared Exclusively For:
Mr. Charles Simon, Director
Pflugerville Community Development Corp.
Gregory R. Hanis, ISHC
President
Member of
Prepared By:
Hospitality Marketers International, Inc.
Gregory R. Hanis, ISHC
President
Professionally Serving the United
States & Canada for Over 27
Years with Offices in
Milwaukee, Wisconsin and
Fort Myers, Florida
P.O. Box 510445
New Berlin, WI 53151-0445
10014 Majestic Avenue #50
Fort Myers, FL 33913
800-657-0835
Fax: 239-334-6562
hmi@hospitalitymarketers.com

2. TABLE OF CONTENTS
Pflugerville, Texas
Introduction...................................................................................1-2
General Market Overview.............................................................3-5
-Geographic Characteristics
-General Market Characteristics
-Exhibits
Site Analysis ..............................................................................6-12
-Site 1
-Site 2
-Site 3
-Site 4
Economic Overview..................................................................13-17
Lodging Demand ......................................................................18-29
Lodging Supply.........................................................................30-36
Issues, Risks and Opportunities ...............................................37-39
Conclusions..............................................................................40-46
-Property Performance
-Projected Preliminary Operating Results
-Benchmark Development Cost Factor
-Property Recommendations

3. EXHIBITS
EXHIBIT 1 - Geographic Location of the Pflugerville
Market Area Within the United States
EXHIBIT 2 - Geographic Location of the Pflugerville Market
Within the State of Texas Including the
Primary Regional Market Area Served
by this Market
EXHIBIT 3 - Pflugerville Market Area as it Relates to the
Austin Area and Surrounding Markets
Including Locations of the Hotels in the
Primary Competitive Set
EXHIBIT 4 - More Detailed View of the Immediate
Pflugerville Market Area and the Location
of the Subject Site

4. Exhibit 1: The geographic location of the Pflugerville market area within
the United States

5. Exhibit 2: The geographic location of the Pflugerville market area within
the State of Texas. Also shown, the regional market area served by
Pflugerville

6. Exhibit 3: The Pflugerville market area as it relates to Austin, Texas and
the surrounding markets. Also shown, the locations of the hotels in the
primary competitive set

