Review of H otel Development GuidelinesArlington Entertainment D istrict

Submitted to:Arlington Convention& Visitors Bureau

October2018

Arlington,Texas

Arlington Entertainment District

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Arlington Entertainment District Hotels

No. Name of Hotel Chain Scale TierOpenDate Rooms

1 Nite Star Inn &Suites Independent 1.00 Jul-08 602 Ranger Inn &Suites Independent 1.00 Jun-98 443 America's Best Value Inn Economy 2.00 Jul-63 404 Days Inn Dallas Arlington NorthCollins Economy 2.00 Jun-77 875 Extended Stay America Arlington Six Flags Economy 2.00 Sep-97 1376 Howard Johnson Express Inn Arlington Ballpark SixFlags Economy 2.00 Jun-67 987 Red Roof Inn Economy 2.00 Jun-72 1148 Baymont Inn & SuitesArlington Midscale 3.00 May-95 949 Candlewood Suites Arlington Midscale 3.00 Aug-98 12510 Hawthorn Suites by Wyndham Arlington DFWSouth Midscale 3.00 May-83 12911 La Quinta Inns & Suites Arlington North Six Flags Drive Midscale 3.00 Aug-06 17812 Quality Inn & Suites Six Flags Area Arlington Midscale 3.00 Mar-73 12113 Sleep Inn Arlington Near SixFlags Midscale 3.00 Jan-97 12614 Wingate By Wyndham Arlington Midscale 3.00 Feb-98 9215 Comfort Suites Arlington Upper Midscale 4.00 Feb-09 10816 Fairfield Inn & Suites Arlington Near Six Flags Upper Midscale 4.00 Aug-93 10117 Hampton Inn Suites Dallas Arlington North Entertainment District Upper Midscale 4.00 May-10 10318 Holiday Inn Arlington Northeast RangersBallpark Upper Midscale 4.00 Jun-08 14719 Holiday Inn Express & Suites Arlington Six Flags Area Upper Midscale 4.00 Jul-96 10320 TownePlace Suites Dallas Arlington North Upper Midscale 4.00 Jan-99 9421 Courtyard Dallas Arlington Entertainment District Upscale 5.00 Mar-87 14722 Crowne Plaza Suites Arlington Ballpark Stadium Upscale 5.00 Jan-86 20023 Hilton Garden Inn Dallas Arlington Upscale 5.00 Jun-09 13224 Homewood Suites Dallas Arlington Upscale 5.00 Feb-01 8925 Hyatt Place Dallas Arlington Upscale 5.00 Apr-96 12726 Residence Inn Arlington Upscale 5.00 Jul-95 11427 Springhill Suites Dallas Arlington North Upscale 5.00 Jul-98 12128 Hilton Arlington Upper Upscale 6.00 Feb-83 30829 Sheraton Hotel Arlington Upper Upscale 6.00 Apr-85 311

District Totals / Averages 4.01 Mar-92 3,650

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ArlingtonEntertainmentDistrict

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Economic Development

Projects

TEXAS Live!Phase 1 opened 2018$250 Million Cost100,000+ sq. ft. entertainment 35,000 sq. ft. conference center 302-room luxury hotel

Texas Rangers Globe Life FieldOpening 2020$1 Billion Cost 42,000 Seats Retractable Roof

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RevPAR Peaked in 2016

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Higher RevPAR in Entertainment District

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Arlington’s Aging Hotel Inventory

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Average Age: 26 Years

1960s

1970s

1980s

1990s

2000s

2010s

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District’s Hotel Quality Ranges Widely

-

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100 200 300 400 500 600 700 800 900 1,000

Upper Midscale

Midscale

Economy

Independent

Upscale

Upper Upscale

Average Quality: Upper-Midscale

Independent 3% Economy

13%

Midscale 24%

Upper Midscale18%

Upscale 25%

Upper Upscale17%

STR Chain ScalesLuxuryUpper UpscaleUpscaleUpper MidscaleMidscaleEconomyIndependent

