The study was conducted to assist the management of the Holiday Inn Express Hotel in deciding whether to expand its operation to the West side of Panama City Beach. The property being evaluated is a Vacant Commercial of number 36719-000-000, which is situated at 19975 Front Beach Rd Panama City Beach, Florida 32413 covering a size of 1.64 Acres. The study was conducted by the hotel Revenue Manager. The summary of the findings are, the population size of Panama City Beach is 13,065 and the average income of $58,619.
The recent tourists visiting the city are estimated at 17 million, where business travelers are 25%, convention delegates are 10%, and vacationers are 65%. The most competitive has a total of 1037 rooms, and the total current nightly demand for those hotels is 749. The future supply for the fifth year required in Panama City Beach is 2287, and the number of rooms is 1250. The number of guest rooms to be constructed is 171, which will take nine floors, 30% of the rooms will be double-Twin, and 70% will be single. The total cost will be $3,480,000, where $1,414,000 will be funded by debt and $1,206,000 by equity. The average net income from the property for five years will be $2,517,073, and the average cash flow will be $2,507,185 for five years from this year.
General market characteristics
The Hotel is to be constructed at the west side of Panama City Beach, Florida 32413, at a vacant commercial number 36719-000-000. It will be situated at 19975 Front Beach Road. The space of the area is 1.64 acres. According to a recent United States Census Estimates, the total population of Panama City Beach is 13,065, with a population density of 261.37 people per square kilometers and 2.34 average sizes of people per household and 2.89 average family sizes. The overall median age of the population is estimated at 43.1 years that is 41.9 years for the male population and 44.1 years as median female (Cox, Nicholas, Lauren, Dunkin, and Jennifer 44). The total area of the land in Panama City Beach is 49.99 square Kilometers. There is high industrial growth at the City with new developments in terms of shops, unique attractions, restaurants, and hotels. The new attraction sites in the area are Alvin`s Island No.1 runaway island, which is at the Front Beach Road, offering various products to visitors (Carla 418). Also, Swampy Jack`s WONGO Adventure which a new hybrid park for tourists, SkyTrail Ropes Course at SkyWheel which is an aerial attraction designed for both fun and safety.
The building permits are applied and collected at the building department of Panama City Beach. The license for our construction is commercial building permit, and it comprises of a submittal checklist to the department, followed by application of the license, then product approval forms, followed by a notice of commencement form, and required affidavits for commercial buildings.
On the economic side of Panama City Beach, the unemployment rate is 3.9%, which equals the overall United States average of 3.9%. The city has realized improvement in the job market with a recent 2.0% increase and future ten years job growth forecast is 34.3%, which surpasses the overall U.S job growth forecast of 33.5% after the same ten years (Cox et al., 46). The sales tax rate at the City is 7.0% compared to 7.35 of the U.S average. The median household income is $58,619, with the mean household income of $77,655 (Manning, Chris, et al., 20).
The tourism collection at Panama City Beach has gone up 25.4%. In terms of convention facilities, the beach itself has sufficient space for guests at the white-sand beach (Manning, Chris, et al., 14). Meetings are mostly done at hotels, condominiums, and motels. The city is served by transportation facilities from American, Delta, Southwest, and United Airlines with service to the Northwest Florida Beaches International Airport. The city also has three highways that lead directly to the town.
The site is 19975 Front Beach Road. Around the place, 98% of its residents commute by car, and it has the lowest crime rate compared to the rest of Bay County (Klytchnikova, Irina, and Dorosh, 17). The site is an incredible front opportunity located at the west side of Panama City Beach, surrounded by luxury communities such as Alys Beach and Rosemary Beach. It is in close immediacy to Scenic 30A like 5 miles east of it. This productive location is some minutes to the Northwest Florida Beaches International Airport and very near like 4 miles to the Pier Park, which is approximately 900,000 square feet shopping and entertainment hub and nearest to Laguna Beach State Park (Klytchnikova et al., 19).
The site is also nearest to Aaron Bessant Park and Russell-Fields Pier. It is deeded to the edge of the water and offers a gulf frontage of 340 feet, and there is a presence of electricity, water, and cable. The nearest roads to be used are Arnold Road, Panama City Breach Pky, Castile Ave, Wisteria Ln, Brenda Ln, 1St Ave, and Armstrong Cir; the nearest schools to the location Surfside Middle School and J.R. Arnold High School (Ribeiro, Nuno, and Garry, 153). The costs of a building permit for commercial buildings are $277,814 plus the value of land which is $3,480,000. The total cost of a commercial building at the site is estimated at $12 million. The property tax is calculated at 1.1mpercent of the value of the property (Ribeiro et al., 157).
In Panama City Beach, the site and development requirements for commercial building are as follows; for low commercial density, maximum building height is 35 feet, 25 feet front, with a minimum of 5 feet side yard setbacks in general, 15 feet side adjacent residential districts above the minimum delay for a rear yard, and minimum of 15 feet side adjacent to street (Ozel, Hidayet, et al 45). In commercial medium density, the maximum height is 55 feet, with the front distance of 25 feet, minimum setbacks of 5 feet general side yard setbacks, and the minimum rear yard and a site adjacent to the street of both 15 feet (Ozel, Hidayet, et al., 50). For high-intensity commercial buildings, the maximum height is 65 feet, front length of 25 feet, minimum general setback from property lines of 5 feet, a minimum rear yard from adjacent residential of 15 feet, and 15 feet distance of adjacent to the street (Carla 420).