7. Subject Site 4
Exhibit 4: A more detailed view of the Pflugerville market area and the
locations of the subject sites

8. INTRODUCTION
Hospitality Marketers International, Inc., (HMI) has been engaged by the Pflugerville
Development Corporation in Pflugerville, Texas to provide this Phase I Community
Overview Market Study Report analysis of the Pflugerville, Texas market area. This
report will provide research regarding the proposed development of a hotel in this
market area. This Market Study will provide an initial overview of the market area
and the market factors that would affect the possible development of a hotel facility in
this community. It is written in an overview format that will highlight key information
to provide a preliminary indication of this market’s ability to support the proposed
hotel development.
The focus of this preliminary report was on the potential development of a hotel
property in the market. The style of hotel, size of hotel and other pertinent details of
this hotel development will be highlighted in this report. The hotel would offer
features, amenities and services that are compatible with any brand selected for this
property. Any additional amenities and services required would be addressed
accordingly in this report. At this time, no food and beverage services are expected
to be offered at the proposed hotel. It is anticipated that the hotel would be a limited-
service style hotel. A continental breakfast would be part of the services offered to its
guests.
The proposed hotel would be located in the community of Pflugerville. In this market,
there are several potential sites identified for this development. Four site areas were
specifically highlighted. These will be addressed in this report and highlights of these
sites will be provided as to the potential of each to support a hotel development.
This report will provide information about the market in which the proposed hotel
would operate. The City of Pflugerville requested that the community’s ability to
support a hotel be addressed. If the community could support a hotel,
recommendations for its brand, type, and size would be made. The projections and
evaluations presented in this report focus on development of the proposed property
within the criteria established.
This report could be expanded, at a later date by a potential developer, to a Phase II
Comprehensive Market Study of the subject area. The Phase II Comprehensive
Market Study would provide more specific and comprehensive supportive
information, statistical data, observations, and research on the market. Also, more
detailed property recommendations and operational projections of property
performance would be presented.
A representative from Hospitality Marketers International, Inc., met with Pflugerville
representatives as well as those from the surrounding area to gather information
pertinent to the proposed hotel development. Comprehensive research was
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9. performed regarding the community’s economic indicators, competitive Lodging
Supply, and Lodging Demand generators. This research was performed to
determine the relationship between the community and the proposed facility’s
Lodging Supply competitors and Lodging Demand generators. Economic indicators
were studied to determine the stability and future growth potential of the general
market area. This research focused on macro- and micro-market analysis of
Pflugerville and the immediate market areas surrounding the proposed hotel to
determine the viability of this market to support the proposed hotel.
This report will present preliminary projections for stabilized hotel operation based
upon current operating performance in the market area. The hotel’s Preliminary
Occupancy, Average Daily Room Rate, and Sales Revenue projections were based
upon a detailed review of the field research and preliminary estimates of Average
Daily Room Rate, Lodging Demand, and Lodging Supply Growth. Also included are
preliminary recommendations as to the property type, suggested property size, brand
affiliation, and services and amenities to be offered. These projections and
recommendations were based upon the market demand research for the proposed
facility. In addition, preliminary recommendations are provided as to the preferred
site for development of this hotel.
This report may or may not be acceptable for external investing and/or lending
purposes and would depend upon financial requirements and the desire for more
specific information concerning the market’s ability to support this hotel. More
specific multi-year operational performance projections and more specific community
research may also be required by investors and lenders for a specific hotel
development. Thus, a Phase II Comprehensive Market Study may be necessary.
Hospitality Marketers International, Inc. would assist a proposed hotel developer in
expanding this report into the required Phase II Comprehensive Market Study Report.
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10. GENERAL MARKET OVERVIEW
GEOGRAPHIC LOCATION
• Pflugerville is located in the central section of the State of Texas.
• It is located along Interstate 35 which travels from Duluth, Minnesota to
Laredo, Texas. This highway is a major north/south interstate highway which
travels through the United States. It also intersects major interstate highways
as it travels throughout the country.
• Pflugerville is located just east of I-35. It is estimated to be ninety-five miles
north of San Antonio, ninety miles south of Waco, and one hundred and
eighty-five miles south of Dallas/Fort Worth. All of these cities are located
along I-35, which would be the major corridor serving the market and would
establish the regional market for the area.
• Pflugerville is located just north of the city limits of Austin, Texas. From
Pflugerville, it is about 17.1miles south to the city center of Austin via I-35.
• Immediately to the north of Pflugerville is Round Rock. The city center is
located about 8.8 miles from Pflugerville via I-35.
GENERAL MARKET CHARACTERISTICS
• Pflugerville is located in the northern suburbs of Austin, Texas. Austin is the
state capital of Texas and the home of the University of Texas. Both entities
generate a significant amount of Lodging Demand for the market. Being
located north of the city center, Pflugerville does receive overflow Lodging
Demand, via a ripple effect, from the government activity and University
events.
• The area immediately surrounding Pflugerville is a mix of corporate,
commercial, retail and residential activity. In addition, the busy I-35 corridor
carries traffic through the Austin area from Dallas to San Antonio to create a
regional market for the area.
• Immediately to the north, Round Rock is a well-developed suburban area with
a corporate base centered around the headquarters of Dell Computers. It
also has a well-developed commercial, retail, medical and residential base.
This development is found along the I-35 corridor and East Palm Valley
Boulevard. Commercial retail development and other support services for
travelers are found along the I-35 corridor and at the exits serving this
community. This well-developed infra-structure of hotels and support services
for travelers offers a broad range of hotels from economy, limited-service to
upscale, full-service hotels. There are also many restaurant options in this
community. A major medical facility that serves the region is located on the
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11. northern side of the community. Round Rock also has the Dell Diamond with
its minor league baseball team, in addition to hosting many sporting
events/tournaments. These form a center of activity in this suburban market.
• Along the I-35 corridor there are well-developed retail and commercial
facilities. This provides a depth of support service for the traveler. There are
also extensive hotel accommodations along this route from Austin to the
Pflugerville exits.
• Pflugerville has several commercial corridors in its community. The most
developed is the Pecan Street corridor. This stretches from the I-35
intersection to the downtown area. Primarily local residential support retail
and support services are located in this area. There are a variety of
restaurants located in this area as well.
• Another developing area is along FM 685 on the east side of the city in the
area near the Pflugerville Parkway intersection. This is a large mixed-use
retail development with Wal-Mart as its anchor retailer. Support retail and
other commercial businesses are located in this area.
• A third developing retail area is at the interchange of Highways 130 and 45 in
the northeast section of the city. This subject site is only one-half mile away
from the FM 685 subject site area. This development is a large mixed-use
development and is anchored by big box retailers and support commercial
activities. Home Depot, Super Target, Bealls, Office Depot, Petco and Best
Buy are located in this development.
• The Highway 130 & 45 corridors are new highway areas that will soon
develop with new growth. With its recent completion, Highway 130 now
provides a bypass route around the east side of Austin for through traffic. It
currently connects with I-35 in the north at Georgetown and reconnects on the
south side of the City of Austin. This highway will relieve congestion on I-35
and bring travelers along the east side of Pflugerville. Transient travelers will
pass the community on this route. Currently, there are advantages to this new
highway as it provides a more direct and less congested route to the Austin-
Bergstrom International Airport, about seven miles south of Pflugerville.
• There are some industrial areas located around the city. However, these
areas are not large and do not have many industrial components to them.
Most of the Corporate/Commercial Lodging Demand would come from
suppliers and vendors servicing the commercial businesses in the area.
There is some distribution activity and the potential for training for area
businesses as well.
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12. • Pflugerville’s population was defined as being younger, residing mostly in
single family homes and a few multi-family dwellings.
• There is a well established amateur and youth sports market in Pflugerville.
On the east side of the city, south of Pecan Street and along Highways 130 &
45, there is a larger soccer, baseball and softball complex. This facility is host
to many weekend tournaments and events. In Round Rock, another large
sports market exists, and due to its location and access, Pflugerville is in close
proximity to service overflow from these events.
• The Dell Diamond, located in Round Rock, is a large minor league baseball
facility. This venue is host to Round Rock Express, an affiliate of the Houston
Astros. In addition to baseball, this facility is also host to other events
including exhibitions, youth/amateur sport tournaments, soccer tournaments,
and concerts. There is the potential that overflow Lodging Demand could
come from some of the larger events held at this venue, with hotels in Round
Rock receiving direct Lodging Demand potential. A hotel in Pflugerville would
also receive overflow Lodging Demand.
• Social/Leisure group business is also present in the market with several free-
standing banquet facilities that currently send Lodging Demand into the
nearby Austin hotels and into Round Rock.
EXHIBITS
• Exhibit 1 of this report shows the geographic location of the Pflugerville
market area within the United States.
• Exhibit 2 of this report shows the geographic location of the Pflugerville
market within the State of Texas. Also highlighted is the primary regional
market area served by this market.
• Exhibit 3 shows the Pflugerville market area as it relates to the Austin area
and surrounding markets. Also included are locations of the hotels in the
primary competitive set.
• Exhibit 4 shows a more detailed view of the immediate Pflugerville market
area and the location of the subject site.
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13. SITE ANALYSIS
This section of the report describes the various sites identified for the proposed hotel
facility.
There are four specific hotel sites identified for development, and they are highlighted
in Exhibit 4 of this report. The following will highlight details for each of these sites.
SITE 1
• Site 1 is located on the east side of the city, on the west side of the Highway
130 & 45 corridor. It is owned by the Pflugerville Community Development
Corporation.
• This site is adjacent to the Northeast Metro County Park where extensive
sports facilities are developed. These include soccer, baseball and softball
fields. Numerous tournaments are held at this park.
• There are plans for a waterpark development is this area. Construction has
not yet begun on this facility. A future developer should monitor progress on
this project accordingly.
• Regarding Site Preparation, the subject site is undeveloped at this time. Its
rating is “Good”. The land would have to be prepared for development. This
would include clearing the land, grading and potential fill for development.
• Major utilities are in this area and are serving the county park facilities. They
would have to be brought to the area of the subject site. The developer
should investigate accessing these items at the site.
• Environmental concerns appear to be minimal. This includes water drainage,
water seepage, flood plain and toxic waste issues. The developer should
conduct the necessary environmental testing of the site to ensure its integrity
to support a hotel project.
• Visibility to the site would be “Good to Very Good”. It could have direct
visibility to the Highway 130 & 45 corridor. Highway signage may also be
needed to identify the site.
• Accessibility would be “Very Good”, off of an access road to the county park.
This road accesses East Pecan Street. There is an interchange off
Highways 130 & 45 in this area. Traffic congestion in this area is minimal at
this time.
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14. • Support Services are minimal at this time and rated as “Fair”. Development
of restaurants, fuel and convenience stores would be desirable to support
travelers. Currently, the Highway 130 & 45 corridor is not well-developed in
this regard. Being a new highway route, the existing interchanges are not
well-developed. This should change in the future as this corridor is better
developed.
• The Competitive Position for this site is rated as being “Good”. This site is
removed from the activity of Pflugerville on the west side of the city.
However, it is convenient to the county park facility and the Highway 130 &
45 corridor. It also is on a convenient route that will bring travelers from the
south and the airport to the Round Rock area.
The following chart will recap the rating for this subject site area.
SUBJECT SITE EVALUATION
SUBJECT SITE 1
CATEGORY RATING
Visibility Good-Very Good
Accessibility Very Good
Site Prep Very Good
Area Support Services Fair
Competitive Position Good
Overall Good
Source: HMI
• Overall, this subject site is rated as being “Good”. In comparison to the three
other sites, its ranking is fourth.
SITE 2
• Site 2 is located on the east side of the city in the Pflugerville Crossing area.
This is a large retail and commercial development that has the Super Wal-
Mart as its anchor. It is located along the FM 685 corridor. Pflugerville
Parkway intersects this area and is on the north side of the Pflugerville
Crossing development.
• There are available sites in Pflugerville Crossing. Additional sites may be
available in the immediate area which are not part of Pflugerville Crossing.
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15. • Regarding Site Preparation, this will depend upon where the specific subject
site is located. If it is in the Pflugerville Crossing development, land
preparation should be “Excellent”. These sites have been prepared for the
mixed-use retail and commercial development. Land preparation includes
clearing the land, grading and potential fill for development.
• If the site is located outside the Pflugerville Crossing development, there may
be more site preparation required. The developer should address this
accordingly.
• Major utilities are in this area and are serving the FM 685 and Pflugerville
Parkway corridor. If development occurred in the Pflugerville Crossing
project, these utilities should be in place. If the development took place in
another location outside this area, utilities may have to be brought to the
area. The developer should investigate accessing these items at the site.
• Environmental concerns appear to be minimal. This includes water drainage,
water seepage, flood plain and toxic waste issues. The developer should
conduct the necessary environmental testing of the site to ensure its integrity
to support a hotel project. Within Pflugerville Crossing, these concerns
should have already been addressed.
• Visibility to the site would be very good from both FM 685 and Pflugerville
Parkway. However, visibility from the Highway 130 & 45 corridor would not
be directly available. A high-rise building would improve potential visibility.
Highway signage on Highways 130 & 45 would be needed to identify the
location of the hotel. The visibility rating would be “Good”.
• Accessibility would be off FM 685 and Pflugerville Parkway into the
Pflugerville Crossing development. The rating is “Very Good”. This access
has been developed and provides very good access to the hotel. There is an
interchange off Highways 130 & 45 to service this area. Traffic congestion in
this area is minimal. There could be heavier traffic during morning and
afternoon drive times. Access to other potential sites in this area would have
to be evaluated accordingly by the developer.
• Support Services are developed in the area and would be rated as being
“Very Good”. The Pflugerville Crossing area has retail and restaurants to
service hotel guests. There may be the need to develop fuel and
convenience stores to support travelers.
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16. • The Competitive Position for this site is rated as being “Good”. This site is
removed from the activity of Pflugerville on the west side of the city.
However, it is convenient to the Pflugerville Crossing development and the
Stonehill Town Center just to the north. It is also in a good position to serve
the Highway 130 & 45 corridor. It also is on a convenient route that will bring
travelers from the south and the airport to the Round Rock area.
The following chart will recap the rating for this subject site area.
SUBJECT SITE EVALUATION
SUBJECT SITE 2
CATEGORY RATING
Visibility Good
Accessibility Very Good
Site Prep Good
Area Support Services Very Good
Competitive Position Good
Overall Very Good
Source: HMI
• Overall, this subject site is rated as being “Very Good”. In comparison to the
three other sites, its ranking is third.
SITE 3
• Site 3 is located on the east side of the city just north of Site 3. It is in the
Stonehill Town Center which is a large, mixed-use retail and commercial
development. This development includes big box retail with Home Depot,
Super Target, Petco, Best Buy, Dick’s Sporting Goods and Bealls. It is
located on the west side of the Highway 130 & 45 corridor and where FM 685
meets this highway.
• Regarding Site Preparation, this will depend upon where the specific subject
site is located. If it is in the Stonehill Town Center development, land
preparation should be “Excellent”. These sites have been prepared for
mixed-use retail and commercial development. Land preparation includes
clearing the land, grading and potential fill for development.
• If the site is located outside the Stonehill Town Center development, there
may be more site preparation required. The developer should address this
accordingly.
9