District Average

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Planned Hotels

Guestrooms: 120 Chain: Upscale

Stories: 4/5Planned Opening:2018

Guestrooms: 302 Chain: Luxury

Stories: 14Planned Opening:2019

Guestrooms: 268 Chain: Upper-Midscale

Stories: 9Planned Opening:2019

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MissingUpscaleBrands

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Missing Upper-

Upscale & Luxury Brands

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CurrentUnified Development

Code

Full-Service Requirements(Allowed in District)

▪ Guestrooms 200

▪ Room Size 350 sq. ft.

▪ Mtg. Space 10,000 sq. ft.

▪ Swimming Pool Required

▪ 3-Meal Restaurant Required

▪ Restaurant Seats 200

▪ Room Service 24-hour

▪ Bell Service 24-hour

▪ Concierge Service 12-hour

▪ Business Ctr. – KeyedAccess

Limited-Service Requirements(Not Allowed in District)

▪ No Guestroom Minimum

▪ Room Size 350 sq. ft.

▪ Mtg. Space 5,000 sq. ft.

▪ Swimming Pool Required

▪ Limited-Service Restaurant

▪ Restaurant Seats 40% x Rooms

▪ No Rooms Service

▪ No Bell Service

▪ No Concierge

▪ Business Ctr. – KeyedAccess

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Recommendations

1. Clarify policy objectives.

2. Consider using published chain scales as a proxy for quality.

3. Prioritize certain development sites or zones in district.

4. Address outdated service and facility requirements.

5. Consider special set of standards for independent hotels.

6. Different standards for new-construction vs. conversions.

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Recommendation#1

Clarify Policy Objectives Related to Hotel Development.

A. Encourage Development that Will Increase District’sADR▪ Full-service vs. Limited-Service might not be the best metric.▪ Some limited-service brands would likely bring up ADR average.▪ Fear limited-service will dilute demand for higher-rated hotel development?▪ Private capital attracted to Upper-Midscale and Upscale chains.▪ Upper-upscale and Luxury may require large subsidies.

B. Construction Quality▪ Is the real policy goal Higher ADRs or ConstructionQuality?▪ Consider height requirements or building material requirements.▪ 4-story (wood frame) vs. 6-story (steel frame)

C. Under Demolished? UDC has aided this.▪ Average existing hotel is over 25 years old.▪ Obsolete products can survive if newer products are not allowed.▪ Consider minimum standards for conversions and/or independent.

D. Can Some Lower-Rated Hotels beGood?▪ Displace older, obsolete hotel products.▪ Introduce popular brands/products to Arlington.▪ Offer varying price points to attract wider range of tourists.

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Recommendation#2

Consider using published chain scales as a proxy for quality.

A. Clarity and Certainty▪ Chain scales are published annually.▪ Every U.S. brand is included in one, and only one, chain scale.▪ No ambiguity or debate.▪ Transparent for everybody to observe.

B. Matches Policy Objective▪ Higher chain scale = higher-rated hotel brand.▪ Chain scale tied directly to a brand’s Average Daily Rate (ADR).

C. Quality Control Built-In▪ Chain acts as watchdog to protect brand.▪ If brand’s ADR declines → STR will reduce chain scale.▪ If individual hotel’s scores drop → Brand will remove flag.

D. Helps Avoid UnintendedConsequences▪ UDC currently would allow certain low-rated, full-service brands.

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Recommendation#3

Prioritize certain development sites or zones in district.

A. Key Sites (e.g. parcels adjacent to 5 major attractions)▪ Luxury or Upper-Upscale▪ Perhaps Minimum Room Count▪ Perhaps Minimum Investment Amount

B. Priority Zone (e.g. within 1 block of major attractions or at key highway interchanges)

▪ Upscale or higher▪ Extended-stay brands allowed?