Supply and demand information
Most competitive Hotels
HOTEL NAME ROOMS ROOM RATES
The Pearl Hotel 55 $329
Marriott`s Legends Edge at Bay Point 81 $262
Hampton Inn & Suites Panama City Beach 182 $137
Wendwood Condominiums 27 $103
Palmetto Inn & Suites Resort 122 $62
Tidewater Beach Resort 570 $87
Somewhat competitive Hotels
HOTEL NAME ROOMS ROOM RATES
Beachcomber by the sea resort 96 $123
Sheraton Bay Point Resort 320 $104
Majestic Beach Resort 165 $98
Beachside Resort Panama City Beach 147 $70
Beachcomber by the sea resort 96 $120
Less competitive Hotels
HOTEL NAME ROOMS ROOM RATES
Shores of Panama Resort 225 $89
Emerald Beach Resort 90 $156
Boardwalk Beach Resort Condominium 319 $71
The Pearl Hotel is on Rosemary Beach, it has a full-service spa, with an outdoor pool. The hotel has a business center inside it, making it possible for its customers to shop without going far. Its customers enjoy airport shuttle, free Wi-Fi in public areas, and can relax as they drink at their two lounges or bars inside the hotel. Inside the hotel 55 guestrooms, there exist amenities such as refrigerators, free Wi-Fi, minibars, bathrobes, coffee or tea makers, and in-room massages (Carla 432). There are two dining venues, wedding services, free telephone services, and breakfast for customers. Check-in time starts at 4 p.m. and ends at 4 a.m. check-out time is 11 a.m., and the minimum check-in age is 21 years. Guests pay resort fee of $49.95 per accommodation per night (Manning, Chris, et al., 22)
Marriott`s Legends Edge at Bay Point Hotel charges a member rate of $224 per night and a leisure rate of $229 per night. The hotel offers kitchen services, pool, free high-speed internet, and fitness center. They offer free parking on-site and do not charge resort fees (Ozel, Hidayet, et al., 47). The rooms are non-smoking. Their food and beverages are tea or coffee, which is prepared using coffee makers inside rooms. Have a dining area.
Hampton Inn & Suites Panama City Beach has four types of rooms, such as family rooms, suites, oceanview, and non-smoking rooms. It offers services such as free breakfast, pool, fitness center, and it has a business center. The room rates are $ 148.25 per night.
Palmetto Inn & Suites Resort has one coffee shop, one poolside bar, playground, a spa tub, an outdoor pool, and a fitness center (Carla 439). The check-in time is 4 p.m. till midnight, and the minimum check-in age is 25. Check-out time is 10:30 a.m (Ozel, Hidayet, et al., 51). Extra beds are paid $10 per night. There is a private beach that has direct access.
Principles sources of demand
Panama City Beach is a 12-month vacation destination. In the year 2018, the passengers in the Northwest Florida Beaches International Airport in Panama City Beach passed several one million, nine years after its opening. In December alone, there was a 28% increase in the number of passengers and 12% growth from the number in 2017(Manning, Chris, et al., 24). A statement released in August this year stated a 10.4% increase year over year, and for this year it is up 8.5% so far. The number of tourists currently is 17million, and they spend about $1.2billion in hotel accommodation and food annually.
The rental demand in Panama City Beach of 10,164 effective short-term vacation rentals is estimated to be 81%, with an occupancy rate of rentals is about 67% (Cox et al., 47). The city has a variety of multipurpose sporting venues where sports activities are held, attracting many people to Panama City Beach.
Source Source of Demand Annual Compound Growth (%)
Business Travellers 25% 7%
Convention Delegates 10% 5%
Vacationers 65% 11%
Total 100% Supply and demand Analysis
Step 1: Calculation of the most recent one-year average occupancy rate of the most competitive Hotels
Most Competitive Hotels
HOTEL NAME Rooms Average Occupancy (%) Current Nightly Demand
The Pearl Hotel 55 84% 46
Marriott`s Legends Edge at Bay Point 81 76% 61
Hampton Inn & Suites Panama City Beach 182 78% 141
Wendwood Condominiums 27 88% 23
Palmetto Inn & Suites Resort 122 75% 91
Tidewater Beach Resort 570 68% 387
Total 1037 749
Average Annual Occupancy =Average nightly demandRooms available100%7491037100% =72.23%
Step 2: Calculation of the Composite Growth Rate of Demand
Source Source of Demand Annual Compound Growth (%) Composite Growth (%)
sBusiness Travellers 10% 5% 0.5%
Convention Delegates 15% 10% 1.5%
Vacationers 75% 8% 6.0%
Total 100% 8.0%
Step 3: Future Supply of rooms required
The average occupancy rate per year is 69% and is constant for the next five years
Year Rooms Demand Normal Occupancy (%) Supply Required Current Supply New Rooms Required
Current 749 69% 1086 1037 49
2020 945 69% 1370 1037 333
2021 1184 69% 1716 1037 679
1345 69% 1949 1037 912
2023 1432 69% 2075 1037 1038
1578 69% 2287 1037 1250
Therefore, to attain the supply required, the rooms demand for each year has been divided by a 69% occupancy rate. Also, estimate the future rooms required, the supply of rooms (1037) has been deducted from the supply necessary annually. At the end of five years, the number of additional rooms that will be supported by a 69% average occupancy rate is 1250.
The contents of the hotel will be a public area and lobby, guestrooms, meeting space, recreational amenities, beverage and food sectors, and back-of-house areas. The hot...
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