17. • Major utilities are in this area and are serving the FM 685 area. If
development occurred in the Stonehill Town Center project, these utilities
should be in place. If the development took place in another location outside
this area, utilities may have to be brought to the area. The developer should
investigate accessing these items at the site.
• Environmental concerns appear to be minimal. This includes water drainage,
water seepage, flood plain and toxic waste issues. The developer should
conduct the necessary environmental testing of the site to ensure its integrity
to support a hotel project. Within the Stonehill Town Center, these concerns
should been addressed at this time.
• Visibility to the site would be “Very Good” from both FM 685 and from the
Highway 130 & 45 corridor. Highway signage on Highways 130 & 45 would
be needed to identify the location of the hotel.
• Accessibility would be off FM 685 into the Stonehill Town Center
development. This access has been developed and provides “Very Good”
access to the hotel. There is an interchange off Highways 130 & 45 to
service this area. Traffic congestion in this area is minimal. There could be
heavier traffic during morning and afternoon drive times. Access to other
potential sites in this area would have to be evaluated accordingly by the
developer.
• Support Services are developed in the area and would be rated as being
“Very Good”. The Stonehill Town Center has retail and restaurants to
service hotel guests. There may be the need to develop fuel and
convenience stores to support travelers.
• The Competitive Position for this site is rated as being “Good”. This site is
removed from the activity of Pflugerville on the east side of the city.
However, it is convenient to the Pflugerville Crossing and the Stonehill Town
Center just to the north. It is also in a good position to serve the Highway
130 & 45 corridor. It also is on a convenient route that will bring travelers
from the south and the airport to the Round Rock area.
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18. SUBJECT SITE EVALUATION
SUBJECT SITE 3
CATEGORY RATING
Visibility Very Good
Accessibility Very Good
Site Prep Very Good
Area Support Services Very Good
Competitive Position Good
Overall Very Good
Source: HMI
• Overall, this subject site is rated as being “Very Good”. In comparison to the
three other sites, its ranking is second.
SITE 4
• Site 4 is located on the west side of the city and owned by a private owner. It
is located along the Pecan Street corridor and links the downtown area with
I-35. This site is along the Pecan Street commercial corridor with well-
developed retail and other commercial support services. The actual site is
on the south side of Pecan Street and west of Heatherwilde Boulevard.
• Regarding Site Preparation, the subject site is undeveloped at this time but
could be rated “Very Good”. The land would have to be prepared for
development which would include clearing the land, grading and potential fill
for development.
• Major utilities are in this area and are in the Pecan Street area. They could
be easily brought to the site area. The developer should investigate
accessing these items at the site.
• Environmental concerns appear to be minimal. This includes water drainage,
water seepage, flood plain and toxic waste issues. The developer should
conduct the necessary environmental testing of the site to ensure its integrity
to support a hotel project.
• Visibility to the site would be “Very Good”. It could have direct visibility to the
Pecan Street corridor. There is no highway visibility to I-35 as the site is
located too far off this highway by at least 1½ to 2 miles.
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19. • Accessibility would be “Excellent” and is assumed to be off Pecan Street.
This would need to be verified.
• Support Services are “Excellent” in this area. There is a variety of
restaurants, fast food and casual dining, and retail in this area. Fuel services
are also available along Pecan Street.
• The Competitive Position for this site is rated as being “Excellent”. This site
is in the area where the activity of Pflugerville has developed. This is the
entry route to the city from I-35.
The following chart will recap the rating for this subject site area.
SUBJECT SITE EVALUATION
SUBJECT SITE 4
CATEGORY RATING
Visibility Good-Very Good
Accessibility Excellent
Site Prep Very Good
Area Support Services Excellent
Competitive Position Excellent
Overall Very Good
Source: HMI
• Overall this subject site is rated as being “Very Good”. In comparison to the
three other sites, its ranking is first.
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20. ECONOMIC OVERVIEW
This section describes the preliminary general economic conditions observed in this
area through various research sources.
• The Pflugerville, Texas area is driven by residential development, retail and
commercial activity. There is some distribution and light industry also located
in the community. The latter economic elements are less developed as the
residential, retail and commercial activities.
• The majority of the economic activity is located along Pecan Street, east of
the downtown area. Also, activity is developing in two major mixed-use retail
areas along FM 685 at the Pflugerville Crossing and Stonehill Town Center
areas.
• The community, being located along the new eastern bypass route around
Austin, with Highways 130 & 45 in Pflugerville, has the potential to see
significant new development at the interchanges along this toll road route.
Currently, this route is now completed and connects the northern and
southern sections of Austin with I-35. With this route now completed, it will be
a major transient traveler route from Dallas to San Antonio. It also provides a
convenient access route from the northern suburbs, such as Round Rock,
with the Austin-Bergstrom International Airport.
• A unique economic driver in this market is the youth and amateur sports
market that has developed in the regional area. Pflugerville and Round Rock
are centers for this activity. Soccer, baseball and softball events are held
regularly in this regional area. Pflugerville gets a direct economic benefit from
events held in its community. It also could receive overflow potential from
events held in Round Rock. On many weekends, the area sees amateur
sports tournaments bringing participants from broad regional and national
areas.
• Retail development is stable. There are some big box retailers in the area,
however, destination retail is not present. The retail activity is designed for
residential support. More developed retail is located along Pecan Street and
in the new Pflugerville Crossing and Stonehill Town Center developments.
• Medical activity is located north of the community in Round Rock. There are a
few clinics in Pflugerville, but no major hospital is located in this market.
• The residential market is stable. The residential market was described as
being mostly single family housing with a few multi-family developments. This
community was also described as being a younger family market and middle-
class in nature. There is a significant commuting base to Austin, Round Rock
and other northern Austin suburban areas.
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21. • There is a well-developed school system in the community, but no community
college, four-year colleges or universities in the area. The community will
receive overflow from University of Texas events due to Lodging Demand
being pushed outward from hotels closer to the university.
• Regionally, Pflugerville does rely on Austin and Round Rock for more
economic base. Both areas are well-developed with retail, dining and
entertainment activity. The I-35 corridor, which connects these two economic
areas with this support activity, is about 1 to 1½ miles west of the city limits of
Pflugerville.
• Pflugerville is a rapidly growing market. In 2000, according to the U.S.
Census data, the city had 16,335 residents. The population was projected to
be around 50,850 in the 2010 census, representing a 21.1% annual growth
rate. Through 2008, Pflugerville was estimated to have a population of
around 40,000 people, indicating an 18.1% annual growth rate. In
comparison, the City of Austin and the County of Travis, where Pflugerville is
located, has grown at a rate of only 3.3% in each area through 2008. This
indicates a rapidly expanding community with no hotel facility to service this
growth. In this community, there is still considerable available land for future
growth. The community also uses annexation to expand its borders and
population growth.
• As reported by Sales and Marketing Management’s Survey of Buying Power,
the Effective Buying Income in the Pflugerville market, on a per capita basis,
shows average annual growth of 2.2% over the past ten years. The range in
growth is 1.7% to 2.9% over this period. The Effective Buying Income is
higher than the City of Austin by 8.5%, and the county by 1.3%. The Effective
Buying Income in the city is currently estimated at $24,113. In Austin, it is
estimated at $22,224 and in the county, at $23,804.
• Detailed Retail Sales data for Pflugerville, as reported by Sales and Marketing
Management’s Survey of Buying Power, was not available. Therefore, this
analysis could not be completed. With recent development in Pflugerville at
the Pflugerville Crossing and Stonehill Town Center, this area of economic
activity should be showing considerable growth. The Pecan Street corridor
and other smaller retail and commercial developments in the community are
showing additional growth. The Pecan Street corridor has much available
land for additional growth in this area. This growth is drawing Retail Sales
back to the Pflugerville area that had been leaving the area for Round Rock
and Austin. This community has limited destination retail to draw external
retail demand.
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22. • Similar to Retail Sales, Eating and Drinking Place Sales data in the
Pflugerville area, as reported by Sales and Marketing Management’s Survey
of Buying Power, was not available. This is also a developing economic factor
in the community. The Pecan Street, Pflugerville Crossing and Stonehill Town
Center are major areas where Eating and Drinking Place Sales is taking place
and expanding. It would be estimated that this economic area will show
considerable future growth as the newer areas are more established. The
Eating and Drinking Place Sales are centered in fast food and casual dining.
Some chain restaurants are locating in this area. There are also several local
dining options in the community.
• In Pflugerville, the Workforce Distribution shows that the following are the top
three industries employing people in the community: 1) Retail (16.0%), 2)
Manufacturing (15.0%) and 3) Education, Health & Social Services (13.0%).
These three industries represent 44.0% of the total employment. This is low
and normally the top three industries represent slightly over 50% of total
employment. This indicates diversity of industry and employment in the
market. The fourth largest employment group is Business/Professionals
(11.0%). This is an unusual employment group to be in the top employment
categories. Adding this group into the top three employment areas, the
distribution is at 55%. The fifth largest employment group is Government
(10.0%). This distribution verifies the activities that support the local
residential base. The Education, Health and Social Services sector is related
to the Pflugerville School District. The Manufacturing is related to the smaller
and more limited activities in this area located in the community. The Retail
activity is the most diverse with considerable new growth entering the
community.
• Specific Unemployment data for Pflugerville shows a healthy employment
base. On average, Pflugerville has an Unemployment Rate of 3.7%. This
compares to the Austin area at 4.8%, Travis County at 4.7% and the State of
Texas at 5.5%.
• In 2009, the Unemployment Rates are more balanced. Pflugerville is at 6.0%
year-to-date compared to the Austin area at 6.5%, Travis County at 6.2% and
the State of Texas at 7.1%. Pflugerville is still out-performing other areas
during this recessionary year.
• Labor Supply should adequately support a hotel development. The hotel will
draw employment from the broad geographic area of Travis County including
Pflugerville, Round Rock and north Austin. The immediate Travis County
regional area near Pflugerville will be the prime area to attract employment for
the hotel. With current higher Unemployment levels, attracting Labor Supply
15