C. Lower Priority Zone▪ Upper-Midscale allowed?▪ Extended-Stay brands allowed?

D. Conversions▪ Are existing hotels allowed to reduce chain scales as they age?▪ Consider certain investment requirements or tax implications.▪ Consider minimum requirements if becoming independent.

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Recommendation#4

Address outdated service and facility requirements.

A. Eliminate Service Requirements (or revise)▪ Room service 24-hour▪ Bell service 24-hour▪ Concierge 12-hour

B. Eliminate Facility Requirements (or revise)▪ Meeting space▪ Restaurant meals served▪ Restaurant seating▪ Business center keyed-access▪ Pool requirement

C. Do Such Requirements Really AddAnything?▪ Current UDC requirements don’t directly address policy goals▪ Chain scale requirement would directly address ADR▪ Building materials requirement would address Construction Quality

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Recommendation#5

Consider requirements for independent hotels.

A. Probably Rare▪ Desirable brands are available▪ Most investors will prefer national branding▪ Difficult to obtain debt financing

B. QualityControl▪ No brand to keep quality control scores▪ No brand to threaten removal of flag▪ No brand to force renovation plans (PIPs)▪ Can be especially vulnerable during recessions▪ Can experience downward QC if CapEx is avoided

C. Design and ConstructionQuality▪ Recommend more intensive planning/review process▪ ADR reporting requirement (to allow comparison vs. chain scales)▪ Consider minimum investment per guestroom

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Recommendation#6

Standards for hotel conversion projects.

A. Economic Life of Hotels▪ Average about 40 years▪ 20-year franchise agreement▪ 10-year extension of franchise after major CapEX investment (PIP)▪ 10-year license after conversion to lower chain scale▪ Renew with lower chain scale or become independent

B. What if Owner Converts Down?▪ Accept this as normal economic trend▪ Consider a CapEx requirement▪ Consider taxing structure that discourages downward conversions (e.g.

portion of tax on PAR or POR rather than sales)C. What if Owner Converts to Independent?

▪ Do you need to meet requirement for new construction of independent hotels?

▪ Perhaps this should trigger a planning/review process.▪ Some markets can become “under-demolished”▪ Consider policies that encourages demolition / redevelopment

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HA & Awww.hotelappraisers.com

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Hotel Appraisers & AdvisorsHans Detlefsen, MPP, MAI

President111 N Wabash Ave, Suite 1717

Chicago IL 60602

Direct +1 (312) 526-3885

Mobile +1 (773) 306-6046

hdetlefsen@hotelappraisers.com

Brands/Chains are slotted by Chain Scale based on the previous year’s annual system wide (global) Average Daily Rate. Rate ranges defining each Chain Scale are determined by STR. The STR Chain Scales –North America and Caribbean is a subsetof the larger Global Chain Scale list. Brand Chain Scale pairings are consistent with each list. Brands listed above are located in U.S., Mexico, Caribbean and Canada. If you have any questions about the Chain Scales, please email support@str.com. Copyright 2016. STR, Inc. Publishing or reproducing this information is strictly prohibited. www.str.com +1 (615) 824 8664. Last updated May2016.

STR Chain Scales – North America andCaribbeanLuxury21cMuseumHotels AKAAndazBelmondConradDorchester CollectionEditionFairmontFourSeasonsGrandHyattInterContinental JWMarriottLanghamLoewsLuxury CollectionMandarin OrientalMontagePalaceResortsParkHyattRitz-CarltonRockResortsRosewoodSixtyHotelsSofitelStRegisTajThePeninsulaThompsonHotels TrumpHotelCollection ValenciaGroupViceroyWHotelWaldorfAstoria

Upper Upscale AceHotelAffiniaAutograph CollectionClubQuartersCurioCollection DeltaDolceEmbassySuites