23. availability is also positive. Labor Supply was reported to be adequate in the
Pflugerville market area.
• Wage pressures were not reported to be a concern in attracting Service
employees for a hotel. Wage competition was indicated as normal.
• The major highways serving the subject market site are I-35 on the west and
Highways 130 & 45 on the east.
o Traffic counts in the Pflugerville area are showing some changes due to
the opening of Highways 130 & 45 on the east side of the city. The
following are some highlights of the traffic patterns in this area.
Traffic on I-35 at the Pecan Street area was averaging 171,500
vehicles per day in 2008. This is down from 2005, when traffic
volume was averaging 176,500 vehicles per day in this same area.
This is a decline of (4,560) vehicles or (2.6%).
However, on Highways 130 & 45 at Pecan Street, average vehicle
traffic is at 13,500 per day. This highway was not yet opened in
2005.
It appears that traffic has been diverted from I-35 to Highways 130 &
45. If combining counts on the two highways, average traffic counts
have increased 8.7% from 2005 to 2008. The average traffic volume
is around 185,000 vehicles per day compared to 176,060 vehicles
per day in 2005.
Traffic on Pecan Street, east of I-35, has declined by (20.0%) from
2005 to 2008. The average vehicle counts are 28,000 in 2008
compared to 34,980 in 2005. The traffic counts on Pecan Street
west of Highways 130 & 45 basically remained the same at around
18,550 in 2008 compared to 19,100 in 2005. This is in the area of
Pecan Street and FM 685.
Changes in traffic patterns in this market should be monitored as the
Highway 130 & 45 corridor becomes more established. Highways
130 & 45 are a Toll Road which requires a toll to use. Even with this
toll, it appears that this route is drawing traffic from the more heavily
traveled and congested I-35 corridor.
16

24. • Another major access method to the market is via air service. The Austin-
Bergstrom International Airport is located about eighteen miles south via
Highways 130 & 45, via the most direct route. This airport serves around
750,000 passengers per year. It offers connecting air service via major hub
airports to most domestic destinations. Major hub cities area Houston, Dallas,
Atlanta, Denver, Memphis, Chicago, Charlotte, Phoenix, New York and St.
Louis. Major airlines are American, Continental, Delta, JetBlue, Frontier,
Southwest and United. International service is not directly offered from this
airport but is available through hub connections.
17

25. LODGING DEMAND
This section of the report will be a brief overview of the Lodging Demand highlights
identified in this market. A more comprehensive Phase II Market Study would
enhance this information.
The preliminary Market Segmentation identified for the proposed hotel is in the areas
of Lodging Demand shown in the following chart.
MARKET SEGMENTATION
SUBJECT
MARKET PROPOSED
PROBABLE PROPERTY
PERCENT PROBABLE MARKET
OF MARKET RANGE MARKET PENET. RANGE
Individual Travel Markets 80.0% 77.5%-82.5% 65.0% 81.3% 62.5%-67.5%
Corporate/Commercial 35.0% 32.5%-37.5% 25.0% 71.4% 22.5%-27.5%
Social/Leisure 45.0% 42.5%-47.5% 40.0% 88.9% 37.5%-42.5%
Group Markets 20.0% 17.5%-22.5% 35.0% 175.0% 32.5%-37.5%
Business Related 5.0% 2.5%-7.5% 5.0% 100.0% 2.5%-7.5%
Social/Leisure Related 15.0% 12.5%-17.5% 30.0% 200.0% 27.5%-32.5%
TOTAL 100.0% 100.0%
Source: HMI
• At this time, the proposed hotel should draw nearly similar Market
Segmentation as the overall market. This would be a slight modification in the
Pflugerville hotel’s Market Segmentation versus the overall market. In
general, this Market Segmentation closely matches the majority of the type of
hotels currently in the regional market as well as the type of hotel being
planned for the Pflugerville market. Also, this is the estimate at this time
based upon no hotels currently being located in Pflugerville.
• The strength of this market will be in through Social/Leisure markets, both
Individual and Group. The Corporate/Commercial market does not seem as
diverse in Pflugerville as in the broader market. As a result, 70% of the
Lodging Demand is expected from the Social/Leisure Market Segments, and
30% from the Corporate/Commercial Market Segments.
• Amateur and Youth sports, weddings, reunions and other social events will
drive this market. The bulk of this demand will come from the Group
Social/Leisure market as opposed to the Individual Social/Leisure markets.
18

26. • The Corporate/Commercial markets are not well-developed at this time. The
Retail sector is the most developed sector within the Corporate/Commercial
Market Segment. These are located along the Pecan Street and FM 685
corridors. New developments such as the Pflugerville Crossing and Stonehill
Town Center offer increasing activity in this sector.
• When touring the area, there are some smaller, light industrial facilities on the
north side of the city. Currently, communities surrounding Pflugerville are
more developed in this regard. Round Rock has the large Dell Corporate
headquarters as its anchor. As a result, it has additional support industries
and services developed in this area. This factor could be changing in the near
future for Pflugerville. There are many sites available for additional corporate
and commercial development. It appears that Pflugerville has been skipped
over for this development from the expansion of Austin to the south and
Round Rock to the north. Lack of direct access to I-35 may have prevented
this type of growth. However, now with direct access to Highways 130 & 45
as a major future traffic pattern through this area, development in the
Corporate/Commercial sector could increase.
19

27. The following chart details the diversity of Lodging Demand identified in this market.
MARKET SEGMENTATION PROFILES
Demand Potential
Transient = T Subject
Extended= E Market
Group= G Potential
Corporate/Commercial Markets
Area Companies
Administration T Average
Sales & Marketing T Average
Visiting Customers & Clients T Average
Human Resources T, E Average
Product Transportation T Below
Service Technicians T Average
Vendors & Suppliers to Local Market T Average
Meetings and Seminars
Corporate G Below
Association G Below
Government G Below
Training Groups G Average
Austin Overflow (Transient Displacement)
Legislative Activity T Average
Conventions-State Associations T Average
Inventory and Auditing Companies G, E Average
Potential Average
Social/Leisure Markets
Visiting Friends & Relatives T, E Average
Highway Travelers
I-35 Travelers T Below
Highway 130 &45 Travelers T Average
Area Events
Rot Rally-Motorcycle T Above
Deutschen Fest T Above
South by Southwest T Average
Austin Events (Overflow Displacement)
Austin City Limits T Average
Film & Music Festivals T Average
University of Texas Events (Overflow-Displacement)
Football Games T Average
Parent Weekends T Average
Graduation T Average
Area Sites, Activities & Recreation
Lake Pflugerville T Below
Relocation-Real Estate T,E Above
Distressed Social-Interim Housing T,E Average
Social, Military, Educational, Religious, Fraternal (S.M.E.R.F.) Groups
Weddings G Above
Reunions G Average
Funerals T,G Average
Other T,G Average
Association G Below
Amatuer & Youth Sports
Visiting Teams G Above
Round Rock Sporting Events G Average
Potential Average
Overall Potential Average
Source: HMI
20

28. • As described in the above chart, the overall market potential appears to be
about Average. As stated previously, the Corporate/Commercial market may
be slightly less than the mid-Average level, but it is still in the Average range.
The Social/Leisure market potential will be just slightly above the mid-Average
level, and still in the Average range. Overall, the market is at slightly below
the mid-Average level, but in the Average range. Some highlights of these
Market Segmentation Demand Profiles are as follows.
o One of the more dynamic elements of this market is the diversity in the
amateur and youth sports events. These events are held in the
Pflugerville and surrounding Round Rock area. The Pflugerville events
will bring direct Lodging Demand to the market. The Round Rock events
will bring overflow to Pflugerville due to its location and proximity to sport
venues. Also, its access to these events will be advantageous for the
market.
o Pflugerville has many sporting organizations that bring events to this
area. These include the groups that represent soccer, little leagues,
youth football, swimming and basketball. All have the potential to bring
events and tournaments to the area. The Northeast Metro Park in
Pflugerville is a major venue for these activities. This facility will host
soccer, baseball and softball tournaments all year.
o In Round Rock, the Convention and Visitors Bureau focuses on the
amateur and youth sports market. This organization brings numerous
tournaments to the area. They have indicated that a hotel in Pflugerville
would provide overflow accommodations for many of these events if
developed in the mid-priced range.
o Contact with the Dell Diamond facility in Round Rock also indicated the
need for accommodations for minor league baseball games, concerts,
tournaments and other events held at this facility. Many of these fill the
Round Rock hotels and overflow would be possible for Pflugerville.
o There are three event centers in the immediate Pflugerville area. These
host weddings, reunions, and anniversary type events all year. One
major event complex, the Plantation House, hosts over seventy
weddings per year that average 250 people in size. They estimate that
on average, 20% to 30% of the attendees require overnight
accommodations. A hotel in Pflugerville would be welcomed as currently
they have to send this demand to Round Rock. A hotel in Pflugerville
would be closer to this venue. This facility is currently booking weddings
into 2011.
21

29. • The Corporate/Commercial sector will be dominated more by suppliers and
vendors servicing the area. Major demand generators in this sector were not
noted. In reviewing the major employers within a five mile radius of
Pflugerville, which includes northern Austin and Round Rock, there were no
major employers listed in Pflugerville. Pflugerville is an island surrounded by
major employers. If a hotel were located along Highways 130 & 45, it may be
able to service major employers in Round Rock. It would be removed from
the major employers along the I-35 corridor.
• Major employers in Pflugerville include:
o Span International
o Laser Manufacturing
o Progressive Manufacturing Technology
o EVS Metals
o Austin Foam Plastics
o Tandem Logistics
o Sears Distribution
The following chart will highlight the major employers with a 5- to 7-mile radius of
Pflugerville.
MAJOR EMPLOYERS
Austin, Texas Area
TOTAL
COMPANY SERVICE OR PRODUCT EMPLOYEES
Dell (including Dell Financial Services) Computer Mfr. of Equipment/Sales 16,000
Sears Teleserve Retailer Customer Service Center 1,460
Harte-Hanks Response Management Marketing/Advertising Services Call Center 1,100
Farmers Insurance Group Insurance 1,030
Samsung Austin Semi-Conductor Electronics 950
Texas Guaranteed Student Loan Corp. Student Financial Aid Program. Adm. 660
Hewlett-Packard Computer Maker Data Ctr./Customer Svce. 550
Pearson Educational Measurements Test Design, Scoring & Pkg. Center 530
American Cancer Society Non-Profit, Call Center & Reg. Hdqtrs. 500
Dresser Wayne Gasoline Dispenser & Control Systems 500
Teco-Westinghouse Motor Co. Electric Motors & Wind Generators 370
Michael Angelo's Gourmet Foods Food Manufacturer 350
Toppan Photomaska Photomasks Manufacturer 344
Austin Foam Plastics Plastics-Based Cushioned Pkg. Mfr. 325
Sysco Foods Restaurant, Hotel & Food Svce. Dist. 300
Source: City of Pflugerville
22

30. • There are transient overflow possibilities from major Austin events and
conventions. As these major events are held in the downtown Austin area,
the typical transient demand is pushed to the surrounding suburbs. A prime
area for this overflow is along the I-35 corridor. Events that will produce this
overflow include:
o Texas State Legislator - This group of lawmakers meets every two years
and fills the downtown and surrounding area with travelers.
o University of Texas - Major football, parent and graduation events fill the
greater Austin area. With over 50,000 students, the demand during
these periods is significant.
o State Associations - Each state association group holds its annual
meeting in Austin. This is a state regulation for state associations.
o Austin City Limits
o International Film and Music Festival - South by Southwest (SXSW)
o ROT Motorcycle Rally
• As the Highway 130 & 45 corridor becomes more established and the
interchanges are developed with support services, this route will become a
preferred way to bypass the more congested I-35 corridor. This will be true
for the more through travelers from Dallas/Fort Worth to San Antonio. This
will open this route up to the transient hotel guests passing through this area.
Completion of the route with a southern connection with I-35 has to take
place to fully develop this corridor as a transient through route.
23

31. The following chart will highlight the overall preliminary Lodging Demand potential for
this market. This chart is based upon a 5-point scale with 5 being high and 2.5 being
average. This would be expanded accordingly in a more comprehensive market
study for a specific hotel and subject site area.
LODGING DEMAND POTENTIAL INDEX
LODGING
DEMAND
PERCENT POTENTIAL
MARKET SEGMENTATION OF MARKET INDEX
Individual Travel Markets
- Corporate/Commercial Markets 25.0% 2.5
- Social/Leisure Markets 40.0% 3.0
Group Markets
- Business Related 5.0% 2.0
- Social Leisure Related 30.0% 3.5
TOTAL 100.0% 3.0
LODGING
DEMAND
PERCENT POTENTIAL
INDUSTRY DISTRIBUTION OF MARKET INDEX
Agriculture, Forestry, Fishing, Mining 1.0% 0.5
Construction 5.0% 2.0
Manufacturing 15.0% 3.0
Wholesale Trade 3.0% 1.5
Retail Trade 16.0% 3.5
Transportation and Public Utilities 6.0% 1.0
Information 2.0% 2.5
Finance, Insurance & Real Estate 7.0% 3.0
Services
- Business/Professional 11.0% 3.0
- Health, Education & Social Services 13.0% 2.0
- Entertainment, Recreation,
Hotel & Food Service 7.0% 2.5
- Other 5.0% 1.5
- Government 10.0% 1.5
TOTAL 101.0% 2.5
Source: HMI
• Preliminary Lodging Demand Potential is rated above average with a yield of
120.0% to average.
• The proposed hotel’s strength will lie in the Individual and Group
Social/Leisure markets. Each of these markets will yield 120.0% and 140.0%
above average, respectively. The amateur sporting events, weddings, area
events and general Social/Leisure traffic to this area will lead this activity.
24

32. • The Individual and Group Corporate/Commercial markets will under-perform
the market at this time. The Individual sector will yield about average but the
Group Corporate/Commercial sector will yield 80.0%. The strength in this
sector will be Retail Trade, Manufacturing, Finance, Insurance & Real Estate
and Business Professional Services.
The following chart shows the seasonality patterns in the market. Highlights of this
chart follows. These highlights would be expanded in a more comprehensive market
study.
SEASONALITY OF LODGING DEMAND
Deviation From Average Monthly Demand
MONTH DEMAND ADR REVPAR
January 86.4% 101.1% 85.2%
February 92.1% 101.5% 101.0%
March 108.9% 101.6% 108.0%
April 105.9% 101.6% 105.0%
May 112.0% 100.3% 102.1%
June 113.6% 102.0% 108.8%
July 105.7% 99.0% 92.4%
August 103.2% 99.6% 90.7%
September 107.7% 102.4% 100.6%
October 105.9% 101.8% 104.7%
November 96.6% 100.3% 97.2%
December 82.3% 97.4% 77.9%
ITALICS = RevPAR Exceeds at Least One Factor
BOLD = RevPAR Exceeds Both Factors
Source: Smith Travel Research and HMI
In the above chart the following abbreviations were used:
ADR-Average Daily Room Rate - The average Daily Room Rate attained by the hotel
for its rooms.
RevPAR-Revenue per Available Room - This is a revenue figure attained by dividing
Revenue by Available Rooms.
• Seasonality of Lodging Demand for this market appears to be strong from
March through October. The market drops off slightly in November but it is
not unusually low in the period of November through February. It appears to
have a relatively stable demand base.
25