Gaylord HardRockHilton HyattHyattCentric

HyattRegencyJoieDeVivreKimptonLeMeridien MagnoliaHotelMarriottMarriottConference CenterMillenniumOmni OutriggerPan Pacific HotelGroup PestanaPullmanRadissonBluRenaissance SheratonStarhotels SwissotelTributePortfolio WarwickHotelsWestin Wyndham

UpscaleAC Hotels by MarriottaloftHotelAscend Collection AstonHotelBest Western PremierCambriaSuitesCanadInnCitizenMHotelsClubMedCoast Hotels &ResortsUSACourtyardCrowne Plaza DisneyHotelsDoubleTree elementEVENHotels FourPointsGraduateHotels GrandAmericaGreat Wolf Lodge Hilton GardenInnHomewoodSuites

HotelIndigo HyattHouse HyattPlace LarkspurLanding LegacyVacationClub MeliaMiyakoHotels NovotelNYLO Hotel PrinceHotelRadisson ResidenceInnRoomMateShell VacationsClubSonestaHotel Springhill Suites Staybridge SuitesStoney Creek Vacation CondosbyOutrigger

UpperMidscaleAyresAquaHotelsBest Western PlusBoarders Inn & SuitesCenterstone HotelsChaseSuitesClarionCobblestoneComfort Inn ComfortSuitesCountry Inn &Suites DoubletreeClubDruryInn Drury Inn &SuitesDrury Plaza HotelDrurySuites FairfieldInnGolden Tulip HamptonInnHampton Inn & Suites HolidayInnHoliday Inn Express Home2 Suites byHiltonIsle ofCapri LexingtonMOXY

OHANAOxfordSuitesParkInnPhoenixInnRamadaPlazaRedLionHotelsSilver Cloud Sonesta ESSuitesTryp by Wyndham TownePlaceSuitesWestmarkWyndham GardenHotelXanterra

Midscale3PalmsHotels&ResortsAVictoryHotelsAmericInnBaymont Inn &SuitesBest Western CandlewoodSuitesClubHouse Crossings by GrandStay CrystalInnFairBridgeInn GrandStayResidentialSuites HawthornSuitesby Wyndham InnSuitesHotelLakeview DistinctiveHotelsLa Quinta Inn &SuitesMainStay SuitesOak TreeInnQualityInn RamadaRed Lion Inn &Suites SettleInnShilo Inn SleepInnVagabondInn VistaWingate byWyndham Yotel

EconomyAffordableSuitesofAmericaAmerica’s Best InnAmerica’s Best Value InnBudgetHostBudgetSuitesofAmericaBudgetelCountry HearthInnCrestwoodSuites CrosslandSuitesDays Inn EconoLodgeExtended StayAmerica E-Z8Family InnsofAmerica Good Nite Inn GuestHouseInnHome-TowneSuites HowardJohnsonInTownSuites JamesonInnKeyWestInn KnightsInnLiteHotelsMastersInn Microtel Inn&Suites byWyndham Motel6National 9 PassportInnPear Tree Inn Red CarpetInnRed RoofInn RodewayInnSavannahSuites ScottishInnSelectInnStudio6Suburban ExtendedStaySun SuitesHotels Super8Travelodge ValuePlaceWoodSpring Suites

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Sources: Tarrant County TAD data (2017), Data & Maps for ArcGIS 2012 - World, Europe,and United States, NHD Waterbody (as amended), NCTCOG 2009 Planimetrics/stream, City of Arlington -CDP GIS data structure.Current to: 29 August 2017

Disclaimer: This data has been compiled byThe City of Arlington using various official and unofficial sources. Although every effort was made to ensure the accuracy of this data, no such guarantee is given or implied.

LegendZone 1

Zone 2

Zone 3

Arlington Municipal Boundary

Entertainment District Overlay

TAD Parcel

Stream Centerline

Waterbody

DRAFT

DRAFT Entertainment District Parcels By Zone With Aerial