33. • The strongest quarter of the year is either April through June or May through
July. Both three-month periods generate 27.6% of the annual demand for a
yield of 110.4%. This is not a higher amount of yield and shows that the
remainder of the year has relatively good balance in demand.
• The strongest half of the year is March through August with 54.1% of the
annual demand. This is a yield of 108.2% to average. Again, this is not an
usually high peak in demand and shows balance throughout the year.
• The slowest season is December through February with 21.8% of the annual
demand for a yield of 87.2%. This period supports the strength of the
Corporate/Commercial demand that comes to the area surrounding
Pflugerville.
• The market seems to hold rates constant during the year. There is very little
change in rate from the peak seasons to the slower months. ADR changes
only 3.4% from its low in July to its high in September. Demand changes
38.0% from its low in December to its high in June. During peak demand
months when demand is above average, the market has rates that are below
average. This occurs in July and August. Likewise, when demand is low in
November, January and February, rate remains high.
• As result of the above comments, this market does not seem to be maximizing
revenue well. It is not adjusting rates higher during peak demand periods and
may be holding rates too high in slower demand periods. This seems
particularly true in January and November when rates may be too high. They
seem to have the potential to increase rates from May through September.
This may increase the maximization of revenue as, at this time, only one
month during the year, June, has maximized revenue.
26

34. The following chart shows the preliminary anticipated Rate Sensitivity expected in the
market. This chart is based upon a 5-point scale with 5 being high and 2.5 being
average. This would be expanded accordingly in a more comprehensive market
study for a specific hotel and subject site area. Rate Sensitivity indicates the
potential for rate discounting to attract the identified Market Segment to the market.
Rate Resistance relates to the same definition.
RATE SENSITIVITY FACTOR
Rate
Sensitivity
Market Segmentation % of Market Factor
Individual Travel Markets
- Corporate/Commercial 25.0% 2.4
- Social/Leisure 40.0% 2.7
Group Markets
- Business Related 5.0% 2.4
- Social/Leisure Related 30.0% 2.7
TOTAL 100.0% 2.6
Source: HMI
• Rate Resistance in the market was estimated to be slightly below average. It
will yield, overall, 104.0% to average.
• The Corporate/Commercial market will be the least Rate Sensitive. It will
yield 96% to the average. Weekday rates average 109.4% higher than
weekend rates. The weekday rates average 106.7% higher than the overall
ADR in the market.
• The Social/Leisure market will be more Rate Sensitive. This sector is
projected to yield 108% to the average. These rates are (8.8%) lower than
the weekday rates and average (2.7%) lower than the average ADR in the
market. Rate Sensitivity in this area will come from the group amateur sport
travelers.
27

35. • The Feeder Markets for this hotel will come primarily from a broad regional
geographic area. The key Feeder Markets will be
o Dallas
o Forth Worth
o Waco
o San Antonio
o Houston
o Remainder of the State of Texas
• The Corporate/Commercial market will be generated mainly from national and
regional areas. Major regional feeder cities would be the same as the above.
This list would be expanded based upon where the local companies conduct
business. There could be some international travel to the area.
• There are national amateur sports tournaments that draw from the greater
Texas and south-central region of the United States.
• Unaccommodated Lodging Demand could always potentially occur in this
market. Unaccommodated Lodging Demand is described as demand desiring
to stay in the market but having to find accommodations in other areas due to
high Occupancy or the lack of available Lodging Supply. This does seem to
be an issue in Pflugerville. With no major hotel in the community, there are
clear signs of Lodging Demand being displaced into the north Austin and
Round Rock areas for hotel accommodations. Quantifying this demand is
difficult without a hotel in the market. However, sources stated that Lodging
Demand is displaced for Corporate/Commercial and Social/Leisure travelers
coming to this area. During the week, the Corporate/Commercial (area
companies, suppliers/vendors, etc.) need hotel rooms. On weekends, the
amateur sports, weddings, reunions, events and other activities in the market
displace demand to other hotel accommodations in the region.
• There were 100 nights when Occupancy rates are over 70% in the regional
market (five-mile radius). This is the Occupancy level where newer and better
hotels should be nearing maximum Occupancy. These 100 nights represent
27.4% of the nights in a year. These nights occur on Tuesdays and
Wednesdays in February, March, April, June, and October. They occur on
Saturdays during the same months and on Fridays in March, April and June,
on Thursdays in March, June and November, and on Mondays in October.
• The average weekday Occupancy over the past three years was 74.3% and
the average weekend Occupancy was 68.4%.
28

36. • Of these 100 nights, 76 nights have Occupancies over 75%. This is a high
number of nights with strong Occupancy.
• A secondary definition of Unaccommodated Lodging Demand is demand
desiring to stay in other markets but having to stay in the Pflugerville market
due to the lack of Lodging Supply in the market they preferred. This type of
Unaccommodated Lodging Demand does not occur as there aren’t any hotels
in Pflugerville to accommodate this demand. There appear to be adequate
hotel accommodations in the regional market to accommodate this demand.
29

37. LODGING SUPPLY
This section of the report describes the primary competitive Lodging Supply that will
affect the subject property, particularly for hotel room demand usage. A more
comprehensive Phase II Market Study would enhance this information.
The following chart highlights the primary competitive hotels identified for this report.
These hotels were the most mentioned hotels that accommodate the variety of
Corporate/Commercial and Social/Leisure Lodging Demand identified for the
Pflugerville market area. There are many hotels in the regional area from north
Austin to Round Rock. All of these hotels are located along the I-35 corridor as they
serve the markets in this area.
Within a five-mile radius, there are 11 hotels identified with 1,105 rooms. These
hotels are felt to be the immediate competitive set for a proposed hotel in Pflugerville.
Also, there is one full-service, upscale hotel within this area, Marriott Austin North.
This hotel would not be a direct competitor with a proposed hotel in Pflugerville. This
increases the available rooms within a five-mile radius to 1,400 rooms. This is an
exceptionally large number of rooms serving a five-mile radius.
Within a 5- to 7-mile radius of Pflugerville, there are another 12 hotels with an
additional 1,247 rooms. This brings the total number of hotels within 7 miles of
Pflugerville to 24 hotels and 2,647 rooms.
30

38. The following chart highlights the immediate five-mile radius of the market and the
hotels that were felt to be the primary competitive hotels with the Pflugerville market
area.
PRIMARY COMPETITIVE HOTELS
Number of Hotels: 11
Number of Hotel Rooms: 1,105
Chain Related: Hotels: 11 % Overall Market: 100.0%
Rooms: 1,105 % Overall Market: 100.0%
Non-Chain Related: Hotels: 0 % Overall Market: 0.0%
Rooms: 0 % Overall Market: 0.0%
PRODUCT DIFFERENTIATION ANALYSIS
NUMBER PERCENT NUMBER PERCENT
CATEGORY OF HOTELS OF MARKET OF ROOMS OF MARKET
Budget 0 0.0% 0 0.0%
Economy 1 9.1% 49 4.4%
(Days Inn-49 rms.)
Economy Suite 0 0.0% 0 0.0%
Mid-Priced 4 36.4% 414 37.5%
(Limited-Service)
(Hampton Inn Round Rock-94 rms., Holiday Inn Express Austin North/Pflugerville-84 rms.,
LaQuinta Round Rock-86. rms., Fairfield Inn & Suites Austin-150 rms.)
Mid-Priced 0 0.0% 0 0.0%
(Full-Service)
Mid-Priced Suite 1 9.1% 64 5.8%
(Limited-Service)
(Comfort Suites Pflugerville-64rms.)
Mid-Priced Extended Stay 1 9.1% 132 11.9%
(Springhill Suites Austin-132 rms.)
Upscale 2 18.2% 262 23.7%
(Select-Service)
(Hilton Garden Inn Austin-117 rms., Courtyard Austin-145 rms.)
Upscale 0 0.0% 0 0.0%
(Boutique)
Upscale Suite 0 0.0% 0 0.0%
(Full-Service)
Upscale Extended Stay 2 18.2% 184 16.7%
(Residence Inn-Round Rock-96 rms., Residence Inn-Austin-88 rms.)
TOTALS 11 100.0% 1,105 100.0%
Average Room Size: 100.5
Source: HMI
31

39. • As indicated in the above chart, the mid-priced product category represents
55.2% of the overall rooms. The upscale product category represents 40.4%
of the available rooms, and this includes the extended-stay hotel products in
this area. The economy product category represents only 4.4% of the
available rooms.
• Positioning the proposed hotel in the mid-priced product category would be
the most competitive. However, it would allow for the most flexibility to serve
the market area. There is the potential for the market to require more upper-
economy hotel product as this market appears to be under-served by the
product distribution.
• The average sized hotel is 100.5 rooms. In the mid-priced hotel product
category, the average size is 101.7 rooms. Two hotels in this category, the
Springhill Suites and Fairfield Inn & Suites, skew this average size with 132
and 150 rooms, respectively. Factoring these hotels out of this mix, the
average sized mid-priced hotel is 82 rooms. An 80-room hotel was factored
into the preliminary projections in this report. This generates a 125.63% yield
adjustment to the primary competitive set performance in Occupancy.
• The most competitive hotels will be along the I-35 corridor. These will be the
closest hotels to the Pflugerville market and are highlighted in Exhibit 3 of
this report.
• Having no hotel rooms in the Pflugerville market at the current time, the
market displaces rooms to the regional hotels identified in the primary
competitive set. As a result, the rooms planned at the proposed hotel will
have a lower impact on the statistical and primary competitive set. It was
estimated that 75.0% of the new rooms would have direct impact on the
overall regional market. The new hotel would attract the Unaccommodated
Lodging Demand identified in the Lodging Demand section of this report, to
the Pflugerville area. This factor could be verified further in a more
comprehensive market study.
• Of the hotels identified in the market area, 100.0% are chain-affiliated,
representing 100.0% of the rooms. Operating without a brand affiliation
would not be recommended.
32

40. The following chart will highlight the current rate positioning of the hotels in the
market area.
COMPETITIVE HOTEL OCCUPANCY & RATES
Occ. RATE ANALYSIS PROJECTED
PROPERTY Perform. SINGLE DOUBLE WEEKEND CORP. ADR
Austin
Courtyard North Parmer Lane Average $110-$120 $110-$120 $110-$120 Same $103.50
Comfort Suites- Pflugerville/Austin Average $95 $95 $100 Same $83.41
Fairfield North Parmer Lane Average $100-$130 $100-$130 $100-$130 Same $94.88
Hilton Garden Austin North Average $93-$109 $93-$109 $101-$119 Same $95.96
Holiday Inn Express Austin North Average $95-$123 $95-$123 $95-$123 Same $92.65
LaQuinta Austin Round Rock Average $72-$107 $72-$107 $85-$114 Same $73.96
Residence Inn North Parmer Lane Average $120-$150 $120-$150 $120-$150 Same $111.38
Springhill North Parmer Lane Average $106-$130 $106-$130 $106-$130 Same $97.35
Round Rock
Days Inn Average $57-$90 $57-$90 $57-$90 Same $55.13
Hampton Inn Average $129 $129 $129 Same $112.88
Residence Inn Average $120-$160 $120-$160 $120-$160 Same $115.50
COMPETITIVE MARKET AVERAGE DAILY ROOM RATE (ADR): $96.83
Source: HMI
• There are several rate tiers operating in this market area. The highest tier is
from $100 and above, and four hotels are in this tier. These properties
consist of two upscale, extended-stay hotels, one upscale, select-service
hotel, and one upper-mid-priced, limited-service hotel.
• The second tier is in the $90 to $99 range. There are four hotels in this rate
range. They are one upscale, select-service hotel, one mid-priced extended-
stay hotel, and two mid-priced, limited-service hotels.
• Below the $90 range are three hotels. On is a mid-priced, limited-service
suite hotel, one is a mid-price, limited-service hotel, and one is an economy,
limited-service hotel.
• Rate positioning for the proposed hotel would place it in the mid-tier of the
market.
33

41. The following chart highlights the preliminary suggested rate positioning.
COMPETITIVE HOTEL OCCUPANCY & RATES
Occ. RATE ANALYSIS PROJECTED
PROPERTY Perform. SINGLE DOUBLE WEEKEND CORP. ADR
Fairfield North Parmer Lane Above $100-$130 $100-$130 $100-$130 Same $94.88
Holiday Inn Express Austin North Above $95-$123 $95-$123 $95-$123 Same $92.65
LaQuinta Austin Round Rock Average $72-$107 $72-$107 $85-$114 Same $73.96
Comfort Suites- Pflugerville/Austin Average $95 $95 $100 Same $83.41
Hampton Inn Above $129 $129 $129 Same $112.88
COMPETITIVE MARKET AVERAGE DAILY ROOM RATE (ADR): $92.73
Source: HMI
• The recommended rate positioning is with the solid mid-priced, limited-
service hotels in the five mile radius and primary competitive set identified.
This rate positioning would position the hotel with an average yield of 95.8%
to hotels in this competitive set.
• The Hampton Inn has the highest yield at 116.6% to the overall competitive
set. The La Quinta has the lowest yield at 76.4%.
• It is felt, for the preliminary projections of ADR in this report, that the
proposed hotel could achieve a slight rate premium to the average yield. A
5.0% yield premium was factored into this market study. This would produce
a preliminary yield at 100.63% by the third year.
The following chart shows the preliminary overall competitive position of the primary
competitive set identified for the rate positioning in the market. The ratings are based
upon a 5-point scale with 5 being highest and 2.5 indicating average competition
factors.
COMPETITIVE FACTOR ANALYSIS
AGE # OF AAA MKT. COMP.
PROPERTY NAME (Yrs.) ROOMS RATING RATE FACILITY BRAND LOCAT. SEG. FACTOR
Fairfield North Parmer Lane 1 150 3.0 2.6 3.0 4.0 2.0 2.5 2.9
Holiday Inn Express Austin North 10 84 3.0 2.7 3.5 4.5 2.0 2.5 3.0
LaQuinta Austin Round Rock 11 86 3.0 3.4 2.5 3.0 2.0 2.5 2.7
Comfort Suites 1 64 3.0 3.0 3.5 3.0 2.0 2.5 2.8
Hampton Inn 8 94 3.0 2.2 3.5 4.5 2.0 2.5 3.0
COMBINED RATING 7.5 3.0 2.8 3.3 3.8 2.0 2.5 2.9
Source: HMI
34

42. • The overall Competitive Factor is estimated to be above average. This is
due to the Facilities and Brand Competitive Factor categories. Location will
give a hotel in Pflugerville an advantage to serve the Lodging Demand
generated in the market and now displaced to other hotel accommodations in
the regional market.
• Operating without a brand affiliation is not recommended as there are strong
brands represented in this market. Hampton and Holiday Inn are expected to
be the strongest brand in the regional market competitive set. Marriott’s
Fairfield Inn is also a strong brand represented in the market. Comfort Suites
and La Quinta also offer above average competition in this market.
• Age will be a factor in the competition in the market. With an average age of
7.5 years, this indicates that these hotels are at their first major renovation
phase. However, two hotels are under one year old and they will be highly
competitive. The two hotels over ten years old will be approaching their
second major renovation period and will need to have on-going renovations
to remain competitive.
• As a result of the age and brand affiliation of the competitive properties,
facilities will be highly competitive. Strong brand compliance will dictate well
maintained facilities.
• The operating performance of the statistical competitive set is listed below.
o Lodging Demand is growing at an annual rate of 5.5% per year over the
past 5 years. The market has seen steady growth in demand except in
2007 when it dropped (3.5%). It did recover in 2008, a recessionary
year, by 3.5%. In 2009, again a recessionary year, demand growth is up
5.8%. This market appears to be absorbing recessionary pressure very
well.
o In projecting Lodging Demand Growth, 5.7% growth in 2009 was
factored in. In forecasting future demand growth, an average growth rate
of 6.35% was used for 2009 through 2013.
o There has been considerable growth in Lodging Supply in 2008 and
2009. Four hotels have opened in 2008 through 2009. The 64-room
Comfort Suites, 150-room Fairfield Inn & Suites, 117-room Hilton
Garden, and 145-room Courtyard were opened. This represented 476
rooms or 43.1% of the 1,105 rooms within a five-mile radius. Supply
growth increased 12.5% last year and 34.1% this year.
35

43. o For the projections in this preliminary report, no other new supply growth
was factored in other than the hotels already developed. In 2009, the
projections show a 37.8% overall increase in supply through the entire
year. The carry-over of these new rooms into 2010 will be another
13.3% increase in supply. Any additional supply growth would have to
be updated in future reports.
o Occupancy reached its peak in 2006, at 79.9%. As new supply growth
entered the market in 2008, Occupancy dropped to 71.0%. In year-to-
date 2009, Occupancy is 58.3% compared to 73.9% last year. However,
supply has gone up 34.1% year-to-date this year and demand has gone
up 5.8% this year. With no new supply growth, the market should see
Occupancy rebounding in 2011 and beyond.
o Average Daily Room Rates are decreasing in the market in 2009. This is
probably due to supply increasing. The average five-year ADR growth is
4.5%. However, ADR dropped (11.3%) in 2009. The market reached its
peak ADR in 2008 at $108.77. This year it is at $96.85 compared to
$109.14 last year. The market has seen positive ADR growth in each
year except 2009.
o Part of the ADR declines may also be related to significant ADR growth
in 2005 through 2007 when the market’s ADR grew by 38.5% or an
average of 12.8% per year. This may have overpriced the market and
when new supply competition entered it, the rates needed to be
adjusted.
o The preliminary projections for ADR are factoring in the (11.3%)
decrease in 2009. A conservative approach to ADR growth was used in
these projections to return the market to an annualized growth rate of
4.5%. Normally, ADR does not recover as fast as demand. It was
estimated that growth in ADR could recover in 2010 to about 2.0%. This
could increase to 4.0% in 2011, 5.0% in 2012 and stabilize at 6.0%
growth in 2013.
o Revenue per Available Room is affected by the declines in demand,
available room supply and ADR. In 2009, RevPAR is expected to
decrease by (30.0%). The significant drop in ADR and increase in
supply in 2009 will lower future RevPAR annual growth to (13.8%) from
2008 levels to projected 2013. The growth from anticipated 2010
RevPAR levels to projected 2013 should see an annualized growth rate
of 10.9%, showing a recovery from the recessionary period.
36

44. ISSUES, RISKS and OPPORTUNITIES
There are areas that should be addressed since they may affect the operational
performance of the subject hotel. Certain areas will require additional research to
determine how they will affect hotel operation. In this preliminary Phase l Community
Overview Market Study, these Issues, Risks and Opportunities are presented as
advisory at this time. In a Phase II Comprehensive Market Study, these Issues,
Risks and Opportunities would be more developed. The following are the highlights
of the research performed for this section.
• The Growth in Lodging Demand has been positive in this market. Even during
the recessionary years of 2008 and 2009, the market has shown growth in
demand. Future growth will come from serving the under-served Lodging
Demand markets that currently come to the Pflugerville area. Additionally,
there is potential growth that will come from the surrounding regional area.
The Highway 130 & 45 corridor should generate new transient and regional
destination traffic into the Pflugerville and Round Rock area. Additional
corporate, commercial, retail and residential growth in Pflugerville and eastern
Round Rock will bring increased demand potential to this market.
• The lack of adequate hotel accommodations in Pflugerville is forcing travelers
to stay in other hotel accommodation areas, primarily Round Rock and the
nearby northern Austin area. Both of these are along the I-35 corridor.
Bringing a new hotel to the Pflugerville market will serve the
Corporate/Commercial and Social/Leisure markets coming for business,
sports and pleasure travel.
• Future growth will be potentially rapid and definitely steady as the economy
improves. This is based upon past growth patterns and the availability of
vacant land to accommodate this growth.
• Modest growth was factored into this preliminary report. The historical
average demand growth in the region, with the projected growth in 2009, has
been in the 6.3% range. In 2009, growth does not seem to be affected by the
United States recession. Future demand growth should increase to a 6.3%
level for the next five years.
• Growth of Lodging Supply is always a concern. However, this does not
appear to be significant in the immediate Pflugerville area. However, supply
growth in the regional area should be monitored.
• Room rate competition for a limited-service, mid-priced hotel product in the
market will be present throughout the year. The hotel will need to be aware
of other competitors in its competitive set. The five hotels identified in the
37

45. report for rate positioning should establish the base for the proposed hotel.
As previously stated, the new hotel, at this time, was factored to attain a 5%
premium over the average rate yield for these five hotels. This could be
modified accordingly in a more comprehensive market study when a specific
hotel property is researched.
• Due to the newness of the hotel product and the fact that this property will be
built in Pflugerville with its limited competitive Lodging Supply, it should offer
an attractive price/value to travelers to this area. The convenient location to
serve the market area should also be a factor to support this rate positioning
with other mid-priced hotels in the regional market.
• The Political Climate in the Pflugerville area appears to be positive and
generally pro-growth. The city seems to be positioning itself as an area of
growth and expansion.
• There is available land for additional development within the Pflugerville
area. This will allow for additional economic growth to enter the market.
Also, as the interchanges around the Highway 130 & 45 corridor are
developed, additional hotel sites may become available. This should be
monitored accordingly.
• Environmental Concerns would require the research to be performed by the
prospective developer. However, the subject site areas researched for this
report appear to be basically ready for development. There will be some
improvements required and they will have to be addressed accordingly. The
developer should also make sure to investigate that all major environmental
concerns are addressed with each site. These environmental concerns
should address issues regarding previous use, toxic waste, floods plain, water
drainage, water seepage, etc. Several of the sites have major developments
around them and this should not be a major issue.
• Zoning and Architectural Controls should not be a factor for this hotel. The
sites should be zoned for business/commercial development. Also, the
subject site areas do not appear to have any unusual architectural controls in
place and standard building code requirements seem to exist. The developer
should verify this with the city.
• Property Taxes should be examined by the developer to determine how taxes
will affect this project.
38

46. • It is recommended that a national or strong regional brand be selected for the
proposed hotel. This would provide competitive awareness. The regional
market has strong brand awareness associated with the hotels identified in
this report. Having a brand associated with the hotel would allow visitors to
identify the type of hotel and may also assist in drawing additional support
services to the surrounding area. Located in Pflugerville it is felt that having a
national or strong regional brand would be critical for the success of the hotel
in this preliminary report.
• Assuming that a brand affiliation is selected for this property, an Area of
Franchise Protection should be addressed by the owner of the subject hotel.
This Area of Franchise Protection should be reviewed to be made compatible
with the Pflugerville market area. This also needs to be compared with the
brand’s Incremental Impact Policy. The owner should seek the largest Area of
Franchise Protection that can be obtained. At times, using the Incremental
Impact Policy may provide the most protection. This market needs to be
protected from similar brand development within the regional Pflugerville
market area. A larger area of protection may not be feasible. It is
recommended that the necessary impact research be performed in relation to
these markets, prior to development.
39

47. CONCLUSIONS
This section will recap the research performed within the Conclusions of this report.
These preliminary conclusions are related to the projected operational performance
of the subject hotel.
PROPERTY PERFORMANCE
The following chart shows the preliminary Projected Performance for a mid-priced
property. This will indicate preliminary projections for Occupancy, ADR, Room
Revenue, and RevPAR at a stabilized year of operation. For these projections, this
was estimated to be 2013. The opening date was expected to be 2011. More
detailed projections would be provided in a Phase II Comprehensive Market Study.
PROJECTED PERFORMANCE
80-ROOM MID-PRICED, LIMITED-SERVICE PROPERTY
PROJECTED
MARKET PROJECTED
PERFORMANCE PROJECTED HOTEL
PRESENT MARKET PERFORMANCE
MARKET PENETRATION 80 ROOMS
OCCUPANCY
Probable 58.2% 130.6% 76.0%
ADR
Probable $114.36 100.8% $115.27
RevPAR
Probable $66.56 131.7% $87.64
REVENUE
Probable NA NA $2,559,033
*Projected performance is +/- 5 percentage points and will be affected by changes in
Lodging Supply and Demand growth levels used to formulate these projections.
Source: HMI
• In regard to Occupancy, this property should be able to achieve an estimated
preliminary 125.6% yield to the market. An additional preliminary 5.0%
premium was also added due to the newness of the property. This will
generate a yield of 130.6% by the third year.
• Affecting the yield factor will be the size of the hotel, 80 rooms, which will be
below the average size of 100.5 rooms in the competitive set. This will allow
the hotel to out-perform the market due to its size.
40